Korean Air ousts scandal-ridden Chairman Cho Yang-ho before shareholders have a chance

Industry

Published: 27 Mar. 2019, 11:00

Korean Air ousts scandal-ridden Chairman Cho Yang-ho before shareholders have a chance

Hanjin Group Chairman Cho Yang-ho [YONHAP]

Hanjin Group Chairman Cho Yang-ho has lost control of the group's key affiliate Korean Air.

As Cho's term as director of the board of the airline officially ended on March 17, whether he could serve another term was put to a vote at the airline’s annual general meeting held Wednesday at 9:00 a.m.

But before the vote could take place, Korean Air announced that they had already counted the shareholders that have expressed a will to vote for and against Cho, realizing that he cannot win the two-thirds majority required.

Korean Air announced that Cho had lost without the vote taking place, saying that 64.1 percent of shareholders present would vote in his favor and 35.9 percent would oppose him.

The airline said 73.84 percent of shareholders, based on shares with voting rights, participated in the Wednesday meeting.

Shareholders express opposition as Bareunmirae Party lawmaker Chae Yi-bai, left, argues that Hanjin Group Chairman Cho Yang-ho should not be re-elected as chairman of Korean Air on Wednesday at Korean Air’s headquarters in western Seoul. Cho failed to hold his position after Korean Air announced he had lost before a vote could be held. [LEE HYE-GYUNG]

The Cho family and Hanjin affiliates control 33.35 percent of Korean Air shares, but the airline's second largest shareholder the National Pension Service controls 11.56 percent. The NPS decided on Tuesday through a committee meeting to vote against Cho’s re-election.

Korean Air said they decided not to hold the vote because major shareholders including the NPS and foreign shareholders had already decided to vote down the re-election.

The airline's decision not to hold a vote infuriated minority shareholders on site.

Woo Kee-hong, vice president of Korean Air, who moderated the meeting said, "We did not need to vote on it as it was already confirmed that Cho cannot be re-elected based on our counting of oppossing shares from our major shareholders."

One minority shareholder on site complained, "I want to claim my right as a minority shareholder to decide whether Cho's re-elected or not" and criticized the meeting for being "much like a communist meeting."

Woo, however, said the meeting can proceed without a vote when the result is already fixed and voting from minority shareholders will make no difference.

Though Cho will lose the title of chairman of Korean Air, he might still have a way of influencing the management, according to a Korean Air spokesperson. Cho remains chairman of Hanjin Group.

In board meetings that follow, Cho’s role will be further discussed. The spokesperson, however, said it is too early to say anything about the timeline of the meetings.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]