Hanjin KAL chairman survives shareholder revolt

Civic activists call for improved corporate governance on Friday at Hanjin KAL’s offices in central Seoul, where the annual general shareholder meeting was held. [YONHAP]

Hanjin KAL Chairman Cho Won-tae was reappointed Friday, surviving a determined challenge mounted by a group of insurgent shareholders.

As all other board candidates nominated by the rebels were rejected, their first attempt at a boardroom coup was complete failure despite owning more than 40 percent of the company.

A total of 56.67 percent of the votes cast were in favor of the reappointment, higher than the required 50 percent, according to Hanjin KAL CEO Seok Tae-soo, who presided over the annual general shareholder meeting held in central Seoul.

A total of 3,619 shareholders voted, representing 84.93 percent of all the shares with voting rights. Around 150 shareholders or their representatives made their way to the site.

Despite the low turnout, the meeting became heated at times, with angry shareholders raising their voices and swearing.

Six directors recommended by the board were voted in, while seven nominees proposed by the group seeking to take control of the board were voted down.

The results of the voting are a huge blow to the coalition - Korea Corporate Governance Improvement (KCGI) fund, Cho Hyun-ah and Bando Engineering & Construction.

The new board directors include Kim Seok-dong, former chief of the Financial Services Commission; Park Young-seok, a business administration professor at Sogang University; Ha Eun-yong, senior managing director at Korean Air Lines; Choi Yoon-hee, a former professor at Konkuk University Law School; Lim Chun-soo, CEO of Midas Private Equity; and Lee Dong-myung, an attorney at Seoul’s Chueum law firm.

Of those six, proxy advisor Institutional Shareholder Service (ISS) recommended investors vote against Lim Chun-soo and Lee Dong-myung.

The only figure nominated by the KCGI group that got the green light from ISS was Kim Shin-bae, former executive vice chairman at SK Group, but shareholders didn’t go along with the recommendation.

The meeting, scheduled to start at 9:00 a.m., was delayed over three hours due primarily to the large number of proxy statements submitted.

The shareholders challenging the chairman own 42.13 percent of Hanjin KAL, but they only have 28.78 percent of the votes.

Shares they bought in 2020 do not count at the 2019 shareholder meeting.

The shares held by Chairman Cho and the shareholders assumed to support him are 41.02 percent of the total.

The tide quickly turned against the challengers this month as proxy advisers started backing Cho Won-tae, while the National Pension Service, which holds around 2.9 percent of shares, announced on Wednesday that it will support Chairman Cho.

Unfazed, Cho Hyun-ah’s alliance vowed to continue the fight.

“KCGI will make the best effort to rebuild Hanjin Group as a respected company,” KCGI said in a statement.

Late Wednesday, the fund sold off around 600,000 shares in Hanjin Transportation for 15.1 billion won ($12.5 million), a move analysts say is an attempt to gather together the resources needed to continue the fight for control of Hanjin KAL.

The latest acquisition is 0.06 percent, or 35,000 shares in the holdings unit reported on Friday, making KCGI’s entire ownership at 18.57 percent.

Still, the odds of turning around the tide appear daunting, because the challengers failed to secure a seat in the board.

“To win the war over control, occupying the board is essential,” said Choi Nam-kon, an analyst at Yuanta Securities.

“[The KCGI group] will find it hard to install more board members, because they would face criticism for expanding the number of board seats that currently stand at 11,” the analyst said.

He raised the possibility of the alliance proposing an extraordinary shareholder meeting since it has a large stake in the company.

Shares of Hanjin KAL surged 29.85 percent on Friday to close at 57,200 won. Shares of Korean Air Lines rose 3.27 percent to 18,950 won.

“The airline industry is going through an unprecedented crisis. More than 90 percent of Korean Air’s planes are grounded,” Cho Won-tae said in a statement Sunday. “The company and its staff will make every effort to get through this and will continue to focus on improving our financial statement.”

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]