NPS to threaten Hanjin chief’s control
State pension fund likely to vote against Cho in March
The National Pension Service (NPS) has decided to exercise its voting rights in the upcoming shareholders’ meetings for Korean Air and other Hanjin Group units, a move that could topple Hanjin Chairman Cho Yang-ho and his three children from management.
On Wednesday, the NPS held a fund operating committee meeting and approved a subcommittee to decide on the range of its exercisable rights on Korean Air and its de-facto holding firm Hanjin KAL during their respective shareholders’ meetings in March.
“The NPS will exercise its fair shareholder rights on Korean Air and Hanjin KAL,” said Minister of Health and Welfare Park Neung-hoo, who is also the chairman of the NPS’s fund managing committee.
“We have requested the subcommittee to take a deep look into the case because it will be the first time that the NPS will be applying its stewardship code,” Park said, adding that the subcommittee will make a recommendation next month.
The NPS is the second largest shareholder of Korean Air with an 11.56 percent stake in the airline. It is also the third largest shareholder of Hanjin KAL with 7.34 percent.
Cho’s term as a Korean Air board member will expire in March, thus shareholders may join their rights to oppose Cho from serving another term. Hanjin KAL also has two outgoing outside directors and shareholders will decide whether to give them another term or replace them.
The move comes amid public criticism of the Cho family for their misdoing and alleged illegal behavior.
Cho will stand trial this year on charges of embezzlement and breach of trust worth 27 billion won.
Should he be found guilty, he may lose his job as Korean Air chief because the government has tightened a rule banning a person from being an airline executive if they are found to have violated the Criminal Law. Also, his family members, including former Korean Air Executive Vice President Heather Cho, who earned her ill reputation due to the so-called "nut rage" incident, will be affected. Earlier this year, Cho’s wife and his youngest daugh- ter were summoned for questioning after reports of them committing physical and verbal violence against company staff and other people under their authority. These caused the aviation empire’s stock price to drop significantly, causing damage to corporate value. To address this, the NPS sent a public letter in June asking Korean Air to improve its corporate value, but the carrier only gave a rhetorical answer. Despite its size and shareholding in major companies in Korea, the NPS has had a limited engagement in those companies’ management, to prevent criticism of excessive interference in corporate management by the government.
If the subcommittee finalizes its decision, it will be the first case of the 630 trillion won fund to apply its stewardship code, which allows the pension operator’s close engagement in corporate affairs, after it adopted this in July.