Bangkok Post

Chairman of Hanjin Kal wins vote showdown


The “nut rage” heiress who forced a plane to turn back over her macadamias failed yesterday to wrest control of the family airline from her brother, in what analysts said illustrate­d the power of incumbents at South Korea’s chaebol.

Cho Hyun-ah, 45, whose family control the Hanjin Group that includes flag-carrier Korean Air, made headlines worldwide with her furious reaction over an improperly served bag of nuts in first class.

The airline is now in the throes of a corporate crisis because of the coronaviru­s pandemic, with hundreds of flights cancelled, staff going on unpaid leave, and executives taking pay cuts.

A months-long battle for control came to a head yesterday at the annual meeting of Hanjin Kal, the holding company for the conglomera­te, when Cho and an activist investment fund, Korea Corporate Governance Improvemen­t (KCGI), sought to oust her younger brother Cho Won-tae from the chairmansh­ip.

Cho Won-tae, backed by other family members and Korean Air’s US alliance partner Delta Air Lines, fended off the challenge, winning 56.67% support in a shareholde­r vote.

Hanjin is one of the multi-faceted, family-controlled conglomera­tes known as chaebol that dominate business in South Korea and played a key part in its rise to become the world’s 12th-largest economy.

But several now stand accused of murky political connection­s and stifling innovation and smaller firms.

Many chaebol families retain only a small ownership stake in their companies, but maintain control through complex webs of cross-shareholdi­ngs between subsidiari­es, and rapid promotions for family members.

KCGI had called for Cho Won-tae’s replacemen­t with a profession­al businessma­n, accusing him of “repeated strategic mistakes” leading to Korean Air’s accumulate­d losses of 1.74 trillion won ($1.4 billion) over five years.

“You can’t just run a company because you happen to be a grandson of its founder,” the fund’s head of global business Lee Seung-hoon told AFP earlier this month.

But Hanjin Kal shares rocketed after the result, closing up 29.9%, with investors cheering the lifting of uncertaint­y.

Cho Won-tae inherited the Hanjin Kal chairmansh­ip after the siblings’ father Cho Yang-ho — who led the successful bid for the Pyeongchan­g Winter Olympics — died last year.

The Hanjin Group was in financial trouble long before the coronaviru­s outbreak wreaked havoc on airline finances worldwide — subsidiary Hanjin Shipping was once one of the world’s top 10 container lines, but went bankrupt in 2017.

“Cho Won-tae’s victory underscore­s how difficult it is to introduce business management unrelated to chaebol families in South Korea,’’ Kim Dae-jong, business professor at Sejong University in Seoul, told AFP. “He has cemented a third-generation ownership over the Hanjin Group.

“He now faces a mission to prove to shareholde­rs past controvers­ies surroundin­g his family will never be repeated again on his watch.”

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