National Pension Service Supports Appointment of Cho Won-tae as Inside Director of Hanjin Kal (Comprehensive)

[Asia Economy Reporter Park Ji-hwan] On the eve of the Hanjin KAL shareholders' meeting, where a fierce management rights dispute is underway among the three-party alliance led by Chairman Cho Won-tae of Hanjin Group and former Korean Air Vice President Cho Hyun-ah, the National Pension Service, expected to play a casting vote role, sided with Chairman Cho.

On the 26th, the National Pension Fund Stewardship Committee held its 8th meeting and announced that it decided to support the appointment of Chairman Cho Won-tae as an inside director at the Hanjin KAL shareholders' meeting scheduled for the 27th. Accordingly, the winner of the management rights dispute appears to have been effectively decided as Chairman Cho. The voting rights gap between Chairman Cho's side and former Korean Air Vice President Cho Hyun-ah's side widened to 11.59 percentage points.

On the same day, the National Pension Fund Stewardship Committee reviewed the direction of exercising voting rights on agenda items for shareholders' meetings of Hanjin KAL, Korean Air, KT&G, and others.

First, in the case of Hanjin KAL, the committee supported the appointment of Chairman Cho Won-tae, Vice President Ha Eun-yong of Hanjin KAL, and former SK Group Vice Chairman Kim Shin-bae as inside directors. However, some members expressed dissent regarding the appointments of candidates Cho Won-tae and Kim Shin-bae. Regarding candidate Bae Gyeong-tae, considering the appropriate board size and other factors, it was decided to oppose, as it was deemed difficult to see it as suitable for long-term shareholder value enhancement.

Among the outside director appointments, the committee supported former Financial Services Commission Chairman Kim Seok-dong, Capital Market Research Institute President Park Young-seok, Midas Private Equity (PE) CEO Lim Chun-soo, Konkuk University Law School Professor Choi Yoon-hee, Law Firm Cheoeum Representative Lawyer Lee Dong-myung, and Ewha Womans University Professor Seo Yoon-seok. However, candidates such as Chung-Ang University Professor Yeo Eun-jung, Suwon University Professor Lee Hyung-seok, and Law Firm Saramgwa Saram Lawyer Koo Bon-ju were opposed, considering the appropriate board size and other factors, as it was deemed difficult to see them as suitable for long-term shareholder value enhancement. Additionally, the appointment of non-executive director candidate Ham Cheol-ho, former CEO of T'way Air, was opposed for the same reasons.

Regarding the amendment of Korean Air's articles of incorporation related to changing the director appointment method, the committee opposed the change from a special resolution to an ordinary resolution, stating there was no justifiable reason for the change. The appointment of Professor Cho Myung-hyun of Korea University’s Business Administration Department as an outside director was also opposed, as it was deemed difficult to align with the fund's interests. Professor Cho serves as a director of the International Corporate Governance Network (ICGN) and chairman of the Korean Stewardship Code Development Committee, raising concerns about conflicts of interest with the National Pension Service.

For KT&G, the committee decided to support the approval of financial statements and the approval of the director remuneration limit. In the case of the audit report delayed due to the novel coronavirus disease (COVID-19), the committee plans to maintain a supportive stance if an appropriate opinion is submitted later.