Hanjin Faces Vote Battle with HYK at Shareholders' Meeting... Key Issue: Whether to Increase Board Members

[Asia Economy Reporter Dongwoo Lee] Hanjin will engage in a vote battle over agenda items including the increase of the maximum number of directors with its second-largest shareholder, the private equity fund HYK Partners, at the regular general shareholders' meeting on the 25th.

According to industry sources, Hanjin will hold the shareholders' meeting at 9 a.m. at the main auditorium of the Hanjin Building in Jung-gu, Seoul, where shareholders will vote for or against agenda items such as partial amendments to the articles of incorporation proposed by HYK, the appointment of outside directors and other non-standing directors, and dividends.

The core issue of this shareholders' meeting is whether to increase the maximum number of directors proposed by HYK as a shareholder proposal. According to Hanjin's articles of incorporation, the board of directors must consist of at least 3 and no more than 8 members. Currently, Hanjin's board is fully staffed with 3 inside directors and 5 outside directors, totaling 8 members.

HYK proposed to increase the board size to a maximum of 10 members at this shareholders' meeting, citing the strengthening of shareholder rights. If the amendment to the articles of incorporation is approved, the appointment of outside director candidate Kim Hyun-gyeom and other non-standing director candidate Han Woo-je, both proposed by HYK, will also be addressed. However, if the proposal to increase the maximum number of directors is rejected, the appointment proposals for the two candidates will be automatically discarded.

Separately, a vote will be held on the appointment of an outside director to serve as a member of the audit committee to fill the vacancy of one outside director whose term expires this year. In this vote, Kim Kyung-won, Vice President for External Affairs at Sejong University, recommended by the company, and Park Jin, professor at the KDI School of Public Policy and Management, recommended by HYK, will compete.

The vote battle will be subject to the revised Commercial Act's "3% rule". However, since Hanjin appoints the audit committee member from outside directors rather than inside directors, shareholders will likely be able to exercise voting rights up to an individual stake of 3% under the revised Commercial Act.

Hanjin's largest shareholder is Hanjin KAL with a 24.16% stake, and including the owner's family friendly shares, it amounts to 27.45%. The second-largest shareholder HYK holds 9.79%, followed by GS Home Shopping with 6.62%, the National Pension Service with 5.94%, and the employee stock ownership association with 3.96%.

The dividend proposal will also be voted on. Hanjin proposed a dividend of 600 KRW per common share, while HYK proposed a dividend of 1,000 KRW per common share.