'Jeonchojeon' Cho Hyun-beom's Sweeping Victory at Hankook Tire & Technology Shareholders' Meeting

Amid Korean Tire Family's Management Dispute... Cho Hyun-beom Wins Big in Reappointment as Inside Director and Election as Audit Committee Member

Cho Hyun-bum, President of Hankook Tire

[Asia Economy reporters Ki-min Lee and Je-hoon Yoo] At the Korea Tire family’s preliminary battle over management rights, the shareholder meeting of Hankook Tire & Technology, the second son, Cho Hyun-beom, CEO of Hankook & Company, emerged victorious. As a result, Cho’s side has gained an advantageous position for the 'main battle' at the holding company Hankook & Company’s shareholder meeting.

Hankook Tire & Technology held its regular shareholder meeting on the morning of the 30th at its headquarters in Seongnam, Gyeonggi Province, and appointed Lee Mi-ra, General HR Manager of General Electric (GE) Korea, as an outside director and audit committee member with an approval rate of 84%. Lee Mi-ra was the candidate for audit committee member and outside director recommended by the management side.

In addition, all management proposals, including the reappointment of CEO Cho Hyun-beom as an inside director of Hankook Tire & Technology, were passed without difficulty.

On the other hand, the candidate for audit committee member and outside director proposed by the eldest son, Cho Hyun-sik, Vice Chairman of Hankook & Company, and the eldest daughter, Cho Hee-kyung, Chairwoman of the Hankook Tire Sharing Foundation, Lee Hye-woong, CEO of BRB Korea Advisors, received only 16% approval and failed to be appointed.

Initially, it was difficult to predict the outcome of the audit committee member and outside director appointments at Hankook Tire & Technology. Although the shareholding ratios were clearly in favor of Cho’s side?Hankook & Company holding 30.67%, Honorary Chairman Cho Yang-rae 5.67%, Chairwoman Cho 2.72%, Vice Chairman Cho 2.07%, and CEO Cho 0.65%?the so-called '3% rule' was applied under the revised Commercial Act, limiting the voting rights of the largest shareholder and related parties to 3%.

In particular, the National Pension Service (NPS), the second-largest shareholder of Hankook Tire & Technology with 8.66%, through its Stewardship Responsibility Committee, opposed the appointment of Lee Hye-woong as inside director proposed by Chairwoman Cho, but supported the audit committee member and outside director candidates proposed by Vice Chairman Cho, making the situation uncertain. Previously, the proxy advisory firm Sustainvest also recommended supporting the candidates proposed by Vice Chairman Cho.

However, the decisive small shareholders sided with CEO Cho, determining the outcome. An industry insider said, "Vice Chairman Cho has not disclosed when he will step down from his vice chairman position at Hankook & Company, whether he will retain his CEO and board chairman positions, or whether he will dispose of his shares, so general shareholders seem to have lost trust."

Following this result, CEO Cho has gained an advantageous position for the main battle at the holding company Hankook & Company’s shareholder meeting. Cho’s side has nominated Kim Hye-kyung, a visiting professor at Ewha Womans University Graduate School of International Studies and former Blue House secretary during the Lee Myung-bak administration, while Vice Chairman Cho’s side has nominated Lee Han-sang, a professor at Korea University, as candidates for audit committee member and outside director.

Although CEO Cho (42.9%) overwhelmingly surpasses Vice Chairman Cho (19.32%) in shareholding at Hankook & Company, the impact of the 3% rule makes the outcome uncertain. The National Pension Service has also sided with Vice Chairman Cho, similar to its stance at Hankook Tire & Technology. The result of the Hankook & Company shareholder meeting is expected to hinge on the choices of the second daughter, Cho Hee-won (10.82%), and small shareholders (22.61%).