[Asia Economy Reporter Ki-min Lee] As the management rights dispute within the Korean Tire family enters its second round with the adult guardianship court hearing of Cho Yang-rae, chairman of Hankook & Company, attention is focused on whether Vice Chairman Cho Hyun-sik will resign from his CEO position. Earlier, Vice Chairman Cho announced that he would step down from his CEO role if Professor Lee Han-sang of Korea University, whom he recommended as an outside director and audit committee member of Hankook & Company through a shareholder proposal in February, was appointed.
According to industry sources on the 9th, Vice Chairman Cho has not expressed his position regarding his tenure for more than ten days following Hankook & Company’s regular shareholders' meeting. In February, he stated, "I will resign if Professor Lee is appointed as an outside director to fundamentally break the chain of controversies surrounding the management rights dispute." Subsequently, at last month’s shareholders' meeting, Professor Lee was appointed as an outside director and audit committee member, and the Hankook & Company board resolved to appoint President Cho Hyun-beom as the new board chairman, anticipating Vice Chairman Cho’s resignation.
However, as Vice Chairman Cho’s pledge has not been fulfilled, the atmosphere of the management rights dispute does not seem to be subsiding anytime soon. The adult guardianship hearing for Chairman Cho at the Seoul Family Court is scheduled for the 21st, marking the second round of the management rights dispute. Chairman Cho is not obligated to attend the hearing.
Industry insiders believe that the timing of Vice Chairman Cho’s voluntary resignation will determine whether he keeps his promise to the shareholders. Although Vice Chairman Cho is not obliged to immediately resign from his CEO position, the later it is, the more it may appear that he is not honoring his commitment. His term as CEO lasts until March next year.
Furthermore, the prolonged management rights dispute is expected to affect the morale of employees. An industry official said, "It is true that currently, Hankook & Company employees are somewhat puzzled by Vice Chairman Cho maintaining his CEO position," adding, "For internal cohesion, it seems important that Vice Chairman Cho fulfills his promise as soon as possible."
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