Sharp Criticism on 'Cho Hyun-min's Promotion'... Shareholder Proposal Ahead of Hanjin KAL's March General Meeting
Kang Sung-boo, CEO of KCGI (center), is answering questions at a press conference held by the shareholder alliance for the normalization of Hanjin Group at the Glad Hotel in Yeouido, Yeongdeungpo-gu, Seoul on the 20th. Photo by Kim Hyun-min kimhyun81@
[Asia Economy Reporter Park So-yeon] Kang Sung-bu, CEO of activist private equity fund KCGI, made a shareholder proposal ahead of the Hanjin KAL regular general meeting of shareholders, focusing on amendments to the articles of incorporation for governance improvement and the appointment of independent outside director candidates.
On the 15th, Kang said in a phone interview with Asia Economy, "The promotion of Cho Hyun-min to president of ㈜Hanjin, a subsidiary of Hanjin KAL, revealed a weakness in the current board system as a check-and-balance mechanism for the Hanjin Group," adding, "In a board where the check-and-balance mechanism does not function, such decisions are commonplace and there is no way to stop them." He questioned, "Would general shareholders excluding the major shareholders really be pleased with a promotion of a figure who caused social controversy enough to provoke public outrage, damaged the company's image, and caused the stock price to plummet?"
Kang also claimed, "Two years ago, Airbus allegedly received rebates from Korean Air, but no one has taken legal responsibility, and Cho Won-tae (Chairman of Hanjin Group) is only parroting advertisements about what he has done well." He continued, "There is no explanation about why Hanjin KAL continues to suffer losses despite Korean Air posting record profits, and the increased value of numerous real estate properties held by the holding company and subsidiaries is not reflected."
He added, "This incident is just the tip of the iceberg among various problems and a clear example," and said, "If shareholders' expressions of opinion become easier through electronic voting at the general meeting, and the qualifications of directors are strengthened through the articles of incorporation, such incidents may not be completely eliminated but can be prevented in advance."
On the previous day, KCGI made a shareholder proposal to Hanjin KAL for amendments to the articles of incorporation and the appointment of outside director candidates to improve governance. The proposed amendments focus on strengthening director qualifications by disqualifying those who have been sentenced to imprisonment or higher for breach of trust or embezzlement, and introducing electronic voting. Professor Seo Yoon-seok of Ewha Womans University was recommended as an outside director candidate.
KCGI holds a 17.41% stake in Hanjin KAL. When combined with the stakes of Bando Construction (17.02%) and former Korean Air Vice President Cho Hyun-ah (2.81%), who were previously allied in a three-party coalition, the total amounts to about 37.24%. The Cho chairman's side holds 32.08% of friendly shares, and KDB Industrial Bank holds 10.58%. The amendments to the articles of incorporation and the outside director appointment require a simple majority of attending shareholders to pass.
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