28th Korea & Company Annual General Meeting
Chairman Cho Faces Shareholders' Criticism Over 'Owner Risk'
"Internal Controls Increased... Awaiting Judicial Authorities' Judgment"
Cho Hee-won and Cho Hyun-sik Siblings Deny Possibility of Additional Management Disputes
At the shareholders' meeting of Hankook & Company, which experienced internal turmoil last year due to a management rights dispute, major shareholders Cho Heewon and Advisor Cho Hyunsik attended in person. The siblings pointed out Chairman Cho Hyunbeom's owner risk and demanded strengthened communication with shareholders. Some minority shareholders also raised concerns about Chairman Cho, noting that although he stepped down as an inside director of Hankook Tire & Technology, he still maintains his positions as CEO and chairman of the holding company, putting his future role under scrutiny.
Hankook & Company held its regular shareholders' meeting on the afternoon of the 28th at its headquarters in Bundang-gu, Seongnam, Gyeonggi Province. The agenda included approval of financial statements, appointment of outside directors and audit committee members, and approval of the directors' remuneration limit, all of which were passed as originally proposed.
At the end of the meeting, Cho Heewon, the second daughter of Honorary Chairman Cho Yangrae of Hankook & Company, attended and made a procedural statement. She said, "Many shareholders, including myself, are anxious due to Chairman Cho's repeated legal risks," and questioned, "There is still a long way to go in Chairman Cho's judicial trial process, so how will the vacancy caused by his absence be filled?"
In response, Park Jaewan, chairman of Hankook & Company's audit committee, said, "We reviewed whether similar issues occurred at the holding company regarding matters arising at the subsidiary (Hankook Tire), but no problems were found," adding, "We are strengthening internal controls and are currently awaiting the final judgment from judicial authorities."
Ahn Jong-seon, CEO of Hankook & Company (left in the photo), is speaking during the regular shareholders' meeting on the 28th. [Photo by Woo Su-yeon]
On the 25th, Chairman Cho voluntarily withdrew his nomination as an inside director of Hankook Tire, a subsidiary of Hankook & Company. This decision appears to have been made considering the ongoing trial for allegations of unfair support to affiliates. Additionally, criticism from civic groups and proxy advisory firms regarding Chairman Cho's reappointment as an inside director increased the pressure. They pointed out that Chairman Cho's attendance at board meetings was low last year due to judicial detention and trials, and also criticized his remuneration as excessively high.
In response, Ahn Jongsun, CEO of Hankook & Company, explained, "The tire industry is one where years of innovation efforts, including brand and technology development, lead to results," adding, "Management cannot achieve good performance simply by working hard in the current year."
There were also criticisms that Chairman Cho only stepped down as an inside director of the subsidiary Hankook Tire but still retains his positions as an inside director and chairman of the holding company, maintaining the same level of control over the group. Another shareholder attending the meeting strongly criticized Chairman Cho's retention of his inside director position at Hankook & Company and his role as group chairman. One shareholder said, "Chairman Cho only relinquished his inside director position at Hankook Tire but keeps all other positions," adding, "If he had even a minimum sense of shame, he should not do this." He further added, "Once trust is restored by resolving the owner risk, the stock price will naturally rise."
Meanwhile, when reporters met with siblings Cho Heewon and Cho Hyunsik on the day, they dismissed the possibility of further attempts to secure management rights. They also avoided direct comments on Chairman Cho's ongoing judicial trial or the guardianship commencement trial concerning Honorary Chairman Cho.
When asked about the possibility of additional management disputes depending on the outcome of Chairman Cho's judicial trial, Cho said, "There are no plans at the moment, and we are trying to minimize the owner risk as much as possible." She added, "We are closely monitoring the impact of owner risk on the stock price," and said, "I think Chairman Cho should feel more ashamed."
Last year, Advisor Cho, the eldest son of Honorary Chairman Cho, teamed up with the private equity fund MBK Partners to conduct a tender offer to secure management rights. During this process, eldest daughter Cho Heekyung, chairwoman of the Hankook Tire Nanum Foundation, and second daughter Cho also joined, escalating the dispute. However, Advisor Cho's side failed to secure the target shares by the tender offer deadline, causing the management rights acquisition attempt to fail. Honorary Chairman Cho then supported his second son, Chairman Cho, by purchasing additional shares, increasing the friendly shareholding ratio to 47.22% and solidifying management control.
However, the ongoing appeal trial regarding the commencement of limited guardianship for Honorary Chairman Cho remains a variable. In 2020, eldest daughter Cho claimed that Honorary Chairman Cho's transfer of shares to his second son, Chairman Cho, was not decided under normal circumstances and filed for limited guardianship. This system allows adults who lack the capacity to manage affairs due to reasons such as old age to have their assets managed by a guardian. The court dismissed the petition in the first trial, and eldest daughter Cho immediately appealed. Recently, the hearing procedure for the second trial has concluded, and a verdict is pending.
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