Shareholders of Hanjin KAL, the holding company of Korean Air, agreed Friday to keep CEO Suk Tae-soo on the board of directors, with a majority of them voting in favor of the move during a regular meeting Friday.
Suk is a close ally of Hanjin Group and Korean Air Chairman Cho Yang-ho, who was voted out as chairman of the board Wednesday.
Hanjin KAL CEO Suk Tae-soo (Yonhap)
With Suk retaining his board seat, Cho now has time to reorganize control over the group, say market insiders.
Since joining the company in 1984, Suk has held various senior positions at the group, including Korean Air’s management strategy team and its American branch. Suk was appointed president of Hanjin Shipping in 2013 and vice chairman of Korean Air last year.
During Friday’s shareholders meeting, 65.46 percent voted for Suk’s re-election to the board, while 33.54 percent voted against it.
Activist hedge fund Korea Corporate Governance Improvement, the company’s second-largest shareholder with a 12.01 percent stake, was against Suk’s reappointment, citing his lack of management skills and saying that it would hurt the interest of shareholders.
However, the National Pension Service, the third-largest shareholder, supported Suk’s reappointment.
Market insiders say the group has earned a significant amount of time through Suk’s re-election, as Chairman Cho Yang-ho and his first son, Cho Won-tae, who is also a CEO of Korean Air, will see both their board terms expire in March next year.
The Cho family currently holds a 33.3 percent stake in Korean Air, as Cho Won-tae currently serves as CEO of Korean Air. The owner family has a 29 percent stake in Hanjin KAL.
“Before the next shareholders meeting, the owner family and Chairman Cho will have to make all-out efforts to come up with reform plans for corporate management to retain their control of the group,” said a market insider.
“Things will change quickly as KCGI is also preparing to gather more heads to enforce its power as the second-largest stockholder,” he added.
Other insiders said the next 12 months will be crucial for Chairman Cho to prove his leadership decisions and regain shareholders’ trust.
Last year, Cho was accused of evading inheritance taxes and embezzling company funds. His wife and two daughters were also investigated by authorities over allegations including the assault of employees and the illegal hiring of foreign housekeepers.
By Kim Da-sol (ddd@heraldcorp.com)