Shareholders to cast crucial vote on replacing CEO on Wednesday
The management feud between Hi Mart, the nation’s largest electronics appliance retailer, and its major shareholder Eugene Corp. was escalating Tuesday, ahead of a shareholders’ meeting scheduled for Wednesday.
Amid fierce resistance from 5,000 Hi Mart employees, shareholders plan to vote on a proposal to replace CEO Sun Jong-koo, the founder and second-largest shareholder of the company.
An ad-hoc committee supporting Sun to stay said in a press conference on Tuesday that some 350 manager-level employees would resign immediately if the proposal is approved.
An ad-hoc panel supporting Hi Mart CEO Sun Jong-koo holds a news conference at the company’s headquarters in southern Seoul on Tuesday. (Yonhap News)
“Eugene had promised it would guarantee the managerial rights of CEO Sun and current executive officials for more than seven years back in 2007,” said the committee.
Saying they have secured witnesses to testify, the committee also revealed an English document signed by representatives of Eugene and Korea CE Holdings, which states the guarantee of employment of “any employee” for seven years.
Korea CE Holdings was established by Affinity Equity Partners, a Hong Kong-based private equity house that owned Hi Mart at the time.
“Eugene and its CEO Yu Kyung-sun are telling a lie. We will seek a lawsuit against them for worsening the situation,” the committee said.
Eugene, however, said it had no comment on managerial rights of executive officials in the contract and the clause is still valid for employees.
“But executive officials, including CEO Sun, are not categorized as employees. If Sun claims his managerial rights based on the clause, he admits he is an employee who cannot claim managerial rights,” the company said in a press release.
Hi Mart, established in 1999, was the former domestic sales unit of Daewoo Electronics that went under court receivership during the 1997-98 financial crisis.
When the company was preparing for a spin-off, Sun, then sales chief at Daewoo, and other executive officials purchased 70 percent of the company shares and secured jobs for employees.
Over the past decade, the company’s sales have surged from 680 billion won ($593 million) in 1999 to 3.5 trillion won last year, growth that workers claim has largely been driven by Sun’s leadership.
Currently, Eugene has secured 39.3 percent of shares, including its own 31.34 percent, while Sun has 27.5 percent, including his own 17.34 percent and 6.8 percent from employees.
By Lee Ji-yoon (jylee@heraldm.com)
koreaherald@heraldcorp.com
