South Korea’s state pension operator on Tuesday decided to vote against Hanjin Group and SK Group’s chairmen continuing their terms, citing concerns of possible damage to corporate value and infringement of shareholder rights.
The announcement came as a result of a meeting of the NPS’ fund management committee, which is the group’s highest decision-making body, on Tuesday afternoon. The meeting was a follow-up from the first of such meeting held Monday, as they were unable to reach a decision at the time.
Regarding their decision on Hanjin Group Chairman Cho Yang-ho, the NPS said, “We decided to vote against Cho's term extension due to his track record of hurting the corporate value and infringement of shareholder rights," the NPS fund management committee said, referring to public criticisms surrounding the chairman and his family.
Cho Yang-ho (Yonhap)
Cho is to stand trial this year on charges of embezzlement and breach of trust worth 27 billion won.
Along with the charges, his family members, including former Korean Air Executive Vice President Heather Cho, most famous for her “nut rage” incident, have displayed behavior in recent years that have affected stock prices in a negative manner.
The NPS is the second-largest shareholder of Korean Air with an 11.56 percent stake in the airline. It is also the third-largest shareholder of Hanjin KAL, Hanjin Group's de-facto holding firm, with a 7.34 percent stake.
The NPS’ decision is likely to act as a key obstacle for shareholders who hope Cho to serve another term. Cho’s term as a Korean Air board member is to expire this month. In order for Cho to keep his board seat, the approval of two-thirds of attending shareholders is required.
Korean Air expressed regret over the NPS' decision, saying it didn't consider the firm's "long-term shareholders' value."
The NPS also voted against term extension of SK Group Chairman Chey Tae-won, also citing damage to shareholder rights and corporate value.
By Jung Min-kyung (firstname.lastname@example.org