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[Newsmaker] Bumpy road to boardroom for SK chairman Chey

National Pension Service may oppose return to board

SK Group chairman Chey Tae-won faces a bumpy road for his return to the boardroom of the holding company SK Holdings, with some shareholders and civic groups strongly opposing the move.

According to local news reports, the fund management division of the National Pension Service, the nation’s largest investor, will convene an investment committee meeting Wednesday to discuss a voting decision on the SK chief’s return to the board of directors. The public pension fund is the second biggest shareholder of SK Holdings with an 8.57 stake, after the 55-year-old group chairman with a 23.4 percent stake.

NPS spokeswoman Chi Young-hye declined to reveal the agenda items of the investment committee meeting due to a compliance issue, downplaying it as regular one for investment decisions. 

SK Group chairman Chey Tae-won
SK Group chairman Chey Tae-won

Despite her explanation, market watchers predict that the NPS will exercise its shareholders voting right against SK chairman in the annual general meeting Friday, based on its internal guidelines on proxy voting and the recommendations of the Institutional Shareholder Service, a global independent proxy advisory firm.

“In principle, both NPS and ISS have opposed the appointment of an unethical figure, who has a track record of breaching criminal laws, as a board member of a company,’’ said Lee Eun-jung, a researcher at the Center for the Good Corporate Governance.

Chey was put behind bars for more than three years on charges of embezzlement and private use of corporate funds before being pardoned by President Park Geun-Hye on August 15, the nation’s Independence Day, last year.

Regarding the chairman’s return to the governing body, company officials repeatedly said there should be no problematic issues in procedure. Rather, they have claimed that his comeback will boost pending investment decisions, which are necessary to explore next growth engines.

Some other institutional investors of SK Holdings, who also put their priority on shareholder value, are expected to follow NPS’ move, but this is unlikely to have any impact and the chairman is expected to realize his long-awaited dream, given the shareholding structure of SK Holdings.  
SK Group chairman Chey Tae-won
SK Group chairman Chey Tae-won
Data from the financial authorities showed the total stake of the chairman and his family members -- including his younger sister with 7.46 percent -- exceeds 30 percent. When the stake of SK-friendly institutional investors are added, the rate is expected to soar to 50 percent.

A similar situation arose in an extraordinary shareholders meeting in June last year. NPS voted against the proposed merger between two units of SK Group -- SK Corp. and SK C&C -- which was designed to strengthen the chairman’s control over the group, saying the deal would hurt shareholder value. But SK pushed ahead with the merger with the backing of other shareholders and launched SK Holdings in July.

By Seo Jee-yeon (jyseo@heraldcorp.com)
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