The National Pension Service (NPS) is in support of the reappointment of Cho Won-tae, chairman of Hanjin Group, as an inside director of Hanjin KAL, the group’s holding company. As a result, the gap in voting rights between the pro-Cho Won-tae side and the opposing side represented by Cho Hyun-ah, the chairman’s elder sister and a former vice president of Korean Air, at a general shareholders' meeting to be held on March 27 increased to 11.59 percentage points. However, the NPS opposed Korean Air's proposal to reduce the quorum requirements for director appointment and dismissal.
The National Pension Fund Trustee Responsibility Committee decided on March 26 to approve the appointment of Hanjin Group chairman Cho Won-tae, Hanjin KAL vice president Ha Eun-yong and Kim Shin-bae, a former vice chairman of SK Group, as inside directors of Hanjin KAL. But the NPS took issue with candidate Bae Kyung-tae as it judged that Bae does not fit in increasing shareholder value in the long run, considering the appropriate size of the board of directors.
As the NPS sided with chairman Cho, it is expected to reverberate among minority shareholders and foreign shareholders as well as other institutional investors such as Time Folio Asset Management with an estimated 2.20 percent, Credit Swiss (CS), and Korea Investment Trust Management. Earlier, the Korea Corporate Governance Service (KCGS), a voting advisor for the NPS, and the world's largest voting advisor ISS expressed their support for the reappointment of chairman Cho.
The NPS, however, opposed Korean Air’s attempt to change the quorum requirements for director appointment and dismissal. Korean Air's articles of association stipulate that the appointment and dismissal of a director requires a special resolution, which means approval by more than two-thirds of the shareholders attending a general shareholders’ meeting. Korean Air wanted to make the appointment and dismissal of a director a matter that requires an ordinary resolution, which means approval by half of the attendants at a general shareholders’ meeting. The management of Korean Air wants to make the change as chairman Cho’s term as an inside director of Korean Air expires in March 2021. With respect to the issue, the trustee committee concluded that there was "no good reason" for the change. The committee also considered a possibility that the change will risk attacks from private equity funds (PEFs) in the future.