[Active Volcano Hanjin Family] The Reason Why Cho Hyun-ah Hastened Her Return to Management

Need for Stable Income to Secure Inheritance Tax Resources Observed
Late Chairman Cho Yang-ho Received 10.7 Billion KRW Salary from Hanjin KAL Group Listed Companies Last Year

Will the rift within the Hanjin Group family be sealed as it is? Although a reconciliation atmosphere was created for the greater cause of maintaining management rights, realistic adjustments of interests for peaceful family co-management have not yet been achieved. Without mutually acceptable give-and-take, the rift can break out again at any time. Everyone knows that if they scatter, they all perish together, but perfectly repairing a once broken plate is no easy task. It is also not easy to distinguish between external allies and enemies. KCGI, Delta Air Lines, and the Bando Group continue to buy shares of Hanjin KAL while calculating their moves. They are currently on our side, but they could turn around and reveal their claws at any time. The National Pension Service and many individual investors watching the situation are weighing which side to take. The third generation of the Hanjin family stands at a turning point on whether they can maintain group control and management rights across three generations. We examine the process through which they secured control over the Hanjin Group, the current situation, and future variables, and assess whether the sibling co-management system can be sustained long-term.

[Image source=Yonhap News]

[Asia Economy Reporter Park Hyungsoo] Former Korean Air Vice President Cho Hyun-ah has embarked on a full-scale move to return to management after receiving a suspended sentence in the appellate trial for customs law violations. After the end of last year’s regular executive reshuffle in the Hanjin Group, which saw her allies cut off, she confirmed that her younger brother, Cho Won-tae, chairman of Hanjin Group, was trying to pursue an independent path, and issued a statement through her legal representative. In the statement, former Vice President Cho said, “Despite repeated requests, important management decisions were made and announced without even minimal prior consultation.”

The business community views that former Vice President Cho drew her sword at an appropriate time to reclaim part of the group’s management rights from Chairman Cho Won-tae, whose term expires in March. This is because it is necessary to prevent the shares held by former Vice President Cho from drifting away amid ongoing management disputes with KCGI, the second-largest shareholder of Hanjin KAL.

Since stepping down from the front line after the so-called 'nut rage' incident in 2014, former Vice President Cho has had no fixed income, making her return to management urgent also to secure the massive inheritance tax funds she must pay. Chairman Cho Won-tae concurrently holds representative positions at Korean Air and Hanjin and receives compensation. Earlier, in November, Chairman Cho responded to a question about inheritance tax payment during a meeting with reporters in New York, saying, “I have income, but others have no income and are struggling.”

Former Executive Director Cho Hyun-min, who resigned from all positions in the Hanjin Group last April amid the so-called 'water cup power abuse' scandal, rejoined the management team two months after the death of the late Chairman Cho Yang-ho. KCGI criticized Executive Director Cho’s participation in management as a move to secure funds for inheritance tax payment by receiving a large salary.

The compensation received by the Hanjin Group owner family from affiliates is indeed substantial. The late Chairman Cho Yang-ho received 2.6583 billion KRW in salary from Hanjin KAL last year. Korean Air paid him 2.7 billion KRW in salary and 430.38 million KRW in bonuses last year. The salary and bonuses received from Korea Airport Services amounted to 2.32335 billion KRW. Compensation from five listed companies including Jin Air (1.496 billion KRW) and Hanjin (1.0985 billion KRW) totaled 10.7 billion KRW. Chairman Cho Yang-ho also concurrently held executive positions at Jungseok Enterprise, Hanjin Information Systems & Telecommunication, Hanjin Travel, and KAL Hotel Network.

This suggests that when Chairman Cho Won-tae, former Vice President Cho Hyun-ah, and Executive Director Cho Hyun-min all take the forefront of management, the annual cash flow they can secure would be considerable.

This content was produced with the assistance of AI translation services.