Hanjin Kal Board Meeting Today... Discussion on Shareholders' Meeting Agenda

Strengthening Professional Management - Significant Expansion of Outside Directors Expected

[Image source=Yonhap News]

[Asia Economy Reporter Yu Je-hoon] Hanjin KAL is strengthening its professional management system and significantly expanding its outside directors. This is in preparation for the 'numbers game' against the shareholder coalition (shareholder coalition) aiming to normalize the Hanjin Group, which will take place at the shareholders' meeting on the 25th. Separately, Chairman Cho Won-tae of Hanjin Group and the shareholder coalition have been rapidly acquiring additional shares of Hanjin KAL, taking turns ahead and behind. This is a strategic move to prepare for a long-term battle beyond this shareholders' meeting.

According to the aviation industry on the 4th, Hanjin KAL held a board meeting at 8 a.m. at the Seosomun office building in Jung-gu, Seoul, to review and finalize the agenda items to be voted on at the shareholders' meeting on the 25th. It is reported that Chairman Cho, who did not appear at the previous board meeting due to self-quarantine after boarding a charter flight to Wuhan, also attended this meeting.

First, Hanjin KAL is known to have decided to reappoint Chairman Cho as CEO, whose term expires this month, and to additionally appoint professional managers both inside and outside the company. Currently, the Hanjin KAL board has been operated by a two-person system consisting of CEO Seok Tae-soo and Chairman Cho since the passing of the late Chairman Cho Yang-ho. The number of outside directors will be significantly expanded. Since the term of outside director Lee Seok-woo, one of the current four outside directors (Lee Seok-woo, Joo In-gi, Shin Sung-hwan, Joo Soon-sik), has expired, about five outside director candidates, including one vacancy, will be appointed. Including the existing three, the outside director group is expected to expand to around eight members.

The industry evaluates that Chairman Cho's simultaneous reinforcement of professional managers and outside directors is a conscious move to compete numerically with the shareholder coalition. The current Hanjin KAL articles of incorporation do not set a limit on the number of directors. The shareholder coalition, composed of former Korean Air Vice President Cho Hyun-ah, private equity fund KCGI, and Bando Construction, previously recommended eight director candidates (three inside director candidates, four outside director candidates, one withdrew) through a shareholder proposal. Hanjin KAL is also said to have submitted this shareholder proposal as an agenda item.

Since the shareholder coalition is attempting to form a majority on the board through a strategy of 'overwhelming numbers,' Hanjin KAL plans to respond by recommending a similar number of director candidates. Lee Sang-heon, a researcher at Hi Investment & Securities, said, "The shareholder coalition first proposed eight directors, and since there is no particular reason to reject such a shareholder proposal, it is interpreted as a countermeasure."

The professional managers are also believed to be considering inside director candidates Kim Shin-bae (former SK Vice Chairman) and Bae Kyung-tae (former Samsung Electronics Vice President). Since they are evaluated as having relatively low expertise in the aviation transportation industry, the strategy is to strengthen the professional management system to dilute the shareholder coalition's justification.

Meanwhile, Chairman Cho and the shareholder coalition have recently been expanding their shares of Hanjin KAL in a back-and-forth manner. Shares purchased after the shareholder registry closure date (December 26 last year) are not included in this voting right. The industry interprets this as both parties entering a long-term battle, keeping in mind extraordinary shareholders' meetings and next year's regular shareholders' meeting.

In fact, Bando Construction, part of the shareholder coalition, disclosed on the 20th of last month that it had additionally purchased 5.02% of Hanjin KAL shares. KCGI also purchased 0.54% the day before, raising the shareholder coalition's stake to 37.48%. Delta Air Lines and Kakao, allies of Chairman Cho, each increased their shares by 1.00%. As a result, Chairman Cho's side's shareholding rose to the 40% range.

Additionally, from last month until today, orders to purchase Hanjin KAL shares have continued through Goldman Sachs channels. The securities industry estimates that the buyer is Delta Air Lines. As the shareholding competition continues, Hanjin KAL's stock price, which had remained in the 30,000 won range at the end of last year, briefly surpassed 93,000 won this morning. An industry insider said, "Regardless of performance, supply and demand have driven up the stock price," adding, "The stock price direction may change depending on the future pattern of the management rights dispute."

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