Cho Won-tae Reveals All Cards vs. Anti-Cho Won-tae... Public Opinion Battle with Minority Shareholders Begins in Earnest

Hanjin Kal to Hold Board Meeting on 4th to Recommend 7 Internal and External Director Candidates... Both Sides Nearing 80% Milestone
Proxy Battle Expected to Intensify

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Je-hoon] Cho Won-tae, Chairman of Hanjin Group, and the shareholder coalition for the normalization of Hanjin Group have laid all their cards on the table and have begun full-scale efforts to persuade minority shareholders who hold the key to the management rights dispute. As an all-out battle unfolds to secure even a single proxy voting right amid a razor-thin gap, the public opinion and psychological warfare between the two sides to gain the moral high ground are also intensifying.

According to the aviation industry on the 5th, Hanjin KAL announced the day before that it will conduct proxy solicitation activities targeting all shareholders holding voting shares starting from the 7th. This is about 20 days ahead of the regular shareholders' meeting scheduled for the 27th. It is also known that KCGI, a private equity fund and a member of the shareholder coalition, recently recruited part-time workers for proxy solicitation activities. The proxy battle between the two sides has now ignited.

Both sides have recently raised their stakes in Hanjin KAL sharply to around 40% in preparation for the post-regular shareholders' meeting. However, based on the voting rights for this shareholders' meeting, the gap in shareholding between the two sides is only about 1.47 percentage points. Ultimately, the key turning point in the management rights dispute will be who can win the votes of institutional and minority shareholders, which account for about 34%.

Both sides are already engaged in an all-out battle. The Korean Air labor union is also joining the proxy battle, supporting Chairman Cho's side. The Korean Air union has strongly opposed the shareholder coalition's attempt to seize management rights. The union appealed, "The shareholder coalition is nothing but a combination of speculative capital that aims to fill its own pockets by putting forward a figurehead professional manager and the greed of former Korean Air Vice President Cho Hyun-ah, who should still be reflecting and repenting," and urged, "We earnestly request that voting rights be delegated to the proxy designated by the union."

A high-stakes public opinion battle targeting domestic and foreign proxy advisory firms is also expected to intensify. This is because the analysis of proxy advisory firms can serve as a criterion for individual institutional investors' voting decisions. In fact, at last year's Korean Air shareholders' meeting, several proxy advisory firms recommended opposing the reappointment of the late Chairman Cho Yang-ho as CEO. At that meeting, the late Chairman Cho lost control of management rights.

Accordingly, the public opinion battle between the two sides is deepening. The shareholder coalition has focused on the rebate fee allegations against Korean Air raised by Rep. Chae Yi-bae of the Minsheng Party. They stated, "This rebate incident clearly shows why a professional management system is necessary," and criticized, "The company can no longer survive under the past authoritarian leadership and behind-the-scenes management."

Hanjin Group is focusing its attack on the shareholder coalition's claim of a 'professional management system' as a pretext. At the shareholders' meeting, Hanjin KAL, which nominated financial and accounting experts as inside and outside director candidates the day before, declared, "We will recommend candidates with superior expertise and independence compared to those proposed by the shareholder coalition and gain shareholders' support."

An industry insider said, "Although each side is securing shares in preparation for a long-term battle, both sides seem highly tense as this shareholders' meeting is a preliminary battle," adding, "Since the introduction of electronic voting was scrapped, it is also possible that both sides will conduct door-to-door persuasion campaigns."

Meanwhile, at the board meeting held the day before, Hanjin KAL decided to appoint a total of seven inside and outside director candidates, including Chairman Cho, whose term as CEO is expiring, at the shareholders' meeting. Inside director candidates include Ha Eun-yong, a financial expert and Vice President of Korean Air and Hanjin KAL, while outside director candidates include heavyweight figures such as former Financial Services Commission Chairman Kim Seok-dong.

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