Hanjin-3-Party Alliance, Disputes Over Proxy Advisors Who Gave Conflicting Recommendations

Jowon Tae Points Out "Neutrality Issue" to Sustainvest Opposing Hanjin
Three-Party Alliance Criticizes ISS and KCGS as "Self-Contradictory"

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Je-hoon] Hanjin Group, which is engaged in a management rights dispute, and the shareholder coalition for the normalization of Hanjin Group (known as the '3-party coalition') are now clashing over proxy advisory firms that have issued opposing conclusions.

According to the business community on the 18th, ahead of the upcoming Hanjin KAL annual general meeting scheduled for the 27th, each proxy advisory firm has issued different recommendations regarding the reappointment of Cho Won-tae, Chairman of Hanjin Group and an inside director, which is the main point of interest in this year's AGM. The world's largest proxy advisory firm ISS and Korea Corporate Governance Service (KCGS), a leading domestic proxy advisory firm, recommended 'approval' of Chairman Cho's reappointment, while the domestic advisory firm Sustainvest recommended 'opposition.'

Hanjin Group and the 3-party coalition are raising issues with the conclusions of the proxy advisory firms that issued unfavorable recommendations to each side. Hanjin Group pointed out that Sustainvest issued a recommendation lacking fairness. Sustainvest opposed the nomination of Park Young-seok, an outside director candidate recommended by the Hanjin KAL board, citing concerns over conflict of interest and doubts about his ability to faithfully perform his duties as he is currently serving as the President of the Korea Capital Market Institute. However, Sustainvest did not apply the same standard to the 3-party coalition's candidates.

In fact, Kim Shin-bae, an inside director candidate from the 3-party coalition, currently serves as an outside director at POSCO and Prudential Life Insurance, and Ham Cheol-ho, a non-executive director candidate, is the CEO of Skyworks, a consulting firm specializing in aviation management. Gu Bon-ju, an outside director candidate, previously worked at a law firm that served as legal counsel for Bando Construction.

Hanjin Group also questions Sustainvest's neutrality. Previously, the Korea Corporate Governance Forum proposed a public debate last month between Hanjin KAL and the 3-party coalition (KCGI), and Ryu Young-jae, CEO of Sustainvest, and Kang Sung-bu, CEO of KCGI, respectively served as the inaugural chairman and founding member of this forum.

On the other hand, the 3-party coalition criticized the recommendations of ISS and KCGS as 'self-contradictory.' In a press release issued that day, the 3-party coalition stated, "Chairman Cho and inside director candidate Ha Eun-yong, Vice President of Korean Air, clearly fall under reasons such as 'damage to corporate value' and 'negligence in supervision' as specified in the director disqualification guidelines by ISS, etc. Recommending approval is a self-contradictory decision." Regarding KCGS, they criticized, "It is unreasonable that KCGS recommended abstention of voting rights only for the shareholder coalition candidates, citing the enlarged board size if both sides' directors are appointed and the aviation industry's downturn," calling it "illogical."

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