SEOUL -- Hanjin KAL Chairman Cho Won-tae has held onto his position as a board director of the transport conglomerate despite a strong challenge from an alliance that included a local activist fund and his own sister.
Shareholders of Hanjin KAL, the holding company of Korean Air Lines, approved the re-appointment of Cho with 56.7% of votes at the annual general meeting on Friday, while 43.3% of shareholders voted against him. The appointment requires more than half of the votes from those at the meeting.
Chairman Cho, who owns a 6.52% stake in the group, was supported by Delta Air Lines with a 10% stake, his mother Lee Myung-hee with 5.31% and his younger sister Cho Hyun-min with 6.47%. The National Pension Service, which owns 3% of the company, played a decisive role by supporting Chairman Cho.
The shareholder alliance of Korea Corporate Governance Improvement, former KAL vice president Cho Hyun-ah and Bando Engineering & Construction was unable to oust Cho from the boardroom, despite owning a combined one-third stake in the company.
Analysts said that the alliance failed to convince investors that they are trustworthy partners. Cho Hyun-ah sparked public anger with her "nut rage" abuse scandal in 2014, while Bando has no expertise in the airline business.
"Regardless of the three-party alliance's diplomatic messages, neutral investors could not trust that Cho Hyun-ah and Bando E&C are reliable," said Choi Nam-kon, an analyst at Yuanta Securities.
All six candidates for board positions recommended by the alliance were rejected by shareholders at the meeting, paving the way for Chairman Cho to strengthen his grip on the company.
Analysts, however, say the KCGI alliance will continue to challenge the chairman as they have been buying up company shares even after the shareholder list for the general meeting closed.
"We believe that the competition [for a greater] stake in Hanjin KAL is highly likely to keep going as no side can win by a big margin," said Yang Ji-hwan, an analyst at Daishin Securities.