SEOUL -- Korean Air Lines Chairman Cho Yang-ho was ousted from the boardroom of the country's largest airline on Wednesday and forced to resign as its chief executive as more than a third of shareholders opposed his re-election due to an embezzlement allegation against him.
The company said 64.1% of shareholders voted for Cho's appointment as a board director in its annual shareholders meeting, falling slightly short of the two thirds, or 66.7%, needed to ensure his re-election. The remaining 35.9% of shareholders, including the National Pension Service, voted against him.
Transport conglomerate Hanjin-KAL, the airline's holding company, is its largest shareholder with a 29.96% stake, followed by the NPS at 10.57%. Individual shareholders have a combined 56.40% stake.
"The appointment of Cho as board director was rejected because it failed to garner more than two-thirds of votes," said Woo Kee-hong, vice president of the company, who chaired the meeting.
The ouster comes five months after Cho was indicted on a charge of allegedly embezzling 27 billion won ($23.8 million) of corporate funds. His case is pending in district court.
"Korean Air has suffered a lot under Chairman Cho Yang-ho's imperial-style of management since the 'nut rage' incident," said lawmaker Chae I-bae of the Bareunmirae Party, referring to an air rage scandal involving Cho's daughter, a former executive of the airline.
"Earnings of Korean Air worsened because the owner's family exploited the company for its own private gain," said Chae, who represents the company's minority shareholders.
Korean Air Lines posted a net loss of 417.6 billion won in 2018, compared with a 1.1 trillion won net profit in 2017. The airline blamed the reversal on high interest payments and a weakening won.
Cho's troubles are not over yet. Local activist fund Korea Corporate Governance Improvement vows to challenge him during Hanjin-KAL's shareholders meeting on Friday. KCGI is the second-largest shareholder in Hanjin-KAL with a 12.8% stake, behind Cho's 17.70%.
KCGI said that it will oppose the appointment of CEO Suk Tae-soo as a board director because he damaged the credit rating of Hanjin-KAL by supporting financially troubled Hanjin Shipping a few years ago. The fund also urged shareholders to vote against all three of the outside directors appointed by Hanjin-KAL, as it questions their independence.