The shareholders of Korean Air eliminate a tycoon from the board of directors during a historic vote

SEOUL (Reuters) – In a landmark vote, shareholders of Korean Air Lines Co Ltd rejected the extension of chief executive officer Cho Yang-ho, ending a 27-year term on the board. administration of the largest South Korean carrier and raising its shares.

The resignation would make him the first member of the founding family of a South Korean giant to be forced to leave his board, badysts said, as growing shareholder activism in Asia's fourth largest economy .

In total, 64.1% of the shareholders attending the airline's annual meeting voted for the airline's proposal, which is far from the two-thirds required to approve a three-year extension of Cho's tenure on the board. of Directors.

Shares of Korean Air climbed 5.6% Wednesday morning after the vote was announced, while parent company Hanjin Kal rose 9.4%, before reducing its previous gains.

"Today's result reminds us that the scandals of the Korean Air family from" nutty rage "have not been forgotten," said Park Ju-gun, head of the US-based badysis firm. CEO Score.

"Although Cho does not seem to lose much of his power without a board member, this is detrimental to his image, and his family will behave much more cautiously now that he realizes that he there are people watching him and watching his direction. "

Cho's eldest daughter, Heather Cho, made headlines in 2014 when she lost her cool because she had been served as a fool in first clbad and had ordered her to go to school. Korean Air plane to return to its door at a New York airport.

In April 2018, Cho's youngest daughter, Emily Cho, faced a wave of public criticism that she would have given a drink to a meeting participant.

Both resigned from their executive positions with the airline following the scandals.

"Since the beginning of the incident, the Cho family has put the airline in financial trouble with a tsar-like management style," said Chae Yi-bai, a shareholder activist turned legislator, at the time of the incident. 39th shareholders' meeting.

"As a result, the company's reputation has bottomed out and the performance of its business has suffered," he said.

The CEO, Cho, did not attend the shareholder meeting because he is overseas, a spokesman for Korean Air said, refusing to comment on the results of the vote.

The president of South Korea, the second largest shareholder of the company, has announced that he will vote against the re-election of Cho, 70, on charges of non-compliance. of trust and embezzlement. Cho denied the charges against him.

An influential voting advisor, ISS, also recommended investors vote against the renewal of the mandate, citing "sufficient evidence of excessive governance concerns and a serious breach of fiduciary duty".

CHANGE "NEARLY IMPOSSIBLE"

South Korea has tried to hold its corporate giants – long dominated by powerful, family-led elites – to account for their management and behavior after a series of corruption scandals and other scandals involving property owners. companies and their family members.

But some observers have doubted that much will change in the country or airline's corporate governance record.

Although his board of directors is being dismissed, Cho may continue to hold his Korean Air Chairman and CEO titles and exercise his rights of direction, company officials said. He is also the largest shareholder of the airline through his control of Hanjin Kal.

Cho's son, Cho Won-tae, widely regarded as the third-generation successor of the conglomerate, is currently a board member of the company and president of Korean Air.

"It is quite obvious that Cho junior's vote will reflect his father's words, finally giving Father Cho a free pbad to continue to participate in issues that should only be discussed by council members. "Administration," Park Chang-jin, a flight attendant of Korean Air, revealed the incident of "nut rage" in 2014, told Reuters after attending the shareholders meeting.

Park was part of a dozen protesters who gathered outside the headquarters of Korean Air in Seoul to demand the removal of Cho from the board of directors before the meeting.

"It is almost impossible to change the corporate culture of South Korea with respect to chaebol family members," he said.