SEOUL, March 14 (Reuters) – Proxy adviser Institutional Shareholder Services has recommended investors of Hanjin Kal 180640.KS, the parent company of South Korea’s top carrier Korean Air Lines Co Ltd 180640.KS, vote to reappointment the company’s chief as an internal director.
Walter Cho, the only son of the company’s late chairman Cho Yang-ho, serves as Hanjin chairman and Korean Air CEO, having accumulated aviation logistics expertise through working in various divisions including passenger, cargo, and management strategy, ISS said in a report.
Cho Yang-ho’s eldest daughter Heather Cho, known for a “nut rage” incident in 2014, has joined forces with the company’s biggest shareholder, activist fund Korea Corporate Governance Improvement (KCGI), to oust her younger brother.
Walter Cho, backed by other family members and Delta Air Lines Inc DAL.N, commands about 40% of the voting rights.
ISS said that shareholders should support five out of seven nominees for board directors’ positions by Hanjin Kal and one nominee by the alliance between Heather Cho, KCGI and their backers, but recommended voting against the other six nominees put forward by the alliance.
KCGI and its backers, who have mustered roughly 37% of Hanjin’s voting rights, are seeking to replace Walter Cho with mobile industry veteran Kim Shin-bae on the company’s board to press ahead with restructuring Korean Air.
However, ISS also recommended shareholders vote in favour of Kim Shin-bae’s appointment as an internal director.
South Korean proxy adviser Korea Corporate Governance Service (KCGS) on Friday also recommended shareholders vote for Walter Cho to keep his board seat and approve other Hanjin Kal board nominees.
The family feud is a major distraction for the loss-making airline which warned this month that the coronavirus outbreak could threaten its survival after it scrapped more than 80% of its capacity and ordered cabin crew to take leave.
Responding to ISS’ recommendations, a spokeswoman at Korean Air said, “with support from the world’s largest and the country’s largest proxy advisers, the chances of Chairman Cho becoming a board member of Hanjin Kal have become more likely.”
Hanjin Kal’s annual shareholder meeting is scheduled for Friday, March 27, the company’s regulatory filing showed.
(Reporting by Heekyong Yang and Joyce Lee; Editing by Kirsten Donovan)
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