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SEOUL, March 24 (Yonhap) -- The National Pension Service (NPS), the country's biggest institutional investor, is expected to back Hanjin KAL Co.'s proposal to reappoint its current chief as one of its board members, industry sources said Sunday.
According to the sources, the Korea Corporate Governance Service (KCGS), the NPS' main proxy adviser, has recommended that the state pension fund back the proposal to keep Suk Tae-soo, president of Hanjin KAL, the holding company of South Korea's leading flag carrier, in the board room.
Hanjin KAL is scheduled to hold a shareholder meeting this week.
The decision is a harsh blow to a local activist fund that forwarded the motions to sack Suk and other board members. Suk is a close aide to Hanjin Group Chairman Cho Yang-ho, who has been charged for allegedly engaging in breach of trust and embezzlement.
Some proxy advisors recommended that shareholders oppose the reappointment of Chairman Cho to be an executive director of Korean Air Lines Co., citing Cho's track record of paying family members and other illegal acts as reasons for its opposition to his continued service in the director position.
Last week, Hanjin KAL also won a court disposition to exclude proposals made by the Korea Corporate Governance Improvement (KCGI) from being put to a vote at its upcoming shareholder meeting.
KCGI's special purpose company, which has a 12.01 percent stake in Hanjin KAL, has claimed that its proposals are aimed at increasing transparency of the transportation and logistics conglomerate, which had taken flak for the inappropriate actions of Chairman Cho and his family members.
Hanjin KAL controls Korean Air Lines, budget carrier Jin Air Co. and several other companies engaged in logistics, accommodations and various other services.
Cho and those allied to the chairman control a combined 28.93 percent of Hanjin KAL, while the NPS holds 7.34 percent.
In the case of Korean Air Lines, Cho and those who are friendly to him own 33.35 percent in Hanjin KAL. The NPS' stake in Korean Air Lines stands at 11.56 percent.
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