FILE PHOTO : Korean Air Lines Chairman Cho Yang-ho arrives at a court in Seoul, South Korea, July 5, 2018. REUTERS/Kim Hong-Ji/File Photo
SEOUL (Reuters) – Korean Air Lines Co Ltd shareholders voted on Wednesday against the airline’s proposal to extend CEO Cho Yang-ho’s term as director for three years, ending his 27-year tenure on the board of South Korea’s biggest carrier.
An ouster would make him the first founding family member of any South Korean corporate giant to be forced off a board, analysts have said, amid growing shareholder activism in Asia’s fourth-biggest economy.
A total of 64.1 percent of shareholders present at the airline’s annual shareholders’ meeting voted for the airline’s proposal, a company executive announced at the meeting, falling short of the two-thirds required for approval.
With his board membership terminated, Cho would no longer hold sway over management issues at the airline such as recommending directors and appointing CEOs, analysts say. However, he can continue to keep his titles of chairman and CEO of the carrier.
Shares of Korean Air rose as much as 5.6 percent on Wednesday morning after news of the vote.
A Korean Air spokeswoman declined to comment.
South Korea’s National Pension Service, the airline’s second-biggest shareholder, decided on Tuesday to vote against the re-election of 70-year-old Cho, who is on trial on charges of breach of trust and embezzlement. Cho has denied the charges against him.
Influential proxy adviser ISS had also recommended investors vote against the reappointment of Cho, citing “sufficient evidence of egregious governance concerns and material failure of fiduciary duty.”
South Korea has been trying to make its corporate giants – long dominated by powerful elites and run by family members – more accountable for their management and behaviour following a series of bribery and other scandals involving owners of corporations and their family members.
Reporting by Heekyong Yang and Hyunjoo Jin; Editing by Muralikumar Anantharaman