|Korea Corporate Governance Improvement CEO Kang Sung-boo|
The Korea Corporate Governance Improvement (KCGI) strongly condemned Hanjin KAL's decision to allow Cho Hyun-min's return to an executive position at the firm. Cho is the youngest daughter of late Hanjin Group Chairman Cho Yang-ho.
The homegrown private equity fund (PEF) is Hanjin KAL's second-largest shareholder as its subsidiary Grace Holdings owns a 15.84 percent stake in Hanjin Group's holding company.
"Hanjin KAL's decision breached a basic principle of responsible management," KCGI said in a press release Wednesday.
"Cho caused irreversible damage to Hanjin Group with her reckless actions. The group's value nosedived to the ground while its shareholders suffered collateral damage. In the meantime, she received 1.7 billion won ($1.44 million) worth of severance pay when she was sacked from the post in 2018."
|Hanjin Group heiress Cho Hyun-min|
KCGI added it will send a protest letter to board members of Hanjin KAL to ask how they could reappoint Cho.
Total market capitalization of Hanjin Group's five listed subsidiaries, including Korean Air, Jin Air and Hanjin Corp., dropped about 20 percent in the six months following the so-called "water rage" incident where Cho flung a cup of water at an employee of an advertising agency last year.
According to a recent study released by Yuanta Securities, KCGI is expected to secure an additional stake in Hanjin KAL to strip management rights from the Cho family.
The study claimed the PEF seeks to secure at least a 20 percent stake in Hanjin KAL by the end of the year.
The late Hanjin Group Chairman Cho Yang-ho and his affiliates own a 28.95 percent stake in the group's holding company.
Last week, KCGI requested the Seoul Central District Court to designate an inspector who will look into Hanjin KAL and whether Hanjin's succession process is legitimate under related law.