The National Pension Service has once again moved to block Hanjin Group Chair Cho Won-tae's reappointment as an inside director at Hanjin KAL. The National Pension Service cited "neglecting its duty to monitor damage to corporations' value" as its rationale, but the business community is criticizing the move as "a decision that thoroughly ignores management achievements such as the successful acquisition of Asiana Airlines and record-breaking results."
In particular, the market says the National Pension Service is trapped in past standards and excessively undermining the current management's leadership. Exercising shareholder rights based on the vague standard of "neglect of monitoring" without concrete figures or clear guidelines amounts to de facto "pressure on management control" using public pensions and a twist on "state-controlled finance."
According to the financial investment industry on the 24th, on the 20th the National Pension Service expressed opposition to the agenda item at Hanjin KAL's shareholders meeting to appoint the chair as an inside director and to the agenda item at Korean Air Lines' shareholders meeting to appoint CEO Woo Kee-Hong as an inside director. Hanjin KAL is the holding company of Korean Air Lines. The National Pension Service cited as its reason for opposition that there was "neglect of the duty to monitor actions that damage corporations' value and infringe shareholder rights."
Although the National Pension Service did not specify detailed reasons for its opposition, the market interprets the move as being influenced by past governance issues such as controversies involving the Korean Air Lines owner family and management control disputes. In addition, analysis says the decision also reflected the National Pension Service's consistently negative stance on Korean Air Lines' acquisition of Asiana Airlines.
In fact, the National Pension Service previously opposed the 2019 agenda to extend the term of the late former Chair Cho Yang-ho as an inside director. That extension was voted down at the shareholders meeting. In 2021, it opposed the appointment of Chair Cho Won-tae and some directors and audit committee members, citing reasons such as failure to conduct due diligence during the Asiana Airlines acquisition process and concerns about an unfavorable contract. In 2024, it also opposed the chair's appointment as an inside director.
The business community argues that given the chair's management performance, management control is being excessively shaken based on the vague rule of neglect of the duty to monitor. After the former chair's death in 2019, Chair Cho took the helm of Hanjin Group, closed the major transaction to acquire Asiana Airlines, and maintained Korean Air Lines' profitability during COVID-19, earning a relatively positive assessment in the market.
Hwang Yong-sik, a professor of business administration at Sejong University, said, "Even though last year's results were not good, the large amount of compensation received can be criticized," but added, "Considering economies of scale and expanded market dominance from the merger of Asiana Airlines and Korean Air Lines since Chair Cho took office, as well as strong results, the overall evaluation is that management has been handled well." He added, "Exercising a negative vote without concrete explanation is not desirable."
The National Pension Service also raised issues with the agenda on directors' compensation limits. The National Pension Service judged that "the compensation limit and actual payments are excessive compared with management performance." In fact, last year the chair received a total of 14,578,000,000 won from four affiliates—Hanjin KAL, Korean Air Lines, Jin Air, and Asiana Airlines. This is the highest individual compensation in Hanjin Group's history.
By contrast, results fell from a year earlier. Hanjin KAL's revenue was 298.4 billion won, holding roughly steady from the prior year, but operating profit swung from a 67.5 billion won surplus in 2024 to a 7.5 billion won deficit last year. At core affiliate Korean Air Lines, last year's revenue rose 41.2% year over year to 25.2255 trillion won, but operating profit fell 47.2% from a year earlier to 1.1136 trillion won.
Still, some in the market say the performance trend itself remains solid. Kang Sung-jin, a research fellow at KB Securities, said, "The decline in Korean Air Lines' operating profit is largely due to losses being included as Asiana Airlines' results were reflected in the consolidated financial statements starting in 2025," adding, "Even so, recent results are among the highest in Korean Air Lines' history."
Meanwhile, although the National Pension Service expressed opposition, the view is that the agenda to reappoint the chair as an inside director will likely pass smoothly at the actual shareholders meeting. That is because the owner family, including the chair, holds about 20.56% equity, and Korea Development Bank (KDB), which supported the integration of Korean Air Lines and Asiana Airlines, is also considered a friendly stake.
Hoban Construction holds about 18.78% equity and is seen as a variable, but the market's general view is that the likelihood it will directly affect management control is low, given that the stake is held for simple investment purposes.