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Hanjin Group Chairman Cho Won-tae. (Photo=Hanjin Group) |
[Alpha Biz= Paul Lee] Hanjin Group is facing backlash for its sudden move to use treasury shares to strengthen Chairman Cho Won-tae’s control, ahead of the legislative push for corporate law reform by the Democratic Party of Korea.
The controversy centers around a clause in President Lee Jae-myung’s campaign pledge to institutionalize the mandatory retirement of treasury shares. Critics argue that Hanjin is exploiting political uncertainty to preemptively transfer its treasury shares before the upcoming presidential election.
According to industry sources on June 10, Hanjin KAL—the holding company of the Hanjin Group—announced on May 15 that it would donate treasury shares worth KRW 66.3 billion (approximately 440,440 shares, or a 0.66% stake) to its in-house employee welfare fund by August. The stated reason was to support employee welfare and financial stability.
However, the move is seen as primarily benefiting Chairman Cho by enhancing his voting power without delivering clear value to other shareholders. Treasury shares do not carry voting rights while held by the company. But once donated to a third party—such as an employee welfare fund—they regain voting rights, effectively turning the fund into an ally. In this case, the fund is considered to be under Chairman Cho’s influence, allowing him to consolidate control.
As a result, the combined stake held by Chairman Cho and his related parties in Hanjin KAL would increase from 20.09% to 20.75%.
The move has sparked criticism that Hanjin’s maneuver, rather than averting reform, further underscores the need for changes to Korea’s corporate governance rules—particularly the regulation of treasury shares.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
