Korean Air Lines Co., said Friday it has taken steps to enhance its governance structure and shareholders' value.
Hanjin KAL's board of directors has decided to set up the governance committee and the compensation committee under its wing as part of its broader efforts to improve its governance structure, according to the company.
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(Yonhap) |
The governance committee will conduct a feasibility study on management issues directly related to shareholders value before a decision is made and review the legality of transactions between affiliates, the statement said.
The compensation committee will be composed of outside directors to make sure that wages for executives will be set in a fair and transparent manner, it said.
The move comes months after local activist fund Korea Corporate Governance Improvement and the country's major logistics group have been in a monthslong battle over the group's opaque governance structure and its founding family members' irregularities that have dragged down stock prices of its key affiliates, such as Korean Air Lines.
The KCGI asked for a meeting with Ed Bastian, chief executive of Delta Air Lines Inc., to join forces to monitor Hanjin's efforts to enhance its governance structure.
Earlier, KCGI also demanded a Seoul court designate an auditor to review the appointment process.
Hanjin KAL's board named late Chairman Cho Yang-ho's only son, Won-tae, as new chairman in April following his father's death.
It also asked Delta to help protect Hanjin Group's founding family's management rights by increasing its stake in Hanjin KAL, the holding firm of the group.
In September, the US carrier said it increased its stake in Hanjin KAL to 10 percent as it aims to strengthen business ties with Korean Air, not at affecting the management rights.
Delta and Korean Air formed a joint venture last year to collaborate on the industry's most robust trans-Pacific routes, providing customers with access to more than 290 U.S. destinations and over 80 in Asia.
In a board meeting held Thursday, Korean Air took similar steps to strengthen transparency of its governance structure. The national flag carrier has also established a compensation committee and plans to give more leeway to the outside director selection committee.
On Friday, shares in Hanjin KAL rose 0.8 percent to 33,450 won, and Korean Air remained unchanged at 26,950 won, outperforming the broader KOSPI's 0.3 percent loss.
The Cho family and other relatives together hold a 28.93 percent stake, including 17.84 percent held by the late chairman, in Hanjin KAL. KCGI owns 16 percent in Hanjin KAL, and the National Pension Fund has a 7.34 percent stake in the firm. (Yonhap)
