Hanjin unveils roadmap to improve transparency and corporate governance
SEOUL, AJU - South Korea's troubled Hanjin Group came up with a roadmap for transparent management in response to consistent pressure from shareholders to solve its ownership crisis through an active campaign to enhance corporate governance and jettison non-core assets.
In a regulatory filing on Wednesday, the group said it would try to increase overall sales from 16.5 trillion ($14.7 billion) in 2018 to 22.3 trillion won in 2023 with its operating profit to be hiked from one trillion to 2.2 trillion won. The group promised to increase dividends.
For transparency, the group said it would increase the number of outside directors from three to four each in the seven-member board of Hanjin KAL, the group's holding company, and Hanjin Corp., a logistics unit. A new committee of three auditors will be set up, with the holding company to be supervised by three outside auditors.
The group said it would turn money and energy into three key sectors -- air transportation and logistics as well as its hotel and leisure business -- by selling non-core assets including land in central Seoul and a hotel on the southern resort island of Jeju.
KCGI, the country's first activist private equity fund, has urged the group to improve its image and regain social credibility. Among other things, the fund called for the creation of a special committee composed of outside directors and experts to supervise important business issues affecting the value of shareholders.
As a key shareholder of Hanjin KAL and Hanjin Corp., the fund wants Korean Air to spin off and list its aerospace research and manufacturing division for long-term growth as a competitive entity. Korean Air suffered a net loss of 80.3 billion won ($71.9 million) in 2018. Operating profit fell 27.6 percent on-year to 692.4 billion won due to rising fuel costs, while sales were up 7.2 percent to 12.65 trillion won.
Hanjin has been hit hard by a scandal involving the chairman's youngest daughter, Cho Hyun-min, who allegedly threw a glass cup and sprayed plum juice during a business meeting with advertising agency officials. The scandal fueled public anger, leading to multiple investigations into the chairman, his wife and children on charges of creating a slush fund, evading taxes, bringing in luxury foreign goods illegally, abusing and assaulting company employees and others. No one has been arrested.