SEOUL (REUTERS, BLOOMBERG, AFP) - Korean Air chairman Cho Yang-ho has died, the South Korean airline said on Monday (April 8), less than three weeks after investors voted to remove him from the board in a landmark victory for shareholder activism.
Cho, 70, died in the United States early on Monday from a chronic ailment, the company said in a statement. A company official said he had a lung condition.
After his death was publicly announced, shares in Hanjin Kal shares leapt 24 per cent at one point in morning trade in Seoul on Monday, while Korean Air Lines opened more than 6 per cent higher and other affiliates also rose.
The death appears to have helped erase the so-called CEO risks, which have plagued Hanjin group firms, as a series of controversies and misconducts by the owner family members have hurt corporate values,” Yonhap news agency quoted a brokerage analyst as saying.
Cho succeeded his father in 2003 as head of Hanjin Kal group – one of the sprawling family-led conglomerates known as “chaebol” that dominate the South Korean economy – and expanded Korean Air, becoming one of the founding members of the global alliance SkyTeam.
The patriarch is survived by his wife, Madam Lee Myung-hee, daughters Heather Cho Hyun-ah and Emily Cho Hyun-min, and son Walter Cho Won-tae, president and chief operating officer of Korean Air, who is most likely to succeed his father as head of the group.
Mr Walter Cho, 43, could face challenges to his succession and may have to mortgage some of the assets to raise money for an inheritance tax of as much as 50 per cent, said Mr Lee Sang-heon, a corporate governance analyst at Hi Investment & Securities in Seoul.
The elder Cho was the largest shareholder of Hanjin Kal Corp, the holding company for the group, with about 17 per cent, while a local activist fund, Korea Corporate Governance Improvement, owns 13.6 per cent.
“Walter Cho is likely to inherit the chairman’s stake,” Mr Lee said. Because of the inheritance tax, the stake handed to him could be half of that owned by the late Cho, unless he is able to pay the full tax, Mr Lee added.
Korean Air has been plagued in recent years by a series of scandals involving its founding family members, culminating in the indictment of the elder Cho last year on charges of embezzlement and breach of trust.
He was facing trial for allegedly embezzling 19.6 billion won (S$23.3 million) in fees meant for Korean Air from maintenance and duty-free operations in the five years through 2018. He denied the charges against him.
The troubles began after Cho's elder daughter, Heather Cho, made headlines in 2014 when she lost her temper over the way she was served nuts in first class and ordered the Korean Air plane to return to its gate at a New York airport.
The "nut rage" incident severely tarnished the carrier's image and generated derisive international headlines for months.
In April last year, Cho’s younger daughter, Emily Cho, faced public criticism for allegedly throwing water in the face of someone during a business meeting. She was cleared of all charges.
Cho’s wife, Madam Lee, has been questioned by police several times in connection with allegations of assault against her employees, including cursing, kicking, slapping and throwing a pair of scissors.