NPS to veto adding Hyosung chair, vice chair to board

The National Pension Service (NPS) will veto the appointment of the chairman and vice chairman of Hyosung Corp. as inside board members of the de facto holding company of the textile and chemicals conglomerate and its affiliates, according to the South Korean pension scheme. 

The Special Committee on Responsible Investment and Governance under the world's third-largest pension fund on Thursday decided to vote against Hyosung Corp. Chairman and co-CEO Cho Hyun-joon and his brother-cum Vice Chairman Cho Hyun-sang from taking seats on its board of directors, up for vote at the company's annual general meeting (AGM) next week.

At the committee meeting, it reviewed the AGM agenda for Hyosung Group's four units. The NPS is the second-largest shareholder of Hyosung Corp. with a 6.2% stake as of the end of 2023.

As for Cho Hyun-joon, also serving as chairman of Hyosung Group, the committee also objected to naming him as an internal director of Hyosung TNC Corp., a textile and yarn manufacturer, as it deemed he had damaged its corporate value.

In 2020, he was sentenced to a two-year jail term suspended for three years on charges of embezzlement of some 20 billion won ($15 million) and breach of trust. He appealed the ruling to the Supreme Court.

The eldest son of the group's former Chairman Cho Suck-rai is the second-largest shareholder of Hyosung TNC with a 14.59% stake as of the end of 2023, after Hyosung Corp. with a 20.32% stake.

The NPS also rejected the proposal of adding his younger brother Cho Hyun-sang, vice chairman of Hyosung Corp., to the board of Hyosung Advanced Materials Corp., an industrial materials producer, citing his neglect of duties as an executive and excessive concurrent positions at the group units.

The younger Cho is the third-largest shareholder of Hyosung Advanced with a 12.21% stake. Hyosung Corp. and his father Cho Suck-rai control 32.57% of the company.

However, the NPS’ vote will unlikely block the two brothers from taking seats on the board of the group subsidiaries.

Hyosung Corp. is 56.1% owned by the group's founding family members, including Cho Hyun-joon’s 21.94% stake and Cho Hyun-sang’s 21.42%.

They also control 45% and 45.74% of Hyosung TNC and Hyosung Advanced Materials, respectively.

Since the early 2010s, Hyosung Group has been embroiled in a series of investigations by prosecutors and the National Tax Service for tax evasion and embezzlement.

Hyosung Chairman Cho Hyun-joon, a grandson of the late Hyosung founder Cho Hong-je, took over the helm of the conglomerate from his father Cho Suck-rai in 2017.

Write to Byeong-Hwa Ryu at hwahwa@hankyung.com
 

Yeonhee Kim edited this article.