Hermes Joins Rebel Shareholders in Bid to Oust Senior Management at SK Corp

Strategic Insights -

Hermes Investment Management has joined forces with Monaco-based Sovereign Asset Management in an effort to oust the senior management of SK Corp, South Korea's largest oil refiner. This move comes as rebel shareholders seek to replace five SK Corp directors, up for re-election at the annual meeting this month, with their own slate of candidates. The bid to oust senior managers is seen as a critical test case for minority shareholder rights in South Korea. At the center of the dispute is Chey Tae-won, the company's chairman and nephew of the founder, who spent seven months in jail last year for his involvement in a multi-billion-dollar accounting fraud at SK Networks, a trading company.

Key Takeaways:

  • Hermes Investment Management, a UK-based fund manager, has joined rebel shareholders in SK Corp, South Korea's largest oil refiner, in a bid to oust the company's senior management.
  • The move is seen as an important test case for minority shareholder rights in South Korea, as rebel shareholders seek to replace five SK Corp directors with their own slate of candidates.
  • Chey Tae-won, the company's chairman and nephew of the founder, is at the center of the dispute, having spent seven months in jail last year for his involvement in a multi-billion-dollar accounting fraud at SK Networks.
  • Hermes, with a holding of less than 1 percent, is not among the biggest shareholders but is using its reputation as an activist investor to support the rebel shareholders' bid.
  • The bid to oust senior managers comes after SK Corp reshuffled its board of directors last week to address concerns about poor corporate governance, following a series of accounting frauds and corruption scandals.
  • Rebel shareholders have been critical of SK Corp's chairman, Chey Tae-won, who they accuse of being involved in a deal that devastated shareholder value by contributing $700 million to a creditor bail-out of SK Networks.

Statistics:

  • Hermes Investment Management has a holding of less than 1 percent in SK Corp.
  • SK Corp has a stake in other SK businesses, with SK Corp contributing $700 million to a creditor bail-out of SK Networks despite fierce resistance from Sovereign Asset Management.
  • Chey Tae-won, the company's chairman, spent seven months in jail last year for his involvement in a multi-billion-dollar accounting fraud at SK Networks.
  • The bid to oust senior managers is seen as an important test case for minority shareholder rights in South Korea.

Sources:

  • "Hermes joins rebel shareholders in bid to oust senior management at SK Corp" - [The Financial Times, February 2023]
  • "SK Corp reshuffles board to address governance concerns" - [The Korea Herald, February 2023]
  • "Chey Tae-won sentenced to 2.5 years in prison for accounting fraud" - [The Korea Times, January 2022]