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Euisun Chung appointed as new board chairman

Vote extends scion’s grip on power within automaker group

Mar 20,2020
Shareholders of Korea’s largest automaker voted to have Hyundai Motor Group de facto leader Euisun Chung serve as chairman of the company’s board for the next three years during Hyundai Motor’s annual shareholder meeting Thursday.

Hyundai Motor said the appointment will help the company focus on innovative growth and improve its standing in the global market, thereby engineering a well-needed turnaround center on mobility services.

With the appointment, Euisun Chung moves closer to a position of control over the conglomerate that his father, Chung Mong-koo, maintained for the past 21 years. Hyundai Motor’s board voted last month to not reappoint Chung Mong-koo as a board member at Thursday’s shareholder meeting.

Hyundai Motor emphasized that Chung Mong-koo will still work as the group chairman even though he will no longer serve as a board member for Hyundai Motor.

Prior to his election as Hyundai Motor board chairman, Euisun Chung has been serving as the CEO of Hyundai Mobis, executive vice chairman and 2.35 percent owner of Hyundai Motor and a director at Kia Motors. He quit his directorship at Hyundai Steel last month to focus on the group’s main automobile business.

Euisun Chung also won reappointment to his position as a Hyundai Mobis director on Wednesday, despite opposition from six foreign pension funds. He will serve in that capacity for another three years.

The younger Chung’s efforts to become chairman of Hyundai Motor Group were thwarted in 2018 by U.S. activist hedge fund Elliott Management, which mounted a challenge over Hyundai Mobis’s dividend plans and board member appointments. The fight forced Hyundai Motor Group to drop its planned restructuring, which would have made Euisun Chung the chairman of the group.

The New York City-based investor lost its battle in March last year and cashed out its holdings in January, selling its 2.9 percent of Hyundai Motor, 2.1 percent of Kia Motors and 2.6 percent of Hyundai Mobis.

Euisun Chung’s consolidation of control over the conglomerate has been ongoing for the past couple of years, as he filled key seats at Hyundai Motor Group’s affiliates and increasingly appeared in meetings. After he started to boost his profile in 2018, his father last year stopped appearing at any of the regular Hyundai Motor shareholder meetings.

Euisun Chung is expected to expedite his vision to transform Hyundai Motor from a vehicle manufacturer to a mobility solutions provider, as nearly all global automakers are seeing sales declines and expectations increase that the global market will continue to stagnate.

In January, he announced the group’s largest investment ever, pledging more than 100 trillion won ($77.6 billion) over the next five years to make Hyundai Motor Group a force in future mobility.

Hyundai Motor Group plans to launch more eco-friendly vehicles, commercialize an autonomous driving platform and introduce new mobility services to the world by 2025.

It remains unclear what Euisun Chung’s next moves will be as he attempts to further strengthen his grip on the conglomerate, which has a complex governance structure among its five key affiliates - Hyundai Steel, Hyundai Mobis, Hyundai Motor, Kia Motors and Hyundai Glovis.

His father holds an 11.81 percent stake of Hyundai Steel, 7.11 percent of Hyundai Mobis, 5.33 percent of Hyundai Motor and 6.71 percent of Hyundai Glovis, according to the Financial Supervisory Service.

By comparison, Euisun Chung does not have much control of the five affiliates, in terms of shares. He owns a 2.35 percent stake of Hyundai Motor, 1.74 percent of Kia Motors and 23.29 percent of Hyundai Glovis.

The conglomerate as a whole also runs in a circuitous stake-holding structure, with one affiliate holding some stake of other affiliates. Gaining firm control over Hyundai Mobis, which owns 21.43 percent of Hyundai Motor and is 17.24 percent owned by Kia Motors, appears to his priority at this point.

During Thursday’s meeting, Hyundai Motor shareholders also voted to appoint Kim Sang-hyun, head of finance and accounting at Hyundai Motor, as a board member. They also voted to appoint former Patent Court of Korea Chief Judge Choi Eun-soo as an outside director.

Hyundai Motor shareholders voted to pay out dividends of 3,000 won per share and 3,050 won and 3,100 won per some preferred shares.

Hyundai Motor shares closed at 68,800 won on Thursday, down 6.4 percent, while the rest of the market dropped even more sharply.

BY KO JUN-TAE [ko.juntae@joongang.co.kr]


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