Hyundai Group prevails in stock vote
In a general shareholder’s meeting yesterday at company headquarters in Yeonji-dong, central Seoul, HMM, an affiliate of Hyundai Group, proposed a revision to the company’s article to increase the limit of preferred stock issuance from 20 million shares to 60 million shares and let newly issued preferred stocks be allocated to third parties with board approval.
Among 152.46 million HMM shares that carry voting rights, 126.19 million (82.77 percent) were used in the voting and 67.35 percent of them favored the HMM proposal.
The article change requires at least half of shares with voting rights to be present at the meeting, and two-thirds approval.
HMM is controlled by Hyundai Group, which owns 27.3 percent of shares through Hyundai Elevator, also an affiliate of Hyundai Group, and Hyundai Group Chairwoman Hyun Jeong-eun. Hyun is the widow of group founder Chung Ju-yung’s fifth son, Chung Mong-hun, who died in 2003.
HHI is the second largest shareholder of HMM, which Chung Mong-joon, current Saenuri Party lawmaker and sixth son of Chung Ju-young, remains the largest shareholder. The shipbuilder owns 15.2 percent of HMM, while its smaller affiliate, Hyundai Samho Heavy Industries, has a 6.8 percent stake.
HHI has opposed HMM’s proposal to change the article, saying there is no reason to expand the limit of preferred the stock issuance. But industry insiders speculate HMM feared that its stake at HHI would weaken as newly issued preferred stocks can be allocated to supporters of Hyun Jeong-eun and Hyundai Group.
Other Hyundai family-owned companies, such as KCC and Hyundai Department Store, also voted against HMM’s proposal, while Hyundai Engineering & Construction, which is controlled by Hyundai Motor Group and owns 7.2 percent of HMM, didn’t show up at the meeting.
“The reason we asked for the article change was for the sake of the company’s future, since the shipping industry is suffering in the slumping economy,” said HMM, which posted a net loss of 998.9 billion won ($893 billion) last year. “HHI never showed up when we needed extra funds through two capital increases by issuing new stocks, but now it is putting us in trouble again and saying its shareholder right has been violated.”
This is not the first time Hyundai Group and HMM have clashed at the shareholder’s meeting. In 2011, HMM proposed an article change to expand the limit of preferred stock issuance from 20 million to 80 million shares, but it was rejected as HHI, KCC and Hyundai Development Company opposed the idea. During yesterday’s shareholder’s meeting, the two sides also fought over limiting consideration for directors. While HMM decided to freeze the limit, which is currently 10 billion won for nine directors, HHI opposed the proposal again, saying it’s too much considering what other shipping companies pay their directors. The proposal, however, was approved with 65.62 percent of the vote.
HMM said HHI’s claim is nonsense, that No. 3 player STX PanOcean has a limit of 20 billion won for its directors, while Hanjin Shipping has set 6 billion won for seven directors.
“It doesn’t mean that we will spend all of the money given, but just set the limit same as last year,” HMM said in a release.
However, other agenda items, such as reappointing Chairwoman Hyun Jeong-eun as executive board member and approval of the financial statement, passed without debate.
“Their [HHI and other Hyundai family companies] will to reconcile was only shown in talks, but nothing has been done,” said an executive of Hyundai Group. “The result of the voting shows HHI and others are still interested in HMM’s management, but they should give up some of their HMM stakes to us and focus on their own businesses.”
By Joo Kyung-don [email@example.com]