Hyundai Motor moves to improve transparency

Hyundai Motor Group announced Thursday that all its affiliates will appoint one outside director to their boards based on the recommendation of shareholders to improve transparency and better reflect their opinions in major decisions.

Previous directors were selected behind closed doors, a practice that shareholders deemed unfair.

The directors will serve in affiliates’ Corporate Governance and Communications Committees, which were established in 2015 to reflect shareholders’ opinions at board of directors meetings. To better fulfill their purpose, the committees are composed solely of outside directors.

Each Hyundai Motor Group affiliate has its own committee. Hyundai Motors, for example, has four outside directors, one of whom will be selected based on shareholders’ recommendation. The director will be able to attend non-deal road shows and other major investment events to speak on shareholders’ behalf and mitigate between the board and shareholders.

Hyundai Glovis, a logistics affiliate of Hyundai Motor, will implement the new system in the first half of the year, followed by Hyundai Motor and Kia Motors in 2019. Auto parts affiliate Hyundai Mobis will implement the system in 2020. Hyundai Steel and Hyundai Construction will implement the system afterward, though an exact timeline hasn’t been confirmed.

“Hyundai Motor will continue its effort in expanding communication channels between the company and its shareholders,” a Hyundai Motor official said. “The company is determined to look for diverse activities that allow the company and its shareholders to brainstorm on methods to enhance the company’s competitiveness.”

Any shareholder of Hyundai Motor and its affiliates can recommend an outside director through the company’s website after a notice is issued. An advisory group comprising figures from academic circles, financial firms and institutes that study corporate governance will narrow the options to three to five candidates. They will be put to a vote at a general shareholders meeting. The director will hold the position for three years.

Hyundai Glovis, which has its board of directors and shareholders meetings in March, will accept candidate recommendations by mail from Jan. 25 to 31.

Hyundai Motor Group’s latest move is seen as a response to the government’s initiative to eliminate unfair business practices, especially at conglomerates, where most decisions are made behind closed doors.

Kim Sang-jo, chairman of the Fair Trade Commission, urged conglomerates like Hyundai Motor last year to make corporate governance more transparent.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]