Shareholders back Hyundai Motor over Elliott on all counts

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Shareholders back Hyundai Motor over Elliott on all counts

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Officials from the law firm KL Partners count shareholders’ votes during Hyundai Motor’s annual general meeting at the company’s headquarters in Gangnam District, southern Seoul, on Friday. U.S. activist fund Elliott Management is a client of KL Partners. [HYUNDAI MOTOR]

Hyundai Motor Group claimed a complete victory over U.S. activist fund Elliott Management at its annual general meeting Friday, putting an end to a lengthy quarrel over the issues of dividend payouts and outside directors.

Elliott had demanded a one-time payout of 4.5 trillion won ($3.9 billion), or 21,967 won per share, this year from Hyundai Motor. The automaker’s board proposed 1.1 trillion won, or 3,000 won per share, instead. Eighty-six percent of the shareholders voted in favor of the company, while just 13.6 percent of votes backed Elliott’s proposal.

As major proxy advisers, including the Institutional Shareholder Services (ISS), Glass Lewis and Korea’s institutional investor the National Pension Service (NPS), had earlier backed Hyundai on the dividend issue, the win was predictable.

The advisers had echoed the automaker’s position that it will need a substantial amount of cash for research and development and potential mergers and acquisitions to improve long-term profitability, meaning it will be better to make investments rather than large dividend payouts at the current time.

The vote on outside directors was a lot harder to predict, as proxy advisers were split on whether to bank the candidates proposed by Hyundai Motor or by Elliott.

Hyundai Motor recommended three candidates for outside directors: Yoon Chi-won, vice chairman at UBS Wealth Management; Eugene Ohr, former partner at Capital International; and Yi Sang-seung, economics professor at Seoul National University.

Elliott recommended: John Liu, former vice president of Wanda Group; Randy MacEwen, president and CEO of Ballard Power Systems; and Margaret Billson, former senior executive at BBA Aviation.

The shareholders at the meeting were able to vote for or against each of the six proposed candidates. The three with the most votes were appointed as directors.

All three of Hyundai’s candidates were successfully appointed to the board.

Yoon won the most votes with 90.6 percent of shareholders welcoming the investment banker on board. Yoon was the only candidate who earned the approval of all the major proxy advisers and the NPS.

Ohr won 82.5 percent of the votes and Yi 77.3 percent, though the ISS had not approved of the two candidates before the vote.
Elliott’s three candidates, on the other hand, each earned less than 20 percent of the votes.

According to recent filings, at least 27 percent of Hyundai Motor shares are controlled by Hyundai Motor Group and its owner family.
Voting went in a similar direction at Hyundai Mobis’s shareholders’ meeting, also held on Friday.

The U.S. hedge fund had demanded a 26,399 won per share dividend from Mobis, totaling 2.5 trillion won. The auto parts maker proposed a 4,000 won per share dividend. Voters sided with the company, with 69 percent of shareholders backing Mobis and only 11 percent voting for Elliott’s aggressive dividend plan.

All outside director candidates recommended by Mobis also won over the candidates selected by Elliott.

Meanwhile, Hyundai Motor Group’s executive vice chairman and heir apparent, Euisun Chung, was approved to become an internal director of both Hyundai Motor and Hyundai Mobis during the annual meetings held at each company. The boards appointed him as one of four chief executive officers at Hyundai Motor, along with his father and group Chairman Chung Mong-koo, and as one of three CEOs at Hyundai Mobis after the shareholders’ meeting.

Hyundai’s big win against Elliott is a turnaround from last year, when Hyundai Motor Group had to nix its restructuring plan due to strong opposition from the U.S. hedge fund.

The auto group attempted to make its auto parts affiliate its de facto holding company by merging part of Hyundai Mobis with the group’s logistics arm Hyundai Glovis. The plan fell through as Elliott said the merger ratio between Mobis and Glovis was unfair.


BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]
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