Hyundai Group chairwoman to leave elevator unit's board
Hyundai Group Chairwoman Hyun Jeong-eun looks at photos of her deceased husband, Chung Mong-hun, during an exhibition held at the group's headquarters in Seoul to commemorate the 20th anniversary of his death in this Aug. 4 file photo. Courtesy of Hyundai Group
Hyundai Group Chairwoman Hyun Jeong-eun decided to leave Hyundai Elevator’s board, the group’s elevator manufacturing unit said Friday.
“Amid the growing awareness of advanced corporate governance structures, Hyundai Elevator also needs to live up to the core value of board-centric management, as the leading elevator maker,” she said at Friday’s extraordinary meeting of Hyundai Elevator’s board of directors, according to the elevator firm.
Hyundai Elevator plans to hold an extraordinary general meeting of shareholders on Dec. 29 to organize a new board. It will appoint the new chair of the board among outside directors. The company also came up with plans for larger shareholder returns, including generous dividends.
“After collecting opinions from the market, shareholders and experts, we finally announced these measures to improve our corporate governance structure,” a Hyundai Elevator official said.
Hyun, who holds a 5.7 percent stake in Hyundai Elevator, is, de facto, the largest shareholder of the company, because she is the largest shareholder of Hyundai Holdings Company, the elevator firm’s largest shareholder with a 19.3 percent stake.
She made her recent decision three months after KCGI Asset Management, which holds around a 2 percent stake in Hyundai Elevator, sent a letter urging her to leave the elevator maker’s board.
The activist fund requested as she paid over 200 billion won ($155 million) in compensation for causing damage to Hyundai Elevator in compliance with a court order. In March, the Supreme Court ruled in favor of Swiss elevator maker, Schindler, Hyundai Elevator’s second-largest shareholder which claimed that the chairwoman had caused damage to the Korean elevator firm by signing derivative financial product contracts between 2006 and 2014.
To keep managing the group's key subsidiary, she finished the compensation with money she borrowed from M Capital. Then she decided to pay back the money by selling convertible and exchangeable bonds issued by Hyundai Network and her stake in Hyundai Elevator to H&Q, a local private equity firm, which also seeks board seats of Hyundai Group affiliates.
In May, The Korea Times disclosed that Schindler filed another lawsuit in 2020 against Hyun and other executives to claim that they owe Hyundai Elevator an additional 214.8 billion won. The litigation is still ongoing.
Against this backdrop, Schindler has denied the rumor that it seeks to gain management control of Hyundai Elevator. However, lawmakers summoned the head of Schindler Elevator Korea to the National Assembly audit last month to question him on suspicion that the Swiss firm had sold its shares in Hyundai Elevator to a certain fund manager in June, for its hostile takeover of the Korean firm by lowering its stock price intentionally.