Nam Hyun-woo has worked as a staff writer at The Korea Times since 2013, mostly covering business and politics. He currently belongs to the Business Desk where he covers topics such as emerging tech, AI, ICT and Korea's chaebol community. Prior to joining the team, he was the paper's correspondent for the presidential office of Korea during the Yoon Suk Yeol and Moon Jae-in administrations.
Hyundai Motor wins landslide victory over Elliott in dividend battle
Hyundai Motor board chairman Lee Won-hee speaks during the company's annual general shareholder meeting at its headquarters in Yangjae-dong, Seoul, Friday. Yonhap
By Nam Hyun-woo
Chung Eui-sun gains firmer grip on control of Korea's auto giant
By Nam Hyun-woo
Hyundai Motor scored a landslide victory at the automaker's annual shareholder meeting, Friday, in its battle with U.S. hedge fund Elliott over setting dividend payments and appointing outside directors.
Also at the meeting, shareholders approved naming Hyundai Motor Group Executive Vice Chairman Chung Eui-sun as one of the company's CEOs paving the way for him to get firmer control of the auto giant. They also made R&D head Albert Biermann an executive director, the company's first foreign board member.
During the shareholder meeting at its headquarters in Yangjae-dong, Seoul, 86 percent of participants approved the company's dividend proposal of paying 3,000 won per common share. This accounted for 69.5 percent of the firm's voting shares.
Elliott's proposal of 21,976 won per common share received support of 13.6 percent approval rate, 11 percent of the total voting shares.
Also at the meeting, shareholders agreed to appoint three candidates recommended by the board as outside directors ― Yoon Chi-won, Eugene Ohr and Lee Sang-seung ― with support of over 77 percent, snubbing Elliott's candidates John Liu, Robert Randall MacEwen and Margaret Billson.
The meeting was attended by 17,117 shareholders holding 167.7 million shares, or 82.1 percent of the total.
The annual general meeting has garnered keen interest as a showdown between the carmaker and Elliott, as the latter had made demands which the former called “unacceptable.”
Elliott's demands of 21,976 won per Hyundai Motor common share and 26,399 won per Hyundai Mobis common share were expected to cost Hyundai Motor Group nearly 7 trillion won in a single dividend payment. Elliott has an approximately 3 percent stake in Hyundai Motor and 2.6 percent in Hyundai Mobis,
Hyundai Motor and Hyundai Mobis also said they could not accept the hedge fund's call to include rival companies' CEOs on their respective boards, because of the potential for conflicts in interests.
Elliott's move was interpreted as an attempt to make up for its assumed 450 billion won loss from investments in Hyundai Motor, after the company's share price nearly halved from January to November last year.
'Killing the golden goose'
During the meeting, several shareholders voiced their concerns over the company's weakened earnings, but added they were still optimistic over Hyundai Motor's investments in future technologies.
“I purchased Hyundai Motor stock for the purpose of investing in the company for more than 10 years,” said a shareholder surnamed Na. “Though the shareholder suggestion (Elliott's demand) may be tempting for now, from the long-term perspective that would be killing the golden goose.”
Unlike previous efforts to persuade shareholders with open letters, Elliott did not present an argument during the meeting. The fund's representative from law firm KL Partners briefly said, “the meeting is not the stage for a Hyundai Motor-Elliott showdown.”
Hyundai Motor's smooth win is largely attributable to the National Pension Service's approval of the board's proposals. The pension operator holds an 8.7 percent stake in Hyundai Motor and a 9.45 percent stake in Hyundai Mobis.
In a separate meeting, Hyundai Mobis shareholders also approved its board's dividend proposal of 4,000 won per common share, rejecting Elliott's demand for 26,399 won.