KCGI welcomes Hyun's resignation from Hyundai Elevator board

The headquarters of Hyundai Elevator in Chungju, North Chungcheong Province / Courtesy of Hyundai Elevator

KCGI Asset Management positively evaluated the recent resignation of Hyun Jeong-eun from the posts of both Hyundai Elevator's board of directors' chair and the firm's registered director, calling it "the first step in normalizing the board."

The activist fund that holds nearly a 3 percent stake in common shares of Hyundai Elevator stated during an online press conference on Wednesday that it hopes Hyun's resignation from the board contributes to Hyundai Elevator becoming a more shareholder-friendly company. In August, the asset management company sent an open shareholder letter to Hyundai Elevator, demanding improvements in the firm's corporate governance.

Jake Myung, equity team leader at KCGI Asset Management, speaks during an online press conference on Wednesday. Image captured from the press conference

"The resignation of current Hyundai Group Chair Hyun Jeong-eun, who's also the de-facto largest shareholder of Hyundai Elevator, from the board of Hyundai Elevator, is regarded as the first step in normalizing the board," Jake Myung, the asset management firm's equity team leader, said during the press conference on Wednesday morning.

"As Hyun was a party who lost in a shareholder representative lawsuit, KCGI Asset Management will closely watch whether she maintains influence over the firm or its subsidiaries either by receiving salaries or participating in the corporate decision-making process."

Yet, the activist fund went on to further press Hyundai Elevator to come up with fundamental measures to make tangible results in its management structure. Regarding a set of shareholder return plans announced by the company at the end of last week, the asset management said: "It is regrettable that Hyundai Elevator has failed to make a mention of fundamental measures to bring in profitability improvements in the firm's shareholder return plan."

Hyundai Group Chair Hyun Jeong-eun speaks during a town hall meeting at the headquarters of Hyundai Elevator in Chungju, North Chungcheong Province on July 21. Yonhap

The asset management company emphasized the need for fundamental changes in management structure and the normalization of corporate value. In the shareholder letter issued in late August, KCGI stated that Hyundai Elevator is showing a very disappointing management performance and corporate value due to large-scale losses from opaque entry into overseas markets and substantial impairment losses from domestic and foreign equity investments, despite the elevator industry's attractive growth outlook in domestic markets.

Hyun, the incumbent Hyundai Group chair, notified her voluntary decision to step down from the posts last Friday, aiming to improve the company's corporate governance. On the same day, Hyundai Elevator also announced the board's restructuring as well as a set of shareholder return policies, such as increasing the firm's dividend payout ratio and the burning of treasury stocks.

Hyundai Elevator is slated to convene an extraordinary shareholders' meeting near the end of next month to form a new board of directors and appoint a new chair of the board.