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| The headquarters of Hyundai Elevator in Chungju, North Chungcheong Province / Courtesy of Hyundai Elevator |
By Anna J. Park
KCGI Asset Management (KCGI AM) has urged Hyundai Elevator to remove Hyun Jeong-eun, the incumbent chair of Hyundai Elevator's board of directors, from the board to bring more transparency and independence to the firm's corporate governance by separating the ownership and management. KCGI holds about a 2 percent stake in common shares of Hyundai Elevator.
The asset manager cited conflicts of interest as the core reasons for demanding her resignation from the board chair. Hyun, who's also Hyundai Group Chair, is serving as an inside board member at multiple affiliated companies of the group. She holds concurrent positions as an inside director at other subsidiaries of the group as well, including Hyundai Asan, Hyundai Movex and Able Hyundai Hotel & Resort.
"KCGI AM believes governance at Hyundai Elevator must be brought in line with global standards. The Board of Directors (BOD) in particular needs stronger independence and transparency as there is concern that the board decisions are driven primarily by self-interest with limited consideration for shareholders," KCGI's correspondence sent to Hyundai Elevator's board of directors reads.
"We urge to reassess Ms. Hyun Jeong-eun's role as an internal director and the Chair of the Board. The recent ruling by the Supreme Court, ordering her to compensate 170 billion won ($126 million) to the company for violations of duty of care demonstrates serious conflict of interest issues," the letter went on.
The asset management company also pointed out that Hyun's further legal actions associated with unfair convertible bond call option issuance and asset transfer to Hyundai Movex would impair the shareholder value of the firm in the long run.
"We doubt her ability to focus properly on the obligations as a board member. Ms. Hyun was paid more than 12 billion won in the past 3 years which seems excessive relative to the company's subpar operation performance. She also sits as the Chair of the BOD for Hyundai Asan and Hyundai Movex. We believe these structures lead to lack of oversight and conflict of interests," the letter stressed.
The asset management company also asked Hyundai Elevator to appoint an external director as the chair of the board's committees, in particular the compensation committee and nominating committee, as well as an appointment of an independent auditor. The asset manager also urged the firm to introduce mid- to long-term earnings improvement roadmap.
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