A shareholder in both Hyundai Motor Co. and Hyundai Mobis Co., Elliott Management exercised the right of shareholder’s proposal to recommend a new outside director. (image: Hyundai-Kia Motor Group)
SEOUL, Feb. 27 (Korea Bizwire) – U.S. activist fund Elliott Management has begun to put pressure on Hyundai Motor Co. by recommending an outside director and demanding a higher yield.
A shareholder in both Hyundai Motor and Hyundai Mobis Co., Elliott Management exercised the right of shareholder’s proposal to recommend a new outside director.
However, the two companies chose a different candidate at the board of directors meeting on Tuesday, indicating a possibility that the issue may be put to a vote at the shareholders meeting next month.
Elliott Management recommended John Y. Liu, a member of the Beijing Normal University Education Fund, R. Randall MacEwen, president of Ballard Power Systems, Inc., and Margaret S. Bilson, an independent director at CAE Inc., as outside directors for Hyundai Motor.
Hyundai Motor rejected the proposal, arguing that “the candidate selected by the company’s internal committee is better suited for the position.”
Another reason behind the rejection involved Hyundai’s concern that outside directors recommended by a shareholder’s proposal may cause a conflict of interest and other management issues.
Elliott Management also suggested that Hyundai Motor pay 21,976 won (US$19.67) per share as a year-end dividend, which would mean total dividends of 4.5 trillion won (US$4 billion) for Elliott Management.
In response, Hyundai Motor said that the proposed amount exceeds last year’s net profits, and asked shareholders to agree to 3,000 won per share.
Elliott Management also recommended two outside directors for Hyundai Mobis, both of which were rejected and replaced by a candidate selected by an internal committee.
Elliott Management made a similar proposal to Hyundai Mobis to pay a dividend of 26,399 won per share, amounting to a total dividend payout of 2.5 trillion won for the company.
Hyundai Mobis rejected the proposal and asked its shareholders to support a dividend of 4,000 won per share.
H. M. Kang (hmkang@koreabizwire.com)
