SEOUL, Mar. 14 (Korea Bizwire) — A panel of South Korea’s state pension fund on Thursday sided with Hyundai Motor Co. and its auto parts affiliate Hyundai Mobis Co.’s proposals on dividends and appointments for board members, dealing a blow to hedge fund Elliott Management.
The decision is likely to help Hyundai Motor and its affiliate win the vote showdowns at the shareholders meeting slated for later this month.
The National Pension Fund is the second-largest shareholder in Hyundai Motor with an 8.7 percent stake. The NPS also owns a 9.45 percent in Hyundai Mobis.
The NPS is the largest institutional investor in South Korea.
Earlier, Elliott Management proposed that the two firms pay a combined 8.3 trillion won (US$7.3 billion) in dividends this year at the upcoming shareholders meetings.
Hyundai Motor and its affiliate rejected the calls and offered to pay 1.1 trillion won to shareholders this year, and Hyundai Mobis offered to deliver a total of 1.1 trillion won in dividends over the next three years.
Elliot, founded by billionaire Paul Singer, has been demanding that Hyundai Motor and its affiliate pay more dividends and fix their governance problems.
The NPS’s panel also voted against the U.S. fund’s proposal for board member nominees for the two firms.
Hyundai Motor and Hyundai Mobis have been in a back-and-forth dispute with Elliott over their dividend plans and appointments for board members, with the New York-based hedge fund seeking to obtain seats on the key body.
Elliott recently proposed three experts to join Hyundai Motor’s board, which will expand to 11 from nine this year, and two to join Hyundai Mobis’ board as outside directors. The experts include Robert Randall MacEwen, chief executive officer of Ballard Power Systems, Inc., and Robert Kruse, chief technology officer of U.S.-based Karma Automotive.
Proxy advisory firm International Shareholder Services (ISS) recommended that shareholders vote for two of the three Elliott nominees to be outside directors at Hyundai Motor. ISS also recommended shareholders support the two Elliott nominees to be Hyundai Mobis board members on the condition that the board expands from nine to 11 directors.
Another proxy advisor, Glass Lewis, however, recommended that Hyundai Motor and Hyundai Mobis investors vote against all five of the Elliott nominees and the New York-based hedge fund’s dividend request.
All eyes are on the shareholders meeting on March 22, when investors in Hyundai Motor and Hyundai Mobis have a chance to vote on the proposals that have been forwarded so far.
Last year, Elliott’s opposition forced Hyundai Motor Group drop its attempt to overhaul its governance structure, which could have helped Executive Vice Chairman Chung Euisun take over the country’s second-biggest family-owned conglomerate from his father, Chairman Chung Mong-koo.