Hyundai to establish shareholder rights
April 29, 2015 | By Laurie Havelock
Shareholder proposal prompts car maker to set up
corporate governance committee
South Korean car manufacturer Hyundai
has heeded advice from foreign investors and established a board-level
committee devoted to protecting its shareholders’ interests, the
company announced this week.
The move comes after Dutch investor APG Asset Management, one of
Hyundai’s largest shareholders, submitted a proposal at the
automaker’s AGM in March earlier this year to establish a group that
would report the company’s activities annually, with a director
appointed to look into governance issues for shareholders. The
proposal had the backing of 20 Hyundai investors, including JPMorgan
and Legal & General.
In a statement released this week, Hyundai says its four independent
directors will form a ‘corporate governance and communication
committee’ tasked with keeping investors’ concerns at the fore during
major business decisions. As suggested by APG, one director – Seoul
National University Professor Youjae Yi – will serve as a
communication channel between shareholders and Hyundai’s board in an
effort to provide a ‘more friendly environment’ for investors.
The proposal to establish the body followed criticism by investors and
corporate governance groups when Hyundai and two of its affiliate
firms bid $10 bn for the site of a new headquarters in Seoul, which
was later revealed to be triple the appraised value of the land.
Hyundai’s board allegedly discussed the bid only twice and without
knowledge of the deal’s value before it was agreed. Unhappy investors
voiced concerns about harming shareholder value and a lack of
transparency at the family-run firm.
Hyundai’s co-CEO, Kim Chong Ho, says he hopes the new committee will
help the firm’s executives make better decisions. ‘We are actively
studying ways to improve shareholder value,’ he writes in a press
release announcing the new shareholder rights group.
The company’s share price remains below its value before the land deal
was completed, despite attempts by the company to win investors over
by increasing buybacks and upping dividend payouts by 54 percent over
the last year. Earlier this month, the firm also announced its net
profits had declined for the fifth consecutive quarter.
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