The second-biggest shareholder in South Korea’s Hyundai Motor and its two largest affiliates will veto the reappointment of two of the sister units’ board members.
The vote against the board members comes as a reaction to last year’s approval of a property deal that led to the purchase of a plot in Seoul’s chic Gangnam district at three times the appraised value – $10 billion. The National Pension Service (NPS) will veto one outside director at both Kia Motors and Hyundai Mobis, but the vote against could have no impact on the board’s structure due to the government-backed fund owning a below ten percent threshold in each company. The vote, on the other hand, comes to signal the major investor discontent over the family-run conglomerate’s traditionally opaque decision making process. The South Korean groups, often run by families – are known as chaebols – and are usually traded at discounts (as opposed to global rivals) because of worldwide investor concern over poor corporate governance.
Last year the shares of Hyundai Motor, Kia and Hyundai Mobis took a nosedive after the group announced a bid for a property in Seoul’s affluent Gangnam borrow for $10 billion – seeking to relocate their headquarters there in the near future. According to numerous sources, the board members of the three companies approved the plot purchase without actually knowing the bid’s exact amount. Brain Asset Management,hodling 0.14 percent of Hyundai Motor’s shares, also said it would back the NPS decision to vote against the reappointment of Hyundai Motor board director Yoon Kap-han after the property acquisition “resulted in a stock price plunge, causing serious damage to investors”.