During the first shareholder meeting for South Korea’s Hyundai Motor after the automaker and its affiliates within the group paid $10 billion for a plot, in a rare sign of dissent at the carmaker an investor asked the company to improve its governance.
Last year in September the Hyundai Group – which includes carmakers Hyundai and Kia – decided to purchase a valued piece of real estate in Seoul’s affluent Gangnam district – but the deal was widely criticized because the payment was three times the land’s appraised value. The cash deal took a heavy toll on Hyundai and Kia’s share prices and resparked the controversies surrounding the opaque decision-making process at South Korea’s family-owned conglomerates – called chaebols. During the shareholder meeting in South Korea, in an unusual sign of discontent, a manager at Netherlands-based pension fund APG Asset Management asked the automaker to reshape its governance structure and promote one of its outside directors in a position that enables him/her to “defend shareholder interests”. “I hope this incident will give an opportunity for Hyundai Motor to improve its governance structure in a rational manner,” said the executive, Park Yoo-kyung, to the packed auditorium at Hyundai Motor’s headquarters in Seoul.
Usually, shareholder activism in South Korea is very rare, as family-run conglomerates known as chaebols are predominant and annual shareholder events are mostly quiet, predictable meetings. The director, who also claimed he was speaking for other investors, urged the fifth largest automaker (when considered with affiliate Kia) to set up a board committee that would bring the company’s governance to international standards.