Shown above is the website of Glass Lewis, which decided to side with Hyundai Motor over Elliott Management in a proxy war between the two. Courtesy of Glass Lewis

Glass Lewis refuses to join Elliott in proxy standoff

Hyundai Motor gains great supports in a proxy war against hedge fund Elliott Management as a renowned shareholder advisory company sided with the former.

Glass Lewis, which offers voting advice for more than 1,300 institutional clients across the world, recommended shareholders to vote against the New York-based activist fund.

Elliott Management, which is headed by billionaire investor Paul Singer, has asked Hyundai Motor and its affiliate Hyundai Mobis to dole out $6.3 billion in a one-off dividends payment and appoint five outside directors suggested by Elliott.

It claimed that the two companies hoard unnecessarily big funds and mismanage them.

Korea’s second-largest conglomerate flatly refused the requests, saying it would stick to its original plan of paying less than $1 billion in combined dividends and not appointing any new outside directors.

The two sides are expected to stage a proxy standoff at two separate shareholders’ meetings slated for March 22.

We remained reluctant to recommend shareholder support for such a large one-time dividend payout at this time,” Glass Lewis said in a recent report.

That is “given the proposed timing and method of the capital return and the rapidly evolving nature of the auto industry, which we acknowledge will require significant R&D spend and potential M&A activity by the company in order to enhance its competitiveness and long-term financial returns.” it noted.

Yet, Glass Lewis did not agree with Hyundai’s nominations of Albert Biermann and Lee Won-hee as executive directors, questioning the independence of the board.

Of note is that Glass Lewis sided with Elliott early 2018 when Hyundai tried to carry out an $8.8 billion deal involving Hyundai Motor affiliates, which Elliott said is designed to benefit Hyundai’s founding families at the expense of other shareholders.

Back then, the proxy fight adviser said that the scheme is “profoundly unattractive” and “lacks business logic.”

Hyundai Motor eventually decided not to go ahead with the mega-sized contract.

The Institutional Shareholder Services, the world’s top proxy advisory company, and the Korea Corporate Governance Service have yet to come up with their opinions over the feuds between Hyundai and Elliott.


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