Shown above is the head office of Hyundai Motor in southern Seoul. Courtesy of Hyundai Motor

Foreign pension funds back Hyundai over Elliott

Five foreign pension funds sided with Hyundai Motor over hedge fund Elliott Management ahead of the two sides’ proxy war at the shareholders’ meeting slated for March 22.

According to the Korea Corporate Governance Service (KCGS) on March 15, all five foreign pension funds that expressed their opinions supported Hyundai Motor in dividends payment.

Elliott Management, which holds a 2.9 percent stake in Hyundai, asks the automaker to dole out $4.5 billion in one-off dividends. In response, Hyundai plans to stick to its plan of paying $650 million.

The five pension funds are CalPERS, CalsTRS, SBA of Florida, CPPIB and OTPP.

With regards to outside directors, four endorsed those recommended by Hyundai. Only CalPERS endorsed those nominated by Elliott, which is headed by billionaire investor Paul Singer.

We intend to support the directors put forth by management,” OTPP said.

About the agenda of reappointing Executive Vice Chairman Chung Eui-sun as a director, CalsTRS and SBA of Florida were against it. The other three advocated it. SBA of Florida said that it “votes against if director serves on more than three boards.”

Chung is the only son of Hyundai Motor Chairman Chung Mong-koo. Hyundai Motor is an iconic affiliate of Hyundai Motor group, which is the country’s second-largest conglomerate.

The news came on the heels of the report that the National Pension Service (NPS), Korea’s biggest institutional investor that has an 8.7-percent share at Hyundai Motor, opted to back Hyundai.

The NPS has been accused of twisting arms of domestic companies, thus making them increase cash dividends to shareholders. But it decided to underpin Hyundai, which is paying far less dividends that Elliott’s proposal, this time around.

Global proxy advisory companies including the International Shareholder Services and Glass Lewis also supported Hyundai in dividend payments.

It is highly likely that Hyundai will beat Elliott in the proxy standoff. It remains to be seen how Elliott will react,” Prof. Kim Pil-soo at Daelim University said.


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