BLOW TO ELLIOTT PROXY FIGHT
S. Korea’s National Pension Service set to vote down US hedge fund’s proposals
ELLIOTT Management received a potentially fatal blow in its proxy fight to shake up South Korea’s Hyundai Motor Group yesterday when major shareholder the National Pension Service (NPS) said it would vote down the United States hedge fund’s proposals.
Elliott, founded by billionaire Paul Singer, has been battling to get South Korea’s No. 2 conglomerate to return excess capital to shareholders and fix governance problems since May last year when it scuppered a restructuring plan.
The fund has demanded seven trillion won (RM25.3 billion) in one-off dividend payments and seats on the boards of group companies Hyundai Motor and Hyundai Mobis, in proposals to be put to a shareholder vote on March 22. Hyundai has rejected the proposals.
The NPS holds swing votes in the proxy contest because it is the second-biggest shareholder of Hyundai Motor and Hyundai Mobis, with stakes of 8.7 and 9.45 per cent, respectively.
It said Elliott’s dividend prop osals were “excessive” and would oppose the US fund’s director nominees because of “conflicts of interest”.
The NPS vote decision was made at a meeting of its panel of outside experts, after South Korea’s leading proxy adviser, KCGS, recommended shareholders vote against Elliott’s proposals.
Global proxy advisory firm International Shareholder Services has recommended that Hyundai investors elect some directors nominated by Elliott, while urging votes against the US investor’s dividend proposals.
“Chances of higher dividends have gone for now,” said Nomura analyst Angela Hong.
“As the NPS opposes Elliott plans, there is no way Elliott will be able to push for proposals.”
Hyundai Motor Group said the pension fund’s decision would “support our company’s future sustainable growth”.
The group has said Elliott’s call for higher payouts would limit its ability to invest in acquisitions and technology.
Shareholder activism is growing in South Korea after President Moon Jae-in made reforms of the country’s powerful conglomerates a key election pledge.
Calls for the country’s familyrun business empires to become more accountable increased in the wake of a corruption scandal involving Moon’s impeached predecessor and Samsung Group.