Status of IR Units Elevated
Hyundai Motor Group has recently elevated the status of investor relations (IR) units of its subsidiaries by putting them under the direct control of company presidents. It is part of its plans to improve the stock performance of the affiliates by expanding the power and responsibility of the IR units which directly meet and communicate with investors. Some watchers said the move may be related with the group’s plan to reform the governance structure.
Previously, these IR units were under the control of the financial department, which was in turn controlled by the president’s office. But through a recent reorganization, they are now directly controlled by the president’s office. Accordingly, group executive vice chairman Chung Eui-sun and president Lee Won-hee will be involved in related matters.
The price of Hyundai Motor shares stood at some 200,000 won (US$166) from 2011 to 2013 but has recently remained at some 100,000 won (US$83). Therefore, the group needs to aggressively inform shareholders of its future strategy, including the expansion of hydrogen-powered electric vehicle lineups.
Industry analysts believe that Hyundai Motor Group made such a decision to manage its share price as well as reform its governance structure. The group announced its corporate governance reform plan in March last year to spin off Hyundai Mobis' lucrative after-sales and module division and merge them with Hyundai Glovis. However, it scrapped its governance reform scheme due to the opposition of U.S. hedge fund Elliott Management Corp. At that time, market experts said the absence of communication with investors was the biggest reason of the failure of the governance reform. This is why many say the group has reorganized the IR unit to improve it.
In addition to Hyundai Motor, the IR unit of other subsidiaries of the group has been put under the CEO’s office. Hyundai Motor Group is expected to carry out the group-level IR activities to prepare for the governance reform based on the president’s office of subsidiaries. An official from an automaker said, “The group seems to have put the IR unit of subsidiaries directly under the CEO’s office to manage its stock price and grant more power, and actively explain its plans to institutional investors.”