Political Struggle

 

The National Pension Service (NPS) will vote against the continuance of two out of seven non-executive directors’ terms from Hyundai Mobis and Kia Motors. The two directors in question are related to the purchase of the Korea Electric Power Corporation (KEPCO) headquarters’ site by the consortium of Hyundai Motor, Hyundai Mobis, and Kia Motors in September last year.

The NPS announced on March 12 that it decided to do so after a discussion on the direction of exercising its voting rights on the agenda of Hyundai Motor’s regular general shareholders meeting.

An NPS representative said that it discussed the propriety of the purchasing price and decision of the consortium led by Hyundai Motor to acquire the KEPCO site in Samseong-dong, Seoul. The representative said that it is difficult to clearly assess the degree of damage done to enterprise value by the purchase.

However, it seems that the NPS has concluded that its stock value crashed after all, due to the expensive purchase of KEPCO’s site and other losses that the NPS suffered.

Also, it has concluded that the directors failed to fulfill their duties as good managers, as they entrusted the CEO with full powers without discussing the company’s investment ability, purchasing price, or investment effect on decisions, which have enormous influence on the business interests.

Accordingly, the NPS has said that it will vote against the re-election of the non-executive directors, because they should, but do not, play a key role in observing and supervising the management. However, it will not vote in favor of or against the internal directors, including Hyundai Motor Group Vice Chairman Chung Eui-sun, in consideration of maintaining the stability of management.

As of the end of September last year, the NPS holds 8.02 percent of Hyundai Mobis and 7.04 percent of Kia Motors. The figures are higher than that of the family of major shareholders, including Chairman Chung Mong-koo and Vice Chairman Chung Eui-sun.

The NPS is currently holding stakes of 107 companies from the top 30 groups. It has more shares than the major shareholders’ families in 64 companies, which are 60 percent of the total. In October last year, the NPS defeated the merger plan of Samsung Heavy Industries and Samsung Engineering, raising a voice against the merger. 

For this reason, the NPS is expected to actively express its views on the problems of corporate governance structure as a stockholder in the future. 

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