Hyundai shareholders inflict big defeat on U.S. fund Elliott in proxy vote

Hyundai shareholders inflict big defeat on U.S. fund Elliott in proxy vote

The conglomerate still faces the bigger challenge of successfully revamping its ownership structure, a process which is attracting close scrutiny from Elliott and other investors amid a government-backed push to curb the power of South Korea’s dominant family-run business empires, or chaebols.

A vote on restructuring requires approval from two-thirds of voters present, a higher threshold than the half required at general meetings.

Elliott garnered support of about 25 percent of voters present for its proposals for Mobis nominees at Friday’s meeting. That compared with some 90 percent backing for the firm’s own proposals.

Elliott said it is “encouraged” by shareholder support for its proposals. “We are confident that the future holds further improvements at Hyundai,” an Elliott spokesman said in a statement.

Some analysts said Elliott would not mind Friday’s defeat as it had a bigger gameplan regarding Hyundai’s planned restructuring.

“Still a bigger battle has not yet started. I think Elliott aims to ultimately rally support from shareholders and win a better deal in terms of a restructuring plan in the future,” Park Ju-gun, the head of corporate analysis firm CEO Score, said.

The results on Friday could reduce the activist investor’s influence with South Korean investors, said Park Sang-in, a professor at Seoul National University.

“Elliott was not able to give a good impression to domestic investors. So, investors who used to be favorable to Elliott may now have second thoughts,” he said.

“However, Hyundai should present a reasonable restructuring plan rather than slightly tweaking last year’s proposal to win shareholder support.”

Hyundai Motor’s shares fell by about a quarter last year, and while it has showed some improvement in 2019 the company’s outlook remains bleak following six consecutive years of falling net profits.

“The auto industry is expected to see a tough year ahead, as falling demand in the United States, a major market, and stalling growth in China and Europe remain,” Hyundai Motor CEO Lee Won-hee told shareholders.

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