U.S. fund Elliott suffers crushing defeat in Hyundai proxy vote

By Hyunjoo Jin and Ju-min Park

SEOUL (Reuters) – Investors in Hyundai Motor Group companies rejected on Friday Elliott Management’s demands for a massive special dividend and board seats, dealing a blow to the U.S. hedge fund’s campaign to shake up South Korea’s second-biggest family-run conglomerate.

Elliott’s loss in a series of closely watched votes is also a setback for shareholder activism more broadly in Asia’s fourth-largest economy, long dominated by powerful elites accused of taking minority investors for granted.

Activist investor Paul Singer’s fund successfully led a campaign against Hyundai’s ownership restructuring plan last year, but failed to convince other shareholders on Friday that the group should pay out excess cash and bring in more independent directors to improve governance and accountability.

Its demand for a steep increase in dividend – more than six times higher than what Hyundai had offered – was rejected by other minority shareholders on the grounds that the automaking group needed to lift investment at a time of plunging profit.

“The dividend proposed by the shareholder (Elliott) may sound tempting, but in the long term, it is like a poisoned chalice or nothing but cutting open the belly of a goose with the golden eggs,” Hyundai Motor shareholder Na Hong-seob told investors at the automaker’s annual general meeting in Seoul.

Elliott had been trying to rally shareholder support for dividend payouts from Hyundai Motor and Hyundai Mobis for 2018 worth a combined 7 trillion won (£4.7 billion).

It also wanted a total of five board nominees at Hyundai Motor and Hyundai Mobis to address “governance shortcomings”, citing investments in non-core assets such as a $10 billion land acquisition in Seoul’s Gangnam business district.

(Reporting by Hyunjoo Jin and Ju-Min Park; Editing by Miyoung Kim and Stephen Coates)

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