[Jeong Eui-sun's Era Launch] The Final Challenge of 3rd Generation Management Succession... Restarting Corporate Governance Restructuring

[Asia Economy Reporter Suyeon Woo] With the inauguration of Chairman Chung Eui-sun, the third-generation management has been fully launched, and the final task of restructuring the governance structure is expected to be restarted. It is anticipated that the restructuring will proceed in a direction that resolves the group's circular shareholding chain while simultaneously enhancing Chairman Chung Eui-sun's actual control.

Currently, Hyundai Motor Group has a total of four circular shareholding chains. The major chain runs as 'Major shareholder → Mobis → Hyundai Motor → Kia Motors → Glovis,' and breaking this chain is necessary to escape controversies over preferential treatment of affiliated companies. The market expects that based on the governance restructuring draft released in March 2018, the merger ratio will be adjusted or an entirely new governance restructuring plan will be proposed.

The restructuring plan at that time centered on splitting Hyundai Mobis and merging it with Hyundai Glovis, but institutional investors opposed it, claiming the merger valuation was unfavorable to Mobis shareholders, forcing the plan to be withdrawn. However, the situation has changed now. Elliott, which suffered a crushing defeat at last year's shareholders' meeting, has sold all its shares. If communication with domestic investors continues and expectations are aligned, this could become an easier alternative.

Chung Euisun, Senior Vice Chairman of Hyundai Motor Group, was appointed chairman on the 14th, marking the full-scale launch of the third-generation management system of Hyundai Motor Group. Hyundai Motor Group, including Hyundai Motor and Hyundai Mobis, held an extraordinary board meeting that morning and approved the appointment of the new chairman Chung. Accordingly, Chairman Chung became the undisputed head of the group just 2 years and 1 month after his promotion to senior vice chairman of the group in September 2018, and 7 months after becoming the chairman of Hyundai Motor's board in March this year. The photo shows the Hyundai Motor Group headquarters in Seocho-gu, Seoul on the day. Photo by Kim Hyunmin kimhyun81@

On the other hand, there is also a forecast that scenarios involving splits or mergers requiring special resolutions at the shareholders' meeting will be excluded as much as possible, and a safer new plan will be presented. One such plan is for Kia Motors and Hyundai Steel to sell their shares in Hyundai Mobis, which Hyundai Glovis would acquire, thereby ascending to the top-level governance structure.

Recently, when stock prices plummeted due to the impact of the novel coronavirus (COVID-19), Chairman Chung increased his shareholding ratio, which could serve as an important clue in the governance restructuring. In March, Chairman Chung purchased Hyundai Motor and Hyundai Mobis stocks worth 90 billion KRW over five days on the market. His shareholding ratio in Hyundai Motor rose to 2.62%, and in Hyundai Mobis to 0.32%. Hyundai Glovis holds a 23.3% stake.

Jinwoo Kim, a researcher at Korea Investment & Securities, said, "With Chairman Chung's promotion, the long-stalled governance restructuring issue will gain momentum," adding, "Through this, shareholder returns are also likely to naturally expand, which is positive news for the entire Hyundai Motor Group."