[Hyundai Way Secret⑦] Group Market Cap Up 48 Trillion Won After Chung Eui-sun's Appointment... Quiet Pragmatic Leadership

Hyundai Motor Raises Shareholder Return Rate Reflecting Major Shareholder's Will
Based on Record-Breaking Performance... Group Market Cap Up 45% Since Chairman Jeong's Inauguration
Chairman Jeong Positively Evaluated for Leadership... Taciturn, Question-Oriented Leader
Strives to Build Ambidextrous Organization of 'Stability and Innovation'
Strong Global Network... Enhances 'Premium Car' Brand Image

"Under the current tax law, if a company increases dividends, major shareholders inevitably suffer losses. I believe Hyundai Motor's Value-Up Program, which raises the shareholder return ratio, is the result of major shareholders reading the times and actively reflecting them."

Lee Chaewon, chairman of Life Asset Management and a master of value investing in Korea, made this assessment on the 10th regarding Hyundai Motor's shareholder return policy announced last month. Hyundai Motor announced a 'Value-Up Program' to maintain a total shareholder return ratio (TSR), including dividends and treasury stock cancellations, at a minimum of 35% over the next three years. To this end, the company plans to increase the dividend per share to at least 10,000 KRW and simultaneously repurchase treasury stock.

In August last year, Chung Euisun, Chairman of Hyundai Motor Group (center in the photo), visited Hyundai Motor's India plant to inspect the factory status.
[Photo by Hyundai Motor Group]

Hyundai Motor's Value-Up policy also aligns with government policies. However, even if the government implements separate taxation on shareholder dividend income, the low tax rate applies only to the increase compared to existing dividends. Therefore, some argue that for major shareholders like Chairman Chung, the policy effect is not significantly felt. Chairman Lee said, "Due to the realistic tax rate mismatch, high dividends are disadvantageous for major shareholders," adding, "While short-term dividend expansion is important, I hope they build a solid growth model to demonstrate confidence in sustainable growth."

◆ High Dividend Value-Up Based on Solid Performance = Hyundai Motor's proactive shareholder return policy was possible because of confidence in record-breaking performance. Since Chairman Chung took office in October 2020, positive indicators have appeared in various market evaluations, including global sales rankings, market capitalization, and credit ratings. Hyundai Motor Group's global sales ranking jumped from 5th in 2020 to 3rd in 2021, and this year it is aiming for 2nd place.

According to FnGuide, Hyundai Motor Group's market capitalization (based on 12 listed companies as of September 2) is about 153 trillion KRW, an increase of approximately 48 trillion KRW compared to before Chairman Chung's appointment. This means the market capitalization increased by 45% over about four years. Hyundai Motor and Kia received 'All A' credit ratings from the three global credit rating agencies. Only four automobile manufacturers, including Hyundai Motor, Mercedes-Benz, Toyota, and Honda, have received A grade or higher from all three agencies.

As strong performance appeared inside and outside the market, positive evaluations of Chairman Chung's leadership have continued. In 2018, when Chairman Chung was promoted to Vice Chairman, Hyundai Motor Group was in crisis. Sales in China plummeted, and the U.S. market, where the SUV lineup was incomplete, was also problematic. They had to maintain market share in internal combustion engines while leading innovation in eco-friendly vehicles.

Professor Lee Muwon of Yonsei University's Department of Business Administration said in a case study listed at Stanford Graduate School of Business Case Center, "Some called Chairman Chung a 'pioneer,' but even he found it difficult to predict the rapidly changing business environment," adding, "As a legacy company, Hyundai Motor found it hard to change faster than startups. Chairman Chung worked hard to create an 'ambidextrous organization' balancing stability and innovation."

◆ The Taciturn 'Questioning Leader' = Evaluations of Chairman Chung inside and outside Hyundai Motor Group can be summarized as a quiet pragmatist and a questioning leader with global sensibility. A senior Hyundai Motor official who closely assisted Chairman Chung said, "He never expressed his opinion before receiving reports," adding, "He listens to all the staff's stories first and then shares his opinion."

Chairman Chung is usually taciturn. He only nods silently when receiving reports. However, when he finds points to improve, he asks sharp questions. Rather than giving direct solutions, he encourages employees to find solutions themselves through continuous questioning.

Chairman Chung's leadership style differs from that of his father, Honorary Chairman Chung Mong-koo. Honorary Chairman Chung thoroughly trusted his own 'intuition.' He made a contrarian investment in the Russian market amid a deep recession and succeeded greatly, and he pushed through the development of a Korean-style hybrid that everyone said would fail. The leader's thoughts and direction determined the group's fate. However, he took full responsibility for failures.

The two leaders also differ in their approach to the media. Honorary Chairman Chung rarely read from scripts at official events. When the company had good news or major events, impromptu press conferences were held on-site. In contrast, Chairman Chung does not enjoy being in the media spotlight. He makes only refined remarks at official events and avoids sudden actions. He prefers that staff members receive attention instead of himself. However, there is one moment when he talks more in front of the media: when discussing archery. He actively answers any questions related to archery.

Hyundai Motor Group Chairman Chung Eui-sun (second from the left in the photo) is talking with the national archery team players at the 2024 Paris Olympics venue.
[Photo by Yonhap News]

◆ The Story Behind Gifting Jensen Huang a Leather Jacket = Another strength of Chairman Chung's leadership is his global sensibility, utilizing a worldwide network. Hans Greimel, Asia editor at Automotive News, responsible for Korea-China-Japan industrial analysis, said, "Chairman Chung is sensitive to global trends and understands well how advanced technology integrates with the automotive industry in the big picture."

Chairman Chung's secret to expanding global networking is meticulous consideration. When he met Jensen Huang, CEO of NVIDIA, at CES in 2017, he gifted Huang his trademark leather jacket. In 2018, he sat in the front passenger seat next to Indian Prime Minister Narendra Modi during a test drive of the hydrogen fuel cell vehicle Nexo, explaining the vehicle's functions one by one. In October last year, he personally explained the construction status of Hyundai Motor Group's electric vehicle-only factory to the governor of Georgia, USA, and his spouse, dressed in work clothes.

Chairman Chung's extensive global networking shone during crises. When the semiconductor supply shortage occurred in 2021, automakers worldwide scrambled to secure semiconductor supplies. At that time, Chairman Chung mobilized his personal connections to support the purchasing department and made every effort to secure semiconductors.

Chairman Chung Eui-sun of Hyundai Motor Group (right) is talking with Mrs. Marty Kemp, wife of Brian Kemp, Governor of Georgia, USA, at the construction site of Hyundai Motor Group Meta Plant America (HMGMA) in Georgia.
[Photo by HMGMA]

◆ "Abandon the Low-Cost Brand Image" = Since Chairman Chung took full control of management, the area he has focused on most is 'brand image enhancement.' His ambition was to erase the image of 'low-cost cars' in domestic and overseas markets and create cars that people want to buy based solely on the brand name.

In particular, Chairman Chung saw urgent need for image improvement starting from Korea, where Hyundai Motor's headquarters are located. He established complex cultural spaces that instill a positive brand image through enjoyable automotive experiences, such as Goyang Hyundai Motorstudio and Taean HMG Driving Experience Center.

Chairman Chung devoted great care to the project, even paying attention to small lighting in showrooms. Building architectural structures to enhance brand image requires astronomical costs and does not yield profits in the short term. Such projects are difficult to proceed without the strong will of the owner.

An employee who participated in the Hyundai Motorstudio project said, "The chairman personally visited the site once a month to check progress," adding, "After inspections, I remember having dinner with the on-site staff over samgyeopsal and soju in a casual atmosphere."