Hyundai Group chair exits Schindler-invested unit board

Hyundai Group's chairwoman on Friday resigned from the board of its elevator unit, whose No. 2 shareholder is Schindler Holding AG, amid mounting shareholder pressure to improve corporate governance. 

Chairwoman Hyun Jeong-eun expressed her intention to step down from her posts as Hyundai Elevator Co.’s internal director and board chair, the group said on Nov. 17. The elevator unit, an industry leader, needs to live up to the value of board-led management as society gains heightened awareness of better corporate governance, the group added.

Hyundai Elevator, which acts as the group’s holding company, has been facing a request from local activist investor KCGI Asset Management, which holds a more than 2% stake in the elevator maker.

In August, KCGI sent an open letter to the elevator producer’s board, urging them to take measures aimed at long-term profitability and improved governance, including the chairwoman’s resignation from the board.

The chairwoman has been struggling in the conflict with Schindler, which holds about a 16% stake in Hyundai Elevator. Earlier this year, she paid 280 billion won ($216.6 million) including 170 billion won in principal to Hyundai Elevator after losing a nine-year-long legal battle against Schindler.

She also faces further legal action from issues like Hyundai Elevator’s asset transfer to Hyundai Movex, the elevator unit’s logistics system affiliate.

KCGI doubts the chairwoman’s ability to properly focus on her obligations as a board member of Hyundai Elevator, the activist fund said in its letter. 

Hyun is the board chair of other group affiliates such as Hyundai Movex Co. and Hyundai Asan Corp.

Hyundai Elevator will hold a general meeting of shareholders to form a new board of directors on Dec. 29. The firm will appoint its new chair from among its outside directors in the subsequent meeting of the new board.

To overhaul Hyundai Elevator’s governance structure, Hyundai Group said it will receive outside director nominations from external organizations rather than from the group’s internal committee.

The group will also set up an evaluation and compensation system for outside directors’ contributions to the elevator unit's performance.

In addition, Hyundai Group is mulling the introduction of new policies for shareholder return, such as a more-than-50% dividend payout, a share buyback and a mandatory minimum dividend, said a group official.

Write to Jae-Fu Kim at hu@hankyung.com
Jihyun Kim edited this article.