US proxy adviser Glass Lewis has stepped up its support for Hyundai Motor Group in its battle against Elliott over the issue of dividend payouts, officials said on March 10.
While urging shareholders to vote against Elliott’s dividend proposal, the adviser also favored the three nonexecutive director nominees selected by the carmaker and opposed those picked by Elliott.
“We are reluctant to recommend shareholder support for such a large one-time dividend payout,” Glass Lewis said in a report, adding that planned research and development activities and potential mergers and acquisitions were likely to enhance theSouth Korean auto group’s competitiveness and returns in the long term.
The move comes amid pressure on the auto group from the US hedge fund Elliott to pay dividends of 7 trillion won ($6.2 billion) from both Hyundai Motor and its biggest shareholder Hyundai Mobis, over what Elliott says is excessive capitalization.
Glass Lewis also recommended that shareholders support the company’s proposal to offer 3,000 won per common share, rather than Elliott’s proposed payout of 21,967 won.
Last month, Hyundai Motor Group rejected Elliott’s proposal, promising instead a bold R&D investment plan of 45 trillion won, along with plans to enhance governance.
Elliott fired back in a press statement that the automaker has net cash reserves of 14.3 trillion won, well above the industry average of around 10 trillion won.
Though it supported most of Hyundai’s proposals, Glass Lewis took issue with the group’s nomination of Albert Biermann and Lee Won-hee as executive directors, voicing concerns over independence of the board.
The group is slated to hold a shareholders’ vote on March 22.
By Kim Da-sol/The Korea Herald (email@example.com)