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Hyundai Motor to Further Strengthen Governance Structure with Board-Centric Management

2019.02.26 00:00:00 No. 16138

• Company unveils plans to further enhance management system prioritizing shareholder value

• Board recommends three new Outside Director candidates with world-renowned expertise in respective fields to enhance shareholder interests

• Company reaffirms commitment to policy of maximizing shareholder value

• Board recommends Hyundai’s first non-Korean R&D Head Albert Biermann and Executive Vice Chairman Euisun Chung as inside director candidates

• New director appointments subject to approval at AGM on March 22

SEOUL, Feb. 26, 2019 — Hyundai Motor Company has announced plans to further strengthen its corporate governance, pledging to improve its board-centric management system that maximizes shareholder value.

The plans, which were disclosed following a board meeting today in Seoul and put forth by the company’s Board of Directors (the Board), recommend three new Outside Director candidates with global expertise in financial, administration and economics to become board members to enhance shareholder interests. The nominations for Outside Directors were proposed by shareholders for the first time in the company’s history, to ultimately enhance shareholders’ interest and corporate governance.

The recommendation is in line with Hyundai Motor’s increasing efforts to strengthen the board’s competitiveness and transparency by bringing in renowned outside professionals.

The three new nominees include Chi-Won Yoon, Vice Chairman of UBS AG’s wealth management division; Eugene Ohr, former partner of Capital International Inc., a unit of Capital Group Companies; and Sang-Seung Yi, Professor of Economics at Seoul National University.

Diversity, Expertise in Board

Chi-Won Yoon, widely recognized as one of the most successful Koreans in the global financial industry, has been nominated to the board’s Outside Director position in charge of protecting shareholder interests. As a former top executive of a multinational investment company, Yoon has led a career protecting shareholder interests using his far-reaching financial expertise and broad insight on shareholder rights.

Eugene Ohr had a 25 year career working at one of the world’s largest asset management firms, the Capital Group Companies, where he oversaw investments in Korea, Japan and other parts of Asia. With wide-ranging experience at a global asset management firm such as Capital Group Companies, including investment analysis and fund management, Ohr has a deep understanding of the automotive industry and foreign investors, as well as expertise in corporate governance, including reorganization.

Sang-Seung Yi — who served as an advisor to the Korea Fair Trade Commission and Chairman of the Korea Academics Society of Industrial Organization — is a renowned scholar with an expertise on corporate governance. He has striven to create a healthy business environment in Korea based on free and fair market competition and consumer protection. As an expert wielding a sharp understanding of the market and economy, he is expected to help the Board make strategic decisions.

Innovative Leadership

EVC Chung’s reappointment as Inside Director is foreseen to catalyze the company’s ongoing transformation to more efficiently cope with the fast-changing business environment. Under his fresh innovative leadership, Hyundai has inched closer to becoming a Smart Mobility Solutions Provider from a conventional automobile manufacturer.

In his New Year’s address in January, Chung urged all employees to embrace “fearless and aggressive changes” in their modus operandi — an attempt to bolster the group’s readiness for the “Fourth Industrial Revolution” era and the related paradigm shifts in the global automotive industry.

EVC Chung also emphasized the importance of engaging in transparent communication with shareholders, investors and market players.

Another candidate for the new Inside Director position is President Biermann — recently appointed as Head of R&D Division. He brings fresh insights to the company’s high-performance vehicles and technologies, and will help Hyundai derive greater technological improvements and breakthroughs spanning wide specialties.

Biermann, who joined Hyundai in 2015, has more than 30 years of experience in developing high-performance vehicles and is the first non-Korean to helm the research and development division at Hyundai. The German engineer played a key role in spawning the BMW M Automobiles, particularly honing the performance and dynamics capacities of the brand’s several celebrated vehicles. As a world-renowned R&D expert, Biermann is tasked with sharpening the group’s future visions, offering shrewd counsel and combining the latest technologies and global trends upon the overall management spectrum.

Transparent Communication with Shareholders

According to the board’s proposal today, Hyundai’s Board will be expanded to 11 members, comprising six Outside Directors and five Inside Directors. That is up from the current nine members, comprising four from outside and five from inside. The move is a testament to the company’s strong determination to reinforce its board-centric management processes, all aimed at better responding to the rapid shifts in the global business environment and boosting shareholder interests.

Hyundai Motor, in the process of nominating its Outside Directors, received recommendations for nominees from shareholders for the first time, which is geared to enhance the transparency and independence of the board and to actively communicate with its shareholders.

Hyundai Motor confirmed Chi-Won Yoon as the candidate for Outside Director in charge of shareholder protection, after soliciting candidate recommendations from its shareholders. This role will consist of acting as a conduit for communication between the board and the shareholders.

Yoon will attend the Corporate Governance and Communication Committee (CGCC) and board meetings and actively advocate from the shareholders position, and also participate in investors’ meetings in both Korea and overseas.

By launching the CGCC in 2015 and enacting the Corporate Governance Charter in 2016, Hyundai has steadily been striving to increase transparency in its board-centric management.

Since its inception in 2016, the CGCC — an independent committee solely comprising Outside Directors — has undertaken various activities to protect shareholder interests in a wide array of important business and management issues.

The new director in charge of shareholder interest protection will represent voices of shareholders at CGCC and Board meetings as well as in various investor meetings in Korea and abroad.

Maximizing Shareholder Return

The Board separately approved a plan for a year-end dividend of KRW 3,000 per common stock. Including a KRW 1,000 interim dividend, the 2018 annual dividend would total KRW 4,000. Once the dividend is approved at the shareholders’ meeting, total dividends will amount to KRW 1.1 trillion, including those for preferred stocks.

To keep its commitment to boosting shareholder return, Hyundai maintained the same amount of dividend as in 2017, despite weakened profitability in an unfavorable business environment, compounded by need for increasing investments for securing future competitiveness.

The effort helped lift the company’s payout ratio to 70.7 percent in 2018, which jumped from the previous year’s 26.8 percent.

New Co-representative Director Appointment Plan

Hyundai Motor plans to appoint EVC Chung as a new co-representative director. EVC Chung is concentrating efforts on leading the paradigm in the current transition period in the automobile industry in the age of the Fourth Industrial Revolution defined by ICT convergence, sharing economy, artificial intelligence and smart mobility.

Once Euisun Chung is appointed as co-representative director, Hyundai Motor Company will be led by a committee of four co-representative directors, comprised of Chairman Mong-Koo Chung, Executive Vice Chairman Euisun Chung, President Wonhee Lee and Executive Vice President Untae Ha. With this appointment, Hyundai Motor expects to strengthen shareholder protection as well as the growth and enhancement of shareholder value.

The candidates for the new director positions are subject to approval at the upcoming Annual General Shareholders Meeting (AGM) on March 22.

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