HYUNDAI MOTOR COMPANY
Korea Exchange: 005380 Meeting Date: 03/13/2015
Shareholders might not know which issue to focus on at Hyundai Motors given the numerous controversies or problematic practices warranting attention. At the top of the list may be the numerous lawsuits the Company is involved, including class-action suits in the US and Canada regarding false-advertising claims regarding the overstatement of fuel-efficiency. These suits, which are being settled or have recently been settled, have also led to hefty fines from the Department of Justice and Environmental Protection Agency for violation of the Clean Air Act. In fact, the penalties totalling $395 million make up the largest civil enforcement action in the Clean Air Act’s 44-year history.
While this has been an ongoing issue over the last several years, more recent developments include legal disputes involving Hyundai Motor and its subsidiary, Kia Motors, and a breach of trust allegation related to overbidding on a land purchase in the Gangnam district of Seoul for $10 billion, three times the appraisal value. Some shareholders have argued that the board of directors neglected its duties by rubber-stamping the bid, which was directed at the sole discretion of the Company’s chairman (a founding family member). Despite these claims, in January 2015, the prosecutor decided to not pursue the case due to the lack of sufficient evidence.
Lastly, shareholders may be concerned with certain shortcomings in such a large, prominent company’s meeting circular: no information regarding board committee chairs, as well as the failure to disclose whether its financial statements as presented in the circular were fully audited.