- Resolved plan to enhance shareholder value at the board meeting on 26th by implementing an advanced management system
- Appointing 2 global independent directors for the first time since the company’s foundation, operating a pool of leading experts in each field
- Announcing the mid & long-term shareholder return strategy of total KRW 2.6 trillion in 3 years to enhance shareholder value
… Paying a dividend of a total of KRW 1.1 trillion, increased to KRW 4,000 per share
… Share buy-back of KRW 1 trillion and treasury share cancellation of 2.04 million shares (459 billion)
- Investing KRW 4 trillion in the core areas of future vehicles for the next 3 years, pursuing M&A with ICT innovators
- Planning to appoint Executive Vice Chairman, Euisun Chung as new CEO to strengthen responsible management
Hyundai Mobis announced its plan to maximize shareholder value, which includes improvement of the operation of the board of directors and active shareholder return strategy.
At the board meeting on 26th, Hyundai Mobis decided on ▲ appointing two global independent directors ▲ paying a dividend of a total KRW 1.1 trillion in 3 years (KRW 4,000 per share) ▲ buying back shares total KRW 1 trillion for the next 3 years and canceling treasury shares of KRW 459 billion ▲ making future investment worth a total KRW 4 trillion for the 3 years to come. The shareholder return such as dividend, share buy-back and treasury share cancellation for the next 3 years will be worth up to KRW 2.6 trillion. The resolutions adopted at the BOD meeting which are subject to shareholder meeting approval will be submitted to the upcoming annual general shareholder meeting next month.
This is to establish a transparent and rapid decision-making system to effectively contend with the rapidly changing business environment amid the Fourth Industrial Revolution, and enhance both corporate and shareholder value based on strong trust with stakeholders including shareholders.
□ First since the company’s foundation to appoint global independent directors to secure diversity, expertise and independence of the board of directors
Hyundai Mobis will be appointing 2 global experts who are considered leading global specialists in technological strategies in future vehicles and financial investments. This is the first time since its foundation that the company is appointing foreign independent directors, and Hyundai Mobis becomes the only company to have 2 global directors among the top 10 market value companies on the Korea Stock Exchange.
Currently, the board of directors at Hyundai Mobis consists of 4 internal and 5 independent directors. Of the two foreign directors, one will replace an existing one whose term will end in March and the other will fill in the seat that has been vacant since last year.
This is based on the judgment that, in order to promptly deal with the rapidly changing business environment, it is necessary to organize independent directors with leading experts that have a broad range of global experience.
First, Hyundai Mobis decided to appoint Dr. Karl Thomas Neumann, a former CEO with experience as a professional engineer, to reinforce competitiveness in the field of technological strategy for future vehicles.
Dr. Neumann is a leading expert in business & product development from Germany, encompassing not only the overall automotive industry but also the future mobility market. Starting out as an automotive semiconductor director at Motorola, he served as CEO at global automotive supplier Continental AG, also as CEO of Volkswagen Group China, and OPEL in Germany.
Currently, he is in charge of mobility, including sales, marketing and digital strategy at Evelozcity, a startup in the field of electric vehicles and new mobility solutions in California. Based on his current experience at a startup in addition to an automotive materials company, tier 1 supplier and global automaker, he is considered a well-experienced leader in the automotive industry with a background in everything from R&D to business development and management. His experience in working in major global fields of the automotive industry such as Europe, China and United States is also a great competitive edge.
To promote expertise in finance, Hyundai Mobis also decided to appoint Brian D. Jones as an independent director, who is an investment specialist in the U.S. Currently, he is a co-president of the US investment company, Archegos Capital Management and is well known as a leading specialist in M&A and investments. For more than a decade, Mr. Jones served as a senior managing director of IB division at Bear Stearns, formerly one of the 5 largest investment banks on Wall Street. He has served as board memember of numerous US financial institutions.
His experience and expertise in corporate value analysis and M&A as an American Institute of Certified Public Accountants will help Hyundai Mobis make investment decisions for future growth.
Once Hyundai Mobis recruits global experts in technological strategy and finance, the company will have 5 independent directors representing each field of expertise, including 3 existing directors. Hyundai Mobis explains that this will promote diversity, expertise and independence of the board of directors as constantly emphasized by the company, thereby maximizing corporate value.
In addition to the new global directors, Hyundai Mobis also currently has a transparent management specialist (Byung-ju Lee), automotive industry specialist (Ji-soo Yu), and operation management specialist (Dae-soo Kim) as independent directors.
Byung-ju Lee serves as executive advisor to Bae, Kim & Lee, LLC after serving on the standing committee member of Korea Fair Trade Commission, and is a leading figure that emphasizes the importance of improving shareholder rights and communication based on rational and transparent decision making of firms.
Ji-soo Yu, the incumbent president of Kookmin University, is a renowned scholar with insight in analyzing real economy. He provides advice regarding the direction for the automotive industry in this unclear global environment and the Fourth Industrial Revolution.
Another independent director, Dae-soo Kim, is a professor at Korea University who also served as director of the Korean Production and Operations Management Society and Korea Association of Procurement and Supply Management. He is a well-known scholar in business administration with a keen insight in overall business, such as production and logistics as well as operation management of firms.
□ Implementing a mid/long-term shareholder-friendly policy with a shareholder return of a total KRW 2.6 trillion in 3 years
Hyundai Mobis is also about to enhance shareholder value with active shareholder return. Having announced the dividend policy of 20-40% of free cash flow in the first half of last year, Hyundai Mobis plans to consistently maintain the shareholder-friendly policy and come up with more diverse ways to enhance shareholder value in the mid/long-term view.
As part of this plan, the company decided on an active shareholder return policy by increasing dividends, additional share buyback, and cancellation of some of existing treasury shares. It is a large-scale shareholder return policy of a total KRW 2.6 trillion in the next 3 years.
Hyundai Mobis decided to first increase the dividends from KRW 3,500 per share last year to KRW 4,000 per share. The total amount of dividend is KRW 379 billion, which is 25% of the free cash flow last year. The dividend payout ratio of 20.1% will also be maintained. The size of dividend in the next 3 years will exceed KRW 1.1 trillion.
In addition, the quarterly dividend payment plan announced in the first half of last year will be implemented starting from the first half of this year (late June expected). This is the first time that Hyundai Mobis is implementing the quarterly dividend payment, and 1/4 of total dividend will be paid in advance.
At the board meeting that day, Hyundai Mobis also decided on the plan to repurchase shares and cancel some of its existing treasury shares. The total size will be KRW 1.5 trillion in the next 3 years.
First, Hyundai Mobis decided to implement share buyback worth KRW 1 trillion in the next 3 years. This is at least 5 times more than the one announced in the first half of last year that a total amount of KRW 188 billion-worth of shares to be bought back by 2021. Accordingly, around 1.5% of outstanding shares will be bought back every year.
The plan to cancel treasury shares announced last year will also be carried out. Hyundai Mobis will cancel 2.04 million treasury stocks in the second half of this year, and the amount is KRW 460 billion.
□ Mid/long-term strategy for future vehicles, investing over KRW 4 trillion in 3 years
To constantly enhance shareholder value, Hyundai Mobis plans to reinforce technological competitiveness and increase investment in future vehicles.
Over the next 3 years, the company will invest at least KRW 4 trillion in ▲ establishing the production base to prepare for the expansion of the electrification market, ▲ forming partnerships and making equity investments with Korean and global startups, ▲ securing the foundation for business through M&A.
In particular, Hyundai Mobis plans to invest KRW 200 ~ 300 billion in forming partnerships and engaging in equity investments in startups to secure core technologies and accelerate technological development by 2021. Moreover, the company will also consider investing several trillion in M&A such as acquiring innovative ICT companies to increase sales to a global automakers.
The global automotive market is expected to grow significantly with a focus on autonomous driving and vehicle electrification, and ICT. To secure technology and expand production facilities for this future market, it is necessary to make strategic investments based on choice and concentration.
Hyundai Mobis plans to double its revenue in core parts business, which is currently KRW 9 trillion, to KRW 18 trillion by 2025 by making concentrated investments in future vehicles.
This demonstrates the will to stably manage cash in consideration of the uncertain business environment and future investment plans. The intention is to secure future growth engines by focusing on increasing investments in this field during the market growth of ICT and electrification in addition to active shareholder return.
By doing so, Hyundai Mobis will establish its production base to prepare for the expansion of the electrification market, while also actively pursuing M&A to increase investment in open innovation and expand the foundation for business by securing core technological competencies.
□ Executive Vice Chairman Euisun Chung of Hyundai Motor Group, will be newly appointed as CEO, anticipated to be a game changer through responsible management
With the new independent board members, Hyundai Mobis plans to reappoint Chairman and CEO Mong-Koo Chung as an internal director and to appoint President Chung-kook Park and Executive Vice President Hyungkeun Bae. As a result, there will be 4 internal directors including Executive Vice Chairman Euisun Chung.
Hyundai Mobis will newly appoint Executive Vice Chairman Euisun Chung and President Chung-Kook Park along with the Chairman & CEO Mong-Koo Chung as CEO among these 4 internal directors, which will be approved by the resolution of the board of directors. With the three CEOs in place, responsible management will be further promoted for maximization of corporate and shareholder value.
In particular, by reappointing Chairman & CEO Mong-Koo Chung, who has exerted strong leadership by pursuing unshakable quality management, the company is determined to maintain the responsible management system.
Executive Vice Chairman Euisun Chung has been leading the development of future vehicles. He has been demonstrating powerful leadership in using the Group’s competencies to strengthen the next era business models. Based on enthusiastic recruitment of global talents and innovative ideas, he is expected to play a key role in making Hyundai Mobis a leader of the automotive industry that is able to bring about a new paradigm.
President Chung-kook Park is a bona fide engineer who served as director of Central Research Institute and America Technical Center, and head of R&D Planning and Coordination Office at Hyundai Motor Company. He is also widely known for making rational decisions with experience as CEO at Hyundai NGV which is in charge of the Group’s industry-academia cooperation and HR development, and CEO at Hyundai Kefico specialized in technology for electronic controlling systems. He is considered to be the right person for this job to lead Hyundai Mobis, which is accelerating R&D in autonomous driving, electrification and connectivity, to become an expert in new future technology based on software and advanced technologies.
Executive Vice President Hyungkeun Bae is a former head of Corporate Strategy Office at Hyundai Motor Company, and is a management specialist with a financial background with abundant theoretical knowledge and who has been coordinating key management issues based on in-depth perspectives about the global business environment. His extensive interpersonal network in Korea and overseas is a great competitive edge. He is expected to not only enhance the corporate value of Hyundai Mobis by promoting organizational competitiveness and increasing profitability, but also contribute to jumpstarting Hyundai Mobis into becoming a global company through stable financial management of reinvestment for future growth engines in the rapidly changing environment.
In addition, to promote transparency and independence of the board of directors, Hyundai Mobis decided to newly appoint an independent director through shareholder nominations when the term of a current independent director comes to an end in 2020. [END]