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Samsung and Hyundai take different path on investor relations

Shareholder meetings reveal diverging approaches at South Korean companies

There were lively discussions between management and investors at Samsung Electronics' annual shareholder meeting on March 23.

SEOUL -- This year's shareholder meetings of Samsung Electronics and Hyundai Motor, the core companies of South Korea's two leading conglomerates, painted sharply different pictures of how the two are approaching investor relations.

While both companies have vowed that management will listen to shareholders, Samsung seems have gone much further toward achieving a global standard of investor relations than Hyundai.

As in many major economies, South Korean companies have become increasingly conscious of the rights of individual shareholders, seeing shareholder meetings as important opportunities to communicate directly with top management.

All of the country's leading conglomerates have promised to reform their shareholder meetings, but there are big differences in how this is actually carried out by the corporate groups that dominate the nation's economy.

At Samsung Electronics' shareholder meeting on March 23, there were lively discussions between management and investors on key management issues. On the other hand, Hyundai's meeting on March 16 had all the hallmarks of a tightly scripted event, prompting murmurs of discontent.

Samsung's management team gave detailed answers to all questions, complaints and proposals. These included a gripe about the "weak" absorption power of Samsung's vacuum cleaners, and a suggestion that the company introduce organic light-emitting diode TVs. More than 500 shareholders attended the event, which lasted about two hours.

One attendee asked if China's recent decision to spend $190 billion to support its semiconductor industry would have any major impact on Samsung's memory business.

The president of the company's Device Solutions Division, Kim Ki-nam, reassured investors by pointing out the high technological hurdles to entering the market, emphasizing the difficulty for newcomers to quickly narrow the technological gap with the leading players. He said Samsung would continue efforts to develop competitive technology to stay ahead of the pack.

Another shareholder demanded an explanation of Samsung's plan to split its stock 50-to-1. Kwon Oh-hyun, a board member who chaired the day's meeting, responded that the average price of stocks on the Korea Exchange was about 50,000 won, and that the stock split would make Samsung shares more accessible to individual investors by lowering the price.

Samsung reported record sales and operating profit for 2017. Unlike its turbulent, extraordinary shareholder meeting in October 2016 following a series of accidents in which the company's flagship Galaxy Note 7 smartphone caught fire, no shareholders criticized management in the latest meeting -- despite the recent suspended jail sentence for group scion Lee Jae-yong for bribery.

In a sharp contrast, Hyundai's latest shareholder meeting appeared carefully scripted to ensure nothing unexpected would happen. Hyundai's top executives gave the impression of being less sincere than their Samsung counterparts in responding to questions and concerns. The event ran for only about 40 minutes, and there were no discussions on specific topics. Many of the attendees were apparently company employees who owned shares, and who duly approved management proposals.

Toward the end of the meeting, however, one shareholder asked about a report that the group was planning to reorganizing its ownership structure. The person received a boilerplate response that the question would be answered later, as it was not among the topics on the day's agenda.

Yet Hyundai Motor is not unaware of the growing trend of management focusing more on shareholders' interests. Its group distribution company has introduced a system to choose candidates for its outside directors from shareholders through public recruitment.

Hyundai Motor plans to follow suit in introducing such a system in 2019. It would be the first major South Korean conglomerate to do so.

Another major South Korean conglomerate, SK Group, has decided to hold the annual shareholder meetings of its three core companies, SK Telecom, SK Hynix and SK Innovation, on different days starting this year, so shareholders can attend all of them.

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