U.S. Proxy Advisory Firm Calls for Hyundai Motor Chief to Resign

Institutional Shareholder Services, a leading independent U.S. proxy advisory firm, said that Chung Mong-koo, chairman of Hyundai Motor Group, should step down, considering the seriousness of his crimes, like the raising of slush funds.

The Wall Street Journal reported on Feb. 29 that the ISS recently released a publication to more than 1,600 institutional investors that although Hyundai’s sales and profits have significantly increased since Chung took control, his accomplishments did not justify the criminal acts.

ISS, a subsidiary of financial risk management analysis firm RiskMetrics Group, is a provider of financial risk management analytics. When Sovereign Global Investment threatened the management rights of SK Corp. and legendary corporate raider Carl Icahn attempted to acquire Korean Tobacco and Ginseng Company ("KT&G"), ISS supported the two foreign investment funds.

Experts, however, predict that the firm’s recommendation will have little impact on the general meeting of the auto company’s shareholders to be held on Mar. 14. As of the end of 2007, Chairman Chung had a 37.27 percent stake, larger than the 30.54 percent held by foreign investors. Kim Hak-joo, head of research at Samsung Securities, said, “The establishment of Chung’s slush fund is not news any more, and ISS is not an organization strong enough to bring together institutional investors.”

aryssong@donga.com