Opposition by the National Pension Service (NPS) is unlikely to change the structure of the boards at Hyundai and affiliates Kia Motor and Hyundai Mobis because the government-run fund holds less than 10 percent in each company, the source said.
A "no" or "abstain" vote, however, would reflect investor discontent over the often-opaque decision-making at family-run South Korean conglomerates known as chaebols, which typically trade at discounts to their global peers in part because of concerns over poor corporate governance.
"The NPS does not expect its decision to prompt other investors to follow suit," said the source, who declined to be named as the matter remained confidential.
"But this will give a warning signal over Hyundai's corporate governance problems," he told Reuters.
A spokesman for Hyundai Motor Group declined to comment on the matter. Hyundai Motor and Hyundai Mobis are due to ask investors to vote on the board during their annual shareholders' meetings on Friday, while Kia's meeting is scheduled for next week.
Several people told Reuters the NPS's independent committee met on Wednesday to decide on how it would vote at the meetings. Brain Asset Management, which holds 0.14 percent of sharesin Hyundai Motor, the country's largest automaker, also said it would vote against the appointment of Hyundai Motor board director Yoon Kap-han because the property acquisition "resulted in a stock price plunge, causing a serious damage to investors".
Shares in Hyundai Motor, Kia and Hyundai Mobis took a hit last year after the companies bid for the property in Seoul's affluent Gangnam district for $10 billion from state-owned Korea Electric Power Corp to house a new headquarters.
Board members of the three companies agreed to bid for the land at auction without knowing how much would be bid.
After the land deal, the automaker announced a dividend hike and a rare share buyback, moves apparently aimed at defusing investor anger, but its shares are still down 19 percent since the bid as of Tuesday, compared to the wider market's 4 percent fall.
--reuters--
