Hyundai Mobis Enhances Shareholder Value by Securing Sustainable Growth
- Announced ‘2022 Shareholder Value Maximization Policy’ based on Total Shareholder Return (TSR), seeking balance between share price performance and shareholder return via growth. - To invest KRW 3-4 trillion in future growth areas including semiconductors and software, through flexible operation with a dividend playout ratio of 20-30%, while maintaining interim dividend. - Has implemented a shareholder return policy worth KRW 2.6 trillion in the past 3 years since 2019 and has established a new committee with focus on ESG.
[SEOUL, FEB 23, 2022] Hyundai Mobis expressed its willingness once more to enhance shareholder returns based on mid to long-term growth after its previous 3-year policy. In the ‘2022 Shareholder Value Maximization Policy’ the company recently released, Hyundai Mobis announced its strategy to maximize shareholder value based on Total Shareholder Return (TSR), seeking both share price performance and shareholder returns.
TSR is an advanced assessment of corporate performance that measures financial return for shareholders, including change in share prices, dividends, and buybacks. Shareholders can calculate the returns objectively by looking at the TSR, making it a leading performance index for creating shareholder value.
Hyundai Mobis also unveiled a plan for administering the cash needed to invest in future mobility over the next three years, and to revamp the company’s mid to long term business model for UAM and robotics, among others. Essential plans include KRW 3-4 trillion (approx. USD 3 billion) for external investment in semiconductors, software, and autonomous driving; KRW 3-4 trillion for facility investment aimed at electrification and ensuring a stable supply of parts including core parts; maintaining the minimum amount of cash required for corporate operation, for example, to respond to a global crisis in the supply chain.
This year’s dividend will be used flexibly at 20-30% of the payout ratio based on net profit. Payout ratio is an index that indicates how the net profit is allocated to shareholders. The current interim dividend will also be maintained. Hyundai Mobis will purchase KRW 330 billion (approx. USD 277 million) worth of treasury shares of which KRW 62.5 billion (approx. USD 52 million) will be cancelled.
One key feature of the Shareholder Value Maximization Policy from Hyundai Mobis is that it has supplemented shareholder’s investment stability, dividend predictability, the balance between future investment and shareholder returns. The company has also actively reflected the views of shareholders and investors. This is also an extension of the mid to long term policy for shareholder return that Hyundai Mobis has implemented over the past three years.
Hyundai Mobis faithfully carried out shareholder returns worth a total of KRW 2.6 trillion since 2019. The total dividend paid was KRW 1.1 trillion and the quarterly dividend was also executed for the first time. The company purchased KRW 1 trillion of treasury stocks, retired 2 million shares and newly purchased KRW 187.5 billion (734,000 shares) of treasury stocks.
Hyundai Mobis’ new Shareholder Value Maximization Policy is also drawing attention from an ESG perspective. The Independent Director Recommendation Committee recommended Hwajin Kim, a professor at Seoul National University School of Law, as an independent director specialized in corporate governance. Professor Kim is the most respected expert in corporate governance in Korea and is a leader of the Proxy Voting Advisory Committee of the Korea Corporate Governance Service (KCGS).
This now means that the Hyundai Mobis Committee is comprised of five independent directors with an emphasis on diversity, expertise, and independence. The addition of Professor Kim is expected to bolster the ESG corporate policy.
Hyundai Mobis plans to approve the settlement of dividends of KRW 3,000 per share at the 45th Annual General Meeting (AGM) scheduled for March 23, 2022. This is the same as the previous year and the total sum amounts to KRW 4,000 per share including the KRW 1,000 per share of the interim dividend.