Hyosung (KRX:004800) is strengthening shareholder-friendly policies under Chairman Cho Hyun-joon’s push to enhance management transparency and share as much information as possible with markets.
Cho has urged employees to “increase communication with markets and concentrate on transparent management to build up corporate and shareholder values.”
Hyosung has steadily increased dividends since 2013, gaining recognition as one of the nation’s best dividend stocks. It has paid out a dividend of 5,000 won per share since 2016. Its dividend yield hit a record high of 8.4% in 2018.
Hyosung created and upgraded systems for transparent management. In 2017, it formed the Management Transparency Committee under the board of directors and also replaced Chairman Cho as chairperson of the Outside Director Candidate Recommendation Committee with Kim Myung-ja, an outside director. The Management Transparency Committee consisting of three outside and one inside director conducts a preliminary review of internal transactions between affiliates to give a huge amount of work to each other and important management issues such as M&A in a bid to check if the management makes rational decisions to serve the interests of shareholders. Hyosung discloses the activities of the Management Transparency Committee each quarter in its business report.
Hyosung has also tightened its internal accounting surveillance. It has increased the number of evaluations by the Audit Committee of the operation of internal accounting management systems from once a year to twice a year. In an effort to improve the competence of its accounting employees, Hyosung trains them in “transparency for compliance with accounting standards.”
Hyosung is credited with improving its governance structure in 2018 by converting it into a holding company system. It was a move to maximize management efficiency and corporate value by simplifying its governance framework and then establishing responsible management systems around specialized affiliates. Hyosung has since strengthened communication with markets. It invited institutional investors to ‘Corporate Day’, where chief executives and other senior officials of related affiliates presented their major business plans personally. Last year, it held three Non-Deal Roadshows for foreign institutional investors in Hong Kong and Singapore. A Non-Deal Roadshow is a roadshow that does not accompany investment deals.
These shareholder-friendly practices are spreading across the Hyosung Group. For the first time among Hyosung’s affiliates, Hyosung ITX is scheduled to introduce a “quarterly dividend payout system” in March this year. Under the system, dividends are paid out at a maximum of four times a year. The quarterly dividend payout will enable Hyosung to expand communication with markets and also increase shareholder value in a low-interest-rate environment. Besides, Hyosung ITX is trying hard to evolve a shareholder-centric management culture by increasing its dividends 30 percent, buying back its stocks and utilizing the electronic voting systems more widely.