Hyundai Chairman Hangs Onto Post
As we reported earlier, Hyundai Chairman and convicted embezzler Chung Mong-koo faced a challenge to his leadership at the annual shareholders meeting. Amazingly, Chung was able to retain his position despite having been convicted of "appropriating" $100m of company money and creating a bribery slush fund. Reuters reports that Chung survived opposition from Korea's National Pension Fund, the company's sixth-largest stakeholder as well as from other minority shareholders. Chung's popularity is said to be based on Hyundai's need for "strong and experienced leadership to cope with tough market conditions." Our guess is that shareholders want to hold onto Chung's battle-proven bribery rolodex in order to keep the Korean currency weak, as the cheap Won is Hyundai's major competitive advantage in light of rising commodity costs and increased competition. Stock value one, rule of law nil.
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It amazes me how Korea can be somewhat successful despite rampant white-collar corruption and nepotism.
Yeah, I'm so glad there's none of that among US automakers.
Recent Businessweek article and recommended read: My Way or the Highway at Hyundai Cross-cultural outreach is long overdue. Several Americans expressed resentment at the so-called coordinators, the Korean overseers whose job it is to keep an eye on American managers. Culled from the ranks of up-and-coming stars in Seoul, they sit alongside American managers, monitoring decision-making and results. Both Hyundai and Kia have about a dozen coordinators. They must agree to major decisions—and sometimes smaller ones, such as whether to award vacations to dealers who hit sales goals. Japanese automakers also have coordinators in their U.S. operations, but they play more of an advisory role while the American executives have free reign to make major decisions. Mark Barnes, chief operating officer at Volkswagen Group of America, who worked as a sales executive at Hyundai Motor America until 2006, says the coordinators applied pressure to achieve targets. "If you were subpar, they would ask what you're going to do to get your numbers up," Barnes says. During some conference calls, he adds, the coordinators would speak Korean to managers in Seoul, all but shutting out the Americans.