(Reuters) - Hyundai Motor and two listed affiliates did not seek board clearance for the size of their record $10 billion (6.14 billion British pound) bid for a plot of land in Seoul, more than triple its appraised value, four board members of the companies told Reuters.

Thursday's winning bid for the land sent shares in Hyundai Motor, Kia Motors and Hyundai Mobis plunging, wiping out $8 billion in shareholder value, and sparked howls of protest from investors, rekindling worries about corporate governance at South Korea's conglomerates, or chaebol.

While boards of the three firms discussed and approved bidding for the plot in the capital's high-end Gangnam district to house a headquarters complex, hotel and automotive theme park, the bid price was not shared with directors as it was deemed to be confidential, three of the directors said.

The Hyundai Motor and Kia Motors boards unanimously approved making a bid for the KEPCO land, two directors said.

"The price was top secret, so it was not something we discussed at the meeting," said one, declining to be identified given the sensitivity of the matter. "The intangible benefits go beyond the appraisal price of the land."

Another director at one of the companies said its board heard and discussed information about the appraisal price of the KEPCO land and the value of nearby buildingshttp://images.intellitxt.com/ast/adTypes/icon1.png. "Hyundai has many grand ideas around the KEPCO land," he said. "I think it's worth it."

Hyundai Motor Group, headed by 76-year-old Chung Mong-koo, declined to comment on board level decision-making behind its bid, and also said it had not yet decided how the purchase price would be divided among the three companies.

"The one very core element was missing, then, during the process," said Park Yoo-kyung, a Hong Kong-based director specializing in corporate governance at Netherlands-based APG Asset Management, which manages $482 billion in pension assets and holds shares in the three Hyundai firms in the bid group.

Noting that Hyundai's statement after the bid was announced on Thursday did not mention shareholder benefits or value-creation, Park said: "That's an amazing thing. It's unbelievably negative. We are very angry."

In sealed bidding, Hyundai Motor Group won the auction by "a wide margin", said an official with the seller, state-run Korea Electric Power (KEPCO). The other bidder, Samsung Electronics, has not said how much it bid, but media reports put it in the $4-$5 billion range.


Hyundai Motor Group, the world's fifth-largest automaker, had long made clear it coveted the 79,342 square meter site, the last big piece of land available for development in the capital's prestigious southern Gangnam district.

Even before its bid, it had spoken of plans to build a landmark complex on the plot, so it had been widely expected to offer a hefty price, but its actual bid far surpassed expectations. Nomura estimated the total investment associated with land, tax, and building could reach 20 trillion won ($19.17 billion).

Hyundai, whose corporate forebears were instrumental in South Korea's breakneck industrialization decades ago, invoked national pride in its plans for the site.

"This (global business centre) will raise the brand value of the automobile industry and the country, and contribute to revitalizing the national economy by actively attracting foreigners and tourists," it said on Thursday.


Kim Sang-jo, executive director of Solidarity for Economic Reform, an advocacy organization for better corporate governance, said his group would ask the companies for minutes of their board meetings to try to determine whether there was adequate discussion.

"Hyundai made a nonsensical, reckless decision because they did not take into account shareholders," Kim said.

South Korea implemented reforms in the aftermath of the Asian financial crisis of 1997-98 to improve the performance of corporate boards, including introducing outside directors. However, worries about corporate governance in the big family-controlled groups that dominate corporate Korea continue to weigh on market valuations.

Hyundai Motor group has plenty of cash, but many investors were hoping instead for bigger dividend payouts, as well as investment in production capacity and research and development in a competitive market chasing better fuel economy and "greener" models.

A Hyundai Motor spokesman said in an email to Reuters on Friday: "There are always meetings with investors, and we are ready to fully answer questions from investors regarding this matter. We would like to say that there has been a need to construct an integrated company building for a long time."