* Elliott says plan not enough to fix 'valuation discounts'
* Elliott urges shareholders to vote against plan
* Hyundai Motor, Mobis previously announced share cancellations (Adds Hyundai exec comments in pars 2-4)
By Joyce Lee and Heekyong Yang
SEOUL, May 11 (Reuters) - U.S. activist fund Elliott Management said it will vote against Hyundai Motor Group's restructuring plan and urged other shareholders to reject the proposal to reform South Korea's second-largest conglomerate.
A Hyundai Motor Group executive responded that the proposed arrangements to simplify the automaker's complex ownership structure would not change and promised higher returns for shareholders.
"Elliott is one of many people who express their opinions," Cheong Jin-haeng, president of Hyundai Motor Group, told reporters on the sidelines of an industry event.
Measures to boost investor returns would be laid out after a meeting on May 29 where shareholders will vote on the restructuring, he added.
Elliott said in a statement late on Thursday that the restructuring plan was "based on flawed assumptions" and the conglomerate's "token measures" to buy back and cancel shares were not enough to achieve fair value for investors.
"More significant measures are needed to address the long-unresolved issues at the group that have led to significant valuation discounts and underperformance at Hyundai Mobis, Hyundai Motor and Kia," Elliott said.
Under the plan, auto-parts maker Hyundai Mobis will spin off its domestic module and after-service parts businesses and merge them with Hyundai Glovis, a logistics firm.
Elliott says it holds over 1.5 percent of common shares in Hyundai Mobis. Hyundai Motor Group Chairman Chung Mong-koo and the group's affiliates own a total 30 percent stake in Mobis, which will put the spin-off plan to a shareholder vote. The state-run National Pension Service holds a nearly 10 percent stake in Hyundai Mobis.
Elliott, which disclosed in April that it holds more than $1 billion worth of shares in three key affiliates of Hyundai Motor Group, previously called on the company to adopt a holding company strategy and appoint more independent board members.
It is Elliott's latest challenge to South Korea's powerful family-run conglomerates after it forced Samsung Electronics Co Ltd to increase shareholder returns in 2017, and comes amid a government campaign to boost investors' power in a country where shareholder activism is rare.
In 2015, Elliott narrowly lost a battle to block the merger of two Samsung Group affiliates. The deal was later implicated in a corruption scandal which led to the jailing of the country's former president and bribery charges against Samsung Group heir Jay Y. Lee, who denies any wrongdoing.
Elliott is seeking compensation from the government of no less than $670 million as part of an ongoing legal dispute over the 2015 merger, according to a letter seen by Reuters.
Hyundai Motor said in late April it would cancel $890 million worth of treasury shares, its first stock cancellation in 14 years. Hyundai Mobis said earlier this month it would cancel about 600 billion won ($562 million) in treasury shares from next year, and pay dividends in more installments.
Shares in Hyundai Motor were 0.3 percent higher, compared to the wider market's 0.5 percent rise as of 0124 GMT. Hyundai Mobis were up 1.3 percent, while Kia Motors was up 0.5 percent.
"Elliott's stakes in Hyundai Motor Group companies are known to be small. The move was expected," said Esther Yim, analyst at Samsung Securities. ($1 = 1,067.7000 won) (Reporting by Joyce Lee, Hyunjoo Jin and Heekyong Yang; Additional reporting by Dahee Kim and Ju-min Park; Editing by Stephen Coates)