KT&G faces vote showdown over appointment of new CEO
KT&G shareholders are expected to have a voting showdown over the appointment of the CEO nominee later this month as the largest shareholder opposes the nominee, saying the nominee was responsible for the firm’s stagnant performance in recent years, industry officials and the company said Friday.
KT&G, once a government-owned company, has no specific owner and many small shareholders, which is similar to the stock ownership structure of steel company POSCO and telecommunications company KT.
On Feb. 22, the company named Bang Kyung-man, its senior executive vice president, as the final candidate for the CEO position. Bang, who joined KT&G in 1998, is known for leading the global expansion of the Esse Change cigarette, a popular company product, in over 100 countries by building a customized brand portfolio for each overseas market.
However, the Industrial Bank of Korea (IBK), the largest shareholder of KT&G, has reportedly decided to vote against Bang’s appointment at the shareholders’ meeting scheduled for March 28. Furthermore, Flashlight Capital Partners (FCP), an activist hedge fund, raised issues regarding the nomination process, making it uncertain whether Bang will be named the CEO at the meeting.
IBK, which holds a 6.93 percent share in KT&G, recently said there was a problem in the nominee selection process. An IBK executive added that the company’s operating profit has fallen by more than 20 percent since the CEO nominee was appointed senior executive vice president.
FCP CEO Lee Sang-hyun also revealed the content of a letter he sent to President Yoon Suk Yeol, appealing for the government’s attention to improve KT&G’s governance.
“We will do our best to make KT&G an exemplary case for large companies, so please continue to have a clear message for the people and interest in governance,” Lee said in the letter.
The National Pension Service (NPS), the third largest shareholder with a 6.31 percent stake, is also expected to decide the appointment of the CEO nominee at the shareholders’ meeting on March 28.
In response to the opposition concerning the appointment of the CEO nominee, KT&G said that the process of selecting a new CEO was conducted fairly, including receiving candidates from outside the company for the first time in 20 years, and that the CEO nominee met the qualifications that the company had set out for the new CEO.