KT&G Criticizes Major Shareholder Industrial Bank of Korea: "Only Bang Kyung-man's Opposition Causes Management Vacuum"

'Opposing Bang Gyeong-man' IBK's Rare Statement
Actively Explains Operating Profit Decline and Luxury Business Trip Controversy
"Serious Management Vacuum if Appointment Proposal Rejected"

KT&G directly criticized IBK Industrial Bank, its 'largest shareholder,' which opposed the nomination of Bang Kyung-man as the next CEO (currently Senior Vice President).

On the 13th, KT&G released a statement titled 'KT&G's Position on IBK's Public Documents' on its website. The statement publicly refuted, point by point, the 'Proxy Voting Solicitation Reference Materials' disclosed by IBK, KT&G's largest shareholder, on the 12th. KT&G argued, "The serious management vacuum that could arise if the nomination of candidate Bang is rejected may lead to damage to corporate value and harm to shareholder interests, including those of IBK. Therefore, shareholder approval is even more necessary to prevent this."

IBK requested shareholders to support the appointment of Son Dong-hwan, an outside director candidate recommended by IBK, and to oppose both the appointments of CEO Bang Kyung-man and outside director candidate Lim Min-gyu. KT&G's shareholders' meeting is scheduled for the 28th. Regarding the reasons for opposition, an IBK official stated, "Since the appointment of Senior Vice President Bang as an inside director, KT&G's operating profit has decreased by more than 20%, and there are concerns about outside directors' overseas trips that appear to be for leisure." The official added, "Given resolutions to secure friendly shares using treasury stock, serious doubts must be raised about the independence and fairness of the current board." Furthermore, "The re-nomination of KT&G's outside director candidate, who is the current chairman of the board, without sufficient explanation regarding various market criticisms, represents the politicization of outside directors and contradicts the purpose of the corporate value-up program."

In response, KT&G stated, "Since candidate Bang's appointment as an inside director, the company's consolidated operating profit has grown by 4%, excluding one-time impacts such as the Suwon real estate development project." They added, "The three core growth businesses grew by 18.9% from 2021 to 2023, and the global tobacco business, including overseas heated tobacco products, saw a 55.6% increase in operating profit in 2023 compared to 2021." This was a rebuttal to the criticism that operating profit had decreased by more than 20% since Bang became an inside director in 2021. Additionally, they noted, "While the KOSPI index fell by 11.8% during the same period, KT&G's stock price rose by 13.4%."

Regarding allegations of 'outside directors' leisure overseas trips,' KT&G explained, "Overseas trips are conducted according to company regulations, with an average annual travel cost per person of about 6.8 million KRW excluding airfare." They also stated, "The major reports in the media refer to past cases from 2012 and 2014." KT&G claims these trips are ordinary, not luxurious.

On suspicions about the method of recommending outside director candidates, KT&G clarified, "There is no involvement or influence from management, so IBK's claim of mutual appointments between outside director candidates and CEO candidates is not true." They added, "The CEO candidate recommendation process and the outside director candidate recommendation process were conducted completely separately."

Regarding KT&G's donation of treasury shares to a nonprofit public interest foundation, KT&G stated, "This has nothing to do with maintaining management control, and there have been no contributions since 2016 over the past eight years, nor are there plans to contribute treasury shares in the future." They also said, "KT&G has no rights over the treasury shares contributed to the foundation." According to the activist fund Flashlight Capital Partners (FCP), which opposes candidate Bang, KT&G has contributed to six affiliated foundations and funds over about 20 years, holding approximately 11% of friendly shares. Current CEO Baek Bok-in leads the scholarship foundation and three funds, while former CEO Min Young-jin is chairman of the welfare foundation. FCP claims that they actively exercise voting rights in management appointments through a 'prearranged game.'

This content was produced with the assistance of AI translation services.