Gov’t suspected of using IBK to meddle in privatized KT&G’s management

KT&G's headquarters in Seoul / Courtesy of KT&G

Concerns are growing over government interference in KT&G’s management, citing opposition from the Industrial Bank of Korea (IBK) to the tobacco maker’s proposal of appointing Senior Executive Vice President Bang Kyung-man as the new CEO, according to industry officials, Friday.Just a week after his nomination on Feb. 22, the state-run bank, which holds a 6.9 percent stake in KT&G, suggested a judge-turned-professor as an external director. This move was seen as a challenge to both Bang and another director nominee proposed by KT&G’s board.Additionally, IBK’s move came after it remained silent during the two-month search for KT&G’s new head.Considering KT&G’s decision to newly appoint two directors through cumulative voting, the company faces the risk of failing to give board seats to the director nominees recommended by its management.Cumulative voting allows shareholders to cast all of their ballots in favor of a single nominee for the board of directors when a company has multiple openings on its governing board.Put simply, in an election for two directors, a shareholder owning 500 shares is given 1,000 votes upfront. The shareholder can use all 1,000 votes for one candidate or split them, giving 500 votes to each of two candidates.KT&G’s opponents are expected to try to disrupt the company’s plan by casting all their votes for the candidate recommended by IBK.

In 2018, IBK, which was the second-largest shareholder, also opposed the reappointment of KT&G CEO Baek Bok-in and recommended two director candidates.At the time, foreign shareholders viewed IBK’s proposals as government intervention in the privatized company. Consequently, they sided with KT&G’s management.The National Pension Service, which was the largest shareholder, chose to stay neutral. This decision came as Institutional Shareholder Services, the world’s most influential proxy adviser, recommended shareholders vote for Baek, emphasizing fairness in the reappointment procedure.Following IBK’s unsuccessful attempt, it was revealed in May 2018 that the Ministry of Economy and Finance, the state-run bank’s largest shareholder, had written documents on its strategies to interfere in the procedure for the appointment of a KT&G CEO.Seven months later, a former finance ministry official claimed that the Moon Jae-in administration had instructed the ministry to facilitate the replacement of the KT&G CEO.IBK said its recent shareholder proposal aims to enhance KT&G’s long-term business performance and voiced hopes that an independent board will be able to represent shareholders.Morgan Stanley and Meritz Securities, however, offered positive evaluations of Bang.The U.S. investment bank said in a report that his efforts to integrate investors’ feedback into the company’s shareholder return policy should be lauded.KT&G’s unionized workers also asserted that a candidate with extensive experience at the tobacco maker should be the leader and backed the CEO nominee, who has held various management positions 카지노사이트 since joining the company in 1998.

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