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  • KT&G Names Final CEO Candidate

    KT&G Names Final CEO Candidate

    Photo: RerF

    KT&G’s CEO candidate recommendation committee has selected Kyung-man Bang, senior executive vice president of KT&G, as the final CEO candidate.

    Pending approval at the annual general meeting of shareholders in late March, Bang is set to officially assume the role and lead the company for the next three years.

    Bang was chosen following an assessment of each shortlisted candidate based on five criteria: management expertise, global acumen, strategic thinking skills, stakeholder communications and universal morality and ethical awareness.

    With a bachelor’s degree in economics from Hankuk University of Foreign Studies and an MBA from the University of New Hampshire, Bang has held various management positions since joining Korea Tobacco and Ginseng in 1998. His extensive experience includes roles such as managing director of brand management, executive managing director of global headquarters, executive managing director of strategy and planning headquarters and chief business officer.

    Bang, currently the chief operating officer, played a pivotal role in formulating the company’s mid-to-long term growth strategies. Among other achievements, he successfully launched the ESSE Change brand and expanded KT&G’s overseas market presence to over 100 countries.

    “Members [of the CEO candidate recommendation committee] have been fully committed to ensuring transparency throughout the candidate assessment process and fair competition without external interference,” said committee Chairman Myung-chul Kim in a statement.

    “I will dedicate myself wholeheartedly to ensuring that KT&G leaps forward as a ‘global top-tier’ company by leading innovation and seizing future growth opportunities,” said Bang.

  • KT&G Recognized for Sustainability

    KT&G Recognized for Sustainability

    Photo: KT&G

    KT&G has been selected as a leading company (Leadership Grade) in the climate change response and water resource management sectors by the global environmental assessment organization CDP (Carbon Disclosure Project).

    Following last year, KT&G has achieved the top grade in the Leadership category in both climate change response and water resource management. In particular, in the water resource management sector, it has risen from Leadership A- last year to the highest grade, A, with only three domestic companies in South Korea receiving an A grade out of the 100 winning companies worldwide. The climate change response sector maintained its Leadership A- grade from last year.

    KT&G established its medium-term to long-term environmental management vision, 2030 Green Impact, in 2021 and has been practicing ESG management to achieve carbon neutrality throughout its value chain. It has set greenhouse gas reduction targets contributing to limiting the rise in global temperatures to within 1.5 degrees Celsius and achieved a 7.5 percent reduction in greenhouse gas emissions from domestic and overseas facilities as of 2022 (compared to the base year of 2020). Additionally, it has enhanced the reliability and objectivity of greenhouse gas emission data by undergoing third-party verification for the emissions in its supply chain.

    In the water resource management sector, KT&G has set a goal to reduce water usage in domestic and overseas manufacturing facilities by 20 percent by 2030 compared to 2020 and is implementing measures to achieve this target. KT&G plans to systematically practice environmental management in the future through the expansion of renewable energy use, water recycling and energy efficiency enhancement.

    CDP, founded in the U.K. in 2000 as a nonprofit organization, requests environmental management information disclosure from over 23,000 companies worldwide and conducts analysis and evaluation of this information. It is also recognized as a credible sustainability assessment organization along with Morgan Stanley International.

    “We have been recognized as an excellent company by CDP for our climate change response and systematic water resource management capabilities in line with global standards,” said a KT&G representative in a statement. “We will continue to promote genuine ESG management, including leading the acceleration of the transition to a circular economy.”

  • KT&G Finalizes Second CEO Shortlist

    KT&G Finalizes Second CEO Shortlist

    Photo: brizmaker

    KT&G’s CEO candidate recommendation committee finalized the selection of candidates to be included in the second shortlist for the next CEO position. The candidates are Chul-ho Her (CEO of Korea Ginseng Corp.), Gye-hyun Kwon (former vice president of Samsung Electronics), Kyung-man Bang (senior vice president of KT&G) and Seok-joo Lee (former CEO of AK Holdings).

    In selecting the candidates, the committee assessed to what extent the qualifications and competencies of the eight candidates on the first shortlist align with the five key competency criteria required for a CEO, which include management expertise, global expertise, strategical thinking skills, stakeholder communications and universal morality and ethical awareness.

    The committee plans to conduct face-to-face interviews with each candidate on the second shortlist and name the final candidate following the committee resolution next week. The CEO will be officially appointed at the annual general meeting of shareholders in late March.

    In a press note announcing the second shortlist, KT&G reiterated its commitment to fair and transparent CEO selection process. In late 2023, shareholder Flashlight Capital Partners urged KT&G to select its next CEO in a more transparent manner.

    “The CEO candidate recommendation committee is fully committed to ensuring the transparency, fairness and objectivity throughout the candidate assessment process, adhering to the principle of maximizing the interests of all shareholders and the future value of the company,” said Myung-chul Kim, chairman of the KT&G CEO candidate recommendation committee.

    “After conducting in-depth interviews with each candidate, we will determine and announce the most suitable candidate for the next CEO position, possessing the leadership qualities necessary to drive KT&G to greater heights of a global leading company.”

  • KT&G Posts Record Revenue

    KT&G Posts Record Revenue

    KT&G posted revenue of KRW1.45 trillion ($1,09 billion) and operating profit of KRW198.6 billion in the fourth-quarter of 2023. For the full-year, the company reported record revenue of KRW5.872 trillion and operating profit of KRW 1.168 trillion.

    KT&G’s record annual revenue was driven mainly by the performance of its overseas combustibles business. The overseas combustibles business reported record annual revenue of KRW1.14 trillion. The combined annual revenue of KT&G’s three core business areas, which also include next-generation products (NGP) and health functional foods, reached KRW3.31 trillion, a 1.1 percent increase year on year.

    KT&G’s NGP business sold 8.24 billion sticks overseas and 5.71 billion sticks in South Korea, reflecting growth rates of 43 percent and 14.4 percent, respectively.

    KT&G achieved an all-time high total overseas sales volume of 61.4 billion sticks, surpassing 60 billion sticks for the first time.

    KT&G projects its annual revenue and operating profit to exceed growth rates of 10 percent and 6 percent, respectively, in 2024. It expects its consolidated year-on-year revenue growth to exceed 15 percent. Additionally, the operating profit from the core business areas is expected to grow 31.5 percent, year on year.

    “Last year was a year dedicated to the successful implementation of a business transformation strategy that focuses on the core business areas, KT&G wrote on its website. “This year, we will continue to strengthen the competitiveness of the core business areas, expand a sustainable business portfolio, and faithfully carry out the shareholder return policy.”

  • KT&G Finalizes CEO Candidates Shortlist

    KT&G Finalizes CEO Candidates Shortlist

    Photo: uaPieceofCake

    The governance committee of KT&G Corp. finalized the first shortlist of KT&G CEO candidates on Jan. 31 and recommended the finalized list to the CEO candidate recommendation committee. The first shortlist includes four external candidates and four internal candidates.

    The governance committee held eight meetings since the end of December to oversee the open recruitment for CEO candidates and conduct comprehensive assessments. Subsequently, the committee selected the first shortlist by taking into account impartial and objective opinions from the advisory panel composed of external experts.

    The CEO candidate recommendation committee will now assess the candidates from the first shortlist in order to ensure sufficient candidate validation and select the most suitable candidate for the CEO position. The committee will finalize the second shortlist of three to four individuals by mid-February and disclose the list upon its finalization.

    Then, the CEO candidate recommendation committee will conduct face-to-face interviews with the candidates on the second shortlist to thoroughly review each candidate. Following the assessment, the committee will name the final CEO candidate and report to the board of directors by the end of February. The board of directors will then table the agenda for the annual general meeting of shareholders after resolution, and the CEO will be appointed following the approval at the annual general meeting of shareholders in late March.

    The CEO candidate recommendation committee is composed entirely of outside directors, without the participation of the incumbent CEO, Bok-in Baek.

  • KT&G Implements Early Settlement Payments

    KT&G Implements Early Settlement Payments

    Image: mnimage

    KT&G is implementing early cash payments of settlement amounts to small and medium-sized partner companies to alleviate their burdens and strengthen cooperative management ahead of the Lunar New Year.

    Among the partner companies that supply raw materials, components and consumables, KT&G is expediting the payment of a total of KRW664 billion to 41 companies more than a month earlier than the regular payment date.

    To ease the financial burden on small and medium-sized partner companies, which face increased capital demands before major holidays such as Lunar New Year and Chuseok each year, KT&G has been executing early payments of settlement amounts. Last Chuseok, they made advance payments totaling KRW917 billion ($497.5 million) to support the liquidity of partner companies.

    Furthermore, KT&G is actively participating in the “Settlement Amount Linked Company” program, which reflects the increase in raw material prices in supplier payments, reducing the burden on small and medium-sized partner companies. This initiative aims to establish a cooperative trading culture and lead the way in the development of a fair market economy.

    In addition to these efforts, KT&G is operating various support systems for mutual growth, such as monthly full cash payments of settlement amounts to alleviate financial difficulties for partner companies.

    “Amidst ongoing global inflation and interest rate hikes, we decided to expedite the payment of settlement amounts to partner companies facing high capital demand ahead of the Lunar New Year,” said a KT&G representative in a statement. “We will continue to explore various support measures to realize the values of mutual growth with partners and enhance sustainability across the entire value chain.”

  • KT&G CEO Won’t Seek Reappointment

    KT&G CEO Won’t Seek Reappointment

    Baek Bok-in (Image: KT&G)

    KT&G’s governance committee on Jan. 11 finalized a longlist of CEO candidates, the company announced on its website. The list comprises 24 individuals including 14 external candidates and 10 internal candidates. The incumbent CEO, Baek Bok-in, has been excluded from the list as he has expressed his intention not to seek reappointment.

    For the external candidates, eight individuals who applied through open recruitment and six individuals recommended by search firms have all been included in the longlist. In addition, 10 internal candidates who have participated in the company’s senior management training program have also been included.

    The CEO appointment process is expected to take about three months. KT&G insists it will be conducted in a fair and transparent manner, following a three-step procedure involving the governance committee, the CEO candidate recommendation committee and approval at the general meeting of shareholders.

    Following the procedure, the governance committee plans to conduct a comprehensive assessment of the candidates who have been longlisted. The governance committee also intends to consider and weigh impartial and objective opinions from the advisory panel, composed of five external experts. The committee will finalize the first shortlist of CEO candidates by the end of this month and recommend it to the CEO candidate recommendation committee.

    Then, the CEO candidate recommendation committee will engage in a systematic and in-depth discussion regarding the candidates included in the first shortlist to form the second shortlist by mid-February. The second shortlist will be disclosed in a transparent manner upon its finalization.

    The final CEO candidate will be named by the end of February. The appointment will be subject to approval at the annual general meeting of shareholders in late March.

    The CEO candidate recommendation committee will be composed entirely of outside directors. Additionally, KT&G’s board of directors plans to propose an agenda item at the upcoming annual general meeting of shareholders to amend the articles of incorporation and make it obligatory to constitute the CEO candidate recommendation committee exclusively of outside directors, regardless of the incumbent CEO’s intentions regarding reappointment.

    Late last year, KT&G shareholder Flashlight Capital Partners urged the tobacco company to select its next CEO in a more transparent manner after expressing disappointment with the current CEO’s performance and identifying several shortcomings in the previous selection procedure.

  • KT&G Starts CEO Search

    KT&G Starts CEO Search

    Photo: Ink Drop

    KT&G Corp. has started the process for appointing its next CEO.

    To secure a wide array of qualified candidates, the external CEO candidate pool will be drawn from a combination of open recruitment and search firm recommendations. The internal CEO candidate pool will include individuals who have participated in KT&G’s senior management training program, as well as the incumbent CEO, Beak Bok-in. The governance committee will impartially assess both the external and internal pools to establish the longlist for CEO candidates.

    Then, the governance committee will institute an advisory panel comprised of external experts to bring an objective perspective into the process of selecting the shortlist for CEO candidates, thereby enhancing the impartiality of the process. KT&G plans to proactively identify and nurture both external and internal CEO candidates moving forward, under the guidance of the governance committee.

    The eligibility criteria for candidates participating in the open recruitment for the CEO position include individuals with experience in the tobacco or consumer goods industry (manufacturing or distribution business) as a representative director, or in the profit/loss management of a business unit equivalent to a company’s representative director.

    KT&G lists the following skill requirements:

    • in-depth understanding of the tobacco or consumer goods industry and management expertise, capability in driving new business initiatives and global expertise;
    • business intuition and strategic thinking skills responsive to environmental changes;
    • ability to communicate with and manage stakeholders;
    • universal morality and ethical awareness required of a CEO

    Candidate application for the open recruitment will be accepted through registered mail or e-mail by Jan. 10, 2024. Details regarding the application will be available on the KT&G website from Dec. 28, 2023.

    According to KT&G, the CEO appointment process will be conducted over approximately three months in a fair and transparent manner. The governance committee will finalize the shortlist for CEO candidates in late January by incorporating the impartial and objective opinions of the advisory panel composed of external experts, and recommend to the CEO candidate recommendation committee.

    After conducting a systematic and in-depth review of the shortlisted candidates, the CEO candidate recommendation committee will name the final CEO candidate and report to the board of directors in late February. The board of directors will then resolve the agenda for the annual general meeting of shareholders, and the CEO will be appointed following the approval at the annual general meeting of shareholders in late March.

    “We have been committed to improving our CEO appointment process, especially focusing on strengthening the transparency, impartiality and objectivity of the process,” said Lim Min-kyu, chairman of the KT&G board of directors.

    “Moving forward, we plan to conduct a comprehensive candidate selection process, taking into account the assessment and perspectives of the advisory panel comprised of external experts.”

    Earlier this month, KT&G shareholder Flashlight Capital Partners urged the tobacco company to select its next CEO in a more transparent manner, after expressing disappointment with the current CEO’s performance and identifying several shortcomings in the previous selection procedure.

    In a press note announcing the new CEO search, KT&G stressed that its governance committee is composed exclusively of outside directors. The Dec. 28 board of directors meeting, it added, was attended only by outside directors, “reinforcing the company’s commitment to ensuring independent decisionmaking of the board.”

  • KT&G Investor Urges Transparent CEO Search

    KT&G Investor Urges Transparent CEO Search

    Baek Bok-in

    Flashlight Capital Partners (FCP) is urging KT&G to select its next CEO in a more transparent manner.

    In a video published ahead of the South Korean tobacco firm’s annual general meeting in March 2024, FCP highlighted what it considered the problems during previous CEO nominations. It lamented the fact that current CEO Beak Bok-in was the only candidate, for example, and criticized the board’s unusually swift 11-day decisionmaking.

    FCP also expressed disappointment in the performance of Baek, who has held the position for three consecutive terms. Over nine years, KT&G stock fell by 19 percent while the KOSPI index rose by 26 percent, according to FCP.

    The investor questioned management’s “vain pursuit on volume” at the expense of profit, noting a 40 percent revenue growth coupled with a 17 percent decrease in operating profit. FCP pointed to such “lack of profit motive” as a primary cause for the stock’s over 50 percent discount relative to its peers.

    To address the shortcomings, Sanghyun Lee, managing partner of Flashlight Capital, suggested allowing sufficient time for a proper candidate evaluation process; considering outsiders with fast-moving consumer goods expertise; and thoroughly documenting the process for the sake of transparency.

    “The 11-day CEO nomination is unprecedented in Korea, standing out even among other former government-owned companies,” said Lee in a statement.

    In 2022, KT&G rebuffed a request by FCP to spin of its lucrative ginseng business and appoint certain outside directors.  

  • KT&G Recognized for Governance

    KT&G Recognized for Governance

    Photo: KT&G

    KT&G has been recognized as The Best in Corporate Governance at the 2023 KCGS Excellent Companies Awards Ceremony hosted by the Korea Institute of Corporate Governance and Sustainability (KCGS).

    As a leading domestic ESG evaluation agency, the KCGS annually selects and announces outstanding companies that have strived to improve their environmental, social responsibility and corporate governance. KT&G was awarded the highest prize among generally listed companies, The Best Award, in the corporate governance category, acknowledging its high-level sustainable management system.

    KT&G was praised for leading board-centric management based on the sound operations of its board. The company has enhanced its checks and oversight functions by appointing only external directors to its key committees and has maintained a 75 percent external director ratio over the past three years, thereby securing board independence. Additionally, KT&G has elevated its board’s continuous monitoring function by operating its internal audit organization directly under the board’s audit committee.

    KT&G has also been awarded an A+ in this year’s ESG integrated rating announced by the KCGS, maintaining an A grade (excellent) or higher for 13 consecutive years. KT&G has proactively adopted the Board Skills Matrix (BSM) to strengthen its “responsible, professional management system” centered on the board. The company has continued to enhance its governance structure by establishing board diversity and independence policies and formulating a group ethical charter.

    “Since its privatization, KT&G has established a transparent and independent advanced governance structure centered on external directors,” the company wrote in a statement. “We plan to strengthen further our board’s independence, expertise and diversity to establish a global top-tier level of governance.”

    The recent recognition confirms KT&G’s commitment to ESG. Since February 2021, the company has consecutively received the highest grade in its industry in the MSCI ESG evaluation. In addition, KT&G was awarded the prime minister’s commendation in the comprehensive ESG category at the 2022 Sustainable Management Merit Government Award.