KT&G shareholders oppose CEO reappointment, call for reform of executive selection process

Flashlight Capital Partners (FCP) has called for improvements to the selection process for the president of KT&G, opposed the reappointment of the current CEO, and pointed to KT&G’s falling share price and declining operating profit. FCP argues that the principles for selecting a new president should be fairness, impartiality, and transparency.

According to a December 7 report by South Korea’s Naver, KT&G shareholder Flashlight Capital Partners (FCP) sent an open letter to KT&G’s board of directors, strongly opposing the reappointment of current president Paek Bok-in and calling on the company to reform its executive selection process.

According to FCP, represented by Lee Sang-hyun, since Paek Bok-in became president in 2015, KT&G’s sales have continued to grow over the past nine years, but its operating profit has been declining. During the same period, the company’s share price has also continued to fall, and its financial performance has lagged far behind that of its industry competitors.

According to financial media reports, although President Paek Bok-in has been responsible for KT&G’s sales growth, the widening gap in operating profit margins compared with industry peers and the continued decline in the share price have led FCP to criticize his ongoing deterioration in performance. As a result, FCP opposes his reappointment and has proposed new principles for selecting a president based on fairness, impartiality, and transparency.

Lee Sang-hyun believes that KT&G’s president candidate pool should be opened to external candidates, and that the board should actively seek out and recruit professional managers from the global fast-moving consumer goods (FMCG) sector.