May 02, 2024

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(KT&G)

Proxy adviser Institutional Shareholder Services (ISS) has urged shareholders of KT&G, South Korea's dominant cigarette maker, to vote for a board nominee endorsed by activist fund Flashlight Capital Partners, according to the fund Friday.

Appointing a new chief executive, which would mark KT&G's first leadership change in nine years, and an outside director are two main agenda items for the company's annual shareholder meeting set for March 28.

Flashlight Capital is seen lining up with KT&G's biggest shareholder, the state-run Industrial Bank of Korea (IBK), to get their nominee on the cigarette maker's board.

"We are pleased that ISS has recognized the urgent need for shareholder-driven change at KT&G," Lee Sang-hyun, head of the Singapore-based fund, said in the statement.

Last month, a committee of KT&G nominated Bang Kyung-man, who has served in various capacities at the company since 1998, as a candidate for chief executive.

Earlier this week, IBK said it opposed the nomination of Bang as chief executive, citing falling profitability and dubious business practices during his tenure as a board member.

IBK also called for KT&G to improve its corporate governance by bolstering the independence of its board.

Both IBK and Flashlight Capital have thrown support behind former judge Sohn Dong-hwan as a new board member of KT&G. (Yonhap)