Possibility of KT&G President's Re-election Raises Concern

According to a report by the South Korean news agency Yonhap on January 10, the possibility of KT&G's current president, Baek Bok-in, being re-elected for a fourth term has become a focal point of market attention. Since taking office in 2015, President Baek has already been re-elected twice, making him the longest-serving president since KT&G's privatization in 2002. The issue of his re-election has sparked widespread market interest and discussion.

According to reports, the reappointment process of the CEOs of South Korean telecommunications company and POSCO Group has been continuously thwarted by the largest shareholder, the National Pension Service of Korea, over the past year. Although President Baek Bok-in has not formally expressed his intention to seek reappointment, there is widespread concern in the market that a similar scenario may arise with regards to his self-reappointment. The activist fund "Flashlight Capital Partners" (FCP) in South Korea has criticized President Baek's method of appointment as a "closed voting game of words.

It is worth noting that as the third largest shareholder of KT&G Corporation, the National Pension Fund has become the focus of public attention. In addition, the position of the largest shareholder- the corporate bank, which currently holds a 6.3% stake in KT&G, has also attracted attention. This state-owned bank had previously opposed the re-election of Baek Bok In in 2018, citing concerns over the selection process for the CEO.

According to reports, during Bai Furen's tenure, KT&G's operating profit has declined from 1.46 trillion Korean won in 2016 to 1.26 trillion Korean won in 2022. Furthermore, concerns about the potential ripple effects of his potential re-election are also troubling investors regarding KT&G's future prospects.

The stock price of KT&G under President Baek Bok-in's tenure has been less than satisfactory, dropping from 104,500 Korean won at the end of 2015 to 91,500 Korean won at the end of last year, a decrease of 12.4%. This indicates a clear contrary trend to the simultaneous 35.4% increase in the South Korean composite stock price index.