Flashlight Capital Partners Pte. Ltd (“Flashlight Capital”), a shareholder of KT&G Corporation (KRX: 033780) (“KT&G” or the “Company”), issued an official statement regarding KT&G’s announcement of new CEO nomination process on December 28, 2023. KT&G’s announcement came after Flashlight Capital urged a fair and transparent CEO nomination process in its letter to the KT&G Board of Directors on December 1.

“KT&G says the new process comprises three steps – Governance Committee, President Candidate Recommendation Committee, and Board of Directors – but these entities essentially consist of the same group of people,” commented Sanghyun Lee, Managing Partner of Flashlight Capital.

Lee highlighted two more peculiarities. Firstly, the Governance Committee will incorporate “objective comments” from the external experts to shortlist candidates. Then, the President Candidate Recommendation Committee, which overlaps with Governance Committee, will choose the final candidate. “It’s a paradox – if the Governance Committee admits its lack of objectivity, how are the same group of people entitled to pick the finalist?” questioned Lee.

Additionally, Lee pointed out that, among three former government-owned companies, KT&G is the only one that does not encourage shareholders to suggest CEO candidates. “Unlike KT and Posco, KT&G suffered significant decline in both stock price and operating profit. The fear is understandable,” Lee commented.

Flashlight Capital also asked a question to NPS, one of KT&G’s top 3 shareholders. “NPS is concerned with Posco CEO’s re-election process despite 50% stock price appreciation under the current CEO. What about KT&G whose stock price declined by 20%?”

About Flashlight Capital

Flashlight Capital Partners Pte. Ltd is an investment management firm founded by the Carlyle Group’s former Head of Korea, Sanghyun Lee. Flashlight Capital is dedicated to strengthening corporate governance and enacting transformative change to its portfolio companies. For more information about Flashlight Capital, please visit www.FlashlightCap.com and YouTube channel (https://www.youtube.com/watch?v=21Uk4bg3tgM).

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