Baek reappointed as KT&G CEO

KT&G CEO Baek Bok-in

By Park Jae-hyuk

The incumbent chief of KT&G has been re-elected to serve another three-year term as head of the nation's leading tobacco producer, despite strong opposition from the company's second-largest shareholder, the Industrial Bank of Korea (IBK).

KT&G said Friday its shareholders approved the reappointment of CEO Baek Bok-in, during a regular meeting held at its headquarters in Daejeon.

The 53-year-old has led KT&G since October 2015.

The chief executive has built up his career at the company since 1993, having been in charge of business strategies, marketing, overseas businesses, manufacturing and R&D.

He has been known for his aggressive overseas expansion into growing markets.

Under his leadership, KT&G posted 1 trillion won ($935 million) in overseas sales last year, despite unfavorable export conditions due to the global economic slowdown and a strong won.

He also pushed ahead with the launch of the company's heat-not-burn e-cigarette, lil, entering into fierce competition on the domestic market with Philip Morris' smokeless cigarette device, IQOS.

In addition to the tobacco business, KT&G's red ginseng business had over 1 trillion won in sales in 2016.

“With aggressive overseas expansion, KT&G will consolidate its position as a global enterprise. I will also maximize value for shareholders and contribute to the growth of the national economy, by establishing a balanced business portfolio with red ginseng, pharmaceuticals, cosmetics and real estate,” he said.

Observers attributed Baek's reappointment to foreign investors holding 53.16 percent of KT&G shares.

When Baek was named the only candidate last month, people expected he would serve another term without difficulties. However, the IBK holding 6.93 percent of KT&G shares decided to vote against the reappointment, citing his alleged double bookkeeping activities and an unfair nomination process.

The state-run bank also urged KT&G to appoint two more outside directors to check the existing executives.

Given that the largest shareholder National Pension Service with a 9.09 percent stake claimed to be neutral and the Institutional Shareholder Services has backed the reappointment, however, 76.26 percent voted in favor of Baek during the shareholders' meeting.

The IBK's request to increase the number of outside executives was rejected as well.

After the election, the IBK said it will cooperate with KT&G for the company's global expansion.