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| Former LG Household & Health Care (LG H&H) Vice Chairman and CEO Cha Suk-yong / Courtesy of LG H&H |
By Park Jae-hyuk
Former LG Household & Health Care (LG H&H) Vice Chairman and CEO Cha Suk-yong, who stepped down late last year after leading the cosmetics and household products maker for 18 years, was recommended as a new nonexecutive director of KT&G by an activist hedge fund, which is at odds with the tobacco product maker's management over the spin-off of Korea Ginseng Corp. (KGC).
Flashlight Capital Partners (FCP) said Thursday it recommended Cha and former Prudential Life Insurance CEO Hwang Ou-jin as KT&G's new nonexecutive directors to be elected at the annual general meeting of the tobacco firm's shareholders in March. The asset manager is reportedly holding around a 1-percent stake in KT&G.
FCP CEO Lee Sang-hyun, who previously led Carlyle Group's Korean office, emphasized that both candidates are qualified to supervise KT&G's board, which has been criticized for not allowing each director to express different opinions.
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| KT&G's headquarters in Seoul / Korea Times file |
The fund manager reiterated that KGC should be independent of KT&G, claiming that the ginseng product maker has been underestimated, due to global investors being reluctant to finance tobacco product manufacturing. It also suggested that KT&G increase dividends and retire its treasury shares.
Anda Asset Management, another activist fund that has made similar requests to KT&G, said the same day that it had sent a letter to the tobacco product maker earlier this week recommending an accounting professor and a female executive from a global brand as the company's new nonexecutive directors.
The accounting professor is reportedly a former securities & futures commissioner. The female executive is said to be Louis Vuitton Korea's communication director, Kim Do-reen, who previously worked for Bausch & Lomb Korea and McKinsey & Company. Anda is also said to be holding around a 1-percent stake in KT&G.
In response, KT&G emphasized once again that it has communicated with its shareholders and listened to their reasonable opinions.
The company's management plans to announce its shareholder return policies later this month.
"We will hold the Investor Day event on Jan. 26 to tell our shareholders and market insiders about our strategies for the future and ways to enhance both shareholder and corporate value," KT&G said in a statement.
The intensifying conflict also raised KT&G's stock price, as investors expect the company to return more to its shareholders.
During the intraday trading session on Thursday, its stock price rose sharply to 94,700 won ($77) from the previous session's closing price of 92,100 won, although it ultimately closed at 94,100 won, up 2.17 percent from a day earlier.
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