NPS to vote in favor of KT&G CEO candidate Bang

South Korea’s National Pension Service (NPS), the world’s third-largest pension fund, is slated to vote in favor of the KT&G Corp. board’s nomination of Bang Kyung-man as the next chief executive officer, investment banking sources said on Thursday.

The pension scheme’s Special Committee on Responsible Investment and Governance decided on Thursday to support the nomination of Bang, the current chief operating officer of KT&G, at the general shareholder’s meeting on March 28.

NPS is also set to vote in favor of the nomination of Son Dong-hwan as an outside director of KT&G.

Son, a law professor at Sungkyunkwan University, has been recommended by the state-run Industrial Bank of Korea (IBK) which was the tobacco maker’s largest shareholder with a 7.11% stake as of Dec. 31, 2023.

IBK said last week that it vetoed the KT&G board’s nomination of Bang, adding that during his term as COO, KT&G’s operating profit declined more than 20% and there had been issues of outside directors’ overseas trips more focused on tourism than business. 

The bank’s decision aligns with Singapore-based investment firm Flashlight Capital Partners Pte., which has led shareholder activism against KT&G since 2022. Global proxy advisor Institutional Shareholder Services Inc. (ISS) has also recommended stakeholders vote against the nomination of Bang.

NPS’ decision has raised the possibility of Bang taking the CEO position. The pension fund owned a 6.64% stake in KT&G as of Dec. 31, 2023.

The stakeholders at the meeting on March 28 will be allowed to give multiple votes to a single candidate, without distinguishing between inside and outside directors.

The two who receive the most votes among the three candidates, Bang, Son and Lim Min-kyu, for KT&G’s current board chair and outside director, will be elected.

Separately, NPS supported Kumho Petrochemical Co.'s proposals up for vote at the firm’s general shareholders meeting on Friday. All proposals by Seoul-based activist fund Tcha Partners Asset Management were defeated.

Tcha has demanded that Kumho cancel all its treasury shares and recommended Kim Kyung-ho, KB Financial Group Inc. board chair, as an outside director.

Kumho partially accepted Tcha’s proposals and pledged it will retire half its treasury shares over the next three years. The company has recently retired about 17% of its treasuries.   

Write to Byeong-Hwa Ryu and Hun-Hyoung Ha at hwahwa@hankyung.com

Jihyun Kim edited this article.