Proxy advisor ISS recommends KT&G investors back activists director nominees

KT&G

16/03/2023 16:31

By Svea Herbst-Bayliss
       NEW YORK, March 16 (Reuters) - Proxy advisor
Institutional Shareholder Services (ISS) on Thursday urged
investors in Korean tobacco conglomerate KT&G  033780.KS  to
elect director candidates nominated by two activist investors
and support their proposals to return more cash to shareholders.
    KT&G, previously known as Korea Tobacco & Ginseng, is facing
pressure from Flashlight Capital and ANDA Asset Management who
are pushing the company to announce bigger dividends and
additional share buybacks, spin off the ginseng business, and
optimize its balance sheet. The two investment firms are not
working together.
    ISS said investors should elect Flashlight Capital's two
nominees Suk-Yong Cha and Ou-Jin Hwang and they should also back
Doreen Kim, one of the three candidates suggested by ANDA.
    Given "our support for the dissident's share buyback and
dividend proposals, the election of three additional directors
with relevant consumer, marketing, supply chain and capital
allocation experience is the right path forward," ISS wrote.
    ISS noted that the company's stock price has underperformed
peers and has fallen more than 10% since an investor day in
January.
    Flashlight Capital, founded by former Carlyle Group
executive Sanghyun Lee, wants the company to raise its dividend
and increase the frequency of payouts to once a quarter from
once a year, among other proposals. ANDA is also pushing the
company to increase the size of its board to 10 members from
eight.
    "Shareholders have suffered for too long," Lee said in a
statement, adding he is pleased that ISS recommended that
investors vote for all ten of his firm's proposals.
    Large investors often follow the recommendations of proxy
advisory firms including ISS and its smaller rival Glass Lewis.
First Eagle Investment Management, BlackRock and Vanguard Group
rank among KT&G's biggest investors. The meeting date is
scheduled for March 28.
    

 (Reporting by Svea Herbst-Bayliss;Editing by Elaine Hardcastle)
 ((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))