6120 Company Shares Granted... About 553 Million KRW
Partial Receipt of 3-Year Long-Term Performance Bonus
Purpose to Strengthen Responsible Management... Board Resolution
Nomination Committee Narrows Next CEO Candidates to 4
Baek Bok-in, CEO of KT&G whose term expires next month, has secured approximately 500 million KRW in performance bonuses through company stocks.
According to industry sources on the 19th, KT&G recently announced through a public disclosure that it will dispose of treasury shares to pay part of the CEO's performance bonus. The disposal target is 6,120 common shares, priced at 90,400 KRW per share based on the closing price on the 13th. Converted into an amount, this totals 553,248,000 KRW.
KT&G pays long-term performance bonuses every three years during the CEO’s term based on the results of long-term management evaluations for inside directors, according to the compensation payment standards. Baek, who was appointed as KT&G’s CEO in October 2015 and has served three consecutive terms, previously received long-term performance bonuses twice. He received 1.212 billion KRW as a long-term performance bonus at the end of his first term in 2018, and 1.142 billion KRW was paid during his second term in 2021.
This is the first time that part of the long-term performance bonus is paid using company stocks, coinciding with his third term. A KT&G official explained, "Three years ago, the board of directors resolved to pay part of the long-term performance bonus through treasury shares to strengthen the CEO’s responsible management," adding, "Accordingly, part of the total performance bonus is replaced with stocks." The total amount of long-term performance bonuses Baek will receive, including company stocks, is expected to be around 1 billion KRW, similar to the previous two times. KT&G achieved record-high consolidated sales of 5.8724 trillion KRW last year, while operating profit was 1.1679 trillion KRW, down 7.9% from the previous year.
Baek is a KT&G public recruitment alumnus and the longest-serving professional CEO, leading the company for nine years. During his tenure, he signed a 15-year long-term contract with global tobacco company PMI to enhance competitiveness in the electronic cigarette (NGP) business, strengthened overseas operations, and increased sales. Although it was widely expected that he would seek a fourth term, he conveyed his intention to step down at the end of this term through last month’s board meeting, stating, "It is time for new leadership for KT&G’s leap to a global top-tier company and transformation."
KT&G is currently shortlisting candidates for the next CEO. On the 16th, the KT&G CEO Candidate Recommendation Committee (CRC) narrowed down four internal and external candidates to the second shortlist: former Samsung Electronics Vice President Kwon Gye-hyun, KT&G Senior Vice President Bang Kyung-man, former AK Holdings CEO Lee Seok-joo, and KGC Ginseng Corporation CEO Heo Cheol-ho (in alphabetical order). The CRC will conduct intensive face-to-face in-depth interviews with these candidates and plans to finalize and announce the final candidate within this month. The next CEO will be officially decided at KT&G’s regular shareholders’ meeting next month.
Kim Myung-chul, Chairman of the CEO Candidate Recommendation Committee, said, "The CRC is doing its best to ensure transparency, fairness, and objectivity in the screening process under the principle of maximizing the interests of all shareholders and the company’s future value," adding, "We will conduct in-depth interviews and select and announce the most suitable candidate with leadership to lead KT&G to a higher level as a global leading company."
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