KT&G Corporation Responds To Dissident Shareholder Letter Regarding Director Nomination Process
"We respect the views of all our shareholders and are committed to good corporate governance," said Kwak Young-Kyoon, KT&G’s Chief Executive Officer. "As part of this commitment, KT&G will continue to follow the procedures that have been established by its independent board - and that are consistent with Korean law and market practice - to protect the integrity of the director election process on behalf of all shareholders. Contrary to the assertions of the dissidents, the Company has fully complied with both the spirit and the letter of Korean law and continues to follow well-established procedures for director nominations."
Responding to the specific claims made in the dissidents’ letter andpress release, the Company explained its procedures in making nominations to its board of directors for its March 17 meeting of shareholders.
Korean law distinguishes between ordinary non-executive directors and the non-executive directors who serve on the audit committee of a company. Both the Korean Commercial Code and the Securities Transaction Act state that no single shareholder may vote in excess of 3% of the total issued and outstanding shares of the company in electing members of the company’s audit committee. No such limitation exists in connection with the election of ordinary non-executive directors. Due to such differential voting rights, the Korea Listed Companies Association suggests that the process to be used in connection with the election of non-executive directors differentiate between the election of non-executive directors in general and non-executive directors who will serve on the audit committee. The Korean securities laws are generally interpreted to mean that shareholders should pass separate resolutions for electing ordinary non-executive directors and non-executive directors who will be on the company’s audit committee, and, in fact, most of the listed companies in Korea follow this interpretation of Korean securities laws.
The Company believes that Mr. Icahn, Steel Partners and their Korean legal advisors should have been, and would probably be, well aware of KT&G’s established procedures and Korean law and market practice when they submitted their director nominations. Like any other shareholders, Mr. Icahn and Steel Partners could have submitted candidates for nomination to audit committee directorships in compliance with established procedures, but they chose not to do so. It is disingenuous of the dissidents to now blame the Company for their own decisions.
Also, contrary to the dissident’s assertions, KT&G has also fully complied with Korean laws relating to cumulative votingin the process of selecting outside directors. A shareholder who has the right to request cumulative voting must do so properly in accordance with the procedures required under Korean law. Specifically, Article 382-2 of the Korean Commercial Code states that such a request must be made after notice of the convening of an ordinary general meeting of shareholders, and until the dissidents’ February 15th letter, no such request had been made. The Company will, however, accept the dissidents’ February 15th letter to the Company as a request for cumulative voting and will comply with such request and provide for cumulative voting at the Company’s 2006 meeting of shareholders.
The Company also disputes the dissidents’ assertions that the Company’s actions in nominating directors somehow constitute a takeover defense. As explained above, shareholders can submit candidates for nomination to audit committee directorships in compliance with established procedures, and seek to fill those positions with their chosen nominees. The Company’s adherence to established Korean market practice and securities law is not a takeover defense.
Finally, the Company views director elections to be one of the most important voting decisions that shareholdersare asked to make, and it takes the utmost care to ensure that it is properly complying with established proceduresand applicable Korean law in order to protect the director election process on behalf of all shareholders. The Company urges the dissident group to act in a similar manner and to refrain from utilizing empty rhetoric and hyperbole as the director election process continues to unfold.
웹사이트: http://www.ktng.com
연락처
Joele Frank / Steve Frankel
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
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