Glass Lewis Recommends Shareholders Vote FOR ALL KT&G Board of Directors' Proposals for the Annual General Meeting of Shareholders

Glass Lewis supports all of the Board's proposals including dividend,acquisition and cancellation of treasury shares,and election of outside directors

SEOUL,South Korea,March 17,2023 --Glass Lewis & Co. ("Glass Lewis" or the "firm"),an independent proxy advisory firm,today recommended that KT&G Corporation("KT&G" or the "Company") (KRX:033780) shareholders vote "FOR" all of the KT&G Board of Directors(the "Board")' proposals at the upcoming 2023 Annual General Meeting of Shareholders("AGM") which is scheduled to be held on the 28th.

In its report,Glass Lewis commented,"Upon reviewing the arguments presented by ANDA Asset Management("ANDA") and Flashlight Capital Partners("FCP"),as well as the incumbent Board's response,we do not believe the dissidents have made a sufficiently compelling argument to warrant supporting their platform at this time." The firm added,"We recognize that the Board is actively returning capital to shareholders through dividends and share repurchases and is taking steps to address shareholder concerns regarding this matter by committing to review its shareholder return policy and announce a new policy this year."

Glass Lewis also noted,"We find that the incumbent Board has proposed a generally sensible dividend of KRW 5,000 per share for 2022,which is in-line with the Company's stated dividend policy." Following its analysis,Glass Lewis issued a recommendation to vote FOR the Board's proposal for cash dividend of KRW 5,000 per share. On the other hand,the firm recommended shareholders to vote AGAINST ANDA's proposal for cash dividend of KRW 7,867 and FCP's proposal for cash dividend of KRW 10,000.

Glass Lewis also recommended AGAINST amendments to the Articles of Incorporation proposed by FCP,which include amendment to and establishment of provisions on Evaluation and Compensation Committee,and addition of right to decide cancellation of treasury shares. Glass Lewis agreed with the Board's proposal to introduce a semi-annual dividend payout policy. The firm recommended AGAINST FCP's proposal to acquire and cancel the treasury shares. Regarding this matter,the firm commented,"Including share repurchases and dividends,the Company's gross payout ratios amount to approximately 95% and 93% in 2021 and 2022 respectively,which the Board notes are the highest in the country and above the payout rates of large-scale global tobacco companies."

Glass Lewis also advised shareholders to vote AGAINST ANDA's proposal to increase the number of outside directors on the Company's Board to eight from the current number of six. Instead,it recommended to vote FOR the Board's proposal to maintain the current number of outside directors. Negative recommendations were also issued against the outside director candidates nominated by the activist funds. While Glass Lewis has opposed ANDA's proposal to elect Lee Soo-hyung,Kim Doreen,and Park Jae-whan as outside directors and FCP's proposal to elect Cha Suk-yong and Hwang Ou-jin,the firm has shown support for the Board's proposal to nominate Kim Myung-chul,Koh Yoon-sung,and Im Il-soon as the Company's outside directors. Glass Lewis commented,"We find that the incumbent Board is reasonably well qualified and we do not believe the dissidents have provided sufficient evidence that their nominees would be additive to the Board or provide skills or qualifications that are not already well represented by the incumbent directors."

The firm added,"In the absence of a more compelling argument for change presented by the dissidents,we believe it would be in the interests of shareholders to reject the dissident proposals and support the incumbent Board at the 2023 AGM."

KT&G said it welcomes the recommendations issued by Glass Lewis,a leading proxy advisor,which advises to vote FOR all of the Board's proposals. The Company also shared its plans to closely communicate with its shareholders about the difficulties of approving the excessive yet short-term focused shareholder return proposals,considering that such proposals may undermine the Company's future growth potential. The Company also added that it will continue with its best efforts to further enhance all shareholders' long-term and sustainable interests and corporate value.