Jay Y. Lee, vice chairman of Samsung Electronics Co. , will become the legal chief of South Korea’s largest conglomerate and household company, in a move to bolster confidence from outside and morale from within in the face of unprecedented challenges.
The South Korean tech giant on Monday said the board will nominate Lee as a registered member in an extraordinary shareholders meeting on October 27 in a symbolic endorsement of the 48-year-old heir of the Samsung founding family as the leader and successor of Samsung Group. He had been running the group on behalf of his father Lee Kun-hee, chairman of Samsung Electronics, bedridden for the last two years after a heart attack.
Upon endorsement, Lee will immediately assume the role of a board director, allowing him to “take a more active role in the company’s strategic decision-making.”
Korean chaebol owners and family members have refrained from registering as a board member subject to disclosure to local regulators and legal accountability for any management fallouts. His father Lee also stayed unregistered.
Industry observers note that the nomination is a public declaration that Lee will not shy away from public evaluation on his leadership and responsibility for mismanagement.
The decision comes as Samsung Electronics faces toughest test on product and quality reliability with its brand name at risk. Its most recent innovation Galaxy Note7 had to exit the market after some of the devices had faulty batteries that blew up while charging. The phone is being denied of use on flights and advised against use by the U.S. consumer protection agency.
Samsung Electronics acted proactively to the crisis and offered to stop selling and recall or refund all 2.5 million devices sold over the last month before any regulatory action.
Although Samsung Electronics did not make a direct link to the ongoing Galaxy Note7 crisis, it noted that his appointment will allow him to more actively participate and take formal responsibility as a board member in important decisions such as appointments and strategic growth initiatives including M&A deals. It will also allow Samsung Group to be more bold and quick in coping with the rapidly changing business environment.
“Lee being appointed as a board member shows that he will be taking hold of the steering wheel instead of staying in the backseat,” said Bae Sang-keun, vice chairman of Korea Economic Research Institute. “Samsung is now under a new leader,” he added.
He would make the fourth director from the management along with Kwon Oh-hyun, head of device solutions business, Yoon Boo-keun, head of consumer electronics business, and Shin Jong-kyun, head of information technology & mobile communications business. Lee will take the director post of Lee Sang-hoon, chief financial officer in charge of overall management support, who will be yielding one of the four board seats reserved for insiders in the nine-strong board structure. The others are outside directors.
The chairman’s title, however, would remain reserved for his father.
By Song Sung-hoon and Lee Seung-hoon
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]