Chaebol scion to take board role

Samsung Group's de facto leader and heir apparent Jay Y. Lee is poised to join the board of crown jewel Samsung Electronics.
Samsung Group's de facto leader and heir apparent Jay Y. Lee is poised to join the board of crown jewel Samsung Electronics.

SEOUL • The Samsung Group's de facto leader and heir apparent is poised to join the board of crown jewel Samsung Electronics, a step towards formalising his role as head of the conglomerate as it reels from a massive smartphone recall.

The world's top smartphone maker yesterday said 48-year-old Jay Y. Lee has been nominated as a director. He has been the key decision- maker since his father and group patriarch Lee Kun Hee was hospitalised after a May 2014 heart attack.

Samsung said it was the right time to put him on the board "to allow him to take a more active role" in strategic decision-making.

The announcement came on the same day that investors wiped off 17.5 trillion won (S$21.5 billion) from the market value of Samsung Electronics as the recall of its fire- prone Galaxy Note7 smartphones takes its toll.

Samsung Electronics yesterday also announced a US$1.05 billion (S$1.4 billion) sale of its printer business to HP, a further move in the South Korean firm's efforts to exit non-core businesses.

The younger Mr Lee was already vice-chairman of Samsung Electronics but was not on its board. Investors will vote on his nomination at an Oct 27 shareholders' meeting.

Samsung said its board of directors opted not to wait for the company's annual shareholders' meeting next year.

"By taking an official position as a member of the board of directors, Mr Lee is demonstrating his commitment to the future of the company and to delivering benefit to the company and its shareholders," the company said in a statement.

Being a director will give Mr Lee greater room to operate in managing Samsung Electronics' affairs but also put him under greater scrutiny for the firm's performance.

"He's already involved in a lot of the strategy and decisions, but it's a step that he takes a more formal, official role in the company," said a person familiar with the matter.

Analysts and investors said the younger Mr Lee taking a board seat may not immediately affect the firm's operations but was a welcome move as it signals his official role as leader and the willingness to take appropriate responsibility.

"Samsung Group appears to have decided it would not be appropriate to delay further, given that it is unlikely for chairman Lee Kun Hee to return," said economics professor Kim Sang Jo at Hansung University. "The longer this decision is delayed, the longer the absence of somebody who can take the responsibility and act in response to issues such as the Samsung C&T merger and the (Note7) recall."

REUTERS

A version of this article appeared in the print edition of The Straits Times on September 13, 2016, with the headline 'Chaebol scion to take board role'. Print Edition | Subscribe