LG Chem’s strange bid to have 3 CEOs
By Kim Yoo-chul
LG Chem, South Korea’s biggest chemical firm, has decided to adopt a ``top three’’ management system in a step to grant greater management independency to its key battery and materials businesses.
Under the reorganization, two company presidents will be promoted to chief executives, while existing CEO and Vice Chairman Kim Bahn-suk will take coordinating also as CEO
LG Chem has currently three business divisions ― batteries, petrochemicals and information materials.
Park Young-key, president of the information materials unit, and Kwon Young-soo, president of the battery division will be promoted to chief executives in a reshuffle early next year, top LG officials told The Korea Times.
Park Jin-soo, president of its petrochemical unit, will retain his current position.
``LG Chairman Koo Bon-moo will name the two LG Chem presidents as CEOs to guarantee management independency in LG’s battery-related business, which the firm sees as our new growth engine,’’ a top-ranking executive said.
The executive stressed that the company has recently scrapped its plan to spin-off its battery business after criticism from institutional investors, who added LG Chem stock to their portfolios.
``The current CEO Kim Bahn-suk will step back in an advisory role and will be tasked with coordinating key decisions made by each of LG Chem’s divisions,’’ said the top executive, Wednesday.
``This new management system looks strange. But it’s the best scenario for LG to effectively push its battery-related businesses without upsetting investors,’’ said another top-ranking executive.
No battery spinoff plan
The adoption of the new management structure comes after the company scrapped its plan to separate the battery business due to heavy resistance from big investors.
``LG Chem still needs to be funded by investors. Their dumping our shares after a spin-off decision would have been a disastrous scenario because the battery business is still in its infancy,’’ said the executive.
``LG’s investor relations team received lots of complaints and there have also been moves from investors to urge stock market analysts to release a report that’s negative toward LG Chem shares if the separation plan proceeds,’’ added the executive, confirming that the firm's top management had considered such a move.
Ironically or coincidentally, leading local brokerages welcomed the decision to scrap the spin-off plan. Woori Investment, a leading local brokerage, recommended LG Chem shares and maintained a ``buy’’ position presenting 480,000 won as its target price.
LG Chem is providing lithium-ion batteries for electric vehicles to 10 major carmakers including General Motors, Ford, Renault and Hyundai-Kia.
Kim said the company is set to earn some 300 billion won from car batteries this year and added it is aiming for just under 1 trillion won next year.
The company’s car battery business has seen a turnaround from the third quarter of this year and will invest a total of 2 trillion won in its battery plants in the United States and Korea by 2013 to produce 350,000 batteries annually, according to Kim.
LG Chem shares fell by 1.23 percent to end at 320,000 won on the nation’s main bourse Wednesday, according to data from the Korea Exchange.