Samsung heir coming to fore in management
By Kim Tae-gyu
Lee Jae-yong, vice chairman of Samsung Electronics
The recent Galaxy Note 7 crisis will prompt Samsung Electronics Vice Chairman Lee Jae-yong to end his quiet and low-key stance and come to the fore in running the group, analysts said Wednesday.
Adding to such expectations is that the 48-year-old Samsung Group heir would win a board seat as a registered executive of the tech giant at a shareholders’ meeting slated for Oct. 27.
As his father, Chairman Lee Kun-hee, has remained incapacitated since a heart attack midway through 2014, Vice Chairman Lee has led the country’s foremost company but has not come forth formally.
“Vice Chairman Lee would not stay in the background anymore. He is likely to take the driver’s seat to deal with the aftermath of the Note 7 blunder,” said Cho Yun-nam, a chief researcher at Daishin Securities.
“The shareholders’ meeting would provide momentum because thereafter he will have to take legal responsibility for the management of Samsung Electronics.”
Earlier this month, Samsung opted to pull the plug on its jumbo smartphone Galaxy Note 7 due to continued reports of the flagship device catching fire while charging.
The unprecedented decision, made less than two months after the introduction of the gadget, is feared to cost Samsung billions of dollars.
IBK Securities research head Lee Jong-woo likened Vice Chairman Lee’s current situation to 1993 when Chairman Lee emerged at the fore to deal with Samsung product quality problems.
After his inauguration in late 1987, Chairman Lee waited almost five years to spearhead the famous new management campaign in 1993 incorporating the quality-first mindset into the group.
Back then, he famously urged employees to “Change everything except your wife and kids.”
“The senior Lee waited five years to come to the fore but the junior Lee does not have the luxury to wait so long because changes are happening so fast now compared to the early 1990s,” Lee said.
To complicate things further, Elliott Management this month urged Samsung Electronics to split in two to improve its “unnecessarily complex” ownership structure, which the hedge fund claimed undermines the firm’s values.
The U.S. fund, which has a 0.62 percent stake in Samsung Electronics, is predicted to bring up the issue when shareholders convene later this month.
“The Galaxy Note 7 recall and other issues put Vice Chairman Lee to the test. I think it is a good option for Lee to speak to the public himself about them,” said Prof. Lee Phil-sang of Seoul National University.
The third-generation Samsung executive had an official press conference only once last year to apologize for the outbreak of the Middle East Respiratory Syndrome (MERS).
Samsung Group’s affiliate, Samsung Medical Center, was accused of being responsible for the disease’s fast spread to many patients at the large-sized hospital.