Power Transfer Begins at Samsung
Old Guard Out; Junior Lee’s Aide Up
By Kim Yoo-chul
Staff Reporter
The Samsung Group Friday conducted a reshuffle at its top echelon affecting 25 out of 46 CEO-level officers, with 12 promoted.
With the retirement of its old guard executives, Samsung has set itself on a path of power transfer to Lee Jae-yong, the only son of former Chairman Lee Kun-hee.
Lee Jae-yong is expected to be included in next week's follow-up reshuffle affecting those below CEO-level.
"Age and performance were key factors," group Vice President Yoon Soon-bong said in a briefing at its headquarters in Seocho-dong, southern Seoul. Most of the CEOs are aged under 60.
Under the operational and management changes, the current CEO Lee Yoon-woo retains his title as vice chairman and CEO of Samsung Electronics, the flagship of the group.
Choi Gee-sung, president of the company's telecommunication division, was tapped to control the consumer products division ― television sets, mobile phones and other electronics products.
Lee and Choi, who is close to Lee Jae-yong, are to form a two-top system controlling the global electronics giant.
Over the past two years, Samsung Electronics has maintained a structure of four main divisions ― chips, liquid crystal displays, consumer electronics and cell phones.
In 2007, it combined a home appliance business with consumer electronics.
Samsung Electronics, the world's No. 1 maker of memory chips and LCD screens, is grappling with chronic oversupply and falling consumer demand, dragging down its profits from the two key units.
In the reshuffle, Samsung's two icons will be sent home packing.
Hwang Chang-gyu, who was the head of Samsung's semiconductor unit from 2000 to its most glorious years and created "Hwang's Law" in chip development, is leaving the management frontline, Yoon said.
Lee Ki-tae, who strongly contributed to Samsung's mobile phone brand having global status, is set to follow suit.
"This may be a strong signal that Samsung will put its top management priority on boosting profits under Lee Yoon-woo's leadership," said an analyst at Woori Investment & Securities.
"It is an overhaul for the future and signifies an end to the old era," said the Woori analyst.
The reshuffle also comes with cost-cutting moves. The group decided to cut the payroll of its some 1,600 executives in 59 affiliates by 10 to 20 percent.
Samsung Electronics will announce its business plan around Jan. 23 when it will announce its fourth quarter earnings. Samsung has postponed the finalization of its investment plan for some time.
Shares in Samsung Electronics rose 2.07 percent to end at 469,000 won on the nation's main bourse.
Groundwork for Jae-yong
Samsung officials downplayed wider speculation that the reshuffle was a pre-emptive measure to help Lee Jae-yong work amid good conditions when he takes the chairman position sometime in the near future.
But analysts and some Samsung officials say the restructuring is part of an effort to pave the way for Jae-yong's eventual ascent to the top, citing the promotion of Choi Gee-sung, in particular.
"Lee Yoon-woo and Choi Gee-sung hold the key. Choi is Lee Jae-yong's close confidant," said a Samsung official, explaining that the new lineup is not only young and good at marketing and financing.
Samsung became the world's top maker of TVs by shipments when Choi was in charge of that business.
Since he took control of the mobile phone business in 2007, Samsung overtook Motorola to become the world's No. 2 phone maker in the global handset market.
Under his leadership, Samsung increased its market share in the U.S. cell phone market.
Lee Jae-yong, who still holds the senior vice executive president title at Samsung Electronics, has been raising his profile by meeting with world leaders including Al Gore and Colin Powell.
Lee has been cleared of legal hurdles for his ascension to the top Samsung job.
The junior was transferred to China as part of a management shake-up after his father resigned as chairman following a conviction on breach of trust and tax evasion charges.
The conviction was upheld by an appeals court for a suspended three-year jail sentence and a 110 billion won fine. Lee is to wait for a final ruling.
