Seoul: In a second management revamp this year aimed at speeding up decision making, South Korea’s Samsung Electronics named a new CEO and promoted Jay Y. Lee, son of former group chairman Lee Kun-hee, to the new post of chief operating officer.
Samsung, which makes up around 12% of the Seoul stock market’s capitalisation and is among the country’s leading exporters, is beefing up its management team to oversee seven divisions that will be run like separate companies.
That replaces a previous structure, only introduced in January, that managed 10 operating divisions under two principal businesses: Digital Media & Communications and Device Solutions.
Some analysts said the changes should improve management at the world’s top maker of memory chips and LCD screens, which posted record quarterly profit in the third quarter despite the global slump and is forecast to earn more than $10 billion in net profit next year.
The promotion of 41-year-old Jay Y. Lee makes him the latest among the descendents of the families that head the bulk of South Korea’s top business groups or “chaebol” to be readied to eventually take over the top job.
“I believe Samsung could make faster investment decisions under the new leadership with Choi at the top and the owner family Lee at the side,” said Lim Young-jae, researcher at state-run think-tank the Korea Development Institute.
“Major South Korean chaebol, including Samsung, are walking a thin line between transparent governance structure and fast and forward-looking decision making.”
New CEO Choi Geesung, previously head of Digital Media & Communications, said in a statement that the organisational changes were being made now “to prepare for the challenges and opportunities ahead.”
Samsung will also absorb its camera making affiliate Samsung Digital Imaging next year in a further move to improve management efficiency. One Samsung Digital share would be exchanged for 0.0577663 of Samsung Electronics stock around April, the companies said.
Japanese rival Sony Corp is undergoing a major restructuring of its sprawling operations after falling behind Apple Inc’s iPod in portable music, Nintendo Co in videogames, and Samsung in LCD TVs.
Jay Y. Lee will be part of what Samsung calls its strengthened C-Suite, where the “C” refers to top executives with ‘chief´ in their title, watching over seven business divisions operating like individual entities.
Almost as reclusive as his father, the younger Lee has long been viewed as being groomed to head the Samsung group, which includes the huge electronics firm and was founded by his grandfather in the 1930s.
Lee Kun-hee, credited with turning the chips-to-mobiles group into one of the world’s leading technology manufacturers, stepped down as Samsung Group chairman in 2008 after he was indicted over corruption allegations.
“In the broader scheme of things, the appointments further ease uncertainties about the group,” said Huh Jang, managing director, Prudential Asset Management Co Ltd. “Through Lee Jae-yong (Jay Y. Lee), former chairman Lee Kun-hee would be able to wield influence.”
Current vice chairman and CEO Lee Yoon-woo will continue as board chairman.
Samsung shares closed around 0.3% lower in a flat broader market.