Samsung's crown prince to become registered board member

By Park Sae-jin Posted : October 27, 2016, 10:11 Updated : October 27, 2016, 10:11

[Photo by Namgung Jinwoong = timeid@]


Samsung Electronics faces a big day in its history Thursday with its vice chairman Jay Y. Lee expected to become a registered board member as the world's largest smartphone maker showed a drastic setback in its third-quarter corporate earnings.

The only son of Samsung Group's bedridden patriarch Lee Kun-hee is set to join the boardroom at a meeting of shareholders at a time when Samsung is reeling from a debacle caused by its fire-prone flagship smartphone.

The 48-year-old would become the first member of the giant group's ruling family to join the boardroom in eight years, but the title requires Jay Y. Lee to assume a heavy responsibility for mismanagement as the country's largest family-run conglomerate faces a sweeping change in its structure and corporate governance.

Samsung has raised a huge amount of money in reserve through the sale of non-core units in preparation for the transfer of leadership from the group's ailing patriarch to his son.

US activist fund Elliott Management has suggested that Samsung could use its smartphone debacle for a chance to improve corporate governance.

"We believe that the company's forthcoming new leadership can build on the company's initial response to this situation by adopting best-in-class operational and corporate governance improvements," Elliott said earlier in a statement.

Elliott has urged Samsung to split into holding and operating companies, list the operating company on the NASDAQ stock exchange, pay a special dividend and consider an equity merger with Samsung C&T.

Analysts in Seoul have floated a possible scenario that the group would be streamlined into two major sections with Samsung Life Insurance controlling financial units and Samsung Electronics spearheading nonfinancial affiliates such as Samsung SDS.

Without support from foreign shareholders who control nearly 50 percent, a corporate split is not possible.

Aju News Lim Chang-won = cwlim34@ajunews.com
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