[FOCUS] LG group put under stewardship of founder's 40-year-old offspring

By Lim Chang-won Posted : June 29, 2018, 13:57 Updated : June 29, 2018, 14:31

[Courtesy of LG Group]


SEOUL -- South Korea's fourth-largest conglomerate, LG, upheld a 40-year-old offspring of the group's founding family as virtual head of its holding company in the fourth-generation transfer of power, retaining the Confucian tradition of transferring group leadership to first sons.

LG Corp., the group's holding company,  said Friday that Koo Kwang-mo became a new board member at a meeting of shareholders to win the title of CEO, six weeks after chairman Koo Bon-moo, credited with nurturing his group into a global tech and chemical powerhouse, died at the age of 73.

Koo Kwang-mo is actually the eldest son of the late chairman's younger brother, Koo Bon-neung, but he was adopted to succeed group leadership because Koo Bon-moo had two daughters and no son. The group, founded in 1947, has retained the tradition of handing over power to the eldest son.

The late chairman was the largest shareholder of LG Corp. with 11.28 percent while Koo Kwang-mo holds 6.24 percent. Since the late chairman was hospitalized for brain surgery last year, Koo Kwang-mo has kept a relatively low profile as information display business manager at LG Electronics' B2B division.

After high school, he studied at the Rochester Institute of Technology, majoring in engineering and earning a master's in management. Koo Kwang-mo joined LG Electronics as an assistant manager of finance in 2006 and returned to the United States in 2013 to work for the American unit of LG Electronics. He was promoted to vice president in 2015.

LG describes Koo Kwang-mo as a prepared manager because he has been involved in multiple businesses to build his career. However, market watchers believe his group-wide role will not be so powerful because many top posts are filled with professional managers. There are also many offsprings working at affiliates.

"As we continue to maintain the advanced management structure of our holding company, we will maintain a responsible management system by professional managers," the group said in a statement, adding the young boos would jointly lead the holding firm with vice chairman Ha Hyun-hoi.

In a statement at Friday's board meeting, Koo Kwang-mo said he would make improvements to find new growth engines. "I will continue to build on LG's accumulated assets such as the creation of customer value, respect for humanity, and righteous management. I will do our best to build a growth base from a long-term perspective and improve those that need to be changed."

LG and other family-run business groups, known as chaebol, were once described as the engine of prosperity and credited for powering the post-war economic miracle, despite their autocratic leadership and dynastic succession practices.

However, they are now under growing pressure to enhance corporate governance, protect the interests of minority shareholders, and reduce their dominant role in South Korea's economy.

Samsung, Hyundai Motor, SK and LG, which together account would for two-thirds of assets held by South Korea's top 30 conglomerates, have been under strict surveillance since President Moon Jae-in took office in May last year with an election pledge to reform chaebol.

The liberal leader has described chaebol's unfair business practices as "old evils" that should be eradicated, revealing antagonism to their dominant role in South Korea's economy. There is widespread public sentiment against arrogant attitudes by the offsprings of conglomerate owners due to illegal activities by the family of Hanjin Group owner Cho Yang-ho.
 
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