SAMSUNG CRISIS DEEPENS AS CEO KWON RESIGNS
Surprise exit comes as the firm reports record $12.8-billion operating income
The chief executive officer (CEO) of Samsung Electronics is stepping down in a surprise resignation after decades at the company, saying the business needed new leadership following a bribery scandal that led to the imprisonment of its de facto chief.
Kwon Oh-hyun, who also serves as co-vice-chairman, announced his retirement on Friday as the Suwon-based company reported record operating income of 14.5 trillion won ($12.8 billion) on booming demand for displays and memory chips. He said the company faces an “unprecedented crisis” despite the financial success. Kwon, who turns 65 on Sunday, plans to stick around for six months until a successor, most likely from inside the company, is installed.
Kwon had emerged as the public face of Samsung Electronics after Jay Y Lee, grandson of the company’s founder, was detained on corruption charges and then sentenced to five years in prison in August amid a scandal that brought down South Korea’s president. While the latest financial results show Samsung’s business units operating smoothly, that in itself may present risks for Kwon, said Park Ju-gun, who tracks corporate executives at CEO-Score.
“Nobody wants to be the chief of Samsung Electronics at a time like this; it’s too risky,” said Park. “It puts that person at odds with the controlling family. Only when he is in the shadow is he playing his role properly.”
Friday’s results didn’t include net income or break out divisional performance. Final numbers are usually released two weeks later. Samsung’s shares fell about 1.5 per cent on Friday in Seoul. They have climbed about 50 per cent this year.
Kwon, a semiconductor engineer, has met with President Moon Jae-in and attended events both at home and abroad since Lee was detained in February on corruption charges. Kwon will resign from the management board in March next year when his term ends, the company said.
“As we are confronted with unprecedented crisis inside out, I believe that time has now come for the company start anew, with a new spirit and young leadership to better respond to challenges arising from the rapidly changing IT industry,” Kwon said in the statement.
Samsung has had a long tradition of stressing crisis even in good times for the business. Chairman Lee Kunhee, who transformed the company from a copycat appliance maker to a global technology leader, said in 2010 that Samsung was entering a “real crisis,” just after the company achieved record annual sales of more than 130 trillion won.
Jay Y Lee has denied any wrongdoing and is appealing his conviction.