Sam­sung share­hold­ers cheer stock gains, lament scan­dals

Com­pany did noth­ing il­le­gal, chief ex­ec­u­tive says at meet­ing.

Austin American-Statesman - - BUSINESS -

Share­hold­ers of Sam­sung Elec­tron­ics praised the com­pany Fri­day for big gains in its share price while lament­ing its in­volve­ment in a mas­sive cor­rup­tion scan­dal that brought the ar­rest of the com­pany’s de facto leader.

Kwon Oh-hyun, Sam­sung’s chief ex­ec­u­tive, told an an­nual share­hold­ers meet­ing the scan­dal was re­gret­table but the com­pany did noth­ing il­le­gal.

Five Sam­sung ex­ec­u­tives, in­clud­ing its vice chair­man and found­ing fam­ily heir ap­par­ent Lee Jae-yong, have been in­dicted on bribery and other charges.

The scan­dal re­sulted in the im­peach­ment of South Korea Pres­i­dent Park Geun-hye this month.

Calls to re­form Sam­sung and other con­glom­er­ates are gain­ing mo­men­tum af­ter Sam­sung, Hyundai, SK, LG and other ma­jor busi­nesses made big do­na­tions to foun­da­tions con­trolled by a friend of Park’s who has been charged with med­dling in state af­fairs.

Sam­sung has ma­jor op­er­a­tions in Austin. Sam­sung said in Novem­ber it plans to in­vest more than $1 bil­lion this year in its semi­con­duc­tor fa­cil­i­ties in Austin, bring­ing the to­tal in­vest­ment to $17 bil­lion at the site. Sam­sung em­ploys about 3,000 peo­ple in Cen­tral Texas.

Some share­hold­ers ex­pressed con­cern over grow­ing pub­lic hos­til­ity to Sam­sung.

The com­pany’s im­age has also taken a big hit from cases of over­heat­ing and some­times ex­plod­ing bat­ter­ies of its flag­ship Galaxy Note 7 smart­phones. Sam­sung ended up dis­con­tin­u­ing the prod­uct just weeks af­ter it was launched in Au­gust.

Shin Jong-kyun, a Sam­sung pres­i­dent, promised share­hold­ers the com­pany will put “flaw­less” prod­ucts through ex­ten­sive safety checks. The pre­cau­tions would be per­fect, he said.

Sam­sung is to un­veil the Galaxy S8 smart­phone next week, its first ma­jor smart­phone launch since the bat­tery fi­asco.

But the main fo­cus of at­ten­tion dur­ing Fri­day’s meet­ing was the scan­dal.

Some found fault with the com­pany’s apolo­gies.

One share­holder, who said he worked at the com­pany for 26 years, de­manded an ex­pla­na­tion for how Sam­sung’s board of au­di­tors, which in­cluded a for­mer na­tional chief pros­e­cu­tor, could have al­lowed cor­po­rate funds to be mis­used.

Kwon, the chief ex­ec­u­tive, de­nied Sam­sung did any­thing un­law­ful in mak­ing the do­na­tions to Park’s as­so­ciate.

“It was a do­na­tion that was tra­di­tional and cus­tom­ary,” Kwon said. “The au­dit­ing com­mit­tee found it was ex­e­cuted through nor­mal pro­ce­dures.”

Sam­sung says it will re­quire its board of di­rec­tors to ap­prove any do­na­tions of more than 1 bil­lion won ($89 mil­lion) to pre­vent fu­ture scan­dals.

A newly cre­ated com­mit­tee to im­prove the com­pany’s gov­er­nance struc­ture will be ap­pointed by next month, the com­pany said. It is still search­ing for a global busi­ness leader to join its board.

While share­hold­ers were shaken by the scan­dal and re­sult­ing dam­age to the com­pany’s im­age, many praised the com­pany for de­liv­er­ing strong re­sults over­all.

Sam­sung stock jumped more than 60 per­cent from a year ago thanks to strong per­for­mance of its semi­con­duc­tor busi­ness, which off­set the dam­age from the Note 7 bat­tery trou­bles.

“I can’t help re­joic­ing over how the value of my as­set has gone up,” said one share­holder sur­named Park.

SEONGJOON CHO/POOL PHOTO VIA AS­SO­CI­ATED PRESS

Kwon Oh-hyun, Sam­sung’s chief ex­ec­u­tive, speaks dur­ing the com­pany’s an­nual gen­eral meet­ing in Seoul, South Korea, on Fri­day.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.