Samsung Group is speeding up the power succession from chairman Lee Kun-hee to his son Lee Jay-yong.
The son’s latest inheritance of the roles in two charitable foundations, Samsung Life Public Welfare Foundation and Samsung Foundation of Culture, heightened speculation about the timing of a formal succession of group leadership.
The both foundations said last week, “As Lee Jae-yong fully understands the object of the establishment of the foundations, we expect that he would well inherit and develop the management philosophy of Samsung Group.”
Analysts, however, view the transition of the roles as the start of the power succession from the sick father. Now, all eyes are fixed on how and when the father Lee’s stakes – Samsung Electronics (3.38%), Samsung Life Insurance (20.76%) and Cheil Industries (3.44%) – are inherited to the son Lee. The inheritance and corporate governance structure should be completed first for Lee Jay-yong to officially secure the group’ management rights.
Some analysts say Samsung Group would form a holding company in a bid to strengthen the dominant power of the owner family. Speculations have been high that Samsung Electronics would be divided into two – an investment company and a business company, and then the investment company will again be merged into Cheil Industries to make it “Samsung Holdings.”
Currently, Lee Jae-young has the most stakes of Cheil Industries with 23.2 percent. His sisters Hotel Shilla CEO Lee Boo-jin and chief of Cheil Industries Lee Seo-Hyun have a 7.7 percent stake each. By building a holding company, the owner family will have more voting rights in management.
Samsung has continued to deny the speculation, saying, “Building a holding company takes too much money and the process is too complicated. It does not seem easy.”
Apart from the power succession, Lee Jay-yong also needs to prove his leadership in the group. According to a survey of 29 analysts at securities firms done by local daily newspaper The Hankyoreh, Lee’s leadership performance for the last year has not been impressive. 31 percent of the respondents said the group performance has not been improved during the period and half said it was just average. Only 20.7 percent said the performance has been improved.
For what to focus on in the future, 69 percent of the respondents said Samsung should focus on the company growth, followed by social responsibility (20.7%) and building labor union (3.4%).
By Chun Go-eun
