Commentary

Three New Co-CEOs Named To Lead Samsung Even As Profits Soar

With its former vice chairman convicted of bribing South Korea’s former president and its chairman in a coma for more than three years, Samsung yesterday announced both record profits and a total reboot of the CEO position, which will continue to be shared by three men.

Kim Ki-nam, 59, Kim Hyun-suk, 56, and Koh Dong-jin, 56, were named to succeed retiring vice chairman Kwon Oh-hyun, 65, and presidents Yoon Boo-keun, 64, and Shin Jong-kyun, 61, as heads of the company's device solutions, consumer electronics and IT and mobile divisions, respectively, in what CNET’s Steven Musil and Shara Tibken characterize as a “surprise move.”

The shake-up came hours after the firm reported quarterly profits — driven by strong memory chip and smartphone sales — had nearly tripled to 11.2 trillion won ($10 billion) from a year ago, the BBC reports

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Indeed, the appointments “come amid a robust recovery for Samsung, which has been stung in recent years by an expensive and embarrassing recall of its Galaxy Note 7 and saturation of the global smartphone market,” Musil and Tibken observe. But “…  some market watchers say it has been too slow to adapt to new technologies like artificial intelligence and augmented reality. It also faces tougher competition from Apple in the market for premium mobile devices, as well as other upcoming Chinese vendors like Huawei.” 

And they also “come as Samsung grapples with a leadership crisis. Its chairman is incapacitated, de facto leader Lee Jae-yong is in prison and the conglomerate’s powerful strategy group has been disbanded,” report Eun-Young Jeongand and Timothy W. Martin for the Wall Street Journal, who point out that Lee is appealing the decision to the Seoul High Court.

“Lee was sentenced to five years in prison for bribery and perjury in August for overseeing payments linked to South Korea’s former president in exchange for political favors. The son of Samsung’s chairman Lee Kun-hee, he has assumed control after his father suffered a heart attack in 2014,” James Titcomb reminds us in The Telegraph. “Samsung Electronics is the most profitable and powerful arm of the wider Samsung conglomerate, which includes interests in healthcare, property and financial services,” he adds.

“In addition to the personnel shake-up, Samsung said it plans to separate the roles of board chairman and CEO for the first time. Both roles were previously held by Kwon … whose surprise resignation this month triggered Tuesday’s shuffle,” Eun-Young and Martin write.

All of the new co-CEOs are insiders. The moves are effective immediately.

“Kim Ki-nam was already responsible for Samsung Electronics' overall semiconductor business, and variously in the past ran the memory division and was CEO of Samsung Display. Samsung describes Kim Hyun-suk as an expert in display technology, having helped lead the company to dominance in the global TV market. Koh Dong-jin was formerly the head of mobile R&D and took over from Shin as mobile leader in 2015,” Sam Byford writes for The Verge.

“The next generation of leaders are well suited to accelerate the pace of innovation and address the demands of the connected world,” says Kwon in the release announcing the moves. He cited the need for new leadership amid “unprecedented crisis” in his resignation last month. 

“Mark Newman, an analyst who covers Samsung at Sanford C. Bernstein, says the reshuffle was spurred in part by Samsung’s desire to show the Korean establishment it’s ‘cleaning up its act’ after its involvement in South Korea’s corruption scandal was discovered. It also will inject younger blood into upper management — ever slight the actual age differences might be. But it won’t lead to a major shift in direction for Samsung,” writes Josh Horwitz for Quartz.

“I don’t think much will change. It’s a very well-run company … and they’re just having a bit of an internal reshuffle, which seems probably quite healthy,” Newman tells Horwitz.

Sanjeev Rana, an analyst at CLSA, agrees that the status quo will be maintained.

“These are not newcomers — they were presidents effectively running their business units,” Rana tells the Financial Times’s Song Jung-a. “They should’ve picked younger people if they wanted a bigger shake-up, but there are limits to this. Samsung is a Korean legacy company where seniority matters. Shock therapy doesn’t work in Korea. Change is always gradual.”

 
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