Samsung Vice Chairman Lee Jae-yong is seen entering the Seoul Central District Court to attend a court session on Thursday. (Yonhap)
Samsung is envisioning a change in governance structure as a presidential pardon has virtually normalized de facto leader Lee Jae-yong’s control over the nation’s largest conglomerate.
Lee Chan-hee, chief of Samsung’s independent compliance oversight committee, told the press before the committee’s regular meeting Tuesday that it is “working to address the corporate governance issue” of Samsung, while declining to elaborate further on the proceedings.
“We will share (our proposal to Samsung) over the governance changes when we make tangible progress,” he said.
Tuesday‘s meeting by the committee, founded in February 2020, was the first of its kind since Vice Chairman Lee was granted a clemency Monday that cleared him of a bribery conviction to ex-president Park Geun-hye and the resulting restrictions to reenter Samsung’s boardroom.
Effective Monday, the pardon also opened the doors for Lee to be promoted to Chairman. Lee has held the “Vice Chairman” title for a decade.
The question is how the family-owned conglomerate would manage to complete a family succession with Lee assuming the leadership role, in part by introducing a holding company that controls Samsung affiliates, including the conglomerate’s crown jewel Samsung Electronics.
Lee is the biggest single shareholder of Samsung C&T, holding about 18 percent of voting rights in what is perceived as the company at the apex of the group’s corporate governance structure.
Samsung C&T is one of the largest shareholders of Samsung Life Insurance with about a 20 percent stake, along with Lee, who owns some 10 percent of stocks. In the meantime, Samsung Life Insurance holds the biggest stake in chips-to-consumer electronics giant Samsung Electronics, with Samsung C&T being the second.
Lee‘s control over the group partly stems from a stock inheritance in April 2021 to Lee from late Samsung Chairman Lee Kun-hee, who passed away in October 2020.
While the inheritance having already taken place, the group was at a crossroads over a full-fledged governance structure overhaul involving Samsung C&T, Samsung Electronics and Samsung Life Insurance. The three companies, which run respective “task forces” that effectively took the place of the controversial groupwide decision-making body Future Strategy Office, requested that Boston Consulting Group advise the governance overhaul. Lee of the compliance committee said the advice has yet to finalize.
In addition, Samsung’s Lee is reportedly scheduled to hold talks with the chief of compliance committee Lee. Samsung Electronics declined to comment on the matter.
Samsung has put an end to a cross-shareholding structure that had virtually allowed the founding family to exert influence over the entire Samsung group in 2018 without controlling shares, three years after construction-to-trading arm Samsung C&T merged with textiles, chemicals and electronic chemical materials firm Cheil Industries.
Should Lee take control of the group with the succession plan, he is expected to be the last founding family member to be in the Samsung boardroom. Lee declared an end to family ownership of Samsung in May 2020, and pledged not to let any of his siblings assume a management role in the company.
Other hurdles for the succession plan include the government’s revision of the Insurance Business Act, proposed in 2020, which might force Samsung Life Insurance to hold no larger than a 3 percent stake in Samsung Electronics. Currently, Samsung Life Insurance owns an 8.5 percent stake in the tech giant.
Moreover, the pardon granted to Lee has not fully removed the legal risk on him, as a trial is ongoing on a weekly basis at the district court over Lee‘s alleged influence on Samsung’s groupwide push to merge Samsung C&T and Cheil Industries.
Meanwhile, attention is also being paid to where Lee‘s upcoming overseas travel destination will be, with the groundbreaking ceremony of a semiconductor chip manufacturing plant in Taylor, Texas later this year being a strong candidate as a place to declare his comeback.
By Son Ji-hyoung (firstname.lastname@example.org)