Reappointment as Registered Executive Followed by Chairman Inauguration VS Promotion to Chairman as Unregistered Executive
[Asia Economy Reporter Park Sun-mi] As Samsung Electronics Vice Chairman Lee Jae-yong is expected to proceed with the promotion to chairman following the special pardon on Liberation Day, Samsung faces a deep dilemma over whether to reappoint him as a registered director. Currently an unregistered executive, Vice Chairman Lee is considered to have the best scenario of becoming a registered director through the regular shareholders' meeting in March next year before ascending to the chairman position. However, since the timing of assuming the chairman role is more urgent than the transition to a registered director, and given that many business circles have cases of chairmen serving while unregistered, Samsung is reportedly weighing the timing carefully.
On the 17th, the business community emphasized the possibility that Vice Chairman Lee, whose five-year employment restriction was lifted by the August 15 Liberation Day special pardon, could be promoted to chairman soon, serving as a central figure for Samsung. The main reason Samsung left the chairman position vacant for a long time after the late Chairman Lee Kun-hee's absence was Vice Chairman Lee's judicial risk.
Although Lee Jae-yong, who was promoted to vice chairman in the year-end personnel reshuffle of 2012, could have taken the vacant chairman position after Chairman Lee's death in October 2020, his judicial risk due to the political scandal made it difficult for him to be promoted to chairman at that time. In fact, despite being responsible for Samsung's overall management, he could not assume the chairman role because of this judicial risk.
Samsung's dilemma in pushing for Vice Chairman Lee's promotion to chairman lies in whether to maintain his status as an unregistered executive. Lee stepped down as a registered executive on October 26, 2019, after completing a three-year term. Currently, he is an unpaid unregistered executive. Until now, he could not serve as a registered executive due to being on parole.
To become a registered executive and then assume the chairman position, he would have to wait at least until the shareholders' meeting in March next year. Given Samsung's urgent need for a central figure capable of making bold decisions and organizational reforms amid global economic uncertainties, promoting him to chairman after becoming a registered executive carries the risk of slowing down Samsung's management normalization.
Therefore, if Samsung intends to promote Vice Chairman Lee to chairman after converting him to a registered executive, it would need to hold an extraordinary shareholders' meeting, as it did when appointing him as a registered director in October 2016. Since Lee's judicial risk has not been completely resolved, there is a possibility of controversy arising during the shareholders' approval process for his transition to a registered executive.
Many in the business community also question whether there is a need to rush the transition to a registered director.
They argue that it is entirely possible to be promoted to chairman even while remaining an unregistered executive. In fact, many owners in the business world hold unregistered chairman positions. SK Chairman Chey Tae-won participates in management as an unregistered chairman at key affiliates such as SK Telecom, SK Hynix, and SK Innovation, and CJ Chairman Lee Jae-hyun is also an unregistered executive. Hanwha Chairman Kim Seung-yeon is similarly active as an unregistered executive at Hanwha Corporation, Hanwha Solutions, Hanwha Construction, and others.
Especially since Samsung has set its management direction as a board-centered and professional management system, there is a possibility that Vice Chairman Lee will only hold the chairman position and be involved in major decisions outside the board. However, in this case, he may face criticism for exercising significant authority and influence in key decision-making processes while avoiding responsibility. This is because unregistered executives exercise management rights but have no legal responsibility.
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