[New Business World 3rd and 4th Generation] ④ 'Hong' Takes Full Control of Management... GS Starts Long-Term Succession Race

Turning Point in Core Businesses like Energy and Construction
New Business Development and 4th Generation Succession Intertwined
Family Management with Shared Shares... Succession Remains Uncertain

"Customers, Field, Future."

The three points emphasized by Heo Tae-soo, Chairman of GS Group, who carried out the largest executive reshuffle since the group's founding, are these. As the core three business sectors?'Energy, Construction, and Distribution'?are all passing through turning points, the message was that survival requires "rapid change." The recent group-level efforts to invest in venture companies and foster startups also reflect the urgent need for new growth engines. At this juncture, combined with the '4th generation management,' GS Group is facing change.

All major affiliates of GS Group faced significant challenges this year. The refining business (GS Caltex) is threatened in terms of sustainability amid the global decarbonization trend. Since last year, it has operated the olefin production facility (MFC) to secure an additional 'cash cow' in petrochemicals, but a new business model suitable for the carbon-neutral era is needed. This is why they are hastening entry into eco-friendly bio and biofuel businesses. Leading this effort is '4th generation' Heo Se-hong, CEO of GS Caltex.

Heo, who joined GS Caltex in 2007, became CEO in 2019 after 12 years, actively engaging in management as the most vigorous among the 4th generation. Known for his management philosophy of "finding answers on-site," he frequently visits factories and actively communicates with employees. His father, Heo Dong-soo, Honorary Chairman of GS Caltex, was also well known for emphasizing on-site management during his active career.

GS Construction had its worst year due to a defective construction scandal. Although the affected apartment was demolished and completely rebuilt to resolve the issue, the stigma of 'Sunsal Xi' remained. '4th generation' CEO Heo Yoon-hong volunteered to play the role of a 'relief pitcher' to confront the crisis head-on.

At his first public appearance after taking office, he attended an apartment compensation meeting and directly apologized to the prospective residents, saying, "We will do our best to become a safe, sturdy, and livable brand." Heo is the son of Heo Chang-soo, Honorary Chairman of GS Group, and built his career by joining GS Construction in 2005 after working at GS Caltex.

[Image source=Yonhap News]

GS Retail has grown into a large distribution company encompassing convenience stores, supermarkets, hotels, and home shopping merged in 2021. However, a new strategy is needed to compete with e-commerce. Vice President Heo Seo-hong, who led the discovery of new growth engines as head of the Future Business Team at GS Corporation, moved to become head of the GS Retail Management Strategy Service Unit, overseeing the management support headquarters, strategy, and new business divisions to seek solutions.

Heo, eldest son of Heo Kwang-soo, Chairman of Samyang International, joined GS Energy and mainly held key future business positions at the holding company GS Corporation. It is reported that he has been given a special mission to accelerate new business initiatives amid fierce competition between online and offline distribution companies. Heo is the eldest son of Heo Kwang-soo, Chairman of Samyang International, and a fifth cousin of Chairman Heo Tae-soo.

Other 4th generation members are also beginning full-scale management activities. Heo Cheol-hong, Executive Director of GS M-Biz, a comprehensive automobile service company, was promoted to Vice President. Heo is the eldest son of Heo Jeong-soo, Chairman of GS Neotek, who is the younger brother of Honorary Chairman Heo Chang-soo and elder brother of current Chairman Heo Tae-soo. Heo Ju-hong, Executive Director of GS Caltex and eldest son of GS Construction Senior Advisor Heo Myung-soo, and Heo Chi-hong, Executive Director of GS Retail and eldest son of GS Caltex Chairman Heo Jin-soo, were also promoted to Executive Director.

GS Group, which separated from LG Group in 2004, will celebrate its 20th anniversary next year. Following the founding Honorary Chairman Heo Chang-soo, his younger brother Heo Tae-soo has led the group since 2020. A distinctive feature of GS Group compared to other groups is that family members share the shares of the holding company GS Corporation little by little and jointly manage the group by consensus. The largest shareholder of GS Corporation is Heo Yong-soo, CEO of GS Energy, with only a 5.26% stake. Chairman Heo Chang-soo holds 4.75%, and Chairman Heo Tae-soo holds only 2.12%.

From the business community's perspective, succession to the 4th generation has not yet been concretized within the family management system. The differences in shareholding ratios are also minimal. Heo Jun-hong, CEO of Samyang Tongsang, holds 3.22%, Heo Se-hong holds 2.37%, and Vice President Heo Seo-hong holds 2.15%. CEO Heo Yoon-hong (0.53%), Vice President Heo Cheol-hong (1.37%), Executive Director Heo Ju-hong (0.77%), and Executive Director Heo Chi-hong (0.83%) each hold just over 1%.