[New Samsung]③ "Lee Jae-yong Should Return as Registered Director to Enhance Corporate Value"

The First Step Toward Strengthening Responsible Management: Returning as a Registered Director
A 'New Samsung' Roadmap Needed Following the Spirit of National Service Through Business and the New Management Declaration
"The 'Control Tower' Should Be Institutionalized"

Experts advise that, now that Samsung Electronics Chairman Lee Jae-yong has put his legal risks behind him, he should reorganize the control tower and return as a registered board director in order to realize the vision of "New Samsung." They emphasize that he must take full responsibility at the forefront of management and lead the group in a responsible manner.

The First Step Toward Strengthening Responsible Management: Returning as a Registered Director

There have been persistent calls both inside and outside the Samsung Group for Chairman Lee, the "conductor of Samsung," to be appointed as a registered board director. In October 2016, when Samsung Electronics faced quality controversies at home and abroad due to the Galaxy Note 7 battery fire incident, Lee took on the position of registered director as part of responsible management. However, in February of the following year, he was arrested in connection with the state affairs manipulation scandal, resulting in his detention after just five months, and he effectively gave up on extending his term thereafter.

For the owner family to become a registered director means that they assume legal responsibility. Unregistered directors are not part of the board of directors, and thus are not subject to laws such as the Serious Accidents Punishment Act. Currently, among the heads of the four largest conglomerates in Korea, Chairman Lee is the only one who is not a registered director.

Cho Donggeun, Professor Emeritus of Economics at Myongji University, said on February 8, "Chairman Lee needs to strengthen responsible management that encompasses all of Samsung's businesses by returning as a registered director."

Industry insiders also agree that the top priority for Chairman Lee's official management activities is his return to the Samsung Electronics board of directors. Major Samsung affiliates plan to hold board meetings in mid-February to resolve to convene the regular shareholders' meeting in March. At Samsung Electronics, the terms of some outside directors, such as Kim Jonghoon, Chairman of Kiswe Mobile, and Kim Sunwook, former President of Ewha Womans University, will expire this year. With a reshuffle of the board inevitable, it is expected that Chairman Lee will be named as an inside registered director.

A professor who requested anonymity pointed out, "Responsible management is not only for the benefit of Samsung as a company, but is also a matter of course from the perspective of ordinary shareholders," adding, "He should return as a registered director and focus on increasing corporate value."

A 'New Samsung' Roadmap Needed Following the Spirit of National Service Through Business and the New Management Declaration

There are also opinions that Samsung should present its future vision-the so-called "New Samsung" roadmap-to employees, shareholders, and the public.

In the past, founder Lee Byung-chul led Samsung with the belief of "contributing to the nation through business," while the late Chairman Lee Kun-hee laid the foundation for a world-class company with his "New Management Declaration." Chairman Lee Jae-yong has been leading "New Samsung," inheriting and developing the management philosophies of his predecessors. However, since his promotion to chairman in 2022, rather than presenting grand visions, he has focused on hands-on management, actively visiting sites at home and abroad as a way of delivering his message.

However, experts point out that a clear vision for the future direction of the vast Samsung Group is essential. Hwang Yongshik, Professor of Business Administration at Sejong University, stated, "Now is the time for him to take full command of Samsung," adding, "A roadmap is needed to demonstrate leadership, not only for investment and M&A tasks, but also because there are many pressing issues in businesses such as semiconductors and smartphones."

"The 'Control Tower' Should Be Institutionalized"

There are also calls for a group-level control tower to focus on future new businesses, in line with the need for M&As. All leading global companies have organizations that coordinate group-wide, long-term projects.

Samsung's control tower organization, which operated under various names such as the Secretariat and the Future Strategy Office, was in place for 58 years before being dismantled in February 2017. Since then, Samsung has operated business support task forces (TFs) for electronics affiliates, a financial competitiveness enhancement TF centered on Samsung Life Insurance, and an EPC (engineering, procurement, and construction) competitiveness enhancement TF at Samsung C&T, but these have been criticized as insufficient.

Professor Cho emphasized, "The current control tower in the form of TFs should not be kept as a temporary measure but should be institutionalized as a formal organization to enhance business continuity and accountability."

He cited the example of General Motors (GM) in the United States, saying, "Whenever an issue arose, they would create a committee to make decisions and then disband it, but this process sometimes led to avoidance of responsibility and business difficulties." He added, "For Samsung to have a future vision for the entire group, there needs to be an organized consultative body."

Lee Chanhee, Chairman of the Samsung Compliance Committee, which oversees compliance management at Samsung Group, has also mentioned the need for a control tower. He remarked, "A small sailboat doesn't need a control tower, but Samsung is an enormous aircraft carrier. Unless many organizations are completely separated, the absence of a control tower will cause problems in terms of efficiency and unity." It is expected that the third Compliance Committee will also review the reconstruction of the control tower.