Samsung Electronics Nominates Heir Apparent to Board as Shares Slammed
September 12 2016 - 10:00AM
Dow Jones News
SEOUL—Samsung Electronics Co. nominated Lee Jae-yong, the son of
its longtime chairman, to its board of directors as shares in the
technology titan suffered their steepest one-day decline since 2008
in the wake of a global phone recall.
The latest step in the elevation of Mr. Lee, the South Korean
company's vice chairman and heir apparent, comes more than two
years after his father, Chairman Lee Kun-hee, was hospitalized
following a heart attack. He remains incapacitated.
Samsung on Monday said the announcement wasn't related to the
crisis that has engulfed the company since it initiated a voluntary
recall of its latest smartphone, the Galaxy Note 7, earlier this
month because of a risk that the battery may catch fire.
Investors dumped Samsung shares again Monday, knocking a further
$15.9 billion off the company's market value after wiping out more
than $10 billion Friday.
Samsung shares Monday finished down 7% at 1.465 million won
($1,334) in Seoul, the largest fall since October 2008. Analysts
said Samsung's steep decline was compounded by global market
concern over a possible U.S. interest-rate increase this year as
well as declines in U.S. stocks last week.
South Korea's main Kospi share index dropped 2.3%, its biggest
one-day fall since January. "It's one thing piling on after
another," said Lee Sei-cheol, an analyst at NK Investment &
Securities.
Since the company announced the voluntary recall of more than
2.5 million smartphones on Sept. 2, it has been under pressure to
act more decisively in response to increasing reports of phones
catching fire because of faulty lithium-ion batteries. On Friday,
the U.S. Consumer Product Safety Commission and Samsung advised
users of the Galaxy Note 7 smartphone to turn off the device and
not use it. Several airlines have asked passengers not to use the
phone while flying or stow them in checked luggage.
The statement revealing Mr. Lee's nomination also came on the
day Samsung said it agreed to sell its printing business unit to HP
Inc., a deal viewed by analysts as driven by the third-generation
heir's desire to slim down the company's business portfolio and
strengthen its better-performing areas.
His nomination will be put to a shareholder vote on Oct. 27, the
company said. The addition of Mr. Lee to the company's board will
allow him to increase his involvement in business decisions such as
investments and mergers-and-acquisitions deals, a person familiar
with the matter said.
Mr. Lee, 48, became vice chairman of Samsung Electronics in 2012
after stints as chief customer officer and chief operating officer.
He is known for keeping a low profile in deference to his
father.
Lately, however, he has stepped up his public appearances,
serving as the face of Samsung in meetings with Facebook Inc. Chief
Executive Mark Zuckerberg, Google parent Alphabet Inc. CEO Larry
Page and Chinese President Xi Jinping.
Pending shareholder approval, the Harvard-educated Mr. Lee will
take the board seat currently held by Chief Financial Officer Lee
Sang-hoon to maintain the existing board membership structure,
comprising four company managers and five external independent
directors, Samsung said.
Write to Eun-Young Jeong at eun-young.jeong@wsj.com
(END) Dow Jones Newswires
September 12, 2016 09:45 ET (13:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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