Lee Jae-yong, vice chairman of Samsung Electronics and the heir apparent of Samsung Group, was named as a registered boardroom member, the company said Monday, signaling him moving one step closer to the throne.
The decision was made during a board meeting earlier in the day, Samsung said in a statement, calling it a decision that would have him more responsible for the management of the nation's largest conglomerate. Registered boardroom members at firms are obliged to take responsibility in both civil and criminal cases. The board members are also required to reveal their salary and bonuses. The nomination of Lee is subject to approval at a shareholders' meeting on Oct 27, the company said in a regulatory filing.
"As part of (realizing) responsible management, the boardroom has asked him to take the boardroom seat for a long time," the company said. "Vice Chairman Lee has decided to accept that as his Chairman Lee Kun-hee has been ill for a long time."
The company also that the junior Lee has proved himself as a qualified executive during the two-year absence of his bed-ridden father despite the deteriorating business environment.
"As a chief operating officer, Vice Chairman Lee has built an in-depth experience in overall management, and displayed his talent as an executive by leading a rebound in the company's sales and business restructuring."
Samsung boardroom members also decided to have Lee as its registered member stressing that the company is in a critical situation to push ahead with innovating corporate culture and restructuring businesses to strengthen the company's competitiveness in fast-changing IT business.
Meanwhile, Samsung Electronics, which is suffering from a recall of its latest phablet, lost more than 6 per cent in its share value Monday, dragging down Korea's benchmark stock index.
Combined with North Korea's nuclear provocation woes and higher probabilities of a US interest rate hike in September, the Kospi tumbled 2.28 per cent to 1,991.48. points.
The world's largest smartphone maker and market bellwether of Seoul's Kospi closed at 1,465,000 won, (S$1.8 million) down 6.98 per cent from the previous trading session on Friday.
The company's shares slid 10.54 per cent as soon as the market opened on the day, dragging down the stock index to 1,991.48.
The issue of the battery defect in the newest Galaxy Note 7 was expected to be well resolved as the company decided to recall all of 2.5 million phones that were pre-sold on reservations. But recommendations made by 10 governments around the world to suspend the use of the Samsung phablet are making the issue more complicated than expected.
"The issue has been graver than the company thought," said Hwang Min-seong, an analyst at Samsung Securities. "Earlier, the company was forecast to see about an 800 billion won decline in its annual earnings, but the figure could exceed 1 trillion won considering the current situation."
In August, Samsung hit a record high of 1,694,000 won on favourable prospects for the latest product and positive forecasts for its semiconductor business, drawing up the Kospi above the 2,060 mark. The index peaked to 2,073.89 during the trading last week, but made a sharp fall this week on bad news about Samsung and the North's nuke test.
"Samsung Electronics and the North Korean nuke test are the two biggest issues weighing down the Kospi," said Lee Kyung-min, an analyst at Daishin Securities. "Throughout this week, the Kospi may hover below the 2,000 mark."