Samsung Group Allows
Each Unit Independence

Disbands the group's Strategic Planning Office

Samsung Business Group announced that it has decided to disband the Strategic Planning Office, a powerful decision-making body under the control of former chairman Lee Kun-hee, by the end of June and to replace it with the council of CEOs in July.
Two new committees -- the investment coordination committee and the corporate brand committee -- will be formed under the umbrella of the council of CEOs.
The nation's largest conglomerate convened the group's last CEOs'meeting and approved follow-up measures for the Samsung Group's management reforms at the group's headquarters in Taepyeongro in downtown Seoul on June 25.
A ranking Samsung official said, "The latest measures cap a 10-point package of reform plans except for the time-consuming improvement of governance, an issue concerning outside directors, and the handling of properties under borrowed names. Chairman Lee Kun-hee stepped down from his official titles as Samsung announced the reform package.
Under the follow-up measures, each of the group's 70 units will launch a new management experiment of deciding its own form of management, an unprecedented move in its 70-year corporate history. Starting July 1, each subsidiary will independently decide on all specifics, including investments and personnel, but only the council of CEOs will coordinate the duplication of work and investments.
In particular, the work on the implementation of new business projects will be coordinated by the investment coordination committee, to be headed by Samsung Electronics CEO Lee Yoon-woo.
The newly-inaugurated brand management committee, to be headed by President Lee Soon-dong, will be responsible for keeping Samsung's brand unified, enhancing its corporate value.
Executive Director Kim Jong-jung will head the work support office, which will be set up under the control of the council of CEOs with the goal of providing administrative support to the council and serve as its external window. Executive Director Kim Tae-ho will be in charge of public relations for the work support office, while managing director Kim Wan-pyo will take charge of such external affairs as social volunteering activities.
Vice Chairman Lee Hak-soo, former chief of the Strategic Planning Office, and President Kim In-joo, chief of the Strategic Support Team, have resigned from management positions and are to be an advisor and a consultant of Samsung Electronics, respectively.
Chairman Lee not only tendered his resignation as the chief executive officer of Samsung Electronics and a registered directorship of the electronics company on April 28, but also quit his position as a staff member. He retains his title of largest shareholder.
It is noteworthy that mainstay units will take the initiative in making decisions in the same business areas when work is necessary to be rearranged for the purpose of synergetic effects. As a result, Samsung Electronics and Samsung Life will play leading roles as coordinating duplicated investments and in consideration of synergetic effects, Samsung officials said.
In the past, the Strategic Planning Office wielded power in the reshuffle of CEOs and deputy-level officials of subsidiaries, but from now on, the board of directors of each unit will have the final say on the personnel management of the CEO before any decisions will be submitted to the shareholders'meeting for approval.
Some authorities say the new management system will not cause any problems, taking into account how Lee Kun-hee has so far fared well in managing the group without posting himself at the forefront.
Others say that the new system could have a negative impact on the management of the group, making it a potential M&A target, as the conglomerate might fall into crisis unless it is managed in a unified and fast manner as it had in the past. They base their negative views on the fact that the council of CEOs, not a decision-making body, could not ensure speedy management with a short decision-making process, considered to be the biggest strength of the group. nw

Samsung Life Chairman Lee Soo-bin also serves as chairman of Samsung's Council of CEOs.

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