Samsung Electronics CEO Kwon to Resign Amid Soaring Profits

Samsung Electronics Co Ltd said on Friday its CEO and Vice Chairman Kwon Oh-hyun plans to step down from management, deepening concerns over a leadership vacuum at the tech giant after group scion Jay Y Lee was jailed for bribery.

The surprise resignation of Samsung’s chip and display head came as he was expected to take on a bigger role following Lee’s arrest in February and the departures of other key executives in the wake of the bribery scandal.

The move came on the same day the South Korean smartphone-maker forecast record third-quarter operating profit on the back of the memory chip business, which Kwon was instrumental in building into the world leader.

The timing is nonsensical. Samsung tipped record earnings, it’s going to be better in the fourth-quarter, and all that’s been driven by Kwon’s components business.

Kwon, 64, is seen as Samsung Group No. 2. As well as being chairman of the board and a board director, he heads the components business – including memory chips – and the display business.

Shares in Samsung, worth about $350 billion, fell 0.6 percent on Friday after hitting an all-time high earlier in the day. The departure of 32-year Samsung veteran Kwon after five years in the top job comes at a time of leadership uncertainty at the company.

Choi Gee-sung, Jay Lee’s mentor, quit earlier this year for his alleged role in the bribery scandal, and Samsung Electronics now needs to fill several more key roles with Kwon’s exit.

Kwon would serve out his term as chairman of the board and board director until March 2018, the company said. He is also not stepping down immediately from his two other roles.
A Samsung Electronics spokeswoman declined comment on the exact timing of succession and potential successors for Kwon’s roles.

While Samsung Group is South Korea’s top conglomerate with businesses ranging from smartphones to hotels, it has had no ‘Plan B’ for taking big decisions following Lee’s arrest, people familiar with the matter have said.

The leadership changes also could be an opportunity for a new generation to emerge, he added.