Samsung Electronics chief unlikely to return to board

Legal battles delay Lee's potential comeback

By Nam Hyun-woo

Samsung Electronics Executive Chairman Lee Jae-yong is unlikely to rejoin the tech giant’s board in the coming years, as the company is considering the potential impact of a Supreme Court ruling on his involvement in a controversial merger of Samsung affiliates.

There have been growing calls both within and outside Samsung for Lee Jae-yong to return to the board, allowing him to take on greater roles in managing the company while reinforcing his responsibilities as a board member. However, this will not be on the agenda at the upcoming annual general meeting of Samsung shareholders, where several board members are set to be replaced.

According to industry officials, Samsung will hold its board meeting on Tuesday to discuss and approve agendas for the 2025 annual general meeting, which is expected to take place a month after the board meeting.

During the meeting, the board will nominate new members to replace outgoing ones.

The board is now comprised of six independent directors and three Samsung executives — Vice Chairman and CEO Han Jong-hee, Mobile Division president Roh Tae-moon and Memory Division president Lee Jung-bae. Of the executive directors, the terms of Roh and Lee Jung-bae will expire on March 15.

Rumors suggest that Roh is likely to secure a new three-year term, while Lee Jung-bae will be replaced by Jun Young-hyun, vice chairman of the memory division. The company is also anticipated to increase the number of executive directors to four and appoint a technology expert.

Since the company’s rules stipulate that the board can have a maximum of 14 members, with independent directors constituting a majority, Lee Jae-yong, in theory, can have his seat on the board. However, sources said that chances are very slim for the board to discuss the executive chairman's board membership.

Lee Jae-yong served a three-year term as a board member from 2016 to 2019 during his time as vice chairman, but he has not returned to the board, even after he was appointed as the company’s executive chairman in 2022.

In 2016, Lee Jae-yong became entangled in a political scandal tied to the impeached former President Park Geun-hye, leading to his imprisonment on two separate occasions from 2017 to 2018 and again in 2021. Since 2020, he has been struggling with legal battles related to a 2015 merger between Samsung C&T and Cheil Industries, which played a critical role in his gaining control of Korea’s largest conglomerate.

Earlier this month, Lee Jae-yong was acquitted in a high court ruling over the merger case, with the court clearing him of all 19 charges sought by prosecutors.

Initially, this was viewed as a ruling that freed the Samsung executive chairman of legal risks because the Supreme Court only reviewed the legal interpretation of rulings by lower courts, which all cleared him of the 19 charges.

However, the prosecution has appealed to the top court, citing the “differences in the court and the prosecution regarding legal interpretation and judgment.”

Calls for Lee Jae-yong’s board membership have been growing amid a slowdown in the company’s businesses in the latter half of the year.

Samsung Electronics’ flagship chip division ended up posting an operating profit of 2.9 trillion won ($1.98 billion) for the fourth quarter of 2024, trailing far behind its rival SK hynix with 8.08 trillion won.

Its smartphone and home appliance businesses are also facing declining numbers amid intensifying competition from Chinese rivals, while the company’s business divisions are increasingly separating from each other to undermine cost-competitiveness.

Despite calls for sweeping changes to the company’s leadership for recovery, Samsung Electronics took a conservative approach in its November leadership reshuffle, which was seen as the company’s inevitable choice for stability before Lee Jae-yong's ruling.

Samsung’s independent Compliance Committee also stated in October that Lee Jae-yong needs to return to the Samsung Electronics’ board “in order to reinforce his responsibility in the company’s management.”

Among Korea’s top four conglomerates — Samsung, SK, Hyundai Motor and LG — Lee Jae-yong is the only owner and chief who is not a member of the group’s major affiliate. SK Group Chairman Chey Tae-won is a board member of the group’s holding firm, SK. Hyundai Motor Group Executive Chair Chung Euisun is also a member of Hyundai Motor Company. LG Group Chairman Koo Kwang-mo is also a board member of LG Corp., the group’s holding firm.

In comparison, internet giant Naver’s founder and de-facto chief, Lee Hae-jin, is set to return to the company’s board next month after an eight-year hiatus to help the company’s amid increasing competition with global artificial intelligence firms.