[THE INVESTOR] Samsung Electronics
plans to roll out a set of new corporate policies next month that are more friendly to shareholders in an apparent move to appease mounting demands from investors calling to modernize its governance structure and share more profits with them.
“We are reviewing the demands from shareholders, including the latest one by Elliott Associates, to offer them more benefits,” said a Samsung executive in a conference call after the company’s third-quarter earnings report on Oct. 27.
“Details of the new policy will be announced by the end of November.”
Samsung had said it would spend around 30 percent to 50 percent of its cash reserve as dividends for shareholders. The executive reaffirmed the company was considering using the cash reserves of fiscal year 2015, including a fresh share buyback.
Samsung’s planned new shareholder policy comes amid criticism that the Korean tech giant has been stingy in sharing profits with its shareholders. The company is under heightened pressure more recently as it is fumbling to deal with the recall of the fire-prone Galaxy Note 7 and follow-up measures.
Sales and production of the Note phone have stopped since this month due to safety concerns.
On the day, the company said its third-quarter operating profit tumbled 29.7 percent to 5.2 trillion won (US$4.55 billion) from a year ago, hit hard by the discontinued Note phone. Revenue also fell 7.4 percent to 47.8 trillion won.
By making the current shareholder polices more favorable to stakeholders, Samsung also hopes to achieve a smooth leadership transition from the current Chairman Lee Kun-hee to his only son, Vice Chairman Lee Jae-yong.
Samsung shareholders approved the nomination of the junior Lee as a board member who will be responsible for civil and criminal matters at the company in an extraordinary meeting held in Seoul on the same day.
He is the first family member to join the boardroom in eight years after the Samsung patriarch resigned over a prosecutors’ probe into the group’s slush fund creation.
At the meeting, shareholders also approved the split of Samsung’s printing business division. The new entity is scheduled to be sold off to HP Inc., the US printer and PC giant, for US$1.05 billion in the latter half of next year.
By Kim Young-won (email@example.com