Wednesday, October 25, 2006

LG Succession Plans

One trait of Korean-run big business is that most are
family managed.

LG is no exception, but has tended to nor get much
press when compared to Hyundai and Samsung. This
article does a great job or highlighting LG and its
family succession plans.

Korean media notes...
While Lee Kun-hee of Samsung and Chung Mong-koo of
Hyundai suffer setbacks in their attempts to evade
inheritance taxes, LG Group’s Koo family is taking
silent and steady steps in their own succession plan,
so far with little opposition.

LG said yesterday that Koo Kwang-mo, a 28-year-old
stepson of Chairman Koo Bon-moo, has joined LG
Electronics as a junior manager of finance in
September, after finishing studying in New York at the
Rochester Institute of Technology. He is the son of
Koo Bon-neung, chairman of Heesung Group and younger
brother of the chairman, and was adopted in 2004 by
his uncle who had no son but two daughters.

Though the group made no official comment on the
chairman’s family succession plan, it did admit that
the junior Koo will deserve more public attention in
the future. ``We told the secretary’s office to
prepare a good-looking photo (of Koo Kwang-mo), as
everybody is talking about the succession plan,’’ a
public relations official said.

In a rare case for chaebol, LG has successfully
switched its governance structure into a holding
company system in recent years. Chairman Koo Bon-moo
holds 10.51 percent of LG Corp., the holding company
of the group, while the stepson has 2.83 percent,
which is the largest chunk for his generation of the
family.

Considering the chairman is only 61 years old, it is
not likely that the junior will take over the throne
soon. But insiders say that there is no doubt that he
is the chosen one.

It’s a tradition of the family that the eldest son
becomes the next chairman. There is no reason to
change it, an LG Electronics official said.

The young Koo is a great grandson of group founder Koo
In-hwoi. The chairman’s seat has been succeeded
through Koo Cha-kyung and Koo Bon-moo without big
fuss, while shares of the group’s affiliates are well
distributed amongst dozens of their family members.

The junior Koo also is receiving financial support
from the family. He has bought LG Corp. shares over 12
times since 2004, with the money he made by selling
unlisted stocks, which he inherited from his real
father, to family members at an undisclosed price. His
father Bon-neung is also able to help him with a
4.76-percent share of LG Corp. when the time comes for
the succession.

Koo Bon-moo, the current chairman, joined LG at the
age of 30 in 1975. It took 20 years for him to become
the chief of the group. In a family member’s wedding
ceremony on Tuesday, he simply answered ``yes’’
without elaborating when reporters asked whether his
stepson is taking management lessons to become the
successor of the group.

3 comments:

  1. Really good article. I have been following your blog for last 3 months. You have good knowledge on Mobile(cell phone) Industry and happenings. Please continue the good work. Thank you.

    ReplyDelete
  2. Family businesses that thrive today are products of effective succession plans. LG Corporation has been known for its steady steps towards a change in leadership.

    In most cases of leadership change, companies consult an estate lawyer. In Ottawa and most parts of the world, they process the legal documents needed to make a transition legitimate. Since LG is a big corporation, the estate lawyer (Ottawa and other places) would be taking care of the transfer of stocks from one person to another.

    Hopefully, the success of LG would continue after the leadership transfer. Thanks!

    ReplyDelete
  3. Thank you for sharing. Family business succession planning is probably the most difficult and complex process a family enterprise will face. Transitioning a business from one generation to the next requires much thought, trust and planning.

    ReplyDelete