Major conglomerates cut back on executive promotions

South Korea’s major conglomerates, including Samsung, SK, and LG Groups, have scaled back on executive promotions while streamlining their organizations in their year-end executive reshuffle. Their strategy to overcome economic difficulties includes pushing for younger leadership through generational change, appointing finance chiefs to key posts, and bringing members of owner families to the forefront.

Samsung Electronics Co. minimized its number of promotions in 2023, with only two to the role of president compared to seven a year ago. There were 143 new executives, the lowest number since the company disbanded its Future Strategy Office in May 2017.

The sharp reduction in the number of presidential and executive promotions is mainly due to the struggling semiconductor industry. Samsung Electronics also became the first company to appoint a president born in the 1970s, excluding owner family member and Hotel Shilla President and Chief Executive Officer Lee Boo-jin, with the appointment of Yong Seok-woo, (53), who currently heads Samsung’s video display business, to the role. The company also appointed several young executives, including one managing director in his 30s and 11 vice presidents in their 40s, and the average age of new executives at the company is 47.3 years old.

Financial executives were less affected by the reshuffle, with chief financial officers, including Samsung Electronics President Park Hark-kyu and Vice President Kim Hong-kyung, retaining their positions.

At SK Group, only 82 new executives were newly appointed, a significant decline of 43 percent from 2022’s 145, and the average age of the new executives is 48.5 years old.

“Many of our affiliates have streamlined their organizations and reduced the size of their executive teams to respond quickly to global market changes,” a senior SK Group official said.

The group’s four vice chairmen—Cho Dae-sik, Park Jung-ho, Kim Jun, and Jang Dong-hyun—stepped down from their positions while CEOs in their 40s and 50s were promoted to replace them. Two of the six new presidents are in their 40s.

Major affiliates retained their CFOs, including SK Inc. President Lee Sung-hyung, SK hynix Inc. Vice President Kim Woo-hyun, SK E&S Co. Vice President Kim Hyung-geun, and SK on Co. Vice President Kim Kyung-hoon. SK Group CFOs are well known to have the ability to review the CEO’s investment decisions.

LG Group also saw fewer promotions for the year at 139, a drop from 160 in 2022. The number of new executives was 99, down 13.1 percent from 114 in 2022.

All the vice chairmen appointed under the group’s late Chairman Koo Bon-moo stepped down, with LG Energy Solution Ltd. Vice Chairman Kwon Young-soo deciding to leave his post, and the heads at each affiliate were replaced by young leaders. Kim Dong-myung, president and CEO at LG Energy Solution, is 12 years younger than his predecessor, and Moon Hyuk-soo, CEO at LG Innotek Co., is nine years younger than his predecessor. More than 97 percent of LG Group’s new executives are born after the 1970s and have an average age of 49.

LG Group promoted several former CFOs, including Kim Chang-tae, CFO at LG Electronics Inc., and Kim Sung-hyun, CFO at LG Display Co., to vice president. Lee Myung-seok, CFO of LG Household & Health Care Ltd., was promoted to senior managing director.

GS Group had the biggest shakeup in its history, replacing four CEOs. Yoo Jae-young, CFO at GS Caltex Corp., was named CEO of GS Power Co., and Kim Sung-jun, CEO at HD Korea Shipbuilding & Offshore Engineering Co., is currently the only CEO born in the 1970s at HD Hyundai Group. “While large companies have reduced the number of their executives, CFOs have been retained or appointed to key positions,” an official from the business circle said. “Financial executives tend to do well in times of crisis as they can be counted on for corporate finance.”

Several conglomerates also appointed members from their owner families to key positions in an effort to respond to crises and identify new businesses and strategies. Chairman Chey Tae-won’s cousin, Vice Chairman Chey Chang-won, was appointed chairman of the SK SUPEX Council, while Chey Yoon-chung, Chey Tae-won’s eldest daughter and head of SK biopharmaceuticals Co.’s strategic investment team, was promoted to an executive and will head business development. Shin Yoo-yeol, the eldest son of Lotte Group Chairman Shin Dong-bin, was promoted to executive vice president of Lotte Corp. and will serve as head of Future Growth Office at the holding company and head of the Global Strategy Office at Lotte Biologics Co.