Jay Lee taking a seat on the board of Samsung Electronics is a signal to investors that he is ready to face the spotlight.
Samsung Electronics has nominated heir-apparent Jay Y. Lee to its board in a move that allows the 48-year-old to have a more active role on strategic decisions as Korea's largest conglomerate faces its biggest crisis to date.
The younger Lee, already the vice chairman of Samsung Electronics, has been steadily gaining influence after his father suffered a heart attack and was hospitalised in 2014. Now, sources familiar with the matter told Reuters that Lee "had finally been persuaded to stand for a seat on Samsung Electronics' board at next year's March shareholder meeting."
Lee had "persistently resisted" calls for him to join the board until last year, when U.S. activist hedge fund Elliot Management attempted to derail a merger of two group businesses, Samsung C&T and Cheil Industries. The block was unsuccessful, but it was considered to be "one of the triggers that prompted [Lee] to take a board seat earlier than planned, and consider governance issues more seriously."
"He felt it was time and he was ready," another person familiar with the issue told the news outlet.
Lee's ascension couldn't have come at a less—or more—opportune time, what with the mounting troubles Samsung is facing at the moment.
In early November, the company was dragged into a political scandal involving South Korean President Park Geun-hye, who was reported to have allowed confidante Choi Soon-sil to use their friendship for financial gain. According to Yonhap news agency, Lee has been questioned by prosecutors over reports that Samsung have donated more than $15 million. The company is also being accused of offering Choi $3.1 million to fund her daughter's equestrian training in Germany.
The investigation is another headache for the embattled Samsung Electronics, which is already weathering the disastrous launch of its Galaxy Note 7 followed by a recall of a washing machine, and then a drop in profits.
Still, Lee taking a seat on the board of Samsung Electronics is a signal to investors that he is ready to face the spotlight. The board seat, which gives Lee formal responsibility for the company's management, will be a test on the investors' confidence in Lee's business acumen.
"So far, he wasn't in a position to officially display his leadership, but he's now finished his lesson," a source told Reuters. "He now has greater official responsibility."
For Kim Hyun-su, a fund manager at IBK Asset Management, believes the Note 7 chaos is Lee's chance to prove himself.
"Regardless of whether people change or not, the (next generation) Galaxy S8 needs to hit the market for Samsung to get beyond the crisis. The company will put all its efforts behind the product to regain consumer trust," Kim said, according to the news outlet.