14 DAY TRIAL // Samsung’s CEO Kwon Oh-Hyun has just announced his resignation citing an unprecedented crisis that’s most likely linked to corruption charges and indictment levied against Lee Jae-Yong, the leader of the Samsung Group.
The trial of billionaire Lee Jae-Yong has just ended, and he was sentenced to five years in prison. It’s the end of a long process that also led to the impeachment of South Korea's former president, Park Geun-Hye.
Samsung and its ruling bodies knew for some time that this is coming, as the trial which also involved Lee Jae-Yong has been going on for a while. Now that the trial has ended and the billionaire is going to prison, the CEO of Samsung has no other alternative on the table but to resign.
It’s also fair to say that Lee Jae-Yong wasn’t really involved in Samsung operations, so the resignation of its CEO is more of self-preservation, and has no relation to the trial itself.
Unprecedented crisis doesn’t sound good for business
Samsung’s CEO sent out a letter today to all employees, announcing that he’s resigning from his position as the company’s head of the Device Solutions Business, and will not seek reelection when his tenure on the Board of Directors and as the Chairman of the Board ends in March 2018.
“As we are confronted with unprecedented crisis inside out, I believe that time has now come for the company to start anew, with a new spirit and young leadership to better respond to challenges arising from the rapidly changing IT industry,” said Kwon Oh-Hyun in his letter.
Of course, the letter does not name the crisis, but it’s easy to see what it means. This will also send a powerful message to the shareholders, and it wouldn’t surprise anyone to see the company take a hit on the stock market.
On the other hand, its latest mobile devices, Galaxy Note 8 and Galaxy S8 and S8 Plus registered record sales, and Samsung is well on its way for a really profitable year. It remains to be seen how will Samsung will deal with this entire situation.