Samsung stingy on promotions due to recent profit drops
Samsung Group commenced its yearly reshuffle, showing fewer executive-level promotions than last year, a reflection of the falling profits of its flagship company, Samsung Electronics.
A total of 353 Samsung Group executives were promoted, a marked drop from 476 promotions awarded in last year's annual reshuffle. In Samsung Electronics itself, only 165 were promoted, another significant drop from the 227 last year. The declining numbers have been attributed to Samsung's falling profits.
Only Samsung Electronics' memory business, part of its semiconductor division and which showed high growth for the year, saw a year-on-year increase in the number of promotions awarded to executives.
Samsung Electronics saw a 60 percent drop in profits for third quarter of the year, its lowest in 3 years, largely due to increased competition from Chinese vendors and Apple's spectacular iPhone 6 sales. Affiliates that rely heavily upon the electronics giant, such as Samsung Display and Samsung Electro-Mechanics also saw their profits plummet. Other non-electronics affiliates also underperformed compared to the year before due to the tough external market.
Earlier this week, for the first round reshuffle for president and vice chairmen, only three minor promotions were announced. Three Presidents of Samsung Electronics IT & Mobile (IM) division, including head of marketing DJ Lee, resigned, taking responsibility for the recent profit drops. Samsung Electronics vice chairman Kang Ho-moon also left the company. However, defying expectations, JK Shin, co-CEO and head of IM division, kept his post.
The IM division is expected to be downsized greatly, according to Samsung insiders, though Samsung has made no official statement nor has it sent publicly available reports to local financial regulators for the outside to measure the cuts. A third round of reshuffles is expected early next week, which will delineate the size and authority of each division.
A total of 8 foreign executives were promoted, including senior vice president David Steel of Samsung Electronics America to executive vice president. Samsung said the promotion was to show that foreign executives have the same opportunity to climb up the ladder as South Koreans and to strengthen communication with overseas clients.