Nepotism remains prevalent at Korean chaebols

Posted on : 2017-12-11 18:01 KST Modified on : 2019-10-19 20:29 KST
Third and fourth generation family members enjoy rapid promotion at large companies
Rapid promotion of third and fourth generation family members at key chaebols
Rapid promotion of third and fourth generation family members at key chaebols

The offspring of founding families won swift promotions in yet another round of chaebol executive appointments this year. Some of the third-generation descendants became “star” executives within four years of joining the company, while others rose up the corporate ladder six times faster than the executives promoted alongside them. Critics charge that descendants with unproven abilities are being recklessly promoted in order to speed inheritance of management rights.

A Dec. 10 examination of data on year-end appointments for major chaebol companies showed Hyundai Heavy Industries (HHI) senior executive director Chung Ki-sun, the 35-year-old oldest son of ASAN Foundation chairman Chung Mong-joon, being promoted to HHI vice president and Hyundai Global Service CEO. The move comes eight years after the younger Chung joined HHI at 27 as a deputy director in 2009, and two years after he reached the post of senior executive director.

His promotion came four times faster than that of 58-year-old Jung Myeong-rim, who became HHI MOS vice president alongside him. Jung joined the company in 1983, taking 34 years to become vice president. Chung’s promotion was also fast compared to those of descendants in their thirties at other chaebol.

At Hankook Tires, the third generation has more or less assumed the management reins, with Hankook Tire Worldwide chairman Cho Yang-rai’s oldest son Hyun-sik, 47, rising from Worldwide CEO to general vice chairman, and second son Hyun-bum, 45, rising from Hankook Tire president to CEO. The two respectively joined the company in 1997 and 1998. Their promotions came 4.8 to 6 times faster than that of Hankook Tire CEO (vice chairman) and professional manager Suh Seung-hwa, 69. Suh joined Hankook Tire in 1973, winning promotion to managing director 24 years later and becoming CEO in 2007. In contrast, Cho Hyun-sik and Cho Hyun-bum respectively took four and five years to become managing directors.

Two third-generation family members were promoted at the LS Group. LS-Nikko Copper executive director Koo Bon-hyuk, 40, was promoted to vice president 14 years after joining the company and three years after being promoted to his previous position. Koo is the son of late LS-Nikko Copper chairman Koo Ja-myung. LS Group chairman Koo Ja-yul’s son, 35-year-old LS Industrial Systems director Koo Dong-hwi, was promoted to executive director in the latest round of appointments. Koo Dong-hwi joined LSIS in 2013 as a deputy manager and was promoted to director three years later in 2016.

At the SeAH Group, three third-generation descendants were each promoted one step: president Lee Hwi-ryeong, 55, to vice chairman; and executive directors Lee Tae-seong and Lee Ju-seong, both 39, to vice president. SeAH Group chairman Lee Soon-hyung’s son Lee Ju-seong became executive director at SeAH Steel five years after joining the company in 2008. In contrast, 58-year-old Kwon Byung-gi, who was promoted to SeAH Steel vice president, took 26 years to become an executive director.

In many cases, descendants in their thirties became company “stars.” At the GS Group, GS department director Huh Cheol-hong, the 38-year-old oldest son to GS Neotek chairman Huh Jung-soo, became a managing director eight years after joining the company and three years after being promoted to his previous position, making him the youngest of the new managing directors named at GS. Deputy managing director Lee Kyu-ho, the 33-year-old oldest son of Kolon Group chairman Lee Woong-yeul, was promoted to Kolon managing director five years after joining the company and two years after becoming deputy managing director.

At the CJ Group, chairman Lee Jay-hyun’s oldest daughter Lee Kyung-hoo, 33, was promoted to managing director six years after joining the company. Her promotion comes just eight months after she was named a deputy managing director in March. Also promoted to managing director was husband Jeong Jong-hwan, the 37-year-old co-director of CJ’s US regional headquarters.

“The major chaebol seem to be hastening the promotion of descendants amid signs that regulations on governance structures and the succession of management rights are going to continue getting tougher,” said president Chung Seon-seop.

“These kinds of swift promotions of third- and fourth-generation family members who have yet to acquire experience or skills could increase risk not just for the companies themselves, but for the economy as a whole,” Chung warned. 

By Choi Ha-yan, staff reporter

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