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Samsung considers steps to keep its ruling family in power

Jung Yeon-Je/AFP/Getty Images

Samsung has always been a family-run company, and it’s apparently bent on keeping things that way. As part of sweeping plans to reward investors (more on that in a bit), the South Korean tech giant says that it’s considering the creation of a “holding company structure.” It’s not certain how this would work, but analysts believe that this would give greater control to vice chairman Lee Jae-yong (son of chairman Lee Kun-hee) and his sisters Lee Boo-jin and Lee Seo-hyun, all of whom play crucial roles in the company. They wouldn’t have to worry as much about losing influence.

The review of this possible shift is expected to take “at least” 6 months, and Samsung stresses that it isn’t leaning one way or the other. It is diversifying beyond the Lee family in other areas, at least. Its Board of Directors is looking for independent members with “international corporate experience” (read: not limited to South Korea), and hopes to nominate at least one by March 2017.

However things shake out, shareholders are likely to be very happy. The company is promising that 50 percent of its free cash flow in 2016 and 2017 will go directly to investor returns, and that its share dividends will jump 30 percent this year. It’ll start paying quarterly dividends in April 2017, too. But why the sudden generosity?

To start, Samsung is facing the same nice-to-have problem Apple has — it’s drowning in cash. Investors don’t like that the company has been hoarding money ($70.3 billion as of the third quarter of 2016) that it seemingly has no inclination to spend. Handing out that money could keep shareholders from jumping ship. We’d add that the payouts might help restore confidence in Samsung stock following the Galaxy Note 7 fiasco. If you have an investment in Samsung and were worried that it faced a bumpy ride, you now have a better reason to stick it out.

About the author

Jon Fingas

4 Comments

  • I agree, buy 3-5 year old computers with no price adjustments instead.

    Also it would be a good idea to purchase a 3 year old design for your phone with no head phone.
    Support the richest tech company in the world instead.
    Long live the fruit company.
  • Tell that to 92% of consumers who where surveyed by reuters and ip/sos that asked would you still buy samsung even after the note 7 troubles , they said yes and so soon afterwards ?. as per review of gsm/arena , it seems no one else report this you know like engadget and the verge , i wonder why ?

  • With the rise in Vizio and other brands, there zero reason to pay a premium for Samsung TV’s. I used to buy Sony TV’s then Samsung put out quality products at a better price, then I bought Samsung TV’s, now Samsung is being under cut, and now I have Vizio TV’s. Samsung is the new Sony.

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