2016 was an altogether bad year for Samsung. Explosively bad in fact. From exploding smartphones to washing machines that spewed fire instead of water — the company’s reputation has taken a big hit. Investors have understandably been pissed off and have been clamoring to split the company into two parts. Samsung has come up with an alternative that it hopes will be able to appease shareholders.
The company is now exploring various alternatives that could make shareholders happy — short of splitting the company into two different parts. Holdings structure, listing the company on international exchanges. In case you are unaware of it, a holdings company is defined as one that owns other companies outstanding stock.
So basically, such a company does not produce goods or services itself but owns shares of other companies to form a corporate entity. So, it pulls the strings without being involved in the day to day affairs of the companies whose stocks it has in its possession.
It does not mean that Samsung will lay off all manufacturing, bur rather that the South Korean behemoth may create a holdings company that is central to everything that happens within its ecosystem.
The company is also planning to get more experience on-board.
In recognition of the ever more global nature of Samsung Electronics business, the company’s board of directors is pursuing plans to invite new independent board members with international corporate experience. With the help of outside advisors, the board is in the process of identifying a number of highly qualified candidates and plans to nominate at least one new board member with robust global C-suite experience for approval at the next annual shareholder meeting in March 2017.
The Board aims to further strengthen corporate governance procedures by creating a new governance committee, comprised solely of independent board members. The committee will address Board decisions and proposals linked to enhancing shareholder value. It will also assume the responsibilities of the current corporate social responsibility committee.
On the ground, these changes will take a lot of time to be implemented properly. Indeed, it may be as much as six months before Samsung is able to formulate a concrete plan that makes everyone happy.
As determining the optimal structure is a highly complex undertaking involving important strategic, operational, legal, regulatory and financial considerations, the company has retained external advisors to conduct a thorough review of the optimal corporate structure.
Well, either way, the next few months are going to be monumental for Samsung. Let’s hope it handles this transition better than it handled the Galaxy Note 7 recall.