Samsung Electronics (SSNLF) refused to commit to demands from a powerful activist shareholder to overhaul its complex structure and broaden the reach of its listed shares Tuesday as questions surrounding competence and corruption at the highest levels in South Korea continue to test investor faith in Asia's third-biggest economy.
However, while political leaders appear to be getting the message, Samsung seems defiant.
South Korea's President Park Geun-hye bowed to her people Tuesday and expressed her willingness to resign before her tenure was up, delegating that decision to parliament, but Samsung Electronics said only that it would study possible changes following adviser reviews that might involve splitting the company in an effort to streamline operations at the world's biggest smartphone maker.
"We want to be absolutely clear that that the review does not indicate the management or the board's intention one way or another," said Robert Yi, Samsung's vice president. "We remain absolutely neutral at this point and will make a decision only after the review is complete."
The review process, which will look into hiving Samsung into holding and operating companies, will take at least six months, given that possible changes to the corporate structure would create tax and legal implications as well as division of cash flow, the company said.
Samsung Electronics CEO Oh-Hyun Kwon spoke to investors on Tuesday less than two months after the Suwon-based company was forced to withdraw its flagship Galaxy Note 7 after fire ignited on its batteries, leaving an opportunity for Apple (AAPL) and others to swoop in. It has also recalled washing machines in the U.S. in November.
Since then, activist shareholder Elliot Associates, which holds less than 1% in the company, launched a campaign pressuring the company to clean up its corporate structure and governance, and return more cash to investors.
Elliot has also argued Samsung's operating company should list on the Nasdaq to boost shareholder liquidity.
While Samsung did not commit to the organizational and fund-raising changes, the Tuesday presentation was heavy on responding to the shareholder return aspect of those demands.
Management said it would allocate 50% of its 2016 and 2017 free cash flow for shareholder returns, pointing to the higher end of its already indicated 30%-50% goal. They also said the company would increase total dividends by 30% to 4.0 trillion won ($3.4 billion) and dividend per share by 36% in 2016.
Samsung said it would appoint new board members with global experience within the next few months, and that it would create a new governance committee made up of independent directors. The current board is made up of nine people, five of which are independent, all are South Korean.
"In recognition of the role that Samsung Electronics plays in the global market, the board is pursuing plans to invite new board members with international corporate experience," Yi said. "With the help of our outside advisers, the board is reviewing a number of highly qualified candidates from diverse backgrounds," adding that it would confirm one or more candidates with global experience in its annual meeting in March 2017.
However, the company did not go beyond these plans to ensure a check-and-balance function that could prevent the repetition of damning incident as significant as the Galaxy Note 7 demise.
Furthermore, the lack of commitment to listing its shares on an international exchange will likely come under severe scrutiny, given its admission later on in the Tuesday conference that means to secure funding in the country is limited, despite its need to maintain a net cash position of between 65 trillion and 70 trillion won to enable forward-looking investments, R&D, working capital and M&A to ensure its participation in cutting edge fields such as the Internet of Things, Virtual Reality and Augmented Reality.
Samsung expects to book a record 27 trillion won capex this fiscal year.
Like President Park, allegedly playing part in corruption, Samsung may be part of a deep-rooted problem that is Corporate Korea struggling to grow out of a tightly-knit world that sometimes blurs the lines between business and personal..
Samsung Electronics is a part of South Korea's largest chaebol, a conglomerate owned by the Lee family, which also includes heavy industries, construction, life insurance and a theme park business. Other South Korean chaebols include Hyundai and Daewoo.
Alongside other conglomerates such as Lotte and SK, Samsung has been raided by prosecutors on suspicion it had made donations to a fund controlled by one of President Park's close friends.
Whether the tech giant is willing to step out and transform itself into a global player remains to be seen in the next few months.
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