Samsung shareholders welcome stock price gains, rue scandals

AP News
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Posted: Mar 24, 2017 1:01 AM
Samsung shareholders welcome stock price gains, rue scandals

SEOUL, South Korea (AP) — Shareholders of Samsung Electronics praised the company Friday for big gains in its share price while lamenting its involvement in a massive corruption scandal that brought the arrest of the company's de facto leader.

Kwon Oh-hyun, Samsung's chief executive, told an annual shareholders meeting the scandal was regrettable, but the company did nothing illegal.

Five Samsung executives, including its vice chairman and founding family heir apparent Lee Jae-yong, have been indicted on bribery and other charges.

The scandal resulted in the impeachment of President Park Geun-hye earlier this month.

Calls to reform Samsung and other conglomerates are gaining momentum after Samsung, Hyundai, SK, LG and other major businesses made big donations to foundations controlled by a friend of Park's who has been charged with meddling in state affairs.

Some shareholders expressed concern over growing public hostility to Samsung, South Korea's biggest company.

The company's image has also taken a big hit from cases of overheating and sometimes exploding batteries of its flagship Galaxy Note 7 smart phones. Samsung ended up discontinuing the product just weeks after it was launched in August.

Shin Jong-kyun, a Samsung president, promised shareholders the company will put "flawless" products through extensive safety checks. The precautions would be perfect, he said.

Samsung is due to unveil the Galaxy S8 smartphone next week, its first major smartphone launch since the battery fiasco.

But the main focus of attention during Friday's meeting was the scandal.

Some found fault with the company's apologies.

One shareholder, who said he worked at the company for 26 years, demanded an explanation for how Samsung's board of auditors, which included a former national chief prosecutor, could have allowed corporate funds to be misused.

Kwon, the chief executive, denied Samsung did anything unlawful in making the donations to Park's associate.

"It was a donation that was traditional and customary," Kwon said. "The auditing committee found it was executed through normal procedures."

Samsung says it will require its board of directors to approve any donations of over 1 billion won ($89 million) to prevent future scandals.

A newly created committee to improve the company's governance structure will be appointed by next month, the company said. It is still searching for a global business leader to join its board.

While shareholders were shaken by the scandal and resulting damage to the company's image, many praised the company for delivering strong results overall.

Samsung stock jumped more than 60 percent from a year ago thanks to strong performance of its semiconductor business, which offset the damage from the Note 7 battery troubles.

"I can't help rejoicing over how the value of my asset has gone up," said one shareholder surnamed Park.