LG's 40-year-old new head becomes largest shareholder of holding company

Lim Chang-won Reporter Posted : 2018-11-02 17:05 Updated : 2018-11-02 17:05
글씨작게 글씨크게

[Courtesy of LG Group]

SEOUL -- The 40-year-old new head of South Korea's fourth-largest conglomerate, LG, became the largest shareholder of the group's holding company by inheriting a portion of shares left over by its late chairman who died in May.

LG Corp. said in a regulatory filing Friday that Koo Kwang-mo increased his stake in the group's holding company from 6.2 percent to 15 percent by inheriting 8.8 percent from Koo Bon-moo, the late chairman credited with nurturing his group into a global tech and chemical powerhouse.

Of 11.3 percent held by the late chairman, 2.0 percent went to his first daughter and the second daughter received 0.5 percent. LG Corp. said the three heirs would pay inheritance taxes, estimated at more than 900 billion won ($802.8 million), in the next five years.

In June, Koo Kwang-mo was upheld as group head in the fourth-generation transfer of power. He is actually the eldest son of the late chairman's younger brother, but he was adopted to inherit group leadership because Koo Bon-moo had two daughters and no son. The group, founded in 1947, has retained the tradition of handing over power to the eldest son.

After high school, he studied at the Rochester Institute of Technology, majoring in engineering and earning a master's in management. Koo Kwang-mo joined LG Electronics as an assistant manager of finance in 2006 and returned to the United States in 2013 to work for the American unit of LG Electronics. He was promoted to vice president in 2015.

LG described Koo Kwang-mo as a prepared manager because he has been involved in multiple businesses to build his career. However, market watchers believe his group-wide role will not be so powerful because many top posts are filled with professional managers. There are also many offsprings working at affiliates.

LG and other family-run business groups, known as chaebol, were once described as the engine of prosperity and credited for powering the post-war economic miracle, despite their autocratic leadership and dynastic succession practices. However, they are now under growing pressure to enhance corporate governance, protect the interests of minority shareholders, and reduce their dominant role in South Korea's economy.