CJ on the Verge of 'Personnel Changes': Lee Jae-hyun's Emergency Management and Strategic Reorganization for the Post-Corona Era

Emergency Management Situation, Emphasis on 'Stability' over 'Radical' Personnel Changes
CEO Heo Min-hoe Returns to Holding Company... Attention on Eldest Son's Promotion and Return

[Asia Economy Reporter Lee Seon-ae] The atmosphere at CJ Group ahead of the regular personnel reshuffle is heavy. Amid ongoing emergency management, there are various speculations about the direction of the 'restructuring' strategy to prepare for the 'post-COVID-19' era (the new era following the overcoming of the novel coronavirus infection). Considering the continued emergency management, it is expected that the personnel reshuffle will focus on stability, such as reducing the scale of promotions. However, some believe that due to increased management uncertainties, there will be significant changes to revitalize the atmosphere. Additionally, the return to work and promotion of Lee Seon-ho, the eldest son of CJ Group Chairman Lee Jae-hyun and head of CJ CheilJedang, as well as the promotion of Lee Kyung-hoo, the eldest daughter and executive director at CJ ENM, are key points to watch.

Early Personnel Reshuffle Expected; Change of ENM CEO

According to the business community on the 23rd, it is widely expected that CJ Group’s personnel reshuffle will be conducted about a month earlier than last year (December 30). Due to the high management uncertainty caused by the COVID-19 pandemic, delaying the reshuffle too much would make it difficult to swiftly push forward next year’s business, so the reshuffle is likely to be expedited.

An insider from CJ Group hinted, "There is a possibility that the announcement will be made this week," adding, "However, if internal coordination over executive personnel is not easily achieved, it might be delayed a bit."

Opinions are divided between 'radical change' and 'stability' regarding the personnel direction, but since the emergency management stance continues, the prevailing view is that the reshuffle will focus more on strengthening internal capabilities rather than making drastic changes.

First, for affiliates with poor performance, CEO replacements are highly likely. It appears that Heo Min-hoe, the CEO leading CJ ENM, will step down. The ongoing lawsuit related to the controversial audition program 'Produce Vote Manipulation Incident' from last year has brought the CEO replacement option to the surface. Kang Ho-sung, CJ’s Executive Vice President of Management Support, is being mentioned as a successor. After working as a prosecutor, he opened a law practice in 1998 and has since specialized in entertainment and celebrity cases. He was recruited by CJ Group as head of legal affairs in 2013 and has served as Executive Vice President of the holding company since 2018. After being listed as an ENM executive in July, he recently started commuting to the Sangam-dong headquarters and receiving work reports, making his appointment as the new CEO virtually a done deal.

Chairman Lee’s selection of Vice President Kang is interpreted as a move to restore the company’s image tarnished by the Produce series vote manipulation case and to demonstrate a commitment to compliance management through a legal expert while focusing on litigation response. CEO Heo is expected to move to the holding company CJ, where he will oversee the overall management of the group. When Chairman Lee was detained in 2013, Heo took charge of CJ’s management, and he has earned strong trust by inheriting registered director positions from Chairman Lee at affiliates such as CJ ENM, CJ O Shopping, and CJ CGV.

Other affiliates where CEO replacements are possible include CJ CGV and CJ Foodville. These two affiliates have been hit hardest by COVID-19, showing the poorest performance. CJ CGV CEO Choi Byung-hwan’s term runs until March 2022, but considering the current management situation, replacement is being discussed. CJ Foodville, which sold its stake in Twosome Place and is currently in the process of selling Tous Les Jours, has been conducting voluntary retirements since last month due to the downturn in the dining business. CEO Jung Sung-pil, who took office in July 2018, has a deep understanding of overall management as he has led restructuring efforts, so there is a possibility that the current system will continue for management continuity.

CJ CheilJedang and CJ Logistics, which have continued to grow sales despite COVID-19, are expected to maintain their current management systems.

A CJ Group official said, "Nothing has been precisely decided regarding the timing, direction, or specific details of the personnel reshuffle," adding, "Although there are many predictions about when the announcement will be made, it is difficult to make hasty assumptions as last year’s early reshuffle possibility still resulted in a year-end announcement."

'Third Generation Era' Rein in Focus: Eldest Son Lee Seon-ho’s Return and Promotion

Lee Sun-ho, eldest son of Lee Jae-hyun, Chairman of CJ Group.

The big question in this personnel reshuffle is whether CJ Group will start drawing the blueprint for the full-fledged third-generation era. First is the return of eldest son Lee Seon-ho.

He majored in Financial Economics at Columbia University in the United States and joined CJ CheilJedang as a new employee through open recruitment in 2013, progressing through assistant manager and manager positions. In March 2017, he was promoted to head of the CJ Group Strategy Office, then worked as head of the Bio Business Management Team at CJ CheilJedang before moving to the Food Strategy Planning Team 1 in the Food Business Division of CJ CheilJedang in April last year. However, in September last year, he was arrested on charges of smuggling variant drugs while entering Korea from the U.S., and in February this year, he was sentenced to three years in prison with a four-year probation. A CJ Group official said, "(Lee) is currently under suspension and reflecting on his actions."

Although many believe it is too early for him to return to work, considering Chairman Lee’s poor health, it is highly likely that he will be promoted to an executive position and brought back to work to facilitate succession. Internally, it is cautiously expected that Lee will be appointed as an executive director at the holding company. Chairman Lee suffers from Charcot-Marie-Tooth disease (CMT), a hereditary disorder, and in 2013, after kidney problems were discovered, he received a kidney transplant from his wife but continues to suffer from aftereffects.

The whereabouts of eldest daughter Lee Kyung-hoo, executive director at CJ ENM, are also of interest. She graduated from Columbia University with a degree in French literature and earned a master’s degree in culinary psychology from the same university. She joined CJ Group as an assistant manager in the business team in 2011, worked in product planning at CJ O Shopping, and served as head of integrated marketing for the U.S. regional headquarters before being promoted to executive director in 2017. In July 2018, she was appointed head of the brand division at the newly established CJ ENM, formed by the merger of CJ O Shopping and CJ E&M, and moved to the U.S. regional headquarters, where she directly participated in establishing marketing strategies for the group’s North American business, leading the smooth U.S. market entry of brands such as KCON and Bibigo. Internally, it is expected that Executive Director Lee will continue to lead the group’s media business, following the path of her aunt, Vice Chairman Lee Mi-kyung.

Meanwhile, at the end of last year, Chairman Lee gifted 1,841,336 newly issued CJ preferred shares he owns equally to Executive Director Lee and Lee Seon-ho, 920,668 shares each. Preferred shares have no voting rights but receive higher cash dividends than common shares and can be converted into common shares after a certain period. Since they have no immediate voting rights and trade at a lower price than common shares, they are used as a means of inheritance to reduce gift tax while expanding common shareholding in the long term. The shares gifted by Chairman Lee were acquired through a dividend of 0.15 preferred shares per common share implemented by CJ on March 27 last year and will be converted into common shares in 2029, ten years later. Through this, Lee Seon-ho will hold a total of 5.2% of CJ shares, including his existing 2.75% stake.

A business insider said, "CJ Group is expected to prepare for the post-COVID-19 era through CEO replacements to revitalize underperforming affiliates, restructuring, and a focus on growth businesses," adding, "Resolving management uncertainties and preparing for the third-generation era to lay the foundation for growth will also be key points to watch."

This content was produced with the assistance of AI translation services.