Poor handset performance claims another CEO victim

South Korea’s LG Electronics, the world’s third-largest mobile handset manufacturer, said its chief executive will be replaced by the brother of the LG Group’s chairman after record losses at its handset business.

Koo Bon-joon, the younger brother of LG Group chairman Koo Bon-moo, will replace Nam Yong, who offered to resign at a board of director’s meeting on September 17 to take responsibility for poor management, LG Group said in a statement.

LG Electronics is the LG Group’s flagship business and its chief is considered number two in rank after the group chairman. Nam, 62, who has been CEO for four years, will remain in the job until a March stockholders meeting, where Koo will be officially appointed.

“Nam Yong offered to resign as CEO to take responsibility for the flagging performance and pave the way for a new CEO to prepare for the coming year and beyond,” the statement said.

In July, LG Electronics reported that second-quarter operating profit plunged 90 per cent to SKW 126 billion (US$109 million) from a record high of SKW 1.24 trillion a year earlier. The handset business suffered an operating loss of SKW 120 billion compared with a profit of SKW 620 billion the year before.

Koo, 59, has served as executive officer in various subsidiaries of LG Group, most recently as vice chairman of LG International.

The demise of Nam follows the removal of Olli-Pekka Kallasvuo as CEO of Nokia later this week, given the handset manufacturers muted performance in the smartphone space and its declining market valuation.