Samsung Revamps Leadership as Earnings Fuel Investor Payouts

Samsung has cleaned out its most senior executives just hours after posting record profit and doubling investor payouts, according to Bloomberg.

Lee Sang-hoon has been nominated as the next board chairman while all three co-chief executive officers were replaced in a massive shakeup of the top ranks. The announcement came hours after Samsung topped profit estimates and said it would boost dividends to 9.6 trillion won ($8.5 billion) in each of the next three years.

Along with the new chairman, Samsung will retain its three co-CEO structure for the business units. Samsung shares closed at a record in Seoul, rising 1.9 percent to 2,754,000 won. Earlier buybacks and growth in semiconductor and display earnings have helped Samsung stock outperform Apple in the past two years.

In addition to the increased dividends, capital spending will reach 46 trillion won this year as it focuses on production of chips and displays. Samsung is setting aside half its free cash flow for shareholder returns. After the dividends, the company may use any remaining portion of that money for share buybacks “as deemed appropriate.“

Net income rose to 11.04 trillion won in the three months ended September, the company said. That compares with the 10.8 trillion won average of estimates compiled by Bloomberg. Operating profit was 14.5 trillion won on sales of 62 trillion won.

Investments in chips and displays has helped Samsung capitalize on the rally in semiconductor prices and demand from rivals for smartphones using organic light-emitting diodes. That helped the business post operating income of 9.96 trillion won.

Operating profit from the phone business was 3.29 trillion won as the Galaxy S8 and Note 8 smartphones helped restore consumer confidence after last year’s Note 7 showed a tendency to explode. Consumer electronics, which includes TVs and appliances, had profit of 440 billion won.