SK E&C’s Chey the latest builder CEO to resign

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SK E&C’s Chey the latest builder CEO to resign

Amid the slump in the construction industry, executives of major builders are resigning positions to accept responsibility for poor performances and revive their companies. Family members of group owners are no exception.

SK Engineering and Construction, under SK Group, said on Wednesday that Vice-Chairman and CEO Chey Chang-won will resign. Chang-won is the younger cousin of SK Group Chairman Chey Tae-won.

“For SK E&C’s refreshed atmosphere and improvement of the organization, I decided to resign as chairman of the board and vice-chairman and move from business management,” Chey said at the board meeting on Wednesday. “We need a new board member who can actively pursue future growth.”

Following Chey’s announcement, SK E&C, the nation’s eighth-largest builder, said that it will appoint Kim Chang-geun, who heads SK Group’s top decision-making body Supex Promotion Council, to fill the void. Kim is expected to join the board after next month’s shareholders meeting.

“Kim wrapped up SK Group’s financial restructuring process successfully during the Asian financial crisis in the late 1990s and also led the turnaround of SK Chemical since 2004,” the company said in a statement.

SK E&C, which is currently not listed on the stock market, reported a first-half operating loss of 261.8 billion won ($241 million). The company cited losses from overseas projects in Saudi Arabia and elsewhere, as well as slump in Korea.

SK E&C said Chey will donate 1.325 million shares to the company worth 56.4 billion won.

Chey holds 2.27 million shares of SK E&C, or 9.6 percent. The largest shareholder of SK E&C is SK Corp. at 40 percent, followed by SK Chemical at 25.4 percent.

Chey’s resignation comes after GS E&C President and CEO Huh Myung-soo stepped down in June, taking responsibility for the builder’s first-quarter operating loss of 535.5 billion won. He is the younger brother of GS Group Chairman Huh Chang-soo. GS E&C, the sixth-largest builder, is under new CEO Lim Byung-yong.

Besides SK and GS, there have been several other cases of major builders replacing CEOs in this year.

Doosan E&C’s Yang He-sun also has been serving as CEO after his predecessor, Choi Jong-il, quit in May due to the company’s poor performance. In the first quarter, operating profit of Doosan E&C plunged 57.1 percent year-on-year to 12.6 billion won.

Daewoo E&C, the third-largest builder, promoted Vice-President Park Young-sik to be president and CEO in May after former CEO Seo Jong-uk resigned. Seo is currently being investigated by prosecutors for allegedly creating slush funds related to the four-rivers project.

Samsung Engineering, which specializes in plant construction, has been run by new CEO Park Choong-heum since last month after former CEO Park Ki-seok was sacked after a water tank explosion in July that killed three employees. Park also was responsible for the company’s poor performance in the first half, with more than 300 billion won in operating losses.

BY Joo Kyung-don []

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