By Alexandra Bruell and Suzanne Vranica
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (March 22, 2019).
Samsung Electronics Co. audited its U.S. marketing operation to
investigate whether employees violated company policies in their
dealings with business partners, resulting in layoffs of several
staffers, according to people familiar with the situation.
The layoffs and the internal probe come amid broader changes at
the company, including the recent departure of top U.S. marketing
executives, as well as other senior executives outside the
marketing group.
Samsung's internal audit looked, in part, at dealings between
its marketing staff and business partners such as media companies
and ad agencies, according to the people familiar with the matter.
It is common for marketers to accompany such partners to
entertainment events they are sponsoring, like the Super Bowl or
the Oscars or to let vendors who are vying for their business pay
for perks during meetings such as a nice lunch or a workout
class.
But such dealings can pose a conflict of interest that calls
into question whether marketers are steering resources to the
best-performing marketing channels, industry executives say.
Samsung declined to comment on whether it has carried out an
internal audit.
"Recently, organization changes have been made to our marketing
division, " the company said in an emailed statement. "We have a
strong management team in the U.S. who remains focused on
continuing to provide our customers in North America with the
products and experiences they have come to expect of the Samsung
brand."
It is unclear how many workers were cut or which incidents or
activities by staff drew scrutiny from Samsung. Samsung's U.S.
total workforce is more than 18,000.
Some Samsung staffers were told on March 15 that they were let
go for cause and without severance following the audit, according
to the people familiar with the matter. Some employees who were
fired said that they have been treated unfairly, and that Samsung's
findings in some cases were trivial and didn't merit its
actions.
The company also conducted a monthslong audit of its ad-agency
partners, including Interpublic Group of Cos's PMK-BNC and R/GA,
independent PR agency Edelman and Publicis Groupe SA's media
agency, according to the people. The audit included an
investigation into agency operations and practices, such as funding
and management of some projects.
Samsung conducts routine audits of its various internal
departments and agencies, according to people close to the
company.
The recent changes at Samsung's U.S. operation included the exit
of Marc Mathieu, the U.S. marketing chief, and Jay Altschuler, vice
president of media and partnerships, according to the people
familiar with the matter. Samsung declined to comment on whether
those moves were linked to its audit.
"Marc has left Samsung Electronics America to pursue
opportunities outside of the company," a company spokeswoman said
last week.
At the time, Mr. Mathieu said, "I have been privileged to lead a
talented team of marketers, which has led to incredible brand
growth during my tenure at the company."
The shifts come amid a broader realignment at Samsung. In recent
months, Samsung appointed a new global marketing head, Stephanie
Choi, at its mobile division.
Outside of the marketing group, there have been other
significant executive exits in the U.S., according to the people
familiar with the matter. Samsung declined to comment on moves of
the other executives.
Tim Baxter, president and chief executive of Samsung Electronics
North America, also announced plans two months ago to retire in
June.
In the U.S., which is a significant market for the company's
phones, consumer appliances and chips, Samsung Electronics America
spent $583 million on media in 2018, according to Kantar Media, a
data and measurement firm. The Kantar figure doesn't include all
digital spending.
The company faces headwinds as smartphone sales have fallen in
recent quarters, including a 4.9% decline during the final three
months of last year, according to International Data Corp. For the
quarter that ended Dec. 31, Samsung's operating profit for its
mobile division declined by nearly one-third, while semiconductors'
operating profit fell 29%.
Timothy W. Martin contributed to this article.
Write to Alexandra Bruell at alexandra.bruell@wsj.com and
Suzanne Vranica at suzanne.vranica@wsj.com
(END) Dow Jones Newswires
March 22, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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