While management disputes between family members and siblings are not uncommon in the corporate world, the founder of a mid-sized company has decided to adopt a professional manager—with whom he shares no blood ties—as his son to pass down the company.

Ceragem announced on the 20th that founder Lee Hwan-sung (65) adopted CEO Lee Kyung-soo (48) as an adult son and gifted him 10% of his 60.5% stake in the company. This unconventional decision to hand over family status and company ownership to an employee who has worked alongside him for over 20 years offers new insights into corporate sustainability and succession models.

It was Sunday, July 13 of last year. Chairman Lee called CEO Lee to a coffee shop and made an unexpected proposal.

"How can I ensure that CEO Lee can steadily lead the company in my place moving forward? I considered giving you stock options, but that didn't feel right. Then I found the most pure and certain method. You become my adopted son."

CEO Lee initially waved his hands, saying, "That makes no sense." With each of them having their own families, he questioned whether they needed to establish a legal parent-child relationship simply for management purposes. After avoiding Chairman Lee for a month, CEO Lee eventually changed his mind. "I am not asking you to support me," Chairman Lee said. "Let's just think about the company. There is nothing complicated about it."

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"At first, my parents opposed it, saying, 'Over our dead bodies,' but after we persuaded them, they gave their permission," said CEO Lee Kyung-soo when meeting at the Ceragem Seoul Town in Yeoksam-dong, Seoul, on the 19th. "We also obtained the consent of the Chairman's family and visited the district office together." Chairman Lee’s 30-something only daughter does not participate in company management. After completing the adoption registration, Chairman Lee apologized, saying, "I am sorry for placing such a heavy burden on you." Although the two have legally become father and son, their titles remain "Chairman" and "CEO Lee." CEO Lee describes himself as both Chairman Lee's son and the "Son of Ceragem."

The first transfer of shares took place this April, and the gift tax is planned to be paid in installments over five years. CEO Lee stated, "Whether gifting to a non-family member or to children, the gift tax rate is the same. This decision was made solely on the foundation of trust, without any conditions regarding management methods or disposal of shares," adding, "We will ultimately move in the direction of becoming the largest shareholder." However, the scale and timing of any additional share transfers remain undecided.

For about two years, Chairman Lee has not attended management meetings, leaving major decisions to CEO Lee. Behind his selection as successor were his entrepreneurial instincts and the execution skills to take risks.

What is Ceragem?

Founded in 1998 by founder Lee Hwan-sung, Ceragem is a home healthcare company whose flagship products include spinal care medical devices and premium massage chairs. After expanding its business primarily overseas, it launched its domestic business in earnest in 2018. In 2019, it introduced "Well Cafe," a cafe-style store where customers can directly experience medical devices. Recently, the company has been expanding its products and services around seven health habits—spine, exercise, rest, beauty, circulation, energy, and mental health—pushing toward a transition into a global wellness company.

CEO Lee passed the hiring process for a large corporation, but anticipating growth in the health sector, he joined Ceragem as a new employee in 2003. The following year, during a business trip to Turkey, he witnessed over 150 customers lining up before opening, which convinced him that his judgment was right. He was rapidly promoted, becoming a team leader at age 34 and a head of division at 38, but in 2017 he submitted his resignation to start his own business, jumping into the general distributorship for Ceragem in Sichuan, China, using his severance pay and money from selling his apartment.

Chairman Lee, who had handed him encouraging funds and supported the challenge, proposed that he take charge of the domestic business when CEO Lee briefly returned to Korea in 2018. Since then, the two have discussed business almost every day, building trust. CEO Lee remarked, "It feels like the Chairman's thoughts and mine have almost 'synchronized'."

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In 2019, despite internal opposition, he introduced "Well Cafe," a medical device experience space. The number of Well Cafes grew from 8 in their first year to about 120 in 2023. Domestic sales also surged from the 70-billion-won range in 2019 to the 600-billion-won range in 2022.

His goal is to nurture Ceragem into a global wellness company with a corporate value of over 10 trillion won. First, he plans to introduce new products for the "seven health habits" to some 1,200 stores in China, achieving 1TB (1 trillion won) in Chinese sales over the long term. He is also pursuing wellness hotel and senior housing projects. CEO Lee noted, "We are also reviewing a listing on the US stock market."

There have been past cases of management rights being handed over to non-family members. Yuhan Corporation's founder Dr. Yuhan Il-han entrusted management to professional managers and transferred shares to the Yuhan Foundation and others. In the case of KSS Shipping, after the founder stepped down, a governance structure centered on an employee-turned-professional-manager system and an employee stock ownership association was established.

Cho Myung-hyun, a professor of business administration at Korea University, evaluated, "Adoption succession by a professional manager is a rare case globally. It is positive in that it secures operational continuity and allows for the pursuit of investment and business strategies from a mid-to-long-term perspective." He added, "What matters is that after the succession, the successor must prove their management capabilities, achieve substantive performance, and gain the market's trust."

[ⓒ Global Economic Times. 무단전재-재배포 금지]