Samsung’s de facto leader, Jay Y. Lee, formally takes the top job

The 54-year-old Mr. Lee—who goes by Jay Y. Lee in the West—had previously held the title of Samsung Electronics vice chairman. He takes over a position previously held by his father, Lee Kun-hee, who died two years ago after being incapacitated by a 2014 heart attack.

With his father ill, Lee Jae-yong, Harvard-educated and trilingual, served as the de facto head of Samsung, which includes Samsung Electronics, the conglomerate’s crown jewel. All major decisions across Samsung’s various affiliates, from theme parks to life insurance to biopharmaceuticals, required his signoff.

Samsung Electronics’ board said Thursday it had recommended giving Mr. Lee the executive chairman title in light of the uncertain global business environment and need for stronger accountability.

A variety of legal issues had complicated Mr. Lee’s formal ascension to the top. He was imprisoned twice in recent years for bribing South Korea’s president at the time. Last year, however, he was paroled from a 30-month sentence tied to the bribery conviction that included a five-year employment ban. And in August, Mr. Lee received a presidential pardon that cleared the 2017 conviction from his record.

The new title formalizes his role, but it hasn’t settled the concerns of corporate-governance experts who have long criticized the company’s arcane structure and decision making. They said it isn’t clear why he should be able to dictate actions across the different affiliates of the Samsung conglomerate from a position atop Samsung Electronics. They also worried his absence from the company’s board means his decisions will be less transparent and less subject to shareholder questions and votes.

“It’s terrible from an accountability perspective,” Yoo-Kyung Park, Asia-Pacific head of responsible investment and governance at Dutch pension fund APG, one of Samsung Electronics’ major institutional investors, said of the failure so far to put Mr. Lee on the board.

A Samsung spokeswoman said it is up to the board to decide whether to nominate Mr. Lee as a director.

Chang Sea-jin, a business professor at the National University of Singapore who has authored books on Samsung and its rise, said Mr. Lee’s power over the conglomerate at large can be problematic.

“Samsung has been a strategically centralized organization, and everyone looks to what the chairman says for big decisions,” Mr. Chang said. “But it should be the professional managers and CEOs at each affiliate making those calls.”

Mr. Lee’s formal ascent has raised expectations that he will be more active in pushing forward big mergers and acquisitions and making decisions to prepare Samsung’s diverse businesses for the future, said Kim Kyeong-jun, president of CEO Score, a Seoul-based corporate-research firm.

“Now is the time to plan our next move. Now is the time to act, to be bold and unwavering in our focus,” said Mr. Lee in a meeting with Samsung CEOs earlier this week. The remarks were shared with Samsung employees on the company’s internal website on Thursday.

The announcement of Mr. Lee’s executive chairmanship appointment came as Samsung Electronics reported a 24% decline in third-quarter net profit from a year earlier due to a slowdown in memory-chip demand.

Samsung is working to gain a bigger foothold in the semiconductor contract-manufacturing business dominated by Taiwan Semiconductor Manufacturing Co. while maintaining its leadership in its flagship memory-chip business.

The South Korean tech giant must also carefully navigate rising U.S.-China tensions over semiconductors given its significant business interests on both sides.

Samsung also faces challenges in a smartphone market that is growing saturated. The company is now directing more resources into building what it hopes will be an ecosystem spanning its smartphones, mobile gadgets and home appliances. It is working to develop strengths in software as technologies such as artificial intelligence become more important.