Lotte cements Chairman Shin's one-man leadership

Lotte Group Chairman Shin Dong-bin enters a meeting room for a biannual gathering with top management at Lotte Hotel, in southern Seoul, Friday. / Yonhap

By Park Jin-hai

Lotte Group, embroiled in a prolonged succession dispute and failed bid to renew the license for its Lotte World Tower duty free shop, held its biannual meeting of company executives, Friday.

Unlike 30 to 40 executives previously forecast to be present, some 80 top management officials, including Lotte Shopping Vice Chairman Lee In-won and President Hwang Kag-gyu, and Lotte Corp CEO Noh Byung-young, took part in the meeting, at the Lotte Hotel in southern Seoul, showing that Chairman Shin Dong-bin is in total control of the group.

It was the first meeting of top executives since Lotte founder Shin Kyuk-ho was dismissed from his executive posts at Lotte Holdings Japan in July.

The company leadership has been problematic since last summer as the group founder’s two sons ― Dong-joo and Dong-bin ― battled for the control of the group.

The eldest son Dong-joo was ousted from key posts at the group’s Japanese units, while Dong-bin took the helm of Tokyo-based Lotte Holdings, the group’s holding firm. On Monday, Lotte founder Shin filed charges against Dong-bin and two other company chief executives for business obstruction and concealing property.

During the Friday meeting, the management discussed multiple tasks the company faces including most importantly the public listing of the Lotte Hotel, slated in the first quarter of next year, and finishing the construction of Lotte World Tower next year.

Chairman Shin ordered top management to make agile responses to economic changes, stronger governance and better communication. For a fast response, he stressed the importance of “open innovation,” where the company actively seeks outside resources.

Starting from its hotel unit, he also said he will increase the number of affiliates to be listed on the local bourse. “We will seek the IPO of hotel, and information and communication units next year and increase the number,” said Shin. “As for non-listed companies, we will hire outside directors to strengthen transparency.”

On Thursday, Japanese shareholders showed that they support the current leadership despite the ongoing succession feud, clearing up uncertainties surrounding the preparation for listing its hotel unit.

The listing has been one of the reform pledges that Dong-bin made to assuage public disgust over the bitter family feud.

The group is slated to announce a management reshuffle in the middle of this month.

Industry insiders say that this will be minor, since the ongoing succession feud is regarded as the main culprit for Lotte not retaining its critical duty free business license.

Dong-bin previously said, 99 percent of the responsibility for the failed bid lies with him.

“Given the developments inside the group, we think the reshuffle might be smaller in size than before,” said a Lotte Group official.

In terms of performance, Lotte Shopping’s operating profit posted 664.7 billion won as of the third quarter, a 30 percent drop year-on-year. Lotte Department Store, due to the increased cost from opening new outlets, reported a 33.7 percent fall in operating profits during the same period, at 282 billion won. Lotte Mart, hit by its sluggish China business, suffered an operating loss of 18 billion won. The other retail units including Lotte Home Shopping, Lotte Mart and Lotte Cinema also saw their operating profits slip 32.2 percent to 75 billion won.

Lotte Hotel reported a 12 percent slide year-on-year at 238.6 billion won.

However, chemical unit Lotte Chemical, which acquired Samsung’s chemical affiliates last month, reported that its operating profit more than quadrupled to 1.3 trillion won.