Shin Dong-ju Opposes Shin Yu-yeol's Appointment as Director of Lotte Holdings

Shin Dong-joo, chairman of SDJ Corporation, expressed opposition to the proposal to appoint his nephew, Shin Yoo-yeol, executive director of Lotte Holdings' Future Growth Office, as a director of Lotte Holdings. The reasons cited were that Shin Yoo-yeol's management capabilities have not yet been verified and concerns over the privatization of Lotte Group by the Shin Dong-bin family.

On the 24th, Shin Dong-joo announced that he would exercise his voting rights to oppose the appointment of Executive Director Shin Yoo-yeol at the upcoming Lotte Holdings annual general meeting scheduled for the 26th. Lotte Holdings is set to hold its annual general meeting on the 26th to decide on the proposal to appoint Executive Director Shin as an inside director. This proposal is reported to have been submitted by shareholders from the Korean side of Lotte.

Shin Dong-ju, Chairman of SDJ Corporation. / Photo by Jin-hyung Kang aymsdream@

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Chairman Shin stated, "At this critical juncture where the management direction of the Korea-Japan Lotte Group is important, it is inappropriate for an individual whose management capabilities have not been verified to join the board of directors, the highest decision-making body." He added, "The deterioration of management in the Korean Lotte Group has significantly damaged the overall corporate value of Lotte Holdings, and the excessive executive compensation received by Shin Dong-bin at subsidiaries is problematic. Therefore, now is the time for a comprehensive overhaul of the Lotte Holdings board of directors, which currently lacks effective management oversight."

Furthermore, as part of the 'normalization of Lotte management,' Chairman Shin submitted a shareholder proposal and a preliminary inquiry to the Lotte Holdings board. Shin Dong-joo is the representative of Kwangyunsa and the largest shareholder holding 50.28% of shares; Kwangyunsa is the largest shareholder of Lotte Holdings. The shareholder proposal includes ▲the appointment of Chairman Shin himself as a director ▲the dismissal of Shin Dong-bin from the Lotte Holdings board ▲and amendments to the articles of incorporation to establish disqualification criteria for directors to prevent the appointment of inappropriate individuals who have been convicted of crimes.

Chairman Shin emphasized, "Lotte, which held a position among the top five domestic conglomerates for 13 years, has remained at 6th place in the business rankings this year following last year, indicating that the entire group is trapped in a vicious cycle of stagnation. This shows that the management of Chairman Shin Dong-bin, who has held the chairman position for many years, has reached its limit." He added, "Until now, Shin Dong-bin has held various group executives accountable for short-term management performance and replaced personnel accordingly, but now the one who needs to change is Shin Dong-bin himself." Chairman Shin argues that the Lotte Holdings board should recruit a professional manager to replace Shin Dong-bin.

In addition, Chairman Shin submitted a preliminary inquiry asking the Lotte Holdings board about their responsibility and stance regarding the ongoing deterioration of Lotte Group's management. The inquiry included questions about ▲the role and responsibility of the Lotte Holdings board ▲responsibility for the damage to corporate value due to the decline in market capitalization ▲responsibility for the deterioration of financial soundness in the Korean Lotte Group ▲responsibility for growth strategies in key industries of the Korean Lotte Group ▲management policies of the Japanese Lotte Group ▲and compliance with laws and regulations.

An SDJ Corporation official explained regarding the opposition vote against Executive Director Shin's appointment and the shareholder proposal, "As the representative of the largest shareholder company at the top of the Korea-Japan Lotte Group's governance structure, Kwangyunsa, Chairman Shin is expressing his determination not to overlook the crisis situation of Lotte and to correct what is wrong."

However, regardless of Chairman Shin's opposition, the proposal to appoint Executive Director Shin is expected to pass smoothly. Although Kwangyunsa is the largest shareholder of Lotte Holdings with a 28.14% stake, major shareholders such as the Employee Shareholders' Association (27.8%) and the Executive Shareholders' Association (5.96%) have expressed support for Shin Dong-bin, chairman of Lotte.

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