Despite public apathy and tougher shareholder censure, South Korea’s chaebol groups are preparing a generational shift in leadership. The Korea Herald looks at different conglomerates and succession scenarios. -- Ed.
Satoshi Shigemitsu (left) in a photo captured from LinkedIn, and Lotte Group Chairman Shin Dong-bin
Satoshi Shigemitsu, 33, who goes by the Korean name Shin Yoo-yeol, is the only son of Lotte Group Chairman Shin Dong-bin.
Being a Japanese citizen, he went to Keio University, got a management degree from Columbia University and currently works at Nomura Singapore.
Although he has no stake in Lotte Group, and does not work for the conglomerate, he is still considered as the strongest candidate to take over the group. His two sisters keep a much lower profile.
Shigemitsu’s educational and career path resembles his father’s corporate journey.
Senior Shin, 64, (Japanese name Akio Shigemitsu), is the second son of Lotte Group founder Shin Kyuk-ho. He began his career at Nomura London when he was 25 and moved to Lotte International in Japan when he was 32. He graduated from Aoyama Gakuin University and then earned an MBA from Columbia University.
He is likely to follow in the footsteps of his father, who gave up his Japanese nationality in 1996 at the age of 41 and became vice chairman of Lotte Group in 1997, industry watchers said. The nation’s military service law stipulates that the obligation to perform military service applies until age 40.
“Shigemitsu is likely to join Lotte in Korea as early as possible once his military duty issue is settled. Lotte in Japan is not as important as it had been in the Kyuk-ho era and Dong-bin has been trying to dilute the power of Lotte in Japan -- for instance, through the listing of Hotel Lotte here,” said Park Sang-in, a professor at Seoul National University.
The son, as part of Nomura’s investment banking team, is rumored to have taken part in the listing of the hotel. But Lotte has flatly denied it, saying, “Nomura was one of the brokerage houses when Lotte pushed the listing back in 2016. At present, we haven’t even decided on which securities firm to proceed with (for the IPO).”
Shin has not made any clear statements so far on the subject of his children’s future participation in management.
“There is such hope as a father. … Now all three children are doing something unrelated to Lotte,” he said during a parliamentary audit of the National Policy Committee in 2015. Shin’s two daughters reportedly work for private companies in Japan unconnected to Lotte.
A Lotte official said it was “too early to talk about the next leadership” because Shin has not been in his role for very long.
Dong-bin was promoted to Lotte chairman in 2011 and last month the board of directors appointed him as head of the holding firm in Japan, effectively conferring leadership in both countries.
He is still seeking to strengthen his grip on the group by listing Hotel Lotte. This is seen as a way to dilute the power of Lotte in Japan -- which holds most of the hotel’s shares -- and to form a single governance structure.
Lotte tried to list the hotel in 2016 but the attempt ended in failure as Shin was caught up in a bribery scandal. The plan has been postponed indefinitely due to the coronavirus pandemic, which has badly hit Lotte Duty Free -- the source of about 90 percent of Lotte Hotel’s sales.
“The listing of the hotel is an important task for governance. But we did not even start it because of the plunge in sales of duty-free shops,” Lotte said.
The valuation of the hotel should be high to attract more outside capital and dilute Lotte Japan’s control, the firm said.
Lotte is now bracing for a major personnel and business reshuffle under the slogan “New Lotte.”
In December, the group conducted a large-scale personnel reshuffle, replacing some 180 executives. About a third of its executives were affected.
The group intends to close 20 percent of its less profitable stores here, including department stores and supermarkets, by the end of this year to shift to digitalization and internet business, Shin said in a recent interview with a Japanese media outlet.
By Shin Ji-hye (firstname.lastname@example.org)