Lotte Group’s beleaguered retail company Lotte Shopping paid a salary of 800 million won ($723,800) to Lotte founder Shin Kyuk-ho for the first half of 2016, despite his absence from company operations, according to a report disclosed by the company Wednesday.


This is the same amount of salary paid to the founder last year. Shin, who is currently undergoing court proceedings to determine whether he should be appointed an adult guardian due to mental incompetency, has not been involved in Lotte’s operations since late 2015. He and his son, current Lotte Chairman Shin Dong-bin, are also under investigation by prosecutors on charges of embezzlement and dubious real estate transactions.

Chairman Shin Dong-bin, meanwhile, was awarded a salary less than that of his father at 625 million won for the first half of 2016, despite being the chief executive of the group.

The high salary is even more controversial because of Lotte Shopping’s poor performance this year. According to disclosures, Lotte Shopping saw a near 20 percent drop in its operating profits from last year, coming in at 379 billion won. The fall in profits came from a sluggish recovery from last year’s Middle East respiratory syndrome outbreak, as well as falling demand in the supermarket sector.

Lotte Mart suffered losses of 63 billion won in the second quarter of this year due to several factors including the tarnishing of its brand image after being connected to the toxic humidifier disinfectant scandal. In addition, the discount store industry is suffering overall from “lower sales of fresh food and a consumer trend toward online shopping,” according to analyst Lee Ji-young of NH Investment & Securities in a report.

Shin Kyuk-ho was not the only controversial figure to receive a high-figure salary. Shin Young-ja, the first member of the Lotte founding family to have been taken into custody on charges of embezzlement and accepting bribes, was also awarded 850 million won in salary and a 496 million won bonus in the first half of 2016 as an executive of Hotel Lotte.

By Won Ho-jung (hjwon@heraldcorp.com)