Shareholders of Tokyo-based Lotte Holdings Co., a key unit of Korean-Japanese retail conglomerate Lotte Group, voted to oppose a measure to remove Chairman Shin Dong-bin at an extraordinary general meeting on Sunday.
Family-controlled Lotte Group is in the midst of a power struggle between Shin Dong-bin, known in Japan as Akio Shigemitsu, and his older sibling who was stripped of his executive positions at the Japanese unit in January last year. The brother, Shin Dong-joo (Japanese name Hiroyuki Shigemitsu), had called for the meeting last month to put him on Lotte Holdings’ board and oust its current directors.
Shareholders denied all measures proposed on Feb. 16 by Shin Dong-joo, Lotte confirmed by electronic mail on Sunday. He had proposed a plan to form a new board of directors for Lotte Holdings with himself as chief executive officer and their father, Shin Kyuk-ho (Takeo Shigemitsu), as founder, and for them to sit at the top of the South Korean business as well. A spokeswoman at Lotte Group in Seoul said at the time those plans don’t seem achievable.
Shin Dong-joo refused to accept Sunday’s rebuttal and said that he would resubmit the proposals at June’s shareholder meeting, according to a statement provided by SDJ Corp., which represents him.
“I could not fully explain (my proposals) under heavy pressure from the current board members,” Shin Dong-joo told reporters after the meeting.
Though Lotte has operations in Japan, the group generates the bulk of its business in Korea, where it has more than 80 affiliates in areas ranging from department stores to amusements parks and hotels with over 100 trillion won ($83 billion) of assets. Lotte Holdings is a particularly important unit because of its stakes in key affiliates and its role in coordinating group strategy.
While the chairman controls Lotte Holdings, the company counts closely held entity Kwang Yoon-sa as its biggest shareholder with a 28.1 percent stake. Shin Dong-joo, who has said he owns 50 percent of Kwang Yoon-sa, had tried to oust his younger brother last July only to see that plan backfire and their father, who started Lotte in Japan in 1948, sidelined.
Among Shin Dong-joo’s proposals last month are a plan for Lotte Holdings to pursue an initial public offering that he said could value the company at ¥1.1 trillion ($9.7 billion), and also to redistribute shares in a key employee association that holds a sizable stake in the Japanese unit. He estimates the association owns 27.8 percent of Lotte Holdings’ outstanding shares, making it the second-biggest owner after Kwang Yoon-sa.
Shin Kyuk-ho founded Lotte in Japan 1948 after completing his university studies there. The company now makes confectionery and operates hotels, golf links and restaurants as well as professional baseball teams in Japan and South Korea.