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Luxury villa provided to Shinsegae International CEO at risk of auction due to landlord's debt

[비즈한국] It has been confirmed that Shinsegae International031430 has recently extended the lease on a luxury villa specially provided to CEO William Kim. This move appears intended to provide housing for the CEO until his term expires in March of next year. However, concerns are emerging that the return of the deposit could be jeopardized, as the villa is slated for auction due to the landlord's debt.

In February 2023, Shinsegae International signed a lease for a unit in Villa A, a luxury villa in Cheongdam-dong, Gangnam-gu, Seoul, to provide as a private residence for the newly appointed CEO, William Kim. At the time, the company paid a deposit of 3.5 billion KRW for a two-year contract. Local real estate sources explained that it was a "ban-jeonse" (a lease with a large deposit and monthly rent) contract, requiring an additional monthly rent of 16 to 18 million KRW. The asking price for a full jeonse lease for the villa was 70 billion KRW at the time.

According to Bizhankook’s investigation, the unit leased by Shinsegae International received a decision for a compulsory auction from the Seoul Central District Court in August last year due to the landlord’s debt. A compulsory auction occurs when a creditor puts up collateral for sale because the debtor has failed to repay their debt.

An auction date has not yet been set for the unit. A real estate industry insider explained, "The compulsory auction process often takes more than a year, considering factors like failed bids. It takes quite a long time, and a short-term resolution is unlikely."

Shinsegae International maintained that there would be no issues with recovering the deposit. A company official stated, "The company is aware of the auction issue. We have reached an agreement (with the landlord) to extend the contract through this year, and we understand there are no problems."

CEO Kim received significant compensation last year. Looking at his earned income for the first half of 2024, his salary increased by about 2.7% compared to the previous year, and he received additional "other" earned income that he had not received before. This included 37 million KRW in welfare benefits, such as medical support and tuition fees, in accordance with executive compensation regulations. His total compensation grew from 1.251 billion KRW in the first half of 2023 to 1.317 billion KRW in the first half of last year.

With such special treatment, expectations for his performance are also rising. However, the industry continues to evaluate that he has yet to show clear results. This year, it appears CEO Kim will need to stake everything on improving Shinsegae International’s performance.

The current situation is far from ideal. Through its 2025 regular executive reshuffle, Shinsegae changed CEO William Kim's role to head of the fashion division and appointed Kim Hong-keuk, CEO of Shinsegae Casa, as the head of the beauty & lifestyle division. CEO William Kim is tasked with turning around the performance of the fashion division, but expectations suggest it will be difficult to find a breakthrough as the domestic fashion market remains stagnant.

The situation is further compounded by unfavorable news. Recently, it was discovered that goose-down products from women's fashion brands Vov and G-cut, operated by Shinsegae International subsidiary Shinsegae Tomboy, actually used duck down. Shinsegae International has been focusing on the growth of Shinsegae Tomboy to bolster its own fashion brands, but this incident puts the brands at risk of a significant loss of consumer trust.

Regarding this, CEO Kim posted an apology on the website on the 24th, stating, "As soon as we became aware of the facts, we stopped selling the products and are currently recalling the products in distribution. We will fundamentally improve our quality control system," and "I once again sincerely apologize to our customers."