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Why does Lotte Holdings Vice President Shin Yoo-yeol use a 5-star Gangnam hotel as his registered address?

[비즈한국]  It has been confirmed that Shin Yoo-yeol (40), Vice President of Lotte Holdings and eldest son of Lotte Group Chairman Shin Dong-bin (71), uses a hotel as his residence, drawing attention to the reasons behind this choice. While living in a hotel is not impossible, there are concerns regarding security given that it is a facility used by many people. It is also difficult to assume that Vice President Shin lacks the funds to purchase or lease a private home. Some interpret this as an indication that Vice President Shin is focused on global business activities. The analysis suggests that because he is not solely focused on the Korean market, he has not yet felt the need to establish a permanent home in the country.

Hotel living for overseas activities?

According to the corporate registry for Lotte Biologics, Vice President Shin Yoo-yeol currently lists his residence at a hotel in Samseong-dong, Gangnam-gu, Seoul. This hotel is a 5-star establishment that opened in 2002. Being a luxury hotel in Gangnam-gu, it is frequently used as accommodation for foreign delegations when major international events are held.

According to the registry, Vice President Shin Yoo-yeol is residing at the hotel. This hotel has no significant connection to Lotte Group or Vice President Shin Yoo-yeol in terms of shareholding or management. This stands in contrast to his father, Chairman Shin Dong-bin, who resides at Lotte World Tower.

Vice President Shin Yoo-yeol is a Japanese national. Under current law, foreigners staying in Korea for more than 90 days must register as foreign residents. They are required to report their place of stay during registration and must also report any changes to their place of residence. It is understood that Vice President Shin is living in a Korean hotel under the status of a long-term foreign resident. His address was first disclosed in September 2024 when he purchased shares in Lotte Holdings, at which time it was also listed as "Samseong-dong, Gangnam-gu, Seoul." For shareholders living abroad, their overseas addresses are reflected as-is.

Some react with curiosity to the fact that Vice President Shin Yoo-yeol chooses to live in a hotel. Given that he has been active in Korea for several years and is the third-generation owner of the Lotte Group, it is unlikely that he feels burdened by the cost of purchasing or leasing a home. A business industry official stated, "Conglomerate families tend to avoid exposing their private lives, and living in a hotel inevitably exposes one's movements to a certain extent; it is also questionable whether one could leave personal documents in a hotel with peace of mind," adding, "Even for someone who isn't a conglomerate heir, it would be difficult to live comfortably in a hotel used by many people."

Although Vice President Shin Yoo-yeol is a Japanese national, he is primarily active in Korea. He currently serves as Vice President and Head of the Future Growth Office at Lotte Holdings and as CEO of Lotte Biologics. He also holds positions as a director of the Japanese entity Lotte Holdings and CEO of Lotte Financial, but since the Korean subsidiaries are larger in scale, it is understood that Korea is effectively his primary stage of activity.

There is another interpretation. While Vice President Shin Yoo-yeol is primarily working in Korea for now, he could participate in the management of overseas subsidiaries at any time. Lotte Group recently announced that it would establish a joint venture in Singapore between Lotte Wellfood and Lotte Confectionery Japan, and Vice President Shin is scheduled to serve as the chairman of the board for this joint venture. Once he begins to actively participate in the management of the Singapore joint venture, he will not be able to stay only in Korea. This is why analysts suggest that since he is expected to have many overseas activities for the time being, there is no need for him to rush into securing a residence in Korea.

A Lotte Group official merely replied, "I do not know about Vice President Shin's personal residence."

Any issues with management succession?

In the business world, Vice President Shin Yoo-yeol is viewed as the next head of the Lotte Group. Among Chairman Shin Dong-bin's children, Vice President Shin is the only one participating in Lotte Group's management. However, the challenge of securing shares remains for the succession of control. The Lotte Holdings shares currently held by Vice President Shin amount to a mere 0.03%.

Lotte Holdings' shareholders currently consist of: Chairman Shin Dong-bin (13.73%), Hotel Lotte (11.68%), Lotte Aluminium (5.33%), Lotte Chilsung (5.26%), Lotte Foundation (3.41%), and Lotte Holdings (Japan) (2.62%), based on common stock. At first glance, Chairman Shin Dong-bin’s control appears solid, but a closer look reveals potential variables. Key shareholders such as Hotel Lotte, Lotte Aluminium, and Lotte Chilsung are subsidiaries or sub-subsidiaries of Lotte Holdings (Japan). The total stake held by Chairman Shin Dong-bin and his related parties in Lotte Holdings is 45.74%, but more than 28% of this is under the control of Lotte Holdings (Japan). Furthermore, the Lotte Foundation is a public interest corporation, which limits its voting rights. Therefore, securing control over Lotte Holdings (Japan) could enable control over the entire Lotte Group.

However, the stake in Lotte Holdings (Japan) held by Chairman Shin Dong-bin is only 2.69%. Looking at the major shareholders of Lotte Holdings (Japan): Kojunsha (28.14%), Lotte Strategic Investment (10.65%), the Executive Shareholding Association (5.96%), Midori Shoji (5.23%), Family (4.61%), and Lotte Green Service (4.10%). In addition, the Lotte Holdings Employees' Shareholding Association is known to hold over 20% of Lotte Holdings (Japan) shares, but they are not disclosed because they are not executives. The largest shareholder of Kojunsha is Chairman Shin Dong-bin’s brother, SDJ Corporation Chairman Shin Dong-joo.

The stakes held by the major shareholders of Lotte Holdings (Japan) that support Chairman Shin Dong-bin are: Lotte Strategic Investment (4.61%), Family (8.34%), and Lotte Green Service (12.35%). It is difficult to say that Chairman Shin Dong-bin’s control over Lotte Holdings (Japan) is absolute. The stakes held by his brother, Chairman Shin Dong-joo, excluding Kojunsha, do not differ significantly from Chairman Shin Dong-bin’s. Instead, many Japanese executives hold substantial stakes in Midori Shoji, Family, and Lotte Green Service.

Looking at the shares, there is room for Chairman Shin Dong-joo to secure control of the Lotte Group. Moreover, Chairman Shin Dong-joo has consistently taken a critical stance toward Chairman Shin Dong-bin. However, Chairman Shin Dong-joo has failed to achieve his intentions at every Lotte Holdings (Japan) shareholders' meeting thus far. At the shareholders' meeting in June, he proposed agendas such as the dismissal of Chairman Shin Dong-bin as a director and his own appointment as a director, but both were rejected.

Chairman Shin Dong-joo argued, "Even at this shareholders' meeting, no responsible explanation for the deteriorating management performance or practical improvement plans were presented," adding, "Despite the group's management crisis becoming visible, such as Lotte Holdings (Japan) recording massive deficits for two consecutive years, management and the board of directors are focusing on maintaining the current system rather than discussing responsibility for it."

It is interpreted that the background to Chairman Shin Dong-bin's dominance at the shareholders' meetings lies in the support of the Lotte Holdings Employees' Shareholding Association, the Executive Shareholding Association, and Japanese shareholders. However, if Lotte Group's performance worsens and its corporate value declines, cracks may appear in the support for Chairman Shin Dong-bin. In this case, it could act as a stumbling block for Vice President Shin Yoo-yeol's management succession.