TOKYO -- The Lotte group came closer to resolving a family feud over leadership Monday when shareholders fell in line behind the founder's younger son, but the dispute may not be over yet.
In January, founder and then-Chairman Shin Kyuk-ho, also known as Takeo Shigemitsu, stripped eldest son Shin Dong-joo of all his titles at Lotte Holdings, including the post of vice chairman. But Dong-joo persuaded his father to reverse course, and last month the elder Shin called for the ouster of the new board led by Chairman Shin Dong-bin, his younger son. Dong-bin and other members of the board responded by removing the father's right to represent the company.
Shin Dong-joo, also known as Hiroyuki Shigemitsu, had planned to propose at the next general shareholders meeting that the board step down, but his younger brother outmaneuvered him. Dong-joo's camp was informed of Monday's meeting Aug. 8, a source said, so it apparently did not have enough time to prepare.
When the meeting began at 9:30 a.m. at a Tokyo hotel, the company put forward two proposals. One was a corporate governance plan to establish stable leadership under the current management team led by Dong-bin, also known as Akio Shigemitsu. The other would appoint Tomoko Sasaki, a lawyer and Teikyo University professor, as Lotte Holdings' first outside director.
The success of these proposals was seen as riding on employee shareholding associations, which own a total of 30% of the company. Kyuk-ho was thought to hold considerable influence over these groups. Dong-joo intended to push back against his brother by winning them over.
But both proposals won majority support. The meeting lasted just 15 minutes. Yonhap News said the result brought the Japanese-South Korean conglomerate more firmly under Dong-bin's leadership.
Yet the younger brother has little time to savor his victory. Confectionery giant Lotte, a core group company, has lacked hit products in recent years. Annual sales have stagnated around 120 billion yen ($957 million), while Calbee and Morinaga & Co. have left it in the dust with double-digit sales growth over the past five years. Some say the leadership battle has damaged the image of Lotte products online in Japan and South Korea.
"Demand hasn't changed yet, but we're keeping an eye on how the feud goes," a representative at one Japanese supermarket operator said.
Dong-bin said after the meeting that Lotte will accelerate efforts to become more transparent and return to its roots. Dong-joo expressed remorse for the family disagreement.
Though both seek to repair their image, trouble could lie ahead. An asset management firm led by Kyuk-ho remains Lotte Holdings' top shareholder. Dong-joo will consider pushing again for the board's removal, a source close to the older brother said. Another flare-up could make a more transparent Lotte an even more distant prospect.