Lotte Construction decided on a management policy to raise the base annual salaries of registered directors, including the CEO, this year. Through the board's compensation committee, it decided to raise the base salary excluding bonuses and allowances, and the rate of increase has not yet been finalized.
Lotte Construction's operating profit fell by nearly 40% last year. Recently, it accepted applications for voluntary retirement from employees, and it is also reviewing ways to secure liquidity by selling or self-developing its headquarters building site in Jamwon-dong, Seocho-gu, Seoul.
According to the construction industry on the 4th, Lotte Construction's board of directors passed a plan in January to raise the base annual salaries of registered directors, including the CEO, with 100% approval by the board's compensation committee. The increase plan passed at the first compensation committee meeting of the year. Lotte Construction has eight registered directors, including CEO Oh Il-keun (executive vice president), inside directors and an auditor, and outside directors.
An outside director who attended the compensation committee told ChosunBiz by phone regarding the base annual salary increase that "it is inappropriate to make specific comments." The compensation committee's decision finalized the management policy to raise this year's base salaries for registered directors. Details such as the rate of increase have not yet been decided.
A Lotte Construction official said, "It is true that we set the direction to raise the base salary as a management policy," adding, "However, as Lotte Group has entered an emergency management regime and executives across all affiliates are returning a certain percentage of their pay by rank, the actual take-home pay of Lotte Construction's registered directors will not increase this year." According to the Financial Supervisory Service, as of last year the average compensation per person for Lotte Construction's six registered directors was 1.256 billion won (including severance).
Lotte Construction's operating profit was 105.4 billion won last year, down 64.1 billion won (37.8%) from 169.5 billion won a year earlier. During the same period, net income fell from 56.7 billion won to 11.4 billion won, down 45.3 billion won (79.8%). Looking at operating cash flow (OCF), it turned to a deficit in 2024, and last year's deficit was 622 billion won. OCF is an indicator showing how much cash actually came in and out from operating activities.
Lotte Construction also accepted applications for voluntary retirement from Apr. 13 to 24, targeting long-tenured employees and those subject to the wage-peak system. It offered conditions including a retirement severance payment of up to 30 months of base salary and an additional special severance of 30 million won. It is also reviewing a plan to secure liquidity by selling or self-developing the headquarters land in Jamwon-dong, Seocho-gu, Seoul.