What 'responsibility' does Chairman Chung claim while avoiding becoming a Emart registered director?
- Chairman Yongjin Chung is increasing key man risk by evading responsibility for management failures and the accumulation of massive debt
- Emart board should review whether approval of Chung’s 2025 compensation of W5.9 billion was appropriate from fiduciary duty perspective
- Emart should focus on reducing W12 trillion debt, or 5x its market cap; it should sell non-core assets such as California wineries and golf courses that are unrelated to its main business
- Chung has 2 options: 1) the board should immediately proceed with registration of Chung as a director and seek shareholder approval at the general meeting; or 2) if Chung lacks confidence, he should step back from management and transition to a professional management team
Chairman Yongjin Chung of the Shinsegae Group publicly emphasized on the 26th that “I take full responsibility for this matter, it is my fault,” regarding the controversy surrounding Starbucks Korea's ‘downplaying of the May 18 Gwangju Democratization Movement’. Emart holds a 68% stake in SCK Company, which operates Starbucks Korea, with the remaining 32% is owned by the GIC.
Chung is not an internal director of Emart’s board. By avoiding the appointment as a registered director, Emart shareholders have not been able to evaluate his poor performance until now. Chung was promoted to group chairman in March 2024 and is the controlling shareholder with a 29% stake in Emart. The recognition of him as chairman two years ago did not come from general shareholders; it was a self-promotion by him and his mother, Myung-hee Lee, the group chairperson.
Authority means the right granted to perform responsibilities. Although he is not an internal director, Chung has been directly involved in major corporate decisions at Emart and its affiliates but has never taken responsibility in front of shareholders. On this occasion, Chung quickly dismissed Son Jung-hyun, the CEO of SCK Company, on the day of the incident as a form of damage control. On the 26th, when announcing the results of their own investigation, Emart representative stated, “If inappropriate interference or intent is confirmed regarding this matter, we will hold individuals accountable, regardless of their position.”
In 2025, Chung received a total compensation of W5.85 billion, including a base salary of W2.45 billion and bonuses of W3.41 billion. Chung’s parents, chairperson Myung-hee Lee (who’s aunt of the Samsung Group chairman JY Lee) and honorary chairman Jae-eun Chung, were classified as ‘full-time’ and each received W1.84 billion. That said, Emart's management performance in 2025 showed a net profit margin of 1%, ROE of 1%, and an equity valuation of only 0.2x book value.
However, the Compensation Committee (composed of independent directors Jun-Oh Lee, former Head of Jungbu Regional Office at National Tax service, and Ji-Hye Choi, Research Fellow of Consumer Trend Center at Seoul National University) approved an increase of 58% in Chairman Chung's total compensation compared to 2024. Since Chung and his parents are not registered internal directors, the total compensation paid to the family of W9.5 billion did not require shareholder approval at the AGM.
Chairman Chung has two options, in our view. One is for the Emart board to immediately initiate the appointment procedures for a registered director and hold an extraordinary general meeting. If this does not get rejected at the general meeting, he can take office as an internal director and receive regular evaluations of his management performance from shareholders. The other option is to step back from management and transition all of Emart and its affiliates to a professional management system. The prerequisite for the latter is to have a board composed of individuals with expertise and independence.
The fundamentals of Emart and its affiliates are extremely weak as follows:
- Excessive debt compared to market cap: Its market cap is still W2.6 trillion, which is one-fifth of its W12 trillion total debt. If the debt is excessive, increasing market capitalization (stock price rise) becomes difficult. Meanwhile, its credit rating continues to decline.
- Long-term stagnation of stock prices: Over the past 5 and 10 years, its stock price has fallen by 42% and 48%, respectively. During the same period, the KOSPI has risen by 154% and 380%, respectively.
- Aftereffects of reckless M&A: Emart has carried out many M&A transactions over the past few years with borrowed funds amounting to trillions of won. Chairman Chung has been clumsy in deal negotiation. There have been frequent cases of overpaying during peak cycles due to urgency, in our opinion. Many deals are unrelated to its main business, such as wineries. The prestigious Napa winery ‘Shafer Vineyard’, which should have been acquired with his personal funds, was bought for W307.7 billion in 2022 by Shinsegae Property, a 100% subsidiary of Emart (essentially with the money of Emart's general shareholders). Shinsegae Property fully reflected impairment charges associated with the goodwill related to the acquisition of Shafer Vineyard, totaling W39.2 billion, on its 2025 financial statements. The losses at Gmarket, which saw an investment of W3.4 trillion, continued losing money, recording a net loss of W114.3 billion in 2025.
- Lack of interest in reducing debt: Shinsegae E&C, which was a locally listed subsidiary in construction and development , delisted itself in February 2025 to promote restructuring and was re-incorporated as a 100% subsidiary of Emart. As of the end of 2025, Shinsegae E&C's debt exceeded Won 800 billion. Unable to withstand annual losses of several hundred billion won, it received a W500 billion equity capital injection from Emart in May this year. In June 2024, Shinsegae E&C sold its leisure division, which includes three golf courses, to Josun Hotels & Resorts, a 100% subsidiary of Emart, for W182 billion. It seems that Chairman Chung found it regrettable to sell the prestigious Trinity Club, Korea’s premier golf course, to a third party, effectively moving money from one pocket to another. As of the end of last year, Josun Hotels & Resorts’ debt reached W1.23 trillion. Despite the urgent need to reduce the group's overall debt, Chung seems unaware of the seriousness of the situation.
- The oppressive attitude of the Chung family disregarding minority shareholders, as seen in the comprehensive share swap case between Emart and Shinsegae Food: There are serious conflicts of interest between controlling shareholders and minority shareholders regarding the promotion of a comprehensive stock exchange between Emart and its controlled listing subsidiary Shinsegae Food. The comprehensive stock exchange aims to delist Shinsegae Food, raising concerns about the fairness of the exchange ratio for minority shareholders, the appropriateness of value assessment, and the potential for de facto forced expulsion. Transactions that do not go through the Majority of Minority (MoM) approval process, which is one of the key elements of the fair process required by directors’ fiduciary duties to shareholders, create a structure where fairness is severely compromised in the conflict of interest situation. This is an abuse of power by the controlling shareholder, ignoring the spirit of the revised Commercial Code that has been amended three times since July last year.
May 27th, 2026
Korean Corporate Governance Forum
Chairman, Namuh Rhee
What 'responsibility' does Chairman Chung claim while avoiding becoming a Emart registered director?
Chairman Yongjin Chung of the Shinsegae Group publicly emphasized on the 26th that “I take full responsibility for this matter, it is my fault,” regarding the controversy surrounding Starbucks Korea's ‘downplaying of the May 18 Gwangju Democratization Movement’. Emart holds a 68% stake in SCK Company, which operates Starbucks Korea, with the remaining 32% is owned by the GIC.
Chung is not an internal director of Emart’s board. By avoiding the appointment as a registered director, Emart shareholders have not been able to evaluate his poor performance until now. Chung was promoted to group chairman in March 2024 and is the controlling shareholder with a 29% stake in Emart. The recognition of him as chairman two years ago did not come from general shareholders; it was a self-promotion by him and his mother, Myung-hee Lee, the group chairperson.
Authority means the right granted to perform responsibilities. Although he is not an internal director, Chung has been directly involved in major corporate decisions at Emart and its affiliates but has never taken responsibility in front of shareholders. On this occasion, Chung quickly dismissed Son Jung-hyun, the CEO of SCK Company, on the day of the incident as a form of damage control. On the 26th, when announcing the results of their own investigation, Emart representative stated, “If inappropriate interference or intent is confirmed regarding this matter, we will hold individuals accountable, regardless of their position.”
In 2025, Chung received a total compensation of W5.85 billion, including a base salary of W2.45 billion and bonuses of W3.41 billion. Chung’s parents, chairperson Myung-hee Lee (who’s aunt of the Samsung Group chairman JY Lee) and honorary chairman Jae-eun Chung, were classified as ‘full-time’ and each received W1.84 billion. That said, Emart's management performance in 2025 showed a net profit margin of 1%, ROE of 1%, and an equity valuation of only 0.2x book value.
However, the Compensation Committee (composed of independent directors Jun-Oh Lee, former Head of Jungbu Regional Office at National Tax service, and Ji-Hye Choi, Research Fellow of Consumer Trend Center at Seoul National University) approved an increase of 58% in Chairman Chung's total compensation compared to 2024. Since Chung and his parents are not registered internal directors, the total compensation paid to the family of W9.5 billion did not require shareholder approval at the AGM.
Chairman Chung has two options, in our view. One is for the Emart board to immediately initiate the appointment procedures for a registered director and hold an extraordinary general meeting. If this does not get rejected at the general meeting, he can take office as an internal director and receive regular evaluations of his management performance from shareholders. The other option is to step back from management and transition all of Emart and its affiliates to a professional management system. The prerequisite for the latter is to have a board composed of individuals with expertise and independence.
The fundamentals of Emart and its affiliates are extremely weak as follows:
May 27th, 2026
Korean Corporate Governance Forum
Chairman, Namuh Rhee