Lotte Group, the fifth-largest conglomerate in South Korea, said it will raise wages for its executives sharply this year, demonstrating its intention to catch up with other chaebol groups in pay levels.

“The group’s overall earnings turned out to be better than expected, which has been reflected in the increase in annual compensation for employees,” the group said, without giving specific rates.

But people familiar with Lotte’s move said the increase rate would be 10-15 percent this year, a level that is seen as “dramatic” considering the group’s conservative tendencies.

The sharp increase for executives came in just two years, shortening the usual pay raise cycle of three years. Lotte said the increase came earlier as it wanted to narrow the gap with other groups, which recently increased wages for their employees.

The move also came in response to the view that Lotte’s compensation packages for its executive-level employees are far lower than other family-controlled conglomerates.

Lotte has long argued that it is unfair to compare its compensation with other groups because its flagship business is retail distribution and many other competitors are engaged in the manufacturing and IT sectors. But even among retailers, Lotte lagged behind as Lotte Shopping’s average wage totaled 30.72 million won versus GS Retail’s 42 million won last year.

Lotte posted a record 73 trillion won in revenue in 2011, up 19 percent from a year earlier. Lotte’s profitability is also robust. According to the Korea Exchange, the country’s bourse operator, Lotte’s operating profit jumped 16.3 percent last year, securing the No. 3 slot in the rankings among the top 10 chaebol groups.

Lotte is recently demonstrating a series of changes in recent months as its chairman Shin Dong-bin has taken reform measures such as globalization initiatives and personnel overhauls.

By Yang Sung-jin (insight@heraldcorp.com)