Dongbu District Court Decision 201Na1444 decided May 1, 201

Defendant (Law Firm International Law, Attorney Gyeong-soo, Counsel for defendant-appellant)

October 15, 2015

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The defendant shall pay to the plaintiff 633,403,33 won and 137,533 won among them at each rate of 5% per annum from April 30, 2011 to the service date of a copy of each complaint of this case from December 29, 2012 to the service date of a copy of each complaint of this case, and 20% per annum from the next day to the day of complete payment.

1. Basic facts

A. The Plaintiff Company runs wholesale and consignment sales business of agricultural and fishery products, and the Defendant served as the representative director of the Plaintiff Company for five years from March 2008 to February 2013. The Plaintiff Company is a shareholder, including the representative director, and the Defendant also owns 11% of the total shares.

Meanwhile, Article 30 of the Articles of incorporation of the Plaintiff Company provides that “The remuneration of executive officers of the Plaintiff Company shall be determined by a general meeting of shareholders, and their respective amount of remuneration shall be determined by a resolution of the board of directors.”

B. The defendant's performance bonus and special bonus payment

1) On March 25, 2008, the general meeting of shareholders of the Plaintiff Company passed a resolution of KRW 800,000. The board of directors, on April 23, 2008, allocated KRW 97,60,000 as performance bonus, KRW 161,40,00 as special bonus. The Defendant received KRW 48,80,000 as special bonus in total, according to the resolution of the board of directors on August 28, 2008, KRW 40,000 as a total of KRW 104,80,000 as basic bonus, and KRW 160,000 as a result of the resolution of the board of directors on December 23, 2008; and KRW 160,000 as a result bonus; and KRW 160,000 as a result bonus; and KRW 160,000,000 as a result bonus.

2) On April 1, 2009, the board of directors decided 30,000,000 won as retirement consolation benefits, performance bonus of KRW 90,200,00,00 as performance bonus, and KRW 210,40,00 as special bonus. On December 17, 2009, the board of directors received 24,000,000 won as special bonus, and the Defendant received 40,200,000,000 of basic salary as performance bonus, according to the resolution of the board of directors, according to the resolution of the board of directors on December 29, 2009, the Defendant received KRW 16,00,000,000 as basic salary.

3) On March 31, 2010, when the general meeting of shareholders of the Plaintiff Company decided the total amount of executive remuneration of KRW 100 million and KRW 900 million, the board of directors, on April 22, 2010, determined KRW 268,079,00 as retirement consolation benefits, KRW 75,60,00 as performance bonus (basic salary) and KRW 127,921,00 as reservation amount. On December 15, 2010, the board of directors received KRW 100 as performance bonus of KRW 94,50,00 in addition to the performance bonus of KRW 500 as above, performance bonus of KRW 21,50,00 as performance bonus, and received KRW 21,50,500 as special bonus and KRW 21,50,000 as performance bonus.

4) On April 14, 201, the board of directors passed a resolution of KRW 275,777,00,000 as retirement consolation benefits, and KRW 93,60,00 as performance bonus (basic salary 400%) as performance bonus, and KRW 95,023,00 as reservation amount. On December 26, 2011, the board of directors passed a resolution of KRW 117,000 as a total of KRW 500,000 as a special bonus and paid KRW 46,80,000 as a total of KRW 20,00,000 as basic salary, in addition to existing performance bonuses. The Defendant received KRW 23,00,000 as performance bonus and KRW 9,20,00 as special bonus.

5) Upon the Plaintiff’s general meeting of shareholders, on March 29, 2012, the total amount of executive remuneration of KRW 90 million increased to KRW 90 million compared to the previous year, the board of directors, on April 19, 2012, determined the amount of KRW 800 of the basic salary, KRW 89 million with retirement compensation, and KRW 100 million with reserve funds. The board of directors determined the bonus as a fixed bonus, performance bonus, and special bonus with KRW 400, and performance bonus and special bonus with KRW 100,000 as a performance bonus in addition to KRW 10,000 of the basic salary as a performance bonus at the end of each year. On December 28, 2012, the board of directors decided to pay KRW 200,000, special bonus, and the Defendant received KRW 2400,09, special bonus with special bonus.

6) As such, the Defendant received the performance bonus of KRW 100,500,00 (i.e., KRW 16 million + KRW 16 million + KRW 21.5 million + KRW 23 million + KRW 23 million) with special bonuses of KRW 88,300,00 (i.e., KRW 24 million + KRW 24 million + KRW 24 million + KRW 24 million + KRW 9.2 million + KRW 9.6 million).

C. The defendant's interim settlement of retirement pay

1) On March 31, 2010, by a resolution of the general meeting of shareholders on March 31, 2010, the amount of retirement allowances under Article 30 of the above articles of incorporation was added to the average monthly amount of annual total remuneration of full-time executives, multiplied by two times the number of years of continuous service. Accordingly, the board of directors enacted the rules on retirement allowances for officers around April 2010, and stipulated the same contents

Article 4 (Retirement Allowance) of the Regulations on Retirement Allowance for Officers included in the main text of this Act shall be the amount calculated based on the following calculation standards: ○ retirement allowance = The average monthly amount of annual total remunerations of full-time officers at the time of retirement 】 the number of years of continuous service 】 the number of years of continuous service 】 the number of years of continuous service of executives refers to the period from the date when the general meeting of shareholders receives the initial appointment to the date of retirement. The additional rate for long-term continuous service of executives under Article 7 (Additional Additional Rates) shall be double times the number of years of continuous service under the preceding Article. 8 (Interim Retirement Allowance and Retirement Pension) (1) A company may conduct interim settlement of retirement allowances at the request of an executive officer. 2) A company may conduct a retirement pension, such as retirement allowance system suitable for the characteristics of the executive officer, fixed leisure or fixed amount of retirement allowance, etc.

2) From the end of 2005 to the end of 2007, the Defendant received KRW 31,533,333 as the interim settlement amount of retirement allowances at the end of three times each year. On April 28, 2011, the Defendant received KRW 132,403,833 as the interim settlement amount of retirement allowances (=amount of KRW 7,925,00 as the monthly average remuneration x 10 years of continuous service x 8 months x 2 - 31,533, 333 - retirement income tax - retirement income tax 4,663,190 - retirement income tax 46,310).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 5 (including branch numbers for those with additional numbers; hereinafter the same shall apply), Gap evidence Nos. 7, Eul evidence Nos. 3-1, 5, 9, Eul evidence Nos. 4 and the purport of the whole pleadings

2. Determination on the defense prior to the merits

The defendant, in the Busan High Court case 201Na4735, ○○○○○○○○○○○ Association and the defendant and the non-party 1 as the non-party 2, the non-party 3, and the non-party 4, entered into mediation. The mediation clause contains the content that "the defendant, the ○○○○○○○ Association, the non-party 1, the non-party 2, the non-party 3, and the non-party 4 shall withdraw the lawsuit and all related litigation, and shall not file any civil or criminal objection." The lawsuit in this case is filed under the initiative of the non-party 2, etc., not the plaintiff as the party to the lawsuit in this case as the Dongbu Office and the non-party 2, etc., and thus, it is in violation of the non-party 2

In the case of this case, there is no evidence to prove that the lawsuit of this case was brought by Nonparty 2, etc. who is the intervenor in the Busan High Court case No. 2011Na4735, and even if the defendant's assertion is true, such circumstance alone cannot be deemed to affect the above mediation clause to Plaintiff Dongdong Office and the corporation, and therefore, the defendant's defense is without merit.

3. Determination as to the cause of action

A. The plaintiff's assertion

The plaintiff asserts that since the defendant received KRW 188,80,000 as bonus under the pretext of interim settlement based on the invalid rules on retirement benefits for officers, he/she shall return it. The plaintiff paid KRW 137,533,333 under the pretext of interim settlement, and in violation of the rules on accounting procedures and the rules on the organization and business division, he/she incurred losses in excess of KRW 804,00,000, and thereby, he/she is obligated to refund KRW 300,000, which is part of the loss as compensation for non-performance of obligation. The plaintiff's money should be compensated for damages because he/she paid annual fees to the organizations whose members are the defendant, and caused damages to KRW 7,070,00,000.

B. Determination

(i) illegality in receipt of performance bonuses and special bonuses of KRW 188,800,00;

A) Article 37 of the articles of incorporation provides for “ bonuses” as one of the details on disposal of profits for each business year. The Plaintiff asserts that payment of performance bonuses and special bonuses of KRW 188,800,00 received by the Defendant constitutes bonus as a disposal of profits in nature, and thus must undergo the procedures for approving the proposal of disposal of profits at the general meeting of shareholders in accordance with Articles 462, 447(1)3 and 449(1) of the Commercial Act, and that payment of performance bonuses and special bonuses merely by the resolution of the board of directors loses the authority of the general meeting of shareholders, and thus is null and void.

On the other hand, the fact that the defendant received performance bonuses and special bonuses on a regular basis each year is the same as mentioned above. Since such performance bonuses and special bonuses are the remuneration of the director in consideration of the defendant's performance of duties, the prior plaintiff's above assertion on a different premise is without merit.

B) The Plaintiff asserts that, since the limit of remuneration for the officers determined by the general meeting of shareholders includes the retirement allowance for the officers, the board of directors shall set the amount of individual wages for each of the officers, and the remaining amount shall be the retirement allowance limit. The Plaintiff asserts that the payment of bonus by the resolution of the board of directors is limited to the limit of the retirement allowance limit,

In full view of the purport of evidence No. 4-2 in the statement of evidence No. 4-2, the above assertion is without merit, since the remaining amount calculated by subtracting individual benefits for each officer as determined by the board of directors from the limit of officer’s remuneration can be acknowledged as well as retirement allowances and bonus.

C) The Plaintiff asserts that the board of directors did not consider the business performance and that the Defendant violated the resolution of the board of directors by uniformly paying performance bonuses to the executives, although it determined that performance bonuses are paid on the basis of business performance at the end of the year.

In full view of the overall purport of the pleadings, the Plaintiff Company paid performance bonus as a kind of remuneration for executive officers in practice from the past, and it can be recognized that the Defendant agreed to the fact that all the members present at the meeting of the board of directors present at the meeting of the board of directors present at the meeting of the board of directors present at the determination of modification of the amount of performance bonus for each executive officer at the end of each year, based on the premise that the Defendant would pay performance bonus to the executive officer at the meeting of the board of directors at the meeting of the board of directors at the end of each year, it shall not be deemed that the payment of performance bonus violates the resolution of the board of directors.

D) The Plaintiff asserted that, although the special bonus of August 28, 2008 was paid for “the promotion of activities for collecting and selling high-water agricultural products,” it does not constitute a ground for payment of bonus as an officer’s inherent duty, and other special bonus was paid in order to adjust the company’s ordinary interests to KRW 500 million, which also does not constitute a ground for reasonable payment. Thus, it goes beyond the limit of delegation by the general meeting of shareholders and thus is unlawful.

As seen earlier, the fact that the special bonus was paid within the limit of the remuneration determined at the general meeting of shareholders is as follows. Since the special bonus cannot be readily concluded to have been paid without reasonable grounds solely on the ground that the Plaintiff asserts, the above assertion is without merit.

E) The Plaintiff asserts that the amount of the annual allowance for severance benefits paid to the shareholders' general meeting in 2008 includes KRW 37,694,000 on December 31, 2008, the total amount of the allowance for severance benefits paid in the year 2008 would be KRW 829,894,000, and the above amount would exceed the above amount. However, the allowance for severance benefits was not actually paid to executives, and the above assertion is without merit.

In addition, the Plaintiff asserts that the limit of the approval of the remuneration at the general meeting of shareholders in 2011 is 90 million won. On December 26, 2011, the board of directors changed the retirement allowance for officers from the previous fixed benefit type to the fixed contribution type, and then made a resolution to pay the retirement pension of 235,00,000 to an external financial institution, thereby executing the amount of KRW 1,122,177,00 as remuneration for officers, which was approved at the general meeting of shareholders. Thus, it erred in executing the above amount of KRW 22,17,00,000 in excess of

On the other hand, as the retirement pension plan of the Plaintiff Company was changed from the defined benefit type to the defined contribution type, the fact that the limit of remuneration for the year 201 exceeds 22,177,000 is not disputed among the parties, but in full view of the purport of the argument in the statement in the statement in No. 5-3, the Plaintiff Company can recognize the fact that it ratified the above retirement pension amount of KRW 235,00,000, which was executed in excess of the regular general meeting of shareholders on March 29, 2012. Accordingly, the Plaintiff’s above assertion is without merit.

On March 29, 2012, the Plaintiff asserted that five shareholders who agreed to the above ratification proposal among eight shareholders present at the general shareholders' meeting on March 29, 2012 are the directors who received performance bonuses and special bonuses at the time and are unable to exercise voting rights in special interests, and thus, there is no legitimate ratification. However, it cannot be concluded that there is special interest in the resolution on the expenditure bill of retirement pension 235,000,000, with the directors who received performance bonuses and special bonuses as directors, and even if they constitute special interest in domestic affairs, the resolution is valid, and the above assertion by the Plaintiff is without merit.

(ii) illegality of interim settlement of 137,533,333 of retirement pay

A) The Plaintiff asserts that the provision on the additional rate for continuous service on retirement benefits for officers increases the retirement allowances to two times as stipulated in the articles of incorporation, and thus is null and void.

On March 31, 2010, by the resolution of the general meeting of shareholders on March 31, 2010, it was added that the amount of retirement pay under Article 30 of the articles of incorporation shall be the average monthly amount of the annual total remuneration of the full-time officer, multiplied by two times the number of years of continuous service. Accordingly, the board of directors established the rules on retirement allowance for officers around April 2010 and prescribed the same contents as above. Thus, the plaintiff's above assertion is without merit.

B) The Plaintiff asserts that, as remuneration paid at the time of retirement, the retirement allowance has to be paid at the time of retirement, there must be grounds for the relevant statute or articles of incorporation in order to conduct interim settlement prior to retirement, and that, without such grounds, interim settlement is invalid

In light of the purport of the entire argument in the statement No. 3-2, 3, 4, 6, 7, 8, and 10 of the evidence No. 3-2, the plaintiff company received interim payment of retirement allowances from the former executives and employees before the enactment of the rules on retirement allowances for executives. The plaintiff company can recognize the fact that the former executives and employees received interim payment of retirement allowances in 2010, and it is difficult to view that interim payment of retirement allowances is not allowed unless there are grounds in the statutes or the articles of incorporation. The plaintiff's above assertion is without merit.

C) The Plaintiff asserts that Article 8(2) of the Guarantee of Workers' Retirement Benefits Act provides that “The period of continuous service for the calculation of retirement allowances after the previous settlement of accounts shall be calculated from the settlement of accounts.” Thus, Article 2 of the Addenda to the Regulations on the Retirement Benefits for Officers, which provides that retirement allowances after the previous settlement of accounts shall be deducted from the date of the first appointment to the settlement of accounts, shall be null and void, and that the Defendant’s interim settlement of accounts

On the other hand, it is difficult to see that the Act on Guarantee of Workers' Retirement applies to the employee of the Plaintiff company who received interim settlement of retirement pay as its employee, and also it is difficult to see that the retirement allowance provision which is more unfavorable to the company than the calculation method of interim settlement under the above provision is null and void.

3) Illegality of enforcement in excess of an expenditure plan

On March 17, 2010, the board of directors approved a management balance plan to disburse KRW 3.94 billion with sales management expenses in the year 2010, and reported it to the general meeting of shareholders on March 31, 2010. As a result of the project execution in the year 2010, the Plaintiff spent KRW 4.7 billion with sales management expenses exceeding KRW 8.4 billion with KRW 4 billion, which is contrary to the accounting procedure rules, the organization and work division rules, and thus, the Defendant is obligated to compensate the Plaintiff for damages therefrom, and the Defendant is obligated to compensate for damages therefrom as part of them.

According to the evidence No. 6, the cost increase can be acknowledged as claimed by the plaintiff. However, there is no evidence to prove that such increase in the cost was illegal or negligent in the management of the defendant, and rather, the following circumstances acknowledged by the purport of the statement No. 4-2 and No. 9-2 and the whole purport of the oral argument as follows: (i) the business performance in 2010 exceeded 15% of the estimated amount, and the ordinary profit is more than 30% of the estimated amount, and the ordinary profit is likely to increase the sales management cost by the increase in the cost according to such business feasibility; (ii) the profit and loss approved by the general meeting of shareholders stated that the sales expenses and management expenses were disbursed in the profit and loss statement approved by the general meeting of shareholders, and the auditor of the plaintiff company reported that such expenditure was appropriate as a result of the audit of the settlement of accounts containing such expenditure, the above assertion is without merit.

(iv) embezzlement of KRW 7,070,000.

The Plaintiff asserts that the Defendant paid KRW 1,00,000 as annual fee and KRW 1,00,000 as annual fee on August 13, 2009, and KRW 1,00,000,000 as annual fee on May 28, 2010, and KRW 1,000,000 as annual fee on April 15, 201 as the Plaintiff’s money, and that the Plaintiff paid KRW 720,000 as an event aid on February 19, 201, and KRW 4,220,000 as total, and KRW 4,20,00 as an advisory member of the △△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△, while working as an advisory member on August 22, 2011.

However, there is no dispute between the parties that the Defendant paid the money as above while working as the operating committee member of the △△△△△△△△△△△△△△△△△△△△△△△△△, and as the △△△△△△△△△ advisory member. However, in light of the fact that Busan Metropolitan City is a person who establishes a wholesale market, which is the Plaintiff’s business place, and that the Defendant is the representative director, it is difficult to view

4. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Judges Park Ma-hee (Presiding Judge)