[1] In a case where the articles of incorporation of the company specify the scope of the amount of retirement allowances for the retired director, and where the board of directors stipulates that the amount may be determined by taking into account his/her contribution while in office, whether the company may refuse to pay retirement allowances for the reason that the resolution of the board of directors on the amount of retirement of the

[2] The case affirming the judgment of the court below that calculated retirement benefits by calculating the number of years of continuous service including the period until the period when a director worked as an employee before the director was appointed

[3] The method of calculating retirement allowances in a case where the provisions of the articles of incorporation concerning the calculation of retirement allowances of directors were amended

[1] Where the articles of incorporation specify the scope of the amount of retirement allowances for a director who retires, but in consideration of various circumstances, such as the contribution of the director while in office, if the board of directors decided the amount of retirement allowance for the retired director, the board of directors may determine the amount of retirement allowance for the retired director, and barring special circumstances such as where the retired director clearly inflicted loss on the company, such as breach of trust, etc., the board of directors may reduce the amount of retirement allowance to a certain extent under the articles of incorporation in consideration of the degree of his/her meritorious service while in office, and cannot make a resolution to deprive him/her of his/her right to claim retirement allowances. Thus, in cases where the board of directors did not adopt any resolution such as the reduction of retirement allowances for the retired director, the board of directors cannot refuse

[2] The case affirming the judgment of the court below that calculated retirement allowances by adding the period of service as an employee to the retired director and the period of service as a director to the retired director to the period of service as an employee, in consideration of the case where the employee did not pay retirement allowances to the employee, and the retirement allowances calculated and paid to the retired director by calculating the number of years of service as stipulated in the articles of incorporation until the period of service as an employee, although the employment relationship which was established while serving as an employee was terminated after being appointed as a director

[3] A director's retirement allowance may be determined by the articles of incorporation including remuneration stipulated in Article 388 of the Commercial Code or by a resolution of the general meeting of shareholders. Such right to claim such retirement allowance arises only when a director has passed a resolution of the payment of retirement allowances in accordance with the articles of incorporation that are effective at the time of retirement, or when a resolution of the general meeting of shareholders has been adopted. Even if the articles of incorporation provides that the specific amount of retirement allowances for the retired director shall be calculated based on the amount of wages at the time of retirement within a certain scope, payment rate, and continuous service years, but the amount of payment has been reduced by amending the articles of incorporation, the calculation of retirement allowances for the retired director shall not apply to the period of continuous service before and after the amendment of the articles of incorporation that are lawfully amended

[1] Article 388 of the Commercial Act / [2] Article 388 of the Commercial Act / [3] Article 388 of the Commercial Act

Plaintiff (Law Firm Gong & Yang, Attorneys Choi Ho-hoon et al., Counsel for the plaintiff-appellant)

Defendant 1 Company

Defendant 2 and two others (Law Firm Geosung, Attorneys Kang Sung-sung et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2001Na56517, 56524 decided Feb. 7, 2003

1. Of the part against Defendant 1 corporation as to damages for delay, the part ordering payment of KRW 106,825,00 per annum from March 28, 1997 to May 31, 2003, and the part ordering payment of KRW 5% per annum from the next day to the day of full payment, and the corresponding part of the Plaintiff’s claim is dismissed. The Plaintiff’s appeal and the remaining appeals by Defendant 1 corporation are dismissed on February 2, 199 and the remaining appeals by Defendant 1 corporation are dismissed.

1. We examine the grounds of appeal by Defendant 1 Company (hereinafter “Defendant Company”)

A. Ground of appeal No. 1

Examining the reasoning of the judgment below in light of the records, it is justifiable for the court below to recognize the retirement date of the plaintiff as March 26, 1997, which is the expiration date of the plaintiff's representative director. The court below did not err by misapprehending the rules of evidence as alleged in the grounds of appeal.

B. Ground of appeal No. 4

Upon examining the reasoning of the judgment below in light of the records, the court below is justified in finding facts and finding that "the money that the defendant company paid to the plaintiff by 1 million won per month is clearly called the money paid separately from the money paid by 500,000 won per month, and the money paid by 500,000 won per month shall be viewed as the allowance paid periodically every month, and shall not be considered as the actual cost compensation, etc." and included the money in the payment, etc. is justified. The court below did not err by misapprehending the facts contrary to the rules of evidence as alleged in the grounds of appeal.

C. Ground of appeal No. 3

Article 388 of the Commercial Act provides that "The remuneration of directors shall be determined by a resolution of the general meeting of shareholders if the articles of incorporation does not provide for the amount of remuneration of directors, and the retirement allowance of directors is paid to a person who retired from the office of directors in return for the execution of duties while in

According to the records, the articles of incorporation of the defendant company at the time of the plaintiff's retirement provides that "the retirement allowance of the retired officer shall be the amount determined by the articles of incorporation within the extent of the amount calculated by multiplying the amount equivalent to 1/10 of the total amount of wages paid during one year retroactively from the date of his retirement by the number of continuous service years," and it can be known that the plaintiff had not made any resolution as to whether the amount of retirement allowance should be paid to the plaintiff by opening a separate board of directors until now after the plaintiff retired from the defendant company. Thus, if the board of directors decided the amount of retirement allowance in consideration of various circumstances, such as the amount of retirement allowance, the board of directors set the amount of retirement allowance for the retired director, and unless there are special circumstances, such as the act of breach of trust, etc. against the retired director, the amount of retirement allowance can be reduced to a certain extent, and it cannot be decided to deprive him/her of his/her right to claim retirement allowance. Thus, it shall not be determined that the board of directors did not have made any resolution to reduce the amount of retirement allowance.

In the same purport, the judgment of the defendant company that is liable to pay retirement allowances to the plaintiff is just, and there is no error in the misapprehension of legal principles regarding the payment of retirement allowances by directors.

D. Ground of appeal No. 2

In light of the reasoning of the lower judgment and the case where the Plaintiff’s employment relationship that the Plaintiff was employed as an employee of the Defendant Company was terminated by taking office as a director, and the Plaintiff newly established a delegation relationship with the Defendant Company from the date of taking office as a director. However, the Plaintiff did not pay retirement allowances to the Plaintiff when the Plaintiff was appointed as a director, and calculated and paid retirement allowances by calculating the number of years of service as stipulated in the articles of incorporation including the period of service as an employee, while paying retirement allowances to other directors retired, the Plaintiff calculated and paid retirement allowances by calculating the number of years of service as stipulated in the articles of incorporation and the records, the lower court is justified in determining the amount of retirement allowances by combining the period and the period of service

E. Ground of appeal No. 5

Examining the reasoning of the judgment below in light of the records, the existence and scope of the claim asserted a set-off, such as the Plaintiff’s loan and its interest on the Defendant Company, the amount of the Plaintiff’s wage and salary income tax paid by the Defendant Company, the liability for damages incurred by the Plaintiff’s tort, etc., shall be deducted only the balance of the loan, and there is insufficient evidence to acknowledge the remainder of the claim, which is just and acceptable, and there is no error of misapprehending the facts contrary to the rules of evidence.

2. We examine the Plaintiff’s grounds of appeal.

A. Ground of appeal No. 1

As seen earlier, a director's retirement allowance is included in the articles of incorporation or may be determined by a resolution of the general meeting of shareholders as stipulated in Article 388 of the Commercial Act. Such a claim for retirement allowance occurs only when a director has a resolution of the payment of a retirement allowance in accordance with the articles of incorporation that is effective at the time of retirement or when a resolution of the general meeting of shareholders has been adopted. As duly established by the court below, the court below determined that the specific amount of a retirement allowance for a director who retired by the defendant company should be calculated based on the amount of wages, payment rate, number of years of service at the time of retirement, and the amount of payment has been reduced by amending the articles of incorporation, even if the amount of payment was reduced by amending the articles of incorporation, the payment rate under the provisions of the articles of incorporation that are lawfully amended at the time of retirement shall not apply to the calculation

In the same purport, the court below is just in determining that the retirement allowance limit for the continuous service period before the amendment of the articles of incorporation and the retirement allowance limit for the continuous service period after the amendment of the articles of incorporation cannot be calculated. In so doing, the court below did not err by misapprehending the legal principles on the calculation of the retirement allowance

Unlike the above, the argument in the grounds of appeal purporting that “an amendment to the articles of incorporation provisions on retirement allowances to disadvantageously affect the right to receive retirement allowances each year during the period of office of the director, and a change in the standards for payment of retirement allowances to the retired directors during retirement time by amending the articles of incorporation in bad faith and negligence is null and void in violation of social norms and equity, and thus, cannot be accepted as it is in violation of the legal principles as seen earlier. In addition, the Supreme Court precedents cited by the plaintiff in the grounds of appeal are all decisions on the calculation of retirement allowances,

B. Ground of appeal No. 2

As seen in paragraph (1)(c) above, as long as the defendant company is deemed liable to pay to the plaintiff the amount equivalent to the retirement allowance limit in the articles of incorporation, the defendant company cannot be held liable for damages caused by illegal acts against the defendant 2, 3 and 4, including the representative director and director and auditor of the defendant company who did not determine the amount of retirement allowance paid to the plaintiff. Therefore, the decision of the court below to the same purport is justifiable, and there is

3. The decisions are made ex officio;

ex officio, I examined the following facts: (a) Article 3(1) of the Act on Special Cases Concerning the Promotion, etc. of Legal Proceedings (amended by Act No. 6868 of May 10, 2003); (b) Article 3(1) of the Act on Special Cases Concerning the Promotion, etc. of Legal Proceedings (amended by Act No. 6868 of May 10, 2003); (c) Article 3(1) of the amended Act and Article 3(1) of the Act on Special Cases Concerning the Promotion, etc. of Legal Proceedings (amended by Presidential Decree No. 17981 of May 29, 2003) provides that the statutory interest rate applicable to a case pending in the court at the time of the enforcement of the above amended Act shall be two percent per annum; (d) the court below erred by applying the provision of the Act on Special Cases Concerning the Promotion, etc. of Legal Proceedings from July 27, 2001 to the date of full payment.

4. Conclusion

Therefore, the part against Defendant 1 regarding delay damages of the judgment below ordering payment of KRW 106,825,00 as to KRW 5% per annum as stipulated in the Civil Act from March 28, 1997 to May 31, 2003, and the part ordering payment of KRW 20% per annum as stipulated in the "Special Act on the Promotion, etc. of Legal Proceedings" as amended from the next day to the day of full payment. This part is sufficient for the Supreme Court to directly render a judgment, and it is sufficient for the Supreme Court to render a final judgment pursuant to Article 437 of the Civil Procedure Act. Accordingly, the corresponding claim of the plaintiff is dismissed. The plaintiff's appeal and the remaining appeals by Defendant 1 are all dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Shin Hyun-chul (Presiding Justice)