[Plaintiff, Appellant] Kim Chae-hu, Counsel Kim Hong-su
[Defendant, Appellee] Daehan Comprehensive Foods Co., Ltd.
[Original Judgment] Seoul High Court, Judgment of July 29, 1977, Case No. 77Na1104
[Order]
The original judgment is reversed, and the case is remanded to the Seoul High Court.
[Reasoning] The first ground of appeal by the Plaintiff's attorney is examined.
According to the original judgment, the court below found that Article 2 of the Defendant Company's Regulations on Officers' Retirement Consolation Payments (임원퇴직위로금규정) provides that the retirement consolation payment for officers shall be calculated by multiplying the monthly compensation at the time of retirement by the payment rate set forth in the attached Table of Retirement Consolation Payment Rates according to the number of years of continuous service, and that such payment shall be made subject to the approval of the general meeting of shareholders; and it was established as fact that, at the general meeting of shareholders of the Defendant Company held on February 26, 1975, a resolution was adopted not to pay the retirement consolation payment to the Plaintiff. The court below held that the purport of Article 2 of the above Regulations on Retirement Consolation Payments could not be interpreted as merely imposing an obligation to adopt a resolution approving payment of the retirement allowance calculated in accordance with the said Regulations, without any right to withhold such approval; and accordingly held that the measure of the general meeting of shareholders of the Defendant Company in resolving not to approve payment of the retirement allowance to the Plaintiff was lawful, and that there was no reason to deem such resolution void, thereby dismissing the Plaintiff's claim and upholding the judgment of the first instance.
However,
Under Article 388 of the Commercial Act (상법), where the amount of a director's compensation is not fixed by the articles of incorporation, it shall be determined by resolution of the general meeting of shareholders; and since a director's retirement consolation payment is a type of compensation paid to a person who has retired from the position of director as consideration for the performance of duties during his tenure,
a director's retirement allowance shall be deemed included in the "compensation" provided for in Article 388 of the Commercial Act above. It is clear from the purport of the provisions of the said Article 388 that it requires the amount of compensation to be fixed either by the articles of incorporation or by resolution of the general meeting of shareholders. Where the amount of the retirement consolation payment has been determined by the articles of incorporation or by resolution of the general meeting of shareholders pursuant to the above provision of law, even if the general meeting of shareholders thereafter adopts a resolution depriving a specifically identified retired director of his right to claim such compensation or reducing the amount thereof, such resolution shall have no effect,
in light of the legal principle of Article 388 of the Commercial Act above and the nature of a director's right to claim compensation. Furthermore, the purport of the portion of Article 2 of the Defendant Company's Regulations on Officers' Retirement Consolation Payments stating that payment shall be made "subject to the approval of the general meeting of shareholders" cannot be construed as meaning that the general meeting of shareholders determines whether or not to make the retirement consolation payment; rather, it is proper to interpret it as merely prescribing an internal procedure regulating the timing and method of payment of the retirement consolation payment to officers of the Defendant Company. Notwithstanding this, the court below's determination as set forth above constitutes an error of law in misunderstanding the legal principle of Article 388 of the Commercial Act and in misconstruing the nature of a director's right to claim compensation in a stock company as well as the interpretation of Article 2 of the Defendant Company's Regulations on Officers' Retirement Consolation Payments.
The argument on this point is therefore well-founded, and without need to examine the other grounds of appeal, the original judgment is reversed and the case is remanded, and it is so ordered as set forth in the Order.
Justices: Yang Byeong-ho (Presiding Justice), Ju Jae-hwang, Im Hang-jun, Ra Gil-jo