[비즈한국] It has been confirmed that Koo Bon-sung, former Vice Chairman of Ourhome, recently won a lawsuit filed against Ourhome. The lawsuit sought the cancellation of the "director remuneration limit" approved during a general shareholders' meeting while his sisters, former CEO Koo Ji-eun and former internal director Koo Myung-jin, were in office. Koo, who filed the suit, was removed from his position as Ourhome CEO in 2021 after being convicted of retaliatory driving. He subsequently raised the issue, claiming that his sisters, who had taken over as CEO and internal director respectively, participated in the resolution to approve the director remuneration limit, despite having a special interest in the matter.
Cancellation of 'Self-Approved' Remuneration Limit for Directors Koo Ji-eun and Koo Myung-jin
On the 27th of last month, the 11th Civil Division of the Seoul Southern District Court (Presiding Judge Joo Jin-am) ruled in favor of the plaintiff, Koo Bon-sung, in the lawsuit he filed against the company to cancel the general shareholders' meeting resolution. The ruling cancels the 2023 director remuneration limit approved at the Ourhome annual general meeting in April of last year. When the motion was passed with the consent of all shareholders except for himself, Koo filed the lawsuit last May, arguing that the exercise of voting rights by his sisters, Koo Ji-eun and Koo Myung-jin, who were serving as directors at the time, was illegal.
Ourhome is a comprehensive food company affiliated with the pan-LG group. It was founded in 2000 after being separated from LG Group by the late Chairman Koo Ja-hak, the third son of LG Group founder Koo In-hwoi. Currently, the company provides food service and food business for corporations and public institutions. The company's shares are held by the late Chairman Koo Ja-hak's eldest son, former Vice Chairman Koo Bon-sung (38.56%), eldest daughter Chairwoman Koo Mi-hyun (19.28%), second daughter former Director Koo Myung-jin (19.6%), and third daughter former Vice Chairman Koo Ji-eun (20.67%). The structure is such that management rights can fluctuate depending on the alliances between the siblings.
Previously, Ourhome held its annual general meeting in April of last year and passed the "Agenda for Approval of the 2023 Director Remuneration Limit." The content set the director remuneration limit for that year at 15 billion won, the same as the previous year. All shareholders, including proxies, attended the meeting, and it was passed with the approval of all shareholders except for Koo Bon-sung (an approval rate of 61.44%). Former Vice Chairman Koo Ji-eun, who was CEO at the time, and former Director Koo Myung-jin, who was an internal director, also exercised their voting rights in favor as shareholders.
The point Koo Bon-sung took issue with was the exercise of voting rights by his sisters. Under the Commercial Act, a person with a special interest in a resolution at a general shareholders' meeting cannot exercise their voting rights. Koo argued that as directors of the company, Koo Ji-eun and Koo Myung-jin had a special interest in the remuneration limit agenda and were therefore ineligible to vote. His logic is that if their shares were excluded, the number of affirmative votes (an approval rate of 35.43%) would not have met the quorum of a majority of attending shares, meaning the motion would have been rejected; therefore, the resolution, which violated the law, should be canceled.
The court ruled, "It is reasonable to view Koo Ji-eun and Koo Myung-jin, who are directors of Ourhome, as persons with a special interest, as they would be entitled to receive remuneration within the limit once the resolution is passed. Therefore, the shares held by Koo Ji-eun and Koo Myung-jin should not have been included in the number of voting rights of attending shareholders." The court concluded, "The resolution in this case is illegal and must be canceled because it includes votes cast by persons who were not eligible to exercise them."
'Will the Management Dispute End?' Change of CEO from Koo Bon-sung to Koo Ji-eun to Koo Mi-hyun
Former Vice Chairman Koo Bon-sung, who filed the lawsuit, was initially considered the successor to the late Chairman Koo Ja-hak. This is because, following the LG Group's tradition of primogeniture, he held the largest stake among the founder's children. In fact, starting in June 2016, when the late Chairman was serving as CEO, Koo Bon-sung took office as co-CEO to lead the company. At that time, the only other sibling working at Ourhome was the fourth child, former Vice Chairman Koo Ji-eun. Koo Ji-eun had served as a director of Ourhome since 2004 before moving to become CEO of the subsidiary Calisco. In 2017, she called a shareholders' meeting to oppose the appointment of a professional manager by Koo Bon-sung, but the move failed when her eldest sister, Chairwoman Koo Mi-hyun, sided with Koo Bon-sung.
Koo Bon-sung's leadership collapsed when he caused social controversy. He was indicted on charges including special injury after engaging in retaliatory driving and hitting another driver who had exited their vehicle. In June 2021, he was sentenced to six months in prison suspended for two years in the first trial. Immediately after the ruling, he was removed from his position as CEO. In November of the same year, Ourhome conducted an internal audit, discovered evidence of embezzlement and breach of trust by Koo, and filed a police complaint. In September of this year, he was sentenced to two years in prison suspended for three years in the first trial regarding this case.
The void left by Koo Bon-sung was filled by Koo Ji-eun. Immediately after his sentencing, the three sisters—Koo Mi-hyun, Koo Myung-jin, and Koo Ji-eun—held a shareholders' meeting and passed a motion to remove him as CEO. On the same day, Koo Ji-eun proposed a motion to appoint directors, including herself, which passed, making her the new CEO. Former Director Koo Myung-jin also took office as an internal director that day. Although eldest sister Koo Mi-hyun had sided with Koo Bon-sung during the 2017 dispute, she chose to support Koo Ji-eun after his scandal.
The alliance of the three sisters did not last long. In April of this year, Ourhome held its annual general meeting and appointed Chairwoman Koo Mi-hyun and her husband, Lee Young-yeol, a former professor at Hanyang University Medical School, as internal directors. The reappointment motions for former Vice Chairman Koo Ji-eun and former Director Koo Myung-jin, whose terms expired in June, were rejected. Analysts suggested that unlike in June 2021, when the three sisters united to oust Koo Bon-sung, this time Koo Bon-sung had joined hands with Chairwoman Koo Mi-hyun to oust his two sisters. Indeed, Koo Bon-sung's son, Koo Jae-mo, was appointed as an internal director at an extraordinary shareholders' meeting in May upon his father's recommendation.
Chairwoman Koo Mi-hyun has taken over as the CEO of Ourhome, succeeding Koo Ji-eun. Koo Mi-hyun, who had acted as a "key man" behind the scenes in every management dispute, was appointed CEO and Chairwoman by the Ourhome board in June. On the same day, her husband, internal director Lee Young-yeol, was appointed Vice Chairman, and Lee Young-pyo, who previously served as Chief of Staff and CFO for the late Chairman Koo Ja-hak, was named President of Management. It is reported that since taking office, Chairwoman Koo Mi-hyun has been pushing for the sale of management rights and an Initial Public Offering (IPO) to end the sibling dispute over management.
In her inauguration speech last June, Chairwoman Koo Mi-hyun stated, "I have determined that the fundamental way to end the management dispute among shareholders is to 'transfer management rights to a professional enterprise that pursues rational company management by professional managers, i.e., sustainable development of the business.'"