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Former BHC Chairman Park Hyun-jong Loses Lawsuit Against BHC Demanding "Retirement Bonus"

[비즈한국] It has been confirmed through BizHankook’s reporting that former BHC Chairman Park Hyun-jong recently lost a lawsuit he filed against BHC (now Dining Brands Group) demanding a retirement bonus. Former Chairman Park argued that based on an agreement signed when BHC appointed him as an executive director about six years ago, the company was obligated to provide him with a condominium, golf club memberships, and a vehicle. Former Chairman Park led BHC for the past 10 years until he was dismissed in November 2023.

On the 20th of last month, the 41st Civil Division of the Seoul Central District Court (Presiding Judge Jung Hoe-il) ruled against the plaintiff, former BHC Chairman Park Hyun-jong, in the claim for payment filed against Dining Brands Group. Former Chairman Park filed the lawsuit last July, claiming that under an agreement signed in January 2019 during the BHC era, the company was required to provide him with a condo, golf club memberships, and a vehicle as a retirement bonus. Meanwhile, former Chairman Park appealed the ruling on the 23rd of last month, refusing to accept the defeat.

The actual majority shareholder of Dining Brands Group is the private equity firm MBK Partners. MBK is the largest shareholder (45.2% stake) of Global Gourmet Services (GGS), which holds 100% of Dining Brands Group. BHC, formerly a subsidiary of Genesis BBQ, was sold to the U.S.-based private equity firm The Rohatyn Group in June 2013, and was re-acquired in December 2018 by Global Restaurant Group (GRG), which was established by MBK Partners along with Company A (9% stake), Company B (36.1%), and former Chairman Park Hyun-jong (9.7%). They later established GGS to act as a holding company and absorbed GRG through a merger.

Former Chairman Park Hyun-jong led BHC for the past 10 years. Having served as the head of the global business division at Genesis BBQ, former Chairman Park was recruited as a professional manager for BHC in June 2013 when the company was sold to The Rohatyn Group, serving as CEO until November 2016. He was later promoted to Chairman and served as an executive director until his dismissal in November 2023. At the time of his dismissal, he was standing trial on charges of accessing Genesis BBQ's internal network using an employee ID from the BHC headquarters. That case concluded in February with a sentence of six months in prison, suspended for two years.

The agreement that sparked this dispute was drafted in January 2019 when BHC signed the contract appointing Park as an executive director. It stipulated that if certain conditions were met, special bonus payments would be provided to the former chairman. Based on this, former Chairman Park argued that as both CEO and executive director, he was entitled to the retirement bonus for growing the company. The retirement benefits he demanded from BHC included a condo in Pyeongchang-gun, Gangwon Province, memberships to two golf courses (A and B), and a Noble Klasse Carnival vehicle.

However, the court dismissed former Chairman Park's claim for the retirement bonus. The court’s reasoning was that the agreement, which essentially defined the director's remuneration, was not concluded through proper legal procedures and was therefore invalid. Under the Commercial Act, if a director's remuneration is not set in the articles of incorporation, it must be determined by a resolution at a general meeting of shareholders. Furthermore, for a director to enter into a valid transaction with the company for themselves or on behalf of a third party, they must obtain prior approval from the board of directors as stipulated by the Commercial Act. The court found that these regulations were not followed in the process of signing the agreement.

The court ruled, “The evidence submitted is insufficient to prove that the remuneration set in this agreement was prescribed by Dining Brands Group's articles of incorporation or determined by a shareholders' resolution, and therefore the agreement to pay such remuneration is invalid. Consequently, the plaintiff's claim is meritless and requires no further examination.” The court added, “This agreement constitutes a self-dealing transaction by the plaintiff as a director, and it is reasonable to conclude that it did not receive approval from the Dining Brands Group board of directors; thus, its validity cannot be recognized.”

Dining Brands Group is Korea's No. 1 chicken franchise operator of BHC. Last year, BHC had 2,291 franchise stores, recording 512.7 billion won in revenue and 133.8 billion won in operating profit. This figure surpasses the No. 2 firm, Genesis BBQ (2,238 stores, 503.2 billion won in revenue), and the No. 3 firm, Kyochon F&B339770 (1,377 stores, 456.5 billion won). Launched under the name BHC in 2004, the company grew its business as a chicken franchise before expanding into a general food service enterprise operating brands such as Keunmam Halmae Sundaeguk and Outback Steakhouse. It changed its corporate name last September.