Changes in director remuneration precedents begin in earnest, risk of return increases if payment is made without resolution at the general shareholders' meeting

This regulation is interpreted as a mandatory regulation, and according to the Supreme Court ruling 2018Da290436 on April 9, 2020, it is difficult to cure the defect only through ex post approval or internal agreement.

This mandatory rule is derived from the following purposes.

Director compensation is judged based on its actuality, regardless of its name.

Supreme Court 2020. 4. 9. Sentence 2018Da290436According to the , special performance bonuses were considered to be abnormal compensation paid to directors in return for performing their duties.

Additionally, the Supreme Court has consistently ruled that severance pay is included in director compensation, considering it as salary paid in return for performing duties during employment.

Summarizing recent precedents, director compensation regulations are changing in the following direction.

• The concept of remuneration continues to expand in real terms

• Strengthen responsibility for procedural violations

• Expand the scope of restrictions on voting rights of interested parties

especiallySupreme Court 2025Da210138 decision on April 24, 2025According to the ruling, shareholders who are directors are considered as special stakeholders and their voting rights are restricted even in remuneration limit resolutions.It is done.

This is assessed as applying more stringent controls to the previously relatively relaxed compensation resolution structure.

This trend continues to affect the overall corporate compensation decision structure.

In principle, director compensation must be determined through a resolution at a general shareholders' meeting, and if this is not done, the right to claim compensation may be denied.

The Supreme Court judges that the burden of proving that a resolution at a general shareholders' meeting exists lies with the directors (Supreme Court 2015. 9. 10. Sentence 2015Da213308), it is believed that remuneration paid without resolution is subject to return of unjust enrichment (Supreme Court 2020. 4. 9. Sentence 2018Da290436).

This trend of precedents isDirection that it is difficult to compensate for procedural defects only through post-approval or internal agreementIt is interpreted as:

In practice, it is common to have a structure in which only the total compensation is approved at a general shareholders' meeting and individual compensation is delegated to the board of directors.

Although the Supreme Court considered this structure itself to be permissible, it ruled that delegation to the board of directors was only possible within a specific scope and comprehensive delegation was not permitted.

Regarding director compensation paid without board resolution, lower courts tend to view it as payment without legal basis and therefore subject to return of unjust enrichment.

actuallySeoul Western District Court Sentence 2020 Gadan 306634 on November 4, 2021classSeoul Southern District Court Dec. 15, 2022 Sentence 2022 Gadan 237856For the same purpose, payment of remuneration without board resolution was deemed illegal.

Combining these judgments, the following structure is derived.

This could have a significant impact on the way compensation is paid in practice.

According to Article 741 of the Civil Code, if a profit is obtained without legal cause, the profit must be returned.

In the case of director compensation, if payment is made without a general shareholders' meeting or board resolution, the legal basis for the payment will not be recognized.

In this case, the compensation is evaluated as a benefit without legal cause, and the amount paid is subject to a refund.

In the end, flaws in the director's remuneration resolution process can become a reason to deny the basis for the payment itself and can lead to problems with the return of all amounts already paid.

During the process of determining director compensation, the voting rights of shareholders with a direct interest in the compensation may be restricted.

Recently, these voting rights restrictions have been interpreted to broadly apply not only to individual remuneration decisions but also to basic resolution steps such as remuneration limits.

• Possibility of disputes over the validity of the remuneration limit resolution itself

• Denial of grounds for compensation due to defects in resolution

• Reexamination of the validity of existing resolutions and expansion of the possibility of disputes

This interpretation may result in strengthening the level of control over the overall remuneration resolution and may result in the legal implications described above.

If any of the following defects exist during the resolution process, the resolution may be invalidated or cancelled.

In particular, if actual payment is made customarily with only a compensation limit set, legal issues may arise based on recent standards, so prior inspection is required.

Daeryun Law Firm's corporate lawyers provide general legal advice, including inspection of compensation systems, reorganization of resolution structures, and establishment of dispute response strategies.