[Why&Next] Ourhome Siblings' Mudfight... Crisis of the 'Gu Ji-eun Ship'

Majority Shares Held by Eldest Son and Daughter... Attempt to Oust Vice Chairman Gu Ji-eun
Reduced Dividends Under Current Regime Cause Sister Alliance Split
Sale Expected After Board Control... Possibility of Sister Negotiations Remains

The sibling feud over control of Ourhome is intensifying. Despite Ourhome recording its best-ever performance last year, the eldest daughter, Koo Mi-hyun, allied with her older brother, former Vice Chairman Koo Bon-sung, to block the reappointment of the youngest daughter, Vice Chairman Koo Ji-eun, over dividend issues. As the casting voter, Koo Mi-hyun has left room for negotiation with both her brother and sister, drawing industry attention to the upcoming extraordinary shareholders' meeting that will decide the direction of management control.

According to industry sources on the 25th, at the confidential Ourhome shareholders' meeting held on the 17th at the headquarters in Magok District, Gangseo-gu, Seoul, a shareholder proposal to appoint Koo Mi-hyun and her husband, former Hanyang University Medical School professor Lee Young-ryeol, as inside directors was approved. On the other hand, the reappointment of existing inside directors, including Vice Chairman Koo Ji-eun, was rejected.

As a result of this shareholders' meeting, Vice Chairman Koo, whose term as an inside director expires in June, will be ousted from the board. Currently, the four siblings hold over 98% of the shares in Ourhome, a non-listed company. The eldest son, former Vice Chairman Koo Bon-sung, owns 38.56%, the youngest daughter, Vice Chairman Koo Ji-eun, 20.67%, the second daughter, Koo Myung-jin, 19.6%, and the eldest daughter, Koo Mi-hyun, 19.28%. The eldest son and eldest daughter joined forces to block the youngest daughter's reappointment as an inside director.

Eldest Son and Eldest Daughter Alliance... Vice Chairman Koo Ji-eun Ousted from Board

Ourhome was established in 2000 when Chairman Koo Ja-hak, the third son of the late Koo In-hoe, founder of LG Group, separated it from LG Group. The company currently operates group catering and food businesses targeting corporations and public institutions.

The sibling feud at Ourhome has been ongoing for nearly a decade. According to LG family's primogeniture succession principle, the eldest son inherited the largest share, but the youngest daughter, current Vice Chairman Koo Ji-eun, was the first to participate in management. After joining Ourhome in 2004, Koo Ji-eun rose to vice president in 2015 and grew as the successor. However, when the eldest son, former Vice Chairman Koo Bon-sung, joined management in 2016, she was pushed to lead the subsidiary Calisco. The following year, she attempted to return to the board by requesting an extraordinary shareholders' meeting at the Seoul Central District Court, but it failed.

The rift in the Koo Bon-sung regime emerged in 2020 amid the controversy over the former vice chairman's 'retaliatory driving.' After the eldest son caused social uproar and public backlash, the three sisters signed a joint sale agreement to exercise voting rights collectively and removed former Vice Chairman Koo Bon-sung from the CEO position at the regular shareholders' meeting that year. During this process, Vice Chairman Koo Ji-eun returned as an inside director after five years and took charge of management in earnest.

(From left) Koo Bon-sung, former Vice Chairman of Ourhome, and Koo Ji-eun, Vice Chairman of Ourhome.

However, peace did not last long. In 2022, when Vice Chairman Koo drastically reduced dividends, eldest daughter Koo Mi-hyun strongly opposed it, and the eldest son, former Vice Chairman Koo, proposed selling shares together, initiating a management rights sale. At that time, the eldest son and eldest daughter alliance selected La D?fense Partners as their advisory firm and pushed for the sale of their shares. Global private equity firms like KKR also considered acquisition. However, due to the joint sale agreement among the three sisters, the eldest daughter's unilateral decision-making became impossible, and the sale failed.

But at this month's shareholders' meeting, Koo Mi-hyun proposed a shareholder proposal to appoint herself and her husband as inside directors, and with the support of former Vice Chairman Koo Bon-sung, avoided violating the joint voting rights agreement between the sisters, putting Vice Chairman Koo Ji-eun at risk of being ousted from the board again.

Eldest Sister Turns Away Over Reduced Dividends

At the heart of this dispute is money. The decisive factor in eldest daughter Koo Mi-hyun's decision to break away from the sister alliance in 2022 appears to be dissatisfaction with the dividend policy under Vice Chairman Koo Ji-eun's leadership. Under former Vice Chairman Koo Bon-sung's regime, Ourhome pursued a high dividend policy. Total dividends increased from 6.8 billion KRW in 2017 to 7.4 billion KRW in 2018, 17.1 billion KRW in 2019, and 45.6 billion KRW in 2020. After recording the first loss in company history due to the COVID-19 pandemic in 2020, dividends paid in 2021 rose to 77.6 billion KRW. During this period, the eldest son and eldest daughter, holding 38.56% and 19.28% shares respectively, received about 60% of the dividends.

However, with the transition to Vice Chairman Koo Ji-eun's leadership, the dividend policy changed. After becoming CEO in 2021, Koo Ji-eun focused on business normalization. Ourhome, which recorded losses in 2020, returned to profitability with an operating profit of 25.6 billion KRW the following year, and last year achieved record sales of 1.9834 trillion KRW and operating profit of 94.2 billion KRW. During this process, dividends were significantly reduced. After declaring no dividends in 2022, dividends for last year's performance were only 3 billion KRW, a sharp decrease from before.

As the family ownership dispute reignited, the Ourhome labor union has come out in support of Vice Chairman Koo Ji-eun's management. On the 22nd, the Ourhome union of the Korean Federation of Food Industry Trade Unions issued a statement demanding, "The ignorant couple Koo Mi-hyun and Lee Young-ryeol must immediately withdraw their acceptance of the director positions." The union added, "Former Vice Chairman Koo Bon-sung, who has no interest in company growth and only fills his own pockets, is unfit as a major shareholder," and demanded, "He must take full moral responsibility and immediately sell his shares."

Casting Vote Held by Eldest Daughter... Leaves Room for Negotiation on Both Sides

Industry attention is now focused on the upcoming extraordinary shareholders' meeting. Companies with capital exceeding 1 billion KRW must have at least three inside directors, but only two?Koo Mi-hyun and her husband?were confirmed at the last meeting. Therefore, the extraordinary meeting must handle the appointment of new directors and other pending matters.

This dispute is analyzed as aiming either to revert to the previous high dividend policy through a change in management control or to cash out through a management rights sale. Accordingly, if the alliance between the eldest son and eldest daughter continues, they are expected to form a board of directors as they wish, holding a majority stake, and proceed with company operation under a professional management system while advancing the management rights sale process. The record-high corporate value following the best-ever performance is also a favorable factor for those pushing for the sale.

However, the differing interests of the eldest son and eldest daughter are considered a variable. Koo Mi-hyun's goals in this dispute are relatively clear: she is more interested in generating profits through dividends or share sales than in securing management control. On the other hand, although former Vice Chairman Koo Bon-sung publicly advocates share sales, there is speculation that if he gains management control, he might change his stance to directly exercising it. The proposal at this shareholders' meeting to appoint his son, Koo Jae-mo, as an inside director supports this view.

Vice Chairman Koo Ji-eun, facing the risk of being ousted from the board, currently has limited options. Her best course is to persuade her elder sister Koo Mi-hyun with a more progressive dividend policy. If that fails, buying out Koo Mi-hyun's shares is considered the next best option. However, with the company's value soaring to as much as 2 trillion KRW and being highly valued, securing massive external funding to purchase at least 10% of the shares will be inevitable.

Ultimately, the casting vote lies with the eldest daughter, Koo Mi-hyun. So far, she has allied with former Vice Chairman Koo Bon-sung but could switch to support her younger sister at any time. In fact, at the last shareholders' meeting, she rejected the proposal to appoint former Vice Chairman Koo's son as an inside director. Given that former Vice Chairman Koo faces embezzlement and breach of trust allegations and has a history of causing social controversies, there is reluctance to fully back him.

Moreover, the psychological burden of handing over the company founded by their father to outsiders may also influence the decision. At the same time, by appointing only herself and her husband as inside directors at the last meeting, Koo Mi-hyun sent a message that negotiations with Vice Chairman Koo Ji-eun are still possible. With room left open on both sides, industry eyes are keenly watching what decision Koo Mi-hyun will make.