"'Sibling Revolt' Ourhome D-4... Union's Petition for Severe Punishment of Koo Bonseong Key Points"

Conclusion on Additional Appointment of Inside Director at Temporary General Meeting on 31st
Labor Union Petitions for Severe Punishment of Former CEO on Charges of Breach of Trust and Embezzlement

Ourhome, a group catering company, is caught up in a management dispute known as the so-called 'Sibling War,' with a crucial extraordinary shareholders' meeting just four days away that will determine the company's fate. The eldest son, former Vice Chairman Gu Bon-seong, and the eldest daughter, Gu Mi-hyun, have joined forces to block the reappointment of the youngest daughter, current CEO Gu Ji-eun, escalating the internal conflict to its peak.

The Ourhome labor union has reportedly submitted a petition to the court urging strict punishment for former Vice Chairman Gu's alleged embezzlement and breach of trust. This is interpreted as an intention to support the 'stability' centered on the current management. Attention is focused on whether these voices from the members will influence the outcome of the extraordinary shareholders' meeting scheduled for the 31st.

Ourhome Magok Food Research Center
Photo by Ourhome

Union: Former Vice Chairman Gu's Attempt to Return to Management Aims to Cover Up Trials and Investigations

According to industry sources on the 27th, the Ourhome union under the Korean Federation of Food Industry Trade Unions submitted a petition to the Seoul Southern District Court Criminal Division 14, requesting "strict punishment for defendant Gu Bon-seong in the case of violation of the Act on the Aggravated Punishment of Specific Economic Crimes (embezzlement and breach of trust in the course of duties)."

The union stated, "Ourhome's internal audit found that former Vice Chairman Gu, while serving as CEO, unilaterally received salaries and bonuses exceeding the prescribed limits, leading to a police complaint filed in November 2021." They added, "According to the case details, the amount embezzled by former Vice Chairman Gu is about 700 million KRW, and the breach of trust amounts to approximately 5.4 billion KRW." They lamented, "Ourhome employees could only feel deep disappointment and betrayal upon learning of this news through media reports," and continued, "Ourhome has maintained its position as the industry leader for 30 years, but under former Vice Chairman Gu's management participation, the company recorded its first-ever deficit, and the resulting damage was passed on to the workers."

Specifically, the union pointed out, "(Former Vice Chairman Gu) forced employees and executives facing difficulties due to COVID-19 in 2020 into contract terminations, unpaid leave, and mandatory use of annual leave, driving workers to the brink," and criticized, "As the company's representative, he caused enormous damage to the company and its employees through retaliatory driving, which is unimaginable, and Ourhome's external credibility rapidly collapsed."

Earlier, former Vice Chairman Gu was sentenced to six months in prison with a two-year probation for damaging a rival's vehicle through retaliatory driving and assaulting the driver after exiting the car in June 2021, leading to his withdrawal from frontline management at Ourhome. He is also on trial for embezzlement and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes.

The union criticized, "Former Vice Chairman Gu shamelessly demanded an astronomical dividend of 20 billion KRW at the shareholders' meeting without showing any remorse even recently during the ongoing trial, and attempted to return to management by appointing himself and his children as inside directors and other non-executive directors," adding, "This can only be seen as an attempt to cover up the ongoing trial and investigations by seizing control of the company's management." They added, "Such actions by former Vice Chairman Gu have caused deep loss and betrayal among Ourhome employees."

The union further stated, "Ourhome, whose main businesses are catering and dining, suffered direct sales hits due to social distancing, but thanks to the active and sacrificial efforts of all employees, it succeeded in turning a profit within a year," emphasizing, "This was not for former Vice Chairman Gu's personal gain or to fill his pockets, but because employees believed in maintaining their families and livelihoods and in the company's growth and expected the company to reciprocate that belief."

They continued, "The profits obtained through embezzlement and breach of trust by former Vice Chairman Gu should have originally been used for Ourhome and its workers," and requested the court, "Please thoroughly investigate the defendant's crimes, which betrayed the trust and efforts of employees who have devoted themselves to the company for a long time, and impose strict punishment."

Gu Ji-eun Throws a Winning Move, Purchases Company Shares from Eldest Daughter and Strengthens Employee Relations

Meanwhile, at last month's Ourhome shareholders' meeting, Gu Mi-hyun sided with former Vice Chairman Gu, blocking the reappointment of existing inside directors including former Vice Chairman Gu, and approving the appointment of herself and her husband, former Hanyang University Medical School professor Lee Young-yeol, as inside directors. Although companies with capital exceeding 1 billion KRW must have at least three inside directors, only two were newly appointed at that meeting, so additional inside directors must be appointed at the upcoming extraordinary shareholders' meeting.

Gu Ji-eun, who is opposed to former Vice Chairman Gu, appears to be focusing on defending management rights by strengthening relations with members. On the 24th, she attended an in-house event at the Magok headquarters in Gangseo-gu, Seoul, where employees' families were invited to the company to introduce the workplace and participate in tours and experiences, spending time communicating by giving gifts and words of encouragement to employees' children.

At this extraordinary shareholders' meeting, Gu Ji-eun proposed a resolution to use Ourhome's distributable profit of 533.1 billion KRW to purchase 14,019,520 treasury shares, equivalent to 61% of the total shares, within one year. Industry insiders view this as a winning move by Gu Ji-eun to protect her management rights by acquiring treasury shares.

Ourhome's shares are held over 98% by the late Chairman Gu Ja-hak's one son and three daughters. Their respective shareholdings are former Vice Chairman Gu Bon-seong 38.56%, Gu Mi-hyun 19.28%, second daughter Gu Myung-jin 19.60%, and Gu Ji-eun 20.67%. If Ourhome buys Gu Mi-hyun's shares as treasury stock, the voting rights corresponding to that 19.28% will disappear. This would allow the combined shareholding of Gu Ji-eun and Gu Myung-jin to surpass former Vice Chairman Gu, and also prevent the alliance between the eldest son and eldest daughter.