Former Namyang Dairy Products Chairman Wonshik Hong Loses First Trial in 44.4 Billion Won Severance Pay Lawsuit

Court Partially Upholds Namyang Dairy Products' Counterclaim
Orders Wonshik Hong to Pay 1.17 Billion Won

Wonshik Hong, former chairman of Namyang Dairy Products, lost the first trial in his lawsuit against Namyang Dairy Products seeking approximately 44 billion won in severance pay. Meanwhile, a counterclaim filed by Namyang Dairy Products against Hong was partially upheld, resulting in Hong being ordered to pay around 1.2 billion won to the company.

Won Sik Hong, former Chairman of Namyang Dairy Products. Photo by Yonhap News Agency

On the afternoon of August 27, the 41st Civil Division of the Seoul Central District Court (Presiding Judge Lee Kyuhun) ruled against Hong in his lawsuit demanding executive severance pay from Namyang Dairy Products. On the other hand, the court partially granted Namyang Dairy Products' counterclaim, which demanded the return of unjust enrichment, and ordered, "Hong must pay Namyang Dairy Products 1,172,428,570 won plus delayed interest."

After losing a management rights dispute against the private equity fund Hahn & Company (Hahn & Co.), Hong filed a lawsuit in May 2024 against Namyang Dairy Products, seeking 44,357,750,000 won in executive severance pay and delayed interest. This amount accounted for about 6.54% of Namyang Dairy Products' equity capital at the time. It is reported that the severance pay amount was calculated based on the company’s executive severance pay regulations and related provisions.

Namyang Dairy Products, on the other hand, has argued that the severance pay should not include periods in which the 5 billion won cap for directors' compensation—approved at shareholder meetings in 2023 and 2024 but later voided by the court—should be excluded from the calculation.

Separately, Hong is also on trial for reportedly using a company-owned villa and vehicles for personal purposes and causing financial loss to the company by involving intermediary firms in transactions. In the first trial, he was sentenced to three years in prison and a forfeiture of 4.3 billion won. The appeal process is currently underway.

Meanwhile, Namyang Dairy Products stated immediately after the ruling that it respects the first-instance court's decision.

This content was produced with the assistance of AI translation services.