사업구조조정과 주식매수선택권

Movement of officers and employees usually happen in the context of merger, spin-off and other form of corporate restructuring. When such officers or employees have been granted with employee stock option, the merger agreement, spin-off plan or relevant restructuring plan should consider how to handle such stock options. Korean Commercial Code has two set of rules regarding employee stock options: (i) article 542-3 for stock options granted by listed companies, and (ii) articles 340-2 through 340-5 for stock options granted by non-listed companies. Korean Commercial Code requires two years incumbency. ESO granted by listed companies are exercisable upon the holder’s death or involuntary retirement within two years from the grant of ESO, as expressly permitted by article 542-3. It is not clear, however, whether ESO granted by non-listed companies would be exercisable upon death or involuntary retirement as well. Recently, Korean Supreme Court found that Article 340-4 regarding two-year incumbency requirement for ESO by non-listed companies is a mandatory provision. According to the Supreme Court decisoin, even if the ESO agreement allowed exercise of ESO upon death or involuntary retirement within two years from the grant of ESO, even if the provision was approved by shareholder’s meeting, such provision is invalid. According to this decision, assumption or assignment of ESO upon corporate restructuring would be invalid; new ESO should be granted resetting two-year incumbency requirement.