1. The Client's Situation
The client is a mid-sized manufacturer that had recently become aware of problems concerning executive retirement: its internal standards were either lacking or out of step with reality. In particular, concerns were raised that the existing rules did not clearly set out specific calculation criteria or exceptions, leaving room for future legal disputes. Accordingly, the client requested advice from Your Legal Team to comprehensively overhaul the rules concerning executive severance pay.
2. Your Legal Team's Advice
Your Legal Team reviewed the legal validity and operational effectiveness of the current rules and presented improvement measures that took into account other companies' precedents and consistency with relevant statutes. In particular, we ensured that points that could become contentious in actual application were clearly defined in advance, such as the clause restricting payment in the case of dismissal for attributable cause, the method of calculating the term in office, and the criteria and procedures for paying special consolation payments. Accordingly, the company was able to lawfully enact the overhauled rules through a resolution of the general meeting of shareholders.
3. Result
By introducing the new rules, the client was able to prevent the possibility of legal disputes upon executive retirement and to establish a reasonable and fair compensation system. In addition, by strengthening the consistency of the company's internal personnel rules, it was able to enhance the stability and trust of organizational operations.