Investors react strongly to the stock price plunge… Kakao rushes to prepare countermeasures belatedly
Kakao Pay CEO Ryu Young-joon (pictured), who was appointed as the new co-CEO of Kakao, resigned on the 10th. Immediately following the listing, they sold out a large amount of stock and faced strong backlash from inside and outside the company, and they seem to be taking responsibility and step down. The leadership of Kakao Chairman Kim Beom-soo, who vowed to reform the organization as Kakao suffered a crisis of trust from the beginning of the year, which suffered from measles last year due to controversy over the infringement of alleys, will also be put to the test.
On the 10th, Kakao announced that “the nominee Ryu, who has been appointed as the new co-CEO, has expressed his resignation and has decided to accept this decision.” It has been more than 40 days since Ryu was appointed as the successor of Kakao co-CEO Su-yong Jo, whose term of office ends. Ryu plans to retain the position of CEO of Kakao Pay until March. A Kakao official explained, “Whether to appoint another new co-representative will be decided through internal discussion.”
Previously, 8 executives of Kakao Pay, including CEO Ryu, sold regarding 440,000 shares acquired by exercising stock options (stock option) in an following-hours block deal (block deal) on December 10 of last year, earning 87.7 billion won in profit. Among them, CEO Ryu took a profit of 45.7 billion won by selling 230,000 shares. This happened regarding a month following Kakao Pay was listed on the stock market on November 3, last year.
The stock price plummeted when it became known that the management had sold a large number of stocks within a month of the company’s listing. This is because investor sentiment toward Kakao and its affiliates rapidly froze as the management’s block deal signaled a short-term high in the stock market. The stock price of Kakao Pay, which was around 200,000 won before the block deal, fell to 148,500 won as of the closing price on the 10th. The stock price of Kakao fell below 100,000 won at 96,600 won for the first time since the stock split in April last year by splitting one share into five shares.
Although there are no legal problems with the management’s share sale, it is rare for multiple executives to sell shares at once. Public opinion deteriorated to the extent that the Kakao union pressured the resignation and the National Assembly also discussed the “Kakao Pay Prevention Act.”
Inside and outside of Kakao, criticism of the internal control system continues. This is because a new problem arose even following Chairman Kim attended the National Assembly audit in October last year and apologized and expressed his will for management renewal.
Seo Seung-wook, head of Kakao’s union branch, said, “Even if there was a ‘control tower’ in the headquarters that oversees affiliates, it did not work. “The company completely failed to respond to the crisis.”
As the controversy over ethical management of the entire management of affiliates both inside and outside the company arose, Kakao was belatedly responding to the issue, including setting up stock option exercise standards. It is also expected to speed up organizational restructuring that strengthens the decision-making authority of the headquarters, led by Chairman Kim.
Reporter Jimin-gu warum@donga.com
Reporter Park Min-woo minwoo@donga.com
Reporter Kim Do-hyung dodo@donga.com
