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Kakao Pay shareholders disappointed by CEO's insincere apology
Representatives from Kakao Pay and the Korea Exchange (KRX) celebrate the fintech firm's listing on the KOSPI market at the KRX building in Seoul in this November 2021 file photo. Yonhap
By Park Jae-hyuk
By Park Jae-hyuk
Kakao Pay's stock price dropped 6.51 percent to 158,000 won, Wednesday, despite its CEO's apology a day earlier about him and other executives exercising their stock options last December, just a month after the company's listing on the benchmark KOSPI market.
Their previous sale of a combined 440,993 shares of Kakao Pay enabled them collectively to earn 87.8 billion won ($73 million), but its stock price has fallen sharply, from 203,704 won a month earlier, as the disposal was considered a signal of the management's distrust in their company's valuation.
In response to the intensifying criticism, Kakao Pay CEO Ryu Young-joon apologized at his meeting with employees, Tuesday, promising that the management will do their best to enhance shareholder value. CEO nominee Shin Won-keun also apologized to Kakao Pay's stakeholders, including shareholders and employees.
“We will overhaul every possible risk from the management's exercise of stock options,” Shin said. “In order to prevent the recurrence of similar incidents, we will make efforts to pursue responsible management.”
The apology was made about a week after the Korea Exchange (KRX) asked the managements of companies preparing for initial public offerings (IPOs) to refrain from exercising their stock options shortly after listing their companies. The bourse operator's request was a countermeasure against worsening investor sentiment following the controversy involving Kakao Pay.
“We are considering drawing up a guideline to prevent the managements of newly listed companies from exercising their stock options for a certain period of time,” a KRX official said.
Minority shareholders viewed Kakao Pay's apology as insincere and belated, so they plan to condemn the company during a rally to be held Thursday in front of the KRX building in Seoul.
Ryu was especially criticized for his plan to sell his remaining stake in Kakao Pay during the first half of this year.
Retail investors feared an additional drop in Kakao Pay's stock price after the sale, although the company explained that the outgoing CEO's plan is intended to prevent any possible conflict of interest, when he starts leading its holding company, Kakao, from March.
The fintech firm also emphasized that the incoming CEO will not sell his stake during his two-year term, but Shin and other executives did not completely rule out the possibility of additionally exercising their stock options.
“If he sells his shares for unavoidable reasons, we will transparently disclose relevant information and minimize the impact on the stock price through active communications,” a Kakao Pay official said. “If other executives exercise their stock options, departments in charge of personnel affairs and investor relations will have in-depth discussions to minimize possible risks.”