Kakao Pay CEO Ryu Young-joon (Kakao)
Amid mounting criticism over Kakao executives forging a block deal to sell massive stakes they received as stock options, the IT giant’s next CEO stepped down voluntarily on Monday, leaving the company‘s management ethics in question.
Ryu Young-joon, the appointee for Kakao’s next CEO, expressed his will to resign amid escalating criticism over the mass sale of his Kakao Pay shares, the IT giant said Monday. Kakao Pay is a payment platform which made a market debut in November.
“The board of directors comprehensively considered the opinions provided by our crew members through various channels and decided to accept the decision,” Kakao said.
“In the future, we will do our best to enhance shareholder value and restore trust among executives and employees.”
Ryu, CEO of Kakao Pay, came under fire for exercising the stock option to sell his Kakao Pay shares only a month after the listing of Kakao Pay. On Dec. 10, Ryu and seven other senior executives sold a combined 440,933 shares through after-hours block trading by exercising their stock options.
Through the mass sale of Kakao Pay shares, Ryu and the senior executives collected a total profit of almost 90 billion won ($75 million). Ryu’s shares accounted for more than half of the total shares sold, putting him at the center of controversy as the disposal was viewed as a moral hazard of management because it could lead to worsening investor sentiment.
Amid the intensifying criticism, Ryu apologized to employees in a company meeting last week, saying that the management will do its best to increase shareholder value.
Despite the apology, Kakao workers and minority shareholders continued to denounce the mass selling of Kakao Pay shares by a few high-ranking officials, and kept calling for the withdrawal of Ryu’s appointment as Kakao’s next CEO.
Following the news about Ryu’s resignation, Kakao’s labor union said in a statement that it was the only reasonable decision and the urgent issue to be solved now is earning back trust from company members and shareholders.
The price of Kakao Pay shares have fallen continuously since the mass sale by management, decreasing by approximately 28 percent from a month ago.
According to Kakao Pay, Ryu is expected to continue to serve as the CEO of Kakao Pay until March, despite his resignation as Kakao CEO appointee. He was appointed to the role in November.
Currently serving as president of the Korea Fintech Industry Association, Ryu has been the CEO of Kakao Pay since January 2017.
By Kan Hyeong-woo (email@example.com