Kakao’s compliance committee more vocal in appointments

[Photo by Kim Ho-young]

Kakao Group’s Compliance & Trust Committee put the brakes on the platform giant’s recent designation of a management figure embroiled in a stock option controversy on Thursday.

“Regarding the controversy over the appointment of new management at Kakao, we recommended that the company establish improvement measures,” the committee said in a statement. “We also urged measures to resolve reputational risks triggered by the appointment of some management figures and to prevent and manage similar risks in the future.”

The committee did not specifically disclose who the central figure in the current personnel controversy is in the material.

But sources believe that the origin of such committee’s recommendation is closely related to the appointment of Jung Gyu-don, former chief technology officer of KakaoBank Corp., as the new CTO of Kakao.

Jung was embroiled in a controversy after he was found to have exercised stock options immediately after KakaoBank went public, earning a profit of about 7 billion won ($5.3 million).

The controversy became an external issue about a week ago as the market raised concerns about the sincerity of the personnel reshuffle at Kakao, which is facing its biggest crisis since its inception.

There were differences of opinion among the committee members on whether to officially discuss the issue, but it is understood that there is a consensus on the need for the committee to raise its voice as a monitoring body for Kakao.

There has been recent talk that the Compliance & Trust Committee’s oversight of affiliated companies, including Kakao Mobility and Kakao Entertainment, is loose. For example, the Financial Supervisory Service investigated suspicions of Kakao Mobility inflating its performance and concluded in February 2024 that there was “intentionality.” It issued the highest level of sanctions including recommending dismissal of the company’s CEO.

Kakao, however, pushed for the reappointment of CEO Ryu Geung-seon.

The committee is expected to play a more active role in the overall appointment process and stated it cannot proceed with the company’s existing plans without any follow-up measures regarding Kakao’s naming of its CTO.

“We respect the committee’s recommendations and plan to prepare alternatives soon,” Kakao said.