Faction and Compensation Complaints Raised
Some Express Skepticism About Innovation and Win-Win Cooperation
[Asia Economy Reporter Kang Nahum] Although Kakao announced a win-win plan and promised to return as an innovative IT company, the atmosphere inside the company remains unsettled. While voices of self-reflection on Kakao's growth strategy are growing, employee dissatisfaction regarding internal factions and performance compensation is also emerging.
According to Kakao on the 15th, the company hinted at a rigorous business structure reorganization through the win-win plan with small business owners announced the day before. Kim Beom-su, Chairman of Kakao's Board, expressed the will to improve, saying, "It is time for Kakao and all its affiliates to boldly abandon the growth methods pursued over the past 10 years and make fundamental changes for growth that fulfills social responsibility."
Accordingly, Kakao is expected to restructure its business focusing on overseas operations and promote the consolidation of 158 affiliates. Mergers are likely to occur mainly among affiliates engaged in similar businesses.
However, the mood among Kakao employees is cold. Rather, dissatisfaction with the management is erupting, showing signs of spreading into internal conflicts. An anonymous Kakao employee said, "It is an open secret that internal factions are formed mainly around Chairman Kim's close associates," and pointed out, "Chairman Kim has allowed his close associates to be appointed as heads of affiliates and has condoned reckless management, which has escalated the situation to this point."
Regarding Kakao's business expansion methods such as aggressive investments and mergers and acquisitions (M&A), internal employees have described it as Chairman Kim and the management's 'company shopping.' An anonymous writer, presumed to be an internal employee, posted on the workplace online community Blind app the day before, stating, "There are now over 100 Kakao companies disclosed, and they 'shop' companies of people close to Chairman Kim, help them exit, and use the Kakao brand loyalty to siphon fees relative to sales," adding, "They acquire companies without milestones and just attach the Kakao brand without strategy, so sales inevitably grow. This is how they have expanded infinitely."
Dissatisfaction with performance compensation is also surfacing. In particular, Chairman Kim's family stock gifts and stock options for all employees are comparable in scale. In January, Chairman Kim gifted 330,000 shares of the company's stock to relatives, worth about 140 billion KRW. His wife, Hyung Mi-sun, and two children, Sang-bin and Ye-bin, each received 60,000 shares, valued at 26.64 billion KRW at the time. Four months later, Kakao granted 472,900 stock options (post-stock split basis) to 2,506 employees. The exercise price was 114,040 KRW, totaling about 53.9 billion KRW.
A union official pointed out, "During Kakao's rapid growth, a so-called inner circle centered around the founder was formed, concentrating a lot of power, but there are few mechanisms to check this," adding, "The lack of a management system inevitably causes communication breakdowns with the organization members."
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