[Exclusive] Yoon Ho-young, CEO of KakaoBank, Also Exercised Stock Options

Some of the 520,000 Shares Exercised in Q4 Last Year... Estimated at Tens of Thousands
No Disclosure Obligation Due to Cash Settlement Method
KakaoPay Executives and Sale Timing Similar...Internal Employees 'Boiling'

[Asia Economy Reporter Jin-ho Kim] It has been confirmed that Yoon Ho-young, CEO of KakaoBank, exercised part of his stock options amounting to 520,000 shares during the fourth quarter of last year. However, he exercised the stock options through a cash-settlement method, showing a different approach from Ryu Young-joon, CEO of KakaoPay. This method was chosen to avoid affecting the stock price, interpreted as a consideration to prevent sending misleading signals to the market.

According to financial sources on the 19th, CEO Yoon exercised part of the 520,000 stock options he holds during the fourth quarter of last year. An insider familiar with internal matters said, "The exercise took place during the fourth quarter, but the volume was not large."

The reason Yoon’s stock option exercise was not previously disclosed is that he used the cash-settlement method, which does not require public disclosure. Stock options are divided into stock-settlement types, where new shares or treasury shares are delivered upon exercise, and cash-settlement types, where the difference between the stock price at exercise and the exercise price is paid in cash. Since the cash-settlement method compensates in cash rather than shares, it does not require disclosure.

CEO Yoon was granted 520,000 common shares as stock options on March 25, 2019. The exercise was conditional upon achieving 13 million customers and 130 billion KRW in pre-tax profit. The stock options were granted through three methods: new share issuance, treasury stock delivery, and cash compensation.

The exercise of Yoon’s stock options will be recorded in the business report to be disclosed before the shareholders' meeting in March. Yoon must exercise the 520,000 stock options granted to him in three installments by 2026. Since the volume exercised in the fourth quarter of last year was reportedly small, a significant scale of stock option exercises is expected in the next two installments.

The stock options exercised by CEO Yoon in the fourth quarter of last year are estimated to be in the tens of thousands of shares. Through this, it is believed that CEO Yoon received at least several hundred million KRW as performance compensation.

Following the revelation of Yoon’s stock option exercise, voices within KakaoBank criticized it as inappropriate. The timing of his exercise was similar to that of the KakaoPay management, who were embroiled in a so-called "eat-and-run" controversy. An employee of KakaoBank said, "While I understand that exercising stock options is a reward for achieving difficult performance goals, considering that the 'eat-and-run' controversy involving KakaoPay’s CEO has not yet been resolved, the fact that the exercise was not disclosed earlier, and the stock price has been continuously falling since listing, it does not seem appropriate."

In response, KakaoBank emphasized that CEO Yoon’s stock option exercise was conducted in a way that did not affect the stock price. They also added that it did not impact the total number of issued shares. This is completely different from the KakaoPay management, who were previously involved in the "eat-and-run" controversy. KakaoBank explained, "CEO Yoon did not receive the employee stock ownership granted to KakaoBank employees in 2019, and this is a performance reward for leading the bank well. Also, according to the recently established 'Kakao Community Executive Stock Sale Regulation,' CEOs are prohibited from selling shares for two years after listing, so CEO Yoon cannot sell shares until the end of his term in March next year."

Meanwhile, KakaoBank closed at 43,300 KRW on the KOSPI market yesterday, down 3.99% (1,800 KRW) from the previous trading day. This marks a 44.84% drop over four months compared to the listing price of 78,500 KRW on August 9.