Kakao Jeongsin-a System Launched... Enhancing Group Cohesion

Kakao has launched the Jeong Sin-ah CEO regime. As a savior stepping in during the worst crisis, a full-scale overhaul including organizational restructuring and executive appointments has been announced. It is expected to lead a transformation in the company’s nature by correcting the sprawling business expansion and redefining the identity as a technology company focusing on artificial intelligence (AI).

On the 28th, Kakao held the 29th regular shareholders' meeting at its headquarters Space Dot One located in Jeju Island and approved the agenda for the appointment of directors, including Jeong Sin-ah, the designated CEO of Kakao. After the shareholders' meeting, Jeong was appointed as the new CEO of Kakao through the board of directors. The new CEO Jeong began a two-year term.

Jungsin A, CEO of Kakao [Photo by Kakao]

With the launch of the Jeong CEO regime, it is widely expected that significant changes will occur. On this day, Kakao formed a new board by newly appointing five internal and external directors. Jeong, Kwon Dae-yeol, chairman of the Kakao CA Council ESG Committee, and Cho Seok-young, head of the CA Council Group Compliance Management Office, were appointed as internal directors, while Cha Kyung-jin, professor of Management Information Systems at Hanyang University, and Ham Chun-seung, president of PH&Company, were appointed as external directors. The board was composed of members from the legal, media, and advisory sectors, emphasizing crisis management.

In particular, escaping from the sprawling business expansion and creating a new growth formula, as well as establishing a headquarters-centered governance system, are considered urgent tasks. The company has already started preparations for organizational restructuring. The shopping division, which was operated as an internal independent company (CIC), will be reorganized so that the headquarters directly manages it. The Daum CIC will change its name to Content CIC to strengthen content capabilities. In addition to subsidiaries such as Kakao Brain and Kakao Enterprise, a new AI organization will be established within Kakao headquarters.

Managing internal unrest surrounding the overhaul is also a challenge. On the same day, the Kakao labor union held a picketing protest in front of Space Dot One. The union stated, "Although they call for reform, we do not feel any concrete changes except for the replacement of a few CEOs," and demanded the introduction of a personnel verification system and disclosure of regulations related to executives.

During the organizational restructuring and personnel process while Jeong was the designated CEO, controversy arose when Jeong nominated Jeong Kyu-don, former CTO of Kakao Bank and a central figure in the past Kakao Bank ‘eat-and-run’ controversy, as Kakao CTO. Furthermore, the reappointment of Ryu Geung-seon, CEO of Kakao Mobility, who was recommended for dismissal by the Financial Supervisory Service due to accounting fraud allegations, has raised doubts about the sincerity of personnel reform. Kakao’s external oversight body, the ‘Compliance and Trust Committee,’ also recommended establishing measures to resolve reputation risks related to the appointment of new management.

As the control tower role over affiliates has been strengthened, there is also interest in what capabilities will be demonstrated. Previously, Kakao appointed personnel from the group control tower, the CA Council, as directors at the major affiliates’ shareholders' meetings. Kwon, the chairman, was included as a board member of Kakao Bank and Kakao Mobility. Kakao Games appointed Jeong Myung-jin, secretary-general of the Kakao CA Council Strategy Committee, and Yoo Tae-wook, head of Kakao Growth Support Office, as non-executive directors. Jeong and Yoo also serve as non-executive directors of Kakao Entertainment and Kakao Pay, respectively.