1.6 Trillion Won Compensation Instead of Kim Beomseok? Preview of Coupang’s Joint Parliamentary Hearing

Six Parliamentary Committees to Participate on December 30-31
Dispute Over the Facts of the Data Breach Investigation
Questions Raised Over the Effectiveness of the Compensation Plan
Broad Criticism Expected Over Payment Terms and Overwork-Relate

Coupang, which suffered a massive customer information leak, announced a compensation package worth 1.6 trillion won on the eve of the joint National Assembly hearing scheduled for December 30-31. Kim Beomseok, Chairman of the Board of Coupang Inc. and founder of Coupang, issued a written apology one month after the incident involving the leak of 33.7 million customer records. Now, by unveiling a large-scale compensation plan, the company is moving quickly to calm the worsening public sentiment.

However, criticism is mounting as Chairman Kim has again expressed his intention not to attend the upcoming hearing. With lawmakers from across the political spectrum continuing their attacks on Coupang and Chairman Kim, the hearing is expected to see heated debate over the findings of the investigation into the cause of the data breach, as well as the adequacy of Coupang's response and compensation plans.

According to the National Assembly and related industry sources on December 29, the upcoming Coupang joint hearing will be led by the ruling party and will include six standing committees: the Science, ICT, Broadcasting and Communications Committee; the Political Affairs Committee; the Land, Infrastructure and Transport Committee; the Climate, Energy, Environment and Labor Committee; the Planning and Finance Committee; and the Foreign Affairs and Unification Committee. Chairman Kim, Vice President Kim Yuseok, and former Coupang CEO Kang Hanseung were all asked to appear as witnesses, but all three reportedly submitted written notices of non-attendance.

On the previous day, Chairman Kim issued his first official statement on the incident through Coupang's Korean subsidiary, saying, "The personal information leak at Coupang has caused great concern and inconvenience to our customers and the public. As the founder and Chairman of the Board, and on behalf of all Coupang employees, I sincerely apologize." He continued, "The Board will take the lead in preparing a compensation plan for Korean customers who have been inconvenienced, and we will implement it as quickly as possible. To ensure that a personal information leak like this never happens again, we will completely overhaul Coupang's information security measures and investments."

Despite this message, criticism has emerged that this is a "belated apology" intended to deflect the worsening public sentiment among the government, politicians, and consumers, as Chairman Kim again refused to attend the latest hearing following his absence from the Science, ICT, Broadcasting and Communications Committee's hearing on December 17 regarding the Coupang breach.

In particular, the government's position on the investigation results announced by Coupang on December 25 differs, so a dispute over the facts is expected at the hearing. Coupang stated that, following government instructions, it identified the former employee responsible for the leak, secured their testimony and storage devices, and confirmed that only 3,000 customer records were stored on the leaker's computer and that this information was neither distributed nor sold externally. Chairman Kim also emphasized this point in his apology, maintaining that it was the result of cooperation with the government. However, the police and the Ministry of Science and ICT, who led the investigation, refuted this, saying they had not coordinated with Coupang. The hearing is expected to examine the facts behind these conflicting claims.

The compensation plan announced by Coupang on this day is also expected to be a key issue at the hearing. Coupang plans to provide compensation of 50,000 won per person to 33.7 million people, including Coupang Wow, regular, and former customers, starting sequentially from January 15 next year. However, the compensation will be in the form of discount vouchers for four categories: 5,000 won for all Coupang products, 5,000 won for Coupang Eats, 20,000 won for Coupang Travel products, and 20,000 won for Alux products, which is seen as a way to encourage additional purchases. Online communities have reacted skeptically, with comments such as, "So they're not giving 50,000 won in cash, just discount coupons?" and "Except for the Coupang voucher, I probably won't use the others."

It is also expected to be controversial that Vice President Kim Yuseok, who oversaw Coupang's delivery camp management, reportedly received compensation and incentives totaling 14 billion won over four years from 2021 to last year. If it is confirmed that Chairman Kim and his family (relatives) have participated in management or had transactions with the company, there is a high possibility that Chairman Kim will be designated as the de facto owner (total shareholder) of Coupang. Chairman Kim has so far avoided this designation by citing exceptions, such as his family's non-involvement in management.

Other issues expected to be addressed at the hearing include the reason why Coupang Inc. belatedly disclosed the data breach to the U.S. Securities and Exchange Commission (SEC), the company's practice of taking up to 60 days to pay for direct-purchase transactions, and suspicions that the company downplayed the 2020 warehouse worker death incident. Meanwhile, the Democratic Party of Korea has announced that, depending on the outcome of the joint hearing, it will consider launching a parliamentary investigation and even imposing an entry ban on Chairman Kim.