Kakao headquarters in Pangyo, Gyunggi Province (Kakao)
Korea’s IT giant Kakao said Thursday it will ban CEOs and executives representing its subsidiaries from selling company shares shortly after their market debuts in an apparent move to quell public criticism over their management ethics.
According to Kakao’s Corporate Alignment Center, the new control tower that oversees Kakao affiliates, CEOs and executives will be prohibited from exercising stock options within two years and one year after the listing day, respectively.
In particular, two or more executives cannot jointly sell company shares to prevent a drastic change in the stock price, a Kakao official said.
Also, executives must notify the control tower and the affiliate company’s investor relations team of when and how much shares they are planning on selling before carrying out the actual sale. The new set of intra-company regulations is mandated even for executives leaving the company or moving to another group unit.
“We will draw up other guidelines to strengthen the morale in executives and ponder upon the social responsibility of Kakao,” the CAC said.
The announcement came days after its incoming CEO Ryu Young-joon offered to resign the top post for drawing ire over his selling his Kakao Pay shares only a month after the company went public. Ryu will remain as CEO of Kakao Pay, the payment arm of the messaging giant, until March, the company said.
Ryu and seven other senior executives sold a combined 440,933 shares, collecting a total profit of approximately a combined 90 billion won ($75 million).
According to reports, Ryu has made a profit of 40 billion won, sparking criticism for his undermining corporate ethics and causing a fall in Kakao Pay share prices.
By Byun Hye-jin (firstname.lastname@example.org)