Kakao names new CEO to salvage reputation hurt by stock options scandal

Kakao Corp., the operator of South Korea’s top mobile messenger KakaoTalk, on Thursday announced a new chief executive nominee as the company is striving to rebuild its reputation hurt by a stock options scandal involving its co-CEO and other executives.

Namkoong Whon, currently head of the mobile platform giant’s Future Initiative Center, will take the helm of Kakao -- a move that will ditch the company's co-leadership structure, the company said in a statement.

His appointment will be made official upon approval at a shareholders’ meeting and a board meeting scheduled for March.

Current Co-CEO Yeo Min-soo, supposed to renew his four-year term, won’t extend his tenure when it expires in March, taking responsibility for the recent scandal, according to the company.

The designation of Namkoong comes less than two weeks after Alex Young-joon Ryu, a co-CEO nominee, stepped down as his earlier disposal of $39 million worth of shares in Kakao’s fintech unit Kakao Pay Corp. met with strong backlash.

About a month after Kakao Pay’s market debut, Ryu and seven other executives of the company exercised their stock options and dumped a combined 440,000 shares in after-hours trade. The block sale caused the company's shares to fall significantly, inviting harsh criticism from its labor union and minority shareholders and raising a management ethics controversy.

NEW CEO, CONFIDANTE OF CHAIRMAN KIM

“I’ll focus on ESG (environmental, social and governance) management with great responsibility so that Kakao can restore people’s trust and live up to their expectations,” the incoming CEO said in the statement.

Namkoong, known as a confidante of Kakao founder and Chairman Kim Beom-su, has been leading the Kakao Future Initiative Center, a division tasked with finding new growth businesses for the company, since December 2021.

He joined Kakao in 2015 after serving as chief executive at various internet and game-related companies, including NHN Corp.’s US office, CJ Internet Corp. and WeMade Co., a Korean video game developer. He was a founding member of Hangame Communications launched by Kim in 1999.

Namkoong is credited with building Kakao Games Corp. as one of Korea’s leading game developers and publishers.

As Kakao Games CEO, he successfully listed the company on the tech-heavy Kosdaq in September 2020. Its shares have more than tripled from its initial public offering price of 24,000 won.

METAVERSE, NEW BUSINESS FOCUS

Former Co-CEO Ryu’s resignation came as the mobile platform giant has been struggling to improve its corporate image, withdrawing from community businesses, after the company faced criticism for competing with mom-and-pop retailers.

Following the stock options scandal, company employees and minor shareholders have also demanded Chairman Kim be held accountable for poor management ethics.

The new CEO nominee said on Thursday he plans to restructure the company’s business portfolio to focus on future-oriented technology such as the metaverse.

Shares of Kakao Corp., which had fallen more than 20% since the scandal, finished up 2.1% at 92,300 won on Thursday. While Kakao Pay closed up 6.3% at 136,000 won, Kakao Games rose 5% at 71,400 won.

Write to Ju-Wan Kim at kjwan@hankyung.com
In-Soo Nam edited this article.