Kakao Pay shares rebound after CEO, others step down amid stock options row (updated)

Kakaopay

21/01/2022 02:29

(Adds context throughout, incoming CEO statement, lawmaker
plan)
    By Joyce Lee and Heekyong Yang
    SEOUL, Jan 21 (Reuters) - Shares in South Korean financial
services firm Kakao Pay Corp  377300.KS  jumped on Friday after
the company said its CEO and two other executives were stepping
down following a slump in the stock, amid fierce criticism of
their exercising of stock options soon after the firm listed
last November.
    The shares surged as much as 11% on Friday, as the wider
market  .KS11  slipped 1.2%, following the executives'
departure, announced late on Thursday.
    The stock had tumbled 35% as of Thursday's close since
regulatory filings in early December showed about 90 billion won
($75 million) worth of stock options in Kakao Pay were exercised
by the departing officials and others soon after the listing.
    The shake-up at Kakao Pay comes in the wake of a boom in
South Korean initial public offerings (IPO), stoked by strong
demand from retail investors. In some cases share prices have
collapsed soon after listings, triggering concern among retail
shareholders that has spilled out onto investment forums.
 urn:newsml:reuters.com:*:nL1N2RU00G 
    Analysts attributed the fall in Kakao Pay stock at least
partly to the negative impact on investor confidence caused by
stock options being exercised, although the transactions were
all legal. Shares in affiliate Kakao Bank  323410.KS  have also
fallen since early December. 
    Unlike many other countries, in South Korea stock options
can typically be exercised without any lock-up periods related
to IPO timing.
    The anger among retail investors has made political waves.
Lee Yong-woo, a ruling party lawmaker, is preparing a draft of a
bill that would make it necessary for insiders in listed
companies to report planned share sales beforehand, his office
told Reuters on Friday. 
    Kakao Pay said that among the eight executives that
exercised stock options, five who will stay on at the firm at
Kakao Pay, including incoming chief executive Shin Won-keun,
will repurchase the shares they sold to strengthen responsible
management. 
    "We apologise for causing many people disappointment by our
misjudgement," Shin said. "We will return to the mindset of when
Kakao Pay was first launched, and do our best to restore the
trust of customers and shareholders." 

     ($1 = 1,193.7600 won)

 (Reporting by Joyce Lee and Heekyong Yang; Editing by Kenneth
Maxwell)
 ((joyce.lee@tr.com;))