Kakao Games' 'Ttasangsang'... Employees' Stock Options Worth at Least 400 Million Won 'Jackpot'

Executives Gain Evaluation Profit Worth 10 Billion Won
Employee Stock Ownership Plan Applicants Receive Only Tens of Millions
"Due to Smaller Allocation Than SK Biopharm and Larger Number of Participants"

Kakao Games CEO Namgung Hoon is speaking at the online IPO briefing held on the 26th of last month.
[Photo by Yonhap News]

[Asia Economy Reporter Minwoo Lee] Kakao Games achieved 'Ttang Sang' (opening price at twice the IPO price followed by the upper price limit) on its first day of listing and recorded the upper price limit again. Successfully achieving the so-called 'Ttang Sang Sang,' employees granted stock options are expected to realize an average valuation gain of over 400 million KRW per person.

According to the Korea Exchange on the 11th, Kakao Games' stock price recorded 81,100 KRW, up 29.97% from the previous day, right after the market opened. Accordingly, the valuation gain of stock options also increased significantly once again. According to Kakao Games' investment prospectus, the company granted a total of 6,222,500 shares to 444 executives and employees (including duplicates) over nine rounds from December 2015 to January this year. Excluding canceled or already exercised shares, a total of 3,219,664 shares remained as of the end of last month.

The exercise prices of the granted stock options vary from 5,981 KRW to 17,192 KRW, approximately 25% to 71.6% of the IPO price of 24,000 KRW. With the stock price recording 'Ttang Sang Sang' on this day, the value of stock options increased by 183.8 billion KRW compared to the IPO price point. This is an increase of more than 60 billion KRW compared to the previous day when 'Ttang Sang' was recorded. Simply dividing this by 444 people results in an average valuation gain of 414.06 million KRW per person. Adding the profit based on individual stock option exercise prices could further increase the valuation gain.

Executives with large stock option holdings are expected to realize valuation gains of up to 10 billion KRW per person. The top is Cho Gye-hyun, co-CEO of Kakao Games. Holding 150,000 stock options with an exercise price of 14,727 KRW, he is estimated to gain a valuation profit of 9.95595 billion KRW. Nam Jae-kwan, former CFO of Kakao Games, who holds 127,000 stock options (125,000 shares at an exercise price of 5,095 KRW and 2,000 shares at 14,727 KRW), is also expected to realize a valuation gain of 9.633 billion KRW. Employee A, who received 60,000 stock options at an exercise price of 11,480 KRW in 2017, is expected to gain about 4.2 billion KRW in valuation profit.

Employee stock ownership association members who were allocated 1,522,088 shares at the IPO price of 24,000 KRW are also expected to realize significant valuation gains. With Kakao Games' stock price recording 'Ttang Sang Sang' on this day, the total valuation gain reaches 86.9 billion KRW. Dividing this by the number of Kakao Games employees (347 regular employees) results in about 250 million KRW per person. However, since employees of subsidiaries such as KakaoVX, Friends Games, and XL Games also qualified for employee stock ownership, the actual number of employees allocated shares is estimated to exceed 1,000. In this case, the valuation gain per person is expected to be in the tens of millions of KRW range.

For this reason, there is an assessment that it is difficult for all employees to achieve a 'jackpot' level like SK Biopharm. The employee stock ownership allocation itself is smaller than SK Biopharm (2,446,931 shares), and the number of executives and employees is larger. Therefore, both the allocation per person and the profit are inevitably smaller compared to SK Biopharm. A Kakao Games official explained, "Even Kakao Games alone has more employees than SK Biopharm, which has around 200 employees," adding, "Since only some employees received stock options, it is hard to say it is a 'jackpot' like SK Biopharm employees."

This content was produced with the assistance of AI translation services.