Nakao Hits New Lows Consecutively... CEO Bonus '0 Won' This Year

Stock Price Plummets Despite Expanded Stock Gain Compensation and Minimum Wage Declaration
Focus on Proving Growth Potential Through Global Business Expansion and KakaoTalk Monetization

[Asia Economy Reporter Yuri Choi] As Naver and Kakao stocks hit new lows day after day, the CEOs who took office earlier this year are expected to receive no performance bonuses at all. They have put their lives on the line to enhance corporate value by expanding long-term compensation based on stock price increases and declaring that they will receive only minimum wage until the stock price rises to a certain level, but the domestic and international environment surrounding the stock market is challenging.

On the 13th, Naver's stock closed at 162,000 won as of the previous day, down 56.9% from the beginning of the year. During the same period, Kakao also closed at 49,850 won, down 56.5%. They slid faster than the KOSPI decline, halving compared to the beginning of the year.

The CEOs' performance bonuses, which are directly linked to stock prices, are also hit. Naver CEO Suyeon Choi receives compensation based on a system composed of ▲ base salary 20-25% ▲ target incentives 30-35% calculated by quantitative indicators such as operating profit and non-quantitative indicators such as contribution ▲ restricted stock units (RSU) as stock compensation for mid- to long-term performance accounting for more than 45%.

Compared to former CEO Seongsuk Han, the base salary was reduced from 1.2 billion won to 600 million won, and the RSU proportion was nearly doubled. The RSU, which has the highest proportion, is a system that grants company stocks free of charge when certain goals are achieved, and the compensation amount is based on the stock's par value. It is a system activated in Silicon Valley, USA, to reward long-term performance.

The scale of RSU payments is determined according to Naver's stock price increase rate compared to KOSPI 200 companies. CEO Choi receives 4,166 shares worth 1.2 billion won over three years, divided into 30%, 30%, and 40%, with the final payment amount determined within 0-150% depending on the stock price increase rate.

If corporate value rises, performance bonuses surge, but in the opposite situation, they become zero. Since CEO Choi took office in March, the KOSPI 200 stock prices have fallen nearly 20%, but Naver's stock price decline (51%) is larger. Considering the continued deterioration of investment sentiment due to concerns about a global economic recession, RSU payments this year are expected to be difficult. This contrasts with the fact that Naver CEOs have received more than 1 billion won annually in performance bonuses so far.

The situation is the same for Kakao co-CEO Hoonyoung Nam. Although he declared he would receive only the statutory minimum wage until Kakao's stock price reaches 150,000 won, it has slid to around 50,000 won. Even when stock options are granted, he requested the exercise price to be set below 150,000 won, so he is receiving only the minimum wage of about 1.9 million won per month. This is a significant difference compared to when CEO Nam received 1.3 billion won in compensation, including salary and bonuses, while serving as CEO of Kakao Games.

Some expect that as corporate value continues to decline, additional measures such as share buybacks may be taken. In CEO Nam's case, he purchased large amounts of company shares as a responsible management measure when he served as CEO of CJ Internet, Wemade, and Kakao Games. He currently holds 2.4 million shares of Kakao Games (equivalent to about 91.6 billion won in equity value).

However, there is also analysis that, since the effect of stock price support measures is weakened by domestic and international adverse factors, it will not be easy to take action. For example, Kakao Bank, a Kakao affiliate, saw its executives engage in large-scale share buybacks, but the stock still hit a 52-week low, failing to gain momentum.

For now, Naver and Kakao plan to focus on proving future growth potential. Naver is accelerating the expansion of its global commerce and content business by acquiring Poshmark, North America's largest secondhand fashion platform. It aims to recover profitability by shifting its core business axis from advertising to community-integrated consumer-to-consumer (C2C) commerce. Kakao plans to focus on monetization by revamping KakaoTalk's Open Chat and Friends tab starting in the fourth quarter. Advertising will be expanded in Open Chat, and the Friends tab will be converted to a Profile tab linked with commerce.

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