The reason why Kakao CEO Nam Goong-hoon wants to receive the minimum wage

 

As many of you know, Kakao has recently been criticized more than ever for its share price drop and win-win issues.

The person who appeared as a relief pitcher in such a crisis is Nam Goong-hoon.

He is the CEO of Kakao Games and has been working with Kakao founder Kim Beom-soo for a long time.

He has the same aspects as a fantasy star in terms of planning and execution skills.

Once again, he came up with an idea that will surprise people.

New KaKao CEO is saying that he will withhold all salary and incentive payments until the stock price of Kakao reaches 150,000 won and receive only the legal minimum wage.

He added that the stock option also requested that the strike price not be set below 150,000 won.

KaKao CEO Nam Goong-hoon officially announced the above issue on the in-house bulletin board and SNS.

Currently, the stock price of Kakao is between 80,000 and 90,000 won, and the market cap is about 40 trillion won. If his goal is achieved, the market cap will rise to 60-70 trillion won.

Then it will return to an all-time high. In other words, you won't get paid until you get a signal that you've completely overcome the crisis.

He said, "The stock price doesn't explain everything, but I think it will become an easy and clear standard for setting one's own will and goals."

He added, "With this opportunity, we will do our best to make Kakao a company loved by society, shareholders and crew once again."

I did not bring up the above story to discuss the direction of Kakao's share price or future business strategy.

It's just that the heads of IT companies are working under what kind of compensation system, and this is to explain why Namgoong-hoon said he would receive the minimum wage in line with what is different from ordinary office workers.

Basically, CEOs are not much different from ordinary workers in that they receive a salary.

It's just that unemployment insurance isn't deductible.

If so, what is the salary?

It will depend on the size of your company. If you don't have an investment and don't have a clear business model, you'll get a minimum wage or no pay at all.

However, if you have received a certain amount of investment or have a business model in place, you may receive it according to the stage. According to 'The Next Web', an overseas IT magazine, if a company has received less than 5 billion won in investment, the annual salary of the CEO is usually around 30-50 million won, which is the lowest in the industry.

In addition, if the service is in the planning and initial stages, it is said to be around 30-50 million won, which is also the lowest in the industry. Then, when a large-scale investment is attracted or the service is on track, the salary is set in the billions or close to that.

Then, what is the situation of listed companies, which can be said to be a barometer of corporateization?

NBT, a digital advertising company, and Flitto, a language data building and sales company, are players who have recently entered the KOSDAQ.

For reference, according to the management indicators, NBT is making tens of billions of won in sales and a slight surplus.

Flitto is making a significant loss in billions of won in sales.

Looking at the business report, NBT paid an average of 113 million won to the three top executives, and Flitto paid an average of 152 million won.

Even if I looked for other small and medium-sized listed companies, it was about 1~200 million won.

Next, let's look at mid-level IT listed companies. Afreeca TV has grown rapidly every year, reaching close to 300 billion won in sales and 80 billion won in operating profit.

The CEO is Mr. Jeong Chan-yong, who has been working as a professional manager for a long time.

 

(1) As of 2020, the basic salary of 380 million won was divided into 12 months and paid in equal installments.
(2) In line with the growth of sales and operating profit, 280 million won was paid as a performance bonus.

For reference, executive bonuses can be given within 400% of the maximum monthly salary if management goals are achieved according to regulations.

(3) In addition, we are receiving 21.6 million won per year for corporate vehicle expenses. As other welfare benefits, we are receiving a consideration equivalent to KRW 144,000.

(4) If you add all these things together, your annual salary is 660 million won, and various allowances are added up to reach 700 million won.

(5) And CEO Jeong Chan-yong received 35,000 stock options separately. The strike price is 12,550 won, and the current company stock price is 143,700 won.

We can note one thing here.

Performance compensation is much greater than earned income! The above system is being used more actively among global IT companies.

 

The most well-known example is perhaps Tesla. Elon Musk has announced that he will not receive paychecks and bonuses in 2020.

In other words, the salary was 0 won. Instead, he entered into a contract with the company that negotiated a stock option contract to buy the stock for $70 and said that the right could be exercised when the stock price reached a certain level.

In fact, Tesla's stock price was able to reach a much higher level than the target as it continued to climb high in line with the market atmosphere.

It has risen more than 10 times. In this regard, how much is the valuation profit of Elon Musk's stock options?

It is estimated to be worth 25 trillion won. Not 25 billion. 25 trillion. A whopping 25 trillion won!!!

Going back to the beginning, I can understand why KaKao CEO Nam Goong-hoon said he would only get the minimum wage.

Of course, sincerity to get the company out of the crisis and the stock price to rebound is the top priority, but it must also be because hundreds of millions of won or billions of won are meaningless to KaKao CEO Nam Goong-hoon.

If the stock price of Kakao exceeds 150,000 won and becomes 500,000 won, 1 million won, and 1.5 million won, he can aim for a profit of several tens of billions or hundreds of billions of won.

And it's just and glorious.

Of course it won't be easy. But there's no way it won't happen again. So I thought that it was really smart, but I didn't hate it and it was cool.

However, some can point out the wealth inequality and the income gap between workers.

Some people have to live a tight life on an annual salary of tens of thousands of won, but some get a huge amount of compensation.

However, this is a global trend and I see it as an irreversible phenomenon.

Customers want top-notch products and services, and companies want people who can create unique values ​​in a rapidly changing environment.

And I don't think there are any fairness issues, at least. It means that I get what I contribute.

But I think there should be an appropriate tax rate.

Even if you are not a CEO or an executive, more people should be able to use the above system.

I will close today's post with the hope that CEO Nam Goong-hoon's vocation will become one of the standards in the labor market.