Upstage announced on Tuesday that the controversial past stock transaction involving Ha Jung-woo, the Democratic Party candidate running in the parliamentary by-election for Busan's Buk-gap constituency, was a legitimate procedure carried out under contract.
The controversy emerged recently after it was revealed that Ha sold 4,444 Upstage shares he owned to Upstage CEO Kim Sung-hoon at 100 won per share immediately after he was appointed Senior Presidential Secretary for AI and Future Planning at the Presidential Office in August last year. In response, Upstage said Ha's sale of Upstage shares to Kim at face value (100 won) was a normal execution of vesting conditions under a shareholders' agreement.
"In 2021, during Upstage's early days, Ha — who was working at Naver at the time — took on a limited non-executive advisory role for AI education after receiving Naver's official approval," Upstage said. "Granting early-stage shares in vesting form to secure advisory services in a startup's early phase is a standard practice in the industry."
At the time, the contract under which Ha received the shares applied a six-year mandatory holding period (with ownership vesting proportionally over a three-year period following a minimum three-year term). When Ha was appointed to public office, the 4,444 shares that had not fulfilled the mandatory holding period under the shareholders' agreement were automatically returned to Kim at the face value of 100 won in accordance with the contract, according to Upstage. The remaining 5,556 shares, which had met the mandatory holding period, underwent a blind trust procedure in line with the stock blind trust obligations under the Public Service Ethics Act, the company explained.
Upstage dismissed allegations of so-called stock parking (holding under another's name) raised in some quarters. "The returned shares cannot be diverted for Kim's personal private assets and are clearly stipulated in the contract to be used solely for talent recruitment and employee compensation," Upstage said. "Claims of private diversion or parking transactions do not stand in the first place."
