Coupang crisis rooted in poor governance; risk of serious reputation and firm value damage comparable to VW’s emissions scandal
Coupang shares sink 19%, mirroring VW’s 58% share plunge a decade ago due to emissions scandal
CEO and BoD Chair Bom Kim appears to prioritize his own legal protection over shareholders and customers, deepening the current crisis
Kim’s 74% voting control via a 29:1 dual-class structure has rendered Coupang board powerless, exposing the systemic risks of unchecked founder authority
The board members must visit Korea immediately to ascertain certain facts, and then install an independent chair, and form a Special Committee to manage Kim’s key-man risk
The situation is fueling demands for the immediate introduction of class-action litigation and pre-trial discovery at the National Assembly
Coupang identified a massive customer data breach on November 18th. While Coupang first disclosed the incident domestically on November 29th, it delayed its U.S. disclosure until December 16th, nearly a month later—when it filed a Form 8-K revealing that the personal information of 33.7 million users had been compromised. A subsequent 8-K update was filed on December 29th. The company listed directly on the New York Stock Exchange (NYSE) in March 2021. To ensure investor protection and transparency, the SEC generally mandates an 8-K filing within four business days of any material event that could significantly impact the share price.
Between the discovery of the cyber security incidents on November 18th and January 5th, 2026, Coupang’s stock price has plummeted 19%, wiping out W14 trillion in market cap. During the same period, S&P500 has advanced 1% and the KOSPI jumped 14%, highlighting a sharp divergence from the broader market.
In its December 16th filing titled 'Material Cybersecurity Incidents,' Coupang admitted that while its operations have not been materially disrupted, it remains subject to various risks due to the Incident, including diversion of management’s attention and potentially material financial losses resulting from the potential loss of revenue and potential higher expenses, including from remediation, regulatory penalties, and litigation. Despite acknowledging these risks, Coupang remained silent for nearly a month before making a belated disclosure on December 16th. Furthermore, its subsequent filing on December 29th failed to mention critical shareholder risks, such as the police raid on headquarters, the special tax audit, escalating friction with the government, and Chairman Bom Kim’s absence from National Assembly hearings.
In our view, CEO and BoD Chairman Bom Kim’s key-man risk appears excessively high. Coupang’s recent actions suggest a coordinated effort to shield the CEO who holds 74% of the voting power via a dual-class share structure at the expense of minority shareholders' financial interests and customer safety. The Coupang Board, chaired by Kim himself, remains notably silent. This crisis has significantly widened the information asymmetry between insiders (management and the board) and outsiders (minority shareholders and stakeholders), leading to a collapse in transparency and a direct erosion of corporate value.
Experts warn that Coupang's delayed disclosures fit a dangerous pattern identified in various academic research: managers strategically withhold 'bad news' to mask poor performance. This 'bad news hoarding' eventually reaches a critical threshold. When this accumulated negative information is finally released all at once, it triggers a catastrophic stock price crash. A prime example is Volkswagen (VW) emissions scandal; following the revelation of the 'Dieselgate' scandal in September 2015, VW share price plummeted 58% within six months, wiping out more than US$70bn in market value. To this day, VW’s share price has failed to recover to its pre-scandal levels.
Over the course of a decade, VW systematically manipulated nitrogen oxide emissions by installing defeat devices (deception software) in 10.7 million diesel vehicles. While VW leadership initially issued adamant denials and claimed German headquarters was unaware, U.S. government investigations uncovered facts proving that management had been involved in the scheme since 2006. Consequently, VW faced tens of billions of dollars in fines, massive recalls, and sprawling litigation. The fallout included the indictment and conviction of both former and current executives, inflicting irreparable damage on customer trust and the company's brand equity.
ISS Governance QualityScore Comparison
(Lower scores indicate higher governance quality)
Source: ISS
Coupang’s two SEC filings in December ostensibly emphasize principles of customer-centric management, the restoration of trust, and transparency. However, in substance, the primary focus appears to be mitigating the legal risks facing Chairman Bom Kim and the company. The supplemental filing on December 29th consisted mostly of unilateral explanations regarding the company’s 'self-conducted' investigation and its customer compensation plan, both of which have faced intense public criticism in Korea for lacking independent oversight.
While the conduct of Coupang and its management has drawn immense public criticism in Korea, corporate governance experts are unsurprised. According to the Governance QualityScore from ISS (Institutional Shareholder Services), Coupang consistently ranks in the bottom decile (lowest 10%) compared to its peers. (See Above Table). The company scores poorly across all four pillars—Shareholder Rights, Board Diversity/Structure, Executive Compensation, and Audit/Accountability with Shareholder Rights and Executive Compensation hitting rock bottom. In contrast, while Amazon has a low overall score, it maintains superior Shareholder Rights. Established retailers like Costco and Walmart deliver vastly superior performance, maintaining near-perfect scores of 1 or 2 in both total ranking and shareholder rights
CEO Bom Kim holds Class B common stock, which grants him 29 votes per share. This is significantly more aggressive than the 10-to-1 voting ratio typically seen in the dual-class structures of U.S. tech giants like Meta (Mark Zuckerberg) or Alphabet (Larry Page and Sergey Brin). Despite holding fewer total shares (164 million) than the largest shareholder, SoftBank (350 million), or the second-largest, Baillie Gifford (167 million), Kim’s super-voting shares grant him 74% of the total voting power. This gives him absolute control over the company. By controlling the general meeting and the board, Kim has effectively immunized himself against accountability. Independent directors and major shareholders lack the legal or structural leverage to penalize him or terminate his employment contract, even in cases of underperformance.
Despite his elite U.S. education (Deerfield Academy, Harvard College), critics argue Kim has adopted the "worst practices" of Korean Chaebol families — specifically, the tendency to disregard minority shareholder rights in favor of founder-centric control. The "Coupang Case" serves as a warning for the Korean market. If Korea adopts a formal dual-class voting system as requested by various Chaebol lobby groups, it could lead to a wave of similar structures that exploit the system, further deteriorating corporate governance standards and harming shareholder value.
The Coupang Board of Directors consists of eight members: CEO and Chairman Bom Kim and seven "independent" directors. However, with Kim wielding 74% of the total voting power and simultaneously serving as the Chairman of the Board, any meaningful oversight or check on executive power is structurally impossible. This represents a fundamentally flawed governance architecture. Beyond his role as CEO, Kim holds the official title of Chief Operating Decision Maker (CODM) at the U.S. parent. A review of Coupang’s Korean subsidiary leadership reveals a pattern of appointing legal and public affairs experts rather than operational business leaders including Harold Rogers, interim chief executive officer of the Korean subsidiary (legal background), Park Dae-jun, a former Representative Director (public affairs background) and Kang Han-seung, a former Representative (former judge and Kim & Chang attorney). As explicitly defined in the company’s 10-Q, the CODM manages the business, allocates resources, makes operating decisions and evaluates operating performance. This title grants him absolute authority over the entire organization and its subsidiaries’ strategic and operational direction.
The seven independent directors receive an average annual compensation above US$300,000, yet there is significant evidence they have failed to uphold their fiduciary duties during the current crisis. Despite the company’s own 10-K filing identifying "damage to brand and reputation" as a critical risk factor that could severely impact financial performance, the Board has failed to issue a formal statement or report addressing the concerns of shareholders and customers. The Board includes globally recognized figures such as Jason Child (Lead Independent Director), Executive Vice President and Chief Financial Officer of Arm Holdings plc, and Kevin Warsh, a former member of the Board of Governors of the Federal Reserve System from 2006 until 2011 and from 2002 until 2006, Special Assistant to the President for Economic Policy and Executive Secretary of the White House National Economic Council. Warsh is a potential candidate for the U.S. Fed Chair. Coupang’s Corporate Governance Guideline mandates that the Board has responsibilities to assess its major risks, and consider ways to address those risks, select and oversee management, and establish and oversee processes to maintain the Company’s integrity. Coupang also officially states that its Audit Committee is responsible for the oversight of information security and data privacy among others.
Our Forum hereby demand that Coupang’s directors immediately conduct an on-site visit to Korea. The Board must directly engage with key stakeholders and consult with independent experts to ascertain the unvarnished facts surrounding this incident. To ensure impartiality, we call for the immediate establishment of a Special Committee with the leadership of Independent Director, Jason Child to objectively evaluate the current crisis and publish a comprehensive remediation plan. CEO Bom Kim must be strictly excluded from this committee. The membership must consist entirely of directors who are demonstrably independent of the CEO’s influence.
This incident serves as a catalyst for the adoption of comprehensive Class Action legislation and Pre-trial Discovery systems in Korea (that are underway at the National Assembly). Currently, Korea’s class action framework is restrictively limited to the securities sector, leaving consumers without a collective legal remedy. Under the current legal framework, the absence of a "Discovery" mandate allows corporations to withhold or conceal internal documents without significant penalty. To ensure corporate accountability, a robust system is required to compel the disclosure of evidence, preventing companies from obstructing the truth during litigation.
On May 15th of last year, our Forum hosted a seminar titled "The Necessity and Impact of Adopting Pre-trial Discovery in Litigation for the Normalization of Corporate Governance." The keynote was delivered by Lee Yong-woo, former MP. The seminar emphasized that a discovery system is not merely a procedural change, but a fundamental requirement for balancing the scales of justice between powerful listed corporations and minority stakeholders. (Reference material in Korean: For detailed presentation materials and full seminar content, please visit: KCGF Seminar Link)
January 7th, 2026
The Korean Corporate Governance Forum
Chairman, Namuh Rhee
Coupang crisis rooted in poor governance; risk of serious reputation and firm value damage comparable to VW’s emissions scandal
Coupang shares sink 19%, mirroring VW’s 58% share plunge a decade ago due to emissions scandal
CEO and BoD Chair Bom Kim appears to prioritize his own legal protection over shareholders and customers, deepening the current crisis
Kim’s 74% voting control via a 29:1 dual-class structure has rendered Coupang board powerless, exposing the systemic risks of unchecked founder authority
The board members must visit Korea immediately to ascertain certain facts, and then install an independent chair, and form a Special Committee to manage Kim’s key-man risk
The situation is fueling demands for the immediate introduction of class-action litigation and pre-trial discovery at the National Assembly
Coupang identified a massive customer data breach on November 18th. While Coupang first disclosed the incident domestically on November 29th, it delayed its U.S. disclosure until December 16th, nearly a month later—when it filed a Form 8-K revealing that the personal information of 33.7 million users had been compromised. A subsequent 8-K update was filed on December 29th. The company listed directly on the New York Stock Exchange (NYSE) in March 2021. To ensure investor protection and transparency, the SEC generally mandates an 8-K filing within four business days of any material event that could significantly impact the share price.
Between the discovery of the cyber security incidents on November 18th and January 5th, 2026, Coupang’s stock price has plummeted 19%, wiping out W14 trillion in market cap. During the same period, S&P500 has advanced 1% and the KOSPI jumped 14%, highlighting a sharp divergence from the broader market.
In its December 16th filing titled 'Material Cybersecurity Incidents,' Coupang admitted that while its operations have not been materially disrupted, it remains subject to various risks due to the Incident, including diversion of management’s attention and potentially material financial losses resulting from the potential loss of revenue and potential higher expenses, including from remediation, regulatory penalties, and litigation. Despite acknowledging these risks, Coupang remained silent for nearly a month before making a belated disclosure on December 16th. Furthermore, its subsequent filing on December 29th failed to mention critical shareholder risks, such as the police raid on headquarters, the special tax audit, escalating friction with the government, and Chairman Bom Kim’s absence from National Assembly hearings.
In our view, CEO and BoD Chairman Bom Kim’s key-man risk appears excessively high. Coupang’s recent actions suggest a coordinated effort to shield the CEO who holds 74% of the voting power via a dual-class share structure at the expense of minority shareholders' financial interests and customer safety. The Coupang Board, chaired by Kim himself, remains notably silent. This crisis has significantly widened the information asymmetry between insiders (management and the board) and outsiders (minority shareholders and stakeholders), leading to a collapse in transparency and a direct erosion of corporate value.
Experts warn that Coupang's delayed disclosures fit a dangerous pattern identified in various academic research: managers strategically withhold 'bad news' to mask poor performance. This 'bad news hoarding' eventually reaches a critical threshold. When this accumulated negative information is finally released all at once, it triggers a catastrophic stock price crash. A prime example is Volkswagen (VW) emissions scandal; following the revelation of the 'Dieselgate' scandal in September 2015, VW share price plummeted 58% within six months, wiping out more than US$70bn in market value. To this day, VW’s share price has failed to recover to its pre-scandal levels.
Over the course of a decade, VW systematically manipulated nitrogen oxide emissions by installing defeat devices (deception software) in 10.7 million diesel vehicles. While VW leadership initially issued adamant denials and claimed German headquarters was unaware, U.S. government investigations uncovered facts proving that management had been involved in the scheme since 2006. Consequently, VW faced tens of billions of dollars in fines, massive recalls, and sprawling litigation. The fallout included the indictment and conviction of both former and current executives, inflicting irreparable damage on customer trust and the company's brand equity.
ISS Governance QualityScore Comparison
(Lower scores indicate higher governance quality)
Coupang’s two SEC filings in December ostensibly emphasize principles of customer-centric management, the restoration of trust, and transparency. However, in substance, the primary focus appears to be mitigating the legal risks facing Chairman Bom Kim and the company. The supplemental filing on December 29th consisted mostly of unilateral explanations regarding the company’s 'self-conducted' investigation and its customer compensation plan, both of which have faced intense public criticism in Korea for lacking independent oversight.
While the conduct of Coupang and its management has drawn immense public criticism in Korea, corporate governance experts are unsurprised. According to the Governance QualityScore from ISS (Institutional Shareholder Services), Coupang consistently ranks in the bottom decile (lowest 10%) compared to its peers. (See Above Table). The company scores poorly across all four pillars—Shareholder Rights, Board Diversity/Structure, Executive Compensation, and Audit/Accountability with Shareholder Rights and Executive Compensation hitting rock bottom. In contrast, while Amazon has a low overall score, it maintains superior Shareholder Rights. Established retailers like Costco and Walmart deliver vastly superior performance, maintaining near-perfect scores of 1 or 2 in both total ranking and shareholder rights
CEO Bom Kim holds Class B common stock, which grants him 29 votes per share. This is significantly more aggressive than the 10-to-1 voting ratio typically seen in the dual-class structures of U.S. tech giants like Meta (Mark Zuckerberg) or Alphabet (Larry Page and Sergey Brin). Despite holding fewer total shares (164 million) than the largest shareholder, SoftBank (350 million), or the second-largest, Baillie Gifford (167 million), Kim’s super-voting shares grant him 74% of the total voting power. This gives him absolute control over the company. By controlling the general meeting and the board, Kim has effectively immunized himself against accountability. Independent directors and major shareholders lack the legal or structural leverage to penalize him or terminate his employment contract, even in cases of underperformance.
Despite his elite U.S. education (Deerfield Academy, Harvard College), critics argue Kim has adopted the "worst practices" of Korean Chaebol families — specifically, the tendency to disregard minority shareholder rights in favor of founder-centric control. The "Coupang Case" serves as a warning for the Korean market. If Korea adopts a formal dual-class voting system as requested by various Chaebol lobby groups, it could lead to a wave of similar structures that exploit the system, further deteriorating corporate governance standards and harming shareholder value.
The Coupang Board of Directors consists of eight members: CEO and Chairman Bom Kim and seven "independent" directors. However, with Kim wielding 74% of the total voting power and simultaneously serving as the Chairman of the Board, any meaningful oversight or check on executive power is structurally impossible. This represents a fundamentally flawed governance architecture. Beyond his role as CEO, Kim holds the official title of Chief Operating Decision Maker (CODM) at the U.S. parent. A review of Coupang’s Korean subsidiary leadership reveals a pattern of appointing legal and public affairs experts rather than operational business leaders including Harold Rogers, interim chief executive officer of the Korean subsidiary (legal background), Park Dae-jun, a former Representative Director (public affairs background) and Kang Han-seung, a former Representative (former judge and Kim & Chang attorney). As explicitly defined in the company’s 10-Q, the CODM manages the business, allocates resources, makes operating decisions and evaluates operating performance. This title grants him absolute authority over the entire organization and its subsidiaries’ strategic and operational direction.
The seven independent directors receive an average annual compensation above US$300,000, yet there is significant evidence they have failed to uphold their fiduciary duties during the current crisis. Despite the company’s own 10-K filing identifying "damage to brand and reputation" as a critical risk factor that could severely impact financial performance, the Board has failed to issue a formal statement or report addressing the concerns of shareholders and customers. The Board includes globally recognized figures such as Jason Child (Lead Independent Director), Executive Vice President and Chief Financial Officer of Arm Holdings plc, and Kevin Warsh, a former member of the Board of Governors of the Federal Reserve System from 2006 until 2011 and from 2002 until 2006, Special Assistant to the President for Economic Policy and Executive Secretary of the White House National Economic Council. Warsh is a potential candidate for the U.S. Fed Chair. Coupang’s Corporate Governance Guideline mandates that the Board has responsibilities to assess its major risks, and consider ways to address those risks, select and oversee management, and establish and oversee processes to maintain the Company’s integrity. Coupang also officially states that its Audit Committee is responsible for the oversight of information security and data privacy among others.
Our Forum hereby demand that Coupang’s directors immediately conduct an on-site visit to Korea. The Board must directly engage with key stakeholders and consult with independent experts to ascertain the unvarnished facts surrounding this incident. To ensure impartiality, we call for the immediate establishment of a Special Committee with the leadership of Independent Director, Jason Child to objectively evaluate the current crisis and publish a comprehensive remediation plan. CEO Bom Kim must be strictly excluded from this committee. The membership must consist entirely of directors who are demonstrably independent of the CEO’s influence.
This incident serves as a catalyst for the adoption of comprehensive Class Action legislation and Pre-trial Discovery systems in Korea (that are underway at the National Assembly). Currently, Korea’s class action framework is restrictively limited to the securities sector, leaving consumers without a collective legal remedy. Under the current legal framework, the absence of a "Discovery" mandate allows corporations to withhold or conceal internal documents without significant penalty. To ensure corporate accountability, a robust system is required to compel the disclosure of evidence, preventing companies from obstructing the truth during litigation.
On May 15th of last year, our Forum hosted a seminar titled "The Necessity and Impact of Adopting Pre-trial Discovery in Litigation for the Normalization of Corporate Governance." The keynote was delivered by Lee Yong-woo, former MP. The seminar emphasized that a discovery system is not merely a procedural change, but a fundamental requirement for balancing the scales of justice between powerful listed corporations and minority stakeholders. (Reference material in Korean: For detailed presentation materials and full seminar content, please visit: KCGF Seminar Link)
January 7th, 2026
The Korean Corporate Governance Forum
Chairman, Namuh Rhee