Korea's WEBTOON Entertainment In Midst of Labor Dispute

Since going public on the U.S. stock market, WEBTOON Entertainment, the world's leading platform for Korean webcomics, has been battling a series of escalating crises. The company's stock price has plummeted by 50%, and disgruntled stockholders have filed multiple class-action lawsuits. Now, just months after its initial public offering (IPO), the company faces an even more serious threat—a brewing internal labor dispute that could disrupt its entire business.

In early October, WEBTOON Entertainment's labor union filed a Labor Dispute Mediation Request with the Gyeonggi Province regional labor commission, signaling the first step toward a potential strike. South Korean media quickly picked up on the possibility that the company, which published popular webcomics such as Hellbound, Sweet Home, All of Us Are Dead, and Itaewon Class, could face its first major strike. For a company rooted in creativity and beloved by fans worldwide, the mere prospect of a strike sends shockwaves through the industry.

A deep rift over employee compensation following WEBTOON Entertainment's June 2024 IPO lies at the heart of this labor dispute. Despite six months of negotiation, the company and its labor union are still miles apart on a resolution. The crux of the issue? There is a vast disparity between how top executives and employees have been compensated. Tensions flared when founder and CEO Joonkoo Kim was awarded an eye-popping $30 million in cash and stock options—enabling him to purchase 3.4 million shares at $11.04 each, well below the IPO price of $21.

When companies go public in South Korea, it is customary—and often legally required—for a portion of the company's shares to be distributed among employees. For entities listed on the KOSPI, the country's largest stock exchange, this can amount to 20% of the total shares. Naturally, WEBTOON Entertainment employees expected a significant windfall when the company was listed on NASDAQ. However, their hopes were dashed when no such generous stock allocation materialized.

Speaking anonymously to Anime News Network, a key union official laid bare the frustrations: “Employees who worked tirelessly to get the company to its IPO expected fair compensation, but instead, management unilaterally decided on stock allocations without any real negotiation.” Despite hopes that the union could broker an agreement on stock compensation, the official said, “There was no negotiation at all.” According to the union, WEBTOON Entertainment didn't even attempt to agree on this critical issue.

At the center of the storm is Joonkoo Kim himself. Many employees are livid that Kim, the man who led the company to global success, took a $30 million cash compensation package at a time when stock options were on the table. To them, this was more than just a bad look—it was a signal that Kim lacked confidence in the company's future. "If he truly believed in WEBTOON's long-term prospects," one employee remarked on BLIND, a popular anonymous forum for professionals, "he would have opted for stock, not cash."

As criticism of Kim and other top executives intensified, Kim called for an all-hands meeting to address the growing discontent. Instead of quelling the unrest, things took a dramatic turn. According to posts by WEBTOON's employees on BLIND, Kim reportedly became so emotional while defending his actions that he broke down in tears. Yet, many employees saw this as nothing more than theatrics. The incident quickly became a topic of ridicule on BLIND, where Kim's tears were branded "crocodile tears" by a CEO who had already secured a massive payday.

Joonkoo Kim wasn't always the target of such widespread criticism. He joined Naver, one of South Korea's largest tech companies and WEBTOON Entertainment's parent company, in 2004. Within two years, driven by his love for comics—Kim reportedly owns nearly 10,000 titles—he began developing Naver's webtoon platform. Under his guidance, the platform flourished, ultimately becoming its own company, WEBTOON Entertainment. His leadership and deep connection to the webcomic community were key to the platform's rise as a global giant, earning him a seat on Naver's board of directors.

Kim's influence has been so significant that he became a legend in the Korean webcomics industry. He has even appeared in popular webcomics like The Sound of Your Heart, Lookism, and Doona!, a testament to his strong rapport with creators and his status as a cultural icon. For years, his close relationships with webcomic creators and his business acumen were seen as key to the platform's success. His career path from rank-and-file employee to CEO has become a role model for many employees at NAVER.

But today, the workforce that helped fuel WEBTOON Entertainment's rise views him with growing suspicion, seeing his actions as self-serving and out of touch.

The labor union has been careful not to comment directly on the likelihood of a strike. There are ongoing negotiations between WEBTOON Entertainment and the union currently mediated by the regional labor commission. For now, both sides seem to be holding out hope that talks will lead to a compromise. But the union isn't ruling out more aggressive measures.

“We can't predict if a strike will happen but if negotiations fall through, we'll communicate with our members and start ramping up from rallies to full-on strikes,” a union official warned.

When WEBTOON Entertainment went public in the U.S., many expected the move to cement the company's status as a global leader in Korean content. After all, WEBTOON has been a powerhouse of creativity, adapting its wildly popular webcomics into successful films and dramas. Yet, just three months post-IPO, the company is teetering on the edge of its most significant crisis. And this time, it's not just disgruntled shareholders filing lawsuits—it's employees who have fueled WEBTOON's success.

For a company whose greatest asset is its workforce's creativity, this growing labor dispute poses an existential threat. If the rift between management and employees continues to deepen, it could shake WEBTOON Entertainment's core, jeopardizing its once bright future.