Klarna Board Secedes to Remove Ally Amid Clash Over Governance and Bonus Structure
Background
Klarna, a Swedish fintech company, is facing a crisis as its board of directors has decided to remove one of its members, Mikael Walther, amid a clash over governance and bonus structure. Walther, a board member who has long represented the interests of Victor Jacobsson, one of the company’s co-founders, has been at odds with the board over several key decisions, including a bonus plan that he claims could hand CEO Sebastian Siemiatkowski as much as $35 billion in the coming years.
The Dispute
Walther has repeatedly challenged the board’s decisions, and his latest move is a letter to investors calling for them to vote against the board’s decision to remove him. In his letter, Walther claims that the board’s plan to award Siemiatkowski a bonus will lead to a direct cost of $2 billion for the company. He also accused the board of using an investigation by law firm Freshfields Bruckhaus Deringer US LLP as a tactic to silence him and undermine his efforts to promote good governance practices.
Background on the Dispute
The dispute between Walther and the board dates back to earlier this year when the company raised its valuation to $6.7 billion from $45.6 billion in a 2022 funding round. The company had also considered an initial public offering (IPO) at a $20 billion valuation. However, the board’s decision to award Siemiatkowski a bonus has raised concerns among investors and led to a backlash.
The Bonus Structure
The bonus plan, which could be worth as much as $35 billion in the long term, is tied to performance targets and is designed to incentivize Siemiatkowski to drive growth and profitability. However, Walther claims that the plan is overly generous and could lead to instability and damage to the company’s reputation.
The Investigation
The Freshfields investigation, which was conducted at the behest of the board, has alleged that Walther may have breached his duty of loyalty to the company during the 2022 fundraising round. However, Walther has denied the allegations, stating that he acted in the best interests of the company and its shareholders.
Conclusion
The dispute between Walther and the board of directors of Klarna is a complex and nuanced issue. While the board has reiterated its confidence in Siemiatkowski and the bonus plan, Walther and his supporters argue that the plan is unsustainable and could lead to long-term damage to the company. The outcome of this dispute will have significant implications for the future of Klarna and its investors.
FAQs
Q: What is the background to the dispute between Walther and the board?
A: The dispute dates back to earlier this year when the company raised its valuation to $6.7 billion from $45.6 billion in a 2022 funding round.
Q: What is the bonus plan that sparked the controversy?
A: The bonus plan, which could be worth as much as $35 billion in the long term, is tied to performance targets and is designed to incentivize Siemiatkowski to drive growth and profitability.
Q: What is the investigation by Freshfields?
A: The Freshfields investigation was conducted at the behest of the board and has alleged that Walther may have breached his duty of loyalty to the company during the 2022 fundraising round.
Q: What is the outcome of the dispute likely to be?
A: The outcome is uncertain, but it could have significant implications for the future of Klarna and its investors. Failure to resolve the dispute could lead to longer-term damage to the company and its reputation.
Q: How does this dispute affect the planned public debut of Klarna?
A: The dispute is unlikely to impact the planned public debut of Klarna, which is expected to take place in the near future. The company has already selected banks to help it with the offering and has been refocusing its business on core operations.
Author: fortune.com
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