Upstage said on the 20th that regarding the controversy over past stock transactions involving Democratic Party of Korea candidate Ha Jung-woo, who is running in the Busan Buk-gap National Assembly by-election, the suspicion of stock parking is not true.
The company had responded cautiously because actively offering explanations in a sensitive period before the election could invite further misunderstandings, but it said it would set the record straight out of concern that the sincerity of a company that has worked for the development of Korea's AI industry is being distorted into a political issue.
According to Upstage, candidate Ha took on a limited, part-time advisory role for AI education in the early days of the company's founding in 2021. At the time, Upstage was running an AI education business and had jointly operated AI education with Naver. It said candidate Ha, who was then employed at Naver, participated in the advisory role after receiving Naver's official approval.
Upstage said that in the early stages of a startup, it is standard practice to grant stock in a vesting structure to outside experts instead of cash compensation. Candidate Ha was granted 10,000 shares at par value as advisory compensation, and the shares carried a six-year mandatory holding period. Specifically, ownership would vest proportionally over three years after completing a minimum three-year term.
Candidate Ha disposed of the shares held upon taking public office. Upstage explained that under the shareholders' agreement, shares that did not meet the mandatory holding period were to be returned to the company—namely to the CEO or a designee—at par value. Accordingly, of the total 10,000 shares, 5,556 shares that had passed the mandatory holding period and became Ha's property were placed in a blind trust under the Public Service Ethics Act, while the remaining 4,444 shares that had not met the period were automatically returned at 100 won par value to CEO Kim Sung-hoon, the largest shareholder, under the shareholders' agreement.
Upstage emphasized that the returned shares are not CEO Kim's private assets. The contract clearly stipulates that the shares are to be used only for talent recruitment and employee compensation, so private use or so-called "parking transactions," in which shares are held during a public service period, cannot be established. The company said, We do not want negative impacts at a critical moment for Korea's AI industry due to suspicions and speculation that are not true.