Kakao Bank plans to cancel about half of its treasury shares and reserve the rest for employee compensation, a move that could serve both its shareholder-return goals and efforts to defuse an ongoing pay dispute.

The internet-only lender said it planned to seek approval for its treasury share retention and disposal plan at its 2027 annual shareholders' meeting, with the 270,000 shares to be canceled within the legally required period.

As of end-June, Kakao Bank held 532,334 treasury shares.

The bank said the remaining 262,334 shares will be used for employee compensation, though the number of shares subject to cancellation or disposal may change as related procedures move forward.

In Monday's announcement, a Kakao Bank official said, "We aim to enhance shareholder value by canceling treasury shares, while using the remaining shares for employee compensation to support sustainable growth and further enhance corporate value."

The cancellation marks the first time Kakao Bank will retire any of the 532,334 shares it bought back in 2023 as part of its shareholder-return program.

It is part of the lender's broader push to increase shareholder returns, with its shareholder return ratio rising from 20.1 percent in 2023 to 39 percent in 2024 and 45.6 percent in 2025. Kakao Bank in May reaffirmed its goal of raising the ratio to 50 percent this year.

Also notable is the decision to earmark nearly half of the treasury shares for employee compensation, as Kakao Bank remains locked in a labor dispute over pay and performance-based rewards. The company had previously proposed bonuses equivalent to about 10 percent of operating profit, paid in cash and treasury shares, according to local reports, while employees are seeking higher compensation.

Unionized workers have staged a series of protests, including an initial walkout on July 31 and a full-day strike on Friday, marking the first labor strike at a Korean internet-only bank.

Although it remains unclear whether the announcement is directly tied to the union's demands, the move is drawing attention to whether it could create room for compromise in the ongoing labor dispute.

By Choi Ji-won (jwc@heraldcorp.com)