Klarna is weighing removing its co-founder’s key ally from its board

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Klarna’s board is weighing ousting a crucial ally of one of the company’s co-founders, in what would be the Swedish fintech’s second major board shakeup in recent months, as it prepares for an IPO success.

A decision on whether to remove Mikael Walther, a confidant of founding partner Victor Jacobsson, could be made at a board meeting scheduled for Wednesday, two of the people said.

It’s still possible that board members will decide not to push for Walther’s ouster. But the potential vote highlights tensions at a critical juncture for the buy-now, pay-later pioneer, months after another high-profile boardroom schism and ahead of a long-awaited initial public offering that could price it between $15 billion and $20 billion. .

Klarna and Walther declined to comment.

The attempt to oust Walther after eight years follows a two-year investigation, according to people with knowledge of the matter. A person familiar with the probe downplayed its significance and said a device was used to apply pressure to it.

However, talk of Walther’s potential ouster is the latest indication of disagreements over the company’s board composition, after a spat between board member Michael Moritz, a Sequoia Capital veteran, and board representative of venture capital firm Matthew Miller burst into the public eye in February. .

The effort to oust Moritz, an ally of Klarna chief executive Sebastian Siemiatkowski, from his role as chairman of the board backfired, and Miller was replaced by another Sequoia partner, Andrew Reed.

The chaotic episode highlighted deep boardroom rifts that emerged as Klarna prepared to relocate from Sweden to the UK ahead of its expected IPO, nearly 20 years after its founding.

Tensions over some shareholders’ outsized influence over Klarna’s decision-making because of historic special voting rights were at the heart of the dispute, the Financial Times previously reported.

Jacobsson, who founded the firm with Siemiatkowski but left more than a decade ago, used his “right of first refusal” as a co-founder to buy Klarna shares through special purpose vehicles and charged commissions external investors to buy their equity.

Walther’s use of SPVs to build up a stake in the company was part of the probe, people familiar with the matter said.

The use of SPVs has been controversial with some Klarna executives due to their perceived opacity.

However, a person familiar with the arrangement previously told the FT that they were “standard onshore entities” and that for “investors and others who need to know, these entities are very clear and transparent”.

Siemiatkowski previously consolidated his position in Klarna through an SPV.

A person familiar with the dispute said that using the SPVs as justification to try to remove Walther from the board was an “excuse” and that “the central issue now is whether Klarna should float gold shares before the IPO ”, a move that could hand. certain shareholders more influence over the company once it goes public.

Klarna has been preparing for an IPO in recent months by lining up investment banks after completing its move to the UK in May.

The company, which reported its half-year results earlier on Tuesday, trimmed its losses and touted the benefits of artificial intelligence to its operations.

After the results, Siemiatkowski told the FT that he was “very happy that the company has taken some of the critical steps to prepare for an IPO” and that only “macro conditions” such as the state of the markets could derail the flotation.

“There is nothing that I can see currently that is related to Klarna that has any implications for our roadmap to becoming a public company,” he said.