Klarna executive says he was ousted over objection to CEO’s bonus

Mikael Walther urged investors to vote against the board’s decision to oust him at an upcoming meeting on Oct. 24, according to a letter to shareholders seen by Bloomberg.

Walther’s request came as Klarna chairman Mike Moritz wrote a separate letter to investors explaining that the recent vote followed an investigation into Walther’s alleged conduct by law firm Freshfields Bruckhaus Deringer US LLP, according to the people. they saw the letter.

The dueling missives are the latest sign that tension is simmering on Klarna’s board ahead of its potential initial public offering, which is expected to take place next year. The vote to oust Walther comes after the company revamped its board earlier this year, replacing Sequoia Capital’s Matthew Miller after he unsuccessfully called for the ouster of Moritz, who previously led the famed venture capital.

Behind the scenes of that public flip-flop were Siemiatkowski and Victor Jacobsson, two estranged co-founders who continue to clash over key governance decisions. The two clashed over how the company would go public and how much control its CEO would ultimately have over that entity.

Klarna’s valuation fell to $6.7 billion from $45.6 billion in a 2022 funding round. The company more recently considered an initial public offering at a $20 billion valuation , Bloomberg reported earlier this year.

Walther has long represented Jacobsson’s interests on the board. In the latest letter, he said the Freshfields inquiry came after he and Jacobsson challenged the board’s plans to give Siemiatkowski a bonus he argued would cause Klarna to incur a $2 billion direct cost.

That bonus, Walther said in the letter, could be worth as much as $35 billion over the long term. Companies can structure incentive payments in a variety of ways, but often pay more if certain profitability or stock price appreciation targets are met.

At the time, Walther also objected to Klarna giving Siemiatkowski so-called super voting shares, which typically give founders and other early investors more power over their businesses, even if they own only a small share of actions.

“This investigation is being used as a tactic in an ongoing disagreement over the correct long-term governance structure for Klarna,” Walther said in a statement to Bloomberg. “I categorically reject his baseless accusations. I have always acted in the best interests of the company and its shareholders in my role as director of the Klarna board.”

The board, in turn, lost confidence in Walther after he threatened to veto certain items or stop major decisions, including one to set up a new holding company based in Britain, Moritz said in his letter, which was first reported by Swedish news. socket Breakit. The formation of that holding company, which Klarna said it completed in May, was a key milestone that gives the company flexibility in where to list.

Representatives for Klarna, Freshfields and Sequoia declined to comment. Moritz did not respond to a request for comment.

In its letter to investors, Walther said Freshfields alleged that it potentially breached its duty of loyalty to the company during a 2022 fundraising round, which led to Klarna’s valuation downgrade. He claimed, however, that the work of him and Jacobsson — who together own about 9 percent of the company, according to Walther — helped the company raise $500 million during that round.

“Our actions during the fundraising process benefited Klarna and certainly do not constitute a violation of any law or regulation,” Walther said in his letter.

Despite the turmoil in its boardroom, Klarna is steadily preparing for its planned public debut. It is close to choosing the banks that will help the company with this offer and has refocused its work on core operations. In June, for example, Klarna agreed to divest its Checkout payments business for about $520 million.

Founded in 2005, Klarna offers payment options to more than 150 million active customers who make about 2 million transactions a day, its website says. It said it has nearly 40 million customers in the US.