Average annual salaries at Naver and Kakao went down last year due to a sharp decline in their stock vaulations caused by decelerated growth experienced after the COVID-19 pandemic, regulatory filings showed Friday.

Naver paid its employees 119 million won ($89,000) in average annual salary last year, down 11.5 percent from 2022. This is the first time in five years that the IT firm’s average annual salary has undergone a decline.

The company explained that it did not cut its base salaries and attributed the decline mainly to reduced incentives and stock grants, as well as to decreased profits from exercising stock options after its share price fall.

Kakao’s average annual salary went down for two consecutive years to 101 million won in 2023 from 139 million won in 2022 and 172 million won in 2021, due to a fall in its performance-based bonuses and smaller profits from exercising stock options.

When the two IT firms maximized their profits during the COVID-19 pandemic, they hiked their employee salaries to attract competent software developers. Their soaring stock prices at that time also enabled their employees to make handsome profits by exercising stock options.

Following the transition to managing COVID-19 as endemic, however, online platforms have witnessed a decline in the number of users, thereby worsening their profitability. Additionally, rising interest rates have also exerted pressure on these businesses.

During the third quarter of last year, Kakao particularly suffered a fall in its quarterly operating profit for the fifth straight quarter.

As part of efforts to improve their profitability, both companies also downsized their respective workforce.

The number of employees at Naver fell to 4,383 in 2023 from 4,930 in 2022, while Kakao’s went down to 3,880 from 3,901.

Executives at Naver and Kakao, however, were still paid huge levels of compensation last year.

Former Kakao CEO Namkoong Whon, who left the company last October, was paid the most among them. In 2023, he earned 9.4 billion won by exercising his stock options, in addition to the 467 million won he received from the company.

Naver founder Lee Hae-jin was paid 1.9 billion won last year, while CEO Choi Soo-yeon received 1.3 billion won.