[Asia Economy Reporter Seungjin Lee] HYBE has revealed the list of seven new board members for SM Entertainment, which it is in the process of acquiring. Not a single person from SM was included on this list.
On the 16th, HYBE disclosed the shareholder proposal for SM Entertainment. This shareholder proposal was made through Lee Soo-man, former Chief Producer of SM Entertainment, who signed a Share Purchase Agreement (SPA) with HYBE on the 9th. Lee Soo-man delegated full authority regarding the shareholder proposal to HYBE through the SPA.
HYBE proposed Lee Jae-sang, HYBE America CEO, Jung Jin-soo, HYBE CLO (Chief Legal Officer), and Lee Jin-hwa, HYBE Head of Business Planning, as candidates for inside directors. Contrary to expectations, Chairman Bang Si-hyuk and ADORE CEO Min Hee-jin were excluded from the inside director candidates. Additionally, musicians, producers, and current SM management were completely excluded.
No candidates from the creative field were recommended. HYBE explained that this decision reflects their intention to respect SM Entertainment’s unique identity, continuously develop it, and nurture future global creative talent internally.
For outside director candidates, HYBE recommended Kang Nam-kyu, lead attorney at Gaon Law Firm; Hong Soon-man, professor of Public Administration at Yonsei University; and Lim Dae-woong, head of the United Nations Environment Programme Finance Initiative (UNEP FI) Korea.
As a non-executive director candidate, HYBE recommended Park Byung-moo, a lawyer who previously served as CEO of Locus Holdings and Plenus Entertainment, now a managing partner at VIG Partners. For the non-standing auditor candidate, HYBE recommended Choi Kyu-dam, a certified public accountant with experience at Anjin Accounting Corporation and Kim & Chang law firm, currently an executive director at NCSoft.
HYBE also made shareholder proposals aimed at governance restructuring, including amendments to the articles of incorporation, anticipating a vote battle. The proposed changes include separating the roles of CEO and board chairperson. Individuals convicted of breach of trust or embezzlement will be barred from being appointed as directors.
HYBE plans to establish committees such as the Outside Director Candidate Recommendation Committee, Internal Transactions Committee, Compensation Committee, and Governance Committee to enhance the board’s independence, expertise, and operational efficiency. These committees, each composed of at least three directors, will have at least two-thirds outside directors, and the chairperson must be an outside director.
Separately from the articles amendment, HYBE proposed measures to strengthen communication with shareholders and improve shareholder returns for shareholder interests. This includes designing the compensation of key executives, including registered directors, to be linked to business performance, incorporating shareholder returns into the key performance indicators (KPIs), thereby promoting the interests of all shareholders beyond mere improvement of management metrics.
Regarding dividend policy, a core shareholder-friendly policy, HYBE plans to maintain an active dividend payout ratio within 30% of net income after acquiring SM Entertainment.
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