Hive proposes SM board director candidates... Foresees vote showdown with current management

No SM Executives Among CEO Candidates
Chairman Bang Si-hyuk and CEO Min Hee-jin Names Omitted

[Asia Economy Reporter Hwang Yoon-joo] Following HYBE becoming the largest shareholder of SM Entertainment (SM), it is moving to take control of the board of directors. HYBE has proposed seven director candidates to SM. None of the candidates on this list were from SM. A vote showdown with SM's current management is expected at the regular shareholders' meeting in March.

According to the music industry on the 16th, HYBE sent a shareholder proposal to SM the day before, designating three internal director candidates: Lee Jae-sang, HYBE America CEO; Jung Jin-soo, HYBE CLO (Chief Legal Officer); and Lee Jin-hwa, HYBE Head of Business Planning. Notably absent were HYBE Chairman Bang Si-hyuk or Min Hee-jin, CEO of ADOR, who had been rumored.

[Image source=Yonhap News]

For outside director candidates, Kang Nam-kyu, lead attorney at Gaon Law Firm; Hong Soon-man, professor of public administration at Yonsei University; and Lim Dae-woong, Korea representative of the UN Environment Programme Finance Initiative, were nominated. For other non-executive director candidates, Park Byung-moo, CEO of VIG Partners, and for non-standing auditor candidate, accountant Choi Kyu-dam were designated respectively.

Looking at HYBE's candidates, all three internal director nominees are senior HYBE executives. It is notable that no musicians or creators are included.

This shareholder proposal was made in accordance with a contract between HYBE and Lee Soo-man, SM's founder and chief producer, whereby Lee Soo-man's side submits a proposal containing personnel designated by HYBE. On the 10th, HYBE announced it would purchase 14.8% of Lee Soo-man's shares.

A vote battle over board seats is expected at the March shareholders' meeting. SM's current management has stated that they plan to reorganize the board with three internal directors, three outside directors, and one other non-executive director. In particular, they announced their intention to recommend Lee Chang-hwan, CEO of Align Partners, an 'ally,' as the other non-executive director.

Meanwhile, the current SM co-CEOs Lee Sung-soo and Tak Young-joon, whose terms end at the end of March, have not yet announced plans for reappointment. The music industry views the possibility of their reappointment as high, given that HYBE has proposed new director candidates.