HYBE says it will 'win together' with SM, like Hyundai-Kia and LVMH-Bulgari

Hive, in full force to secure voting rights, has announced its vision, strategy, and distribution policy for enhancing shareholder value at SM Entertainment. It made an impassioned plea for proxy voting rights at the company's annual general meeting later this month. 

On March. 2, Hive opened its shareholder proposal campaign page, "SM with HYBE," and posted a video explaining the shareholder proposal by Hive's Chief Legal Officer (CLO) Jinsoo Jeong and Hive America's CEO Jae Sang Lee, who are both candidates for the board of directors. They revealed specific measures to protect shareholder rights, aimed at adding professionalism and transparency. Hive pointed out unfair business cooperation with Kakao approved by SM's current management, unrealistic "SM 3.0" financial targets requiring rapid growth in the short term, and emotional messaging strategies that mislead the public.

Currently, Hive has put forward a slate of seven candidates for SM's board of directors, with three of its senior leaders - Hive Americas CEO Lee Jae-sang, Hive CLO Jin-soo Jung, and Hive's head of business planning Lee Ji-hwa - nominated for internal directors. SM's current management team nominated CFO Jang Chul-hyuk, Head of Marketing Center Kim Ji-won, and Head of Global Business Center Choi Jung-min. In response, Hive criticized SM's nominees, saying, "SM's current management team is composed of people who cannot meet the requirements of the management team to run the company." SM's nominees for non-executive directors, Lee Chang-hwan, CEO of Align Partners, and Jang Yoon-jung, Vice President of Global Strategy at Kakao Entertainment, "are not only not conducive to improving shareholder value but are also expected to steer the company's management in a direction that favors certain stakeholders."

Hive proposed changes to the bylaws to strengthen the transparency of the board of directors, including the introduction of a compliance officer system, separation of the CEO and chairman of the board, establishment of subcommittees, and ensuring independent operation. "SM is an iconic company that pioneered the K-pop genre and contributed to the growth and development of the Korean music market," said Lee Jae-sang, a nominee for the board of directors. He emphasized that Hive has been pursuing a multi-label, multi-production system for several years, calling it "successful." "We intend to actively support the practical implementation of 'SM 3.0' based on our practical experience." Hive aims to achieve consolidated sales of 1.35 trillion won and operating profit of 270 billion won by 2025.

"The business strategy of 'SM 3.0' proposed by SM's current management is similar to what Hive has already successfully implemented, with the same objective of growing the K-pop industry and strengthening its position in the global music market," said Mr. Jeong. "Through this shareholder proposal, Hive intends to maximize shareholder value by growing SM's business and enhancing its enterprise value, which the current SM management and board of directors have not been able to do." Hive intends to maintain SM's dividend policy of 30% of net income for the next three years and strengthen its shareholder return policy through share buybacks and retirements.

By Corporate Korea