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Hello,
This is HYBE.
We would like to clarify some points in response to the remarks made by ADOR’s CEO Min Hee Jin at a press conference that was held on April 25 for the protection of shareholder value and intellectual property (IP).
1. Regarding the claim that the takeover of management rights was a joke or casual talk
Records of discussions held over several months for the same purpose are recorded in conversation transcripts and work logs. Casual talk that occurs repeatedly over a long period of time, accompanied by the involvement of third parties, is no longer “casual talk” but becomes a plan with execution [of the plan]. Moreover, the vice president who the conversations were held with is a certified public accountant with professional knowledge of corporate governance who has conducted HYBE’s IPO duties and numerous M&As. He is also a core executive of ADOR, who was in a position to access all of the company’s financial information. The vice president even noted the CEO’s remark of “ultimately leaving HYBE” in the work log. It cannot be considered a joke by any means.
It cannot be dismissed as jokes when several documents that calculated the amount that could be obtained by exercising put options, specifically stated the timing of action, and mentioned terms such as infringement lawsuits, investors, and battle of public opinion have already been found. There is even a record of [Min Hee Jin] instructing the vice president, “This will have to be noted as being casual conversation.”
2. Regarding the claim that the monetary compensation was not enough
CEO Min claimed that her salary is 2 billion won (approximately $1.45 million). More accurately, the incentive for her 2023 performance is 2 billion won, and her salary and long-term incentives are calculated separately. This salary is the highest by far among all individuals who work at HYBE headquarters and the Korean subsidiaries.
HYBE also provided substantial stock compensation apart from the salary. The value of her stocks is very large to the extent that cannot be imagined by normal people. Nevertheless, CEO Min proposed an amount that the company could not possibly accept and led the conversation to a disaster. We see this process as her setting up a pretext to gain independence of management rights.
3. Regarding the claim that the audit began immediately without a response to the whistleblowing email
We sent a detailed 6-page-long in A4 size response on April 22 at 10:01 a.m., and it is confirmed that CEO Min read the reply at about noon on the day that the email was sent. However, CEO Min keeps insisting in her statement and at the press conference that she “did not receive an answer.”
The audit was conducted after recognizing attempts to seize management rights over several months through internal and external information and confirming that documents considered confidential business data were leaked. It is absurd to argue that the audit schedule for serious misconduct should be notified in advance.
4. Regarding the claim that there was no guidance on the return of information assets
As part of the audit procedure, we visited [Min Hee Jin’s] residence and studio located in Mapo District, Seoul, to retrieve information assets on April 22 at 10:00 a.m. Despite several attempts to contact CEO Min via landline phone, email, and mobile phone messages, she did not respond. After the return deadline expired on April 23 at 6:00 p.m, we again requested the return of information assets through ADOR’s Vice President Shin. Vice President Shin replied, “CEO Min is too busy to do so.” [Min Hee Jin’s claim] that she found out about the return of information assets through the media without any notice and concluding that it is media play is an irresponsible lie.
The claim that we took away computer assets so that she could not work ahead of [NewJeans’s] comeback is also a lie. As soon as we receive the returned laptop, we provide a new laptop and allow the download of all previous data so that work is not disrupted. Other auditees are also working with new devices that have been provided to them.
5. Regarding the claim that we promised to debut [NewJeans] as [HYBE’s] first girl group
This is a part that we have already answered in detail in the email sent to CEO Min on April 22. We suspect the reason why CEO Min claims that she did not receive an email is because she cannot make such provocative but untrue claims if she has read the email. We sent a detailed answer as below:
“CEO Min is making false claims based on your own distorted way of interpretation about the process of separation from SOURCE MUSIC. The reason why NewJeans could not debut as HYBE’s first girl group is not because HYBE did not keep our promise. At the time, you strongly insisted that you would debut [NewJeans] under her own separate label while requesting to form a team of which you hold all the responsibilities. HYBE respected your opinion and transferred the members to ADOR despite the opposition of SOURCE MUSIC and provided a large amount of funds amounting to 16 billion won (approximately $11.6 million) so that NewJeans could debut in the way you wanted. In this process, NewJeans’s debut schedule could not help but be delayed regardless of HYBE’s intention due to the division of the company and the transfer of contracts.
Moreover, you yourself have revealed this process before. In an interview with a media outlet published on March 24, 2022, you directly mentioned that the girl group project will proceed under your plan and that the launch will be in the third quarter of 2022. You even remarked, ‘A rushed debut can only be a big burden on young members. I don’t want to make everyone feel rushed, so I set the third quarter of 2022 as the launch time.’”
6. Regarding the claim that she was told to not promote NewJeans at debut
Due to the R&R (roles and responsibilities) dispute between SOURCE MUSIC and CEO Min, NewJeans’s debut schedule got delayed, and SOURCE MUSIC’s LE SSERAFIM debuted first. As there was not adequate time for the two groups’ promotions because their debut schedules followed one after the other right away, it was decided that minimum promotional periods would be set. In addition, in the case of LE SSERAFIM member Sakura, articles about her “transferring to HYBE” had been pouring out even before she signed a contract with HYBE. Amid this situation, if we promoted ADOR’s debut group as “a team composed only of rookies,” there were concerns that the fact that Sakura joined SOURCE MUSIC as well as the information on the composition of NewJeans members would be exposed. We made this request in order to protect the news value of both teams, and even then, we shortened the period in the middle and started promoting NewJeans early.
Regarding this, we also included our response in the email as follows:
“Also, the time when CEO Min’s interview [with a media outlet] took place was two months before the debut of LE SSERAFIM (May 22, 2022), so it can be recognized that you already had plenty of time to promote her new girl group.
Your claim greatly differs from the perception of staff members who know how much full support and compromise SOURCE MUSIC and HYBE have provided for the success of ADOR.”
7. Regarding the claim that HYBE is neglecting the promotion of only NewJeans
We have already answered this claim in detail in the reply to the email she sent.
“The HYBE Communication Organization is putting in full effort for the promotion of NewJeans. Last year, 273 press releases were written and distributed for NewJeans alone. Compared to the 659 press releases for BIGHIT MUSIC, which operated a total of eight teams including BTS as a group and individually, and 365 press releases for PLEDIS Entertainment, which operated four teams including SEVENTEEN, it is difficult to claim that ‘we’ve been neglecting promotion of NewJeans only.’ Our PR is promoting all labels and artists without discrimination and doing their best to promote them.”
8. Regarding the claim of a slave contract
The non-competition clause in the shareholder agreement has a duty of confidentiality but was mentioned at the press conference by CEO Min. The non-competition clause is requested by shareholders to prevent unfair competition from a majority shareholder setting up a business in the same industry after selling their shares. It is a common clause in any industry.
It is also not true to say that she is tied up forever. CEO Min can sell her stocks beginning in November of this year, and if she sells the stocks, she will not be subject to the non-competition clause from November 2026, when her employment contract with our company expires.
It is impossible to call it a slave contract when CEO Min is guaranteed a large amount of money to the point that she herself expressed that, “I can make 100 billion won (approximately $72.7 million) just by staying still,” and when there is the condition that she can cash in and start a business by the year after next year. These are unconventional compensation conditions that normal people cannot even imagine.
Even in the KakaoTalk conversation that CEO Min had with confidants, it is stated that she can exercise the put option on January 2, 2025 and “EXIT.”
Regarding the clauses about selling stocks in the contract that CEO Min is claiming to be a slave contract, there was a difference in interpretation of the priority order of the two clauses, and we already sent her a reply in December of last year, saying, “If the interpretation is ambiguous, we can settle the ambiguous provisions by modifying them so that there is no issue.” CEO Min said, “I’m not interested in money,” but the core issue that triggered the discussion was the scale of the compensation.
9. Regarding the claim telling us to do ESG management
Our company is fulfilling ESG management activities within the scope that we can carry out. Regarding the eco-friendly album that the company has worked hard to push forward with, CEO Min spoke down on it saying, “melting photocards is nonsense.” The company had to invest considerable manpower and expenses to convert the plastic material of the digital album to paper and to convert the album case and photo card to environmentally friendly biodegradable material. Accepting this willingly and investing in this is ESG management. We are promoting the expansion of applying eco-friendly albums to all labels under HYBE, but the most uncooperative label is ADOR, which internal staff members are very well aware of.
10. Regarding the claim that there was no attempt for conversation
HYBE continuously discussed with CEO Min regarding changes to the shareholder agreement, but the discussion was suspended when CEO Min’s inquiry claimed to be “whistleblowing” arrived at HYBE. Nevertheless, HYBE sincerely responded about the matter claimed by CEO Min as “whistleblowing.” However, it was confirmed through the audit that CEO Min, during the period when the shareholder agreement negotiation was in progress, instead secretly took in HYBE’s internal lawyers and accountants to be consulted on changing the shareholder agreement and raising issues in the form of whistleblowing, and she contacted law firms and institutional investors, etc. to discuss the takeover of management rights.
11. Regarding the claim that the shaman is simply a friend
An outsider involved intricately in overall management cannot be viewed as a mere friend.
In the course of conversation [between Min Hee Jin and the shaman], undisclosed executive stock option amounts along with the management takeover structure including names of potential investors and each investor’s shareholding percentage are being exchanged. Decisions on various management issues were made based on the shaman’s proposals. We cannot regard such a conversation partner as a mere acquaintance. The company takes seriously the fact that important company information is being indiscriminately exposed to outsiders, who are intervening in decision-making, and that she has also received hiring requests.
12. Why during the comeback period…? Regarding the claim that HYBE does not cherish NewJeans
The side that began attacking the company via email around the time of NewJeans’s comeback is CEO Min’s side. Records secured through forensics include instructions from CEO Min since April to prepare for a battle of public opinion along with records of creating noise to torment the company. We question whether they thought the company would accept a compensation request that borders on unreasonable if they pressured the company at this time.
CEO Min’s side is the one actually threatening the company using the artist as hostage. If the compensation request is accepted, it’s good, and if not, they intend to use it as a pretext to end the relationship.
Over the years, our company has accommodated and compromised with CEO Min’s repeated requests. However, this time we realized these requests are part of the so-called “build-up” process to take over the management, and we had no choice but carry out an audit to protect the multi-label’s value, regardless of timing. The reason we also requested that she not mention the artist in press conferences and interviews is because we value the artist’s worth.
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