SM Shareholders' Meeting Turned into an Embankment Site

SM's Audit, Internal, and Outside Director Candidates Resign in Succession

Lee Soo-man / Photo by SM Entertainment

[Asia Economy Reporter Minji Lee] "Do you think it makes sense to run a major entertainment company as a personal business with less than 20% of the shares? Don’t turn a deaf ear; it’s time for change."

At the 27th SM Entertainment (SM) shareholders' meeting held on the 2nd floor conference room of Acro Seoul Forest D-Tower in Seongdong-gu, Seoul on the 31st of last month, shareholders’ criticisms were relentless. Before the meeting, SM tried to appease shareholders by announcing a surprise dividend of 200 KRW per share, but it was insufficient to quell their complaints. Before the meeting started, one shareholder took the podium with a voice full of frustration, saying, "The structure is such that shareholders get a meager dividend while the rest of the money goes to Lee Soo-man. SM does not exist for one person. It’s time for shareholders to wake up."

Due to a larger-than-expected crowd, some attendees had to watch the meeting from a backup conference room via monitors, creating an unusual scene. Some investors, facing unstable communication, even moved to the main meeting room to watch the meeting standing. The meeting started two hours later than the scheduled 9 a.m., beginning at 11 a.m. This delay was due to the verification process of voting rights after Align Partners Asset Management (hereafter Align), the shareholder proposal side, brought over three boxes of voting rights. An SM company official explained, "We started the verification process with the proposing shareholders and inspectors from 7 a.m., but it seems to be taking longer than expected," repeatedly citing this as the reason for the delay.

At the meeting, SM suffered a complete defeat in the vote against Align Partners Asset Management, the shareholder proposal side. Regarding the appointment of the auditor, which was the biggest issue at the meeting, SM’s candidate, former Daewoo Securities President Lim Ki-young, voluntarily withdrew before the meeting, and Align’s candidate Kwak Jun-ho was appointed auditor with the support of about 6.53 million shares out of 8.03 million shares present.

Additionally, the proposals to appoint Professor Lee Jang-woo of Kyungpook National University as an outside director and Director Choi Jung-min of SM True as an inside director, both consistently opposed by Align, were withdrawn. Both candidates had expressed their intention to resign for personal reasons before the meeting, effectively blocking their appointments as Align intended.

The word that was on shareholders’ lips from the beginning to the end of the meeting was “Like Planning.” Like Planning is Lee Soo-man’s personal company, which has a producing contract with SM and receives a portion of sales as royalties. Shareholders argue that this structure prevents the stock price from properly reflecting corporate value and call for resolving the governance structure. This issue has been raised by Align, KB Asset Management, and even during the 2019 National Assembly audit, where Congressman Jisung Wook urged the Fair Trade Commission to investigate.

At the end of the meeting, one shareholder took the microphone and said, “It seems that Producer Lee Soo-man effectively holds the company’s personnel authority, and at this point, he should come into the company and take legal responsibility for its operation.” He also urged, “Please communicate with shareholders about when the contract with Like Planning expires and how SM plans to grow without Producer Lee Soo-man.”

In response, an SM official stated, “Producer Lee Soo-man is currently necessary for SM’s growth,” but added, “However, we deeply empathize with shareholders’ concerns and will look into Like Planning.”

This content was produced with the assistance of AI translation services.