The dispute within SM Entertainment arose over the end of Lee Soo Man's production contract.
According to insiders on February 6th, singer and actor Kim Min Jong who has been with SM Entertainment for 17 years rebuked the management's decision to end the production contract with Lee Soo Man.
Kim Min Jong claimed, "Unlike their previous words that they will make the best decision for the SM family, co-CEOs Lee Sung Soo and Tak Young Joon unilaterally issued such an announcement without any internal discussion."
Previously on February 3rd, the co-CEOs announced their plans to implement a multi-producing system including 5 production centers and multiple labels independently producing music, moving away from the current Lee Soo Man's producing system.
Kim Min Jong continued, "I don't understand why they made such a drastic decision over the national Seollal holidays and I believe there has to be an ulterior motive in proposing salary negotiations to all departments except for Lee Soo Man's office of secretary. I don't think this new plan will neither benefit the SM family nor shareholders in the long term."
It was reported Lee Soo Man is currently in a state of shock after the sudden announcement of the board cutting ties with him on the 3rd. He has been out of the office since the announcement and reportedly is considering voicing his opinion during the shareholders' meeting next month.
However, many employees are also supporting the board's decision. On the anonymous employee community 'Blind', many SM employees voiced that the company needs to implement drastic changes to improve market capitalization and operating profits.
SM Entertainment has yet to issue an official statement regarding this internal dispute.
SHARE
Just to recap what this “dispute” is all about, Lee Soo Man privately formed a company called Like Planning completely separate from SM Entertainment, it’s “job” is ‘music production’ and has been paid by SM Entertainment a reported $100 000 000 since inception.
What does Like Planning actually do? What value does it add? Well, that’s the problem, nobody knows including the shareholders.
Because Like Planning is a separate private company it’s contract for business with SM Entertainment isn’t publicly available, and because of confidentiality clauses or laws (I don’t know which) it can’t be disclosed to the shareholders.
This has for a number of years caused a major dispute between shareholders and the company particularly one of the main shareholders Align Partners, this is because of the lack of transparency and because of the huge payments being made to Like Planning which have kept the company from making the sort of profit that would allow payment of dividends to shareholders.
The upshot is the shareholders believe that Like Planning was set up to “legally” allow Lee Soo Man to siphon profits from SM Entertainment above what he would get paid simply being a shareholder to the detriment of all other shareholders.
4 more replies