SM to increase number of outside directors, make subsidiary dealings more transparent

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SM to increase number of outside directors, make subsidiary dealings more transparent

Published: 15 Jan. 2023, 15:59 Updated: 27 Apr. 2023, 01:31

SM Entertainment will increase the number of outside directors and make its dealings with subsidiaries more transparent, the K-pop company said Sunday.

The number of board members will be raised from four to seven, adding three non-employees to the company board. One of these outside directors will become the chairman. Previously, there was only one outside director at SM Entertainment, the third-largest K-pop agency based on market cap.

The members will be subject to a vote at the shareholders meeting scheduled for March.

The company will also establish three or more committees under the board aimed at enhancing the company's governance structure, including so-called environmental, social and government (ESG) management and internal transactions. The internal transactions committee will focus in particular on scrutinizing its dealings with subsidiaries and making them more transparent, the company said.

"SM Entertainment will also recommend female and global entertainment industry experts to the board in order to maximize diversity within the company's board of directors," the K-pop agency said in a press release.

"We hope to become a global entertainment company through the board restructuring and hope to increase shareholder value through the move."

The announcement comes a month after an official shareholder’s letter from Align Partners Capital Management, which owns 1.1 percent of SM Entertainment, recommending the company raise the number of outside shareholders and make clearer internal deals.

Last October, the company ended its contract with a music production company 100 percent owned by chief producer Lee Soo-man, which had been taking up to 6 percent of SM Entertainment’s revenue for providing its music insight in making SM artists’ music. The contract between the two companies ended on Dec. 31.

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]