Min Hee-jin alleges unlawful removal from ADOR CEO role as HYBE shares rise

Industry

Min Hee-jin alleges unlawful removal from ADOR CEO role as HYBE shares rise

Published: 28 Aug. 2024, 10:49

YOON SO-YEON
yoon.soyeon@joongang.co.kr

Min Hee-jin during a press conference on May 31 in central Seoul [JOINT PRESS CORPS]

Min Hee-jin, now the former CEO of ADOR, claims she was illegally pushed out of her position by the company's board, though the market has reacted positively to the board's decision.

HYBE shares opened at 183,700 won ($138) on Wednesday morning, 3.9 percent higher than the previous trading session, after reports surfaced that Min "stepped down" as CEO of ADOR but would remain a board member and producer for NewJeans.

ADOR also announced that the company would begin separating its production and management sectors under the new leadership. Min had previously overseen both management and production for its girl group NewJeans, "as the only exception among all the HYBE labels," said ADOR.

"The separation of management and production will complement the multi-label system," said Kim Min-young, an analyst at Meritz Securities.

"The court decision on the ongoing cases is crucial. If the shareholders' contracts [between Min Hee-jin and HYBE] are nullified, then risk and market fatigue may be mitigated."

Min Hee-jin during a press conference on May 31 in central Seoul [JOINT PRESS CORPS]

Reports on Tuesday indicated that the ADOR board was able to remove Min as CEO because HYBE initiated the process of terminating the shareholders' contracts between the two parties. The contract stipulated that Min would remain as CEO of ADOR until November 2026 and that she could require HYBE to buy 75 percent of her ADOR shares — a process known as a put option.

HYBE sent Min a letter last month notifying her of the contract termination and filed the necessary paperwork with the court to confirm the termination, according to media reports.

However, according to her legal representation from law firm Shin & Kim, Min never agreed to the contract termination and HYBE has no legal grounds to end the deal.

"We emphasize that the decision [to remove Min Hee-jin as CEO of ADOR] violates the shareholders' contract and directly contradicts the court's ruling," read a statement from the law firm on Wednesday morning.

Kim Ju-young, the new CEO of ADOR [ADOR]

The law firm cited a May court decision that ruled HYBE does not have the right to exercise its majority stakeholder powers to remove Min from her post because she did not commit any crimes against HYBE.

HYBE attempted to remove Min as CEO of ADOR during a board meeting on May 31 but only succeeded in replacing two ADOR board members with three HYBE executives: current HYBE CEO Lee Jae-sang, current ADOR CEO and HYBE's HR chief Kim Ju-young and HYBE's chief financial officer Lee Kyung-jun.

"The board meeting was also convened through problematic means," Shin & Kim continued.

"ADOR's regulations state that board members should be notified of a meeting a week in advance. However, the regulation was changed so that notification could be made only a day earlier during the temporary board meeting. We strongly suspect this was intended to remove the CEO and deny her the opportunity to prepare."

Min is exploring possible legal options but has not made a decision, as her removal only occurred a day earlier, according to the law firm.

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