Seoul – A Seoul court has ruled in favor of Min Hee-jin, the former Chief Executive Officer of ADOR, a subsidiary of K-pop powerhouse HYBE, ordering the entertainment label to pay her ₩25.5 billion (approximately $17.7 million USD, or roughly ₱1 billion) in a dispute over stock options. The ruling, delivered by Presiding Judge Nam In Soo of the Civil Agreement Division 31 of the Seoul Central District Court on , centers on a “put option” – a contractual right allowing Min to sell her shares back to HYBE under specific conditions.
The legal battle stemmed from HYBE’s attempt to terminate its shareholders’ agreement with Min, following allegations of a planned coup to wrest control of ADOR and its highly successful girl group, NewJeans. Min, in turn, filed a counterclaim seeking payment for the proceeds from the sale of her stock, invoking her put option rights. The court sided with Min, validating her right to exercise those options.
According to the court, the core issue revolved around whether Min’s exercise of the put option constituted a legitimate action, or a breach of contract warranting termination of the shareholders’ agreement. Judge Nam stated that the exercise of the put option itself was a separate matter from any alleged wrongdoing. The exercise of the put option results in the termination of the shareholders’ agreement. Such termination is permissible only in the event of a serious breach substantial enough to justify it. Accordingly, we do not accept HYBE’s claims arising from the exercise of the stock sale claim right,
the court stated.
The ruling effectively rejects HYBE’s argument that Min’s actions – which included exploring the possibility of ADOR’s independence and a potential initial public offering – constituted a serious enough breach to invalidate her stock option rights. While HYBE had argued that Min violated the shareholders’ agreement, the court found that her actions did not meet the threshold for such a severe infraction.
Beyond the principal amount awarded to Min, the court also ordered HYBE to compensate two former ADOR executives. Former ADOR Vice President “A” is to receive ₩1.7 billion (approximately $11.8 million USD), and former ADOR Creative Director “B” will be paid ₩1.4 billion (approximately $9.7 million USD). These payments are linked to the same validation of the shareholders’ agreement and the put option rights.
The dispute between HYBE and Min Hee-jin escalated publicly in , culminating in Min’s dismissal as CEO of ADOR in . Prior to her removal, Min was widely credited with the phenomenal success of NewJeans, a group that quickly became a leading force in the K-pop industry. She subsequently founded Ooak Records, an independent label, and has expressed her intention to focus on developing new talent.
HYBE has announced its intention to appeal the court’s decision, stating that it is regrettable that our arguments were not fully accepted.
This suggests the company remains convinced that Min’s actions warranted a termination of the shareholders’ agreement and a denial of her put option claim. The appeal process could prolong the legal battle and introduce further complexities.
The case has drawn significant attention within the South Korean entertainment industry, raising questions about corporate governance, shareholder rights, and the power dynamics between entertainment agencies and their creative leaders. The substantial financial award to Min Hee-jin underscores the potential financial implications of such disputes, particularly in the highly lucrative K-pop market.
The ruling also highlights the importance of carefully drafted shareholder agreements and the potential risks associated with attempts to exert control over successful subsidiaries. HYBE’s initial efforts to curtail Min’s influence and ultimately terminate her employment appear to have backfired, resulting in a costly legal defeat.
Min Hee-jin, in a statement following the ruling, expressed deep respect
for the court’s decision and pledged to humbly accept
it. She further stated her commitment to building a stable management environment, maximizing the value of the artist, and nurturing new talent to lead the K-pop industry.
She also indicated a desire to move past the conflict, stating she wants to put an end to these exhausting disputes in my life, and surprise everyone again with great music, and performances.
The financial implications of the court’s decision extend beyond the direct payments to Min and the former ADOR executives. HYBE’s stock price could be affected by the outcome of the appeal, and the company may face increased scrutiny from investors regarding its corporate governance practices. The case serves as a cautionary tale for other entertainment agencies navigating similar disputes with key personnel.
The broader context of the K-pop industry, known for its intense competition and demanding contracts, adds another layer of significance to this case. The ruling could embolden other creative professionals to assert their rights and challenge the authority of entertainment agencies, potentially leading to a shift in the balance of power within the industry.
