Lee Soo-man uses aespa to defend SM's management rights following Kakao acquisition

Article: SM's girl group autograph reception... aespa used as a "gift" to protect their "teacher"

Source: 10Asia

SM's new girl group aespa is being used as a tool to defend the company.

Kpop fans spend tens of millions of won to obtain autographed goods of their favorite idols. Only affection and loyalty to the idol make fans open their wallets. Things such as the size of the agency, stock price, and corporate value are outside of their interests.

If your precious idol's autograph was used as a tool by the agency, the words would be different, that's why this is an issue that cannot be ignored. Even if they were used for purpose, to have sharpened this "tool" without thought is causing controversy.

According to reports, aespa has become a tool to defend SM's management's rights following Kakao acquisition. This is to protect Lee Soo-man, who's called "teacher" among employees and artists. 

SM is looking to secure votes from its 57,000 institutional investors and minority shareholders ahead of the regular shareholders' meeting to be held on the 31st. Some shareholders that used their power of attorney were given autographed gifts signed by their favorite girl group idol as a "token of gratitude."

The reason why SM is eager to secure votes is because they're set to compete with Align Partners over the appointment of a new auditor. If a new auditor is appointed to handle the acquisition, it's highly likely that private businesses like Lee Soo-man's 'Like Planning' will get sorted out.

'Like Planning' has consistently been cited as a risk for SM as it's Lee Soo-man's private business that's been under controversy for hogging company profits having received over 46% of its annual operating profit from SM. Since its listing in 2000, SM has paid a total of 142.7 billion won to Like Planning until third quarter of 2021. Last year, SM transferred 18.1 billion won to Like Planning as "royalties."

Like Planning has been under criticism since 4 years ago. In 2019, several institutions including KB Asset Management, publicly demanded SM cut ties with Like Planning including its mergers with other subsidiaries unrelated to the main entertainment business but SM rejected all of them. 

Align Partners has pointed out that Lee Soo-man and Like Planning are reason for SM's undervaluation and explained that "while it's not strange that SM signed the contract, it's problematic that counter-party and owner is SM's founder and largest shareholder who also approved the transaction."

Align also pointed out several negative issues such as frequent performance shocks, deficit subsidiaries, embezzlements and tax evasion scandals that make it difficult for SM's board to independently review the adequacy of the acquisition transaction, conditions, and alternatives. Therefore, Align argued that people unrelated to Board should be appointed as auditors for independent monitoring and checking.

According to industry sources, Align has a high chance of winning at shareholders' meeting therefore SM has began to actively "move" to maintain current situation by securing votes through giving out aespa autographs as "gifts." The company also paid 200 won per share dividend for the first time to appease shareholders and seem to be moving quickly due to Align's aggressive movements. 

Meanwhile, the victims of this confrontation are its artists. SM's management rights and corporate value are outside fans interests. For fans, it's more important that their idols release a good album and actively promote in a good environment. That's why these "autograph gifts" are leaving a sour impression on fans who think aespa is being used as "tool" outside of their will for Lee Soo-man's private interests. 

Autographs are not easy for fans to obtain so for SM to freely hand them out to "protect" their "teacher" is quite the ironic situation.