Dutchyyy

▶ Official Statement Released by Min Hee-jin, CEO of OOAK Records, on the Afternoon of November 6: 1. Who Drafted the Contract and Who Held Final Approval Authority At the time, ADOR had neither an independent legal team nor legal professionals capable of directly drafting and reviewing the key provisions of exclusive artist contracts. This was because HYBE’s operating system did not allow its subsidiary labels to establish their own independent departments. This was a consequence of what HYBE had widely promoted as its “Shared Functions” system. The initial draft of NewJeans’ exclusive contract was prepared by HYBE’s Legal Team. Revisions to the contract were also handled through HYBE’s Legal Team. ADOR’s role was to communicate with the artists based on the contract drafted by HYBE, relay the parents’ questions and requests for revisions to HYBE’s Legal Team, and coordinate the discussions. Since HYBE’s Legal Team was leading the drafting of the exclusive contract, its lawyers personally handled the explanations, discussions, and persuasion process, apart from the coordination carried out by ADOR. HYBE, however, describes this as the label communicating with the contracting parties and determining the key terms. Even in the actual contract approval process, the CEO of ADOR could not finalize the contract through her approval alone. The process required subsequent agreement and approval from HYBE’s Legal Team, HYBE’s CFO, and HYBE’s CEO. Approval from ADOR’s board of directors was also required, and the board consisted of two HYBE representatives and one ADOR CEO. The contract could not proceed without HYBE’s consent. This is different from simply receiving legal advice. The issue is who held the authority to draft and revise the key contract provisions and grant final approval. Page 56 of HYBE’s 2022 Sustainability Report explicitly outlines the company-wide legal management procedures: drafting contracts using standard contract templates, review by the Legal Department, approval by the relevant senior authorities, and finalization of contracts through agreement with the Legal Department. This demonstrates that HYBE’s role in artists’ exclusive contracts was not limited to merely providing reference contract templates. Its internal procedures stipulated that HYBE would be directly involved in the contract approval process. Because the label did not have the authority to revise the key provisions of the exclusive contract, ADOR’s former vice president even sent the following message to one of the parents during their discussions: “I was informed that the contract is a standard one used across HYBE affiliates, so it is difficult to revise all the items you requested. This is because HYBE is involved in the final decision-making process. However, since Min Hee-jin is the CEO, please trust ADOR, which she leads, and its staff, and leave things in their hands.” Throughout her tenure, former CEO Min Hee-jin fought tirelessly to fulfill the promises she had made to the parents by seeking practical improvements to the contradictions and loopholes in the contracts drafted by HYBE. She raised objections and proposed alternatives to the structural problems within the parent company, not only in legal matters but also in business and operational areas, in order to protect the IP of NewJeans, ADOR’s only artist group. Yet, what ultimately came in return were absurd accusations and the initiation of an unlawful audit. 2. ADOR CEO’s Objections in 2024 On January 25, 2024, Min Hee-jin, then CEO of ADOR, requested authority to execute important contracts, including exclusive artist contracts, during a meeting with Park Ji-won, then CEO of HYBE. Subsequently, on February 16, she submitted a revised shareholder agreement to HYBE that included this request. These demands and the circumstances surrounding them were also reported in the media at the time. If ADOR had sufficient authority to independently determine and execute the key terms of exclusive contracts, as HYBE claims, why would its CEO have needed to separately request that authority from the parent company? In May 2024, HYBE itself openly confirmed through the media that it had “rejected” this request. HYBE’s recent statement has made it clear that the request at the time was not simply an attempt to obtain additional formal authority. Rather, it clearly demonstrates that former CEO Min Hee-jin had experienced structural limitations that prevented her from independently making decisions on important contracts while carrying out her actual duties as CEO, and that she sought to address those limitations. 3. Decisions Regarding Certain Settlement Terms HYBE claims that ADOR’s former vice president rejected a proposal that would have reduced the artists’ financial burden. However, this explanation also leaves out the actual decision-making structure behind the contracts. The fact that ADOR could negotiate certain settlement terms or methods of allocating costs is an entirely different matter from whether it had the authority to independently change the fundamental structure and key policy provisions of the exclusive contracts established by HYBE. In reality, within the scope of matters it could decide independently, ADOR chose options that reduced the artists’ financial burden. When the NewJeans members were transferred from Source Music to ADOR, the ADOR led by former CEO Min Hee-jin decided not to make the members bear any related expenses, including costs incurred during their previous trainee period. At the time, we understood that other HYBE labels charged artists for trainee expenses after their debut. However, ADOR decided not to charge the members for these costs. This decision took into consideration the circumstances surrounding the cancellation of the members’ original debut plans and the failure to fulfill related promises. Even this process demonstrates that ADOR made every effort to be considerate of the members when determining their share of expenses. However, this does not mean that ADOR was free to revise every major provision of the contract. HYBE’s claim that a “cost-sharing proposal was rejected” must also be considered in light of the actual “decision-making process” explained above. According to the recollection of staff members who handled the matter at the time, even when HYBE’s Legal Team formally presented multiple options, examples from other labels or the policy direction of HYBE’s management were also communicated verbally and factored into the discussions. Therefore, it is difficult to assess the entire decision-making process based solely on whether a proposal was formally rejected in writing. The documents do not include comments from HYBE’s management or remarks made by the Legal Team staff handling the matter. Even if the documents indicate that ADOR selected or rejected a proposed option, this alone does not establish that the decision was made independently of HYBE’s policy judgments. A record of selecting or rejecting a particular provision should not be broadly interpreted as evidence that ADOR had independent decision-making authority over the entire contract. 4. Provisions Concerning the Artists’ Faces and Voices HYBE explained that the use of artists’ names, likenesses, and voices after the termination of their contracts would require separate consent for any actual use, and that it had no intention of engaging in activities that violate the law. However, this does not answer the question of who decided to include these provisions in the contract or for what purpose. It was HYBE’s Legal Team that prepared the initial draft and explained and justified its provisions to the parents. ADOR did not have an independent legal team at the time. In particular, the rights structure concerning new business ventures that would allow the use of artists’ voices or likenesses even after their contracts had ended involved matters requiring legal and business considerations beyond the scope of ordinary entertainment management practices. It is unreasonable to suggest that ADOR independently designed such provisions. Furthermore, the core issue is not whether HYBE intends to abuse these rights in the future. The issue is who decided to include such rights in the contract and what approval process they went through. HYBE should remember that its CEO and an ADOR board of directors dominated by HYBE-appointed directors were clearly part of the approval process. 5. The Parents’ Signatures and Consent HYBE emphasizes that there were approximately three months of discussions before the contracts were signed, including question-and-answer sessions, email correspondence, legal reviews, and negotiations over revisions. These things did take place during the actual contract process. However, the existence of such discussions is different from having actual decision-making authority over the key provisions of the contract. At the time, ADOR’s former vice president communicated with the parents based on the contract drafted by HYBE’s Legal Team and relayed their questions and requests to HYBE’s Legal Team. Emails were exchanged while coordinating comments with the Legal Team. There were also phone conversations with the parents to explain the provisions and resolve misunderstandings, and some wording was revised through subsequent discussions with HYBE’s Legal Team. However, these were primarily limited revisions intended to clarify the wording and reduce misunderstandings. They did not change the underlying structure in which HYBE established the key provisions of the contract and participated in the final approval process. The fact that the parents ultimately agreed to and signed the contracts is simply a matter of fact regarding the execution of the contracts. It does not, by itself, answer who drafted the key provisions, who had the authority to revise them, or whether those provisions were fair. Likewise, the fact that the court recognized the validity of the contracts does not fully explain how actual authority over drafting and approving the contracts was distributed between HYBE and ADOR. Therefore, rather than repeatedly emphasizing that ADOR and the parents participated in the contract process, HYBE should answer who actually had the authority to determine the key provisions. 6. HYBE’s Multi-Label Structure While operating its multi-label system, HYBE centrally managed legal functions and contract-related information. The labels communicated with the artists and became the formal contracting parties, but the functions responsible for designing and reviewing the fundamental structure and key legal terms of the contracts were concentrated at HYBE. In particular, ADOR did not have an independent legal function at the time. HYBE’s Legal Team had access to information about contract practices at other labels and HYBE’s policy direction. ADOR had no choice but to receive and review such information through HYBE’s Legal Team. Under this structure, the fact that a label could formally express its opinions does not mean that it exercised actual decision-making authority over the contracts. Furthermore, at the time NewJeans’ exclusive contracts were signed, ADOR’s board of directors consisted of three inside directors. Two of them, excluding CEO Min Hee-jin, were HYBE representatives. Therefore, in matters requiring board approval, HYBE representatives held a majority, making it difficult for ADOR’s CEO to independently push through decisions that differed from HYBE’s position. When this is considered alongside the approval system requiring agreement from HYBE’s Legal Team and HYBE’s CEO, questions arise as to the actual extent of the independent decision-making authority that HYBE now emphasizes in its statement. Externally, HYBE can emphasize that ADOR was the contracting party and that ADOR’s management negotiated with the parents. However, this creates a structural problem in which the authority to design and approve the key provisions is concentrated at the parent-company level, while external responsibility for those provisions is concentrated at the subsidiary level, which is the formal contracting party. HYBE’s recent explanation does not address the difference between the party that actually exercised authority within this structure and the party that bears external responsibility. This manner of explaining the situation ultimately has the effect of downplaying the actual authority exercised by HYBE while concentrating responsibility on ADOR, the formal contracting party. If HYBE intends to describe its role as nothing more than providing contract templates and legal advice, it must first clearly explain whether ADOR could have changed the key provisions and finalized the contracts without HYBE’s consent. What needs to be explained now is not who signed the contracts, but who actually had the authority to draft and change their key provisions. That is the most important factual issue missing from HYBE’s explanation. HYBE should remember that approval of NewJeans’ exclusive contracts required not only approval from HYBE’s Legal Team and HYBE’s CEO, but also approval from ADOR’s board of directors, in which HYBE representatives held the majority. After designing a structure in which a subsidiary’s CEO cannot grant approval without the approval of the parent company’s CEO, HYBE has now distributed a statement attempting to shift responsibility by creating someone to blame. This is essentially HYBE spitting in its own face. —- It should be self-evident, without even needing to ask, whether the actual power to determine the structure of the contracts rested with ADOR or with HYBE, the company that controlled ADOR. If HYBE genuinely wishes for the K-pop industry to develop, it should be able to transparently explain the drafting and approval procedures, as well as the reasonableness and fairness of the contract terms, even if those contracts are made public. That is what a truly responsible company should do. (End)