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Kakao Corporation is reportedly preparing to replace the executives of SM Entertainment Co. Ltd. with more competent leaders. The internet company can make this kind of decision as it became the largest shareholder of the entertainment agency last year after acquiring a 39.9% stake for $963 million.
According to The Korea Economic Daily, Kakao Corp. will appoint new executives to lead SM Entertainment. It was learned that the executives who will be fired are the same ones who ousted the company's founder, Lee Soo Man.
Reason for Job Termination
Kakao decided to dismiss the current executives of SM Entertainment as they have shown poor corporate governance. It was mentioned that those who will be replaced include Jang Cheol Hyuk, the chief executive officer; Lee Sung Soo, the chief artists and repertoire (A&R) officer; Park Jun Young, chief creative officer; and Tak Young Jun, the current executive director and chief operating officer.
Kakao Entertainment will establish a new leadership group because the company reportedly failed to curb cloudy acquisitions and investments by SM executives. These critical activities were done without any consultation with Kakao, so the deals have become dubious.
The mentioned top management officials are set to be replaced around 10 months after Kakao purchased a considerable stake in SM, beating HYBE Co. in the bid. Kakao will assign new leaders and seek better corporate governance through cooperation with Align Partners Capital Management, a local activist fund group.
Kakao's Concern
As part of the move for leadership reorganization, Kakao Corp. is also looking into SM Entertainment's financials. It has launched an investigation as it is concerned that some issues could arise from the SM executives' questionable acquisitions and investments.
These issues may hurt Kakao, primarily if anomalies are found in the dealings. Bloomberg reported that the company hired a law firm to check on SM Entertainment's financial books, and the request was made by the firm's board's audit committee.
Photo by: Kakao Newsroom
