ADOR Issues Rebuttal Against HYBE

• HYBE announces audit of ADOR due to alleged attempt to take over full management rights
• ADOR CEO Min Hee Jin alleges that the audit is provoked by the internal report she made about HYBE letting ILLIT copy NewJeans
• HYBE announces audit results, Min Hee Jin holds emergency press conference
• HYBE responds to Min Hee Jin's press conference

After HYBE refuted the claims CEO Min Heejin during the emergency press conference held on April 25th, ADOR released an official press release to deny HYBE's statements.

On May 2nd, the embattled CEO's label explained, "ADOR has not responded so far in order to protect its value and not interfere with artist activities even after HYBE's rebuttal. However, unconfirmed content continues to spread to the public. As confusion is increasing, we are delivering an official statement to provide accurate facts about the controversial areas, and we hope this will help resolve the speculations and misunderstandings.”

According to ADOR's press release on the same day:

• 1. Regarding the alleged usurpation of management rights

The “usurpation of management rights” claimed by HYBE is a vain claim without substance. Additionally, the materials presented as evidence are not about seizing management rights, but are 'imaginations' that emerged from the ongoing conflict with HYBE. I would like to clearly state once again that there were no specific plans or implementation in this regard.

As the audit began and the black public opinion war became more serious, the vice president, who was very worried about CEO Min Hee Jin's safety, visited HYBE's key executives and asked them to stop the one-sided public opinion war. However, HYBE management said that now is not the time to worry about CEO Min Hee Jin, and cooperated with HYBE by making remarks such as 'How are you going to cover the damages that you, a working-level worker, will have to pay if you are cut off if you are sued?' and 'Think of your family.' I persuaded him to do it. They psychologically pressured the vice president into signing the consent form to provide information, saying, 'If you cooperate, there will be no problem.' The next day, the vice president's KakaoTalk content was released to the media. This is a serious invasion of privacy and a violation of human rights.

Recently, CEO Min Hee Jin's legal representative checked with the Yongsan Police Station to submit a seniority report, and confirmed that the vice president who wrote the document was excluded from the defendant list.

Without considering the context of the conversation, HYBE maliciously pieced together the conversation as if its original purpose was to seize management rights, and intentionally reported it extensively in the media.

• 2. Regarding the financial compensation

CEO Min Hee Jin announced at a press conference that the ‘incentive’, not the annual salary, was 2 billion won. This is a reward for achieving an operating profit of 33.5 billion won in just two years after the establishment of ADOR.

As she stated in her press conference, the issue raised when calculating incentives was not the amount itself, but the criteria for determining incentives and the transparency of that decision process. CEO Min Hee Jin thought that HYBE's incentive decision criteria were not clear and that there was a lack of clear explanation of the incentive calculation process.

Distorting the facts regarding incentives like this, and confusing the issue by mentioning CEO Min Hee Jin's annual salary, incentives, and stock compensation can only be seen as HYBE's attempt to falsely frame that CEO Min Hee Jin is driven by financial desires.

• 3. Regarding the whistleblowing and audit process

It is said that HYBE CEO Park Jiwon responded to ADOR's whistleblowing email at 10 am on April 22nd. At the same time, HYBE began an audit, including confiscating the vice president's laptop. In addition, at the same time, an official letter was sent requesting CEO Min's resignation and requesting a general shareholders' meeting to be convened. Then, just a few hours later, a series of news articles were reported saying that ADOR's management was granted a surprise audit. And, the next day, as if it were a live broadcast, articles about HYBE's personally aggressive media activities continued.

I'd like to ask HYBE, what was your response to CEO Min’s whistleblowing email?

I would also like to ask you another question. What kind of listed company would publicize audit details that should have been conducted privately, edit out even unconfirmed content, and report it as if it were a real-time broadcast? Moreover, the artist (Newjeans) belonging to the affiliated label was about to make a comeback.

This exercise of the right to audit is causing serious obstacles to the work progress of CEO Min Hee Jin and ADOR members, who have been working day and night ahead of NewJeans' comeback. In particular, HYBE claims that it provides new laptops as soon as they are returned and downloads existing data to ensure that there is no disruption to work, but this is not true, and the vice presidents' laptops were confiscated without time to download existing work data. The confiscation process also did not make common sense.

• 4. Regarding HYBE's promise to debut NewJeans as its first girl group

HYBE has already publicly announced New Jeans as Min Hee Jin's girl group and HYBE's first girl group since the 'Plus Global Audition'. This is a fact that NewJeans parents and Adore executives and employees at the time all remember as witnesses. In the end, with the recruitment of Sakura and Kim Chaewon, LE SSERAFIM became HYBE's first girl group, and even though it turned out to be true that HYBE did not keep its promise of being 'HYBE's first girl group', HYBE does not hesitate to make false claims. At the time, CEO Min Hee Jin gave up her shares and requested the establishment of ADOR. After enduring various disputes during the establishment, Newjeans members were transferred to ADOR and debuted.

Despite the truth about the Newjeans debut process, HYBE continues to lie about what has already happened, saying, "Due to dividing the company and transferring contracts, NewJeans' debut schedule had to be delayed regardless of HYBE intentions." It is deplorable that this exists.

• 5. Regarding the part about not promoting NewJeans upon debut

HYBE said that there were concerns that the fact that Sakura was joining Source Music and information about the composition of NewJeans members would also be exposed, but this is not only untrue but also illogical. It doesn't fit.

It is not explained at all what the statement that ADOR's debut team is 'a team composed only of rookies' has anything to do with Sakura's joining Source Music, or what the problem is with the disclosure of ADOR's debut member composition information. .

HYBE made an excuse, saying, “The two teams debuted one after another and there was not enough time to sufficiently promote each other, so we decided to set a minimum promotional period for a certain period of time,” but in reality, there was no such agreement. At the time, HYBE wanted to create confusion in the market that LE SSERAFM might be Min Hee Jin's girl group, and as a result, HYBE CEO Park Jiwon explicitly asked CEO Min Hee Jin over the phone and through social media not to promote NewJeans to ADOR.

Here are the facts: Although this can be confirmed through SNS conversation records between CEO Park Jiwon and Min Hee Jin, HYBE is constantly changing its words, citing unrelated reasons.

• 6. Regarding the claim that it was not a slave contract

CEO Min Hee Jin is not denying the necessity of the non-competition clause itself. As a representative of a company engaged in the entertainment business, she understands that she may be prohibited from engaging in competitive business during her tenure and for certain periods thereafter. However, the business subject to the non-compete and the period must be reasonable, but this is not the case with the current shareholder agreement.

Contrary to the official position on April 25, HYBE's rebuttal released on April 26, which was distributed to all media outlets, refuted the statement by disclosing part of the content, placing CEO Min Hee Jin's responsibility for informing the shareholders of the contract.

The irrationality of the current shareholder contract lies, above all, in the fact that CEO Min Hee Jin can be free from the non-competition clause that requires her to no longer hold stocks, and it would be natural for anyone to seek to resolve this unfairness. In a rebuttal, HYBE said that in December of last year, they sent a response saying, “There was a difference in interpretation of the sale-related provisions in the contract, and we will resolve the ambiguous interpretation.” The interpretation of the content is not ambiguous to any legal professional, and CEO Min Hee Jin must continue to be subject to the non-competition obligation until all stocks are disposed of with the consent of HYBE. It is said that they sent a response in December of last year saying that they would resolve the ambiguous clause, but it was not until mid-March of this year that she was able to receive an amendment proposal containing that content.

• 7. Following HYBE's rebuttal regarding other follow-up reports related to shareholder contracts

Speculations and distortions related to shareholder contracts are rife in various follow-up reports confirmed by HYBE through the media. We would like to inform you to correct any further misunderstandings.

HYBE is misleading the public by saying that CEO Min Hee Jin insisted on a value (30x) in relation to put options, as if the current conflict was motivated by financial motives. However, the value (30x) reflected the future production quality of ADOR's upcoming boy group, and was only one of the proposals in the process of changing the contract between shareholders, which had various unreasonable elements, and was not a priority item for negotiation.

In addition, HYBE promised an additional 10% of ADOR's shares as a stock option to CEO Min Hee Jin when signing the stock purchase agreement and shareholder agreement in March last year. However, as a result of legal advice, we learned that stock options cannot be granted to CEO Min Hee Jin, a major shareholder, under commercial law. These stock options were not requested by CEO Min Hee Jin, but were suggested by HYBE. CEO Min Hee Jin could not help but think that HYBE had deceived her. It was a matter of ‘trust’.

HYBE offered to lift the non-competition obligation, and CEO Min Hee Jin said she refused, but this is also not true. HYBE proposed that employees be required to serve for 8 years and have a non-competition obligation for 1 year after retirement, and that put options be exercised in stages according to the period. However, while the shareholder contract negotiations were in progress, a controversy related to ILLIT arose and continues to this day. Regarding HYBE's proposal, CEO Min Hee Jin has not communicated any relevant position. It is not true that CEO Min Hee Jin expressed her intention to refuse.

• 8. Regarding the fact that shamans are mere acquaintances

The success of Newjeans and the amazing performance that ADOR achieved in a short period of time are based on rational management decisions. These claims appear to be framed by HYBE to denigrate and deny ADOR's success.

The reason for ADOR's sales and operating profit is that it has increased its value by preventing unnecessary spending, managing its budget efficiently, and working to improve its brand image. If it is possible as they claim, why are CEO Min Hee Jin and ADOR members working hard day and night?

It is pathetic that HYBE, which is supposed to lead K-POP, attempted to frame it as a personal slander that was unrelated to the issue and not worth responding to, and that it was announced right before CEO Min Hee Jin's press conference.

• 9. Regarding the fact that HYBE does not spare Newjeans