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YG CEO survives no-confidence vote

  • Published : Mar 22, 2019 - 14:26
  • Updated : Mar 22, 2019 - 14:26

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(Yonhap)
YG Entertainment CEO Yang Min-suk, younger brother of the agency’s founder and chief producer Yang Hyun-suk, survived a no-confidence vote at a shareholders meeting Friday despite snowballing allegations against former Big Bang member Seungri and the company’s leadership.

Unlike earlier expectations that angry investors could protest about falling stock prices, the meeting that started at 9:30 a.m. ended in just 15 minutes without much trouble. Most of the agenda items, including re-election of the incumbent CEO, got almost unanimous approval from shareholders.

Adding to mounting criticism about the lax management of its artists, the CEO and his brother are facing fresh allegations of tax evasion. On Thursday, the tax authorities raided its headquarters in Hapjeong-dong, western Seoul, to secure accounting documents.

“I take these cases very seriously. I’ll faithfully cooperate with the ongoing investigations,” the CEO told reporters before attending the shareholders meeting. “I hope I will have an opportunity to comment on additional positions and future plans when comprehensive results come out.”

He declined to comment on tax evasion allegations. The Yang brothers are suspected of evading taxes by registering a Seoul club they own as a restaurant, not entertainment business subject to higher taxes.

Even though the CEO may have won the confidence vote, industry watchers say he and the agency will be beset with a many unsolved problems to recover trust from investors. Its stock price has tumbled almost 30 percent in recent weeks since police investigations started last month into Seungri’s sex bribery and corruption allegations.

Some sources say it is also likely that its key investor Great World Music Investment, a subsidiary of L Catterton Asia, a private equity fund of French fashion powerhouse LVMH Group, could consider selling its redeemable convertible preference shares worth $60 million that were purchased at 48,000 won ($48.29) apiece back in 2014. Now the stock is trading at about 36,000 won. The company is required to decide on the sale of the stake by October this year.

Since the agency’s listing on the local bourse in 2011, the younger Yang has led its sprawling business while his older brother and largest shareholder stepped away from day-to-day operations to focus on his producer role.

Founder Yang and the CEO own 16.12 percent and 3.31 percent stake in the company, respectively.

Key institutional investors who are obliged to disclose their stake ownership of more than 5 percent include LVMH-backed Global World Music Investment at 9.53 percent, Naver at 8.5 percent, Shanghai Fengying Business Consultant Partnership at 7.54 percent and the state-run pension fund National Pension Service with 6.06 percent. In the meantime, China’s Tencent Mobility is also known to have acquired a 4.1 percent stake recently.

By Hong Dam-young (lotus@heraldcorp.com)