SM Releases Detailed Statement Refuting Baekhyun, Xiumin, And Chen's Basis For Contract Termination

SM Entertainment has released an additional statement in response to EXO’s Baekhyun, Xiumin, and Chen notifying the company of their contract termination via their legal representative.

Following the initial statement suspecting a third party of being behind this situation, SM Entertainment shared the following statement refuting claims from Baekhyun, Xiumin, and Chen’s legal representative:

Hello. This is SM Entertainment.
As the legal representative of Byun Baek Hyun, Kim Jong Dae, and Kim Min Seok (hereafter referred to as “artists”) claimed the termination of their exclusive contracts today, we would like to release our statement on this matter.

First of all, EXO is an artist we cherish greatly. As a result, we increased the artists’ settlement rates twice even during periods when their existing exclusive contracts were valid. We have been carrying out their payments for several years with a system in which the artists can check the basis for settlements at any time, and they have not brought up any issues with this process over the years. Even when discussing new contracts with the artists when their existing contracts were expiring, the three artists Byun Baek Hyun, Kim Jong Dae, and Kim Min Seok all signed new valid exclusive contracts after carrying out mutually level negotiations, and there were no issues with the settlement aspects in that process either.

However, the artists’ legal representative suddenly started to claim that their newly signed exclusive contracts cannot be accepted, and we began to hear that there is an external force that is influencing the artists. We were very taken aback, but we worked to sign an agreement in order to fully respect the opinions of our valuable artists, but we requested the guarantee of not signing additional contracts that would breach their exclusive contracts. Then the artists’ legal representative, who initially requested that we sign an agreement, changed their attitude, ending negotiations for the agreement and unilaterally notifying us of their contract termination without any explanation of whether there are dual contracts.

1. Transparency of the settlement process

-Payments carried out every month, settlement reports available for viewing at any time.

-Artists did not raise issues regarding settlements.

-Although the settlement reports are available for viewing at any time, they are requesting copies for different purposes and are using as reasoning for contract termination.

First of all, we will explain in detail that the artists’ claim of settlement reports not being provided properly is not true at all. We carried out payments twice a year before the amendment of the Popular Culture and Arts Industry Development Act and every month since after the amendment. We also cooperated so the artists could visit at any time to view the settlement reports and additionally provided expense reports whenever the artists visited, and the artists have not raised any issues with the settlement process over the past several years of their exclusive contract periods. However, as mentioned before, we were told that an external influence approached our artists, spreading false rumors and instigating them, proposing that it is legally okay to ignore our exclusive contracts and sign exclusive contracts with them. Thus, it was a situation where we couldn’t help but suspect that a negative intention of the external influence was behind the artists raising issues with the settlement or requesting copies of the entire settlement reports.

We then explained several times that the artists can view the entirety of the settlement reports, which they were already able to view before, together with experts such as their legal representative or an accountant and can review them in detail at any time, and we provided sufficient explanation to the artists’ legal representative that only viewing has been allowed recently due to the concern of unjust provision to external influences or other third parties. Despite this, not only did the artists’ legal representative not express the intent to view the settlement reports in the first place, but the legal representative also did not promise to not provide the reports to external parties. Without responding at all about the basic question of whether they signed dual contracts with an external party or have carried out negotiations, [the legal representative] only repeated mechanically that the contracts have to be terminated because we did not provide “copies of the settlement reports.”

Provision of copies of our artists’ settlement reports to external parties is an issue that we cannot simply turn a blind eye to. For example, if the various detailed activities provided as basis for settlement are leaked to external parties, the other EXO members excluding the three artists can receive unjust harm. Hence, we requested for confirmation on whether or not dual contracts were signed between the artists and external party, but the artists’ legal representative did not provide any response on this and sent an official notice of contract termination right away.

2. Legitimacy and validity of existing and new exclusive contracts

– Contracts based on the Standard Exclusive Contract Form for Entertainers.
– Validity and legitimacy of the contract period has been acknowledged by the Supreme Court,
– In the case of they new exclusive contracts signed on December 30, 2022, they are the contracts completed after discussing the terms in detail with a lawyer from a large law firm assigned by the members.

Second, we would like to explain the legitimacy and validity of the existing and new exclusive contracts. We faithfully follow the Standard Exclusive Contract Form for Entertainers enacted and recommended by the Fair Trade Commission and the Ministry of Culture, Sports and Tourism. The validity and legitimacy of the contracts were acknowledged by the Supreme Court through a lawsuit filed by former EXO member Huang Zitao on confirming the invalidity of his exclusive contract. Nevertheless, our agency has changed the settlement rate in favor of the artists by signing annexed agreements twice with the EXO members including the artists. This was a measure to promote mutual growth between our agency and the artists even though there was no contractual obligation.

We would like to emphasize that we ensure our artists receive sufficient assistance and that they can renew their contracts on their own free will after in-depth discussions with our agency. In fact, among our agency’s groups, members of Girls’ Generation, f(x), and so on signed exclusive contracts with other agencies, and in the case of Girls’ Generation in particular, even after three members left for new agencies, they are maintaining good relationships with our agency through album releases and participation in SMTOWN performances. On the other hand, there are also cases where artists signed exclusive contracts with our agency again after careful consideration. For example, many artists such as TVXQ and Super Junior have renewed their contracts with our agency twice.

In fact, ahead of the expiration of the existing exclusive contracts, the artists signed new exclusive contracts with the help of a lawyer from a large law firm after sufficient consultation with us in a situation where renewal of the contracts was not coerced at all. We signed contracts with seven [EXO] members on December 30, 2022 after a long discussion with the EXO members for one year and six months from June 2021 to the end of 2022. Discussions on contract renewal started at different times [for each member] because each member had a different military service period, but because we understood the importance of EXO as a team, the members as well as our agency started discussing contract renewals starting with the members whose contracts were to end first. During the process of discussing the contract renewals, a lawyer from a large law firm appointed by the members also joined the discussion from April 2022, and we went through the process of coordinating each party’s opinions. In particular, for about a month from mid-November 2022, amendments were exchanged with the member’s legal representatives a total of eight times, and we completed our discussions as we went over in detail each and every word in the exclusive contracts. Despite this situation, the artists’ newly appointed representative suddenly changed their position and insisted that they cannot accept that the new exclusive contracts are valid, which makes us speculate that what we are being informed about is true.

Our biggest goal is to protect EXO and their fans who show infinite love and support for EXO and to protect all of our agency’s artists. To this end, we will take strong action against external forces that try to delude artists with unreasonable financial temptations, flattery, and groundless rumors to collapse the team itself.
Thank you.

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