[Asiae Kyeongjae Reporter Lee Chang Hwan] On the strength of the popularity of its signed artists, such as Super Junior and Girls Generation, SM Entertainment recorded its highest ever gain in the first half of this year, but only executives of the company received the fruits through a showering of bonuses. Their fellow executives received 3 times their usual paycheck in bonuses but regular employees, on the other hand, actually saw their salaries shrink. This is causing no small amount of shock, as it seems that the very managers under suspicion for signing Dong Bang Shin Ki, Girls Generation and others on to “slave contracts” are the ones being rewarded.
The Financial Supervisory Service revealed on the 16th that in the early half of this year SM gave out bonuses of 780,000 USD to CEO Kim Young Min and six other executives. This amount is 3 times the amount given out at the same time last year, which was 220,000 USD per person and substantially bigger than the amount given out the year before, which stood at around 300,000 USD.
The rise in the bonuses of the executives is a reflection of the rise of the company’s status overall. SM has recorded its highest ever gain since its inception thanks to the explosive popularity of Super Junior, Girls Generation and its other artists, leading to an increase in album and digital download sales.
In the first half of this year, the company’s total sales and operating profits stood at 47.5 million USD and 18.6 million USD respectively, which represents an increase of 59% and 385% relative to the same time last year when recorded total sales was 29.8 million USD and operating profits 3.8 million USD. For three years in a row, from 2006 to 2008, SM Entertainment recorded sales deficits, but last year, after pulling out of the red, the company has only been recording gains.
Financial firms are attributing the success of SM’s turnaround to the improvement of the business structure at the company. According to Daewoo Securities, “SM appears to be improving its business structure since 2009,” and “they were able to improve their sales numbers due to a strong line-up of artists in 6 teams who were able to draw in meaningful sales numbers.”
Analyst Kim Chang Kwong said, “More than anything, this is attributable to the success of BoA, Dong Bang Shin Ki and Girls Generation in the world’s second biggest music market, Japan,” and “the integration of modern technology, such as smart phones and smart TV and other related technologies to increase viewings of music videos and music downloads.”
Although it might seem obvious given this newfound success for the company to award its executives bonuses, it must also be pointed out that the company still has a long way to go and a lot of improving to do when it comes to the treatment of its regular employees and contracted artists. Currently, regular employees do not even have a bonus scheme and, if anything, their average salary has in fact decreased. In the first half of this year, SM paid 154 employees an average of 16,000 USD per person. This represents a diminished sum from what was given out at the same time last year, which was 17,000 USD per person on average.
According to a representative of the company, “Since the gains this year were much better than last year, we decided it would be a good idea to hand out incentive payments to our executives,” and, “compared to other similar companies, our pay levels are low, so we thought this would be a good move.”
However, in the current situation, where the company continues to be criticised for its treatment of its contracted artists, handing out bonuses to executives largely responsible for this represents a problem from an ethical point of view. It cannot be denied that contracted artists play a large role in the sales and operational profits of [the company], but the content of the contracts, once exposed to the public, has led it to be labeled slave contracts by many in the greater public.
At the current moment, Dong Bang Shin Ki members Kim Jaejoong, Park Yoochun, Kim Junsu as well as Super Junior’s Hangeng are engaged in large-scale lawsuits over their exclusive contracts.
Translated by Jimmie of TheJYJFiles