TVXQ‘s legal dispute with SM Entertainment is one of the most famous cases in the industry. Back then, three members decided to sue SM Entertainment.
It was reported in an interview that the boys of TVXQ were only paid ₩11.0 billion KRW (about $8.33 million USD) in a year. SM Entertainment had given them this amount in cash and provided a luxury imported sedan for the team. Divided by five, each member’s post-tax pay was ₩200 million KRW (about $152,000 USD) per year during that period. Given that TVXQ was one of their generation’s most popular boy groups, reaching regional and domestic success, their money seemed quite paltry.
It was no wonder that members Jaejoong, Yoochun, and Junsu filed a lawsuit to terminate their exclusive contract with the company in 2009. They cited long schedules that were held without the agreement of the members, an excessively long “slave contract” of 13 years, and unfair distributions of profit. In October of the same year, the Seoul Central District Court granted a temporary contract injunction, and TVXQ’s group activities in Korea ceased. SM Entertainment filed a counter-suit in April 2010 to validate their contracts and sue for damage. In February 2011, the Seoul Central District Court dismissed SM Entertainment’s injunction.
Ultimately, in November 2012, a voluntary arbitration took place and SM Entertainment and the three members reached a mutual agreement to terminate all contracts between the two parties and not to interfere with each other’s activities in the future, thus concluding the lawsuit that lasted three years and four months.