As losses elevated at its central Vision Fund venture capital arm, Masayoshi Son is now personally on the hook for about $5.1 billion on side deals he set up at SoftBank Group Corp. to enhance his compensation.
In November, Son, whose stake in SoftBank rose, also owns portions of the company’s key investment vehicles. While these holdings have raged controversy because of corporate governance concerns, the Japanese billionaire has denied any conflict of interest.
Source: Yahoo News Singapore
His unrealized losses widened roughly $400 million from three months before. The founder and chief executive of SoftBank was down $4.7 billion on the same side deals through the September quarter.
Since a long time, compensation has been a contentious issue at SoftBank. The companies of Japan pay some of the lowest executive salaries in the world, showcasing a culture where job-hopping by managers is still infrequent. Son himself has kept his pay at 100 million yen, now approximately $760,000 — a rounding error in the US where CEOs periodically make more than $100 million.
SoftBank further grew into a global investor, Son debated the company couldn’t keep talent unless executives were allowed to cut side deals that tied compensation to the company’s performance. That’s exposed him further to the current market downturn.
On Wednesday, the Vision Fund unit posted a $5 billion loss in its fourth straight quarter in the red, sinking SoftBank’s shares in their biggest tumble in more than a year. According to Bloomberg calculations based on company filings, Son owns more than a third of the company.
The global tech investor was hit by continued mark downs in its investments in unlisted startups, which outweighed gains in its public holdings. “They applied “extremely strict” standards in writing down investment losses”, Chief Financial Officer Yoshimitsu Goto said. By December, SoftBank had invested in 472 companies through its venture capital arm.
According to disclosures for the December quarter, Portfolio losses plummeted down Son’s deficit to about $2.9 billion from his Vision Fund 2 interest, and $344 million at the Latin America fund. His remaining deficit at SB Northstar was 246.1 billion yen ($1.85 billion). According to Bloomberg calculations based on company disclosures, the debt amounts to $5.1 billion.
The 65-year-old billionaire has a stake of 17.25% of a vehicle set up under SoftBank’s Vision Fund 2 for its unlisted holdings, and also a 17.25% of a unit within the company’s Latin America fund, which also invests in startups. He has a 33% stake in SB Northstar which is a vehicle set up at the company to trade stocks and derivatives.
