LONDON (BLOOMBERG) – Masayoshi Son is losing a growing number of top executives at SoftBank Group, putting more responsibility on the founder’s shoulders just as the outlook for the Japanese conglomerate turns increasingly ominous.
Two more managing partners at the company’s Vision Fund, Yanni Pipilis and Munish Varma, are leaving, Bloomberg News reported last week, bringing the number of top level departures from the world’s largest investment fund to at least 10 since March of 2020.
Rajeev Misra, the long-time head of the Vision Fund, is giving up most of his titles and responsibilities as he starts his own investment fund. Chief operating officer Marcelo Claure left earlier this year, while chief strategy officer Katsunori Sago resigned in 2021.
That leaves Mr Son increasingly on his own as he plots a new course for the company he founded four decades ago. The 64-year-old is shifting focus away from the Vision Fund after steep losses and toward fresh opportunities, particularly the UK chip firm Arm, according to people familiar with the matter. Mr Son is planning to reposition the chip designer and cut costs to boost profits in order to increase its appeal as he prepares to take it public next year, said the people.
Mr Son has struggled to retain executives ever since he began remaking his telecom conglomerate into an investment holding company five years ago. As he set up the original US$100 billion (S$137.7 billlion) Vision Fund in 2017, he declined to provide the kind of profit sharing or deal-by-deal “carry” that venture capital firms give partners to compensate for big winners. Losses at the Vision Fund in recent years have aggravated the problem, leaving little overall profit to entice top performers.
“Masa gets all the glory, the team behind him gets breadcrumbs” said David Gibson, senior research analyst at MST Financial Services.
There hasn’t been much glory for anyone since Mr Son repositioned his telecom conglomerate into the world’s biggest technology investor. It suffered missteps at portfolio companies like WeWork and Greensill, as well as a broad downturn in technology stocks that hit holdings such as Alibaba Group Holding and Coupang.
SoftBank is essentially back where it started in 2017. Its stock has averaged a 5.2 per cent return over the last five years, far short of Japan’s benchmark Nikkei 225 at 9 per cent and the Nasdaq’s 16 per cent gain.
SoftBank is scheduled to report earnings on Aug 8 and it may report another loss after the 2.1 trillion yen (S$21/7 billion) in red ink from the last fiscal quarter, according to Bloomberg Intelligence analysts.
While top executives in Japan earn modests paycheques by global standards, the finance industry’s stars are among the highest paid in the world. Venture capital firms often allocate 20 per cent of their profits to partners, which can mean tens of millions of dollars apiece.
Mr Son’s own compensation was 100 million yen in the most recent fiscal year, a mere US$733,000. Mr Misra earned US$8.4 million in the most recent year for which his compensation was disclosed, among the highest in Japan but far below successful global venture investors.
SoftBank’s board members have warned the company isn’t doing enough to compete for talent.
“The best venture firms have little turnover because they understand the importance of retaining rainmakers, or excellent deal makers,” Tan Lip-Bu, founder of venture capital firm Walden International, wrote in his June departure letter when he stepped down as external board director at SoftBank.
Instead of boosting official renumeration, SoftBank has offered up side deals for executives to enrich themselves, according to the people and company disclosures. These included huge loans to senior staff that often carried little downside for the borrowers.