SoftBank: pay cuts do not offset investment flops

Founder Masayoshi Son is trying to turn round the fortunes of SoftBank following a historic loss for its Vision Fund unit. But moves to counteract falling profits and a dwindling share price are too little, too late. They include steep pay cuts for executives of the Japanese tech investment group.

The surprisingly steep reductions follow a record investment loss of ¥3.5tn ($27.5bn) at the Vision Fund unit for the year to March. Oddly, Son’s pay was unchanged at Y100mn ($785,000). Executives who suffered pay package shrinkage included chief financial officer Yoshimitsu Goto. His remuneration dropped 40 per cent compared with the previous year

SoftBank has a history of largesse. Simon Segars, the former chief executive of the company’s chip unit Arm, earned $9mn during the three months that he was a board director. Former chief operating officer Marcelo Claure, who left SoftBank earlier this year after months of frosty negotiations over pay, earned more than $14mn in the year before his departure. That put him on a par with former chief operating officer of Bank of America Thomas Montag.

SoftBank blamed the record loss at its first Vision Fund in the year to March on the tech sell-off in the US and China. But some prominent companies in which SoftBank is the largest shareholder have performed far worse than the market. Shares in South Korean ecommerce platform Coupang have plunged 72 per cent since it listed. The stock of Didi, a Chinese ride-hailing group, has fallen 75 per cent in the past year.

Such reversals call into question the strategy of SoftBank executives including Rajeev Misra, chief executive of SoftBank Investment Advisers, which oversees the firm’s Vision Funds.

SoftBank shares have halved since their 2021 peak. They trade below book value at less than half the group’s stated net asset value of $150bn.

Son has promised to play defence, slowing the pace of new investments and preserving cash. The question for investors should be whether it is worth holding shares in a business that is still paying executives highly to underperform the market.