SoftBank COO spars with Masayoshi Son, demands $2 billion in compensation

SoftBank, the Japanese conglomerate that became synonymous with freewheeling spending on unprofitable technology start-ups including WeWork and Uber, is trying to spend less money — starting with one of its own top executives.

Marcelo Claure, the firm’s chief operating officer and a close confidant of the SoftBank founder and chief executive Masayoshi Son, is seeking roughly $2 billion in compensation over the next several years, according to four people with knowledge of the discussions who were not authorised to speak publicly on pay issues. Son and other senior SoftBank executives in Japan are seeking to pay Claure a much smaller sum — tens of millions of dollars at most.

The unusually large amount at stake reflects  Claure’s singular role at SoftBank, where he has been part Fixit and part ambassador — untangling messy investments, scouting out lucrative opportunities and wooing start-up founders — since joining in 2017. He arrived after running the telecom company Sprint when asked to do so by Son.

Claure has insisted in private conversations with individuals inside and outside SoftBank that he was owed the $2 billion for various cleanup jobs, including straightening out SoftBank’s investment in WeWork, the office-space leasing giant that went public in October. The amount also reflects Claure’s estimate of the future value he could bring to SoftBank, one of the individuals said.

But Son and other SoftBank executives are worried that anything approaching such a gigantic payday would raise the hackles of investors in Japan, where the conglomerate’s stock trades and where big payouts to executives are generally frowned upon. Already, Claure — who made $17 million last year — was one of the highest-paid executives in Japan in recent years. Even in the United States, few executives of publicly traded companies are paid more than $1 billion in salary and stock awards in a single year. In 2020, only Alexander Karp, the chief executive of Palantir, had a total pay package of more than $1 billion.

Moreover, SoftBank, which has a market capitalisation of around $85 billion, is battling a drooping stock price. Its shares have fallen more than 35 percent this year after a regulatory crackdown in China that has weighed on Chinese stocks. Alibaba, the Chinese online retailing behemoth, is SoftBank’s largest holding.

“SoftBank and Marcelo Claure are actively engaged in discussions about his role at the company and his compensation,” SoftBank said in a statement. “Marcelo is an important executive at SoftBank who has helped with many important initiatives.”

Some SoftBank executives are also peeved at another lucrative activity of Claure’s, even though the firm cleared it: He occasionally made personal investments in start-ups that he also introduced to SoftBank. When SoftBank later invested in some of the same start-ups at much bigger valuations, the value of Claure’s personal investments rose handsomely, giving him millions of dollars in profits — at least on paper. The firm’s chief financial officer, Yoshimitsu Goto, is among those who have complained to Son about the matter, according to two of the people.

Although it’s not unheard-of, many companies discourage this type of personal investing because it can cause a conflict between the employee’s interests and the firm’s — or even create the appearance of one.

“You’re walking terribly close to the line between legal and illegal and ethical and unethical,” said Aswath Damodaran, a professor of finance at the Stern School of Business at New York University. 

Claure and SoftBank have been locked in the pay dispute for weeks, working with their own teams of lawyers. The negotiations, which could go on for weeks more, have frayed the close ties between Son, 64, and Claure, 50 — so much so that Claure could leave SoftBank in the coming months whether or not he receives the compensation he is seeking, the four people said.