New Delhi: Nikesh Arora, heir apparent to the chief executive officer’s role at SoftBank Group Corp., is leaving the Japanese company after founder, chairman and CEO Masayoshi Son, who had been expected to step down after turning 60 next year, said he will remain at the helm.
India-born Arora, 48, who joined SoftBank in September 2014 with a bulge-bracket annual salary of $135 million, and Son announced the departure a day after a panel comprising independent members of the company’s board cleared the former of conflict-of-interest charges.
Arora will step down as representative director, president and chief operating officer of SoftBank and will assume an advisory role effective 1 July.
Simultaneously, he will also step down from the chairmanship at Yahoo Japan, a company in which SoftBank has a 36.4% stake, as well as director of Sprint, the ill-fated acquisition Son made in 2013.
In addition, he has also sold the 60 billion yen (around $483 million at the time) of SoftBank shares he bought at the time of joining the company, incurring what he termed “a small loss” in the process.
“Nikesh is a unique leader with unparalleled skills around strategy and execution. He should be CEO of a global business, and I had hoped to hand over the reins of SoftBank to him on my 60th birthday—but I feel my work is not done,” Son said in a statement.
“I want to cement SoftBank 2.0, develop Sprint to its true potential and work on a few more crazy ideas. This will require me to be CEO for at least another five to 10 years—this is not a time frame for me to keep Nikesh waiting for the top job,” added Son, who built SoftBank from a computer software distributor into one of Japan’s largest telecommunications and investment holding corporations.
Commenting on the decision, Arora who joined SoftBank from Google Inc., where he was the chief business officer, said: “Helping Masa begin the transformation of SoftBank and sowing the early seeds has been a great experience. I have enjoyed working with Masa and the SoftBank team and I look forward to my next challenge. In the meantime I will continue to support SoftBank and our investee companies.”
The unexpected parting will obviously come with a hefty severance package for Arora, who generated over $20 billion in cash in one month, a first in SoftBank’s history.
The company said: “We will compensate him in accordance with global standards.”
Recently, SoftBank sold a small part of its shareholding in Alibaba Group for $7.9 billion and on Tuesday, the company agreed to sell its stake in game developer Supercell for a total return of $7.3 billion.
One fund manager said the departure of Arora demonstrated “disunity”.
“You can’t really sprinkle any sugar on this one. This shows disunity,” said Amir Anvarzadeh, manager of Japanese equity sales at BGC Partners Inc. “Given how much Son was putting the responsibility of running the business into his hands, to have him not there, I don’t think anyone would say the share price will start going up.”
With his exit from SoftBank, attention now turns to Arora’s future plans after his one-year advisory role is over.
Given his background in the corporate sector with successful stints at Google, where he was senior vice-president and chief business officer at the time of leaving in July 2014, as well as T-Mobile US Inc., where he was chief marketing officer of the international division, it is possible he may want to fill the one gap in his impressive resume, that of heading a global technology corporation.
It is also possible that, given his own ample resources as well as the plethora of backers willing to bankroll him, he may start his own fund.
The timing of the move is clearly unfortunate, since it suggests it may have been linked to the committee’s investigation of the charge of conflict of interest.
An investor group urged the SoftBank board this year to investigate and possibly dismiss Arora, citing potential conflict of interest because of his role as an adviser to private equity firm Silver Lake.
Insiders say the decision on Arora’s departure was taken weeks ago, but couldn’t be made public pending legal clearances. With SoftBank’s annual general meeting due in Tokyo on 22 June, Arora’s decision to not seek to be re-elected as a representative director had to be made public, consistent with governance requirements.
During Arora’s tenure, SoftBank invested in several start-ups in India, including Snapdeal, Ola, Oyo Rooms, Grofers and Housing, besides extending its footprint in Asia with investments in the mobile e-commerce company Coupang in South Korea and the ride-share company Grab in South-East Asia.
SoftBank also started building its portfolio in the US with investments such as SoFi, a fintech company, and Banjo, which utilizes data analytics. It is the nearly $2 billion worth of Indian investments that will be of some concern, since Arora was known to play a significant strategic role in guiding the portfolio companies.
While Arora says he will “continue to support various investments as an adviser”, it remains to be seen how that will pan out, particularly since most of the companies are still in an early phase of growth and will need fresh investments.
Bloomberg contributed to this story.