Some executives at Japanese technology titan Softbank have reportedly expressed concerns about an incentive scheme whereby employees can take out large personal loans to invest in the group’s Vision Fund.
The investment scheme is designed to align the interests of employees with the $97bn technology fund, but the Financial Times reported the scheme is described internally as a test of staff’s loyalty to founder Masayoshi Son.
Under the incentive scheme, loans taken out by employees are converted into equity to invest in the Vision Fund, which will generate profit when the fund’s deals make money – and losses when they don’t.
Softbank offers loans on a sliding scale linked to salary and the length of employment.
Although participation in the scheme is voluntary, some employees are reportedly concerned that opting out may damage their career prospects. Several executives said they understand it is “expected” that they take out the loans.
Some executives have been encouraged to borrow over 10 times their salary under the programme, the Financial Times reported.
The Vision Fund has come under intense scrutiny after Wework – one of the Vision Fund’s major investments – scrapped its planned IPO last week after receiving a lacklustre reception from investors.
The office space provider is now expected to slash its valuation when it does list to under $20bn, less than half the $47bn it had received in private fundraising in January. There are concerns that the drop in Wework’s valuation could leave the Vision Fund at risk of writedowns.
Softbank employees accounted for around $5bn of the investment in the first Vision Fund, which was raised in 2017, but that money is almost all invested.
When he unveiled a second Vision Fund in July, Son said $108bn of capital had already been committed to the fund, but that figure appears increasingly less certain.
Softbank declined to comment.
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