Q&A at Small Meeting
with External Directors

Date	Monday, April 4, 2022 3:00 pm - 4:00 pm
Speakers	SoftBank Corp.: Takehiro Kamigama, External Director (Independent Officer), Member of the Nominating, Remuneration, and Special Committees (Biography) Kyoko Uemura, External Director (Independent Officer), Member of the Nominating, Remuneration, and Special Committees (Biography) Moderator: Yoshiko Sato, Japan Investor Relations Association, Executive Managing Director

Date

Monday, April 4, 2022 3:00 pm - 4:00 pm

Speakers

SoftBank Corp.:
Takehiro Kamigama, External Director (Independent Officer), Member of the Nominating, Remuneration, and Special Committees (Biography)

Kyoko Uemura, External Director (Independent Officer), Member of the Nominating, Remuneration, and Special Committees (Biography)

Moderator:
Yoshiko Sato, Japan Investor Relations Association, Executive Managing Director

What are your thoughts on the relationship between SoftBank Corp. (“SoftBank”) and Z Holdings Corporation (“Z Holdings”), given both are listed companies? What kinds of discussions do you have regarding governance, synergies, future group structure/ business organization, and shareholder returns, etc.?

We recognize that it is a large and complicated organization, and understand that it is in the process of elimination, consolidation and adjustment. I believe that Z Holdings will become the linchpin of SoftBank's growth strategy in the future. Governance needs to be effective while maintaining neutrality of Z Holdings. As external directors, we must pay the most attention to governance.
Yahoo Japan Corporation (currently Z Holdings, hereinafter “Yahoo Japan”) has grew through the Internet focusing on PCs. But when migrating its business to smartphones, the collaboration with SoftBank smartphone users makes a lot of sense. Business integration with LINE Corporation (“LINE”) or PayPay business would not have been possible if SoftBank and Yahoo Japan were not working together. SoftBank smartphone users also contributed to Yahoo Japan's expansion for its shopping users. For SoftBank, Yahoo Japan is an important partner in terms of differentiation from other mobile carrier, especially in the environment of mobile price cut issue. We believe considerable synergy has been generated for both companies.
In terms of the balance between shareholder returns and retained earnings, the two companies have different policies. We believe that they make their decisions independently as listed companies. Regarding SoftBank's policy in the future, we would like to continue to discuss internally.
Please tell us the opinions discussed and the conclusion in the Board of Directors regarding President Miyakawa borrowing 20 billion yen from SoftBank to acquire SoftBank shares.

We were surprised by the fairly large amount. The main reason of this arrangement is to let President Miyakawa to take responsibility for the stock price. It may not be familiar in Japan, but it is often said that good management comes from running a company from the standpoint of an owner in US. In that sense, Director Son insisted on considering the management of the company as an owner. We suppose that without a sense of ownership it is impossible to run a company like SoftBank.
There was a discussion about whether it would lead to a wrong management approach focusing on short-term results due to the fear of stock price fall. President Miyakawa stated clearly that he would not do such operation. He will make contribution to shareholders through stock price rise and take responsibility for the stock price. We were convinced that President Miyakawa would be able to manage, and we agreed with the arrangement. Regarding the funds for purchasing stock, the purchased shares are used as collateral. Director Son takes the position of a guarantor with personal assets as collateral, which shows how much President Miyakawa is trusted.
There are business fields that overlap under the arm of SoftBank and Z Holdings, such as PayPay, LINE, and bank-related businesses. Since both are listed companies, I think that the shareholders of each company want to concentrate the added value on the shares they own. From what perspectives do you have the discussion? How do you perceive the difference in their positions?

We had that kind of discussion when we exchange opinions with the external directors of Z Holdings. The two companies should ensure independence from each other and establish a win-win relationship. It is important to discuss whether we can build that relationship with the current structure. Although there is some overlap between the businesses of SoftBank and Z Holdings, we believe that the business integration of Z Holdings and LINE is essential. We are aware that the integration of banking and other businesses has just begun, and there is a slight delay due to the issues such as the management system of personal information. The integration should have some confusion at the beginning, but we expect that new businesses, ideas and synergies will spring in a year or two. SoftBank also supports the growth of Z Holdings, including shopping business, by making good use of approximately 45 million users of PayPay and 89 million users of LINE. The growth of Z Holdings is also the result of SoftBank's cooperation and the efforts in the background, and SoftBank also benefit from the profit of Z Holdings. In addition to Z Holdings profit, SoftBank also expects to enjoy profits from “Beyond Carrier” strategy and PayPay, etc. We are also discussing the long-term strategy centered on the mobile carrier business,
When SoftBank Group Corp. (“SoftBank Group”) announced the sale of assets of 4.5 trillion yen, SoftBank shares were also targeted for sale. Please tell us what kind of discussion you had at that time. Also, if there is another sale of assets from SoftBank Group in the future, please tell us your thoughts as an external director from the perspective of protecting the stock value of SoftBank Corp.

We had quite some debate. The two main points of discussion were the possibility of a stock plunge and possibility of a similar sale in the future. As an external director, we asked many questions such as how much have been considered for the risk of stock price fall. In conclusion, the risk of price fall is greater if the SoftBank Group sells SoftBank shares little by little to the market. Therefore, SoftBank decided to make a public offering of its shares and implement share buybacks simultaneously, to make all efforts to find the long-term shareholders in the scale similar to that of IPO. SoftBank took these measures to protect its stock price. Since the issue of mobile service price reduction occurred at the same time, the stock price recovery was slower than expected, but it returned to the previous price six months later. In addition, we have discussed with Director Son, and received a reply that he will not sell SoftBank shares in the future. We believe that promise will be kept.
About the change in executive compensation system, I think the changes such as linking the remuneration with the total shareholder returns (“TSR”) is a very good direction. Please tell us about the background of the introduction of this method, the ratio of remuneration determined by this method, and the evaluation of whether the alignment with shareholder interests has progressed.

The change was discussed in the remuneration committee. As for executive remuneration, all performance-based remuneration will be share-based payment, so the ratio of share-based remuneration can be up to about 80%. We interpret it as executives are responsible for business performance, as well as the stock price by receiving share-based payment. TSR is calculated quite objectively and is designed so that it is difficult to make subjective judgments. It is a fairly strict compensation system, since the cash portion is small and the remuneration does not increase unless the net profit increases.
Please tell us whether there were cases that external directors have found problems proactively and discussed them and had the decision made.

There are a number of cases. For example, an external director pointed out the problem of impairment. For several times, the external director asked why the impairment occurred and how it could be remedied in the future. Another example is that we requested the quarterly report on the management and relationship status of subsidiaries and affiliates. Director Kamigama requested timely reports on all the group companies that affect SoftBank. In addition, from the perspective of risk management, we confirmed the management system of Z Holdings especially regarding information management issue in Demae-can Co., Ltd and LINE. We also instructed Z Holdings strictly to implement a solid management system like SoftBank.
SoftBank belongs to a fast-moving industry. I think it is necessary to understand other companies in the industry such as Nippon Telegraph and Telephone Corporation (“NTT”), KDDI CORPORATION, and Rakuten Group, Inc. in order to properly supervise the management, and it requires a huge amount of knowledge. Do you take care of this area yourself, or do you get support from SoftBank?

While we pay close attention to general news reports about other companies in the industry, SoftBank's executive departments conduct excellent investigation and provide us reports of their analysis. The Board of Directors and strategy meetings are held once a month to discuss future growth strategies. Monthly reports explain the operating results of the consumer business and enterprise business, and the situation of other companies when necessary. On the other hand, SoftBank takes a stance that they need to continue to evolve in its own way. President Miyakawa is in process of formulating a new strategy, and I think he will announce it at an appropriate timing.