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Alibaba's Ma: Compensation talks ongoing

Updated: 2011-06-15 10:19

By Chen Limin (China Daily)

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Alibaba's Ma: Compensation talks ongoing

Jack Ma speaks at a press conference in Hangzhou on June 14, 2011.[Photo/Xinhua]  

HANGZHOU - Jack Ma, founder and chief executive of Alibaba Group Holding Ltd, said compensation negotiations between the management and Yahoo Inc and Softbank Corp are still going on, and he declined to say when they might be completed.

Last month, Yahoo said it had been blindsided when Alibaba transferred its online payment arm, Alipay.com Co Ltd, to a new company controlled by Ma.

Alibaba is in negotiations with Yahoo's founder Jerry Yang and Softbank founder Masayoshi Son, who occupy two of the four seats on Alibaba's board, about compensating the two companies.

Ma said at a media briefing on Tuesday that Alibaba made the transfer to help Alipay get a license for the online payment business, but Softbank doesn't think the ownership transfer was the only solution.

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Hu Shuli, editor of the Caixin Century magazine, said in a comment published in Monday's edition of the magazine that the transfer of Alipay's ownership without the knowledge of the stakeholders violated the principle of a contract. It will hurt Ma's reputation internationally and, more importantly, Alibaba's growth.

Last year, the People's Bank of China (PBOC) said that companies must apply for a license to operate online payment businesses and that companies with foreign capital must go through separate rules, which have not been disclosed.

Ma said that Alipay's chance of getting a license would be at risk if it did not transform its foreign fund stock structure into a Chinese one. This brought about the transfer and the dispute with its biggest shareholders, Yahoo and Softbank.

However, he said that the negotiations have become "more complicated" because Alibaba has been hit with a wave of criticism, some of it from well known critics in China, for dealing with the Alipay issue without consulting stakeholders. This, he said, increased the bargaining position of Yahoo and Softbank.

"I had a thorough discussion with Jerry Yang but as for Masayoshi Son, we have many differences of opinion which made the negotiations difficult," he said.

Ma said it will be easier to reach an agreement with Yahoo than Softbank in the negotiations about the ownership transfer of its prime asset.

Previously, sources said Alibaba and Yahoo had reached an agreement in late May and that the deal would require the consent of Softbank's Son, who has been reluctant to negotiate, according to a Reuters report citing unnamed sources on June 1.

Yahoo and Softbank have "no choice but to fight for fair compensation. If they don't, then the CEO and others will be forced out," said Duncan Clark, chairman of Beijing-based consultancy BDA China.

Yahoo owns a 43-percent equity interest in Alibaba and Softbank 33 percent.

Alipay was granted a license by the PBOC last month as one of 27 companies in the first batch of those to gain approval.

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