No pay for Sea CEO, top management amid deepening cash flow woes

In an internal memo sent to staff, Sea CEO Forrest Li said top management will forgo their salaries and tighten company expense policies. PHOTO: THE BUSINESS TIMES

SINGAPORE - Sea Limited's top management will forgo their salaries and tighten company expense policies, as the Singapore gaming and e-commerce giant tries to shield itself from the economic slowdown threatening tech companies.

Chief executive Forrest Li said in an internal memo sent to staff on Thursday that the leadership team has decided that it will not take any cash compensation "until the company reaches self-sufficiency".

This comes days after Sea shut down operations in some markets and trimmed staff across its divisions.

"We can now see that this is not a quickly passing storm: These negative conditions will likely persist into the medium term," he added.

In his 1000-word missive, seen by Bloomberg News, the billionaire addressed head-on the struggle for Sea in an era of rising interest rates, accelerating inflation and a volatile market.

The company has lost about US$170 billion (S$239 billion) of market value since an October high on questions about its money-making prospects and a global decline in technology stocks.

"With investors fleeing for 'safe haven' investments, we do not anticipate being able to raise funds in the market," Mr Li said, reiterating that the company's primary objective for the next 12 to 18 months is to achieve positive cash flow as soon as possible.

The company will cap business travel to economy class flight fares, with travel meal expenses limited to US$30 a day. It will also curb spending on hotel stays for business trips to US$150 a night, and cull reimbursement for meals and entertainment bills.

"The only way for us to free ourselves from relying on external capital is to become self-sufficient, generating enough cash for all our own needs and projects," Mr Li said.

Sea is facing increasing pressure to simultaneously grow and control costs. Consumers are pulling back on spending online as rising interest rates and prices weigh on the economy, while investors are becoming less willing to bankroll growth without profits.

After grappling with a string of extraordinary setbacks this year - including India's abrupt ban of its most popular mobile game - the company is looking to take significant steps to move from unbridled growth to profitability.

The company has said it expects gaming arm Garena to post its first decline in bookings this year, and last month, it withdrew its 2022 e-commerce forecast.

Sea is facing increasing pressure to simultaneously grow and control costs. PHOTO: SEA LIMITED

Last week, Sea's e-commerce unit said it is leaving Argentina and closing most of its operations in Chile, Colombia and Mexico, retreating from much of Latin America to focus on profitability over growth.

Shopee will close offices in Chile and Colombia and maintain just a small local presence in Mexico to support regional markets, according to a person with knowledge of the matter and an internal e-mail seen by Bloomberg News.

The decision should affect a few hundred jobs, said the person, who asked not to be named as the matter was private.

Shopee CEO Chris Feng cited "elevated macro uncertainty" for the pull-out. 

"This means focusing our resources on our core operations," he said in an internal e-mail.

Shopee had also pulled out of France, Spain and India months after launching operations in those markets. BLOOMBERG

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