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Failures cost executives half their salaries, bonuses, and retirement pay

2012 was a horrific year for Taiwanese phonemaker HTC Corp. (TPE:2498).  While some its handsets achieved modest sales, such as the 5-inch Droid DNA, HTC's smartphone market share plunged nearly 20 percent and its stock was beaten down 40 percent.  One particular nasty blow came when Apple, Inc. (AAPL) secured a ban on U.S. sales of HTC handsets in May 2012, shutting down its rival's biggest market.  HTC had been the top smartphone seller in the U.S. for much of 2011.

As a result of these failures, HTC's executives took a big hit to the purse in 2012, according to The Wall Street Journal.  The newspaper is quoting HTC officials as stating that executive compensation -- including salaries, bonuses, and retirement pay -- dipped to NT$660.5M USD ($21.89M USD) in 2012, down 51.4 percent from NT$1.36B ($45.1M USD) in 2011.

Two of the hardest hit are still with HTC -- HTC CEO Peter Chou and president of engineering Fred Lui.  Their compensation dropped to an even NT$100M ($3.32M USD) -- the lowest level in two years.  Mr. Chou made waves early this year when it was revealed that he vowed to resign if the company's next flagship device did not sell well.

Taiwan Dollars
Poor performance led to a big paycut for HTC executives in 2012. [Image Source: Reuters]

However, the cuts across the board may have driven out some executives.  HTC is rumored to have bled a variety of executive, artistic, marketing, and engineering talent in 2012, as employees jumped ship for more lucrative offers.

After the boom years of 2010 and 2011, which featured meteoric growth, and the disappointment of 2012, 2013 seems to be off to a modest start for HTC thus far.  Despite the flop of the HTC First "Facebook Phone", the company has seen strong sales of its HTC One flagship device, which should help to further stabilize the company's tepid financials.

HTC is rumored to have paid Robert Downey Jr. (who plays Marvel superhero Iron Man) $12M USD to be the face of a new ad campaign for the phonemaker.  HTC is looking to compete with the marketing pull of South Korea's Samsung Electronics Comp., Ltd. (KSC:005930), who is offering 1 million copies of the new Jay-Z album to Galaxy S IV buyers.

Source: The Wall Street Journal



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Learn to be like the west
By Shig on 6/21/2013 1:27:50 PM , Rating: 2
Where your executives actually make more money by screwing over the company.




RE: Learn to be like the west
By Schrag4 on 6/21/2013 1:38:01 PM , Rating: 2
I don't know if that's necessarily true. Perhaps if an executive jumped from company to company, cashing in on short term gains that ultimately wreck the companies, and nobody ever caught on that the executive was leaving a wake of destruction then that's certainly true. Wouldn't an executive who stays at a company for decades and who makes every decision with the long term in mind stand to make a lot more money?


RE: Learn to be like the west
By Shig on 6/21/2013 1:49:34 PM , Rating: 3
Not really Shrag4, now what companies do is fire employees, the stock goes up, they cash in said stock, then they could care less how the actual company does, they're set with their golden parachute.

Check out Comcast's executive pay vs. their customer service and cost per megabit. It's painful to look at.


RE: Learn to be like the west
By BRB29 on 6/21/2013 2:54:42 PM , Rating: 2
You forgot that they always fire the part time and lowest people first to get huge numbers for wow effects on stocks. Then they usually hire people again without announcing it. Smoke and mirrors, nothing new.


RE: Learn to be like the west
By seamonkey79 on 6/21/2013 4:26:43 PM , Rating: 2
Depends... my CEO gets paid a little more than 1700x what the average employee earns... it is an 80,000+ employee company, but there you have it.


RE: Learn to be like the west
By mik123 on 6/21/2013 7:53:58 PM , Rating: 2
So, assuming average salary at your company is $100k, your CEO makes $170M? Which company is that?


RE: Learn to be like the west
By Camikazi on 6/22/2013 3:24:24 PM , Rating: 2
With 80k employees the average isn't gonna be anywhere near 100k for salary. Usually the highest amount of employees make the least or close to the lowest for salary depending on the industry of course.


RE: Learn to be like the west
By retrospooty on 6/21/2013 1:38:14 PM , Rating: 2
LOL. But seriously, I dont care about their exec, or thier finances... Just give me the Butterfly S. Its freegin perfect for me. The butterfly was released on Verizon as the Droid DNA... I hope to hell thiey do the Butterfly S as a DNA2. Seriously, take my money now! I held off with the S4 and didnt buy because I wasnt too impressed... But this one looks really great.

http://www.androidcentral.com/htc-butterfly-s-spec...


RE: Learn to be like the west
By spread on 6/21/13, Rating: 0
RE: Learn to be like the west
By NA1NSXR on 6/22/2013 3:57:14 AM , Rating: 2
Grow up.


RE: Learn to be like the west
By Shig on 6/22/2013 3:39:06 PM , Rating: 2
In ^ world, being an adult means taking an exorbitant share far beyond what you earned.

The average CEO makes 380x the average worker. NOT the minimum wage worker, the *average* salaried worker in most fortune 500s. Please enlighten me on how the CEO does 380x the work of a regular engineer or salesmen.


RE: Learn to be like the west
By crazy1 on 6/23/2013 9:19:47 AM , Rating: 2
quote:
Please enlighten me on how the CEO does 380x the work of a regular engineer or salesmen.


I think you misunderstand how capitalism works. As an employee, you are not only paid based on the amount of effort you put into your job. You are also paid based on your title, resume, and supply and demand. If you are an average salesman applying for a job, you will likely get offered the average salary of salesmen hired for a similar position at other companies. Although, if there is more demand for salesmen than there is supply, you could probably negotiate for a better salary. Essentially, people get paid what the JOB is worth in the JOB market.

Additionally, superiors get paid more. The goal of getting promoted drives many people to work hard. If you get promoted, you want a higher salary, right? Otherwise, what would be the incentive to taking the promotion? What would drive people to work hard? Are you a socialist?

In a large company, there is a long corporate ladder that is topped by the CEO. Each level of manager makes more than their subordinates. That is how you have CEO's making 380x the average worker. Plus, when someone is offered to be the CEO of a Fortune 500, they probably have among the best resumes of all the other CEOs in the world. That individual is likely in high demand by several companies.


RE: Learn to be like the west
By Cloudie on 6/23/2013 4:45:28 PM , Rating: 2
You didn't answer the question.


RE: Learn to be like the west
By homebredcorgi on 6/23/2013 10:07:00 PM , Rating: 2
Right. Capitalism. Did you just read this out of an econ 101 textbook or something?

Here's how CEO pay is actually determined:

CEOs are hired by the executive board. The board looks to the pay of other CEOs to determine the salary...they tend to look at companies larger than their own (which tend to pay more) since, of course their company will grow to that size in just a few short years. Furthermore, no executive board wants a "below average" CEO, so they tend to pay higher than the average salary.

When a company hires a salesman, they try to get the best salesman for the lowest salary possible. For an executive, they intentionally pay higher than average under the impression that it will lure better talent. But yeah, keep believing its all supply and demand or something.

I'll put it this way: 40 years ago, CEO pay was roughly 10x the median pay - It is now over 300x the median. What has changed in the last 40 years that demands we pay our executives 30-40x more money than their workers? Note that this is a ratio - inflation is not involved. Did executives really become 30-40x more productive than their subordinates?

MBAs are a dime a dozen, so you can't say that an executive is some scarce resource. Yes, you might argue that for the very top, very large companies they might be hard to find. But those companies will have hundreds of high-level employees already that they can chose from. This is another thing companies seem to love: picking CEOs that are from outside their industry.


RE: Learn to be like the west
By BRB29 on 6/24/2013 9:03:13 AM , Rating: 2
Because they realized that a good CEO with a good compensation will more likely to do honest work to take the company forward instead of doing illegal things.

You can compare the difference between Jack and Ripper Vs Enron or Kmart.


Yeah Just Make More Android Phones...
By Arsynic on 6/21/2013 3:19:43 PM , Rating: 2
...only to get ignored by the "next best thing."

It's obvious that people only buy two types of phones: iPhones and Galaxy S.




RE: Yeah Just Make More Android Phones...
By BRB29 on 6/21/2013 3:26:29 PM , Rating: 3
HTC ONE sold 5 mil in the first month. That's hard to ignore.


RE: Yeah Just Make More Android Phones...
By michael2k on 6/21/13, Rating: -1
RE: Yeah Just Make More Android Phones...
By aliasfox on 6/24/2013 9:59:21 AM , Rating: 1
Not really screwy - Apple releases one phone a year. Sales of new iPhone > sales of new Galaxy, but sales of Apple phones < sales of Samsung phones.

Samsung sells fewer Galaxy S3/S4 phones than Apple sells iPhones, but Samsung sells more Android smartphones than Apple sells iOS smartphones. Not too hard.


By michael2k on 6/24/2013 1:30:02 PM , Rating: 2
I didn't say it was hard, I said it was screwy, since we're comparing flagships (iPhone, Galaxy, One) and not the entire company.

In terms of flagships it is Apple, Samsung, HTC (by a good amount too), in terms of overall volume it is Samsung, Apple, and HTC.


"And boy have we patented it!" -- Steve Jobs, Macworld 2007














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