Sprint CEO Gives $3.25M Back to Company After Upsetting Shareholders in iPhone Deal
May 8, 2012 10:44 AM
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Sprint CEO Dan Hesse
Hesse returned the $3.25 million after previosuly excluding the financial effect of carrying Apple's iPhone when determining employee bonuses
Sprint Chief Executive Officer Dan Hesse has decided to return over $3.25 million after shareholders expressed concern with the company's recent move regarding employee bonuses and Apple's iPhone.
According to a filing with the Securities and Exchange Commission on Monday, Hesse returned the $3.25 million after previously excluding the financial effect of carrying Apple's iPhone when determining employee bonuses.
This move upset shareholders, so Hesse decided to return the money to the company.
"I do not want, nor does our Compensation Committee want, to penalize Sprint employees for the company's investment with Apple," said Hesse. "I'm hopeful that these actions will
allow the company to remain focused
on delivering the best overall customer experience in the wireless industry, which is what will serve the company best in the long run."
Sprint agreed to purchase 30.5 million iPhones for about $20 billion over a four-year period last year. In August 2011, Hesse reportedly told the Sprint board of directors that the company would likely lose on the agreement with Apple until 2014, but believed in the deal because he said iPhones were more profitable than others like Android-based phones. According to Hesse, iPhones have a "low churn rate" and iPhone users consume less data.
When the iPhone 4S first launched, which was
Sprint's first iPhone
, the carrier sold 1.8 million of the Apple smartphone. In Q1 2012, Sprint sold 1.5 million iPhones total.
"We applaud Dan for his willingness to sacrifice personal compensation in order to reduce any distraction that could negatively affect the morale and performance of the company," said Sprint Board Chairman James Hance Jr. "Dan enjoys the full support of our board of directors, and we appreciate the leadership he has demonstrated as he continues to
guide the company
through a turnaround in a difficult competitive environment."
Hesse's pay in 2011 was $11.9 million, including stock and option awards. Hesse said he plans to reduce his salary by $346,223 this year to pay back part of the iPhone bonus, and will give up $544,607 in future pay for last year's performance. The other $2 million that he's giving back will be in performance units that he was given in February.
Kansas City Business Journal
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RE: CEO's should be punished for failure.
5/8/2012 12:15:00 PM
"There is no justification that anyone can produce that is plausible."
If you rise to the rank of CEO and have it pre-written into your contract, can you blame them? The finger has to point at the board that hires the CEO and allows golden parachute contracts. Its basically saying, we like you and have faith in your ability to run the company, but just in case you flop and massively hurt our business we will still pay you. Not a good sounding deal. I would think it would be pay by merit. Make us profiatable and you get millions, run us into the dirt and you get dirt.
"We can't expect users to use common sense. That would eliminate the need for all sorts of legislation, committees, oversight and lawyers." -- Christopher Jennings
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