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Sprint CEO Dan Hesse  (Source: technobuffalo.com)
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.

Source: Kansas City Business Journal



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RE: You gotta like Hesse
By Reclaimer77 on 5/8/2012 5:09:56 PM , Rating: 1
quote:
They should have provisions in their contracts where if they fail to meet goals or cause a grossly negligent future impact on business, they should face instant termination with zero severance and forfeiture of prior year pay.


This is the most absurd thing I've ever read from you. You are usually a very rational guy, but I guess you caught the hate-CEO's fever like so many others. This is a barely coherent and completely unrealistic rant and nothing more. Why are you so angry about CEO pay anyway? You aren't a shareholder or on the board of directors. Why do so many people uninvolved with a company think it's their business what a CEO makes?

quote:
The problem is, so many are being rewarded for taking risks and causing catastrophe while doing so.


Wrong. A TINY minority. There are thousands of CEO's out there doing their jobs, we only hear about the tiny minority in big companies when they screw up. We very rarely see any acknowledgment for the positive side of the position.

A large percentage of the idiot public seem to think a CEO's job involves sitting around doing nothing making millions, firing employees, and waiting to get fired so he can get a bonus. Nothing is farther from the truth, and I guess I'll have to put you in this category sadly.


RE: You gotta like Hesse
By MrBlastman on 5/8/2012 5:45:29 PM , Rating: 3
I know more about CEOs and what they do than most people given the clientele I work with/for. I'm not caught up in the CEO fever, believe it or not. Back in 1998 (or was it 97) I remember sitting in one of my Marketing classes in b-school while my professor gave a presentation to the class on CEO compensation. He was very thorough and quite positive about how much they make.

Basically, he was toting the merits of rising to the top and earning big. He stopped with the pay of Coke's CEO--who, at the time, earned 111 million bucks the prior year along with another CEO that earned 550 million. Everyone in the class was in awe--except me. I was the only one to stand up and say to the class--"Don't you think that is absurd?" I argued that it would be better to compensate the employee base as a whole than piling into the pockets of a single man a large sum of money such as that, especially one that didn't found the company.

To be fair, Goizueta was a superstar and made Coke into what it is today. It wouldn't be as huge a company as it is now if it were not for him. He was an exception to the rule, a rarity, one in a million as far as CEO's are concerned.

The whole class gasped when I provided an opinion contrary to what the professor was telling us--they were in shock at what I did. Nobody agreed with me either, nobody except my father. My father worked with very wealthy people his whole life--so this concept of wealth and money is something I "get."

I'm not against the concept of wealth either. What I am against and always have been against is huge disparity gaps between the top and the bottom. Yes, gaps should exist, but my feeling is the gap has swung to the extreme again and needs to come back in line to more realistic levels.

CEO compensation should be proportionate to baseline employee pay and should only fluctuate as much as baseline employee pay when going upwards--directly proportionate on a 1:1 level aside from bonuses (bonuses are earned as a result of performance).

quote:
Wrong. A TINY minority. There are thousands of CEO's out there doing their jobs, we only hear about the tiny minority in big companies when they screw up. We very rarely see any acknowledgment for the positive side of the position.

A large percentage of the idiot public seem to think a CEO's job involves sitting around doing nothing making millions, firing employees, and waiting to get fired so he can get a bonus. Nothing is farther from the truth, and I guess I'll have to put you in this category sadly.


I would hope you don't, as I don't belong in that category. I realize the CEO spot takes a special person to do the job. Most people aren't cut out for it and the 24/7 sacrifice they put into their position is insurmountable and unimagineable by most. I know CEO's and have been around them for my whole life. What I don't like is greed.

There are plenty of fairly compensated CEO's--and there are many that are disproportionately compensated far beyond what they deserve. This is where I see the problem at. It has become a large problem with "good ole boys" sitting on everyone's boards and needs to move back to Earth from Outer Space.

I happen to be a shareholder in quite a few companies--so I'm not exactly someone just sitting around twiddling my thumbs about this sort of thing.

I look at this from a societal/monetary trend philosophical, objective view and nothing more. I'm a capitalist pure and through but I can also call out absurdities when I see them.


RE: You gotta like Hesse
By Reclaimer77 on 5/9/12, Rating: 0
RE: You gotta like Hesse
By TSS on 5/9/2012 9:03:58 AM , Rating: 2
quote:
Simple logic dictates that, for obvious reasons, your idea of proportional compensation would cause an unsustainable increase in the cost of operations.


Your logic is flawed. If the increase in CEO pay was distributed amongst workers in a 1:1 fashion, then the total expenditures on salary for the company would stay the same. It's different people recieving the money, not more money being handed out. In fact one could argue that the more money the workers have the more financial stability they will be able to achieve, the happier they are. And happy workers are productive workers.

quote:
I just generally don't like to indulge in such thoughts because they lead to a class warfare Marxist mentalit


No, the trick is to enduldge in those thoughts and *form your own oppinion*. I've asked myself alot of times wether it's right or not that 22 people chasing a ball get paid so damn much. And the awnser is yes, because people desire to see 22 people chasing a ball to the extent that much more money can be made off the sport then the individual players ask. I'd imagine some of the more hardcore supporters only buying products from companies that support their team, and try to convince others of the same to name just one thing.

In other words, if it wasn't sustainable, it wouldn't happen. I remember reading about some transfers being cancelled in 2008 due to the economic crisis. Guess they had to ask for less money after that.

Dealing with those thoughts in an orderly fashion lets you deal with more thoughts, and question your own beliefs. If you don't question your own beliefs, how the heck do you know that they are true? Because somebody else told you so? I'm sure you can see the folly of that.

It's important because it lets you see things like the current corruption in the definition of capitalism. Capitalism was ment as a system to deal with the value of things, what everything is worth. Currently, we've set that value at "whatever people are willing to give for it". This is wrong. Just because somebody pays a billion for a toilet roll, doesn't mean it's actually valued at a billion dollars. If money dissapears, then a toilet roll will not get you the equivalent of a billion dollars in gold in exchange for it.

Just this change in distinction is the cause of alot of problems today, including CEO pay disrepancies. They get the maximum what the company will pay for them, rather then what their services are actually worth.


RE: You gotta like Hesse
By Reclaimer77 on 5/9/2012 10:36:01 AM , Rating: 2
Your premise is flawed. The "worth" of a position is decided by the market. If you decide that someone is being paid more than they are "worth", you have to back that up with some kind of objective comparison. But there is none, so you're in fact making a SUBjective statement. In your heart you feel someone is making too much, but that's all it is, a feeling.

quote:
No, the trick is to enduldge in those thoughts and *form your own oppinion*.


I don't know why you are talking down to me. I've clearly formed my own opinions and have a clear sense of right and wrong.

quote:
If you don't question your own beliefs, how the heck do you know that they are true? Because somebody else told you so? I'm sure you can see the folly of that.


What does this have to do with this? Again with the condescending. Of course I question my beliefs, I'm human aren't I? What the hell...

This isn't about beliefs anyway. CEO's, like any other person, have a right to whatever salary and compensation they can earn on the open market. All of us do this, we want the highest pay and benefits we can get. Don't we? But when a CEO does this he's "greedy" and should instead distribute his salary to all employees 1:1! I seriously refuse to indulge such an absurd notion.

quote:
Capitalism was ment as a system to deal with the value of things, what everything is worth.


Capitalism is the concept of a privately owned and operated economic system. With the emphasis on the profit motive. You have some big flaws in your logic here:

quote:
Currently, we've set that value at "whatever people are willing to give for it". This is wrong. Just because somebody pays a billion for a toilet roll, doesn't mean it's actually valued at a billion dollars.


Lots wrong here. If the price of goods and services were only what the product was "worth", manufacturing would cease because there would be no profit at all. Obviously you have to prices goods more than they are "worth" if you expect to run a business. And yes, what something is worth is exactly what people are willing to pay. That IS a major tenant to Capitalism.

quote:
If money dissapears, then a toilet roll will not get you the equivalent of a billion dollars in gold in exchange for it.


Cars aren't "worth" $40k. There's maybe $5k worth of metal and plastic/electronics put into them. But we pay that much because they are worth it to us. And just like the "billion dollar toilet roll" they depreciate. Things like "value" and "worth" are decided by the buyer, not you.

You're trying to apply a subjective value measure to CEO pay, but that's just not how it works.


RE: You gotta like Hesse
By WalksTheWalk on 5/9/2012 1:59:13 PM , Rating: 2
Yes you have it right. In a capitalist system something/someone is only worth, dollar wise, what someone is willing to pay for it. The personal worth of something/someone is completely subjective and varies from person to person.

Having said that, when it comes to some CEOs (not all), there is still a boys club where they sit on the boards of each others companies and approve outrageous compensation above and beyond what any other company would pay, all things being equal. The stock market doesn't typically punish companies who do this as long as they are posting profits and generally doing an OK job (not even good, just OK).

It's the SEC that should be addressing this type of collusion-style board room.


RE: You gotta like Hesse
By WalksTheWalk on 5/9/2012 2:02:04 PM , Rating: 2
Whoops, hit wrong reply link. Doh!


RE: You gotta like Hesse
By The Raven on 5/10/2012 9:31:18 AM , Rating: 2
quote:
It's the SEC that should be addressing this type of collusion-style board room.
https://upload.wikimedia.org/wikipedia/commons/7/7...

Yeah... like the guys at the SEC have no ties to Wall St.


RE: You gotta like Hesse
By The Raven on 5/10/2012 9:36:34 AM , Rating: 2
You guys are going back and forth on CEOs compensation when, as R77 pointed out, you have no power over that. Before you even think of worrying about that, you should worry (to a MUCH higher degree) about the money and especially power that politicians have. You actually can/should do something about that.

I hope you all can agree on that.


RE: You gotta like Hesse
By MrBlastman on 5/9/2012 11:04:41 AM , Rating: 2
quote:
I just don't understand how you can be a capitalist and believe in the free market yet seem to run with a lot of anti-big business talking points. How you can reconcile those two are interesting but kind of frustrating.


Well I used to be a die hard conservative but after years of thought I've moved to a social moderate (for _some_ things--not welfare) and a fiscal conservative. It's hard being a moderate due to how polarized our country has become, being either absolute left or absolute right.

As I see it, either polarizing position is doing far more harm than good to us, as they are chiefly responsible for the abhorrent election choices we've had for the last twenty years. I'm quite conservative at heart; I tend though these days to let my own thoughts override some of that inside me with reason.

quote:
There is only one or a handful of CEO's in a company. There could be tens of thousands, or even hundreds of thousands of employees. Simple logic dictates that, for obvious reasons, your idea of proportional compensation would cause an unsustainable increase in the cost of operations. Very few, if any, companies could stay in business if this were to happen.


Not exactly. You're thinking too extreme--ratchet it down a little bit and what I propose is more reasonable. I'm not saying pump everyone's pay up, as that is asinine. No, businesses have to cater to the bottom line and ultimately the shareholder. They have to focus on profitability and sustainability of operations first and foremost.

Thus, pay has to fit in with operational costs while still allowing either a break even or profit. What I was getting at was say you have an average base salary of 30k, the CEO is locked to that base with a multiplier, decided by not only the board (we'll get to that) but by shareholders as well. As it is right now, many CEO's are getting 150-300 times the pay of that average (not all) which is asinine in itself.

So, instead of increasing baseline pay, we notch down that multiple to something earthly and reasonable--say 25 to 50 times at most (depending on whether they are a founder or not--remember, founders have unlimited bonus potential as it is their kitty). 25 would be quite fair as I see it. So, we're not creating a huge fixed cost here, we're instead lightening it at the top to make it more proportional to what it was many years ago before "boards" became all the rage.

quote:
Okay there it is again. "Deserve". I keep seeing all these Liberal buzzwords being used, getting nervous here. Fairness, greed, deserve and "absurd" salaries.


Here's what I mean about this: Corporate boards. They've always served as a platform to keep the CEOs in check with wise members that know much about the business a company is involved in. They are an oversight, a check and balance that represent the shareholders. Well, they've served this purpose well for a long time. The problem with them though are they are full of other company CEOs and nothing else.

In essence, they are comprised of their peers who seek the same net result from their boards--higher compensation. It has become sort of a "club" where everyone awards everyone more money continually. Nobody wants to vote down pay as it might cause their pay to be voted down from their own board.

This has to change. This is why we are now seeing shareholders balk at compensation--instead of placing on boards other CEOs, place employees or other people not involved (remember, they still have to be qualified)--but, ultimately, _remove_ CEO pay from their hands if the structure isn't changed, and subject _all_ CEO pay to a shareholder vote. This will be in the best interest of everyone as long as someone like Icahn doesn't jump in and pull a coup (and he does this frequently).

Then, we get to golden parachutes. To mitigate risk, CEOs are given parachutes if they mess up. This, in my eyes, is a crime. It is corporate robbery and nothing more. Paying someone 200 million because they screwed up is ridiculous and nonsensical. All golden parachutes should be voted out--and yes, this should be up to the shareholders, not just philosophy class.

Do you think golden parachutes are right?

I don't. Not at all.

quote:
How about authors like Tom Clancy. Isn't it "absurd" that someone sitting on their ass making up stories can get that rich?


No, given it is their ideas, their hard work and people like them so much to buy all those books. Tom and other writers deserve everything they get. If they get greedy and start overcharging, I know what will happen... people will stop buying the books.

Same goes with pro athletes and actors--I think they make a ridiculous amount but whatever, I'm not yelling for our government to stop it. I vote with my wallet and watch few movies and never, ever go to a professional sports game (maybe baseball once every few years). I believe strongly in voting with our wallets. It's kind of hard to do when CEOs are concerned as you effect tens of thousands of employees at the same time, not just a couple hundred or less.


RE: You gotta like Hesse
By WalksTheWalk on 5/9/2012 2:01:03 PM , Rating: 2
Yes you have it right. In a capitalist system something/someone is only worth, dollar wise, what someone is willing to pay for it. The personal worth of something/someone is completely subjective and varies from person to person.

Having said that, when it comes to some CEOs (not all), there is still a boys club where they sit on the boards of each others companies and approve outrageous compensation above and beyond what any other company would pay, all things being equal. The stock market doesn't typically punish companies who do this as long as they are posting profits and generally doing an OK job (not even good, just OK).

It's the SEC that should be addressing this type of collusion-style board room.


RE: You gotta like Hesse
By The Raven on 5/10/2012 9:49:02 AM , Rating: 2
quote:
Thus, pay has to fit in with operational costs while still allowing either a break even or profit. What I was getting at was say you have an average base salary of 30k, the CEO is locked to that base with a multiplier, decided by not only the board (we'll get to that) but by shareholders as well. As it is right now, many CEO's are getting 150-300 times the pay of that average (not all) which is asinine in itself.
Oh ok I see. You are absolutely right. Give this man the Nobel prize in economics! Now take this idea and run with it. Start a company and rather than pay a CEO large amounts of cash, pay him X multiple of the base salary because we all know that execs only work 40 hrs/wk and make tiny decisions like the rest of the company. You will totally be able to low ball all your competitors and put them all out of business. You are a genius! It is such a simple idea, why didn't I or a million other people think of this?!? Let me know when you start it up because that is a board that I want to be on if you'd have me.


RE: You gotta like Hesse
By MrBlastman on 5/10/2012 10:25:44 AM , Rating: 2
I think you're sarcasm is unfounded here. You totally glossed over one of my previous posts in this thread...

quote:
I would hope you don't, as I don't belong in that category. I realize the CEO spot takes a special person to do the job. Most people aren't cut out for it and the 24/7 sacrifice they put into their position is insurmountable and unimagineable by most. I know CEO's and have been around them for my whole life. What I don't like is greed.


A 25x multiple, per hooked on Mathics(sp?) is 750k assuming employees earn an average of 30k. If say they earn 50k, it moves up to 1.25 million. Then, on top of that, the CEO's could earn a performance bonus (yet the employees would have to receive one as well).

I don't care if a CEO would or would not want to serve with that board. You've TOTALLY missed my point...

My point is to get rid of boards deciding compensation completely and put it up to shareholder vote. Boards are littered with other CEOs looking for a payday.

You make it sound like CEOs are the messiah when in reality, only 1 in 10,000 are _that_ good.


RE: You gotta like Hesse
By The Raven on 5/10/2012 3:11:28 PM , Rating: 2
quote:
My point is to get rid of boards deciding compensation completely and put it up to shareholder vote.
Really? Most shareholders don't know much about their portfolios let alone how to determine what their execs should make to make an informed decision on such a thing. And who is to say that if the shareholders did form a direct democracy that the result would be any different? But anyway if you were ok with that I don't see why shareholders wouldn't be able to determine the salary of all of the employees. I know a lot of people at the DMV who should be paid less.

And besides, if CEO pay was such a concern shareholders have a meetings where they elect the board members. So basically that is your idea except it is a representative form of it. I'm surprised that you didn't know this already about the typical corporate structure.

And that brings me to the point that you seem to miss and that is that if what you propose is such a great system, why doesn't anyone use it? You sound like you assume that the shareholders and board members are all a bunch of greedy dolts who just want to take the money and run. They have a very sizable interest in seeing the company succeed. Does corruption exist? Yes. Do you have to take efforts to curb corruption? Yes, you do at all levels of life. And that is the kicker. Like in your example where the board members are just looking for a raise at their company. Ok let's shift that power to the shareholders and they all vote themselves a raise. What the hell?

If you don't like this system. Don't use a cell phone or buy soap or hamburgers in America or most of the world. Go into the hills and live off the fat of the land.

Anyway, sorry if I missed some of your previous posts. Though I thought I read most of them. But really what you are saying is so crazy to me that I really have given little thought to it ever since I realized that Santa Claus isn't real.


RE: You gotta like Hesse
By The Raven on 5/10/2012 3:22:34 PM , Rating: 2
quote:
You make it sound like CEOs are the messiah when in reality, only 1 in 10,000 are _that_ good.
Conversely it seems you think they are the devil when only 1 in 10,000 are that bad.

Look, I'm not sure where you got that impression. I just implied that they do more than a peon who you would like to tie CEO compensation to.

Anyway, even if you did this, how do you keep other forms of compensation in check? Does the CEO have to surrender his tax return to the company?

Playa gonn' play.


"If a man really wants to make a million dollars, the best way would be to start his own religion." -- Scientology founder L. Ron. Hubbard

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