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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 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.


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