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: You gotta like Hesse
5/9/2012 1:54:39 PM
While your math may be correct (I didn't double check-it), I am sure that every one of those 72.25 families would disagree that what he did was a pittance, or peanuts.
Before you write-off the gesture, noble or otherwise, that is real money, and likely more than most folks would see in their entire lifetime. Yes, his compensation is pretty good, but unlike his cohorts at AT&T or Verizon, he (at least on the surface) seems to care about the employees that work for him. It may only be a drop in the bucket, and a small percentage of his 5 year comp, but a VOLUNTARY 5.6% pay-cut is significant, no matter what your tax bracket may be.
Why can't you just say that you are not impressed with the gesture and leave it at that? Many, myself included, feel that it is just a glimpse at the man behind title. Many CEOs in similar situations would not even consider the same course of action, instead choosing to point the finger, spin the debate or deflect the criticisms. Instead, he chose to face it head-on, atone in a meaningful way and say in the most basic way possible "it didn't work out the way we thought it would." Can't be more accountable than that.
At the end of the day, he has proven himself to be more accountable and more credible because of the way he handled this whole situation. No excuses, just an "I screwed up and I'll take a pay cut because of it" gesture. Too bad all CEOs can't behave the same way.
"It seems as though my state-funded math degree has failed me. Let the lashings commence." -- DailyTech Editor-in-Chief Kristopher Kubicki
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