HTC Executives Get a Big Pay Cut
June 21, 2013 12:45 PM
comment(s) - last by
Failures cost executives half their salaries, bonuses, and retirement pay
2012 was a horrific year for Taiwanese phonemaker HTC Corp. (
). 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. (
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,
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.
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
HTC First "Facebook Phone"
, the company has
seen strong sales
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
) $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. (
), who is offering 1 million copies of the new Jay-Z album to Galaxy S IV buyers.
The Wall Street Journal
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RE: Learn to be like the west
6/23/2013 10:07:00 PM
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
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
6/24/2013 9:03:13 AM
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.
"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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