Sprint CEO Hesse Cuts His Pay by $3.25M
NEW YORK (AP) - Sprint Nextel CEO Dan Hesse on Friday said he's cutting his 2012 pay by $3.25 million after shareholder complaints about how his 2011 pay was calculated.
Sprint's board bases the CEO's pay on the company's performance, but departed from its guidelines last year to exclude the cost of selling the iPhone. That boosted Hesse's pay.
"I do not want, nor does our Compensation Committee want, to penalize Sprint employees for the company's investment with Apple, so I will forego this adjustment to my compensation," Hesse said in a letter to the company.
The iPhone is expensive for phone companies, since Apple charges them hundreds of dollars more than the phones sell for in stores. The phone companies figure they'll make their money back in service fees over the run of a two-year contract. Sprint started selling the phone in October, incurring big upfront costs.
"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's board chairman, James Hance, in a statement.
Hesse's 2011 pay was $11.9 million, including stock and option awards. Hesse said he's reducing his salary by $346,223 this year to repay part of the iPhone bonus granted last year, and giving up $544,607 in future payments related to last year's performance. He's also cutting his bonus for this year, to set his bonus targets at 2010's level.
Hesse is also giving back $2 million in "performance units" that he was granted in February.
Sprint's annual shareholder meeting is May 15. The AFL-CIO has introduced a proposal for the meeting that would stop the company from awarding bonuses based on one year or less of the company's performance, and stretch the evaluation period to three years.