Sprint CEO Returns $3.25 Million in Bonuses to Appease Investors

By Beecher Tuttle May 08, 2012

Facing a firestorm of complaints from angry shareholders, Sprint CEO, Dan Hesse has agreed to return more than $3.25 million in incentive-laden compensation, according to the Kansas City Business Journal.

The move is a direct response to – you guessed it – Sprint's long-term gamble on the iPhone, a decision that Hesse recently admitted he still gets "crucified" for making. Last year, Sprint reportedly agreed to buy more than 30 million iPhones for an astounding $20 billion. Hesse acknowledged at the time that the company likely won't profit from the deal until 2014.

Shareholders were irate with Hesse and the Sprint board because the company excluded the short-term financial impact of the iPhone deal when calculating year-end bonuses. Essentially, Sprint ignored the fact that its deal with Apple contributed to widening losses in the first quarter of 2012, resulting in yet another share price hit.

To appease the masses, Hesse on Friday agreed to reduce salary owed to him under a number of short-term and long-term incentive programs to reset his bonus targets to mirror 2010 numbers. In total, Hesse will be returning $3,250,830.

"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 wrote in a letter. "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."

The gesture aside, Hesse has never backed down from his decision to join rival AT&T and Verizon in selling the iconic, yet highly-subsidized iPhone. Speaking at the Fortune conference last month, Hesse commented on the Wall Street's obsession with expense savings, while environmental benefits – like Sprint's investment in the iPhone – "go right over their heads," according to Bloomberg.

"There is a disconnect with Wall Street because if you’re building a brand, it does take a long time," Hesse said of the pushback on the iPhone. "It’s hard to quantify."

Sprint sold 1.8 million iPhones in Q4 of 2012, compared to a combined total of nearly 12 million units sold by Verizon and AT&T.




Edited by Brooke Neuman

TechZone360 Contributor

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