Sprint CEO to take 2012 pay cut on account of iPhone subsidies

Tue, May 8, 2012


Well this is sort of an odd story.

So remember how Sprint, in an effort to save the company, bet the farm on the iPhone by agreeing to purchase $15 worth of iPhones over the course of a few years? That is to say, Sprint committed to purchasing x amount of iPhones regardless of whether or not they were selling. It was a bold move, but ultimately one that the company arguably had to make, especially as consumers were leaving in greater numbers for the likes of Verizon and AT&T.

And so far, it appears that Sprint’s gamble is paying off. You might remember that when the iPhone 4S launched last October, the device became Sprint’s hottest selling device in history – in just 12 hours. What’s more, the company last quarter reported sales of 1.5 million iPhones – not too shabby for the March quarter. Even more reassuring that of those sales, 44% were sold to new customers.

Still, the Sprint’s iPhone gambit is a long term play and Sprint put up a lot of money upfront to carry the iPhone, prompting some Sprint shareholders to voice displeasure in the wake of disappointing earnings. After all, while those new iPhone customers are great, it’s going to take Sprint a few months to recoup the price of their subsidies.

That said, and here’s where things get odd, Sprint CEO Dan Hesse recently said that his 2012 salary will take a $3.25 million hit.

These voluntary actions regarding my personal compensation, which total $3,250,830, will eliminate any benefit for me to the discretionary adjustment the compensation committee made earlier this year.

I suppose shareholders aren’t happy that the price Sprint pays for the iPhone is about $200 higher than what it does for other Android handsets. Seems like spurious reasoning to me since the iPhone commands higher pricing because even Hesse has said that iPhone’s are more data efficient than Android smartphones and that iPhone customers tend to be more loyal than Android users.

via Reuters



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