Sprint CEO's '08 compensation valued at $15.5 million

Pay includes $1.2 million base salary, $2.7 million performance bonus

By Brad Reese, Network World
March 30, 2009 05:15 PM ET

Although his company lost more than 4 million wireless subscribers in 2008, Sprint CEO Dan Hesse received an executive compensation package that the company valued at $15.5 million.

View slideshow: CEO payday: How much tech chiefs made in '08

Hesse's compensation includes a base salary of $1.2 million and a performance bonus of $2.7 million, as well as $287,000 in 401(k) and reimbursement expenses. The rest of his compensation package last year came in the form of stock awards and option grants, which the company valued at $11.3 million at the time they were issued.

However, the company points out that Hesse's compensation is worth significantly less today than when it was issued because Sprint's stock price had collapsed to $1.83 per share by the end of 2008 after trading for around $13 per share one year earlier. Because of this steep loss in stock value, the company says that Hesse's stock-based compensation for 2008 was worth $3.3 million at the end of the year, making his total compensation package for the year worth $7.4 million.

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A Sprint spokesman told the Kansas City Star that the company's board of directors thinks that stock-based compensation is the "most effective" way to measure executive performance. Referring to Hesse's total compensation package, the spokesman said that because Sprint's stock "did not perform as well as we had hoped… Hesse's compensation dropped by 52% at the end of the year."

2008 was a difficult year for Sprint, as the carrier posted an annual loss of $2.8 billion, and 2009 didn't start off much better, as the company wound up laying off 8,000 workers in January. On the plus side, the company's churn rate -- or the rate at which its customers cancel their service -- dropped to 2.15% in 2008, down from 2.23% in 2007. Even more encouraging is that the 2.16% churn rate that the company posted in the fourth quarter was down significantly from the 2.29% churn rate that the company reported in the fourth quarter of 2007.

Hesse has served as Sprint's CEO since December 2007, when he was hired to replace embattled former CEO Gary Forsee, who had stepped down under investor pressure two months earlier. Hesse, 55, previously had served as CEO of Sprint's local telecom division before the company spun it off and formed Embarq in 2006. Before that, he spent 23 years at AT&T and was the president and CEO of AT&T Wireless Services from 1997 to 2000.

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