Sprint CEO Hesse gets $14.2M in 2008 compensation
KANSAS CITY, Mo. (AP) – Sprint Nextel Corp. Chief Executive Dan Hesse received compensation valued at $14.2 million in 2008 as the telecommunications company continued to lose ground in the wireless industry, according to an Associated Press analysis of a regulatory filing Monday.
However, much of Hesse's compensation was in stock and options, which have plummeted in value since he received them.
Hesse, 55, received a base salary of $1.2 million and a performance-based bonus of $2.7 million last year, according to a proxy statement filed with the Securities and Exchange Commission.
He also received stock and options valued by the company at $10.1 million when they were awarded. However, the stock awards, originally valued at $7.8 million, have lost 36 percent of their worth since they were granted. Furthermore, shares are currently trading below the exercise price of the options, rendering the options effectively worthless.
Hesse also received perks of $287,228, which included a $173,801 contribution to his 401(k), $91,462 for security and $21,965 for other expenses, including personal use of corporate aircraft. The company said it requires Hesse to use corporate aircraft for all travel for security reasons.
Hesse joined the company in December 2007 from Sprint spin-off Embarq Corp. In 2007, he received compensation valued at $28.3 million, all but $2.7 million of which was stock and options he received that were meant to make up for losses he faced by leaving Embarq.
The Associated Press executive compensation formula is designed to isolate the value that the company's board placed on the executive's total compensation package during the last fiscal year. It includes salary, bonus, performance-related bonuses, perks, above-market returns on deferred compensation, and the estimated value of stock options and awards granted during the year. The calculations don't include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the SEC, which reflect the size of the accounting charge taken for the executive's compensation in the previous fiscal year.
In 2008, Overland Park, Kan.-based Sprint Nextel reported a loss of $2.8 billion, or 98 cents per share, compared with a loss of $29.4 billion, or $10.27 per share, during 2007. Revenue fell 11.2 percent to $35.6 billion.
The company has struggled since acquiring Nextel Communications Inc. in 2005, as technical and operational problems and unsuccessful marketing has driven customers away and made it hard for Sprint to compete with AT&T Inc. and Verizon Wireless.
For the year, Sprint lost 4.6 million subscribers but remains the nation's third-largest wireless carrier.
During the year, Hesse and Sprint focused on improving the company's customer service reputation and made great strides in that arena, according to third-party reviewers such as J.D. Power and Associates.
That success, as well as improved operational profits and cash flow, led to the $2.7 million performance bonus, the company said in the proxy. For 2009, the company said Hesse's performance bonus will be based more on adding customers and operational profits.
According to the proxy, Sprint will hold its annual shareholders meeting in Overland Park on May 12.