Sprint Nextel Corp chief executive officer Dan Hesse agreed to return US$3.25 million of his compensation, which had been increased last year by excluding the costs of adding Apple Inc’s iPhone to the carrier’s network.
The Overland Park, Kansas-based carrier, which sells the iPhone at a loss, originally excluded the device’s cost from last year’s bonus calculations for eligible employees. After “feedback from some shareholders,” Hesse said he would reduce his salary this year to repay the costs associated with the adjustment, according to a filing on Friday.
“I do not want, nor does our Compensation Committee want, to penalize Sprint employees for the company’s investment with Apple,” Hesse said in a letter to Sandra Price, senior vice president of human resources at Sprint, that was part of Friday’s filing.
Hesse’s decision to repay the funds comes amid uncertainty over whether the iPhone will help orchestrate a turnaround at Sprint so it can compete better with rivals AT&T Inc and Verizon Wireless. The company, the third-biggest wireless carrier in the US, reported a wider loss in the first quarter amid contract user defections and has posted annual losses for the past five years.
“Dan enjoys the full support of our board of directors and we appreciate the leadership he has demonstrated as he continues to guide the company through a turnaround in a difficult competitive environment,” Sprint chairman James Hance said in the statement.
For last year, Hesse had received US$11.9 million, a 31 percent increase from a year earlier. He also got stock awards worth US$3.2 million and non-equity incentive plan compensation of US$4.8 million. Shares of Sprint declined 45 percent last year as it posted a loss of US$2.89 billion.
Sprint started carrying the iPhone last year and in the first quarter sold 1.5 million of the devices, helped by its US$99.99-a-month unlimited calling and data plan that Verizon Wireless and AT&T don’t offer. The iPhone also helped boost contract customers’ average monthly bills by 6.6 percent to US$59.88, from a year earlier, as users spent more on data plans.
In the first quarter, sales rose 5.1 percent to US$8.73 billion, ahead of analysts’ estimates as the company’s loss widened to US$0.29 a share from US$0.15 a year earlier.