Sprint CEO Cuts His Pay by $3.25 Million After Shareholder Criticism Over iPhone Deal

Posted by Nikhil on May 06, 2012 | Comments (11)

Sprint iPhone

Sprint Nextel CEO Daniel Hesse had gone all-in to start offering Apple’s iPhone last year. But Hesse’s decision doesn’t seem to have gone down too well with shareholders as they are not happy that the results were hit due to the heavy subsidy that Sprint has to pay Apple for the iPhone.

In response to the shareholder disappointment, Hesse has announced that he will cut his personal compensation by $3.25 million this year.

Reuters reports:

Hesse said his 2012 salary would be cut to repay about $346,000 in incentive pay that he has already received and forfeit additional amounts that he was eligible to receive under his 2011 and 2012 incentive plans.

“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,” Hesse said in a letter to the company’s human resources department.

Hesse actions would set his 2012 compensation back to 2010 levels.

Sprint reported net operating revenue of $8.7 billion, a net loss of $863 million and a diluted net loss of $.29 per share for the first quarter of 2012. Sprint announced that they’ve activated 1.5 million iPhones in the last quarter, of which 44% were new customers.

Sprint, the United State’s third largest carrier behind Verizon Wireless and AT&T, pays Apple 40% higher or $200 per device more subsidy compared to other phones. That hasn’t gone too well for them – even though the iPhone has attracted new customers in the last quarter.

Sprint’s shareholders disappointment for betting on the iPhone is quite surprising as Sprint really didn’t have a choice as they would end up losing customers to AT&T and Verizon if they didn’t offer Apple’s iPhone.

To highlight this point, you need to take a look at AT&T’s and Verizon’s numbers to figure out how important Apple’s iPhone is to these carriers despite the higher subsidy. AT&T activated 4.3 million iPhones, or 78% of all AT&T smartphones for the quarter and Verizon activated 3.2 million iPhones, or 51% of all Verizon smartphones for the quarter.

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Categories : iPhone News, Sprint iPhone


  • Meme

    I think it’s messed up how the greedy pigs AT&T and Verizon win while sPrint(although greedy but much more easier on their customers accounts) loose. My bill is 120 a month which I believe is a lot. But I have unlimited everything. When I was with AT&T and verizon it was never under 150/160 and not even unlimited internet(using the dictionaries definition of unlimited)

    • Antonia

      I think they are all greedy, even tmobile, BUT i still agree with your point. taking the greedy part away, they are all lying SOB, unlimited (but capped), 4G (but hspa+) , and so on

  • Antonia

    I think it will pay off eventually, things to consider:
    1- sprint did a poor piss job , and still does of promoting iPhone on their network. i bet a lot of people still don’t know iPhones run on sprint. SO they just banked on the fact people would come miraculously.. HENCE the 44% were new activation, the 66% was people that walked in store.

    2- advertsiment is the name of the game. period. LOOK at Verizon, 2 months before getting the iPhone they were running ADS bashing the iPhone… they turned the table and now promote it… so sprint can do it….

  • Hmmm?

    This why Carriers can sell Android phones for less (BOGO), because they cost less. I’m glad we have this competition. I can’t imagine what the prices would be for phones and plans if Apple were the only ones in the market. They are a too much of control freaks but it does have it advantages. Also, Verizon sells the 4 and 4s and AT&T carries up to the 3Gs so it’s obivious that they would sell more. Curious how T Mobile’s financials are?

  • Grime

    The best options if you live in the US is to buy a new full priced iphone from Apple or used At&t compatible one on Craigslist/Ebay etc. Then purchase a sim card from straighttalksim.com for $15, activate it for $45 bucks a month for unlimited everything (Of course like most carriers, data’s throttled, but Straightalk throttles at 2GB), and never look back. Straighttalk use AT&T’s network so you can pay AT&t $120 a month for a similar plan or $45 a month for Straighttalks plan. That’s $75 extra a month and $1800 extra over the course of two years. Apples Flag ship 64GB cost a whooping $850, but its a hell of a lot less than $1800 so the choice is yours. Jump ship or stop complaining. No one is forcing you to go with the big 4.
    Oh, and by the way, for the people complaining about carriers greed. Apples just as guilty as the carriers. They’re all about the bottom line. Apples charges a hell of lot more for the iphone compared to cost of making it, and that’s including material and research and development. So if you want to point the finger go right ahead, just don’t forget to leave anyone out. With that said Apple makes a great phone that high in demand so I guess we can either take it leave it. As far as carriers go you should weigh all your options.

    • Aaron

      Dude you’re just hating cuz you can’t afford an iPhone on a 2 year contract. If you think about it apple prices their product way below of what they should be charging for a new developed device. Like you said materials research and development it’s not cheap so apple is actually pricing their product at a value price. Before apple other companies if they came out with a new hot phone or electronic device they would price that product at double or triple the total cost of the product’s total price including manufacturing etc etc.

      • Grime

        You got me, yes I’m hating. lol Lol Hating the fact that corporations consistently rape the consumer (That includes you even if your not intelligent enough to see it). Your argument is weak. The 4s 64GB version sells for $850, why? Apple buys parts from Samsung and other manufactures, and other manufactures don’t charge any where near as much, why. Apple desktop and labtops use the same components as windows. There isn’t much difference in hard drives, motherboards, CPU’s. Speaking of CPU’s their nearly identical to windows pcs, but greedy Apple charges much more, again why? And please don’t tell me Research and Developement cost that much. I could give a few more examples, but its just to obvious. Insulting me by saying I can’t afford an iphone, thats just petty and imature please stick to the argument if you really want people to take you serious.

        • jussayin

          funny you should mention laptops etc as strange how the competition is failing to match the price of the MAC book airs!!!! and calling on intel to lower the prices so they can compete with apple. to say a product is over priced then we have to consider all things, and materials to build such a product, face facts every one you don’t get a rolls royce for skoda money…….

          • Grime

            Face what facts? You will never see a new Apple laptop for $350. You can find PC laptops in the there digit price range. You will be hard pressed to find any thing close to that price from Apple with the exception of the entry level model for $999.00. lol I’m here to set the record straight for the uninformed, not the blind. If you want to continue to give your money away to Apple for overpriced merchandise that’s your prerogative. I’m sure they’ll gladly take it. lol As far as the iphone its overpriced, but I still love it, its a great device. Its a totally different story with the PC. Apple has no advantage in that area that makes it worth my consideration. Without getting into technical details they run the same Applications or at least type, both run on Intel processors and pretty much do the same thing. The difference is Apples cost a whole lot more. That’s my 2 cents, I have my preference and you have yours but deep down inside you and I both know Apple screws their customers. I’d much rather give my money to Bill Gates, at least I know he’ll donate a sizable amount to a worth cause. Good day. Steve Junior is that you. lol

      • Troy

        Your calling this guy out because he is smart with his money? It takes more up front money to buy a phone unsubsidised than buy on contract, so who is really the one who “can’t afford” the phone? With that said I’m glad your so wealthy you can just afford to give money away especially to companies who really need it like AT&T!

        • mike

          ^^^ I agree the dude is a asshole bashing him for savings money . My 4s is using the att go phone plan which is $75 monthly so I may look into str8 talk.