In 2013 Sprint (NYSE: S) CEO Dan Hesse had probably his busiest year at the helm of the carrier since he came on board in late 2007, and the company handsomely rewarded him for his efforts. Hesse scored a total compensation package of $49 million in 2013, according to a filing with the Securities and Exchange Commission. That figure is far above Hesse's 2012 compensation and made him easily the highest-paid executive in the wireless industry last year.
(Here is the complete list of the top 10 highest paid executives in wireless in 2013.)
Hesse had a total compensation package of $11 million in 2012, according to Sprint's proxy filings with the SEC. However, in 2013 Hesse saw substantial increases over 2012 in his stock awards, options awards and compensation from Sprint's non-equity incentive plan.
The carrier notes in its SEC filing that 2013 was "one of the most eventful years in Sprint's history." Last year SoftBank completed its $21.6 billion purchase of 80 percent of Sprint, Sprint bought partner Clearwire, shut down its Nextel iDEN network and started deploying its tri-band LTE Sprint Spark service.
Sprint also said it "recognized the benefits of leadership continuity in light of the transformative SoftBank" deal, as well as "the ongoing execution of our network modernization plans." As a result, in September 2013, the company signed a new employment contract with Hesse, which provides for an employment term through July 31, 2018, subject to earlier termination as provided in the agreement. The company also noted that in 2013, Hesse was granted a one-time award of 1,733,102 restricted stock units and 1,733,102 stock options.
Sprint said the awards "were intended to enhance our ability to retain Mr. Hesse's leadership for a minimum period of at least five years during which the Company plans to undergo a transformative change."
Hesse's total compensation package was significantly higher than his peers' total compensation. AT&T (NYSE: T) CEO Randall Stephenson made $23.24 million in 2013, up from $22.23 million in 2012. Verizon (NYSE: VZ) Communications CEO Lowell McAdam made $15.82 million in 2013, up from $14.05 million in 2012. T-Mobile US (NYSE:TMUS) has not yet filed its proxy statements detailing executive compensation for 2013.
Overall, executive compensation is going up. As the New York Times recently noted in its annual compilation of compensation for executives at the 100 largest publicly traded American companies, the median compensation of a CEO in 2013 was $13.9 million, up 9 percent from 2012. The 100 CEOs in the survey took home a combined $1.5 billion last year, a slight bump from 2012.
Hesse wasn't the only Sprint executive to see a pay increase in 2013. Sprint CFO Joe Euteneuer made $9.09 million in 2013, up from $4.18 million in 2012. Euteneuer also saw large increases in his stock awards and compensation from Sprint's non-equity incentive plan. And Steve Elfman, Sprint's former president of network operations who recently announced plans to leave the company later this year, made $8.41 million in 2013, up from $4.23 million in 2012. He also received large increases in pay from stock awards and compensation from Sprint's non-equity incentive plan.
2014 promises to be another busy year for Sprint. The company is finishing up its Network Vision network modernization effort, which involves the wholesale upgrade of Sprint's CDMA network and the deployment of LTE. And Sprint hopes to start more broadly deploying its high-speed Spark service, which combines LTE transmissions across its 800 MHz, 1900 MHz and 2.5 GHz bands.
However, Sprint has said it expects churn to remain elevated through the middle of the year due to the effects of its network modernization--Sprint said its churn should gradually improve in the second half of the year as its network improves.
- see this SEC filing
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SoftBank's Son vows broadband speeds of 200 Mbps, more competition in U.S. market
Sprint beats analyst expectations with 477,000 new subscribers in Q4
SoftBank extends Sprint CEO Hesse's contract through 2018
Correction, April 17, 2014: This article incorectly stated that Steve Elfman had left Sprint. He has announced plans to leave Sprint later this year.