Sprint Nextel (NYSE:S) has dropped a component of its short-term executive bonus plan that was directly linked to signing up mobile WiMAX subscribers for Clearwire's (NASDAQ:CLWR) network, a reversal from last year when that factor made up 10 percent of compensation.
Instead, executive bonus compensation will be based on a diverse array of factors and more traditional metrics, including operating income, churn and service revenues. In a filing with the Securities and Exchange Commission, Sprint also said that short-term bonuses will be weighed against postpaid and prepaid subscriber additions. Sprint spokeswoman Cristi Allen told Bloomberg that Sprint's board will weigh Clearwire customer additions as part of postpaid additions.
The change in executive incentives is notable in light of several factors, and comes as Clearwire and Sprint are in the final stages of resolving a dispute over wholesale revenue distribution. In the meantime, Clearwire's network buildout is on hold as it searches for additional funding options.
Sprint, which holds a 54 percent stake in Clearwire, has said that over the next four to six months it will study the rate at which its customers migrate from EV-DO to mobile WiMAX and evaluate the best way to use its existing spectrum before it decides whether or not to deploy LTE. Sprint will deploy new multi-mode base stations starting this year. The base stations will give it the technological flexibility to deploy LTE should it decide to do so.
The focus on adding WiMAX subscribers paid off last year; BTIG analyst Walter Piecyk estimated that Sprint's 3G/4G devices, such as the HTC Evo and Samsung Epic, made up 40 percent of its smartphone sales in the second half of last year, according to Dow Jones Newswires. Sprint has heavily advertised the Evo with a national advertising campaign.
- see this Dow Jones Newswires article (sub. req.)
- see this Bloomberg article
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