Sprint extends Claure's contract until 2019, will give him 10M shares if he gets stock to $8

Sprint (NYSE: S) extended CEO Marcelo Claure's contract until May 31, 2019, and said he will get 10 million shares of company stock if his turnaround efforts can push Sprint's stock to at least $8 per share.


As the Kansas City Star notes, Sprint's shares have not been at $8 since July 2014, before SoftBank CEO and Sprint Chairman Masayoshi Son abandoned plans last summer to merge with T-Mobile US (NYSE:TMUS) and bring in Claure to replace former CEO Dan Hesse. Sprint's shares are currently trading at around $3.61.

Claure's contract had been due to run out on Aug. 18. Sprint said in a filing that the revised contract will give Claure the special stock award "that can be earned only upon a sustained and significant increase in the price of Sprint stock." In exchange for the 10 million shares in restricted stock units, as outlined in the "Turnaround Incentive Award Grant," Claure will receive no increase in base salary or short-term incentive bonus opportunity and will also receive no awards under the long-term incentive plans for 2016, 2017 and 2018.

The 10 million shares will only be earned "upon the achievement of specified volume-weighted average prices" of Sprint's common stock during regular trading on the New York Stock Exchange over any 150-calendar day period during a four-year period from June 1, 2015, through May 31, 2019. In order to earn 100 percent of the 10 million shares, the volume-weighted average price must be at least $8 during that period. If the volume-weighted average stock price during the period goes above $8, Claure could earn more stock, but no more than 120 percent of the original award.

All of that gives Claure an incentive to make Sprint's turnaround stick. Last week the carrier said that for the first time in nearly two years it added postpaid phone customers in May and June and recorded its best-ever Sprint platform postpaid churn. Claure has said he is confident that Sprint can cut costs and improve its network and subscriber trends.

At the same time, Sprint burned through $2.2 billion in cash last quarter and continued to post financial losses. Sprint's total revenue also fell 8.7 percent during the quarter to $8.03 billion.

Sprint is undertaking a massive densification of its network and plans to add thousands of macro cell sites and tens of thousands of small cells to densify its network. It also plans to make sure "nearly all" of its existing macro cell sites will be upgraded to support 800 MHz, 1900 MHz and 2.5 GHz for LTE. 

Under Claure, Sprint has also expanded its distribution through a partnership with RadioShack and the launch of its "Direct 2 You" service in which drivers meet customers at home, work or around a city to help them set up their phones.

Sprint also recently launched a new family plan promotion that offers unlimited voice, texting and 10 GB of shared data for $100 per month. The carrier also said that families can choose Sprint's 40 GB shared data plan for just $20 more per month, or $120 in total.

For a limited time, Sprint will pay off customers' leftover balance of monthly device payments and wireless contract if they switch. Sprint also said these new 10 GB and 40 GB options on the plan have no per-line data access charges on the first four lines when a customer switches.

For more:
- see these two separate SEC filings
- see this Kansas City Star article

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