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Tuesday, May 08, 2012, 05:16 am PT (08:16 am ET)

Sprint CEO returns $3.25M in pay after shareholders deride Apple deal

In an effort to placate shareholders upset over Sprint's iPhone deal with Apple, the company's chief executive has returned more than $3.25 million in compensation.

The move by Sprint CEO Dan Hesse was revealed this week in a filing with the U.S. Securities and Exchange Commission, and highlighted by the Kansas City Business Journal. Shareholders had expressed unhappiness that Sprint had excluded the financial effect of carrying Apple's iPhone when calculating employee bonuses.

"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 announcing his decision. "I'm hopeful these actions will allow the company to remain focused on delivering the best overall customer experience in the wireless industry, which is what will serve the company best in the long run."

Last year, it was said that Sprint had agreed to purchase 30.5 million iPhones from Apple for nearly $20 billion over the next four years. The deal was characterized by The Wall Street Journal as a play that "bet the company" on the iPhone.

Hesse reportedly told his company's board of directors in August that Sprint will likely lose money on the deal with Apple until 2014, but he is expecting that the addition of the iPhone to Sprint's lineup will help turn the carrier's struggles around.

Dan Hesse

Sprint CEO Dan Hesse, via Wikipedia.


Sprint announced last month that it sold 1.5 million iPhones in the first quarter of calendar 2012, with 44 percent of those sales going to new customers. For the iPhone 4S launch window, Sprint sold 1.8 million iPhones, and 40 percent of those went to subscribers who were new to the company.

Hesse defended his company's deal with Apple in March, saying that users of the iPhone are "more profitable" on a whole when compared with users of other devices, like those running Google's Android platform. Besides having a low churn rate, iPhone users also use less data on average than other smartphone users, Hesse said.

"So from a cost point of view and a customer lifetime value perspective, [iPhone users] are more profitable than the average smartphone customer," Hesse said.