Dan Hesse

Two 'Dan Hesse' stories March 2012 - May 2012

After backlash, Sprint CEO to return $3.25M in salary tied to iPhone

Sprint’s CEO Daniel Hesse will take a small pay cut during 2012 after receiving a bit of flack from shareholders for investing so much in adding Apple’s iPhone to the network. Reuters reported Hesse will lose $3.25 million from his salary. Hesse said in a statement to Sprint HR: “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.”

Why are shareholders so upset? Sprint, the nation’s third-largest carrier, invested $15 billion to add the iPhone to its network. However, shareholders think that was a bit much, because the network has to pay a $200 higher subsidy per-device than its other phones. I guess this is a bit of an apology from Hesse.

Sales of the iPhone on the network are pretty solid, though. The company reported a sale of 1.5 million iPhones during Q1, compared to 1.8 million during Q4 2011. A very cool 44 percent (or 660,000) of the new iPhones sold during Q1 were new customers.

I think we can all agree this sounds much better than the news regarding the AT&T’s CEO from earlier today…
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Sprint CEO: iPhone users are more loyal, use less data

Reports from the Wall Street Journal last October revealed Sprint’s Chief Executive Officer Dan Hesse convinced the company’s board to take on a staggering commitment of approximately $20 billion to purchase 30.5 million iPhones over four years. At the time, Hesse said Sprint “would likely lose money on the deal until 2014. ″ He also claimed not having the iPhone was “the No. 1 reason customers leave or switch.” In an interview with Mobile World Live (via BGR), Hesse defended the decision and claimed, among other things, that iPhone users are “more profitable than the average smartphone customer.”

“ Subsidies are heavy for the iPhone. This is the reason why a high percentage of new customers is important… But iPhone customers have a lower level of churn and they actually use less data on average than a high-end 4G Android device. So from a cost point of view and a customer lifetime value perspective. They’re more profitable than the average smartphone customer.”

Hesse went on to claim that Sprint was “pulling a lot of customers” from AT&T and Verizon during the fourth quarter by noting four out of every 10 iPhones the carrier sold were new customers. According to Hesse, that is around double the rate of the other carriers.

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