Why is Dan Hesse Still CEO of Sprint (S)?
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So when is Dan Hesse going to get fired? Probably soon, though it might cost Sprint (NYSE: S) an arm and a leg to close on.
Based on recent news connected with the proposed AT&T (NYSE: T) acquisition of T-Mobile for $39 billion, comments out of Dan Hesse suggest that he may, in fact, not know what he's doing.
Recently, Hesse spoke at the CTIA Wireless 2011 conference, in which he said that the deal between AT&T and T-Mobile would "stifle innovation."
Hesse also spoke with Jim Cramer yesterday, in which he noted he was "shocked" to learn of the AT&T and T-Mobile deal. Hesse notes that the deal "wasn't even on our radar." Comically, Hesse continued that AT&T and Verizon controlled 52% of the wireless market, which jumped to 67% today, and could be 79% upon approval of the deal.
Hesse also noted that the combination would provide AT&T and Verizon with more favorable deals, given the size and reach of the company.
Continuing, Hesse said that a silver lining to the deal is that Sprint, with "considerably" more spectrum and better assets, "should" be a worth a whole lot more this week than it was last week.
As an investor, is this the kind of banter that you want to hear from your CEO? Hesse clearly admitted that he's not doing his job when he touted that improved market share for AT&T and Verizon. And being a CEO of a large corporation, why wouldn't a deal between two giants be on the radar? It happens all the time in other markets: Kraft and Cadbury, Glaxo Wellcome and SmithKline Beecham., Inbev and Anheuser-Busch.
What's more, Hesse became CEO of Sprint in late-2007, and shares are still down 65% or so since he started. Comparably, Verizon, skating its way through the same environment, have seen their shares gain 13% since the end of 2007, and even AT&T is down just 18% over the same time frame. Verizon and AT&T also both pay big fat dividends. Sprint pays nothing out.
What's more, Verizon's CEO Dan Mead said that he "wasn't concerned" with the AT&T and T-Mobile deal, sending a message that he actually knows what he's doing and should expect the unexpected. Though Mead hasn't been on the job as long, his predecessor, Lowell McAdam, is still working with Verizon and probably providing some decent advice to keep Verizon churning.
So, the sticky point is whether the termination of Hesse's contract would be "for cause" by Sprint, citing lower market value and underperformance. If so, Sprint is clear-and-free in the deal. However, should Hesse be terminated without cause, then Sprint would be liable for the typical perks that a CEO receives upon termination: full base pay through the date of termination, a pro-rata bonus, health care coverage, and so on. Those payments and bonuses could tack on millions to Hesse's already large tab.
Investors in Sprint hope that the next thing that Hesse is "shocked" to here about is his own dismissal.
Based on recent news connected with the proposed AT&T (NYSE: T) acquisition of T-Mobile for $39 billion, comments out of Dan Hesse suggest that he may, in fact, not know what he's doing.
Recently, Hesse spoke at the CTIA Wireless 2011 conference, in which he said that the deal between AT&T and T-Mobile would "stifle innovation."
Hesse also spoke with Jim Cramer yesterday, in which he noted he was "shocked" to learn of the AT&T and T-Mobile deal. Hesse notes that the deal "wasn't even on our radar." Comically, Hesse continued that AT&T and Verizon controlled 52% of the wireless market, which jumped to 67% today, and could be 79% upon approval of the deal.
Hesse also noted that the combination would provide AT&T and Verizon with more favorable deals, given the size and reach of the company.
Continuing, Hesse said that a silver lining to the deal is that Sprint, with "considerably" more spectrum and better assets, "should" be a worth a whole lot more this week than it was last week.
As an investor, is this the kind of banter that you want to hear from your CEO? Hesse clearly admitted that he's not doing his job when he touted that improved market share for AT&T and Verizon. And being a CEO of a large corporation, why wouldn't a deal between two giants be on the radar? It happens all the time in other markets: Kraft and Cadbury, Glaxo Wellcome and SmithKline Beecham., Inbev and Anheuser-Busch.
What's more, Hesse became CEO of Sprint in late-2007, and shares are still down 65% or so since he started. Comparably, Verizon, skating its way through the same environment, have seen their shares gain 13% since the end of 2007, and even AT&T is down just 18% over the same time frame. Verizon and AT&T also both pay big fat dividends. Sprint pays nothing out.
What's more, Verizon's CEO Dan Mead said that he "wasn't concerned" with the AT&T and T-Mobile deal, sending a message that he actually knows what he's doing and should expect the unexpected. Though Mead hasn't been on the job as long, his predecessor, Lowell McAdam, is still working with Verizon and probably providing some decent advice to keep Verizon churning.
So, the sticky point is whether the termination of Hesse's contract would be "for cause" by Sprint, citing lower market value and underperformance. If so, Sprint is clear-and-free in the deal. However, should Hesse be terminated without cause, then Sprint would be liable for the typical perks that a CEO receives upon termination: full base pay through the date of termination, a pro-rata bonus, health care coverage, and so on. Those payments and bonuses could tack on millions to Hesse's already large tab.
Investors in Sprint hope that the next thing that Hesse is "shocked" to here about is his own dismissal.
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