Posted on 05/10/2008 1:58:58 AM PDT by bruinbirdman
What does it cost to attract first-class talent to a chief executive job in the U.S.? A lot. What does it cost to hire a clunker? Almost as much.
You need look no further than Gary Forsee to see why the absurdities of compensation for U.S. executives rankle shareholders so much. In 2003 Forsee negotiated a pay package to join Sprint as its chief executive officer that promised to leave him rich--whether he succeeded or failed at turning around the troubled long-distance phone company.
Sprint first paid him $6.5 million in cash and stock just to leave BellSouth, where he was the number two executive. Sprint also bought Forsee's house in Atlanta before he moved to Kansas City. Once on the job Forsee was paid between $1.5 million and $5 million a year. His only real claim to fame while running Sprint was engineering the disastrous Nextel merger and watching its stock price tumble from $25 two years ago to $7.40.
At the end of 2007 he was fired "without cause." But he had negotiated well. Sprint gave him $40 million, including a $1.5 million salary through 2009, $5 million in bonuses, stock options and restricted shares worth $23 million and an $84,000-a-month pension for life. This package was structured under his contract as if he were still running the company and had met all his goals. Oh, Sprint also paid for "outplacement services" that landed him the presidency of the University of Missouri (where his annual salary and bonus amount to $500,000).
Nowadays directors, in the guise of rewarding performance, blithely bestow vast fortunes on bosses who destroy shareholder value, as well as on those who create it. Somewhere along the way just becoming a chief executive, rather than a good one, became tantamount to winning the lottery.
(Excerpt) Read more at forbes.com ...
And no, please don't advise me to start up my own multi-billion dollar, e.g., steel company if I don't think that the current system is fair.
The system is broken, becaue stockholders have insufficient means of voicing their disapproval.
JANUARY 10, 2005
THE BEST & WORST MANAGERS OF 2004 -- THE BEST MANAGERS
Gary Forsee
Sprint
Give Gary D. Forsee credit for his vision. After taking the reins at Sprint Corp. in March, 2003, he recognized that for his company to excel in the sluggish telecom sector, it would have to jettison its image as a long-distance provider. So Forsee combined Sprint's wireless and wireline businesses to create a company that could provide everything from cellular to local phone service. Then, buoyed by a stock that had soared 50% from a year earlier, Forsee agreed to a $35 billion merger with Nextel Communications Inc. in December. He'll serve as CEO of the combined Sprint Nextel.
Forsee's telecom giant will have the heft to battle Cingular Wireless LLC and Verizon Wireless and the means to forge the broadband future. Sprint was already partly there, thanks to forsee. He struck deals to let Virgin Mobile Telecoms LTD., AT&T, and others lease Sprint's wireless network so they could market services that would compete with Sprint's own offerings. Radical? Maybe, but it got Sprint 3 million new users. And he teamed with cable operators to deliver residential phone service, giving Sprint access to 95% of U.S. households that have phones. That's Forsee -- always willing to break with convention to win.
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