Sprint Filings

At left: Sprint's newest board member works on the potential Ericsson outsourcing deal. And places an order for bananas.





It has been said that if you took an infinite number of randomly typing monkeys that they, eventually, would produce some of the world's greatest literary works. In fact, I'm pretty sure that's how romance novels are written today. "Fascinating", you may say, "but what does that have to do with anything?" Well, for one, everyone loves monkeys. Humans love monkeys so much we destroy their habitat, dress them up as people for laughs, and then put them in cages to live out their now sad, miserable lives. That's what I call true love. But, the point is that the infinite monkey theorem can also be applied to the Board of Directors. In fact, it has been noted that monkeys can out pick stock professionals; so why then could they not outperform the Board?

Obviously, I am only (sort of) joking when comparing monkeys to the Board. After all, I don't know of any monkeys that have made decisions that led to a 80% drop in stock value since the merger (see chart - Sprint vs. S&P500 vs. North American Telecom Index.). But I am digressing from the original intent of this post - what do board members get for leading Sprint to such prosperity and riches? Let's take a peek...

Each outside director is paid a $70,000 annual base salary plus meeting fees and additional retainers. Not unreasonable sounding, at least to me. They work hard and it's not like they're hiring outside firms to study such issues as executive compensation. Actually, scratch that last part as "for 2008 and year-to-date 2009, the Compensation Committee...retained Frederic W. Cook & Co., Inc. as its independent compensation consultant." Also mentioned is that "our CEO periodically discusses the design of compensation programs and the compensation levels of our other named executive officers and certain key personnel with the Compensation Committee." Now, I'm clearly not an ethicist but that seems poor judgment on the part of the board - allowing the CEO to have input into executive compensation issues when he is the top executive.

But, back to the board. They are, after all, providing a valuable service to Sprint and it's not like they're serving on other boards too. Umm, well, nevermind that one too. The current (current as of the 2009 proxy filing) board members actually serve on a combined 19 other boards. It would seem difficult to devote enough time and energy to Sprint while serving other companies as well but, then again, I could be wrong as there is a first time for everything. But it's not like members get other perks like, say, unlimited number of wireless units including accessories, wireless long distance, and long distance calling cards (max $12,000). And it's not like they get the following for simply attending a meeting:

• $2,000 for in-person meetings
• $1,000 for meetings "held telephonically"

All told, during 2008, the board of directors held 17 meetings with all directors attending at least 75% of board and committee meetings. I'm not sure what legally constitutes a meeting ("Everyone here? Alright, meeting adjourned") but I'm glad to see they're on top of things. Oh, I forget to mention some additonal perks. What are the additional retainers needed to keep these vitally important individuals?

• the Chairman (James Hance) receives an additional $150,000
• the Chair of the Audit Committee (James Hance) receives an additional $20,000
• the Chair of the Compensation Committee (Gordon Bethune) receives an additional $15,000
• the Chairs of the Finance (Robert Bennett) and Corporate Governance Committees (Irvine Hockaday) each receive an additional $10,000

All things considered, being a member of this club is not a bad gig if you can get it. Beats Costco, at least. So, what did Sprint pay in 2008 in total compensation (cash, stock, & other) to all board members (current & former, excluding Hesse)? Here's the breakdown:

• James Hance - $436,036
• Robert Bennett - $265,516
• Gordon Bethune - $264,864
• Larry Glasscock - $257,864
• Irvine Hockaday - $251,194
• V. Janet Hill - $250,690
• Rodney O' Neal - $242,864
• William R. Nuti - $109,222 (joined board on 6/9/08)
• Sven-Christer Nilsson - $46,432 (joined board on 11/10/08)

All told, in 2008 Sprint paid $2,633,617 to current and former board members (not including Hesse). And $2,633,617 sure can buy a lot of bananas. Here's the compensation table lifted from page 14 of the proxy: