Sprint CEO Marcelo Claure has a job through May 31, 2019, and the chance to pick up an extra 10 million shares of the Overland Park-based company.
He just has to give up pay raises and increases to his short-term incentive bonuses and forgo any long-term incentive bonuses. Moreover, Claure needs to push Sprint’s $3.85 stock price to $8, a level it hasn’t seen since he came aboard a year ago.
Those are the terms of a new employment contract Sprint disclosed Tuesday in a filing with the Securities and Exchange Commission. The extension is dated Aug. 7. Claure’s employment agreement, which pays him $1.5 million in salary, had been set to run out next Tuesday.
Sprint’s shares have not seen $8 since the company’s controlling chairman, Masayoshi Son of Tokyo-based SoftBank, gave up plans to merge Sprint and T-Mobile US. Regulators in Washington made clear they weren’t interested in such a deal, and Son brought in Claure to replace Dan Hesse as CEO.
The 10 million Sprint shares set before Claure amount to a “Turnaround Incentive Award Grant,” the filing said. It said Claure can earn them by engineering “a sustained and significant increase in the price of Sprint stock.”
Specifically, Sprint’s stock price would need to average $8 “over any 150-day period during a four-year term from June 1, 2015, through May 31, 2019.”
Sprint spokesman David Tovar said the deal was designed, from the company’s perspective, to keep the company and its CEO focused on building shareholder value over a sustained time. It won’t help, Tovar said, for Sprint shares to touch $8 if they can’t stay that high.
The company, under Claure, has been adding subscribers and is counting growth among its high-revenue phone subscribers in recent months. Sprint’s network also has begun to fare better in national network comparisons.
Adding 10 million shares to Claure’s stock pile would push his total to 18.3 million shares. That includes 5 million shares he bought in February, paying on average $5 or less per share.