Rising Apple iPhone subsidy costs force Sprint CEO Dan Hesse to take pay cut

With the spiraling costs of subsidizing the Apple iPhone cutting into Sprint's profits, company CEO Dan Hesse said he would take a cut in pay to help the company recover some of the costs. In a letter to the carrier's human Resources department., Hesse said that he would take a cut in pay that would allow him to repay $346,000 in incentive pay that he had already received. Further cuts will make Hesse forfeit huge sums of incentive pay that he was eligible to receive under terms of his contract. All together, Hesse will be missing out on $3,250,830 that he was entitled to receive after Sprint's compensation committee made some adjustments to his pay. Hesse said that after taking everything into account, his 2012 incentive compensation target has been cut to 2010 levels.

Sprint has a $15 billion bet on the Apple iPhone

Sprint has made a $15 billion commitment to the Apple iPhone. While adding the iconic smartphone to its lineup has helped the nation's third largest carrier add new subscribers, it comes at a high cost since Sprint subsidizes most of its iPhone sales. The carrier started selling the iPhone last October 7th and pays Apple a subsidy for each phone it sells that is 40% higher, or $200 more, than the subsidy it pays to manufacturers for other phones. In the most recently released quarter, Sprint sold 1.5 million units of the Apple iPhone and the device helped Sprint add 1.1 million new subscribers in the period to a company record 56 million customers.
 
source: Reuters