Motorola
Sanjay Jhas compensation is made up of huge incentives the Schaumburg, Ill.-based company said it needed to offer to recruit an executive of his caliber to help lead a major restructuring effort. It comes as thousands of Motorola employees have been laid off because of mounting losses.
Jha was lured to Motorola last year from Qualcomm Inc., where he served as chief operating officer. He was brought in to run Motorolas badly wounded cell phone business, which the company plans to spin off but has been delaying because of its huge losses.
Jha, who leads Motorolas mobile devices division, has a big job ahead of him: Motorolas cell phone business has eroded sharply as its hit Razr phone has fallen out of favor, the recession crimps consumer spending on new gadgets, and the company scrambles to cut costs to keep pace.
Motorolas cell phone revenue has dropped 70 percent in the past two years, and the company has announced 7,000 job cuts over the past six months. The company as a whole lost $4.16 billion last year, as sales slid 18 percent to $30.1 billion. Both Jha and the companys other co-CEO, Greg Brown, said in December they would forgo any 2008 bonus, given Motorolas overall poor performance.
The total value of Jhas 2008 pay package was $104.4 million, according to calculations by The Associated Press.
That figure includes a base salary of $484,615 and $412,096 in perks such as personal use of the company aircraft, a chauffeur, relocation expenses and company 401(k) matches. But nearly all the rest of his pay package came in the form of restricted stock and options worth $103.5 million on the dates they were awarded to him.
Motorola said in its executive-compensation filing Tuesday with the Securities and Exchange Commission that a big part of Jhas compensation consisted of shares of restricted stock and options to make up for similar awards he gave up when he left Qualcomm.
Motorola said about 60 percent of the value of his “make-whole” awards are in the form of stock options that wont be worth anything unless the companys stock price goes higher.
Jha was awarded 10,211,226 of those options, which have an exercise price of $9.82. That was Motorolas closing stock price on August 4, the date the options were awarded. Jha also received 6,383,658 in “inducement” options and about 3.67 million restricted shares that carry the same exercise price.
But shares have slid sharply since then, closing at $3.30 on Tuesday. That means the stock would have to triple before Jha can make money off the awards.
Jha was also promised a big payday if the spinoff of the mobile devices business doesnt go through. If that division doesnt become a separate, publicly traded company by October 31, 2010, Jha would forgo a promised equity award and instead get $30 million in cash.
If the division does become a separate, publicly traded company, all of Jhas outstanding equity awards in Motorolas common stock convert to equity awards in the new companys common stock, Motorola said in its filing.
In 2008, his compensation was valued at $24.2 million, a 149 percent increase from the $9.7 million pay package he got in 2007. But like Jha, the majority of Browns pay package came in the form of $22.6 million of stock options and restricted stock that will be worthless without a large increase in Motorolas stock price.
The Associated Press calculations of total pay include executives salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The calculations dont include changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the SEC.
Motorola plans to hold its annual meeting on May 4 in Rosemont, Ill.
In a separate filing Tuesday, it said it will submit a proposal to shareholders at the annual meeting to approve a one-time stock option exchange program for some employees.
The company said many of its workers hold outstanding stock options that were granted when Motorola shares traded much higher, but now are “underwater,” given that the exercise price is well above the stocks current price.