Motorola has agreed to pay its CEO, Greg Brown a bonus when the company sells off its mobile phone division and the company is then floated onto a stock market and is worth at least US$2 billion. The bonus, in the form of stock options is worth US$3.3 million and restricted options worth a further US$1.67 million
The move not only encourages him to sell off the company - but also ensures that the firm is not asset stripped, or simply run down as the bonus is dependent on a future successful IPO and minimum valuation for the firm.
The company announced the new package in an SEC filing at the end of last week.
Motorola has struggled, having lost half its market share since 2006. The company reported wider losses at its cellphone business in the second quarter even as it held on to its market-share position. Results were helped by cost cutting and growth in its other businesses. Brown made it clear to analysts during a conference call when announcing the results that even with such a long-term target for the spinoff, a lot still depends on a narrowing of losses at the handset division.
Former Qualcomm executive Sanjay Jha was recently hired to head up Motorola's handset division and prepare it for separation from the rest of the group. Jha, speaking to analysts during a conference call when he took the job, said he will take 90 days to review the business before making any drastic changes. His own compensation is significant - comprising of some $35 million worth of stock and options, plus a 3% stake in the firm when it is sold off.
Coincidentally, Motorola's stock market capitalisation jumped by just over US$2 billion on the day it announced Jha would be joining the firm - the same as the required valuation for Greg Brown to claim his bonus.
Posted to the site on 31st August 2008
Posted to: www.cellular-news.com/story/33351.php