2014 was a lucrative year for the top dogs at telecom vendors, who were paid big bucks for driving turnarounds, M&A, continued relevancy or brand revivals.

August 24, 2015

7 Min Read
Vendor CEO Comp: Cashing In, Cashing Out

Comparing CEO compensation is like comparing professional athlete compensation: The numbers are so huge, and so far removed from what the average Joe or Jo makes, that a lot of us can't conceive of a way that -- even when responsible for an entire company -- they really earn the money they make.

Having said that, we can be fairly sure that Juniper Networks Inc. (NYSE: JNPR) didn't get a fair return for what it was due to pay its CEO last year. A quick study of annual report proxy filings from companies throughout the Light Reading vendor community showed that Shaygan Kheradpir, hired as Juniper's CEO in November 2013, was due to collect more than $30 million in total compensation (base salary, stock awards, bonus, etc.) in 2014, far more than his peers, as we can see from the graph below.

Figure 1: Executive Compensation -- Telecom Vendors Source: Securities and Exchange Commission Source: Securities and Exchange Commission

Some would certainly argue that his pay deal reflected the challenges he faced -- orchestrating a massive corporate turnaround and helping Juniper win deals with big name accounts, such as his former employer Verizon Communications Inc. (NYSE: VZ) However, Kheradpir departed Juniper in November 2014 in a cloud of mystery and disappointment. (See Juniper Names New CEO and Turmoil at Juniper as CEO Quits.)

As Juniper's proxy filing makes clear (on page 55 for you skimmers), Kheradpir's hasty exit meant he didn't necessarily collect the $23 million in stock awards, nor the $5 million bonus he was promised in his employment agreement (confirmation either way has not been forthcoming from the vendor) and it should be noted that Kheradpir had one of the lowest base salaries, just over $850,000, on our list.

Still, Kheradpir's overall compensation package led the Light Reading vendor community field by a large margin. The runner-up, perhaps predictably, was the now ex-Cisco Systems Inc. (Nasdaq: CSCO) CEO John Chambers, who hauled in more than $16 million in total compensation during a year in which Cisco, facing market pressures like never before, adapted to virtualization and white box market trends and instigated a massive reorganization. (See Report: Cisco Starts Reorg, Layoffs.)

The rest of our top 10 list presents an interesting blend of chief executives from chip makers and equipment vendors that draw strength from different segments of the industry.

Executive (CEO, fiscal 2014)

Vendor

Basic Salary ($)

Total compensation ($)

Shaygan Kheradpir/Rami Rahim

Juniper

$854,167

$30,165,992

John Chambers (until July 25, 2015)

Cisco

$1,100,000

$16,488,184

Scott McGregor

Broadcom

$983,769

$16,451,411

Mike Pulli

Pace

$750,000

$11,408,000

Tom Rogers

Tivo

$1,150,000

$11,387,213

Brian Krzanich

Intel

$1,000,000

$11,197,400

Lloyd Carney

Brocade

$2,661,440

$10,074,949

Rajeev Suri

Nokia

$1,189,625.00

$9,343,823.00

Robert Stanzione

Arris

$968,750

$7,968,703

Hans Vestberg

Ericsson

$1,907,679

$7,764,379

Source: SEC

Next page: From small chips to big paychecks

From small chips to big paychecks
Along with Chambers, the other $16 million man on the list is Scott McGregor of Broadcom Corp. (Nasdaq: BRCM), which just agreed to be acquired for $37 billion by Avago Technologies Pte. Avago is the chip juggernaut intent on challenging Intel Corp. (Nasdaq: INTC), which, by the way, paid its own CEO, Brian Krzanich, almost $11.2 million in 2014, enough to make the No. 6 spot on our list. Krzanich's route to earning his own lofty pay package was to lead Intel on an aggressive M&A strategy to stay ahead of the likes of Avago. (See Avago Seals Deal to Buy Broadcom for $37B and Intel Buys $1.5B Stake in Chinese Chip Firm.)

Besides the chip giant chiefs, leaders from three companies hailing from the pay-TV technology sector made appearances on our list. Pace plc 's Mike Pulli came in fourth with $11.4 million in total pay, though his base salary of $750,000 made him the guy with probably the lowest bi-weekly paycheck on the list.

While we're on the topic of base salary, the highest on the list belonged to Brocade Communications Systems Inc. (Nasdaq: BRCD) CEO Lloyd Carney with more than $2.6 million. What can we say? As Spiderman's uncle might have put it (stick with us...), with New IP power comes great responsibility and a nice take-home sum. Carney's base pay, along with other factors, helped nudge him above $10 million in total compensation last year.

Back to the pay-TV honchos: The difference between Pulli's total compensation and that of TiVo Inc. (Nasdaq: TIVO) top dog Tom Rogers at No. 5 was a well-paid CEO's idea of pocket change -- not much more than $20,000. (Some CEOs spend that much on hair care, though clearly neither Pulli nor Rogers does.) Rogers might make a good argument for having earned more than $11.3 million in total compensation last year, given he has rallied once-flagging TiVo around an increasingly successful cable partnership strategy. (see TiVo Continues Cable Run.)

Like McGregor, Pulli ended up being one of the most highly compensated CEOs in the Light Reading vendor community just months before helping to sell his company to a rival -- Arris Group Inc. (Nasdaq: ARRS) in Pace's case.

And speaking of Arris, its CEO, Robert Stanzione, came in ninth on our list, making more than $7.9 million in total compensation in 2014. Considering both Pace and Arris have been seeing an overall decline in video equipment spending, and lower spending in particular by pay-TV operators intent on mega-mergers, you have to wonder if investors in both those companies felt the high payouts were warranted. (See Arris & Pace: More Than Just a Set-Top Deal and Arris: Media M&A Will Mar Q4 Results.)

Since we're (still) on the topic of vendor M&A, let's bring up Rajeev Suri, who made more than $9.3 million in US dollars last year for No. 8 on our list (though if it sounds like a lot, consider it was only €7.3 million). Suri took over as CEO of Nokia Corp. (NYSE: NOK) just after the mobile maven sold its devices unit to Microsoft Corp. (Nasdaq: MSFT), and barely a year later directed the so-called "new" Nokia to acquire Alcatel-Lucent (NYSE: ALU). Like Keradpir, he's another chief getting paid to turn around an ocean liner. Unlike the ex-Juniper lead, he's following through, though certainly isn't without his critics. (See Rajeev Suri: The Right Choice for Nokia and Nokia's Suri Defends AlcaLu Deal Against Critics.)

Last, but not least -- well, actually he did collect the least amount in total compensation on this particular list, though no one feels sorry for him -- at No. 10 is Ericsson AB (Nasdaq: ERIC) CEO Hans Vestberg. The Ericsson chief's total payout sounds a lot more impressive in Swedish kronor -- SEK55.4 million -- than in US dollars, $7.7 million -- but it's a whole lotta lingonberries either way (the Swedes probably hate it when we say stuff like that).

For more compensation reports, see:

— The Staff, Light Reading

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