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Vendor CEO Comp: Cashing In, Cashing Out

Light Reading
Prime Reading
Light Reading
8/24/2015
50%
50%

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.

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.

Table 1: Vendor Executive Compensation

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

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