Jha signs a multimillion dollar deal with Motorola
Motorola Inc.'s new co-chief executive officer is earning a hefty multimillion dollar compensation package that rivals any sole CEO at the Schaumburg company, according to filings with the U.S. Securities and Exchange Commission.
The document shows that Sanjay Jha, who started on Monday, will earn "not less than" $1.2 million as a base salary, a $2.4 million bonus and also a hefty stock package that could be worth millions of dollars, depending on vesting or maturity dates and the share prices on those dates.
Motorola as well as Wall Street analysts said Tuesday that the high price is worth it to turn around the floundering mobile phone business and to successfully spin it off into a separate, viable company.
"It is a significant amount of money, which is debatable on whether any executive deserves this, but it took a lot to peel him away from QualComm," said Mark McKechnie, telecom analyst with American Technology Research. "It makes sense for him to go there, and I cannot blame him. If anyone can do it, I'd like to think that Sanjay can."
Motorola announced Monday that Jha was hired as co-CEO of the entire company as well as CEO of its beleaguered Mobile Devices business. He then will lead the business when it spins off, possibly during the third quarter of next year.
Jha's deal is for three years and subject to automatic one-year renewals. His base salary would be "not less than" $1.2 million and have a "target of not less than 200 percent of the base salary," or a 2008 bonus of $2.4 million.
Motorola CEO Greg Brown also is earning $1.2 million base salary as part of his overall compensation package. His predecessar, Ed Zander, had a $1.5 million base salary.
As co-CEOs, Brown and Jha are sharing responsibility for Motorola and should be compensated appropriately, said Motorola spokeswoman Jennifer Erickson.
"We believe this is the right structure with the right leaders to provide the necessary management focus and agility to position both our Mobile Devices and Broadband Mobility Solutions businesses for long-term success as two separate companies," said Erickson.
Jha's compensation package was approved by Motorola's Compensation and Leadership Committee and the full board and is commensurate with the scope of his position and his peers, she said.
"It is designed to strongly align Jha's interests with those of the shareholders," Erickson said.
Of the total value of the package, about 95 percent is in the form of equity awards. Of the equity, about 60 percent of the value is in the form of options, which will result in payment to Jha only if the price of the stock increases after the date of the grant, Erickson said.
The reports show Jha will receive 3.7 million restricted Motorola stock units and 16.6 million options, said McKechnie.
"When the handset spinoff is completed, Jha will receive additional stock and options worth a 3 percent stake in the handset business," said McKechnie.
Overall, analysts were thrilled with Jha, lauding his long-time career of helping to lead QualComm Inc. and his reputation among industry colleagues.
Still, Jha is walking into a legendary business that has slipped mightily in recent years and is seeking another hit, like the ultrathin Razr phone in 2004.
Given Motorola's recent missteps, some believe the company needed to "pay up" to attract someone of Jha's caliber. His current pay package reflects this, said Rick Franklin, telecom analyst with Edward Jones.
"We consider the large pay required by Jha, however, as indicative of his own assessment of Motorola's risk profile," said Franklin. "Negotiating this level of pay likely indicates that Jha has his own concerns about the company's ability to execute a successful turnaround or, more politely, shows just how difficult and intensive the work ahead is for Jha."