Hans Vestberg, the former CEO of Verizon, was dismissed by the company’s board last month, but he might still pocket most of his hefty $20 million salary package even as Verizon faces customer losses, a falling stock price, and potential layoffs for 15,000 employees.
Reportedly, some board members are advocating that Vestberg, who was removed from his position in October, continue receiving the majority of his pay package, as detailed by The Wall Street Journal.
In the previous year, Vestberg’s total pay was $24.16 million, which encompassed a base salary of $1.5 million as well as stock awards and bonuses, according to SEC filings.
At 59 years old, he will remain in an advisory position until October 2026 and will stay on the payroll for a full year after his firing.
Provided he satisfies specific performance criteria, he could potentially receive a significant portion of his compensation package, which might exceed $20 million, as the Journal stated.
In the third quarter that ended in September, Verizon lost 7,000 net customers, which fell short of analysts’ expectations of a 19,000 customer gain.
Appointed CEO in 2018, Vestberg had previously led Swedish telecom equipment firm Ericsson. His tenure saw a focus on customer retention, with two quarters of monitoring customer churn and another quarter approaching.
T-Mobile, buoyed by a $26 billion merger with Sprint, continues to capture market share through lower prices and better service, the Journal noted.
Meanwhile, Verizon’s stock has plummeted by 30% over the last five years, causing significant investor concern.
Mark Bertolini, who stepped in as Verizon’s board chairman last month, pointed out that significant changes are necessary due to the company’s ongoing challenges.
“Verizon has slipped from being number one to number three in market value, bond rating, and market share,” he mentioned in a CNBC interview.
He added, “Losing 30% market share in the last eight years is something we have to address.”
Former PayPal CEO Dan Schulman, who has been on Verizon’s board since 2018, has been appointed to lead the company immediately.
Schulman’s contract runs until 2027 and includes a base salary of $1.5 million, plus stock options worth millions based on performance metrics.
Plans are underway for substantial cost reductions, potentially leading to about 15,000 layoffs among Verizon’s approximately 100,000 staff, as reported recently.
A source mentioned that this number is merely an estimate, indicating that affected staff will be informed next week.
Meanwhile, two high-ranking executives, Soumya Narayan Sampath and Anthony Skiadas, have received $4 million in severance to remain employed until at least late 2027.
At a recent Wall Street Journal event, Schulman emphasized the need for Verizon to become “less crude and less bureaucratic.”
He suggested that the focus should shift from network technicalities to aligning with customer demands.
“We are not advocating effectively for our shareholders,” he admitted. “At this stage, I’m prepared to make tough choices.”
“Consistent market share losses are not sustainable,” he stated, affirming the urgency for change.
Rich Young, a Verizon spokesperson, echoed this sentiment, asserting that Schulman is leading a mission that the company is committed to fulfilling.
