Let's Be Clear: T-Mobile CEO John Legere Has A $US42 Million Interest In This Sprint Buyout

T-mobile ceo john legereT-MobileJohn Legere

T-Mobile CEO John Legere will receive $US42 million in compensation if he sells T-Mobile to Sprint. The two companies are discussing a $32 billion deal to do just that right now.

This is one of those things that has the appearance of a conflict of interest.

The intentions of both companies have not been much of a mystery. As The New York Times puts it:

… mergers and acquisitions by competitors of Sprint and T-Mobile have created a landscape that has increasingly marginalized the two smaller companies, which each have about 50 million subscribers and only provide wireless service.

Neither Sprint nor T-Mobile, on their own, would have the financial resources to compete against these larger players, nor the suite of offerings to attract customers who can get a whole host of services from other rivals. As a result, both sides believe that the only way to remain relevant is to combine.

So it is likely that Legere’s contract with T-Mobile, which gives him a $US42 million payout if he sells, was specifically designed to incentivise him to sell the company. You can see that deal on page 48 of this SEC disclosure. Just above that, you can see the rest of Legere’s compensation. He earned $US29 million last year, after just one year in the position.

How tough a negotiator can Legere be when he gets a lottery prize simply for saying yes? Is he really being as tough as possible to make sure that T-Mobile shareholders get the best deal?

We assume he is doing just that. The only problem is that the $US42 million package makes it look like it might be otherwise.

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