Subject: [NEXTEL-1] Timmy Gets a 43% Raise

From: [email-masked]
Date: Tue, 12 Aug 2003 15:08:22 -0400

Timmy Gets a 43% Raise
Rich Reward for Nextel Chief
By Scott Moritz
Senior Writer
08/12/2003 07:10 AM EDT
URL: http://www.thestreet.com/tech/scottmoritz/10107363.html

With his underdog cell-phone service turning into a fan favorite, Nextel
(NXTL:Nasdaq) Chief Tim Donahue is on a roll.
Now shareholders may be wondering what he'll do with his winnings.

That issue became more pressing with last week's word that Nextel had renewed
Donahue's employment contract. The new deal bumps up his salary by 43% and
provides a million-share gift on top, according to a Friday filing with the
Securities and Exchange Commission. All things told, the value of the arrangement,
which runs through 2006, could reach into the tens of millions of dollars.

Given the events of the last year, few investors would dispute Donahue's worth.
Having posted surprisingly strong growth in subscribers, sales and profits last
quarter, Nextel has rapidly rebounded from being the wireless industry's David to
the Goliath of business services. Wall Street has taken note, more than tripling
the value of Nextel stock off last year's miserable low.
Still, not everyone's feeling ecstatic about the CEO's new paycheck. Some
observers point out that Donahue has been CEO since 1999, which means he also
oversaw the 93% plunge in Nextel shares that preceded the recent revival.
"If I were a shareholder, I'd question how expensive it is to keep him," says Paul
Hodgson with the Corporate Library, a corporate governance advocacy shop. "The
stock is certainly up, but it's coming from quite a low." Nextel rose 16 cents
Monday to close at $17.90.

'Results-Driven'

There's nothing low about Donahue's new compensation arrangement. According to the
contract, Donahue will collect a base salary of $1 million, an annual bonus of up
to $1.5 million, a long-term bonus of $2.7 million and options for 500,000 shares.

But wait, there's more: The executive also gets 1 million deferred shares worth
close to $18 million at recent prices.
Donahue, who wasn't available for comment Monday, struck a gracious note in
Friday's announcement of the employment contract. "At Nextel, I'm surrounded by
the most dedicated, innovative and results-driven team I've ever seen," the
executive said in a press release. This left some people wondering whether Donahue
was referring to his employees or the team of lawyers who helped ink him his sweet
pay contract.

What stands out in Donahue's pay, says Hodgson, are the stock awards, which make
up the largest portion of the package. Unlike options or incentive bonuses, stock
gifts have no strings attached and represent free money for Donahue.
"These awards aren't set up as performance incentives," says Hodgson. "They seem
to be for retention, to make sure he doesn't leave."

A Nextel spokeswoman says it's not uncommon for tech companies to have lower
salaries "balanced" by stock and bonuses. All Nextel employees have received stock
options every quarter, and that helps "create a strong team working environment."
 There's no doubt that this summer's resurgence in Nextel shares has improved the
working environment at the Reston, Va., company.

After Nextel shares powered into the high double digits during the
telecommunications boom of 1999-2000, Wall Street's renewed interest in
profitability and balance sheet health brought the stock screaming back to earth.
By this time last year Nextel shares were fetching just $5.05 each, punishing the
portfolios of shareholders large and small.
Donahue was no exception. But now, with Nextel shares hovering around their
postboom highs, he is in a position to capitalize. In 1999 he received a grant of
600,000 deferred shares before taking account of a June 2000 2-for-1 stock split.
Those shares fully vest Sept. 1.

Now investors will be thinking of that team spirit as Donahue decides how to
handle a cashout opportunity estimated at $20 million.

------------------------ Yahoo! Groups Sponsor ---------------------~-->
Buy Ink Cartridges or Refill Kits for Your HP, Epson, Canon or Lexmark
Printer at Myinks.com. Free s/h on orders $50 or more to the US & Canada. http://www.c1tracking.com/l.asp?cid=5511
http://us.click.yahoo.com/l.m7sD/LIdGAA/qnsNAA/61FxlB/TM
---------------------------------------------------------------------~->

Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/