Last week the directors of optical equipment vendor Sycamore Networks agreed to raise the salary of its CEO, Daniel Smith, to $275,000 per year. That represents a 174% raise.
However, before that raise, Smith was by far Sycamore’s lowest-paid C-level executive. All five of Sycamore’s other top execs had salaries in excess of $200,000 in ‘07. (In fact, in 2006, Smith’s salary was less than a quarter of that of the company’s top sales officer.) And Smith has not had a raise or a bonus –by his own request — in at least the last five years. That’s mainly because he owns more than 15% of the company’s stock (at today’s prices of $2.74 a share, he holds about $118 million’s worth).
So if Smith hasn’t needed a raise before, why is he accepting one now? (Sycamore itself has declined to comment.)
With a net loss of just $114,000, the company broke even on an earnings-per-share basis in its 2008 fiscal year (which ended July 31). And with nearly $942 million in cash (the vendor has been sitting on a cash stockpile since the telecom bubble days), Sycamore’s name has come up in recent discussions with analyst about potential buyers of Nortel’s Metro Ethernet business. Could Smith’s salary be rising in commensuration with an expanded role at a larger company? Is commensuration even a real word? What do YOU think? Post a comment below.