I suppose you can’t argue with the market but I do wonder about the price Motorola has paid to lure Sanjay Jha from Qualcomm to become chief executive of its troubled mobile phone division.
Mr Jha apparently wanted to be the chief executive of a public company – and doubted whether Paul Jacobs was going to move over at Qualcomm – but his pay and benefits package is reminiscent of a private equity deal.
Motorola plans to spin off its mobile phone arm and, if it does, Mr Jha gets to own 3 per cent of the company. If it does not, he will be paid $30m to compensate him for his time and trouble. His entire package is estimated as being worth up to $94m.
The market liked the fact that Motorola had managed to recruit Mr Jha and its shares rose by 11.5 per cent on the news. Since it failed to follow up its success with the Razr phone, it has been losing market share to rivals such as Nokia.
Mr Jha is a talented man, and he is probably the highest-paid graduate of the University of Strathclyde in Scotland. His expertise in electrical engineering and chip design should help Motorola to regain momentum.
My doubt is that his share package is so clearly structured for the medium-term – to turn the division round and prepare it for flotation. Like a private equity executive, he will be heavily incentivised to make it look good in a couple of years’ time.
But Motorola has a history of recoveries followed by lapses back to the old ways, the Razr being a prime example. I would be more reassured as a Motorola shareholder if I really thought the company was being managed for the long term.