Ousted Verizon boss could still pocket most of $20M salary as company cuts 15,000 jobs: report

Verizon's former CEO, Hans Vestberg, is reportedly set to receive the majority of his $20 million+ compensation package despite being ousted following the company's sustained underperformance, including a Q3 net loss of 7,000 customers and a 30% stock decline over five years. New CEO Dan Schulman, brought in to reverse market share losses to rivals like T-Mobile, is planning significant cost reductions, including an estimated 15,000 job cuts, and a strategic pivot from network engineering to a customer-centric approach to improve shareholder value.

Analysis

Verizon (VZ) is undergoing a significant strategic pivot following sustained underperformance, evidenced by a 30% stock decline over the past five years and a Q3 net loss of 7,000 customers, significantly missing analyst expectations for a 19,000 customer gain. Former CEO Hans Vestberg was ousted after overseeing two consecutive quarters of customer defections, yet remains eligible for the majority of his $20 million+ compensation package, including a $1.5 million base salary, while serving in an advisory role until October 2026. This executive compensation structure, amidst planned 15,000 job cuts, highlights potential governance concerns.

Vestberg's strategy, which included over $50 billion in 5G spectrum investment and the acquisitions of TracFone and Frontier, failed to stem market share losses. Verizon has fallen from the top position in market cap, bond ratings, and market share to third, losing 30% share over eight years, primarily to rivals like T-Mobile (TMUS) and AT&T (T). T-Mobile, bolstered by its Sprint merger, has gained ground with lower-cost and higher-quality service, intensifying competitive pressures for Verizon.

New CEO Dan Schulman (formerly of PayPal, PYPL) has been appointed with a mandate to reverse these trends, acknowledging the company's failure to perform for shareholders and consistent market share loss. Schulman's immediate plans include substantial cost reductions, targeting approximately 15,000 job cuts from Verizon's 100,000-strong workforce, and a strategic shift towards a customer-centric approach over a sole focus on network engineering. The company has also offered $4 million retention bonuses to key executives to ensure continuity during this transition.

Key Decisions for Investors

• Investors should closely monitor new CEO Dan Schulman's execution of planned cost reductions and strategic pivot towards customer-centricity, as these are critical for reversing Verizon's market share erosion and improving shareholder value.
• Evaluate Verizon's ability to effectively compete against aggressive rivals like T-Mobile, particularly regarding service quality and pricing strategies, which have historically driven customer defections.
• Scrutinize the implications of the former CEO's substantial severance package amidst widespread layoffs, as this could signal broader governance issues or impact employee morale and public perception.