Ideally, company performance and executive payment should work as communicating vessels. This, however, does not seem to be the case with Frontier Communications Corp. (NASDAQ:FTR).
The share price of FTR has been slipping down a grease-slicked incline over the past year. Since the latest slide that started around July 11, the company, with CEO Mary Agnes Wilderotter at the helm, lost about $400 million for its collective shareholders. This seems like a bitter pill to swallow, especially for people who kept believing in FTR and stuck with them throughout the slow decline of the last 12 months.
Mrs. Wilderotter, CEO and Chairman of FTR, however, has little to fear. Her future seems to be more secure than a personal room under Cheyenne Mountain. Tucked away in a proxy statement accompanying the company’s last 10-K filing, there are some numbers. Those indicate that in 2011 alone Mrs. Wilderotter received a compensation amounting to $2.20 million, including a hefty $1.2 million incentive bonus, and that’s without counting a whopping $4.5 million in stock awards.
FTR may be using a different stimulus model where the CEO is given a bonus of over $1 million, not so much because they let the company drop from about $8 per share to below $5 in a calendar year, but instead to try and stimulate them enough to prevent the pattern from repeating in the new year.[BANNER]
The latest 10-Q filing for Q1 (with a new one expected on Jul 31) lists a 26% decline of cash flow from operations compared to Q1 2011. Revenue for the period is also down $78 million and FTR admits that their customers are bailing out.
With insiders continuously obtaining FTR shares, there may be some positive flipside that the company is not making public. Looking at analyst estimates, if Q4 of 2011, which marked their last positive surprise percentage, turns out to be a point of symmetry in the future, FTR may still have hopes of recovery, which could potentially help investors regain some of their money as well.
The 10-Q report for the second quarter that is due very soon should make for an interesting read and give more hints at where FTR is going.
