Last December when Padmashree Warrior left Motorola to join Cisco as its chief technology officer, the fate of the over $37 billion (2007 figure) global communications player was hotly debated. Especially since Warrior was credited to a very large extent with the success of Motorola’s largest-selling and most popular handset series — the Razr.
Indian-born Jha’s hiring had boosted the Schaumburg-based Motorola’s market capitalisation by over $2 billion in a single day of trading – a sign that he surely has the credentials. He holds a Ph.D in electronic and electrical engineering from the University of Strathclyde, Scotland, and a Bachelor’s in engineering from the University of Liverpool, England. Jha was an engineer at Brooktree in San Diego, and GEC Hirst Research Labs in London before joining Qualcomm in 1994 as a senior engineer to work on a satellite phone. He became vice-president of engineering in 1997, overseeing development of cellphone chips and software, and began Qualcomm’s investment arm in 2002 and its president in 2003. He also became executive vice-president of the whole company before being named Qualcomm’s chief operating officer in 2006.
However, analysts are divided over Jha’s ability to help the company regain its glory. Qualcomm may be a great “training ground” and Jha a “great operations guy”, argue analysts, but what Motorola needs is someone with “creative” flair and “more imagination in devices” as Gartner research director Michael King reportedly put it, to turn around the unit.
Nevertheless, it’s an over $30 million bet that Motorola is taking on Jha. Filings with the Securities and Exchange Commission (SEC) reveal that the 45-year-old Jha has been granted about 3.7 million shares of Motorola stock and an additional 16.6 million shares in stock options. At Motorola’s Wednesday closing stock price of $9.50, his stock was worth around $35 million. Those shares, as well as the options, vest in three equal annual instalments beginning in July 2009.
Jha’s employment agreement, filed separately with the SEC, reveals that he will receive a base salary of no less than $1.2 million plus a bonus of $2.4 million this year. Motorola is planning to separate its mobile phone unit from its other two divisions, which make communications equipment for industrial and government clients. The split-up is expected to take place in the third quarter of 2009, with Jha leading the newly-independent handset business and co-CEO Greg Brown heading the other unit. Jha’s employment agreement states he will receive $30 million if the separation fails to take place before October 31, 2010. If the split-up goes through, he will get stock and stock options worth 3 per cent of the new handset company.
Incidentally, Motorola agreed to float the handset unit after Carl Icahn — the billionaire activist shareholder — insisted that the failing division be restructured. It’s the very same Icahn who wanted Yahoo! to sell out to Microsoft. He is the group’s second-biggest shareholder with a 6.3 per cent stake. Given that he had hoped to appoint Keith Meister — who runs Icahn’s $8 billion investment fund — as head of the handset unit, Jha’s progress will be keenly watched by one and all.