Sprint announced the resignation of President and COO Ronald LeMay late Wednesday. No replacement has been named.
Sprint had to battle BellSouth in court to hire former BellSouth vice chairman Gary Forsee as its new CEO. In March, the court ruled in favor of Sprint, letting it replace longstanding CEO William Esrey with Forsee.
Industry pundits speculated that LeMay would step down after his and Esrey's questionable use of a tax shelter.
Esrey, LeMay and other Sprint executives used a tax shelter for income from options they exercised in 1999 and 2000 based on the recommendation of Sprint auditor Ernst & Young.
Executives were told by the auditor that the shelter, which was sold to hundreds of companies by Ernst & Young, would let them delay for 30 years paying taxes on exercised options, instead of having to pay those taxes the year the options were exercised, according to several reports.
In an e-mail sent to Sprint employees in February, Esrey said he was being audited by the Internal Revenue Service and that the organization had not taken action to disallow the tax shelter. Esrey's e-mail went on to say that should an "extreme adverse outcome occur," in combination with low Sprint stock prices, future taxes could wipe out his assets since nearly all of them were tied up in Sprint stock. Esrey also said that Ernst & Young assured him his investment and tax strategy were legal and that he was seeking additional legal advice from an outside law firm.
In response to LeMay's resignation, Sprint executives made no mention of the tax shelter, instead praising LeMay for his contributions to the company.
"Ron LeMay has been a valuable member of the Sprint management team, helping guide the company through many challenges and playing an integral role in the growth and success of the company," said Forsee in a statement.
LeMay joined Sprint in 1985 as vice president and general counsel for then-Sprint affiliate United Telephone System. In 1987, he became senior vice president of operations and executive vice president of corporate affairs at the carrier. In 1989, LeMay was appointed president and COO of Sprint Long Distance, and in March 1995 he became CEO of Sprint PCS, a position he held until September 1996, when he was named Sprint's president and COO.