New York ? Sprint Corp. is paying a starting salary, bonus and equity worth more than $7 million to the new chief executive of the local telephone business that the company plans to spin off after its planned merger with Nextel Communications Inc.

Next year, Daniel Hesse is slated to receive at least $9 million more in compensation.

The pay package for Hesse, 51, was disclosed Friday as Sprint and Nextel also announced they would ask shareholders to vote July 13 to approve the proposed $35 billion merger.

Hesse, a former AT&T Corp. executive who was named CEO of the Sprint unit on Tuesday, is being given a base salary of $900,000 to run the Sprint unit – which like other local phone businesses has been hurt by competition from cell phones and Internet-based phone service.

Hesse also was given a sign-on bonus of $600,000, plus 157,000 restricted stock units and 408,000 stock options, according to Sprint’s filing with the Securities and Exchange Commission.

The stock units, which vest after a three-year period, were worth $3.78 million, based on the share price of $24.05 when they were issued earlier this week. The options, which vest over a four-year period, were worth at least $1.3 million at issue, based on a common pricing formula used to value publicly traded options.

Besides salary, Hesse also is entitled to receive a minimum bonus for the remainder of this year worth $1.05 million. Thereafter, his annual bonus will be worth between 120 percent and 200 percent of his annual salary, or from $1.08 million to $1.80 million.

In 2006, Hesse also will receive a long-term compensation award worth at least $7 million in restricted stock and stock options regardless of whether he remains with the company past next March.

Hesse comes to Sprint with 27 years of experience in the industry, including three years as CEO of AT&T Wireless while that company was still a subsidiary of AT&T.

Sprint plans to spin off the local division after its merger with Nextel so the combined company can focus on wireless services.

The Sprint unit is the fifth-largest local phone company in the country with 7.6 million access lines in 18 states. But the operation has shrunk as more households drop traditional landline service for wireless and Internet calling.

The local business, with 16,000 employees, posted revenues of $6.02 billion last year, down slightly from $6.13 billion in 2003, as access lines fell by 229,000. The lone bright spot has been high-speed Internet service. The division added 190,000 DSL lines in 2004, for a total of 492,000.

Separately, Sprint and Nextel also set the time and place for shareholders to vote on their merger.

Sprint will have its annual meeting in Overland Park, while Nextel shareholders will meet in Reston, Va., both on July 13, according to an SEC filing.

As part of the “merger of equals,” Nextel shareholders will receive 1.3 shares of the new Sprint Nextel Corp. for each of their shares, as well as some cash. The companies said they were structuring the merger to prevent tax liability, so officials don’t know yet how much Nextel shareholders would receive. But they said the amount of money to be paid was capped at $2.8 billion.

Assuming the merger is approved by shareholders and regulators, the companies expect to close the deal in the third quarter. The company’s executive headquarters will move to Nextel’s base in Reston, Va., while its operations headquarters will remain in Kansas.

Shares of Sprint rose 27 cents, or 1.1 percent, to close at $24.70 in Friday’s trading on the New York Stock Exchange. Shares of Nextel rose 26 cents to $31.87 in Nasdaq Stock Market trading, setting a new 52-week high.