Compensation
Discussion and Analysis
In connection with our change in fiscal year, this compensation discussion and analysis describes and analyzes our
compensation program for our named executive officers for both the three-month transition period ended March 31, 2014 (Transition Period) as well as for the 12-month fiscal year ended December 31, 2013 (fiscal year 2013).
The named executive officers for the Transition Period were: Daniel R. Hesse, President and CEO; Joseph J. Euteneuer, CFO; Dow Draper, President,
Prepaid; Steven L. Elfman, President, Products and Services; and Robert L. Johnson, President, Sprint Retail and Chief Service and Information Technology Officer.
Compensation Overview
Philosophy and
Objectives of Our Executive Compensation Program
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Attract and retain qualified and experienced executives by providing base salaries, target incentives, and benefits that are market competitive and by requiring that a large portion of total compensation is earned over
a multi-year period and subject to forfeiture to the extent that vesting requirements and performance objectives are not met;
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Pay for performance by tying a substantial portion of our executives compensation opportunities directly to, and rewarding them for, our performance through short- and long-term incentive compensation plans that
include performance objectives most critical to driving our continued financial and operational improvement and long-term stockholder value; and
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Align compensation with stockholder interests by structuring our compensation programs to align executive interests with those of our stockholders, mitigate the possibility that our executives undertake excessively
risky business strategies, and adhere to corporate governance best practices.
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Components of Our Executive Compensation Program
The major components of our executive compensation program are base salary, our short-term incentive compensation (STIC) plan, and our long-term
incentive compensation (LTIC) plan. The base salaries as of March 31, 2014 and target opportunities under our fiscal year 2013 STIC and LTIC plans for our named executive officers are listed below.
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Named Executive Officer
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Base Salary
($)
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2013
STIC Plan
($)
(1)
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2013
LTIC Plan
($)
(2)
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Hesse
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1,200,000
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2,400,000
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13,800,000
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Euteneuer
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775,000
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1,007,500
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4,025,000
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Draper
(3)
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375,000
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147,303
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Elfman
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650,000
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812,500
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3,737,500
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Johnson
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625,000
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625,000
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1,840,000
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(1)
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The amount for Mr. Draper reflects his target opportunity for the second half-year performance period from July 1, 2013 through December 31, 2013 under the 2013 STIC plan. See Performance and
Key Compensation DecisionsSTIC Plan. Mr. Draper was not employed by Sprint before July 1, 2013 and therefore did not participate in Sprints 2013 STIC plan during the first half-year performance period.
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(2)
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As adjusted for the one-time overall 2013 LTIC plan target opportunity increase of 15% in connection with the SoftBank Merger, as discussed below.
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(3)
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Mr. Draper did not participate in Sprints 2013 LTIC plan but received a sign-on award on September 10, 2013 of 131,579 RSUs, which had a total market value on the grant date of $832,895.
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CEO Compensation Ratio
Our mix of fixed and performance-based compensation target opportunities under the 2013 STIC and LTIC plans for Mr. Hesse is illustrated by the
following:
Performance and Key Compensation Decisions
Fiscal year 2013 marked one of the most eventful years in Sprints history. We successfully completed the SoftBank Merger, which strengthened
Sprints balance sheet and provided capital for continued investment in the modernization of our network, allowing us to upgrade our technology, expand our service offerings and to improve the quality and reliability of our product offerings.
The SoftBank Merger also has allowed Sprint to leverage SoftBanks operational and technological expertise. We also completed the acquisition (Clearwire Acquisition) of the remaining equity interests in Clearwire Corporation and its
consolidated subsidiary Clearwire Communications LLC that we did not previously own, from which we expect to fully utilize and integrate Clearwires complementary 2.5 gigahertz (GHz) spectrum and tower resources for use in conjunction with our
network modernization plan. In addition, we shut down the iDEN network in 2013, and through our network modernization project, we are repurposing the 800 megahertz (MHz) iDEN spectrum and are continuing our buildout of fourth generation
(4G) services using Long Term Evolution (LTE). We also unveiled Sprint Spark
SM
, a combination of advanced network and device technology capable of delivering up to 50-60 Mbps peak speeds
today with increasing speed potential over time.
The Company also recognized the benefits of leadership continuity in light of the transformative
SoftBank Merger and the ongoing execution of our network modernization plans. As a result, the Company entered into a new employment agreement in fiscal year 2013 with Mr. Hesse, which replaced his prior employment agreement. The agreement
provides for a term through July 31, 2018, subject to earlier termination as provided in the agreement. The agreement provides for an annual base salary of $1,200,000 and participation in our STIC and LTIC plans. Also in fiscal year 2013,
Mr. Hesse was granted a one-time award of 1,733,102 RSUs and 1,733,102 stock options. The RSUs and stock options vest on the fifth anniversary of their grant or, if earlier, upon an involuntary termination without cause or resignation with good
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reason, or upon death or disability, and are subject to certain restrictions, including Mr. Hesses compliance with the restrictive covenants in his employment agreement and clawback at
the discretion of the board of any value related to his knowing or intentional fraudulent or illegal conduct. These awards were intended to enhance our ability to retain Mr. Hesses leadership for a minimum period of at least five years
during which the Company plans to undergo a transformative change.
We continued to build on the successes of fiscal year 2013 throughout the
Transition Period, as we delivered operating income of $420 million, representing our best performance on this metric in over seven years. We also launched the revolutionary new Framily
SM
plan
during the Transition Period, which quickly became the fastest growing Sprint rate plan on record.
STIC Plan
Our STIC plan is our annual cash incentive plan, which is intended to ensure that annual incentives are tied to the successful achievement of critical
operating and financial objectives that are the leading drivers of sustainable increases in stockholder value. As required under the SoftBank Merger Agreement, the Compensation Committee used two six-month performance periods for determining amounts
payable under the 2013 STIC plan. The two six-month performance periods for 2013 provided flexibility to revisit the performance criteria at mid-year due to the anticipated transformative SoftBank Merger in 2013. The first performance period was
from January 1, 2013 through June 30, 2013, and the second period was from July 1, 2013 through December 31, 2013. The SoftBank Merger closed on July 10, 2013. Each performance period had discrete performance objectives, and
participants generally had to be employed on December 31, 2013 in order to receive compensation for either period.
The table below summarizes
our key priorities during fiscal year 2013 and throughout the Transition Period as well as the metrics selected in support of these priorities, and the rationale for why each was chosen by the Compensation Committee.
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Priority
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Objective
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Rationale
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Customer Experience
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Sprint platform postpaid subscriber churn, which is a measure of our ability to retain our subscribers who pay for their wireless service on a contract basis, typically for one- or two-year periods.
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Measures the degree to which we retain our most profitable subscribers.
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Strengthening our Brand
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Sprint platform net additions, which is a measure of the new wireless subscribers we gain, net of deactivations.
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Measures the degree to which we have attracted new subscribers to the Sprint brand.
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Generating Cash
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Adjusted EBITDA, which means Adjusted Operating Income Before Depreciation and Amortization less severance, exit costs and other special items. Includes certain impacts from the SoftBank
Merger and Clearwire Acquisition that were not included in the standalone plan from which the 2013 STIC targets were established.
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Measures our ability to generate cash and profit, which are critical to our ability to invest in our business and service our
debt.
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The Compensation Committee approved the effective aggregate payout percentage for the 2013 STIC plan
at 118.96% of the target award opportunity for all eligible employees who participated in the 2013 STIC plan for the full fiscal year 2013, including our named executive officers, based on actual performance results. Our 2013 STIC plan objectives,
targets, and actual results are summarized in the tables below.
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Fiscal Year 2013 First Half-Year
Performance Period
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Objective
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Weight
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Target
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Actual Results
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Percent Payout
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Sprint Platform Postpaid Subscriber Churn
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30%
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1.87%
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1.83%
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116.7%
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Sprint Platform Net Additions
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20%
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549,000
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989,000
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200.0%
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Adjusted EBITDA
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50%
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$2,582 million
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$2,782 million
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200.0%
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First
Half-Year Payout
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175.01%
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Fiscal Year 2013 Second Half-Year
Performance Period
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Objective
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Weight
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Target
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Actual Results
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Percent Payout
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Sprint Platform Postpaid Subscriber Churn
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30%
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1.88%
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2.03%
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28.56%
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Sprint Platform Net Additions
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20%
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223,000
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(212,000)
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0%
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Adjusted EBITDA
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50%
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$2,909 million
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$2,930 million
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110.53%
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Second Half-Year Payout
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63.83%
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Payouts under the 2013 STIC plan were capped at 200% of target opportunity. The payout for the second half-year
performance period was computed by adding the first half-year performance achievements that were above the 200% payout level for Sprint platform net additions and adjusted EBITDA to the second half-year achievement. We outperformed our adjusted
EBITDA target for each of the six-month periods during fiscal year 2013; however, we underperformed on our performance objectives set for Sprint platform postpaid subscriber churn and Sprint platform net additions in the second half of 2013, despite
having highest-ever Sprint platform subscribers at December 31, 2013 of 53.9 million. This occurred at a time of continued modernization of our network, including our expansion of 4G LTE to more than 200 million people and launching Sprint
Spark
TM
in 11 markets as of December 31, 2013.
Our Compensation Committee did not
establish financial and operational objectives and respective weightings and targets for the Transition Period. As a result, no payouts under our STIC plan related to performance during the Transition Period were made.
LTIC Plan
Our LTIC plan is designed to encourage
retention, link payment of performance-based awards to achievement of financial and operational objectives critical to our long-term success, and create commonality of interests between our executives and our stockholders. By dovetailing with the
STIC plan, it is also intended to create balance between short-term, or annual, performance goals and longer-term objectives that are critical to growing and sustaining stockholder value. We granted two types of awards under our 2013 LTIC plan:
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Time-based restricted stock units (RSUs)vest on February 27, 2016.
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Performance-based RSUsvest on February 27, 2016, with payout conditioned on achievement of a predetermined performance objective during a single two-year performance period of 2014-2015.
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The Compensation Committee selected the following primary objective to support our efforts with
respect to the performance-based RSUs under the 2013 LTIC plan:
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Priority
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Objective
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Rationale
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Generating Cash
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Cumulative adjusted EBITDA
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Measures our ability to generate cash and profit, which are critical to our ability to invest in our business and service our
debt.
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The Compensation Committee selected cumulative adjusted EBITDA as the primary objective in order to emphasize long-term
focus on earnings and growing subscribers and revenues. Sprint offers wireless services on a postpaid and prepaid payment basis to retail subscribers and also on a wholesale and affiliate basis, which includes the sale of wireless services that
utilize the Sprint network but are sold under a wholesalers brand. Payment on the adjusted EBITDA objective noted above in excess of 150% up to 200% of the targeted opportunity is contingent on achieving an additional objective of retail net
subscriber additions, which includes both prepaid and postpaid additions but excludes wholesale and affiliate additions. The Compensation Committee believes use of retail net subscriber additions supports Sprints core focus of growing our
subscriber base. Failure to attain the minimum threshold achievement level on the cumulative adjusted EBITDA performance objective results in forfeiture of the associated opportunity.
Pursuant to the terms of the SoftBank Merger Agreement, we delayed the grant of awards under the 2013 LTIC plan until after closing of the SoftBank
Merger. As a result, awards under the 2013 LTIC plan were not granted on our typical schedule in February. Recognizing that participants would have received additional RSUs through the SoftBank Mergers equity exchange process in the absence of
this delay of the traditional February grant and that participants would have benefited from the value creation since February 2013 with respect to those awards, the Compensation Committee increased participants overall 2013 LTIC plan target
opportunities by 15%. The Compensation Committee decided such increase also was appropriate in order to reward participants for their performance in the first half of 2013. The adjusted target opportunities under the 2013 LTIC plan for our
executives are reflected in Compensation OverviewComponents of Our Executive Compensation Program. Mr. Draper did not participate in our 2013 LTIC plan, but he received a sign-on award of time-based RSUs on
September 10, 2013, which is reflected in Compensation OverviewComponents of Our Executive Compensation Program.
Consistent with its decisions regarding the STIC plan for the Transition Period, our Compensation Committee did not establish financial and operational
objectives and respective weightings and targets for the Transition Period. As a result, no grants under our LTIC plan related to performance were made during the Transition Period.
Corporate Governance Highlights
We
endeavor to maintain good governance standards, including with respect to our executive compensation practices. Several highlights are listed below:
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Our named executive officers are subject to a clawback provision in our incentive compensation programs, under which we may recover payouts thereunder to the extent based on financial results or operating metrics
impacted by the named executive officers knowing or intentional fraudulent or illegal conduct.
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We have stock ownership guidelines. See Other Components of Executive CompensationStock Ownership Guidelines;
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Our named executive officers receive few perquisites, entitlements or elements of non-performance-based compensation, except for market-competitive salaries and modest benefits that are comparable to those provided to
all employees;
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Our severance benefits are positioned conservatively relative to market practices, with no benefit in excess of two times base salary plus annual incentive, change-in-control benefits payable only upon a
double-trigger qualified termination, and no golden parachute excise tax gross-ups; and
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The Compensation Committee retains Frederic W. Cook & Co., Inc. (Cook) as an independent advisor that performs no other work for the Company.
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Setting Executive Compensation
Role of
Compensation Consultant and Executive Officers
The Compensation Committee has retained Cook as its independent compensation consultant.
Cook provides no services to us other than advisory services for executive and director compensation and has no other relationships with the Company. Cook works with management only at the request and under the direction of the Compensation
Committee and only on matters for which the Compensation Committee has oversight responsibility. The Compensation Committee has assessed the independence of Cook and other advisors to the Compensation Committee, as required under NYSE listing rules.
The Compensation Committee has also considered and assessed all relevant factors, including those required by the SEC that could give rise to a potential conflict of interest with respect to Cook and its other advisors during 2013. Based on this
review, the Compensation Committee did not identify any conflict of interest raised by the work performed by any advisors to the Compensation Committee.
Representatives of Cook attend Compensation Committee meetings at the Compensation Committees request and provide guidance to the
Compensation Committee on a variety of compensation issues. The primary point of contact at Cook frequently communicates with the chair of the Compensation Committee and interacts with all Compensation Committee members without management
present.
Cook has reviewed the compensation components and levels for our named executive officers and advised the Compensation Committee on
the appropriateness of our compensation programs, including our incentive and equity-based compensation plans, retention incentives and proposed employment agreements, as these matters arose during the year. The Compensation Committee has directed
that Cook provide this advice taking into account our overall executive compensation philosophy as described above. Cook prepares benchmarking data discussed below, reviews the results with the Compensation Committee, and provides
recommendations and an opinion on the reasonableness of new compensation plans, programs and arrangements.
In addition to its ongoing support of
the Compensation Committee and continuous advice on compensation design, levels and emerging market practices, Cook periodically conducts a comprehensive review of our overall executive compensation program, including direct and indirect elements of
compensation, to ensure that the program operates in support of our short- and long-term financial and strategic objectives and that it aligns with evolving corporate governance best practices.
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Our CEO periodically discusses the design of and makes recommendations with respect to our
compensation programs and the compensation levels of our other named executive officers and certain key personnel with the Compensation Committee. Our CEO does not make recommendations to the Compensation Committee with regard to his own
compensation; rather, Cook provides the Compensation Committee with an annual report on CEO compensation and a range of alternatives with regard to potential changes.
Process for Setting Executive Compensation
The
Compensation Committee annually reviews the compensation packages of our named executive officers in the form of tally sheets. These tally sheets value each component of compensation and benefits, including a summary of the outstanding
equity holdings of each named executive officer as of year-end and the value of such holdings at various assumed stock prices. The tally sheets also set forth the estimated value that each of our named executive officers would realize upon
termination under various scenarios.
The Compensation Committee uses these tally sheets when considering adjustments to base salaries and awards of
equity-based or other remuneration and in establishing incentive plan target opportunity levels as follows:
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comparing each named executive officers total compensation against a similar position in our peer group;
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understanding the impact of decisions on each individual element of compensation on total compensation for each named executive officer;
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evaluating total compensation of each named executive officer from an internal equity perspective; and
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assuring that equity compensation represents a portion of each named executive officers total compensation that is in line with our philosophy of motivating the executives to align their interests with our
stockholders.
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Although the Compensation Committee reviews and considers the amounts realizable by our named executive officers under
different termination scenarios, including those in connection with a change in control, as well as the current equity-based award holdings, these are not the primary considerations in the assessment and determination of annual compensation for our
named executive officers.
Use of Benchmarking Data
To assist in setting total compensation levels that are reasonably competitive, the Compensation Committee annually reviews market trends in executive
compensation and a competitive analysis prepared by Cook. This information is derived from the most recent proxy statement data of companies in a peer group of telecommunications and high-technology companies and, where limited in its functional
position match to our executives, is supplemented with data on our peer group from a published compensation survey prepared by Towers Watson of approximately 80 participating industry companies all with revenues exceeding $4 billion.
Taking into consideration the recommendation of Cook, the Compensation Committee determines companies for our peer group based on similarity of their
business model and product offerings as well as comparability from a size perspective, including annual revenue, market capitalization, net income, enterprise value and number of employees. For example, our
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revenue is above the median of our peer group while our enterprise value is below the median. The Compensation Committee approved the use of the following 12 companies for its fiscal year 2013
executive compensation benchmarking analysis:
AT&T, Inc., CenturyLink, Inc., Comcast Corporation, Computer
Sciences Corporation, Dell Inc., DIRECTV, Motorola Solutions, Inc., Qualcomm Incorporated, Texas Instruments Incorporated, Time Warner Cable, Inc., Verizon Communications Inc., and Xerox Corporation.
In September 2013, we made the following changes to our peer group for future executive compensation decisions: removed Dell Inc. from our peer group
given its transition to a privately-held company and added Cisco Systems, Inc., EMC Corporation and Intel Corporation, based on size, business comparability and other relevant factors.
The Compensation Committee does not follow a specific formula in making its pay decisions, but rather uses benchmarks as a frame of reference and
generally targets total compensation at the median of our peer group to reflect our relative position within it. Based on performance against predetermined goals and changes in total stockholder return over time, this approach results in an
opportunity to earn total payouts above median market rates for over-achievement and below the median for under-achievement relative to the peer group. The Compensation Committee exercises its judgment by taking into consideration a multitude of
other important factors such as experience, individual performance, and internal pay equity in setting target compensation levels, but actual payouts under our variable incentive plans are primarily determined based on formulaic outcomes. With
respect to our named executive officers total targeted compensation for 2013, excluding Mr. Hesses retention awards, Messrs. Elfman and Euteneuer were above the median, and the remaining named executive officers, including our CEO,
were below the median for the peer group.
Primary Components of Executive Compensation
Following is a discussion and analysis of the primary elements of our named executive officer compensation program. These components are available to
each named executive officer throughout a typical 12 month period; however, not all were implicated during the three-month Transition Period.
Base Salary
Base salary is designed to attract and retain executives. Our named executive officers salaries are based on a number of factors,
including the nature, responsibilities and reporting relationships of the position, individual performance of the executive, salary levels for incumbents in comparable positions at peer companies, as well as other executives within our organization,
and experience and tenure of the executive.
Mr. Johnsons base salary was increased to $625,000 in 2013 due to a significant increase in
job responsibilities as President, Sprint Retail and Chief Service and Information Technology Officer. Mr. Drapers base salary was increased to $375,000 in 2013 due to a significant increase in job responsibilities as President, Prepaid.
The base salaries of both Messrs. Johnson and Draper after their respective salary increases remained below median for the peer group.
None of our
named executive officers received an increase in base salary during the Transition Period.
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Short-Term Incentive Compensation Plan
Our STIC plan is our annual cash bonus plan, which we believe will ultimately result in an increase in stockholder value because our incentives under it
are linked to business objectives that we believe will deliver our long-term success.
As required under the SoftBank Merger Agreement, the
Compensation Committee used two six-month performance periods for determining the amount of plan payments under the 2013 STIC plan rather than one annual performance period. Based on performance against stated objectives, our named executive
officers must have been employed through December 31, 2013 in order to be eligible to receive full compensation for the performance period. A prorated payout is received by employees who are terminated during the year as the result of death,
disability, retirement, or involuntary termination without cause.
In February 2013, the Compensation Committee established financial and
operational objectives and their respective weightings and targets for the first half-year 2013 performance period, continuing to balance our senior management teams and other plan participants focus among our most critical financial and
strategic objectives, which remained as growing revenue and earnings while increasing subscriber growth and reducing churn. To that end, the Compensation Committee established the following objectives and weightings for the first half
of 2013:
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Sprint platform postpaid subscriber churn, 30%; and
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Sprint platform net additions, 20%.
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Following the close of the SoftBank Merger, the Compensation
Committee reaffirmed the stated objectives from the first half-year 2013 performance period by establishing the same objectives for the second half of 2013.
To further our goal of tying a significant portion of each named executive officers total annual compensation to our business performance, the
STIC plan provides for a payment equal to the named executive officers targeted opportunity (set at a percentage of his base salary) only if our actual results meet the targets. Similarly, a payment in excess of a named executive
officers targeted opportunity may be made if our actual performance exceeds the targeted objectives (capped at 200%), a payment below targeted opportunity may be made if our actual performance is below the target objectives but exceeded the
minimum threshold level, and no payout would be made if our actual performance does not exceed the minimum threshold level. As previously disclosed on Sprints Current Report on Form 8-K filed on May 4, 2012, Mr. Hesse agreed to a
reduction in his target opportunity under the 2012 STIC plan from 200% to 170%, which returned his incentive opportunity to his 2010 level. Also, in connection with Mr. Drapers entry into an employment agreement with Sprint and his
increased responsibilities, Mr. Drapers targeted STIC opportunity (expressed as a percentage of his base salary) increased in 2013.
As
discussed above, the Compensation Committee did not establish STIC plan financial and operational objectives and respective weightings and targets for the Transition Period.
Long-Term Incentive Compensation Plan
Our LTIC plan
serves our compensation objectives by linking payment to achievement of financial and operational objectives and by linking executive interests with those of our stockholders.
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Pursuant to the SoftBank Merger Agreement and following evaluation of the factors critical to driving
long-term stockholder value, the Compensation Committee established the components and terms of the 2013 LTIC plan. Since 2009, the Compensation Committee has used performance units (cash-settled) as a component of awards under the LTIC plan. This
was done during our turnaround phase when the stock price was low and highly volatile. However, the Compensation Committee returned to awards issued under the 2013 LTIC plan comprised solely of equity in light of the transformative SoftBank Merger
and the desire to provide incentives for achieving long-term growth and alignment of stockholder interests. The Compensation Committee granted half of executives LTIC plan opportunities in the form of performance-based RSUs and half in
time-based RSUs. The time-based RSUs were granted as a component in order to promote executive retention while allowing us to set aggressive performance goals for the performance-based RSUs component. In light of these considerations, the
Compensation Committee established awards under the 2013 LTIC plan as follows:
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Time-based RSUsvest on February 27, 2016.
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Performance-based RSUsvest on February 27, 2016, with payout conditioned on achievement of a predetermined performance objective during a single two-year performance period of 2014-2015.
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The 2013 LTIC plan places a longer-term focus on Company earnings and growing subscribers and revenues through establishing cumulative adjusted EBITDA
as the primary performance objective. This metric was chosen for the performance period because it represents a critical financial and strategic objective. Payment on the adjusted EBITDA objective in excess of 150% up to 200% of the targeted
opportunity is contingent on achieving an additional objective of retail net subscriber additions, which includes both prepaid and postpaid additions but excludes wholesale and affiliate additions. The Compensation Committee believes use of retail
net subscriber additions as a performance objective under the 2013 LTIC plan supports Sprints core focus of growing our subscriber base.
Mr. Johnsons target compensation under the 2013 LTIC plan increased in connection with his increased responsibilities discussed under
Base Salary above. His LTIC opportunity after the increase remained below median for the peer group. Otherwise, there were no changes in our named executive officers LTIC plan opportunities for 2013 compared to 2012.
As discussed above, the Compensation Committee did not grant awards under the LTIC plan during the Transition Period.
Other Compensation Decisions
On September 10,
2013, Mr. Elfman entered into an amendment to his employment agreement. In exchange for continuing his employment through the earlier of certain specified employment terminations and January 2, 2015, Mr. Elfman is entitled to the
following under the amendment: (1) relocation of Mr. Elfmans place of performance to Seattle, Washington, (2) any change in his reporting relationship to anyone other than the chief executive officer or the board would
constitute an event of good reason as defined in the agreement; and (3) following termination under certain circumstances and execution of a general release, continued and/or prorated accelerated vesting of his then-outstanding
equity as if he was involuntarily terminated without cause on his termination date.
Effective September 6, 2013, Mr. Draper entered into
an employment agreement and was appointed President, Prepaid of Sprint. Mr. Draper formerly was Senior Vice President and Manager, Retail of Clearwire. On September 10, 2013, Mr. Draper received a sign-on award of
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131,579 RSUs. On February 21, 2014, Mr. Draper entered into an amendment to his employment agreement, which provided for tax assistance with respect to the Companys payment of
Mr. Drapers state home sale transaction expenses in connection with his relocation from Kirkland, Washington to the vicinity of our Overland Park, Kansas headquarters as required under his employment agreement. These expenses are included
in the summary compensation table in the All Other Compensation column for the Transition Period.
As a result of the SoftBank Merger,
which complicated our ability to accurately measure performance based on the goals that were originally set, the performance units and performance-based RSUs granted under the 2012 LTIC plan and, with respect to the 2013 annual performance period,
the 2011 LTIC plan, were deemed met at target. Amounts deemed earned at target for these awards are included in the summary compensation table in the Non-Equity Incentive Plan Compensation column for fiscal year 2013.
Other Components of Executive Compensation
Our named
executive officers total rewards opportunities consist of a number of other elements important to our compensation philosophy for both fiscal year 2013 and the Transition Period of attracting, retaining, and motivating our named executive
officers:
Employee Benefit Plans and Programs
. Our compensation program includes a comprehensive array of health and welfare benefits in
which our eligible employees, including our named executive officers, are eligible to participate. We pay all of the costs for some of these benefit plans, and participants contribute a portion of the cost for other benefit plans.
Retirement Programs
. Our retirement program consists of the Sprint Corporation 401(k) Plan, which provides participants a fixed matching
contribution on up to 4% of eligible compensation an opportunity to build financial security for their future. The amount of any matching contributions made by us to participating named executive officers is included in the All Other
Compensation column of the summary compensation table.
Deferred Compensation
. Certain employees, including our named executive
officers, are offered the opportunity to participate in the Sprint Corporation Deferred Compensation Plan, a nonqualified and unfunded plan, under which they may defer to future years the receipt of certain compensation in addition to that eligible
under the 401(k) plan. Participants may elect to defer up to 50% of base salary, up to 75% of STIC plan payments, and up to 75% of cash-based performance unit payouts made under the LTIC plan. We believe this plan helps attract and retain executives
by providing the participant another tax efficient retirement plan. Participants elect to allocate deferred and any matching contributions among one or more hypothetical investment options, which include one option that tracks our common stock and
other options that track broad-based bond and equity indices. Our plan provides for a matching contribution using the same matching contribution percentage as our 401(k) plan of eligible earnings above the applicable annual limit, which is intended
to compensate highly-compensated employees for limitations placed on our 401(k) plan by federal tax law. For each of fiscal year 2013 and the Transition Period, Mr. Hesse participated in the Sprint Corporation Deferred Compensation Plan.
Personal Benefits and Perquisites
. The limited personal benefits and perquisites that we provide to our named executive officers are intended to
promote executive retention and to allow our executives to maximize their focus on the Company. These benefits are summarized in footnote 6 to the summary compensation table. As a result of the recommendations contained in an independent third-party
security study, the Compensation Committee established an overall
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34
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Statement
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security program for Mr. Hesse. Under the security program, we currently provide Mr. Hesse with residential security systems and equipment, and he is required to use our aircraft for
business and non-business travel. We believe these measures ensure the safety of Mr. Hesse and allow him to devote his full attention to Company business. Mr. Hesse is permitted to have his family accompany him on the corporate aircraft
for business and non-business travel.
Change in Control
. If a transaction that could result in a change in control were under consideration,
we expect that our named executive officers would face uncertainties about how the transaction may affect their continued employment with us. We believe it is in our stockholders best interest if our named executive officers remain employed
and focused on our business through any transition period following a change in control and remain independent and objective when considering possible transactions that may be in stockholders best interests but possibly result in the
termination of their employment. Our change in control benefits accomplish this goal by providing each eligible named executive officer with a meaningful severance benefit in the event that a change in control occurs and, within a specified time
period of the change in control, his employment is involuntarily terminated without cause or voluntarily terminated for good reason.
The Sprint Corporation Change in Control Severance Plan, which we refer to as the CIC plan, provides severance benefits to a select group of senior
executives, including our named executive officers, in the event of a qualified termination of employment in connection with a transaction that results in a change in control. Any of these benefits payable would be reduced to the extent of any
severance benefit otherwise available under any other applicable policy, program, or plan so that there would be no duplication of benefits. The benefits upon termination in connection with a change in control to which our named executive officers
are entitled, as described in Potential Payments upon Termination of Employment or Change in Control, are likewise competitive within our peer group.
The SoftBank Merger was a change in control under the Change in Control Severance Plan. On September 17, 2013, our board amended the plan to modify
the definition of Change in Control to (i) exclude acquisitions by SoftBank or its controlled affiliates from the change in control trigger associated with a group (within the meaning of Section 13(d)(3) of the Securities
Exchange Act) acquiring 30 percent or more of the combined voting power of the Company, and (ii) include Sprint Corporation ceasing to have equity securities trading on a national securities exchange as a change in control trigger. The board
also amended the plan to include an offset of change in control benefits for pay and benefits received during any WARN notification period to align with such an offset provided in the broad-based separation plan.
Tax Deductibility of Compensation
Section 162(m)
limits to $1 million the amount of non-performance-based remuneration that we may deduct from our taxable income in any tax year with respect to our CEO and the three other most highly compensated executive officers, other than the CFO, at the
end of the year. Section 162(m) provides, however, that we may deduct from our taxable income without regard to the $1 million limit the full value of all qualified performance-based compensation.
Our base salary and perquisites and other personal benefits are not considered qualified performance-based compensation and therefore are
subject to the limit on deductibility. Our STIC plan and LTIC plan awards may be considered qualified performance-based compensation if certain requirements are met, including among others that the maximum number of stock option or full
value share awards and the maximum amount of other cash
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Notice of Annual Meeting and Proxy Statement |
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performance-based remuneration that may be payable to any one executive officer has been disclosed to and approved by stockholders prior to the award or payment.
The Compensation Committee considers Section 162(m) deductibility in designing our compensation program and incentive-based compensation plans. In
general, we may design our STIC and LTIC plans to be compliant with the performance-based compensation rules of Section 162(m) in order to maximize deductibility. In certain circumstances, however, the Compensation Committee has determined it
necessary in order to retain executives and attract candidates for senior level positions to offer compensation packages in which the non-performance-based elements exceed the $1 million Section 162(m) limit. The Compensation Committee
makes no assurance that such compensation will be fully deductible for federal income tax purposes.
The awards under our 2013 STIC plan and
performance-based RSUs under the 2013 LTIC plan are designed so that they may qualify as qualified performance-based compensation under Section 162(m), except for those awards to Mr. Johnson due to the terms of his employment
agreement.
For the 2013 STIC plan, the Compensation Committee for the first six-month performance period, and a sub-committee comprised of Messrs.
Bethune and Mullen (the Section 16 Sub-Committee) of the Compensation Committee for the second six- month performance period, established Section 162(m) objectives for the named executive officers potentially subject to
Section 162(m) at a small fraction of a percentage of our adjusted operating income. The Compensation Committee and Section 16 Sub-Committee are precluded from exercising upward discretion to the payout achieved under these objectives. The
Section 16 Sub-Committee exercised its discretion to make payments under the 2013 STIC plan at levels below the payout achieved under the Section 162(m) objectives for both performance periods during 2013 as guided by the performance
metrics discussed under Performance and Key Compensation DecisionsSTIC Plan.
For the performance-based RSU award for the 2013
LTIC plan, the Section 16 Sub-Committee established a Section 162(m) objective for the named executive officers potentially subject to Section 162(m) based on cumulative adjusted operating income during a single two-year performance
period of 2014-2015. The Section 16 Sub-Committee is precluded from exercising upward discretion to the payout achieved under this objective.
The Section 16 Sub-Committee did not establish Section 162(m) objectives under the STIC plan or the LTIC plan for the Transition Period.
Stock Ownership Guidelines
We have
stock ownership guidelines for our named executive officers and other members of our senior management team. The board believes ownership by executives of a meaningful financial stake in our Company serves to align executives interests with
those of our stockholders. Our guidelines encourage our CEO to hold shares of our common stock with a value equal to five times his base salary, and encourage the other named executive officers to hold shares of our common stock with a value equal
to three times their respective base salaries. Eligible shares and share equivalents counted toward ownership consist of:
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restricted stock or RSUs;
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common or preferred stock, including those purchased through our Employee Stock Purchase Plan;
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intrinsic value (the excess of the current stock price over the options exercise price) of vested, in-the-money stock options; and
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share units held in our 401(k) plan and various deferred compensation plans.
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Persons subject to the
stock ownership guidelines have five years beginning on the date on which the person becomes subject to the ownership guidelines to achieve the ownership requirement. For fiscal year 2013, all of our named executive officers who had been with the
Company for at least five years had met the stock ownership guidelines.
Stockholder Say-on-Pay Vote
We provide our stockholders with the opportunity to cast an annual advisory vote on named executive officer compensation (a say-on-pay
proposal). At our last annual meeting of stockholders, 81% of the votes cast on the say-on-pay proposal at that meeting were voted in favor of the proposal. The Compensation Committee considered the voting results at discussions among its
members during its meetings, and the Compensation Committee believes this vote affirms stockholders support of the Companys approach to executive compensation. As a result of this consideration, we did not change our approach to
named executive officer compensation in fiscal year 2013 or the Transition Period. The Compensation Committee will continue to consider the outcome of the Companys say-on-pay votes when making future compensation decisions for the named
executive officers.
Compensation Committee Report
The Compensation Committee has reviewed and discussed Sprints Compensation Discussion and Analysis with management. Based on these reviews and
discussions, the Compensation Committee recommended to the board that Sprints Compensation Discussion and Analysis be included in this proxy statement and the transition report on Form 10-K for the period ended March 31, 2014.
The Compensation Committee
Gordon M. Bethune, Chair
Ronald D. Fisher
Adm. Michael G. Mullen
Relationship of Compensation Practices to Risk Management
We have assessed whether there are any risks arising from our compensation policies and practices for our employees and factors that may affect the
likelihood of excessive risk taking. Based on that review, we have concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.
In coming to this conclusion, in late 2013 and early 2014, our human resources department reviewed the Companys incentive plans, surveying sales-
and non-sales-related compensation programs, as well as executive and non-executive compensation programs. Pay philosophies, performance objectives and overall incentive plan designs were reviewed. Human resources discussed plan elements with
representatives from the business functions responsible for incentive plan design and administration. Design features were assessed to determine whether there is a likelihood that incentive plans could encourage excessive risk-taking resulting in a
material adverse effect on the Company and to ensure that appropriate governance is in place to mitigate risk under unforeseen circumstances. The results of this assessment were reviewed by the Compensation Committee in February and May 2014. In
addition, the Compensation Committees independent consultant, Cook, considered risk in all aspects of the
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Notice of Annual Meeting and Proxy Statement |
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plans in which our executives participate and advised the Compensation Committee accordingly. Cook confirmed that there are no aspects of the programs described in the preceding Compensation
Discussion and Analysis that create an incentive to take risks that are reasonably likely to have a material adverse effect on the Company.
Summary Compensation Table
The table below summarizes the compensation of our named executive officers that is attributable to the
three-month Transition Period ended March 31, 2014 and the fiscal years ended December 31, 2013, 2012, and 2011. The named executive officers are our President and CEO, our CFO, and our three other most highly compensated executive
officers serving at March 31, 2014. Amounts included in Non-Equity Incentive Plan Compensation for 2013 include performance units granted under the 2012 LTIC plan, which, as provided for in the SoftBank Merger Agreement, were
converted as if target performance had been achieved as of the closing date of the SoftBank Merger. Although these awards do not vest until December 31, 2014, the target amounts are required to be reported as earned in 2013 and account for
nearly all of the increase over 2012 non-equity incentive plan compensation.
As previously disclosed, on May 4, 2012, Mr. Hesse agreed to
a reduction in his 2012 base pay to repay amounts associated with a discretionary adjustment the Compensation Committee made under the incentive plan payouts for 2011 for the impact of the
iPhone
®
on Sprints financial results. Amounts reported in the summary compensation table under the Salary, Non-Equity Incentive Plan Compensation and
Total columns for 2012 and 2013 reflect amounts paid or awarded to Mr. Hesse before taking into account such repayments. The repayments are disclosed in supplemental columns under the headings Salary Foregone and
Non-Equity Incentive Plan Compensation Foregone.
Each of our named executive officers has an employment agreement with us. For more
information regarding our compensation philosophy and a discussion of the elements of our compensation program, see Compensation Discussion and Analysis.
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38
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Notice of Annual Meeting and Proxy
Statement
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Name and Principal Position
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Fiscal Year
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Salary
($)
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Salary
Foregone
($)
(1)
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Bonus
($)
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Stock
Awards
($)
(2)
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Option
Awards
($)
(3)
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Non-Equity
Incentive Plan
Compensation
($)
(4)
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Non-Equity
Incentive Plan
Compensation
Foregone
($)
(5)
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All Other
Compensation
($)
(6)
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Total
($)
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Daniel R. Hesse
President and Chief Executive
Officer
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3 months
ended
3/31/2014
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300,000
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|
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13,299
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|
|
|
313,299
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2013
|
|
|
1,200,000
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|
|
|
|
|
|
|
|
|
|
|
27,782,547
|
|
|
|
6,291,160
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|
13,431,914
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(2,000,000)
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|
|
372,078
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|
|
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49,077,699
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2012
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|
1,200,000
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|
|
(346,223)
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|
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|
3,560,070
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|
1,214,695
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|
5,002,457
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(362,592)
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|
|
167,334
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|
|
|
11,144,556
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2011
|
|
|
1,200,000
|
|
|
|
|
|
|
|
829,322
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|
|
|
3,222,768
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|
1,692,000
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|
|
|
4,844,272
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94,289
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|
|
|
11,882,651
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|
Joseph J. Euteneuer
Chief Financial Officer
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|
3 months
ended
3/31/2014
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|
|
193,750
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
19,708
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|
|
|
213,458
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|
2013
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|
775,000
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|
|
|
|
|
|
|
|
|
|
|
4,776,268
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3,531,887
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10,200
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|
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|
9,093,355
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2012
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775,000
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|
|
|
|
|
|
|
|
|
|
|
1,215,727
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|
742,609
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|
|
1,430,935
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|
|
|
|
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|
14,875
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|
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|
4,179,146
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2011
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|
551,442
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|
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|
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|
688,150
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|
|
930,557
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|
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|
689,755
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|
|
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895,935
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|
|
|
|
|
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77,088
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|
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|
3,832,927
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Dow Draper
President Prepaid
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|
3 months
ended
3/31/2014
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93,750
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|
|
|
|
|
|
|
|
|
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|
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156,951
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250,701
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|
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|
2013
|
|
|
172,462
|
|
|
|
|
|
|
|
|
|
|
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832,895
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|
|
|
|
|
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94,023
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|
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|
|
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46,000
|
|
|
|
1,145,380
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|
Steven L. Elfman
President Products and Services
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|
3 months
ended
3/31/2014
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162,500
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|
162,500
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|
2013
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|
|
650,000
|
|
|
|
|
|
|
|
|
|
|
|
4,448,210
|
|
|
|
|
|
|
|
3,133,242
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|
|
|
|
|
182,922
|
|
|
|
8,414,374
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2012
|
|
|
650,000
|
|
|
|
|
|
|
|
|
|
|
|
1,319,200
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|
|
|
689,565
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|
|
|
1,561,531
|
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|
|
|
|
|
|
14,875
|
|
|
|
4,235,171
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|
|
2011
|
|
|
650,000
|
|
|
|
|
|
|
|
251,232
|
|
|
|
868,963
|
|
|
|
596,097
|
|
|
|
1,470,688
|
|
|
|
|
|
|
|
7,837
|
|
|
|
3,844,817
|
|
Robert L. Johnson
President Sprint Retail and Chief
Service and Information
Technology Officer
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|
3 months
ended
3/31/2014
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|
|
156,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
156,250
|
|
|
2013
|
|
|
566,981
|
|
|
|
|
|
|
|
|
|
|
|
2,163,490
|
|
|
|
|
|
|
|
1,645,661
|
|
|
|
|
|
|
|
10,200
|
|
|
|
4,386,332
|
|
|
2012
|
|
|
523,846
|
|
|
|
|
|
|
|
|
|
|
|
597,376
|
|
|
|
318,261
|
|
|
|
847,621
|
|
|
|
|
|
|
|
14,875
|
|
|
|
2,301,979
|
|
|
2011
|
|
|
486,308
|
|
|
|
|
|
|
|
123,842
|
|
|
|
372,019
|
|
|
|
256,780
|
|
|
|
718,990
|
|
|
|
|
|
|
|
47,578
|
|
|
|
2,005,517
|
|
(1)
|
As previously disclosed on Sprints Current Report on Form 8-K filed on May 4, 2012, Mr. Hesse agreed to a reduction in his base pay to repay amounts associated with a discretionary adjustment the
Compensation Committee made under the incentive plan payouts for 2011 for the impact of the iPhone
®
on Sprints financial results.
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Notice of Annual Meeting and Proxy Statement |
39
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(2)
|
The value shown for 2013 is the sum of several awards, including performance-based RSU awards allocable to the 2013 performance period under the 2011 LTIC plan plus time- and performance-based RSU awards under the 2013
LTIC plan. The value shown for Mr. Hesse also includes a retention award in the form of time-based RSUs. The value shown for Mr. Draper consists of a sign-on award of time-based RSUs.
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 pRSUs
($)
|
|
|
2013 RSUs
($)
|
|
|
2013 pRSUs
($)
|
|
|
Retention
RSUs
($)
|
|
|
Sign-on
RSUs
($)
|
|
|
Total
($)
|
|
Hesse
|
|
|
1,884,969
|
|
|
|
6,900,003
|
|
|
|
7,940,384
|
|
|
|
11,057,191
|
|
|
|
|
|
|
|
27,782,547
|
|
Euteneuer
|
|
|
447,821
|
|
|
|
2,012,501
|
|
|
|
2,315,946
|
|
|
|
|
|
|
|
|
|
|
|
4,776,268
|
|
Draper
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
832,895
|
|
|
|
832,895
|
|
Elfman
|
|
|
428,946
|
|
|
|
1,868,747
|
|
|
|
2,150,517
|
|
|
|
|
|
|
|
|
|
|
|
4,448,210
|
|
Johnson
|
|
|
184,778
|
|
|
|
919,998
|
|
|
|
1,058,714
|
|
|
|
|
|
|
|
|
|
|
|
2,163,490
|
|
For the 2013 RSU awards, the value represents the aggregate grant date fair market value computed in accordance with
FASB ASC Topic 718 as of the date the Compensation Committee approved the applicable objectives and targets for the two-year performance period under the 2013 LTIC plan. The performance-based RSUs granted under the 2013 LTIC plan are based on target
opportunity and vest on February 27, 2016 but are also subject to performance-based vesting conditions. Payout values for performance-based RSUs under the 2013 LTIC plan based on maximum performance and grant date fair market value would be
$15,880,768 for Mr. Hesse, $4,631,892 for Mr. Euteneuer, $4,301,034 for Mr. Elfman, and $2,117,428 for Mr. Johnson. The time-based RSUs granted under the 2013 LTIC plan vest on February 27, 2016. The RSUs under the 2011 LTIC
plan are allocated one-third to each annual performance period from 2011-2013 and represent the aggregate grant date fair market value computed in accordance with FASB ASC Topic 718 as of the date the Compensation Committee approved the applicable
objectives and targets for the 2013 performance period. Each annual performance target was set by the Compensation Committee at the start of each respective single year performance period under the 2011 LTIC plan. The sign-on RSUs granted to
Mr. Draper vest 25% on each of September 10, 2014, September 10, 2015, September 10, 2016 and September 10, 2017; the reported value represents the aggregate grant date fair market value computed in accordance with FASB
ASC Topic 718. For more information regarding Mr. Hesses retention award, see Compensation Discussion and AnalysisSetting Executive CompensationOther Compensation Decisions for 2013. For more information
regarding the 2013 LTIC plan, see Compensation Discussion and AnalysisPrimary Components of Executive CompensationLong-Term Incentive Compensation Plan. For more information regarding Mr. Drapers sign-on
award, see Compensation Discussion and AnalysisCompensation OverviewComponents of Our Executive Compensation Program.
(3)
|
Represents the grant date fair value of options granted in 2013 computed in accordance with FASB ASC Topic 718. The grant date fair value for the options awarded is $3.63 per share. See Note 2Summary
of Significant Accounting Policies in Sprints Transition Report on Form 10-K for the fiscal year ended March 31, 2014 for more information. For more information regarding Mr. Hesses retention award, see
Compensation Discussion and AnalysisSetting Executive CompensationOther Compensation Decisions for 2013.
|
|
|
|
|
|
|
|
40
|
Notice of Annual Meeting and Proxy
Statement
|
|
|
|
|
(4)
|
The value shown for 2013 is the sum of performance unit awards under the 2011 LTIC plan allocable to the 2013 performance period, performance unit awards earned in 2013 under the 2012 LTIC plan, and the payout under the
2013 STIC plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 STIC
Plan
($)
|
|
|
2011
Performance
Units
($)
|
|
|
2012
Performance
Units
($)
|
|
|
Total
($)
|
|
Hesse
|
|
|
2,855,114
|
|
|
|
1,956,800
|
|
|
|
8,620,000
|
|
|
|
13,431,914
|
|
Euteneuer
|
|
|
1,198,553
|
|
|
|
583,334
|
|
|
|
1,750,000
|
|
|
|
3,531,887
|
|
Draper
|
|
|
94,023
|
|
|
|
|
|
|
|
|
|
|
|
94,023
|
|
Elfman
|
|
|
966,575
|
|
|
|
541,667
|
|
|
|
1,625,000
|
|
|
|
3,133,242
|
|
Johnson
|
|
|
662,327
|
|
|
|
233,334
|
|
|
|
750,000
|
|
|
|
1,645,661
|
|
With respect to the 2013 STIC plan, with the exception of Mr. Draper, each named executive officer earned a payout
of 118.96% of his targeted opportunity based on actual performance in 2013. Mr. Draper was not eligible to participate in the first half-year performance period under Sprints 2013 STIC plan because he was not a Sprint employee until the
second
half-year
performance period. Mr. Draper earned a payout of 63.83% of his targeted opportunity based on actual performance from July 1, 2013 through December 31, 2013. For more
information regarding our STIC plan, see Compensation Discussion and AnalysisPrimary Components of Executive CompensationShort-Term Incentive Compensation Plan.
With respect to the performance units under the 2011 LTIC plan, the amount shown is the amount allocable to the 2013 performance period with respect to
performance units granted by the Compensation Committee on February 23, 2011. The performance unit award under the 2011 LTIC plan is allocated one-third to each annual performance period for three years (2011-2013) and is payable in cash after
the end of the three-year period. Each annual performance target is set by the Compensation Committee at the start of each respective single-year performance period, and the payout of the performance unit award may range from 0% to 150% based on the
achievement of specified results. As a result of the SoftBank Merger, the performance units granted under the 2011 LTIC plan with respect to the 2013 annual performance period were deemed met at target, resulting in an aggregate payout percentage
for our named executive officers of 100% for those awards. Performance units granted under the 2012 LTIC plan were deemed met at target as a result of the SoftBank Merger, resulting in an aggregate payout percentage for our named executive officers
of 100% for those awards. See Note 2Summary of Significant Accounting Policies in Sprints Transition Report on Form 10-K for the fiscal year ended March 31, 2014 and Compensation Discussion and
AnalysisPrimary Components of Executive CompensationOther Compensation Decisions.
(5)
|
As previously disclosed on Sprints Current Report on Form 8-K filed on May 4, 2012, Mr. Hesse agreed to forfeit performance units valued at $2 million granted to him on February 22, 2012 under the
2012 LTIC plan and reduce his 2012 STIC plan opportunity from 200% of his annual base salary ($2.4 million) to 170% ($2.04 million), which returned his incentive opportunity to his 2010 level.
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting and Proxy Statement |
41
|
|
(6)
|
Consists of perquisites and other personal benefits and tax gross-ups during fiscal year 2013 and the Transition Period as follows:
|
Transition Period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-business
use of
Corporate
Aircraft
($)
(i)
|
|
Security
Services
($)
(ii)
|
|
Relocation
Costs
($)
(iii)
|
|
Tax
Gross-Ups
($)
(iv)
|
Hesse
|
|
6,265
|
|
7,034
|
|
|
|
|
Euteneuer
|
|
|
|
|
|
10,554
|
|
9,155
|
Draper
|
|
|
|
|
|
139,117
|
|
17,834
|
Elfman
|
|
|
|
|
|
|
|
|
Johnson
|
|
|
|
|
|
|
|
|
(i)
|
The incremental cost of use of our aircraft is calculated by dividing the total variable costs (such as fuel, aircraft maintenance, engine warranty expense, contract labor expense and other trip expenses) by the total
flight hours for the past 12 months and multiplying such amount by the individuals total number of flight hours for non-business use for the year.
|
(ii)
|
The Compensation Committee has established an overall security program for Mr. Hesse. Under the security program, we provided Mr. Hesse with residential security systems and equipment and he was required to
use our aircraft for business travel as well as non-business travel. Mr. Hesse was permitted to have his family accompany him on the corporate aircraft for business and non-business travel.
|
(iii)
|
For Mr. Euteneuer, consists of relocation costs incurred in connection with relocation of Mr. Euteneuers principal residence to the Overland Park, Kansas area.
|
For Mr. Draper, consists of relocation costs incurred in connection with relocation of Mr. Drapers principal residence to the Overland
Park, Kansas area. For more information regarding Mr. Drapers relocation, see Compensation Discussion and AnalysisPrimary Components of Executive CompensationOther Compensation Decisions.
(iv)
|
For Mr. Euteneuer, consists of tax gross-ups in connection with relocation of Mr. Euteneuers principal residence to the Overland Park, Kansas area.
|
For Mr. Draper, consists of tax gross-ups in connection with relocation of Mr. Drapers principal residence to the Overland Park, Kansas
area. For more information regarding Mr. Drapers relocation, see Compensation Discussion and AnalysisPrimary Components of Executive CompensationOther Compensation Decisions.
|
|
|
|
|
|
|
42
|
Notice of Annual Meeting and Proxy
Statement
|
|
|
|
|
Fiscal Year 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-business
use of
Corporate
Aircraft
($)
(i)
|
|
Security
Services
($)
(ii)
|
|
Relocation
Costs
($)
(iii)
|
|
Tax
Gross-Ups
($)
(iv)
|
|
Legal Fees
and Other
($)
(v)
|
|
Company
Contributions to
401(k) and
Deferred
Compensation
Plans
($)
|
Hesse
|
|
6,686
|
|
8,687
|
|
|
|
|
|
226,794
|
|
129,911
|
Euteneuer
|
|
|
|
|
|
|
|
|
|
|
|
10,200
|
Draper
|
|
|
|
|
|
45,100
|
|
|
|
900
|
|
|
Elfman
|
|
|
|
|
|
143,549
|
|
29,173
|
|
|
|
10,200
|
Johnson
|
|
|
|
|
|
|
|
|
|
|
|
10,200
|
(i)
|
The incremental cost of use of our aircraft is calculated by dividing the total variable costs (such as fuel, aircraft maintenance, engine warranty expense, contract labor expense and other trip expenses) by the total
flight hours for the past twelve months and multiplying such amount by the individuals total number of flight hours for non-business use for the year.
|
(ii)
|
The Compensation Committee has established an overall security program for Mr. Hesse. Under the security program, we provided Mr. Hesse with residential security systems and equipment and he was required to
use our aircraft for business travel as well as non-business travel. Mr. Hesse was permitted to have his family accompany him on the corporate aircraft for business and non-business travel.
|
(iii)
|
For Mr. Draper, consists of relocation costs incurred in connection with relocation of Mr. Drapers principal residence to the Overland Park, Kansas area. For more information regarding
Mr. Drapers relocation, see Compensation Discussion and AnalysisPrimary Components of Executive CompensationOther Compensation Decisions.
|
For Mr. Elfman, consists of relocation costs in connection with relocation of Mr. Elfmans principal place of work to Seattle, Washington.
For more information regarding Mr. Elfmans relocation, see Compensation Discussion and AnalysisPrimary Components of Executive CompensationOther Compensation Decisions.
(iv)
|
Consists of tax gross-ups in connection with relocation of Mr. Elfmans principal place of work to Seattle, Washington. For more information regarding Mr. Elfmans relocation, see
Compensation Discussion and AnalysisPrimary Components of Executive CompensationOther Compensation Decisions.
|
(v)
|
For Mr. Hesse, consists of legal fees relating to the negotiation of Mr. Hesses employment contract. For Mr. Draper, consists of phone allowance.
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting and Proxy Statement |
43
|
|
Grants of Plan-Based Awards
Transition Period.
No grants of plan-based awards were made to our named executive officers during the Transition Period.
Fiscal year 2013.
The table below summarizes awards under our 2013 STIC and LTIC incentive plans and other option awards to our named executive
officers for the fiscal year ended December 31, 2013. These awards consisted of the following:
|
|
|
Awards granted pursuant to our 2013 STIC plan;
|
|
|
|
Performance units and performance-based RSUs granted for the 2013 portion of our 2011 LTIC plan;
|
|
|
|
Time-based and performance-based RSUs granted pursuant to our 2013 LTIC plan;
|
|
|
|
Stock options and time-based RSUs granted to Mr. Hesse in connection with Mr. Hesses new employee agreement as described in Compensation Discussion and AnalysisPerformance and Key
Compensation Decisions; and
|
|
|
|
Time-based RSUs granted to Mr. Draper in connection with Mr. Drapers sign-on award as described in Compensation Discussion and AnalysisCompensation OverviewComponents of Our Executive
Compensation Program.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
|
|
|
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
Award
Type
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)
|
|
|
Grant Date
Fair Value
of Stock
and
Option
Awards
($)
|
|
Hesse
|
|
2/27
|
|
|
STI
(1)
|
|
|
|
600,000
|
|
|
|
2,400,000
|
|
|
|
4,800,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27
|
|
|
LTI
(2)
|
|
|
|
1,467,600
|
|
|
|
5,870,400
|
|
|
|
8,805,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27
|
|
|
pRSU
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
321,667
|
|
|
|
321,667
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,884,969
|
|
|
|
9/16
|
|
|
pRSU
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
298,960
|
|
|
|
1,195,841
|
|
|
|
2,391,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,940,384
|
|
|
|
7/24
|
|
|
RSU
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,195,841
|
|
|
|
|
|
|
|
|
|
|
|
6,900,003
|
|
|
|
8/1
|
|
|
RSU
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,733,102
|
|
|
|
|
|
|
|
|
|
|
|
11,057,191
|
|
|
|
8/1
|
|
|
SO
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,733,102
|
|
|
|
6.38
|
|
|
|
6,291,160
|
|
Euteneuer
|
|
2/27
|
|
|
STI
(1)
|
|
|
|
251,875
|
|
|
|
1,007,500
|
|
|
|
2,015,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27
|
|
|
LTI
(2)
|
|
|
|
437,500
|
|
|
|
1,750,000
|
|
|
|
2,625,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27
|
|
|
pRSU
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,420
|
|
|
|
76,420
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
447,821
|
|
|
|
9/16
|
|
|
pRSU
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87,197
|
|
|
|
348,787
|
|
|
|
697,574
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,315,946
|
|
|
|
7/24
|
|
|
RSU
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
348,787
|
|
|
|
|
|
|
|
|
|
|
|
2,012,501
|
|
Draper
|
|
2/27
|
|
|
STI
(1)
|
|
|
|
36,826
|
|
|
|
147,303
|
|
|
|
294,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/10
|
|
|
RSU
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131,579
|
|
|
|
|
|
|
|
|
|
|
|
832,895
|
|
Elfman
|
|
2/27
|
|
|
STI
(1)
|
|
|
|
203,125
|
|
|
|
812,500
|
|
|
|
1,625,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27
|
|
|
LTI
(2)
|
|
|
|
406,250
|
|
|
|
1,625,000
|
|
|
|
2,437,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27
|
|
|
pRSU
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,199
|
|
|
|
73,199
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
428,946
|
|
|
|
9/16
|
|
|
pRSU
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,968
|
|
|
|
323,873
|
|
|
|
647,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,150,517
|
|
|
|
7/24
|
|
|
RSU
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
323,873
|
|
|
|
|
|
|
|
|
|
|
|
1,868,747
|
|
Johnson
|
|
2/27
|
|
|
STI
(1)
|
|
|
|
142,757
|
|
|
|
571,027
|
|
|
|
1,142,054
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27
|
|
|
LTI
(2)
|
|
|
|
175,000
|
|
|
|
700,000
|
|
|
|
1,050,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/27
|
|
|
pRSU
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,532
|
|
|
|
31,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
184,778
|
|
|
|
9/16
|
|
|
pRSU
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,861
|
|
|
|
159,445
|
|
|
|
318,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,058,714
|
|
|
|
7/24
|
|
|
RSU
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
159,445
|
|
|
|
|
|
|
|
|
|
|
|
919,998
|
|
(1)
|
STIRepresents the threshold, target and maximum estimated possible payouts for fiscal year 2013 under our 2013 STIC plan. With the exception of
Mr. Draper, payouts under the 2013 STIC plan, which were based on our 2013 actual performance compared to the financial and operating objectives of the
|
|
|
|
|
|
|
|
44
|
Notice of Annual Meeting and Proxy
Statement
|
|
|
|
|
|
plan, were made at approximately 118.96% of each named executive officers target opportunity. With the exception of Mr. Draper, each named executive officer earned a payout of 118.96%
of his targeted opportunity based on actual performance in 2013. Mr. Draper was not eligible to participate in the first half-year performance period under Sprints 2013 STIC plan because he was not a Sprint employee until the second
half-year performance period. Mr. Draper earned a payout of 63.83% of his targeted opportunity based on actual performance from July 1, 2013 through December 31, 2013. Payouts under the 2013 STIC plan are reflected in the summary
compensation table in the column entitled Non-Equity Incentive Plan Compensation. Each performance objective under the plan had a threshold achievement level, below which there would be no payout, a target achievement level, at which the
target opportunity would be paid, and a maximum achievement level, at which 200% of the target would be paid for the annual performance period. For purposes of this table, the minimum estimated possible payout assumes that the threshold achievement
level was satisfied and for target, assumes payout at satisfaction of target. For more information on the 2013 STIC plan, see Compensation Discussion and AnalysisComponents of our Executive Compensation ProgramPerformance and Key
Compensation DecisionsSTIC Plan.
|
(2)
|
LTIRepresents the threshold, target and maximum estimated possible payouts for the 2013 portion of performance units granted by the Compensation Committee on February 23, 2011 under our 2011 LTIC plan; the
summary compensation table reflects target payouts, as described in footnote 3 thereto. As a result of the SoftBank Merger, the performance units granted under the 2011 LTIC plan with respect to the 2013 annual performance period were deemed met at
target, resulting in an aggregate payout percentage for our named executive officers of 100% for those awards.
|
(3)
|
pRSUsRepresents a performance-based RSU award for the 2013 portion of our 2011 LTIC plan, which, as granted, was payable only upon satisfaction of performance conditions, and now is payable at target in accordance
with the SoftBank Merger Agreement and vested 100% on February 23, 2014 (April 4, 2014 for Mr. Euteneuer).
|
(4)
|
pRSUsRepresents a performance-based RSU award granted under our 2013 LTIC plan, which is subject to adjustment in accordance with the performance objectives. Vesting occurs 100%, as adjusted for achievement in the
two-year performance period ending on December 31, 2015, on February 27, 2016.
|
(5)
|
RSUsRepresents a time-based RSU award granted under our 2013 LTIC plan. Vesting occurs 100% on February 27, 2016.
|
(6)
|
RSUsRepresents a time-based RSU award granted to Mr. Hesse. Vesting occurs 100% on August 1, 2018.
|
(7)
|
SORepresents stock options granted to Mr. Hesse. Vesting occurs 100% on August 1, 2018.
|
(8)
|
RSUsRepresents a time-based RSU award granted to Mr. Draper. Vesting occurs 25% on each of September 10, 2014, September 10, 2015, September 10, 2016 and September 10, 2017.
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting and Proxy Statement |
45
|
|
Option Exercises and Stock Vested
Transition Period.
The table below summarizes option awards that were exercised and stock awards that vested for the Transition Period with
respect to each of our named executive officers.
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
Shares
Acquired on
Exercise
(#)
|
|
Value
Realized
on
Exercise
($)
|
|
Number of
Shares
Acquired on
Vesting
(#)
|
|
Value
Realized on
Vesting
($)
(1)
|
Hesse
|
|
|
|
|
|
958,903
(2)
|
|
8,112,319
|
Euteneuer
|
|
|
|
|
|
|
|
|
Draper
|
|
|
|
|
|
|
|
|
Elfman
|
|
|
|
|
|
218,207
(3)
|
|
1,846,031
|
Johnson
|
|
|
|
|
|
93,997
(4)
|
|
795,215
|
(1)
|
Amounts reflect the average high and low common stock price as reported on the NYSE composite of the underlying common stock on the day the RSU award vested multiplied by the number of shares that vested.
|
(2)
|
Mr. Hesse surrendered 459,794 shares of common stock receivable upon the vesting of his RSU award to satisfy tax withholding obligations, resulting in Mr. Hesse receiving 499,109 shares of our common stock.
|
(3)
|
Mr. Elfman surrendered 91,538 shares of common stock receivable upon the vesting of his RSU award to satisfy tax withholding obligations, resulting in Mr. Elfman receiving 126,669 shares of our common stock.
|
(4)
|
Mr. Johnson surrendered 43,662 shares of common stock receivable upon the vesting of his RSU award to satisfy tax withholding obligations, resulting in Mr. Johnson receiving 50,335 shares of our common stock.
|
Fiscal year 2013.
The table below summarizes option awards that were exercised and stock awards that vested in 2013 with
respect to each of our named executive officers for the fiscal year ended December 31, 2013.
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
Shares
Acquired on
Exercise
(#)
|
|
Value
Realized
on
Exercise
($)
(1)
|
|
Number of
Shares
Acquired on
Vesting
(#)
|
|
Value
Realized on
Vesting
($)
(1)
|
Hesse
|
|
|
|
|
|
738,781
(2)
|
|
4,332,951
|
Euteneuer
|
|
|
|
|
|
|
|
|
Draper
|
|
|
|
|
|
|
|
|
Elfman
|
|
|
|
|
|
221,634
(3)
|
|
1,299,883
|
Johnson
|
|
871,267
|
|
6,207,777
|
|
94,564
(4)
|
|
554,618
|
(1)
|
Amounts reflect the average high and low common stock price as reported on the NYSE composite of the underlying common stock on the day the option shares were exercised or RSU award vested multiplied by the number of
shares that vested or were exercised.
|
|
|
|
|
|
|
|
46
|
Notice of Annual Meeting and Proxy
Statement
|
|
|
|
|
(2)
|
Mr. Hesse surrendered 323,775 shares of common stock receivable upon the vesting of his RSU award to satisfy tax withholding obligations, resulting in Mr. Hesse receiving 415,006 shares of our common stock.
|
(3)
|
Mr. Elfman surrendered 97,133 shares of common stock receivable upon the vesting of his RSU award to satisfy tax withholding obligations, resulting in Mr. Elfman receiving 124,501 shares of our common stock.
|
(4)
|
Mr. Johnson surrendered 32,352 shares of common stock receivable upon the vesting of his RSU award to satisfy tax withholding obligations, resulting in Mr. Johnson receiving 62,212 shares of our common stock.
|
Outstanding Equity Awards at Fiscal Year-End
Transition Period.
The table below summarizes option and equity awards outstanding as of March 31, 2014 held by each of our named executive
officers based on the closing price of a share of our common stock of $9.19 on that date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number
of
Shares or Units
of Stock that
Have Not
Vested
(#)
|
|
Market
Value of
Shares or
Units
of
Stock that
Have Not
Vested
($)
(1)
|
|
|
Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units, or
Other Rights that
Have Not Vested
(#)
|
|
Equity
Incentive Plan
Awards:
Market or
Payout Value of
Unearned
Shares, Units,
or Other Rights
that Have Not
Vested
($)
(1)
|
Hesse
|
|
|
|
|
|
|
1,733,102
|
(2)
|
|
|
6.38
|
|
|
|
8/1/2023
|
|
|
4,044,201
(5)
|
|
|
37,166,207
|
|
|
1,195,841
(6)
|
|
10,989,778
|
|
|
|
741,928
|
(3)
|
|
|
370,965
|
(3)
|
|
|
2.00
|
|
|
|
2/22/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,005,977
|
(4)
|
|
|
|
|
|
|
3.76
|
|
|
|
2/23/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
508,070
|
(4)
|
|
|
|
|
|
|
3.09
|
|
|
|
3/16/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,968,678
|
(4)
|
|
|
|
|
|
|
3.22
|
|
|
|
2/25/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
573,795
|
(4)
|
|
|
|
|
|
|
5.84
|
|
|
|
3/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,117,753
|
(4)
|
|
|
|
|
|
|
12.45
|
|
|
|
12/17/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,117,753
|
(4)
|
|
|
|
|
|
|
14.94
|
|
|
|
12/17/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,425,135
|
(4)
|
|
|
|
|
|
|
17.42
|
|
|
|
12/17/2017
|
|
|
|
|
|
|
|
|
|
|
|
Euteneuer
|
|
|
453,580
|
(3)
|
|
|
226,791
|
(3)
|
|
|
2.00
|
|
|
|
2/22/2022
|
|
|
1,133,260
(5)
|
|
|
10,414,659
|
|
|
348,787
(6)
|
|
3,205,353
|
|
|
|
254,447
|
(7)
|
|
|
127,224
|
(7)
|
|
|
4.14
|
|
|
|
4/4/2021
|
|
|
|
|
|
|
|
|
|
|
|
Draper
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131,579
(5)
|
|
|
1,209,211
|
|
|
|
|
|
Elfman
|
|
|
421,181
|
(3)
|
|
|
210,591
|
(3)
|
|
|
2.00
|
|
|
|
2/22/2022
|
|
|
810,395
(5)
|
|
|
7,447,530
|
|
|
323,873
(6)
|
|
2,976,393
|
|
|
|
354,409
|
(4)
|
|
|
|
|
|
|
3.76
|
|
|
|
2/23/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
304,841
|
(4)
|
|
|
|
|
|
|
3.09
|
|
|
|
3/16/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
989,677
|
(4)
|
|
|
|
|
|
|
3.22
|
|
|
|
2/25/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
172,138
|
(4)
|
|
|
|
|
|
|
7.06
|
|
|
|
5/4/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
487,038
|
(4)
|
|
|
|
|
|
|
8.48
|
|
|
|
5/4/2018
|
|
|
|
|
|
|
|
|
|
|
|
Johnson
|
|
|
97,196
|
(8)
|
|
|
97,196
|
(8)
|
|
|
2.00
|
|
|
|
2/22/2022
|
|
|
383,993
(5)
|
|
|
3,528,896
|
|
|
159,445
(6)
|
|
1,465,300
|
|
|
|
50,890
|
(4)
|
|
|
|
|
|
|
3.76
|
|
|
|
2/23/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,517
|
(4)
|
|
|
|
|
|
|
3.09
|
|
|
|
3/16/2020
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Market value is based on the closing price of a share of our common stock of $9.19 on March 31, 2014.
|
(2)
|
Stock options vest 100% on August 1, 2018.
|
(3)
|
Stock options vest/vested 33 1/3% on February 22, 2013, February 22, 2014 and February 22, 2015.
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting and Proxy Statement |
47
|
|
(4)
|
Stock options are fully vested.
|
(5)
|
Consists of Mr. Hesses time-based RSU award of 1,733,102 shares that vest on August 1, 2018 and Mr. Drapers time-based RSU award of 131,579 that vests 25% on September 10,
2014, September 10, 2015, September 10, 2016 and September 10, 2017.
|
Consists of Mr. Euteneuers
restricted stock award of 32,718 shares that vested on April 4, 2014 and 227,809 performance-based RSUs that vested on April 4, 2014 and with respect to which the applicable performance periods have been completed.
Consists of time-based RSU awards that vest on February 27, 2016:
|
|
|
|
|
Name
|
|
Amount
|
|
Hesse
|
|
|
1,195,841
|
|
Euteneuer
|
|
|
348,787
|
|
Elfman
|
|
|
323,873
|
|
Johnson
|
|
|
159,445
|
|
Consists of performance-based RSUs that vest on February 22, 2015 and with respect to which the applicable
performance periods have not been completed:
|
|
|
|
|
Name
|
|
Amount
|
|
Hesse
|
|
|
1,115,258
|
|
Euteneuer
|
|
|
523,946
|
|
Elfman
|
|
|
486,522
|
|
Johnson
|
|
|
224,548
|
|
(6)
|
Consists of performance-based RSUs that vest on February 27, 2016 and with respect to which the applicable performance periods have not been completed:
|
|
|
|
|
|
Name
|
|
Amount
|
|
Hesse
|
|
|
1,195,841
|
|
Euteneuer
|
|
|
348,787
|
|
Elfman
|
|
|
323,873
|
|
Johnson
|
|
|
159,445
|
|
(7)
|
Stock options vest/vested 33 1/3% on April 4, 2012, April 4, 2013 and April 4, 2014.
|
(8)
|
Stock options vest/vested 50% on February 22, 2014 and February 22, 2015.
|
|
|
|
|
|
|
|
48
|
Notice of Annual Meeting and Proxy
Statement
|
|
|
|
|
Fiscal year 2013.
The table below summarizes option and equity awards outstanding as of
December 31, 2013 held by each of our named executive officers for the fiscal year ended December 31, 2013 based on the closing price of a share of our common stock of $10.75 on that date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares or Units
of Stock that
Have Not
Vested
(#)
|
|
|
Market
Value of
Shares or
Units
of
Stock that
Have Not
Vested
($)
(1)
|
|
|
Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units, or
Other Rights that
Have Not Vested
(#)
|
|
|
Equity
Incentive Plan
Awards:
Market or
Payout Value of
Unearned
Shares, Units,
or Other Rights
that Have Not
Vested
($)
(1)
|
|
Hesse
|
|
|
|
|
|
|
1,733,102
|
(2)
|
|
|
6.38
|
|
|
|
8/1/2023
|
|
|
|
5,003,104
|
(8)
|
|
|
53,783,368
|
|
|
|
1,195,841
|
(9)
|
|
|
12,855,291
|
|
|
|
|
370,964
|
(3)
|
|
|
741,929
|
(3)
|
|
|
2.00
|
|
|
|
2/22/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
670,651
|
(4)
|
|
|
335,326
|
(4)
|
|
|
3.76
|
|
|
|
2/23/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
254,035
|
(5)
|
|
|
254,035
|
(5)
|
|
|
3.09
|
|
|
|
3/16/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,968,678
|
(7)
|
|
|
|
|
|
|
3.22
|
|
|
|
2/25/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
573,795
|
(7)
|
|
|
|
|
|
|
5.84
|
|
|
|
3/26/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,117,753
|
(7)
|
|
|
|
|
|
|
12.45
|
|
|
|
12/17/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,117,753
|
(7)
|
|
|
|
|
|
|
14.94
|
|
|
|
12/17/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,425,135
|
(7)
|
|
|
|
|
|
|
17.42
|
|
|
|
12/17/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Euteneuer
|
|
|
226,790
|
(3)
|
|
|
453,581
|
(3)
|
|
|
2.00
|
|
|
|
2/22/2022
|
|
|
|
1,133,260
|
(8)
|
|
|
12,182,545
|
|
|
|
348,787
|
(9)
|
|
|
3,749,460
|
|
|
|
|
254,447
|
(10)
|
|
|
127,224
|
(10)
|
|
|
4.14
|
|
|
|
4/4/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Draper
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131,579
|
(8)
|
|
|
1,414,474
|
|
|
|
|
|
|
|
|
|
Elfman
|
|
|
210,590
|
(3)
|
|
|
421,182
|
(3)
|
|
|
2.00
|
|
|
|
2/22/2022
|
|
|
|
1,028,602
|
(8)
|
|
|
11,057,472
|
|
|
|
323,873
|
(9)
|
|
|
3,481,635
|
|
|
|
|
236,272
|
(4)
|
|
|
118,137
|
(4)
|
|
|
3.76
|
|
|
|
2/23/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
228,630
|
(6)
|
|
|
76,211
|
(6)
|
|
|
3.09
|
|
|
|
3/16/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
989,677
|
(7)
|
|
|
|
|
|
|
3.22
|
|
|
|
2/25/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
172,138
|
(7)
|
|
|
|
|
|
|
7.06
|
|
|
|
5/4/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
487,038
|
(7)
|
|
|
|
|
|
|
8.48
|
|
|
|
5/4/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Johnson
|
|
|
|
|
|
|
194,392
|
(11)
|
|
|
2.00
|
|
|
|
2/22/2022
|
|
|
|
477,990
|
(8)
|
|
|
5,138,393
|
|
|
|
159,445
|
(9)
|
|
|
1,714,034
|
|
|
|
|
|
|
|
|
50,890
|
(12)
|
|
|
3.76
|
|
|
|
2/23/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,517
|
(13)
|
|
|
3.09
|
|
|
|
3/16/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Market value is based on the closing price of a share of our common stock of $10.75 on December 31, 2013.
|
(2)
|
Stock options vest 100% on August 1, 2018.
|
(3)
|
Stock options vest/vested 33 1/3% on February 22, 2013, February 22, 2014 and February 22, 2015.
|
(4)
|
Stock options vest/vested 33 1/3% on February 23, 2012, February 23, 2013 and February 23, 2014.
|
(5)
|
Stock options vest/vested 50% on March 16, 2013 and March 16, 2014.
|
(6)
|
Stock options vest/vested 25% on March 16, 2011, March 16, 2012, March 16, 2013 and March 16, 2014.
|
(7)
|
Stock options are fully vested.
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting and Proxy Statement |
49
|
|
(8)
|
Consists of Mr. Hesses time-based RSU award of 1,733,102 shares that vest on August 1, 2018 and Mr. Drapers time-based RSU award of 131,579 that vests 25% on September 10,
2014, September 10, 2015, September 10, 2016 and September 10, 2017.
|
|
Consists of Mr. Euteneuers restricted stock award of 32,718 shares that vest on April 4, 2014 and performance-based RSUs for each named executive officer that vest on February 23, 2014 (April 4,
2014 for Mr. Euteneuer) and with respect to which the applicable performance periods have been completed:
|
|
|
|
|
|
Name
|
|
Amount
|
|
Hesse
|
|
|
958,903
|
|
Euteneuer
|
|
|
227,809
|
|
Elfman
|
|
|
218,207
|
|
Johnson
|
|
|
93,997
|
|
Consists of Mr. Hesses time-based RSU award of 1,733,102 shares that vest on August 1, 2018 and
time-based RSUs for each named executive officer that vest on February 27, 2016:
|
|
|
|
|
Name
|
|
Amount
|
|
Hesse
|
|
|
1,195,841
|
|
Euteneuer
|
|
|
348,787
|
|
Elfman
|
|
|
323,873
|
|
Johnson
|
|
|
159,445
|
|
Consists of performance-based RSUs that vest on February 22, 2015 and with respect to which the applicable
performance periods have not been completed:
|
|
|
|
|
Name
|
|
Amount
|
|
Hesse
|
|
|
1,115,258
|
|
Euteneuer
|
|
|
523,946
|
|
Elfman
|
|
|
486,522
|
|
Johnson
|
|
|
224,548
|
|
(9)
|
Consists of performance-based RSUs that vest on February 27, 2016 and with respect to which the applicable performance periods have not been completed:
|
|
|
|
|
|
Name
|
|
Amount
|
|
Hesse
|
|
|
1,195,841
|
|
Euteneuer
|
|
|
348,787
|
|
Elfman
|
|
|
323,873
|
|
Johnson
|
|
|
159,445
|
|
(10)
|
|
Stock options vest/vested 33 1/3% on April 4, 2012, April 4, 2013 and April 4, 2014.
|
(11)
|
|
Stock options vest 50% on February 22, 2014 and February 22, 2015.
|
(12)
|
|
Stock options vest 100% on February 23, 2014.
|
(13)
|
|
Stock options vest 100% on March 16, 2014.
|
Pension Benefits
None of our named executive officers for the Transition Period are entitled to pension benefits under the Companys pension or retirement plans.
|
|
|
|
|
|
|
50
|
Notice of Annual Meeting and Proxy
Statement
|
|
|
|
|
Nonqualified Deferred Compensation
Certain employees, including our named executive officers, are entitled to participate in the Sprint Corporation Deferred Compensation Plan, a
nonqualified and unfunded plan under which participants may defer to future years the receipt of certain compensation.
Transition Period.
For
the Transition Period, the plan permitted participants to defer up to 50% of base salary, up to 75% of their STIC plan payout and up to 75% of cash-based performance unit payouts made under the LTIC plan. To compensate participants for federal tax
law limitations under our 401(k) plan, we match deferrals to the plan using the same matching contribution formula as our 401(k) plan for eligible compensation above the applicable annual limit, which for the calendar year 2014 is $260,000.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions in
Transition
Period
($)
(1)
|
|
Registrant
Contributions in
Transition
Period
($)
|
|
Aggregate
Earnings in
Transition
Period
($)
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance at
3/31/2014
($)
|
Hesse
|
|
158,910
|
|
|
|
13,392
|
|
|
|
1,443,727
|
Euteneuer
|
|
|
|
|
|
|
|
|
|
|
Draper
|
|
|
|
|
|
|
|
|
|
|
Elfman
|
|
|
|
|
|
|
|
|
|
|
Johnson
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes contributions by Mr. Hesse with respect to base salary during the Transition Period and 2013 STIC plan payout, the amount of which is included in the summary compensation table in Salary and
Non-Equity Incentive Plan Compensation, respectively.
|
Fiscal year 2013.
For fiscal year 2013, the plan permitted
participants to defer up to 50% of base salary and up to 75% of their STIC plan payout. We also matched deferrals to the plan in 2013 using the same matching contribution formula as our 401(k) plan for eligible compensation above the applicable
annual limit, which for 2013 was $255,000. Of our named executive officers for the fiscal year ended December 31, 2013, only Mr. Hesse participated in this plan with respect to compensation earned during 2013. The table below summarizes
the information with respect to this plan and the activity and balances with respect to the account of each named executive officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
in 2013
($)
(1)
|
|
Registrant
Contributions
in 2013
($)
(2)
|
|
Aggregate
Earnings
In 2013
($)
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance at
12/31/2013
($)
(3)
|
Hesse
|
|
162,734
|
|
119,711
|
|
16,255
|
|
|
|
1,151,715
|
Euteneuer
|
|
|
|
|
|
|
|
|
|
|
Draper
|
|
|
|
|
|
|
|
|
|
|
Elfman
|
|
|
|
|
|
|
|
|
|
|
Johnson
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes contributions by Mr. Hesse with respect to 2013 base salary and 2012 STIC plan compensation, the amounts of which are included in the 2013 Summary Compensation Table in the Salary and
Non-Equity Incentive Plan Compensation.
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting and Proxy Statement |
51
|
|
(2)
|
Represents matching contributions by us with respect to 2013 base salary deferrals on STIC plan compensation earned in 2013 but paid in 2014 and were credited to Mr. Hesses account on March 20,
2014, the respective amounts of which are included in the summary compensation table in the All Other Compensation column.
|
(3)
|
Represents the aggregate balance as of December 31, 2013, which does not include the matching contribution noted in footnote 2 above.
|
Compensation deferred by participants and any matching contributions made by us are credited to a bookkeeping account that represents our unsecured
obligation to repay the participant in the future. Participants elect to allocate deferred and matching contributions among one or more hypothetical investment options, which include one option that tracks our common stock and other options that
track broad-based bond and equity indices. Participants may change hypothetical investment elections only four times a year and at least three months must elapse between each change. Under the plan, the amount of our unfunded obligation is
determined by tracking the value in the bookkeeping account according to the performance of the hypothetical investments.
Potential
Payments upon Termination of Employment or Change in Control
Upon a termination of employment at the end of the Transition Period, as
applicable, due to a resignation without good reason or termination by us with cause, our named executive officers would be entitled to only those payments and benefits provided to all our salaried employees on a non-discriminatory basis, including:
|
|
|
accrued salary and vacation pay; and
|
|
|
|
payment of any vested balances or accrued benefits under our 401(k) plan and deferred compensation plan, pension plan and supplemental executive retirement plan.
|
In addition, while none of our named executive officers satisfied the age and service requirements as of the end of the Transition Period, had their
termination been at their normal retirement, they would be entitled to receive (consistent with benefits provided to all our salaried employees) (1) accelerated vesting of options granted with exercisability thereof for five years and of RSUs
granted (except for those under the 2013 LTIC plan) with performance-based RSUs payable at target; (2) continued participation in group life and health plans; and (3) the 2012 LTIC plan performance unit award prorated to their termination
date and payable based on actual performance. For more information on the retirement and deferred compensation benefits available to our named executive officers, see Setting Executive CompensationOther Components of Executive
Compensation.
Pursuant to the terms of our named executive officers respective employment agreements or our Change in Control Severance
Plan (CIC Severance Plan), upon an involuntary termination without cause or resignation for good reason (in connection with a change in control or not) or a termination in connection with their disability or death, our named executive officers would
be entitled to not only their accrued benefits noted above, but other payments and benefits as set forth in more detail below.
While each of the
applicable employment agreements and the Change in Control Severance Plan set forth relevant definitions in full, generally:
Change in
control
means: (1) the acquisition by a person or group, excluding SoftBank or its controlled affiliates, of 30% or more of Sprints voting stock; (2) a change in the composition of a majority of our directors; (3) the close
of a merger, reorganization, business combination or
|
|
|
|
|
|
|
52
|
Notice of Annual Meeting and Proxy
Statement
|
|
|
|
|
similar transaction after which: (a) Sprints stockholders do not hold more than 50% of the combined entity, (b) the members of Sprints board do not constitute a majority of
the directors of the combined entity, (c) a person or group holds 30% or more of the voting securities of the combined entity; (4) Sprint ceasing to have equity securities trading on a national securities exchange; or (5) the liquidation
or dissolution of Sprint.
We have
cause
to terminate the employment of a named executive officer involuntarily where that officer materially
breaches his employment agreement, fails to perform his duties, intentionally acts in a manner that is injurious to us, or violates our code of conduct.
Good reason
means the occurrence of any of the following without the named executive officers consent:
|
|
|
our material breach of his employment agreement; a reduction in salary or short-term incentive compensation target opportunity, except for across-the-board reductions; certain relocations; or
|
|
|
|
in connection with a change in control:
|
|
¡
|
|
a significant and adverse reduction of a named executive officers duties or responsibilities or organizational status;
|
|
¡
|
|
the failure to provide a long-term incentive compensation opportunity comparable to other senior executives or a greater than 10% across-the-board reduction to any of base salary or short- or long-term incentive
compensation opportunities; or
|
|
¡
|
|
our failure to obtain an agreement from a successor to assume the employment agreement.
|
As a condition
to our named executive officers entitlement to receive the amounts below, except for vested retirement or death benefits, they would have been:
|
|
|
required to execute a release in favor of us;
|
|
|
|
subject to confidentiality and non-disparagement provisions on a permanent basis following the termination of their employment; and
|
|
|
|
for the duration of their payment period, prohibited from:
|
|
¡
|
|
engaging in certain employment activities with a competitor of ours;
|
|
¡
|
|
soliciting our employees and certain other parties doing business with us to terminate their relationship with us; and
|
|
¡
|
|
soliciting or assisting any party to undertake any action that would be reasonably likely to, or is intended to, result in a change in control or seek to control our board.
|
If the named executive officer breached any of these obligations, he would have no rights in, and we would have no obligation to provide, any severance
benefits yet to be paid or provided under his employment agreement and any outstanding equity-based award granted under his employment agreement would have terminated immediately.
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting and Proxy Statement |
53
|
|
The following table and footnotes, along with the narrative below, describe the potential payments and
benefits that would be provided to our named executive officers upon each respective hypothetical March 31, 2014 termination of employment scenario, based on the closing price of a share of our common stock of $9.19 on that date. The Non-CIC
column shows the amounts due to each named executive officer in the event of his involuntary termination without cause or resignation with good reason on March 31, 2014. These amounts include the effect of the SoftBank Merger on July 10,
2013, which was a change in control of Sprint. Amounts in the CIC column assume a qualifying termination in connection with a subsequent change in control occurring after July 24, 2013.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without Cause or For Good Reason
(1)
|
|
|
|
|
|
|
|
|
Non-CIC
($)
(2)
|
|
|
CIC
($)
|
|
|
Disability
($)
|
|
|
Death
($)
|
|
Hesse
|
|
Salary-based
|
|
|
|
|
|
|
2,400,000
|
|
|
|
2,400,000
|
|
|
|
1,200,000
|
|
|
|
|
|
|
|
STI-based
|
|
|
|
|
|
|
5,391,781
|
|
|
|
5,391,781
|
|
|
|
591,781
|
|
|
|
591,781
|
|
|
|
LTI-based
(3)
|
|
|
|
|
|
|
48,315,311
|
|
|
|
62,313,241
|
|
|
|
60,652,201
|
|
|
|
60,652,201
|
|
|
|
Benefits/Perquisites
|
|
|
|
|
|
|
55,336
|
|
|
|
55,336
|
|
|
|
10,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
56,162,428
|
|
|
|
70,160,358
|
|
|
|
62,454,150
|
|
|
|
61,243,982
|
|
Euteneuer
|
|
Salary-based
|
|
|
|
|
|
|
1,550,000
|
|
|
|
1,550,000
|
|
|
|
775,000
|
|
|
|
|
|
|
|
STI-based
|
|
|
|
|
|
|
2,263,425
|
|
|
|
2,263,425
|
|
|
|
248,425
|
|
|
|
248,425
|
|
|
|
LTI-based
(3)
|
|
|
|
|
|
|
13,560,390
|
|
|
|
17,643,120
|
|
|
|
17,204,024
|
|
|
|
17,204,024
|
|
|
|
Benefits/Perquisites
|
|
|
|
|
|
|
55,336
|
|
|
|
55,336
|
|
|
|
10,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
17,429,152
|
|
|
|
21,511,882
|
|
|
|
18,237,617
|
|
|
|
17,452,449
|
|
Draper
|
|
Salary-based
|
|
|
|
|
|
|
562,500
|
|
|
|
562,500
|
|
|
|
375,000
|
|
|
|
|
|
|
|
STI-based
|
|
|
|
|
|
|
589,469
|
|
|
|
589,469
|
|
|
|
83,219
|
|
|
|
83,219
|
|
|
|
LTI-based
(3)
|
|
|
|
|
|
|
2,344,366
|
|
|
|
2,344,366
|
|
|
|
2,344,366
|
|
|
|
2,344,366
|
|
|
|
Benefits/Perquisites
|
|
|
|
|
|
|
50,252
|
|
|
|
50,252
|
|
|
|
10,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
3,546,587
|
|
|
|
3,546,587
|
|
|
|
2,812,753
|
|
|
|
2,427,585
|
|
Elfman
|
|
Salary-based
|
|
|
|
|
|
|
1,300,000
|
|
|
|
1,300,000
|
|
|
|
650,000
|
|
|
|
|
|
|
|
STI-based
|
|
|
|
|
|
|
1,825,342
|
|
|
|
1,825,342
|
|
|
|
200,342
|
|
|
|
200,342
|
|
|
|
LTI-based
(3)
|
|
|
|
|
|
|
9,771,972
|
|
|
|
13,563,072
|
|
|
|
13,155,340
|
|
|
|
13,155,340
|
|
|
|
Benefits/Perquisites
|
|
|
|
|
|
|
49,513
|
|
|
|
49,513
|
|
|
|
7,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
12,946,828
|
|
|
|
16,737,928
|
|
|
|
14,012,939
|
|
|
|
13,355,682
|
|
|
|
|
|
|
|
|
Johnson
|
|
Salary-based
|
|
|
|
|
|
|
1,250,000
|
|
|
|
1,250,000
|
|
|
|
625,000
|
|
|
|
625,000
|
|
|
|
STI-based
|
|
|
|
|
|
|
1,404,110
|
|
|
|
1,404,110
|
|
|
|
154,110
|
|
|
|
154,110
|
|
|
|
LTI-based
(3)
|
|
|
|
|
|
|
6,443,035
|
|
|
|
6,443,035
|
|
|
|
6,254,851
|
|
|
|
6,254,851
|
|
|
|
Benefits/Perquisites
|
|
|
|
|
|
|
71,084
|
|
|
|
71,084
|
|
|
|
10,542
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
9,168,229
|
|
|
|
9,168,229
|
|
|
|
7,044,503
|
|
|
|
7,033,961
|
|
(1)
|
The CIC Severance Plan provides that if the payments and benefits provided to an executive under the CIC Severance Plan or any other plan or agreement would
constitute an excess parachute payment for purposes of Section 280G of the Internal Revenue Code, the executive would either have his or her payments and benefits reduced to the highest amount that could be paid without triggering
excise taxes under Section 4999 of the Internal Revenue Code; or, if greater, receive the after-tax amount of his or her payment and benefits taking into
|
|
|
|
|
|
|
|
54
|
Notice of Annual Meeting and Proxy
Statement
|
|
|
|
|
|
account the excise taxes and any other applicable federal, state and local taxes. Amounts do not take into account any possible reduction due to the effects of Section 280G of the Internal
Revenue Code.
|
(2)
|
If Mr. Johnsons termination was for good reason based on relocation, his salary-based benefit would have been $625,000, his STI-based benefit would have been $779,110, his LTI-based benefit would have been
$6,443,035, and his benefits/perquisites would have been $10,542, for a total value of $7,857,687.
|
(3)
|
Includes performance units (payable in cash), stock options and RSUs. The value of options is based on the intrinsic value of the options, which is the difference between the exercise price of the option and the market
price of our shares on March 31, 2014, multiplied by the number of options, and the value of RSUs is based on the market value of our stock on March 31, 2014, multiplied by the number of RSUs, as adjusted for performance prior to 2013, for
performance-based RSUs.
|
Resignation for Good Reason or Involuntary Termination without Cause
If our named executive officers employment had been terminated either by them for good reason or by us without cause, they would have been entitled
to:
|
|
|
a lump sum payment equal to their then-current base salary for their respective payment period, which is 24 months for each named executive officer (18 months for Mr. Draper and 12 months for Mr. Johnson if
his termination was for good reason based on relocation);
|
|
|
|
a lump sum payment equal to their STIC target opportunity for their respective payment period and payment of their STIC plan award for the calendar year of their termination at their STIC target opportunity, prorated to
their termination date for a March 31, 2014 termination;
|
|
|
|
a payment of their 2012 LTIC plan performance unit award payable at target and immediate vesting as of their termination date of:
|
|
¡
|
|
outstanding options with exercisability of such options vested through the 90
th
day (12 months for Mr. Johnson) after such vesting; and
|
|
¡
|
|
RSUs granted, prorated (except for Mr. Johnson) to their termination date for RSUs granted under the 2013 LTIC plan for a termination not following a change in control, with performance-based RSUs: under the 2012
LTIC plan payable at target and under the 2013 LTIC plan payable based on actual performance (at target for Mr. Johnson, or for terminations following a change in control); and
|
|
|
|
continued participation for the payment period at employee rates in our group health and life plans (and for Mr. Johnson, the long-term disability plan) and outplacement services in an amount not to exceed $35,000
(for Mr. Johnson: $50,000; zero if his termination was for good reason based on relocation), each for the duration of his payment period.
|
In addition, Mr. Hesse would have received his Sign-On RSU Award (as defined in his employment agreement) on the first business day of the seventh
month following his termination and Mr. Draper would have received the remaining balance in his Restricted Cash Account, plus the prorated balance of his 2013 Restricted Cash Account (each as defined in that certain Agreement and Plan of Merger
by and among Sprint Nextel Corporation, Collie Acquisition Corp, and Clearwire Corporation) less any prior payments received, with such proration based on the sum of 365 days plus the number of days worked during the vesting period, divided by the
total number of days in the vesting period.
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting and Proxy Statement |
55
|
|
Termination Disability Plan Benefits
If our named executive officers employment had terminated as a result of their disability, they would have been entitled to:
|
|
|
continuation of their base salary for 12 months, less (except for Mr. Johnson) any benefits paid under our Long-term Disability Plan, through periodic payment with the same frequency as our payroll schedule;
|
|
|
|
a payment of their 2014 STIC plan award prorated to the termination date and payable based on actual performance;
|
|
|
|
a payment of their 2012 LTIC plan performance unit award prorated to their termination date and payable at target, and immediate vesting of options granted with exercisability thereof for five years (12 months for
Mr. Johnson) and of RSUs granted with performance-based RSUs payable at target; and
|
|
|
|
continued participation at employee rates in our group health and life plans for 12 months.
|
In addition,
Mr. Hesse would have received his Sign-On RSU Award on the first business day of the seventh month following his termination and Mr. Draper would have received the remaining balance in his Restricted Cash Account, plus the prorated balance
of his 2013 Restricted Cash Account (each as defined in that certain Agreement and Plan of Merger by and among Sprint Nextel Corporation, Collie Acquisition Corp, and Clearwire Corporation) less any prior payments received, with such proration based
on the sum of 365 days plus the number of days worked during the vesting period, divided by the total number of days in the vesting period.
Termination as a
Result of Death
Had our named executive officers employment terminated as a result of their death, their estates would have been entitled,
as with respect to our employees generally, to a payment of their 2014 STIC plan award prorated to the termination date and payable based on actual performance; a payment of their 2012 LTIC plan performance unit award prorated to the termination
date and payable at target; and immediate vesting of options granted with exercisability thereof for 12 months and of RSUs granted with performance-based RSUs payable at target.
Mr. Hesses estate also would have received his Sign-On RSU Award on the first business day of the seventh month following his death,
Mr. Drapers estate would have received the remaining balance in his Restricted Cash Account, plus the prorated balance of his 2013 Restricted Cash Account (each as defined in that certain Agreement and Plan of Merger by and among Sprint
Nextel Corporation, Collie Acquisition Corp, and Clearwire Corporation) less any prior payments received, with such proration based on the sum of 365 days plus the number of days worked during the vesting period, divided by the total number of days
in the vesting period, and Mr. Johnsons estate also would have received continuation of his base salary for 12 months.
|
|
|
|
|
|
|
56
|
Notice of Annual Meeting and Proxy
Statement
|
|
|
|
|
Certain Relationships & Related Transactions
Certain Relationships and Related Transactions
SoftBank, through its wholly-owned subsidiaries, is the controlling stockholder of Sprint. Mr. Son is SoftBanks controlling stockholder,
chairman of the board and chief executive officer. Mr. Fisher is the founder of SoftBank Capital, a director and president of SoftBank Holdings, Inc. and a member of the board of directors of SoftBank. Mr. Claure is Chairman and CEO of
Brightstar Corp. (Brightstar). Brightstar is a controlled affiliate of SoftBank. We refer to SoftBank, its controlled affiliates (other than Sprint) and Messrs. Claure, Fisher and Son as SoftBank Parties or each a SoftBank Party. We
consider SoftBank, its controlled affiliates, as well as our directors and executive officers to be related parties.
Policy
on Oversight of Related Party Transactions
Our board has adopted, and the Audit Committee has maintained, a written policy on the review and
approval of transactions with related parties. The policy generally groups these transactions into three categories: (1) transactions requiring the approval by the Audit Committee; (2) transactions requiring the approval of our board,
including approval of the majority of the independent directors; and (3) certain ordinary course transactions that are deemed pre-approved by our board.
Generally, our board deems pre-approved any transaction or series of transactions between SoftBank or its controlled affiliates that is entered into
in the ordinary course of business and has substantially the same terms and conditions offered to or by third parties, or where the rates or charges involved are determined by competitive bid, as well as certain tri-party agreements. All ordinary
course transactions deemed pre-approved by our board must be approved by the Related Party Transaction Committee, which is comprised of members of management.
Related Party Transactions during 2013 and the transition period ended March 31, 2014.
Transactions with Sprints Officers and Directors
We have entered into indemnity agreements with our officers and directors that provide, among other things, that we will indemnify each such officer
or director, under the circumstances and to the extent provided for therein, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings in which he or she is or may be made a party by reason of
his or her position as a director, officer or other agent of Sprint or its subsidiaries.
Transactions with SoftBank Parties - Approved by Sprint Nextel
Corporation
So long as SoftBank remains our controlling stockholder, our governing documents confer SoftBank certain rights, including
the right to appoint board members
see
Election of Directors- Director Nomination Process.
In connection with the SoftBank Merger
and other related transactions, SoftBank Parties and Sprint entered into certain agreements in addition to the Merger Agreement and the Bond Purchase Agreement. On November 30, 2012, Sprint Nextel and a SoftBank Party entered into an expense
reimbursement agreement, as amended and restated on April 9, 2013, pursuant to which the parties agreed that the SoftBank Party will reimburse Sprint for certain out-of-pocket expenses of up to $5.5 million in the aggregate incurred in
connection with certain audit services performed on behalf of Sprint Nextel, including converting Sprint Nextels financial statements to a presentation in conformity with the International Financial Reporting Standards and performing a
valuation of Sprint Nextels assets to be acquired and
|
|
|
|
|
|
|
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|
Notice of Annual Meeting and Proxy Statement |
57
|
|
Certain Relationships & Related Transactions
liabilities to be assumed in connection with the preparation of pro forma financial statements. On April 8, 2013, Sprint Nextel and SoftBank Inc. entered into an expense reimbursement
agreement, pursuant to which the parties agreed that SoftBank Inc. will reimburse Sprint Nextel for certain out-of-pocket expenses of up to $115,000 in the aggregate incurred in connection with certain audit services performed on behalf of Sprint
Nextel, including reviewing its financial information to be included in an offering memorandum for the offering of SoftBank debt.
In connection
with the Clearwire acquisition, on December 17, 2012, SoftBank Parties entered into a consent and agreement with Sprint Nextel, which permitted Sprint Nextel to enter into the agreements related thereto and provided SoftBank with certain rights
to information and review of certain actions which might be taken by Sprint Nextel in connection with the Clearwire acquisition, and on January 30, 2013 and February 26, 2013, SoftBank Parties delivered consents to Sprint Nextel, which
permitted Sprint Nextel to enter into amendments to the note purchase agreement related thereto. On May 20, 2013, a SoftBank Party delivered a consent to Sprint Nextel, which permitted Sprint Nextel to enter into an amendment to the Clearwire
acquisition agreement.
In connection with an unsolicited proposal from DISH Networks, Inc. (DISH) prior to the close of the SoftBank
Merger (the DISH Proposal), on April 26, 2013, a SoftBank Party delivered to Sprint Nextel a waiver under the Merger Agreement, which permitted Sprint Nextel to engage in discussions with DISH and its representatives solely for the
purpose of clarifying, and obtaining further information regarding, the DISH Proposal in order to enable Sprint Nextels Special Committee of the board to determine whether the DISH Proposal was reasonably likely to lead to a
superior offer (as defined in the Merger Agreement prior to the Merger Agreement amendment revising such definition). On May 20, 2013, a SoftBank Party delivered to Sprint Nextel a second
waiver under the Merger Agreement, which permitted Sprint Nextel to engage in further discussions regarding the DISH Proposal, and otherwise take certain actions that would otherwise have been prohibited by the Merger Agreement.
Wholly-owned subsidiaries of Sprint and a SoftBank Party signed a Hubbing, Routing Agreement on February 28, 2013, with a total transaction value
of approximately $0.2 million. The term of this agreement was seven months. This transaction was ratified by the Sprint Nextel board of directors.
In March and April of 2013, a SoftBank Party and Sprint entered into license agreements providing the SoftBank Party with use of a portion of
Sprints facilities in Overland Park, Kansas, for approximately $0.13 million. These transactions were ratified by the Sprint Nextel board of directors.
A Sprint subsidiary and a SoftBank Party entered into two Traffic Termination Agreements, with a total transaction value of approximately $1.1
million. The agreements provide for the exchange of voice minutes between the U.S. and Japan. The term of the first agreement began October 1, 2012 and terminated on April 30, 2013 and the term of the second agreement ran from May 1,
2013 through November 30, 2013. These transactions were ratified by the Sprint Nextel board.
Transactions with SoftBank Parties outside the Ordinary
Course of Business
Transactions with SoftBank Parties outside the ordinary course of business are reviewed by the Audit Committee and
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|
|
|
|
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|
58
|
Notice of Annual Meeting and Proxy
Statement
|
|
|
|
|
Certain Relationships & Related Transactions
approved by our board, including a majority of our independent directors. The transactions that have been approved by our board are described below.
Sprint developed, owns, and operates a content delivery and device configuration platform known as Mobile ID. Sprint and a SoftBank subsidiary entered
into wholesale agreement providing for Sprint to enable the Mobile ID platform for use by SoftBank and license those capabilities to SoftBank. The term of this agreement is for one year. The total value for this transaction is estimated to be $4.7
million.
Wholly-owned subsidiaries of Sprint and a SoftBank Party revised their International Roaming Agreement on May 21, 2013, which was
originally entered into prior to SoftBank becoming a beneficial owner. The amendment provided lower rates to Sprint for Sprint subscribers roaming on SoftBanks network. This amendment was ratified by Sprint Nextels Nominating and
Corporate Governance Committee. Our board subsequently authorized an amendment to the International Roaming Agreement. Effective January 1, 2014, Sprint and a SoftBank subsidiary entered into a second amendment to the International Roaming
Agreement. The term of the amendment is for one year, with automatic renewals for successive one year periods and may be terminated by either Party with 180 days notice. This amendment allows Sprint the ability to roam free of charge
on SoftBanks network. This transaction is estimated to save Sprint $3.1 million through December 2016. The Board has also authorized the parties to enter into other amendments to the International Roaming Agreement, under which Sprint
would not charge SoftBank for SoftBank subscribers roaming on Sprints CDMA network. At this time, this transaction is expected to have little, if any, cost to Sprint in 2014 as SoftBank subscribers
cannot roam on the Sprint network at this time.
Effective February 28, 2014, Sprint entered
into an assignment agreement with a SoftBank Party and an unrelated third-party software vendor. The agreement provides that Sprint will assign a specified quantity of certain third-party software licenses to a SoftBank Party and is expected to
result in: (1) payment by a SoftBank Party to a Sprint subsidiary an amount equal to 50-70% of the contract license price, with a maximum amount of approximately $2.9 million, and (2) SoftBanks agreement to pay the corresponding
ongoing annual support services fees for the transferred licenses, the maximum amount of such fees being approximately $0.9 million per year, thereby relieving Sprint of such corresponding ongoing support services fees into perpetuity due to the
perpetual terms of the licenses.
Effective March 18, 2014, a SoftBank Party and a Sprint subsidiary entered into a sublease providing the
Sprint party the right to occupy and use a floor of SoftBanks leased offices at Two Circle Star Way in San Carlos, California for an executive briefing center and general office use. Over the five year initial sublease term, Sprint will pay
approximately $8 million for rent, operating expenses and other services. SoftBank will provide an improvement allowance to Sprint of up to $5 million.
Effective June 16, 2014, Sprint and a SoftBank Party entered into an agreement whereby Sprint would provide IT services to SoftBank at its facilities
in San Carlos. The total transaction value of this agreement is approximately $0.3 million.
Effective May 14, 2014, Sprint and a SoftBank Party
have entered into a Joint Provisioning Capacity Agreement to identify and implement capacity in their respective networks to support current and near term transport requirements in the Asia/Pacific
|
|
|
|
|
|
|
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|
Notice of Annual Meeting and Proxy Statement |
59
|
|
Certain Relationships & Related Transactions
region and the United States. The total transaction value of this agreement is approximately $3.8 million.
Transactions with SoftBank Parties in the Ordinary Course Business and Certain Tri-Party Agreements
Sprint or its affiliates have also entered into various commercial arrangements with SoftBank Parties, including for international wireless roaming,
wireless and wireline call termination and potential joint procurement activities (collectively, the Commercial Agreements). These Commercial Agreements, which include interconnection agreements, sale of data telecommunication services,
master services agreements, international roaming agreements, traffic termination agreements and other commercial agreements, were entered into in arms-length transactions in the ordinary course of business and are typical for Sprints
contractual arrangements with other U.S. carriers and in third-party dealings. The Commercial Agreements and related contract orders between Sprint or its affiliates and SoftBank Parties covered an aggregate of less than $40 million and $5.7 million
in payments for services, fees and expenses between the parties during the fiscal year ended December 31, 2013 and the transition period March 31, 2014 respectively. Such transactions are generally deemed pre-approved under our related party
transactions policy.
Since January 1, 2014, Sprint and SoftBank have entered into various roaming agreements with unrelated third parties. The
aggregate value of such transactions to SoftBank is approximately $2.5 million dollars. These transactions are deemed pre-approved under Sprints related party transaction policy.
Transactions with Brightstar, a SoftBank Party
Sprint or its affiliates entered into various commercial agreements with Brightstar or its affiliates prior to Mr. Claure becoming a Sprint
director on January 13, 2014 and prior to Brightstar becoming a controlled affiliate of SoftBank on January 29, 2014. These agreements were entered into in arms-length transactions in the ordinary course of business and are typical for
Sprints contractual arrangements with unrelated third-parties. These transactions are valued at approximately $130 million and $13.3 million for the fiscal year ended December 31, 2013 and the transition period March 31, 2014
respectively.
Effective May 7, 2014, Sprint consented to an assignment of a Master Services Agreement and Statement of Work (collectively, the
MSA) from an existing third party vendor to Brightstar. Pursuant to the MSA, Brightstar will provide device buyback and trade-in technology and related services to Sprint. The MSA has a total transaction value of approximately $48
million for 2014 which encompasses both fees and payments to Brightstar from Sprint and to Sprint from Brightstar. The term of the MSA expires on December 31, 2014.
Transactions with SoftBank Product Group (a subsidiary of Brightstar)
Effective September 1, 2013, Sprint entered into an agreement with the SoftBank Product Group (SBPG) (f/k/a Buying and Innovation Group).
The agreement provides for reimbursement to Sprint by SBPG for compensation, benefits, travel and related expenses for Sprint employees providing services to SBPG, with a transaction value for 2013 of approximately $0.6 million and for the fiscal
year ended March 31, 2014 of approximately $0.2 million. The term of the agreement is for one year, but may be extended as necessary.
|
|
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60
|
Notice of Annual Meeting and Proxy
Statement
|
|
|
|
|
Certain Relationships & Related Transactions
Effective March 1, 2014, the Company, SoftBank, and other related parties entered into agreements with
SBPG. Under these agreements SBPG may procure mobile devices and accessories on their behalf. The total annual volume of transactions to be processed by SBPG on Companys behalf is estimated at $6.6 billion for 2014. In connection with the
transactions, Sprint initially anticipates paying SBPG an initial annual service fee of approximately $9.05 million for device services. For accessory services, Sprint will pay compensate SBPG by paying an agreed upon percentage increase above
SBPGs cost of acquiring the accessory. The percentage increase payable to SBPG varies based on accessory type and may be increased or decreased so that the
total amount paid to SBPG for accessory services is equal to one half of the estimated net savings attributable to SBPGs efforts. The total accessory fees paid to SBPG are further limited
to not more than certain costs related to the operation of SBPGs accessories business unit plus an agreed upon percentage of overhead. Other than these service fees, the estimated value of the transactions to SBPG is nominal as the agreements
are primarily structured to enable SBPG to deliver savings and benefits to the Company and other participants in the arrangement (including SoftBank and Brightstar). Prior to entering into these agreements, as part of the set-up and testing of the
program these services were generally provided to Company without charge.
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting and Proxy Statement |
61
|
|
Security Ownership
Security Ownership of Certain Beneficial Owners
The following table provides information about the only known beneficial owners of five percent or more of our common stock. For
purposes of the table below, beneficial ownership is determined based on Rule 13d-3 of the Securities Exchange Act of 1934, which states that a beneficial owner is any person who directly or indirectly has or shares voting and/or investment or
dispositive power.
|
|
|
|
|
|
|
|
Name and Address of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
|
|
Percent
of Class
(1)
|
|
|
|
SOFTBANK CORP.
|
|
|
|
|
1-9-1 Higashi-Shimbashi, Minato-ku,
|
|
3,205,665,088
(2)
|
|
81.2%
|
Tokyo, 105-7303 Japan
|
|
|
|
|
(1)
|
The ownership percentages set forth in this column are based on Sprints outstanding shares on June 9, 2014 plus shares of Sprint common stock issuable upon exercise of a warrant to SoftBank, dated
July 10, 2013, and assumes that SoftBank continued to own the number of shares reflected in the table above on June 9, 2014.
|
(2)
|
According to a Schedule 13D filed with the SEC on September 18, 2013, by SoftBank Corp. According to the Schedule 13D, SoftBank is the beneficial owner of, and has sole voting power and sole dispositive power with
respect to, all of the shares.
|
|
|
|
|
|
|
|
62
|
Notice of Annual Meeting and Proxy
Statement
|
|
|
|
|
Security Ownership of Directors and Executive Officers
The following table states the number of shares of our common stock beneficially owned as of June 9, 2014 by each director, named executive officer, and all
directors and executive officers as a group. Except as otherwise indicated, each individual named has sole investment and voting power with respect to the shares owned.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name of Beneficial Owner
|
|
Shares
Owned
|
|
Shares
Covered by
Exercisable
Options and
RSUs to be
Delivered
(1)
|
|
Percentage of
Common Stock
|
Robert R. Bennett
|
|
56,553
|
|
|
|
*
|
Gordon M. Bethune
|
|
109,440
|
|
|
|
*
|
Marcelo Claure
|
|
|
|
13,480
|
|
*
|
Brandon Draper
|
|
|
|
|
|
*
|
Steven L. Elfman
|
|
127,323
|
|
2,729,284
|
|
*
|
Joseph J. Euteneuer
|
|
188,409
|
|
835,251
|
|
*
|
Ronald D. Fisher
|
|
|
|
71,736
|
|
*
|
Daniel R. Hesse
|
|
1,749,717
|
|
9,459,089
|
|
*
|
Frank Ianna
|
|
48,649
|
|
|
|
*
|
Robert L. Johnson
|
|
|
|
97,196
|
|
*
|
Adm. Michael G. Mullen
|
|
|
|
15,782
|
|
*
|
Masayoshi Son
|
|
|
|
|
|
*
|
Sara Martinez Tucker
|
|
|
|
17,214
|
|
*
|
Directors and Executive Officers as a group (20 persons)
|
|
2,308,248
|
|
13,503,262
|
|
*
|
*Indicates ownership of less than 1%.
(1)
|
Represents shares that may be acquired upon the exercise of stock options exercisable, and shares of stock that underlie restricted stock units to be delivered, on or within 60 days after June 9, 2014 under
our equity-based incentive plans.
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more than 10% of a
registered class of our equity securities, to file with the SEC and the NYSE initial reports of beneficial ownership and reports of changes in beneficial ownership of our shares and other equity securities. These people are required by the SEC
regulations to furnish us with copies of all Section 16(a) reports they file, and we make these reports available at
www.sprint.com/investors/sec.
To our knowledge, based solely on a review of the copies of these reports furnished to us and written representations that no other reports were
required, during the three month transition period ended March 31, 2014, all Section 16(a) filing requirements applicable to our directors, executive officers and beneficial owners of more than 10% of our equity securities were met.
|
|
|
|
|
|
|
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|
Notice of Annual Meeting and Proxy Statement |
63
|
|
Proposal 2 Ratification of the Selection of the
Independent Registered Public Accounting Firm
Proposal 2. Ratification of the Selection of the Independent Registered Public
Accounting Firm
(Item 2 on Proxy Card)
Our Audit Committee has voted to appoint Deloitte & Touche LLP as our independent registered public accounting firm to audit the consolidated
financial statements and the effectiveness of internal control over financial reporting for our company and our subsidiaries for the year ending March 31, 2015. Our stockholders are asked to ratify that appointment at the annual meeting. In
keeping with good corporate governance, the Audit Committee will periodically assess the suitability of our incumbent independent registered public accounting firm taking into account all relevant facts and circumstances, including the possible
consideration of the qualifications of other accounting firms.
Deloitte has served as the independent registered accounting firm of Sprint
Corporation (formerly known as Starburst II, Inc) since its formation in 2012. Prior to the completion of the SoftBank Merger on July 10, 2013, KPMG LLP served as the independent registered accounting firm of Sprint Nextel Corporation.
Representatives of Deloitte are expected to be present at the annual meeting and will have the opportunity to make a statement and to respond to
appropriate questions. If the appointment of Deloitte is not ratified at the meeting, the Audit Committee will consider the selection of another accounting firm.
The following table provides the fees billed for professional services rendered by Deloitte for the
three-month
transition period ended March 31, 2014 and by Deloitte and KPMG for the fiscal year ended December 31, 2013. The Audit Committee determined that the non-audit services rendered by Deloitte in 2013 were compatible with maintaining its
independence as auditors of our consolidated financial statements.
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Deloitte
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KMPG
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Three-month
transition period
ended March 31, 2014
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January 1, 2013 -
December 31, 2013
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January 1, 2013
July 10,
2013
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Audit Fees
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$5.0 million
(1)
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$9.1 million
(1)
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$9.7 million
(2)
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Audit-Related Fees
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$0.0 million
(3)
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$1.1 million
(3)
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$3.6 million
(4)
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Tax Fees
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$0.0 million
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$0.1 million
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$0.8 million
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All Other
Fees
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$5.6 million
(5)
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$13.6 million
(6)
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$0.2 million
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(1)
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For professional services rendered for the audit of our consolidated financial statements, the audit of the effectiveness of internal control over financial reporting, the review of the consolidated financial
statements, and the audits of certain subsidiaries for statutory reporting purposes.
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(2)
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For professional services rendered for the audit of Sprint Nextel Corporations consolidated financial statements, the audit of the effectiveness of internal control over financial reporting, the review of the
consolidated financial statements, and the audits of certain subsidiaries for statutory reporting purposes.
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(3)
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For professional audit-related services rendered to us, generally related to other attestation services including registration statements and other offering related services.
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64
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Notice of Annual Meeting and Proxy
Statement
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Proposal 2 Ratification of the Selection of the
Independent Registered Public Accounting Firm
(4)
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For professional audit-related services rendered to Sprint Nextel Corporation, generally related to other attestation services including registration statements and other offering related services.
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(5)
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All other fees include approximately $3.3 million and $1.3 million for management advisory services for the periods from January 1, 2013 through December 31, 2013 and January 1, 2014 through March 31, 2014,
respectively, and approximately $10.3 million and $4.3 million billed to us by Deloitte for the periods from January 1, 2013 through December 31, 2013 and January 1, 2014 through March 31, 2014, respectively, for amounts paid by Sprint directly
related to Deloitte providing subcontractor services to an independent third party administrator that oversees the Federal Communications Commission 800 MHz Band Reconfiguration Order.
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(6)
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All other fees included non-audit services of approximately $13.6 million which included approximately $3.3 million for management advisory services and approximately $10.3 million billed to us by Deloitte in 2013 for
amounts billed to and paid by Sprint directly related to Deloitte providing subcontractor services to an independent third-party administrator that oversees the FCC 800 MHz Band Reconfiguration.
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The Audit Committee has adopted policies and procedures concerning our independent registered public accounting firm, including the pre-approval of
services to be provided. Our Audit Committee pre-approved all of the services described above. The Audit Committee is responsible for the pre-approval of all audit, audit-related, tax and non-audit services; however, pre-approval authority may be
delegated to one or more members of the Audit Committee. The details of any services approved under this delegation must be reported to the full Audit Committee at its next regular meeting. Our independent registered public accounting firm is
generally prohibited from providing certain non-audit services under our policy, which is more restrictive than the SEC rules related to non-audit services. Any permissible non-audit service engagement must be specifically approved in advance by the
Audit Committee. We provide quarterly reporting to the Audit Committee regarding all audit, audit-related, tax and non-audit services provided by our independent registered public accounting firm.
Our Board of Directors recommends that you vote
FOR
Proposal 2.
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Notice of Annual Meeting and Proxy Statement |
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Proposal 3 Advisory Approval of the
Companys Executive Compensation
Proposal 3. Advisory Approval of the Companys Named Executive Officer Compensation
(Item 3 on Proxy Card)
The Dodd-Frank Wall
Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and Section 14A of the Exchange Act require that we permit our stockholders to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive
officers as disclosed in the Executive CompensationCompensation Discussion and Analysis and accompanying Executive Compensation Tables and related narrative disclosure beginning on page 25. At our 2011 Annual Meeting, Sprint Nextel
stockholders approved, on an advisory basis, that an advisory vote on executive compensation should be held annually. Based on such result, our board determined that the advisory vote on executive compensation will be held every year until the next
advisory vote on the frequency of future advisory votes on executive compensation, which will be no later than the Companys 2017 annual meeting of stockholders. The next stockholder advisory vote on executive compensation will be held in
connection with the 2015 annual meeting of stockholders.
Our executive compensation programs are designed to attract, motivate, and retain our named
executive officers, who can contribute to our success. We believe our incentive compensation must strike a balance between rewarding achievement of our short-term objectives and rewarding long-term stockholder return and must be highly sensitive to
the degree to which those results are realized. Please read the Executive CompensationCompensation Discussion and Analysis for additional details about our executive compensation programs.
We are asking our stockholders to indicate their support for our named executive officer compensation as described in this proxy statement. This
proposal, commonly known as a say-on-pay proposal, gives our stockholders the opportunity to express their views on our named executive officers compensation. This vote is not intended to address any specific item of compensation,
but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we will ask our stockholders to vote FOR the following resolution at the 2014
Annual Meeting:
RESOLVED, that the compensation paid to the Companys named executive officers, as disclosed pursuant to Item 402 of
Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.
The say-on-pay
vote is advisory, and therefore not binding on Sprint, the Compensation Committee or our board of directors. Our board of directors and our Compensation Committee value the opinions of our stockholders and expect to take into account the outcome of
the vote when considering future executive compensation decisions to the extent they can determine the cause or causes of any significant negative voting results.
Our Board of Directors recommends that you vote
FOR
Proposal 3.
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66
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Notice of Annual Meeting and Proxy
Statement
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Proposal 4 - Stockholder Proposal Concerning
Executives Retaining Significant Stock
Proposal 4. Stockholder Proposal Concerning Executives Retaining Significant
Stock
Kenneth Steiner of Great Neck, New York, who owns no less than 500 shares of the Companys stock, has given notice of its intention
to introduce the following resolution at the annual meeting. The stockholder proposal and the supporting statement appear as received by us and we are not responsible for its contents. Following the stockholder proposal is our response.
(Item 4 on Proxy Card)
Proposal 4
Executives To Retain Significant Stock
Resolved: Shareholders urge that our executive pay committee adopt a policy requiring senior executives to retain a
significant percentage of shares acquired through equity pay programs until reaching normal retirement age and to report to shareholders regarding the policy before our Companys next annual meeting. For the purpose of this policy, normal
retirement age would be an age of at least 60 and determined by our executive pay committee. Shareholders recommend that the committee adopt a share retention percentage requirement of 50% of net after-tax shares.
This single unified policy shall prohibit hedging transactions for shares subject to this policy which are not sales but reduce the risk of loss to the executive.
Otherwise our directors would be able to avoid the impact of this proposal. This policy shall supplement any other share ownership requirements that have been established for senior executives, and should be implemented so as not to violate our
Companys existing contractual obligations or the terms of any pay or benefit plan currently in effect.
Requiring senior executives to hold a significant
portion of stock obtained through executive pay plans would focus our executives on our companys long-term success. A Conference Board Task Force report stated that hold-to-retirement requirements give executives an ever-growing
incentive to focus on long-term stock price performance.
Please vote to protect shareholder value:
Executives To Retain Significant Stock Proposal 4
Our Response to the Stockholder Proposal
The
Board recommends a vote against this proposal because we believe Sprints current executive compensation program and governance practices already adequately encourage executives to focus on the Companys long-term performance. In
addition, the proposal, if adopted, would undermine our ability to attract and retain executives.
We agree that senior executives should have a
significant stake in the Company to align their interests with our long-term success. To that end, under our compensation program, we typically grant equity awards annually with three- or four-year vesting periods, so at any particular time our
executives hold unvested equity awards that provide proper incentives for them to build long-term stockholder value.
Further, our Board has
established share ownership guidelines requiring our CEO to own a number of shares with a market value equal to at least five times his base salary and each of our other named executive officers to own a number of shares equal to at least three
times their respective base salaries.
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Notice of Annual Meeting and Proxy Statement |
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Proposal 4 - Stockholder Proposal Concerning
Executives Retaining Significant Stock
Each of our named executive officers who has been with the company for at least five years met these guidelines at December 31, 2013.
Contrary to the proponents suggestion, requiring holding periods for future equity awards in addition to satisfying these guidelines, which we
believe sufficiently retain their effectiveness over time, is unnecessary. Rather, taken together, our existing practices and policies strike an important balance between ensuring that our executives have a significant equity stake in Sprints
future, while allowing them to prudently manage their personal financial affairs during their employment.
The policy called for under the proposal
would place Sprint at a competitive disadvantage in recruiting and retaining executives. According to a recent survey report by Towers Watson, approximately 37 percent of companies have retention requirements in their equity plans, but of those only
eight percent require that the retention period be to retirement. We also believe requiring executives to retain shares until reaching a minimum retirement age of 60, regardless of their age at employment termination as called for under the
proposal, would further make Sprint an outlier and place us at a competitive disadvantage.
Our Board of Directors recommends
that you vote
AGAINST
adoption of Proposal 4.
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68
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Notice of Annual Meeting and Proxy
Statement
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Proposal 5 Stockholder Proposal Concerning
Political Contributions
Proposal 5. Stockholder Proposal Concerning Political Contributions
(Item 5 on Proxy Card)
The New York City Fire
Department Pension Fund, the New York City Teachers Retirement Systems, the New York Police Pension Fund, and the New York City Board of Education Retirement System, who own 34,087, 772,001, 143,970, and 53,484 shares respectively, have given
notice of their intention to introduce the following resolution at the annual meeting. The stockholder proposal and the supporting statement appear as received by us and we are not responsible for its contents. Following the stockholder proposal is
our response.
Resolved,
the shareholders of Sprint Nextel (the Company) hereby request the Company to prepare and semiannually
update a report, which shall be presented to the pertinent board of directors committee and posted on the Companys website, that discloses the Companys
(a) Policies and procedures for making political contributions and expenditures (both direct and indirect) with corporate funds, including the
boards role (if any) in that process, and
(b) Monetary and non-monetary political contributions or expenditures that could not be deducted
as an ordinary and necessary business expense under section 162(e) of the Internal Revenue Code; this would include (but not be limited to) contributions to or expenditures on behalf of political candidates, political parties, political
committees and other entities organized and operating under sections 501(c)(4) of the Internal Revenue Code, as well as the portion of any dues or payments that are made to any tax-exempt organization (such as a trade association) and that are used
for an expenditure or contribution that, if made directly by the Company, would not be deductible under section 162(e) of the Internal Revenue Code.
The report shall identify all recipients and the amount paid to each recipient from Company funds.
Stockholder Supporting Statement
As long-term Sprint Nextel
shareholders, we support transparency and accountability in corporate spending on political activities. Disclosure is consistent with public policy and in the best interest of the Company and its shareholders. Indeed, the Supreme Courts 2010
Citizens United decision which liberalized rules for corporate participation in election-related activities recognized the importance of disclosure to shareholders. The Court said: [D]isclosure permits citizens and shareholders
to react to the speech of corporate entities in a proper way. This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.
Sprint Nextel contributed at least $4.7 million in corporate funds since the 2004 election cycle. (CQ: http://moneyline.cq.com and National Institute on
Money in State Politics: http://www.followthemoney.org)
We note that our Company discloses its contributions to state-level candidates and
candidate committees on its website. We believe this is deficient because the Company will not disclose:
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ballot measure payments;
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Notice of Annual Meeting and Proxy Statement |
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Proposal 5 Stockholder Proposal Concerning
Political Contributions
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independent expenditures; and
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payments to third-party organizations such as trade associations, super PACs, and groups organized under the sections 527 and 501(c)4 of the I.R.S. tax codes, if any.
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Relying on publicly available data does not provide a complete picture of the Companys political spending. Information on indirect political
engagement through trade associations and 501(c)4 groups cannot be obtained by shareholders unless the Company discloses it. This proposal asks the Company to disclose all of its political spending, direct and indirect. This would bring our Company
in line with a growing number of leading companies, including Exelon, Merck and Microsoft, which support political disclosure and accountability and present this information on their websites.
The Companys Board and its shareholders need comprehensive disclosure to be able to fully evaluate the political use of corporate assets. We urge
your support for this critical governance reform.
Our Response to the Stockholder Proposal
Sprint shares the proponents support for transparency and accountability in corporate spending on political activities. To that end, we have been
responsive to input from our stockholders by publishing earlier this year a report on our 2013 political contributions. The report, available on our website at http://www.sprint.com/responsibility/gov-ethics-policy/contributions.html, not only lists
our contributions to political candidates during 2013, it also describes the processes and oversight used in connection with such contributions. We intend to publish this report annually. The information contained in or accessible though our website
is not part of this Proxy Statement.
While agreeing with the policy espoused by the proposal, we take issue with its overly prescriptive nature.
For example, the proposal calls for us to identify the persons responsible for political contributions. We believe our published reports description of the process and oversight provided by the Nominating Committee is an appropriate best
practice followed by many other companies.
Government policies and regulation have a significant impact on our business. It is important that we be
able to advocate effectively for public policies that support our business objectives, our ability to compete fairly in the marketplace, and candidates who share our public policy views. We believe our level of transparency has been equal to, or in
excess of, that of our competitors. Parties with interests adverse to us, sometimes with significantly more resources than us to expend on political advocacy, also participate in the political process to their business advantage. Any unilateral
expanded disclosure could benefit those parties while harming our interests and the interests of our stockholders.
Our Board
of Directors recommends that you vote
AGAINST
Proposal 5.
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70
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Notice of Annual Meeting and Proxy
Statement
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General Information
Information Regarding Solicitation
Mailing
Date:
On or about June 27, 2014, we mailed to our stockholders entitled to vote at the meeting the Notice or, for stockholders who have already requested to receive printed materials, this proxy statement, the accompanying proxy card and
the Form 10-K for the transition period ended March 31, 2014.
Address of Principal Executive Offices:
6200 Sprint Parkway, Overland Park, Kansas 66251.
Solicitation:
These proxy materials are delivered in connection with the solicitation by our board of directors of proxies to be voted at our annual meeting
of stockholders.
Purpose of the Annual Meeting
At the annual meeting, you will be asked to:
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elect the nine directors named herein (
Item 1 on the proxy card
);
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ratify the selection of the independent registered public accounting firm (
Item 2 on the proxy card
);
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approve, on an advisory basis, our executive compensation (
Item 3 on the proxy card
);
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vote on a stockholder proposal concerning executive compensation, if presented at the meeting (
Item 4 on the proxy card
);
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vote on a stockholder proposal concerning political contributions, if presented at the meeting (
Item 5 on the proxy card
); and
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take action on any other business that properly comes before the meeting and any adjournment or postponement of the meeting.
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Record Date; Stockholders Entitled to Vote
The close of business on June 9, 2014 has been fixed as the record date for the determination of stockholders entitled
to notice of, and to vote at, the 2014 annual meeting or any adjournments or postponements of the 2014 annual meeting.
As of the record date, we had 3,944,772,872 shares of our common stock outstanding of which 819,763 are not entitled to vote. These shares represent
shares originally issued by Sprint Nextel Corporation that have not been exchanged for Sprint Corporation shares. Each share of our common stock entitles the record holder to one vote on each matter presented at the 2014 annual meeting.
A complete list of stockholders entitled to vote at the 2014 annual meeting will be available for examination by any stockholder at our Principal
Executive Offices for purposes pertaining to the 2014 annual meeting during normal business hours for a period of ten days before the annual meeting and at
www.virtualshareholdermeeting.com/SprintCorp14
during the annual meeting.
Street Name and Broker Non-Votes
You are a record holder if you hold our shares directly in your name through our transfer agent, Computershare Trust Company, N.A., as
a stockholder of record. If you hold our shares through a broker, bank, financial institution, trust, or other nominee, then you are a holder of our shares in street name. If you hold your shares in street name, you must
instruct the broker or other nominee about how to vote your shares.
A broker non-vote occurs when a stockholder holding in
street name fails to provide voting instructions to his or her broker or other nominee. Under the rules of the NYSE, if you do not provide such instructions, the firm that holds your shares will have discretionary authority to vote your
shares with respect to routine matters. Of the five items to be considered at our annual meeting, only the appointment of Deloitte (Item 2) is considered routine. Those non-routine items for which a
stockholders broker or other nominee does not have discretion to vote are treated as broker non-votes.
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Notice of Annual Meeting and Proxy Statement |
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Voting Standards
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Election of
Directors
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Auditor
Ratification
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Advisory
Approval of
Executive
Compensation
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Stockholder
Proposals
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Voting Standard
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Plurality, which means directors receiving the highest number of votes FOR will be elected
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Majority of
shares present and entitled
to vote
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Majority of shares present and entitled to vote
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Majority of shares present and entitled to vote
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Broker
Non-Votes
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Not counted as entitled to vote and therefore no effect
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Not applicable
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Not counted as entitled to vote and therefore no effect
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Not counted as entitled to vote and therefore no effect
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Treatment of
Abstentions
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Not applicable
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Will be treated as a vote AGAINST
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Will be treated as a vote AGAINST
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Will be treated as a vote AGAINST
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Uninstructed Proxy
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Will be voted FOR this item.
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Will be voted FOR this item.
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Will be voted FOR this item.
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Will be voted AGAINST these items.
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Board
Recommendation
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FOR
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FOR
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FOR
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AGAINST
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We do not intend to bring any other matters before the meeting, and we do not know of any matters to be brought before
the meeting by others. Should any matter not described above be properly presented at the meeting, the persons named in the proxy card will vote in accordance with their judgment as permitted.
Quorum
In order to carry on the business of the meeting, we must have a quorum. A quorum requires the presence, in person or by proxy, of the holders of a
majority of the votes entitled to be cast at the meeting. We count abstentions and broker non-votes as present and entitled to vote for purposes of determining a quorum.
Voting of Proxies
Giving a proxy
means that you authorize the persons named in the proxy card to vote your shares at the 2014 annual meeting in the manner directed. You may vote by proxy or, if you attend the annual
meeting via the Internet, by following the instructions at
www.virtualshareholdermeeting.com/SprintCorp14
. To vote by proxy, you may use one of the following methods if you are a
record holder:
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By Internet
You can vote over the Internet at
www.proxyvote.com
by entering the control number found on your Notice or proxy card;
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By Telephone
You can vote by telephone by calling 1-800-690-6903 and entering the control number found on your Notice or proxy card; or
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Notice of Annual Meeting and Proxy
Statement
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By Mail
If you received your proxy materials by mail, you can vote by signing, dating and mailing the proxy card in the pre-paid enclosed envelope. Your proxy card must be received before the voting
polls close at the annual meeting.
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We request that you vote as soon as possible. When the proxy is properly submitted, the shares of
stock represented by the proxy will be voted at the 2014 annual meeting in accordance with the instructions contained in the proxy.
If your shares
are held in street name by a broker or other nominee, you should review the voting form used by that firm to determine whether you may provide voting instructions to the broker or other nominee by telephone or the Internet.
The deadline for voting by phone or via the Internet, except with respect to shares acquired through participation in our 401(k) plan, is 11:59 p.m.
Eastern on August 5, 2014.
Your vote is important. Accordingly, you should vote via the Internet or by telephone; sign, date and return the enclosed
proxy card if you received it by mail; or provide instructions to your broker or other nominee whether or not you plan to attend the annual meeting online.
Revocability of Proxies and Changes to a Stockholders Vote
You have the power to revoke your proxy or change your vote at any time before the proxy is voted at the annual meeting. You can revoke your proxy or
change your vote in one of four ways:
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by sending a signed notice of revocation to our corporate secretary to revoke your proxy;
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by sending to our corporate secretary a completed proxy card bearing a later date than your
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original proxy indicating the change in your vote;
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by logging on to
www.proxyvote.com
in the same manner you would to submit your proxy electronically or calling 1-800-690-6903, and, in each case, following the instructions to revoke or change your vote; or
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by attending the annual meeting online and voting, which will automatically cancel any proxy previously given. But attendance alone will not revoke any proxy that you have given previously.
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If you choose any of the first three methods, you must take the described action no later than the beginning of the 2014 annual meeting. Once voting on
a particular matter is completed at the annual meeting, you will not be able to revoke your proxy or change your vote. If your shares are held in street name by a broker or other nominee, you must contact that institution to change your vote.
Solicitation of Proxies
This
solicitation is made on behalf of our board, and we will pay the cost and expenses of printing and mailing this proxy statement and soliciting and obtaining the proxies, including the cost of reimbursing brokers, banks, and other financial
institutions for forwarding proxy materials to their customers. Proxies may be solicited, without extra compensation, by our officers and employees by mail, telephone, email, personal interviews or other methods of communication.
Voting by Our Employees Participating in Sprints 401(k) Plan
If you are an employee of Sprint who has a right to vote shares acquired through your participation in our 401(k) plan, you are entitled to instruct
the trustee, Fidelity Management Trust Company, how to vote
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Notice of Annual Meeting and Proxy Statement |
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the shares allocated to your account. The trustee will vote those shares as you instruct. You will receive voting information for any shares held in your 401(k) plan account, as well as any other
shares registered in your own name.
If you do not instruct the trustee how to vote your shares, the 401(k) plan provides for the trustee to vote
those shares in the same proportion as the shares for which it receives instructions from all other participants. To allow sufficient time for the trustee to vote, your voting instructions must be received by the trustee by August 1, 2014.
Delivery of Proxy Materials to Households Where Two or More Stockholders Reside
SEC rules allow us to deliver multiple Notices in a single envelope or a single copy of an annual report and proxy statement to any household where two
or more stockholders reside if we believe the stockholders are members of the same family. This rule benefits stockholders by reducing the volume of duplicate information they receive at their households. It also benefits us by reducing our printing
and mailing costs and reducing the environmental impact associated with our annual meeting.
We mailed Notices in a single envelope, or a single set
of proxy materials, as applicable, to each household this year unless the stockholders in these households provided instructions to the contrary in response to a notice previously mailed to them. However, for stockholders who previously requested a
printed set of the proxy materials, we mailed each stockholder in a single household a separate proxy card or voting instruction form. If you prefer to receive your own copy of the proxy materials for this or future annual meetings and you are a
record holder, you may request a duplicate set by writing to shareholder relations, 6200 Sprint Parkway, Mailstop KSOPHF0302-3B424, Overland
Park, Kansas 66251, by email at
shareholder.relations@sprint.com
or by calling 913-794-1091, and we will promptly furnish such materials. If a broker or other nominee holds your shares,
you may instruct your broker to send duplicate mailings by following the instructions on your voting instruction form or by contacting your broker.
If you share a household address with another stockholders, and you receive duplicate mailings of the proxy materials this year, you may request that
your household receive a single set of proxy materials in the future. If you are a record holder, please contact Sprint Shareholder Relations using one of the contact methods described above. If a broker or other nominee holds your shares, you
should follow the instructions on your voting instruction form or contact your broker.
If you hold some shares as a record holder or through our
401(k) plan, and other shares in the name of a broker or other nominee, we must send you proxy materials for each account. To avoid receiving duplicate sets of proxy materials, you may consolidate accounts or consent to electronic delivery as
described in the following section.
Internet Availability of the Proxy Materials
We are able to distribute the annual report and proxy statement to stockholders in a fast and efficient manner via the Internet. This reduces the
amount of paper delivered to a stockholders address, eliminates the cost of sending these documents by mail and reduces the environmental impact associated with our annual meeting. You may elect to view all future annual reports and proxy
statements on the Internet instead of receiving them by mail. Alternatively, you may elect to receive all future annual reports and proxy statements by mail instead of viewing them via the Internet. To make an election, please
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log on to
www.proxyvote.com
and enter your control number.
If you have enrolled for
electronic delivery, you will receive an email notice of stockholder meetings. The email will provide links to our annual report and our proxy statement. These documents are in PDF format so you will need Adobe Acrobat
®
Reader to view these documents online, which you can download for free by visiting
www.adobe.com
. The email will also provide a link to a voting web site and a control number to use to
vote via the Internet.
Attending the Meeting
Anyone can view the annual meeting live via the internet at
www.virtualshareholdermeeting.com/SprintCorp14
We encourage you to access the meeting prior to the start time.
Webcast starts at
1:00 p.m. Pacific time.
Instructions on how to attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted on the
meeting website.
Stockholders may vote and submit questions while attending the meeting on the Internet.
The webcast will be available for replay until midnight on August 16, 2014.
Proposals Submitted Pursuant to Rule 14a-8
You may submit proposals for consideration at future stockholder meetings. Such proposals also
must comply with SEC regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials. The deadline for submitting stockholder proposals to be included in the proxy statement for our 2015 annual
meeting of stockholders is February 27, 2015. If you intend to submit a proposal, it must be received by our Corporate Secretary at our Principal Executive Offices, no later than that date.
Proposals or Nominations Not Submitted Pursuant to Rule 14a-8
For a stockholders proposal or nomination that is not intended to be included in our proxy statement for the 2015 annual meeting under Rule 14a-8,
the stockholder must provide the information required by our bylaws and give timely notice to our Corporate Secretary in accordance with our bylaws, which, in general, require that the notice be received by our Corporate Secretary not earlier than
the close of business on April 8, 2015; and no later than the close of business on May 8, 2015. If the date of the annual meeting is advanced or delayed by more than 30 days from the anniversary of this years meeting, notice
will be timely if received, no earlier than the close of business 120 days and no later than the close of business 90 days in advance of such annual meeting or 10 calendar days following the date on which public announcement of the
date of the meeting is first made.
Availability of Sprints Bylaws
Our bylaws, which contain provisions regarding the requirements for making stockholder proposals and nominating director candidates, are available on
our website at
www.sprint.com/ governance
.
Form 10-K
Upon written request to the Corporate Secretary at our Principal Executive Offices, we will provide without charge a copy of our transition report on
Form 10-K, including the financial statements and financial statement schedules, filed with the SEC for the three-month transition period ended March 31, 2014.
Litigation
In March 2009, a
stockholder brought suit,
Bennett v. Sprint Nextel Corp
., in the U.S. District Court for the District of Kansas, alleging that Sprint Communications and three of its former officers violated
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Notice of Annual Meeting and Proxy Statement |
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Section 10(b) of the Exchange Act and Rule 10b-5 by failing adequately to disclose certain alleged operational difficulties subsequent to the Sprint-Nextel merger, and by purportedly
issuing false and misleading statements regarding the write-down of goodwill. The plaintiff seeks class action status for purchasers of Sprint Communications common stock from October 26, 2006 to February 27, 2008. On January 6, 2011,
the Court denied the motion to dismiss. Subsequently, our motion to certify the January 6, 2011 order for an interlocutory appeal was denied, and discovery is continuing. The plaintiff moved to certify a class of bondholders as well as owners
of common stock, and Sprint Communications has opposed that motion. Sprint Communications believes the complaint is without merit and intends to continue to defend the matter vigorously. We do not expect the resolution of this matter to have a
material adverse effect on our financial position or results of operations.
In addition, five related stockholder derivative suits were
filed against Sprint Communications and certain of its present and/or former officers and directors. The first,
Murphy v. Forsee
, filed in state court in Kansas on April 8, 2009, was removed to federal court, and was stayed by the court
pending resolution of the motion to dismiss the
Bennett
case; the second,
Randolph v. Forsee
, filed on July 15, 2010 in state court in Kansas, was removed to federal court, and was remanded back to state court; the third,
Ross-Williams v. Bennett, et al.
, filed in state court in
Kansas on February 1, 2011; the fourth,
Price v. Forsee, et al.,
filed in state court in Kansas on April 15, 2011; and the fifth,
Hartleib v. Forsee, et.
al
., filed in federal court in Kansas on July 14, 2011. These cases are essentially stayed while the
Bennett
case is in the discovery phase. We do not expect the resolution of these matters to have a material adverse effect on
our financial position or results of operations.
Sprint Communications, Inc. has received a complaint purporting to assert claims on behalf of Sprint
Communications, Inc. stockholders, alleging that members of the board of directors breached their fiduciary duties in agreeing to the SoftBank Merger, and otherwise challenging that transaction. There were initially five cases consolidated in state
court in Johnson County, Kansas:
UFCW Local 23 and Employers Pension Fund, et al. v. Bennett, et al
., filed on October 25, 2012;
Iron Workers Mid-South Pension Fund, et al. v. Hesse, et al
., filed on October 25, 2012;
City
of Dearborn Heights Act 345 Police and Fire Retirement System v. Sprint Nextel Corp.
,
et al
., filed on October 29, 2012;
Testani, et al. v. Sprint Nextel Corp., et al
., filed on November 1, 2012; and
Patten, et al. v.
Sprint Nextel Corp., et al
., filed on November 1, 2012. There are two cases filed in federal court in the District of Kansas, entitled
Gerbino, et al. v. Sprint Nextel Corp., et al
., filed on November 15, 2012, and
Steinberg,
et al. v. Bennett, et al.
, filed on May 16, 2013 (and now consolidated with
Gerbino
); those cases are stayed pending the resolution of the state cases. Plaintiffs in the state cases have indicated that they do not intend to challenge
the transaction as completed. The Company intends to defend these cases vigorously, and we do not expect the resolution of these matters to have a material effect on our financial position or results of operations.
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Notice of Annual Meeting and Proxy
Statement
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SPRINT CORPORATION
6200 SPRINT PARKWAY
OVERLAND PARK, KS 66251
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SPRINT CORPORATION
YOUR VOTE IS IMPORTANT
Please take a moment now to vote the shares of Sprint Corporation common stock for the Wednesday, August 6, 2014, Annual Meeting of
Stockholders.
YOU CAN VOTE TODAY IN ONE OF FOUR
WAYS:
1. Vote by Telephone
Please
call toll-free at
1-800-690-6903 from any touch-tone telephone
and follow the instructions. Have your proxy card available when you call and use the Company Number and Account Number shown on this proxy card.
OR
2. Vote by Internet
Please access
www.proxyvote.com
or scan
the QR Barcode above and follow the on-screen instructions. Have this proxy card available when you access the web page, and use the Company Number and Account Number shown on your proxy card.
You may vote by telephone or Internet 24 hours a day, 7 days a week until 11:59 p.m.
Eastern Time on August 5, 2014 (August 1, 2014 for shares held through our 401(k) plan). Your telephone or Internet vote authorizes the named proxies to vote the shares in the same manner as if you had executed a proxy card.
OR
3. Vote by Mail
Please complete, sign, date and return the proxy
card in the envelope provided to: Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717 to arrive no later than the closing of the polls on August 6, 2014.
OR
4. During The Meeting
- Go to
www.virtualshareholdermeeting.com/SprintCorp14
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
M76039-P53584
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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SPRINT CORPORATION
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For
All
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Withhold All
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For All
Except
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To withhold authority to vote for any individual nominee(s), mark For All Except and write the number(s) of the nominee(s) on the line below.
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The Board of Directors recommends you vote
FOR
the following proposals:
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1.
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Election of Directors
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Nominees:
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¨
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¨
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¨
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01)
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Robert R. Bennett
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06) Frank Ianna
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02)
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Gordon M. Bethune
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07) Adm. Michael G. Mullen
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03)
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Marcelo Claure
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08) Masayoshi Son
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04)
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Ronald D. Fisher
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09) Sara Martinez Tucker
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05)
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Daniel R. Hesse
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For
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Against
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Abstain
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2.
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To ratify the appointment of Deloitte & Touche LLP as
the independent registered public accounting firm of Sprint Corporation for the year ending March 31, 2015.
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¨
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¨
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¨
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3.
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Advisory approval of the Companys named executive
officer compensation.
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¨
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¨
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¨
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The Board of Directors recommends you vote
AGAINST
the following proposals:
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4.
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To vote on a stockholder proposal concerning executives
retaining significant stock.
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¨
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¨
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5.
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To vote on a stockholder proposal concerning political
contributions.
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¨
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¨
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¨
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NOTE:
The proxy holder(s) will vote in their
discretion on any other business as may properly come before the meeting or any adjournment or postponement thereof.
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must
sign. If a corporation or other entity, please sign in full corporate or entity name as an authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Transition Report on Form 10-K are available at www.proxyvote.com.
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M76040-P53584
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SPRINT CORPORATION
6200
SPRINT PARKWAY
OVERLAND PARK, KANSAS 66251
ANNUAL MEETING OF STOCKHOLDERS - August 6, 2014
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles R. Wunsch and Timothy P.
OGrady, and each of them, with full power of substitution, as proxies, to vote all the shares of stock of Sprint Corporation that the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held at 1:00 p.m. Pacific time,
on August 6, 2014, and any adjournment or postponement thereof, upon the matters set forth, and in their discretion upon such other matters as may properly come before the meeting.
This Proxy, if signed and returned, will be voted as indicated. If this card is signed
and returned without indication as to how to vote, the shares will be voted FOR items 1 through 3 and AGAINST items 4 and 5.
Any one of said proxies, or any substitutes, who shall be present and act at the meeting shall have all the powers of
said proxies hereunder.
Continued and to be signed on
reverse side
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