NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
May 24, 2017 at 10:00 a.m. Eastern
Time
NII’s U.S. Headquarters located at
1875 Explorer Street, Suite 800, Reston, VA 20190
We will hold the Annual Meeting of
Stockholders of NII Holdings, Inc. (“NII”) on May 24, 2017 at 10:00 a.m. Eastern
Time at NII’s U.S. headquarters, located at 1875 Explorer Street, Suite 800,
Reston, Virginia 20190 (703-390-5100).
At our Annual Meeting, our stockholders
will be asked to:
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1.
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Elect seven directors for a
one-year term ending 2018;
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2.
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Provide an advisory vote to
approve the compensation of our named executive officers;
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3.
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Ratify the appointment of KPMG
LLP as NII’s independent registered public accounting firm for fiscal year
2017; and
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4.
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Transact any other business that
properly comes before the Annual Meeting and any adjournments
thereof.
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The Board of Directors of NII recommends
that you vote FOR the nominees for director; FOR the approval, on an advisory
basis, of the compensation of the Company’s named executive officers; and FOR
the ratification of the appointment of KPMG LLP as NII’s independent registered
public accounting firm.
Only stockholders of record as of April 3,
2017 can vote at the Annual Meeting.
April 19, 2017
By Order of the Board of
Directors,
Kevin L. Beebe
Chairman of the Board of Directors
IMPORTANT NOTICE REGARDING THE
AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDERS’ MEETING TO BE HELD ON MAY
24, 2017.
The proxy statement and the Company’s
annual report on Form 10-K for the fiscal year ended December 31, 2016 are
available at www.proxyvote.com.
Table of Contents
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TABLE OF
CONTENTS
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3
Table of Contents
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Time and Place of
Annual
Meeting
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The Annual Meeting will be held on
May 24, 2017 at 10:00 a.m. Eastern Time at our U.S. headquarters located
at 1875 Explorer Street, Suite 800, Reston 20190, Virginia,
USA.
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Enclosed
Materials
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Enclosed are the following
materials:
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the proxy statement for the Annual Meeting;
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the Company’s annual report on Form 10-K for the year
ended December 31, 2016, as filed with the Securities and Exchange
Commission (the “SEC”) on March 9, 2017; and
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the proxy card or vote instruction form for the Annual
Meeting.
We are providing these proxy
materials in connection with the Board’s solicitation of proxies to be
voted at the Annual Meeting. We commenced mailing this proxy statement and
the enclosed form of proxy to our stockholders entitled to vote at the
meeting on or about April 19, 2017.
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Management
Proposals
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At the Annual Meeting, stockholders
will be asked to:
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elect Messrs. Kevin Beebe, James Continenza, Howard
Hoffmann, Ricardo Knoepfelmacher, Christopher Rogers, Robert Schriesheim
and Steven Shindler to the Board to serve for a one-year term ending 2018
(Item 1 on the proxy card);
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provide an advisory vote on the compensation of the
Company’s named executive officers (Item 2 on the proxy
card);
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ratify the appointment of KPMG LLP as the Company’s
independent registered public accounting firm for the fiscal year 2017
(Item 3 of 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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Stockholders
Entitled to
Vote
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The holders of common stock at the
close of business on April 3, 2017, or the Record Date, are entitled to
receive notice of, to attend and to vote one vote per share on each matter
at the Annual Meeting or any adjournment or postponement of the Annual
Meeting.
As of the Record Date, there were
100,776,222 shares of common stock outstanding. A complete list of
stockholders entitled to vote at the Annual Meeting will be available for
examination at the time and place of the Annual Meeting.
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How to Vote
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Stockholder of
Record
. If you are a stockholder of
record (that is, stockholders who hold their shares in their own name),
there are four ways to vote:
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In person.
You may vote in person at the Annual Meeting. The
Company will give you a ballot when you arrive.
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Via the Internet.
You may vote by proxy via the Internet by following the
instructions provided on the proxy card.
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By Telephone.
You may vote by proxy by calling the toll free number
found on the proxy card.
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By Mail.
You may vote by proxy by filling out the proxy card and
sending it back in the envelope provided.
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If you are a stockholder of record
and a current employee of the Company, you will receive an e-mail
containing instructions on how to access our proxy materials and how to
vote your shares on the Internet.
Beneficial Owner
. If you are a beneficial owner of shares held in street
name (that is, shares held in the name of a bank, broker or other holder
of record), the materials were forwarded to you by the organization
holding your account and there are up to four ways to
vote:
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In person.
If you wish to vote in person at the Annual Meeting,
you must obtain a legal proxy from the organization that holds your
shares. Please contact that organization for instructions regarding
obtaining a legal proxy.
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Via the Internet.
You may be eligible to vote by proxy via the Internet
by following the instructions on the vote instruction
form.
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By Telephone.
You may be eligible to vote by proxy by following the
instructions on the vote instruction form.
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By Mail.
You may vote by proxy by filling out the vote
instruction form and sending it back in the envelope
provided.
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4
Table of Contents
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Quorum
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The presence of, by person or by
proxy, the holders of a majority of the total number of issued and
outstanding shares of common stock that are entitled to vote at the Annual
Meeting constitutes a quorum and is necessary for the transaction of
business at the Annual Meeting.
An inspector of elections will
determine the presence of a quorum and tabulate the results of the voting
by stockholders at the Annual Meeting. The inspector will treat valid
proxies marked abstain or proxies required to be treated as broker
non-votes (which occurs when a broker has not received voting instructions
on a matter and either does not vote the shares on that matter or is not
entitled to vote on that matter without instruction but has voted on
another matter the broker is entitled to vote on) as present for purposes
of determining whether there is a quorum at the Annual
Meeting.
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Voting
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All shares represented by valid
proxies received prior to the Annual Meeting will be voted and, where a
stockholder specifies by means of the proxy a choice with respect to any
matter to be acted upon, the shares will be voted in accordance with the
stockholder’s instructions.
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Effect of Not
Providing
Voting
Instructions
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Stockholder of
Record
. If you are a stockholder of
record and you sign, date and return the enclosed proxy card but do not
specify how to vote, then your shares will be voted in accordance with the
recommendations of the Board on all matters presented in this proxy
statement and as the proxy holders may determine in their discretion
regarding any other matters properly presented for a vote at the Annual
Meeting or any adjournments thereof.
If you are a current employee of the
Company, you will receive an e-mail containing instructions on how to
access our proxy materials and how to vote your shares on the
Internet.
Beneficial Owner
. If you are a beneficial owner of shares held in street
name and hold your shares through a broker, bank or other financial
institution, and you do not provide the broker or other nominee that holds
your shares with voting instructions, the broker or other nominee will
determine if it has the discretionary authority to vote on a particular
matter. Brokers and other nominees have the discretion to vote on routine
matters such as Proposal 3, but do not have the discretion to vote on
non-routine matters such as Proposals 1 and 2. Therefore, if you do not
provide voting instructions to your broker or other nominee, your broker
or other nominee may only vote your shares on Proposal 3 and any other
routine matters properly presented for a vote at the Annual
Meeting.
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Vote Standard
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In uncontested elections, directors
are elected if they receive a majority of the votes cast for each director
at the Annual Meeting. A majority of the votes cast means that the number
of votes cast “for” a director must exceed the number of votes cast
“against” that director. Abstentions and broker non-votes will not be
counted as votes against a director.
Proposals 2 and 3 require the
approval of a majority of the votes cast on the matter, excluding any
abstentions or broker non-votes.
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Broker Non-Votes
and
Abstentions
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Broker non-votes occur on a matter
when a broker is not permitted to vote on that matter without instructions
from the beneficial owner and instructions are not given. These matters
are referred to as “non-routine” matters. All of the matters scheduled to
be voted on at the Annual Meeting are “non-routine,” except for the
proposal to ratify the appointment of KPMG LLP as the Company’s
independent registered public accounting firm for the fiscal year ending
December 31, 2017.
While broker non-votes will be
treated as present for purposes of determining whether there is a quorum,
they will not be counted for purposes of determining the number of votes
cast with respect to a particular proposal. Accordingly, a broker non-vote
will be counted in order to obtain a quorum and will not be counted or
otherwise affect the outcome of the vote with respect to proposals 1 and
2.
Abstentions with respect to the
election of directors will not be counted as votes either “for” or
“against” the director’s election. Abstentions with respect to proposals 2
and 3 will not be counted as a vote cast or otherwise affect the outcome
of the vote with respect to such proposals.
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Changing Your
Vote
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A stockholder has the power to
revoke his or her proxy or change his or her vote at any time before the
proxy is voted at the Annual Meeting. If your shares are held in street
name by a broker, bank or other financial institution, you must contact
that institution to change your vote. If you are a stockholder of record,
you can revoke your proxy or change your vote in one of five ways:
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you can send a signed written notice of revocation to
our corporate secretary at the address noted below to revoke your proxy;
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you can send a completed proxy card bearing a later date
than your original proxy to us indicating the change in your vote;
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you can vote again on a later date on the Internet or by
telephone (only your latest proxy submitted prior to the Annual Meeting
will be counted);
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you can attend the Annual Meeting and vote in person,
which will automatically cancel any proxy previously given; or
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you can revoke your proxy in person at the Annual
Meeting, but attendance at the Annual Meeting alone will not revoke any
proxy that you have given previously.
If you choose either of the first
three methods, we must receive the described notice or proxy no later than
the beginning of the Annual Meeting. If you choose the fourth or fifth
methods, you will be asked to present documents for the purpose of
establishing your identity as a NII Holdings’ stockholder. Before the
Annual Meeting, any written notice of revocation should be sent to NII
Holdings, Inc., 1875 Explorer Street, Suite 800, Reston, Virginia 20190,
Attention: General Counsel. Any notice of revocation that is delivered at
the Annual Meeting should be hand delivered to our General Counsel before
a vote is taken. 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 as to that matter.
If you are a stockholder of record
and a current employee of the Company, you will receive an e-mail
containing instructions on how to access our proxy materials and how to
vote your shares on the Internet.
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Table of Contents
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Voting Results
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The preliminary voting results will
be announced at the Annual Meeting. The final voting results will be
tallied by the inspector of elections and published in the Company’s
Current Report on Form 8-K, which the Company is required to file with the
SEC within four business days following the Annual Meeting and can be
accessed on the investor relations area of our website at
www.nii.com.
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Householding
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In an effort to reduce the Company’s
printing and mailing costs, as well as minimizing the environmental impact
of the Company’s annual meetings, the Company will deliver a single copy
of the proxy materials to multiple stockholders who share the same address
unless the Company has received instructions to the contrary from one or
more of the stockholders at that address. You may request a separate copy
of the proxy materials by writing or calling the Company at the following
address and telephone number:
Investor Relations
NII Holdings,
Inc.
1875 Explorer Street, Suite 800
Reston, Virginia, 20190
(703) 547-5209
Stockholders who hold shares in
street name may contact the organization holding their account to request
information about householding.
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Cost of Solicitation
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The cost of soliciting proxies for the Annual Meeting
will be borne by the Company. We have hired Broadridge Financial
Solutions, Inc. (“Broadridge”) to help us send out the proxy materials and
expect Broadridge’s fee for this service to be about $20,000. While we do
not expect to incur additional solicitation expenses, the Company may
incur additional expenses in order to encourage voting on a particular
matter. In addition, certain of our officers and regular employees,
without additional compensation, may use their personal efforts, by
telephone or otherwise, to obtain proxies. We also reimburse banks,
brokerage firms and other custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses in forwarding proxy materials to the
beneficial owners of shares of common
stock.
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Every stockholder’s vote is important.
Accordingly, you should sign, date and return the enclosed proxy card, vote via
the Internet or by telephone, or provide instructions to your broker or other
nominee whether or not you plan to attend the Annual Meeting in
person.
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Table of Contents
We are committed to effective corporate
governance and high ethical standards because we believe that these values
support our long-term performance. Under our current governance framework, the
Board, working with senior management and our stockholders, has implemented the
following corporate governance practices to support our values:
Corporate Governance
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71% Independent
Board
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Independent Chair
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Independent Audit and Compensation
Committees
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Stockholder Rights
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Declassified Board in
2017
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Majority Voting for
Directors
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Stockholder Right to Call Special
Meeting
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CORPORATE GOVERNANCE
FRAMEWORK
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The Board is responsible for the oversight
of management on behalf of our stockholders, and the Board accomplishes this
function acting directly and through its committees. Directors discharge their
duties at Board and committee meetings and also through telephone contact and
other communications with management and others regarding matters of concern and
interest to the Company. In accordance with our policies, our corporate
governance is managed under the following structure, details of the roles and
responsibilities of each of these elements are outlined further
below:
We have an independent Chair of the Board
who presides over meetings of the Board of Directors and annual meetings of
stockholders and serves as a liaison between the Board of Directors and senior
management. Our leadership structure ensures a strong role for the independent
directors in the oversight of the Company and in establishing priorities and
procedures for the work of the Board. The Board recognizes that there is no
single generally accepted approach to providing Board leadership and that the
Board’s leadership structure may vary in the future as circumstances
warrant.
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The specific roles and responsibilities of
the Board’s committees are delineated in written charters adopted by the Board
for each committee and are reviewed annually by the Corporate Governance and
Nominating Committee in accordance with our Corporate Governance Guidelines. As
provided in their charters, each committee is authorized to engage or consult
from time to time, as appropriate, at our expense, with outside independent
legal counsel or other experts or advisors it deems necessary, appropriate or
advisable to discharge its duties.
Each member of the Audit Committee and
Compensation Committee is independent in accordance with the NASDAQ Stock Market
(“NASDAQ”) listing rules and the Securities Exchange Act of 1934, as amended, as
applicable.
One member of the Corporate Governance and
Nominating Committee is not independent. The Board considered the relationship
with RK Partners Assessoria Financeira e Gestão de Recursos Ltda (“RK Partners”)
described below in “Certain Relationships and Related Transactions” and
determined that Mr. Knoepfelmacher does not meet the independence standards of
the NASDAQ listing rules and the Securities Exchange Act of 1934, as amended.
Nonetheless, the Board, relying on the exception included in NASDAQ listing rule
5605(e)(3) as well as on the Corporate Governance and Nominating Committee
charter, considered Mr. Knoepfelmacher’s background and experience and
determined that, given Mr. Knoepfelmacher’s ability to provide substantial
insight and guidance on potential director nominees and succession planning, his
membership on the Corporate Governance and Nominating Committee is required in
the best interests of the Company and its stockholders.
Below is a summary of the primary
responsibilities of each committee.
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Audit:
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Oversight of the quality and
integrity of our financial statements and related disclosures, and our
accounting, auditing, and reporting practices.
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Review of our processes to manage
financial risk, and for compliance with significant applicable legal,
ethical and regulatory requirements.
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Appointment, replacement,
compensation and oversight of the independent registered public accounting
firm engaged to prepare and issue audit reports on our financial
statements.
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Oversight of our internal audit function.
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Compensation:
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Review and approve our annual
executive compensation and executive compensation program and
philosophy.
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Oversee the administration of our
equity-based compensation and other benefit plans and the compensation
programs and philosophy for non-executive employees.
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Approve grants of stock options and
stock awards to directors, officers and employees under our stock
plan.
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Corporate Governance
and
Nominating:
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Promote the effective and efficient
governance of the Company, including the development and periodic
assessment of ethics and corporate governance policies.
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Assist the Board in the oversight of
management succession planning.
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Oversee the Board and committee
annual evaluation process.
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Develop qualifications for director
candidates and recommend to the Board persons to serve as directors and as
members of the Board’s committees.
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CORPORATE GOVERNANCE POLICIES AND
PRACTICES
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We manage our business and affairs in
accordance with the Delaware General Corporation Law and a number of key
governance documents, including our Corporate Governance Guidelines, Amended and
Restated Certificate, Fifth Amended and Restated Bylaws, Code of Conduct and
Business Ethics, and Board Committee Charters. Our Board reevaluates our
policies and practices on an ongoing basis to ensure high standards of business
conduct that facilitate the Board’s execution of its responsibilities.
Additional information is provided below regarding key corporate governance and
ethics policies and practices that we believe enable us to manage our business
in accordance with the highest standards of business practices and in the best
interest of our stockholders.
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Table of Contents
In accordance with our Corporate
Governance Guidelines, a majority of our Board must be independent as defined by
the NASDAQ listing rules and the Securities Exchange Act of 1934, as amended. On
March 7, 2017, the Board determined that the following five of its seven current
members (71%) are independent: Kevin L. Beebe (Chair), James V. Continenza,
Howard S. Hoffmann, Christopher T. Rogers and Robert A. Schriesheim. In making
that determination, the Board considered Mr. Shindler’s employment as chief
executive officer of the Company and the relationship between Mr. Knoepfelmacher
and RK Partners described below in “Certain Relationships and Related
Transactions.” The Audit Committee and the Compensation Committee are comprised
entirely of independent directors.
Our Board has an active role, as a whole
and also at the committee level, in overseeing the management of the risks that
the Company faces in its business. Our Corporate Governance Guidelines set forth
the responsibilities of our Board, including the Board’s oversight of the
Company’s risk assessment and risk audit functions and provides for specific
actions to mitigate certain risks. The Board regularly reviews information
regarding the Company’s results of operations and any related trends and other
factors contributing to or affecting those results, long range strategy,
financial reporting systems and processes, and access to capital and liquidity,
as well as the risks associated with these aspects of the Company’s business.
The Company’s Code of Conduct and Business Ethics establishes standards of
conduct for employees that are designed to mitigate risks associated with the
Company’s and its employees’ compliance with legal requirements, foster ethical
conduct by employees in dealing with the Company and others, and protect company
assets. The Company requires that all employees receive annual training relating
to the Code of Conduct and Business Ethics and related policies in order to
ensure that employees are familiar with those standards of conduct and to
mitigate the risks associated with employees’ failure to meet those
standards.
In addition, each of the committees of the
Board is involved in the assessment of risks relevant to their area of
responsibility and the implementation of actions designed to address or mitigate
those risks. The types of risks that are considered by the committees and some
of the actions taken to address those risks include:
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Audit:
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Risks related to the Company’s tax,
accounting, financial reporting systems and processes, internal controls,
and its legal and regulatory compliance.
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The committee holds regular meetings with our independent
registered public accounting firm, principal accounting officer, vice
president of internal audit, chief financial officer, general counsel and
management to discuss the risks faced by the Company and the actions being
taken to mitigate those risks.
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Compensation:
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Risks relating to the Company’s
compensation and benefit programs.
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Historically, the committee retains
an independent compensation consultant to assist it in satisfying its
oversight responsibilities and to ensure that the compensation and benefit
programs are designed in a manner that aligns the compensation of
executives and other employees with the interests of the Company and its
stockholders. In 2016, the Compensation Committee did not utilize the
services of an independent compensation consultant given the determination
that no changes would be made to executive officer compensation for 2016
and no equity grants would be provided.
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Corporate Governance
and
Nominating:
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Risks related to the Company’s
corporate governance and management.
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The committee reviews, and
implements changes to, the Company’s policies relating to corporate
governance, ethics and related processes; assists the Board in management
succession planning; and selects and recommends individuals nominated to
our Board in an effort to ensure that a majority of the members of the
Board are independent and have appropriate time, skills and experiences
necessary to assist the Board in its oversight
role.
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In addition, the Company’s internal audit
group, which reports directly to the chairman of the Audit Committee through the
vice president of internal audit, prepares an annual risk assessment that
includes a review of risks related to the Company’s operations and processes,
market and business environment, as well as risks relating to the availability
and reliability of information used by management in its decision making. Based
on this risk assessment, the internal audit group makes a
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recommendation to the Audit Committee
concerning an annual internal audit plan that identifies the business activities
and processes that will be reviewed and analyzed by the internal audit group
during the year. The Audit Committee approves the risk assessment and annual
internal audit plan to be carried out by the internal audit group and receives
detailed reports concerning the results of each review, including
recommendations made to address risks that are identified and actions taken by
management with respect to those recommendations. The Audit Committee also
receives quarterly updates concerning the status and outcome of the reviews
conducted by the internal audit group pursuant to the annual review plan and the
status of actions taken by management to mitigate risks identified in the
reviews.
While each of the committees of our Board
is responsible for evaluating certain risks and overseeing the management of
such risks, the entire Board is regularly informed through management and
committee reports about risks, our risk assessment and the internal audit
group’s annual review plan.
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CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
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Our Corporate Governance Guidelines
require that the Audit Committee review and approve or ratify transactions
involving the Company and related persons (such as the Company’s officers,
directors, family members of the officers and directors and other related
parties) in accordance with the requirements of NASDAQ. In determining whether
to approve or ratify a related party transaction, the Audit Committee evaluates
whether the transaction is in the best interests of the Company taking into
consideration all relevant factors, including, as applicable, the Company’s
business rationale for entering into the transaction and the fairness of the
transaction to the Company. The Audit Committee generally seeks to consider and
approve these transactions in advance where practicable, but may also ratify
them after the transactions are entered into, particularly in instances where
the transactions are entered into in the ordinary course of business or if the
transaction is on terms that are consistent with a policy previously approved by
the Audit Committee or the Board. In instances where the transaction is subject
to renewal or if the Company has the right to terminate the relationship, the
Audit Committee expects to periodically monitor the transaction to ensure that
there are no changed circumstances that would render it advisable for the
Company to amend or terminate the transaction.
The Audit Committee has reviewed and
approved an agreement dated October 27, 2016 between the Company’s subsidiary,
Nextel Telecomunicações Ltda (“Nextel Brazil”) and RK Partners, a financial and
operational restructuring advisory firm for which Ricardo Knoepfelmacher, a
director of the Company, serves as the Managing Partner, for advice relating to
the restructuring of the Company’s outstanding debt. In 2016, Nextel Brazil paid
RK Partners an engagement fee (the “Engagement Fee”) of R$1,027,367, or $294,366
based on the average exchange rate of 3.4901 Brazilian Reais to 1.00 U.S. Dollar
for the year ended December 31, 2016 (the “Average Exchange Rate”). The
agreement provides for fixed monthly payments of R$330,000, or $94,553 based on
the Average Exchange Rate (the “Retainer Fee”), and Retainer Fees of R$339,031,
or $97,141 based on the Average Exchange Rate, were paid to RK Partners in
connection with this agreement in 2016. RK Partners is also entitled to a
potential success fee in the aggregate amount of R$12,000,000, or $3,438,297
based on the Average Exchange Rate; provided, however, that 50% of the
Engagement Fee and 50% of the Retainer Fees will be deducted from the total
amount due to RK Partners in connection with any success fee. The Company
expects Nextel Brazil will pay more than $120,000 to RK Partners in 2017. Due to
this transaction, the Board has determined that Mr. Knoepfelmacher does not meet
the independence standards of the NASDAQ listing rules and the Securities
Exchange Act of 1934, as amended.
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CODE OF CONDUCT AND BUSINESS
ETHICS
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The Company’s Code of Conduct and Business
Ethics covers our directors, officers and employees, including the directors,
officers and employees of our operating subsidiaries in Brazil. The Code of
Conduct and Business Ethics addresses such topics as protection and proper use
of our assets, compliance with applicable laws and regulations, accuracy and
preservation of records, accounting and financial reporting, conflicts of
interest and insider trading. The Company requires that all employees receive
annual training relating to the Code of Conduct and Business Ethics and related
policies in order to ensure that employees are familiar with those standards of
conduct.
Only the Board or the Audit Committee may
consider a waiver of the Code of Conduct and Business Ethics for an executive
officer or director. If a provision of the Code of Conduct and Business Ethics
is materially modified, or if a waiver of the Code of Conduct and Business
Ethics is granted to a director or executive officer, we will post a notice of
such action on the Investor Relations link of our website at
www.nii.com
. No such
waivers were granted during 2016.
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HEDGING, SHORT SALE AND PLEDGING
POLICIES
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Historically, the Company has discouraged
its employees from engaging in short sales, hedging transactions, transactions
involving publicly traded options and pledging involving the Company’s
securities. In 2012, the Board adopted a policy prohibiting all employees
(including executive officers and directors) from engaging in any transaction
involving our common stock that may be viewed as speculative, including buying
or selling puts, calls or options, short sales, hedging transactions or
purchases of our common stock on margin.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
|
No member of the Compensation Committee is
a current or former officer of us or any of our subsidiaries. In addition, there
are no compensation committee interlocks with other entities with respect to any
such member.
|
AVAILABILITY OF GOVERNANCE
INFORMATION
|
Our governance documents, including the
charters of the Audit, Compensation, and Corporate Governance and Nominating
Committees may be viewed free of charge on the Investor Relations link of our
website at
www.nii.com
. The charters and our Code of Conduct and Business Ethics may
also be obtained by writing to us at NII Holdings, Inc., 1875 Explorer Street,
Suite 800, Reston, Virginia 20190, Attention: Investor Relations.
|
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF
DIRECTORS
|
As provided for in our Corporate
Governance Guidelines, stockholders may communicate directly with the Board by
electronic mail sent to
boardinquiries@nii.com
or by regular
mail sent to the address below. The Board has instructed the Board
Communications Designee to examine incoming communications to determine whether
the communications are relevant to the Board’s roles and responsibilities. The
Board has authorized the Board Communications Designee to disregard or discard
inappropriate communications such as spam, business solicitations or
advertisements, resumes or similar communications. The Board Communications
Designee will forward any service inquiries or complaints to the appropriate
groups within the Company for processing and response.
The Board Communications Designee will
review all appropriate communications and report such communications to the
chair of the Corporate Governance and Nominating Committee, the Board, or the
independent directors, as appropriate. The Board Communications Designee will
take additional action or respond to letters in accordance with instructions
from the relevant Board source. Communications relating to the Company’s
accounting, internal accounting controls or auditing matters will be referred
promptly to members of the Audit Committee. Stockholder communications to the
Board should be sent to:
Shana C. Smith
Board Communications
Designee
NII Holdings, Inc.
1875 Explorer
Street, Suite 800
Reston, Virginia 20190
12
Table of Contents
Our Board consists of seven directors.
Each of the directors of the Board was appointed in connection with our plan of
reorganization, which became effective on our emergence from our Chapter 11
bankruptcy proceedings on June 26, 2015, and determined to be qualified to serve
on the Board by The Capital Group Companies, Inc. (“Capital Group”), Aurelius
Capital Management, LP (“Aurelius”) and the informal group of holders of notes
issued by NII International Telecom (the “LuxCo Group”), the creditors who had
the right to make the appointments. Pursuant to the plan of reorganization, our
chief executive officer, who was a member of our board of directors and our
chief executive officer when we filed a voluntary petition seeking relief under
Chapter 11 of the U.S. Bankruptcy Code in September 2014, was appointed to our
Board of Directors. In addition, Capital Group designated three of our
directors, Aurelius designated one director and the LuxCo Group designated two
of our directors that comprise our current seven-member Board. The term for all
of our directors expires at the 2017 Annual Meeting of Stockholders and all
directors are elected annually.
Each of our directors brings a strong and
unique background and set of skills to the Board, giving the Board as a whole
competence and experience in a wide variety of areas, including:
|
●
|
experience in senior executive
positions in the telecommunications and other industries and service on
the board of directors of other companies, including telecommunications
companies;
|
|
●
|
experience in key management and
operating roles for large, complex organizations, including technology and
manufacturing companies, operators of wireless networks, retailers and
companies with international operations and, specifically, operations in
Latin America;
|
|
●
|
experience serving on other public
company boards, including serving on audit, compensation and other
committees responsible for oversight of corporate governance and related
issues; and
|
|
●
|
experience in financing, capital
markets and strategic transactions, including as executives of public
companies with responsibility for capital planning and fundraising; as
executives of investment banks and other financial institutions, including
investment funds and private equity investment firms; and as investment
fund managers.
|
The Corporate Governance and Nominating
Committee and the Board believe that these and the other skills and experiences
brought to the Board by its members position the Board to be able to fulfill its
oversight role and to evaluate and advise management with respect to a wide
variety of matters faced by the Company in its business. We have included a
brief description of the experience, qualifications, attributes and skills that
led to the conclusion that each director should serve on our Board as part of
the directors’ biographies below.
13
Table of Contents
|
DIRECTOR
NOMINATION PROCEDURES
|
In evaluating a director candidate, each
of the Corporate Governance and Nominating Committee and the Board consider
factors that it believes are in the best interests of the Company and its
stockholders. In addition, the Corporate Governance and Nominating Committee has
adopted guidelines for the evaluation of potential director nominees. These
guidelines set forth standards by which potential nominees for election to our
Board will be evaluated and include:
|
●
|
the prospective nominee’s
professional skills and experience;
|
|
●
|
the ability of the prospective
nominee to represent the interests of our stockholders;
|
|
●
|
the prospective nominee’s
reputation, standards of integrity, commitment and independence of thought
and judgment;
|
|
●
|
the prospective nominee’s
independence from our company under the NASDAQ listing rules, and, as
applicable, the standards for independence established by the SEC;
|
|
●
|
the prospective nominee’s ability to
dedicate sufficient time, energy and attention to the diligent performance
of his or her duties as a director, taking into account, among other
things, the prospective nominee’s service on other public company boards;
and
|
|
●
|
the extent to which the prospective
nominee contributes to the range of talent, skill and expertise
appropriate for the Board.
|
While we do not have a formal diversity
policy, the Corporate Governance and Nominating Committee considers diversity of
talents, skills and expertise in evaluating potential nominees. In addition,
from time to time, the Corporate Governance and Nominating Committee retains
third-party search firms to identify qualified director candidates and to assist
the committee in evaluating candidates that have been identified by
others.
It is the policy of the Corporate
Governance and Nominating Committee to consider candidates recommended by
stockholders. Any stockholder who would like to suggest or recommend a person
for the Board’s consideration as a director candidate may do so at any time by
writing to the corporate secretary at the address below. A stockholder wishing
to formally nominate a person for election as a director must comply with the
advance notice provisions in the Company’s Fifth Amended and Restated Bylaws.
Generally these provisions require that the corporate secretary receive notice
of the nomination not less than 75 calendar days prior to the anniversary of the
date for the preceding year’s annual meeting. The notice must set forth, as to
each nominee, the name, age, business and residential address, principal
occupation or employment, class, series and number of securities of the Company
owned by such person, the date or dates the securities were acquired, any other
information relating to such person that is required to be disclosed in
solicitation for proxies or election of directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934 and a representation that such person
meets the qualifications to serve as a director of the Company. The notice must
include a completed director questionnaire, which is available from the
corporate secretary of the Company, and the nominee’s signed consent to serve as
a director if elected. The notice must also set forth, among other things, the
name and address of, and the number of our common shares owned by, the
stockholder giving the notice and the beneficial owner on whose behalf the
nomination is made and any other stockholders believed to be supporting such
nominee, and a description of any material relationships between the stockholder
giving the notice and any other stockholders and the proposed nominee.
Additional details regarding the process to be followed by stockholders wishing
to nominate a person for election as a director are included in the Company’s
Fifth Amended and Restated Bylaws, which are available on the Investor Relations
page of our website at
www.nii.com
. Stockholder
recommendations and formal nominations should be sent to:
Shana C. Smith
General Counsel and
Corporate Secretary
NII Holdings, Inc.
1875 Explorer Street, Suite 800
Reston, Virginia 20190
14
Table of
Contents
|
SUMMARY OF QUALIFICATIONS
|
Below is a summary of certain of the
qualifications of the members of our Board that, among other things, led the
Corporate Governance and Nominating Committee to conclude that each director is
qualified to serve on the Board. Please review the biographies of our Board
below.
|
|
|
Beebe
|
|
Continenza
|
|
Hoffmann
|
|
Knoepfelmacher
|
|
Rogers
|
|
Schriesheim
|
|
Shindler
|
|
Senior executive experience in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
large, complex
organizations
|
|
x
|
|
x
|
|
|
|
x
|
|
x
|
|
x
|
|
x
|
|
Telecommunications
experience
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
|
Diverse experience in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
multiple industries
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
|
|
|
Experience in
Brazil or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
similar Latin
American or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
emerging markets
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
|
Service on the board of other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
public companies
|
|
x
|
|
x
|
|
|
|
|
|
x
|
|
x
|
|
|
|
Managerial
experience
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
evaluating risks
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
|
Experience in financial and capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
markets and strategic
transactions
|
|
x
|
|
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
|
DIRECTORS STANDING FOR REELECTION — TO HOLD OFFICE
UNTIL 2018
|
|
|
|
Steven M. Shindler
|
|
|
Chief Executive Officer, NII
Holdings, Inc.
|
|
|
|
|
|
|
Non-Independent
|
|
|
|
|
|
|
Age
54
|
|
|
Director Since
1997
|
|
|
Committees
|
|
|
●
None
|
|
|
|
|
|
|
Mr. Shindler has served as Chief
Executive Officer of NII Holdings since December 2012 and has served as a
director since 1997 (including as Chairman of the Board from 2002 to
2013). Prior to his most recent appointment as Chief Executive Officer,
Mr. Shindler served as Executive Chairman of NII Holdings from February
2008 to July 2012 and as Chief Executive Officer from 2000 until February
2008. Mr. Shindler also served as Executive Vice President and Chief
Financial Officer of Nextel Communications from 1996 until 2000. From 1987
to 1996, Mr. Shindler was an officer with Toronto Dominion Bank, where he
was a managing director in its communications finance
group.
|
15
Table of
Contents
|
|
|
Kevin L. Beebe
|
|
|
Chair of the Board, NII Holdings,
Inc.
|
|
|
|
|
|
President and Chief Executive
Officer, 2BPartners, LLC
|
|
|
|
|
|
|
Independent
|
|
|
|
|
|
|
Age
58
|
|
|
Director Since
2010
|
|
|
Committees
|
|
|
●
Audit
|
|
|
|
|
|
|
Mr. Beebe has served as a director
since 2010 and has served as Chair of the Board since 2013. Mr. Beebe has
been President and Chief Executive Officer of 2BPartners, LLC, a
partnership that provides strategic, financial and operational advice to
private equity clients, investors and management, since November 2007. He
is also a founder and senior operating partner of Astra Capital, a private
equity firm focused on providing capital to technology and telecom
companies, since 2014. Previously, he was Group President of Operations at
ALLTEL Corporation, a telecommunications services company, from 1998 to
2007. Mr. Beebe also serves as a director for Skyworks Solutions, Inc., a
semiconductor and wireless handset chip supplier, and SBA Communications
Corporation, a provider of wireless and broadcast communications
infrastructure.
|
|
|
|
James V. Continenza
|
|
|
Chairman and Chief Executive
Officer, TBC Holdings I, Inc.
|
|
|
|
|
|
|
Independent
|
|
|
|
|
|
|
Age
54
|
|
|
Director Since
2015
|
|
|
Committees
|
|
|
●
Compensation
●
Corporate Governance and Nominating
|
|
|
|
|
|
|
Mr. Continenza has been the
Chairman and Chief Executive Officer of TBC Holdings I, Inc., the parent
company of The Berry Company, LLC, a holding company created to acquire
and manage various advertising, marketing and technology companies, since
2012. Prior to joining The Berry Company, Mr. Continenza served as
President of STi Prepaid, LLC, a telecommunications company, from 2010 to
2011. Prior to that, Mr. Continenza served as Interim Chief Executive
Officer of Anchor Glass Container Corp., a leading manufacturer of glass
containers; President and Chief Executive Officer of Teligent, Inc., a
provider of communications services including voice, data, and internet
access; Director of Arch Wireless, Inc., a wireless services provider; and
as President and Chief Executive Officer of Lucent Technologies Product
Finance, a global leader in telecom equipment. In addition, Mr. Continenza
currently serves as a director and chair of the boards of Eastman Kodak
Company, a provider of imaging products and services, Neff Corp., a
company that provides construction equipment and tool rental, and Tembec
Inc., a forest products company.
|
16
Table of
Contents
|
|
|
Howard S. Hoffmann
|
|
|
Managing Partner, De Novo
Perspectives
|
|
|
|
|
|
|
Independent
|
|
|
|
|
|
|
Age
62
|
|
|
Director Since
2015
|
|
|
Committees
|
|
|
●
Audit
●
Compensation
|
|
|
|
|
|
|
Mr. Hoffmann has served as a
Managing Partner at De Novo Perspectives, a professional services firm
specializing in financial and operational performance improvement, crisis
and litigation management, investor and creditor advisory services, and
corporate turnaround and restructuring advisory services, since 2008. From
2001 to 2012, Mr. Hoffmann served as a Managing Partner at Nightingale
& Associates, LLC, a consulting firm providing financial, business
advisory and management services. Mr. Hoffmann also currently serves as
Chief Executive Officer of Extend Resources LLC, a business and legal
solutions company, Executive Director at Hickey Smith LLP, a multi-state
law firm, Executive Director of American Discovery Limited, a business
process outsourcing company, and as Vice President of Evolution Pharmacy
Services, Inc., a pharmacy services company.
|
|
|
|
Ricardo Knoepfelmacher
|
|
|
Managing Partner, RK
Partners
|
|
|
|
|
|
|
Non-Independent
|
|
|
|
|
|
|
Age
51
|
|
|
Director Since
2013
|
|
|
Committees
|
|
|
●
Corporate Governance and Nominating
|
|
|
|
|
|
|
Mr. Knoepfelmacher has served on
our Board since 2013. Mr. Knoepfelmacher co-founded RK Partners, formerly
known as Angra Partners Turnaround, a financial and operational
restructuring and turnaround advisory firm, in 2003 and is currently a
Managing Partner of the firm. Prior to his service as Managing Partner at
RK Partners, Mr. Knoepfelmacher served as Chief Executive Officer of
Brasil Telecom from 2005 to 2009 and Chief Executive Officer of Pegasus
Telecom from 2000 to 2002. He also worked for Citibank and McKinsey &
Company before starting his first company, MGDK & Associados, a
restructuring and consulting firm.
|
17
Table of
Contents
|
|
|
Christopher T. Rogers
|
|
|
General Partner, Lumia
Capital
|
|
|
|
|
|
|
Independent
|
|
|
|
|
|
|
Age
58
|
|
|
Director Since
2015
|
|
|
Committees
|
|
|
●
Compensation
●
Corporate Governance and Nominating
|
|
|
|
|
|
|
Mr. Rogers has been a General
Partner at Lumia Capital since 2013. From 1991 until 2012, Mr. Rogers held
various executive positions with Sprint Corporation and Nextel
Communications, Inc. Most recently, Mr. Rogers served as Senior Vice
President, Corporate Development and Spectrum, at Sprint, where he oversaw
mergers, acquisitions, divestitures, equity investments and joint ventures
and was responsible for management and oversight of wireless spectrum
licenses and Sprint’s portfolio of emerging technology investments. Mr.
Rogers serves as a director of Digital Turbine, Inc., a provider of mobile
products that enable the monetization of mobile
content.
|
|
|
|
Robert A. Schriesheim
|
|
|
Executive Vice President and Chief
Financial Officer, Sears Holdings Corporation
|
|
|
|
|
|
|
Independent
|
|
|
|
|
|
|
Age
56
|
|
|
Director Since
2015
|
|
|
Committees
|
|
|
●
Audit
|
|
|
|
|
|
|
Mr. Schriesheim served as the
Executive Vice President and Chief Financial Officer of Sears Holdings
Corporation from August 2011 to October 2016. Prior to that, Mr.
Schriesheim served as Chief Financial Officer of Hewitt Associates, Inc.,
a global human resources consulting and outsourcing company, from January
2010 to October 2010. From October 2006 to January 2010, he served as
Executive Vice President and Chief Financial Officer of Lawson Software,
Inc., an ERP software provider. Prior to joining Lawson Software, Mr.
Schriesheim held executive positions at ARCH Development Partners, Global
TeleSystems, SBC Equity Partners, Ameritech, AC Nielsen and Brooke Group
Ltd. Mr. Schriesheim currently serves as a director of Houlihan Lokey,
Inc., a global investment bank, where he serves as the chair of the audit
committee and as a member of the compensation committee. Mr. Schriesheim
also serves as a director of Skyworks Solutions, Inc., a semiconductor and
wireless handset chip supplier, where he is the chair of the audit
committee.
|
18
Table of
Contents
|
BOARD AND
COMMITTEE MEMBERSHIP AND ATTENDANCE
|
The current Board and its committees were
appointed on June 26, 2015, and during 2016 the current Board held eight
regularly scheduled and eleven additional meetings, with the members of the
Board attending 100% of the regularly scheduled meetings and 96% of the
additional meetings, for an aggregate Board meeting attendance of 98%. The
aggregate attendance for Audit Committee meetings was 100%, for Compensation
Committee meetings was 92% and for Corporate Governance and Nominating Committee
meetings was 100%. In addition to attending formal meetings, directors also
fulfilled their responsibilities in 2016 by meeting informally on a regular
basis, through informal and regular meetings with management and legal and
financial advisors.
The standing committees of the Board are
the Audit, Compensation and Corporate Governance and Nominating Committees.
Current membership of the Board and each standing committee and the number of
formal meetings of the Board and each standing committee since January 1, 2016
was as follows:
|
Name
|
|
|
|
Board
|
|
Audit
|
|
Compensation
(1)
|
|
Corporate
Governance
and
Nominating
|
|
Steven Shindler
|
|
|
|
•
|
|
|
|
|
|
|
|
Kevin Beebe
|
|
I, A
|
|
C
|
|
•
|
|
|
|
|
|
James Continenza
|
|
I
|
|
•
|
|
|
|
•
|
|
C
|
|
Howard Hoffmann
|
|
I, A
|
|
•
|
|
•
|
|
•
|
|
|
|
Ricardo Knoepfelmacher
|
|
|
|
•
|
|
|
|
|
|
•
|
|
Christopher Rogers
|
|
I
|
|
•
|
|
|
|
C
|
|
•
|
|
Robert Schriesheim
|
|
I, A
|
|
•
|
|
C
|
|
|
|
|
|
TOTAL NUMBER OF MEETINGS IN
2016
|
|
|
|
19
|
|
9
(2)
|
|
5
|
|
3
|
|
I:
Independent
|
|
A: Audit
Committee Financial Expert
|
|
C:
Chair
|
|
(1)
|
In connection with the Company’s
engagement of RK Partners, on October 25, 2016 Mr. Knoepfelmacher stepped
down from the Compensation Committee, and the Board appointed Mr. Hoffmann
to serve as a member of the Compensation Committee.
|
|
(2)
|
During 2016, the Audit Committee
also held meetings with KPMG LLP, our independent registered public
accounting firm, without employees present, and meetings with our vice
president of internal audit.
|
|
EXECUTIVE SESSIONS OF THE
BOARD
|
As required by our Corporate Governance
Guidelines, it is the practice of our Board to have executive sessions where
non-employee directors other than Mr. Shindler meet to discuss matters of
interest and concern. Executive sessions are held in conjunction with regularly
scheduled meetings of the Board and at such other times as the Chair or
independent members of the Board determine necessary. During executive sessions,
the directors occasionally meet with and question our employees outside the
presence of employee directors and other members of management and with their
outside legal counsel.
19
Table of
Contents
|
FEES PAYABLE TO
NON-EMPLOYEE DIRECTORS
|
Each of our non-employee directors
receives an annual retainer for serving on the Board. In addition, our
non-employee directors receive additional fees for their service on committees.
Our director compensation for 2016 consisted of the following
components:
|
Board:
|
|
|
|
Annual Retainer
|
$
|
70,000
|
|
Annual Non-Executive Chairman
|
$
|
45,000
|
|
|
|
Committees:
|
|
|
|
Committee Chairs
|
$
|
5,000
|
|
Audit Committee
|
$
|
25,000
|
|
Compensation Committee
|
$
|
20,000
|
|
Corporate Governance and Nominating Committee
|
$
|
15,000
|
We pay all retainers in arrears in
quarterly installments. We also reimburse directors for travel expenses incurred
in connection with attending Board, committee and stockholder meetings and for
other related expenses. We do not provide any additional compensation to
employees who serve as a director or a committee member in periods in which they
are also employees.
|
DIRECTOR
COMPENSATION TABLE
|
In the table and discussion below, we
summarize the compensation paid to our non-employee directors.
DIRECTOR COMPENSATION FISCAL YEAR
2016
|
Name
(1)
|
|
Fees Earned or
Paid in Cash
($)
|
|
Stock
Awards
(2)
($)
|
|
Total
($)
|
|
Kevin Beebe
|
|
140,000
|
|
—
|
|
140,000
|
|
James Continenza
|
|
110,000
|
|
—
|
|
110,000
|
|
Howard Hoffmann
|
|
98,611
|
|
—
|
|
98,611
|
|
Ricardo Knoepfelmacher
|
|
101,389
|
|
—
|
|
101,389
|
|
Christopher Rogers
|
|
110,000
|
|
—
|
|
110,000
|
|
Robert Schriesheim
|
|
100,000
|
|
—
|
|
100,000
|
|
(1)
|
The compensation information for
Mr. Shindler, our chief executive officer, is included in the Summary
Compensation Table.
|
|
(2)
|
In light of the Company’s recent
results, current stock price and available equity share pool, no equity
grants were made in 2016.
|
20
Table of
Contents
|
SECURITIES
OWNERSHIP OF DIRECTORS AND MANAGEMENT
|
In the table and the related footnotes
below, we list the amount and percentage of shares of our common stock that are
deemed under the rules of the SEC to be beneficially owned on April 3, 2017 by:
|
●
|
each person who served as one of our
directors as of that date;
|
|
●
|
each of the named executive
officers; and
|
|
●
|
all directors and executive officers
as a group.
|
|
|
|
Shares Covered by
|
|
Name of Beneficial Owner
|
|
Shares Beneficially Owned
(1)
and Vested
Options
(2)
|
|
|
Unvested
Restricted Stock
(3)
|
|
Percent of
Class
(4)
|
|
Kevin Beebe
|
|
11,607
|
(5)
|
|
—
|
|
*
|
|
Howard Hoffmann
|
|
11,607
|
(5)
|
|
—
|
|
*
|
|
James Continenza
|
|
11,607
|
(5)
|
|
—
|
|
*
|
|
Ricardo Knoepfelmacher
|
|
11,607
|
(5)
|
|
—
|
|
*
|
|
Christopher Rogers
|
|
11,607
|
(5)
|
|
—
|
|
*
|
|
Robert Schriesheim
|
|
11,607
|
(5)
|
|
—
|
|
*
|
|
Steven Shindler
|
|
167,509
|
(6)
|
|
98,333
|
|
*
|
|
Daniel Freiman
|
|
34,076
|
(7)
|
|
19,344
|
|
*
|
|
Francisco Valim
|
|
246,746
|
(8)
|
|
152,207
|
|
*
|
|
Shana Smith
|
|
34,076
|
(7)
|
|
19,344
|
|
*
|
|
All directors and executive officers as a
group (10 persons)
|
|
552,049
|
|
|
289,228
|
|
*
|
|
*
|
Indicates ownership of less than
1%
|
|
(1)
|
None of the listed individuals have options or
restricted stock vesting within 60 days of April 3, 2017. This column does
not include shares of unvested restricted common stock that have voting
rights prior to vesting, which are reflected in the second column in the
table.
|
|
(2)
|
All vested options had an option exercise price above
the closing price of our common stock on the NASDAQ stock market of $2.15
on December 30, 2016.
|
|
(3)
|
Indicates shares of unvested restricted common stock
that have voting rights prior to vesting.
|
|
(4)
|
Based on the total amount of shares reflected in columns
one and two and 100,776,222 shares of common stock issued and outstanding
on April 3, 2017.
|
|
(5)
|
Common stock currently owned.
|
|
(6)
|
Includes 25,714 shares of common stock currently owned
and 141,795 shares of common stock issuable upon exercise of options that
are fully vested and exercisable.
|
|
(7)
|
Includes 6,181 shares of common stock currently owned
and 27,895 shares of common stock issuable upon exercise of options that
are fully vested and exercisable.
|
|
(8)
|
Includes 55,175 shares of common stock currently owned
and 191,571 shares of common stock issuable upon exercise of options that
are fully vested and exercisable.
|
|
|
21
Table of Contents
|
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 initial reports of beneficial ownership and reports of changes in beneficial
ownership of our equity securities. Based solely upon a review of Forms 3, 4 and
5 furnished to us under Rule 16a-3(e) during 2016, and written representations
of our directors and executive officers that no additional filings were
required, we believe that all directors, executive officers and beneficial
owners of more than 10% of our common stock have filed with the SEC on a timely
basis all reports required to be filed under Section 16(a) of the Securities
Exchange Act.
The table below lists each person or
group, as that term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934, known by us to be the beneficial owner of more than 5% of our
outstanding common stock as of April 3, 2017, the Record Date for the Annual
Meeting.
|
Name and Address of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
|
|
Percent
of Class
(1)
|
|
Capital World
Investors
(2)
|
|
|
|
|
|
333 South Hope
Street
|
|
|
|
|
|
Los Angeles, CA 90071
|
|
18,246,988
|
|
18.1%
|
|
Vanguard World Funds
(3)
|
|
|
|
|
|
100 Vanguard Blvd.
|
|
|
|
|
|
Malvern, PA 19355
|
|
11,954,617
|
|
11.9%
|
|
BlackRock,
Inc.
(4)
|
|
|
|
|
|
55 East 52nd
Street
|
|
|
|
|
|
New York, NY 10055
|
|
11,585,299
|
|
11.5%
|
|
The Vanguard Group
(5)
|
|
|
|
|
|
100 Vanguard Blvd.
|
|
|
|
|
|
Malvern, PA 19355
|
|
10,326,031
|
|
10.2%
|
|
Aurelius Capital
Management, LP
(6)
|
|
|
|
|
|
535 Madison Avenue, 22nd
Floor,
|
|
|
|
|
|
New York, NY 10022
|
|
7,955,623
|
|
7.9%
|
|
(1)
|
Based on 100,776,222 shares of
common stock issued and outstanding on April 3, 2017.
|
|
(2)
|
According to a Schedule 13G/A
filed with the SEC on March 10, 2017, Capital World Investors has sole
voting and dispositive power with respect to 18,246,988 shares of our
common stock.
|
|
(3)
|
According to a Schedule 13G/A
filed with the SEC on March 10, 2017, Vanguard World Funds has sole voting
power with respect to 11,954,617 shares of our common stock.
|
|
(4)
|
According to a Schedule 13G/A
filed with the SEC on January 17, 2017, BlackRock, Inc. beneficially owns
11,585,299 shares of our common stock, including sole voting power with
respect to 11,425,207 shares, sole dispositive power with respect to
11,564,846 shares and shared dispositive power with respect to 20,453
shares.
|
|
(5)
|
According to a Schedule 13G/A
filed with the SEC on February 10, 2017, The Vanguard Group beneficially
owns 10,326,031 shares of our common stock, including sole voting power
with respect to 78,532 shares, shared voting power with respect to 2,309
shares, sole dispositive power with respect to 10,245,190 shares and
shared dispositive power with respect to 80,841 shares.
|
|
(6)
|
According to a Schedule 13D/A
filed with the SEC on June 1, 2016, Aurelius Capital Management, LP has
shared voting and dispositive power with respect to 7,955,623 shares of
our common stock.
|
22
Table of Contents
|
COMPENSATION
COMMITTEE REPORT
|
The Compensation Committee of the Board of
Directors is responsible for the development, oversight and implementation of
our compensation program for executive officers and is committed to a philosophy
that links a significant portion of each executive’s compensation to
performance.
The Compensation Committee has reviewed
the Compensation Discussion and Analysis included in this report and discussed
it with our management. Based on this review and discussion, the Compensation
Committee recommended that the Compensation Discussion and Analysis be included
in our proxy statement for the 2017 Annual Meeting of Stockholders.
Compensation Committee
Christopher T. Rogers, Chairman
James
V. Continenza
Howard S. Hoffmann
|
COMPENSATION
DISCUSSION AND ANALYSIS
|
This Compensation Discussion and Analysis
provides the principles, objectives, structure, analysis and determinations of
the Compensation Committee with respect to the 2016 compensation of the
following named executive officers:
|
●
|
Steven M. Shindler, Chief Executive
Officer
|
|
●
|
Daniel E. Freiman, Vice President, Chief
Financial Officer
|
|
●
|
Francisco Tosta Valim Filho, President and
Legal Representative, Nextel Brazil
(1)
|
|
●
|
Shana C. Smith, Vice President, General Counsel
and Corporate Secretary
|
|
(1)
|
Mr. Valim is employed by Nextel
Telecomunicações Ltda., our wholly owned subsidiary, which we refer to as
Nextel Brazil. In 2016, Mr. Valim’s salary and annual bonus were paid in
Brazilian Reais. The compensation amounts provided in this Compensation
Discussion and Analysis and disclosed in the Summary Compensation Table
are based on the average exchange rate for the year ended December 31,
2016, which was 3.4901 Brazilian Reais to 1.00 U.S.
Dollar.
|
23
Table of Contents
|
EXECUTIVE OFFICER
BIOGRAPHIES
|
There is no family relationship between
any of our executive officers or between any of these officers and any of our
directors.
|
|
|
Steven M. Shindler
|
|
|
Chief Executive Officer, NII
Holdings, Inc.
|
|
|
|
|
|
|
Age
54
|
|
|
|
|
|
|
Mr. Shindler has served as Chief
Executive Officer of NII Holdings since December 2012 and has served as a
director since 1997 (including as Chairman of the Board from 2002 to
2013). Prior to his most recent appointment as Chief Executive Officer,
Mr. Shindler served as Executive Chairman of NII Holdings from February
2008 to July 2012 and as Chief Executive Officer from 2000 until February
2008. Mr. Shindler also served as Executive Vice President and Chief
Financial Officer of Nextel Communications from 1996 until 2000. From 1987
to 1996, Mr. Shindler was an officer with Toronto Dominion Bank, where he
was a managing director in its communications finance
group.
|
|
|
|
Daniel E. Freiman
|
|
|
Vice President, Chief Financial
Officer, NII Holdings, Inc.
|
|
|
|
|
|
|
Age
45
|
|
|
|
|
|
|
Mr. Freiman has served as Vice
President, Chief Financial Officer of NII Holdings since September 2015.
Prior to September 2015, Mr. Freiman served as Treasurer, Vice President
of Corporate Development and Investor Relations of NII Holdings since
2009. From 2005 to 2008, Mr. Freiman served as Vice President and
Controller of NII Holdings. Prior to joining NII Holdings, Mr. Freiman was
with PricewaterhouseCoopers.
|
|
|
|
Francisco Tosta Valim Filho
|
|
|
President and Legal Representative,
Nextel Brazil
|
|
|
|
|
|
|
Age
53
|
|
|
|
|
|
|
Mr. Valim has served as President
and Legal Representative of Nextel Brazil since August 2015. Prior to
joining Nextel Brazil in August 2015, Mr. Valim served as Chief Executive
Officer of Via Varejo S.A., an electronics and furniture retailer in Latin
America from August 2013 until April 2014. Prior to that, Mr. Valim served
as Chief Executive Officer of Oi S.A., a telecommunications operator in
Brazil, from August 2011 until January 2013. From January 2008 to July
2011, Mr. Valim was the Chief Executive Officer of Experian UK, EMEA and
LATAM, a division of Experian plc, a credit reference
company.
|
|
|
|
Shana C. Smith
|
|
|
Vice President, General Counsel and
Corporate Secretary, NII Holdings, Inc.
|
|
|
|
|
|
|
Age
44
|
|
|
|
|
|
|
Mrs. Smith has served as Vice
President, General Counsel and Corporate Secretary of NII Holdings since
September 2015. Prior to September 2015, Mrs. Smith served as Vice
President, Deputy General Counsel and Corporate Secretary of NII Holdings
since 2011 and as Corporate Counsel and Assistant Secretary from 2009 to
2011. Prior to joining NII Holdings, Mrs. Smith served as Corporate
Counsel of Sprint Nextel Corporation and was previously a corporate
associate with the law firm of Fried, Frank, Harris, Shriver and
Jacobson.
|
24
Table of Contents
|
COMPENSATION OBJECTIVES AND
PHILOSOPHY
|
Our executive compensation program is
designed to provide competitive compensation that is substantially linked to our
performance and aligned with long-term stockholder interests. The Compensation
Committee’s primary objective in designing our compensation program is to
recruit and retain the high caliber executive officers and employees necessary
to deliver strong and consistent performance to our stockholders, customers and
communities in which we operate. Within this framework, the Compensation
Committee has developed a compensation program that incorporates salary and
benefits that allow us to retain and motivate our executive officers, short-term
incentives that challenge our executive officers to achieve our financial and
operational goals, and long-term incentives that link our executives’ risks and
rewards with those of our stakeholders.
|
2017
EXECUTIVE OFFICER COMPENSATION
|
In March 2017, the Compensation Committee
determined that given the current state of the business and the Company’s focus
on liquidity, no changes other than a 3.5% cost of living increase on base
salary for Mr. Freiman and Mrs. Smith would be made to executive officer
compensation for 2017. In addition, in light of the Company’s recent results,
current stock price and available equity share pool, the Compensation Committee
determined that no equity grants would be made in 2017 to current
employees.
|
2016
TARGET TOTAL DIRECT COMPENSATION
|
During our Chapter 11 bankruptcy
proceedings, changes to the compensation of key executives, including our named
executive officers, were not permitted without the approval of the bankruptcy
court and no changes were made to the compensation of our named executive
officers during our bankruptcy proceedings other than the implementation of a
key employee incentive plan that provided for a potential incentive bonus
payment should the Company and its subsidiaries successfully emerge from
bankruptcy within specified time frames and/or if a sale transaction meeting
specified enterprise values was completed. In June and August 2015, following
our emergence from bankruptcy and in connection with the restructuring of our
executive team, the Compensation Committee approved our executive compensation
program for executive officers expected to remain with the Company, which
included base salary, short-term incentives and long-term emergence grants. In
February 2016, the Compensation Committee decided that no changes would be made
to executive officer compensation for 2016 given the tenure of most of the
executive officers. Likewise, in light of the Company’s results, stock price and
available equity share pool, the Compensation Committee determined that no
equity grants would be made to current employees in 2016. No other changes were
made to our executive compensation program in 2016 in consideration of the
results of the non-binding advisory stockholder vote on the compensation program
for our named executive officers held at our 2016 Annual Meeting of
Stockholders.
In 2016, the elements of our executive
compensation program included:
|
●
|
Base Salary
.
Base salary provides a fixed source of income and allows the Company to
attract and retain experienced executives.
|
|
●
|
Short-Term Incentives
. Short-term incentives provide variable cash compensation that
allows the Company to motivate executives to achieve the Company’s
operating and financial objectives.
|
25
Table of Contents
The Compensation Committee approved the
following base salary and target bonus amounts for our executive officers in
2015, and in February 2016 determined no changes would be made for
2016.
|
Name
|
|
Base
Salary($)
|
|
Target Bonus at
100%
Payout
|
|
2016 Target Total
Direct
Compensation
(1)
|
|
Steven Shindler
|
|
974,376
|
|
1,266,689
|
|
2,241,065
|
|
Daniel Freiman
|
|
450,000
|
|
450,000
|
|
900,000
|
|
Francisco Valim
(2)
|
|
687,659
|
|
1,375,319
|
|
2,062,978
|
|
Shana Smith
|
|
450,000
|
|
450,000
|
|
900,000
|
|
(1)
|
Target total direct compensation
is calculated as the sum of (a) base salary and (b) the target annual
bonus amount for the year assuming a payout of 100%.
|
|
(2)
|
Mr. Valim’s salary, bonus and
benefits are paid in Brazilian Reais. As a result, the amount of
compensation approved for Mr. Valim as reflected in U.S. Dollars in the
Base Salary, Target Bonus at 100% Payout and 2016 Target Total Direct
Compensation columns varies based on the applicable exchange rate of the
Brazilian Real relative to the U.S. Dollar. Mr. Valim’s compensation as
reported in U.S. Dollars can vary significantly with no actual change to
the compensation paid to Mr. Valim in Brazilian currency if the exchange
rates are volatile. The amounts for Mr. Valim reflected in the Base
Salary, Target Bonus at 100% Payout and 2016 Target Total Direct
Compensation columns in the table above are based on the average exchange
rate of 3.4901 Brazilian Reais to 1.00 U.S. Dollar for the year ended
December 31, 2016.
|
Base salary is the only fixed element of
our named executive officers’ target total direct compensation. Base salary was
determined in 2015 and was based primarily on historic base salary levels and
internal pay equity and base salaries paid to executives in comparable positions
at a peer group of companies. In February 2016, the Compensation Committee
decided not to increase the base salaries of the named executive officers for
2016. Our named executive officers’ annual base salaries and the percentage of
2016 target total direct compensation represented by the base salaries are as
follows:
|
Name
|
|
2016 Base Salary ($)
|
|
Percent of Target Total
Direct Compensation
|
|
Steven Shindler
|
|
974,376
|
|
43.5%
|
|
Daniel Freiman
|
|
450,000
|
|
50.0%
|
|
Francisco Valim
|
|
687,659
|
|
33.3%
|
|
Shana Smith
|
|
450,000
|
|
50.0%
|
Our 2016 Bonus Plan rewards executive
officers for performance relative to key financial and operating measures that
are designed to stabilize and enhance the value of the Company. The target bonus
percentage of base salary for each executive was decided in 2015 based on
historic target levels and internal equity, and the comparison of annual
incentive compensation targets for executives in comparable positions at a peer
group of companies. In February 2016, the Compensation Committee decided not to
change target bonus percentages for any employees. For 2016, the bonus payout
percentage for headquarters-based executive officers was determined after the
conclusion of each fiscal quarter by evaluating the Company’s performance
relative to pre-determined performance goals and performance “intervals” for
that quarter. Performance intervals are the upper and lower boundaries of
performance in which actual bonus payouts are awarded. The bonus payout
percentage is designed to provide payments in a range from 200% of the target
bonus, if performance greatly exceeds the Company’s targets, to 0% of the target
bonus, if performance fails to reach minimum threshold levels. The use of these
intervals is intended to provide a greater performance incentive to
participating employees by providing a more significant increase in the bonus
award in instances where there is over performance in relation to our
performance targets and a more significant decrease in the bonus award where
there is under performance in relation to those targets.
For Mr. Valim, the achievement of the 2016
bonus payout was determined after the conclusion of each fiscal quarter by
evaluating Nextel Brazil’s performance relative to pre-determined performance
goals.
26
Table of Contents
The 2016 target bonus percentage as
determined by the Compensation Committee in August 2015, the potential cash
payout under the 2016 Bonus Plan at 100% of target and the percentage of each
named executive officer’s target total direct compensation represented by the
target bonus at 100% payout were as follows:
|
|
|
2016 Target Bonus
Percentage of Base Salary
|
|
2016 Target Bonus
at 100% Payout ($)
|
|
Percent of Target
Total Direct Compensation
|
|
Steven Shindler
|
|
130%
|
|
1,266,689
|
|
56.5%
|
|
Daniel Freiman
|
|
100%
|
|
450,000
|
|
50.0%
|
|
Francisco Valim
|
|
200%
|
|
1,375,319
|
|
66.7%
|
|
Shana Smith
|
|
100%
|
|
450,000
|
|
50.0%
|
|
2016 Performance
Goals and Targets
|
The Compensation Committee reviews and
determines the appropriate performance measures and weightings for our bonus
plan on an annual basis. The Compensation Committee determined that quarterly
payouts of earned bonus awards provided the strongest performance incentives to
the Company’s named executive officers and to other headquarters-based employees
participating in the 2016 Bonus Plan. Each of the following performance measures
and weights were selected in order to focus the Company’s employees on cash
utilization and value preservation and to provide balanced incentives as any
actions to improve one performance measure would be expected to have a
corresponding negative impact on the other performance measure.
The 2016 Bonus Plan for Messrs. Shindler
and Freiman and Mrs. Smith was based 75% on Nextel Brazil’s performance and 25%
on cash flow at the Company’s headquarters. The 2016 Bonus Plan for Mr. Valim
was based 100% on Nextel Brazil’s performance. For all named executive officers,
Nextel Brazil’s performance was measured through revenue; adjusted earnings
before interest, taxes, depreciation and amortization, or adjusted EBITDA, which
eliminates the impact of impairments and restructuring charges from EBITDA; and
cash flow. Nextel Brazil’s cash flow had to meet a minimum threshold of 90% of
target in order for any payment to be awarded under the 2016 Bonus Plan. Nextel
Brazil’s cash flow acted as a multiplier to potential bonus payouts with every
10 basis points of achievement over 90% multiplied by the weighted results of
achievement on Nextel Brazil revenue and adjusted EBITDA. A minimum threshold of
85% was also required to be met on revenue and adjusted EBITDA for any bonus to
be awarded on each of those specific metrics. For Messrs. Shindler and Freiman
and Mrs. Smith, 25% of the target bonus was based on headquarter cash flow, with
a required minimum achievement of 80% of target for any bonus to be awarded on
that metric. The payout potential for Messrs. Shindler and Freiman and Mrs.
Smith ranged from zero to two times target. For Mr. Valim, payout was binary and
if achieved, 100% payout was awarded each quarter.
The Compensation Committee approved the
2016 quarterly performance targets and intervals based on the Company’s business
plan. The performance targets and corresponding intervals are designed to drive
Company performance against challenging performance standards, but are not goals
that would cause our executives to take inappropriate business risks.
27
Table of Contents
The quarterly targets, results and weights
under the 2016 Bonus Plan for the named executive officers were as
follows:
|
|
|
|
|
|
|
Targets
(1)
|
|
Performance Measures
(millions)
|
|
Minimum
|
|
Weight
|
|
Q1
2016
|
|
Q2
2016
|
|
Q3
2016
|
|
Q4
2016
|
|
Brazil Revenue Target R$
|
|
85%
|
|
BR 60%
|
|
1,815
|
|
2,653
|
|
3,480
|
|
4,306
|
|
Results
|
|
|
|
HQ
45%
|
|
1,763
|
|
2,616
|
|
3,446
|
|
4,249
|
|
Cumulative achievement
|
|
|
|
|
|
97%
|
|
99%
|
|
99%
|
|
99%
|
|
Brazil Adjusted EBITDA Target R$
|
|
85%
|
|
BR
40%
|
|
(150)
|
|
(221)
|
|
(217)
|
|
(170)
|
|
Results
|
|
|
|
HQ 30%
|
|
5
|
|
111
|
|
159
|
|
165
|
|
Cumulative achievement
|
|
|
|
|
|
203%
|
|
250%
|
|
274%
|
|
297%
|
|
Brazil Cash Flow Target
(2)
|
|
0x @<90%
|
|
|
|
|
|
|
|
|
|
|
|
Multiplier R$
|
|
|
|
|
|
(1,163)
|
|
(1,020)
|
|
(1,136)
|
|
(1,174)
|
|
Results
|
|
2x @>110%
|
|
|
|
(599)
|
|
(556)
|
|
(553)
|
|
(453)
|
|
Cumulative achievement
|
|
|
|
|
|
149%
|
|
146%
|
|
151%
|
|
161%
|
|
HQ Cash Flow Target
(2)(3)
US$
|
|
80%
|
|
BR 0%
|
|
(24)
|
|
(32)
|
|
(43)
|
|
(51)
|
|
Results
|
|
|
|
HQ
25%
|
|
(25)
|
|
(33)
|
|
(42)
|
|
(48)
|
|
Cumulative achievement
|
|
|
|
|
|
96%
|
|
96%
|
|
102%
|
|
104%
|
|
(1)
|
As adjusted and approved by the
Compensation Committee. The 2016 Bonus Plan targets were based on a
15-month business plan that started on October 1, 2015.
|
|
(2)
|
Cash flow defined as cash
earnings before interest, taxes, depreciation and amortization minus cash
taxes and cash investments and does not include restructuring fees,
performance bonds, debt and interest repayments or intercompany transfers
between segments.
|
|
(3)
|
Headquarters cash flow
performance measure included in the 2016 Bonus Plan for Messrs. Shindler
and Freiman and Mrs. Smith.
|
|
2016 Calculation
of Bonus Payout
|
To determine bonus amounts earned by our
executive officers during the 2016 Bonus Plan, the Compensation Committee met
following each fiscal quarter-end to review our financial and operating
performance as compared to the applicable performance measures for that quarter
and to discuss performance factors and other criteria related to the bonus
awards. At each quarterly meeting, the applicable targets set for each
performance measure were compared to the results for the quarter in order to
determine the appropriate bonus payout percentage, which for Messrs. Shindler
and Freiman and Mrs. Smith could range from 0% to 200% and for Mr. Valim would
be either no payout or a payout of 100% of target depending on the Company’s
performance relative to the performance targets.
In some instances, the Compensation
Committee, upon the recommendation of management, makes adjustments to the bonus
payments or, if appropriate, the methodology used to calculate the bonus target
or our performance relative to the target to take into account, among other
things, changes in our Company’s goals and plans and changes in business
conditions in the relevant bonus period if it concludes that such adjustments
are appropriate and are consistent with our overall goals and strategy. The
Compensation Committee adjusted the 2016 bonus targets and payments for the
named executive officers to reflect: changes in the Company’s business plan;
deviations in timing of certain capital expenditures; the reallocation of
certain costs between market and headquarters’ operations; and one-time,
non-operational items and strategic operational decisions made after the targets
were set. These adjustments had no impact on the payouts for the named executive
officers.
28
Table of Contents
|
2016 Financial
Achievement and Bonus Payouts
|
Based on the foregoing, the quarterly
achievement and bonuses awarded to the named executive officers with respect to
our performance in 2016 were as follows:
|
Name
|
|
Q1
(1)
Cumulative
Achievement
|
|
Q2
Cumulative
Achievement
|
|
Q3
Cumulative
Achievement
|
|
2017
Cumulative
Achievement
|
|
2016
Bonus Plan
Payout
Percentage
of Target
(2)
|
|
2016
Actual Bonus
Payout
|
|
Steven Shindler
|
|
230%
|
|
259%
|
|
281%
|
|
298%
|
|
200%
|
|
$
|
2,533,378
|
|
Daniel Freiman
|
|
230%
|
|
259%
|
|
281%
|
|
298%
|
|
200%
|
|
$
|
900,000
|
|
Francisco Valim
|
|
279%
|
|
318%
|
|
338%
|
|
356%
|
|
100%
|
|
$
|
1,375,319
|
|
Shana Smith
|
|
230%
|
|
259%
|
|
281%
|
|
298%
|
|
200%
|
|
$
|
900,000
|
|
(1)
|
Targets based on a
15-month business plan that started on October 1, 2015.
|
|
(2)
|
The 2016 Bonus Plan
payout was capped at two times target for Messrs. Shindler and Freiman and
Mrs. Smith and at target for Mr. Valim.
|
|
BANKRUPTCY SALE TRANSACTION
BONUS
|
In connection with our bankruptcy
proceedings, the court approved a key employee incentive plan that provided for
a potential incentive bonus payout to insiders, as defined by the federal
bankruptcy code, should the Company complete a sale transaction meeting
specified enterprise values in connection with its emergence from bankruptcy.
The sale transaction bonus was earned at the time of the bankruptcy court’s
approval of a sale transaction and the amount of the bonus was calculated as 75
basis points of incremental sale value over the threshold of 120% of the plan
value of those assets with the sale value representing gross consideration,
including the assumption of debt after deductions for:
|
●
|
all costs and expenses related to
the sale;
|
|
●
|
any corporate cash used by the
entity or business being sold; and
|
|
●
|
all holdbacks and reductions in
proceeds for indemnities, which are added back on the release of
proceeds.
|
All employees eligible to earn the sale
bonus as of the date of court approval of the asset sale are entitled to any
portion of the bonus subject to holdbacks upon the subsequent release of the
holdbacks regardless of whether they are still in the employment of the Company
or its successors as long as the employee was not terminated for cause. The
bonus will not be paid until it otherwise comes due.
On April 30, 2015, we completed the sale
of our operations in Mexico, which we refer to as Nextel Mexico, to New Cingular
Wireless, an indirect subsidiary of AT&T. The transaction was structured as
a sale of all of the outstanding stock of Nextel Mexico for a purchase price of
approximately $1.875 billion, including $187.5 million deposited in escrow to
satisfy potential indemnification claims. On June 19, 2015, the bankruptcy court
entered an order approving and confirming our plan of reorganization, and on
June 26, 2015, the conditions of the bankruptcy court’s order and the plan of
reorganization were satisfied, the plan of reorganization became effective and
we emerged from bankruptcy. As of December 31, 2016, we paid $4.2 million out of
escrow to settle an indemnification claim, and in exchange, $20.0 million of the
escrow was released to us, which resulted in payment of a portion of the earned
bankruptcy sale bonus. The named executive officers earned the following bonuses
in connection with the sale of Nextel Mexico, and in November 2016 received the
following payouts in connection with the partial release of escrowed
funds:
|
Executive
|
|
Allocation of Total
Payout
(1)
|
|
Asset Sale Bonus
(Earned in
2015)
(2)
|
|
Asset Sale Bonus
(Paid November 2016)
|
|
Steven Shindler
|
|
32.34%
|
|
$
|
357,990
|
|
$
|
22,838
|
|
Daniel Freiman
|
|
5.13%
|
|
$
|
56,764
|
|
$
|
3,621
|
|
Shana Smith
|
|
5.13%
|
|
$
|
56,764
|
|
$
|
3,621
|
|
(1)
|
The bonus pool was
allocated among the eligible employees based on each employee’s proportion
of target quarterly cash bonus incentive payments at the time the key
employee incentive plan was approved by the bankruptcy court.
|
|
(2)
|
These amounts are
subject to reduction and will not be paid until the money deposited into
an escrow account to satisfy potential indemnification claims is
released.
|
29
Table of Contents
|
Roles and
Responsibilities
|
The following tables summarize the roles
and responsibilities of the Compensation Committee and management in connection
with the development and implementation of our compensation program for our
executive officers.
Compensation Committee
(3
Independent Directors)
|
|
Quarterly reviews and approves
corporate goals and objectives with respect to our executive officers’
compensation.
Annually reviews and approves the
evaluation process and compensation structures with respect to our
executive officers’ compensation.
Evaluates our performance in light
of the Committee’s established goals and objectives.
Approves the annual
compensation for our executive officers, considering the recommendations
made by the chief executive officer (for compensation other than his own)
and the independent compensation consultant, when needed.
Evaluates the performance of the
chief executive officer relative to the performance goals determined by
the Board.
|
|
Management
|
|
Recommends the compensation
structure for the Company’s executive officers.
Chief executive officer recommends
the level of annual compensation for the Company’s executive officers
(other than the chief executive officer).
Chief executive officer evaluates
each executive officer’s performance of their respective business or
function and their retention considerations (other than for the chief
executive officer).
Provides input to the Compensation
Committee on the strategy, design and funding of our incentive
compensation plans.
Makes plan design recommendations
for broad-based benefit programs in which our executive officers
participate.
|
|
Compensation
Committee Consultant and Independence
|
Historically, the Compensation Committee
considers the advice of an independent compensation consultant, together with
information and analysis from management and its own judgment and experience,
when evaluating the Company’s executive compensation program. In 2016, the
Compensation Committee did not utilize the services of an independent
compensation consultant and did not use comparative industry data or a peer
group given the determination that no changes would be made to executive officer
compensation for 2016 and no equity grants would be provided.
30
Table of Contents
|
ADDITIONAL COMPENSATION AND COMPENSATION
PLANS
|
In the United States, the named executive
officers participate in the same benefit plans as the general employee
population of the Company. International plans vary, and incremental amounts
paid to executives who work outside the United States pursuant to foreign
government required programs, including mandatory vacation allowances and
retirement benefits, are not taken into consideration in determining base salary
and are not used in calculating the annual target bonus amounts or in
determining those executives’ target total direct compensation. In general,
benefits are designed to provide a safety net of protection against the
financial catastrophes that can result from illness, disability or death, and to
provide a reasonable level of retirement income based on years of service with
the Company. Benefits help keep employees focused on serving the Company and not
distracted by matters related to paying for health care, saving for retirement
or similar issues.
|
Retirement,
Deferred Compensation and Pension Plans
|
During 2016, our U.S.-based executive
officers that were eligible participated at their election in our 401(k)
retirement savings plan that provides employees with an opportunity to
contribute a portion of their cash compensation to the plan on a tax-deferred
basis to be invested in specified investment options and distributed upon their
retirement. Consistent with the 401(k) plan, we matched 100% of each employee’s
contributions to the 401(k) plan up to a maximum of 4% of the employee’s
eligible annual compensation. Our matching contribution for 2016 for named
executive officers was $31,800 in the aggregate.
We do not have any pension
plans that entitle our named executive officers to additional benefits. In
addition, we have not adopted a supplemental executive retirement plan or other
“excess plan” that pays benefits to highly compensated executives whose salaries
exceed the Internal Revenue Service’s maximum allowable salary for qualified
plans, and we do not have any nonqualified deferred compensation
plans.
We have two severance plans that provide
for the payment of severance benefits to our U.S.-based employees, including our
U.S.-based executive officers, if their employment is terminated in specified
circumstances. One plan provides for the payment of severance benefits if the
executive officer’s employment is terminated without cause for certain reasons,
and the other plan provides for the payment of severance benefits if, in
connection with or following a change of control, the executive officer’s
employment is terminated without cause or if the executive officer of the
Company terminates his or her employment with good reason. The two severance
plans are mutually exclusive, meaning that an executive officer may be eligible
to receive payments under one or the other of the plans depending on the
circumstances surrounding the termination of the executive officer’s employment,
but it is not possible for an executive officer to receive payments under both
plans. While the Compensation Committee generally does not take into account the
potential payments to executive officers under our severance plans, including
termination and change of control arrangements, in performing its annual
evaluation of the target total direct compensation that may be realized by our
executive officers, the Compensation Committee believes that the terms of these
arrangements are generally consistent with those offered by similarly situated
companies. A description of the terms of our severance plans, the specific
circumstances that trigger payment of benefits, an estimate of benefits payable
upon the occurrence of those triggering events and other information relating to
such plans can be found below under the caption “Executive Compensation -
Potential Payments under Severance Plans.”
31
Table of Contents
|
EXECUTIVE
COMPENSATION GOVERNANCE PRACTICES
|
We believe that our compensation programs
should ensure that our executives remain accountable for business results and
take responsibility for the assets of the business and its employees. Consistent
with these objectives, our Board has incorporated the following governance
features into our compensation governance programs.
|
COMPENSATION RISK MITIGATION
|
The Company’s executive compensation
program includes features designed to discourage executives and other employees
from taking unnecessary risks that could harm the financial health and viability
of the Company, including balanced performance measures in the 2016 Bonus
Plan.
The Compensation Committee believes that the performance criteria used in
our 2016
Bonus Plan strike an appropriate balance between preserving liquidity and
spending for future growth and profitability and mitigate risk to the Company
because
actions taken to improve our performance with respect to one of the
criteria would normally be expected to have a
corresponding negative impact on other
criteria. For example, if management were to implement promotional
programs
designed to aggressively pursue growth in revenue, those actions would be
expected to increase expenses, resulting in a
potential deterioration in operational
free cash flow in the short term.
The Compensation Committee reviewed the
risk profile of our compensation policies and practices and determined that our
compensation programs are not reasonably likely to have a material adverse
effect on the Company.
|
TAX
DEDUCTIBILITY UNDER SECTION 162(m)
|
Section 162(m) of the Internal Revenue
Code imposes a limitation on the deductibility of non-performance-based
compensation in excess of $1 million paid to certain named executive officers of
public companies. The Compensation Committee has implemented a compensation
program that links a substantial portion of each executive’s compensation to
performance, but has not implemented a policy that limits the amount of
compensation based on the limitations of Section 162(m). We intend to qualify
executive compensation for deductibility under Section 162(m) if doing so is
consistent with our best interests and the interests of our
stockholders.
|
TRADING AND DERIVATIVES
POLICY
|
The Board has adopted a policy prohibiting
our directors, officers and members of their immediate families from entering
into any transactions in our securities without first obtaining pre-clearance of
the transaction from our general counsel. In addition, we prohibit directors and
employees from engaging in any transaction involving our common stock that may
be viewed as speculative, including buying or selling puts, calls or options,
short sales, hedging transactions or purchases of our common stock on
margin.
Generally, we do not enter into employment
contracts with our employees. Our foreign subsidiaries enter into employment
contracts with their employees where required or customary based on local law or
practice. As is customary for executives in Brazil, Nextel Telecomunicações
Ltda., our Brazilian subsidiary, has entered into an employment agreement with
Mr. Valim in connection with his service as president of Nextel Brazil. In
accordance with his employment agreement, Mr. Valim was granted a base salary of
R$2,400,000 ($687,659), a target bonus of R$4,800,000 ($1,375,319), and
$3,000,000 in equity awards, which were granted in November 2015. The agreement
also provides for a payment of $4,500,000 should Mr. Valim be terminated in
connection with a change of control of NII Holdings or Nextel
Telecomunicações.
32
Table of Contents
The 2015 Incentive Compensation Plan (the
“2015 Plan”) approved by our stockholders in connection with the approval of our
plan of reorganization prohibits the repricing of stock options governed by the
2015 Plan.
|
COMPENSATION RECOUPMENT
POLICY
|
The Compensation Committee believes that
the Company’s compensation programs should provide for the reduction or recovery
of certain incentive payments made to our executives in the event our financial
statements were to be restated in the future in a manner that would have
negatively impacted the size or payment of the award at the time of payment.
Although the Compensation Committee has not adopted a formal policy in addition
to remedies available under applicable law, the Compensation Committee intends
to adopt a policy to recover payments in compliance with the rules issued by the
Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform
and Consumer Protection Act when such rules are finalized. As described above,
long-term equity incentives comprise a significant portion of our executives’
target direct compensation and when combined with our ownership guidelines,
subject our executives to substantial financial risk should there be a material
negative restatement of our financial results.
|
SUMMARY
COMPENSATION TABLE
|
Name and Principal
Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
(1)
($)
|
|
Stock
Awards
(2)
($)
|
|
Option
Awards
(2)
($)
|
|
Non-Equity
Incentive Plan
Compensation
(3)
($)
|
|
All
Other
Compensation
(4)
($)
|
|
Total
($)
|
|
Steven Shindler
|
|
2016
|
|
974,376
|
|
22,838
|
|
—
|
|
—
|
|
2,533,378
|
|
26,307
|
|
3,556,899
|
|
Chief Executive
Officer
|
|
2015
|
|
969,646
|
|
1,004,774
|
|
3,050,005
|
|
3,050,003
|
|
1,165,354
|
|
18,549
|
|
9,258,331
|
|
|
|
2014
|
|
945,996
|
|
—
|
|
423,876
|
|
466,420
|
|
1,437,323
|
|
9,483
|
|
3,283,098
|
|
Daniel Freiman
|
|
2016
|
|
450,000
|
|
3,621
|
|
—
|
|
—
|
|
900,000
|
|
10,600
|
|
1,364,221
|
|
Chief Financial Officer
|
|
2015
|
|
419,875
|
|
159,320
|
|
600,007
|
|
600,014
|
|
333,649
|
|
10,600
|
|
2,123,465
|
|
Francisco
Valim
(5)
|
|
2016
|
|
687,659
|
|
—
|
|
—
|
|
—
|
|
1,375,319
|
|
326,275
|
|
2,389,253
|
|
President, Nextel Brazil
|
|
2015
|
|
201,979
|
|
302,969
|
|
1,500,003
|
|
1,500,001
|
|
—
|
|
221,858
|
|
3,726,810
|
|
Shana Smith
|
|
2016
|
|
450,000
|
|
3,621
|
|
—
|
|
—
|
|
900,000
|
|
10,600
|
|
1,364,221
|
|
General Counsel and
|
|
2015
|
|
423,125
|
|
159,320
|
|
600,007
|
|
600,014
|
|
334,907
|
|
10,600
|
|
2,127,973
|
|
Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The amounts in this
column for 2016 for Messrs. Shindler and Freiman and Mrs. Smith reflect
the bankruptcy asset sale bonus paid in 2016. The amounts in this column
for 2015 for Messrs. Shindler and Freiman and Mrs. Smith reflect the
bankruptcy emergence bonus and the bankruptcy asset sale bonus paid or
earned in 2015. The bankruptcy emergence bonus was paid on July 2, 2015,
and the asset sale bonus earned in 2015 is subject to the release of funds
escrowed for indemnification and subject to reduction based on amounts
paid for indemnification claims. The amount in this column for Mr. Valim
for 2015 reflects the bonus that he received, pursuant to his employment
agreement, at the submission and acceptance of the Nextel Brazil business
plan by our Board of Directors and is based on the average exchange rate
of 3.96 Brazilian Reais to 1.00 U.S. Dollar for 2015.
|
|
(2)
|
No equity compensation
was provided to executive officers in 2016.
|
|
(3)
|
The amounts in this
column represent the bonus that we paid under the Bonus Plans in effect in
2014, 2015 and 2016. The bonus is determined based on a target bonus
amount, which is a predetermined percentage of base salary, and is
adjusted based on achievement of operating unit and/or consolidated
performance goals and for 2014 individual
performance.
|
33
Table of Contents
|
(4)
|
Consists of: (a)
amounts contributed by us under our 401(k) plan, (b) in the case of Mr.
Valim, amounts contributed by Nextel Brazil to the Fundo de Garantia de
Tempo de Servico, or FGTS, and to a private savings plan, (c) perquisites
and other personal benefits described in more detail below, and (d) tax
gross-up payments made in connection with the
foregoing:
|
|
|
|
|
Year
|
|
Company
Contributions
to 401(k)
Plan
($)
|
|
Company
Contributions
to
Government
Plans
($)
|
|
Company
Contributions
to
Private
Savings
Plan
($)
(a)
|
|
Perquisites and
Other Personal
Benefits
($)
(b)
|
|
Tax Gross-Up
Payments
($)
(c)
|
|
|
Mr. Shindler
|
|
2016
|
|
10,600
|
|
N/A
|
|
N/A
|
|
15,414
|
|
293
|
|
|
|
|
2015
|
|
10,600
|
|
N/A
|
|
N/A
|
|
7,949
|
|
—
|
|
|
|
|
2014
|
|
—
|
|
N/A
|
|
N/A
|
|
9,483
|
|
—
|
|
|
Mr.
Freiman
|
|
2016
|
|
10,600
|
|
N/A
|
|
N/A
|
|
—
|
|
—
|
|
|
|
|
2015
|
|
10,600
|
|
N/A
|
|
N/A
|
|
—
|
|
—
|
|
|
Mr. Valim
|
|
2016
|
|
N/A
|
|
152,493
|
|
63,476
|
|
110,306
|
|
—
|
|
|
|
|
2015
|
|
N/A
|
|
41,266
|
|
18,644
|
|
161,948
|
|
—
|
|
|
Mrs.
Smith
|
|
2016
|
|
10,600
|
|
N/A
|
|
N/A
|
|
—
|
|
—
|
|
|
|
|
2015
|
|
10,600
|
|
N/A
|
|
N/A
|
|
—
|
|
—
|
|
|
a)
|
Represents the
contribution by Nextel Brazil to a private savings program designed to
complement Brazilian social security in which Nextel Brazil matches
employee contributions up to 10% of an employee’s annual salary. The
employer contribution vests based on length of service.
|
|
|
b)
|
The dollar value of perquisites and other
personal benefits received by Messrs. Shindler and Valim each exceeded $10,000 in
2016.
|
|
|
|
The perquisites and other personal benefits
paid to Mr. Shindler in 2016 include $12,172 in commuting expenses and the
cost of an executive physical.
|
|
|
|
The perquisites and other personal benefits
paid to Mr. Valim in 2016 represent the value of an automobile transferred
by Nextel Brazil to Mr. Valim including $4,419 of property taxes and
services related to the transfer, in connection with the cancellation of
Nextel Brazil’s automobile program on January 26, 2016. The amounts
reflected in the Benefits column of the table above and the All Other
Compensation column of the Summary Compensation Table are in U.S. Dollars
based on the average exchange rate of 3.4901 Brazilian Reais to 1.00 U.S.
Dollar for the year ended December 31, 2016. The perquisites and other
personal benefits paid to Mr. Valim in 2015 consist of an annual allowance
for an automobile supplied by Nextel Brazil, including related maintenance
and fuel, which had an incremental cost to Nextel Brazil of $128,285;
$33,062 for medical, dental and other customary executive insurance; and
meal vouchers. These benefits are paid to Mr. Valim in Brazilian Reais,
the amounts of which are reflected in the Benefits column of the table
above and the All Other Compensation column of the Summary Compensation
Table in U.S. Dollars based on the average exchange rate of 3.96 Brazilian
Reais to 1.00 U.S. Dollar for the year ended December 31, 2015.
|
|
|
c)
|
Tax gross-up payments in 2016 reflect amounts
paid to Mr. Shindler relating to commuting expenses.
|
|
(5)
|
Mr. Valim joined Nextel Brazil on August 25, 2015. Mr. Valim’s
salary, bonus and benefits, other than his equity grants, were paid in
Brazilian Reais. As a result, the amount of compensation provided to Mr.
Valim as reflected in U.S. Dollars in the Salary, Bonus and All Other
Compensation columns varies based on the applicable exchange rate of the
Brazilian Real relative to the U.S. Dollar. Mr. Valim’s compensation as
reported in U.S. Dollars can vary significantly with no actual change to
the compensation paid to Mr. Valim in Brazilian currency if the exchange
rates are volatile. The amounts for Mr. Valim reflected in the Salary,
Bonus and All Other Compensation columns in the table above are based on
the average exchange rate of 3.4901 Brazilian Reais to 1.00 U.S. Dollar for
the year ended December 31, 2016 and 3.96 Brazilian Reais to 1.00 U.S.
Dollar for December 31, 2015.
|
34
Table of Contents
|
GRANTS OF
PLAN-BASED AWARDS TABLE
|
The table below describes cash incentive
bonus payments under our 2016 Bonus Plan. Our 2016 Bonus Plan does not provide
for payouts in fiscal years after 2016. We did not provide any equity
compensation to named executive officers during 2016.
|
Name
|
|
Grant Date
|
|
Estimated Future Payouts
Under
Non-Equity Incentive Plan Awards
(1)
|
|
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
($)
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Steven Shindler
|
|
6/26/2015
|
|
0
|
|
1,266,689
|
|
2,533,378
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
Daniel Freiman
|
|
6/26/2015
|
|
0
|
|
450,000
|
|
900,000
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
Francisco Valim
|
|
11/9/2015
|
|
0
|
|
1,375,319
|
|
1,375,319
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
Shana Smith
|
|
6/26/2015
|
|
0
|
|
450,000
|
|
900,000
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
(1)
|
The amounts reflect
the potential range of payouts pursuant to the 2016 Bonus Plan. The actual
amounts of the payments made under this plan to the named executive
officers are reflected in the Non-Equity Incentive Plan Compensation
column of the Summary Compensation Table.
|
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END 2016
TABLE
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Grant Date
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
|
Option
Exercise Price
($)
|
|
Option
Expiration
Date
|
|
Number
of Shares
or Units of
Stock That
Have Not
Vested
(#)
|
|
|
Market
Value
of Shares
or
Units
of Stock
That Have Not
Vested
(1)
($)
|
|
Steven Shindler
|
|
6/26/2015
|
|
141,795
|
(2)
|
|
283,589
|
(2)
|
|
20.6780
|
|
6/26/2025
|
|
98,333
|
(4)
|
|
211,416
|
|
Daniel Freiman
|
|
6/26/2015
|
|
27,895
|
(2)
|
|
55,788
|
(2)
|
|
20.6780
|
|
6/26/2025
|
|
19,344
|
(4)
|
|
41,590
|
|
Francisco Valim
|
|
11/9/2015
|
|
191,571
|
(3)
|
|
383,142
|
(3)
|
|
6.5700
|
|
11/9/2025
|
|
152,207
|
(5)
|
|
327,245
|
|
Shana Smith
|
|
6/26/2015
|
|
27,895
|
(2)
|
|
55,788
|
(2)
|
|
20.6780
|
|
6/26/2025
|
|
19,344
|
(4)
|
|
41,590
|
|
(1)
|
The market value of
the restricted stock is based on the reported $2.15 closing price of a
share of our common stock as reported on the NASDAQ stock market on
December 30, 2016. The long-term equity incentives disclosed in this table
reflect the current fair value of our outstanding equity
awards.
|
|
(2)
|
Stock option award
vested/vests 33 1/3% on each of June 26, 2016, June 26, 2017 and June 26,
2018.
|
|
(3)
|
Stock option award
vested/vests 33 1/3% on each of November 9, 2016, November 9, 2017 and
November 9, 2018.
|
|
(4)
|
Restricted Stock
vested/vests 33 1/3% on each of June 26, 2016, June 26, 2017 and June 26,
2018.
|
|
(5)
|
Restricted Stock
vested/vests 33 1/3% on each of November 9, 2016, November 9, 2017 and
November 9, 2018.
|
35
Table of
Contents
|
OPTION EXERCISES
AND STOCK VESTED
|
In the table below, we list information on
the vesting of restricted stock during the year ended December 31, 2016. None of
our executive officers exercised any options in 2016.
|
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on Vesting
(#)
|
|
Value Realized
on
Vesting
(1)
($)
|
|
Steve Shindler
|
|
49,167
|
|
$
|
147,501
|
|
Daniel Freiman
|
|
9,673
|
|
$
|
29,019
|
|
Francisco Valim
|
|
76,104
|
|
$
|
190,260
|
|
Shana Smith
|
|
9,673
|
|
$
|
29,019
|
|
(1)
|
The value realized on vesting is
calculated as the number of shares vested multiplied by the closing price
of the shares on the date of vesting, unless vesting occurs on a Saturday
or Sunday, in which case the shares vested are multiplied by the closing
price on the Friday preceding the vesting
date.
|
|
PENSION BENEFITS
AND NONQUALIFIED DEFERRED COMPENSATION
|
The Company does not offer pension
benefits or a deferred compensation plan.
|
POTENTIAL
PAYMENTS UNDER SEVERANCE PLANS
|
We have arrangements with each of our
U.S.-based named executive officers under our Change of Control Severance Plan
that provide for payments and benefits if an executive officer’s employment is
terminated in connection with the occurrence of certain events involving a
change in control. In addition, we have an obligation to make payments and
provide certain benefits to our U.S.-based named executive officers under our
Severance Plan, the 2015 Plan and Separation and Release Agreements between the
Company and Messrs. Shindler and Freiman and Mrs. Smith resulting from
termination of employment upon the occurrence of certain events. The following
is a summary of the payments that we or our successor may make under each of
these arrangements.
36
Table of
Contents
|
PAYMENTS UPON TERMINATION OF
EMPLOYMENT
|
Each of our U.S.-based named executive
officers is covered by our Change of Control Severance Plan and our Severance
Plan. The Change of Control Severance Plan provides for the payment of certain
benefits if, in connection with a change of control, an executive officer’s
employment is terminated by the Company without cause or by the executive
officer for good reason. No benefits are required to be paid unless the
executive officer’s employment is terminated. The named executive officers are
also entitled to severance benefits if their employment is terminated by the
Company in specified circumstances under the Severance Plan. Although the
benefits under the Severance Plan apply without regard to whether any change of
control has occurred or is pending, the Change of Control Severance Plan
provides that employees entitled to receive amounts paid under the Change of
Control Severance Plan will not be entitled to cash severance under any other
severance plan, including the Severance Plan. Messrs. Shindler and Freiman and
Mrs. Smith have additional severance benefits pursuant to Separation and Release
Agreements that provide for the payment of one additional year of base salary in
addition to the benefits provided by our Severance Plan.
Mr. Valim is an employee of Nextel Brazil
and is not eligible to receive benefits under the Change of Control Severance
Plan and Severance Plan. Mr. Valim’s termination benefits are as set forth in
his employment agreement and as required by Brazilian law. Pursuant to his
employment agreement, Mr. Valim will receive separation payments if his
employment is terminated in connection with a change of control.
The named executive officers have also
received awards of stock options and restricted stock under the 2015 Plan, which
contains provisions that may accelerate the vesting of awards made to a named
executive officer if we terminate the executive officer’s employment with us, or
if the executive officer terminates his or her employment with us for good
reason, in connection with a change of control.
Except as noted below, we otherwise have
not entered into any employment agreements or other arrangements that provide
for benefits in connection with a termination of employment of our named
executive officers.
37
Table of
Contents
|
POTENTIAL
PAYMENTS UPON TERMINATION OF EMPLOYMENT
|
|
PAYMENTS UPON TERMINATION OF
EMPLOYMENT
|
The following table shows the estimated
amount of the payments to be made to each of the named executive officers upon
termination of their employment in connection with a change of control under the
Change of Control Severance Plan, their involuntary termination under the
Severance Plan or upon their termination in connection with their death,
disability or retirement. For purposes of calculating the value of the benefits
for the named executive officers, we have assumed that the triggering event for
payment occurred under each of the arrangements as of December 31, 2016. The
footnotes to the table contain an explanation of the assumptions made by us to
calculate the payments, and the discussion that follows the table provides
additional details on these arrangements.
POTENTIAL PAYMENTS UPON TERMINATION OF
EMPLOYMENT
|
Termination Event
(1)
|
|
Base
Salary
(2)
($)
|
|
Bonus
(3)
($)
|
|
Other
Payments
(4)
($)
|
|
Equity
Awards
(5)
($)
|
|
Total
(6)
($)
|
Change of Control Severance
Plan - Termination
by Executive for Good Reason or by the
Company
Without Cause
(7)
|
|
|
|
|
|
|
|
|
|
|
|
Steven Shindler
|
|
1,948,752
|
|
3,166,723
|
|
48,069
|
|
211,416
|
|
5,374,960
|
|
Daniel Freiman
|
|
900,000
|
|
1,125,000
|
|
48,069
|
|
41,590
|
|
2,114,659
|
|
Francisco Valim
(8)
|
|
N/A
|
|
N/A
|
|
4,500,000
|
|
327,245
|
|
4,827,245
|
|
Shana Smith
|
|
900,000
|
|
1,125,000
|
|
48,069
|
|
41,590
|
|
2,114,659
|
|
Severance Plan - Involuntary
Termination
(9)
|
|
|
|
|
|
|
|
|
|
|
|
Steven Shindler
|
|
974,376
|
|
633,344
|
|
974,376
|
|
54,447
|
|
2,636,543
|
|
Daniel Freiman
|
|
450,000
|
|
225,000
|
|
450,000
|
|
10,711
|
|
1,135,711
|
|
Francisco Valim
(8)
|
|
N/A
|
|
N/A
|
|
142,234
|
|
23,310
|
|
167,197
|
|
Shana Smith
|
|
450,000
|
|
225,000
|
|
450,000
|
|
10,711
|
|
1,135,711
|
|
Death, Disability or
Retirement
|
|
|
|
|
|
|
|
|
|
|
|
Steven Shindler
|
|
—
|
|
—
|
|
—
|
|
211,416
|
|
211,416
|
|
Daniel Freiman
|
|
—
|
|
—
|
|
—
|
|
41,590
|
|
41,590
|
|
Francisco Valim
(8)
|
|
—
|
|
—
|
|
—
|
|
327,245
|
|
327,245
|
|
Shana Smith
|
|
—
|
|
—
|
|
—
|
|
41,590
|
|
41,590
|
|
(1)
|
The Change of Control Severance
Plan and Severance Plan provide benefits for employees of NII Holdings. No
payments are required to be made to any named executive officer under the
Change of Control Severance Plan or the Severance Plan if the executive is
terminated for cause or if the executive voluntarily terminates his
employment (other than for good reason in connection with a change of
control under the Change of Control Severance Plan). The Change of Control
Severance Plan provides that employees entitled to receive payments under
the Change of Control Severance Plan will not also be entitled to
severance under the Severance Plan. Mr. Valim is an employee of Nextel
Brazil and is not eligible to receive benefits under the Change of Control
Severance Plan or the Severance Plan. Mr. Valim’s termination benefits are
as set forth in his employment agreement and as required by Brazilian law.
Equity awards have been granted to the named executive officers pursuant
to our 2015 Plan, and the 2015 Plan and grant agreements apply to equity
awards held by all named executive officers.
|
|
(2)
|
Amounts included in this column
reflect the portion of the severance payment attributable to base salary.
Amounts attributable to the target bonus are included in the Bonus column
(see note 3 below). The severance payment under the Change of Control
Severance Plan for U.S.-based named executive officers is 200% of the
executive’s annual base salary on the day immediately preceding the change
of control.
|
|
|
The severance payment under the
Severance Plan for the U.S.-based named executive officers is 100% of the
named executive officer’s annual base salary at the time of
termination.
|
38
Table of
Contents
|
(3)
|
Amounts included in this column
reflect the portion of the severance payment attributable to the target
bonus. The portion of the severance payment attributable to base salary is
included in the Base Salary column (see note 2 above). Under the Change of
Control Severance Plan, upon termination, each U.S.-based executive is
entitled to receive as part of the severance payment 200% of the
executive’s annual target bonus on the day immediately preceding the
change of control, as well as an amount equal to the earned portion of the
bonus payment for the period ending on the termination event.
|
|
|
The Severance Plan provides for
the payment of an amount equal to a prorated portion of the actual bonus
payment earned for the period ending on the termination event for each
U.S.-based named executive officer, payable when bonuses are paid to all
other eligible employees.
|
|
(4)
|
Other Payments for the U.S.-based
named executive officers with respect to the Change of Control Severance
Plan include 18 months of COBRA health insurance and six months of
outplacement counseling assistance. The U.S.-based executive officers are
also eligible for reimbursement of legal, accounting and other fees
incurred by the executive in a good faith effort to obtain the benefits
provided for under the Change of Control Severance Plan; no amounts have
been included in the Other Payments column for these potential
payments.
|
|
|
Mr. Valim is an employee of
Nextel Brazil and is not eligible to receive benefits under the Change of
Control Severance Plan. For Mr. Valim, Other Payments listed under the
Change of Control Severance Plan represent an enhanced severance
protection of $4,500,000, which includes any severance or termination
payment required under Brazilian law, as provided for in his employment
agreement and triggered if Mr. Valim is severed in connection with a
change of control of NII Holdings or Nextel Brazil.
|
|
|
For Messrs. Shindler and Freiman
and Mrs. Smith, Other Payments under Severance Plan – Involuntary
Termination include an additional 12 months of annualized base salary at
the time of termination, as provided for in their Separation and Release
Agreements.
|
|
|
Mr. Valim is an employee of
Nextel Brazil and is not eligible to receive benefits under the Severance
Plan. For Mr. Valim, Other Payments under the Severance Plan provides an
estimate of the legal severance payment calculated using base salary,
certain benefits and tenure that would be required under Brazilian law.
The amount is based on the average exchange rate of 3.4901 Brazilian Reais
to 1.00 U.S. Dollar for the year ended December 31, 2016.
|
|
(5)
|
All outstanding options had an
option exercise price above the closing price of our common stock on the
NASDAQ stock market of $2.15 on December 30, 2016. Amounts included in the
Equity Awards column reflect the value of restricted stock calculated
using the closing price of our common stock on December 30, 2016
multiplied by the shares whose vesting or payment are prorated or
accelerated upon the triggering event.
|
|
|
In a change of control situation,
we have assumed that the surviving entity has elected not to assume,
replace or convert any of the awards made under the 2015 Plan. As
described in more detail below, the 2015 Plan provides for the vesting of
all unvested options and restricted stock in specific circumstances
following a change of control of the Company. The 2015 Plan and the grant
agreements made under that plan provide for a pro rata vesting of
outstanding awards if an employee is terminated without cause based on the
number of days served. The 2015 Plan and the grant agreements made under
that plan also provide that outstanding and unvested options and
restricted stock will vest upon an employee’s death, disability, and if
the employee retires at or after age 65 or at an earlier age with the
consent of the Compensation Committee, with vested options remaining
exercisable for a period of one year after the date the employee ceases to
be an employee of the Company or its subsidiary. The 2015 Plan and the
grant agreements also provide for continued exercisability of vested
options for a period of 90 days from the employee’s date of termination in
all other situations.
|
|
(6)
|
In addition to the amounts
specified in this column, upon termination in each of the circumstances
noted, the executive officer is entitled to receive base salary and cash
or non-cash benefits earned prior to the date of the named executive
officer’s termination, including payments with respect to accrued and
unused vacation time and any reimbursements for the reasonable and
necessary business expenses incurred by the named executive officer prior
to termination.
|
|
(7)
|
Change of Control Severance Plan
— Termination by Executive for Good Reason or by the Company Without Cause
describes the benefits payable to our U.S.-based named executive officers
if the named executive officer voluntarily terminates his or her
employment for good reason in connection with a change of control or if
the named executive officer’s employment is terminated without cause by us
or the surviving entity in connection with a change of control as
described below in “Change of Control Severance Plan.” This section also
describes the benefits provided for in our 2015 Plan and the grant
agreements made under that plan that apply to all named executive officers
in connection with a termination by an executive for good reason or by the
Company without cause in connection with a change of control.
|
|
|
In cases in which a U.S.-based
named executive officer’s employment is terminated by us or the surviving
entity in connection with a change of control, each named executive
officer will be entitled to a severance payment under the Change of
Control Severance Plan, but not the Severance Plan.
|
|
|
As an employee of
Nextel Brazil, Mr. Valim is not eligible to receive benefits pursuant to
the Change of Control Severance Plan, and we have included the enhanced
severance payment due to Mr. Valim under his employment agreement in
connection with a change of control of the Company or Nextel Brazil under
the Other Payments column of this section.
|
|
(8)
|
Mr. Valim is an employee of
Nextel Brazil and is not eligible for benefits under the Change of Control
Severance Plan or the Severance Plan. Mr. Valim’s termination benefits are
as set forth in his employment agreement and as required by Brazilian law.
Under Brazilian law, Mr. Valim may be eligible for additional benefits
than those indicated based on the specific circumstances of his
termination. Mr. Valim’s equity awards were made pursuant to our 2015
Plan, and the terms of our 2015 Plan and the grant agreements made under
that plan apply to his equity awards.
|
|
(9)
|
Severance Plan — Involuntary
Termination describes the benefits payable to a U.S.-based named executive
officer if the named executive officer’s employment is terminated by us
without cause other than in connection with a change of control under the
circumstances described below under “Severance Plan.” This section also
includes the benefits provided for in our 2015 Plan and the grant
agreements made under that plan that would apply to all named executive
officers in connection with an involuntary termination.
|
|
|
As an employee of Nextel Brazil,
Mr. Valim is not eligible to receive benefits pursuant to the Severance
Plan. He may be eligible, depending on the circumstances of his
termination, to receive benefits under Brazilian
law.
|
39
Table of
Contents
|
Change of Control
Severance Plan
|
The Change of Control Severance Plan
provides that each U.S.-based named executive officer will receive a payment if
a change of control, as defined below, occurs and either is terminated without
cause or resigns for good reason. Each U.S.-based named executive officer will
be entitled to receive 200% of his or her annual base salary and target bonus at
the date of his or her termination upon such an event as provided in the Change
of Control Severance Plan. Each named executive officer will be entitled to
receive his or her payment under the Change of Control Severance Plan in a lump
sum within thirty days following termination of employment.
We or the surviving entity will also pay
the full premium cost of continued health care coverage for each named executive
officer under the federal COBRA law in such a termination. We will make the
COBRA payments up to the lesser of 18 months or the time at which the named
executive officer is reemployed and is eligible to receive group health coverage
benefits under another employer-provided plan. The payments may also cease for
any of the reasons provided in the COBRA law.
In addition, in the event that any of the
named executive officers incur any legal, accounting or other fees and expenses
in a good faith effort to obtain benefits under the Change of Control Severance
Plan, we or the surviving entity will reimburse the named executive officer for
such reasonable expenses. In the event that any payment made under the Change of
Control Severance Plan is subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code, the named executive officer’s payments will be
reduced to the maximum amount that does not trigger the excise tax unless the
named executive officer would be better off (on an after-tax basis) receiving
all payments and paying all excise and income taxes.
A change of control will be deemed to
occur under the Change of Control Severance Plan when:
|
●
|
we are merged, consolidated or
reorganized into or with another company, or we sell or otherwise transfer
all or substantially all of our assets to another company, and, as a
result of either transaction, less than a majority of the combined voting
power of the then outstanding securities of the resulting company
immediately after the transaction is held by the holders of our voting
securities immediately prior to the transaction;
|
|
●
|
the directors on our Board as of the effective
date of the Change of Control Severance Plan or directors elected
subsequent to that date and whose nomination or election was approved by a
vote of at least two-thirds of the directors on the Board as of the
effective date of the Change of Control Severance Plan cease to be a
majority of our board;
|
|
●
|
our stockholders approve our
complete liquidation or dissolution;
|
|
●
|
an individual, entity or group
acquires beneficial ownership of 50% or more of our then outstanding
shares or 50% of our then outstanding voting power to vote in an election
of our directors, excluding any acquisition directly from us; or
|
|
●
|
our Board approves a resolution
stating that a change of control has
occurred.
|
A named executive officer will receive
compensation under the Change of Control Severance Plan if:
|
●
|
the named executive officer is
terminated without cause, as defined in the Change of Control Severance
Plan, within 12 months from a change of control or prior to the change of
control if the named executive officer reasonably demonstrates that the
termination was at the request of a third party attempting to effect a
change of control or otherwise in connection with a change of control; or
|
|
●
|
the named executive officer
voluntarily terminates his employment for good reason during the 12 months
following a change of control, defined as when, after the change of
control:
|
|
●
|
there was a material and adverse
change in or reduction of the named executive officer’s duties,
responsibilities and authority that the named executive officer held
preceding the change of control;
|
|
●
|
the named executive officer’s
principal work location was moved to a location more than 40 miles away
from his prior work location;
|
|
●
|
the named executive officer was
required to travel on business to a substantially greater extent than
prior to the change of control, which results in a material adverse change
in his employment conditions;
|
|
●
|
the named executive officer’s
salary, bonus or bonus potential were materially reduced or any other
significant adverse financial consequences occurred;
|
|
●
|
the benefits provided to the named
executive officer were materially reduced in the aggregate; or
|
|
●
|
we or any successor fail to assume
or comply with any material provisions of the Change of Control Severance
Plan.
|
40
Table of
Contents
The Severance Plan provides payments to
our U.S.-based named executive officers in the event of an involuntary
termination of employment, which includes termination due to job elimination,
work force reductions, lack of work, a determination by us that the executive
officer’s contributions no longer meet the needs of the business and any other
reason determined by us. Under the Severance Plan, each of the U.S.-based named
executive officers will be entitled to a payment equal to 12 months of his
annualized base salary, not including any bonus, incentive payments or
commission payments. Each eligible named executive officer will also receive a
pro rata payment of his bonus based on the portion of the year that the named
executive officer was employed by us. We will pay the bonus to the named
executive officer at the same achievement level as other employees subject to
the same bonus targets and when we pay bonuses to employees at the same position
level following the bonus period.
We expect to make a lump sum payment of
the amount due under the Severance Plan, although we reserve the right to make
the payments periodically for a period not to exceed 24 months. In order to
receive payments under the Severance Plan, each named executive officer must
return all of our property and execute a release agreement:
|
●
|
acknowledging that the payments to
be received represent the full amount that the named executive officer is
entitled to under the Severance Plan;
|
|
●
|
releasing any claims that the named
executive officer has or may have against us; and
|
|
●
|
in our discretion, agreeing not to
compete with us for a certain period.
|
The release agreement will also require
the named executive officer to comply with specified confidentiality,
non-disparagement and non-solicitation obligations. Our obligation to make or
continue severance payments to the executive officer will cease if the executive
officer does not comply with those obligations.
|
2015 Incentive
Compensation Plan
|
The 2015 Plan currently covers the grant
of certain incentives and awards, including stock options, restricted stock,
restricted stock units and cash-based incentives, to our employees, including
the named executive officers. Under the 2015 Plan, if a change of control occurs
and the incentives and awards granted under the 2015 Plan are not assumed by the
surviving entity, or the employee is terminated within a certain period
following a change of control, each outstanding award is treated as explained
below. A change of control under the 2015 Plan is defined the same as in the
Change of Control Severance Plan and the same events that trigger payments to
the named executive officer under the Change of Control Severance Plan trigger
payments under the 2015 Plan.
|
●
|
Options
. If the surviving entity assumes, replaces or converts
the options and the named executive officer is terminated within 12 months
under circumstances that would trigger payment, the options will become
fully exercisable, vested or earned. If the options are not assumed,
replaced or converted, each option shall be fully exercisable upon a
change of control.
|
|
●
|
Restricted Stock and Restricted
Stock Units
. If the surviving entity
assumes, replaces or converts the stock award and the named executive
officer is terminated within 12 months under circumstances that would
trigger payment, the stock awards shall be vested. If the restricted stock
and restricted stock unit awards are not assumed, replaced or converted,
the restricted stock or restricted stock units shall be vested upon a
change of control.
|
|
●
|
Cash-Based
Incentives
. If the surviving entity
assumes, replaces or converts cash-based incentives and the named
executive officer is terminated within 12 months under circumstances that
would trigger payment, each outstanding cash-based incentive award shall
be deemed earned pro-rata based on the fraction of the performance period
that has elapsed from the beginning of the performance period until
termination. If the cash-based incentives are not assumed, replaced or
converted, the cash-based incentives shall be deemed earned upon a change
of control.
|
The 2015 Plan provides that the
Compensation Committee, as administrator of the plan, shall determine what
amounts will be payable to the named executive officer upon termination, death,
disability or retirement in the agreement under which awards are made under the
2015 Plan. The award agreements relating to the 2015 emergence long-term equity
grants provide for full vesting of any outstanding restricted stock and option
awards covered by the agreement in connection with a named executive officer’s
death, disability or retirement at or after age 65. In addition, the agreements
provide for vesting of a pro-rated portion of the restricted stock and option
awards based on time served if the named executive officer is terminated without
cause.
41
Table of
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|
Employment
Agreement with Mr. Valim
|
In accordance with his employment
agreement with Nextel Telecomunicações Ltda., Mr. Valim will receive a payment
of $4,500,000 should he be terminated in connection with a change of control of
NII Holdings or Nextel Telecomunicações.
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Separation
Agreements with Messrs. Shindler and Freiman and Mrs.
Smith
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We are implementing a restructuring of our
U.S.-based corporate headquarters to further streamline our expenses by shifting
the costs and associated responsibilities from our headquarters in Reston,
Virginia to our operating subsidiary in Brazil. In connection with these
changes, we entered into Separation and Release Agreements with Messrs. Shindler
and Freiman and Mrs. Smith. The agreements provide for benefits consistent with
our Severance Plan plus an additional payment of one times base salary. The
agreement for Mr. Shindler provided for a target termination date of April 1,
2017. Mr. Shindler’s employment with NII has continued beyond April 1, 2017 and
a final termination date has not been determined. The agreements for Mr. Freiman
and Mrs. Smith contemplate a target termination date of July 1, 2017, although
the actual termination date has not been determined.
42
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KPMG LLP has audited our consolidated
financial statements for the fiscal years ended December 31, 2016 and December
31, 2015.
|
FEES PAID TO
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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The following table sets forth the fees
accrued or paid to the Company’s independent registered public accounting firm
for the years ended December 31, 2016 and 2015.
|
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2016
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2015
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Audit Fees
(1)
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$
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6,650,739
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$
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9,751,766
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Audit-Related Fees
(2)
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$
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$
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60,000
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TOTAL
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$
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6,650,739
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$
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9,811,766
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(1)
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Audit fees consist of those fees
rendered for the audit of our annual consolidated financial statements,
audit of the effectiveness of internal controls over financial reporting,
review of financial statements included in our quarterly reports and for
services normally provided in connection with statutory and regulatory
filings or engagements, such as comfort letters or attest services.
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(2)
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Audit-related fees consist of
those fees for assurance and related services that are reasonably related
to the review of our financial statements.
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AUDIT COMMITTEE
PRE-APPROVAL POLICIES AND PROCEDURES
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It is the policy of the Audit Committee
that our independent registered public accounting firm may provide only those
services that have been pre-approved by the Audit Committee. Unless a type of
service to be provided by the independent registered public accounting firm has
received general pre-approval, it requires specific pre-approval by the Audit
Committee or, in specified circumstances, the Audit Committee chair pursuant to
authority delegated by the Audit Committee. The term of any general pre-approval
is eighteen months from the date of pre-approval, unless the Audit Committee or
a related engagement letter specifically provides for a different period. The
Audit Committee will annually review and pre-approve the services that may be
provided by the independent registered public accounting firm without obtaining
specific pre-approval. The Audit Committee has delegated its pre-approval
authority to Robert Schriesheim, the chair of the Audit Committee.
Requests or applications to provide
services that require specific approval by the Audit Committee must be submitted
to the Audit Committee by both the independent registered public accounting firm
and our controller, and must include a joint statement as to whether, in their
view, the request or application is consistent with the SEC’s rules on auditor
independence. For the years ended December 31, 2016 and 2015, all services
provided by our independent registered public accounting firm were pre-approved
in accordance with the Audit Committee policy described above.
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No portion of this Audit Committee Report
shall be deemed to be incorporated by reference into any filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, through any general statement incorporating by reference in its
entirety the proxy statement in which this report appears, except to the extent
that we specifically incorporate this report or a portion of it by reference. In
addition, this report shall not be deemed to be filed under either the
Securities Act or the Exchange Act.
The Board of Directors has adopted a
written audit committee charter, which is available on the Investor Relations
link of our website at the following address:
www.nii.com
. In addition, all members
of our Audit Committee are independent, as defined in the NASDAQ listing
standards. The Audit Committee has reviewed and discussed our audited
consolidated financial statements with our management and KPMG LLP, our
independent registered public accounting firm. The Audit Committee has also
discussed with our independent registered public accounting firm the matters
required to be discussed pursuant to Statement on Auditing Standards No. 61, as
amended (AICPA,
Professional
Standards
, Vol. 1. AU Section 380), as
adopted by the Public Company Accounting Oversight Board in Rule 3200T,
“Communication with Audit Committees.”
The Audit Committee has received and
reviewed the written disclosures and the letter from KPMG LLP required by
applicable requirements of the Public Company Accounting Oversight Board
regarding the independent accountant’s communications with the audit committee
concerning the firm’s independence from our company and our subsidiaries and has
discussed with KPMG LLP their independence.
In addition, the Audit Committee met with
senior management periodically during 2016 and reviewed key initiatives and
programs aimed at strengthening the effectiveness of our internal and disclosure
control structure. As part of this process, the Audit Committee continued to
monitor the scope and adequacy of our internal auditing program, reviewing
staffing levels and steps taken to implement recommended improvements in
internal procedures and controls. The Audit Committee also met to discuss with
senior management our disclosure controls and procedures and the certifications
by our chief executive officer and our chief financial officer, which are
required for certain of our filings with the Securities and Exchange Commission.
The Audit Committee met privately with our independent registered public
accounting firm, our internal auditors and other members of our management, each
of whom has unrestricted access to the Audit Committee.
Based on the review and discussions
referred to above, the Audit Committee recommended to our Board of Directors
that the audited financial statements be included in our annual report on Form
10-K for fiscal year 2016 filed with the Securities and Exchange Commission. By
recommending to the Board of Directors that the audited financial statements be
so included, the Audit Committee is not opining on the accuracy, completeness or
presentation of the information contained in the audited financial
statements.
Date: March 6, 2017
Audit Committee
Robert A. Schriesheim, Chair
Kevin L.
Beebe
Howard S. Hoffmann
44
Table of
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PROPOSAL I ELECTION OF
DIRECTORS
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The Board, upon the recommendation of the
Corporate Governance and Nominating Committee, has nominated
Messrs. Kevin Beebe, James Continenza, Howard Hoffmann,
Ricardo Knoepfelmacher, Christopher Rogers, Robert Schriesheim and Steven
Shindler, who are incumbent directors, for reelection to the Board for a
one-year term ending 2018. Please see “Director Biographies – Directors Standing
for Re-election – To Hold Office Until 2018” on page 15 of this proxy statement
for information concerning our incumbent directors standing for
re-election.
If any of the nominees are unable to serve
as a director, the persons named in the enclosed proxy reserve the right to vote
for a substitute nominee designated by our Board, to the extent consistent with
our Amended and Restated Certificate and our Fifth Amended and Restated Bylaws.
The nominees listed above have consented to be nominated and to serve if
elected. We do not expect any of the nominees will be unable to
serve.
Provided a quorum is present and it is an
uncontested election, directors are elected by a majority of the votes cast for
each director at the Annual Meeting. This means that the number of shares voted
“for” a director nominee must exceed the number of votes cast “against” that
nominee. Abstentions and broker non-votes will have no effect on the election of
directors. If a nominee who is currently serving as a director is not elected at
the Annual Meeting, under Delaware law the director will continue to serve on
the Board as a “holdover director.” However, in accordance with our Corporate
Governance Guidelines, incumbent directors are required to submit an
irrevocable, contingent resignation to the Board that becomes effective only if
the director fails to receive a majority of votes cast for re-election in an
uncontested election. In accordance with the Corporate Governance Guidelines,
the Board will consider the director’s resignation within 90 days following the
election results and will promptly disclose its decision to accept or reject the
director’s conditional resignation. Since Messrs. Beebe, Continenza, Hoffmann,
Knoepfelmacher, Rogers, Schriesheim and Shindler are standing for re-election,
they have each submitted irrevocable, contingent resignations consistent with
the requirements of our Corporate Governance Guidelines.
In the event of a contested election in
accordance with our Bylaws, directors shall be elected by the vote of a
plurality of the votes cast. Abstentions and broker non-votes will have no
effect on the election of directors in a contested election.
Our Board recommends that the holders
of common stock vote “FOR” incumbent directors Kevin Beebe, James Continenza,
Howard Hoffmann, Ricardo Knoepfelmacher, Christopher Rogers, Robert Schriesheim
and Steven Shindler.
45
Table of
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|
PROPOSAL II ADVISORY VOTE ON EXECUTIVE
COMPENSATION
|
As required by Section 14A of the Exchange
Act of 1934, we are asking our stockholders to provide advisory approval of the
compensation of our named executive officers, as described in this proxy
statement. While this vote is advisory, it will provide information to our
Compensation Committee regarding investor sentiment about our compensation
principles and objectives. We urge you to read the Compensation Discussion and
Analysis beginning on page 23, and the compensation tables and related
narratives appearing in this proxy statement for more information regarding the
compensation of our named executive officers. The Compensation Committee
develops our executive compensation strategy in furtherance of the following
principal compensation objectives:
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●
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align executive compensation with
stockholders’ interests;
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●
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recognize individual initiative and
achievements;
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●
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attract, motivate and retain highly
qualified executives; and
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●
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create incentives that drive the
entire executive management team to achieve challenging corporate goals
that drive superior long-term
performance.
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The Compensation Committee fulfills our
compensation objectives by setting target direct compensation at a level
commensurate with the executive’s and the Company’s performance relative to our
Peer Group utilizing individual and market measures. A substantial majority of
our executives’ compensation is provided in the form of variable,
performance-based compensation that links our executives’ compensation to our
long-term performance.
The vote on this resolution is not
intended to address any specific element of compensation; rather, the vote
relates to the philosophy and structure of our compensation program for our
named executive officers as well as the overall compensation of those officers,
as described in this proxy statement in accordance with the compensation
disclosure rules of the SEC. The vote is advisory, which means that the vote is
not binding on the Company, our Board or the Compensation Committee. To the
extent there is any significant vote against our named executive officer
compensation as disclosed in this proxy statement, the Compensation Committee
will evaluate whether any actions are necessary to address the concerns of
stockholders.
Our Board and our Compensation Committee
value the opinions of our stockholders.
Accordingly, we ask our stockholders to
vote on the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s stockholders
approve, on an advisory basis, the compensation of the named executive officers,
as disclosed in this proxy statement for the 2017 Annual Meeting of Stockholders
pursuant to the compensation disclosure rules of the Securities and Exchange
Commission, including the Compensation Discussion and Analysis, compensation
tables and the other related narrative disclosure.”
The affirmative vote of a majority of the
shares present or represented and entitled to vote either in person or by proxy
is required to approve this Proposal II. Abstentions and broker non-votes will
not impact the outcome of the vote on this proposal.
Our Board recommends that the
stockholders vote “FOR” the approval of the compensation of our named executive
officers, as disclosed in this proxy statement.
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Table of
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|
PROPOSAL III RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
|
KPMG LLP served as our independent
registered public accounting firm for the fiscal year ended December 31, 2016,
and has been selected by the Audit Committee to serve as our independent
registered public accounting firm for the current fiscal year. Information
concerning the fees paid to KPMG LLP is included in this proxy statement under
the heading “Audit Information.” Representatives of KPMG LLP will be present at
the Annual Meeting and available to respond to appropriate questions from
stockholders and may make a statement if they so desire.
Although our Fifth Amended and Restated
Bylaws do not require stockholder ratification or other approval of the
retention of our independent registered public accounting firm, as a matter of
good corporate governance, the Board is requesting that stockholders ratify the
selection of KPMG LLP as our independent registered public accounting firm for
the fiscal year ending December 31, 2017.
The affirmative vote of a majority of the
shares present or represented and entitled to vote either in person or by proxy
is required to approve this Proposal IV. Abstentions and broker non-votes will
not impact the outcome of the vote on this proposal.
Our Board recommends that the
stockholders vote “FOR” the ratification of the appointment of KPMG
LLP.
47
Table of
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|
STOCKHOLDER PROPOSALS FOR THE 2018 ANNUAL
MEETING
|
Stockholder proposals intended for
consideration for inclusion in our proxy statement for the 2018 Annual Meeting
must be forwarded in writing and received at our principal executive office at
1875 Explorer Street, Suite 800, Reston, Virginia 20190 no later than December
20, 2017, directed to the attention of our Vice President, General Counsel and
Secretary. Moreover, with respect to any proposal by a stockholder not seeking
to have a proposal included in our proxy statement but seeking to have a
proposal considered at the 2018 Annual Meeting, the stockholder must notify our
Vice President, General Counsel and Secretary in the manner set forth above
before March 10, 2018. With respect to proposals in this latter category, the
persons who are appointed as proxies may exercise their discretionary voting
authority with respect to that proposal, if the proposal is considered at the
2018 Annual Meeting, even if stockholders have not been advised of the proposal
in the proxy statement for the 2018 Annual Meeting. Any proposals submitted by
stockholders must comply in all respects with the rules and regulations of the
SEC then in effect and Delaware law and our Fifth Amended and Restated Bylaws.
Additional details regarding the process to be followed by stockholders wishing
to make a proposal are included in the Company’s Fifth Amended and Restated
Bylaws, which are available on the Investor Relations page of our website at
www.nii.com
.
48
Table of
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To assure your representation and a quorum
for the transaction of business at the Annual Meeting, we urge you to please
complete, sign, date and return the enclosed proxy card promptly or otherwise
vote by using the toll free number or visiting the website listed on the proxy
card if you are eligible to do so.
OUR ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2016, INCLUDING FINANCIAL STATEMENTS, IS BEING
MAILED TO STOCKHOLDERS WITH THIS PROXY STATEMENT. ADDITIONAL COPIES OF OUR
ANNUAL REPORT ON FORM 10-K MAY BE OBTAINED WITHOUT CHARGE BY: (1) WRITING TO NII
HOLDINGS, INC., 1875 EXPLORER STREET, SUITE 800, RESTON, VIRGINIA 20190,
ATTENTION: VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY, OR (2) BY CONTACTING
OUR INVESTOR RELATIONS DEPARTMENT AT 703-547-5209. THE ANNUAL REPORT IS NOT PART
OF THE PROXY SOLICITATION MATERIALS.
49
Table of Contents
NII HOLDINGS,
INC.
1875 EXPLORER STREET, SUITE
800
RESTON, VA 20190
VOTE BY INTERNET - www.proxyvote.com
Use the
Internet to transmit your voting instructions and for electronic delivery of
information up until 11:59 P.M. Eastern Time the day before the meeting date.
Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting
instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY
MATERIALS
If you would like to reduce the
costs incurred by our company in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using the Internet and, when
prompted, indicate that you agree to receive or access proxy materials
electronically in future years.
VOTE BY PHONE -
1-800-690-6903
Use any touch-tone
telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time
the day before the meeting date. Have your proxy card in hand when you call and
then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY
11717.
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TO VOTE, MARK
BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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KEEP THIS PORTION FOR YOUR
RECORDS
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DETACH AND RETURN THIS
PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED.
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The Board of Directors recommends
you vote FOR
the following nominees:
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1.
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Election of Directors
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Nominees
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For
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Against
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Abstain
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1A
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Kevin L. Beebe
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☐
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☐
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☐
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1B
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James V. Continenza
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☐
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☐
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☐
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1C
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Howard S. Hoffmann
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☐
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☐
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☐
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1D
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Ricardo Knoepfelmacher
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☐
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☐
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☐
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1E
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Christopher T. Rogers
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☐
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☐
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☐
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1F
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Robert A. Schriesheim
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☐
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☐
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☐
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1G
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Steven M. Shindler
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☐
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☐
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☐
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For address
change/comments, mark here.
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☐
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(see reverse for
instructions)
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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 partnership,
please sign in full corporate or partnership name, by authorized
officer.
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The Board of Directors
recommends you vote FOR proposals 2 and 3:
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For
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Against
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Abstain
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2
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Advisory Vote to approve Executive
Compensation.
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☐
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☐
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☐
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3
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Ratification of KPMG LLP as our Independent
Registered Public Accounting Firm for fiscal year 2017.
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☐
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☐
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☐
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NOTE:
Such other business as may
properly come before the meeting or any adjournment thereof.
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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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Table of Contents
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Important
Notice Regarding the Availability of Proxy Materials for the Annual
Meeting:
|
|
The Proxy Statement and Form 10-K are available at
www.proxyvote.com
|
NII HOLDINGS, INC.
Annual Meeting
of Stockholders
May 24, 2017 10:00 AM
This proxy is solicited by the Board of
Directors
The stockholder(s) hereby appoints Shana
C. Smith and Daniel E. Freiman, or either of them, as proxies, each with the
power to appoint (his/her) substitute, and hereby authorizes them to represent
and to vote, as designated on the reverse side of this ballot, all of the shares
of common stock of NII HOLDINGS, INC. that the stockholder(s) is/are entitled to
vote at the Annual Meeting of Stockholder(s) to be held at 10:00 AM, EDT on May
24, 2017, at 1875 Explorer Street, Suite 800, Reston, VA 20190, and any
adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED,
WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO SUCH DIRECTION IS MADE, THIS
PROXY WILL BE VOTED IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS.
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Address
change/comments:
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(If you noted any Address Changes
and/or Comments above, please mark corresponding box on the reverse
side.)
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Continued and to be signed on reverse
side
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