Sprint - Nextel 2005 Annual Report Download - page 146

SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Under our Restricted Stock Plan, we granted restricted stock to officers and key employees. Employees granted
restricted stock are not required to pay for the shares but must remain employed with us until the restrictions on
the shares lapse. The restricted stock vests at a rate of 33.3% per year on each of the first three anniversaries of
the grant date. No restricted stock was granted in 2005.
Under the Sprint Retention Program, if the employment of a holder of an equity award is involuntarily terminated
other than for cause within one year of the Nextel merger, then unvested equity awards held by that holder for at
least one year at the end of the holders’ severance period will fully vest at that time.
Nextel Incentive Equity Plan
As a result of the Sprint-Nextel merger, outstanding Nextel deferred shares, which constitute an agreement to
transfer shares upon the performance of service over a defined period of time, and grants of options to purchase
shares of Nextel common stock were converted into Sprint Nextel Series 1 deferred shares or options to purchase
a number of shares of Sprint Nextel Series 1 common stock equal to the number of shares of Nextel common
stock subject to the corresponding Nextel options or deferred shares multiplied by 1.3, with a corresponding
adjustment to the option strike price.
The Nextel Incentive Equity Plan, or Nextel Equity Plan, was approved by Nextel’s shareholders before the
Nextel merger. This plan provides for the issuance to directors, officers, employees and consultants of our
common stock (giving effect to the conversion ratio in the merger) upon the exercise or issuance of a variety of
forms of equity rights, including grants of options to purchase stock and deferred shares. As of December 31,
2005, this plan authorized equity-based awards for approximately 132.9 million common shares and 48.5 million
common shares remained available. Typically, nonqualified stock options to purchase stock were granted under
the Nextel Equity Plan, and such options that currently are outstanding generally:
• have been granted at prices equal to or exceeding the market value of the stock on the grant date;
• vest on a monthly basis over periods up to four years; and
• expire ten years from date of grant.
If an option holder’s employment is involuntarily terminated within one year after the effective date of a change
of control of Nextel, or, in the case of specified executives, if the employee terminates their employment for
“good reason” as defined in the plan, then that holder’s unvested options immediately vest or otherwise become
payable, subject to some limits. A change of control was deemed to have occurred as a result of the Sprint-Nextel
merger.
The Nextel Equity Plan also provides for the grant of deferred shares at no cost to selected employees generally
in consideration of future services. These deferred shares generally vest over a service period ranging from
several months to four years. An accelerated vesting schedule may be triggered in the event of a change in
control. Accelerated vesting was triggered with respect to certain deferred shares granted prior to the Sprint-
Nextel merger as a result of the Sprint-Nextel merger.
Employee Stock Purchase Plan
Under our Employees Stock Purchase Plan, or ESPP, eligible employees may subscribe quarterly to purchase
shares of Series 1 common stock through payroll deductions of up to 20% of eligible compensation. The
purchase price is equal to 90% of market value on the last trading day of each quarter. The aggregate number of
shares purchased by an employee may not exceed 9,000 shares or $25,000 of fair market value in any calendar
year, subject to limitations imposed by Section 423 of the Internal Revenue Code.
F-51