Sprint - Nextel 2007 Annual Report Download - page 126

SPRINT NEXTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
During 2007, the number of shares available under the 2007 Plan increased by about 8 million, as the
number of shares available under the 2007 Plan is increased by any shares originally granted under the 1997
Program, the Nextel Plan, or the MISOP that are forfeited, expired, or otherwise terminated. As of December 31,
2007, about 201 million common shares were available under the 2007 Plan.
Under the 1997 Program, we previously had the authority to grant options, restricted shares, restricted stock
units and other equity-based awards to directors and employees. As of December 31, 2007, awards to acquire
about 80 million shares were outstanding under the 1997 Program. Under the 1997 Program, options generally
were granted with an exercise price equal to the market value of the underlying shares on the grant date;
however, the 2005 option awards for certain senior level executives had an exercise price equal to 110% of the
market value of the underlying shares on the grant date. Options granted in 2007 and 2006 generally vest on an
annual basis over three years and have a contractual term of ten years. Options granted before 2006 generally
vest on an annual basis over four years, and also have a contractual term of ten years. In addition, restricted stock
units awarded to certain senior level executives in 2005 and many of the restricted stock units granted in 2006
and 2007 contain performance provisions such as the achievement of defined levels of wireless subscriber
additions, adjusted operating income before depreciation and amortization, cumulative free cash flow from
operations, post-paid wireless subscriber retention and/or other qualitative and quantitative factors. Restricted
stock units granted in 2007 have a three-year performance period and will vest on the third anniversary of the
date of the award. Performance provision achievement for awards prior to 2007 is typically evaluated one year
after grant, at which point we may increase or decrease the number of awards an employee is eligible to receive.
To the extent the performance provisions are achieved, the vesting of any awards that remain outstanding is
subject only to the remaining term of employment or service discussed above. Prior to 2005, restricted shares, or
nonvested shares, were granted to officers and key employees under the 1997 Program.
Under the Nextel Plan, outstanding Nextel deferred shares, or nonvested shares, which constitute an
agreement to deliver shares upon the performance of service over a defined period of time, and grants of options
to purchase Nextel common shares were converted at the time of the Sprint-Nextel merger into our nonvested
shares or options to purchase a number of our common shares. As of December 31, 2007, awards to acquire
48 million common shares were outstanding under the Nextel Plan. Options were granted prior to the Sprint-
Nextel merger with an exercise price equal to the market value of the underlying shares on the grant date. These
options vest on a monthly basis over periods of up to four years, and have a contractual term of ten years.
Employees are not required to pay for the nonvested shares; however, they must remain employed with us until
the restrictions on the shares lapse. The nonvested 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 and options granted prior to the
Sprint-Nextel merger as a result of the Sprint-Nextel merger.
Under the MISOP, we granted stock options to employees eligible to receive annual incentive
compensation. Eligible employees could elect to receive stock options in lieu of a portion of their target incentive
under our annual incentive compensation plans. The options generally became exercisable on December 31 of
the year granted and have a maximum contractual term of ten years. Under the MISOP, we also granted stock
options to executives in lieu of long-term incentive compensation, or LTIP-MISOP options. The LTIP-MISOP
options generally became exercisable on the third December 31 following the grant date and have a maximum
term of ten years. MISOP options were granted with exercise prices equal to the market price of the underlying
common stock on the grant date. As of December 31, 2007, options to buy about 30 million common shares were
outstanding under the MISOP.
In connection with the Sprint-Nextel merger, the vesting of certain equity-based awards issued under the
1997 Program, the MISOP and the Nextel Plan was accelerated following the termination of employment of
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