Sprint - Nextel 2008 Annual Report Download - page 100

SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
generally must remain employed with us, or continue to serve as a member of our board of directors, until the
restrictions lapse, which is typically three years for employees and one year for directors. The Compensation
Committee of our board of directors, or one or more executive officers should the Compensation Committee so
authorize, as provided in the 2007 Plan, will determine the terms of each equity-based award. No new grants can
be made under the 1997 Program, the Nextel Plan or the MISOP.
During 2009, the number of shares available under the 2007 Plan increased by about 51 million to
approximately 174 million common shares, 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, 2009, restricted stock units and options to acquire about 50 million
shares were outstanding under the 2007 Plan, restricted stock units and options to acquire about 39 million shares
were outstanding under the 1997 Program, options to acquire about 18 million shares were outstanding under the
Nextel Plan and options to acquire about 18 million common shares were outstanding under the MISOP.
Restricted stock units granted in 2008 and 2007 generally have both performance and service
requirements with vesting periods ranging from one to three years. Furthermore, restricted stock units awarded
after the second quarter 2008 through the first quarter 2009 included quarterly performance targets. These
awards, however, were not granted until after the performance targets had been met. Therefore, at the grant date
these awards only had a remaining service requirement and vested six months following the last day of the
applicable quarter. In the fourth quarter 2009, approximately 1 million restricted stock units were granted with
service requirements only and graded vesting over a period of two or three years.
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. These options vested on a monthly basis over
periods of up to four years, and have a contractual term of ten years. Employees were not required to pay for the
nonvested shares; however, they were required to remain employed with us until the restrictions on the shares
lapsed. The nonvested shares generally vested over a service period ranging from several months to four years.
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.
At the time of the VMU acquisition, outstanding VMU restricted stock and restricted stock units, or
nonvested shares, and grants of options to purchase VMU common shares which were awarded under the legacy
VMU Plan were converted into our nonvested shares or options to purchase a number of our common shares
using a ratio of 1.3668, with a corresponding adjustment to the option strike price. These options vest on a
monthly basis over a period of ten to fifteen months, 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 over a defined period of
time until the restrictions on the shares lapse. The nonvested shares generally vest over a service period ranging
from ten months to four years. The VMU Plan is no longer active as a result of the acquisition; however, terms of
the awards remain consistent to those terms at the time the award was received or granted.
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 (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.
Under our ESPP, eligible employees may subscribe quarterly to purchase shares of our Series 1
common stock through payroll deductions of up to 20% of eligible compensation. Effective April 1, 2009 the
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