Sprint - Nextel 2012 Annual Report Download - page 77

Table of Contents
objectives most critical to driving our continued financial and operational improvement and long - term shareholder value.
Components of Our Executive Compensation Program
The major components of our executive compensation program are base salary, our short
- term incentive compensation (STIC) plan, and our
long - term incentive compensation (LTIC) plan. The base salary and target opportunities under the STIC and LTIC plans for our named executive
officers in 2012 are listed below.
_________________________________
Numerous changes were made to the primary components of our overall executive compensation program in 2012 to better align with
recognized market “best practices” and to ensure that the program strongly supported our overall business objectives. These changes included:
2012 Performance—
Delivering on the Sprint Turnaround
We continue to execute on our plan to accomplish Sprint's turnaround in three phases: (1) Phase One, the recovery and strengthening of
our business; (2) Phase Two, the investment phase; and (3) Phase Three, margin expansion.
In 2012, we transitioned from the recovery phase to the investment phase which made 2012 perhaps the most pivotal and challenging year
in Sprint's turnaround. There were two dominant headlines for Sprint's executive compensation story in 2012. First, Sprint generated excellent returns
for our stockholders. Sprint's total shareholder return in 2012 of 142% was the second highest among the companies making up the S&P 500.
Accordingly, our executives, who have a significant portion of their incentive compensation tied to Sprint equity, stand to share in future realizable
compensation gains if they remain with Sprint. Second, we set challenging objectives and goals in 2012 as Sprint entered the investment phase of our
turnaround. These included aggressive targets on Network Vision Deployment. As detailed below, not withstanding the progress we made in 2012, the
setting of very aggressive performance goals against these objectives resulted in below target payouts for our performance units and performance
-
based RSUs in our LTIC plan.
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•
Align compensation with shareholder interests by structuring our compensation programs to align executive interests with those of our
shareholders, mitigate the possibility that our executives undertake excessively risky business strategies, and adhere to corporate
governance best practices.
Base Salary
STIC Plan
LTIC Plan
Hesse1
$
853,777
$
2,040,000
$
10,000,000
Euteneuer
$
775,000
$
1,007,500
$
3,500,000
Cowan2
$
725,000
$
906,250
$
2,500,000
Elfman
$
650,000
$
812,500
$
3,250,000
Johnson3
$
540,000
$
540,000
$
1,500,000
(1)
The compensation elements shown for Mr. Hesse in this table reflect the reductions agreed to in his May 4, 2012 letter as previously disclosed in Sprint's Current
Report on Form 8-K filed on May 4, 2012.
(2)
As previously announced, Mr. Cowan left the Company effective January 2, 2013.
(3)
Amounts shown reflect base salary and STIC target opportunity effective June 30, 2012.
•
Adoption of a single three - year performance measurement period in our LTIC plan for 2012 performance units and performance - based
restricted stock units (RSUs) in lieu of three one
- year performance periods as was used in our LTIC plans for 2010 and 2011. This
change emphasized and provided incentives for performance over the long term.
•
Addition of an operational objective to the 2012 LTIC plan to provide incentives for exceptional deployment of Network Vision, Sprint's
multi - year network infrastructure initiative intended to provide subscribers with an enhanced network experience by improving voice
quality, coverage, and data speeds, while enhancing network flexibility, reducing operating costs, and improving environmental
sustainability through the utilization of multiple spectrum bands onto a single multi
- mode base station.
•
Adoption of a single one - year performance measurement period in our STIC plan for 2012 in lieu of two six - month performance periods
as was used in our STIC plans for 2010 and 2011.