Sprint - Nextel 2012 Annual Report Download - page 79

Table of Contents
2012 LTIC Plan
Our LTIC plan is designed to encourage retention, linking payment of performance
- based awards to achievement of financial and
operational objectives critical to our long
- term success, and granting equity awards to directly link executive interests with those of our shareholders.
In 2012, we granted three types of awards under our LTIC plan:
With respect to the performance units and performance
- based RSUs, the Compensation Committee selected objectives to support our
turnaround efforts, including the investment phase, as described below.
Our performance units and performance
- based RSUs granted in 2012 set performance objectives and targets over a single three - year period
covering 2012, 2013 and 2014. However, in 2010 and 2011, our LTIC plan grants of performance units and performance
- based RSUs were allocated one -
third to each of three annual performance periods.
For the 2012 annual performance period for performance units granted in 2010 and 2011, the Compensation Committee approved the
aggregate payout percentage as compared to targeted opportunity for our executives at approximately 71.35%. The Compensation Committee
approved the payout percentage for 2012 for the performance - based RSUs at 66.7%.
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•
Performance units—Each unit has a value of $1.00, and executives earn a cash payout that vests on December 31, 2014 and will be paid
in the 1
st
Quarter of 2015, with cash payouts ranging from 0% to 150% based on achievement of predetermined performance objectives
during a single three
- year performance period of 2012 - 2014.
•
Performance - based RSUs—RSUs vest on the third anniversary of the grant date, with vesting conditioned on achievement of
predetermined performance objectives during a single three
- year performance period of 2012 - 2014.
•
Stock options—Non - qualified stock options vest ratably on each of the three anniversaries of the grant date with an exercise price
equal to the fair market value (closing price on the NYSE) of our stock on the grant date. To determine the number of stock options to be
delivered under the 2012 LTIC plan, we used a Black
- Scholes valuation model discussed below in footnote 3 to the 2012 Summary
Compensation Table.
Priority
Objective
Rationale
Generating Cash
Net service revenue
Measures the degree to which we have grown annual
revenue, which is the key to driving long
- term growth
in profitability.
Free cash flow, which is the cash provided by our
operating activities less the cash used in our investing
activities other than short
- term investments and equity
method investments during the applicable period.
Measures our ability to generate cash, which is critical
to our ability to invest in our business and service our
debt.
Strengthening our Brand
Network Vision Deployment, measured by the number
of Network Vision cell sites on air by the end of the
performance period.
Measures our progress toward enhancing our network
experience for our customers while reducing operating
costs and improving environmental sustainability.