Sprint - Nextel 2012 Annual Report Download - page 85

Table of Contents
shareholders, is most sensitive to performance against long - term goals. As part of the May 4, 2012 letter previously disclosed in Sprint's Current
Report on Form 8
- K filed on May 4, 2012, Mr. Hesse agreed to forfeit 2 million performance units granted to him on February 22, 2012 under our 2012
LTIC plan. This forfeiture had the effect of rebalancing Mr. Hesse's targeted 2012 LTIC opportunity in the form of performance
- based opportunities as
follows: 66% in performance units, 22% in performance - based RSUs and 12% in non - qualified stock options.
The 2012 LTIC plan continued our prior years' focus on generating cash through establishing a free cash flow performance objective
weighted at 33.4% and a net service revenue performance objective objective weighted at 33.3% and included a new focus on improving the customer
experience through establishing Network Vision deployment as the third objective, also weighted at 33.3%. These metrics were chosen for the 2012 to
2014 performance period because they represent our most critical longer
- term objectives.
Other Compensation Decisions for 2012
2012 Performance Period for the 2010 and 2011 LTIC Plans
In early 2012, the Compensation Committee approved the results for the 2011 performance period of the 2010 and 2011 LTIC plans. In
addition, the Compensation Committee set goals for the 2012 performance period of the Company's 2010 and 2011 LTIC plans with respect to free cash
flow, net service revenue and Network Vision. Please refer to footnotes 2 and 4 of the 2012 Summary Compensation Table and footnotes 3, 5 and 6 of
the “2012 Grants of Plan
- Based Awards” table for a discussion of these awards.
Other Components of Executive Compensation
Our named executive officers' total rewards opportunities consist of a number of other elements important to our compensation philosophy
for 2012 of attracting, retaining, and motivating our named executive officers:
80
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Employee Benefit Plans and Programs. Our compensation program includes a comprehensive array of health and welfare benefits in
which our eligible employees, including our named executive officers, are eligible to participate. We pay all of the costs for some of
these benefit plans, and participants contribute a portion of the cost for other benefit plans.
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Retirement Programs. Our retirement program consists of the Sprint Nextel 401(k) Plan, which provides participants, with our help of a
profit
- sharing matching contribution opportunity and, continuing from 2011, a fixed matching contribution on up to 2% of eligible
compensation, an opportunity to build financial security for their future. The amount of any matching contributions made by us to
participating named executive officers is included in the “All Other Compensation” column of the 2012 Summary Compensation Table.
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Deferred Compensation. Certain employees, including our named executive officers, are offered the opportunity to participate in the
Sprint Nextel Deferred Compensation Plan, a nonqualified and unfunded plan, under which they may defer to future years the receipt of
certain compensation in addition to that eligible under the 401(k) plan. Participants may elect to defer up to 50% of base salary and 75%
of STIC plan payments. We believe this plan helps attract and retain executives by providing the participant another tax efficient
retirement plan. Participants elect to allocate deferred and any matching contributions among one or more hypothetical investment
options, which include one option that tracks our common stock and other options that track broad
- based bond and equity indices. Our
plan provides for a matching contribution using the same matching contribution percentage as our 401(k) plan of eligible earnings
above the applicable annual limit, which is intended to compensate highly
- compensated employees for limitations placed on our 401(k)
plan by federal tax law. For 2012, Mr. Hesse was the only named executive officer who participated in the Sprint Nextel Deferred
Compensation Plan.
•
Personal Benefits and Perquisites. The limited personal benefits and perquisites that we provide to our named executive officers are
summarized in footnote 6 to the 2012 Summary Compensation Table below. As a result of the recommendations contained in an
independent third
- party security study, the Compensation Committee established an overall security program for Mr. Hesse. Under the
security program, we currently provide Mr. Hesse with residential security systems and equipment, and he is required to use our aircraft
for business and non
- business travel. We believe these measures ensure the safety of Mr. Hesse and enable him to devote his full
attention to Company business. Mr. Hesse is