Sprint - Nextel 2012 Annual Report Download - page 86

Table of Contents
permitted to have his family accompany him on the corporate aircraft for business and non - business travel.
The Sprint Nextel Change in Control Severance Plan, which we refer to as the CIC plan, provides severance benefits to a select group of
senior executives, including our named executive officers, in the event of a qualified termination of employment in connection with a
transaction that results in a change in control. Any of these benefits payable would be reduced to the extent of any severance benefit
otherwise available under any other applicable policy, program, or plan so that there would be no duplication of benefits. The benefits
upon termination in connection with a change in control to which our named executive officers are entitled, as described in “—Potential
Payments upon Termination of Employment or Change in Control,” are likewise competitive within our peer group.
Tax Deductibility of Compensation
Section 162(m) limits to $1 million the amount of non
- performance - based remuneration that we may deduct from our taxable income in any
tax year with respect to our CEO and the three other most highly compensated executive officers, other than the CFO, at the end of the year. Section
162(m) provides, however, that we may deduct from our taxable income without regard to the $1 million limit the full value of all “qualified performance
-
based compensation.”
Our base salary and perquisites and other personal benefits are not considered “qualified performance
- based compensation” and therefore
are subject to the limit on deductibility. Our STIC plan and LTIC plan awards may be considered “qualified performance
- based compensation” if
certain requirements are met, including among others that the maximum number of stock option or full value share awards and the maximum amount of
other cash performance - based remuneration that may be payable to any one executive officer has been disclosed to and approved by shareholders
prior to the award or payment.
The Compensation Committee considers Section 162(m) deductibility in designing our compensation program and incentive - based
compensation plans. In general, we design our STIC and LTIC plans to be compliant with the performance
- based compensation rules of Section 162(m)
in order to maximize deductibility. In certain
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Executive Severance Policy. Providing severance to our named executive officers helps attract and retain high quality talent by (1)
mitigating the risks associated with leaving their former employer or position and assuming the challenges of a new position with us,
and (2) providing income continuity following an unexpected termination of employment. Under our executive severance policy, our
board will seek shareholder approval for any future severance agreement or arrangement with an executive officer, including our named
executive officers, that provides (a) severance pay in excess of two times the senior executive's base salary plus bonus and
(b) continuation of group health, life insurance, and other benefits in excess of 24 months following the executive's termination. The
policy permits, without shareholder approval: (x) accelerated vesting of RSUs, stock options and any other LTIC plan awards, and
(y) continued vesting during the severance period of any such awards. The policy also requires that we seek shareholder approval of
any future severance agreement or arrangement that provides for the reimbursement of excise taxes imposed under Internal Revenue
Code Section 4999 to a senior level executive. The severance benefits to which our named executive officers are entitled as provided in
the their employment agreements and described in “—Potential Payments upon Termination of Employment or Change in Control,”
allow us to attract and retain a management team and secure our competitive advantage in the event of their departure through
corresponding restrictive covenants.
•
Change in Control. If a transaction that could result in a change in control were under consideration, we expect that our named
executive officers would face uncertainties about how the transaction may affect their continued employment with us. We believe it is in
our shareholders' best interest if our named executive officers remain employed and focused on our business through any transition
period following a change in control and remain independent and objective when considering possible transactions that may be in
shareholders' best interests but possibly result in the termination of their employment. Our change in control benefits accomplish this
goal by providing each eligible named executive officer with a meaningful severance benefit in the event that a change in control occurs
and, within a specified time period of the change in control, his employment is involuntarily terminated without “cause” or voluntarily
terminated for “good reason.”