Sprint - Nextel 2012 Annual Report Download - page 87

Table of Contents
circumstances, however, the Compensation Committee has determined it necessary in order to retain executives and attract candidates for senior level
positions to offer compensation packages in which the non
- performance - based elements exceed the $1 million Section 162(m) limit.
The awards under our 2012 STIC and LTIC plans are considered performance
- based compensation under Section 162(m), except for a
portion of Mr. Hesse's performance unit award under the LTIC plan due to the limits set under our incentive compensation plan, as well as Mr.
Johnson's award under the STIC plan and his performance
- based RSU award under the LTIC plan due to the terms of his employment agreement.
For the 2012 STIC plan, the Compensation Committee also established an annual Section 162(m) objective for the named executive officers
potentially subject to Section 162(m) at a small fraction of a percentage of our adjusted operating income. The Compensation Committee is precluded
from exercising upward discretion to the payout achieved under this objective. The Compensation Committee exercised its discretion to make
payments under the STIC plan at levels below the payout achieved under the Section 162(m) objective for 2012 as guided by the performance metrics
discussed under "—
2012 Performance —Delivering on the Sprint Turnaround—Phase Two— 2012 STIC Plan."
For the 2012 LTIC plan, the Compensation Committee also established Internal Revenue Code Section 162(m) objectives for the named
executive officers potentially subject to Section 162(m) except for a portion of Mr. Hesse's performance unit award. The Section 162(m) objective for
performance units was a small fraction of a percentage of our adjusted operating income, and for performance
- based restricted stock units was a
required threshold level of adjusted operating income achievement. The Compensation Committee is precluded from exercising upward discretion to
the payout achieved under these objectives.
Clawback Policy
We have a “clawback” policy, which provides that, in addition to any other remedies available to us under applicable law, we may recover
(in whole or in part) any bonus, incentive payment, commission, equity
- based award, or other compensation received by certain executives, including
our named executive officers, if our board or any committee of our board determines that such bonus, incentive payment, commission, equity
- based
award, or other compensation is or was based on any financial results or operating objectives that were impacted by the officer's knowing or
intentional fraudulent or illegal conduct, and recovery is appropriate.
Stock Ownership Guidelines
We have stock ownership guidelines for our named executive officers and other members of our senior management team. The board
believes ownership by executives of a meaningful financial stake in our Company serves to align executives' interests with those of our shareholders.
Our guidelines encourage our CEO to hold shares of our common stock with a value equal to five times his base salary, and that the other named
executive officers hold shares of our common stock with a value equal to three times their respective base salaries. Eligible shares and share
equivalents counted toward ownership consist of:
Persons subject to the stock ownership guidelines have five years beginning on the date on which the person becomes subject to the
ownership guidelines, or until December 31, 2012 if later, to achieve the ownership requirement. Failure to meet the ownership requirement as of such
date results in the requirement to retain 50% of shares received on vesting of restricted stock units and option exercises until the requirement is met.
As of December 31, 2012, all of our named executive officers who have been with the Company for at least five years had met the stock ownership
guidelines.
2012 Shareholder Say
- on - Pay Vote
The Company provides its shareholders with the opportunity to cast an annual advisory vote on named executive officer compensation (a
“say
- on - pay proposal” ). At the Company's annual meeting of shareholders held in May 2012, 81% of the votes cast on the say - on - pay proposal at
that meeting were voted in favor of the proposal. The Compensation Committee considered the 2012 voting results at discussions among its members
during its meetings,
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common or preferred stock, including those purchased through our Employee Stock Purchase Plan;
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restricted stock or RSUs;
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intrinsic value (the excess of the current stock price over the option's exercise price) of vested, in - the - money stock options; and
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share units held in our 401(k) plan and various deferred compensation plans.