Sprint - Nextel 2013 Annual Report Download - page 74

Table of Contents
network and device technology capable of delivering up to 50
- 60 Mbps peak speeds today with increasing speed potential over time.
The Company also recognized the benefits of leadership continuity in light of the transformative SoftBank Merger and the ongoing execution of our
network modernization plans. As a result, the Company entered into a new employment agreement with Mr. Hesse, which replaced his prior employment
agreement. The agreement provides for a term through July 31, 2018, subject to earlier termination as provided in the agreement. The agreement provides for an
annual base salary of $1,200,000 and participation in our STIC and LTIC plans. Also in 2013, Mr. Hesse was granted a one - time award of 1,733,102 RSUs and
1,733,102 stock options. The RSUs and stock options vest on the fifth anniversary of their grant or, if earlier, upon an involuntary termination without cause or
resignation with good reason, or upon death or disability, and are subject to certain restrictions, including Mr. Hesse
’ s compliance with the restrictive
covenants in his employment agreement and clawback at the discretion of the board of any value related to his knowing or intentional fraudulent or illegal
conduct. These awards were intended to enhance our ability to retain Mr. Hesse's leadership for a minimum period of at least five years during which the
Company plans to undergo a transformative change.
2013 STIC Plan
Our STIC plan is our annual cash incentive plan, which is intended to ensure that annual incentives are tied to the successful achievement of critical
operating and financial objectives that are the leading drivers of sustainable increases in stockholder value. As required under the SoftBank Merger Agreement,
the Compensation Committee used two six
- month performance periods for determining amounts payable under the 2013 STIC plan. The two six - month
performance periods for 2013 provided flexibility to revisit the performance criteria at mid
- year due to the anticipated transformative SoftBank Merger in 2013.
The first performance period was from January 1, 2013 through June 30, 2013, and the second period was from July 1, 2013 through December 31, 2013. The
SoftBank Merger closed on July 10, 2013. Each performance period had discrete performance objectives, and participants generally had to be employed on
December 31, 2013 in order to receive compensation for either period.
The table below summarizes our key priorities in 2013, the metrics selected in support of these priorities, and the rationale for why each was chosen
by the Compensation Committee.
The Compensation Committee approved the effective aggregate payout percentage for the 2013 STIC plan at 118.96% of the target award
opportunity for all eligible employees, including our named executive officers, based on actual performance results. Our 2013 STIC plan objectives, targets, and
actual results are summarized in the tables below.
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Priority
Objective
Rationale
Customer Experience
Sprint platform postpaid subscriber churn, which is a
measure of our ability to retain our subscribers who pay
for their wireless service on a contract basis, typically for
one
- or two - year periods.
Measures the degree to which we retain our most
profitable subscribers.
Strengthening our Brand
Sprint platform net additions, which is a measure of the
new wireless subscribers we gain, net of deactivations.
Measures the degree to which we have attracted new
subscribers to the Sprint brand.
Generating Cash
Adjusted EBITDA, which means Adjusted Operating
Income Before Depreciation and Amortization less
severance, exit costs and other special items. Includes
certain impacts from the SoftBank Merger and Clearwire
Acquisition that were not included in the standalone plan
from which the 2013 STIC targets were established.
Measures our ability to generate cash and profit, which
are critical to our ability to invest in our business and
service our debt.