Sprint - Nextel 2013 Annual Report Download - page 75

Table of Contents
Payouts under the 2013 STIC plan are capped at 200% of target opportunity. The payout for the second half
- year performance period was computed
by adding the first half
- year performance achievements that were above the 200% payout level for Sprint platform net additions and adjusted EBITDA to the
second half
- year achievement. We outperformed our adjusted EBITDA target for each of the six month periods; however, we underperformed on our
performance objectives set for Sprint platform postpaid subscriber churn and Sprint platform net additions in the second half of 2013, despite having highest
-
ever Sprint platform subscribers at December 31, 2013 of 53.9 million. This occurred at a time of continued modernization of our network, including our expansion
of 4G LTE to more than 200 million people and launching Sprint SparkTM in eleven markets as of December 31, 2013.
2013 LTIC Plan
Our LTIC plan is designed to encourage retention, link payment of performance
- based awards to achievement of financial and operational objectives
critical to our long
- term success, and create commonality of interests between our executives and our stockholders. By dovetailing with the STIC plan, it is also
intended to create balance between short
- term, or annual, performance goals and longer - term objectives that are critical to growing and sustaining stockholder
value. We granted two types of awards under our 2013 LTIC plan:
The Compensation Committee selected the following primary objective to support our efforts with respect to the performance
- based RSUs:
The Compensation Committee selected cumulative adjusted EBITDA as the primary objective in order to emphasize long
- term focus on earnings and
growing subscribers and revenues. Payment on the adjusted EBITDA objective in excess of 150% up to 200% of the targeted opportunity is contingent on
achieving an additional objective of retail net subscriber additions, which includes both prepaid and postpaid additions but excludes wholesale and affiliate
additions. The Compensation Committee believes use of retail net subscriber additions supports Sprint
’ s core focus of growing our subscriber base. Failure to
attain the minimum threshold achievement level on the cumulative adjusted EBITDA performance objective results in forfeiture of the associated opportunity.
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2013 First Half- Year Performance Period
Objective
Weight
Target
Actual Results
Percent Payout
Sprint Platform Postpaid Subscriber Churn
30%
1.87%
1.83%
116.7%
Sprint Platform Net Additions
20%
549,000
989,000
200.0%
Adjusted EBITDA
50%
$2,582 million
$2,782 million
200.0%
First Half- Year Payout
175.01%
2013 Second Half- Year Performance Period
Objective
Weight
Target
Actual Results
Percent Payout
Sprint Platform Postpaid Subscriber Churn
30%
1.88%
2.03%
28.56%
Sprint Platform Net Additions
20%
223,000
(212,000)
0%
Adjusted EBITDA
50%
$2,909 million
$2,930 million
110.53%
Second Half- Year Payout
63.83%
•
Time - based restricted stock units (RSUs)—vest on February 27, 2016.
•
Performance - based RSUs—vest on February 27, 2016, with payout conditioned on achievement of a predetermined performance objective
during a single two
- year performance period of 2014 - 2015.
Priority
Objective
Rationale
Generating Cash
Cumulative adjusted EBITDA
Measures our ability to generate cash and profit, which
are critical to our ability to invest in our business and
service our debt.