Sprint - Nextel 2013 Annual Report Download - page 78

Table of Contents
added Cisco Systems, Inc., EMC Corporation and Intel Corporation, based on size, business comparability and other relevant factors.
The Compensation Committee does not follow a specific formula in making its pay decisions, but rather uses benchmarks as a frame of reference and
generally targets total compensation at the median of our peer group to reflect our relative position within it. Based on performance against predetermined goals
and changes in total stockholder return over time, this approach results in an opportunity to earn total payouts above median market rates for over
- achievement
and below the median for under
- achievement relative to the peer group. The Compensation Committee exercises its judgment by taking into consideration a
multitude of other important factors such as experience, individual performance, and internal pay equity in setting target compensation levels, but actual
payouts under our variable incentive plans are primarily determined based on formulaic outcomes. With respect to our named executive officers' total targeted
compensation for 2013, excluding Mr. Hesse's retention awards, Messrs. Elfman and Euteneuer were above the median, and the remaining named executive
officers, including our CEO, were below the median for the peer group.
Primary Components of Executive Compensation
Following is a discussion and analysis of the primary elements of our 2013 named executive officer compensation program.
Base Salary
Base salary is designed to attract and retain executives. Our named executive officers' salaries are based on a number of factors, including the nature,
responsibilities and reporting relationships of the position, individual performance of the executive, salary levels for incumbents in comparable positions at peer
companies, as well as other executives within our organization, and experience and tenure of the executive.
Mr. Johnson's base salary was increased to $625,000 in 2013 due to a significant increase in job responsibilities as President, Sprint Retail and Chief
Service and Information Technology Officer. His base salary after the increase remained below median for the peer group.
Short
- Term Incentive Compensation Plan
Our STIC plan is our annual cash bonus plan, which we believe will ultimately result in an increase in stockholder value because our incentives under
it are linked to business objectives that we believe will deliver our long
- term success.
As required under the SoftBank Merger Agreement, the Compensation Committee used two six
- month performance periods for determining the
amount of plan payments under the 2013 STIC plan rather than one annual performance period. Based on performance against stated objectives, our named
executive officers must have been employed through December 31, 2013 in order to be eligible to receive full compensation for the performance period. A
prorated payout is received by employees who are terminated during the year as the result of death, disability, retirement, or involuntary termination without
cause.
In February 2013, the Compensation Committee established financial and operational objectives and their respective weightings and targets for the
first half
- year 2013 performance period, continuing to balance our senior management team's and other plan participants' focus among our most critical financial
and strategic objectives, which remained as growing revenue and earnings while increasing subscriber growth and reducing churn. To that end, the
Compensation Committee established the following objectives and weightings for the first half of 2013:
Following the close of the SoftBank Merger, the Compensation Committee reaffirmed the stated objectives from the first half
- year 2013 performance period by
establishing the same objectives for the second half of 2013.
To further our goal of tying a significant portion of each named executive officer's total annual compensation to our business performance, the STIC
plan provides for a payment equal to the named executive officer's targeted opportunity (set at a percentage of his base salary) only if our actual results meet the
targets.
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adjusted EBITDA, 50%;
•
Sprint platform postpaid subscriber churn, 30%; and
•
Sprint platform net additions, 20%.