Sprint - Nextel 2013 Annual Report Download - page 81

Table of Contents
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.
The SoftBank Merger was a change in control under the Change in Control Severance Plan; however, on September 17, 2013, our board amended
the plan to modify the definition of “Change in Control” to (i) exclude acquisitions by SoftBank or its controlled affiliates from the change in
control trigger associated with a group (within the meaning of Section 13(d)(3) of the Securities Exchange Act) acquiring 30 percent or more of
the combined voting power of the Company, and (ii) include Sprint Corporation ceasing to have equity securities trading on a national securities
exchange as a change in control trigger. The board also amended the plan to include an “offset” of change in control benefits for pay and
benefits received during any “WARN” notification period to align with such an offset provided in the broad
- based separation plan.
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 stockholders 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 may 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 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 Compensation Committee makes no assurance that such compensation will be fully deductible for federal income tax purposes.
The awards under our 2013 STIC plan and performance
- based RSUs under the 2013 LTIC plan are designed so that they may qualify as "qualified
performance
- based compensation" under Section 162(m), except for those awards to Mr. Johnson due to the terms of his employment agreement.
For the 2013 STIC plan, the Compensation Committee for the first six
- month performance period, and a sub - committee comprised of Messrs. Bethune
and Mullen (the "Section 16 Sub
- Committee") of the Compensation Committee for the second six - month performance period, established Section 162(m)
objectives 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 and Section 16 Sub
- Committee are precluded from exercising upward discretion to the payout achieved under these objectives. The
Section 16 Sub
- Committee exercised its discretion to make payments under the STIC plan at levels below the payout achieved under the Section 162(m)
objectives for both performance periods during 2013 as guided by the performance metrics discussed under "Outcomes for 2013 Incentive Awards—
2013 STIC
Plan." For the performance
- based RSU award for the 2013 LTIC plan, the Section 16 Sub - Committee established a Section 162(m) objective for the named
executive officers potentially subject to Section 162(m) based on cumulative adjusted operating income during a single two
- year performance period of 2014 -
2015. The Section 16 Sub - Committee is precluded from exercising upward discretion to the payout achieved under this objective.
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 stockholders. Our guidelines
encourage our CEO to hold shares
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