Sprint - Nextel 2014 Annual Report Download - page 22

Table of Contents
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SoftBank’s ability to eventually control our board of directors may make it difficult for us to recruit independent directors.
For so long as SoftBank and its controlled affiliates hold shares of our common stock representing at least a
majority of the votes entitled to be cast by the holders of our common stock at a stockholders’ meeting, SoftBank will be able
to elect all of the members of our board of directors commencing in July 2016, which is three years following the effective
time of the SoftBank Merger. Further, the interests of SoftBank and our other stockholders may diverge. Under these
circumstances, persons who might otherwise accept an invitation to join our board of directors may decline.
Any inability to resolve favorably any disputes that may arise between the Company and SoftBank or its affiliates may
adversely affect our business.
Disputes may arise between SoftBank or its affiliates and the Company in a number of areas, including:
• business combinations involving the Company;
• sales or dispositions by SoftBank of all or any portion of its ownership interest in us;
• the nature, quality and pricing of services SoftBank or its affiliates may agree to provide to the Company;
• arrangements with third parties that are exclusionary to SoftBank or its affiliates or the Company; and
• business opportunities that may be attractive to both SoftBank or its affiliates and the Company.
We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable than
if we were dealing with an unaffiliated party.
We are a "controlled company" within the meaning of the NYSE rules and, as a result, rely on exemptions from certain
corporate governance requirements that provide protection to stockholders of companies that are not "controlled
companies."
SoftBank owns more than 50% of the total voting power of our common shares and, accordingly, we have elected
to be treated as a “controlled company” under the NYSE corporate governance standards. As a controlled company, we are
exempt under the NYSE standards from the obligation to comply with certain NYSE corporate governance requirements,
including the requirements:
• that a majority of our board of directors consists of independent directors;
• that we have a corporate governance and nominating committee that is composed entirely of independent
directors with a written charter addressing the committee’s purpose and responsibilities;
• that we have a compensation committee that is composed entirely of independent directors with a written
charter addressing the committee’s purpose and responsibilities; and
• that an annual performance evaluation of the nominating and governance committee and compensation
committee be performed.
As a result of our use of the “controlled company” exemptions, holders of our common stock and debt securities
may not have the same protection afforded to stockholders of companies that are subject to all of the NYSE corporate
governance requirements.
Regulatory authorities have imposed measures to protect national security and classified projects as well as other
conditions that could have an adverse effect on Sprint.
As a precondition to approval of the SoftBank Merger, certain U.S. government agencies required that SoftBank
and Sprint enter into certain agreements, including a National Security Agreement (NSA) under which SoftBank and Sprint
have agreed to implement certain measures to protect national security, certain of which may materially and adversely affect
our operating results due to increasing the cost of compliance with security measures, and limiting our control over certain
U.S. facilities, contracts, personnel, vendor selection, and operations. If we fail to comply with our obligations under the NSA
or other agreements, our ability to operate our business may be adversely effected.
Item 1B. Unresolved Staff Comments
None.