Sprint - Nextel 2015 Annual Report Download - page 22

Table of Contents
market price of our common stock or terms upon which we issue indebtedness could be adversely affected. In addition, the existence of a controlling stockholder
may have the effect of making it more difficult for a third-party to acquire, or discouraging a third-party from seeking to acquire, the Company. A third-party
would be required to negotiate any such transaction with SoftBank, and the interests of SoftBank with respect to such transaction may be different from the
interests of our other stockholders or with holders of our indebtedness. In addition, the performance of SoftBank and SoftBank’s ordinary shares or speculation
about the possibility of future actions SoftBank may take in connection with us may adversely affect our share price or the trading price of our debt securities.
Subject to limitations in our certificate of incorporation that limit SoftBank’s ability to engage in certain competing businesses in the U.S. or take
advantage of certain corporate opportunities, SoftBank is not restricted from competing with us or otherwise taking for itself or its other affiliates certain corporate
opportunities that may be attractive to the Company.
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.
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