def14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
NII HOLDINGS, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
o Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the form or schedule and the date of its
filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
ANNUAL
MEETING OF STOCKHOLDERS
April 1,
2010
Dear Stockholder:
You are cordially invited to attend the 2010 Annual Meeting of
Stockholders of NII Holdings, Inc., which is to be held on
May 11, 2010 at 10:00 a.m. Eastern Time at the
Hyatt Regency Reston, located at 1800 Presidents Street, Reston,
VA 20190
(703-709-1234).
At the Annual Meeting, you will be asked to elect three
directors to serve three-year terms, ratify the appointment of
PricewaterhouseCoopers LLP as our independent registered public
accounting firm for fiscal year 2010 and approve an amendment to
the 2004 Incentive Compensation Plan to increase the authorized
number of shares available for issuance under that plan.
Whether or not you plan to attend, it is important that your
shares be represented and voted at the Annual Meeting. You can
vote by signing, dating, and returning the enclosed proxy card.
Also, eligible stockholders may vote by telephone or over the
Internet. Instructions for using these convenient services are
set forth in the instructions for voting that are attached to
the enclosed proxy card or voting instruction. Beneficial owners
of shares of our common stock held in street name should follow
the enclosed instructions for voting their shares. I hope you
will be able to attend the Annual Meeting, but even if you
cannot, please vote your shares as promptly as possible.
In addition, we invite you to view our 2009 electronic annual
report at
http://www.nii.com/investor_relations/2009
annual_report.pdf, which will be available starting on
May 11, 2010.
Sincerely,
Steven M. Shindler
Chairman of the Board of Directors
NII
Holdings, Inc.
1875 Explorer Street, 10th Floor
Reston, VA 20190
www.nii.com
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
MAY 11, 2010
We will hold the Annual Meeting of Stockholders of NII Holdings,
Inc. (the Company or NII Holdings) on
May 11, 2010, at 10:00 a.m. Eastern Time at the
Hyatt Regency Reston, located at 1800 Presidents Street, Reston,
VA 20190
(703-709-1234).
The purpose of the Annual Meeting is to consider and take
action on the following:
1. Election of three directors, Steven P. Dussek, Donald
Guthrie and Steven M. Shindler, each for a three-year term
ending 2013;
2. Ratification of the appointment of
PricewaterhouseCoopers LLP as the Companys independent
registered public accounting firm for fiscal year 2010;
3. Approval of an amendment to the 2004 Incentive
Compensation Plan to increase the authorized number of shares
available for issuance under that plan; and
4. Any other business that properly comes before the Annual
Meeting and any adjournments thereof.
The Board of Directors recommends that you vote FOR the
three nominees for director, FOR the ratification of the
appointment of PricewaterhouseCoopers LLP as the Companys
independent registered public accounting firm and FOR the
approval of the amendment to the 2004 Incentive Compensation
Plan.
Only stockholders of record as of March 19, 2010 can vote
at the Annual Meeting.
By Order of the Board of Directors,
Steven M. Shindler
Chairman of the Board of Directors
April 1, 2010
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 11,
2010.
The proxy statement and the Companys annual report on
Form 10-K
for the fiscal year ended December 31, 2009 are available
at www.edocumentview.com/nihd.
* *
*
On March 8, 2010, the Company filed a current report on
Form 8-K
with the Securities and Exchange Commission solely for the
purpose of providing condensed consolidating financial
information in a new footnote 14 to the financial statements
included in the Companys annual report on
Form 10-K
for the fiscal year ended December 31, 2009. The
consolidating financial information was added in connection with
the registration of certain senior notes issued by NII Capital
Corp. and guaranteed by the Company and certain of its
subsidiaries, and no other changes were made to the financial
statements. This
Form 8-K
is available at www.sec.gov.
TABLE OF
CONTENTS
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GENERAL
INFORMATION ABOUT PROXIES AND VOTING
Date,
Time and Place
These proxy materials are delivered in connection with the
solicitation by our board of directors of proxies to be voted at
our annual meeting, which is to be held at the Hyatt Regency
Reston, located at 1800 Presidents Street, Reston, VA 20190 at
10:00 a.m. Eastern Time on Tuesday, May 11, 2010
(the Annual Meeting). On or about April 2,
2010, we commenced mailing this proxy statement and the enclosed
form of proxy to our stockholders entitled to vote at the
meeting.
Purpose
of the Annual Meeting
At the annual meeting, stockholders will be asked to:
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elect three directors to serve for a term of three years
(Item 1 on the proxy card);
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ratify the appointment of PricewaterhouseCoopers LLP as our
independent registered public accounting firm for fiscal year
2010 (Item 2 on the proxy card);
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approve an amendment to the 2004 Incentive Compensation Plan to
increase the authorized number of shares available for issuance
under that plan (Item 3 on the proxy card); and
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take action on any other business that properly comes before the
meeting and any adjournment or postponement of the meeting.
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Solicitation,
Use and Revocation of Proxies
Our Board of Directors solicits the accompanying proxy for use
at the Annual Meeting. Giving your proxy means that you
authorize the persons indicated on the proxy card to vote your
shares at the Annual Meeting in the manner you direct. If you
sign, date and return the enclosed proxy card but do not specify
how to vote, your shares will be voted (1) for the election
of the nominees designated below to serve for three-year terms
ending 2013, (2) for ratification of the appointment of
PricewaterhouseCoopers LLP as the Companys independent
registered public accounting firm for fiscal year 2010,
(3) for the amendment to the 2004 Incentive Compensation
Plan; and (4) at the discretion of the persons indicated on
the proxy card, on all other matters that may properly come
before the Annual Meeting or any adjournments thereof. A
stockholder has the power to revoke his or her proxy or change
his or her vote at any time before the proxy is voted at the
Annual Meeting. You can revoke your proxy or change your vote in
one of four ways:
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you can send a signed written notice of revocation to our
corporate secretary (at the address noted below) to revoke your
proxy;
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you can send a completed proxy card bearing a later date than
your original proxy to us indicating the change in your vote;
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you can attend the Annual Meeting and vote in person, which will
automatically cancel any proxy previously given; or
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you can revoke your proxy in person at the Annual Meeting, but
attendance at the Annual Meeting alone will not revoke any proxy
that you have given previously.
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If you choose any of the first two methods, you must take the
described action no later than the beginning of the Annual
Meeting. If you choose the third or fourth methods, you may be
asked to present documents for the purpose of establishing your
identity as a NII Holdings stockholder. Before the Annual
Meeting, any written notice of revocation should be sent to NII
Holdings, Inc., 1875 Explorer Street, 10th Floor, Reston,
Virginia 20190, Attention: Vice President, General Counsel and
Secretary. Any notice of revocation that is delivered at the
Annual Meeting should be hand delivered to our Vice President,
General Counsel and Secretary before a vote is taken. Once
voting on a particular matter is completed at the Annual
Meeting, you will not be able to revoke your proxy or change
your vote as to that matter. If your shares are held in street
name by a broker, bank or other financial institution, you must
contact that institution to change your vote.
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Stockholders whose shares are registered in the name of a bank
or brokerage firm may be eligible to vote through the Internet
or by telephone. The enclosed proxy card provides instructions
for eligible stockholders. Stockholders who do not own shares
through a broker and stockholders who own shares through a
broker, but whose proxy card does not mention information about
Internet or telephone voting, should complete the enclosed paper
proxy card and return it in the enclosed postage-paid envelope.
Signing and returning the proxy card or submitting the proxy via
the Internet or by telephone does not affect your right to
revoke your proxy or to vote in person at the Annual Meeting.
The cost of soliciting proxies for the Annual Meeting will be
borne by us. We have hired Georgeson Inc. to help us send out
the proxy materials and solicit proxies on behalf of the Board
of Directors. Georgesons fee for this service is $7,500
plus expenses. In addition, certain of our officers and regular
employees, without additional compensation, may use their
personal efforts, by telephone or otherwise, to obtain proxies.
We may also reimburse banks, brokerage firms and other
custodians, nominees and fiduciaries for their reasonable
out-of-pocket
expenses in forwarding proxy materials to the beneficial owners
of shares of common stock.
Every stockholders vote is important. Accordingly, you
should sign, date and return the enclosed proxy card, vote via
the Internet or by telephone, or provide instructions to your
broker or other nominee whether or not you plan to attend the
Annual Meeting in person.
Record
Date, Voting Rights and Outstanding Shares
Our Board of Directors has established the close of business on
March 19, 2010, as the record date for determining
stockholders entitled to receive notice of and to vote on
proposals at the Annual Meeting or any adjournment or
postponement of the Annual Meeting. Only holders of record of
our common stock on the record date are entitled to vote at the
Annual Meeting. Holders of common stock on the record date are
entitled to one vote per share on each matter voted upon at the
Annual Meeting. As of the record date, there were
166,947,684 shares of common stock outstanding. A complete
list of stockholders entitled to vote at the Annual Meeting will
be available for examination at the time and place of the Annual
Meeting.
Quorum,
Voting Requirements and Effect of Abstentions and Broker
Non-Votes
A quorum is necessary for the transaction of business at the
Annual Meeting. A quorum exists when holders of a majority of
the total number of issued and outstanding shares of common
stock that are entitled to vote at the Annual Meeting are
present in person or by proxy. At the Annual Meeting, inspectors
of election will determine the presence of a quorum and tabulate
the results of the voting by stockholders. The inspectors will
treat valid proxies marked abstain or proxies
required to be treated as broker non-votes as
present for purposes of determining whether there is a quorum at
the Annual Meeting. A broker non-vote occurs when a
broker or nominee holding shares for a beneficial owner votes on
one proposal, but does not vote on another proposal because the
broker or nominee does not have discretionary voting power and
has not received instructions from the beneficial owner of the
shares. A broker cannot vote on the election of directors or the
amendment to the 2004 Incentive Compensation Plan without
receiving instructions from the beneficial owner of the shares.
Abstentions with respect to any matter will have the same effect
as a vote against that proposal.
A plurality of the votes of the holders of the common stock
present at the Annual Meeting, in person or represented by
proxy, and entitled to vote on the election of directors, is
required for the election of directors. This means that the
nominees for director who receive the greatest number of votes
cast will be elected. All other matters will require the
approval of a majority of the votes of the record holders
present at the meeting, in person or represented by proxy, and
entitled to vote on such matters.
Management and the Board of Directors are not aware of any
matters to be presented for action at the Annual Meeting other
than the matters stated in the Notice of Annual Meeting of
Stockholders. If any such matter requiring a vote of the
stockholders should properly come before the Annual Meeting,
unless otherwise instructed, it is the intention of the persons
named in the proxy card to vote such proxy in accordance with
their best judgment.
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PROPOSAL I
ELECTION
OF DIRECTORS
General
Our Second Amended and Restated Bylaws set our Board of
Directors at nine members divided into three classes in
accordance with our Certificate of Incorporation, with each
class having three directors. Our Board currently consists of
nine members. The three-year terms of each class are staggered
so that the term of one class expires at each Annual Meeting.
The Board of Directors, upon the recommendation of the Corporate
Governance and Nominating Committee, has nominated Steven P.
Dussek, Donald Guthrie and Steven M. Shindler, each of whom is
an incumbent director, for reelection to the Board for
three-year terms ending 2013.
If any nominee is unable to serve as a director, the persons
named in the enclosed proxy reserve the right to vote for a
lesser number of directors or for a substitute nominee
designated by our Board of Directors, to the extent consistent
with our Restated Certificate of Incorporation and our Second
Amended and Restated Bylaws. All of the nominees listed above
have consented to be nominated and to serve if elected. We do
not expect that any nominee will be unable to serve.
George A. Cope, whose current term expires in 2012, will be
stepping down from our Board of Directors effective May 11,
2010. Although the Board of Directors expects to identify and
elect a new member to fill the vacancy that will result from
Mr. Copes resignation, the Board of Directors has
reduced the number of seats on the Board of Directors as of the
time of our annual meeting to eight in accordance with our
Certificate of Incorporation and our Second Amended and Restated
Bylaws.
In evaluating a director candidate, each of the Corporate
Governance and Nominating Committee and the Board consider
factors that it believes are in the best interests of the
Company and its stockholders, including, but not necessarily
limited to the candidates: professional skills and
experience; ability to represent the interests of the
Companys stockholders; reputation, integrity, commitment
and independence of thought and judgment; independence from the
Company under the Nasdaq listing standards and, as applicable,
the standards for independence established by the Securities and
Exchange Commission; ability to devote sufficient time, energy
and attention to the diligent performance of his or her duties
as a director, taking into account, among other things, service
on other public company boards; and ability to contribute to the
range of talent, skill and expertise appropriate for the Board
of Directors.
Each of our directors brings a strong and unique background and
set of skills to the Board of Directors, giving the Board as a
whole competence and experience in a wide variety of areas,
including:
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experience in senior executive positions in the
telecommunications and other industries and service on the board
of directors of other companies including telecommunications
companies;
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experience in key management and operating roles for large,
complex organizations, including technology and manufacturing
companies, operators of wireless networks and companies with
international operations and, specifically, operations in Latin
America;
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experience serving on other public company boards, including
serving on audit, compensation and other committees responsible
for oversight of corporate governance and related issues;
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experience in managing sales and marketing functions for
companies with international operations, including in Latin
America; and
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experience in financing and capital markets transactions,
including as executives of public companies with responsibility
for capital planning and fund raising; as executives of
investment banks and other financial institutions, including
investment funds and private equity investment firms; and as
investment fund managers.
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The Corporate Governance and Nominating Committee and the Board
of Directors believe that these and the other skills and
experiences brought to the Board of Directors by its members
position the Board of Directors to be able to fulfill its
oversight role and to evaluate and advise management with
respect to a wide variety of matters
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faced by the Company in its business. We have included a brief
description of the experience, qualifications, attributes and
skills that led to the conclusion that each director should
serve on our Board of Directors as part of the directors
biographies below.
Directors
Standing for Reelection To Hold Office Until
2013
Steven P. Dussek, (53), has been a director on the Board
of NII Holdings since 1999 and our chief executive officer since
February 2008. Mr. Dussek served as president and chief
executive officer of Dobson Communications Corporation, a
publicly traded wireless telecommunication company, from April
2005 until AT&T acquired Dobson Communications in November
2007. While NII Holdings was a subsidiary of Nextel
Communications, Inc., Mr. Dussek served as its chief
executive officer and chief operating officer from 1999 until
2000 and as president and chief operating officer from March
1999 until September 1999. From 1996 until 2002, Mr. Dussek
also served in various senior management positions with Nextel
Communications, including as executive vice president and chief
operating officer. From 1995 to 1996, Mr. Dussek served as
vice president and general manager of the northeast region for
the PCS division of AT&T Wireless Services. From 1993 to
1995, Mr. Dussek served as a senior vice president and
chief operating officer of Paging Networks, Inc., a paging
company. Mr. Dussek served on the board of directors of
Dobson Communications from 2006 to 2007.
Mr. Dussek is our chief executive officer and has served in
executive level leadership roles in the telecommunications
industry for nearly 20 years with experience in executive
positions with operators of wireless telecommunications
businesses in the U.S. and internationally. His past
executive roles have included serving as chief executive officer
and chief operating officer of two substantial wireless
operators, both of which were public companies, and service in
executive leadership and director roles for two companies in
turnaround situations, both of which emerged from these
situations as viable entities. Mr. Dussek has international
experience in Latin American markets and an in depth
understanding of the customer service and other issues that
drive a subscriber oriented business, as well as the key
performance measures relevant to the successful operation of a
wireless service provider like the Company. He also has
significant experience in addressing operational matters, such
as the management of employee relations and of relationships
with equipment and other vendors. Mr. Dussek has also
served as a director of a public company and has experience
serving on audit and compensation committees.
Donald Guthrie, (54), has been a director on the Board of
NII Holdings since May 2008. Since February 2006,
Mr. Guthrie has served as a managing director of Trilogy
Equity Partners, a private investment firm. From 1995 to 2005,
he served as vice chairman of the Western Wireless Corporation,
a wireless communications company, where he also served as chief
financial officer from February 1997 to May 1999. From 1995 to
2002, Mr. Guthrie served as vice chairman of VoiceStream
Wireless, a wireless communications company, now
T-Mobile
USA, subsequent to its acquisition by Deutsche Telekom AG. From
1986 to 1995, Mr. Guthrie served as senior vice president
and treasurer of McCaw Cellular and, from 1990 to 1995, as
senior vice president, finance for LIN Broadcasting.
Mr. Guthrie served on the board of directors of Lumera
Corporation from 2004 through 2008.
Mr. Guthrie has been working in the telecommunications
industry for over 20 years serving in a number of executive
leadership roles, including as chief financial officer and in
other positions responsible for capital and strategic planning.
His executive roles have included responsibility for raising
funds in private and public financing transactions in order to
support the development and construction of wireless
communications networks. He understands the key financial and
operating measures used by wireless operators to evaluate the
performance of their business, as well as the measures used by
investors in evaluating investments in, and the performance of,
wireless operators, and has significant experience in the
development and structuring of complex financing arrangements.
His experience ranges from investing in, and assisting in the
development of early stage companies to managing the financial
and strategic functions of complex established
telecommunications companies, including the management of
technology vendor and other relationships that are important to
the Companys success. Mr. Guthrie qualifies as an
audit committee financial expert. He has prior public company
board experience, including audit committee experience.
Steven M. Shindler, (47), has been a director on the
Board of NII Holdings since 1997, chairman of the Board since
2002 and executive chairman since February 2008.
Mr. Shindler served as our chief executive officer from
2000 until February 2008. Mr. Shindler also served as
executive vice president and chief financial officer of Nextel
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Communications from 1996 until 2000. From 1987 to 1996,
Mr. Shindler was an officer with Toronto Dominion Bank, a
bank where he was a managing director in its communications
finance group.
Mr. Shindler, who previously held the position as our chief
executive officer, has served in leadership roles in the
telecommunications and banking industries, including senior
level financial roles for public and private companies. He has
served as our chief executive officer with substantial
experience in operations, marketing, strategy and growth of
organizations and has also served as the chief financial officer
and in other positions responsible for capital planning and
raising funds in private and public financing transactions in
order to support the development and construction of wireless
communications networks. He understands the key financial and
operating measures used by wireless operators to evaluate the
performance of their business, as well as the measures investors
utilize in evaluating investments in, and the performance of,
wireless operators. He has significant experience in the
development and structuring of complex financing arrangements.
Mr. Shindler also has experience in funding
telecommunications companies through his senior role in a
banks telecommunications finance group. He studied
economics and holds a master of business administration
specializing in finance. Mr. Shindlers financial and
leadership experience is enhanced by his active participation on
the board of directors of a nonprofit organization that supports
education in Latin American countries. In addition to experience
in fundraising and fund management activities, his role at the
nonprofit provides Mr. Shindler with invaluable insight
into our markets and target customers.
Our Board of Directors recommends that the holders of
common stock vote FOR incumbent directors Steven P.
Dussek, Donald Guthrie and Steven M. Shindler.
Directors
Not Standing for Reelection To Hold Office Until
2012
Raymond P. Dolan, (52), has served as a director on the
Board of NII Holdings since July 2008. Mr. Dolan most
recently served as chief executive officer of QUALCOMM Flarion
Technologies and senior vice president at QUALCOMM until January
2008. Mr. Dolan had been chairman and chief executive
officer of Flarion Technologies, Inc., a provider of mobile
broadband communications systems, since its inception in 2000
until its acquisition by QUALCOMM in January 2006. From 1996
until May 2000, Mr. Dolan was chief operating officer of
NextWave Telecom. Prior to joining NextWave, he was executive
vice president of marketing for Bell Atlantic/NYNEX Mobile.
Mr. Dolan currently is a director of American Tower
Corporation, a provider of wireless and broadcast communications
infrastructure.
Mr. Dolan has significant experience in the wireless
communications and wireless technology industries, including
executive management and senior leadership positions in charge
of operations, growth and strategy. He has served as the chief
executive officer of a company that developed next generation
broadband wireless communications technologies, has served as
the chief operating officer of an early stage telecommunications
company, has managed the marketing functions of a large public
wireless telecommunications company and has served as an
executive of a distressed company. As a result of his
experience, Mr. Dolan has an in depth understanding of the
customer service and other issues that drive a subscriber
oriented business and the key performance measures relevant to
the successful operation of a wireless service provider. His
experience as the chief executive of a wireless technology
company also provides him with a unique perspective as the Board
of Directors advises management in connection with its
evaluation of available technology solutions as part of its
planned deployment of next generation broadband technologies in
its networks. Mr. Dolan has an engineering background, as
well as a bachelors degree in engineering, holds a master
of business administration and, prior to entering into the
wireless industry, had a distinguished career in the military.
Mr. Dolan also has public and private company board
experience and has served on compensation and corporate
governance committees.
Carolyn Katz, (48), has served as a director on the Board
of NII Holdings since 2002 and is our lead independent director.
Ms. Katz was a principal at Providence Equity Partners, a
private equity firm specializing in media and
telecommunications, from 2000 to 2001. From 1984 to 2000,
Ms. Katz worked for Goldman Sachs, an investment bank, most
recently as managing director. Ms. Katz currently is a
director of American Tower Corporation. Ms. Katz served on
the board of directors of IWO Holdings, Inc., a wireless
telecommunications provider, from 2004 to 2005.
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Ms. Katz has served on our Board of Directors since 2002
and as our lead independent director since 2008, and, as a
result, has significant knowledge relating to the history and
development of our business, the results of our operations and
our capital structure. In her role as lead independent director,
chair of the Audit Committee and member of the Finance
Committee, she has consulted with and advised management
regarding corporate governance matters and regarding strategic
and financing transactions. She has significant investment
banking, financial, and merger and acquisition experience,
including in the telecommunications industry, as a result of her
position as a principal in a private equity firm. She also has
experience with international telecommunications businesses and
emerging market companies in Latin America, Europe and Asia. She
understands the key financial and operating measures used by
wireless operators to evaluate the performance of their
business, as well as the measures investors utilize in
evaluating investments in, and the performance of, wireless
operators, and has significant experience in the development and
structuring of public and private financing for
telecommunications companies. She qualifies as an audit
committee financial expert and has public company board
experience, including serving on audit, finance and corporate
governance committees.
Directors
Not Standing for Reelection To Hold Office Until
2011
Charles M. Herington, (50), has served as a director on
the Board of NII Holdings since 2003. He has been executive vice
president, Latin America and Central and Eastern Europe of Avon
Products, Inc., a global beauty company, since June 2009 and was
executive vice president, Latin America of Avon Products, Inc.
from March 2008 until June 2009 and senior vice president, Latin
America of Avon Products, Inc. from March 2006 until March 2008.
From 1999 to February 2006, he was the president and chief
executive officer of AOL Latin America. From 1997 until 1999, he
served as president of Revlon America Latina. From 1990 through
1997, he held a variety of executive positions with PepsiCo
Restaurants International. Mr. Herington currently serves
as a director of Molson Coors Brewing Company and previously
served on the board of directors of Advo, Inc. from 2004 to 2007.
Mr. Herington has served on our Board of Directors since
2003 and, as a result, has significant knowledge relating to the
history and development of our business, the results of our
operations and our capital structure. As chair of the
Compensation Committee, he has advised management regarding the
structure of our compensation programs and their relationship to
our corporate goals. He has over 25 years of experience in
marketing, brand management and operations in Latin American
countries, including experience as the senior executive
responsible for the operations of a start up internet provider
in Mexico, Brazil, Argentina and Puerto Rico that eventually
became a public company. Mr. Herington has an in depth
understanding of the telecommunications and technology
industries, particularly with respect to operations in Latin
American markets, and has operational experience with companies
that have competed for customers directly with some of the
largest telecommunications companies in Latin America. He is
knowledgeable on the key performance measures that drive our
business, including subscriber acquisition, churn, and cost per
customer addition and has experience in product development,
marketing, and operational issues faced by a subscriber based
business in our markets. Mr. Herington has experience
obtaining financing for an early stage company in Latin America
and served as an executive of a distressed company as it worked
through its successful liquidation. Mr. Herington qualifies
as a financial expert. He has public company board experience
and compensation, audit and corporate governance committee
experience.
Rosendo G. Parra, (50), has served as a director on the
Board of NII Holdings since October 2008. Mr. Parra is a
retired executive of Dell Inc., an international information
technology company, and a founder of Daylight Partners, a
technology-focused venture capital firm, where he has been a
partner since December 2007. From 1993 until his retirement in
2007, Mr. Parra held various executive and senior
management positions at Dell Inc., including senior vice
president for the Home and Small Business Group from June 2006
to April 2007; and senior vice president and general manager,
Dell Americas from April 2002 until June 2006. Mr. Parra
currently serves on the board of directors of Brinker
International, Inc. and PG&E Corporation.
Mr. Parra has served in senior leadership roles at Dell
Inc., a large, international public company, where he obtained
significant sales, manufacturing, marketing, operations, risk
management and strategy experience in Latin America, China,
India, Canada and the United States. He has senior management
experience with companies in the high tech industry with
international operations, and has managed government relations
functions, including groups specializing in the formulation of
strategies and responses to regulation of business activities in
foreign countries. He has experience in managing customer
service and call center operations and has senior leadership
experience
8
with a company with significant business to business operations
and a growing consumer sector focus in Latin America. In
addition, Mr. Parras experience includes strategy,
product marketing and life cycles, as well as customer
development, acquisition and retention in Latin American
markets. He has experience in the technology and wireless
industries and has experience with technology convergence,
including the convergence of smart phones and personal
computers. Through his current work with Daylight Partners,
Mr. Parra has obtained high tech start up and early stage
company experience. Mr. Parra has public and nonprofit
board experience and has experience serving on compensation,
corporate governance and finance committees.
John W. Risner, (50), has served as a director on the
Board of NII Holdings since 2002. He is currently the president
of The Childrens Tumor Foundation, which he joined in
2002. From 1997 to 2002, he served as senior vice
president portfolio manager at AIG/SunAmerica Asset
Management, a money management firm. Prior to that,
Mr. Risner was vice president-senior portfolio manager at
Value Line Asset Management, a money management firm, where he
worked from 1992 to 1997. Mr. Risner currently serves on
the board of directors of Accuride Corporation, a manufacturer
of commercial vehicle components and previously served on the
board of directors of Airgate PCS, a wireless telecommunications
provider, from 2004 to 2005 and UGC Europe Inc., a cable and
telecommunications provider, from 2003 to 2004.
Mr. Risner has served on our Board of Directors since 2002
and as a result, has significant knowledge relating to the
history and development of our business, the results of our
operations and our capital structure. As chair of our Finance
Committee, he has consulted with management regarding the
companys capital structure and funding needs and the terms
of various public and private financing alternatives available
to the Company. He is a chartered financial analyst with
experience in investments in high yield bond assets, convertible
bonds, mortgage backed securities and distressed assets. He
understands the key financial and operating measures used by
investors in evaluating investments in the debt and equity
securities of, and the performance of, wireless operators, and
has significant experience in the development and structuring of
public and private financing transactions. He has experience
with financial statement preparation and analysis, tax matters,
issues relating to restatements of financial statements and
overall GAAP reporting. Mr. Risner also has merger,
takeover, restructuring and bankruptcy experience.
Mr. Risner has lobbying and government relations experience
through work as an executive of a nonprofit organization, and he
currently serves on a committee that advises a congressional
committee responsible for making allocations of medical research
funding. Mr. Risner qualifies as an audit committee
financial expert. He has public and nonprofit board experience
and has experience serving on audit, compensation, finance and
special committees.
GOVERNANCE
OF THE COMPANY
Our business and affairs are managed under the direction of the
Board of Directors in accordance with the Delaware General
Corporation Law and our Restated Certificate of Incorporation
and Second Amended and Restated Bylaws. Members of the Board of
Directors are kept informed of our business through discussions
with management, by reviewing materials provided to them, and by
participating in meetings of the Board of Directors and its
committees. The corporate governance practices that we follow
are summarized below.
Independence
The Board of Directors has determined that seven of its nine
current members are independent as defined by The Nasdaq Stock
Market (Nasdaq) listing standards, including the
following: George A. Cope, Raymond P. Dolan, Donald
Guthrie, Charles M. Herington, Carolyn Katz, Rosendo G. Parra
and John W. Risner. In making that determination, the Board of
Directors did not consider any relationships other than those
described below in Certain Relationships and Related
Transactions. The Audit Committee, Compensation Committee,
and Corporate Governance and Nominating Committee are composed
entirely of independent directors.
Board
Leadership Structure
The positions of Chairman of the Board, which is currently a
non-independent executive position, and principal executive
officer of the Company are currently held by two individuals. We
believe that this allocation of roles strengthens our governance
structure. Our current Chairman of the Board, Steven Shindler,
is a past principal
9
executive officer of NII Holdings. In addition, our Board of
Directors has adopted a policy that establishes the role of lead
director. The lead director is required to be independent as
defined by Nasdaq listing standards. The policy provides that
the lead independent director will be selected annually by all
of the non-management directors. Currently, the lead independent
director selected by the non-management members of the Board is
Carolyn Katz. The responsibilities of the lead independent
director are to promote strong, independent oversight of our
management and affairs. As part of these responsibilities, the
duties of the lead independent director include:
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participating in the development and approval of the agenda for
meetings of the Board of Directors and the schedule and timing
of such meetings;
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assuring the adequacy of the quality, quantity and timeliness of
information provided to non-management directors;
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convening meetings of non-management directors as necessary and
appropriate;
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presiding at meetings of the Board of Directors at which the
chairman is not present;
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recommending to the chairman the retention of advisors and
consultants who report to the Board of Directors;
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serving as principal liaison between the non-management
directors and the chairman;
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assisting with the development, implementation and compliance
with corporate governance policies and practices; and
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recommending the membership of committees of the Board and
committee chairman.
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Separate positions for Chairman of the Board and principal
executive officer, coupled with a lead director that is
independent, provides an efficient and effective leadership
model, fostering clear accountability, differing perspectives
and effective decision-making. In addition, the structure
ensures a strong role for the independent directors in the
oversight of the Company and in establishing priorities and
procedures for the work of the Board.
Risk
Oversight
Our Board of Directors has an active role, as a whole and also
at the committee level, in overseeing the management of the
risks that the Company faces in its business. The Board
regularly reviews information regarding the Companys
results of operations and any related trends and other factors
contributing to or affecting those results, long range strategy,
financial reporting systems and processes, and access to capital
and liquidity, as well as the risks associated with each of
these aspects of the Companys business. The Board of
Directors has also approved a Code of Business Conduct and
Ethics that establishes standards of conduct for employees that
are designed to mitigate risks associated with the
Companys and its employees compliance with legal
requirements, to foster ethical conduct by employees in dealing
with the Company and others and to protect company assets. The
Company requires that all employees receive annual training
relating to the Code of Business Conduct and Ethics and related
policies in order to ensure that employees are familiar with
those standards of conduct and to mitigate the risks associated
with employees failure to meet those standards.
In addition, each of the committees of the Board of Directors is
involved in the assessment of risks relevant to their area of
responsibility and the implementation of actions to address or
mitigate those risks. The types of risks that are considered by
the committees and some of the actions taken to address those
risks include:
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The Compensation Committees oversight of the management of
risks relating to the Companys compensation and benefit
programs, and the retention by the Compensation Committee of an
independent compensation consultant to assist it in satisfying
these oversight responsibilities and to ensure that the
compensation and benefit programs are designed in a manner that
aligns the compensation of executives and other employees with
the interests of the Company and its stockholders.
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The Corporate Governance and Nominating Committees review
of, and implementation of changes to, the Companys
policies relating to corporate governance and related processes,
including the selection and recommendation of individuals
nominated to our Board of Directors in an effort to ensure that
a majority of
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the members of the Board of Directors are independent and have
appropriate skills and experiences necessary to assist the Board
of Directors in its oversight role.
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The Finance Committees review of the Companys
liquidity position and oversight of risks associated with the
Companys access to capital needed to meet its business
plans and risks associated with fluctuations in interest and
foreign currency exchange rates and the strategies used by the
Company to mitigate those risks.
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The Audit Committees oversight and management of risks
related to the Companys investments, its accounting and
financial reporting systems and processes, and its legal and
regulatory compliance. To satisfy these oversight
responsibilities, the Audit Committee meets regularly with our
independent public accounting firm, principal accounting
officer, vice president of internal audit, chief financial
officer, general counsel and management to discuss the risks
faced by the Company and the actions being taken to mitigate
those risks.
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In addition, the Companys internal audit group, which
reports directly to the chairman of the Audit Committee through
the vice president of internal audit, prepares an annual risk
assessment that includes a review of risks related to the
Companys operations and processes, markets and business
environment, as well as risks relating to the availability and
reliability of information used by management in its decision
making. Based on this risk assessment, the internal audit group
makes a recommendation to the Audit Committee concerning an
annual plan for the business activities and processes that will
be reviewed and analyzed during the year. The Audit Committee
approves the risk assessment and annual review plan to be
carried out by the internal audit group and receives detailed
reports concerning the results of each review conducted by the
internal audit group, including recommendations made to address
risks that are identified. The Audit Committee also receives
quarterly updates concerning the status and outcome of the
reviews conducted by the internal audit group pursuant to the
annual review plan and the status of actions taken by management
to mitigate risks identified in the reviews.
While each of the committees of our Board is responsible for
evaluating certain risks and overseeing the management of such
risks, the entire Board of Directors is regularly informed
through committee reports about risks, our risk assessment and
the internal audit groups annual review plan.
Code of
Ethics
The Board of Directors has approved a Code of Business Conduct
and Ethics for our directors, chief executive officer, chief
financial officer, principal financial and accounting officers,
officers and employees, and each of our subsidiaries and
controlled affiliates. The Code of Business Conduct and Ethics
addresses such topics as protection and proper use of our
assets, compliance with applicable laws and regulations,
accuracy and preservation of records, accounting and financial
reporting, conflicts of interest and insider trading. A current
copy of our Code of Business Conduct and Ethics may be viewed
free of charge on the Investor Relations link of our website at
the following address: www.nii.com and may also be
obtained by writing to us at NII Holdings, Inc., 1875 Explorer
Street, 10th Floor, Reston, Virginia 20190, Attention: Investor
Relations.
Only the Board of Directors or the Audit Committee may consider
a waiver of the Code of Business Conduct and Ethics for an
executive officer or director. If a provision of the Code of
Business Conduct and Ethics is materially modified, or if a
waiver of the Code of Business Conduct and Ethics is granted to
a director or executive officer, we will post a notice of such
action on the Investor Relations link of our website at the
following address: www.nii.com.
Meeting
Attendance
Board
and Committee Meetings
During 2009, our Board of Directors held 12 meetings and each
member of the Board of Directors attended over 75% of the
aggregate meetings of the Board of Directors and the committees
on which they served. In addition to attending meetings,
directors also fulfill their responsibilities by meeting or
communicating informally with one another regarding matters of
interest or concern to us, by attending, in person or
telephonically, sessions at which they are briefed about the
status of particular matters, by review of our reports to
directors, by visits to our facilities,
11
and by correspondence and telephone conferences with our
executive officers and others regarding matters of interest and
concern to us.
Annual
Meeting of Stockholders
We encourage members of the Board of Directors to attend the
Annual Meeting. Each of the directors then serving on the Board
of Directors attended the 2009 Annual Meeting of Stockholders.
Executive
Sessions of the Board
It is the practice of our Board of Directors to have executive
sessions where non-employee directors meet in conjunction with
each regularly scheduled meeting of the Board of Directors.
During these executive sessions, directors can discuss matters
of interest and concern and meet with and question our employees
outside the presence of employee directors and other members of
management.
Committees
of the Board
The standing committees of the Board of Directors are the Audit
Committee, the Compensation Committee, the Finance Committee and
the Corporate Governance and Nominating Committee. Membership on
the Board of Directors and each standing committee, as of
April 2, 2010, was as follows:
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Corporate
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Governance &
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Name
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Board
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Audit
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Compensation
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Nominating
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Finance
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Steven M. Shindler
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X
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*
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X
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Steven P. Dussek
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X
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George A. Cope
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X
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Raymond P. Dolan
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X
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X
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Donald Guthrie
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X
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X
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X
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Charles M. Herington
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X
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X
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*
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X
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Carolyn Katz
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X
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X
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*
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X
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X
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Rosendo G. Parra
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X
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X
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X
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*
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John W. Risner
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X
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X
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X
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*
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Total Number of Meetings in 2009
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12
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11
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(1)
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6
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1
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11
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* |
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Chairman |
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(1) |
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During 2009, the Audit Committee also held meetings with
PricewaterhouseCoopers LLP, our independent registered public
accounting firm, without employees of the Company present and
meetings with our vice president of internal audit. |
Audit
Committee
The Audit Committee assists the Board of Directors in its
oversight of the quality and integrity of our financial
statements and related disclosures and our accounting, auditing,
and reporting practices. The Audit Committees role
includes discussing with management our processes to manage
business and financial risk, and for compliance with significant
applicable legal, ethical, and regulatory requirements. The
Audit Committee is responsible for the appointment, replacement,
compensation, and oversight of the independent registered public
accounting firm engaged to prepare or issue audit reports on our
financial statements and for the oversight of our internal audit
function. The Audit Committee relies on the expertise and
knowledge of management and the internal auditors in carrying
out its oversight responsibilities. The specific
responsibilities in carrying out the Audit Committees
oversight role are delineated in the written charter adopted by
the Board. A current copy of the Audit Committee Charter may be
viewed free of charge on the Investor Relations link of our
website at the following address: www.nii.com and may
also be obtained by writing to us at NII Holdings, Inc., 1875
Explorer Street, 10th Floor, Reston, Virginia 20190, Attention:
Investor Relations.
12
The Board of Directors, in its business judgment, has determined
that all of the members of the Audit Committee are independent
as defined by regulations of the Securities and Exchange
Commission and the Nasdaq listing standards. The Board of
Directors has also determined that all of the members of the
Audit Committee have sufficient knowledge in financial and
auditing matters to serve on the Audit Committee and that
Carolyn Katz, Donald Guthrie and John Risner each qualifies as
an audit committee financial expert as defined by
regulations of the Securities and Exchange Commission.
The Audit Committee is authorized to engage or consult from time
to time, as appropriate, at our expense, independent legal
counsel and other experts and advisors it considers necessary,
appropriate or advisable in the discharge of its
responsibilities.
Compensation
Committee
The primary responsibilities of the Compensation Committee are
to:
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review and approve the compensation of our chief executive
officer and all other executive officers;
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review and approve executive bonus plan allocations for our
chief executive officer and all other executive officers and
review and approve the bonus plan terms for all other employees;
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oversee and advise the Board of Directors on the adoption of
policies that govern our compensation programs;
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oversee the administration of our equity-based compensation and
other benefit plans;
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approve grants of stock options and stock awards to our
directors, officers and employees under our stock plan;
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produce the report on executive compensation required by the
rules and regulations of the Securities and Exchange
Commission; and
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review the disclosures relating to executive compensation
contained in the Compensation Disclosure and Analysis with
management and recommend that those disclosures be included in
our annual proxy statement.
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The Compensation Committee is authorized to engage or consult
from time to time, as appropriate, at our expense, consultants,
independent legal counsel and other experts and advisors it
considers necessary, appropriate or advisable in the discharge
of its responsibilities. The Compensation Committee operates
under a written charter adopted by the Board. A current copy of
the Compensation Committee Charter may be viewed free of charge
on the Investor Relations link of our website at the following
address: www.nii.com and may also be obtained by writing
to us at NII Holdings, Inc., 1875 Explorer Street, 10th Floor,
Reston, Virginia 20190, Attention: Investor Relations. The Board
of Directors, in its business judgment, has determined that all
of the members of our Compensation Committee are independent, as
defined in the Nasdaq listing standards.
Corporate
Governance and Nominating Committee
On May 12, 2009, the Board of Directors created a new
Corporate Governance and Nominating Committee, expanding the
duties of the prior Nominating Committee to include oversight of
the corporate governance functions of the Board. The Corporate
Governance and Nominating Committee is responsible for promoting
the effective and efficient governance of the Company, including
developing and periodically assessing corporate governance
policies, developing and administering the Board evaluation
process and assisting the Board in the oversight of management
succession planning. The Committee also develops qualifications
for director candidates and recommends to the Board of Directors
persons to serve as our directors and as members of the
Boards committees. The Corporate Governance and Nominating
Committee operates under a written charter adopted by the Board.
A current copy of the Corporate Governance and Nominating
Committee Charter may be viewed free of charge on the Investor
Relations link of our website at the following address:
www.nii.com and may also be obtained by writing to us at
NII Holdings, Inc., 1875 Explorer Street, 10th Floor, Reston,
Virginia 20190, Attention: Investor Relations.
13
The Board of Directors, in its business judgment, has determined
that all of the members of the Corporate Governance and
Nominating Committee are independent, as defined in the Nasdaq
listing standards.
The Corporate Governance and Nominating Committee has set forth
guidelines for the evaluation of potential nominees. These
guidelines set forth standards by which potential nominees are
to be evaluated, including, but not necessarily limited to, the
following:
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the prospective nominees professional skills and
experience;
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the ability of the prospective nominee to represent the
interests of our stockholders;
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the prospective nominees reputation, standards of
integrity, commitment and independence of thought and judgment;
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the prospective nominees independence from our company
under the Nasdaq listing standards, and, as applicable, the
standards for independence established by the Securities and
Exchange Commission;
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the prospective nominees ability to dedicate sufficient
time, energy and attention to the diligent performance of his or
her duties as a director, taking into account, among other
things, the prospective nominees service on other public
company boards; and
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the extent to which the prospective nominee contributes to the
range of talent, skill and expertise appropriate for the Board
of Directors.
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The Corporate Governance and Nominating Committee currently does
not consider diversity, other than diversity of talents, skills
and expertise, in evaluating potential nominees.
It is the policy of the Corporate Governance and Nominating
Committee to consider candidates recommended by stockholders.
Stockholders entitled to vote for the election of directors may
submit candidates for consideration if we receive written
notice, in proper form, for each such recommended nominee. If
the notice is not written and in proper form, then the Corporate
Governance and Nominating Committee cannot consider the nominee.
To be in proper form, the notice must include (1) each
nominees written consent to be named as a nominee and to
serve, if elected, (2) the name and address of the
stockholder making the nomination and evidence of share
ownership pursuant to the requirements of
Rule 14a-8
of the Securities and Exchange Commission relating to
stockholder proposals, and (3) information about the person
nominated for election conforming with the Securities and
Exchange Commissions biographical requirements for
directors. All stockholder nominations should be sent to:
Vice President, General Counsel and Secretary
NII Holdings, Inc.
1875 Explorer Street, 10th Floor
Reston, Virginia 20190
Finance
Committee
The primary responsibilities of the Finance Committee are to
consult with and provide guidance to management with respect to
our capital requirements and financing efforts. The Board of
Directors may also delegate its power to the Finance Committee
to approve the pricing and other terms of various financing
transactions.
Communications
with the Board of Directors
Stockholders may communicate directly with the Board of
Directors. All communications should be directed to our Vice
President, General Counsel and Secretary at the address below
and should prominently indicate on the outside of the envelope
that it is intended for the Board of Directors, or for
non-management directors. If no party is specified, the
communication will be forwarded to the entire Board of
Directors. Each communication intended for the Board of
Directors and received by the Vice President, General Counsel
and Secretary will be forwarded to the specified party following
its clearance through normal security procedures used for
regular mail. The
14
communication will not be opened, but rather will be forwarded
unopened to the intended recipient. Stockholder communications
to the Board of Directors should be sent to:
Vice President, General Counsel and Secretary
NII Holdings, Inc.
1875 Explorer Street, 10th Floor
Reston, Virginia 20190
EXECUTIVE
COMPENSATION
Compensation
Committee Report
The Compensation Committee of the Board of Directors is
responsible for the development, oversight and implementation of
our compensation program for executive officers, including our
executive chairman, chief executive officer, our chief financial
officer and each of our three other most highly compensated
executive officers who earned more than $100,000 in total
compensation for services, who we refer to as the named
executive officers, and in that role annually reviews and
establishes the compensation of our executive officers. The
Compensation Committee is committed to a philosophy that links a
significant portion of each executives compensation to
corporate performance. That philosophy guides the Compensation
Committees discussions and determinations with respect to
executive compensation.
The Compensation Committees primary goals in structuring
compensation for executives are to attract, motivate and retain
qualified and experienced executives and to provide executives
with meaningful and competitive financial rewards for superior
performance. To achieve these goals, the Compensation Committee
seeks to provide a mix of annual and long-term compensation that
will align the short- and long-term interests of our executives
with those of the company and our stockholders. In 2009, the
Compensation Committee approved an executive compensation
program that consisted of base salaries, an annual cash bonus
plan with payouts based on performance against defined targets
and long-term equity incentive awards of stock options and
restricted stock.
A discussion of the principles, objectives, components, analyses
and determinations of the Compensation Committee with respect to
executive compensation are included in the Compensation
Discussion and Analysis that follows this Committee report. The
specific decisions of the Compensation Committee regarding the
compensation of named executive officers are reflected in the
compensation tables and narrative that follow the Compensation
Discussion and Analysis.
The Compensation Committee has reviewed the Compensation
Discussion and Analysis included in this report and discussed it
with our management. Based on this review and discussion, the
Compensation Committee recommended that the Compensation
Discussion and Analysis be included in our annual report on
Form 10-K
for the fiscal year ended December 31, 2009 or proxy
statement for the 2010 annual meeting of stockholders.
Compensation Committee
Charles M. Herington, Chairman
Raymond P. Dolan
Rosendo G. Parra
Compensation
Committee Interlocks and Insider Participation
No member of the Compensation Committee is a current or former
officer of us or any of our subsidiaries. In addition, there are
no compensation committee interlocks with other entities with
respect to any such member.
Compensation
Discussion and Analysis
The Compensation Committee of our Board of Directors annually,
or more frequently, reviews and establishes the salary and other
compensation of our executive officers, including the named
executive officers, and provides oversight of our equity based
compensation programs for other employees.
15
Compensation
Objectives and Philosophy
In making its determinations relating to executive compensation,
the Compensation Committees principal compensation
objectives are to:
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align executive pay with corporate and stockholders
interests;
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recognize individual initiative and achievements;
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attract, motivate and retain highly qualified
executives; and
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create incentives that drive the entire executive management
team to achieve defined common corporate goals.
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To achieve these objectives the Compensation Committee has
followed a philosophy that focuses on an executives total
compensation, including cash and non-cash compensation, and that
links a significant portion of each executives
compensation to corporate performance.
In particular, the Compensation Committee believes that total
compensation for each executive should generally be set at a
level commensurate with the executives and our performance
and comparable to the total compensation paid by a peer group of
companies to executives in similar positions and with similar
levels of experience. The Compensation Committee also believes
that the greater portion of our executives compensation
should be at risk and focused on long-term results. Consistent
with this belief, the base salary and annual bonus components,
which are paid in cash, are generally a relatively smaller
portion, and the long-term equity incentives are a relatively
larger portion, of total compensation than is the case for the
executives employed by the peer companies.
The Compensation Committee generally does not take into account
the potential payments to executives under our severance plans,
including payments that may be made in connection with an
executives termination in connection with a change of
control or in other circumstances as described below in
Severance Plans, when determining total
compensation. The Compensation Committee believes that the terms
of these arrangements are generally consistent with those
offered by similarly situated companies, including our peer
group companies.
Our current compensation program does not provide for the
reduction or recovery of payments and awards made to our
executives in the event that our financial statements were to be
restated in the future in a manner that would have impacted the
size or payment of the award at the time of payment. Under our
current executive compensation program, a significant portion of
the executives overall compensation is in the form of
equity that vests over multiple years. When combined with our
ownership guidelines, which require our executives to accumulate
a significant investment in our common stock over time, our
executives have a very large component of their compensation, as
well as the value of their required investment in the company,
at risk should there be a material restatement of our financial
statements. By using a combination of options and restricted
stock on a
year-over-year
basis, we have further linked the executives to the long-term
success of the stockholders.
Setting
Executive Compensation
When determining each executives total compensation and
mix of compensation components, the Compensation Committee looks
to a number of factors to be sure it is effectively implementing
our executive compensation philosophy. Those factors include the
following:
|
|
|
|
|
our financial and operating performance, measured by attainment
of specific strategic objectives and operating results;
|
|
|
|
the duties, responsibilities and performance of each executive
officer, including the achievement of identified goals for the
year as they pertain to the areas of our operations for which
the executive is personally responsible and accountable;
|
|
|
|
historic cash and equity compensation levels of the executive
and similarly situated executives within the Company; and
|
|
|
|
comparative industry market data, which is used to assess
compensation competitiveness.
|
16
The Compensation Committee also takes into consideration, among
other things, the recommendations made by the chief executive
officer (with respect to the compensation of executives other
than his own), recommendations of our human resources
professionals and the advice and recommendations of the
Compensation Committees executive compensation consultant.
Role of the Compensation Consultant
The Compensation Committee has engaged Mercer Consulting, an
outside global human resources consulting firm, to conduct an
annual review of the Companys executive compensation
program. In connection with its review, Mercer Consulting
advises the Compensation Committee as to the competitiveness of
our executive compensation packages and practices and provides
the Compensation Committee with data relating to total
compensation levels and relative amounts of cash and equity
compensation earned by executives in comparable positions within
the peer group of companies described below, as well as
information regarding industry trends relevant to executive
compensation. Specifically, Mercer Consulting provides the
Compensation Committee with, among other things, the following
analyses that assess the competitiveness of our senior
executives compensation:
|
|
|
|
|
a comparison of our performance with that of the peer group of
companies over one and three year periods with respect to
several performance measures, including revenues, revenue
growth, return on invested capital, return on assets, return on
equity and total stockholder return; and
|
|
|
|
a comparison of each named executives cash and non-cash
compensation and total compensation with that of the comparable
executives at the peer group companies over one and three year
periods, including a ranking of each component of the
executives compensation relative to the comparable
executives in the peer group and a comparison of our
executives total compensation relative to that of the
executives in the peer group companies taking into account our
performance in comparison to that of the peer group companies.
|
In making these comparisons, Mercer Consulting utilizes the
reported information included in the peer group companies
public filings with certain adjustments that are designed to
normalize the information for differences in valuation
techniques we use compared to those used by the peer group
companies and differences in the terms of the compensation
arrangements used by the peer group companies. These adjustments
are designed to improve the comparability of our compensation
components with those utilized by the peer group companies.
Use of Comparative Industry Data
With respect to comparative industry data, the Compensation
Committee reviews executive salaries and evaluates the
compensation structures and the financial performance of
comparable companies in a designated peer group established by
the Compensation Committee with assistance from Mercer
Consulting. The peer group is focused principally on high
performing public companies selected from the Nasdaq 100 and
includes those in the telecommunications or related industries
and companies that are similar to us in terms of revenues,
assets or complexity or companies with similar market
capitalization and other characteristics. The Compensation
Committee re-evaluates our peer group companies on an annual
basis. In 2009, the following companies were selected as the
peer group for purposes of collecting comparative industry
market data:
|
|
|
Autodesk Incorporated
|
|
Network Appliance Incorporated
|
Broadcom Corporation
|
|
Patterson Companies, Incorporated
|
Dentsply International Incorporated
|
|
Sandisk Corporation
|
Fastenal Company
|
|
Sigma-Aldrich Corporation
|
IDT Corporation
|
|
Tellabs Incorporated
|
Level 3 Communications, Inc.
|
|
United States Cellular Corporation
|
Marvell Technology Group LTD
|
|
|
The financial performance measures used by the Compensation
Committee to evaluate our performance in comparison to the
performance of the peer group companies include revenues,
revenue growth, return on invested capital, return on assets,
return on equity and total stockholder return.
Determination of Total Compensation and Compensation
Components
The Compensation Committee sets total compensation ranges for
our executive officers based on factors such as the competitive
environment, historic compensation levels of the executive and
similarly situated executives
17
within our Company, individual performance, the compensation
levels contemplated by the Companys annual budget and the
recommendations made by the chief executive officer (with
respect to the compensation of executives other than his own).
Based on these criteria and the financial performance measures
used to evaluate our performance in comparison to the peer group
of companies, the Compensation Committee establishes the total
compensation ranges for each executive based on the ranking of
the Companys performance within, and the comparable
compensation amounts for similarly situated executives within,
the peer group. For 2009, the Compensation Committee targeted
total compensation for our executive officers at the 65th
percentile for comparable positions within our peer group
companies. In some instances, adjustments were made to the total
compensation ranges to take into account the executives
tenure, experience, responsibilities of the position and other
contributions.
Once total compensation ranges are set for executive officers,
the Compensation Committee determines how that compensation will
be allocated among the principal components of our compensation
program, which include:
|
|
|
|
|
base salaries;
|
|
|
|
annual cash incentive payments in the form of annual
bonuses; and
|
|
|
|
long-term equity incentives in the form of restricted stock and
nonqualified stock options.
|
The Compensation Committee allocates the executives total
compensation among components of executive compensation to
strike an appropriate balance between cash and stock
compensation and between short-term and long-term incentives
consistent with our overall philosophy on executive
compensation. This allocation is designed to ensure that a
significant portion of each executives total compensation
is tied to our performance and to the creation of stockholder
value. We differentiate the composition of compensation among
the members of the executive team based on each executives
position and responsibility, with senior executives having a
greater percentage of both their total compensation and cash
compensation tied to corporate performance. Accordingly,
executives with greater roles and responsibilities associated
with achieving our performance targets bear a greater proportion
of the risk if those goals are not achieved and receive a
greater proportion of the reward if our performance targets are
met or surpassed. In addition, as an executives position
and responsibility increases, the long-term incentive
compensation component of the executives compensation
becomes more significant relative to the other components of
compensation because our most senior executives have the
greatest influence on our strategic performance over time.
As a matter of process, the Compensation Committee begins the
allocation of the executives total compensation among the
components of executive compensation by setting base salary and
annual target bonus amounts for each executive. Base salary is
based primarily on historic base salary levels with adjustments
to reflect customary annual increases consistent with our annual
budget for base salary increases, to recognize outstanding
individual performance or expanded duties, or to address changes
in the competitive marketplace. The Compensation Committee also
takes into account the recommendations made by the chief
executive officer regarding the appropriate base salary and
annual target bonus amounts for executives other than his own.
Incremental amounts paid to executives who work outside the
United States pursuant to foreign government required programs
or to compensate them for the additional costs and other
obligations relating to those assignments, such as amounts paid
for security services, housing costs, travel costs and certain
related tax obligations, are not taken into consideration in
determining base salary and are not used in calculating the
annual target bonus amounts as described below or in determining
those executives total compensation.
The annual target bonus amount for each executive officer is
determined by multiplying his or her base salary by the target
bonus percentage applicable to that position. The Compensation
Committee, in consultation with our senior executives, designs
the annual bonus program to provide incentives to achieve the
corporate performance goals established by our Board of
Directors for the year in which the bonus is earned.
Consistent with the Compensation Committees view that the
greater portion of executive compensation should be at risk, the
base salary and annual bonus components are generally a smaller
portion of total compensation for our executives than is the
case for executives within the peer group of companies. As a
result, a relatively greater proportion of our executives
total compensation is allocated to long-term equity incentives.
The resulting increased emphasis on stock option grants is
consistent with our compensation philosophy because stock
options require stock
18
price appreciation in order for executives to realize any
benefit, thus directly aligning executive and stockholder
interests. Restricted stock awards provide a similar alignment
of interests while providing a substantial retention incentive
through their vesting terms.
To determine the amount of the long-term equity incentives for
each executive officer, including grants of restricted stock and
nonqualified stock options, the equity compensation target
amount is calculated by subtracting the cash components of
compensation (i.e., base salary and the target annual
bonus amount) for each executive officer from the total
compensation target range for that executive officer, with the
remaining amount of compensation allocated to long-term equity.
The equity compensation target amount, after deduction of any
amounts attributable to a restricted stock grant made in 2006 as
described in Long-Term Equity Incentives
below, is allocated approximately 25% to restricted stock and
75% to nonqualified stock options with both the restricted stock
and nonqualified options vesting ratably over a three year
period. The number of shares of restricted stock provided to
each executive is determined using the closing value of the
underlying common stock on a specified date chosen for
compensation valuation purposes. The number of shares subject to
grants of nonqualified stock options provided to each executive
officer is then determined by dividing the remaining equity
compensation target amount by the fair market value per option,
which is determined using the Black-Scholes option pricing
model. The number of shares of restricted stock and shares
subject to options is then compared to the annual grants made to
that executive officer in prior years and to the grants proposed
to be made to other executive officers to ensure equity/parity
among similarly situated executives. In the case of executive
officers other than the chief executive officer, the amount of
the long-term equity incentive target and the proposed grants of
restricted stock and options are also reviewed in light of the
recommendations of the chief executive officer with respect to
the proposed grants as described in more detail in
Long-Term Equity Incentives below.
As a result of this process, the sum of the values of
|
|
|
|
|
the base salary of the executive,
|
|
|
|
the target bonus amount for the executive,
|
|
|
|
the value of the restricted stock grants made to the executive
in that year, and, if applicable the value of the portion of
restricted stock grants made in prior years that are
attributable to the year, and
|
|
|
|
the fair market value of the option grant made to the executive
in that year are generally within the total compensation target
range for the executive officer for that year.
|
2009
Executive Compensation
Total Compensation
In April 2009, the Compensation Committee established the total
compensation ranges for our executive officers, including the
named executive officers in this proxy statement, which we refer
to as our 2010 named executive officers. The goal is to
generally align our compensation with that of the comparable
compensation amounts for similarly situated executives within
the peer group of companies with adjustments based on Company
performance and the executives tenure, position, skills,
experience, attainment of goals and other contributions. In
setting the total compensation ranges, the Compensation
Committee evaluated our performance in comparison to the
performance of peer group companies over one and three year
periods with respect to revenues, revenue growth, return on
invested capital, return on assets, return on equity and total
stockholder return. In particular, in making the comparisons
with the peer group, the Committee considered our peer group
ranking for each of these performance measures individually and
in the aggregate.
In making the comparisons of our executive officers
compensation to that of the executives at the peer group
companies, the Compensation Committee took into account both the
overall level of compensation paid to the named executive
officers within the peer group companies and the nature of the
positions held by the executives at the peer group companies in
comparison to the positions held by our named executive
officers. The comparable compensation amounts for the peer group
executives were determined using information reported by the
peer group companies as adjusted and normalized to take into
account differences in valuation techniques we use compared to
19
those used by the peer group companies and differences in the
terms of the compensation arrangements used by the peer group
companies. In situations where the Compensation Committee
determines a comparable position for one of our executives is
not available in our peer group companies, the Compensation
Committee evaluates the total compensation of that executive
based on factors that include the executives performance,
mix of responsibilities and compensation of executives at our
Company with similar levels of responsibility.
In making the 2009 executive compensation decisions, the
Compensation Committee relied primarily on the relative ranking
of our performance compared to the peer group companies using
the performance measures described above, which was at
approximately the 65th percentile of our peer group companies.
Based on that comparison, the Compensation Committee set the
target for the total compensation for each of our executive
officers at the 65th percentile for comparable positions within
our peer group companies, taking into consideration the
Compensation Committees assessment of the individual
performance of each of our executive officers during 2008 and
the economic environment in early 2009.
In allocating the amounts of the different types of compensation
that comprise total compensation, the Compensation Committee
determined that it was prudent in light of the economic
conditions prevailing in early 2009 not to increase the base
salaries of executive officers from 2008 levels and instead
elected to increase the bonus target percentages for the year,
which put more of the executives compensation at risk
based on the Companys performance. In addition, the value
of the 2009 long-term equity grants made to our executive
officers was generally lower than the value attributed to the
2008 grants because the increase in the number of shares subject
to options and restricted stock approved by the Compensation
Committee did not fully offset the decrease in the per option
value of the option grants resulting from the decrease in our
stock price that occurred between the 2008 and 2009 grant dates.
The annual total compensation for 2009 for each of our 2010
named executive officers (effective from April 1, 2009
through March 31, 2010, except as noted below) and the
percentage change from 2008 total compensation based on the fair
values reviewed by the Compensation Committee in April 2009 are
as follows:
|
|
|
|
|
|
|
|
|
|
|
2009 Total
|
|
Percent Change
|
Name and Position
|
|
Compensation(1)
|
|
From 2008
|
|
Steven P. Dussek
|
|
$
|
6,094,995
|
|
|
|
(29.6
|
)%
|
Chief executive officer
|
|
|
|
|
|
|
|
|
Gokul V. Hemmady
|
|
$
|
2,030,100
|
|
|
|
(13.9
|
)%
|
Vice president and
chief financial officer
|
|
|
|
|
|
|
|
|
Sergio
Chaia(2)
|
|
$
|
1,802,508
|
|
|
|
(14.9
|
)%
|
President, Nextel Brazil
|
|
|
|
|
|
|
|
|
Gary D. Begeman
|
|
$
|
1,754,448
|
|
|
|
(12.0
|
)%
|
Vice president, general
counsel and secretary
|
|
|
|
|
|
|
|
|
John M. McMahon
|
|
$
|
1,867,395
|
|
|
|
5.2
|
%
|
Vice president
business operations
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Total Compensation is calculated as the sum of (a) base
salary, (b) the target annual bonus amount for the year
assuming a payout of 100%, (c) the value of the restricted
stock grant made to the executive in the current year based on
the aggregate fair value using the closing price of our common
stock on a date prior to the April 2009 Compensation Committee
meeting computed in accordance with FASB ASC Topic 718,
(d) for Mr. McMahon, the portion of the value of the
restricted stock grant made in 2006 that is not vested and is
attributed to the current year, and (e) the fair market
value of the option awards made during the applicable year
determined using the closing price of our common stock on a date
prior to the April 2009 Compensation Committee meeting and
computed using the Black-Scholes method in accordance with FASB
ASC Topic 718, but disregarding estimated forfeitures related to
service-based vesting conditions and assuming the full life of
the options. Total compensation for 2008 has been computed using
the same formulas, but incorporating the grant date fair values
for the restricted stock and option grants made in 2008 in order
to conform to the methodology used by the Compensation Committee
in 2009. |
20
|
|
|
(2) |
|
Mr. Chaia is employed by Nextel Telecomunicações
Ltda., our indirect, wholly owned subsidiary, which we refer to
as Nextel Brazil, and his salary and annual bonus is paid in
Brazilian Reais. The amounts provided here and on the other
tables in the Compensation Discussion and Analysis section are
based on an exchange rate of 2.34 Brazilian Reais to $1.00 that
was used by the Compensation Committee in April 2009 when making
compensation decisions. The amount provided in the Summary
Compensation Table is the average exchange rate during 2009,
which results in an exchange rate of 2.00 Brazilian Reais to
$1.00. |
In order to provide consistency between companies when doing its
peer group comparisons of total compensation, the Compensation
Committee calculates the value of options for our Company and
the comparison companies assuming the full life of the options,
which, in our case, is ten years, rather than the expected life
of the options used in calculating the values for the Summary
Compensation Table. The use of the full life of the options
generally results in a higher grant date fair value than the
value reflected in the Summary Compensation Table.
The decline in the named executive officers total
compensation reflects the Compensation Committees decision
in light of the Companys performance and economic
conditions prevailing at that time to target the
65th
percentile for comparable positions within our peer group
companies and maintain executive officer base salary at the same
levels as 2008. In addition, the value of the 2009 long-term
equity grants made to our executive officers were generally
lower than the value attributed to the 2008 grants because the
increase in the number of shares subject to options and
restricted stock did not fully offset the decrease in the per
option value of the option grants pursuant to the Black-Scholes
option pricing model, which is affected by the decrease in our
stock price that occurred between the 2008 and 2009 grant dates.
Mr. McMahons total compensation increased due to
adjustments in his annual bonus and long-term incentive equity
made to reflect his increased responsibilities in the
organization and past performance, and due to an increase in the
value of his long-term equity incentive compared to the
long-term equity incentive granted to him in 2008. In 2008, the
long-term equity incentive granted to Mr. McMahon had a
lower value as a result of a decision to grant relatively less
stock options to him in comparison to certain other executives
due to the amount of his recoveries from past grants. In 2009,
Mr. McMahons grant level was comparable to those of
other similarly situated executives in our Company.
As noted above, the 2009 total compensation includes the value
of the restricted stock grant on the date of grant computed in
accordance with FASB ASC Topic 718, and the fair market value of
the option awards made during the applicable year determined on
the date of grant using the Black-Scholes method in accordance
with FASB ASC Topic 718. The compensation amounts actually
realized by the named executive officers with respect to the
stock awards and option awards made to them could vary
significantly from the values reflected in the table above as a
result of, among other things, significant fluctuations in the
market value of our common stock from the values at the date of
grant.
Base Salary
In April 2009, the Compensation Committee determined that it was
prudent in light of the economic conditions at that time not to
increase the base salaries of our executive officers from 2008
levels.
The annual base salaries in 2009 (effective from April 1,
2009 through March 31, 2010) for our named executive
officers and the percentage of total compensation base salaries
represented are as follows:
|
|
|
|
|
|
|
|
|
|
|
2009 Annual
|
|
Percent of Total
|
Name
|
|
Base Salary
|
|
Compensation
|
|
Steven P. Dussek
|
|
$
|
725,000
|
|
|
|
11.9
|
%
|
Gokul V. Hemmady
|
|
$
|
418,000
|
|
|
|
20.6
|
%
|
Sergio Chaia
|
|
$
|
544,872
|
|
|
|
30.2
|
%
|
Gary D. Begeman
|
|
$
|
376,635
|
|
|
|
21.5
|
%
|
John M. McMahon
|
|
$
|
350,819
|
|
|
|
18.8
|
%
|
Annual Bonus
In 2010, cash bonuses were paid to our executive officers for
the achievement of certain corporate financial and operating
targets relating to our 2009 fiscal year (the 2009 Bonus
Plan). In February 2009, the Compensation Committee
determined the criteria relating to our performance that were
used to determine the amounts paid under
21
our 2009 Bonus Plan to all employees eligible for annual bonus
and located at our headquarters. These criteria were
consolidated operating income before depreciation and
amortization, or consolidated OIBDA, consolidated net subscriber
additions and consolidated OIBDA margin, which is the amount
equal to consolidated OIBDA divided by revenues for the year.
For employees who are eligible for annual bonus and responsible
for operations in one or more foreign markets, the criteria
relating to our performance that were used to determine the
amounts paid under the 2009 Bonus Plan were OIBDA, net
subscriber additions and OIBDA margin for the applicable
country, as well as consolidated OIBDA, consolidated net
subscriber additions and consolidated OIBDA margin.
The Compensation Committee believes that the performance
criteria used in our 2009 Bonus Plan strike an appropriate
balance between growth and profitability and mitigate risk to
the Company because actions taken to improve our performance
with respect to one of the criteria would normally be expected
to have a corresponding negative impact on other criteria. For
example, if management were to implement promotional programs
designed to aggressively pursue growth in subscriber additions,
those actions would be expected to increase expenses, resulting
in a potential deterioration in OIBDA and OIBDA margin.
Up to 10% of the target bonus amount was determined based on
individual performance subject to the approval of the
Compensation Committee. Performance goals and the amount of
payout of the individual performance metric for our chief
executive officer were determined by the Compensation Committee.
For our other executive officers, individual performance goals
were established by the chief executive officer, and the chief
executive officer made individual performance payout
recommendations for each executive officer. These
recommendations were reviewed by the Compensation Committee and
taken into account in making the bonus awards for the executive
officers. For 2009, the named executive officers each received a
10% payout for their individual performance metric.
The 2009 Bonus Plan also provides for an adjustment of the
performance targets in the event the average currency exchange
rates are more than 10% above or below levels contemplated in
the budget used to set the performance goals. No payouts were
affected by adjustments made to 2009 bonus payments due to
foreign currency fluctuations.
The targeted bonus criteria amounts for each of
Messrs. Dussek, Hemmady, Begeman and McMahon, the named
executive officers located at headquarters, were as follows
(dollar amounts in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
Subscriber
|
|
|
|
|
|
OIBDA
|
|
|
|
|
|
Individual
|
|
|
|
|
OIBDA
|
|
Weight
|
|
|
Additions
|
|
|
Weight
|
|
|
Margin
|
|
|
Weight
|
|
|
Performance
|
|
|
Weight
|
|
|
$1,257
|
|
|
50%
|
|
|
|
1,385,010
|
|
|
|
30%
|
|
|
|
28.9%
|
|
|
|
10%
|
|
|
|
N/A
|
|
|
|
10%
|
|
The targeted amounts for Mr. Chaia, who is the named
executive officer responsible for our operations in Brazil, were
as follows (dollar amounts in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Country
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cons. Net
|
|
|
|
|
|
Cons.
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
Country
|
|
|
|
|
|
|
|
|
|
|
Cons.
|
|
|
|
|
Subscriber
|
|
|
|
|
|
OIBDA
|
|
|
|
|
|
Country
|
|
|
|
|
|
Subscriber
|
|
|
|
|
|
OIBDA
|
|
|
|
|
|
Ind.
|
|
|
|
|
OIBDA
|
|
Weight
|
|
|
Additions
|
|
|
Weight
|
|
|
Margin
|
|
|
Weight
|
|
|
OIBDA
|
|
|
Weight
|
|
|
Additions
|
|
|
Weight
|
|
|
Margin
|
|
|
Weight
|
|
|
Performance
|
|
|
Weight
|
|
|
$1,257
|
|
|
30%
|
|
|
|
1,385,010
|
|
|
|
15%
|
|
|
|
28.9%
|
|
|
|
5%
|
|
|
|
$396
|
|
|
|
20%
|
|
|
|
625,000
|
|
|
|
15%
|
|
|
|
27.7%
|
|
|
|
5%
|
|
|
|
N/A
|
|
|
|
10%
|
|
The 2009 Bonus Plan was designed to provide incentive bonuses
that would reward executives for superior achievement and be
competitive as compared to bonuses paid by the peer group of
companies established by the Compensation Committee, while being
consistent with the Compensation Committees views on the
appropriate levels of total compensation and the amount of
compensation at risk. The performance measures and the target
amounts used for the 2009 Bonus Plan were initially developed
and recommended by our senior executives based on their
assessment of our 2009 operating and financial goals that were
included in our operating budget for 2009.
The terms of the 2009 Bonus Plan were evaluated by the
Compensation Committee, with the input of Mercer Consulting, in
light of the Compensation Committees overall compensation
philosophy of placing greater weight on the at risk
components of compensation and our short- and long-term
strategies and goals. In addition, as previously discussed, the
Compensation Committee determined that it was prudent in light
of the economic conditions prevailing at that time not to
increase the base salaries of executive officers from 2008
levels and instead to increase the bonus targets, which put more
of the executives compensation at risk based on the
Companys
22
performance. The Compensation Committee determined that 2009
incentive bonuses for the named executive officers should be
targeted at the following percentages of base salary for each of
the named executive officers:
|
|
|
|
|
|
|
|
|
|
|
Target Bonus Percentage of Base Salary
|
Name
|
|
2009
|
|
2008
|
|
Steven P. Dussek
|
|
|
120%
|
|
|
|
100%
|
|
Gokul V. Hemmady
|
|
|
70%
|
|
|
|
60%
|
|
Sergio Chaia
|
|
|
50%
|
|
|
|
40%
|
|
Gary D. Begeman
|
|
|
65%
|
|
|
|
60%
|
|
John M. McMahon
|
|
|
55%
|
|
|
|
50%
|
|
Under the terms of the 2009 Bonus Plan, payouts are adjusted in
one percent increments above and below targets, with total
payouts ranging from 80% to 118% of the target bonus amount
based on the percentage of the specific target performance goals
achieved. The minimum achievement required to qualify for any
bonus payment was 80% of the specified target performance goals
under the 2009 Bonus Plan. The maximum payout of a bonus was
120% of the target bonus amounts for each metric other than
individual performance, which was capped at 100%. In order to
obtain a payout of 120% on a metric, achievement of at least
120% of the specified target performance goal had to be achieved.
To determine bonus amounts earned by our executive officers
during the plan year, the Compensation Committee meets following
the fiscal year end to review our financial and operating
performance as compared to the applicable performance measures
and to discuss performance factors and other criteria related to
the award of bonuses. In some instances, the Compensation
Committee, upon the recommendation of management, makes
adjustments to the bonus payments based on, among other things,
changes in our corporate goals, plans and business conditions
during the course of the bonus plan year if it concludes that
such adjustments are appropriate and are consistent with our
overall goals and strategy. In 2009, the Compensation Committee
approved an adjustment to reflect the costs associated with the
implementation of outsourcing programs designed to enhance our
companys long-term efficiency that were not contemplated
at the time of the approval of the 2009 budget or in setting the
2009 Bonus Plan criteria. The Compensation Committee considers,
but is not bound by, the recommendations of executive officers,
including the chief executive officer, with respect to the
payment or amounts of bonuses to executive officers.
In 2009, the Company achieved on a consolidated basis 96% of the
performance target for OIBDA, 86% of the performance target for
net subscriber additions and 101% of the performance target for
OIBDA margin. Nextel Brazil achieved 120% of its performance
target for OIBDA, 107% of its performance target for net
subscriber additions and 111% of its performance target for
OIBDA margin. Based on these results, and giving effect to the
adjustment approved by the Compensation Committee relating to
the costs associated with the implementation of the outsourcing
programs not contemplated by the 2009 budget or the 2009 Bonus
Plan, and taking into account the individual performance
component of the bonus plan, the named executive officers
bonus payouts under the 2009 Bonus Plan ranged from 94% to 102%
of the target bonus amounts, which were based on predetermined
percentages of base salary as described above. Based on the
foregoing, the bonuses awarded to the named executive officers
with respect to our performance in 2009, the percentage changes
from 2008 and the percentage of total compensation the bonuses
represented were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of
|
|
|
|
|
Percent Change
|
|
Total
|
Name
|
|
2009 Bonus
|
|
From 2008
|
|
Compensation
|
|
Steven P.
Dussek(1)
|
|
$
|
817,800
|
|
|
|
21.4
|
%
|
|
|
13.4
|
%
|
Gokul V. Hemmady
|
|
$
|
275,044
|
|
|
|
8.6
|
%
|
|
|
13.5
|
%
|
Sergio Chaia
|
|
$
|
277,885
|
|
|
|
22.6
|
%
|
|
|
15.4
|
%
|
Gary D. Begeman
|
|
$
|
230,124
|
|
|
|
0.8
|
%
|
|
|
13.1
|
%
|
John M. McMahon
|
|
$
|
181,373
|
|
|
|
2.4
|
%
|
|
|
9.7
|
%
|
23
|
|
|
(1) |
|
Mr. Dusseks bonus award in 2008 reflects the prorated
amount based on his service from February 11, 2008 through
December 31, 2008. The percentage change from 2008
reflected in the table above is calculated as if Mr. Dussek
had been employed for the full year in 2008. |
The Compensation Committee determined that given the economic
environment of early 2009 it was prudent to not increase the
base salaries of executives, but instead to increase the bonus
target percentages. Accordingly, the change in the bonus amounts
paid in 2009 relative to 2008 was primarily due to the increases
in the executive officers change in bonus percentage
targets, which, for all named executive officers other than
Mr. Chaia, were offset by a lower level of bonus
achievement relative to the performance targets in 2009 in
comparison to 2008.
Long-Term Equity Incentives
The Compensation Committee provides equity-based incentives to
executive officers through the 2004 Incentive Compensation Plan,
which permits the grant of stock options, stock appreciation
rights, stock awards, performance stock awards, incentive awards
and stock units. The amount of executive compensation allocated
to long-term equity incentives in 2009 was determined by
subtracting base salary and bonus potential from the total
compensation target range set for each executive officer by the
Compensation Committee, with the remaining amount of
compensation allocated to long-term equity as described below.
Prior to 2009, the Compensation Committee had followed a
practice of making periodic grants of restricted stock as a
retention incentive with the terms of the restricted stock
grants typically providing for the vesting of the grant in full
on the third or fourth anniversary of the date of grant. Under
this methodology, the value of the outstanding restricted stock
grants made to each executive, which was based on the aggregate
value of the underlying common stock on the date of grant, was
allocated ratably over the applicable vesting period with a
portion of that amount attributed to the current year and
subtracted from the equity compensation target amount for the
executive for that year. In 2009, the Compensation Committee
adopted a change from its prior practice of making periodic
grants of restricted stock to an approach under which the
executive officers long-term equity incentives granted on
an annual basis would be allocated between restricted stock and
options that each vest on a pro rata basis over a three year
period from the date of grant. As part of the transition to this
new methodology, and to account for the restricted stock grant
made in 2006 that had not yet fully vested, the Compensation
Committee, in making the compensation determinations for 2009,
also subtracted the amortization of the restricted stock award
made to some of our executive officers in 2006 that was not
fully vested from the total compensation target range in
determining the equity compensation target amounts for those
executive officers. Mr. McMahon is the only named executive
officer who received the 2006 restricted stock grant.
In 2009, the Compensation Committee considered the long-term
equity incentives available under the 2004 Incentive
Compensation Plan and granted restricted stock and nonqualified
stock options to our executive officers, with the long-term
equity incentive target of each executive officer, after
deduction of any amounts attributable to restricted stock grants
made in prior years as described above, allocated approximately
25% to restricted stock and 75% to nonqualified stock options.
Both the restricted stock and stock options vest ratably over a
three year period and vesting is not conditioned on any
individual performance of the executive or on our financial or
operating performance. The 2009 nonqualified stock option grants
expire after ten years. The exercise price of each option is the
closing price of our common stock on the date of grant.
The value of the restricted stock grant is determined by
multiplying the number of shares of restricted stock proposed to
be granted to each executive by the closing price of our common
stock, which is the fair value computed in accordance with FASB
ASC Topic 718. The value of the stock option grant is determined
by multiplying the number of stock options proposed to be
granted to each executive by the value of each option, which is
computed using the Black-Scholes option-pricing model and using
the same assumptions that we use in calculating the compensation
expense attributable to such grants under FASB ASC Topic 718,
except that for purposes of this analysis, we disregard
estimated forfeitures related to service-based vesting
conditions and use the full 10 year term as the expected
life of the options. This is done in order to provide
consistency between companies when the Compensation Committee
conducts its peer group comparisons of total compensation. For
comparison purposes, the Compensation Committee calculates the
value of options for our Company and the comparison companies
assuming the full life of the options, which, in our case, is
ten years, rather than the expected life of the options used
24
in calculating the values for the Summary Compensation Table.
The use of the full life of the options generally results in a
higher grant date fair value than the value computed for the
Summary Compensation Table. The number of shares of restricted
stock and shares subject to options is then compared to the
annual grants made to that executive officer in prior years and
to the grants proposed to be made to other executive officers to
ensure equity/parity among similarly situated executives.
The number of shares of restricted stock and the number of
shares subject to options granted in 2009 to Mr. Dussek,
our chief executive officer, was determined by the Compensation
Committee, with assistance from Mercer Consulting, based, among
other things, on the compensation levels of the chief executive
officers at the peer group companies using a target of the 65th
percentile of the peer group and the value of the proposed
grants as described above. That determination also took into
account the assessment of Mr. Dusseks performance by
the Compensation Committee and other members of our Board of
Directors and historic grant levels, with adjustments to
recognize performance and the expansion of
Mr. Dusseks duties as a result of changes in the
structure of the management team that occurred in 2009.
The number of shares of restricted stock and the number of
shares subject to options granted in 2009 to each executive
officer other than Mr. Dussek was determined by the
Compensation Committee based, among other things, on
recommendations of our chief executive officer. Those
recommendations were developed using the amount of the proposed
long-term equity incentive target for each executive based on
the Compensation Committees recommended target of the 65th
percentile of the peer group, and the value of the grants as
described above. Those recommendations also took into account a
number of factors, including the executives position and
responsibility, the assessment by the chief executive officer of
the executives performance, the historic grant levels with
adjustments to recognize outstanding individual performance or
expanded duties, the competitive environment and the
compensation paid to executives with similar duties at
comparable companies and the budgeted amounts for non-cash
equity compensation. The number of shares of restricted stock
and shares subject to options was also compared to the annual
grants made to that executive officer in prior years and to the
grants proposed to be made to other executive officers to ensure
equity/parity among similarly situated executives.
The annual long-term equity grants provided to each of our named
executive officers and the percentage of total compensation the
2009 long-term equity grants represented based on values
reviewed by the Compensation Committee in April 2009 are as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of 2009
|
|
Value of 2009
|
|
Percent of Total
|
Name
|
|
Stock Option
Grant(1)
|
|
Restricted Stock
Grant(2)
|
|
Compensation
|
|
Steven P. Dussek
|
|
$
|
3,825,000
|
|
|
$
|
674,995
|
|
|
|
73.8
|
%
|
Gokul V. Hemmady
|
|
$
|
967,500
|
|
|
$
|
352,000
|
|
|
|
65.0
|
%
|
Sergio Chaia
|
|
$
|
774,000
|
|
|
$
|
211,200
|
|
|
|
54.7
|
%
|
Gary D. Begeman
|
|
$
|
851,400
|
|
|
$
|
281,600
|
|
|
|
64.6
|
%
|
John M. McMahon
|
|
$
|
890,100
|
|
|
$
|
281,600
|
|
|
|
62.7
|
%
|
|
|
|
(1) |
|
The value of the stock option grant reviewed by the Compensation
Committee is the fair market value of the option awards made
during the applicable year determined using the closing price of
our common stock on a date prior to the April 2009 Compensation
Committee meeting and computed using the Black-Scholes method in
accordance with FASB ASC Topic 718, but disregarding estimated
forfeitures related to service-based vesting conditions and
assuming the full life of the options. |
|
(2) |
|
The value of the restricted stock grant reviewed by the
Compensation Committee is based on the aggregate fair value
using the closing price of our common stock on a date prior to
the April 2009 Compensation Committee meeting computed in
accordance with FASB ASC Topic 718. |
The Compensation Committee believes the increased emphasis on
stock option grants is consistent with our compensation
philosophy because stock options require stock price
appreciation in order for executives to realize any benefit,
thus directly aligning executive and stockholder interests.
Restricted stock awards provide a similar alignment of
interests, while also providing a substantial retention
incentive through their vesting terms. In 2009, the Compensation
Committee changed the grant schedule and vesting period of
restricted stock grants from our prior practice of periodic
grants that typically vested a minimum of three years from the
date of grant to an annual
25
grant of restricted stock that vests on a pro rata basis over a
three year period from the date of grant, making the executive
officers retention incentive more consistent over time.
Timing
of Long-Term Incentive Awards
Our practice with respect to the timing of long-term incentive
awards that we have followed since the approval of the 2004
Equity Plan in April 2004 has been to make grants of
nonqualified stock options
and/or
awards of restricted stock to executive officers once each year
in late April, which had historically coincided with scheduled
meetings of the Board of Directors and various committees,
including the Compensation Committee. Non-employee directors
also typically received annual grants of stock options in
connection with the April board meetings. Awards of stock
options or other equity incentives to new executive officers and
directors occur at the time of the persons appointment or
election as an executive officer or director. In addition, our
chief executive officer may grant, under authority delegated to
him by the Compensation Committee, a limited number of stock
options (not to exceed 10,000 shares in any single grant
and 100,000 shares in the aggregate, with such aggregate
amount subject to renewal by the Compensation Committee from
time to time) to employees who are not executive officers.
Pursuant to the 2004 Equity Plan, the exercise price of all
stock options is not lower than the closing market price of our
stock on the date of grant.
In 2009, grants of nonqualified stock options and restricted
stock to executive officers were made by the Compensation
Committee on April 22, 2009. Non-employee directors serving
on the Board of Directors also received grants of restricted
stock on April 22, 2009. The exercise price of the stock
options was the closing market price on the date of grant.
We also follow a practice of disclosing our financial results
for the first quarter of the fiscal year following the April
Board of Directors meeting at which time those results are
discussed. The 2009 first quarter earnings release was made
publicly available on April 23, 2009. Although the members
of the Compensation Committee were aware of the impending
release of information relating to first quarter results at the
time grants of stock options were made, the Compensation
Committee did not use such information in determining the amount
of the awards to be made to executive officers and directors for
that fiscal year nor did the Compensation Committee withhold the
making of grants to confer a benefit on the recipient of a grant
or avoid a loss in value of a grant.
We are aware that the release of our quarterly financial results
may have an impact on the market price of our common stock, and
therefore the value of the option grant, depending on whether
the information is favorable or unfavorable. However, we believe
that the April Board of Directors meeting is an appropriate time
during the year to make option grants and that a consistent
application of our option granting practices from year to year
regardless of the content of the first quarter earnings release
is also appropriate. As noted above, we have followed this
consistent practice since the 2004 Equity Plan was adopted. The
stock options granted by the Compensation Committee are designed
to create incentives for the creation of long-term stockholder
value and contain delayed vesting provisions that prevent
recipients of stock options from taking advantage of short-term
fluctuations in the market price of our common stock.
We have not planned in the past, nor do we plan in the future,
to time the release of material non-public information for the
purpose of affecting the value of executive compensation. We do
not have a practice of setting the exercise price of options
based on the stock price on any date other than the grant date,
nor do we use a formula or any other method to select a price
based on a period before, after or surrounding the grant date.
Nonqualified stock options are always granted at the closing
price of our common stock on the date of grant.
Executive
Stock Ownership Guidelines
In 2004, we adopted an executive target stock ownership program
that requires our chief executive officer and the executive
officers who report to our chief executive officer to attain
designated stock ownership levels, and therefore maintain a
vested interest in our equity performance. Over a five-year
period, which commenced in 2004 for the individuals who were
executive officers at the time the policy was adopted and which
commences upon the appointment of the individual as an executive
officer for those appointed to those positions after 2004, the
executive officers covered by the program are expected to reach
the targeted ownership levels based on specific share value
targets per executive officer level. The types of stock
ownership that qualify toward the ownership requirement
26
under our policy include direct stock ownership and vested
options where the exercise price is lower than the fair market
value of our common stock and the value of any deferred stock
units held by the executive officer under the Executive Deferral
Plan described below. The penalty for non-compliance of our
policy may include a discontinuation of future equity grants
until compliance is achieved.
As chief executive officer, the executive stock ownership
guidelines require that Mr. Dussek reach a targeted stock
ownership level with a value equal to two times his base salary
by December 31, 2011, a value equal to four times his base
salary by December 31, 2012 and a value equal to five times
his base salary by December 31, 2013. For the remaining
named executive officers, the ownership guidelines require the
executive officer to reach the following targeted minimum stock
ownership levels by the following dates:
|
|
|
|
|
|
|
Name
|
|
1x Base Salary
|
|
2 x Base Salary
|
|
3 x Base Salary
|
|
Gokul V. Hemmady
|
|
December 31, 2010
|
|
December 31, 2011
|
|
December 31, 2012
|
Sergio Chaia
|
|
December 31, 2011
|
|
December 31, 2012
|
|
December 31, 2013
|
Gary D. Begeman
|
|
December 31, 2010
|
|
December 31, 2011
|
|
December 31, 2012
|
John M. McMahon
|
|
December 31, 2005
|
|
December 31, 2007
|
|
December 31, 2009
|
Based on his base salary level paid in 2009 and the closing
price of our common stock on the Nasdaq Global Select Market on
December 31, 2009 of $33.58, Mr. McMahon achieved his
target of $1,052,457 at December 31, 2009, and each of our
other executive officers subject to an ownership target at
December 31, 2009 met their respective targets.
Our corporate policy that applies to trading in our stock by
executive officers restricts the hedging by the named executive
officers of the economic risk of ownership of our common stock.
Tax
Deductibility Under Section 162(m)
Section 162(m) of the Internal Revenue Code imposes a
limitation on the deductibility of nonperformance-based
compensation in excess of $1 million paid to named
executive officers of public companies. As noted above, the
Compensation Committee has implemented a compensation program
that links a substantial portion of each executives
compensation to performance and requires each executive officer
to attain designated stock ownership levels, and therefore
maintain a vested interest in our equity performance, but has
not implemented a policy that limits the amount of compensation
based on the limitations of Section 162(m). We intend to
qualify executive compensation for deductibility under
Section 162(m) if doing so is consistent with our best
interests and the interests of our stockholders. Since our
corporate objectives may not always be consistent with the
requirements of full deductibility, it is conceivable that we
may enter into compensation arrangements in the future under
which payments are not deductible under Section 162(m). We
currently believe that we should be able to continue to manage
our executive compensation program for the named executive
officers to preserve the related federal income tax deductions,
although individual exceptions may occur.
Retirement,
Deferred Compensation and Pension Plans
Our executive officers who are eligible may participate at their
election in our 401(k) retirement savings plan that provides
employees with an opportunity to contribute a portion of their
cash compensation to the plan on a tax-deferred basis to be
invested in specified investment options and distributed upon
their retirement. Consistent with the 401(k) plan, we match 100%
of each employees contributions to the 401(k) plan up to a
maximum of 4% of the employees base salary. The employer
matching contribution vests based on the employees years
of service. Our matching contribution for 2009 for named
executive officers was $29,400 in the aggregate.
We do not have any pension plans. In addition, we have not
adopted a supplemental executive retirement plan or other
excess plan that pays benefits to highly compensated
executives whose salaries exceed the Internal Revenue
Services maximum allowable salary for qualified plans. In
December 2008, the Compensation Committee approved the adoption
of an Executive Deferral Plan, which became effective
January 1, 2009. Under the Executive Deferral Plan,
executives may defer a portion of their compensation with the
amount deferred by a participating executive attributed to a
hypothetical account and treated as if it is invested in
deferred stock units with
27
the value of those units linked to the value of our common
stock. No compensation was deferred by executive officers in
2009. We do not have any other nonqualified deferred
compensation plans.
Severance
Plans
We previously adopted two severance plans that provide for the
payment of severance benefits to employees, including our
executive officers, if their employment is terminated in
specified circumstances. One plan provides for the payment of
severance benefits if the executive officers employment is
terminated without cause for certain reasons and the other plan
provides for the payment of severance benefits if the executive
officers employment is terminated without cause, or if the
executive officer terminates his or her employment with good
reason, in connection with a change of control. The two
severance plans are mutually exclusive. These arrangements have
been in place for several years and were not modified in 2009.
While the Compensation Committee generally does not take into
account the potential payments to executives under our severance
plans, including termination and change of control arrangements,
in performing its annual evaluation of the total compensation
that may be realized by our executive officers, the Compensation
Committee believes that the terms of these arrangements are
generally consistent with those offered by similarly situated
companies including those in the peer group. A description of
the terms of our severance plans, the specific circumstances
that trigger payment of benefits, an estimate of benefits
payable upon the occurrence of those triggering events and other
information relating to such plans can be found below under the
caption Executive Compensation Potential
Payments under Severance Plans.
Annual
Compensation of Executive Officers
Summary
Compensation Table
In the table below and discussion that follows it, we summarize
the compensation earned during 2009 by our chief executive
officer, our chief financial officer, and each of our three
other most highly compensated executive officers who earned more
than $100,000 in total compensation for services rendered in all
capacities during 2009. We refer to these individuals in this
proxy statement as the named executive officers.
Messrs. Chaia and Begeman were not named executive officers
prior to 2009 and Messrs. Dussek and McMahon were not named
executive officers prior to 2008.
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
Compensation
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus(1)
|
|
Awards(2)
|
|
Awards(3)
|
|
Compensation(4)
|
|
Earnings
|
|
Compensation(5)
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
Steven P. Dussek
|
|
|
2009
|
|
|
|
725,000
|
|
|
|
|
|
|
|
686,980
|
|
|
|
3,706,395
|
|
|
|
817,800
|
|
|
|
n/a
|
|
|
|
4
|
|
|
|
5,936,179
|
|
Chief executive officer
|
|
|
2008
|
|
|
|
648,317
|
|
|
|
|
|
|
|
2,569,200
|
|
|
|
3,588,000
|
|
|
|
673,670
|
|
|
|
n/a
|
|
|
|
355,760
|
|
|
|
7,834,947
|
|
Gokul V. Hemmady
|
|
|
2009
|
|
|
|
418,000
|
|
|
|
|
|
|
|
358,250
|
|
|
|
937,500
|
|
|
|
275,044
|
|
|
|
n/a
|
|
|
|
23,272
|
|
|
|
2,012,066
|
|
Vice president and chief
|
|
|
2008
|
|
|
|
413,500
|
|
|
|
|
|
|
|
|
|
|
|
1,570,800
|
|
|
|
253,308
|
|
|
|
n/a
|
|
|
|
132,686
|
|
|
|
2,370,294
|
|
financial officer
|
|
|
2007
|
|
|
|
247,179
|
|
|
|
200,000
|
|
|
|
1,577,400
|
|
|
|
1,496,000
|
|
|
|
167,232
|
|
|
|
n/a
|
|
|
|
4,020
|
|
|
|
3,691,831
|
|
Sergio
Chaia(6)
|
|
|
2009
|
|
|
|
637,500
|
|
|
|
21,795
|
|
|
|
214,950
|
|
|
|
750,000
|
|
|
|
325,125
|
|
|
|
n/a
|
|
|
|
143,587
|
|
|
|
2,092,957
|
|
President, Nextel Brazil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary D. Begeman
|
|
|
2009
|
|
|
|
376,635
|
|
|
|
|
|
|
|
286,600
|
|
|
|
825,000
|
|
|
|
230,124
|
|
|
|
n/a
|
|
|
|
9,800
|
|
|
|
1,728,159
|
|
Vice president, general counsel and secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John M. McMahon
|
|
|
2009
|
|
|
|
350,819
|
|
|
|
|
|
|
|
286,600
|
|
|
|
862,500
|
|
|
|
181,373
|
|
|
|
n/a
|
|
|
|
9,811
|
|
|
|
1,691,104
|
|
Vice president, business
|
|
|
2008
|
|
|
|
346,643
|
|
|
|
|
|
|
|
|
|
|
|
831,600
|
|
|
|
177,164
|
|
|
|
n/a
|
|
|
|
9,200
|
|
|
|
1,364,607
|
|
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Hemmady was hired to serve as our Vice President and
Chief Financial Officer effective May 21, 2007 and received
$200,000 as a sign-on bonus. |
|
|
|
Mr. Chaia received a vacation bonus of $21,795, which is
legally mandated under Brazilian law. |
28
|
|
|
(2) |
|
The amounts in this column reflect the grant date fair value of
awards computed in accordance with stock-based compensation
accounting rules (FASB ASC Topic 718), but disregarding
estimated forfeitures related to service-based vesting
conditions. We value restricted stock awards at the date of
grant based on the number of shares subject to the grant
multiplied by the closing price of our common stock on the date
of grant. Additional information regarding the awards of
restricted common stock to the named executive officers in 2009
is included in the Grants of Plan-Based Awards table below. |
|
(3) |
|
The amounts in this column reflect the grant date fair value of
awards computed in accordance with stock-based compensation
accounting rules (FASB ASC Topic 718) with respect to
awards of options to purchase shares of common stock held by
each of the named executives, but disregarding estimated
forfeitures related to service-based vesting conditions. The
valuation assumptions used in determining these amounts are
described in footnote 10 to our consolidated financial
statements included in our 2009 annual report on
Form 10-K.
Additional information regarding the awards of options to
purchase common stock to the named executive officers in 2009 is
included in the Grants of Plan-Based Awards table below. |
|
(4) |
|
The amounts in this column represent the bonus that we paid
under our annual incentive compensation plan. The bonus is
predicated on a predetermined percentage of base salary based on
achievement of operating unit and/or consolidated performance
goals. Additional information on this non-equity incentive plan
compensation is included in our Compensation Discussion
and Analysis section above. |
|
(5) |
|
Consists of: (a) amounts contributed by us under our 401(k)
plan, (b) in the case of Mr. Chaia, amounts
contributed by Nextel Brazil to the Fundo de Garantia de
Tempo de Serviço, or FGTS, and a private savings plan,
(c) amounts paid in reimbursement of relocation expenses
and relocation-related allowances, (d) perquisites and
other personal benefits, and (e) tax
gross-up
payments made in connection with the foregoing, as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
Company
|
|
|
|
Perquisites
|
|
|
|
|
|
|
Company
|
|
Contributions to
|
|
Contribution to
|
|
Relocation-
|
|
and Other
|
|
|
|
|
|
|
Contributions to
|
|
Brazilian
|
|
Private Savings
|
|
Related
|
|
Personal
|
|
Tax Gross-Up
|
|
|
Year
|
|
401(k) Plan($)
|
|
FGTS($)
|
|
Plan($)(a)
|
|
Expenses($)
|
|
Benefits($)(b)
|
|
Payments($)
|
|
Mr. Dussek
|
|
|
2009
|
|
|
|
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
355,760
|
|
|
|
|
|
|
|
|
|
Mr. Hemmady
|
|
|
2009
|
|
|
|
9,800
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
|
|
|
|
13,444
|
|
|
|
28
|
|
|
|
|
2008
|
|
|
|
9,200
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
123,486
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
4,020
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Chaia
|
|
|
2009
|
|
|
|
n/a
|
|
|
|
51,000
|
|
|
|
31,385
|
|
|
|
|
|
|
|
61,202
|
|
|
|
|
|
Mr. Begeman
|
|
|
2009
|
|
|
|
9,800
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. McMahon
|
|
|
2009
|
|
|
|
9,800
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
|
2008
|
|
|
|
9,200
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Represents the contribution by Nextel Brazil to a private
savings program designed to complement Brazilian social security
in which Nextel Brazil matches employee contributions up to 8%
of an employees annual salary. The employer contribution
vests based on length of service. Mr. Chaia is vested in
60% of the matched funds. |
|
(b) |
|
The dollar value of perquisites and other personal benefits
received by each of the named executive officers did not exceed
$10,000 except for Messrs. Hemmady and Chaia. The
perquisites and other personal benefits received by
Mr. Hemmady in 2009 consist of an executive physical and
personal use of our corporate aircraft on one occasion during
2009, which was approved by our chief executive officer.
Personal use of our corporate aircraft is valued based on the
aggregate incremental cost to us, which is calculated on a
fiscal year basis and is based on our variable operating cost
including the cost of fuel, trip-related maintenance, crew
travel, landing and ramp fees and other smaller variable costs.
Because our corporate aircraft is used primarily for business
travel, fixed costs that do not change based on usage, such as
pilot salaries and aircraft purchase and lease costs, are
excluded from this calculation. |
|
|
|
The perquisites and other personal benefits received by
Mr. Chaia in 2009 consist of an annual allowance for a
company supplied automobile, including related maintenance and
fuel, which is a customary element of compensation for senior
executives in Brazil and which had an incremental cost to Nextel
Brazil of $60,237, and wireless handsets and service for
Mr. Chaia and his family. |
29
|
|
|
(6) |
|
Mr. Chaias salary, bonus and benefits, other than his
equity grants, are paid in Brazilian Reais. As a result, the
amount of compensation provided to Mr. Chaia as reflected
in U.S. dollars in the Salary, Bonus, Non-Equity Incentive Plan
Compensation and All Other Compensation columns varies based on
the applicable exchange rate of the Brazilian Real relative to
the U.S. dollar. Mr. Chaias compensation as reported
in U.S. dollars can vary significantly with no actual change to
the compensation paid to Mr. Chaia in Brazilian currency if
the exchange rates are volatile. The amounts for Mr. Chaia
reflected in the Salary, Bonus, Non-Equity Incentive Plan
Compensation and All Other Compensation columns in the table
above are based on the average exchange rate of 2.00 Brazilian
Reais to $1.00 for 2009. |
Grants
of Plan-Based Awards Table
In the table below and discussion that follows it, we summarize
the grants of stock options and stock awards to each of the
named executive officers during 2009. Our non-equity incentive
bonus plan adopted for 2009 does not provide for payouts in
fiscal years after 2009, and we historically have not issued any
performance-based equity incentive plan awards.
Grants of
Plan-Based Awards
Fiscal Year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
Number of
|
|
Number of
|
|
Exercise or
|
|
Grant Date Fair
|
|
|
|
|
Under Non-Equity Incentive
|
|
Shares of
|
|
Securities
|
|
Base Price
|
|
Value of Stock
|
|
|
|
|
Plan
Awards(1)
|
|
Stock or
|
|
Underlying
|
|
of Option
|
|
and Option
|
Name
|
|
Grant Date
|
|
Threshold($)
|
|
Target($)
|
|
Maximum($)
|
|
Units(#)
|
|
Options(#)
|
|
Awards($/sh)
|
|
Awards(2)($)
|
|
Steven P, Dussek
|
|
|
N/A
|
|
|
|
696,000
|
|
|
|
870,000
|
|
|
|
1,026,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,940
|
|
|
|
|
|
|
|
|
|
|
|
686,980
|
|
|
|
|
4/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
494,186
|
|
|
|
14.33
|
|
|
|
3,706,395
|
|
Gokul V. Hemmady
|
|
|
N/A
|
|
|
|
234,080
|
|
|
|
292,600
|
|
|
|
345,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
358,250
|
|
|
|
|
4/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
|
14.33
|
|
|
|
937,500
|
|
Sergio Chaia
|
|
|
N/A
|
|
|
|
255,000
|
|
|
|
318,750
|
|
|
|
376,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
214,950
|
|
|
|
|
4/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
14.33
|
|
|
|
750,000
|
|
Gary D. Begeman
|
|
|
N/A
|
|
|
|
195,850
|
|
|
|
244,813
|
|
|
|
288,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
286,600
|
|
|
|
|
4/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110,000
|
|
|
|
14.33
|
|
|
|
825,000
|
|
John M. McMahon
|
|
|
N/A
|
|
|
|
154,360
|
|
|
|
192,950
|
|
|
|
227,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
286,600
|
|
|
|
|
4/22/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,000
|
|
|
|
14.33
|
|
|
|
862,500
|
|
|
|
|
(1) |
|
The amounts reflect the potential range of payouts for the 2009
Bonus Plan. The actual amounts of the payments made under this
plan to the named executive officers are reflected in the
Non-Equity Incentive Plan Compensation column of the Summary
Compensation Table. |
|
(2) |
|
The amounts in this column reflect the grant date fair value of
the restricted stock and option awards on the date of grant
computed in accordance with stock-based compensation accounting
rules (FASB ASC Topic 718), but disregarding estimated
forfeitures related to service-based vesting conditions. We
value restricted stock awards at the date of grant based on the
number of shares subject to the grant multiplied by the closing
price of our common stock on the date of grant. We determined
the fair market value of option awards based on the
Black-Scholes option pricing model. The valuation assumptions
used in determining these amounts are described in footnote 10
to our consolidated financial statements included in our 2009
annual report on
Form 10-K. |
30
Supplemental
Discussion of Awards
The exercise price for the options listed above, which is equal
to the closing price of a share of our common stock as reported
on the Nasdaq Global Select market on the date of grant, may be
paid in cash, in shares of our common stock valued at fair
market value on the date of exercise or pursuant to a cashless
exercise procedure under which the optionee provides irrevocable
instructions to a brokerage firm to sell the purchased shares
and to remit to us, out of the sale proceeds, an amount equal to
the exercise price plus all required tax withholding and other
deductions. Both the restricted stock and the right to exercise
the options granted vest ratably over a three year period and
vesting is not conditioned on any individual performance of the
executive or on our financial or operating performance. The
options expire ten years from the date of grant. An earlier
expiration date may apply in the event of the optionees
termination of employment, retirement, death or disability. For
information on how we determined the number of restricted stock
awards and stock option grants for 2009, see the
Compensation Discussion and Analysis section above.
Outstanding
Equity Awards at Fiscal Year-End Table
The equity awards reflected in the table below include the
number and value of stock options and shares of restricted stock
that remain outstanding as of December 31, 2009.
Outstanding
Equity Awards at Fiscal Year-End 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Number of
|
|
Market Value of
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
|
Unexercised
|
|
Unexercised
|
|
|
|
|
|
Units of
|
|
Units of
|
|
|
Options
|
|
Options
|
|
Option
|
|
Option
|
|
Stock That
|
|
Stock That
|
|
|
(#)
|
|
(#)
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Price ($)
|
|
Date
|
|
Vested(#)
|
|
Vested(1) ($)
|
|
Steven P.
Dussek(2)
|
|
|
15,000
|
(3)
|
|
|
|
|
|
|
18.97
|
|
|
|
4/28/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(3)
|
|
|
|
|
|
|
26.20
|
|
|
|
4/27/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
(4)
|
|
|
2,500
|
(4)
|
|
|
60.77
|
|
|
|
4/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
4,250
|
(5)
|
|
|
4,250
|
(5)
|
|
|
78.30
|
|
|
|
4/25/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(6)
|
|
|
150,000
|
(6)
|
|
|
42.82
|
|
|
|
2/11/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
494,186
|
(7)
|
|
|
14.33
|
|
|
|
4/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
(8)
|
|
|
2,014,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,940
|
(9)
|
|
|
1,609,825
|
|
Gokul V. Hemmady
|
|
|
25,000
|
(10)
|
|
|
25,000
|
(10)
|
|
|
78.87
|
|
|
|
5/21/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
21,250
|
(11)
|
|
|
63,750
|
(11)
|
|
|
40.62
|
|
|
|
4/23/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
(7)
|
|
|
14.33
|
|
|
|
4/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(12)
|
|
|
671,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
(9)
|
|
|
839,500
|
|
Sergio Chaia
|
|
|
12,500
|
(13)
|
|
|
12,500
|
(13)
|
|
|
64.33
|
|
|
|
1/17/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
13,750
|
(11)
|
|
|
41,250
|
(11)
|
|
|
40.62
|
|
|
|
4/23/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(7)
|
|
|
14.33
|
|
|
|
4/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(14)
|
|
|
335,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(9)
|
|
|
503,700
|
|
Gary D. Begeman
|
|
|
30,000
|
(15)
|
|
|
10,000
|
(15)
|
|
|
65.17
|
|
|
|
11/27/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(5)
|
|
|
20,000
|
(5)
|
|
|
78.30
|
|
|
|
4/25/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
17,500
|
(11)
|
|
|
52,500
|
(11)
|
|
|
40.62
|
|
|
|
4/23/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110,000
|
(7)
|
|
|
14.33
|
|
|
|
4/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(9)
|
|
|
671,600
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
Number of
|
|
Market Value of
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
|
Unexercised
|
|
Unexercised
|
|
|
|
|
|
Units of
|
|
Units of
|
|
|
Options
|
|
Options
|
|
Option
|
|
Option
|
|
Stock That
|
|
Stock That
|
|
|
(#)
|
|
(#)
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
Have Not
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Price ($)
|
|
Date
|
|
Vested(#)
|
|
Vested(1) ($)
|
|
John M. McMahon
|
|
|
27,500
|
(3)
|
|
|
|
|
|
|
26.20
|
|
|
|
4/27/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
(4)
|
|
|
10,000
|
(4)
|
|
|
60.77
|
|
|
|
4/26/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(5)
|
|
|
20,000
|
(5)
|
|
|
78.30
|
|
|
|
4/25/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
11,250
|
(11)
|
|
|
33,750
|
(11)
|
|
|
40.62
|
|
|
|
4/23/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,000
|
(7)
|
|
|
14.33
|
|
|
|
4/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(16)
|
|
|
335,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(9)
|
|
|
671,600
|
|
|
|
|
(1) |
|
The market value of the restricted stock is based on the $33.58
closing price of a share of our common stock, as reported on the
Nasdaq Global Select Market on December 31, 2009. |
|
(2) |
|
Mr. Dusseks awards expiring in 2014, 2015, 2016 and
2017 were granted to him in his capacity as a member of our
Board of Directors prior to his appointment as our chief
executive officer. |
|
(3) |
|
Stock options vested 25% on the four anniversary dates following
the date of grant. As of December 31, 2009 these grants
were fully vested. |
|
(4) |
|
Stock options vest/vested 25% on each of April 26, 2007,
April 26, 2008, April 26, 2009 and April 26, 2010. |
|
(5) |
|
Stock options vest/vested 25% on each of April 25, 2008,
April 25, 2009, April 25, 2010 and April 25, 2011. |
|
(6) |
|
Stock options vest/vested 25% on each of February 11, 2009,
February 11, 2010, February 11, 2011 and
February 11, 2012. |
|
(7) |
|
Stock options vest
331/3%
on each of April 22, 2010, April 22, 2011 and
April 22, 2012. |
|
(8) |
|
Restricted stock vests on February 11, 2011, the third
anniversary of the grant date. |
|
(9) |
|
Restricted stock vests
331/3%
on each of April 22, 2010, April 22, 2011 and
April 22, 2012. |
|
(10) |
|
Stock options vest/vested 25% on each of May 21, 2008,
May 21, 2009, May 21, 2010 and May 21, 2011. |
|
(11) |
|
Stock options vest/vested 25% on each of April 23, 2009,
April 23, 2010, April 23, 2011 and April 23, 2012. |
|
(12) |
|
Restricted stock vests on May 21, 2010, the third
anniversary of the grant date. |
|
(13) |
|
Stock options vest/vested 25% on each of January 17, 2008,
January 17, 2009, January 17, 2010 and
January 17, 2011. |
|
(14) |
|
Restricted stock vested on January 17, 2010, the third
anniversary of the grant date. |
|
(15) |
|
Stock options vest/vested 25% on each of November 27, 2007,
November 27, 2008, November 27, 2009 and
November 27, 2010. |
|
(16) |
|
Restricted stock vests on April 26, 2010, the fourth
anniversary of the grant date. |
32
Option
Exercises and Stock Vested Table
In the table below, we list information on the exercise of
options and the vesting of restricted stock during the year
ended December 31, 2009.
Option
Exercises and Stock Vested
Fiscal Year 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
Shares
|
|
Value
|
|
Shares
|
|
Value
|
|
|
Acquired on
|
|
Realized on
|
|
Acquired on
|
|
Realized on
|
Name
|
|
Exercise(#)
|
|
Exercise($)
|
|
Vesting(#)
|
|
Vesting(1)($)
|
|
Steven P. Dussek
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
79,150
|
|
Gokul V. Hemmady
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sergio Chaia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary D. Begeman
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
604,600
|
|
John M. McMahon
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
158,300
|
|
|
|
|
(1) |
|
The value realized on vesting is calculated as the number of
shares vested multiplied by the closing price of the shares on
the date of vesting. |
Pension
Benefits and Nonqualified Deferred Compensation
None of our executive officers are entitled to pension benefits
from us. None of our executive officers participated in our
Executive Deferral Plan in 2009.
Potential
Payments under Severance Plans
We have arrangements with each of our named executive officers
under our Change of Control Severance Plan that provide for
payments and benefits if an executive officers employment
is terminated in connection with the occurrence of certain
events involving a change in control. In addition, we have an
obligation to make payments and provide certain benefits to our
named executive officers under our Severance Plan and 2004
Incentive Compensation Plan resulting from termination of
employment upon the occurrence of certain events. The following
is a summary of the payments that we or our successor may make
under each of these arrangements.
Payments
upon Termination of Employment
Each of our named executive officers is covered by our Change of
Control Severance Plan and our Severance Plan. The Change of
Control Severance Plan provides for the payment of certain
benefits if an executive officers employment is terminated
by the company without cause or by the executive officer for
good reason in connection with a change of control. No benefits
are required to be paid unless the executive officers
employment is terminated. The named executive officers are also
entitled to severance benefits if their employment is terminated
by the company in specified circumstances under the Severance
Plan. Although the benefits under the Severance Plan apply
without regard to whether any change of control has occurred or
is pending, the Change of Control Severance Plan provides that
employees entitled to receive amounts paid under the Change in
Control Severance Plan will not be entitled to cash severance
under any other severance plan, including the Severance Plan.
Each of the named executive officers has also received awards of
stock options and restricted stock under the 2004 Incentive
Compensation Plan, which contains provisions that may accelerate
the vesting of awards made to a named executive officer if we
terminate the executive officers employment with us or if
the executive officer terminates his or her employment with us
for good reason in connection with a change of control.
Except as noted below, we otherwise have not entered into any
employment agreements or other arrangements that provide for
benefits in connection with a termination of employment of our
named executive officers.
The following table shows the estimated amount of the payments
to be made to each of the named executive officers who continued
to be employed by us as of December 31, 2009 upon
termination of their employment in connection with a change of
control under the Change of Control Severance Plan, their
involuntary termination under the Severance Plan
33
or upon their termination in connection with their death or
disability. For purposes of calculating the value of the
benefits, we have assumed that the triggering event for payment
occurred under each of the arrangements as of December 31,
2009. The footnotes to the table contain an explanation of the
assumptions made by us to calculate the payments, and the
discussion that follows the table provides additional details on
these arrangements.
Potential
Payments upon Termination of Employment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
|
|
|
|
Other
|
|
Equity
|
|
|
Termination
Event(1)
|
|
Salary(2)($)
|
|
Bonus(3)($)
|
|
Payments(4)($)
|
|
Awards(5)($)
|
|
Total(6)($)
|
|
Change of Control Plan Termination by Executive
for Good Reason or by the Company Without
Cause(7)(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven P. Dussek
|
|
|
1,812,500
|
|
|
|
3,045,000
|
|
|
|
2,890,140
|
|
|
|
13,137,706
|
|
|
|
20,885,346
|
|
Gokul V. Hemmady
|
|
|
1,045,000
|
|
|
|
1,024,100
|
|
|
|
931,336
|
|
|
|
3,917,350
|
|
|
|
6,917,786
|
|
Sergio Chaia
|
|
|
1,275,000
|
|
|
|
956,250
|
|
|
|
15,000
|
|
|
|
2,764,500
|
|
|
|
5,010,750
|
|
Gary D. Begeman
|
|
|
941,588
|
|
|
|
856,845
|
|
|
|
815,076
|
|
|
|
2,789,100
|
|
|
|
5,402,609
|
|
John M. McMahon
|
|
|
701,638
|
|
|
|
578,851
|
|
|
|
36,907
|
|
|
|
3,221,150
|
|
|
|
4,538,546
|
|
Severance Plan Involuntary
Termination(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven P. Dussek
|
|
|
725,000
|
|
|
|
817,800
|
|
|
|
|
|
|
|
|
|
|
|
1,542,800
|
|
Gokul V. Hemmady
|
|
|
418,000
|
|
|
|
275,044
|
|
|
|
|
|
|
|
|
|
|
|
693,044
|
|
Sergio Chaia
|
|
|
637,500
|
|
|
|
325,125
|
|
|
|
|
|
|
|
|
|
|
|
962,625
|
|
Gary D. Begeman
|
|
|
376,635
|
|
|
|
230,124
|
|
|
|
|
|
|
|
|
|
|
|
606,759
|
|
John M. McMahon
|
|
|
350,819
|
|
|
|
181,373
|
|
|
|
|
|
|
|
|
|
|
|
532,192
|
|
Death, Disability or Retirement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven P. Dussek
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,137,706
|
|
|
|
13,137,706
|
|
Gokul V. Hemmady
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,917,350
|
|
|
|
3,917,350
|
|
Sergio Chaia
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,428,700
|
|
|
|
2,428,700
|
|
Gary D. Begeman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,789,100
|
|
|
|
2,789,100
|
|
John M. McMahon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,221,150
|
|
|
|
3,221,150
|
|
|
|
|
(1) |
|
No payments are required to be made to any named executive
officer under the Change of Control Severance Plan or the
Severance Plan if the executive is terminated for cause or if
the executive voluntarily terminates his employment (other than
for good reason in connection with a change of control under the
Change of Control Plan). |
|
(2) |
|
The Severance Payment under the Change of Control Severance Plan
is 250% of the executives annual base salary and annual
target bonus percentage on the day immediately preceding the
change of control in the case of Messrs. Dussek, Hemmady
and Begeman and 200% of such amounts in the case of
Messrs. Chaia and McMahon. Amounts included in this column
with respect to the Change of Control Severance Plan reflect the
portion of the severance payment attributable to base salary.
Amounts attributable to the target bonus are included in the
Bonus column (see note 3 below). The Severance
Payment under the Severance Plan for the named executive
officers is 12 months of the named executive officers
annualized base salary at the time of termination. If the
severance payments under both plans apply, the total severance
payment will not exceed 250% or 200% of the executives
annual target bonus percentage, as applicable. |
|
(3) |
|
Under the Change of Control Severance Plan upon termination an
executive is entitled to receive as part of the severance
payment 250% of the executives annual target bonus
percentage on the day immediately preceding the change of
control in the case of Messrs. Dussek, Hemmady and Begeman
and 200% of such amounts in the case of Messrs. Chaia and
McMahon. Amounts included in this column with respect to the
Change of Control Severance Plan reflect the portion of the
severance payment attributable to the target bonus. The portion
of the severance payment attributable to base salary is included
in the Severance Payment column (see note 2
above). Under the Change of Control Plan, the executive is also
entitled to receive an amount equal to a prorated portion of the
annual bonus payment for the period ending on the termination
event. The Severance Plan also provides for the payment of an
amount equal to a prorated portion of the actual annual bonus
payment for the |
34
|
|
|
|
|
period ending on the termination event for each named executive
officer, payable when bonuses are paid for the applicable plan
year. Accordingly, the amounts reflected in this column for each
of the plans include an amount equal to the target bonus for
2009 based on the assumption that the executive was terminated
on December 31, 2009. |
|
(4) |
|
Other Payments for the named executive officers other than
Mr. Chaia include tax
gross-ups,
COBRA health insurance and outplacement counseling assistance
provided under the Change of Control Severance Plan.
Mr. Chaia is eligible for outplacement counseling
assistance under the Change of Control Severance Plan and may be
eligible for additional benefits under Brazilian law. |
|
(5) |
|
The Equity Awards are the value (calculated in the case of
options as the difference between the exercise price of the
options and the market value of the related shares on
December 31, 2009 and in the case of restricted shares as
the value of shares on that date) of any awards granted under
the 2004 Plan whose vesting or payment are accelerated upon the
triggering event. We have assumed that the surviving entity has
elected not to assume, replace or convert any of the awards made
under the 2004 Plan. As described in more detail below, the 2004
Plan provides for the vesting of unvested options in specific
circumstances following a change of control of the Company. The
2004 Plan and the grant agreements made under that plan also
provide that outstanding and unvested options will vest upon an
employees death or disability or if the employee retires
at or after age 65 or at an earlier age with the consent of
the Compensation Committee, with these vested options remaining
exercisable for a period of one year after the date the employee
ceases to be an employee of the Company. The 2004 Plan and the
grant agreements also provide for continued exercisability of
vested options for a period of 90 days from the
employees date of termination in all other situations. |
|
(6) |
|
In addition to the amounts specified in this column, upon
termination in each of the circumstances noted the executive
officer is entitled to receive base salary and cash or non-cash
benefits earned prior to the date of the named executive
officers termination, including payments with respect to
accrued and unused vacation time and any reimbursements for the
reasonable and necessary business expenses incurred by the named
executive officer prior to termination. |
|
(7) |
|
Change of Control Plan Termination by Executive for
Good Reason or by the Company Without Cause describes the
benefits payable to a named executive officer if the named
executive officer voluntarily terminates his or her employment
for good reason in connection with a change of control or if the
named executive officers employment is terminated without
cause by us or the surviving entity in connection with a change
of control as described below in Change of Control
Severance Plan. |
|
(8) |
|
In cases in which a named executive officers employment is
terminated by us or the surviving entity in connection with a
change of control, each named executive officer will be entitled
to a severance payment under the Change of Control Severance
Plan, but not the Severance Plan. |
|
(9) |
|
Severance Plan Involuntary Termination describes the
benefits payable to a named executive officer if the named
executive officers employment is terminated by us other
than in connection with a change of control under the
circumstances described below under Severance Plan. |
Change
of Control Severance Plan
The Change of Control Severance Plan provides that each named
executive officer will receive a payment if a change of control,
as defined below, occurs and he either is terminated without
cause or resigns for good reason. Messrs. Dussek, Hemmady
and Begeman will be entitled to receive 250% of their annual
base salary and target bonus at the date of his termination upon
such an event, and Messrs. Chaia and McMahon will be
entitled to receive 200% of such amounts, all as provided in the
plan. Each named executive officer will be entitled to receive
his payment under the plan in a lump sum within thirty days
following his termination of employment.
We or the surviving entity will also pay the full premium cost
of continued health care coverage for each named executive
officer under the federal COBRA law in such a
termination. We will make the COBRA payments up to the lesser of
18 months or the time at which the named executive officer
is reemployed and is eligible to receive group health coverage
benefits under another employer-provided plan. The payments may
also cease for any of the reasons provided in the COBRA law.
In addition, in the event that any of the named executive
officers incur any legal, accounting or other fees and expenses
in a good faith effort to obtain benefits under the Change of
Control Severance Plan, we or the surviving
35
entity will reimburse the named executive officer for such
reasonable expenses. The named executive officer will be
entitled to receive a tax
gross-up
payment in the event that any payments made under the plan is
subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code. Such reimbursement and
gross-up
payments will be subject to Section 409A of the Internal
Revenue Code and will be paid within the timeframe prescribed by
the regulations thereunder.
A change of control will be deemed to occur under the plan when:
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we are merged, consolidated or reorganized into or with another
company, or we sell or otherwise transfer all or substantially
all of our assets to another company, and, as a result of either
transaction, less than a majority of the combined voting power
of the then outstanding securities of the resulting company
immediately after the transaction is held by the holders of our
voting securities immediately prior to the transaction;
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the directors on our board as of July 22, 2008 or directors
elected subsequent to that date and whose nomination or election
was approved by a vote of at least two-thirds of the directors
on the board as of July 22, 2008 cease to be a majority of
our board;
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our stockholders approve our complete liquidation or dissolution;
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an individual, entity or group acquires beneficial ownership of
50% or more of our then outstanding shares or 50% of our then
outstanding voting power to vote in an election of our
directors, excluding any acquisition directly from us; or
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our board approves a resolution stating that a change of control
has occurred.
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A named executive officer will receive compensation under the
plan if:
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he is terminated without cause within 18 months from a
change of control or prior to the change of control if he
reasonably demonstrates that the termination was at the request
of a third party attempting to effect a change of control or
otherwise in connection with a change of control; or
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he voluntarily terminates his employment for good reason during
the 18 months following a change of control, defined as
when, after the change of control:
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there was a material and adverse change in or reduction of his
duties, responsibilities and authority that he held preceding
the change of control;
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his principal work location was moved to a location more than
40 miles away from his prior work location;
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he was required to travel on business to a substantially greater
extent than prior to the change of control, which results in a
material adverse change in his employment conditions;
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his salary, bonus or bonus potential were materially reduced or
any other significant adverse financial consequences occurred;
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the benefits provided to him were materially reduced in the
aggregate; or
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we or any successor fail to assume or comply with any material
provisions of the plan.
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Severance
Plan
The Severance Plan provides payments to a named executive
officer in the event of an involuntary termination of
employment, which includes termination due to job elimination,
work force reductions, lack of work, a determination by us that
the executive officers contributions no longer meet the
needs of the business and any other reason determined by us.
Under the Severance Plan, each of the named executive officers
will be entitled to a payment equal to 12 months of his
annualized base salary, not including any bonus, incentive
payments or commission payments. Each named executive officer
will also receive a pro rata payment of his bonus based on the
portion of the year that he was employed by us. We will pay the
bonus to the named executive officer when we pay bonuses to
employees at the same position level for the bonus plan year in
the following year, and such bonus will be based on the
achievement level of the named executive officers business
unit for the applicable year.
We will make a lump sum payment of the amount due under the
Severance Plan to each named executive officer. We reserve the
right to make the payments periodically for a period not to
exceed 24 months. In order to
36
receive payments under the Severance Plan, each named executive
officer must return all of our property and execute a release
agreement:
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acknowledging that the payments to be received represent the
full amount that he is entitled to under the Severance Plan;
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releasing any claims that he has or may have against us; and
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in our discretion, agreeing not to compete with us for a certain
period.
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The release agreement will also require the executive officer to
comply with specified confidentiality, non-disparagement and
non-solicitation obligations. Our obligation to make or continue
severance payments to the executive officer will cease if the
executive officer does not comply with those obligations.
2004
Incentive Compensation Plan
The 2004 Incentive Compensation Plan covers the grant of certain
incentives and awards, including stock options, stock
appreciation rights, stock, performance shares, incentive
awards, stock units and dividend equivalent rights, to our
employees, including the named executive officers. Under the
2004 Plan, if a change of control occurs and the incentives and
awards granted under the plan are not assumed by the surviving
entity, or the employee is terminated within a certain period
following a change of control, each outstanding award is treated
as explained below. A change of control under the 2004 Plan is
defined the same as in the Change of Control Severance Plan and
the same events that trigger payments to the executive officer
under the Change of Control Severance Plan trigger payments
under the 2004 Plan, both as described above.
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Options. If the surviving entity assumes,
replaces or converts the options and the named executive officer
is terminated within 24 months under circumstances that
would trigger payment, the options will become fully
exercisable, vested or earned. If the options are not assumed,
replaced or converted, each option shall be fully exercisable
upon a change of control.
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Stock Appreciation Rights. If the surviving
entity assumes, replaces or converts the stock appreciation
rights and the named executive officer is terminated within
24 months under circumstances that would trigger payment,
the stock appreciation rights will become fully exercisable,
vested or earned. If the stock appreciation rights are not
assumed, replaced or converted, each stock appreciation right
shall be fully exercisable upon a change of control. We have not
issued any stock appreciation rights.
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Stock Awards. If the surviving entity assumes,
replaces or converts the stock award and the named executive
officer is terminated within 24 months under circumstances
that would trigger payment, the stock awards shall be
transferable and nonforfeitable. If the stock awards are not
assumed, replaced or converted, each stock award shall be
transferable and nonforfeitable upon a change of control.
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Performance Shares. If the surviving entity
assumes, replaces or converts the performance shares and the
named executive officer is terminated within 24 months
under circumstances that would trigger payment, the performance
shares will become fully exercisable, vested or earned. If the
performance shares are not assumed, replaced or converted, the
named executive officer shall earn the performance shares
pro-rata based on the fraction of the performance period that
has elapsed before the change of control. We have not issued any
performance shares.
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Incentive Awards. If the surviving entity does
not assume, replace or convert an incentive award, the named
executive officer shall have earned the pro-rata share of the
incentive award based on a fraction of the performance period
that has elapsed from the beginning of the performance period
until the change of control. We have not issued any incentive
awards.
|
The 2004 Plan provides that the administrator of the plan shall
determine what amounts will be payable to the named executive
officer upon death, disability or retirement in the agreement
under which awards are made under the plan.
37
DIRECTOR
COMPENSATION
Director
Compensation Table
In the table and discussion below, we summarize the compensation
paid to our non-employee directors and Mr. Shindler in 2009.
Director
Compensation
Fiscal Year 2009
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Change in
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Pension
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Value and
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Fees
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Nonqualified
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Earned or
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Non-Equity
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Deferred
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Paid in
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Name
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Cash($)
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Awards(1)($)
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Awards(2)($)
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Compensation($)
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Earnings
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Compensation($)
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Total($)
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George A.
Cope(3)
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77,334
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125,001
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n/a
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n/a
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202,335
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Raymond P. Dolan
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90,000
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125,001
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n/a
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n/a
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215,001
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Donald Guthrie
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108,308
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125,001
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n/a
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n/a
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233,309
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Charles M.
Herington(4)
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110,000
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125,001
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n/a
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n/a
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235,001
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Carolyn Katz
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150,000
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125,001
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n/a
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n/a
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275,001
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Rosendo G. Parra
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95,444
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125,001
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n/a
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n/a
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220,445
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John W. Risner
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115,000
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125,001
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n/a
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n/a
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240,001
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Steven M.
Shindler(5)
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125,001
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n/a
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270,820
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558,187
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954,008
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(1) |
|
The amounts in this column reflect the grant date fair value of
awards computed in accordance with stock-based compensation
accounting rules (FASB ASC Topic 718), but disregarding
estimated forfeitures related to service-based vesting
conditions. We value restricted stock awards at the date of
grant based on the number of shares subject to the grant
multiplied by the closing price of our common stock on the date
of grant. On April 22, 2009, we provided each non-employee
director and Mr. Shindler with a grant of 8,723 shares
of restricted stock that vests
331/3%
on each of April 24, 2010, April 24, 2011 and
April 24, 2012. The grant date fair value was $14.33 per
share. The dollar value of the shares subject to those grants,
based on the $33.58 closing price of a share of our common stock
as reported on the Nasdaq Global Select Market on
December 31, 2009, was $292,918. No other shares of
restricted stock of the Company are held by any of our
non-employee directors. |
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(2) |
|
No awards of options to purchase common stock were made to our
directors in 2009. The aggregate number of shares of our common
stock underlying options held by each of the non-employee
directors and Mr. Shindler on December 31, 2009 were
as follows: Mr. Cope 60,167;
Mr. Dolan 18,300; Mr. Guthrie
19,700; Mr. Herington 63,500;
Ms. Katz 75,500; Mr. Parra
17,100; Mr. Risner 68,000; and
Mr. Shindler 415,000. |
|
(3) |
|
Amounts included in Fees Earned or Paid in Cash for
Mr. Cope include $38,668 in director fees subject to
deferral under the NII Holdings, Inc. Outside Directors Deferral
Plan. As of December 31, 2009, Mr. Cope held
approximately 1,616 deferred share units under that plan that
were granted in lieu of director fees earned in 2009. |
|
(4) |
|
Amounts included in Fees Earned or Paid in Cash for
Mr. Herington include $55,000 in director fees subject to
deferral under the NII Holdings, Inc. Outside Directors Deferral
Plan. As of December 31, 2009, Mr. Herington held
approximately 3,897 deferred share units under that plan that
were granted in lieu of director fees earned in 2008 and 2009. |
|
(5) |
|
During 2009, we entered into an agreement with
Mr. Shindler, which we refer to as the Shindler
Compensation Agreement, that amended the compensation
arrangements relating to his service as executive chairman of
our Company effective as of July 1, 2009. Non-Equity
Incentive Plan Compensation is the pro rata portion of
Mr. Shindlers annual cash bonus under our 2009 Bonus
Plan, representing the 94% payout earned at headquarters of his
80% target applied to his six months of salary for his service
through June 30, 2009. All Other Compensation includes
Mr. Shindlers base salary of $360,000 for the period
from January 1, 2009 through June 30, 2009 and
$125,000 for the period from July 1, 2009 through
December 31, 2009, a Company match of $9,800 on his 401(k)
contributions and perquisites. Mr. Shindler continues to
participate in all |
38
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compensation plans and benefits available to our executive
officers, including our Severance Plan and Change of Control
Severance Plan, and he participated in an executive physical in
2009. As contemplated by the Shindler Compensation Agreement,
Mr. Shindler used our corporate aircraft to commute to our
offices in 2009, with such use having an aggregate incremental
cost to us of $54,476, and was provided with a related tax
gross-up of
$4,916 related to his commuting costs. See also Certain
Relationships and Related Transactions Aircraft
Management Arrangements below for information on our
management and use of Mr. Shindlers aircraft. |
Fees
Payable to Non-Employee Directors
Each of our non-employee directors receives an annual retainer
of $70,000. In addition, our non-employee directors receive the
following annual retainer for serving on the following specified
committees:
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$20,000 for serving as the Lead Independent Director;
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$30,000 for serving as Chairman of the Audit Committee;
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$25,000 for serving as Chairman of the Compensation Committee;
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$20,000 for serving as the Chairman of the Corporate Governance
and Nominating Committee;
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$20,000 for serving as the Chairman of the Finance Committee;
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$25,000 for serving as a member of the Audit Committee;
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$20,000 for serving as a member of the Compensation Committee;
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$15,000 for serving as a member of the Finance
Committee; and
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$15,000 for serving as a member of the Corporate Governance and
Nominating Committee.
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We pay all retainers in arrears in quarterly installments. We
also reimburse directors for travel expenses incurred in
connection with attending board, committee and stockholder
meetings and for other related expenses. We do not provide any
additional compensation to employees who serve as a director or
a committee member. Some of our directors and, in one case, a
family member of a director participate in our employee phone
program that pays the cost of mobile phone services.
Non-employee directors are also permitted to defer all or a
portion of their annual retainer pursuant to the NII Holdings,
Inc. Outside Directors Deferral Plan described below.
Option
Grants and Restricted Stock Awards
Historically, we have granted each non-employee director an
option to purchase 15,000 shares of our common stock upon
becoming a director. These options vest
331/3%
annually over a three year period and have an exercise price
equal to the closing price of a share of our common stock, as
reported on the Nasdaq Global Select Market, on the grant date.
No new directors joined our Board in 2009.
We have adopted a policy to grant to each non-employee director
an equity grant around the date of our annual meeting of
stockholders. Pursuant to the Shindler Compensation Agreement,
Mr. Shindler is also eligible for this annual grant
beginning with the grant made in 2009, but is not eligible for
employee equity grants. On May 22, 2009, each non-employee
director and Mr. Shindler received 8,723 restricted shares
that vest
331/3%
annually over a three year period. Historically, directors who
join the board subsequent to the annual grant receive a prorated
portion of the annual grant amount. In prior years, we have
provided this annual grant in the form of options to purchase
shares of our common stock. On April 23, 2008, we granted
to each non-employee director, other than Messrs. Dolan,
Guthrie and Parra who joined the board after that date, options
to purchase 5,000 shares of our common stock at an exercise
price of $40.62 per share that vest 25% annually over a four
year period. We granted Messrs. Dolan, Guthrie and Parra
options to purchase a prorated amount of shares with an exercise
price equal to the closing price of a share of our common stock,
as reported on the Nasdaq Global Select Market, on the grant
date. Their options will vest 25% annually over a four year
period.
In addition, we may grant additional stock options or restricted
stock to non-employee directors. No awards of options to
purchase our common stock were provided to any of our directors
during 2009.
39
Outside
Directors Deferral Plan
In 2007, the Board of Directors approved the adoption of the NII
Holdings, Inc. Outside Directors Deferral Plan, which we refer
to as the Director Deferral Plan. The Director Deferral Plan
allows our non-employee directors to elect to defer 0%, 50% or
100% of his or her annual retainer and committee fees with the
amount deferred by a participant attributed to a hypothetical
account and treated as if it is invested in deferred stock
units. For each deferred stock unit credited to the
participating directors account, the participating
director has the right to receive a payment equal to the fair
market value of one share of the Companys common stock on
the date of payment. The number of deferred stock units credited
to a participating directors account is determined by
dividing the amount of the fee compensation elected to be
deferred by the closing price of our common stock on the date
the compensation would otherwise have been paid to the
non-employee directors, and is increased for dividends paid on
the Companys common stock and adjusted equitably for stock
splits, mergers, reorganizations and similar events. Deferral
elections may be made annually by December 31 of the preceding
year and remain in effect until the participating director
revokes the election or timely files a new election for a
subsequent year. Newly eligible non-employee directors have
thirty days to make an initial deferral election. Payments out
of the participating directors hypothetical account are
made in shares of the Companys common stock, except that
any fractional share is paid in cash. The Company may also elect
to make the payment in a lump sum in cash in an amount equal to
the value of the deferred stock units credited to the
participating directors hypothetical account. Shares are
issued under the 2004 Incentive Compensation Plan. A
participating directors account is payable to the
participating director on the first day of the month following
his termination of service on the Board.
Stock
Ownership Guidelines
On July 21, 2006, we adopted a director target ownership
program that requires our non-employee directors who receive
stock options
and/or
restricted stock awards to attain certain stock ownership
levels, and therefore maintain a vested interest in our equity
performance. Over a five-year period, the directors covered by
the program are expected to reach certain ownership levels based
on specific share targets. The current target is for our
non-employee directors to own a multiple of five times their
cash base retainer. Our current base retainer is $70,000, thus
our non-employee directors currently have a share ownership
target of $350,000. Although this share ownership target is not
required to be met for five years, as of December 31, 2009,
six of our seven non-employee directors and Mr. Shindler
exceeded that target, and Mr. Shindler also exceeded the
share ownership target that applied to him as executive
chairman. Under our policy, an increase in the base retainer
will result in an increase in the ownership requirement. The
types of stock ownership that qualify toward the ownership
requirement under our policy include direct stock ownership,
vested options where the exercise price is lower than the fair
market value of our common stock and vested restricted stock.
The penalty for non-compliance of our policy may include a
discontinuation of future grants of stock options or restricted
stock awards until the non-complying director becomes compliant.
SECURITIES
OWNERSHIP
Securities
Ownership of Certain Beneficial Owners
The table below lists each person or group, as that term is used
in Section 13(d)(3) of the Securities Exchange Act of 1934,
known by us to be the beneficial owner of more than 5% of our
outstanding common stock as of March 19, 2010.
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Amount and Nature of
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Percent of
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Name and Address of Beneficial Owner
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Beneficial Ownership
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Class(1)
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FMR LLC(2)
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17,986,975
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10.77
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%
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82 Devonshire Street
Boston, Massachusetts 02109
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BlackRock,
Inc.(3)
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13,296,427
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7.96
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%
|
40 East 52nd Street
New York, New York 10022
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Prudential Financial,
Inc.(4)
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10,347,820
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6.20
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%
|
751 Broad Street
Newark, New Jersey 07102
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(1) |
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Based on 166,947,684 shares of common stock issued and
outstanding on March 19, 2010. |
40
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(2) |
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According to a Schedule 13G/A filed with the Securities and
Exchange Commission on February 16, 2010, FMR LLC has sole
power to vote 6,874,460 shares and to dispose of
17,986,975 shares of our common stock. Of that amount,
Fidelity Management & Research Company
(Fidelity) is the beneficial owner of
10,611,486 shares of our common stock. Fidelity, a
wholly-owned subsidiary of FMR LLC, owns the securities as
investment adviser to various investment companies. The number
of shares of our common stock held by those investment companies
included 1,394,446 shares resulting from the assumed
conversion of certain of our convertible notes. Edward C.
Johnson 3d, Chairman of FMR LLC, and FMR LLC, through its
control of Fidelity, each has sole power to dispose of the
10,611,486 shares beneficially owned by those investment
companies. One investment company, Pyramis Global Advisors, LLC
(PGALLC) is the beneficial owner of
2,061,447 shares of our common stock. PGALLC, an indirect
wholly-owned subsidiary of FMR LLC, owns the securities as
investment manager of certain institutional accounts. The number
of shares of our common stock held by those institutional
accounts managed by PGALLC included 16,227 shares resulting
from assumed conversion of certain of our convertible notes.
Each of Edward C. Johnson 3d and FMR LLC, through its control of
PGALLC, has sole dispositive and voting power over the
2,061,447 shares beneficially owned by the institutional
accounts or funds advised by PGALLC. Pyramis Global Advisors
Trust Company (PGATC) is the beneficial owner
of 3,571,322 shares of our common stock. PGATC, an indirect
wholly-owned subsidiary of FMR LLC, owns the securities as
investment manager of certain institutional accounts. The number
of shares of our common stock held by the institutional accounts
managed by PGATC included 38,032 shares resulting from the
assumed conversion of certain of our convertible notes. Each of
Edward C. Johnson 3d and FMR LLC, through its control of PGATC,
has sole dispositive power over 3,571,322 shares and sole
voting power over 3,197,193 shares beneficially owned by
PGATC. The members of the Edward C. Johnson 3d family are a
controlling group of FMR LLC due to their ownership of
approximately 49% of the voting power of FMR LLC and a voting
agreement. FIL Limited (FIL) is the beneficial owner
with the sole power to dispose of 1,742,510 shares of our
common stock. FIL and various foreign-based subsidiaries provide
investment advisory and management services to a number of
non-U.S.
investment companies and certain institutional investors. FIL
has sole power to vote 1,614,770 shares and no power to
vote 127,740 shares of our common stock held by such
international funds. Partnerships controlled by Edward C.
Johnson 3d and members of his family control approximately 47%
of the voting stock of FIL. FMR LLC and FIL do not believe they
are required to attribute to each other the beneficial ownership
of securities beneficially owned by the other, but voluntarily
reported the ownership on a joint basis. |
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(3) |
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According to a Schedule 13G/A filed with the Securities and
Exchange Commission on January 29, 2010, BlackRock, Inc.
has sole voting and dispositive power with respect to these
shares of our common stock. |
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(4) |
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According to a Schedule 13G/A filed with the Securities and
Exchange Commission on February 3, 2010, Prudential
Financial, Inc. (Prudential) has, through its direct
or indirect subsidiaries, sole voting and dispositive power with
respect to 712,286 shares of our common stock, shared
voting power with respect to 9,523,939 shares and shared
dispositive power with respect to 9,635,534 shares.
Prudential is the direct or indirect parent of Jennison
Associates LLC (Jennison) and, according to a
Schedule 13G/A filed by Jennison with the Securities and
Exchange Commission on February 12, 2010, Jennison reported
that it has sole power to vote 10,192,930 shares, and
shared power to dispose of 10,304,525 shares of our common
stock. |
Securities
Ownership of Management
In the table and the related footnotes below, we list the amount
and percentage of shares of our common stock that are deemed
under the rules of the Securities and Exchange Commission to be
beneficially owned on March 19, 2010 by:
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each person who served as one of our directors as of that date;
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each of the named executive officers who currently are our
executive officers; and
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all directors and executive officers as a group.
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41
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Shares Covered by
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Restricted
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Shares
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Options to
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Stock
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Percent of
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Name of Beneficial Owner
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Owned(1)
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Vest(2)
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to
Vest(3)
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Class(4)
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Gary D. Begeman
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80,500
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64,167
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6,667
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*
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Sergio Chaia
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42,500
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47,084
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5,000
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*
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George A.
Cope(5)
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56,511
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5,875
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2,908
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*
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Raymond P. Dolan
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5,825
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0
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2,908
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*
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Steven P. Dussek
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176,550
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169,354
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15,980
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*
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Donald Guthrie
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11,175
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6,175
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2,908
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*
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Gokul V. Hemmady
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46,250
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62,917
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8,334
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*
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Charles M.
Herington(5)
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62,256
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5,875
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2,908
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*
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Carolyn Katz
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89,000
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5,875
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2,908
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*
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John M. McMahon
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134,150
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69,584
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16,667
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*
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Rosendo G. Parra
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5,525
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0
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2,908
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*
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John W. Risner
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71,500
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5,875
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2,908
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*
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Steven M. Shindler
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440,580
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66,250
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37,908
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*
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All directors and executive officers as a group
(22 persons)(5)
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2,070,329
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885,878
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174,415
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1.24
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%
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* |
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Indicates ownership of less than 1%. |
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(1) |
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Includes common stock currently owned, deferred share units and
exercisable options, including those options with an exercise
price that is greater than the trading price of our common stock
on the Nasdaq Global Select Market on March 19, 2010. This
column does not include shares covered by options and restricted
stock that vest within 60 days of March 19, 2010,
which are reflected in the second and third columns in the
table. Under the rules of the Securities and Exchange
Commission, a person is deemed to be the beneficial owner of a
security if that person, directly or indirectly, has or shares
the power to direct the voting of the security or the power to
dispose or direct the disposition of the security. Accordingly,
more than one person may be deemed to be a beneficial owner of
the same securities. Unless otherwise indicated by footnote, the
named individuals have sole voting and investment power with
respect to beneficially owned shares of stock. A person is also
deemed to be a beneficial owner of any securities if that person
has the right to acquire beneficial ownership within
60 days of the relevant date. Shares beneficially owned as
a result of the right to acquire beneficial ownership within
60 days are reflected in the second and third columns of
the table. |
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(2) |
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Indicates shares that may be acquired upon the exercise of stock
options exercisable on or within 60 days of March 19,
2010. |
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(3) |
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Indicates shares of restricted common stock that are scheduled
to vest on or within 60 days of March 19, 2010. |
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(4) |
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Based on the total amount of shares reflected in columns one
through three and 166,947,684 shares of common stock issued
and outstanding on March 19, 2010. |
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(5) |
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Includes deferred share unit grant in lieu of cash compensation
pursuant to the Companys Outside Director Deferral Plan as
follows: Mr. Cope 1,844 and Mr. Herington 4,256. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires our directors and executive officers, and persons who
own more than 10% of a registered class of our equity
securities, to file with the Securities and Exchange Commission
initial reports of beneficial ownership and reports of changes
in beneficial ownership of our equity securities. Based solely
upon a review of Forms 3, Forms 4 and Forms 5
furnished to us under
Rule 16a-3(e)
during 2009, and written representations of our directors and
executive officers that no additional Forms 5 were required
to be filed, we believe that all directors, executive officers
and beneficial owners of more than 10% of our common stock have
filed with the Securities and Exchange Commission on a timely
basis all reports required to be filed under Section 16(a)
of the Securities Exchange Act.
42
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The Audit Committee of the Board of Directors reviews and
approves or ratifies transactions involving the Company and
related persons (directors and executive officers or
their immediate family members, or stockholders owning five
percent or more of our outstanding common stock) in accordance
with the requirements of The NASDAQ Stock Market. In determining
whether to approve or ratify a related party transaction, the
Audit Committee evaluates whether the transaction is in the best
interests of the Company taking into consideration all relevant
factors, including as applicable the Companys business
rationale for entering into the transaction and the fairness of
the transaction to the Company. The Audit Committee generally
seeks to consider and approve these transactions in advance
where practicable, but may also ratify them after the
transactions are entered into, particularly in instances where
the transactions are entered into in the ordinary course of
business or if the transaction is on terms that are consistent
with a policy previously approved by the Audit Committee or the
Board of Directors (as was the case with the transactions
involving the use of our aircraft by our employees described
below). In instances where the transaction is subject to renewal
or if the Company has the right to terminate the relationship,
the Audit Committee expects to periodically monitor the
transaction to ensure that there are no changed circumstances
that would render it advisable for the Company to amend or
terminate the transaction.
Currently, the only related person transactions are the
transactions involving the aircraft management and use
arrangements as described in more detail below. The Audit
Committee approved these arrangements.
Aircraft
Management Arrangements
In August 2008, we entered into agreements with Steven M.
Shindler, chairman of our Board, pursuant to which we provide
management services relating to a Falcon 2000EX aircraft, which
we refer to as the managed aircraft, that is leased by SMS
Services LLC, or SMS Services, an entity controlled by
Mr. Shindler and leased by SMS Services without crew to
certain parties including Mr. Shindler. Under the terms of
these agreements, we provide flight crew, maintenance and other
administrative services necessary to support the operation of
the managed aircraft in exchange for compensation in the form of
a monthly management fee and a right to lease the managed
aircraft without crew for up to 100 hours per year (with
each annual period commencing in August) in exchange for a
nominal lease payment pursuant to the lease agreement between us
and SMS Services. During 2009, we used a total of
172.9 hours of flight time. We used all of our allotted
hours available under this lease arrangement for the annual
period ending in August 2009, and we entered into an amendment
to this lease agreement pursuant to which we acquired the right
to use Mr. Shindlers aircraft for an additional
30.5 hours of flight time for that period, for which we
paid Mr. Shindler $250,113. Both the aircraft management
and leasing arrangements expire in August 2010 and are
automatically renewed for one year terms thereafter unless we or
any other party to the agreements elect to withdraw.
The agreements relating to the management and operation of the
managed aircraft provide that certain costs relating to the
operation of the managed aircraft, such as maintenance, repair
and insurance costs, are passed through to the operators of the
managed aircraft, including Mr. Shindler and us. Those
agreements also provide for an allocation of the compensation
expense, except for stock-based compensation expense, relating
to employees of our aviation department among the operators
based on an estimate of the combined proportional usage of the
aircraft leased and operated by the Company and the managed
aircraft, subject to adjustment if the actual use deviates
substantially from the estimate. Currently, that allocation
results in 60% of these shared costs being allocated to us with
the remainder allocated to the other operators of the managed
aircraft. Direct operating costs relating to the use of the
managed aircraft such as fuel costs, landing and over-flight
fees, and other fees and expenses are borne by the party using
the aircraft for the specific flight. During the fiscal year
ended December 31, 2009, Mr. Shindler paid us $981,830
for the monthly management fees, passed through costs and
allocated personnel costs described above. We estimate that the
value of our use of the managed aircraft during 2009 under the
leasing arrangement described above was approximately $1,149,958
based on an industry valuation of the hourly cost of a dry lease
for this type of aircraft.
We believe that the arrangements provided for in the management
services and lease agreements are reasonable and beneficial to
us. The cost sharing arrangements allow us to employ additional
flight support personnel at a lower overall cost and to utilize
our flight support personnel and facilities more efficiently.
The lease agreement also provides us with access to an
additional aircraft for business use, when needed, at a
substantially lower cost than we would incur to own or charter
an additional aircraft of comparable capacity.
43
Executive
Use of Company Aircraft
Unlike many companies that own or lease a private aircraft, we
have implemented a policy that generally limits the use of
company owned or leased aircraft to company business purposes.
However, we do make the company aircraft available for use to
our executives at times when it is not in use for regular
business purposes through time sharing arrangements on terms
that are consistent with our FAA authorizations and that provide
for payments to us in amounts that recover the incremental
operating costs associated with the employees use of the
aircraft. We use the payments received from the executives using
the aircraft under these arrangements to offset the operating
costs of our aircraft. In 2009, Mr. Dussek, our chief
executive officer, utilized our aircraft under the time sharing
arrangement and paid us a total of $55,191 for such use.
AUDIT
INFORMATION
PricewaterhouseCoopers LLP has audited our consolidated
financial statements for the fiscal years ended
December 31, 2009 and December 31, 2008.
Fees Paid
to Independent Registered Public Accounting Firm
The following information is furnished with respect to the fees
incurred by our principal accountant for each of the last two
fiscal years.
Audit
Fees
The aggregate amount of fees billed and expected to be billed to
us by PricewaterhouseCoopers LLP for professional services
rendered in connection with the audit of our annual financial
statements for the fiscal years ended December 31, 2009 and
December 31, 2008 were $8,968,537 and $8,998,739,
respectively.
Related expenses billed to us by PricewaterhouseCoopers LLP for
the years ended December 31, 2009 and 2008 were
approximately $132,815 and $427,411, respectively.
Audit fees consist of those fees rendered for the audit of our
annual consolidated financial statements, audit of the
effectiveness of internal controls over financial reporting,
review of financial statements included in our quarterly reports
and for services normally provided in connection with statutory
and regulatory filings or engagements, such as comfort letters
or attest services.
Audit
Related Fees
The aggregate amount of fees incurred by PricewaterhouseCoopers
LLP for professional services for assurance and related services
that are reasonably related to the review of our financial
statements and not reported under the heading Audit
Fees above for the fiscal years ended December 31,
2009 and December 31, 2008 were $68,215 and $16,587,
respectively. There were no related expenses billed to us by
PricewaterhouseCoopers LLP for the years ended December 31,
2009 and 2008.
Tax
Fees
The aggregate amount of fees incurred by PricewaterhouseCoopers
LLP for professional services for tax compliance, tax advice,
tax planning, transfer pricing and expatriate tax services for
the fiscal years ended December 31, 2009 and
December 31, 2008 were $128,914 and $319,739, respectively.
Tax fees consist of those fees billed by the independent
registered public accounting firms tax department, except
those services related to the audit. Related expenses billed to
us by PricewaterhouseCoopers LLP for the years ended
December 31, 2009 and 2008 were $0 and $127, respectively.
All
Other Fees
The aggregate amount of fees incurred by PricewaterhouseCoopers
LLP for services other than those described above for the fiscal
years ended December 31, 2009 and December 31, 2008
were $982,085 and $704,500, respectively. All other fees are
those fees billed for permitted services other than the services
described above. Related expenses billed to us by
PricewaterhouseCoopers LLP for the years ended December 31,
2009 and December 31, 2008 with respect to such other
permitted services were $123,074 and $400,921, respectively.
44
Audit
Committee Pre-Approval Policies and Procedures
It is the policy of the Audit Committee that our independent
registered public accounting firm may provide only those
services that have been pre-approved by the Audit Committee.
Unless a type of service to be provided by the independent
registered public accounting firm has received general
pre-approval, it requires specific pre- approval by the Audit
Committee. The term of any general pre-approval is eighteen
months from the date of pre-approval, unless the Audit Committee
or a related engagement letter specifically provides for a
different period. The Audit Committee will annually review and
pre-approve the services that may be provided by the independent
registered public accounting firm without obtaining specific
pre-approval. The Audit Committee has delegated its pre-approval
authority to Carolyn Katz, the chairwoman of the Audit Committee.
Requests or applications to provide services that require
specific approval by the Audit Committee must be submitted to
the Audit Committee by both the independent registered public
accounting firm and our controller, and must include a joint
statement as to whether, in their view, the request or
application is consistent with the Securities and Exchange
Commissions rules on auditor independence. In addition,
our Chief Financial Officer also must submit to the Audit
Committee requests or applications to provide services for
amounts anticipated to exceed $100,000. For the years ended
December 31, 2009 and December 31, 2008, all services
provided by our independent registered public accounting firm
were pre-approved in accordance with the Audit Committee policy
described above.
Audit
Committee Report
No portion of this Audit Committee Report shall be deemed to be
incorporated by reference into any filing under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, through any general statement incorporating by
reference in its entirety the Proxy Statement in which this
report appears, except to the extent that we specifically
incorporate this report or a portion of it by reference. In
addition, this report shall not be deemed to be filed under
either the Securities Act or the Exchange Act.
The Board of Directors has adopted a written audit committee
charter, which is available on the Investor Relations link of
our website at the following address: www.nii.com. In
addition, all members of our Audit Committee are independent, as
defined in the Nasdaq listing standards.
The Audit Committee has reviewed and discussed our audited
consolidated financial statements with our management and
PricewaterhouseCoopers LLP, our independent registered public
accounting firm. The Audit Committee has also discussed with our
independent registered public accounting firm the matters
required to be discussed pursuant to Statement on Auditing
Standards No. 61, as amended (AICPA, Professional
Standards, Vol. 1. AU Section 380), as adopted by the
Public Company Accounting Oversight Board in Rule 3200T,
Communication with Audit Committees.
The Audit Committee has received and reviewed the written
disclosures and the letter from PricewaterhouseCoopers LLP
required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent
accountants communications with the audit committee
concerning the firms independence from our company and our
subsidiaries and has discussed with PricewaterhouseCoopers LLP
their independence.
In addition, the Audit Committee met with senior management
periodically during 2009 and reviewed key initiatives and
programs aimed at strengthening the effectiveness of our
internal and disclosure control structure. As part of this
process, the Audit Committee continued to monitor the scope and
adequacy of our internal auditing program, reviewing staffing
levels and steps taken to implement recommended improvements in
internal procedures and controls. The Audit Committee also met
to discuss with senior management our disclosure controls and
procedures and the certifications by our chief executive officer
and our chief financial officer, which are required for certain
of our filings with the Securities and Exchange Commission. The
Audit Committee met privately with our independent registered
public accounting firm, our internal auditors and other members
of our management, each of whom has unrestricted access to the
Audit Committee.
Based on the review and discussions referred to above, the Audit
Committee recommended to our Board of Directors that the audited
financial statements be included in our annual report on
Form 10-K
for fiscal year 2009 filed with the Securities and Exchange
Commission. By recommending to the Board of Directors that the
audited
45
financial statements be so included, the Audit Committee is not
opining on the accuracy, completeness or presentation of the
information contained in the audited financial statements.
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Date: February 24, 2010
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Audit Committee
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Carolyn Katz, Chairwoman
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Donald Guthrie
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John W. Risner
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PROPOSAL II
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING
FIRM
PricewaterhouseCoopers LLP, independent registered public
accounting firm, served as our independent registered public
accounting firm for the fiscal year ended December 31,
2009, and has been selected by the Audit Committee to serve as
our independent registered public accounting firm for the
current fiscal year. Information concerning the fees paid to
PricewaterhouseCoopers LLP is included in this proxy statement
under the heading Audit Information. Representatives
of PricewaterhouseCoopers LLP will be present at the Annual
Meeting and available to respond to appropriate questions from
stockholders and may make a statement if they so desire.
Although our Second Amended and Restated Bylaws do not require
stockholder ratification or other approval of the retention of
our independent registered public accounting firm, as a matter
of good corporate governance, the Board of Directors is
requesting that stockholders ratify the selection of
PricewaterhouseCoopers LLP as our independent registered public
accounting firm for the fiscal year ending December 31,
2010.
The
Board of Directors recommends that the stockholders vote
FOR the Proposal for Ratification of the Appointment
of PricewaterhouseCoopers LLP.
PROPOSAL III
APPROVAL
OF THE AMENDMENT TO THE 2004 INCENTIVE COMPENSATION
PLAN
The NII Holdings, Inc. 2004 Incentive Compensation Plan (the
Incentive Plan) governs the award and payment of
equity awards to our employees and non-employee directors. The
Incentive Plan was initially approved by the Companys
stockholders on April 28, 2004. The Board of Directors and
management are requesting that stockholders approve an amendment
to the Incentive Plan to increase by 20,000,000 shares the
number of shares of common stock reserved for issuance of awards
under the Incentive Plan. The Companys experience with
stock options and other stock-based incentives has convinced the
Board of Directors of their important role in recruiting and
retaining officers, directors and employees with ability and
initiative and in encouraging such persons to have a greater
financial investment in the Company. The Board of Directors and
management are not requesting any amendment to the Incentive
Plan other than the increase in the number of shares of common
stock reserved for issuance under the Incentive Plan as set
forth above.
The maximum number of shares of common stock originally reserved
for issuance under the Incentive Plan at the time of its
adoption in 2004 was 39,600,000, including share
dividends/splits subsequent to the inception of the Incentive
Plan. As of December 31, 2009, 12,517,735 shares
remained available for issuance under the Incentive Plan.
Management and the Board of Directors have determined that,
given current annual grant practices and the current market
value of the Companys common stock, the Company should
seek stockholder approval to increase the authorized number of
shares under the Incentive Plan at the 2010 Annual Meeting of
Stockholders by 20,000,000 shares, resulting in a total
number of shares available under the Incentive Plan of
59,600,000 in order to ensure that adequate shares are available
for future grants. The Company currently anticipates that the
proposed increase in the number of shares reserved for issuance
under the Incentive Plan will be sufficient to meet the demand
for shares under the Incentive Plan through its scheduled
termination in 2014 in light of our current utilization rate,
forfeiture rates, stock performance and the remaining shares
available from the original authorization. If our stockholders
do not approve this amendment to the Incentive Plan, we estimate
that our remaining share reserve will not be sufficient to
permit us to make annual grants after 2011.
46
The complete text of the Incentive Plan (as proposed to be
amended and restated upon approval of stockholders of this
agenda item) is attached to this Proxy Statement as
Annex A. The following general description of the principal
features of the Incentive Plan is qualified in its entirety by
reference to Annex A.
General
Information
The Incentive Plan authorizes the Compensation Committee of the
Board of Directors (the Committee) to grant one or
more of the following awards to directors, officers, key
employees, consultants and advisors to the Company and its
subsidiaries who are designated by the Committee:
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options;
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stock appreciation rights (SARs);
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stock awards;
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performance stock awards;
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incentive awards; and
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stock units.
|
The Committee will administer the Incentive Plan and may
delegate all or part of its authority to one or more officers.
However, the Compensation Committee may not delegate its
responsibility with respect to individuals who are subject to
Section 16 of the Exchange Act. As used in this summary,
the term administrator means the Compensation
Committee and any delegate of the Compensation Committee.
If the stockholders approve the Incentive Plan, the Company will
be authorized to issue under the Incentive Plan up to
59,600,000 shares of common stock plus the number of shares
of common stock available for issuance under the NII Holdings,
Inc. 2002 Management Incentive Plan (the 2002 Plan),
which was replaced by the Incentive Plan in April 2004. The
number of authorized shares is reduced by 1 share of common
stock for each share of common stock issued pursuant to a stock
option or SAR. With respect to all other awards, the authorized
number of shares is reduced by
11/2 shares
of common stock for each share of common stock issued pursuant
to such grants. Awards that are substituted in connection with a
corporate transaction, that are made to a new employee outside
of the Incentive Plan or that are issued pursuant to elective
deferred compensation, do not count against the limit.
Generally, if an award is terminated, the shares allocated to
that award under the Incentive Plan or forfeited under the 2002
Plan may be reallocated to new awards under the Incentive Plan.
Shares surrendered pursuant to the exercise of a stock option or
other award or in satisfaction of tax withholding requirements
under the Incentive Plan or the 2002 Plan may also be
reallocated to other awards, as well as shares of common stock
that the Company reacquires on the open market using cash
proceeds received pursuant to the exercise of a stock option
granted under the Incentive Plan and the value of any tax
deduction to the Company on the option gain. Any shares of
common stock that are reallocated shall increase the authorized
number of shares available for issuance by 1 share of
common stock if such shares were subject to stock options or
SARs and
11/2 shares
of common stock if such shares were subject to any other awards.
The Incentive Plan provides that if there is a stock split,
stock dividend or other event that affects the Companys
capitalization, appropriate adjustments will be made in the
number of shares that may be issued under the Incentive Plan and
in the number of shares and price of all outstanding grants and
awards made before such event.
The Incentive Plan also provides that no award may be granted
more than 10 years after the date it is approved by the
Companys stockholders.
Equity
Compensation Plan Information
Currently, 39,600,000 shares of common stock are reserved
for issuance under the Incentive Plan, giving effect to share
dividends/splits subsequent to the inception of the Incentive
Plan. As of December 31, 2009, the company had made
incentive awards amounting to 28,391,686 shares of the
common stock reserved for issuance under the Incentive Plan. As
a result of the awards, 12,517,735 shares of common stock
remained available for incentive awards under the Incentive Plan
as of that date. This amount includes shares available under the
2002 Plan and shares that have been forfeited or otherwise
terminated without issuance of shares.
47
As of December 31, 2009, the total number of shares of
common stock underlying outstanding options and restricted stock
grants made under the Incentive Plan was 16,546,067. The
15,862,843 options outstanding have exercise prices ranging from
$14.33 to $86.40 and vest over three or four years, depending on
the grant. Of the outstanding options, 6,180,147 are vested and
7,397,625 had exercise prices below the closing price of our
common stock at December 31, 2009, which we call in the
money. The aggregate value of the outstanding options that are
in the money, calculated based on the difference between the
exercise price for those options and the closing price for a
share of our common stock on the Nasdaq Global Select Market of
$33.58 on that date, was $117,863,950, of which $21,066,292 are
currently exercisable. The aggregate value of the
683,224 shares of outstanding restricted stock on
December 31, 2009, based on the closing price for a share
of our common stock on that date, was $22,942,662. Our executive
officers and directors as a group have been awarded 508,224 of
the outstanding restricted stock awards, with an aggregate value
at December 31, 2009 of $17,066,162. Our executive officers
and directors as a group have been awarded 4,234,398 of the
outstanding options with an aggregate value at December 31,
2009 of $37,749,923, of which 1,662,762 options with an
aggregate value at December 31, 2009 of $8,055,849 are
currently exercisable.
The following table sets forth information as of
December 31, 2009, with respect to compensation plans under
which shares of our common stock are authorized for issuance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
To Be Issued Upon
|
|
|
Weighted Average
|
|
|
Number of Securities
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Remaining Available For
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Future Issuance Under Equity
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Compensation
Plans(1)
|
|
|
Equity compensation plans approved by stockholders 2004
Incentive Compensation Plan (the Incentive Plan)
|
|
|
15,862,843
|
|
|
|
39.35
|
|
|
|
12,517,735
|
(2)
|
Equity compensation plans not approved by stockholders 2002
Management Incentive Plan (the 2002
Plan)(3)
|
|
|
27,958
|
|
|
|
0.42
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
15,890,801
|
|
|
|
|
|
|
|
12,517,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amounts exclude any securities to be issued upon exercise of
outstanding options, warrants and rights. |
|
(2) |
|
The Incentive Plan permits the grant of one or more of the
following awards: options, stock appreciation rights
(SAR), stock awards, performance stock awards,
incentive awards and stock units. The number of shares
authorized to be issued under the Incentive Plan will be reduced
by 1 share of common stock for each share of common stock
issued pursuant to a stock option or SAR and by
11/2 shares
of common stock for each share of common stock issued pursuant
to all other awards. |
|
(3) |
|
The 2002 Plan was adopted pursuant to the Revised Third Amended
Joint Plan of Reorganization and became effective on
November 12, 2002. The 2002 Plan provided for equity and
equity-related incentives to our directors, officers or key
employees and consultants up to a maximum of
13,333,332 shares of common stock subject to adjustments.
The 2002 Plan was administered by our Board of Directors. The
2002 Plan provided for the issuance of options for the purchase
of shares of common stock, as well as grants of shares of common
stock where the recipients rights may vest upon the
fulfillment of specified performance targets or the
recipients continued employment by us for a specified
period, or in which the recipients rights may be subject
to forfeiture upon a termination of employment. The 2002 Plan
also provided for the issuance to our non-affiliate directors,
officers or key employees and consultants of stock appreciation
rights whose value is tied to the market value per share, as
defined in the 2002 Plan, of the common stock, and performance
units which entitle the recipients to payments upon the
attainment of specified performance goals. The 2002 Plan
provided for the issuance of incentive stock options in
compliance with Section 422 of the Internal Revenue Code,
as well as non-qualified options which do not
purport to qualify for treatment under Section 422. All
options issued under the 2002 Plan include vesting provisions as
determined by the Board of Directors. |
|
(4) |
|
In 2004, the Board of Directors recommended, and the
stockholders approved, the Incentive Plan to succeed the 2002
Plan. As a result, no shares are available for any future awards
or grants under the 2002 Plan and any unissued shares under the
2002 Plan became subject to the Incentive Plan. |
48
Grants
and Awards under the Incentive Plan
The principal features of awards under the Incentive Plan are
summarized below.
Stock
Options
The Incentive Plan permits the grant of non-qualified stock
options. The exercise price for options will not be less than
the fair market value of a share of common stock on the date of
grant. Other than in connection with a corporate
recapitalization, the option price may not be reduced after the
date of grant. The period in which an option may be exercised is
determined by the Committee on the date of grant, but may not
exceed 10 years. Payment of the option exercise price may
be in cash, in a cash equivalent acceptable to the
administrator, using a cashless exercise with a broker, with
shares of common stock or with a combination of cash and shares
of common stock. If the agreement provides, payment may be made
by the Company by withholding shares of common stock upon
exercise to the extent permitted under applicable laws and
regulations. The Incentive Plan provides that a participant may
not be granted options in a calendar year for more than
1,000,000 shares of common stock.
Stock
Appreciation Rights
SARs may be granted either independently or in combination with
underlying stock options. Each SAR will entitle the holder upon
exercise to receive the excess of the fair market value of a
share of common stock at the time of exercise over the
SARs initial value, which cannot be less than the fair
market value of a share of common stock on the date of grant of
the SAR. Other than in connection with a corporate
recapitalization, the initial value of any SAR may not be
reduced after the date of grant. At the discretion of the
Committee, all or part of the payment in respect of a SAR may be
in cash, shares of common stock or a combination thereof. The
maximum period in which a SAR may be exercised is 10 years
from the date of its grant. No participant may be granted SARs
in a calendar year covering more than 1,000,000 shares of
common stock. For purposes of this limitation and the individual
limitation on the grant of options, a SAR and a related option
are treated as a single award.
Stock
Awards
The Company may also grant stock awards that entitle the
participant to receive shares of common stock, including common
stock that is issued to settle the Companys obligations
under its incentive compensation or deferral plan or any
successor plan. A participants rights in the stock award
will be forfeitable or otherwise restricted for a period of time
or subject to conditions set forth in the grant agreement. The
restrictions must include a period of restriction for at least
3 years, unless the stock award is granted in connection
with the settlement of performance shares, stock awards or an
incentive award or in the case of a substituted award. The
administrator may, in its discretion, waive the requirements for
vesting or transferability for all or part of the stock awards
in connection with a participants termination of
employment or service. The Incentive Plan provides that no
participant may be granted stock awards in any calendar year for
more than 500,000 shares of common stock.
Performance
Shares
Performance share awards entitle the participant to receive a
payment equal to the fair market value of a specified number of
shares of our common stock if certain performance objectives or
other conditions prescribed by the administrator and set forth
in the award agreement are satisfied. The performance period may
be shortened and the administrator may adjust the performance
objectives for all or part of the performance shares in
connection with a participants termination of employment
if the administrator finds that the circumstances of the
particular case justify doing so. To the extent that the
performance shares are earned, our payment obligation may be
settled in cash, shares of common stock, the grant of stock
units, or a combination of the three. The Incentive Plan
provides that no participant may be granted more than 500,000
performance shares in a calendar year.
Incentive
Awards
Incentive awards entitle the participant to receive a payment if
certain performance objectives or other conditions prescribed by
the administrator and set forth in the award agreement are
satisfied. The award may only be earned upon the satisfaction of
stated performance objectives during a performance period of at
least one year but no more than five years. The performance
objectives that apply to an incentive award may be based on the
performance criteria described below. The restrictions in the
award agreement must include a period of restriction for at
least three years or the attainment of stated performance
objectives. To the extent that incentive awards are earned, our
49
obligation will be settled in cash, shares of common stock, the
grant of stock units or a combination of the three. The
Incentive Plan provides that no person may be granted incentive
awards in any calendar year with a maximum possible payment of
more than $2,000,000 (in the case of awards with a performance
period of one year). The Incentive Plan also provides that no
person may be granted incentive awards in any calendar year with
a maximum possible payment of more than $200,000 times the
number of months in the performance period (in the case of
awards with a performance period greater than one year).
Stock
Units
The Committee may also award stock units, which is an award
stated with reference to a number of shares of common stock. The
award may entitle the recipient to receive, upon satisfaction of
performance objectives or other conditions prescribed by the
administrator and set forth in the award agreement, cash, shares
of common stock or a combination of both. The performance
objectives that apply to a stock unit award may be based on the
performance criteria described below. The restrictions in the
award agreement must include a period of restriction for at
least three years or the attainment of stated performance
objectives. The Incentive Plan provides that no participant may
be granted more than 500,000 stock units in a calendar year.
Performance
Criteria
The performance objectives stated with regard to an award may be
based on one or more of the following performance criteria:
(a) cash flow
and/or free
cash flow (before or after dividends), (b) earnings per
share as defined by the Company, (c) EBITDA, as defined by
the Company, (d) the price of common stock, (e) return
on equity, (f) total stockholder return, (g) return on
capital (including return on total capital or return on invested
capital), (h) return on assets or net assets,
(i) market capitalization, (j) total enterprise value
(market capitalization plus debt), (k) economic value
added, (l) debt leverage (debt to capital),
(m) revenue, (n) income (including net income,
operating income, pre or after-tax income or income from
continuing operations), (o) operating profit or net
operating profit, (p) operating margin or profit margin,
(q) return on operating revenue, (r) cash from
operations, (s) operating ratio, (t) cash flow per
share, (u) market share, (v) subscriber growth (on a
gross or net basis), (w) churn, (x) capital
expenditures, and (y) expense levels. Performance
objectives may be established on a Company-wide basis, on the
basis of smaller units of the Company or relative to the
performance of other companies. Measurement of the performance
objectives excludes the impact of certain unusual and
non-recurring events on the Companys financial statements.
Change of
Control Provisions
The Incentive Plan provides that in the event of a Change
of Control (as defined in the Incentive Plan), unless the
award is assumed, replaced or converted to the equivalent award
by the continuing entity, all outstanding awards will become
fully exercisable and the applicable restrictions on such awards
will lapse. Replacement awards will be earned, vested or
exercisable if the participant is terminated within
24 months of a change in control under a circumstance that
would require severance under the Companys severance
policy or agreement covering such participant.
Federal
Income Tax Consequences
The fair market value of any shares of common stock awarded to a
participant and any cash payments a participant receives in
connection with other awards under the Incentive Plan or as
dividends on restricted stock are taxable as ordinary income in
the year received or made available to the participant without
substantial limitations or restrictions. Generally, the Company
will be entitled to deduct the amount (other than dividends)
that the participant includes as income as a business expense in
the year the participant recognizes such income.
Section 162(m) of the Internal Revenue Code places a
$1 million annual limit on the deductible compensation of
certain executives of publicly traded corporations. The limit,
however, does not apply to qualified performance-based
compensation. The Company believes that grants of options
and SARs under the Incentive Plan will qualify for the
performance-based compensation exception to the deductibility
limit, assuming that the Incentive Plan is approved by the
stockholders. Stock awards, performance share awards, incentive
awards and stock units will also qualify for this exception to
the extent they are subject to the satisfaction of
stockholder-approved performance objectives and certain other
criteria are satisfied. Stock awards, performance share awards,
incentive awards and
50
stock units will also qualify for this exception to the extent
they are subject to the satisfaction of stockholder-approved
performance objectives and certain other criteria are satisfied.
State tax consequences may in some cases differ from those
described above. Grants and awards under the Incentive Plan may
in some instances be made to employees who are subject to tax in
jurisdictions other than the United States and may result in tax
consequences differing from those described above.
The principal federal tax consequences to participants and to
the Company of grants and awards under the Incentive Plan are
summarized below.
Nonqualified
Stock Options
Nonqualified stock options granted under the Incentive Plan are
not taxable to an optionee at grant but result in taxation at
exercise, at which time the individual will recognize ordinary
income in an amount equal to the difference between the option
exercise price and the fair market value of the common stock on
the exercise date. The Company will be entitled to deduct a
corresponding amount as a business expense in the year the
optionee recognizes this income.
Stock
Appreciation Rights
There are no immediate federal income tax consequences to a
participant when a SAR is granted. Instead, the participant
realizes ordinary income upon exercise of a SAR in an amount
equal to the cash
and/or the
fair market value (on the date of exercise) of the shares of
common stock received. The Company will be entitled to deduct
the same amount as a business expense at the time.
Stock
Awards
The federal income tax consequences of stock awards depend on
the restrictions imposed on the stock. Generally, the fair
market value of the stock received will not be includable in the
participants gross income until such time as the stock is
no longer subject to a substantial risk of forfeiture or becomes
transferable. The participant may, however, make a tax election
to include the value of the stock in gross income in the year of
receipt despite such restrictions. Generally, the Company will
be entitled to deduct the fair market value of the stock
transferred to the participant as a business expense in the year
the participant includes the compensation in income.
Performance
Share Awards
A participant generally will not recognize taxable income upon
the award of performance share awards. The participant, however,
will recognize ordinary income when the participant receives
payment of cash
and/or
shares of common stock for the performance share award. The
amount included in the participants income will equal the
amount of cash and the fair market value of the shares of common
stock received. The Company generally will be entitled to a
corresponding tax deduction at the time the participant
recognizes ordinary income with respect to performance share
awards.
Incentive
Awards
A participant generally will not recognize taxable income upon
the award of incentive awards. The participant, however, will
recognize ordinary income when the participant receives payment
of cash
and/or
shares of common stock for the incentive awards. The amount
included in the participants income will equal the amount
of cash and the fair market value of the shares of common stock
received. The Company generally will be entitled to a
corresponding tax deduction at the time the participant
recognizes ordinary income with respect to incentive awards.
Stock
Units
A participant generally will not recognize taxable income upon
the award of stock units. The participant, however, will
recognize ordinary income when the participant receives payment
of cash
and/or
shares of common stock for the stock unit. The amount included
in the participants income will equal the amount of cash
and the fair market value of the shares of common stock
received. The Company generally will be entitled to a
corresponding tax deduction at the time the participant
recognizes ordinary income with respect to stock units.
51
Amendment
and Termination
The Board of Directors may amend or terminate the Incentive Plan
at any time, provided that no such amendment will be made
without stockholder approval if (i) the amendment would
increase the aggregate number of shares of common stock that may
be issued under the Incentive Plan (other than as permitted
under the Incentive Plan), (ii) the amendment changes the
class of individuals eligible to become participants or
(iii) such approval is required under any applicable law,
rule or regulation.
Vote
Required
The amendment to increase the number of shares of common stock
authorized for issuance under the Incentive Plan must be
approved by the affirmative vote of a majority of the votes of
holders of record of the Companys common stock present at
the meeting and entitled to vote on the proposal.
Abstentions will be included in determining the number of votes
cast, but broker non-votes will not be included.
The
Board of Directors recommends that the stockholders vote
FOR the approval of the amendment to the 2004
Incentive Compensation Plan.
STOCKHOLDER
PROPOSALS FOR 2011 ANNUAL MEETING
Proposals by stockholders intended to be presented at the 2011
Annual Meeting must be forwarded in writing and received at our
principal executive office at 1875 Explorer Street, 10th Floor,
Reston, Virginia 20190 no later than December 1, 2010,
directed to the attention of our Vice President, General Counsel
and Secretary, for consideration for inclusion in our proxy
statement for that Annual Meeting. Moreover, with respect to any
proposal by a stockholder not seeking to have a proposal
included in our proxy statement but seeking to have a proposal
considered at the 2011 Annual Meeting, if that stockholder fails
to notify our Vice President, General Counsel and Secretary in
the manner set forth above no later than February 14, 2011,
then the persons who are appointed as proxies may exercise their
discretionary voting authority with respect to that proposal, if
the proposal is considered at the 2011 meeting, even if
stockholders have not been advised of the proposal in the proxy
statement for the 2011 Annual Meeting. Any proposals submitted
by stockholders must comply in all respects with the rules and
regulations of the Securities and Exchange Commission then in
effect and Delaware law.
IMPORTANT
INFORMATION
To assure your representation and a quorum for the
transaction of business at the Annual Meeting, we urge you to
please complete, sign, date and return the enclosed proxy card
promptly or otherwise vote by using the toll free number or
visiting the website listed on the proxy card if you are
eligible to do so.
OUR ANNUAL REPORT ON
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009, INCLUDING FINANCIAL
STATEMENTS, IS BEING MAILED TO STOCKHOLDERS WITH THIS PROXY
STATEMENT. ADDITIONAL COPIES OF OUR ANNUAL REPORT ON
FORM 10-K
MAY BE OBTAINED WITHOUT CHARGE BY: (1) WRITING TO NII
HOLDINGS, INC., 1875 EXPLORER STREET, 10TH FLOOR, RESTON,
VIRGINIA 20190, ATTENTION: VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY, OR (2) BY CONTACTING OUR INVESTOR RELATIONS
DEPARTMENT AT
703-390-5113.
THE ANNUAL REPORT IS NOT PART OF THE PROXY SOLICITATION
MATERIALS.
On March 8, 2010, the Company filed a current report on
Form 8-K
with the Securities and Exchange Commission solely for the
purpose of providing condensed consolidating financial
information included in a new footnote 14 to the financial
statements included in the Companys annual report on
Form 10-K
for the fiscal year ended December 31, 2009. The
consolidating financial information was added in connection with
the registration of certain senior notes issued by NII Capital
Corp. and guaranteed by the Company and certain of its
subsidiaries, and no other changes were made to the financial
statements. This
Form 8-K
is available at www.sec.gov.
52
Annex A
AMENDED
AND RESTATED
NII HOLDINGS, INC.
2004 INCENTIVE COMPENSATION PLAN
DATED MAY 11, 2010
NII
HOLDINGS, INC.
2004 Incentive Compensation Plan
Table of Contents
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ARTICLE I DEFINITIONS
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A-5
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1.01
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Accounting Firm
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A-5
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1.02
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Administrator
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A-5
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1.03
|
|
Agreement
|
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A-5
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1.04
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Award
|
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A-5
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1.05
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|
Board
|
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A-5
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1.06
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|
Change in Control
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A-5
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1.07
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Code
|
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A-6
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1.08
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Committee
|
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A-6
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1.09
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Common Stock
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A-6
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1.10
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Company
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A-6
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1.11
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Control Change Date
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A-6
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1.12
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Corresponding SAR
|
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A-6
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1.13
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Exchange Act
|
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A-6
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1.14
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Fair Market Value
|
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A-6
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1.15
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|
Incentive Award
|
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A-6
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1.16
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Initial Value
|
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A-6
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1.17
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|
Option
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A-6
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1.18
|
|
Participant
|
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A-7
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1.19
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|
Performance Criteria
|
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A-7
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1.20
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|
Performance Shares
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A-7
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1.21
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|
Plan
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|
A-7
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1.22
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|
SAR
|
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A-7
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1.23
|
|
Stock Award
|
|
|
A-7
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|
1.24
|
|
Stock Unit
|
|
|
A-7
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|
1.25
|
|
Subsidiary
|
|
|
A-7
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ARTICLE II PURPOSES
|
|
|
A-8
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ARTICLE III ADMINISTRATION
|
|
|
A-8
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ARTICLE IV ELIGIBILITY
|
|
|
A-9
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ARTICLE V STOCK SUBJECT TO PLAN
|
|
|
A-9
|
|
5.01
|
|
Shares Issued
|
|
|
A-9
|
|
5.02
|
|
Aggregate Limit
|
|
|
A-9
|
|
5.03
|
|
Reallocation of Shares
|
|
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A-10
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|
|
|
|
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ARTICLE VI OPTIONS
|
|
|
A-10
|
|
6.01
|
|
Award
|
|
|
A-10
|
|
6.02
|
|
Option Price
|
|
|
A-10
|
|
6.03
|
|
Maximum Option Period
|
|
|
A-10
|
|
6.04
|
|
Nontransferability
|
|
|
A-10
|
|
6.05
|
|
Transferable Options
|
|
|
A-10
|
|
6.06
|
|
Employee Status
|
|
|
A-11
|
|
6.07
|
|
Exercise
|
|
|
A-11
|
|
6.08
|
|
Payment
|
|
|
A-11
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|
A-2
|
|
|
|
|
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6.09
|
|
Change in Control
|
|
|
A-11
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|
6.10
|
|
Shareholder Rights
|
|
|
A-11
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|
|
|
|
|
|
|
|
|
|
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|
ARTICLE VII SARS
|
|
|
A-11
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|
7.01
|
|
Award
|
|
|
A-11
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|
7.02
|
|
Maximum SAR Period
|
|
|
A-12
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|
7.03
|
|
Nontransferability
|
|
|
A-12
|
|
7.04
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Transferable SARS
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7.05
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Exercise
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A-12
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7.06
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Change in Control
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A-12
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7.07
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Employee Status
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A-12
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7.08
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Settlement
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A-12
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7.09
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Shareholder Rights
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ARTICLE VIII STOCK AWARDS
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A-13
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8.01
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Award
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A-13
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8.02
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Vesting
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A-13
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8.03
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Employee Status
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A-13
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8.04
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Change in Control
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A-13
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8.05
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Shareholder Rights
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ARTICLE IX PERFORMANCE SHARE AWARDS
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9.01
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Award
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A-14
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9.02
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Earning the Award
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A-14
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9.03
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Payment
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9.04
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Shareholder Rights
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9.05
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Nontransferability
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A-14
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9.06
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Transferable Performance Shares
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9.07
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Employee Status
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A-15
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9.08
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Change in Control
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ARTICLE X INCENTIVE AWARDS
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10.01
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Award
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A-15
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10.02
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Terms and Conditions
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A-15
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10.03
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Payment
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A-15
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10.04
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Nontransferability
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A-15
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10.05
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Transferable Incentive Awards
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10.06
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Employee Status
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10.07
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Change in Control
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A-16
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10.08
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Shareholder Rights
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ARTICLE XI STOCK UNITS
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11.01
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Award
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A-16
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11.02
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Earning the Award
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A-16
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11.03
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Payment
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A-17
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11.04
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Nontransferability
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A-17
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11.05
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Shareholder Rights
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A-17
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11.06
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Change in Control
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ARTICLE XII ADJUSTMENT UPON CHANGE IN COMMON STOCK
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ARTICLE XIII COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY
BODIES
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A-3
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ARTICLE XIV GENERAL PROVISIONS
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14.01
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Effect on Employment and Service
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A-18
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14.02
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Unfunded Plan
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14.03
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Rules of Construction
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A-18
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14.04
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Tax Withholding
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A-18
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ARTICLE XV AMENDMENT
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ARTICLE XVI DURATION OF PLAN
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ARTICLE XVII EFFECTIVE DATE OF PLAN
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ARTICLE I
DEFINITIONS
1.01. Accounting Firm
Accounting Firm means the independent accounting firm engaged to
audit the Companys financial statements.
1.02. Administrator
Administrator means the Committee and any delegate of the
Committee that is appointed in accordance with Article III.
Notwithstanding the preceding sentence,
Administrator means the Board on any date on which
there is not a Committee.
1.03. Agreement
Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant
specifying the terms and conditions of an Award granted to such
Participant.
1.04. Award
Award means an award of Performance Shares, or a Stock Award,
Stock Unit, Incentive Award, Option or SAR granted to a
Participant.
1.05. Board
Board means the Board of Directors of the Company.
1.06. Change in Control
Change in Control means the occurrence of any of the events set
forth in any one of the following paragraphs:
(a) The Company is merged or consolidated or reorganized
into or with another company or other legal entity, and as a
result of such merger, consolidation or reorganization less than
a majority of the combined voting power of the then outstanding
securities of such resulting company or entity immediately after
such transaction is held directly or indirectly in the aggregate
by the holders of voting securities of the Company immediately
prior to such transaction, including voting securities issuable
upon the exercise or conversion of options, warrants or other
securities or rights; or
(b) The Company sells or otherwise transfers all or
substantially all of its assets to another company or other
legal entity, and as a result of such sale or other transfer of
assets, less than a majority of the combined voting power of the
then outstanding securities of such company or other entity
immediately after such sale or transfer is held directly or
indirectly in the aggregate by the holders of voting securities
of the Company immediately prior to such sale or transfer,
including voting securities issuable upon exercise or conversion
of options, warrants or other securities or rights; or
(c) Individuals who, as of the effective date of the Plan,
constitute the Board (the Incumbent Board) cease for
any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the Effective Date whose election, or nomination
for election by the Companys shareholders, was approved by
a vote of at least two thirds of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption
of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents
by or on behalf of a person or entity other than the
Board; or
(d) Approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company; or
(e) An acquisition by an individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (Exchange
Act)) of beneficial ownership (within the meaning of
Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either the
then outstanding shares (Outstanding Company Stock),
or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (Outstanding Company Voting
Securities), excluding, however, the following:
(i) any acquisition directly from the Company other
A-5
than the acquisition by virtue of the exercise of a conversion
privilege unless the security being so converted was itself
acquired directly from the Company, (ii) any acquisition by
the Company or any of its subsidiaries, or (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any of its
subsidiaries; or
(f) Approval by the Board of Directors of the Company of a
resolution that a Change in Control has occurred.
Notwithstanding the foregoing, a Change in Control
shall not be deemed to have occurred by virtue of the
consummation of any transaction or series of integrated
transactions immediately following which the recordholders of
the common stock of the Company immediately prior to such
transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.
1.07. Code
Code means the Internal Revenue Code of 1986, and any amendments
thereto.
1.08. Committee
Committee means the Compensation Committee of the Board.
1.09. Common Stock
Common Stock means the common stock of the Company.
1.10. Company
Company means NII Holdings, Inc.
1.11. Control Change Date
Control Change Date means the date on which a Change in Control
occurs. If a Change in Control occurs on account of a series of
transactions, the Control Change Date is the date of the last of
such transactions.
1.12. Corresponding SAR
Corresponding SAR means an SAR that is granted in relation to a
particular Option and that can be exercised only upon the
surrender to the Company, unexercised, of that portion of the
Option to which the SAR relates.
1.13. Exchange Act
Exchange Act means the Securities Exchange Act of 1934, as
amended from time to time.
1.14. Fair Market Value
Fair Market Value means, on any given date, the reported
closing price of a share of Common Stock on the
NASDAQ National Market System or the Principal Stock Exchange on
which the Common Stock is traded, or if the Common Stock was not
so traded on such day, then on the next preceding day that the
Common Stock was so traded.
1.15. Incentive Award
Incentive Award means a cash-denominated Award which, subject to
the terms and conditions as may be prescribed by the
Administrator, entitles the Participant to receive a payment, in
cash or Common Stock, Stock Units or a combination of cash,
Common Stock and Stock Units from the Company or a Subsidiary.
1.16. Initial Value
Initial Value means, with respect to a Corresponding SAR, the
option price per share of the related Option and, with respect
to an SAR granted independently of an Option, the price per
share of Common Stock as determined by the Administrator on the
date of the grant; provided, however, that the price per share
of Common Stock encompassed by the grant if an SAR shall not be
less than Fair Market Value on the date of grant. Except for an
adjustment authorized under Article XIII, the Initial Value
may not be reduced (by amendment or cancellation of the sale or
otherwise) after the date of grant.
1.17. Option
Option means a stock option that entitles the holder to purchase
from the Company a stated number of shares of Common Stock at
the price set forth in an Agreement, which is not intended to
comply with Code Section 422.
A-6
1.18. Participant
Participant means an employee of the Company or a Subsidiary, a
member of the Board or the board of directors of a Subsidiary or
any consultant or advisor to the Company or a Subsidiary who
satisfies the requirements of Article IV and is selected by
the Administrator to receive an Award.
1.19. Performance Criteria
Performance Criteria means one or more of (a) cash flow
and/or free
cash flow (before or after dividends), (b) earnings per
share as defined by the Company, (c) EBITDA (as defined by
the Company), (d) the price of Common Stock,
(e) return on equity, (f) total shareholder return,
(g) return on capital (including return on total capital or
return on invested capital), (h) return on assets or net
assets, (i) market capitalization, (j) total
enterprise value (market capitalization plus debt),
(k) economic value added (or equivalent metric),
(l) debt leverage (debt to capital), (m) revenue,
(n) income (including net income, operating income, pre or
after-tax income or income from continuing operations),
(o) operating profit or net operating profit,
(p) operating margin or profit margin, (q) return on
operating revenue, (r) cash from operations,
(s) operating ratio, (t) cash flow per share,
(u) market share (v) subscriber growth (on a gross or
net basis), (w) churn, (x) capital expenditures, and
(y) expense levels. Measurement of Performance Criteria
against goals excludes the impact of charges for restructurings,
discontinued operations, extraordinary items, and other unusual
or non-recurring items, and the cumulative effects of accounting
changes, each as defined by Generally Accepted Accounting
Principles and as identified in the financial statements or
Managements Discussion and Analysis in the Annual Report.
Performance Criteria may be established on a Company-wide basis,
with respect to one or more business units, divisions or
subsidiaries; and in either absolute terms or relative to the
performance of one or more comparable companies or an index
covering multiple companies.
1.20. Performance Shares
Performance Shares means an Award, in the amount determined by
the Administrator and specified in an Agreement, stated with
reference to a specified number of shares of Common Stock or
Stock Units, that entitles the holder to receive a payment for
each specified share equal to the Fair Market Value of Common
Stock on the date of payment.
1.21. Plan
Plan means the NII Holdings, Inc. 2004 Incentive Compensation
Plan.
1.22. SAR
SAR means a stock appreciation right that entitles the holder to
receive, with respect to each share of Common Stock encompassed
by the exercise of such SAR, the excess, if any, of the Fair
Market Value at the time of exercise over the Initial Value.
References to SARs include both Corresponding SARs
and SARs granted independently of Options, unless the context
requires otherwise.
1.23. Stock Award
Stock Award means Common Stock or Stock Units awarded to a
Participant under Article VIII, including shares issued in
settlement of benefit obligations under the Companys
incentive compensation or deferral plan or any successor thereto.
1.24. Stock Unit
Stock Unit means an Award, in the amount determined by the
Administrator and specified in an Agreement, stated with
reference to a specified number of shares of Common Stock, that
entitles the holder to receive a payment for each Stock Unit
equal to the Fair Market Value of a share of Common Stock on the
date of payment. Each Stock Unit Award shall be adjusted (from
the date of grant to the date of payment), to reflect the
payment of dividends on the comparable number of shares of
Common Stock and the adjustment shall be in the form of
additional Stock Units as if such dividends had been invested in
Common Stock on the dividend payment date.
1.25. Subsidiary
Subsidiary means a corporation, partnership, joint venture,
unincorporated association or other entity in which the
Corporation has a direct or indirect ownership or other equity
interest that represents, directly or indirectly, more
A-7
than 50 percent of the total combined voting power
represented by all classes of stock or other ownership or equity
interest units issued by such corporation, partnership, joint
venture, unincorporated association or other entity.
ARTICLE II
PURPOSES
The Plan is intended to assist the Company and its Subsidiaries
in recruiting and retaining individuals with ability and
initiative by enabling such persons to participate in the future
success of the Company and its Subsidiaries and to associate
their interests with those of the Company and its shareholders.
The Plan is intended to permit the grant of Options, SARs, Stock
Awards, Stock Units, Incentive Awards and Performance Shares.
The proceeds received by the Company from the sale of Common
Stock pursuant to this Plan shall be used for general corporate
purposes.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Administrator. The
Administrator shall have authority to grant Awards, upon such
terms (not inconsistent with the provisions of this Plan), as
the Administrator may consider appropriate; provided, however,
that for 2004 no Awards may be made covering an aggregate number
of shares of Common Stock in excess of 4,000,000. Such terms may
include conditions (in addition to those contained in this Plan)
on the exercisability of all or any part of an Option or SAR or
on the transferability or forfeitability of a Stock Award, Stock
Unit, Incentive Award or an award of Performance Shares,
including by way of example and not of limitation, requirements
that the Participant complete a specified period of employment
or service with the Company or a Subsidiary, requirements that
the Company achieve a specified level of financial performance
or that the Company achieve a specified level of financial
return. Notwithstanding any such conditions, the Administrator
may, in its discretion, accelerate the time at which any Option
or SAR may be exercised, or the time at which a Stock Award may
become transferable or nonforfeitable or both, or the time at
which an award of Performance Shares, Stock Unit or Incentive
Award may be settled. In addition, the Administrator shall have
complete authority to interpret all provisions of this Plan; to
prescribe the form of Agreements; to adopt, amend, and rescind
rules and regulations pertaining to the administration of the
Plan; and to make all other determinations necessary or
advisable for the administration of this Plan. The express grant
in the Plan of any specific power to the Administrator shall not
be construed as limiting any power or authority of the
Administrator. Any decision made, or action taken, by the
Administrator in connection with the administration of this Plan
shall be final and conclusive. Neither the Administrator nor any
member of the Committee shall be liable for any act done in good
faith with respect to this Plan or any Agreement or Award. All
expenses of administering this Plan shall be borne by the
Company, a Subsidiary or a combination thereof.
The Committee, in its discretion, may delegate to one or more
officers of the Company all or part of the Committees
authority and duties with respect to grants and awards to
individuals who are not subject to the reporting and other
provisions of Section 16 of the Exchange Act. The Committee
may revoke or amend the terms of a delegation at any time but
such action shall not invalidate any prior actions of the
Committees delegate or delegates that were consistent with
the terms of the Plan.
Any other provision of this Plan to the contrary
notwithstanding, the Committee may, in its discretion, specify
that grants and Awards to any United States national who is
employed by the Company or provides services to the Company or a
Subsidiary outside of the United States, or to any foreign
national who is employed by the Company or provides services to
the Company or a Subsidiary, can be made on such terms and
conditions that are different from those specified in the Plan
and which, in the judgment of the Committee, are necessary and
desirable to further the purposes of the Plan; other than with
respect to (i) the applicable individual limitation on
grants and awards set forth in Plan sections 6.01, 7.01,
8.01, 9.01, 10.01 and 11.01; and (ii) the criteria for
establishing the Option price described in Plan
section 6.02 or SAR Initial Value.
A-8
ARTICLE IV
ELIGIBILITY
Any employee of the Company, any member of the Board, any
employee or director of a Subsidiary (including a corporation
that becomes a Subsidiary after the adoption of this Plan) or
any consultant or advisor to the Company or a Subsidiary is
eligible to participate in this Plan if the Administrator, in
its sole discretion, determines that such person has contributed
or can be expected to contribute to the profits or growth of the
Company or a Subsidiary.
ARTICLE V
STOCK
SUBJECT TO PLAN
5.01. Shares Issued
Upon the Award of shares of Common Stock pursuant to a Stock
Award or in settlement of an Award of Performance Shares, Stock
Units or Incentive Award, the Company may issue shares of Common
Stock from its authorized but unissued Common Stock. Upon the
exercise of any Option or SAR the Company may deliver to the
Participant (or the Participants broker if the Participant
so directs), shares of Common Stock from its authorized but
unissued Common Stock.
5.02. Aggregate Limit
(a) The maximum aggregate number of shares of Common Stock
that may be issued under this Plan, pursuant to the exercise of
SARs and Options, the grant of Stock Awards and the settlement
of Performance Shares, Stock Units and Incentive Awards is
59,600,000 shares plus any shares of Common Stock
remaining available for grant under the NII Holdings, Inc. 2002
Management Incentive Plan (the Prior Plan) on the effective date
of the Plan. The maximum aggregate number of shares that may be
issued under this Plan shall be subject to adjustment as
provided in Article XIII.
(b) With respect to grants of SARs and Options, the maximum
aggregate number of shares shall be reduced by one share of
Common Stock for each share of Common Stock issued pursuant to
such grants. With respect to all other Awards made under the
Plan, the maximum aggregate number of shares shall be reduced by
one and one-half shares of Common Stock for each share of Common
Stock issued under such Awards.
(c) Any Awards that are substituted pursuant to
Article XIII shall not reduce the shares of Common Stock
authorized for issuance under the Plan or authorized for grant
to a Participant in any calendar year. In the event that a
company acquired by the Company or any Subsidiary or with which
the Company or any Subsidiary combines has shares available
under a pre-existing plan approved by shareholders and not
adopted in contemplation of such acquisition or combination, the
shares available for grant pursuant to the terms of such
pre-existing plan (as adjusted, to the extent appropriate, using
the exchange ratio or other adjustment or valuation ratio or
formula used in such acquisition or combination to determine the
consideration payable to the holders of common stock of the
entities party to such acquisition or combination) may be used
for Awards under the Plan and shall not reduce the maximum
aggregate number of shares of Common Stock authorized for
issuance under the Plan; provided that Awards using such
available shares shall not be made after the date awards or
grants could have been made under the terms of the pre-existing
plan absent the acquisition or combination, and shall only be
made to individuals who were not employees or directors of the
Company or any Subsidiary prior to such acquisition or
combination.
(d) Awards made as a material inducement to a person
becoming an employee of the Company or any Subsidiary, including
new employees in connection with a merger or acquisition, or a
former employee being rehired as an employee following a bona
fide period of interruption of employment, shall not reduce the
maximum aggregate number of shares of Common Stock authorized
for issuance under the Plan if the Committee determines to not
grant such Awards under the Plan.
(e) Shares of Common Stock issued pursuant to elective
deferred compensation accounts that are credited as deferred
Stock Units shall not reduce the maximum aggregate number of
shares of Common Stock authorized for issuance under the Plan.
A-9
5.03. Reallocation of Shares
(a) If any shares of Common Stock subject to an Award or to
an award under the Prior Plan are forfeited, expire or otherwise
terminate without the issuance of shares of Common Stock or any
Award under the Prior Plan is settled for cash or otherwise does
not result in the issuance of all or a portion of the shares of
Common Stock subject to such Award or award under the Prior
Plan, the shares of Common Stock shall, to the extent of such
forfeiture, expiration, termination, cash settlement or
non-issuance, again be available for Awards under the Plan,
subject to paragraph (d) below.
(b) If shares of Common Stock are surrendered either
actually or by attestation or withheld (i) pursuant to the
exercise of an Option or other Award under the Plan or award
under the Prior Plan or (ii) in satisfaction of tax
withholding requirements with respect to Awards under the Plan
or awards under the Prior Plan, the number of shares surrendered
or withheld may be reallocated to other Awards to be granted
under this Plan.
(c) Shares of Common Stock reacquired by the Company on the
open market using cash acquired pursuant to the exercise of an
Option shall be available for Awards under the Plan. Cash
proceeds include payment of the Option price and the value of
the Companys tax deduction on the Option gain. The
increase in shares of Common Stock available pursuant to the
repurchase of shares of Common Stock with such proceeds shall
not be greater than the amount of such proceeds divided by the
Fair Market Value of a share of Common Stock on the date of
exercise of the Option giving rise to such Option proceeds.
(d) Any shares of Common Stock that are reallocated
pursuant to this Section 5.03 shall increase the maximum
aggregate number of shares available for issuance under the Plan
by one share of Common Stock if such shares were subject to
Options or SARs granted under the Plan and as one and on-half
shares of Common Stock if such shares were subject to Awards
other than Options or SARs granted under the Plan.
ARTICLE VI
OPTIONS
6.01. Award
In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom an Option
is to be granted and will specify the number of shares of Common
Stock covered by each such Award; provided, however that no
Participant may be granted Options in any calendar year covering
more than 1,000,000 shares of Common Stock.
6.02. Option Price
The price per share for Common Stock purchased on the exercise
of an Option shall be determined by the Administrator on the
date of grant, but shall not be less than the Fair Market Value
on the date the Option is granted. Except for an adjustment
authorized under Article XIII, the Option price may not be
reduced (by amendment or cancellation of the Option or
otherwise) after the date of grant.
6.03. Maximum Option Period
The maximum period in which an Option may be exercised shall be
ten years from the date such Option was granted. The terms of
any Option may provide that it has a term that is less than such
maximum period.
6.04. Nontransferability
Except as provided in Section 6.05, each Option granted
under this Plan shall be nontransferable except by will or by
the laws of descent and distribution. In the event of any
transfer of an Option (by the Participant or his transferee),
the Option and any Corresponding SAR that relates to such Option
must be transferred to the same person or persons or entity or
entities. Except as provided in Section 6.05, during the
lifetime of the Participant to whom the Option is granted, the
Option may be exercised only by the Participant. No right or
interest of a Participant in any Option shall be liable for, or
subject to, any lien, obligation, or liability of such
Participant.
6.05. Transferable Options
Section 6.04 to the contrary notwithstanding, if the
Agreement provides, an Option may be transferred by a
Participant to the Participants children, grandchildren,
spouse, one or more trusts for the benefit of such family
members or a partnership in which such family members are the
only partners, on such terms and conditions as may
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be permitted under Securities Exchange Commission
Rule 16b-3
as in effect from time to time. The holder of an Option
transferred pursuant to this Section shall be bound by the same
terms and conditions that governed the Option during the period
that it was held by the Participant; provided, however, that
such transferee may not transfer the Option except by will or
the laws of descent and distribution. In the event of any
transfer of an Option (by the Participant or his transferee),
the Option and any Corresponding SAR that relates to such Option
must be transferred to the same person or persons or entity or
entities.
6.06. Employee Status
In the event that the terms of any Option provide that it may be
exercised only during employment or continued service or within
a specified period of time after termination of employment or
service, the Administrator may decide to what extent leaves of
absence for governmental or military service, illness, temporary
disability, or other reasons shall not be deemed interruptions
of continuous employment or service.
6.07. Exercise
Subject to the provisions of this Plan and the applicable
Agreement, an Option may be exercised in whole at any time or in
part from time to time at such times and in compliance with such
requirements as the Administrator shall determine. An Option
granted under this Plan may be exercised with respect to any
number of whole shares less than the full number for which the
Option could be exercised. A partial exercise of an Option shall
not affect the right to exercise the Option from time to time in
accordance with this Plan and the applicable Agreement with
respect to the remaining shares subject to the Option. The
exercise of an Option shall result in the termination of any
Corresponding SAR to the extent of the number of shares with
respect to which the Option is exercised.
6.08. Payment
Unless otherwise provided by the Agreement, payment of the
Option price shall be made in cash or a cash equivalent
acceptable to the Administrator or to the extent permitted under
the Agreement, by a cashless exercise through a securities
broker. Subject to rules established by the Administrator,
payment of all or part of the Option price may be made with
shares of Common Stock which have been owned by the Participant
for at least six months and which have not been used for another
Option exercise during the prior six months. If Common Stock is
used to pay all or part of the Option price, the sum of the cash
and cash equivalent and the Fair Market Value (determined as of
the day preceding the date of exercise) of the shares
surrendered must not be less than the Option price of the shares
for which the Option is being exercised.
6.09. Change in Control
Section 6.07 to the contrary notwithstanding, unless an
outstanding Option is assumed, replaced or converted to an
equivalent award by the continuing entity, each outstanding
Option shall be fully exercisable (in whole or in part at the
discretion of the holder) upon a Change in Control. Any such
replacement Awards shall be fully exercisable, vested or earned
if the Participant is terminated within twenty-four months of a
Change in Control in a circumstance that requires the payment of
severance under the NII Holdings, Inc. Change of Control
Protection Plan or the NII Holdings, Inc. Severance Policy or
any successors or substitutes for such plans. An Option that
becomes exercisable pursuant to this Section 6.09 shall
remain exercisable thereafter in accordance with the terms of
the Agreement.
6.10. Shareholder Rights
No Participant shall have any rights as a shareholder with
respect to shares subject to his Option until the date of
exercise of such Option.
ARTICLE VII
SARS
7.01. Award
In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom SARs are to
be granted and will specify the number of shares covered by each
such Award; provided, however, no Participant may be granted
SARs in any calendar year covering more than
1,000,000 shares of Common Stock. For purposes of the
foregoing limit, an Option and Corresponding SAR shall be
treated as a single Award.
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7.02. Maximum SAR Period
The maximum period in which an SAR may be exercised shall be ten
years from the date such SAR was granted. The terms of any SAR
may provide that it has a term that is less than such maximum
period.
7.03. Nontransferability
Except as provided in Section 7.04, each SAR granted under
this Plan shall be nontransferable except by will or by the laws
of descent and distribution. In the event of any such transfer,
a Corresponding SAR and the related Option must be transferred
to the same person or persons or entity or entities. Except as
provided in Section 7.04, during the lifetime of the
Participant to whom the SAR is granted, the SAR may be exercised
only by the Participant. No right or interest of a Participant
in any SAR shall be liable for, or subject to, any lien,
obligation, or liability of such Participant.
7.04. Transferable SARs
Section 7.03 to the contrary notwithstanding, if the
Agreement provides, an SAR, may be transferred by a Participant
to the Participants children, grandchildren, spouse, one
or more trusts for the benefit of such family members or a
partnership in which such family members are the only partners,
on such terms and conditions as may be permitted under
Securities Exchange Commission
Rule 16b-3
as in effect from time to time. The holder of an SAR transferred
pursuant to this Section shall be bound by the same terms and
conditions that governed the SAR during the period that it was
held by the Participant; provided, however, that such transferee
may not transfer the SAR except by will or the laws of descent
and distribution. In the event of any transfer of a
Corresponding SAR (by the Participant or his transferee), the
Corresponding SAR and the related Option must be transferred to
the same person or person or entity or entities.
7.05. Exercise
Subject to the provisions of this Plan and the applicable
Agreement, an SAR may be exercised in whole at any time or in
part from time to time at such times and in compliance with such
requirements as the Administrator shall determine. An SAR
granted under this Plan may be exercised with respect to any
number of whole shares less than the full number for which the
SAR could be exercised. A partial exercise of an SAR shall not
affect the right to exercise the SAR from time to time in
accordance with this Plan and the applicable Agreement with
respect to the remaining shares subject to the SAR. The exercise
of a Corresponding SAR shall result in the termination of the
related Option to the extent of the number of shares with
respect to which the SAR is exercised.
7.06. Change in Control
Section 7.05 to the contrary notwithstanding, unless the
outstanding SAR is assumed, converted or replaced with an
equivalent award by the continuing entity, each outstanding SAR
shall be fully exercisable (in whole or in part at the
discretion of the holder) upon a Change in Control. Any such
replacement Awards shall be fully exercisable, vested or earned
if the Participant is terminated within twenty-four months of a
Change in Control in a circumstance that requires the payment of
severance under the NII Holdings, Inc. Change of Control
Protection Plan or the NII Holdings, Inc. Severance Policy or
any successors or substitutes for such plans. An SAR that
becomes exercisable pursuant to this Section 7.06 shall
remain exercisable thereafter in accordance with the terms of
the Agreement.
7.07. Employee Status
If the terms of any SAR provide that it may be exercised only
during employment or continued service or within a specified
period of time after termination of employment or service, the
Administrator may decide to what extent leaves of absence for
governmental or military service, illness, temporary disability
or other reasons shall not be deemed interruptions of continuous
employment or service.
7.08. Settlement
At the Administrators discretion, the amount payable as a
result of the exercise of an SAR may be settled in cash, Common
Stock, or a combination of cash and Common Stock. No fractional
share will be deliverable upon the exercise of an SAR but a cash
payment will be made in lieu thereof.
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7.09. Shareholder Rights
No Participant shall, as a result of receiving an SAR, have any
rights as a shareholder of the Company until the date that the
SAR is exercised and then only to the extent that the SAR is
settled by the issuance of Common Stock.
ARTICLE VIII
STOCK AWARDS
8.01. Award
In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom a Stock
Award is to be made and will specify the number of shares of
Common Stock covered by each such Award; provided, however, that
no Participant may receive Stock Awards in any calendar year for
more than 500,000 shares of Common Stock.
8.02. Vesting
The Administrator, on the date of the Award, may prescribe that
a Participants rights in a Stock Award shall be
forfeitable or otherwise restricted for a period of time or
subject to such conditions as may be set forth in the Agreement.
The restrictions set forth in the Agreement must include a
period of restriction for at least three years; provided,
however, that such restrictions shall not apply in the case of a
Stock Award granted in connection with the settlement of
Performance Shares, Stock Awards or an Incentive Award or in the
case of a substitute Award pursuant to Article XIII or in
settlement of benefit obligations under the Companys
incentive compensation or deferral plans. By way of example and
not of limitation, the restrictions may postpone transferability
of the shares or may provide that the shares will be forfeited
if the Participant separates from the service of the Company and
its Subsidiaries before the expiration of a stated period. The
Administrator, in its discretion, may waive the requirements for
vesting or transferability for all or part of the shares subject
to a Stock Award in connection with a Participants
termination of employment or service.
8.03. Employee Status
In the event that the terms of any Stock Award provide that
shares may become transferable and nonforfeitable thereunder
only after completion of a specified period of employment or
service, the Administrator may decide in each case to what
extent leaves of absence for governmental or military service,
illness, temporary disability, or other reasons shall not be
deemed interruptions of continuous employment or service.
8.04. Change in Control
Sections 8.02 and 8.03 to the contrary notwithstanding,
unless an outstanding Stock Award is assumed, replaced or
converted to an equivalent award by the continuing entity, each
outstanding Stock Award shall be transferable and nonforfeitable
upon a Change in Control. Any such replacement Awards shall be
fully exercisable, vested or earned if the Participant is
terminated within twenty-four months of a Change in Control in a
circumstance that requires the payment of severance under the
NII Holdings, Inc. Change of Control Protection Plan or the NII
Holdings, Inc. Severance Policy or any successors or substitutes
for such plan.
8.05. Shareholder Rights
Prior to their forfeiture (in accordance with the applicable
Agreement and while the shares of Common Stock granted pursuant
to the Stock Award may be forfeited or are nontransferable), a
Participant will have all the rights of a shareholder with
respect to a Stock Award, including the right to receive
dividends and vote the shares; provided, however, that during
such period (i) a Participant may not sell, transfer,
pledge, exchange, hypothecate, or otherwise dispose of shares of
Common Stock granted pursuant to a Stock Award, (ii) the
Company shall retain custody of the certificates evidencing
shares of Common Stock granted pursuant to a Stock Award, and
(iii) the Participant will deliver to the Company a stock
power, endorsed in blank, with respect to each Stock Award. The
limitations set forth in the preceding sentence shall not apply
after the shares of Common Stock granted under the Stock Award
are transferable and are no longer forfeitable.
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ARTICLE IX
PERFORMANCE
SHARE AWARDS
9.01. Award
In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom an Award of
Performance Shares is to be made and will specify the number of
shares of Common Stock covered by each such Award; provided,
however, that no Participant may receive an Award of Performance
Shares in any calendar year for more than 500,000 shares of
Common Stock.
9.02. Earning the Award
The Administrator, on the date of the grant of an Award, shall
prescribe that the Performance Shares, or a portion thereof,
will be earned, and the Participant will be entitled to receive
payment pursuant to the Award of Performance Shares, only upon
the satisfaction of performance objectives or such other
criteria as may be prescribed by the Administrator and set forth
in the Agreement. The restrictions set forth in the Agreement
must include the attainment of performance objectives, including
performance objectives stated with reference to Performance
Criteria; provided, however, that such restrictions shall not
apply in the case of a Stock Award granted in connection with
the settlement of Performance Shares, Stock Awards or an
Incentive Award or in the case of a substitute Award pursuant to
Article XIII. By way of example and not of limitation, the
performance objectives or other criteria may provide that the
Performance Shares will be earned only if the Participant
remains in the employ or service of the Company or a Subsidiary
for a stated period and that the Company, a Subsidiary, the
Company and its Subsidiaries or the Participant achieve stated
objectives. Notwithstanding the preceding sentences of this
Section 9.02, the Administrator, in its discretion, may
reduce the duration of the performance period and may adjust the
performance objectives for outstanding Performance Shares in
connection with a Participants termination of employment
or service.
9.03. Payment
In the discretion of the Administrator, the amount payable when
an Award of Performance Shares is earned may be settled in cash,
by the issuance of Common Stock, grant of Stock Units or a
combination of cash, Common Stock
and/or Stock
Units. A fractional share shall not be deliverable when an Award
of Performance Shares is earned, but a cash payment will be made
in lieu thereof.
9.04. Shareholder Rights
No Participant shall, as a result of receiving an Award of
Performance Shares, have any rights as a shareholder until and
to the extent that the Award of Performance Shares is earned and
settled by the issuance of Common Stock. After an Award of
Performance Shares is earned, if settled completely or partially
in Common Stock, a Participant will have all the rights of a
shareholder with respect to such Common Stock.
9.05. Nontransferability
Except as provided in Section 9.06, Performance Shares
granted under this Plan shall be nontransferable except by will
or by the laws of descent and distribution. No right or interest
of a Participant in any Performance Shares shall be liable for,
or subject to, any lien, obligation, or liability of such
Participant.
9.06. Transferable Performance Shares
Section 9.05 to the contrary notwithstanding, if the
Agreement provides, an Award of Performance Shares may be
transferred by a Participant to the Participants children,
grandchildren, spouse, one or more trusts for the benefit of
such family members or a partnership in which such family
members are the only partners, on such terms and conditions as
may be permitted under Securities Exchange Commission
Rule 16b-3
as in effect from time to time. The holder of Performance Shares
transferred pursuant to this Section shall be bound by the same
terms and conditions that governed the Performance Shares during
the period that they were held by the Participant; provided,
however, that such transferee may not transfer Performance
Shares except by will or the laws of descent and distribution.
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9.07. Employee Status
In the event that the terms of any Performance Share Award
provide that no payment will be made unless the Participant
completes a stated period of employment or service, the
Administrator may decide to what extent leaves of absence for
government or military service, illness, temporary disability,
or other reasons shall not be deemed interruptions of continuous
employment or service.
9.08. Change in Control
Section 9.02 to the contrary notwithstanding, upon a Change
in Control, unless an outstanding Performance Share Award is
assumed, replaced or converted to an equivalent award by the
continuing entity, each outstanding Performance Share Award
shall be earned pro-rata based on the fraction (using nearest
whole months) of the performance period that has elapsed from
the beginning of the performance period until the Control Change
Date. Any such replacement Awards shall be fully exercisable,
vested or earned if the Participant is terminated within
twenty-four months of a Change in Control in a circumstance that
requires the payment of severance under the NII Holdings, Inc.
Change of Control Protection Plan or the NII Holdings, Inc.
Severance Policy or any successors or substitutes for such
plans.. The amount payable for Performance Shares that are
earned pursuant to this Section 9.08 shall be settled in
cash or Common Stock or a combination of cash and Common Stock
as determined by the Administrator in its discretion on the
first day following the Control Change Date.
ARTICLE X
INCENTIVE
AWARDS
10.01. Award
The Administrator shall designate Participants to whom Incentive
Awards are made. All Incentive Awards shall be finally
determined exclusively by the Administrator under the procedures
established by the Administrator. With respect to an Incentive
Award based on a performance period of one year, no Participant
may receive an Incentive Award payment in any calendar year that
exceeds $2,000,000. With respect to an Incentive Award based on
a performance period of more than one year, no Participant may
receive an Incentive Award payment in any calendar year that
exceeds the product of (i) $200,000 and (ii) the
number of months in the performance period.
10.02. Terms and Conditions
The Administrator, at the time an Incentive Award is made, shall
specify the terms and conditions which govern the Award. Such
terms and conditions shall prescribe that the Incentive Award
shall be earned only upon, and to the extent that, performance
objectives are satisfied during a performance period of at least
one year but no more than five years after the grant of the
Incentive Award. The restrictions set forth in the Agreement
must include the attainment of performance objectives, including
performance objectives stated with reference to Performance
Criteria. By way of example and not of limitation, the
performance objectives may provide that the Incentive Award will
be earned only if the Company, a Subsidiary or the Company and
its Subsidiaries or the Participant achieve stated objectives,
including objectives stated with reference to Performance
Criteria. The Administrator, at the time an Incentive Award is
made, shall also specify when amounts shall be payable under the
Incentive Award and whether amounts shall be payable in the
event of the Participants death, disability, or retirement.
10.03. Payment
In the discretion of the Administrator, the Award payable when
an Incentive Award is earned, may be settled in cash, by the
issuance of Common Stock, grant of Stock Units, or a combination
of cash, Common Stock
and/or Stock
Units.
10.04. Nontransferability
Except as provided in Section 10.05, Incentive Awards
granted under this Plan shall be nontransferable except by will
or by the laws of descent and distribution. No right or interest
of a Participant in an Incentive Award shall be liable for, or
subject to, any lien, obligation, or liability of such
Participant.
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10.05. Transferable Incentive Awards
Section 10.04 to the contrary notwithstanding, if provided
in an Agreement, an Incentive Award may be transferred by a
Participant to the Participants children, grandchildren,
spouse, one or more trusts for the benefit of such family
members or to a partnership in which such family members are the
only partners, on such terms and conditions as may be permitted
by
Rule 16b-3
under the Exchange Act as in effect from time to time. The
holder of an Incentive Award transferred pursuant to this
Section shall be bound by the same terms and conditions that
governed the Incentive Award during the period that it was held
by the Participant; provided, however, that such transferee may
not transfer the Incentive Award except by will or the laws of
descent and distribution.
10.06. Employee Status
If the terms of an Incentive Award provide that a payment will
be made thereunder only if the Participant completes a stated
period of employment or service, the Administrator may decide to
what extent leaves of absence for governmental or military
service, illness, temporary disability or other reasons shall
not be deemed interruptions of continuous employment or service.
10.07. Change in Control
Section 10.02 to the contrary notwithstanding, unless an
outstanding Incentive Award is assumed, replaced or converted to
an equivalent award by the continuing entity, upon a Change in
Control, each outstanding Incentive Award shall be earned
pro-rata based on the fraction (using nearest whole months) of
the performance period that has elapsed from the beginning of
the performance period until the Control Change Date. Any such
replacement Awards shall be fully exercisable, vested or earned
if the Participant is terminated within twenty-four months of a
Change in Control in a circumstance that requires the payment of
severance under the NII Holdings, Inc. Change of Control
Protection Plan or the NII Holdings, Inc. Severance Policy or
any successors or substitutes for such plans.
10.08. Shareholder Rights
No Participant shall, as a result of receiving an Incentive
Award, have any rights as to shareholder of the Company or any
Subsidiary on account of such Award until, and except to the
extent that, the Incentive Award is earned and settled in shares
of Common Stock.
ARTICLE XI
STOCK UNITS
11.01. Award
In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom an Award of
Stock Units is to be made and will specify the number of Stock
Units covered by such Awards; provided, however, that no
Participant may be awarded Stock Units for more than
500,000 shares of Common Stock in any calendar year.
11.02. Earning the Award
The Administrator, on the date of grant of the Award, may
prescribe that the Stock Units or a portion thereof, will be
earned only upon, and the Participant will be entitled to
receive a payment pursuant to the Award of Stock Units, only
upon the satisfaction of performance objectives or such other
criteria as may be prescribed by the Administrator and set forth
in the Agreement. The restrictions set forth in the Agreement
must include a period of restriction of at least three years or
the attainment of performance objectives, including performance
objectives stated with reference to Performance Criteria;
provided, however, that such restrictions shall not apply in the
case of a Stock Unit granted in connection with the Settlement
of Performance Shares, Stock Awards or an Incentive Award or in
the case of a substitute Award pursuant to Article XIII. By
way of example and not of limitation, the Performance Criteria
or other criteria may provide that the Stock Units will be
earned only if the Participant remains in the employ or service
of the Company or a Subsidiary for a stated period or that the
Company, a Subsidiary, the
A-16
Company and its Subsidiaries or the Participant achieve stated
objectives including performance objectives stated with
reference to Performance Criteria. Notwithstanding the preceding
sentences of this Section 11.02, the Administrator, in its
discretion, may reduce the duration of the performance period
and may adjust the performance objectives for outstanding Stock
Units in connection with a Participants termination of
employment or service.
11.03. Payment
In accordance with the Agreement, the amount payable when an
award of Stock Units is earned may be settled in cash, Common
Stock or a combination of cash and Common Stock. A fractional
share shall not be deliverable when an Award of Stock Units is
earned, but a cash payment will be made in lieu thereof.
11.04. Nontransferability
A Participant may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of a Stock Unit Award other
than by will or the laws of descent and distribution. The
limitations set forth in the preceding sentence shall not apply
to Common Stock issued as payment pursuant to a Stock Unit Award.
11.05. Shareholder Rights
No Participant shall, as a result of receiving a Stock Unit
Award, have any rights as a shareholder of the Company or
Subsidiary until and to the extent that the Stock Units are
earned and settled in shares of Common Stock. After Stock Units
are earned and settled in shares of Common Stock, a Participant
will have all the rights of a shareholder with respect to such
shares.
11.06. Change in Control
Section 11.02 to the contrary notwithstanding, unless an
outstanding Stock Unit is assumed, replaced or converted to an
equivalent award by the continuing entity, each Stock Unit shall
be earned in its entirety as of a Control Change Date without
regard to whether any Performance Criteria or other condition to
which the award is subject have been met. Any such replacement
Awards shall be fully exercisable, vested or earned if the
Participant is terminated within twenty-four months of a Change
in Control in a circumstance that requires the payment of
severance under the NII Holdings, Inc. Change of Control
Protection Plan or the NII Holdings, Inc. Severance Policy or
any successors or substitutes for such plans.
ARTICLE XII
ADJUSTMENT
UPON CHANGE IN COMMON STOCK
The maximum number of shares as to which Awards may be granted
under this Plan; and the terms of outstanding Awards; and the
per individual limitations on the number of shares of Common
Stock for which Awards may be granted shall be adjusted as the
Committee shall determine to be equitably required in the event
that (a) the Company (i) effects one or more stock
dividends, stock
split-ups,
subdivisions or consolidations of shares or (ii) engages in
a transaction to which Section 424 of the Code applies, or
(b) there occurs any other event which, in the judgment of
the Committee necessitates such action. Any determination made
under this Article XIII by the Committee shall be final and
conclusive.
The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for
cash or property, or for labor or services, either upon direct
sale or upon the exercise of rights or warrants to subscribe
therefore, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities, shall
not affect, and no adjustment by reason thereof shall be made
with respect to, the maximum number of shares as to which Awards
may be granted, the per individual limitations on the number of
shares of Common Stock for which Awards may be granted or the
terms of outstanding Awards.
The Committee may make Awards in substitution for performance
shares, phantom shares, stock awards, stock options, stock
appreciation rights, or similar awards held by an individual who
becomes an employee of the Company or a Subsidiary in connection
with a transaction or event described in the first paragraph of
this Article XIII. Notwithstanding any provision of the
Plan (other than the limitation of Section 5.02), the terms
of such substituted Awards shall be as the Committee, in its
discretion, determines is appropriate.
A-17
ARTICLE XIII
COMPLIANCE
WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option or SAR shall be exercisable, no Common Stock shall be
issued, no certificates for shares of Common Stock shall be
delivered, and no payment shall be made under this Plan except
in compliance with all applicable federal and state laws and
regulations (including, without limitation, withholding tax
requirements), any listing agreement to which the Company is a
party, and the rules of all domestic stock exchanges on which
the Companys shares may be listed. The Company shall have
the right to rely on an opinion of its counsel as to such
compliance. Any share certificate issued to evidence Common
Stock when a Stock Award is granted, a Performance Share,
Incentive Award or Stock Unit is settled or for which an Option
or SAR is exercised may bear such legends and statements as the
Administrator may deem advisable to assure compliance with
federal and state laws and regulations. No Option or SAR shall
be exercisable, no Stock Award, Stock Unit or Performance Share
shall be granted, no Common Stock shall be issued, no
certificate for shares shall be delivered, and no payment shall
be made under this Plan until the Company has obtained such
consent or approval as the Administrator may deem advisable from
regulatory bodies having jurisdiction over such matters.
ARTICLE XIV
GENERAL
PROVISIONS
14.01. Effect on Employment and Service
Neither the adoption of this Plan, its operation, nor any
documents describing or referring to this Plan (or any part
thereof), shall confer upon any individual any right to continue
in the employ or service of the Company or a Subsidiary or in
any way affect any right or power of the Company or a Subsidiary
to terminate the employment or service of any individual at any
time with or without assigning a reason therefore.
14.02. Unfunded Plan
The Plan, insofar as it provides for grants, shall be unfunded,
and the Company shall not be required to segregate any assets
that may at any time be represented by grants under this Plan.
Any liability of the Company to any person with respect to any
grant under this Plan shall be based solely upon any contractual
obligations that may be created pursuant to this Plan. No such
obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.
14.03. Rules of Construction
Headings are given to the articles and sections of this Plan
solely as a convenience to facilitate reference. The reference
to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such
provision of law.
14.04. Tax Withholding
Each Participant shall be responsible for satisfying any income
and employment tax withholding obligation attributable to
participation in this Plan. In accordance with procedures
established by the Administrator, a Participant may surrender
shares of Common Stock, or receive fewer shares of Common Stock
than otherwise would be issuable, in satisfaction of all or part
of that obligation.
ARTICLE XV
AMENDMENT
The Board may amend or terminate this Plan from time to time;
provided, however, that no amendment may become effective until
shareholder approval is obtained if (i) the amendment
increases the aggregate number of shares of Common Stock that
may be issued under the Plan (other than an adjustment pursuant
to Article XIII) or (ii) the amendment changes
the class of individuals eligible to become Participants. No
amendment shall, without a Participants consent, adversely
affect any rights of such Participant under any Award
outstanding at the time such amendment is made.
A-18
ARTICLE XVI
DURATION OF
PLAN
No Award may be granted under this Plan more than ten years
after the earlier of the date the Plan is adopted by the Board
or the date that the Plan is approved in accordance with
Article XVIII. Awards granted before that date shall remain
valid in accordance with their terms.
ARTICLE XVII
EFFECTIVE
DATE OF PLAN
Options, SARs, Incentive Awards, Stock Units and Performance
Shares may be granted under this Plan upon its adoption by the
Board, provided that no Option, SAR, Incentive Award, Stock
Units or Performance Shares shall be effective or exercisable
unless this Plan is approved by a majority of the votes by the
Companys shareholders entitled to vote and present, either
in person or by proxy, at a duly held shareholders meeting
at which a quorum is present or by unanimous consent. Stock
Awards may be granted under this Plan, upon the later of its
adoption by the Board or its approval by shareholders in
accordance with the preceding sentence.
A-19
et
MR A SAMPLE
DESIGNATION (IF ANY)
ADD 1 Electronic Voting Instructions
ADD 2
ADD 3 You can vote by Internet or telephone! ADD 4 Available 24 hours a day, 7 days a week!
ADD 5 Instead of mailing your proy, you may choose one of the two voting ADD 6 methods
outlined below to vote your proy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proies submitted by the Internet or telephone must be received by 11:59 p.m. Eastern Time on May
10, 2010.
Vote by Internet
Log on to the Internet and go to www.envisionreports.com/nihd
Follow the steps outlined on the secured website.
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Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada any time on a
touch tone telephone. There is NO CHARGE to you for the call.
Using a black ink pen, mark your votes with an as shown in Follow the instructions
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Annual Meeting Proy Card 1234 5678 9012 345
3 IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND
RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3
A Proposals The Board of Directors recommends a vote FOR the listed nominees and FOR the
following proposals.
1. Election of Directors. For Withhold For Withhold For Withhold
01 Steven P. Dussek 02 Donald Guthrie 03 Steven M. Shindler
For Against Abstain For Against Abstain
2. Ratification of PricewaterhouseCoopers LLP as our 3. Amendment of 2004 Incentive
Compensation Plan to Independent Registered Public Accounting Firm for fiscal increase
authorized shares available for issuance. year 2010.
B Non-Voting Items
Change of Address Please print your new address below.
C Authorized Signatures This section must be completed for your vote to be counted. Date and
Sign Below
Please sign eactly as name appears. When shares are held by joint tenants, both should sign. When
signing as attorney, eecutor, administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in corporations name by President or other authorized officer. If a
partnership, please sign in partnerships name by authorized person.
Date (mm/dd/yyyy) Please print date below. Signature 1 Please keep signature within the
bo. Signature 2 Please keep signature within the bo.
1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE
140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND
MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND
015LTD |
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND
RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. 3
Proy NII Holdings, Inc.
This Proy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints Gary D. Begeman, Gokul Hemmady and Shana C. Smith, and each or any
of them, proies for the undersigned, with power of substitution, to vote all the shares of common
stock of NII Holdings, Inc. held of record by the undersigned on March 19, 2010 at the Annual
Meeting of Stockholders of NII Holdings, Inc. to be held at 10:00 a.m. Eastern Time on May 11,
2010, and at any adjournments thereof, upon the matters listed on the reverse side, as more fully
set forth in the Proy Statement, and for the transaction of such other business as may properly
come before the Annual Meeting and any adjournments thereof.
THIS PROY, WHEN PROPERLY EECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON THE REVERSE SIDE BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROY WILL BE VOTED FOR ALL NOMINEES IN
PROPOSAL I, FOR PROPOSAL II AND FOR PROPOSAL III.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
(continued and to be DATED and SIGNED on reverse side) |