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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant
[X]
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Filed by a Party other than
the Registrant [ ]
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Check the appropriate
box:
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[ ]
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Preliminary Proxy
Statement
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Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
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[X]
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Definitive Proxy
Statement
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Definitive Additional
Materials
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Soliciting Material Pursuant to §240.14a-12
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NII Holdings, Inc.
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(Name of Registrant as
Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment of Filing Fee (Check
the appropriate box):
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[X]
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No fee required.
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Fee computed on
table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1)
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Title of each class of
securities to which transaction applies:
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Aggregate number of securities to
which transaction applies:
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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):
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4)
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously
with preliminary materials.
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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.
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1)
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Amount Previously
Paid:
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2)
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Form, Schedule or Registration
Statement No.:
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Filing Party:
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Date Filed:
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Table of Contents
ANNUAL MEETING OF
STOCKHOLDERS
April 27, 2016
DEAR FELLOW
STOCKHOLDERS:
You are invited to attend the 2016 Annual
Meeting of Stockholders of NII Holdings, Inc., which is to be held on May 25,
2016 at 10:00 a.m. Eastern Time at NIIs U.S. headquarters located at 1875
Explorer Street, Suite 800, Reston, Virginia 20190. At the Annual Meeting, you
will be asked to elect one director to serve a one-year term, cast an advisory
vote on executive compensation, cast an advisory vote on the frequency of
executive compensation advisory votes and ratify the appointment of KPMG LLP as
our independent registered public accounting firm for fiscal year
2016.
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 form.
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.
The proxy statement and the Companys
annual report on Form 10-K for the fiscal year ended December 31, 2015 are
available at www.proxyvote.com.
Thank you for your ongoing support of NII
Holdings, Inc.
Sincerely,
Kevin L. Beebe
Chairman of the Board of Directors
NII Holdings,
Inc.
1875 Explorer Street, Suite 800
Reston, VA 20190
www.nii.com
Table of Contents
NOTICE OF ANNUAL
MEETING OF STOCKHOLDERS
May 25, 2016 at 10:00 a.m. Eastern
Time
NIIs U.S. Headquarters located at
1875 Explorer Street, Suite 800, Reston, VA 20190
We will hold the Annual Meeting of
Stockholders of NII Holdings, Inc. (NII) on May 25, 2016 at 10:00 a.m. Eastern
Time at NIIs U.S. headquarters, located at 1875 Explorer Street, Suite 800,
Reston, Virginia 20190 (703-390-5100).
At our Annual Meeting, our stockholders
will be asked to:
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1.
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Elect one director,
Steven M. Shindler, for a one-year term ending 2017;
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2.
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Provide an advisory
vote to approve the compensation of our named executive
officers;
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3.
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Provide an advisory
vote on the frequency of future executive compensation advisory
votes;
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4.
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Ratify the appointment
of KPMG LLP as NIIs independent registered public accounting firm for
fiscal year 2016; and
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5.
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Transact any other
business that properly comes before the Annual Meeting and any
adjournments thereof.
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The Board of Directors of NII recommends
that you vote FOR the nominee for director; FOR the approval, on an advisory
basis, of the compensation of the Companys named executive officers; FOR the
approval, on an advisory basis, of an annual advisory vote on executive
compensation; and FOR the ratification of the appointment of KPMG LLP as NIIs
independent registered public accounting firm.
Only stockholders of record as of April 1,
2016 can vote at the Annual Meeting.
April 27, 2016
By Order of the Board of
Directors,
Kevin L. Beebe
Chairman of the Board of
Directors
IMPORTANT NOTICE REGARDING THE
AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDERS MEETING TO BE HELD ON MAY
25, 2016.
The proxy statement and the Companys
annual report on Form 10-K for the fiscal year ended December 31, 2015 are
available at www.proxyvote.com.
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TABLE OF
CONTENTS
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3
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Time and Place of
Annual
Meeting
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The Annual Meeting will be held on May 25,
2016 at 10:00 a.m. Eastern Time at our U.S. headquarters located at 1875
Explorer Street, Suite 800, Reston 20190, Virginia, USA.
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Enclosed
Materials
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Enclosed are the following
materials:
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the proxy statement for the Annual Meeting;
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the Companys annual report on Form 10-K for the year
ended December 31, 2015, as filed with the Securities and Exchange
Commission on March 3, 2016; and
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the proxy card or vote instruction form for the Annual
Meeting.
We are providing these proxy
materials in connection with the Boards solicitation of proxies to be
voted at the Annual Meeting. We commenced mailing this proxy statement and
the enclosed form of proxy to our stockholders entitled to vote at the
meeting on or about April 27, 2016.
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Management
Proposals
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At the Annual Meeting, stockholders
will be asked to:
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elect Steven M. Shindler to the Board to serve for a
one-year term ending 2017 (Item 1 on the proxy card);
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provide an advisory vote on the compensation of the
Companys named executive officers (Item 2 on the proxy
card);
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provide an advisory vote on the frequency of executive
compensation advisory votes (Item 3 on the proxy card);
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ratify the appointment of KPMG LLP as the Companys
independent registered public accounting firm for the fiscal year 2016
(Item 4 of 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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Stockholders Entitled to
Vote
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The holders of common stock at the
close of business on April 1, 2016, or the Record Date, are entitled to
receive notice of, to attend and to vote one vote per share on each matter
at the Annual Meeting or any adjournment or postponement of the Annual
Meeting.
As of the Record Date, there were
100,899,961 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.
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How to Vote
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Stockholder of
Record
. If you are a stockholder of
record (that is, stockholders who hold their shares in their own name),
there are four ways to vote:
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In person.
You may vote in person at the Annual Meeting. The
Company will give you a ballot when you arrive.
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Via the Internet.
You may vote by proxy via the Internet by
following the instructions provided on the proxy card.
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By Telephone.
You may vote by proxy by calling the toll free number
found on the proxy card.
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By Mail.
You may vote by proxy by filling out the proxy card and
sending it back in the envelope provided.
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If you are a stockholder of record
and a current employee of the Company, you will receive an e-mail
containing instructions on how to access our proxy materials and how to
vote your shares on the Internet.
Beneficial Owner
. If you are a beneficial owner of shares held in street
name (that is, shares held in the name of a bank, broker or other holder
of record), the materials were forwarded to you by the organization
holding your account and there are up to four ways to
vote:
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In person.
If you wish to vote in person at the Annual Meeting, you
must obtain a legal proxy from the organization that holds your shares.
Please contact that organization for instructions regarding obtaining a
legal proxy.
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Via the Internet.
You may be eligible to vote by proxy via the
Internet by following the instructions on the vote instruction
form.
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By Telephone.
You may be eligible to vote by proxy by following the
instructions on the vote instruction form.
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By Mail.
You may vote by proxy by filling out the vote
instruction form and sending it back in the envelope
provided.
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Quorum
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The presence of, by person or by
proxy, the 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 constitutes a quorum and is necessary for the transaction of
business at the Annual Meeting.
An inspector of election will
determine the presence of a quorum and tabulate the results of the voting
by stockholders at the Annual Meeting. The inspectors will treat valid
proxies marked abstain or proxies required to be treated as broker
non-votes (which occurs when a broker has not received voting instructions
on a matter and either does not vote the shares on that matter or is not
entitled to vote on that matter without instruction but has voted on
another matter the broker is entitled to vote on) as present for purposes
of determining whether there is a quorum at the Annual
Meeting.
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Voting
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All shares represented by valid
proxies received prior to the Annual Meeting will be voted and, where a
stockholder specifies by means of the proxy a choice with respect to any
matter to be acted upon, the shares will be voted in accordance with the
stockholders instructions.
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Effect of Not
Providing
Voting
Instructions
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Stockholder of
Record
. If you are a stockholder of
record and you sign, date and return the enclosed proxy card but do not
specify how to vote, then your shares will be voted in accordance with the
recommendations of the Board on all matters presented in this proxy
statement and as the proxy holders may determine in their discretion
regarding any other matters properly presented for a vote at the Annual
Meeting or any adjournments thereof.
If you are a current employee of the
Company, you will receive an e-mail containing instructions on how to
access our proxy materials and how to vote your shares on the
Internet.
Beneficial Owner
. If you are a beneficial owner of shares held in street
name and hold your shares through a broker, bank or other financial
institution, and you do not provide the broker or other nominee that holds
your shares with voting instructions, the broker or other nominee will
determine if it has the discretionary authority to vote on a particular
matter. Brokers and other nominees have the discretion to vote on routine
matters such as Proposal 4, but do not have the discretion to vote on
non-routine matters such as Proposals 1, 2 and 3. Therefore, if you do not
provide voting instructions to your broker or other nominee, your broker
or other nominee may only vote your shares on Proposal 4 and any other
routine matters properly presented for a vote at the Annual
Meeting.
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Vote Standard
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In uncontested elections, directors
are elected if they receive a majority of the votes cast for each director
at the Annual Meeting. A majority of the votes cast means that the number
of votes cast for a director must exceed the number of votes cast
against that director. Abstentions and broker non-votes will not be
counted as votes against a director.
Proposals 2 and 4 require the
approval of a majority of the votes cast on the matter, excluding any
abstentions or broker non-votes.
For Proposal 3, the voting frequency
that receives the greatest number of votes cast in favor of that response
will be selected as the preferred frequency of future advisory votes on
executive compensation.
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Broker Non-Votes
and
Abstentions
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A broker non-vote occurs when a
broker or nominee holding shares for a beneficial owner votes on one
proposal, but does not have discretionary voting power to vote on another
proposal because the broker or nominee has not received instructions from
the beneficial owner of the shares. A broker cannot vote on the election
of directors, the advisory vote on executive compensation or the advisory
vote on the frequency of executive compensation advisory votes without
receiving instructions from the beneficial owner of the shares.
While broker non-votes will be
treated as present for purposes of determining whether there is a quorum,
they will not be counted for purposes of determining the number of votes
cast with respect to a particular proposal. Accordingly, a broker non-vote
will be counted in order to obtain a quorum and will not be counted or
otherwise affect the outcome of the vote with respect to matters 1, 2, 3
and 4.
Abstentions with respect to the
election of directors will not be counted as votes either for or
against the directors election. Abstentions with respect to matters 2,
3 and 4 will not be counted as a vote cast or otherwise affect the outcome
of the vote with respect to such proposals.
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Changing Your
Vote
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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. 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. If you are a stockholder of record,
you can revoke your proxy or change your vote in one of five
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 vote again on a later date on the Internet (only
your latest Internet proxy submitted prior to
the
Annual Meeting will be counted);
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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.
If you choose either of the first
three methods, we must receive the described notice or proxy no later than
the beginning of the Annual Meeting. If you choose the fourth or fifth
methods, you will 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, Suite 800, Reston, Virginia 20190,
Attention: General Counsel. Any notice of revocation that is delivered at
the Annual Meeting should be hand delivered to our General Counsel 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 you are a stockholder of record
and a current employee of the Company, you will receive an e-mail
containing instructions on how to access our proxy materials and how to
vote your shares on the Internet.
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Voting
Results
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The preliminary voting results will
be announced at the Annual Meeting. The final voting results will be
tallied by the inspector of election and published in the Companys
Current Report on Form 8-K, which the Company is required to file with the
Securities and Exchange Commission within four business days following the
Annual Meeting and can be accessed on the investor relations area of our
website at
www.nii.com
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Householding
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In an effort to reduce the Companys
printing and mailing costs as well as minimizing the environmental impact
of the Companys annual meetings, the Company will deliver a single copy
of the proxy materials to multiple stockholders who share the same address
unless the Company has received instructions to the contrary from one or
more of the stockholders at that address. You may request a separate copy
of the proxy materials by writing or calling the Company at the following
address and telephone number:
Investor Relations
NII Holdings,
Inc.
1875 Explorer Street, Suite 800
Reston, Virginia, 20190
(703) 547-5209
Stockholders who hold shares in
street name may contact the organization holding their account to request
information about householding.
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Cost of
Solicitation
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The cost of soliciting proxies for
the Annual Meeting will be borne by the Company. We have hired Broadridge
Financial Solutions, Inc. (Broadridge) to help us send out the proxy
materials and expect Broadridges fee for this service to be about
$20,000. While we do not expect to incur additional solicitation expenses,
the Company may incur additional expenses in order to encourage voting on
a particular matter. 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 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.
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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.
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We are committed to effective corporate
governance and high ethical standards because we believe that these values
support our long-term performance. Under our current governance framework, the
Board, working with senior management and our stockholders, has implemented the
following corporate governance practices to support our values:
Corporate Governance
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86% Independent Board
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Independent Chair
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Independent Audit, Compensation and Corporate Governance and
Nominating Committees
Stockholder Rights
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Declassified Board in 2017
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Majority Voting for Directors
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Stockholder Right to Call Special Meeting
CORPORATE GOVERNANCE
FRAMEWORK
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The Board is responsible for the oversight
of management on behalf of our stockholders, and the Board accomplishes this
function acting directly and through its committees. Directors discharge their
duties at Board and committee meetings and also through telephone contact and
other communications with management and others regarding matters of concern and
interest to the Company. In accordance with our policies, our corporate
governance is managed under the following structure, details of the roles and
responsibilities of each of these elements are outlined further
below:
We have an independent Chair of the Board
who presides over meetings of the Board of Directors and annual meetings of
stockholders and serves as a liaison between the Board of Directors and senior
management. Our leadership 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. The Board recognizes that there is no
single generally accepted approach to providing Board leadership and that the
Boards leadership structure may vary in the future as circumstances
warrant.
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The specific roles and responsibilities of
the Boards committees are delineated in written charters adopted by the Board
for each committee and are reviewed annually by the Corporate Governance and
Nominating Committee in accordance with our Corporate Governance Guidelines. As
provided in their charters, each committee is authorized to engage or consult
from time to time, as appropriate, at our expense, with outside independent
legal counsel or other experts or advisors it deems necessary, appropriate or
advisable to discharge its duties. Each member of the Audit Committee,
Compensation Committee and Corporate Governance and Nominating Committee is
independent in accordance with the NASDAQ Stock Market (NASDAQ) listing rules
and the Securities Exchange Act of 1934, as amended, as applicable. Below is a
summary of the primary responsibilities of each committee.
Audit:
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Oversight of the quality and integrity of our financial
statements and related disclosures, and our accounting, auditing, and
reporting practices.
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Review of our processes to manage financial risk, and
for compliance with significant applicable legal, ethical and regulatory
requirements.
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Appointment, replacement, compensation and oversight of
the independent registered public accounting firm engaged to prepare and
issue audit reports on our financial statements.
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Oversight of our internal audit
function.
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Compensation:
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Review and approve our annual executive compensation and
executive compensation program and philosophy.
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Oversee the administration of our equity-based
compensation and other benefit plans and the compensation programs and
philosophy for non-executive employees.
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Approve grants of stock options and stock awards to
directors, officers and employees under our stock plan.
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Corporate Governance
and
Nominating:
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Promote the effective and efficient governance of the
Company, including the development and periodic assessment of ethics and
corporate governance policies.
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Assist the Board in the oversight of management
succession planning.
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Oversee the Board and committee annual evaluation
process.
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Develop qualifications for director candidates and
recommend to the Board persons to serve as directors and as members of the
Boards committees.
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CORPORATE GOVERNANCE POLICIES AND
PRACTICES
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We manage our business and affairs in
accordance with the Delaware General Corporation Law and a number of key
governance documents, including our Corporate Governance Guidelines, Amended and
Restated Certificate, Fifth Amended and Restated Bylaws, Code of Conduct and
Business Ethics, and Board Committee Charters. Our Board reevaluates our
policies and practices on an ongoing basis to ensure high standards of business
conduct that facilitate the Boards execution of its responsibilities.
Additional information is provided below regarding key corporate governance and
ethics policies and practices that we believe enable us to manage our business
in accordance with the highest standards of business practices and in the best
interest of our stockholders.
In accordance with our Corporate
Governance Guidelines, a majority of our Board must be independent as defined by
the NASDAQ listing rules and the Securities Exchange Act of 1934, as amended. On
February 17, 2016, the Board determined that the following six of its seven
current members (86%) are independent: Kevin L. Beebe (Chair), James V.
Continenza, Howard S. Hoffmann, Ricardo Knoepfelmacher, Christopher T. Rogers
and Robert A. Schriesheim. In making that determination, the Board considered
the relationships described below in Certain Relationships and Related
Transactions. The Audit Committee, Compensation Committee, and Corporate
Governance and Nominating Committee are comprised entirely of independent
directors.
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Our Board 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. Our Corporate Governance Guidelines set forth
the responsibilities of our Board, including the Boards oversight of the
Companys risk assessment and risk audit functions and provides for specific
actions to mitigate certain risks. 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 these aspects of the Companys business.
The Companys Code of Conduct and Business Ethics establishes standards of
conduct for employees that are designed to mitigate risks associated with the
Companys and its employees compliance with legal requirements, foster ethical
conduct by employees in dealing with the Company and others and protect company
assets. The Company requires that all employees receive annual training relating
to the Code of Conduct and Business 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 is involved in the assessment of risks relevant to their area of
responsibility and the implementation of actions designed 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:
Audit:
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Risks related to the Companys tax, accounting,
financial reporting systems and processes, internal controls, and its
legal and regulatory compliance.
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The committee holds regular meetings 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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Compensation:
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Risks relating to the Companys compensation and benefit
programs.
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The committee retains an independent compensation
consultant to assist it in satisfying its 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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Corporate Governance
and
Nominating:
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Risks related to the Companys corporate governance and
management.
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The committee reviews, and implements changes to, the
Companys policies relating to corporate governance, ethics and related
processes; assists the Board in management succession planning; and
selects and recommends individuals nominated to our Board in an effort to
ensure that a majority of the members of the Board are independent and
have appropriate time, skills and experiences necessary to assist the
Board in its oversight role.
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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,
market 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 internal audit plan that identifies the
business activities and processes that will be reviewed and analyzed by the
internal audit group during the year. The Audit Committee approves the risk
assessment and annual internal audit plan to be carried out by the internal
audit group and receives detailed reports concerning the results of each review,
including recommendations made to address risks that are identified and actions
taken by management with respect to those recommendations. 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 is regularly informed through management and
committee reports about risks, our risk assessment and the internal audit
groups annual review plan.
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CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
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Our Corporate Governance Guidelines
require that the Audit Committee review and approve or ratify transactions
involving the Company and related persons (such as the Companys officers,
directors, family members of the officers and directors and other related
parties) in accordance with the requirements of NASDAQ. 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. 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, there are no related person
transactions that require disclosure.
CODE
OF CONDUCT AND BUSINESS ETHICS
|
The Companys Code of Conduct and Business
Ethics covers our directors, officers and employees, including the directors,
officers and employees of our operating subsidiaries in Brazil. The Code of
Conduct and Business 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. The Company requires that all employees receive
annual training relating to the Code of Conduct and Business Ethics and related
policies in order to ensure that employees are familiar with those standards of
conduct.
Only the Board or the Audit Committee may
consider a waiver of the Code of Conduct and Business Ethics for an executive
officer or director. If a provision of the Code of Conduct and Business Ethics
is materially modified, or if a waiver of the Code of Conduct and Business
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
www.nii.com
. No such
waivers were granted during 2015.
HEDGING, SHORT SALE AND PLEDGING
POLICIES
|
Historically, the Company has discouraged
its employees from engaging in short sales, hedging transactions, transactions
involving publicly traded options and pledging involving the Companys
securities. In 2012, the Board adopted a policy prohibiting all employees
(including executive officers and directors) from engaging in any transaction
involving our common stock that may be viewed as speculative, including buying
or selling puts, calls or options, short sales, hedging transactions or
purchases of our common stock on margin.
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.
11
Table of Contents
AVAILABILITY OF GOVERNANCE
INFORMATION
|
Our governance documents, including the
charters of the Audit, Compensation, and Corporate Governance and Nominating
Committees may be viewed free of charge on the Investor Relations link of our
website at
www.nii.com
. The charters and our Code of Conduct and Business Ethics may
also be obtained by writing to us at NII Holdings, Inc., 1875 Explorer Street,
Suite 800, Reston, Virginia 20190, Attention: Investor Relations.
STOCKHOLDER COMMUNICATIONS WITH THE
BOARD
OF
DIRECTORS
|
As provided for in our Corporate
Governance Guidelines, stockholders may communicate directly with the Board by
electronic mail sent to
boardinquiries@nii.com
or by regular
mail sent to the address below. The Board has instructed the Board
Communications Designee to examine incoming communications to determine whether
the communications are relevant to the Boards roles and responsibilities. The
Board has authorized the Board Communications Designee to disregard or discard
inappropriate communications such as spam, business solicitations or
advertisements, resumes or similar communications. The Board Communications
Designee will forward any service inquiries or complaints to the appropriate
groups within the Company for processing and response.
The Board Communications Designee will
review all appropriate communications and report such communications to the
chair of or the Corporate Governance and Nominating Committee, the Board, or the
independent directors, as appropriate. The Board Communications Designee will
take additional action or respond to letters in accordance with instructions
from the relevant Board source. Communications relating to the Companys
accounting, internal accounting controls or auditing matters will be referred
promptly to members of the Audit Committee. Stockholder communications to the
Board should be sent to:
Shana C. Smith
Board Communications
Designee
NII Holdings, Inc.
1875 Explorer
Street, Suite 800
Reston, Virginia 20190
12
Table of Contents
Our Board consists of seven directors.
Each of the directors of the Board was appointed in connection with our plan of
reorganization, which became effective on our emergence from our Chapter 11
bankruptcy proceedings on June 26, 2015, and determined to be qualified to serve
on the Board by The Capital Group Companies, Inc. (Capital Group), Aurelius
Capital Management, LP (Aurelius) and the informal group of holders of notes
issued by NII International Telecom (the LuxCo Group), the creditors who had
the right to make the appointments. Pursuant to the plan of reorganization, our
chief executive officer, who was a member of our board of directors and our
chief executive officer when we filed a voluntary petition seeking relief under
Chapter 11 of the U.S. Bankruptcy Code in September 2014, was appointed to our
Board of Directors. In addition, Capital Group designated three of our
directors, Aurelius designated one director and the LuxCo Group designated two
of our directors that comprise our current seven-member Board. Until the annual
meeting of stockholders to be held in 2017, the directors are divided into two
classes, designated as Class I and Class II. The initial term for the one
director in Class I, Mr. Shindler, expires at the annual meeting of stockholders
to be held in 2016, and thereafter at each annual meeting of stockholders. The
term for all of the other directors who are in Class II expires at the annual
meeting of stockholders to be held in 2017. All directors will be elected
annually, commencing at the annual meeting of stockholders to be held in
2017.
Each of our directors brings a strong and
unique background and set of skills to the Board, giving the Board as a whole
competence and experience in a wide variety of areas, including:
●
|
experience in senior executive
positions in the telecommunications and other industries and service on
the board of directors of other companies including telecommunications
companies;
|
●
|
experience in key management and
operating roles for large, complex organizations, including technology and
manufacturing companies, operators of wireless networks, retailers and
companies with international operations and, specifically, operations in
Latin America;
|
●
|
experience serving on other public
company boards, including serving on audit, compensation and other
committees responsible for oversight of corporate governance and related
issues; and
|
●
|
experience in financing, capital
markets and strategic 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.
|
The Corporate Governance and Nominating
Committee and the Board believe that these and the other skills and experiences
brought to the Board by its members position the Board to be able to fulfill its
oversight role and to evaluate and advise management with respect to a wide
variety of matters 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 as part of
the directors biographies below.
13
Table of Contents
DIRECTOR NOMINATION
PROCEDURES
|
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. In addition, the Corporate Governance and Nominating Committee has
adopted guidelines for the evaluation of potential director nominees. These
guidelines set forth standards by which potential nominees for election to our
Board will be evaluated and include:
●
|
the prospective nominees
professional skills and experience;
|
●
|
the ability of the prospective
nominee to represent the interests of our stockholders;
|
●
|
the prospective nominees
reputation, standards of integrity, commitment and independence of thought
and judgment;
|
●
|
the prospective nominees
independence from our company under the NASDAQ listing rules, and, as
applicable, the standards for independence established by the Securities
and Exchange Commission;
|
●
|
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
|
●
|
the extent to which the prospective
nominee contributes to the range of talent, skill and expertise
appropriate for the Board.
|
While we do not have a formal diversity
policy, the Corporate Governance and Nominating Committee considers diversity of
talents, skills and expertise in evaluating potential nominees. In addition,
from time to time, the Corporate Governance and Nominating Committee retains
third-party search firms to identify qualified director candidates and to assist
the committee in evaluating candidates that have been identified by
others.
It is the policy of the Corporate
Governance and Nominating Committee to consider candidates recommended by
stockholders. Any stockholder who would like to suggest or recommend a person
for the Boards consideration as a director candidate may do so at any time by
writing to the corporate secretary at the address below. A stockholder wishing
to formally nominate a person for election as a director must comply with the
advance notice provisions in the Companys Fifth Amended and Restated Bylaws.
Generally these provisions require that the corporate secretary receive notice
of the nomination not less than 75 calendar days prior to the anniversary of the
date for the preceding years annual meeting. The notice must set forth, as to
each nominee, the name, age, business and residential address, principal
occupation or employment, class, series and number of securities of the Company
owned by such person, the date or dates the securities were acquired, any other
information relating to such person that is required to be disclosed in
solicitation for proxies or election of directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934 and a representation that such person
meets the qualifications to serve as a director of the Company. The notice must
include a completed director questionnaire, which is available from the
corporate secretary of the Company, and the nominees signed consent to serve as
a director if elected. The notice must also set forth, among other things, the
name and address of, and the number of our common shares owned by, the
stockholder giving the notice and the beneficial owner on whose behalf the
nomination is made and any other stockholders believed to be supporting such
nominee, and a description of any material relationships between the stockholder
giving the notice and any other stockholders and the proposed nominee.
Additional details regarding the process to be followed by stockholders wishing
to nominate a person for election as a director are included in the Companys
Fifth Amended and Restated Bylaws, which are available on the Investor Relations
page of our website at
www.nii.com
. Stockholder
recommendations and formal nominations should be sent to:
Shana C. Smith
General Counsel and
Corporate Secretary
NII Holdings, Inc.
1875
Explorer Street, Suite 800
Reston, Virginia 20190
14
Table of Contents
SUMMARY OF
QUALIFICATIONS
|
Below is a summary of certain of the
qualifications of the members of our Board that, among other things, led the
Corporate Governance and Nominating Committee to conclude that each director is
qualified to serve on the Board. Please review the biographies of our Board
below.
|
|
Beebe
|
|
Continenza
|
|
Hoffmann
|
|
Knoepfelmacher
|
|
Rogers
|
|
Schriesheim
|
|
Shindler
|
Senior executive
experience in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
large, complex organizations
|
|
x
|
|
x
|
|
|
|
x
|
|
x
|
|
x
|
|
x
|
Telecommunications experience
|
|
x
|
|
x
|
|
|
|
x
|
|
x
|
|
x
|
|
x
|
Diverse experience
in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
multiple industries
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
|
|
Experience in our markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
or similar Latin American or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
emerging markets
|
|
|
|
|
|
|
|
x
|
|
|
|
x
|
|
x
|
Service on the board of
other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
public companies
|
|
x
|
|
x
|
|
|
|
|
|
x
|
|
x
|
|
|
Managerial experience
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
evaluating risks
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
Experience in financial
and capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
markets and strategic transactions
|
|
x
|
|
|
|
x
|
|
x
|
|
x
|
|
x
|
|
x
|
DIRECTORS STANDING FOR REELECTION
TO HOLD
OFFICE UNTIL
2017
|
|
Steven M.
Shindler
|
Chief
Executive Officer, NII Holdings, Inc.
|
|
|
Non-Independent
|
|
|
Age
53
|
Director Since
1997
|
Committees
|
●
None
|
|
Mr. Shindler has served as Chief Executive
Officer of NII Holdings since December 2012 and has served as a director since
1997 (including as Chairman of the Board from 2002 to 2013). Prior to his most
recent appointment as Chief Executive Officer, Mr. Shindler served as Executive
Chairman of NII Holdings from February 2008 to July 2012 and as Chief Executive
Officer from 2000 until February 2008. Mr. Shindler also served as Executive
Vice President and Chief Financial Officer of Nextel Communications from 1996
until 2000. From 1987 to 1996, Mr. Shindler was an officer with Toronto Dominion
Bank, where he was a managing director in its communications finance
group.
15
Table of Contents
INCUMBENT DIRECTORS TERMS EXPIRE IN
2017
|
|
|
Kevin L. Beebe
|
|
Chair of the Board, NII Holdings,
Inc.
President and Chief Executive
Officer, 2BPartners, LLC
Independent
Age
57
Director
Since
2010
Committees
●
Audit
|
|
|
|
Mr. Beebe has served as a director since 2010 and has served
as Chair of the Board since 2013. Mr. Beebe has been President and Chief
Executive Officer of 2BPartners, LLC, a partnership that provides
strategic, financial and operational advice to private equity clients,
investors and management, since November 2007. He is also a founder and
senior operating partner of Astra Capital, a private equity firm focused
on providing capital to technology and telecom companies, since 2014.
Previously, he was Group President of Operations at ALLTEL Corporation, a
telecommunications services company, from 1998 to 2007. Mr. Beebe also
serves as a director for Skyworks Solutions, Inc., a semiconductor and
wireless handset chip supplier, and SBA Communications Corporation, a
provider of wireless and broadcast communications
infrastructure.
|
|
|
James V. Continenza
|
|
Chairman and Chief Executive
Officer, TBC Holdings I, Inc.
Independent
Age
53
Director
Since
2015
Committees
●
Compensation
●
Corporate Governance and Nominating
|
|
|
|
Mr. Continenza has been the Chairman and Chief Executive
Officer of TBC Holdings I, Inc., the parent company of The Berry Company,
LLC, a holding company created to acquire and manage various advertising,
marketing and technology companies, since 2012. Prior to joining The Berry
Company, Mr. Continenza served as President of STi Prepaid, LLC, a
telecommunications company, from 2010 to 2011. Prior to that, Mr.
Continenza served as Interim Chief Executive Officer of Anchor Glass
Container Corp., a leading manufacturer of glass containers; President and
Chief Executive Officer of Teligent, Inc., a provider of communications
services including voice, data, and internet access; Chief Operating
Officer of Arch Wireless, Inc., a wireless services provider; and as
President and Chief Executive Officer of Lucent Technologies Product
Finance, a global leader in telecom equipment. In addition,
Mr. Continenza currently serves as a director and chair of the boards of
Eastman Kodak Company, a provider of imaging products and services, Neff
Corp., a company that provides construction equipment and tool rental, and
Tembec Inc., a forest products company.
|
16
Table of Contents
|
|
Howard S.
Hoffmann
|
|
Managing Partner, De Novo
Perspectives
Independent
Age
61
Director
Since
2015
Committees
●
Audit
|
|
|
|
Mr. Hoffmann has served as a
Managing Partner at De Novo Perspectives, a professional services firm
specializing in financial and operational performance improvement, crisis
and litigation management, investor and creditor advisory services, and
corporate turnaround and restructuring advisory services, since 2008. From
2001 to 2012, Mr. Hoffmann served as a Managing Partner at Nightingale
& Associates, LLC, a consulting firm providing financial, business
advisory and management services. Mr. Hoffmann also currently serves as
Executive Director at Hickey Smith LLP, a multi-state law firm, Executive
Director of American Discovery Limited, a business process outsourcing
company, and as Vice President of Evolution Pharmacy Services, Inc., a
pharmacy services company.
|
|
|
Ricardo
Knoepfelmacher
|
|
Managing Partner, RK
Partners
Independent
Age
50
Director
Since
2013
Committees
●
Compensation
●
Corporate Governance and Nominating
|
|
|
|
Mr. Knoepfelmacher has served on our
Board since 2013. Mr. Knoepfelmacher co-founded RK Partners, formerly
known as Angra Partners Turnaround, a financial and operational
restructuring and turnaround advisory firm, in 2003 and is currently a
Managing Partner of the firm. Prior to his service as Managing Partner at
RK Partners, Mr. Knoepfelmacher served as Chief Executive Officer of
Brasil Telecom from 2005 to 2009 and Chief Executive Officer of Pegasus
Telecom from 2000 to 2002. He also worked for Citibank and McKinsey &
Company before starting his first company, MGDK & Associados, a
restructuring and consulting firm.
|
17
Table of Contents
|
|
Christopher T.
Rogers
|
|
General Partner, Lumia
Capital
Independent
Age
57
Director
Since
2015
Committees
●
Compensation
●
Corporate Governance and Nominating
|
|
|
|
Mr. Rogers has been a General
Partner at Lumia Capital since 2013. From 1991 until 2012, Mr. Rogers held
various executive positions with Sprint Corporation and Nextel
Communications, Inc. Most recently, Mr. Rogers served as Senior Vice
President, Corporate Development and Spectrum, at Sprint, where he oversaw
mergers, acquisitions, divestitures, equity investments and joint ventures
and was responsible for management and oversight of wireless spectrum
licenses and Sprints portfolio of emerging technology investments. Mr.
Rogers serves as a director of Digital Turbine, Inc., a provider of mobile
products that enable the monetization of mobile
content.
|
|
|
Robert A.
Schriesheim
|
|
Executive Vice President and
Chief Financial Officer, Sears Holdings Corporation
Independent
Age
55
Director
Since
2015
Committees
●
Audit
|
|
|
|
Mr. Schriesheim has been the
Executive Vice President and Chief Financial Officer of Sears Holdings
Corporation since August 2011. Prior to that, Mr. Schriesheim served as
Chief Financial Officer of Hewitt Associates, Inc., a global human
resources consulting and outsourcing company, from January 2010 to October
2010. From October 2006 to January 2010, he served as Executive Vice
President and Chief Financial Officer of Lawson Software, Inc., an ERP
software provider. Prior to joining Lawson Software, Mr. Schriesheim held
executive positions at ARCH Development Partners, Global TeleSystems, SBC
Equity Partners, Ameritech, AC Nielsen and Brooke Group Ltd. Mr.
Schriesheim currently serves as a director of Houlihan Lokey, Inc., a
global investment bank, where he serves as the chair of the audit
committee and as a member of the compensation committee. Mr. Schriesheim
also serves as a director of Skyworks Solutions, Inc., a semiconductor and
wireless handset chip supplier, where he is the chair of the audit
committee.
|
18
Table of Contents
BOARD AND COMMITTEE MEMBERSHIP
AND
ATTENDANCE
|
The current Board and its committees were
appointed on June 26, 2015 and during 2015 the current Board held eight
regularly scheduled and four additional meetings with each member of the Board
attending 100% of the aggregate meetings of the Board and 100% of the aggregate
meetings of the committees on which they served. In addition to attending formal
meetings, directors also fulfilled their responsibilities in 2015 by meeting
informally on a regular basis, through informal and regular meetings with
management and legal and financial advisors.
The standing committees of the Board are
the Audit, Compensation and Corporate Governance and Nominating Committees.
Membership of the Board and each standing committee as of June 26, 2015 and the
number of formal meetings of the Board and each standing committee since June
26, 2015 was as follows:
Name
|
|
|
|
Board
|
|
Audit
|
|
Compensation
|
|
Corporate
Governance
and Nominating
|
Steven Shindler
|
|
|
|
|
|
|
|
|
|
|
Kevin Beebe
|
|
I, A
|
|
C
|
|
|
|
|
|
|
James Continenza
|
|
I
|
|
|
|
|
|
|
|
C
|
Howard Hoffmann
|
|
I, A
|
|
|
|
|
|
|
|
|
Ricardo Knoepfelmacher
|
|
I
|
|
|
|
|
|
|
|
|
Christopher Rogers
|
|
I
|
|
|
|
|
|
C
|
|
|
Robert Schriesheim
|
|
I, A
|
|
|
|
C
|
|
|
|
|
TOTAL NUMBER OF MEETINGS IN 2015
|
|
|
|
12
|
|
3
(1)
|
|
4
|
|
0
(2)
|
I: Independent
|
|
A: Audit Committee Financial
Expert
|
|
C:
Chair
|
(1)
|
During 2015, the Audit Committee also held meetings with KPMG LLP,
our independent registered public accounting firm, without employees
present, and meetings with our vice president of internal
audit.
|
(2)
|
In June 2015, the newly seated
Board of Directors handled the annual governance matters that in the
future will be delegated to the Corporate Governance and Nominating
Committee.
|
EXECUTIVE SESSIONS OF THE
BOARD
|
As required by our Corporate Governance
Guidelines, it is the practice of our Board to have executive sessions where
non-employee directors other than Mr. Shindler meet to discuss matters of
interest and concern. Executive sessions are held in conjunction with regularly
scheduled meetings of the Board and at such other times as the Chair or
independent members of the Board determine necessary. During executive sessions,
the directors occasionally meet with and question our employees outside the
presence of employee directors and other members of management and with their
outside legal counsel.
19
Table of Contents
FEES PAYABLE TO NON-EMPLOYEE
DIRECTORS
|
Each of our non-employee directors
receives an annual retainer for serving on the Board. In addition our
non-employee directors receive additional fees for their service on committees.
Our director compensation for 2015 consisted of the following
components:
Board:
|
|
|
|
Annual Retainer
|
$
|
70,000
|
|
Annual Non-Executive Chairman
|
$
|
45,000
|
|
Non-Recurring Emergence Equity Grant
|
$
|
240,010
|
(1)
|
Committees:
|
|
|
|
Committee Chairs
|
$
|
5,000
|
|
Audit Committee
|
$
|
25,000
|
|
Compensation Committee
|
$
|
20,000
|
|
Corporate Governance and Nominating Committee
|
$
|
15,000
|
|
(1)
|
On June 26, 2015, our date of emergence from bankruptcy
proceedings, each non-employee director appointed on that date received
11,607 restricted shares that vest in full on June 26, 2016. Our common
stock was not listed on an exchange on our date of emergence, and the
grant date value of our common stock as established by our plan of
reorganization was $20.678 per share. Mr. Schriesheim joined our Board on
August 20, 2015, and we provided him with a grant of 11,607 shares of
restricted stock on that date.
|
We pay all retainers in arrears in
quarterly installments. We also reimburse directors for travel expenses incurred
in connection with attending Board, committee and stockholder meetings and for
other related expenses. We do not provide any additional compensation to
employees who serve as a director or a committee member in periods in which they
are also employees.
DIRECTOR COMPENSATION TABLE
|
In the table and discussion below, we
summarize the compensation paid to our non-employee directors appointed in
connection with our emergence from bankruptcy in June 2015.
DIRECTOR COMPENSATION FISCAL YEAR
2015
Name
(1)
|
|
Fees Earned or
Paid in Cash
($)
|
|
Stock
Awards
(2)
($)
|
|
Total
($)
|
Kevin Beebe
|
|
147,500
|
|
240,010
|
|
387,510
|
James Continenza
|
|
56,507
|
|
240,010
|
|
296,517
|
Howard Hoffmann
|
|
48,801
|
|
240,010
|
|
288,811
|
Ricardo Knoepfelmacher
|
|
87,500
|
|
240,010
|
|
327,510
|
Christopher Rogers
|
|
60,274
|
|
240,010
|
|
300,284
|
Robert Schriesheim
|
|
36,507
|
|
101,561
|
|
138,068
|
(1)
|
The compensation information for Mr.
Shindler, our chief executive officer, is included in the Summary
Compensation Table.
|
(2)
|
On June 26, 2015, our date of
emergence from Chapter 11 bankruptcy proceedings, we provided Messrs.
Beebe, Continenza, Hoffmann, Knoepfelmacher and Rogers, the non-employees
directors appointed to our Board on that date, with a grant of 11,607
shares of restricted stock that vest on June 26, 2016. Our common stock
was not listed on an exchange on our date of emergence, and the grant date
value of our common stock as established by our plan of reorganization was
$20.678 per share. The grant date fair value of the awards made on June
26, 2015 computed in accordance with stock-based compensation accounting
rules (FASB ASC Topic 718), but disregarding estimated forfeitures related
to service-based vesting conditions would be $16.00 per share, or
$185,712, based on trades immediately following the listing of our common
stock on the NASDAQ stock market on July 6, 2015. Mr. Schriesheim joined
our Board on August 20, 2015, and we provided him with a grant of 11,607
shares of restricted stock on that date. The grant date fair value of Mr.
Shriesheims shares listed in the table above is computed in accordance
with stock-based compensation accounting rules (FASB ASC Topic 718), but
disregarding estimated forfeitures related to service-based vesting
conditions and based on the closing price of our common stock on the
NASDAQ stock market on August 20, 2015 of $8.75. The dollar value of the
shares subject to those grants, based on the $5.05 closing price of a
share of our common stock as reported on the NASDAQ on December 31, 2015,
was $58,615. None of the directors hold any additional shares of our
common stock.
|
20
Table of Contents
SECURITIES OWNERSHIP OF DIRECTORS
AND
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 April 1, 2016 by:
●
|
each person who served as one of our
directors as of that date;
|
●
|
each of the named executive
officers; and
|
●
|
all directors and executive officers
as a group.
|
|
|
Shares Covered by
|
Name of Beneficial Owner
|
|
Shares Owned and
Vested Options
(1)
|
|
Unvested
Restricted Stock
(2)
|
|
Percent of
Class
(3)
|
Kevin Beebe
|
|
0
|
|
11,607
|
|
*
|
Howard Hoffmann
|
|
0
|
|
11,607
|
|
*
|
James Continenza
|
|
0
|
|
11,607
|
|
*
|
Ricardo Knoepfelmacher
|
|
0
|
|
11,607
|
|
*
|
Christopher Rogers
|
|
0
|
|
11,607
|
|
*
|
Robert Schriesheim
|
|
0
|
|
11,607
|
|
*
|
Steven Shindler
|
|
0
|
|
147,500
|
|
*
|
Daniel Freiman
|
|
0
|
|
29,017
|
|
*
|
Francisco Valim
|
|
0
|
|
228,311
|
|
*
|
David Truzinski
|
|
3,342
|
|
0
|
|
*
|
Shana Smith
|
|
0
|
|
29,017
|
|
*
|
Juan Figuereo
|
|
0
|
|
0
|
|
0
|
Gokul Hemmady
|
|
0
|
|
0
|
|
0
|
All
directors and executive officers as a group (13 persons)
|
|
3,342
|
|
503,487
|
|
*
|
*
|
Indicates ownership of less than
1%
|
(1)
|
Includes common stock currently owned. None of the listed
individuals have options or restricted stock vesting within 60 days of
April 1, 2016. This column does not include shares of unvested restricted
common stock that have voting rights prior to vesting, which are reflected
in the second column in the table.
|
(2)
|
Indicates shares of unvested restricted common stock that have
voting rights prior to vesting.
|
(3)
|
Based on the total amount of
shares reflected in columns one and two and 100,899,961 shares of common
stock issued and outstanding on April 1, 2016.
|
21
Table of Contents
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, 4 and 5 furnished to us under Rule 16a-3(e)
during 2015, and written representations of our directors and executive officers
that no additional filings were required, 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.
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 April 1, 2016, the Record Date for the Annual
Meeting.
Name and Address of Beneficial Owner
|
|
Amount and Nature of
Beneficial Ownership
|
|
Percent
of Class
(1)
|
Capital World
Investors
(2)
|
|
|
|
|
333 South Hope
Street
|
|
|
|
|
Los Angeles, CA 90071
|
|
33,853,469
|
|
33.6
%
|
Aurelius Capital Management,
LP
(3)
|
|
|
|
|
535 Madison Avenue, 22nd Floor,
|
|
|
|
|
New
York, NY 10022
|
|
13,635,623
|
|
13.5
%
|
(1)
|
Based on 100,899,961 shares of common
stock issued and outstanding on April 1, 2016.
|
(2)
|
According to a Schedule 13G/A filed with the Securities and
Exchange Commission on February 12, 2016, Capital World Investors has sole
voting and dispositive power with respect to 33,853,469 shares of our
common stock.
|
(3)
|
According to a Schedule 13D filed
with the Securities and Exchange Commission on July 6, 2015, Aurelius
Capital Management, LP has shared voting and dispositive power with
respect to 13,635,623 shares of our common
stock.
|
22
Table of Contents
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 and is committed to a philosophy
that links a significant portion of each executives compensation to
performance.
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 proxy statement for the 2016 Annual Meeting of Stockholders.
Compensation Committee
Christopher T. Rogers, Chairman
James
V. Continenza
Ricardo Knoepfelmacher
COMPENSATION DISCUSSION AND
ANALYSIS
|
This Compensation Discussion and Analysis
provides the principles, objectives, structure, analysis and determinations of
the Compensation Committee with respect to the 2015 compensation of the
following named executive officers:
●
|
Steven M. Shindler, Chief Executive
Officer
|
●
|
Daniel E. Freiman, Vice President,
Chief Financial Officer
|
●
|
Francisco Tosta Valim Filho,
President and Legal Representative, Nextel
Brazil
(1)
|
●
|
David P. Truzinski, Executive Vice
President, Chief Digital Officer and Chief Strategy
Officer
(2)
|
●
|
Shana C. Smith, Vice President,
General Counsel and Corporate Secretary
|
Our named executive officers for 2015 also
include two former executives, who were not employed by the Company as of
December 31, 2015:
●
|
Juan R. Figuereo, Former Executive
Vice President, Chief Financial Officer
(3)
|
●
|
Gokul Hemmady, Former Chief
Operating Officer and President, Nextel
Brazil
(4)
|
(1)
|
Mr. Valim was appointed President and Legal Representative, Nextel
Brazil effective August 25, 2015 and is employed by Nextel
Telecomunicações Ltda., our wholly owned subsidiary, which we refer to as
Nextel Brazil. In 2015, Mr. Valims salary and annual bonus were paid in
Brazilian Reais. The compensation amounts provided in this Compensation
Discussion and Analysis and disclosed in the Summary Compensation Table
are based on the average exchange rate during 2015, which was 3.9608
Brazilian Reais to 1.00 U.S. dollar.
|
(2)
|
Mr. Truzinskis employment with the Company was terminated without
cause on January 1, 2016. For more information related to Mr. Truzinskis
separation from the Company, please see 2016 Management Changes Former
Executive Vice President, Chief Digital Officer and Chief Strategy
Officer.
|
(3)
|
Mr. Figuereos employment with the Company was terminated without
cause on October 1, 2015. For more information related to Mr. Figuereos
separation from the Company, please see 2015 Management Changes Former
Executive Vice President, Chief Financial Officer.
|
(4)
|
Mr. Hemmadys employment with the
Company was terminated without cause on October 1, 2015. For more
information related to Mr. Hemmadys separation from the Company, please
see 2015 Management Changes Former Chief Operating Officer and
President, Nextel Brazil.
|
23
Table of Contents
EXECUTIVE OFFICER
BIOGRAPHIES
|
There is no family relationship between
any of our executive officers or between any of these officers and any of our
directors.
|
|
Steven M.
Shindler
|
|
Chief Executive Officer,
NII Holdings, Inc.
Age
53
|
|
|
|
Mr. Shindler has served as Chief
Executive Officer of NII Holdings since December 2012 and has served as a
director since 1997 (including as Chairman of the Board from 2002 to
2013). Prior to his most recent appointment as Chief Executive Officer,
Mr. Shindler served as Executive Chairman of NII Holdings from February
2008 to July 2012 and as Chief Executive Officer from 2000 until February
2008. Mr. Shindler also served as Executive Vice President and Chief
Financial Officer of Nextel Communications from 1996 until 2000. From 1987
to 1996, Mr. Shindler was an officer with Toronto Dominion Bank, where he
was a managing director in its communications finance
group.
|
|
|
Daniel E.
Freiman
|
|
Vice President, Chief Financial
Officer, NII Holdings, Inc.
Age
44
|
|
|
|
Mr. Freiman has served as Vice
President, Chief Financial Officer of NII Holdings since September 2015.
Prior to September 2015, Mr. Freiman served as Treasurer, Vice President
of Corporate Development and Investor Relations of NII Holdings since
2009. From 2005 to 2008, Mr. Freiman served as Vice President and
Controller of NII Holdings. Prior to joining NII Holdings, Mr. Freiman was
with PricewaterhouseCoopers.
|
|
|
Francisco Tosta
Valim Filho
|
|
President and Legal
Representative, Nextel Brazil
Age
52
|
|
|
|
Mr. Valim has served as President
and Legal Representative of Nextel Brazil since August 2015. Prior to
joining Nextel Brazil in August 2015, Mr. Valim served as Chief Executive
Officer of Via Varejo S.A., an electronics and furniture retailer in Latin
America from August 2013 until April 2014. Prior to that, Mr. Valim served
as Chief Executive Officer of Oi S.A., a telecommunications operator in
Brazil, from August 2011 until January 2013. From January 2008 to July
2011, Mr. Valim was the Chief Executive Officer of Experian UK, EMEA and
LATAM, a division of Experian plc, a credit reference
company.
|
|
|
David P. Truzinski
|
|
Former Executive Vice President,
Chief Digital Officer and Chief Strategy Officer, NII Holdings,
Inc.
Age
57
|
|
|
|
Mr. Truzinski served as Executive
Vice President, Chief Digital Officer and Chief Strategy Officer of NII
Holdings from 2014 to January 2016. From 2013 to 2014, Mr. Truzinski
served as Executive Vice President, Chief Information Officer and Chief
Digital Officer of NII Holdings, and from 2012 to 2013, he served as NII
Holdings Executive Vice President, Chief Information Officer. Prior to
2012, Mr. Truzinski served as Senior Vice President and Chief Information
Officer at Leap Wireless/Cricket Communications beginning in 2005.
|
|
|
Shana C. Smith
|
|
Vice President, General Counsel
and Corporate Secretary, NII Holdings, Inc.
Age
43
|
|
|
|
Mrs. Smith has served as Vice
President, General Counsel and Corporate Secretary of NII Holdings since
September 2015. Prior to September 2015, Mrs. Smith served as Vice
President, Deputy General Counsel and Corporate Secretary of NII Holdings
since 2011 and as Corporate Counsel and Assistant Secretary from 2009 to
2011. Prior to joining NII Holdings, Mrs. Smith served as Corporate
Counsel of Sprint Nextel Corporation and was previously a corporate
associate with the law firm of Fried, Frank, Harris, Shriver and
Jacobson.
|
24
Table of Contents
|
|
Juan R. Figuereo
|
|
Former Executive Vice President,
Chief Financial Officer, NII Holdings, Inc.
Age
60
|
|
|
|
M
r. Figuereo served as Executive Vice President, Chief Financial
Officer of NII Holdings from October 2012 to October 2015. Prior to
joining NII Holdings, Mr. Figuereo served as Executive Vice President and
Chief Financial Officer of Newell Rubbermaid, Inc., a global marketer of
consumer and commercial products from 2009 to 2012
.
|
|
|
Gokul Hemmady
|
|
Former Chief Operating Officer,
NII Holdings, Inc. and President, Nextel Brazil
Age
55
|
|
|
|
M
r. Hemmady served as Chief Operating Officer of NII Holdings and
President of Nextel Brazil from 2013 through 2015. From 2012 to 2013, Mr.
Hemmady was the Interim President of Nextel Brazil and Chief Operations
Officer of NII Holdings. From 2011 to 2012, Mr. Hemmady served as
Executive Vice President and Chief Financial Officer of NII Holdings. He
was also NII Holdings' Chief Transformation Officer from October 2011
through June 2012
.
|
COMPENSATION OBJECTIVES AND
PHILOSOPHY
|
Our executive compensation program is
designed to provide competitive, flexible, and market-based compensation that is
substantially linked to our performance and aligned with long-term stockholder
interests. The Compensation Committees primary objective in designing our
compensation program is to recruit and retain the high caliber executive
officers and employees necessary to deliver strong and consistent performance to
our stockholders, customers and communities in which we operate. Within this
framework, the Compensation Committee has developed a compensation program that
incorporates salary and benefits that allow us to retain and motivate our
executive officers, short-term incentives that challenge our executive officers
to achieve our financial and operational goals, and long-term incentives that
link our executives risks and rewards with those of our
stakeholders.
2016 EXECUTIVE OFFICER
COMPENSATION
|
In February 2016, the Compensation
Committee determined that no changes would be made to executive officer
compensation for 2016 given the short tenure of most of the executive officers.
In addition, in light of the Companys recent results, current stock price and
available equity share pool, the Compensation Committee determined that no
equity grants would be made to current employees.
2015 TARGET TOTAL DIRECT
COMPENSATION
|
During our Chapter 11 bankruptcy
proceedings, changes to the compensation of key executives, including our named
executive officers, were not permitted without the approval of the bankruptcy
court and no changes were made to the compensation of our named executive
officers during our bankruptcy proceedings other than the implementation of a
key employee incentive plan that provided for a potential incentive bonus
payment should the Company and its subsidiaries successfully emerge from
bankruptcy within specified time frames and/or if a sale transaction meeting
specified enterprise values was completed. In June and August 2015, following
our emergence from bankruptcy and in connection with the restructuring of our
executive team, the Compensation Committee approved the following elements of
our executive compensation program for executive officers expected to remain
with the Company:
●
|
Base
Salary
. Base salary provides a fixed
source of income and allows the Company to attract and retain experienced
executives.
|
●
|
Short-Term Incentives
. Short-term incentives provide variable cash compensation that
allows the Company to motivate executives to achieve the Companys
operating and financial objectives.
|
●
|
Long-Term Incentive
Emergence Grant
. Long-term incentives
provide variable equity awards in the form of stock options and restricted
stock that build executive stock ownership, encourage retention, drive
strategic and operating performance and align our executives interests
with those of our stockholders.
|
25
Table of Contents
The Compensation Committee based its
executive compensation decisions on the analysis of various factors that it
deemed relevant to those decisions when they were made. The decision on the
value of the emergence equity grant for each named executive officer other than
Mr. Valim was made in June 2015 in connection with our emergence from
bankruptcy, and the decision on base salary and target short-term incentives
were made in August 2015. Based on our recent financial and operational results,
continued challenges in the business, and a focus on retention in light of
changes in our executive leadership team, in August 2015, the Compensation
Committee generally set the target ranges for our named executive officers'
total cash compensation other than Mr. Valim at the 75th percentile for
comparable positions within our Peer Group (as defined below). Due primarily to
the decline in the value of the 2015 long-term emergence grants, total direct
compensation opportunities for the named executive officers as set in August
2015 were below the 75th percentile and in one case below the median for
comparable positions within our Peer Group.
The Compensation Committee approved the
following composition of our executive compensation program in June and August
2015.
Name
|
|
Base
Salary($)
|
|
Target Bonus
at
100%
Payout
|
|
Value of 2015
Long-
Term Incentives
(1)
($)
|
|
2015 Target Total
Direct
Compensation
(2)
|
Steven Shindler
|
|
974,376
|
|
1,266,689
|
|
6,100,000
|
|
8,341,065
|
Daniel Freiman
|
|
450,000
|
|
450,000
|
|
1,200,000
|
|
2,100,000
|
Francisco Valim
(3)
|
|
605,938
|
|
302,969
|
|
3,000,000
|
|
3,908,907
|
David Truzinski
|
|
500,000
|
|
500,000
|
|
1,300,000
|
|
2,300,000
|
Shana Smith
|
|
450,000
|
|
450,000
|
|
1,200,000
|
|
2,100,000
|
(1)
|
Represents the value of the stock
options and restricted stock granted to executives in the current year on
the date of grant. Our common stock was not listed on an exchange on our
date of emergence, and the number of shares awarded to Messrs. Shindler,
Freiman and Truzinski and Mrs. Smith was determined using the value of our
common stock established by our plan of reorganization of $20.678 per
share. Our common stock was listed on the NASDAQ stock market on July 6,
2015 and the grant date fair value of the awards made on June 26, 2015,
computed in accordance with stock-based compensation accounting rules
(FASB ASC Topic 718), but disregarding estimated forfeitures related to
service-based vesting conditions, was $16.00 per share, based on trades
immediately following the listing of our common stock on the NASDAQ stock
market. The grant date fair value of Mr. Valims shares listed in the
table above is computed in accordance with stock-based compensation
accounting rules (FASB ASC Topic 718), but disregarding estimated
forfeitures related to service-based vesting conditions and based on the
closing price of our common stock on the NASDAQ stock market on the date
of grant, November 9, 2015, of $6.57.
|
(2)
|
Target total direct compensation is calculated as the sum of (a)
base salary, (b) the target annual bonus amount for the year assuming a
payout of 100% and (c) value of the 2015 stock options and restricted
stock units on the date of grant to named executive officers.
|
(3)
|
Mr. Valim joined Nextel Brazil on
August 25, 2015. Mr. Valim's salary, bonus and benefits, other than his
equity grants, are paid in Brazilian Reais. As a result, the amount of
compensation approved for Mr. Valim as reflected in U.S. Dollars in the
Base Salary, Target Bonus at 100% Payout and 2015 Total Direct
Compensation columns varies based on the applicable exchange rate of the
Brazilian Real relative to the U.S Dollar. Mr. Valim's compensation as
reported in U.S Dollars can vary significantly with no actual change to
the compensation paid to Mr. Valim in Brazilian currency if the exchange
rates are volatile. The amounts for Mr. Valim reflected in the Base
Salary, Target Bonus at 100% Payout and 2015 Total Direct Compensation
columns in the table above are based on the average exchange rate of
3.9608 Brazilian Reais to 1.00 U.S. Dollar for
2015.
|
In June and August 2015, the Company
entered into severance agreements with Messrs. Figuereo and Hemmady, and no
changes were made to their compensation, which had previously been approved by
the members of the former compensation committee of the former board of
directors in February 2014.
Name
|
|
Base
Salary($)
|
|
Target Bonus at
100% Payout
|
|
Value of 2015
Long-Term Incentives ($)
|
Juan Figuereo
|
|
566,500
|
|
849,750
|
|
0
|
Gokul Hemmady
|
|
666,925
|
|
1,000,388
|
|
0
|
2015 REALIZABLE
COMPENSATION
|
On September 15, 2014, we and eight of our
U.S. and Luxembourg-domiciled subsidiaries filed voluntary petitions seeking
relief under chapter 11 of the U.S. Bankruptcy Code. Subsequent to that date,
five additional subsidiaries voluntarily filed for relief and joined the
proceedings. During our bankruptcy proceedings, we sold our operations in Mexico
and used a portion of the proceeds of this sale to repay all outstanding
principal and interest under a debtor-in-possession loan agreement we entered
into prior to our emergence from our bankruptcy proceedings and to fund
distributions to specified creditors
26
Table of Contents
pursuant to our plan of reorganization.
Subsequent to our emergence from bankruptcy, we also sold our operations in
Argentina. We now operate exclusively in Brazil, and our assets, subscribers and
cash flows are concentrated there. During 2015, the Brazilian economy contracted
as domestic demand decreased due to a combination of high inflation, high
interest rates, growing unemployment, tighter credit conditions, a decline in
business investments and political issues. These economic conditions are
affecting the wireless telecommunications industry in Brazil, leading to lower
customer credit and pressure on customer demand, pricing and customer turnover.
With operations solely in Brazil, our growth and operating results are dependent
on the strength and stability of the economic, political and regulatory
environments in that country. In early 2015, we did not forecast the severity of
the economic changes that occurred, and we did not achieve the financial and
operational goals set out in our business plan that we filed in connection with
our bankruptcy proceedings. Our failure to meet all of our 2015 financial and
operational goals, particularly the business plan filed with the Bankruptcy
Court, combined with external challenges in Brazil that affected our operational
and financial performance, negatively impacted our growth and financial and
operating results in 2015 compared to our expectations and relative to the
performance goals for our executive officers established during our
reorganization proceedings. Consistent with our pay-for-performance philosophy,
our failure to meet those goals had the following negative impacts on our named
executive officers compensation for 2015:
Reduced 2015 Bonus Payouts
|
Payouts under our 2015 Bonus Plan
for our named executive officers averaged 59% of their target. See Annual
Bonus 2015 Financial Results and Bonus Payout below for
details.
|
Underwater Stock Options
|
Stock options granted on June 26,
2015 with an exercise price of $20.678 and on November 9, 2015 with an
exercise price of $6.57 have no intrinsic value as of
year-end.
|
Decline in Restricted Stock Value
|
The value of the restricted stock
awards granted in June and November 2015 declined by approximately 76% in
potential value at year-end.
|
Base salary is the only fixed element of
our named executive officers target total direct compensation and is based
primarily on historic base salary levels and internal pay equity and base
salaries paid to executives in comparable positions at the Peer Group companies.
In February 2016, the Compensation Committee determined not to increase the base
salaries of the named executive officers for 2016. Our named executive officers
annual base salaries (effective from August 1, 2015 through December 31, 2016)
and the percentage of target total direct compensation represented by the base
salaries are as follows:
Name
|
|
2015 Base Salary ($)
|
|
Percent of Target Total
Direct
Compensation
|
Steven Shindler
(1)
|
|
974,376
|
|
11.7%
|
Daniel Freiman
(2)
|
|
450,000
|
|
21.4%
|
Francisco Valim
(3)
|
|
605,938
|
|
15.5%
|
David Truzinski
(4)
|
|
500,000
|
|
21.7%
|
Shana Smith
(5)
|
|
450,000
|
|
21.4%
|
Juan Figuereo
(6)
|
|
566,500
|
|
N/A
|
Gokul Hemmady
(6)
|
|
666,925
|
|
N/A
|
(1)
|
Mr. Shindlers base salary did not
change in 2015.
|
(2)
|
Mr. Freimans base salary increased from $401,700 in connection
with his promotion to chief financial officer.
|
(3)
|
Mr. Valim joined Nextel Brazil on August 25, 2015 and his base
salary was effective as of that date.
|
(4)
|
Mr. Truzinskis base salary increased from $453,200 in connection
with additional roles and responsibilities assumed in connection with the
restructuring of our senior executive team.
|
(5)
|
Mrs. Smiths base salary increased from $409,500 in connection with
her promotion to general counsel.
|
(6)
|
The base salary for Messrs.
Figuereo and Hemmady were not changed in 2015 and remained in place
through their severance date of October 1,
2015.
|
27
Table of Contents
Our 2015 Bonus Plan rewards executive
officers for performance relative to key financial and operating measures that
are designed to enhance the value of the Company. The target bonus percentage of
base salary for each executive is determined based on historic target levels and
internal equity, and the comparison of annual incentive compensation targets for
executives in comparable positions at the Peer Group. For 2015, the bonus payout
percentage is determined after the conclusion of each fiscal quarter by
evaluating the Companys performance relative to pre-determined performance
goals and performance intervals for that quarter. Performance intervals are
the upper and lower boundaries of performance in which actual bonus payouts are
awarded. The bonus payout percentage is designed to provide payments in a range
from 200% of the target bonus, if performance greatly exceeds the Companys
targets, to 0% of the target bonus, if performance fails to reach minimum
threshold levels. The use of these intervals is intended to provide a greater
performance incentive to participating employees by providing a more significant
increase in the bonus award in instances where there is over performance in
relation to our performance targets and a more significant decrease in the bonus
award where there is under performance in relation to those targets. The Company
was required to seek Bankruptcy Court approval for the targets and payouts after
filing a petition for relief under Chapter 11 on September 15, 2014 through our
emergence from bankruptcy proceedings on June 26, 2015.
The Compensation Committee sets our
executive officers target bonus percentages at a level that balances fixed and
at-risk short-term compensation. The 2015 target bonus percentage as determined
by the Compensation Committee in August 2015, the potential cash payout under the 2015 Bonus
Plan at 100% of target and the percentage of each named executive officers
target total direct compensation represented by the target bonus at 100% payout
were as follows:
|
|
2015 Target Bonus
Percentage of Base Salary
|
|
2015 Target Bonus
at 100% Payout ($)
|
|
Percent of Target
Total Direct
Compensation
|
Steven Shindler
(1)
|
|
130%
|
|
1,266,689
|
|
15.2%
|
Daniel Freiman
(2)
|
|
100%
|
|
450,000
|
|
21.4%
|
Francisco Valim
(3)
|
|
50%
|
|
302,969
|
|
7.8%
|
David Trusinski
(4)
|
|
100%
|
|
500,000
|
|
21.7%
|
Shana Smith
(5)
|
|
100%
|
|
450,000
|
|
21.4%
|
Juan Figuereo
(6)
|
|
150%
|
|
849,750
|
|
N/A
|
Gokul Hemmady
(6)
|
|
150%
|
|
1,000,388
|
|
N/A
|
(1)
|
Mr. Shindlers target bonus was
reduced from 195% in light of the Companys emergence from bankruptcy and
the reduced work-load anticipated post-emergence.
|
(2)
|
Mr. Freimans target bonus was increased from 75% in connection
with his promotion to chief financial officer.
|
(3)
|
Mr. Valim joined Nextel Brazil on August 25, 2015 and was eligible
for a pro-rated 2015 bonus equal to 50% of his base salary. Mr. Valim did
not participate in the 2015 Bonus Plan, and his target bonus and
performance metrics for 2015 were set forth in his employment
agreement.
|
(4)
|
Mr. Truzinskis target bonus was increased from 90% in connection
with additional roles and responsibilities assumed in connection with the
restructuring of our senior executive team.
|
(5)
|
Mrs. Smiths target bonus was increased from 75% in connection with
her promotion to general counsel.
|
(6)
|
The target bonus for Messrs.
Figuereo and Hemmady were not changed in 2015 and remained in place
through their respective severance dates.
|
28
Table of Contents
In 2015, the bankruptcy court reviewed and
approved the key employee incentive plan, which included the 2015 Bonus Plan
that provided for a quarterly cash bonus program based on the achievement of
quarterly performance targets for the named executive officers for the first and
second quarter of 2015. Upon emergence, the Compensation Committee reviewed the
2015 Bonus Plan and determined that in order to set appropriate performance
measures and weightings throughout the year, performance measures and weightings
should continue to be set on a quarterly basis to allow the Compensation
Committee to respond to changes in the Companys business plan. In addition, the
Compensation Committee determined that quarterly payouts of earned bonus awards
provided the strongest performance incentives to the Companys named executive
officers and to other employees participating in the 2015 Bonus Plan. Each of
the following performance measures and weightings were selected in order to
provide balanced incentives as any actions to improve one performance measure
would be expected to have a corresponding negative impact on the other
performance measure, and the plans for the third and fourth quarters were
developed to focus the Companys employees on cash utilization. The quarterly
criteria and weightings under the 2015 Bonus Plan for named executive officers
other than Mr. Valim were as follows:
Performance Measures and
Weights
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
Consolidated Revenue
|
|
40%
|
|
40%
|
|
25%
|
|
|
Consolidated OFCF
(1)
|
|
60%
|
|
60%
|
|
|
|
|
Consolidated Cash Flow
(2)
(before financing)
|
|
|
|
|
|
50%
|
|
|
Consolidated postpaid voice net additions
|
|
|
|
|
|
25%
|
|
|
Brazil Revenue
|
|
|
|
|
|
|
|
45%
|
Brazil OIBDA
|
|
|
|
|
|
|
|
30%
|
HQ Cash
Flow
(2)
|
|
|
|
|
|
|
|
|
(before financing)
|
|
|
|
|
|
|
|
25%
|
Multiplier
|
|
|
|
|
|
|
|
|
Metric
|
|
Brazil &
Mexico
|
|
Brazil &
Mexico
|
|
|
|
Brazil Cash
Flow
(2)
|
|
|
voice net adds
|
|
voice net adds
|
|
n/a
|
|
(before financing)
|
Applies to
|
|
Consolidated
|
|
Consolidated
|
|
|
|
Brazil Revenue &
|
|
|
Revenue
|
|
Revenue
|
|
n/a
|
|
OIBDA
|
Range
|
|
1x to 2.5x
|
|
1x to 2.5x
|
|
n/a
|
|
0x to 2x
|
(1)
|
Operating income before depreciation
and amortization (OIBDA) less capital expenditures.
|
(2)
|
Cash flow defined as cash OIBDA
less cash taxes and cash investments.
|
Mr. Valim did not participate in the 2015
Bonus Plan. Mr. Valims 2015 Bonus Targets were set forth in an individualized
plan in his employment agreement and required him to present and receive
approval for a business plan for Nextel Brazil. In 2016, Mr. Valims performance
measures are based on Nextel Brazils revenues, OIBDA and cash flow.
29
Table of Contents
2015 Targets and Calculation of Bonus
Payout
|
To determine bonus amounts earned by our
executive officers during the 2015 Plan year, the Compensation Committee met
following each fiscal quarter-end to review our financial and operating
performance as compared to the applicable performance measures for that quarter
and to discuss performance factors and other criteria related to the bonus
awards. At each quarterly meeting, the applicable targets set for each
performance measure were compared to the results for the quarter in order to
determine the appropriate bonus payout percentage, which may range from 0% to
200% depending on the Companys performance relative to the performance targets.
Performance at levels below a minimum threshold for a particular performance
measure result in no payout under the 2015 Bonus Plan, and performance at levels
above the target threshold will result in a combined payout limited to 200%
under the 2015 Bonus Plan. In addition, in order to balance growth and
profitability under the 2015 Bonus Plan, the potential payout for each of the
first and second quarters could be enhanced if the performance targets were
achieved in conjunction with predefined levels of net voice subscriber additions
along with a minimum level of loading average revenue per subscriber, as well as
for the fourth quarter if the performance targets were achieved in conjunction
with predefined levels of Nextel Brazil cash flow.
The bankruptcy court approved the
performance measures, weights, and target and minimum thresholds for the cash
bonus plan for the named executive officers for the first and second quarters of
2015 in connection with its approval of the key employee incentive plan. The
Compensation Committee approved the 2015 quarterly performance targets and
intervals for the third and fourth quarters of 2015 based on the Companys
business plan. The performance targets and corresponding intervals are designed
to drive Company performance against challenging performance standards, but are
not goals that would cause our executives to take inappropriate business risks.
In 2015, our quarterly performance targets and minimum thresholds for each of
the performance measures were as follows:
|
|
First Quarter
|
|
Second Quarter
(1)
|
|
Third Quarter
(1)
|
|
Fourth Quarter
(1)
|
Performance
Measures
|
|
Min.
|
|
Target
|
|
Min.
|
|
Target
|
|
Min.
|
|
Target
|
|
Min.
|
|
Target
|
Consolidated Revenue ($)
|
|
610M
|
|
677M
|
|
426M
|
|
473M
|
|
334M
|
|
371M
|
|
|
|
|
Consolidated OFCF ($)
|
|
(157M)
|
|
(131M)
|
|
(216M)
|
|
(180M)
|
|
|
|
|
|
|
|
|
Consolidated Cash Flow ($) (before financing)
|
|
|
|
|
|
|
|
|
|
(109M)
|
|
(91M)
|
|
|
|
|
Consolidated postpaid voice net additions
|
|
|
|
|
|
|
|
|
|
97k
|
|
121k
|
|
|
|
|
Brazil Revenue ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
209M
|
|
246M
|
Brazil OIBDA ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(29M)
|
|
(25M)
|
HQ Cash Flow ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(before financing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17M)
|
|
(14M)
|
Multiplier
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metric
|
|
Brazil & Mexico
|
|
Brazil & Mexico
|
|
|
|
|
|
Brazil Cash Flow
|
|
|
voice net adds
|
|
voice net adds
|
|
|
|
n/a
|
|
(before financing)
|
Range
|
|
BR: 188k - 264k
|
|
BR: 188k - 263k
|
|
|
|
|
|
|
|
|
|
|
MX: 12k - 52k
|
|
MX: 25k - 39k
|
|
|
|
n/a
|
|
(146M)
|
|
(132M)
|
(1)
|
As adjusted and approved by the Compensation
Committee.
|
In some instances, the Compensation
Committee, upon the recommendation of management, makes adjustments to the bonus
payments or, if appropriate, the methodology used to calculate the bonus target
or our performance relative to the target to take into account, among other
things, changes in our Companys goals and plans and changes in business
conditions in the relevant bonus period if it concludes that such adjustments
are appropriate and are consistent with our overall goals and strategy. The
Compensation Committee adjusted the 2015 bonus targets and payments for the
named executive officers to reflect: changes in the Companys business plan; the
sale of Nextel Mexico and the sale of Nextel Argentina; deviations in timing of
certain capital expenditures; the reallocation of certain costs between market
and headquarter operations; one-time, non-operational items and strategic
operational decisions made after the targets were set; and foreign currency
translations. For the first and second quarter bonus programs, these adjustments
reduced the payouts from 82% to 74% and from 100% to 39% respectively. For the
second quarter bonus program, these adjustments resulted in a payout of 12% of
target for the named executive officers, although the Companys performance as
compared to the approved metrics for that quarter would have resulted in zero
payout.
30
Table of Contents
2015 Financial Results and Bonus
Payouts
|
The Companys 2015 results were as
follows:
|
|
First Quarter
|
|
Second
Quarter
(1)
|
|
Third Quarter
(1)
|
|
Fourth
Quarter
(1)
|
Performance
Measures
|
|
Target
|
|
Results
|
|
Payout
|
|
Target
|
|
Results
|
|
Payout
|
|
Target
|
|
Results
|
|
Payout
|
|
Target
|
|
Results
|
|
Payout
|
Consolidated Revenue ($)
|
|
677M
|
|
616M
|
|
9%
|
|
473M
|
|
398M
|
|
0%
|
|
371M
|
|
360M
|
|
70%
|
|
|
|
|
|
|
Consolidated OFCF ($)
|
|
(131M)
|
|
(113M)
|
|
114%
|
|
(180M)
|
|
(269M)
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Cash Flow
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(before financing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(91M)
|
|
(101M)
|
|
42%
|
|
|
|
|
|
|
Consolidated postpaid
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
voice net additions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121k
|
|
38k
|
|
0%
|
|
|
|
|
|
|
Brazil Revenue ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
246M
|
|
235M
|
|
95%
|
Brazil OIBDA ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(25M)
|
|
3M
|
|
212%
|
HQ Cash Flow ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(before financing)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14M)
|
|
(14M)
|
|
106%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multiplier
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazil & Mexico
|
|
Brazil & Mexico
|
|
|
|
|
|
|
|
Brazil Cash Flow
|
Metric
|
|
voice net adds
|
|
voice net adds
|
|
|
|
n/a
|
|
|
|
(before financing)
|
|
|
BR: 188k -
264k BR: 19k
|
|
|
|
BR: 188k - 263k
BR:
47k
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range
|
|
MX: 12k - 52k MX: 141k
|
|
1.7x
(2)
|
|
MX: 25k - 39k
MX: n/a
|
|
1x
|
|
|
|
n/a
|
|
|
|
(132M)
|
|
(59M)
|
|
2.0x
|
Weighted Average
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payout
(as
percentage
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
target)
|
|
74%
|
|
12%
(3)
|
|
39
%
|
|
200
%
|
(1)
|
As adjusted and approved by the
Compensation Committee.
|
(2)
|
Bonus kicker (170%) applied to revenue payout in accordance with
voice net subscriber additions and ARPU achievement in Mexico and
Brazil.
|
(3)
|
The Compensation Committee
approved a payout of 12% of target for the named executive officers for
the second quarter bonus plan.
|
Based on the foregoing, the bonuses
awarded to the named executive officers with respect to our performance in 2015
were as follows:
Name
|
|
2015 Bonus Plan
Achievement
|
|
2015 Actual Bonus
Payout ($)
|
|
Bonus Payout Percentage
(% of Target)
|
Steven Shindler
(1)
|
|
81%
|
|
1,165,354
|
|
92%
|
Daniel Freiman
(2)
|
|
81%
|
|
333,649
|
|
74%
|
Francisco Valim
(3)
|
|
N/A
|
|
302,969
|
|
100%
|
David Trusinkski
(4)
|
|
81%
|
|
386,444
|
|
77%
|
Shana Smith
(5)
|
|
81%
|
|
334,907
|
|
74%
|
Juan Figuereo
(6)
|
|
81%
|
|
265,547
|
|
31%
|
Gokul Hemmady
(6)
|
|
81%
|
|
312,621
|
|
31%
|
(1)
|
Mr. Shindlers bonus payout
percentage of target was impacted by the reduction in his target bonus
from 195% to 130% of base salary during 2015 in light of the Companys
emergence from bankruptcy.
|
(2)
|
Mr. Freimans bonus payout percentage of target was impacted by the
increase in his target bonus from 75% to 100% of base salary during 2015
in connection with his promotion to chief financial officer.
|
(3)
|
Mr. Valim joined Nextel Brazil on August 25, 2015 and did not
participate in the 2015 Bonus Plan. Mr. Valim was eligible for a pro-rated
2015 bonus equal to 50% of his base salary based on performance metrics
set forth in his employment agreement. He earned 100% of the pro-rated
bonus.
|
(4)
|
Mr. Truzinskis bonus payout percentage of target was impacted by
the increase in his target bonus from 90% to 100% of base salary during
2015 in connection with additional roles and responsibilities assumed in
connection with the restructuring of our senior executive
team.
|
(5)
|
Mrs. Smiths target bonus percentage of target was impacted by the
increase in her target bonus from 75% to 100% of base salary during 2015
in connection with her promotion to general counsel.
|
(6)
|
Pursuant to the terms of the
Companys Severance Plan, Messrs. Figuereo and Hemmady were eligible for a
pro-rated bonus based on time served.
|
31
Table of Contents
2015 BANKRUPTCY EMERGENCE
BONUS
|
In connection with our bankruptcy
proceedings, the court approved a key employee incentive plan that provided for
a potential incentive bonus payout to insiders, as defined by the federal
bankruptcy code, should the Company and its subsidiaries successfully emerge
from bankruptcy within specified time frames and/or if a sale transaction
meeting specified enterprise values was completed. The payout under each program
was additive, but the total payout pool was capped at $5.5 million. Voluntary
termination would result in forfeiture of all bonus and involuntary terminations
without cause would result in a prorated bonus based on the number of days
employed during the bankruptcy and asset sale process.
Bankruptcy-Related Metric Reorganization
Metric
|
8/31/15
|
7/31/15
|
6/30/15
|
5/31/15
|
4/30/15
|
$0
|
$1,000,000
|
$2,000,000
|
$3,000,000
|
$4,000,000
|
Bankruptcy-Related Metric Sale
Transaction
|
The sale transaction bonus was earned at
the time of the bankruptcy courts approval of a sale transaction and the amount
of the bonus was calculated as 75 basis points of incremental sale value over
the threshold of 120% of the plan value of those assets with the sale value
representing gross consideration including the assumption of debt after
deductions for:
●
|
all costs and expenses
related to the sale;
|
●
|
any corporate cash used
by the entity or business being sold; and
|
●
|
all holdbacks and
reductions in proceeds for indemnities, which are added back up on the
release of proceeds.
|
All employees eligible to earn the sale
bonus as of the date of court approval of the asset sale are entitled to any
portion of the bonus subject to holdbacks upon the subsequent release of the
holdbacks regardless of whether they are still in the employment of the Company
or its successors as long as the employee was not terminated for cause, but the
bonus will not be paid until it otherwise comes due.
On April 30, 2015, we completed the sale
of our operations in Mexico, which we refer to as Nextel Mexico, to New Cingular
Wireless, an indirect subsidiary of AT&T. The transaction was structured as
a sale of all of the outstanding stock of Nextel Mexico for a purchase price of
approximately $1.875 billion, including $187.5 million deposited in escrow to
satisfy potential indemnification claims. On June 19, 2015, the bankruptcy court
entered an order approving and confirming our plan of reorganization, and on
June 26, 2015, the conditions of the bankruptcy courts order and the plan of
reorganization were satisfied, the plan of reorganization became effective and
we emerged from bankruptcy. The named executive officers earned the following
bonuses in connection with the sale of Nextel Mexico and the Companys emergence
from bankruptcy:
Executive
|
|
Allocation of Total
Payout
(1)
|
|
Restructuring Bonus
(Paid July 2, 2015)
|
|
Asset Sale Bonus
(Payment
Pending)
(2)
|
Steven Shindler
|
|
32.34%
|
|
$
|
646,785
|
|
$
|
357,990
|
David Truzinski
|
|
6.94%
|
|
$
|
138,845
|
|
$
|
76,850
|
Daniel Freiman
|
|
5.13%
|
|
$
|
102,556
|
|
$
|
56,764
|
Shana Smith
|
|
5.13%
|
|
$
|
102,556
|
|
$
|
56,764
|
Juan Figuereo
|
|
14.46%
|
|
$
|
289,261
|
|
$
|
160,103
|
Gokul Hemmady
|
|
17.03%
|
|
$
|
340,539
|
|
$
|
188,485
|
(1)
|
The bonus pool was allocated among
the eligible employees based on each employees proportion of target
quarterly cash bonus incentive payments at the time the key employee
incentive plan was approved by the bankruptcy court.
|
(2)
|
These amounts are subject to
reduction and will not be paid until the money deposited into an escrow
account to satisfy potential indemnification claims is
released.
|
32
Table of Contents
2015 LONG-TERM EQUITY
INCENTIVES
|
In 2015, in connection with our emergence
from bankruptcy, the Compensation Committee awarded emergence grants pursuant to
the 2015 Plan to the named executive officers with one-half of the target value
of each named executive officers long-term equity award in the form of stock
options and one-half in the form of restricted stock. The award values were
based on internal pay equity and award values and total direct compensation for
comparable positions at the Peer Group companies.
In addition, as a result of our plan of
reorganization and emergence from bankruptcy, which resulted in no recovery with
respect to former equity interests in the Company, the named executive officers
did not realize any value or receive any recovery from the long-term incentives
granted to them during 2014 or in prior years.
In 2015, one-half of the target total
value for our named executive officers long-term incentive equity awards was
granted in the form of nonqualified stock options that vest ratably over a
three-year period and expire after 10 years. The exercise price of each option
was the plan of reorganization value of our stock at emergence, or the closing
price of our common stock on the date of grant for grants made after our listing
on the NASDAQ stock market. The number of options granted was determined by
dividing the target value for each executive of the portion of the incentive
equity grant to be paid in stock options by the value of each option, which was
computed using the Black-Scholes option-pricing model using the plan of
reorganization value, or the closing price of our common stock on the date of
grant, and using the same assumptions that we use in calculating the
compensation expense attributable to such grants under FASB ASC Topic
718.
In 2015, one-half of the target value for
our named executive officers long-term incentive award was granted in the form
of restricted stock that vests ratably over a three year period. The number of
shares of restricted stock awarded to each executive was determined by dividing
the target value for each executive of the portion of the incentive equity grant
to be paid in restricted stock by the plan of reorganization value of our stock
at emergence, or the closing price of our common stock on the grant date for
grants made after our listing on the NASDAQ stock market, which was the fair
value computed in accordance with FASB ASC Topic 718.
The grant date value of the annual
long-term equity grants provided to each of our named executive officers in 2015
and the percentage of target total direct compensation that the 2015 long-term
emergence equity grants represented were as follows:
|
|
Value of 2015
|
|
Value of 2015
|
|
Percent of Target
|
|
|
Stock Option
|
|
Restricted Stock
|
|
Total Direct
|
Name
|
|
Grants ($)
|
|
Grant ($)
|
|
Compensation
|
Steven Shindler
|
|
3,050,000
|
|
3,050,000
|
|
73%
|
Daniel Freiman
|
|
600,000
|
|
600,000
|
|
57%
|
Francisco Valim
|
|
1,500,000
|
|
1,500,000
|
|
62%
|
David Truzinski
|
|
650,000
|
|
650,000
|
|
57%
|
Shana Smith
|
|
600,000
|
|
600,000
|
|
57%
|
33
Table of Contents
President and Legal Representative, Nextel
Brazil
|
Francisco Tosta Valim Filho was appointed
president and legal representative of Nextel Brazil effective August 25, 2015.
As is customary in Brazil, Mr. Valim entered into an employment agreement with
his employer, Nextel Telecomunicações Ltda. In accordance with his employment
agreement, Mr. Valim was granted a base salary of R$2,400,000 ($605,938), a
target bonus of R$1,200,000 ($302,969) for 2015 and R$4,800,000 ($1,211,876)
starting in 2016, and $3,000,000 in equity awards. The agreement also provides
for a payment of $4,500,000 should Mr. Valim be terminated in connection with a
change of control of NII Holdings or Nextel Telecomunicações.
Former Executive Vice President, Chief Financial
Officer
|
On June 30, 2015, the Company announced
that Juan Figuereo would no longer serve as the Companys executive vice
president, chief financial officer on or before October 1, 2015. In accordance
with a severance agreement between Mr. Figuereo and the Company, which is
consistent with the terms of the Companys Severance Plan, Mr. Figuereo received
a payment of $566,500, which represents one year of base salary, and $82,851 for
his third quarter bonus. In the event that we make a payment pursuant to the key
employee incentive plan provided for in our bankruptcy proceedings, we will owe
Mr. Figuereo a payout pursuant to the terms and conditions of the plan when
payments are made to other eligible employees. Mr. Figuereo did not receive an
equity grant in 2015 and is not eligible for any other severance payments or
benefits.
Former Chief Operating Officer and President, Nextel
Brazil
|
On June 30, 2015, the Company announced
that Gokul Hemmady would no longer serve as the Companys chief operating
officer and president of Nextel Brazil on or before October 1, 2015. In
connection with his departure, Mr. Hemmady entered into two agreements with the
Company. The first agreement provided for severance benefits consistent with the
Companys Severance Plan equal to one year of base salary and prorated
short-term bonus. The second agreement provided for an additional payment of six
months of base salary in consideration of his agreement to (a) extend the
non-compete, non-solicitation and confidentiality covenants agreed to in his
separation agreement for a period of two years after his separation date and (b)
remain with the Company to assist in the transition of his roles and
responsibilities to his successor and to provide other specified assistance to
the Company until the earlier of October 1, 2015 or the date on which the
Company determines that such transition has been successfully completed. In
connection with these agreements Mr. Hemmady received a payment of $1,000,388,
which represents eighteen months of base salary and $97,538 for his third
quarter bonus. He also received R$955,641 ($241,275) in legally required
severance benefits from Nextel Telecomunicações Ltda. In the event that we make
a payment pursuant to the key employee incentive plan provided for in our
bankruptcy proceedings, we will owe Mr. Hemmady a payout under the key employee
incentive plan pursuant to the terms and conditions of the plan when payments
are made to other eligible employees. Mr. Hemmady did not receive an equity
grant in 2015 and is not eligible for any further severance payments or
benefits.
Former Executive Vice President, Chief Digital Officer and
Chief Strategy Officer
|
On January 1, 2016, Mr. Truzinski was
severed from his position without cause in connection with the restructuring of
our corporate headquarters. In accordance with a severance agreement between Mr.
Truzinski and the Company, which is consistent with the terms of the Companys
Severance Plan, Mr. Truzinski received a payment of $500,000, which represents
one year of base salary, and $250,000 for his fourth quarter bonus. In the event
that we trigger a payment pursuant to the
34
Table of Contents
key employee incentive plan provided for
in our bankruptcy proceedings, we will owe Mr. Truzinski a payout pursuant to
the terms and conditions of the plan when payments are made to other eligible
employees. Mr. Truzinski is not eligible for any other severance payments or
benefits.
Roles and Responsibilities
|
The following tables summarize the roles
and responsibilities of the Compensation Committee, management and the
independent compensation consultant retained by the Compensation Committee in
connection with the development and implementation of our compensation program
for our executive officers.
Compensation Committee
(3 Independent Directors)
|
|
Quarterly reviews
and approves corporate goals and objectives with respect to our executive
officers compensation.
Annually reviews and approves the evaluation
process and compensation structures with respect to our executive
officers compensation.
Evaluates our performance in light
of the Committees established goals and objectives.
Approves the annual
compensation for our executive officers, considering the recommendations
made by the chief executive officer (for compensation other than his own)
and the independent compensation consultant.
Evaluates the performance of the
chief executive officer relative to the performance goals determined by
the Board.
|
Management
|
|
Recommends the compensation
structure for the Companys executive officers.
Chief executive officer recommends
the level of annual compensation for the Companys executive officers
(other than the chief executive officer).
Chief executive officer evaluates
each executive officers performance of their respective business or
function and their retention considerations (other than for the chief
executive officer).
Provides input to the Compensation
Committee on the strategy, design and funding of our incentive
compensation plans.
Makes plan design recommendations
for broad-based benefit programs in which our executive officers
participate.
|
Independent
Compensation
Consultant
|
|
Conducts annual review of our
executive compensation program, advising on the external competitiveness
of our executive compensation packages and practices.
Provides data relating to total
compensation levels and relative amounts of cash and equity compensation
earned by executives in comparable positions within the Peer Group.
Provides a comparison of our performance with that of our Peer Group over
one and three year periods with respect to various performance
measures.
Provides no services to our company
other than those provided directly to or on behalf of the Compensation
Committee.
Performs other work at the direction
and under the supervision of the Committee.
Reviews and reports on Compensation
Committee materials, participates in Compensation Committee meetings and
communicates with the chair of the Compensation Committee between meetings
as requested.
|
35
Table of Contents
Compensation
Committee Consultant and Independence
|
The Compensation Committee considers the
advice of its independent compensation consultant, together with information and
analysis from management and its own judgment and experience, when evaluating
the Companys executive compensation program. In 2015, the Compensation
Committee was advised by Pearl Meyer & Partners.
Use of
Comparative Industry Data
|
In order to design our compensation
programs, the Compensation Committee reviews the executive salaries,
compensation structures and the financial performance of comparable corporations
in a designated Peer Group established by the Compensation Committee. As part of
its annual compensation process, with assistance from Pearl Meyer &
Partners, the Compensation Committee evaluated the Companys historical peer
group in order to ensure that the most appropriate industry data was utilized in
the evaluation of the Companys compensation programs. The Committee focused on
ensuring that our Peer Group companies operated in the telecommunication or
broader technology industries and recognized revenues within 50% to 200% of the
Companys estimated revenue for 2015 and low-to-moderate earnings before income,
taxes, depreciation and amortization margin. The Committee also sought to ensure
some year-over-year consistency in the Peer Group, a reasonable market
capitalization to revenue multiple and that our Peer Group companies maintained
a significant international presence with exposure to foreign currency
fluctuations. Based on these criteria and the advice and recommendations
provided by Pearl Meyer & Partners, the Compensation Committee approved the
following Peer Group for 2015:
Broca de Communications Systems, Inc.
|
IDT Corporation
|
CA, Inc.
|
Juniper Networks,
Inc.
|
Ciena Corporation
|
NTELOS Holdings Corp.
|
Cincinnati Bell
Inc.
|
Polycom, Inc.
|
CommScope Holding Company, Inc.
|
Telephone & Data Systems, Inc.
|
Consolidated
Communications Holdings
|
United States Cellular
Corporation
|
Fairpoint Communications, Inc.
|
ViaSat Inc.
|
Frontier Communications
Corporation
|
Vonage Holdings
Corporation
|
General Communication Inc.
|
Windstream Holdings, Inc.
|
Harris
Corporation
|
|
To assess the competitiveness of our
executive compensation programs, we analyze Peer Group compensation data
included in proxy statements or other public filings as well as compensation and
benefits survey data developed by global compensation consulting firms. As part
of this process, we measure pay levels within each of our three primary elements
of compensation (base salary, target bonus and equity incentive grants) and in
the aggregate. We also review the mix of our compensation attributable to these
elements with respect to their characteristics including fixed versus variable,
short-term versus long-term, and cash versus equity-based pay. The Compensation
Committee generally compares the compensation of each named executive officer in
relation to various percentiles reflected in the Peer Group data for similar
positions based on proxy ranking and job title and responsibilities.
36
Table of Contents
ADDITIONAL COMPENSATION AND COMPENSATION
PLANS
|
In the United States, the named executive
officers participate in the same benefit plans as the general employee
population of the Company. International plans vary, and incremental amounts
paid to executives who work outside the United States pursuant to foreign
government required programs, including mandatory vacation allowances and
retirement benefits, 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 or in determining those executives
target total direct compensation. In general, benefits are designed to provide a
safety net of protection against the financial catastrophes that can result from
illness, disability or death, and to provide a reasonable level of retirement
income based on years of service with the Company. Benefits help keep employees
focused on serving the Company and not distracted by matters related to paying
for health care, saving for retirement or similar issues.
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 eligible annual compensation. Our
matching contribution for 2015 for named executive officers was $63,600 in the
aggregate.
We do not have any pension plans that
entitle our named executive officers to additional benefits. 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, and we
do not have any nonqualified deferred compensation plans.
We have two severance plans that provide
for the payment of severance benefits to our U.S.-based employees, including our
U.S.-based 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 of the Company terminates his or her employment with good reason, in
connection with or following a change of control. The two severance plans are
mutually exclusive meaning that an executive may be eligible to receive payments
under one or the other of the plans depending on the circumstances surrounding
the termination of the executives employment, but it is not possible for an
executive to receive payments under both plans. 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 target total direct 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.
37
Table of Contents
EXECUTIVE COMPENSATION GOVERNANCE
PRACTICES
|
We believe that our compensation programs
should ensure that our executives remain accountable for business results and
take responsibility for the assets of the business and its employees. Consistent
with these objectives, our Board has incorporated the following governance
features into our compensation governance programs.
COMPENSATION RISK
MITIGATION
|
The Companys executive compensation
program includes features designed to discourage executives from taking
unnecessary risks that could harm the financial health and viability of the
Company, including:
●
|
Balanced Performance
Measures
. The Compensation Committee believes that the
performance criteria used in our 2015
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 revenue, those
actions would be expected to increase expenses, resulting in a
potential deterioration in operational free cash
flow in the short term.
|
●
|
Emphasis on Long-Term
Stockholder Value
. Long-term incentive awards focus
executives on creating long-term stockholder
value and delivering exceptional long-term operating
results. These awards align the interests of our executive officers
with those of our
stockholders.
|
The Compensation Committee reviewed the
risk profile of our compensation policies and practices and determined that our
compensation programs are not reasonably likely to have a material adverse
effect on the Company.
TAX
DEDUCTIBILITY UNDER SECTION 162(m)
|
Section 162(m) of the Internal Revenue
Code imposes a limitation on the deductibility of non-performance-based
compensation in excess of $1 million paid to certain named executive officers of
public companies. The Compensation Committee has implemented a compensation
program that links a substantial portion of each executives compensation to
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.
TRADING AND DERIVATIVES
POLICY
|
The Board has adopted a policy prohibiting
our directors, officers and members of their immediate families from entering
into any transactions in our securities without first obtaining pre-clearance of
the transaction from our general counsel. In addition, we prohibit directors and
employees from engaging in any transaction involving our common stock that may
be viewed as speculative, including buying or selling puts, calls or options,
short sales, hedging transactions or purchases of our common stock on
margin.
Generally, we do not enter into employment
contracts with our employees. Our foreign subsidiaries enter into employment
contracts with their employees where required or customary based on local law or
practice. As is customary for executives in Brazil, Nextel Telecomunicações
Ltda., our Brazilian subsidiary, has entered into an employment agreement with
Mr. Valim in connection with his service as president of Nextel Brazil. The
terms of Mr. Valims employment agreement are summarized under 2
015 Management Changes - President, Nextel
Brazil
. We do not have employment contracts
with any of our other named executive officers.
38
Table of Contents
TIMING OF LONG-TERM INCENTIVE
AWARDS
|
In 2015, our annual equity grants were
made to our employees, executive officers and directors at our emergence from
bankruptcy proceedings on June 26, 2015. The number of options and shares of
restricted stock awarded and the exercise price of the stock options granted
were based on the value of our common stock established by our plan of
reorganization of $20.678 per share. We do not expect to grant long-term
incentive awards to our employees, executive officers and directors in
2016.
It is the policy of the Compensation
Committee not to use information relating to our results when determining the
amount, timing or other characteristics of our annual equity grants to
employees, executive officers and directors. Historically, we have granted our
annual long-term incentive awards in April, regardless of the content or timing
of the issuance of the first quarter earnings release. Although our quarterly
financial results may have an impact on the market price of our common stock,
and therefore the number of options and shares of restricted stock and
restricted stock units awarded as well as the exercise price of the option
awarded, historically we have used the April board meeting to grant our annual
long-term incentive awards and generally believe that a consistent application
of our granting practices from year to year is appropriate. The equity grants by
the Compensation Committee are designed to create incentives for the creation of
long-term stockholder value and contain delayed vesting provisions that prevent
any advantages from 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 an exercise price of options 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.
The 2015 Incentive Compensation Plan (the
2015 Plan) approved by our stockholders in connection with the approval of our
plan of reorganization prohibits the repricing of stock options governed by the
2015 Plan.
COMPENSATION RECOUPMENT
POLICY
|
The Compensation Committee believes that
the Companys compensation programs should provide for the reduction or recovery
of certain incentive payments made to our executives in the event our financial
statements were to be restated in the future in a manner that would have
negatively impacted the size or payment of the award at the time of payment.
Although the Compensation Committee has not adopted a formal policy in addition
to remedies available under applicable law, the Compensation Committee intends
to adopt a policy to recover payments in compliance with the rules issued by the
Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform
and Consumer Protection Act when such rules are finalized. As described above,
long-term equity incentives comprise a significant portion of our executives
target direct compensation and when combined with our ownership guidelines,
subject our executives to substantial financial risk should there be a material
negative restatement of our financial results.
39
Table of Contents
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
|
Name and Principal
|
|
|
|
Salary
|
|
Bonus
(1)
|
|
Awards
(2)
|
|
Awards
(2)
|
|
Compensation
(3)
|
|
Compensation
(4)
|
|
Total
|
Position
|
|
Year
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
Steven Shindler
|
|
2015
|
|
969,646
|
|
1,004,774
|
|
3,050,005
|
|
3,050,003
|
|
1,165,354
|
|
18,549
|
|
9,258,331
|
Chief Executive
Officer
|
|
2014
|
|
945,996
|
|
|
|
423,876
|
|
466,420
|
|
1,437,323
|
|
9,483
|
|
3,283,098
|
|
|
2013
|
|
945,996
|
|
|
|
999,995
|
|
|
|
245,959
|
|
23,792
|
|
2,215,742
|
Daniel Freiman
|
|
2015
|
|
419,875
|
|
159,320
|
|
600,007
|
|
600,014
|
|
333,649
|
|
10,600
|
|
2,123,465
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francisco
Valim
(5)
|
|
2015
|
|
201,979
|
|
302,969
|
|
1,500,003
|
|
1,500,001
|
|
|
|
221,858
|
|
3,726,810
|
President, Nextel Brazil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Truzinski
|
|
2015
|
|
470,501
|
|
215,695
|
|
650,013
|
|
650,004
|
|
386,444
|
|
10,600
|
|
2,383,257
|
Former Executive Vice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President, Chief Digital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer and Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategy Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shana Smith
|
|
2015
|
|
423,125
|
|
159,320
|
|
600,007
|
|
600,014
|
|
334,907
|
|
10,600
|
|
2,127,973
|
General Counsel
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Juan Figuereo
|
|
2015
|
|
424,304
|
|
449,364
|
|
|
|
|
|
265,547
|
|
611,236
|
|
1,750,451
|
Former Executive
|
|
2014
|
|
550,000
|
|
|
|
92,261
|
|
64,895
|
|
642,813
|
|
13,032
|
|
1,363,001
|
Vice President, Chief
|
|
2013
|
|
550,000
|
|
|
|
933,340
|
|
466,673
|
|
110,000
|
|
31,394
|
|
2,091,407
|
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gokul Hemmady
|
|
2015
|
|
499,521
|
|
529,024
|
|
|
|
|
|
312,621
|
|
1,669,605
|
|
3,010,771
|
Former Chief
Operating
|
|
2014
|
|
647,500
|
|
|
|
128,835
|
|
90,620
|
|
756,765
|
|
785,053
|
|
2,408,773
|
Officer and
President,
|
|
2013
|
|
647,500
|
|
|
|
1,303,330
|
|
651,666
|
|
129,500
|
|
329,293
|
|
3,061,289
|
Nextel Brazil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The amounts in this column for
Messrs. Shindler, Freiman, Truzinski, Figuereo and Hemmady and Mrs. Smith
reflect the bankruptcy emergence and asset sale bonuses earned in 2015.
The bankruptcy emergence bonus was paid on July 2, 2015, but the asset
sale bonus is pending the release of funds escrowed for indemnification
and subject to reduction based on amounts paid for indemnification claims.
Mr. Valim's amount reflects the bonus that he received, pursuant to his
employment agreement, at the submission and acceptance of the Nextel
Brazil business plan by our Board of Directors.
|
(2)
|
The amounts in these columns represent the value of the stock
options and restricted stock granted to executives in the current year on
the date of grant. Our common stock was not listed on an exchange on our
date of emergence, and the number of shares awarded to Messrs. Shindler,
Freiman and Truzinski and Mrs. Smith was determined using the value of our
common stock established by our plan of reorganization of $20.678 per
share. Our common stock was listed on the NASDAQ stock market on July 6,
2015 and the grant date fair value of the awards made on June 26, 2015,
computed in accordance with stock-based compensation accounting rules
(FASB ASC Topic 718), but disregarding estimated forfeitures related to
service-based vesting conditions, was $16.00 per share, based on trades
immediately following the listing of our common stock on the NASDAQ stock
market. The grant date fair value of Mr. Valims shares listed in the
columns above is computed in accordance with stock-based compensation
accounting rules (FASB ASC Topic 718), but disregarding estimated
forfeitures related to service-based vesting conditions and based on the
closing price of our common stock on the NASDAQ stock market on the date
of grant, November 9, 2015, of $6.57.
|
|
The restricted awards and stock options granted in 2014 and 2013
were canceled without recovery in connection with our plan of
reorganization and emergence from bankruptcy.
|
(3)
|
The amounts in this column
represent the bonus that we paid under the Bonus Plans in effect in 2013,
2014 and 2015. The bonus is determined based on a target bonus amount,
which is a predetermined percentage of base salary, and is adjusted based
on achievement of operating unit and/or consolidated performance goals and
for 2013 and 2014 personal performance.
|
40
Table of Contents
(4)
|
Consists of: (a) amounts contributed by us
under our 401(k) plan, (b) in the case of Messrs. Valim and Hemmady, amounts contributed by Nextel Brazil to the
Fundo de Garantia de Tempo de Servico, or FGTS, and for Mr. Valim to a private savings plan, (c) perquisites and other
personal benefits described in more detail below, (d) severance payments and (e) tax gross-up payments made
in connection with the foregoing:
|
|
|
|
Year
|
|
Company
Contributions
to 401(k)
Plan
($)
|
|
Company
Contributions
to
Government
Plans
($)
|
|
Company
Contributions
to Private
Savings
Plan
($)
(a)
|
|
Perquisites and
Other
Personal
Benefits
($)
(b)
|
|
Tax Gross-Up
Payments
($)
(c)
|
|
Severance
Payments
($)
|
|
Mr. Shindler
|
|
2015
|
|
10,600
|
|
N/A
|
|
N/A
|
|
7,949
|
|
|
|
N/A
|
|
|
|
2014
|
|
|
|
N/A
|
|
N/A
|
|
9,483
|
|
|
|
N/A
|
|
|
|
2013
|
|
|
|
N/A
|
|
N/A
|
|
22,046
|
|
1,745
|
|
N/A
|
|
Mr. Freiman
|
|
2015
|
|
10,600
|
|
N/A
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
Mr. Valim
|
|
2015
|
|
N/A
|
|
41,266
|
|
18,644
|
|
161,948
|
|
|
|
N/A
|
|
|
|
Mr. Truzinski
|
|
2015
|
|
10,600
|
|
N/A
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
Mrs. Smith
|
|
2015
|
|
10,600
|
|
N/A
|
|
N/A
|
|
|
|
|
|
N/A
|
|
|
|
Mr. Figuereo
|
|
2015
|
|
10,600
|
|
N/A
|
|
N/A
|
|
|
|
|
|
600,636
|
|
|
|
2014
|
|
10,400
|
|
N/A
|
|
N/A
|
|
1,977
|
|
654
|
|
N/A
|
|
|
|
2013
|
|
9,167
|
|
N/A
|
|
N/A
|
|
14,952
|
|
7,276
|
|
N/A
|
|
Mr. Hemmady
|
|
2015
|
|
10,600
|
|
39,614
|
|
N/A
|
|
328,207
|
|
42,445
|
|
1,248,739
|
|
|
|
2014
|
|
8,944
|
|
46,817
|
|
N/A
|
|
524,147
|
|
205,145
|
|
N/A
|
|
|
|
2013
|
|
10,200
|
|
N/A
|
|
N/A
|
|
304,606
|
|
14,487
|
|
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 10% of an
employees annual salary. The employer contribution vests based on length
of service.
|
|
b)
|
The dollar value of perquisites and other
personal benefits received by Messrs. Valim and Hemmady each exceeded
$10,000 in 2015.
|
|
|
The perquisites and other personal
benefits paid to Mr. Valim in 2015 consist of an annual allowance for an
automobile supplied by Nextel Brazil, 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 $128,285; $33,062 for medical, dental and other customary executive
insurance; and meal vouchers. These benefits are paid to Mr. Valim in Brazilian Reais, the amounts of which are reflected in the Benefits column of the
table above and the All Other Compensation column of the Summary Compensation Table in U.S. Dollars based on the average exchange rate
of 3.9608 Brazilian Reais to 1.00 U.S. Dollar for 2015.
|
|
|
Pursuant to an international assignment
agreement with Mr. Hemmady, who is a U.S. citizen, we agreed to provide
certain benefits and expatriation/repatriation assistance for the period
of his assignment in Brazil that are reflected as perquisites and other
personal benefits. Some of these benefits are paid to Mr. Hemmady or to
third parties on Mr. Hemmady's behalf in Brazilian Reais, the amounts of
which are reflected in the Benefits column of the table above and the All
Other Compensation column of the Summary Compensation Table in U.S.
Dollars based on the average exchange rate of 3.9608 Brazilian Reais to
1.00 U.S. Dollar for 2015. Perquisites and other personal benefits
received by Mr. Hemmady in 2015 consist of $107,792 for housing and
utilities; $144,076 representing Mr. Hemmadys foreign services
differential; $27,477 for expenses relating to an automobile and driver
supplied by Nextel Brazil, including maintenance and fuel; $44,753 for
medical, dental and other customary executive insurance; and $4,109 for
language training. We also provided Mr. Hemmady with tax counseling and
made tax equalization payments on his behalf so that Mr. Hemmady pays the
same taxes as he would as a U.S. citizen working in the
U.S.
|
|
c)
|
Tax gross up payments in 2015 reflect amounts
paid for Mr. Hemmady for tax equalization, housing allowance and language
courses.
|
(5)
|
Mr. Valim joined Nextel Brazil on August
25, 2015. Mr. Valim's salary, bonus and benefits, other than his equity
grants, were paid in Brazilian Reais. As a result, the amount of
compensation provided to Mr. Valim as reflected in U.S. Dollars in the
Salary, Bonus and All Other Compensation columns varies based on the
applicable exchange rate of the Brazilian Real relative to the U.S Dollar.
Mr. Valim's compensation as reported in U.S Dollars can vary significantly
with no actual change to the compensation paid to Mr. Valim in Brazilian
currency if the exchange rates are volatile. The amounts for Mr. Valim
reflected in the Salary, Bonus and All Other Compensation columns in the
table above are based on the average exchange rate of 3.9608 Brazilian
Reais to 1.00 U.S. Dollar for
2015.
|
41
Table of Contents
GRANTS OF PLAN-BASED AWARDS
TABLE
|
In the table below and discussion that
follows, we summarize the cash incentive bonus payments, and grants of stock
options and restricted stock to each of the named executive officers during
2015. Our 2015 Bonus Plan does not provide for payouts in fiscal years after
2015, and this year we have not issued any performance-based equity incentive
plan awards.
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive
Plan Awards
(1)
|
|
All Other
Stock
Awards:
Number
of
Shares
of Stock
|
|
All Other
Option
Awards:
Number
of
Securities
Underlying
|
|
Exercise or
Base Price
of Option
|
|
Grant
Date Fair
Value of
Stock and
Option
|
Name
|
|
|
|
Grant Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
or Units
(#)
|
|
Options
(#)
|
|
Awards
($/sh)
|
|
Awards
(2)
($)
|
Steven Shindler
|
|
Annual Bonus
|
|
|
|
0
|
|
1,266,689
|
|
2,533,378
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Restricted Stock
|
|
6/26/2015
|
|
N/A
|
|
N/A
|
|
N/A
|
|
147,500
|
|
N/A
|
|
N/A
|
|
3,050,005
|
|
|
Stock Options
|
|
6/26/2015
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
425,384
|
|
20.678
|
|
3,050,003
|
Daniel Freiman
|
|
Annual Bonus
|
|
|
|
0
|
|
450,000
|
|
900,000
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Restricted Stock
|
|
6/26/2015
|
|
N/A
|
|
N/A
|
|
N/A
|
|
29,017
|
|
N/A
|
|
N/A
|
|
600,007
|
|
|
Stock Options
|
|
6/26/2015
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
83,683
|
|
20.678
|
|
600,014
|
Francisco
Valim
(3)
|
|
Annual Bonus
|
|
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|
Restricted Stock
|
|
11/9/2015
|
|
N/A
|
|
N/A
|
|
N/A
|
|
228,311
|
|
N/A
|
|
N/A
|
|
1,500,003
|
|
|
Stock Options
|
|
11/9/2015
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
574,713
|
|
6.57
|
|
1,500,001
|
David Truzinski
|
|
Annual Bonus
|
|
|
|
0
|
|
500,000
|
|
1,000,000
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Restricted Stock
|
|
6/26/2015
|
|
N/A
|
|
N/A
|
|
N/A
|
|
31,435
|
|
N/A
|
|
N/A
|
|
650,013
|
|
|
Stock Options
|
|
6/26/2015
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
90,656
|
|
20.678
|
|
650,004
|
Shana Smith
|
|
Annual Bonus
|
|
|
|
0
|
|
450,000
|
|
900,000
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Restricted Stock
|
|
6/26/2015
|
|
N/A
|
|
N/A
|
|
N/A
|
|
29,017
|
|
N/A
|
|
N/A
|
|
600,007
|
|
|
Stock Options
|
|
6/26/2015
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
83,683
|
|
20.678
|
|
600,014
|
Juan Figuereo
|
|
Annual Bonus
|
|
|
|
0
|
|
849,750
|
|
1,699,500
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Restricted Stock
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Stock Options
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
Gokul Hemmady
|
|
Annual Bonus
|
|
|
|
0
|
|
1,000,388
|
|
2,000,775
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Restricted Stock
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Stock Options
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
(1)
|
The amounts reflect the potential
range of payouts pursuant to the 2015 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 these columns represent the value of the stock
options and restricted stock granted to executives in the current year on
the date of grant. Our common stock was not listed on an exchange on our
date of emergence, and the number of shares awarded to Messrs. Shindler,
Freiman and Truzinski and Mrs. Smith was determined using the value of our
common stock established by our plan of reorganization of $20.678 per
share. Our common stock was listed on the NASDAQ stock market on July 6,
2015 and the grant date fair value of the awards made on June 26, 2015,
computed in accordance with stock-based compensation accounting rules
(FASB ASC Topic 718), but disregarding estimated forfeitures related to
service-based vesting conditions, was $16.00 per share, based on trades
immediately following the listing of our common stock on the NASDAQ stock
market. The grant date fair value of Mr. Valims shares listed in the
columns above is computed in accordance with stock-based compensation
accounting rules (FASB ASC Topic 718), but disregarding estimated
forfeitures related to service-based vesting conditions and based on the
closing price of our common stock on the NASDAQ stock market on the date
of grant, November 9, 2015, of $6.57.
|
(3)
|
Mr. Valim will be eligible to
participate in the 2016 Bonus Plan beginning on January 1, 2016. In 2015,
Mr. Valim was eligible for an individualized bonus based on performance
measures set forth in his employment agreement.
|
42
Table of Contents
OUTSTANDING EQUITY AWARDS AT
FISCAL YEAR-END 2015 TABLE
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Grant Date
|
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
|
Option
Exercise Price
($)
|
|
Option
Expiration
Date
|
|
Number
of Shares
or Units of
Stock That
Have
Not
Vested
(#)
|
|
|
Market Value
of Shares or
Units of Stock
That Have
Not
Vested
(1)
($)
|
Steven Shindler
|
|
6/26/2015
|
|
|
|
425,384
|
(2)
|
|
20.6780
|
|
6/26/2025
|
|
147,500
|
(4)
|
|
744,875
|
Daniel Freiman
|
|
6/26/2015
|
|
|
|
83,683
|
(2)
|
|
20.6780
|
|
6/26/2025
|
|
29,017
|
(4)
|
|
146,536
|
Francisco Valim
|
|
11/9/2015
|
|
|
|
574,713
|
(3)
|
|
6.5700
|
|
11/9/2025
|
|
228,311
|
(5)
|
|
1,152,971
|
David Truzinski
|
|
6/26/2015
|
|
|
|
90,656
|
(2)
|
|
20.6780
|
|
6/26/2025
|
|
31,435
|
(4)
|
|
158,747
|
Shana Smith
|
|
6/26/2015
|
|
|
|
83,683
|
(2)
|
|
20.6780
|
|
6/26/2025
|
|
29,017
|
(4)
|
|
146,536
|
Juan Figuereo
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gokul Hemmady
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The market value of the restricted
stock is based on the reported $5.05 closing price of a share of our
common stock as reported on the NASDAQ stock market on December 31, 2015.
The long-term equity incentives disclosed in this table reflect the
current fair value of our outstanding equity awards.
|
(2)
|
Stock option award vests 33 1/3% on each of June 26, 2016, June 26,
2017 and June 26, 2018.
|
(3)
|
Stock option award vests 33 1/3% on each of November 9, 2016,
November 9, 2017 and November 9, 2018.
|
(4)
|
Restricted Stock vests 33 1/3% on each of June 26, 2016, June 26,
2017 and June 26, 2018.
|
(5)
|
Restricted Stock vests 33 1/3% on each of November 9, 2016, November 9, 2017 and November 9, 2018.
|
(6)
|
Messrs. Figuereo and Hemmady were
not granted equity awards in 2015.
|
OPTION EXERCISES AND STOCK
VESTED
|
None of our executive officers had exercisable options or restricted stock vest in 2015.
PENSION BENEFITS AND
NONQUALIFIED DEFERRED COMPENSATION
|
The Company does not offer pension
benefits or a deferred compensation plan.
POTENTIAL PAYMENTS UNDER
SEVERANCE PLANS
|
We have arrangements with each of our
U.S.-based 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 U.S.-based named executive officers under our
Severance Plan, the 2015 Plan and Separation and Release Agreements between the
Company and Messrs. Shindler and Freiman and Mrs. Smith 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.
43
Table of Contents
PAYMENTS UPON TERMINATION OF
EMPLOYMENT
|
Each of our U.S.-based 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 of Control Severance
Plan will not be entitled to cash severance under any other severance plan,
including the Severance Plan. Messrs. Shindler and Freiman and Mrs. Smith have
additional severance benefits pursuant to Separation and Release Agreements that
provide for the payment of one additional year of base salary in addition to the
benefits provided by our Severance Plan. Mr. Valim is an employee of Nextel
Brazil and is not eligible to receive benefits under the Change of Control
Severance Plan and Severance Plan. Mr. Valims termination benefits are as set
forth in his employment agreement and as required by Brazilian law. Pursuant to
his employment agreement, Mr. Valim will receive separation payments if his
employment is terminated in connection with a change of control.
Certain of the named executive officers
have also received awards of stock options and restricted stock under the 2015
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.
44
Table of Contents
POTENTIAL PAYMENTS UPON TERMINATION OF
EMPLOYMENT
|
PAYMENTS UPON TERMINATION OF
EMPLOYMENT
|
The following table shows the estimated
amount of the payments to be made to each of the named executive officers 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 or upon their termination in connection with their death,
disability or retirement, except for Messrs. Truzinski, Figuereo and Hemmady for
whom we included actual severance benefits received in connection with
involuntary separations without cause. For purposes of calculating the value of
the benefits for the named executive officers other than Messrs. Truzinski,
Figuereo and Hemmady, we have assumed that the triggering event for payment
occurred under each of the arrangements as of December 31, 2015. 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
Termination Event
(1)
|
|
Base
Salary
(2)
($)
|
|
Bonus
(3)
($)
|
|
Other
Payments
(4)
($)
|
|
Equity
Awards
(5)
($)
|
|
Total
(6)
($)
|
Change of Control Severance Plan - Termination
|
|
|
|
|
|
|
|
|
|
|
by Executive for Good Reason or by the Company
|
|
|
|
|
|
|
|
|
|
|
Without
Cause
(7)
|
|
|
|
|
|
|
|
|
|
|
Steven Shindler
|
|
1,948,752
|
|
3,166,721
|
|
48,069
|
|
744,875
|
|
5,908,417
|
Daniel Freiman
|
|
900,000
|
|
1,125,000
|
|
48,069
|
|
146,536
|
|
2,219,605
|
Francisco Valim
(8)
|
|
N/A
|
|
N/A
|
|
4,500,000
|
|
1,152,971
|
|
5,652,971
|
Shana Smith
|
|
900,000
|
|
1,125,000
|
|
48,069
|
|
146,536
|
|
2,219,605
|
Severance Plan - Involuntary
Termination
(9)
|
|
|
|
|
|
|
|
|
|
|
Steven Shindler
|
|
974,376
|
|
633,344
|
|
974,376
|
|
127,891
|
|
2,709,987
|
Daniel Freiman
|
|
450,000
|
|
225,000
|
|
450,000
|
|
25,159
|
|
1,150,159
|
Francisco Valim
(8)
|
|
N/A
|
|
N/A
|
|
N/A
|
|
197,955
|
|
197,955
|
David Truzinski
(10)
|
|
500,000
|
|
250,000
|
|
|
|
27,401
|
|
777,401
|
Shana Smith
|
|
450,000
|
|
225,000
|
|
450,000
|
|
25,159
|
|
1,150,159
|
Juan Figuereo
(11)
|
|
566,500
|
|
82,851
|
|
|
|
|
|
649,351
|
Gokul Hemmady
(12)
|
|
666,925
|
|
97,538
|
|
574,738
|
|
|
|
1,339,201
|
Death, Disability or Retirement
|
|
|
|
|
|
|
|
|
|
|
Steven Shindler
|
|
|
|
|
|
|
|
744,875
|
|
744,875
|
Daniel Freiman
|
|
|
|
|
|
|
|
146,536
|
|
146,536
|
Francisco Valim
(8)
|
|
|
|
|
|
|
|
1,152,971
|
|
1,152,971
|
Shana Smith
|
|
|
|
|
|
|
|
146,536
|
|
146,536
|
(1)
|
The Change of Control Severance Plan
and Severance Plan provide benefits for employees of NII Holdings. 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 Severance Plan). The Change of Control
Severance Plan provides that employees entitled to receive payments under
the Change of Control Severance Plan will not also be entitled to
severance under the Severance Plan. Mr. Valim is an employee of Nextel
Brazil and is not eligible to receive benefits under the Change of Control
Severance Plan or the Severance Plan. Mr. Valims termination benefits are
as set forth in his employment agreement and as required by Brazilian law.
Equity awards have been granted to the named executive officers pursuant
to our 2015 Plan, and the 2015 Plan and grant agreements apply to equity
awards held by all named executive officers.
|
(2)
|
Amounts included in this column 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 Change of Control Severance Plan for
U.S.-based named executive officers is 200% of the executives annual base
salary on the day immediately preceding the change of
control.
|
|
The severance payment under the
Severance Plan for the U.S.-based named executive officers is 12 months of
the named executive officers annualized base salary at the time of
termination.
|
45
Table of Contents
(3)
|
Amounts included in this column 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 Base
Salary column (see note 2 above). Under the Change of Control Severance
Plan, upon termination each U.S.-based executive is entitled to receive as
part of the severance payment 200% of the executives annual target bonus
on the day immediately preceding the change of control as well as an
amount equal to a prorated portion of the target bonus payment for the
period ending on the termination event.
|
|
The Severance Plan provides for the payment of an amount equal to a
prorated portion of the actual bonus payment earned for the period ending
on the termination event for each U.S.-based named executive officer,
payable when bonuses are paid to all other eligible
employees.
|
(4)
|
Other Payments for the U.S.-based named executive officers with
respect to the Change of Control Severance Plan include 18 months of COBRA
health insurance and six months of outplacement counseling assistance. The
U.S.-based executive officers are also eligible for reimbursement of
legal, accounting and other fees incurred by the executive in a good faith
effort to obtain the benefits provided for under the Change of Control
Severance Plan; no amounts have been included in the Other Payments
column for these potential payments.
|
|
For Mr. Valim, Other Payments include an enhanced severance
protection of $4,500,000, which includes any severance or termination
payment required under Brazilian law, as provided for in his employment
agreement and triggered if Mr. Valim is severed in connection with a
change of control of NII Holdings or Nextel Brazil.
|
|
For Messrs. Shindler and Freiman and Mrs. Smith, Other Payments
under Severance Plan Involuntary Termination include an additional 12
months of annualized base salary at the time of termination, as provided
for in their Separation and Release Agreements.
|
|
For Mr. Hemmady, Other Payments include an additional six months of
base salary and severance as required under Brazilian law as further
described in note 12 below.
|
(5)
|
All outstanding options had an option exercise price above the
closing price of our common stock on the NASDAQ stock market of $5.05 on
December 31, 2015. Amounts included in the Equity Awards column reflect
the value of restricted stock calculated using the closing price of our
common stock on December 31, 2015 multiplied by the shares whose vesting
or payment are prorated or accelerated upon the triggering
event.
|
|
In a change of control situation, we have assumed that the
surviving entity has elected not to assume, replace or convert any of the
awards made under the 2015 Plan. As described in more detail below, the
2015 Plan provides for the vesting of all unvested options and restricted
stock in specific circumstances following a change of control of the
Company. The 2015 Plan and the grant agreements made under that plan
provide for a pro rata vesting of outstanding awards if an employee is
terminated without cause based on the number of days served. The 2015 Plan
and the grant agreements made under that plan also provide that
outstanding and unvested options and restricted stock will vest upon an
employees death, disability, and if the employee retires at or after age
65 or at an earlier age with the consent of the Compensation Committee,
with vested options remaining exercisable for a period of one year after
the date the employee ceases to be an employee of the Company or its
subsidiary. The 2015 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 Severance Plan Termination by Executive for
Good Reason or by the Company Without Cause describes the benefits payable
to our U.S.-based named executive officers 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. This section also describes the benefits provided for in our 2015
Plan and the grant agreements made under that plan that apply to all named
executive officers in connection with a termination by an executive for
good reason or by the Company without cause in connection with a change of
control.
|
|
In cases in which a U.S.-based 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.
|
|
As an employee of Nextel Brazil, Mr. Valim is
not eligible to receive benefits pursuant to the Change of Control
Severance Plan, and we have included the enhanced severance payment due to
Mr. Valim under his employment agreement in connection with a change of
control of the Company or Nextel Brazil under the Other Payments column
of this section.
|
(8)
|
Mr. Valim is an employee of Nextel Brazil and is not eligible for
benefits under the Change of Control Severance Plan or the Severance Plan.
Mr. Valims termination benefits are as set forth in his employment
agreement and as required by Brazilian law. Under Brazilian law, Mr. Valim
may be eligible for additional benefits than those indicated based on the
specific circumstances of his termination. Mr. Valims equity awards were
made pursuant to our 2015 Plan, and the terms of 2015 Plan and the grant
agreements made under that plan apply to his equity awards.
|
(9)
|
Severance Plan Involuntary Termination describes the benefits
payable to a U.S.-based named executive officer if the named executive
officers employment is terminated by us without cause other than in
connection with a change of control under the circumstances described
below under Severance Plan. This section also includes the benefits
provided for in our 2015 Plan and the grant agreements made under that
plan that would apply to all named executive officers in connection with
an involuntary termination.
|
|
As an employee of Nextel Brazil, Mr. Valim is not eligible to
receive benefits pursuant to the Severance Plan. He may be eligible,
depending on the circumstances of his termination, to receive benefits
under Brazilian law.
|
(10)
|
Mr. Truzinski was involuntarily terminated without cause on January
1, 2016 in connection with the restructuring of our corporate
headquarters. He received severance in accordance with our Severance Plan
and his equity awards vested in accordance with the 2015 Plan and related
grant agreements.
|
(11)
|
Mr. Figuereo was involuntarily terminated without cause on October
1, 2015 in connection with the restructuring of our corporate
headquarters. He received severance in accordance with our Severance
Plan.
|
(12)
|
Mr. Hemmady was involuntarily terminated without cause on October
1, 2015 in connection with the restructuring of our operations. He
received severance in accordance with our Severance Plan. Mr. Hemmady also
received an additional six months of base salary in consideration of his
agreement to extend his non-compete, non-solicitation and confidentiality
covenants for a period of two years and to assist in the transition of his
roles and responsibilities to his successors, and R$955,641 ($241,275) in
legally required severance from Nextel Brazil, which are both included in
the Other Payments column.
|
46
Table of Contents
Change of Control Severance
Plan
|
The Change of Control Severance Plan
provides that each U.S.-based 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. Each U.S.-based named executive
officer will be entitled to receive 200% of his or her annual base salary and
target bonus at the date of his or her termination upon such an event as
provided in the Change of Control Severance Plan. Each named executive officer
will be entitled to receive his or her payment under the Change of Control
Severance Plan in a lump sum within thirty days following 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 entity will reimburse the named executive
officer for such reasonable expenses. In the event that any payment made under
the Change of Control Severance Plan is subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code, the named executive officers
payments will be reduced to the maximum amount that does not trigger the excise
tax unless the named executive officer would be better off (on an after-tax
basis) receiving all payments and paying all excise and income taxes.
A change of control will be deemed to
occur under the Change of Control Severance Plan when:
●
|
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;
|
●
|
the directors on our board as
of the effective date of the Change of Control Severance Plan 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 effective
date of the Change of Control Severance Plan cease to be a majority of our
board;
|
●
|
our stockholders approve our
complete liquidation or dissolution;
|
●
|
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
|
●
|
our board approves a
resolution stating that a change of control has
occurred.
|
A named executive officer will receive
compensation under the Change of Control Severance Plan if:
●
|
the named executive officer is
terminated without cause, as defined in the Change of Control Severance
Plan, within 12
months from a change of
control or prior to the change of control if the named executive officer
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
|
●
|
the named executive officer
voluntarily terminates his employment for good reason during the 12 months
following a
change of control, defined as
when, after the change of control:
|
●
|
there was a material and
adverse change in or reduction of the named executive officer's duties,
responsibilities and
authority that the
named executive officer held preceding the change of control;
|
●
|
the named executive officer's
principal work location was moved to a location more than 40 miles away
from his prior
work location;
|
●
|
the named executive officer
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;
|
●
|
the named executive officer's
salary, bonus or bonus potential were materially reduced or any other
significant adverse
financial consequences
occurred;
|
●
|
the benefits provided to the
named executive officer were materially reduced in the aggregate;
or
|
●
|
we or any successor fail to
assume or comply with any material provisions of the Change of Control
Severance Plan.
|
47
Table of Contents
The Severance Plan provides payments to
our U.S.-based named executive officers 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 U.S.-based 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 eligible named executive officer will also receive a
pro rata payment of his bonus based on the portion of the year that the named
executive officer was employed by us. We will pay the bonus to the named
executive officer at the same achievement level as other employees subject to
the same bonus targets and when we pay bonuses to employees at the same position
level following the bonus period.
We expect to make a lump sum payment of
the amount due under the Severance Plan although we reserve the right to make
the payments periodically for a period not to exceed 24 months. In order to
receive payments under the Severance Plan, each named executive officer must
return all of our property and execute a release agreement:
●
|
acknowledging that the payments to be
received represent the full amount that the named executive officer is
entitled to
under the Severance Plan;
|
●
|
releasing any claims that the named
executive officer has or may have against us; and
|
●
|
in our discretion, agreeing not to compete
with us for a certain period.
|
The release agreement will also require
the named 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.
2015 Incentive Compensation
Plan
|
The 2015 Plan currently covers the grant
of certain incentives and awards, including stock options, restricted stock,
restricted stock units and cash-based incentives, to our employees, including
the named executive officers. Under the 2015 Plan, if a change of control occurs
and the incentives and awards granted under the 2015 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 2015 Plan is defined the same as in the
Change of Control Severance Plan and the same events that trigger payments to
the named executive officer under the Change of Control Severance Plan trigger
payments under the 2015 Plan.
●
|
Options
.
If the surviving entity assumes, replaces or converts the options and the
named executive officer is terminated
within 12 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.
|
●
|
Restricted Stock and Restricted Stock
Units
. If the surviving entity assumes,
replaces or converts the stock award and the
named executive
officer is terminated within 12 months under circumstances that would
trigger payment, the stock
awards shall be vested. If the restricted
stock and restricted stock unit awards are not assumed, replaced or
converted, the
restricted stock or restricted stock units shall be vested upon a
change of control.
|
●
|
Cash-based Incentives
. If the surviving entity assumes, replaces or converts
cash-based incentives and the named executive
officer is
terminated within 12 months under circumstances that would trigger
payment, each outstanding cash-based
incentive award shall be deemed earned
pro-rata based on the fraction of the performance period that has elapsed
from
the beginning of the performance period until termination. If the
cash-based incentives are not assumed, replaced or
converted, the
cash-based incentives shall be deemed earned upon a change of
control.
|
The 2015 Plan provides that the
Compensation Committee, as administrator of the plan, shall determine what
amounts will be payable to the named executive officer upon termination, death,
disability or retirement in the agreement under which awards are made under the
2015 Plan. The award agreements relating to the 2015 emergence long-term equity
grants provide for full vesting of any outstanding restricted stock and option
awards covered by the agreement in connection with a named executive officers
death, disability or retirement at or after age 65. In addition, the agreements
provide for vesting of a pro-rated portion of the restricted stock and option
awards based on time served if the named executive officer is terminated without
cause.
48
Table of Contents
Employment Agreement with Mr.
Valim
|
In accordance with his employment
agreement with Nextel Telecomunicações Ltda., Mr. Valim will receive a payment
of $4,500,000 should he be terminated in connection with a change of control of
NII Holdings or Nextel Telecomunicações.
Separation Agreements with Messrs. Shindler and Freiman
and Mrs. Smith
|
We are implementing a restructuring of our
U.S.-based corporate headquarters to further streamline our expenses by shifting
the costs and associated responsibilities from our headquarters in Reston,
Virginia to our operating subsidiary in Brazil. In connection with these
changes, we entered into Separation and Release Agreements with Messrs. Shindler
and Freiman and Mrs. Smith. The agreements contemplate a target termination date
of July 1, 2016, although the actual termination date has not been determined,
and provide for benefits consistent with our Severance Plan plus an additional
payment of one times base salary.
49
Table of Contents
KPMG LLP has audited our consolidated
financial statements for the fiscal years ended December 31, 2015 and December
31, 2014.
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
|
The following table sets forth the fees
accrued or paid to the Companys independent registered public accounting firm
for the years ended December 31, 2015 and December 31, 2014.
|
|
2015
|
|
2014
|
Audit Fees
(1)
|
|
$
|
9,751,766
|
|
$
|
9,609,173
|
Audit-Related Fees
(2)
|
|
$
|
60,000
|
|
$
|
|
Tax Fees
(3)
|
|
$
|
|
|
$
|
39,890
|
All
Other Fees
(4)
|
|
$
|
|
|
$
|
|
TOTAL
|
|
$
|
9,811,766
|
|
$
|
9,649,063
|
(1)
|
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.
|
(2)
|
Audit-Related fees consist of those
fees for assurance and related services that are reasonably related to the
review of our financial statements.
|
(3)
|
Tax fees consist of those fees billed
by KPMG for professional services for tax compliance, tax advice, tax
planning, transfer pricing and expatriate tax services.
|
(4)
|
Fees incurred for services other than those described above for
consulting, assessment of information technology systems, salary and human
resources projects, and research and disclosure
tools.
|
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 or, in specified circumstances, the Audit Committee chair pursuant to
authority delegated 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 Robert Schriesheim, the chair 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. For
the years ended December 31, 2015 and December 31, 2014, all services provided
by our independent registered public accounting firm were pre-approved in
accordance with the Audit Committee policy described above.
50
Table of Contents
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 KPMG 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 KPMG 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 KPMG LLP their independence.
In addition, the Audit Committee met with
senior management periodically during 2015 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 2015 filed with the Securities and Exchange Commission. By
recommending to the Board of Directors that the audited 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.
Date: February 16, 2016
Audit Committee
Robert A. Schriesheim, Chair
Kevin L.
Beebe
Howard S. Hoffmann
51
Table of Contents
PROPOSAL I ELECTION OF
DIRECTOR
|
The Board, upon the recommendation of the
Corporate Governance and Nominating Committee, has nominated Steven M. Shindler,
who is an incumbent director, for reelection to the Board for a one-year term
ending 2017. Please see Director Biographies Director Standing for
Re-election To Hold Office Until 2017 on page 15 of this proxy statement for
information concerning our incumbent director standing for
re-election.
If the nominee is unable to serve as a
director, the persons named in the enclosed proxy reserve the right to vote for
a substitute nominee designated by our Board, to the extent consistent with our
Amended and Restated Certificate and our Fifth Amended and Restated Bylaws. The
nominee listed above has consented to be nominated and to serve if elected. We
do not expect the nominee will be unable to serve.
Provided a quorum is present and it is an
uncontested election, directors are elected by a majority of the votes cast for
each director at the Annual Meeting. This means that the number of shares voted
for a director nominee must exceed the number of votes cast against that
nominee. Abstentions and broker non-votes will have no effect on the election of
directors. If a nominee who is currently serving as a director is not elected at
the Annual Meeting, under Delaware law the director will continue to serve on
the Board as a holdover director. However, in accordance with our Corporate
Governance Guidelines, incumbent directors are required to submit an
irrevocable, contingent resignation to the Board that becomes effective only if
the director fails to receive a majority of votes cast for re-election in an
uncontested election. In accordance with the Corporate Governance Guidelines,
the Board will consider the directors resignation within 90 days following the
election results and will promptly disclose its decision to accept or reject the
directors conditional resignation. Since Mr. Shindler is standing for
re-election, he has submitted an irrevocable, contingent resignation consistent
with the requirements of our Corporate Governance Guidelines.
In the event of a contested election in
accordance with our Bylaws, directors shall be elected by the vote of a
plurality of the votes cast. Abstentions and broker non-votes will have no
effect on the election of directors in a contested election.
Our Board recommends that the holders
of common stock vote FOR incumbent director Steven M. Shindler.
52
Table of Contents
PROPOSAL II ADVISORY VOTE ON EXECUTIVE
COMPENSATION
|
As required by Section 14A of the Exchange
Act of 1934, we are asking our stockholders to provide advisory approval of the
compensation of our named executive officers, as described in this proxy
statement. While this vote is advisory, it will provide information to our
Compensation Committee regarding investor sentiment about our compensation
principles and objectives. We urge you to read the Compensation Discussion and
Analysis beginning on page 23, and the compensation tables and related
narratives appearing in this proxy statement for more information regarding the
compensation of our named executive officers. The Compensation Committee
develops our executive compensation strategy in furtherance of the following
principal compensation objectives:
●
|
align executive compensation with
stockholders interests;
|
●
|
recognize individual initiative and
achievements;
|
●
|
attract, motivate and retain highly
qualified executives; and
|
●
|
create incentives that drive the
entire executive management team to achieve challenging corporate goals
that drive superior long-term performance.
|
The Compensation Committee fulfills our
compensation objectives by setting target direct compensation at a level
commensurate with the executives and the Companys performance relative to our
Peer Group utilizing individual and market measures. A substantial majority of
our executives compensation is provided in the form of variable,
performance-based compensation that links our executives compensation to our
long-term performance.
The vote on this resolution is not
intended to address any specific element of compensation; rather, the vote
relates to the philosophy and structure of our compensation program for our
named executive officers as well as the overall compensation of those officers,
as described in this proxy statement in accordance with the compensation
disclosure rules of the Securities and Exchange Commission. The vote is
advisory, which means that the vote is not binding on the Company, our Board or
the Compensation Committee. To the extent there is any significant vote against
our named executive officer compensation as disclosed in this proxy statement,
the Compensation Committee will evaluate whether any actions are necessary to
address the concerns of stockholders.
Our Board and our Compensation Committee
value the opinions of our stockholders.
Accordingly, we ask our stockholders to
vote on the following resolution at the Annual Meeting:
RESOLVED, that the Companys stockholders
approve, on an advisory basis, the compensation of the named executive officers,
as disclosed in this proxy statement for the 2016 Annual Meeting of Stockholders
pursuant to the compensation disclosure rules of the Securities and Exchange
Commission, including the Compensation Discussion and Analysis, compensation
tables and the other related narrative disclosure.
The affirmative vote of a majority of the
shares present or represented and entitled to vote either in person or by proxy
is required to approve this Proposal II. Abstentions and broker non-votes will
not impact the outcome of the vote on this proposal.
Our Board recommends that the
stockholders vote FOR the approval of the compensation of our named executive
officers, as disclosed in this proxy statement.
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PROPOSAL III ADVISORY VOTE ON THE
FREQUENCY OF ADVISORY VOTES ON EXECUTIVE
COMPENSATION
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The Dodd-Frank Wall Street Reform and
Consumer Protection Act provides that stockholders must be given the opportunity
to vote, on a non-binding, advisory basis, for their preference as to how
frequently we should seek future advisory votes on the compensation of our named
executive officers as disclosed in accordance with the compensation disclosure
rules of the Securities and Exchange Commission, which we refer to as an
advisory vote on executive compensation. By voting with respect to this
Proposal III, stockholders may indicate whether they would prefer that we
conduct future advisory votes on executive compensation once every one, two, or
three years. Stockholders also may, if they wish, abstain from casting a vote on
this proposal.
Our Board of Directors has determined that
an annual advisory vote on executive compensation will allow our stockholders to
provide timely, direct input on the Companys executive compensation philosophy,
policies and practices as disclosed in the proxy statement each year. The Board
believes that an annual vote is therefore consistent with the Companys efforts
to engage in an ongoing dialogue with our stockholders on executive compensation
matters.
The Company recognizes that stockholders
may have different views as to the best approach to be used by the Company in
establishing the philosophy and structure of our executive compensation program
and in the frequency for soliciting input from stockholders relating to the
compensation of our executives. Although this vote is advisory and not binding
on the Company or our Board of Directors in any way, we look forward to hearing
from our stockholders as to their preferences on the frequency of an advisory
vote on executive compensation and intend to take that input into account as we
develop the process for soliciting stockholder input regarding those matters.
The board may nonetheless decide that it is in the best interests of our
stockholders and the Company to hold an advisory vote on executive compensation
more or less frequently than the frequency receiving the most votes cast by our
stockholders.
Stockholders may cast a vote on the
preferred voting frequency by selecting the option of one year, two years, or
three years (or abstain) on the proxy card. Stockholders are not voting to
approve or disapprove the Board of Directors recommendation.
The voting frequency that receives the
greatest number of votes cast in favor of that response will be selected as the
preferred frequency of advisory votes on executive compensation.
The Board of Directors recommends that
you vote for the option of once every year as the preferred frequency for
advisory votes on executive compensation.
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PROPOSAL IV RATIFICATION OF APPOINTMENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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KPMG LLP served as our independent
registered public accounting firm for the fiscal year ended December 31, 2015,
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 KPMG LLP is included in this proxy statement under
the heading Audit Information. Representatives of KPMG 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 Fifth 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 is requesting that stockholders ratify the
selection of KPMG LLP as our independent registered public accounting firm for
the fiscal year ending December 31, 2016.
The affirmative vote of a majority of the
shares present or represented and entitled to vote either in person or by proxy
is required to approve this Proposal IV. Abstentions and broker non-votes will
not impact the outcome of the vote on this proposal.
Our Board recommends that the
stockholders vote FOR the ratification of the appointment of
KPMG LLP.
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STOCKHOLDER PROPOSALS FOR THE 2017 ANNUAL
MEETING
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Stockholder proposals intended for
consideration for inclusion in our proxy statement for the 2017 Annual Meeting
must be forwarded in writing and received at our principal executive office at
1875 Explorer Street, Suite 800, Reston, Virginia 20190 no later than December
28, 2016, directed to the attention of our Vice President, General Counsel and
Secretary. 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 2017 Annual Meeting, the stockholder must notify our
Vice President, General Counsel and Secretary in the manner set forth above
before March 11, 2017. With respect to proposals in this latter category, 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
2017 Annual Meeting, even if stockholders have not been advised of the proposal
in the proxy statement for the 2017 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 and our Fifth
Amended and Restated Bylaws. Additional details regarding the process to be
followed by stockholders wishing to make a proposal are included in the
Companys Fifth Amended and Restated Bylaws, which are available on the Investor
Relations page of our website at
www.nii.com
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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, 2015, 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, SUITE 800, RESTON, VIRGINIA 20190,
ATTENTION: VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY, OR (2) BY CONTACTING
OUR INVESTOR RELATIONS DEPARTMENT AT 703-547-5209. THE ANNUAL REPORT IS NOT
PART OF THE PROXY SOLICITATION MATERIALS.
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NII
HOLDINGS, INC.
1875 EXPLORER
STREET, SUITE 800
RESTON, VA 20190
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to
transmit your voting instructions and for electronic delivery of information up
until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting
instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY
MATERIALS
If you would like to reduce the
costs incurred by our company in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using the Internet and, when
prompted, indicate that you agree to receive or access proxy materials
electronically in future years.
VOTE BY PHONE -
1-800-690-6903
Use any touch-tone
telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time
the day before the cut-off date or meeting date. Have your proxy card in hand
when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote Processing, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK
INK AS FOLLOWS:
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KEEP THIS PORTION FOR YOUR
RECORDS
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DETACH
AND RETURN THIS PORTION ONLY
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THIS PROXY
CARD IS VALID ONLY WHEN SIGNED AND DATED.
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The Board of
Directors recommends you vote FOR
the following proposal:
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1.
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Election of
Director
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Nominees
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For
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Against
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Abstain
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01
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Steven M.
Shindler
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The Board of Directors
recommends you vote FOR the following proposal:
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For
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Against
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Abstain
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NOTE:
Such other business as may properly come before the
meeting or any adjournment thereof
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2
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Advisory Vote to Approve
Executive Compensation
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☐
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The Board of Directors
recommends you vote 1 YEAR on the following proposal:
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1
year
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2
years
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3
years
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Abstain
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3
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Advisory Vote on the Frequency of
Advisory Votes on Executive Compensation
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☐
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☐
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☐
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☐
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The Board of Directors
recommends you vote FOR the following proposal:
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For
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Against
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Abstain
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Ratification of KPMG LLP as our
Independent Registered Public Accounting Firm for fiscal year
2016
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☐
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For address change/comments, mark
here.
(see reverse for instructions)
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Please sign exactly as your
name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. All holders must sign. If a
corporation or partnership, please sign in full corporate or partnership
name, by authorized officer.
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Signature [PLEASE SIGN WITHIN
BOX]
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Date
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Signature (Joint Owners)
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Date
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Table of Contents
Important
Notice Regarding the Availability of Proxy Materials for the Annual
Meeting:
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The Proxy Statement and Form 10-K are available at
www.proxyvote.com
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NII HOLDINGS,
INC.
Annual Meeting of Shareholders
May 25, 2016 10:00
AM
This proxy is solicited by the Board
of Directors
The shareholder(s) hereby appoints
Shana C. Smith and Daniel E. Freiman, or either of them, as proxies, each with
the power to appoint (his/her) substitute, and hereby authorizes them to
represent and to vote, as designated on the reverse side of this ballot, all of
the shares of common stock of NII HOLDINGS, INC. that the shareholder(s) is/are
entitled to vote at the Annual Meeting of shareholder(s) to be held at 10:00 AM,
EDT on May 25, 2016, at 1875 Explorer Street, Suite 800, Reston, VA 20190, and
any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED,
WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO SUCH DIRECTION IS MADE, THIS
PROXY WILL BE VOTED IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS.
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Address change/comments:
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(If you noted any Address Changes
and/or Comments above, please mark corresponding box on the reverse
side.)
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Continued and to be signed on reverse
side
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