Nextel Partners plans to give its executives millions of dollars in incentives if they stay with the Kirkland company through a potential...
Nextel Partners plans to give its executives millions of dollars in incentives if they stay with the Kirkland company through a potential buyout triggered by the proposed merger between Sprint and Nextel Communications.
In December, Sprint and Nextel agreed to a $36 billion merger that would create the third-largest wireless carrier in the U.S.
In doing so, Nextel Communications, which owns 32 percent of Nextel Partners, could be required to buy most or all of Nextel Partners’ remaining shares. Nextel Partners’ shareholders will vote on whether they want to sell the remainder of the company after the Sprint-Nextel merger becomes final later this year.
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In preparation, Nextel Partners filed a notice with the Securities & Exchange Commission yesterday outlining an incentive program designed to retain its executives.
Under the program, executives and employees would get retention and severance packages that could total tens of millions of dollars.
The company declined to say how much the total package was worth, but said if a Nextel Partners acquisition falls through, the incentives would not be awarded.
In the incentive package, all executives would receive the equivalent of their base salary and annual bonus. Half of the money would be paid at the time Nextel Partners is sold; the other half would be paid after the executive leaves the company voluntarily or involuntarily, or six months after the sale.
Under the severance package, executives would receive a cash payment twice their salary and bonus in addition to medical and dental benefits for two years if they leave within a year of a Nextel Partners sale.
Executives who leave the company within 12 to 18 months of the closing would receive a cash payment equal to their base salary and bonus, as well as medical and dental for one year. An executive who leaves without good reason or after being terminated for cause would not receive the packages.
In addition to cash payments, executives would receive stock options, which would automatically vest if there is a change in control and they meet certain objectives.
Also according to the document, employees would receive an undisclosed amount of cash, and any stock options granted before this year would fully vest after the sale.
For Nextel Partners Chief Executive John Chapple, the plans mean that if he stays with the company through the Sprint-Nextel merger and leaves within 12 months of a Nextel Partners sale, he could receive incentives and severance totaling $2.2 million, including two years of medical and dental. That figure is based on his 2003 salary and bonus, the most recent information available.
“We felt it was a prudent and timely decision to give performance-based incentives to keep everyone focused on delivering industry-leading results,” said Susan Johnston, a company spokeswoman.
She said the incentive programs were not a sign of low morale at the company, “but people know that it’s out there,” she said. “It’s a proactive step to keep everyone focused on driving the business.”
Nextel Partners has almost 3,000 employees nationwide and about 60 in its Kirkland headquarters. It operates Nextel-branded services in rural and small markets.
Yesterday, its stock rose 9 cents to close at $19.98 and remained unchanged in after-hours trading.
Tricia Duryee: 206-464-3283 or email@example.com