DEF 14A 1 w32146def14a.htm DEFINITIVE PROXY STATEMENT def14a
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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 þ
Filed by a Party other than the Registrant o
Check the appropriate box:
o   Preliminary Proxy Statement
o   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ   Definitive Proxy Statement
o   Definitive Additional Materials
o   Soliciting Material Pursuant to §240.14a-12
 
SPRINT NEXTEL CORPORATION
 
(Name of Registrant as Specified In Its Charter)
 
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ   No fee required.
o   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)   Title of each class of securities to which transaction applies:
 
     
     
 
 
  (2)   Aggregate number of securities to which transaction applies:
 
     
     
 
 
  (3)   Per unit or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
     
     
 
 
  (4)   Proposed maximum aggregate value of transaction:
 
     
     
 
 
  (5)   Total fee paid:
 
     
     
 
o   Fee paid previously with preliminary materials.
 
o   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)   Amount Previously Paid:
 
     
     
 
 
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  (4)   Date Filed:
 
     
     
 


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(LOGO)
 
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 8, 2007
 
We will hold the annual meeting of shareholders of Sprint Nextel Corporation on Tuesday, May 8, 2007 at 10:00 a.m. local time at The Hyatt Regency Reston, 1800 Presidents Street, Reston, Virginia 20190 (703-709-1234).
 
The purpose of the annual meeting is to consider and take action on the following:
 
1. Election of 10 directors for a one-year term ending 2008;
 
  2.  Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2007;
 
3. Approval of the 2007 Omnibus Incentive Plan;
 
4. Vote on one shareholder proposal, if presented at the meeting; and
 
5. Any other business that properly comes before the meeting.
 
Shareholders of record as of March 20, 2007 can vote at the annual meeting. This proxy statement, the accompanying proxy card, and the annual report on Form 10-K for the year ended December 31, 2006 are being mailed or otherwise distributed to you on or about April 9, 2007. Please vote before the annual meeting in one of the following ways:
 
1. Use the toll-free number shown on your proxy card;
 
2. Visit the website shown on your proxy card to vote via the Internet; or
 
3. Complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope.
 
Your vote is very important. Please vote before the meeting using one of the methods above to ensure that your vote will be counted. Your proxy may be revoked at any time before the vote at the annual meeting by following the procedures outlined in the accompanying proxy statement.
 
By order of the Board of Directors,
 
(SIGNATURE)
 
Gary D. Forsee
Chairman of the Board of Directors
 
Reston, Virginia
April 9, 2007


 

 
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Annex A 2007 Omnibus Incentive Plan
  A-1
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General Information About Proxies and Voting
 
Date, Time and Place
 
These proxy materials are delivered in connection with the solicitation by our board of directors of proxies to be voted at our annual meeting, which will be held at The Hyatt Regency Reston, 1800 Presidents Street, Reston, Virginia 20190 at 10:00 a.m. local time on Tuesday, May 8, 2007. On or about April 9, 2007, we mailed this proxy statement and the enclosed form of proxy to our shareholders entitled to vote at the meeting.
 
Purpose of the Annual Meeting
 
At the annual meeting, shareholders will be asked to:
 
  •  elect 10 directors to serve for a term of one year (Item 1 on the proxy card);
 
  •  ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2007 (Item 2 on the proxy card);
 
  •  approve the 2007 Omnibus Incentive Plan (Item 3 on the proxy card);
 
  •  vote on a shareholder proposal concerning an advisory vote on the compensation of named executive officers, if presented at the meeting (Item 4 on the proxy card); and
 
  •  take action on any other business that properly comes before the meeting and any adjournment or postponement of the meeting.
 
Record Date; Shareholders Entitled to Vote
 
The close of business on March 20, 2007 has been fixed as the record date for the determination of shareholders entitled to notice of, and to vote at, the 2007 annual meeting or any adjournments or postponements of the 2007 annual meeting.
 
As of the record date, the following shares were outstanding and entitled to vote:
 
                 
          Votes per
 
Designation
  Outstanding     Share  
 
Series 1 common stock
    2,809,560,604       1.0000  
Series 2 common stock
    79,831,333       0.1000  
 
The relative voting power of our different series of voting stock is set forth in our articles of incorporation.
 
A complete list of shareholders entitled to vote at the 2007 annual meeting will be available for examination by any shareholder at our headquarters, 2001 Edmund Halley Drive, Reston, Virginia 20191, for purposes pertaining to the 2007 annual meeting, during normal business hours for a period of ten days before the annual meeting, and at the time and place of the annual meeting.
 
Quorum
 
In order to carry on the business of the meeting, we must have a quorum. A quorum requires the presence, in person or by proxy, of the holders of a majority of the votes entitled to be cast at the meeting. We count abstentions and broker “non-votes” as present and entitled to vote for purposes of determining a quorum. A broker “non-vote” occurs when a shareholder fails to provide voting instructions to his or her broker for shares held in “street name.” Under those circumstances, a shareholder’s broker may be authorized to vote for the shareholder on some routine items, but is prohibited from voting on other items. Those items for which a shareholder’s broker cannot vote result in broker “non-votes.”


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Votes Required
 
Required Vote to Elect the Directors (Proposal 1; Item 1 on the Proxy Card)
 
Each of the 10 nominees for director will be elected as a director if the votes cast for each such nominee exceed the number of votes against that nominee, assuming that there is a quorum represented at the annual meeting.
 
Required Vote to Ratify the Appointment of our Independent Registered Public Accounting Firm (Proposal 2; Item 2 on the Proxy Card)
 
The affirmative vote of a majority of votes cast in person or by proxy by holders of our common stock entitled to vote on the matter is required to ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2007.
 
Required Vote to Approve the 2007 Omnibus Incentive Plan (Proposal 3; Item 3 on the Proxy Card)
 
The affirmative vote of a majority of votes cast in person or by proxy by holders of our common stock entitled to vote on the matter is required to approve the 2007 Omnibus Incentive Plan.
 
Required Vote to Approve the Shareholder Proposal (Proposal 4; Item 4 on the Proxy Card)
 
The affirmative vote of a majority of votes cast in person or by proxy by holders of our common stock entitled to vote on the matter is required to approve the shareholder proposal, if presented at the annual meeting.
 
Treatment of Abstentions, Not Voting and Incomplete Proxies
 
If a shareholder marks the “Abstain” box, it will have no effect on the vote for Proposal 1, but it will have the same effect as a vote against Proposals 2, 3 and 4. If a shareholder does not return a proxy, it will have no effect on the vote for the proposal. Broker non-votes for non-routine proposals will also have no effect on the vote for the proposal. Except for broker non-votes, if a proxy is returned without indication as to how to vote, the stock represented by that proxy will be considered to be voted in favor of Proposals 1, 2 and 3, and voted against Proposal 4.
 
Voting of Proxies
 
Giving a proxy means that you authorize the persons named in the enclosed proxy card to vote your shares at the 2007 annual meeting in the manner directed. You may vote by proxy or in person at the meeting. To vote by proxy, you may use one of the following methods if you are a registered holder (that is, you hold our stock in your own name):
 
  •  Telephone voting, by dialing the toll-free number and following the instructions on the proxy card;
 
  •  Via the Internet, by going to the web address www.proxyvote.com and following the instructions on the proxy card; or
 
  •  Mail, by completing and returning the proxy card in the enclosed envelope. The envelope requires no additional postage if mailed in the United States.
 
We request that shareholders vote as soon as possible. When the proxy is properly returned, the shares of stock represented by the proxy will be voted at the 2007 annual meeting in accordance with the instructions contained in the proxy.
 
Except for broker non-votes, if any proxy is returned without indication as to how to vote, the stock represented by the proxy will be considered to be voted in favor of Proposals 1, 2 and 3, and voted against Proposal 4. Unless a shareholder checks the box on the proxy card to withhold discretionary authority, the proxies may use their discretion to vote on other matters introduced at the 2007 annual meeting.


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If a shareholder’s shares are held in “street name” by a broker or other nominee, the shareholder should check the voting form used by that firm to determine whether the shareholder may provide voting instructions to the broker or other nominee by telephone or the Internet.
 
Every shareholder’s 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.
 
Revocability of Proxies and Changes to a Shareholder’s Vote
 
A shareholder has the power to revoke his or her proxy or change his or her vote at any time before the proxy is voted at the annual meeting. You can revoke your proxy or change your vote in one of four ways:
 
  •  by sending a signed notice of revocation to our corporate secretary to revoke your proxy;
 
  •  by sending to our corporate secretary a completed proxy card bearing a later date than your original proxy indicating the change in your vote;
 
  •  by logging on to the Internet website specified on the proxy card in the same manner you would to submit your proxy electronically or calling the telephone number specified on the proxy card, and in each case following the instructions on the proxy card to revoke or change your vote; or
 
  •  by attending the annual meeting and voting in person, which will automatically cancel any proxy previously given, or by revoking your proxy in person, but attendance alone will not revoke any proxy that you have given previously.
 
If you choose any of the first three methods, you must take the described action no later than the beginning of the 2007 annual meeting. Once voting on a particular matter is completed at the annual meeting, you will not be able to revoke your proxy or change your vote as to that matter. If your shares are held in street name by a broker, bank or other financial institution, you must contact that institution to change your vote.
 
Solicitation of Proxies
 
This solicitation is made on behalf of our board of directors, and we will pay the cost and expenses of printing and mailing this proxy statement and soliciting and obtaining the proxies, including the cost of reimbursing brokers, banks and other financial institutions for forwarding proxy materials to their customers. Proxies may be solicited, without extra compensation, by our officers and employees by mail, telephone, fax, personal interviews or other methods of communication. We have engaged the firm of Georgeson Shareholder Communications, Inc. to assist us in the distribution and solicitation of proxies and will pay Georgeson a fee of $9,000 plus out-of-pocket expenses for its services.
 
Voting by Our Employees Participating in our Retirement Savings Plan
 
If you are an employee of Sprint Nextel who has a right to vote shares acquired through your participation in our retirement savings plan, you are entitled to instruct the trustee, Fidelity Management Trust Company, how to vote the shares allocated to your account. Fidelity will vote those shares as you instruct on your proxy card. You will receive voting information that covers any shares held in your retirement savings plan account, as well as any other shares registered in your own name.
 
If you do not instruct Fidelity how to vote your shares, the retirement savings plan provides for Fidelity to vote those shares in the same proportion as the shares for which it receives instructions from all other participants. To allow sufficient time for Fidelity to vote, your voting instructions must be received by Fidelity by May 3, 2007.


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Delivery of Proxy Materials to Households Where Two or More Shareholders Reside
 
Rules of the Securities and Exchange Commission, or SEC, allow us to deliver a single copy of an annual report and proxy statement to any household where two or more shareholders reside if we believe the shareholders are members of the same family. This rule benefits shareholders by reducing the volume of duplicate information they receive at their households. It also benefits us by reducing our printing and mailing costs.
 
We mailed a single set of proxy materials to each household this year unless the shareholders in these households provided instructions to the contrary in response to a notice previously mailed to them. However, we mailed each shareholder in a single household a separate proxy card or voting instruction form. If you prefer to receive your own copy of the proxy materials for this or future annual meetings and you are a registered holder, you may request a duplicate set by writing to Sprint Nextel Shareholder Relations, 6200 Sprint Parkway, Mailstop KSOPHF0302-3B424, Overland Park, Kansas 66251 or by email at shareholder.relations@sprint.com, or by calling 913-794-1091. If a broker or other nominee holds your shares, you may instruct your broker to send duplicate mailings by following the instructions on your voting instruction form or by contacting your broker.
 
If you share a household address with another shareholder, and you receive duplicate mailings of the proxy materials this year, you may request that your household receive a single set of proxy materials in the future. If you are a registered holder, please contact Sprint Nextel Shareholder Relations. If a broker or other nominee holds your shares, you should follow the instructions on your voting instruction form or contact your broker.
 
If you hold some shares as a registered holder or through our retirement savings plan, and other shares in the name of a broker or other nominee, we must send you proxy materials for each account. To avoid receiving duplicate sets of proxy materials, you may consolidate accounts or consent to electronic delivery as described in the following section.
 
Viewing the Proxy Materials On-line
 
We are able to distribute the annual report and proxy statement to shareholders in a fast and efficient manner via the Internet. This reduces the amount of paper delivered to a shareholder’s address and eliminates the cost of sending these documents by mail. You may elect to view all future annual reports and proxy statements on the Internet instead of receiving them by mail. To make this election, please follow the instructions after you vote via the Internet.
 
If you have enrolled for electronic delivery, you will receive an e-mail notice of shareholder meetings. The e-mail will provide links to our annual report and the proxy statement. These documents are in PDF format so you will need Adobe Acrobat® Reader to view these documents on-line. The e-mail will also provide a link to a voting web site and a control number to use to vote via the Internet.
 
Confidential Voting Policy
 
Your votes are kept confidential from our directors, officers and employees, except for certain specific and limited exceptions. One exception occurs if you write opinions or comments on your proxy card. In that case, a copy of the proxy card is sent to us.
 
Attending the Meeting
 
Shareholders, their guests and persons holding proxies from shareholders may attend the annual meeting. Seating, however, is limited and will be available on a first-come, first-served basis. If you plan to attend the meeting, please bring proof of ownership to the meeting. A brokerage account statement showing that you owned our stock on March 20, 2007 is acceptable proof.
 
Conference Call
 
Shareholders may listen live by phone to our annual meeting. The dial-in numbers for the conference call will be posted at www.sprint.com/investors/shareholders/annualmeeting/ before the meeting. Lines are limited and will be available on a first-come, first-served basis.


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Security Ownership of Certain Beneficial Owners
 
The following table provides information about the only known beneficial owners of five percent or more of our voting common stock based on our stock outstanding at March 20, 2007.
 
                             
        Amount and Nature of
    Percent
    Percent
 
Title of Class
 
Name and Address of Beneficial Owner
  Beneficial Ownership     of Class     of Vote  
 
Common Stock
 
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
    321,755,260 shares(1 )     11.1 %     11.4 %
   
Legg Mason Capital Management, Inc.
100 Light Street
Baltimore, Maryland 21202
    153,853,149 shares(2 )     5.3 %     5.5 %
 
 
(1) According to a Schedule 13G filed on February 12, 2007 by Capital Research and Management Company, includes 413,070 shares resulting from the assumed conversion of convertible debt. Capital Research and Management Company has sole voting power with respect to 73,296,470 shares and sole dispositive power with respect to all of the shares.
 
(2) According to a Schedule 13G filed on February 15, 2007, Legg Mason Capital Management, Inc. has shared voting and shared dispositive power with respect to 144,353,149 shares, and LMM LLC has shared voting and shared dispositive power with respect to 9,500,000 shares.
 
Security Ownership of Directors and Executive Officers
 
The following table states the number of shares of our series 1 common stock beneficially owned, as of March 15, 2007, by each current director, current named executive officer and all current directors and executive officers as a group. No individual director or executive officer owned more than 1% of the outstanding shares of our series 1 common stock. As a group, the listed individuals owned less than 1% of our outstanding common stock. Except as otherwise indicated, each individual named has sole investment and voting power with respect to the shares owned.
 
                         
          Shares Covered by
       
          Exercisable Options
    Shares
 
          and RSUs to be
    Represented
 
Name of Beneficial Owner
  Shares Owned     Delivered(1)     by RSUs(2)  
 
Keith J. Bane
    3,471       25,791        
Robert R. Bennett
    20,000              
Gordon M. Bethune
    4,070       4,431       3,766  
Frank M. Drendel
    92,461       243,328        
Gary D. Forsee
    543,226       2,368,568       1,718,141  
James J. Hance, Jr. 
    25,010       4,431       3,766  
V. Janet Hill
    9,470       176,904        
Irvine O. Hockaday, Jr. 
    75,087       54,026       3,766  
Timothy E. Kelly
    62,448       582,174       364,988  
Richard T. C. LeFave
    7,613       355,490       248,337  
Linda Koch Lorimer
    37,677       43,264       3,766  
Paul N. Saleh
    403,562       1,814,903       317,412  
William H. Swanson
    10,895       4,431       3,766  
Barry J. West
    12,675       1,181,988        
                         
Directors and Executive Officers as a group (19 persons)
    1,438,674       8,096,084       3,425,745  


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(1) Represents shares that may be acquired upon the exercise of stock options exercisable, and restricted stock units, or RSUs, to be delivered, on or within 60 days after March 15, 2007 under our equity-based incentive plans.
 
(2) Represents unvested RSUs and deferred share grants that will vest more than 60 days after March 15, 2007 and with respect to which we will issue the underlying shares of our common stock after the units and grants vest. There are no voting rights with respect to these RSUs. These amounts do not include any RSUs or deferred share grants covered by footnote 1.
 
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 SEC and the New York Stock Exchange, or NYSE, initial reports of beneficial ownership and reports of changes in beneficial ownership of our common stock and other equity securities. These people are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file, and we make these reports available at www.sprint.com/investors/sec.
 
To our knowledge, based solely on a review of the copies of these reports furnished to us and written representations that no other reports were required, during 2006 all Section 16(a) filing requirements applicable to our directors, executive officers and beneficial owners of more than 10% of our equity securities were met.
 
Proposal 1. Election of Directors
 
(Item 1 on Proxy Card)
 
We have 10 seats on our board. Each of the 10 nominees, if elected, will serve one year until the 2008 annual meeting and until a successor has been elected and qualified. The persons named in the accompanying proxy will vote for the election of the nominees named below unless a shareholder directs otherwise. Each nominee has consented to be named and to continue to serve if elected. If any of the nominees becomes unavailable for election for any reason, the proxies will be voted for the other nominees and for any substitutes.
 
Nominees for Director
 
     
Keith J. Bane, age 67. Retired Executive Vice President and President, global strategy and corporate development of Motorola, Inc., a provider of wireless, broadband and automotive communications technologies and embedded electronic products, Schaumberg, Illinois. He served as Executive Vice President and President, global strategy and corporate development of Motorola from May 2000 to March 2003. Mr. Bane served as Executive Vice President and President, Americas region of Motorola from March 1997 until May 2000. Mr. Bane served as a director of Nextel Communications, Inc. from 1995 until its merger with us in August 2005, and he has served as one of our directors since that time.
  (PHOTO)
     
Robert R. Bennett, age 48. President, Discovery Holding Company, a media-related holding company, Englewood, Colorado. Since March 2005, Mr. Bennett has served as President of Discovery Holding Company. He served as Chief Executive Officer of Liberty Media from April 1997 to August 2005, and President from April 1997 to February 2006. He is a director of Liberty Media and Discovery Holding Company. Mr. Bennett has served as one of our directors since October 2006.
  (PHOTO)


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Gordon M. Bethune, age 65. Retired Chairman and Chief Executive Officer of Continental Airlines, Inc., an international commercial airline company, Houston, Texas. He served as Chief Executive Officer of Continental Airlines from 1994 and as Chairman and Chief Executive Officer from 1996 until December 2004. He is a director of Honeywell International Inc., Willis Group Holdings, Limited and Prudential Financial, Inc. Mr. Bethune has served as one of our directors since 2004.
  (PHOTO)
     
Frank M. Drendel, age 62. Chairman and Chief Executive Officer of CommScope, Inc., a manufacturer of coaxial cable and supplier of high-performance electronics cables, Hickory, North Carolina. Mr. Drendel has served as Chairman and Chief Executive Officer of CommScope since 1976. Mr. Drendel served as a director of Nextel from 1997 until its merger with us in August 2005, and he has served as one of our directors since that time.
  (PHOTO)
     
Gary D. Forsee, age 56. Chairman, President and Chief Executive Officer of Sprint Nextel, Reston, Virginia. Mr. Forsee has been our Chief Executive Officer and one of our directors since March 2003. He has been our Chairman since December 2006 and also served as our Chairman from May 2003 until August 2005. He served as Vice Chairman — Domestic Operations of BellSouth Corporation from January 2002 to March 2003 and President of BellSouth International from 2000 to 2001, during which time he also was Chairman of Cingular Wireless from 2001 to January 2002. He has declined to stand for re-election to the board of Good Year Tire & Rubber Co. and will continue to serve as a director of Goodyear Tire & Rubber Co. until its annual meeting on April 10, 2007.
  (PHOTO)
     
James H. Hance, Jr., age 62. Retired Vice Chairman and former member of the Board of Directors of Bank of America Corporation, a financial services holding company, Charlotte, North Carolina. He served as the Vice Chairman of Bank of America Corporation from 1993 until January 2005 and as the Chief Financial Officer of Bank of America Corporation from 1988 until April 2004. Mr. Hance also serves as a Senior Advisor to The Carlyle Group. He is a director of Cousins Properties Incorporated, Duke Energy Corporation and Rayonier Corporation. Mr. Hance has served as one of our directors since February 2005.
  (PHOTO)
     
V. Janet Hill, age 59. Vice President of Alexander & Associates, Inc., a corporate consulting firm, Washington, D.C. Mrs. Hill has been Vice President of Alexander & Associates, Inc. since 1981. Mrs. Hill also serves as a director of Wendy’s International, Inc. and Dean Foods, Inc. Mrs. Hill served as a director of Nextel from 1999 until its merger with us in August 2005, and she has served as one of our directors since that time.
  (PHOTO)
     
Irvine O. Hockaday, Jr., age 70. Retired President and Chief Executive Officer of Hallmark Cards, Inc., a manufacturer of greeting cards, Kansas City, Missouri. Mr. Hockaday served as President and Chief Executive Officer of Hallmark Cards, Inc. from 1985 to 2001. He is a director of Aquila, Inc., Crown Media Holdings, Inc., Ford Motor Company and Estee Lauder, Inc., and he will continue to serve as a director of Dow Jones, Inc. until he retires from its board on April 18, 2007. Mr. Hockaday has served as one of our directors since 1997. He is our Lead Independent Director.
  (PHOTO)

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Linda Koch Lorimer, age 55. Vice President and Secretary of the University, Yale University, New Haven, Connecticut. Ms. Lorimer has been Vice President and Secretary of Yale University since 1993. She is the Lead Director of McGraw-Hill, Inc., and a trustee of both Yale-New Haven Hospital and Hollins University. Ms. Lorimer has served as one of our directors since 1993.
  (PHOTO)
     
William H. Swanson, age 58. Chairman and Chief Executive Officer of Raytheon Company, an industry leader in defense and government electronics, space, information technology, technical services, and business and special mission aircraft, Waltham, Massachusetts. Mr. Swanson has served as Chairman of Raytheon since January 2004 and as Chief Executive Officer since July 2003. Mr. Swanson was president of Raytheon from July 2002 until May 2004. Before that, he was executive vice president of Raytheon and president of Raytheon’s Electronic Systems from January 2000 until July 2002. He joined Raytheon in 1972 and has held a number of leadership positions in several Raytheon business units. Mr. Swanson has served as one of our directors since 2004.
  (PHOTO)
 
Our board of directors recommends that you vote for the election of the 10 nominees for director in this Proposal 1.
 
Compensation of Directors
 
The following table provides compensation information for our current directors and former directors who served during 2006. Compensation information for Gary D. Forsee, our Chairman, President and Chief Executive Officer, and Timothy M. Donahue, former Chairman, can be found in the “Executive Compensation” section of this proxy statement.
 
                                                         
                            Change in
             
                            Pension
             
                            Value and
             
                      Non-Equity
    Nonqualified
             
    Fees Earned
    Stock
    Option
    Incentive Plan
    Deferred
    All Other
       
    or Paid in Cash
    Awards
    Awards
    Compensation
    Compensation
    Compensation
    Total
 
Name
  ($)(1)     ($)(7)     ($)(7)     ($)     Earnings     ($)(8)     ($)  
 
Keith J. Bane
    128,000       63,799                         4,954       196,753  
Robert R. Bennett(2)
    26,500                                     26,500  
Gordon M. Bethune
    111,000       100,612                         3,289       214,901  
Frank M. Drendel
    98,000       63,799                         4,985       166,784  
James H. Hance, Jr. 
    154,083       99,574                         4,465       258,122  
V. Janet Hill
    117,000       63,799                         8,057       188,856  
Irvine O. Hockaday, Jr. 
    202,000 (3)     124,820       1,933                   10,392       339,145  
Linda Koch Lorimer
    124,000       124,820       1,933                   7,169       257,922  
William H. Swanson
    132,000 (3)     99,574                         6,120       237,694  
Former Directors
                                                       
William E. Conway, Jr.(4)
    69,208                               8,565       77,773  
William E. Kennard(5)
    110,000       63,799                         9,006       182,805  
Stephanie M. Shern(6)
    48,333                               5,969       54,303  
 
 
(1) Includes annual retainer fees; Lead Independent Director, committee and/or committee chair fees; and board and committee meeting fees.
 
(2) Mr. Bennett joined our board on October 8, 2006.

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(3) Messrs. Hockaday and Swanson participated in our Directors Shares Plan in 2006 and elected to use their annual and additional retainer fees and meeting fees to purchase shares of our common stock in lieu of receiving cash payments. Our Directors Shares Plan is described below on page 13.
 
(4) Mr. Conway retired from our board on April 18, 2006.
 
(5) Mr. Kennard resigned from our board on March 1, 2007. In 2006, Mr. Kennard participated in our Deferred Compensation Plan and elected to defer receipt of his annual retainer and meeting fees. Our Deferred Compensation Plan is described below on page 13.
 
(6) Ms. Shern resigned from our board on April 30, 2006.
 
(7) Represents the compensation costs of RSU and stock option awards for financial reporting purposes for 2006, as determined under Financial Accounting Board Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment, or FAS 123R.
 
For a discussion of the assumptions used in determining the compensation cost associated with stock and option awards, see note 4 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2006. We did not issue stock options to outside directors as part of our 2006 outside director compensation program. The option award compensation cost listed for Mr. Hockaday and Ms. Lorimer represents the expense related to the final tranche of options granted prior to 2006, which fully vested in February 2006.
 
On June 12, 2006, we issued 4,419 RSUs to each of our outside directors in connection with their annual RSU grant for 2006. The grant date fair value of the 2006 RSU grant to each of our outside directors is $109,105, which is the product of the per share grant date fair value multiplied by the number of RSUs granted. To determine the grant date fair value, we used the average of the highest and lowest trading prices of our common stock on May 16, 2006, the date that the Human Capital and Compensation Committee approved the methodology for calculating the number of RSUs to be issued to our outside directors.
 
The number of RSUs granted to each of our outside directors was calculated by dividing the director’s annual RSU grant value of $100,000 by $22.63, which was the product of (1) the 30-calendar day stock price average of $24.79 for our common stock beginning on February 16, 2006 and ending on March 17, 2006, multiplied by (2) 0.912812 (post-distribution stock value divided by the pre-distribution stock value) to reflect the value of the Embarq common stock dividend. Due to the spin-off of Embarq on May 17, 2006, the grant date of the director RSUs was after the date of the 2006 annual meeting, and the dates of the 30 calendar day range were selected in order to put the directors in the same economic position as they would have been in if we had made the grant at our annual meeting on April 18, 2006.


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As of December 31, 2006, the outside directors held stock awards in the form of RSUs as set forth in the following table:
 
                 
    Aggregate Number of Sprint
    Aggregate Number of
 
    Nextel RSUs Outstanding at
    Embarq RSUs Outstanding
 
Name
  December 31, 2006     at December 31, 2006  
 
Keith J. Bane
    4,431        
Robert R. Bennett
           
Gordon M. Bethune
    12,256       389  
Frank M. Drendel
    4,431        
James H. Hance, Jr. 
    8,196       187  
V. Janet Hill
    4,431        
Irvine O. Hockaday, Jr. 
    12,569       404  
Linda Koch Lorimer
    18,402       404  
William H. Swanson
    8,196       187  
Former Directors
               
William E. Conway, Jr. 
           
William E. Kennard
    4,431        
Stephanie M. Shern
           
 
Cash dividend equivalents on the RSUs granted to the outside directors are reinvested into RSUs, which vest when the underlying RSUs vest. The aggregate number of RSUs disclosed in this table includes the dividend accruals on the underlying RSUs. This table reflects the number of stock awards outstanding as of December 31, 2006 attributable to compensation paid by us to our directors. In connection with our spin-off of Embarq, holders of Sprint Nextel RSUs received one Embarq RSU for every 20 Sprint Nextel RSUs held.
 
As of December 31, 2006, the outside directors held outstanding option awards, all of which are vested, as set forth in the following table:
 
         
    Aggregate Number of Sprint
 
    Nextel Option Awards
 
    Outstanding at December 31,
 
Name
  2006  
 
Keith J. Bane
    21,360  
Robert R. Bennett
     
Gordon M. Bethune
     
Frank M. Drendel
    238,897  
James H. Hance, Jr. 
     
V. Janet Hill
    172,473  
Irvine O. Hockaday, Jr. 
    49,595  
Linda Koch Lorimer
    38,833  
William H. Swanson
     
Former Directors
       
William E. Conway, Jr. 
     
William E. Kennard
    169,110  
Stephanie M. Shern
     
 
This table includes options granted to Mr. Hockaday and Ms. Lorimer under Sprint’s 1997 Long-Term Stock Incentive Program in February 2002. Options granted to Messrs. Bane, Drendel and Kennard and Mrs. Hill were granted under the legacy Nextel incentive equity plan prior to the Sprint-Nextel merger. In 2006, we did not issue stock options to our outside directors as part of our outside director compensation program.


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(8) Consists of tax gross-up payments made in 2006 for certain compensation earned in 2005, and charitable matching contributions of $5,000 made with respect to Mr. Hockaday and $2,000 made with respect to Mr. Swanson. Our Sprint Foundation matching gift program and other benefits are described below on page 14. Beginning in 2006, no tax gross-ups are provided on the value of communications services and equipment utilized by our outside board members.
 
The compensation of our outside directors is partially equity-based and is designed to comply with our Corporate Governance Guidelines, which provide that the guiding principles behind our outside director compensation practices are: (1) alignment with shareholder interests, (2) preservation of outside director independence, and (3) preservation of the fiduciary duties owed to all shareholders. Our outside directors are directors who are not employees of our company. Our board made no changes to our outside directors’ retainers and meeting fees in 2006. Our outside directors are also reimbursed for direct expenses relating to their activities as members of our board of directors.
 
Annual Retainers, Additional Retainers and Meeting Fees
 
Our outside directors are each paid $70,000 annually plus meeting fees and the following additional retainers:
 
  •  the Lead Independent Director receives an additional annual retainer of $75,000;
 
  •  the Chair of the Audit Committee receives an additional annual retainer of $20,000;
 
  •  the Chair of the Human Capital and Compensation Committee (HC&CC) receives an additional annual retainer of $15,000; and
 
  •  the Chairs of the Finance Committee and the Nominating and Corporate Governance Committee each receive an additional annual retainer of $10,000.
 
For each meeting attended, we pay our outside directors the following fees:
 
  •  $2,000 for in-person board and committee meetings; and
 
  •  $1,000 for board and committee meetings held telephonically.
 
As disclosed in the footnotes to the director compensation table, our directors are entitled to participate in our Deferred Compensation Plan, a nonqualified and unfunded plan under which our outside directors can defer receipt of all or part of their annual and additional retainer fees and meeting fees into various investment funds and stock indices, including a fund that tracks our common stock. In 2006, Mr. Kennard participated in our Deferred Compensation Plan. Also disclosed in the footnotes to the director compensation table is the Directors Shares Plan, under which our outside directors can elect to use all or part of their annual and additional retainer fees and meeting fees to purchase shares of our common stock in lieu of receiving cash payments. Our outside directors can also elect to defer receipt of these shares. In 2006, Messrs. Hockaday and Swanson participated in our Directors Shares Plan. On an annual basis, our outside directors are given the opportunity to either enroll in or discontinue their participation in one or both of these plans.
 
Restricted Stock Units
 
Each of our outside directors receives an annual grant of $100,000 in RSUs representing shares of our common stock. Generally, the RSUs are granted each year at the annual meeting and each grant vests in full upon the subsequent annual meeting.
 
Stock Ownership Guidelines
 
Our director stock ownership guidelines require our outside directors to hold equity or equity interests in our common stock with a value of at least $140,000, which is two times the annual retainer fee. Each outside director is expected to meet this ownership level by the later of August 12, 2007 or the second anniversary of the director’s initial election or appointment to the board. Our director stock ownership guidelines provide the board with flexibility to grant exceptions based on its consideration of individual circumstances. All of our


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current outside directors are in compliance with our director stock ownership guidelines, and the same stock and stock equivalents that count towards the stock ownership guidelines for our executive officers (as described below under “Executive Compensation — Compensation Discussion and Analysis”) are used to determine our outside directors’ compliance with the director stock ownership guidelines. In addition, a minimum holding period of twelve months applies to equity and equity interests acquired by directors from us.
 
Other Benefits
 
We believe that it serves the interests of our company and our shareholders to enable our outside directors to utilize our communications services. Accordingly, each outside director may receive up to two wireless units and one connection card and the related wireless service, wireline long distance services and international calling cards. In addition to the value of the communications service, the value of any additional services and features (e.g., ringers, call tones, directory assistance), and the lease value of the wireless devices, replacements and associated accessories are included in the value of the communications benefit. The value of any communications benefits realized by a director is subject to federal, state or local income taxes that are paid by the director. There may be other circumstances in which units are provided to board members (such as demonstration, field testing and training units); these units must be returned or they will be converted to a consumer account and applied toward the wireless units under this communications benefit once the units reach production.
 
Under our charitable matching gifts program, the Sprint Foundation matches contributions made to qualifying organizations on a dollar-for-dollar basis, up to the annual donor maximum of $5,000. The annual maximum contribution per donor, per organization is $2,500. As described in the director compensation table, Messrs. Hockaday and Swanson were the only outside directors for whom the Sprint Foundation provided matching charitable contributions in 2006.
 
Except as described in this paragraph, we currently do not offer retirement benefits to outside directors. Ms. Lorimer is our only outside director who is eligible to receive benefits under a retirement plan originally adopted by our board of directors in 1982. The board amended the retirement plan in 1996 to eliminate the retirement benefit for any outside director who did not have five years of credited service as of the date of the amendment. Ms. Lorimer was deemed as having over five years of credited service at the time the retirement benefit was eliminated as a result of her years of service on the board of Centel Corporation, with which we merged in 1993. Ms. Lorimer will receive monthly benefit payments equal to the monthly fee (not including meeting fees or additional retainers) being paid to outside directors at the time of her retirement. The monthly retirement benefit would be $5,833 while the current $70,000 annual fee remains in effect, and the number of monthly benefit payments to Ms. Lorimer will be 120 payments.
 
Corporate Governance Matters
 
Our board and senior management devote considerable time and attention to corporate governance matters. We maintain a comprehensive set of corporate governance initiatives that include the following:
 
  •  maintaining a Corporate Governance and Ethics organization that is functionally independent from our other operating units and is designed to provide an enhanced level of transparency into the company for all of our stakeholders;
 
  •  refinement of our policies and goals with respect to the determination of executive compensation programs, including increasing emphasis on performance-based equity compensation, as further described below under “Compensation Discussion and Analysis;”
 
  •  implementing a majority vote standard in an uncontested election of directors;
 
  •  implementing an executive compensation clawback policy, which is discussed on page 34;
 
  •  conducting annual board, committee, and director self evaluations;
 
  •  declassification of the board;


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  •  adherence to strict independence standards for directors that meet or exceed NYSE listing standards;
 
  •  election of a Lead Independent Director on an annual basis;
 
  •  requiring the outside directors to hold executive sessions without management present no less than three times a year, at or in conjunction with regularly-scheduled board meetings;
 
  •  requiring the Audit Committee, the Finance Committee, the HC&CC, and the Nominating and Corporate Governance Committee to be composed entirely of independent directors;
 
  •  publication on our website of our Corporate Governance Guidelines and charters for all standing committees of the board, which detail important aspects of our governance policies and practices;
 
  •  maintaining limits on the number of other public company boards and audit committees on which our directors can serve;
 
  •  maintaining a policy that prohibits our independent registered public accounting firm from providing professional services, including tax services, to any employee or board member or any of their immediate family members that would impair the independence of our independent registered public accounting firm;
 
  •  maintaining stock ownership guidelines for vice presidents and above and outside directors; and
 
  •  maintaining limits on payments made in any future severance agreement with any officer at the level of senior vice president or above as further described below under “Compensation Discussion and Analysis”.
 
We value the views of our shareholders and other interested parties. Consistent with this approach, our board has established a system to receive, track and respond to communications from shareholders and other interested parties addressed to our board or to our outside directors. A statement regarding our board communications policy is available at www.sprint.com/governance. Any shareholder or other interested party who wishes to communicate with our board or our outside directors may write to Board Communications Designee, Sprint Nextel Corporation, 2001 Edmund Halley Drive, Mailstop VARESPO513-503, Reston, VA 20191, or send an email to boardinquiries@sprint.com. Our board has instructed the Board Communications Designee to examine incoming communications to determine whether the communications are relevant to our board’s roles and responsibilities. The Board Communications Designee will review all appropriate communications and report on the communications to the chair of or the full Nominating and Corporate Governance Committee, the full board, or the outside 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 accounting, internal accounting controls, or auditing matters will be referred promptly to members of the Audit Committee in accordance with our policy on communications with the board of directors.
 
As detailed in our Corporate Governance Guidelines, a Lead Independent Director is elected annually by our independent directors. Irvine O. Hockaday, Jr. currently serves as our Lead Independent Director. The responsibilities and authority of our Lead Independent Director are designed to facilitate the board’s oversight of management and ensure the appropriate flow of information between the board and management, and include the following:
 
  •  providing direction to the Chairman on board meeting agendas and schedules and ensuring that agenda items requested by the outside directors will be included on the agenda;
 
  •  providing direction to the Chairman on the quality, quantity, and timeliness of the flow of information from management and ensuring that the outside directors receive any information they request;
 
  •  coordinating, developing the agenda for, and chairing meetings of the outside directors;
 
  •  acting as principal liaison between the outside directors and the Chairman on sensitive issues and ensuring that a full discussion of those issues occurs at board meetings;


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  •  providing input to the HC&CC regarding the chief executive officer’s (CEO’s) performance and, along with the chair of the HC&CC, meeting with the CEO to discuss the board’s evaluation;
 
  •  assisting the Nominating and Corporate Governance Committee, the board and the company’s officers in assuring compliance with and implementation of the Corporate Governance Guidelines, and providing input to the Nominating and Corporate Governance Committee on revisions to the guidelines; and
 
  •  providing input to the Nominating and Corporate Governance Committee regarding the appointment of chairs and members of the Audit Committee, the HC&CC, the Finance Committee, and the Nominating and Corporate Governance Committee.
 
The Lead Independent Director and other directors may, from time to time, with the Chairman’s knowledge and in most instances with members of management present, meet with outside parties on issues of importance to all shareholders.
 
A current copy of our Corporate Governance Guidelines and the charters for all standing committees of the board are available at www.sprint.com/governance. They may also be obtained by writing to Sprint Nextel Shareholder Relations, 6200 Sprint Parkway, Mailstop KSOPHF0302-3B424, Overland Park, Kansas 66251 or by email at shareholder.relations@sprint.com.
 
Independence of Directors
 
Our board has adopted a definition of director independence that in several areas exceeds the listing standards of the NYSE. Our Corporate Governance Guidelines require that at least two-thirds of our board be independent. Under our Corporate Governance Guidelines, our board will determine affirmatively whether a director is “independent” on an annual basis and disclose these determinations in our annual proxy statement. That determination is set forth below. A director will not be independent unless the board, considering all relevant circumstances, determines that the director does not have a material relationship with us, including any of our consolidated subsidiaries. A director will not be independent if:
 
  •  during the preceding five years, the director was employed by, or any member of the director’s immediate family was employed as an executive officer by, our company;
 
  •  during any 12-month period in the last three years, the director or any member of the director’s immediate family received more than $100,000 per year in direct compensation from our company, other than excluded compensation;
 
  •  during the preceding five years, the director was affiliated with or employed by, or any member of the director’s immediate family was affiliated with or employed by, a present or former independent registered public accounting firm of our company;
 
  •  during the preceding five years, an executive officer of our company served on the compensation committee of the board of another company that concurrently employed the director or any member of the director’s immediate family as an executive officer;
 
  •  an executive officer of our company serves on the board of a company that employs the director as an executive officer;
 
  •  during the current or previous fiscal year, the director or an immediate family member accepted any payments (other than those arising from investments in our securities, excluded compensation, or other non-discretionary compensation) from our company in excess of $45,000;
 
  •  the director is an employee of, or any member of the director’s immediate family is an executive officer of, any company to which our company made, or from which our company received, payments (other than those arising solely from investments in our securities) that during any of the preceding three fiscal years exceeded the greater of 2% of the other company’s consolidated gross revenues or $1,000,000; or


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  •  the director is a partner in or controlling shareholder or executive officer of any organization to which our company made, or from which our company received, payments (other than those arising solely from investments in our securities) that during any of the preceding three fiscal years exceeded the greater of 3% of the recipient’s (i.e., our company’s or the other organization’s) consolidated gross revenues or $200,000.
 
Our board may determine that a director who does not meet the standards in the fifth, sixth or eighth bullet points above nevertheless is independent. Following any such determination, our board will disclose a detailed explanation of its determination in our annual proxy statement. In no event will our board make such determination for a director for more than two consecutive years.
 
The board uses the following definitions to determine director independence:
 
  •  “excluded compensation” means director and committee fees and pension or other forms of deferred compensation for prior service, provided such compensation is not contingent in any way on continued service; and
 
  •  “executive officer” and “immediate family” have the meanings set forth in Rule 303A.02 of the New York Stock Exchange Listing Manual, as amended from time to time.
 
In determining the independence of the outside directors, our board considered whether our outside directors, their immediate family members, and the companies with which they are employed as an executive officer (if applicable) have any relationships with our company that would prevent them from meeting the independence standards listed above, as well as the listing standards of the NYSE. In performing its review, our board considered the responses provided by the outside directors in their director questionnaires and determined that the following directors have no material relationship with our company and are independent using the definition described above: Mrs. Hill and Ms. Lorimer, and Messrs. Bane, Bennett, Bethune, Drendel, Hance, Hockaday, and Swanson. Based on these standards, nine of the ten current members of the board of directors are independent directors. The Audit Committee, the Finance Committee, the HC&CC, and the Nominating and Corporate Governance Committee are composed entirely of independent directors.
 
Board Committees and Director Meetings
 
Board Meetings
 
During 2006, our board of directors held seven regular meetings and seven special meetings. Our board of directors has the following standing committees: an Audit Committee, a Finance Committee, a HC&CC, an Executive Committee, and a Nominating and Corporate Governance Committee. Directors are expected to devote sufficient time to properly prepare for and attend meetings of our board, its committees and executive sessions, and to attend our annual meeting of shareholders. All directors attended at least 75% of the meetings of the board and board committees on which they served during 2006, and all directors who served on our board at the time of our 2006 annual meeting attended that annual meeting.
 
Meetings of Outside Directors
 
In addition to board and committee meetings, our outside directors met six times in 2006 without management present. Our Lead Independent Director chairs the meetings of our outside directors.
 
The Audit Committee
 
The primary function of the Audit Committee is to advise and assist the board in fulfilling its oversight responsibilities to the investment community, including current and potential shareholders. The primary purpose of the Audit Committee is to assist our board in fulfilling its oversight responsibilities with respect to:
 
  •  the integrity of our financial statements and related disclosures, as well as related accounting and financial reporting processes;
 
  •  our compliance with legal and regulatory requirements;


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  •  our independent registered public accounting firm’s qualifications, independence, audit and review scope, and performance;
 
  •  the audit scope and performance of our internal audit function; and
 
  •  our ethics and compliance program.
 
The Audit Committee also has sole authority for the appointment, retention, termination, compensation, evaluation and oversight of our independent registered public accounting firm. The committee’s principal responsibilities in serving these functions are described in the Audit Committee Charter that was adopted by our board of directors.
 
Current copies of the Audit Committee Charter and our code of ethics, The Sprint Nextel Code of Conduct, both of which comply with SEC rules and the NYSE corporate governance standards, are available at www.sprint.com/governance. Copies of the Audit Committee Charter and The Sprint Nextel Code of Conduct may also be obtained by writing to Sprint Nextel Shareholder Relations, 6200 Sprint Parkway, Mailstop KSOPHF0302-3B424, Overland Park, Kansas 66251, or by email at shareholder.relations@sprint.com.
 
The Sprint Nextel Code of Conduct describes the ethical and legal responsibilities of directors and employees of our company and our subsidiaries, including senior financial officers and executive officers. All of our directors and employees (including all senior financial officers and executive officers) are required to comply with The Sprint Nextel Code of Conduct. In support of the ethics code, we have provided employees with a number of avenues for the reporting of potential ethics violations or similar concerns or to seek guidance on ethics matters, including a 24/7 telephone helpline. The Audit Committee has established procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters, including the confidential, anonymous submission by our employees of any concerns regarding questionable accounting or auditing matters to the Ethics Helpline at 1-800-788-7844, by mail to the Audit Committee, c/o Sprint Nextel Corporation, 2001 Edmund Halley Drive, Mailstop VARESPO513-503, Reston, VA 20191, or by email to boardinquiries@sprint.com. Our Chief Ethics Officer reports regularly to the Audit Committee and annually to the entire board on our Ethics and Compliance program.
 
The Chair of the Audit Committee is Mr. Hance. The other members are Ms. Lorimer and Messrs. Bennett and Bane. Each of the members is financially literate and able to devote sufficient time to serving on the Audit Committee. Our board has determined that each of the Audit Committee members is an independent director under the independence requirements established by our board and the NYSE corporate governance standards. Our board has also determined that Messrs. Bennett and Hance each possess the qualifications of an “audit committee financial expert” as defined in SEC rules. The Audit Committee met 17 times in 2006.
 
The Finance Committee
 
The primary functions of the Finance Committee include:
 
  •  reviewing and approving our financing activities consistent with the authorization levels set forth in our fiscal policy;
 
  •  reviewing and making recommendations to the board on our capital structure, annual budgets, enterprise risk management program, fiscal policy, investment policy, and other significant financial initiatives; and
 
  •  reviewing and approving proposed acquisitions, dispositions, mergers, joint ventures and similar transactions consistent with the authorization levels set forth in our fiscal policy.
 
The committee’s principal responsibilities in serving these functions are described in the Finance Committee Charter that was adopted by our board of directors.
 
The Chair of the Finance Committee is Mr. Bennett. The other members are Messrs. Bane, Hance, Hockaday and Swanson. Each member of the Finance Committee satisfies the independence requirements


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established by our board and the independence requirements of the NYSE corporate governance standards. The Finance Committee met eight times in 2006. A current copy of the charter for the Finance Committee is available at www.sprint.com/governance. It may also be obtained by writing to Sprint Nextel Shareholder Relations, 6200 Sprint Parkway, Mailstop KSOPHF0302-3B424, Overland Park, Kansas 66251, or by email at shareholder.relations@sprint.com.
 
The Human Capital and Compensation Committee
 
The primary functions of the HC&CC include:
 
  •  developing and overseeing our compensation programs and practices for executives generally and for the direct reports of our CEO and the individuals designated as executive officers under Section 16 of the Securities Exchange Act of 1934, which we call principal senior officers, in particular;
 
  •  evaluating the performance of our CEO and reviewing management’s assessment of the performance of principal senior officers;
 
  •  setting the annual compensation levels for our CEO and other principal senior officers;
 
  •  with input from the Nominating and Corporate Governance Committee, making recommendations to the board on outside director compensation;
 
  •  making recommendations to the board on incentive compensation plans and equity-based compensation plans that are subject to board approval, including the adoption of those plans and any amendments to those plans;
 
  •  reviewing and approving executive compensation disclosures made in our annual proxy statement and annual report on Form 10-K;
 
  •  determining, approving and acknowledging awards under incentive compensation and equity-based compensation plans, including amendments to the awards under any such plans, and reviewing and monitoring awards under such plans;
 
  •  reviewing and approving any proposed employment agreement (and any amendments) with principal senior officers;
 
  •  with input from the Nominating and Corporate Governance Committee, annually reviewing with management plans for the orderly development and succession of senior executive officers; and
 
  •  annually reviewing compliance with our executive stock ownership guidelines and director stock ownership guidelines.
 
Additional information regarding the HC&CC’s processes and procedures can be found below in “Executive Compensation — Compensation Discussion and Analysis.” Generally, the committee’s primary processes for establishing and overseeing outside director compensation and the role of company personnel and compensation consultants are similar to those regarding executive compensation. Any appropriate changes to outside director compensation are made following recommendation to the board by the HC&CC, with input from the Nominating and Corporate Governance Committee. In accordance with its charter, the HC&CC may delegate authority to subcommittees or any committee member when appropriate.
 
The Chair of the HC&CC is Mr. Swanson. The other members are Mrs. Hill and Mr. Bethune. Mr. Kennard served as a member of the HC&CC until his resignation from our board on March 1, 2007. Each member of the HC&CC satisfies the independence requirements established by our board and the independence requirements of the NYSE corporate governance standards. The HC&CC met seven times in 2006.
 
A current copy of the charter for the HC&CC is available at www.sprint.com/governance. It may also be obtained by writing to Sprint Nextel Shareholder Relations, 6200 Sprint Parkway, Mailstop KSOPHF0302-3B424, Overland Park, Kansas 66251, or by email at shareholder.relations@sprint.com.


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Compensation Committee Interlocks and Insider Participation
 
Messrs. Bethune, Kennard and Swanson, and Mrs. Hill served on the HC&CC during 2006. There were no compensation committee interlocks or insider participation during 2006.
 
The Executive Committee
 
The primary function of the Executive Committee is to exercise powers of the board on matters of an urgent nature that arise between regularly scheduled board meetings.
 
Messrs. Forsee and Hockaday serve on the Executive Committee. Mr. Donahue served on the Executive Committee until his retirement from our board on December 29, 2006. The Executive Committee did not meet in 2006.
 
The Nominating and Corporate Governance Committee
 
The primary function of the Nominating and Corporate Governance Committee is to ensure that our company has effective corporate governance policies and procedures and an effective board and board review process. In fulfilling this function, the committee:
 
  •  determines director selection criteria consistent with our Corporate Governance Guidelines and conducts searches for prospective directors whose skills and attributes reflect these criteria;
 
  •  evaluates and makes recommendations to the board on nominees to fill board vacancies between annual meetings of the shareholders as well as nominees (including nominees proposed by shareholders) for election at the next annual meeting of shareholders;
 
  •  evaluates and makes recommendations to the board on a director’s retirement, an offer to resign due to a change in circumstances, or a resignation tendered as a result of a director’s failure to receive the required number of votes for re-election;
 
  •  evaluates and makes recommendations to the board on the appointment of directors to board committees and the selection of board committee chairs;
 
  •  develops, reviews, and makes recommendations to the board on corporate governance policies and practices designed to benefit our shareholders;
 
  •  provides input to the HC&CC on outside director compensation and the orderly development and succession of senior executive officers;
 
  •  oversees the annual board, board committee and director self evaluation process; and
 
  •  if applicable, evaluates, at least once every three years, our shareholder rights plan to determine whether it continues to be in the best interests of our company and our shareholders.
 
In evaluating prospective candidates or current board members for nomination, the Nominating and Corporate Governance Committee considers all factors it deems relevant, including, but not limited to, the candidate’s: (1) character, including reputation for personal integrity and adherence to high ethical standards, (2) judgment, (3) knowledge and experience in leading a successful company, business unit or other institution, (4) independence from our company, (5) ability to contribute diverse views and perspectives, (6) business acumen, and (7) ability and willingness to devote the time and attention necessary to be an effective director — all in the context of an assessment of the needs of the board at that point in time.
 
The Nominating and Corporate Governance Committee reviews with the board the appropriate characteristics and background needed for directors. This review is undertaken not only in considering new candidates for board membership, but also in determining whether to nominate existing directors for another term. The Nominating and Corporate Governance Committee determines the current director selection criteria and conducts searches for prospective directors whose skills and attributes reflect these criteria. To assist in the recruitment of new members to our board, the Nominating and Corporate Governance Committee employs one or more third party search firms. Final approvals of nominations are determined by the full board.


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It is the policy of the Nominating and Corporate Governance Committee also to consider candidates recommended by shareholders. These recommendations should be sent to the Nominating and Corporate Governance Committee, c/o Corporate Secretary, Sprint Nextel Corporation, 2001 Edmund Halley Drive, Mailstop VARESPO513, Reston, VA 20191. To be timely, your recommendation must be received by our Corporate Secretary between December 10, 2007 and January 9, 2008. Your recommendation must include the following for each candidate you intend to recommend:
 
  •  name, age, business address and residence address;
 
  •  principal occupation or employment;
 
  •  the class and number of shares of our stock beneficially owned;
 
  •  a description of all arrangements or understandings relating to the nomination between or among you, each nominee, and any other person or persons;
 
  •  the signed consent of each nominee to serve as a director if so elected;
 
  •  any other information that is required by law to be disclosed in connection with solicitations of proxies for the election of directors; and
 
  •  a statement signed by the nominee that indicates whether the nominee, if elected as a director, intends to comply with our Corporate Governance Guidelines.
 
The notice must also include your name and address and the class and number of shares of our stock that you own.
 
On February 27, 2007, our board approved amendments to our bylaws to provide that each nominee for director in an uncontested election will be elected if the votes cast for that nominee exceed the votes cast against that nominee. Votes cast against a nominee include votes to withhold authority with respect to the nominee, but do not include abstentions and broker non-votes. The date for determining if an election is contested or uncontested has been set at 14 days before we file our definitive proxy statement. This requirement is intended to help us determine for our proxy statement whether director nominees will be elected under a majority or plurality standard prior to soliciting proxies.
 
In connection with the amendments to our bylaws establishing a majority vote standard for the election of directors in uncontested elections, our board also amended our Corporate Governance Guidelines to provide that an incumbent nominee who fails to receive a majority of votes cast in an uncontested election is expected to tender promptly his or her resignation. The Nominating and Corporate Governance Committee will recommend, and the board will determine, whether or not to accept the tendered resignation within 90 days of the certification of the stockholder vote with respect to the director election. Our board’s decision will be publicly disclosed.
 
In 1997, our board adopted a shareholder rights plan. The rights plan is reviewed every three years by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee began its review of the plan in October 2005, and, in February 2006, the board accepted the Nominating and Corporate Governance Committee’s recommendation that the plan remain in place until the rights issuable under the plan expire in June 2007.
 
The Chair of the Nominating and Corporate Governance Committee is Mr. Hockaday. The other members are Mrs. Hill, Ms. Lorimer and Mr. Bethune. Mr. Kennard served as a member of the Nominating and Corporate Governance Committee until his resignation from our board on March 1, 2007. Each member of the Nominating and Corporate Governance Committee satisfies the independence requirements established by our board and the independence requirements of the NYSE corporate governance standards. The Nominating and Corporate Governance Committee met seven times in 2006.
 
A current copy of the charter for the Nominating and Corporate Governance Committee and our Corporate Governance Guidelines are available at www.sprint.com/governance. They may also be obtained by


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writing to Sprint Nextel Shareholder Relations, 6200 Sprint Parkway, Mailstop KSOPHF0302-3B424, Overland Park, Kansas 66251 or by email at shareholder.relations@sprint.com.
 
Audit Committee Report
 
The Audit Committee has reviewed and discussed our audited consolidated financial statements with management. The Audit Committee has also discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61 (SAS 61 — Communication with Audit Committees), as amended, relating to the auditors’ judgment about the quality of our accounting principles, judgments and estimates, as applied in our financial reporting.
 
The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) that relates to the firm’s independence from our company and our subsidiaries and has discussed with the independent registered public accounting firm its independence.
 
The Audit Committee met with senior management periodically during the 2006 fiscal year to consider the adequacy of our internal controls and discussed these matters with our independent registered public accounting firm and with appropriate financial personnel. The Audit Committee also discussed with senior management our disclosure controls and procedures and the certifications by our CEO and our Chief Financial Officer, which are required by the SEC for certain of our filings with the SEC. The Audit Committee met privately with the independent registered public accounting firm, our internal auditors and other members of management, each of whom has unrestricted access to the Audit Committee.
 
Based on the reviews and discussions referred to above, the Audit Committee recommended to the board that our audited consolidated financial statements be included in our annual report on Form 10-K for the year ended December 31, 2006 for filing with the SEC.
 
The Audit Committee
 
James H. Hance, Jr., Chair
Keith J. Bane
Robert R. Bennett
Linda Koch Lorimer
 
Human Capital and Compensation Committee Report
 
The HC&CC has reviewed and discussed our Compensation Discussion and Analysis with management. Based on these reviews and discussions, the HC&CC recommended to the board that our Compensation Discussion and Analysis be included in this proxy statement.
 
The Human Capital and Compensation Committee
 
William H. Swanson, Chair
Gordon M. Bethune
V. Janet Hill


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Executive Compensation
 
Compensation Discussion and Analysis
 
Overview of Compensation Philosophy and Program
 
The compensation program for our named executive officers consists of a comprehensive package that includes a base salary and short- and long-term incentive opportunities, and employee benefits. This program is designed to:
 
  •  retain our executive officers and attract qualified and experienced executives;
 
  •  motivate our executives to achieve critical operating and financial objectives;
 
  •  align the interests of our executives with those of our shareholders, thereby encouraging them to think and act like owners of our company;
 
  •  promote our tax, accounting and financial objectives; and
 
  •  adhere to corporate governance best practices.
 
We believe that this program will enable us to retain our executive officers and attract qualified and experienced executives, and to motivate executives to accomplish goals and objectives that serve our interests and those of our shareholders. Our incentive plans tie executive remuneration to our performance, striking a balance between our short- and long-term performance, and between remuneration for achieving operating and financial objectives and producing a return for our shareholders. Target opportunities under our short- and long-term incentive plans comprise the majority of the compensation packages of each of our executives, which we believe serves to properly motivate each of them to achieve these objectives. We also believe that the interests of each executive will be aligned with the interests of our shareholders if a significant portion of his or her compensation package is comprised of equity-based awards.
 
To determine the appropriate levels of compensation with respect to each element of our compensation program, we periodically review the compensation levels of our named executive officers and other key personnel against compensation analyses of telecommunications and high-technology companies conducted by third parties, and the compensation levels of the named executive officers of a peer group of companies that we believe represents the types of companies with which we compete for personnel. This peer group includes communications and high technology companies, as well as other companies with business models similar to ours. We periodically review and update the companies that we include in our peer group with input from the HC&CC’s compensation consultant.
 
For 2006, the companies that comprised our peer group consisted of Alltel Corporation, AT&T Inc., BellSouth Corporation, Comcast Corporation, Lucent Technologies Inc., Motorola, Inc., Nortel Networks Corporation, QUALCOMM Incorporated, Qwest Communications International Inc., Time Warner Inc. and Verizon Communications Inc. For 2007, we added The DIRECTV Group Inc., due to its similar business model, Dell Inc., due to its similar size, and Electronic Data Systems Corporation and Computer Sciences Corporation, based on their systems integration similarities. For 2007, we removed Nortel Networks based on a number of considerations related to its financial and operating characteristics.
 
The HC&CC annually reviews the compensation packages of our named executive officers and other key personnel, as presented in the form of “tally sheets,” which set forth all components of compensation, including base salary, incentive opportunities, deferred compensation, outstanding equity-based awards, non-recurring cash or equity-based retention awards, and the present value of retirement benefits and other benefit plans and programs and perquisites. The tally sheets also set forth the estimated value that each named executive officer would realize upon separation from our company under various scenarios including: normal retirement; voluntary termination of employment with and without good reason; involuntary termination of employment with and without cause; termination of employment in connection with a change in control of us; and death or disability. The HC&CC uses these tally sheets in connection with its consideration of adjustments


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to base salaries and awards of equity-based or other remuneration, and in establishing incentive plan opportunity levels.
 
Our named executive officers are Gary D. Forsee, Chairman, President and Chief Executive Officer; Paul N. Saleh, Chief Financial Officer; Timothy E. Kelly, President — Customer Management; Barry J. West, Chief Technology Officer and President — 4G Mobile Broadband Operations; Richard T.C. LeFave, Chief Information Officer; Timothy M. Donahue, our former Executive Chairman; and Len J. Lauer, our former Chief Operating Officer.
 
Use of Compensation Consultants and Management Involvement
 
The HC&CC regularly engages the services of consulting firms to advise it on matters related to executive compensation. These consulting firms take direction from and report to the HC&CC. Prior to the May 2006 spin-off of our local communications business, the HC&CC engaged both Deloitte Consulting LLP and Frederic W. Cook & Co., Inc. Since the spin-off, the HC&CC has engaged Frederic W. Cook & Co., Inc. exclusively to advise it on matters related to executive compensation. At no time since the beginning of 2006 has Frederic W. Cook & Co., Inc. had any other business relationship with us. Frederic W. Cook & Co., Inc. works with our management only under the direction of the HC&CC. Personnel in our human resources department support the work of the HC&CC and its consultants. In addition, our CEO meets periodically with the HC&CC regarding the design of compensation programs and the compensation levels of our other named executive officers and certain key personnel.
 
Tax Deductibility of Pay
 
Section 162(m) of the Internal Revenue Code, or IRC, limits to $1 million the amount of non-performance-based remuneration that a company may deduct from its taxable income in any tax year with respect to its named executive officers who are employed at the end of the year. Base salary, certain equity-based awards and perquisites and other personal benefits are not considered performance-based remuneration. A company, however, may deduct from its taxable income without regard to the $1 million limit the full value of all performance-based compensation under section 162(m), such as annual cash incentive compensation and stock option awards, if certain requirements are met, including that the maximum number of stock options that may be awarded and the maximum amount of other performance-based remuneration that may be payable to any one executive officer have been disclosed to and approved by shareholders prior to the award or payment. Our shareholders have approved limits on the number of stock options awarded and the amount of other performance-based remuneration payable to any one executive officer during a calendar year.
 
The HC&CC considers section 162(m) deductibility in designing our compensation program and incentive-based compensation plans. In certain circumstances, the HC&CC has determined it necessary, to retain executives in and attract candidates for senior level positions, to offer compensation packages in which the non-performance-based elements exceed the $1 million section 162(m) limit.
 
Elements of Compensation
 
Base Salary
 
Because base salary is not performance-based remuneration, it serves as a minimum payment to executive officers.
 
The respective employment agreement of each of Messrs. Forsee and Donahue provided for a minimum base salary of $1.4 million, which was negotiated in connection with the Sprint-Nextel merger. The HC&CC considered it necessary and appropriate to set a base salary for Mr. Forsee, and, prior to his retirement, to have set a base salary for Mr. Donahue, above the $1 million section 162(m) limit.
 
We determined the base salary of each of the other named executive officers based on a number of factors, including the:
 
  •  nature, responsibilities and reporting relationships of the position;


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  •  salary levels for incumbents in comparable positions at peer companies as well as other executives within our organization; and
 
  •  experience and tenure of the executive.
 
We periodically make adjustments to the base salaries of executive officers based on the factors listed above, as well as our performance and that of the executive officer. In 2006, we did not adjust the base salaries of any named executive officers, other than a $50,000 increase in Mr. Forsee’s base salary, to $1,450,000. We made this adjustment in connection with the elimination of certain perquisites and other personal benefits, including allowances for an automobile, country club dues and other miscellaneous services, that Mr. Forsee had received previously.
 
We completed our annual review of base salaries in February 2007 and, as of February 17, 2007, the base salary of each of our named executive officers is as follows:
 
  •  Mr. Forsee — $1,500,000;
 
  •  Mr. Saleh — $780,000;
 
  •  Mr. Kelly — $569,809;
 
  •  Mr. West — $469,356; and
 
  •  Mr. LeFave — $432,000.
 
Annual Short-term Incentive Compensation Plan
 
Our annual short-term incentive compensation, or STIC, plan sets forth the terms under which annual cash incentive compensation is paid to eligible employees, including our named executive officers. We have designed the STIC plan to motivate eligible employees to achieve critical operating and financial objectives by remunerating them based on our performance and their individual performance.
 
We established incentive target opportunities under the STIC plan for 2006 for each named executive officer as a multiple of his base salary. To hold those employees with the highest levels of responsibility accountable for our performance, we vary incentive target opportunities under the STIC plan in proportion with each named executive officer’s role and responsibilities.
 
The respective employment agreement of each of Messrs. Forsee and Donahue provided for a target opportunity under the 2006 STIC plan of 170% of base salary, which was negotiated in connection with the Sprint-Nextel merger. We determined the target opportunities under the STIC plan of each of the other named executive officers based on his job responsibilities and a number of other factors, including the short-term incentive compensation levels paid to employees with comparable responsibilities by the companies in our peer group. We also considered the target opportunities of each named executive officer as compared with the levels for other members of our senior management team. For 2006, our named executive officers had the following STIC target awards:
 
  •  Mr. Forsee — 170% of his base salary, or $2,465,000;
 
  •  Mr. Saleh — 125% of his base salary, or $937,500;
 
  •  Mr. Kelly — 105% of his base salary, or $577,500;
 
  •  Mr. West — 100% of his base salary, or $425,000;
 
  •  Mr. LeFave — 100% of his base salary, or $400,000;
 
  •  Mr. Donahue — 170% of his base salary, or $2,380,000; and
 
  •  Mr. Lauer — 130% of his base salary, or $1,262,820.
 
In early 2006, the HC&CC established financial and operational objectives against which our actual performance was to be compared as a basis for determining the amount of payments made under the STIC


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plan, and provided for significant payouts if our performance met or exceeded these objectives. For 2006, the HC&CC established three financial and operational objectives, based on the outlook of our business for 2006, to focus executives’ attention on areas that we believed were important to achieving strategic results: growth of revenues and our customer base; cost efficient use of resources; and improved customer experience. These objectives were:
 
  •  adjusted operating income before depreciation and amortization and special items, or adjusted OIBDA, which is segment income under Generally Accepted Accounting Principles, for 2006;
 
  •  the number of additional wireless subscribers acquired, net of subscriber deactivations, in 2006, which we refer to as net subscriber additions; and
 
  •  a measure of retention of our post-paid wireless subscribers, which we refer to as post-paid wireless churn, for 2006.
 
The STIC plan weighted these objectives 50% for adjusted OIBDA, 30% for net subscriber additions and 20% for post-paid churn. We weighted the adjusted OIBDA objective at 50% because it measures our financial and operating performance. We weighted the net subscriber additions objective at 30% and the post-paid wireless churn objective at 20% because, together, they are important indicators of our ability to grow our business and generate revenue in future periods.
 
The STIC plan provided that payouts to each named executive officer were determined using three variables:
 
  •  the named executive officer’s target opportunity;
 
  •  our actual performance compared with each performance objective; and
 
  •  the relative weightings of each performance objective.
 
The STIC plan provided for a range of payouts above and below each named executive officer’s targeted opportunity so long as our actual results exceeded minimum threshold levels. To further our goal of tying a significant portion of each named executive officer’s total annual compensation to our performance, the plan provided that we would make a STIC payment equal to the participant’s targeted opportunity only if our actual results met the targeted objectives. Similarly, the plan provided for a payment in excess of a participant’s targeted opportunity if our actual performance exceeded the targeted objectives. The plan also provided that, if our actual performance was below the target objectives but exceeded the minimum threshold levels, we would make a payment that was below the participant’s targeted opportunity. Plan participants were not eligible for payouts under the plan if our actual performance did not meet the minimum threshold level for any of the targeted objectives.
 
For 2006, the STIC plan capped the amount of payout at 200% of targeted opportunities with respect to the net subscriber additions and post-paid wireless churn objectives, but, for each named executive officer other than Messrs. Forsee and Donahue, the maximum amount of payout was unlimited with respect to the adjusted OIBDA objective. The terms of the respective employment agreements of Messrs. Forsee and Donahue provided that actual payouts under the STIC plan were limited to 200% of their respective targeted opportunity. The STIC plan also provided for an individual performance factor that could adjust the final payout between 0 and 120% of the calculated payout based on the individual’s performance.
 
The HC&CC designed the STIC plan to meet the IRC section 162(m) performance-based requirements. To enable payments under the STIC plan to be deemed performance-based for purposes of section 162(m), the HC&CC limited the maximum amount that any named executive officer may receive under the plan to a small fraction of a percentage of our adjusted operating income. As indicated below, the HC&CC exercised this discretion to make payments under the STIC plan at levels below this limit.
 
For 2006, each participant’s payout under the STIC plan was equal to 16.8% of his or her targeted opportunity, based on our adjusted OIBDA for 2006 exceeding the minimum threshold level for that objective under the plan, although it was less than the targeted objective. For 2006, however, our net subscriber additions and post-paid wireless churn did not meet the minimum threshold levels under the STIC plan.


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Consequently, each named executive officer, other than Messrs. Forsee and Donahue, received a payout under the STIC plan equal to 16.8% of his targeted opportunity. Mr. Forsee elected not to receive a STIC plan payout for 2006. Upon Mr. Donahue’s retirement, he was entitled under his employment agreement to receive payment with respect to our short-term incentive plan equal to his target opportunity. Consequently, his payout under our 2006 STIC plan equaled his target opportunity for 2006. Each payout under the 2006 STIC plan was below the IRC section 162(m) maximum amount established by the HC&CC. Payouts under our 2006 STIC plan are reflected in the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table.
 
For our 2007 short-term incentive plan, the HC&CC established three financial and operational objectives to focus executives’ attention on areas that we believe are important to achieving strategic results: growth of revenues and our customer base; cost efficient use of resources; and improved customer experience. The HC&CC also established a functional objective for each executive to focus attention on his or her respective function. The HC&CC weighted each objective in relation to the importance of each objective in light of our strategic goals. These objectives and their respective weightings are as follows:
 
  •  adjusted OIBDA, weighted at 30%;
 
  •  post-paid wireless churn, weighted at 30%;
 
  •  net service revenue, weighted at 20%; and
 
  •  one or more financial or operational functional objectives that will be aligned with each participant’s function, weighted at 20%.
 
We replaced the net subscriber addition metric with the net service revenue objective, which excludes equipment revenue and reflects our goal of not only attracting and retaining new subscribers, but also selling innovative services to new and existing customers.
 
For 2007, we did not adjust for any named executive officer the multiple of base salary that represents the target opportunity, although the 2007 target opportunity reflects the adjustment to base salary discussed above. Messrs. Donahue and Lauer are not participants in the 2007 short-term incentive plan because they are no longer employed by us. The target opportunity for each named executive based on annual base salary rates for 2007 are as follows:
 
  •  Mr. Forsee — $2,550,000;
 
  •  Mr. Saleh — $975,000;
 
  •  Mr. Kelly — $598,299;
 
  •  Mr. West — $469,356; and
 
  •  Mr. LeFave — $432,000.
 
Long-term Incentive Compensation Plan
 
Our long-term incentive compensation, or LTIC, plan sets forth the terms under which equity-based incentive compensation is awarded to eligible employees, including our named executive officers. We have designed the LTIC plan to promote our long-term objectives and motivate eligible employees to achieve critical operating and financial objectives and produce positive returns for our shareholders, as well as our retention objectives, by providing executive officers with equity-based incentive awards.
 
The respective employment agreement of each of Messrs. Forsee and Donahue provided for a target opportunity under the 2006 LTIC plan of $10 million, which was negotiated in connection with the Sprint-Nextel merger. We determined the target opportunities under the LTIC plan of each of the other named executive officers based on his job responsibilities and a number of other factors, including the long-term incentive compensation levels paid to employees with comparable responsibilities by the companies in our peer group, the individual’s performance, the importance of the individual’s function to our business, and the risk that we will not be able to retain the individual and the ability to replace him with an employee with


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comparable skills and experience. We also considered the target opportunities of each named executive officer as compared with the levels of other members of our senior management team. For 2006, our named executive officers had the following LTIC targeted opportunities:
 
  •  Mr. Forsee — $10,000,000;
 
  •  Mr. Saleh — $5,000,000;
 
  •  Mr. Kelly — $3,025,000;
 
  •  Mr. West — $1,600,000;
 
  •  Mr. LeFave — $1,760,000;
 
  •  Mr. Donahue — $10,000,000; and
 
  •  Mr. Lauer — $7,700,000.
 
To create an appropriate balance between rewarding our named executive officers for achieving critical financial and operating results and creating value for the shareholders, and to ensure that the program supports our retention objectives, the LTIC plan provides that one-half of each participant’s targeted opportunity be made in the form of non-qualified options to purchase our common stock and the other half be made in performance-based RSUs. By subjecting both the stock options and RSU awards granted under the plan to time-based vesting schedules, we support our retention objectives. In addition, each named executive officer generally realizes remuneration from stock option awards only if he remains employed with us during the vesting period and the price of our common stock appreciates after the date of grant, which supports our goal of tying remuneration to shareholder return. The number of RSUs initially awarded under the 2006 LTIC plan was subject to a performance adjustment so that each named executive officer would retain a portion of the RSUs initially awarded to him only if our actual performance exceeded a minimum financial objective under the plan, which supports our goal of motivating our executives to achieve critical objectives.
 
We calculated the number of shares of common stock underlying the stock options that each LTIC plan participant was awarded in 2006 by dividing one-half of his targeted opportunity by the value of an option, as determined using the Black-Scholes option valuation model. The Black-Scholes model incorporates into the determination of the value of a stock option the term of the option, the risk-free rate of return and the fair market value, dividend yield, and assumed future price volatility of the stock that underlies the option. For determining the number of shares of common stock underlying the stock options that each LTIC plan participant was awarded, we used the same assumptions that we use to determine share-based compensation expense in our consolidated financial statements, except that, for the fair market value assumption, we used a 30-day average price of our common stock, which resulted in the compensation expense computed pursuant to FAS 123R varying slightly from the portion of the LTIC plan targeted opportunity related to stock option grants.
 
These options, which we granted on February 7, 2006, vest ratably in equal amounts on the first, second and third anniversaries of the grant date and have an exercise price equal to the fair market value of a share of our common stock on the date of the grant, which we determined using the average of the high and low of the trading price on the date of grant.
 
We determined the number of RSUs that each LTIC plan participant initially was awarded in 2006 by dividing one-half of his targeted opportunity by the average fair market value of our common stock over a consecutive 30-calendar day period, which we believe mitigated the volatility inherent in our stock if the price on any single day were used. We issued these RSUs on June 12, 2006, following the spin-off of our local communications company. Each RSU award vests on February 7, 2009, which is designed to coincide with the vesting of the final installment of the stock options granted under the 2006 LTIC plan. Each RSU award is eligible to receive dividend-equivalent payments as and to the extent that we declare dividends with respect to our common stock, although the plan provides that no such payments are made until after any performance adjustments have been made.


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The LTIC plan provides that each initial award of RSUs is subject to adjustment based on our actual performance compared to established performance objectives. For the 2006 LTIC plan, the HC&CC established the same performance objectives as used in the 2006 STIC plan and weighted them in the same manner. The LTIC plan provides that these adjustments are determined using three variables:
 
  •  the portion of the named executive officer’s target opportunity related to the performance-based RSU awards;
 
  •  our actual performance compared with each performance objective; and
 
  •  the relative weightings of each performance objective.
 
These adjustments could result in forfeitures of or increases in the number of RSUs initially awarded, in amounts ranging from 0 to 200% of the initial award.
 
The HC&CC designed the LTIC plan to allow for the stock options granted under the plan to comply with the IRC section 162(m) performance-based requirements. To properly motivate our named executive officers to achieve and exceed the financial and operating performance objectives, the HC&CC determined that it was in our best interest to design the RSU award to not comply with the section 162(m) performance-based requirements. Consequently, the value of the RSU awards under the plan was not subject to the individual limit approved by our shareholders.
 
For 2006, as was the case with respect to the 2006 STIC plan, our net subscriber additions and post-paid wireless churn did not meet the minimum threshold levels, but our adjusted OIBDA for 2006 exceeded the minimum threshold level under the 2006 LTIC plan. Consequently, each named executive officer has retained 16.8% of the RSUs initially granted to him, and has forfeited the remaining RSUs.
 
In February 2006, as a result of the performance adjustment tied to RSU awards made in 2005 under our 2005 long-term incentive compensation plan, Messrs. Forsee, Kelly and Lauer received additional RSU awards in proportion to the number of RSUs initially awarded under that plan. Under that plan, for 2005, we established an objective based on our net operating profits after taxes less a charge for the carrying cost of all capital invested in the enterprise. Actual performance for the year up to the date of the Sprint-Nextel merger exceeded the objective resulting in awards of additional RSUs. These additional awards are subject to the terms and conditions of the RSUs initially awarded in 2005 under our 2005 long-term incentive compensation plan, and, like those initial awards, vest on February 8, 2008. Because Messrs. Saleh, West, LeFave and Donahue, who were employees of Nextel prior to the Sprint-Nextel merger, were not employed by us in the beginning of 2005 when we adopted the 2005 long-term incentive compensation plan, they were not eligible to receive any additional RSU awards.
 
Similar to our 2006 LTIC plan, under our 2007 long-term incentive plan, one-half of each plan participant’s targeted opportunity has been made in the form of non-qualified stock options and the other half has been made in performance-based RSU awards. The stock options vest ratably in equal amounts on the first, second and third anniversaries of the grant date and have an exercise price equal to the fair market value of a share of our common stock on the date of the grant. With respect to the performance-based RSU awards, the HC&CC established two financial objectives to focus executives’ attention on two areas that we believe are important to achieving long-term strategic results: improved profitability; and generation of cash from our operations. These objectives, each weighted as 50%, are as follows:
 
  •  consolidated adjusted OIBDA margin of our core operations for 2009; and
 
  •  cumulative free cash flow from operations for 2007 through 2009.
 
To emphasize the long-term nature of this incentive program, the HC&CC set the adjusted OIBDA margin objective for the third year of the vesting period of the RSU awards, and the free cash flow objective for the entire three-year performance period. These objectives are consistent with our 2007 revenue and OIBDA guidance and our plans for a return to growth thereafter.
 
Following the three-year performance period, the RSU awards initially granted will be subject to adjustment based on our actual performance compared to the financial objectives. All RSU awards under our


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2007 long-term incentive plan will vest on the later of the third anniversary of the date of the award and the date that the financial results tied to the performance objectives are approved by the HC&CC. All RSU awards are eligible to receive dividend equivalent payments, as and to the extent declared with respect to our common stock, following any performance adjustment. For each employee eligible to participate in the 2007 long-term incentive plan who also participated in our 2006 LTIC plan, the HC&CC approved grants of additional performance-based RSU awards to recognize the efforts of the eligible plan participants and to promote our retention efforts. This grant was made to each of our named executive officers other than Messrs. Forsee, West, Donahue and Lauer. We granted these RSU awards in an amount equal to 35% of the RSU portion of each participant’s target opportunity. These RSU awards are subject to the same performance criteria and other terms of our 2007 long-term incentive plan. Similar to the 2006 LTIC plan, the RSU awards granted under the 2007 long-term incentive plan do not comply with the section 162(m) performance-based requirements.
 
For 2007, Mr. Forsee’s target opportunity remains at the level of his target opportunity under the 2006 LTIC plan, pursuant to the terms of his employment agreement, and he declined to receive the additional 35% in RSUs discussed above. For Messrs. Saleh and Kelly, the only adjustment to their respective 2006 target opportunity was the additional 35% in RSUs discussed above. Mr. West will not participate in the 2007 long-term incentive compensation plan due to consideration that he will receive under an amendment to his employment agreement entered into in February 2007. For additional information regarding this amendment, see “— Potential Payments Upon Termination of Employment or Change of Control.” For 2007, Mr. LeFave’s target opportunity was increased to $2 million, plus the additional 35% in RSUs discussed above, based on the factors used to determine target opportunities discussed above. Messrs. Donahue and Lauer are not participants in the 2007 long-term incentive compensation plan because they no longer are employed with us. Consequently, the target opportunity for each named executive officer participating in the 2007 long-term incentive compensation plan is as follows:
 
  •  Mr. Forsee — $10,000,000;
 
  •  Mr. Saleh — $5,875,000;
 
  •  Mr. Kelly — $3,554,375; and
 
  •  Mr. LeFave — $2,350,000.
 
Other Incentive Programs
 
From time to time the HC&CC authorizes other incentive plans and retention programs as it deems appropriate.
 
Integration Overachievement Plan
 
The HC&CC adopted an Integration Overachievement Plan following the Sprint-Nextel merger to promote achievement of merger integration and results aimed at increasing shareholder value. The two-year plan provides an incentive payment to our named executive officers and other key personnel at specific target amounts based on the achievement of certain objectives.
 
The HC&CC determined the targeted opportunity for each named executive officer based on each officer’s base salary and his role and expected impact in achieving the synergies that we anticipate realizing from the integration of Sprint and Nextel and their respective operations. Our named executive officers have the following Integration Overachievement Plan target opportunities:
 
  •  Mr. Forsee — $2,500,000;
 
  •  Mr. Saleh — $1,000,000;
 
  •  Mr. Kelly — $550,000;
 
  •  Mr. West — $425,000; and
 
  •  Mr. LeFave — $400,000.


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In general, a plan participant will forfeit his or her rights under the plan if he or she is not in active full-time employment with us on December 31, 2007. Because Messrs. Donahue and Lauer are no longer employed with us, they no longer are eligible to participate in the Integration Overachievement Plan and, therefore, are not entitled to any payments under the plan.
 
Actual payouts can range from 0 to 150% of the targeted opportunities based on our actual adjusted OIBDA margin for 2007 compared to the adjusted OIBDA margin objective that the HC&CC determined in February 2007, together with the following additional factors that the HC&CC may consider: our actual 2007 OIBDA; incremental free cash flow in 2006 and 2007 attributable to merger synergies; costs that we have incurred to achieve merger synergies; and the performance of our common stock relative to the Dow Jones U.S. Telecommunications Stock Index. We believe that our adjusted OIBDA margin and these additional factors are indicators of achievement of the expected benefits from merger integration and results aimed at increasing shareholder value.
 
The plan provides that any payouts will be made beginning in 2008 following completion of the 2006-2007 performance period. The plan provides that one-half of any payout will be made in cash and the other half will be in the form of RSU awards, unless the HC&CC decides to make all or a portion of this part of the payout in cash, in which case the second cash payment will be made in the first quarter 2009. Any RSUs awarded under the plan will be awarded in the first quarter 2008 and vest one year from the date of award, which supports our goal to motivate employees to produce positive returns for our shareholders and our retention objectives.
 
The Integration Overachievement Plan does not meet the section 162(m) performance-based requirements.
 
Retention Programs
 
Pre-Merger Sprint Retention Programs
 
In January 2005, the HC&CC adopted a retention program designed to retain our named executive officers and other key personnel through completion of the Sprint-Nextel merger and the spin-off of the local communications business and for the one year period following the merger. The HC&CC did not include Messrs. Forsee or Lauer as program participants because Mr. Forsee already had been designated to be our CEO and Mr. Lauer already had been designated to be our chief operating officer following the Sprint-Nextel merger. The program provided for a payment equal to the participant’s annual base salary plus short-term incentive opportunity target, with fifty percent of the base salary portion paid upon completion of the Sprint-Nextel merger and the balance paid following the one year anniversary of the merger. In August 2006, following the one-year anniversary of the Sprint-Nextel merger, Mr. Kelly received his second installment under the retention program. This payment is included under the “Bonus” column in the Summary Compensation Table.
 
In March 2005, in lieu of participation in the retention program, and to further motivate Messrs. Forsee and Lauer to achieve critical operating and financial objectives and align their interests with those of our shareholders, the HC&CC granted performance-adjusted RSUs and premium-priced stock options to Messrs. Forsee and Lauer. The RSUs were subject to adjustment based on the same performance objective under our 2005 long-term incentive compensation plan. Actual performance for the year up to the date of the Sprint-Nextel merger exceeded the performance objective resulting in awards of additional RSUs in proportion to the number of RSUs initially awarded. These additional awards are subject to the terms and conditions of the RSUs initially awarded in 2005, and, like those initial awards, vest on March 15, 2008. These RSU awards do not comply with the section 162(m) performance-based requirements.
 
Pre-Merger Nextel Retention Programs
 
In 1999, Nextel’s board of directors approved a change in control retention bonus and severance pay plan to retain its named executive officers and other key personnel following a transaction that resulted in a change in control of Nextel. The Sprint-Nextel merger was a change in control under the plan and triggered certain rights for plan participants. Under the plan, each named executive officer employed with Nextel prior to the


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merger was entitled to receive 150% of his annual base salary and target incentive as a retention bonus, with one-half of the retention bonus paid at the time the Sprint-Nextel merger was completed and the remaining half paid following the first anniversary of the merger. In August 2006, following the one-year anniversary of the Sprint-Nextel merger, Messrs. Saleh, West, LeFave and Donahue each received their second installment under the retention program. These payments are included under the “Bonus” column in the Summary Compensation Table.
 
Equity-Based Retention Awards
 
The HC&CC periodically evaluates whether we are at risk of losing the services of any of our executive officers and other key personnel who we believe are critical to the success of our business. To ensure that we retain the employment of our executive officers and other key personnel who we believe may be at particular risk of voluntarily terminating employment with us, the HC&CC from time to time awards RSUs to further our retention objectives and promote a commonality of interests with shareholders. In determining to whom to make such an award, and the number of RSUs to be awarded, the HC&CC considers the current stock and equity-based award holdings of each executive officer under consideration. RSU awards made for retention purposes generally do not comply with the section 162(m) performance-based requirements.
 
During 2006, the HC&CC awarded Mr. LeFave 147,943 RSUs that vest on July 24, 2008, and awarded Mr. Kelly 134,409 RSUs that vest on December 11, 2009. The three-year vesting period for Mr. Kelly’s retention award, as compared to the two-year vesting period for Mr. LeFave’s retention award, reflects the HC&CC’s evolving practice for establishing an appropriate time period over which equity-based retention awards should vest. These awards are included in the Grants of Plan-Based Award table.
 
Employee Benefit Plans and Programs
 
Our compensation program includes a comprehensive array of health and welfare benefits. Our named executive officers participate in the same benefit programs, plans and arrangements that are provided to all of our eligible employees. We pay all of the costs for some of these benefit plans, and participants contribute a portion of the cost for other benefit plans.
 
Retirement Programs
 
Our retirement program includes a 401(k) plan and traditional and supplemental pension plans. Under the Sprint Nextel 401(k) Plan, we match 100% of each participant’s contributions up to 5% of his or her eligible compensation.
 
Those of our named executive officers who were employed with us prior to the Sprint-Nextel merger are entitled to receive retirement benefits under our traditional defined benefit pension plan and our supplemental executive retirement plan, or SERP. Following the Sprint-Nextel merger, we froze benefits under the pension plan and SERP. Plan participants who meet vesting requirements maintain their accrued benefit as of December 31, 2005 under the pension plan and SERP, but do not accrue additional benefits under either plan.
 
Under the terms of Mr. Forsee’s employment agreement, he is eligible to receive an annual retirement benefit equal to five percent of his covered compensation (generally, annual base salary plus actual annual incentive pay earned) for each calendar year of service beginning with 2003, up to a maximum of 65% of his covered compensation. This benefit will be offset by pension benefits payable to him by any former employer and by us under our traditional defined benefit pension plan and the SERP. Any retirement benefits earned pursuant to Mr. Forsee’s employment agreement will be payable, without reduction, on the later of January 1, 2008 or the date that his employment is terminated.
 
Personal Benefits and Perquisites
 
We provide certain of our named executive officers with personal benefits and perquisites, as described in the footnotes to the Summary Compensation Table. We believe that these personal benefits and perquisites are


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a necessary component of a competitive compensation program, and appropriate relative to the benefits and perquisites provided to executives by our peer group of companies.
 
Deferred Compensation
 
Our named executive officers are entitled to participate in the Sprint Nextel Deferred Compensation Plan, a nonqualified and unfunded plan under which they may defer to future years the receipt of certain compensation that would otherwise be paid to them in the year in which it was earned. Under the plan, we match contributions made by participants in an amount up to 5% of eligible earnings above the applicable annual limit, which for 2006 was $220,000, to compensate highly-compensated employees for limitations placed on our 401(k) plan by federal tax law. Participants elect to allocate deferred and matching contributions among one or more hypothetical investment options, which include one option that tracks our common stock and other options that track broad bond and equity indices. Although Mr. Forsee is eligible to participate in the plan, he is not eligible to participate in the plan’s matching feature due to the retirement benefits that he is eligible to receive under his employment agreement. Messrs. Forsee, Saleh, LeFave, Kelly and Lauer participated in this plan during 2006. Prior to the Sprint-Nextel merger, Mr. Donahue participated in the Nextel Communications, Inc. Cash Compensation Deferral Plan.
 
Prior to the Sprint-Nextel merger, our executive officers were eligible to participate in our Executive Deferred Compensation Plan, or EDCP. Contributions no longer may be made to the EDCP, but it provides for two hypothetical investment options — one that is interest bearing and one that tracks the performance of our common stock — to which prior contributions credited to bookkeeping accounts may be allocated. The interest bearing account accrues interest at a per annum rate equal to the greater of Citibank’s prime rate in effect at the beginning of each month or 6%. Earnings on EDCP interest bearing accounts are considered above-market under applicable securities laws if they exceed a specified federal long-term rate.
 
The amount of matching contributions made by us to participating named executive officers and any above market earnings are included in the “All Other Compensation” column of the Summary Compensation Table.
 
Executive Severance Policy
 
In 2003, our board of directors adopted an executive severance policy. Under the policy, the board will seek shareholder approval for any future severance agreement or arrangement with a senior executive that provides (a) in excess of two times the senior executive’s base salary plus bonus and (b) the value of other benefits in excess of those that would be paid or afforded to the senior executive over a 24 month period following the executive’s termination. Other benefits include the continued and accelerated vesting of RSUs, stock options and any other equity-based awards, extension of the exercise period for stock options, accrual of retirement service, group health and life insurance benefits, and all other benefits offered to senior executives generally under our broad based severance program. The policy also requires that we seek shareholder approval of any future severance agreement or arrangement that provides for the reimbursement of excise taxes imposed under IRC section 4999 to a senior level executive. Under the terms of Mr. Forsee’s employment agreement, entered into prior to the adoption of this policy, he is entitled to reimbursement of excise taxes related to severance payments made in connection with a change in control of us.
 
For additional information regarding severance benefits to which our named executive officers are entitled, see “— Potential Payments Upon Termination of Employment or Change of Control.”
 
Change in Control
 
The Sprint Nextel Change in Control Severance Plan, which became effective January 1, 2007, provides severance benefits to a select group of senior management, including Messrs. Saleh, Kelly, West and LeFave, in the event of a qualified termination of employment in connection with a transaction that results in a change in control of us. The plan is designed to increase the willingness of participants to remain with us notwithstanding the employment uncertainties related to a possible change in control of us. Mr. Forsee was not named as a participant in the plan because the HC&CC believes that his employment agreement provides appropriate benefits in the event of a transaction that results in a change in control of us.


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For additional information regarding benefits upon a change in control of us to which our named executive officers are entitled, see “— Potential Payments Upon Termination of Employment or Change of Control.”
 
Clawback Policy
 
In December 2006, our board adopted a “clawback” policy. The policy provides that, in addition to any other remedies available to us under applicable law, we may recover (in whole or in part) any bonus, incentive payment, commission, equity-based award or other compensation received by certain executives, including our named executive officers, if the board or any committee of the board determines that such bonus, incentive payment, commission, equity-based award or other compensation is or was based on any financial results or operating metrics that were impacted by the officer’s knowing or intentional fraudulent or illegal conduct, and our board or a committee of the board determines that recovery is appropriate. We intend to incorporate this policy into our short and long-term incentive plans, and awards granted under those plans, beginning in 2007.
 
Stock Ownership Guidelines
 
In August 2005, we adopted stock ownership guidelines for our executive officers, other members of our senior management team and our outside directors. The board believes ownership by executives of a meaningful financial stake in our company serves to align executives’ interests with those of our shareholders. Our guidelines require that Mr. Forsee hold shares of our common stock with a value equal to five times his base salary, and that the other named executive officers currently employed by us hold shares of our common stock with a value equal to three times their respective base salaries. Eligible shares and share equivalents counted toward ownership include:
 
  •  common or preferred stock;
 
  •  restricted stock and RSUs;
 
  •  intrinsic value of vested, in-the-money stock options; and
 
  •  share units held in various deferred compensation plans.
 
Persons subject to the stock ownership guidelines have five years to achieve the ownership requirement beginning on the later of January 1, 2006 and the date on which the person becomes subject to the ownership guidelines. As of December 31, 2006, each of our named executive officers had attained his respective ownership goal.


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Summary Compensation Table
 
The table below summarizes the compensation of our named executive officers that is attributable to 2006. The named executive officers are our chairman, chief executive officer and president; our chief financial officer; and three other most highly compensated executive officers ranked by their total compensation in the table below (reduced by the amount in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column). In addition, two additional executive officers whose employment ended in 2006 are included because their compensation exceeds that of other named executive officers.
 
Each of our named executive officers has an employment agreement with us. With respect to Messrs. Saleh, West, LeFave and Donahue, who were employed by Nextel prior to the Sprint-Nextel merger, we assumed the obligations under their respective employment agreements in connection with the merger.
 
For more information regarding our compensation philosophy and a discussion of the elements of our compensation program, see “— Compensation Discussion and Analysis.”
 
                                                                         
                                        Change in
             
                                        Pension
             
                                        Value and
             
                                        Nonqualified
             
                                  Non-Equity
    Deferred
             
                      Stock
    Option
    Incentive Plan
    Compensation
    All other
       
          Salary
    Bonus
    Awards
    Awards
    Compensation
    Earnings
    Compensation
    Total
 
Name and Principal Position
  Year     ($)(1)     ($)(2)     ($)(3)     ($)(3)     ($)(4)     ($)     ($)(6)     ($)  
 
Gary D. Forsee
    2006       1,436,783             10,070,270       8,374,256             1,165,216 (5)     254,910       21,301,435  
Chairman, Chief Executive Officer and President
                                                                       
Paul N. Saleh
    2006       750,000       900,000       1,122,067       3,378,557       157,500             88,237       6,396,361  
Chief Financial Officer
                                                                       
Timothy E. Kelly
    2006       547,893       667,001       1,337,855       1,116,442       97,020             38,117       3,804,328  
President — Customer Management
                                                                       
Barry J. West
    2006       425,000       480,000       372,765       2,195,766       71,400             28,991       3,573,922  
Chief Technology Officer
                                                                       
Richard T. C. LeFave
    2006       400,000       421,875       573,564       1,690,030       67,200             42,246       3,194,915  
Chief Information Officer
                                                                       
Former Executive Officers:
                                                                       
Timothy M. Donahue
    2006       1,400,000       2,250,000       5,073,655       17,228,343       2,380,000             7,876,671       36,208,669  
Former Chairman
                                                                       
Len J. Lauer
    2006       665,093             6,696,856       6,034,420       212,154             3,042,508       16,651,031  
Former Chief Operating Officer
                                                                       
 
 
(1) Includes any portions of base salary earned in 2006 that the named executive officer elected to have deferred under our deferred compensation plan. See the Nonqualified Deferred Compensation table on page 49 for information regarding contributions to our deferred compensation plan.
 
(2) Represents payments to Messrs. Saleh, Kelly, West, LeFave and Donahue under applicable retention plans in connection with the Sprint-Nextel merger. See “— Compensation Discussion A and Analysis — Elements of Compensation — Other Incentive Programs — Retention Programs” for information regarding these retention programs. Payments under our annual short-term incentive plan are reflected as Non-Equity Incentive Plan Compensation.
 
(3) Represents the compensation costs of RSU, deferred share and stock option awards for financial reporting purposes for 2006, determined under FAS 123R, rather than an amount paid to or realized by the named executive officer, which is consistent with the approach by which we determine share-based compensation expense in our consolidated financial statements. Under FAS 123R, the fair market value of a stock award is determined as of the date of grant, and that amount is amortized over all periods during which the named executive officer is required to provide service to us in exchange for the award — that is, the vesting period. Because our equity-based awards are subject to vesting over a number of years, compensation cost for equity-based awards includes costs related to awards granted in previous years —


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that is, costs related to grants made in 2003, 2004 and 2005 by us and Nextel prior to the Sprint-Nextel merger, as well as awards granted in 2006. See the Grants of Plan-Based Awards table on page 37 for the grant date fair value of stock and option awards granted in 2006. For a discussion of the assumptions used in determining the compensation costs associated with stock and option awards, see note 4 of the Notes to Consolidated Financial Statements in our annual report on Form 10-K for the year ended December 31, 2006.
 
(4) Represents amounts paid under our 2006 STIC plan during 2007 in respect of service performed in 2006. Each named executive officer, other than Messrs. Forsee and Donahue, received a payout under the STIC plan equal to 16.8% of his targeted opportunity, based on our actual performance in 2006 compared to the financial and operating objectives under the plan. Mr. Forsee elected not to receive a STIC plan payout for 2006. Pursuant to Mr. Donahue’s employment agreement, he was entitled to receive payment with respect to our 2006 STIC plan in an amount equal to his target opportunity. For more information regarding our 2006 STIC plan, see “— Compensation Discussion and Analysis — Elements of Compensation — Annual Short-term Incentive Compensation Plan.”
 
(5) Represents an estimate of the increase for 2006 in the actuarial present value of Mr. Forsee’s accrued benefit under retirement plans in which Mr. Forsee participates of $1,114,616 and above market nonqualified deferred compensation earnings for 2006 of $50,600. The change in pension value also reflects the increase in the assumed discount rate from 5.75% at December 31, 2005 to 6.2% at December 31, 2006. See the Pension Benefits table on page 47 for a discussion of pension-related assumptions.
 
(6) Consists of: (a) amounts contributed by us under our 401(k) and deferred compensation plans, (b) amounts paid in reimbursement of relocation expenses and relocation-related allowances, (c) severance benefits in connection with the termination of the employment of Messrs. Donahue and Lauer, (d) perquisites and other personal benefits required to be disclosed, and (e) tax gross-up payments made in connection with the foregoing and other benefits, as follows:
 
                                         
    Company
                         
    Contributions to
                         
    401(k) and
                         
    Deferred
    Relocation
          Perquisites and
       
    Compensation
    -Related
    Severance
    Other Personal
    Tax Gross-Up
 
    Plans     Expenses     Benefits(a)     Benefits(b)     Payments  
 
Mr. Forsee
    11,000                   241,694       2,216  
Mr. Saleh
    66,635                   21,602        
Mr. Kelly
    33,146                         4,971  
Mr. West
    1,635       27,356                    
Mr. LeFave
    31,385       10,085                   776  
Mr. Donahue
    11,000             7,620,223       245,448        
Mr. Lauer
    11,000             3,002,336       26,810       2,362  
 
(a) Represents severance benefits that we accrued in 2006 related to Mr. Donahue retirement and the termination of Mr. Lauer’s employment described in “— Potential Payments Upon Termination of Employment or Change of Control.” The severance benefits column does not include the intrinsic value of $979,566 for Mr. Donahue and $10,287,324 for Mr. Lauer of options and RSUs vesting in connection with their terminations as reflected in the Potential Payments Upon Termination of Employment or Change of Control tables because the compensation cost of these awards is included in the stock awards and option awards columns of the Summary Compensation Table.
 
(b) Prior to the completion of the Sprint-Nextel merger, we offered several of our named executive officers certain personal benefits and perquisites, including allowances for automobiles, country club dues and financial and tax services. The purpose of providing these perquisites and benefits was to provide a competitive compensation program relative to our peer group of companies. Following the Sprint-Nextel merger, the HC&CC determined that these types of perquisites and other personal benefits no longer were necessary from a competitive standpoint, and it eliminated them in early 2006 in order to increase the focus of our program on performance-based compensation.


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The HC&CC of our board established an overall security program for Messrs. Forsee and Donahue for our benefit. Under the security program, in 2006, we provided Messrs. Forsee and Donahue with residential security systems and equipment, and they are required to use our aircraft for non-business as well as business travel. Messrs. Forsee and Donahue each are permitted to have their spouses accompany them on the corporate aircraft for business and non-business travel. Mr. Donahue’s rights under this program terminated effective as of his last day of employment with us.
 
The perquisites and other personal benefits received by Mr. Forsee in 2006 consist of: non-business use of our corporate aircraft by Mr. Forsee, which had an incremental cost to us of $192,530; costs for security equipment and services for Mr. Forsee’s residences, which had an incremental cost to us of $39,801; and other perquisites and personal benefits, which include allowances for automobiles, country club dues and financial and tax services (which were terminated in 2006), communications equipment and services, insurance, gifts related to his service on our board and other miscellaneous gifts and awards.
 
The perquisites and other personal benefits received by Mr. Saleh in 2006 consist of non-business use of our corporate aircraft by Mr. Saleh, communications equipment installed in his residence and other miscellaneous gifts.
 
The perquisites and other personal benefits received by Mr. Donahue in 2006 consist of: non-business use of our corporate aircraft by Mr. Donahue, which had an incremental cost to us of $241,303, costs for security services for Mr. Donahue’s residences, and gifts related to his service on our board.
 
The perquisites and other personal benefits received by Mr. Lauer in 2006 consist of non-business use of our corporate aircraft by Mr. Lauer, allowances for financial and tax services, communications services and other miscellaneous gifts and awards.
 
Family members of Messrs. Forsee, Saleh, Donahue and Lauer occasionally have accompanied them on our corporate aircraft, at no or de minimus incremental cost to us.
 
Grants of Plan-Based Awards
 
The table below summarizes awards under our short and long-term incentive plans, and other stock and option awards, to our named executive officers in 2006. These awards consisted of the following:
 
  •  Awards made pursuant to our STIC plan, our annual cash incentive compensation plan;
 
  •  Awards under our Integration Overachievement Plan, a two-year plan that includes both cash and equity-based awards;
 
  •  Stock option and performance-based RSU awards granted pursuant to our LTIC plan, our long-term, equity-based incentive plan; and
 
  •  A “reload” stock option granted to Mr. Forsee and retention RSU awards granted to Messrs. Kelly and LeFave.
 


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                                              All Other
    All Other
             
                                              Stock
    Option
             
                                              Awards:
    Awards:
    Exercise
    Grant Date
 
                                              Number of
    Number of
    or Base
    Fair
 
          Estimated Future Payouts Under
                      Shares of
    Securities
    Price of
    Value of
 
          Non-Equity Incentive Plan Awards     Estimated Future Payouts Under Equity Incentive Plan Awards     Stock
    Underlying
    Option
    Stock and
 
          Threshold
    Target
    Maximum
    Threshold
    Target
    Maximum
    or Units
    Options
    Awards
    Option
 
Name
  Grant Date     ($)     ($)     ($)     (#)     ($)     (#)     (#)     (#)     ($/Sh)     Awards  
 
Gary D. Forsee
    02/06/2006                                                       252,552 (3)                     6,085,857  
                                                                                         
      02/07/2006       123,250 (1)     2,465,000 (1)     4,930,000 (1)                                     698,670 (4)     20.72 (4)     4,869,730  
                                                                                         
      02/21/2006       0 (2)     1,250,000 (2)     1,875,000 (2)     0 (2)     1,250,000 (2)     1,875,000 (2)                                
                                                                                         
      03/28/2006                                                               157,767 (6)     23.55 (6)     1,176,942  
                                                                                         
      05/16/2006                               11,600 (5)     232,019 (5)     464,038 (5)                             5,728,549 (7)
                                                                                         
Paul N. Saleh
    02/07/2006       46,875 (1)     937,500 (1)     1,875,000 (1)                                     349,335 (4)     20.72 (4)     2,434,865  
                                                                                         
      02/21/2006       0 (2)     500,000 (2)     750,000 (2)     0 (2)     500,000 (2)     750,000 (2)                                
                                                                                         
      05/16/2006                               5,800 (5)     116,009 (5)     232,018 (5)                             2,864,262 (7)
                                                                                         
Timothy E. Kelly
    02/06/2006                                                       44,572 (8)                     1,083,768  
                                                                                         
      02/07/2006       28,875 (1)     577,500 (1)     1,155,000 (1)                                     211,348 (4)     20.72 (4)     1,473,096  
                                                                                         
      02/21/2006       0 (2)     275,000 (2)     412,500 (2)     0 (2)     275,000 (2)     412,500 (2)                                
                                                                                         
      05/16/2006                               3,509 (5)     70,186 (5)     140,372 (5)                             1,732,892 (7)
                                                                                         
      12/11/2006                                                       134,409 (9)                     2,604,846  
                                                                                         
Barry J. West
    02/07/2006       21,250 (1)     425,000 (1)     850,000 (1)                                     111,787 (4)     20.72 (4)     779,155  
                                                                                         
      02/21/2006       0 (2)     212,500 (2)     318,750 (2)     0 (2)     212,500 (2)     318,750 (2)                                
                                                                                         
      05/16/2006                               1,856 (5)     37,123 (5)     74,246 (5)                             916,567 (7)
                                                                                         
Richard T. C. LeFave
    02/07/2006       20,000 (1)     400,000 (1)     800,000 (1)                                     122,966 (4)     20.72 (4)     857,073  
                                                                                         
      02/21/2006       0 (2)     200,000 (2)     300,000 (2)     0 (2)     200,000 (2)     300,000 (2)                                
                                                                                         
      05/16/2006                               2,041 (5)     40,835 (5)     81,670 (5)                             1,008,216 (7)
                                                                                         
      07/24/2006                                                       147,943 (10)                     2,890,806  
                                                                                         
Timothy M. Donahue
    02/07/2006       119,000 (1)     2,380,000 (1)     4,760,000 (1)                                     698,670 (4)     20.72 (4)     4,869,730  
                                                                                         
      02/21/2006       0 (2)     1,250,000 (2)     1,875,000 (2)     0 (2)     1,250,000 (2)     1,875,000 (2)                                
                                                                                         
      05/16/2006                               11,600 (5)     232,019 (5)     464,038 (2)                             5,728,549 (7)
                                                                                         
Len J. Lauer
    02/06/2006                                                       137,687 (11)                     3,329,249  
                                                                                         
      02/07/2006       63,141 (1)     1,262,820 (1)     2,525,640 (1)                                     537,976 (4)     20.72 (4)     3,749,693  
                                                                                         
      02/21/2006       0 (2)     750,000 (1)     1,125,000 (2)     0 (2)     750,000 (2)     1,125,000 (2)                                
                                                                                         
      05/16/2006                               8,932 (5)     178,654 (5)     357,308 (2)                             4,410,967 (7)
 
 
(1) Represents the threshold, target and maximum payouts under our 2006 STIC plan. Payouts under the 2006 STIC plan, which were based on our 2006 actual performance compared to the financial and operating objectives of the plan, were made at 16.8% of each named executive officer’s target opportunity, and are reflected in the Summary Compensation Table in the column entitled “Non-Equity Incentive Plan Compensation.” Mr. Forsee elected not to receive a STIC plan payout for 2006. Pursuant to Mr. Donahue’s employment agreement, he was entitled to receive payment with respect to our 2006 STIC plan in an amount equal to his target opportunity. Each performance objective under the plan had a threshold achievement level, below which there would be no payout, a target achievement level, at which the target opportunity would be paid, and a maximum achievement level, at which 200% of the target would be paid, except with respect to the adjusted OIBDA performance objective, which was uncapped, except for Messrs. Forsee and Donahue, whose maximum payout was capped at 200%. The plan also provided for an individual performance factor that could adjust the final payout between 0 and 120% of the calculated payout based on performance versus the three objectives. For purposes of this table, the minimum estimated possible payout assumes that the threshold achievement level was satisfied only for the post-paid wireless churn objective, which had the lowest weighting of all of the objectives under the plan. For purposes of this table, the maximum estimated possible payout assumes a 200% payout for the adjusted OIBDA performance objective and no adjustment for individual performance. For more information on the 2006 STIC plan, see “— Compensation Discussion and Analysis — Elements of Compensation — Annual Short-term Incentive Compensation Plan.”
 
(2) Represents the threshold, target and maximum payouts under our Integration Overachievement Plan. Actual payouts will range from 0 to 150% of the targeted opportunities based on a 2007 adjusted OIDBA margin performance objective and additional factors that the HC&CC may consider. The plan provides that one-half of any payout will be made in cash and the other half will be in the form of RSU awards,

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but the HC&CC has the authority to make all or a portion of this part of any payout in cash. The table reflects that one-half of any payout will be made in cash and the other half will be in the form of RSU awards. The RSU award amounts under the “Estimated Possible Payouts Under Equity Incentive Plan Awards” column have been denominated in dollars, and, therefore, the grant date fair value under FAS 123R cannot be computed at this time. Because Messrs. Donahue and Lauer are no longer employed with us, they no longer are eligible to participate in the Integration Overachievement Plan and, therefore, are not entitled to any payments under the plan. For more information on the Integration Overachievement Plan, see “— Compensation Discussion and Analysis — Elements of Compensation — Other Incentive Programs — Integration Overachievement Plan.”
 
(3) Represents two RSU awards: 205,389 RSUs were granted as a performance adjustment in connection with our 2005 long-term incentive compensation plan and vest on February 8, 2008, and 47,163 RSUs were granted as a performance adjustment in connection with a retention award granted in 2005 and vest on March 15, 2008. In connection with our spin-off of Embarq, Mr. Forsee received one Embarq RSU with an identical vesting schedule for every twenty of these RSUs.
 
(4) Represents stock option awards granted under our 2006 LTIC plan. In connection with our spin-off of Embarq, each option was adjusted by multiplying the number of shares subject to the option by 1.0955 and dividing the exercise price by the same number. Pursuant to the terms of Mr. Donahue’s Employment Agreement, the stock options granted to him vested as of his retirement date, December 29, 2006. Pursuant to Mr. Lauer’s employment agreement, 360,444 of the stock options granted to him will vest during his severance period and he will forfeit the remaining 177,532 stock options. For more information on the 2006 LTIC plan, see “— Compensation Discussion and Analysis — Elements of Compensation — Long-term Incentive Compensation Plan.”
 
(5) Represents the threshold, target and maximum estimated possible payouts of performance-based RSU awards granted under our 2006 LTIC plan, which are denominated in shares of our common stock. The threshold and maximum figures were determined in the same manner as with respect to our 2006 STIC plan. See footnote 1 above. We granted the target opportunity level of RSU awards to each named executive officer on May 16, 2006. The number of RSUs retained under the LTIC plan, which were based on our 2006 actual performance compared to the financial and operating objectives of the plan, were 16.8% of each named executive officer’s target opportunity. Consequently, on February 26, 2007, each named executive officer forfeited all but 16.8% of RSU awards originally granted on May 16, 2006. The number of RSUs held by each named executive officer awarded under our 2006 LTIC plan, net of awards forfeited, are included in the Outstanding Equity Awards at Fiscal Year-End table on page 40 in the column entitled “Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested.” Pursuant to the terms of Mr. Donahue’s Employment Agreement, RSUs granted to him, net of RSUs subsequently forfeited on February 26, 2007, vested as of his retirement date, December 29, 2006. Pursuant to Mr. Lauer’s employment agreement, he will not vest in any of these RSU awards and, therefore, will forfeit all of them. For more information on the 2006 LTIC plan, see “— Compensation Discussion and Analysis — Elements of Compensation — Long-term Incentive Compensation Plan.”
 
(6) Pursuant to the terms of a stock option that Mr. Forsee exercised on March 28, 2006, because he paid for the exercise price and satisfied the tax withholding obligations with other shares of our common stock that he held, he was entitled to receive a stock option for an equal number of shares, with an exercise price equal to the market price on March 28, 2006, which options vest on the first anniversary of the grant date. In connection with our spin-off of Embarq, this option was adjusted by multiplying the number of shares subject to the option by 1.0955 and dividing the exercise price by the same number.
 
(7) The grant date fair value is based on the number of RSU awards initially granted on May 16, 2006 under our 2006 LTIC plan, before the forfeiture of RSU awards described in footnote 5 above.
 
(8) Represents a RSU award that was granted as a performance adjustment in connection with our 2005 long-term incentive compensation plan and will vest on February 8, 2008. In connection with our spin-off of Embarq, Mr. Kelly received one Embarq RSU with an identical vesting schedule for every twenty of these RSUs.


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(9) Represents a RSU award that was granted for retention purposes and will vest on December 11, 2009.
 
(10) Represents a RSU award that was granted for retention purposes and will vest on July 24, 2008.
 
(11) Represents two RSU awards, one of which was granted as a performance adjustment in connection with our 2005 long-term incentive compensation plan and vests on February 8, 2008, and the other of which was granted as a performance adjustment in connection with a retention award granted in 2005 and vests on March 15, 2008. Pursuant to Mr. Lauer’s employment agreement, 121,712 RSUs will vest during his severance period and he will forfeit the remaining 15,975 RSUs. In connection with our spin-off of Embarq, Mr. Lauer received one Embarq RSU with an identical vesting schedule for every twenty of these RSUs.
 
Outstanding Equity Awards at Fiscal Year-End
 
The table below summarizes option and stock awards outstanding as of December 31, 2006 held by each of our named executive officers. The table reflects the following actions taken in connection with the May 17, 2006 spin-off of Embarq:
 
  •  Each outstanding stock option held by a named executive officer was adjusted by multiplying the number of shares subject to the option by 1.0955 and dividing the exercise price by the same number.
 
  •  Each named executive officer who held a RSU award entitled to receive dividend equivalent payments, which includes substantially all RSU awards that were outstanding at the time of the spin-off, received one Embarq RSU award for every twenty Sprint Nextel RSU awards held. The vesting schedule for each Embarq RSU award is identical to the vesting schedule of the related Sprint Nextel RSU award.
 
  •  Each outstanding deferred share award granted under the Nextel Incentive Equity Plan was adjusted by multiplying the number of deferred shares by 1.0955, and cash was paid to the named executive officer in lieu of any fractional share.
 
                                                                                         
    Option Awards     Sprint Nextel Stock Awards     Embarq Stock Awards  
                                                    Equity
             
                                              Equity
    Incentive
             
                                              Incentive
    Plan Awards:
             
                Equity
                            Plan
    Market or
             
                Incentive
                            Awards:
    Payout«cf
             
                Plan
                            Number
    Value of
             
                Awards:
                      Market
    of Unearned
    Unearned
          Market
 
                Number
                Number of
    Value of
    Shares,
    Shares,
    Number of
    Value of
 
    Number of
    Number of
    of Securities
                Shares
    Shares or
    Units or
    Units or
    Shares
    Shares or
 
    Securities
    Securities
    Underlying
                or Units
    Units of
    Other
    Other Rights
    or Units
    Units of
 
    Underlying
    Underlying
    Unexercised
    Option
          of Stock
    Stock
    Rights
    That
    of Stock
    Stock That
 
    Unexercised
    Unexercised
    Unearned
    Exercise
    Option
    That Have
    That Have
    That Have
    Have Not
    That Have
    Have Not
 
    Options (#)
    Options (#)
    Options
    Price
    Expiration
    Not Vested
    Not Vested
    Not Vested
    Vested
    Not Vested
    Vested
 
Name
  Exercisable     Unexercisable     (#)     ($)     Date     (#)     ($)(1)     (#)     ($)(1)     (#)     ($)(2)  
 
Gary D. Forsee
            698,670 (3)             20.72       02/07/2016       1,751,355 (10)     33,083,096       38,979 (11)     736,313       88,160 (12)     4,633,690  
      45,190 (4)     135,570 (4)             23.25       03/15/2015                                                  
      197,196 (5)     591,575 (5)             24.42       02/08/2015                                                  
      284,616 (6)     284,614 (6)             16.38       02/10/2014                                                  
      142,309 (6)     142,306 (6)             16.64       02/10/2014                                                  
              114,343 (7)             7.74       03/19/2013                                                  
      103,720 (7)     228,687 (7)             10.84       03/19/2013                                                  
              327,121 (8)             7.74       03/19/2013                                                  
              654,242 (8)             10.84       03/19/2013                                                  
              157,767 (9)             23.55       03/19/2013                                                  


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Table of Contents

                                                                                         
    Option Awards     Sprint Nextel Stock Awards     Embarq Stock Awards  
                                                    Equity
             
                                              Equity
    Incentive
             
                                              Incentive
    Plan Awards:
             
                Equity
                            Plan
    Market or
             
                Incentive
                            Awards:
    Payout«cf
             
                Plan
                            Number
    Value of
             
                Awards:
                      Market
    of Unearned
    Unearned
          Market
 
                Number
                Number of
    Value of
    Shares,
    Shares,
    Number of
    Value of
 
    Number of
    Number of
    of Securities
                Shares
    Shares or
    Units or
    Units or
    Shares
    Shares or
 
    Securities
    Securities
    Underlying
                or Units
    Units of
    Other
    Other Rights
    or Units
    Units of
 
    Underlying
    Underlying
    Unexercised
    Option
          of Stock
    Stock
    Rights
    That
    of Stock
    Stock That
 
    Unexercised
    Unexercised
    Unearned
    Exercise
    Option
    That Have
    That Have
    That Have
    Have Not
    That Have
    Have Not
 
    Options (#)
    Options (#)
    Options
    Price
    Expiration
    Not Vested
    Not Vested
    Not Vested
    Vested
    Not Vested
    Vested
 
Name
  Exercisable     Unexercisable     (#)     ($)     Date     (#)     ($)(1)     (#)     ($)(1)     (#)     ($)(2)  
 
Paul N. Saleh
            349,335 (3)             20.72       02/07/2016       106,812 (22)     2,017,679       19,490 (11)     368,166                  
      65,273 (13)     77,144 (13)             20.65       02/24/2015                                                  
      11,125 (14)     10,237 (14)             19.99       12/01/2014                                                  
      12,460 (15)     8,902 (15)             16.29       08/31/2014                                                  
      13,796 (16)     7,566 (16)             16.24       05/28/2014                                                  
      176,534 (17)     72,695 (17)             19.20       02/11/2014                                                  
      16,466 (18)     4,896 (18)             17.79       11/28/2013                                                  
      17,801 (19)     3,561 (19)             13.58       08/29/2013                                                  
      19,136 (20)     2,226 (20)             10.53       05/30/2013                                                  
      81,888 (21)     3,562 (21)             8.65       02/13/2013                                                  
      356,042                       3.77       04/23/2012                                                  
      142,417                       3.53       02/13/2012                                                  
      21,362                       7.53       11/30/2011                                                  
      712,085                       7.15       09/05/2011                                                  
Timothy E. Kelly
            211,348 (3)             20.72       02/07/2016       289,418 (24)     5,467,106       11,791 (11)     222,732       7,749 (25)     407,287  
      42,563 (5)     127,677 (5)             24.42       02/08/2015                                                  
      26,513 (6)     26,509 (6)             16.38       02/10/2014                                                  
      13,257 (6)     13,254 (6)             16.64       02/10/2014                                                  
      12,051 (23)     12,049 (23)             7.90       03/27/2013                                                  
      72,304 (23)     24,101 (23)             10.76       03/27/2013                                                  
      71,407                       11.84       02/19/2012                                                  
      35,704                       16.25       02/19/2012                                                  
      21,171                       13.18       02/11/2012                                                  
      8,110                       22.64       02/11/2012                                                  
      25,611                       20.02       05/11/2011                                                  
      8,537                       44.89       05/11/2011                                                  
      57,514                       24.22       01/10/2011                                                  
      16,980                       48.73       01/10/2011                                                  
Barry J. West
            111,787 (3)             20.72       02/07/2016       35,604 (22)     672,560       6,237 (11)     117,817                  
      52,218 (13)     61,715 (13)             20.65       02/24/2015                                                  
      11,125 (14)     10,237 (14)             19.99       12/01/2014                                                  
      12,460 (15)     8,902 (15)             16.29       08/31/2014                                                  
      13,796 (16)     7,566 (16)             16.24       05/28/2014                                                  
      95,833 (17)     39,463 (17)             19.20       02/11/2014                                                  
      16,466 (18)     4,896 (18)             17.79       11/28/2013                                                  
      17,801 (19)     3,561 (19)             13.58       08/29/2013                                                  
      19,136 (20)     2,226 (20)             10.53       05/30/2013                                                  
      81,888 (21)     3,562 (21)             8.65       02/13/2013                                                  
      32,048                       3.77       04/23/2012                                                  
      11,366                       3.53       02/13/2012                                                  
      21,362                       7.53       11/30/2011                                                  
      298                       6.08       09/28/2011                                                  
      14,241                       12.19       07/27/2011                                                  
      4,557                       11.98       07/02/2011                                                  
      121,054                       15.67       02/20/2011                                                  
      1,703                       16.24       01/02/2011                                                  
      1,954                       42.97       06/30/2010                                                  
      199,383                       43.49       02/17/2010                                                  
      128,175                       10.73       02/18/2009                                                  
      71,209                       9.33       02/11/2008                                                  

41


Table of Contents

                                                                                         
    Option Awards     Sprint Nextel Stock Awards     Embarq Stock Awards  
                                                    Equity
             
                                              Equity
    Incentive
             
                                              Incentive
    Plan Awards:
             
                Equity
                            Plan
    Market or
             
                Incentive
                            Awards:
    Payout«cf
             
                Plan
                            Number
    Value of
             
                Awards:
                      Market
    of Unearned
    Unearned
          Market
 
                Number
                Number of
    Value of
    Shares,
    Shares,
    Number of
    Value of
 
    Number of
    Number of
    of Securities
                Shares
    Shares or
    Units or
    Units or
    Shares
    Shares or
 
    Securities
    Securities
    Underlying
                or Units
    Units of
    Other
    Other Rights
    or Units
    Units of
 
    Underlying
    Underlying
    Unexercised
    Option
          of Stock
    Stock
    Rights
    That
    of Stock
    Stock That
 
    Unexercised
    Unexercised
    Unearned
    Exercise
    Option
    That Have
    That Have
    That Have
    Have Not
    That Have
    Have Not
 
    Options (#)
    Options (#)
    Options
    Price
    Expiration
    Not Vested
    Not Vested
    Not Vested
    Vested
    Not Vested
    Vested
 
Name
  Exercisable     Unexercisable     (#)     ($)     Date     (#)     ($)(1)     (#)     ($)(1)     (#)     ($)(2)  
 
Richard T. C. LeFave
            122,966 (3)             20.72       02/07/2016       165,033 (26)     3,117,473       6,860 (11)     129,585                  
      45,690 (13)     54,001 (13)             20.65       02/24/2015                                                  
      5,638 (14)     6,824 (14)             19.99       12/01/2014                                                  
      2,077 (15)     5,934 (15)             16.29       08/31/2014                                                  
      2,077 (16)     5,044 (16)             16.24       05/28/2014                                                  
      70,613 (17)     29,078 (17)             19.20       02/11/2014                                                  
      6,529 (18)     3,264 (18)             17.79       11/28/2013                                                  
      2,077 (19)     2,374 (19)             13.58       08/29/2013                                                  
      2,077 (20)     1,484 (20)             10.53       05/30/2013                                                  
      7,121 (21)     2,375 (21)             8.65       02/13/2013                                                  
      1                       3.77       04/23/2012                                                  
      142,417                       43.49       02/17/2010                                                  
Timothy M. Donahue
    698,670 (27)                     20.72       12/31/2009 (28)                     38,979 (29)     736,313                  
      522,716                       3.53       07/01/2008 (28)                                                
      567,321                       3.77       07/01/2008 (28)                                                
      356,042                       7.15       07/01/2008 (28)                                                
      569,668 (27)                     8.65       07/01/2008 (28)                                                
      356,042                       10.68       07/01/2008 (28)                                                
      498,459                       10.73       07/01/2008 (28)                                                
      712,085                       15.67       07/01/2008 (28)                                                
      356,042                       19.20       07/01/2008 (28)                                                
      356,042                       20.65       07/01/2008 (28)                                                
      712,085                       43.49       07/01/2008 (28)                                                
      569,668                       9.33       02/11/2008 (28)                                                

42


Table of Contents

                                                                                         
    Option Awards     Sprint Nextel Stock Awards     Embarq Stock Awards  
                                                    Equity
             
                                              Equity
    Incentive
             
                                              Incentive
    Plan Awards:
             
                Equity
                            Plan
    Market or
             
                Incentive
                            Awards:
    Payout«cf
             
                Plan
                            Number
    Value of
             
                Awards:
                      Market
    of Unearned
    Unearned
          Market
 
                Number
                Number of
    Value of
    Shares,
    Shares,
    Number of
    Value of
 
    Number of
    Number of
    of Securities
                Shares
    Shares or
    Units or
    Units or
    Shares
    Shares or
 
    Securities
    Securities
    Underlying
                or Units
    Units of
    Other
    Other Rights
    or Units
    Units of
 
    Underlying
    Underlying
    Unexercised
    Option
          of Stock
    Stock
    Rights
    That
    of Stock
    Stock That
 
    Unexercised
    Unexercised
    Unearned
    Exercise
    Option
    That Have
    That Have
    That Have
    Have Not
    That Have
    Have Not
 
    Options (#)
    Options (#)
    Options
    Price
    Expiration
    Not Vested
    Not Vested
    Not Vested
    Vested
    Not Vested
    Vested
 
Name
  Exercisable     Unexercisable     (#)     ($)     Date     (#)     ($)(1)     (#)     ($)(1)     (#)     ($)(2)  
 
Len J. Lauer
    5,821                       19.84       02/19/2012       492,872 (35)     9,310,352                       24,642 (36)     1,295,184  
      16,895                       22.64       02/11/2012                                                  
      55,639                       20.02       05/11/2011                                                  
      18,546                       44.89       05/11/2011                                                  
      14,625                       20.02       02/08/2010                                                  
      2,720                       44.89       02/08/2010                                                  
      3,549                       28.47       02/08/2009                                                  
      12,622                       35.59       02/08/2009                                                  
      7,140                       55.64       02/08/2009                                                  
      9,332                       61.25       02/08/2009                                                  
      1,031                       92.03       02/08/2009                                                  
      1,377                       104.29       02/08/2009                                                  
              35,781 (23)             7.90       05/21/2008 (33)                                                
              71,564 (23)             10.76       05/21/2008 (33)                                                
      116,346 (6)     116,341 (6)             16.38       05/21/2008 (33)                                                
      58,174 (6)     58,169 (6)             16.64       05/21/2008 (33)                                                
      27,415                       19.84       05/21/2008 (33)                                                
      276,069                       20.02       05/21/2008 (33)                                                
              360,444 (30)             20.72       05/21/2008 (33)                                                
      15,064 (31)     15,063 (31)             23.25       05/21/2008 (33)                                                
      115,030 (32)     230,058 (32)             24.42       05/21/2008 (33)                                                
      4,108                       28.47       05/21/2008 (33)                                                
      21,910                       30.31       05/21/2008 (33)                                                
      65,730                       35.59       05/21/2008 (33)                                                
      79,150                       44.89       05/21/2008 (33)                                                
      6,037                       55.64       05/21/2008 (33)                                                
      8,047                       61.25       05/21/2008 (33)                                                
      3,488                       91.69       05/21/2008 (33)                                                
      1,506                       92.03       05/21/2008 (33)                                                
      1,545                       104.29       05/21/2008 (33)                                                
      43,820                       20.02       03/22/2008 (34)                                                
      16,432                       44.89       03/22/2008 (34)                                                
 
 
(1) Market value is based on the closing price of a share of our common stock of $18.89 on December 29, 2006.
 
(2) Market value is based on the closing price of a share of Embarq common stock of $52.56 on December 29, 2006.
 
(3) Stock options vest 331/3% on each of February 7, 2007, February 7, 2008 and February 7, 2009.
 
(4) Stock options vest/vested 25% on each of March 15, 2006, March 15, 2007, March 15, 2008 and March 15, 2009.
 
(5) Stock options vest/vested 25% on each of February 8, 2006, February 8, 2007, February 8, 2008 and February 8, 2009.
 
(6) Stock options vest/vested 25% on each of February 10, 2005, February 10, 2006, February 10, 2007 and February 10, 2008.
 
(7) Stock options vest/vested 25% on each of March 19, 2004, March 19, 2005, March 19, 2006 and March 19, 2007.
 
(8) Stock options vest on December 31, 2007.

43


Table of Contents

 
(9) Stock options vest on March 28, 2007.
 
(10) RSU awards vest as follows:
 
  •  297,000 on February 10, 2007.
 
  •  58,320 on each of March 19, 2007 and December 31, 2007.
 
  •  753,163 on December 31, 2007.
 
  •  475,389 on February 8, 2008.
 
  •  109,163 on March 15, 2008.
 
(11) RSU awards vest on February 7, 2009, and reflect forfeitures of RSU awards on February 26, 2007. Under the terms of our 2006 LTIC plan, RSU awards initially granted under the plan were subject to adjustment based on our actual performance compared to established performance objectives, which resulted in forfeiture on February 26, 2007 of all but 16.8% of the RSU awards initially granted on May 16, 2006. For more information on the LTIC plan, see “— Compensation Discussion and Analysis — Elements of Compensation — Long-Term Incentive Compensation Plan.” For information regarding the RSU awards initially granted under the 2006 LTIC plan, see the Grants of Plan-Based Awards table on page 37.
 
(12) RSU awards vest as follows:
 
  •  14,850 on February 10, 2007.
 
  •  2,916 on each of March 19, 2007 and December 31, 2007.
 
  •  38,251 on December 31, 2007.
 
  •  23,769 on February 8, 2008.
 
  •  5,458 on March 15, 2008.
 
(13) Stock options vest/vested over four years on a monthly basis from the date of grant with the first installment vesting on March 24, 2005.
 
(14) Stock options vest/vested over four years on a monthly basis from the date of grant with the first installment vesting on December 30, 2004.
 
(15) Stock options vest/vested over four years on a monthly basis from the date of grant with the first installment vesting on September 30, 2004.
 
(16) Stock options vest/vested over four years on a monthly basis from the date of grant with the first installment vesting on June 28, 2004.
 
(17) Stock options vest/vested over four years on a monthly basis from the date of grant with the first installment vesting on March 11, 2004.
 
(18) Stock options vest/vested over four years on a monthly basis from the date of grant with the first installment vesting on December 28, 2003.
 
(19) Stock options vest/vested over four years on a monthly basis from the date of grant with the first installment vesting on September 29, 2003.
 
(20) Stock options vest/vested over four years on a monthly basis from the date of grant with the first installment vesting on June 30, 2003.
 
(21) Stock options vest/vested over four years on a monthly basis from the date of grant with the first installment vesting on March 13, 2003.
 
(22) Deferred share awards vest on August 13, 2007.
 
(23) Stock options vest/vested 25% on each of March 27, 2004, March 27, 2005, March 27, 2006 and March 27, 2007.
 
(24) RSU awards vest as follows:
 
  •  51,843 on February 10, 2007.


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  •  103,166 on February 8, 2008
 
  •  134,409 on December 11, 2009.
 
(25) RSU awards vest as follows:
 
  •  2,592 on February 10, 2007.
 
  •  5,157 on February 8, 2008
 
(26) Deferred share and RSU awards vest as follows:
 
  •  17,090 on August 13, 2007.
 
  •  147,943 on July 24, 2008.
 
(27) Pursuant to Mr. Donahue’s employment agreement, all unvested stock options vested on December 29, 2006, the date of his retirement.
 
(28) Pursuant to Mr. Donahue’s employment agreement, all stock option grants with an expiration date subsequent to July 1, 2008 will expire on that date, except for a stock option grant of 698,670 shares that expires on December 31, 2009, and a stock option grant of 569,668 shares that expires on February 11, 2008.
 
(29) Pursuant to Mr. Donahue’s employment agreement, this RSU award became fully vested and non-forfeitable as of the date of his retirement, but, as of December 31, 2006, remained outstanding and subject to the performance adjustment under our 2006 LTIC plan. The number of RSUs reflects the adjustment made on February 26, 2007, which resulted in forfeiture of all but 16.8% of the RSU awards initially granted on May 16, 2006.
 
(30) Stock options vest 50% on each of February 7, 2007 and February 7, 2008.
 
(31) Stock options vest/vested 50% on each of March 15, 2006 and March 15, 2007.
 
(32) Stock options vest/vested 331/3% on each of February 8, 2006, February 8, 2007 and February 8, 2008.
 
(33) Pursuant to the terms and conditions of our equity incentive plans, stock options grants with an original expiration date subsequent to May 21, 2008 will expire on that date.
 
(34) Pursuant to the terms and conditions of our equity incentive plans, stock option grants with an original expiration date subsequent to March 22, 2008 will expire on that date.
 
(35) RSU awards vest as follows and is net of awards that are scheduled to vest after February 21, 2008, which have been forfeited.
 
  •  121,500 on February 10, 2007.
 
  •  64,278 on March 27, 2007.
 
  •  25,382 on September 10, 2007
 
  •  281,712 on February 8, 2008.
 
(36) RSU awards vest as follows and is net of awards that are scheduled to vest after February 21, 2008, which have been forfeited.
 
  •  6,075 on February 10, 2007.
 
  •  3,213 on March 27, 2007.
 
  •  1,269 on September 10, 2007
 
  •  14,085 on February 8, 2008.


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Option Exercises and Stock Vested
 
The table below summarizes option awards that were exercised and stock awards that vested in 2006 with respect to each of our named executive officers. The table below reflects the following actions taken in connection with the May 17, 2006 spin-off of Embarq:
 
  •  Each outstanding stock option held by a named executive officer was adjusted by multiplying the number of shares subject to the option by 1.0955 and dividing the exercise price by the same number.
 
  •  Each named executive officer who held a RSU award entitled to receive dividend equivalent payments, which includes substantially all RSU awards that were outstanding at the time of the spin-off, received one Embarq RSU award for every twenty Sprint Nextel RSU awards held. The vesting schedule for each Embarq RSU award is identical to the vesting schedule of the related Sprint Nextel RSU award.
 
  •  Each outstanding deferred share award granted under the Nextel Incentive Equity Plan was adjusted by multiplying the number of deferred shares by 1.0955, and cash was paid to the named executive officer in lieu of any fractional share.
 
                                                 
    Option Awards     Sprint Nextel Stock Awards     Embarq Stock Awards  
    Number of
          Number of
          Number of
       
    Shares
    Value Realized
    Shares
    Value Realized
    Shares
    Value Realized
 
    Acquired on
    on Exercise
    Acquired on
    on Vesting
    Acquired on
    on Vesting
 
Name
  Exercise (#)     ($)(1)     Vesting (#)     ($)(2)     Vesting (#)     ($)(2)  
 
Gary D. Forsee
    239,315 (3)     3,359,463       469,720 (4)     10,739,690                  
Paul N. Saleh
    0       0       10 (5)     168                  
Timothy E. Kelly
    0       0       22,891 (6)     504,351                  
Barry J. West
    0       0       10 (7)     168                  
Richard T. C. LeFave
    70,783       1,033,363       10 (8)     168                  
Timothy M. Donahue
    761,383       14,218,965       474,733 (9)     8,279,337                  
Len J. Lauer
    759,279       3,350,637       198,931 (10)     4,313,498       1,269 (10)     60,049  
 
 
(1) Amounts reflect the difference between the exercise price of the option and the market price of the underlying common stock at the time of exercise.
 
(2) Amounts reflect the market price of our stock on the day the RSU award vested.
 
(3) Mr. Forsee surrendered 164,878 shares of common stock to satisfy the exercise price of the stock options and related tax withholding obligations.
 
(4) Mr. Forsee surrendered 198,130 shares of common stock receivable upon the vesting of these RSU awards to satisfy tax withholding obligations, resulting in Mr. Forsee receiving 271,590 shares of our common stock.
 
(5) Mr. Saleh surrendered 4 shares of common stock receivable upon the vesting of this RSU award to satisfy tax withholding obligations, resulting in Mr. Saleh receiving 6 shares of our common stock.
 
(6) Mr. Kelly surrendered 8,403 shares of common stock receivable upon the vesting of these RSU awards to satisfy tax withholding obligations, resulting in Mr. Kelly receiving 14,488 shares of our common stock.
 
(7) Mr. West surrendered 4 shares of common stock receivable upon the vesting of this RSU award to satisfy tax withholding obligations, resulting in Mr. West receiving 6 shares of our common stock.
 
(8) Mr. LeFave surrendered 5 shares of common stock receivable upon the vesting of this RSU award to satisfy tax withholding obligations, resulting in Mr. LeFave receiving 5 shares of our common stock.
 
(9) With respect to 10 RSUs that vested, Mr. Donahue surrendered 5 shares of common stock receivable upon the vesting of this RSU award to satisfy tax withholding obligations, resulting in Mr. Donahue receiving 5 shares of our common stock. Mr. Donahue satisfied the tax withholding obligations related to 474,723 deferred shares that vested in cash, resulting in him receiving all 474,723 shares of our common stock related to that award.
 
(10) Mr. Lauer surrendered 67,638 shares of Sprint Nextel common stock receivable upon the vesting of these RSU awards to satisfy tax withholding obligations, resulting in Mr. Lauer receiving 131,293 shares of our


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common stock. Mr. Lauer did not use any shares to satisfy the tax withholding obligations related to the vesting of the Embarq RSUs.
 
Pension Benefits
 
The table below summarizes, as of December 31, 2006, pension benefits to which our named executive officers are entitled, which include:
 
  •  Sprint Retirement Pension Plan, or the Qualified Plan, designed to provide funded, tax-qualified defined benefits up to the limits on compensation and benefits under the IRC;
 
  •  Sprint Supplemental Executive Retirement Plan, or SERP, which provides unfunded, non-qualified benefits in excess of the limits applicable to the Qualified Plan; and
 
  •  Additional unfunded, non-qualified benefits to which Mr. Forsee is entitled under his employment agreement.
 
                             
              Present
    Payments
 
              Value of
    During
 
        Number of Years
    Accumulated
    Last Fiscal
 
        Credited Service
    Benefit
    Year
 
Name
  Plan Name(1)   (#)     ($)(2)     ($)  
 
Gary Forsee
  Sprint Retirement Pension Plan     13.3333       223,712        
    Sprint Supplemental Executive Retirement Plan     13.3333       1,030,124        
    Additional Retirement Benefits(3)     4.0000       6,039,410        
Paul N. Saleh
                   
Timothy Kelly
  Sprint Retirement Pension Plan     11.1667       98,977        
    Sprint Supplemental Executive Retirement Plan     11.1667       123,759        
Barry J. West
                   
Richard T. C. LeFave
                   
Timothy M. Donahue
                   
Len Lauer
  Sprint Retirement Pension Plan     8.7500       87,332        
    Sprint Supplemental Executive Retirement Plan     8.7500       342,685        
    Mid Career Pension Enhancement under SERP (4)     10.0000       557,864        
 
 
(1) Because Messrs. Forsee, Kelly and Lauer were employed with us prior to the Sprint-Nextel merger, each is entitled to receive retirement benefits under our Qualified Plan and the SERP. Following the Sprint-Nextel merger, we froze benefits under both plans. Messrs. Forsee, Kelly and Lauer maintain their accrued benefit as of December 31, 2005 under these plans, but do not accrue additional benefits under either plan.
 
(2) The Present Value of Accumulated Benefit amounts below have been measured as of December 31, 2006, and are based on a number of assumptions, including:
 
  •  A discount rate of 6.2%;
 
  •  Mortality rates based on standard actuarial tables;
 
  •  No retirements prior to normal retirement age or withdrawals for disability or otherwise prior to retirement; and
 
  •  A normal retirement age of 65 for all benefits, except with respect to Mr. Forsee’s additional retirement benefits, for which a January 1, 2008 retirement date is assumed.


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Benefits are payable in the form of an annuity with monthly benefit payments.
 
(3) Under the terms of Mr. Forsee’s employment agreement, he is eligible to receive retirement benefits in addition to those provided under our Qualified Plan and SERP.
 
(4) Under the terms of Mr. Lauer’s employment agreement, his accumulated benefit under the SERP is based on an additional ten years of credited service.
 
Sprint Retirement Pension Plan
 
The Qualified Plan is a tax-qualified defined benefit pension plan. Only individuals who were employed with us prior to August 12, 2005, the date of the Sprint-Nextel merger, are eligible to participate in the Qualified Plan. Messrs. Forsee, Kelly and Lauer are the only named executive officers eligible to participate in the Qualified Plan.
 
Benefits under the Qualified Plan are based on each participant’s number of years of credited service and his or her eligible compensation. Benefit accruals under the plan were frozen on December 31, 2005 for all plan participants. Eligible compensation under the Qualified Plan is equal to the sum of base salary, certain annual short term incentive compensation, sales commissions and sales bonus compensation, including any amounts deferred under applicable deferred compensation plans, subject to annual compensation limits under the IRC.
 
The benefit amount, expressed as a single life annuity beginning at age 65, is equal to:
 
  •  the product of 1.5% and the average annual compensation for the 60 months ending on December 31, 1993, multiplied by the number of years of credited service through December 31, 1993, plus
 
  •  the product of 1.5% and eligible compensation earned from January 1, 1994 through December 31, 2005.
 
Benefits are limited by the IRC. The limit for 2006 is $175,000, expressed as a single life annuity beginning at normal retirement age. Benefits under the Qualified Plan are payable in the form of an annuity with monthly benefit payments. No lump sums are available for the named executive officers. Benefits under this plan are funded by an irrevocable tax-exempt trust.
 
Participants who are at least age 55 and have at least 10 years of service are eligible to elect a reduced early retirement benefit. The benefit is reduced by 5% for each year the benefit commences before age 65. Mr. Forsee is the only named executive officer who is eligible for early retirement benefits under the Qualified Plan as of December 31, 2006.
 
Sprint Supplemental Executive Retirement Plan
 
The SERP is an unfunded, non-qualified defined benefit pension plan designed to restore a participant’s overall retirement benefit to the level that would have been payable under the Qualified Plan absent certain IRC limitations. Messrs. Forsee, Kelly and Lauer are the only named executive officers eligible to participate in the SERP.
 
Benefits under the SERP are based on each participant’s number of years of credited service and the participant’s eligible compensation. Benefit accruals under the plan were frozen on December 31, 2005 for all plan participants. The years of credited service for eligible named executive officers are based only on their service while eligible for participation in the Qualified Plan, except with respect to Mr. Lauer. Under the mid-career pension enhancement provision, the board granted Mr. Lauer an additional ten years of service to recognize relevant employment prior to being employed with us. Accordingly, the accumulated benefit shown for Mr. Lauer is based on ten additional years of credited service awarded and average compensation paid to him during the period from his date of hire through 2005.
 
Eligible compensation under the SERP is equal to the sum of base salary, certain annual short term incentive compensation, sales commissions, and sales bonus compensation, inclusive of any amounts deferred


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under applicable deferred compensation plans. The amount of such compensation is not limited by the IRC annual compensation limits.
 
The benefit amount, expressed as a single life annuity beginning at age 65, is equal to:
 
  •  the product of 1.5% and the average annual compensation for the 60 months ending on December 31, 1993, multiplied by the number of years of credited service through December 31, 1993, plus
 
  •  the product of 1.5% and eligible compensation earned from January 1, 1994 through December 31, 2005.
 
This benefit amount is reduced by the benefit amount provided by the Qualified Plan.
 
Benefits under the SERP are payable in the form of an annuity with monthly benefit payments. No lump sums are available for the named executive officers. The SERP is unfunded; thus, participants are general creditors of ours with respect to their SERP benefit payments.
 
Participants who are at least age 55 and have at least 10 years of service are eligible to elect a reduced early retirement benefit. The benefit is reduced by 5% for each year the benefit commences before age 65. Mr. Forsee is the only named executive officer who is eligible for early retirement benefits under the SERP as of December 31, 2006.
 
Additional Retirement Benefits
 
Under the terms of Mr. Forsee’s employment agreement, he is eligible to receive an annual retirement benefit equal to five percent of his covered compensation (generally, annual base salary plus actual annual incentive pay earned) for each calendar year of service beginning with 2003, up to a maximum of 65% of his covered compensation. This benefit will be offset by pension benefits payable to him by any former employer and by us under the Qualified Plan and the SERP. Any retirement benefits earned pursuant to Mr. Forsee’s employment agreement will be payable, without reduction, on the later of January 1, 2008 or the date that his employment is terminated.
 
Nonqualifed Deferred Compensation
 
The table below summarizes the information with respect to our nonqualified deferred compensation plans, and the activity and balances with respect to the account of each named executive officers who participates in one of our deferred compensation plans.
 
                                         
                      Aggregate
       
    Executive
    Registrant
    Aggregate
    Withdrawals/
    Aggregate
 
Name
  Contributions in
    Contributions in
    Earnings in
    Distributions
    Balance at Last
 
(a)
  Last FY ($)(1)     Last FY ($)(2)     Last FY ($)     ($)     FYE ($)(3)  
 
Gary D. Forsee
    932,896             189,606             2,685,031  
Paul N. Saleh
    66,635       66,635       5,639             138,908  
Barry J. West
                             
Timothy E. Kelly
    22,126       22,126       1,286             45,539  
Richard T. C. LeFave
    40,000       22,031       3,472             65,502  
Timothy M. Donahue
                96,057             945,152  
Len J. Lauer
    53,595             4,287             57,881  
 
 
(1) Represents contributions by the named executive officers, the amounts of which are included in the Summary Compensation Table in the Salary column.
 
(2) Represents contributions by us, the amounts of which are included in the Summary Compensation Table in the All Other Compensation column.
 
(3) Represents the aggregate balance as of December 31, 2006, adjusted to include contributions by us earned in 2006, but not credited to the account of the applicable named executive officer until January 2007.


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Each named executive officer is entitled to participate in the Sprint Nextel Deferred Compensation Plan, a nonqualified and unfunded plan under which they may defer to future years the receipt of certain compensation that would otherwise be paid to them in the year in which it was earned. Participants may defer up to 75% of base salary and 100% of STIC payments. Under the plan, for each of our named executive officers who participate in the plan, other than Mr. Forsee, we match contributions made by participants in an amount up to 5% of eligible earnings above the applicable annual limit, which for 2006 was $220,000, to compensate highly-compensated employees for limitations placed on our 401(k) plan by federal tax law. Mr. Forsee is not eligible to participate in the matching feature of this plan due to the retirement benefits to which he is eligible under his employment agreement. Compensation deferred by participants and any matching contributions made by us are credited to a bookkeeping account that represents our unsecured obligation to repay the participant in the future. Participants elect to allocate deferred and matching contributions among one or more hypothetical investment options, which include one option that tracks our common stock and other options that track broad bond and equity indices. Participants may change hypothetical investment elections only four times a year and at least three months must elapse between each change. Under the plan, the amount of our unfunded obligation is determined by tracking the value in the bookkeeping account according to the performance of the hypothetical investments. Messrs. Forsee, Saleh, Kelly, LeFave and Lauer participated in this plan during 2006. Prior to the merger, Mr. Donahue participated in the Nextel Communications, Inc. Cash Compensation Deferral Plan.
 
Prior to the Sprint-Nextel merger, Mr. Forsee participated in our Executive Deferred Compensation Plan, or EDCP. The EDCP provides for two hypothetical investment options — one that is interest bearing and one that tracks the performance of our stock — to which deferred contributions credited to bookkeeping accounts may be allocated. The interest bearing account accrues interest at a per annum rate equal to the greater of Citibank’s prime rate in effect at the beginning of each month or 6%.
 
Potential Payments Upon Termination of Employment or Change of Control
 
The amounts shown in the tables and discussed in the narratives below do not include payments and benefits to the extent they are provided on a non-discriminatory basis to salaried employees upon termination of employment, including accrued salary and vacation pay, distribution of balances under our 401(k) and deferred compensation plans and accrued pension benefits available for eligible employees. For more information on the pension and deferred compensation benefits available to our named executive officers, see the Pension Benefits table and related narrative disclosure beginning on page 47 and the Non-Qualified Deferred Compensation table and related narrative disclosure beginning on page 49 of this proxy statement.


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Mr. Forsee
 
The following table and narrative describe the potential payments upon termination of employment for Gary D. Forsee, our Chairman, President and Chief Executive Officer, assuming the date of termination of employment was December 29, 2006.
 
                 
Executive Benefits and Payments
  Termination Without Cause or
    Change of Control: Termination
 
Upon Termination
  for Constructive Discharge     Without Cause or for Good Reason  
 
Compensation:
               
Base Salary
  $ 2,900,000     $ 4,350,000  
Short Term Incentive — 2006
  $ 414,120     $ 2,465,000  
Short Term Incentive -Target
  $ 4,930,000     $ 7,395,000  
Long Term Incentive — Accelerated Vesting(1)
  $ 43,240,921     $ 50,723,475  
Integration Overachievement Plan(2)
  $ 1,250,000     $ 1,250,000  
Benefits:
               
Present Value of Additional Retirement Benefit
  $ 2,702,699     $ 7,501,646  
Health and Welfare Benefits
  $ 34,205     $ 51,307  
Outplacement Services
  $ 45,000     $ 67,500  
Security Equipment and Services, Communications Services and Insurance
  $ 9,658     $ 14,487  
Excise Tax Reimbursement
  $ 0     $ 16,071,258  
 
 
(1) The value of accelerated options is based on the intrinsic value of the options, and the value of accelerated RSUs is based on the market value of our stock, on December 29, 2006.
 
(2) Table gives effect to the Integration Overachievement Plan. This plan provides for a pro-rata payout only for involuntary terminations without cause, or in the case of death or disability, that occur on or after December 31, 2006.
 
Termination Without Cause or for Constructive Discharge
 
Had Mr. Forsee’s employment been terminated on December 29, 2006, either by us without cause or by Mr. Forsee in connection with an event deemed a constructive termination (as defined in Mr. Forsee’s employment agreement), other than during the 24-month period following a change of control (as defined in Mr. Forsee’s employment agreement), he would have been entitled to receive the following severance benefits:
 
  •  his annual short-term incentive payment for the year of termination, based on our actual performance for the year, with payment being made after the HC&CC determined whether targets were achieved;
 
  •  compensation through the second anniversary of the termination of his employment, paid in monthly installments, at an annual rate equal to his base salary at the time of termination and his target short-term incentive opportunity for the year in which his employment was terminated;
 
  •  only in the case of an involuntary termination without cause occurring on or after December 31, 2006, a pro-rata portion of his Integration Overachievement Plan target award, paid on the same schedule as other participants;
 
  •  two years of outplacement services;
 
  •  continued participation in our medical and welfare plans for a period of two years;
 
  •  continued receipt for two years of perquisites that he was receiving, or entitled to receive, at the time his employment was terminated (other than use of company aircraft), which perquisites currently


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  include security equipment and services, communications services and an umbrella liability insurance policy;
 
  •  a 10% increase in his additional retirement benefit; and
 
  •  acceleration of certain options granted and RSUs awarded to Mr. Forsee pursuant to his employment agreement, the number of which is determined based on the number of whole months Mr. Forsee has been employed by us divided by the number of months in the vesting period for each award, and all other option grants and RSU awards will continue to vest according to their terms during a two-year severance period.
 
Termination Without Cause or For Good Reason Following a Change of Control
 
Had Mr. Forsee’s employment been terminated on December 29, 2006, either by us without cause or by Mr. Forsee for good reason, and the termination date was within a 24-month period following a change of control, Mr. Forsee would have been entitled to receive, as soon as practicable:
 
  •  his pro-rata annual short-term incentive payment for the year of termination, based on the greater of his target opportunity for the year in which the change of control occurred and the year in which his employment was terminated;
 
  •  a lump sum equal to three times the sum of (i) the highest rate of his base salary during the period beginning immediately prior to the change of control and ending at the time that his employment was terminated, and (ii) the greater of his target opportunity for the year in which the change in control occurred and the year in which his employment was terminated;
 
  •  only in the case of an involuntary termination without cause occurring on or after December 31, 2006, a pro-rata portion of his Integration Overachievement Plan target award, paid on the same schedule as other participants;
 
  •  three years of outplacement services;
 
  •  continued participation in our medical and welfare plans for a period of three years;
 
  •  continued receipt for three years of perquisites that he was receiving, or entitled to receive, at the time that his employment was terminated (other than use of company aircraft), which perquisites currently include security equipment and services, communications services and an umbrella liability insurance policy;
 
  •  a 15% increase in additional retirement benefits; and
 
  •  immediate vesting of all options granted and RSUs awarded to Mr. Forsee that, as of the date of the change of control, had been outstanding for one year, pursuant to our 1997 Long-Term Stock Incentive Program.
 
Upon a change of control, Mr. Forsee may be subject to certain excise taxes pursuant to section 4999 of the IRC. We have agreed to reimburse Mr. Forsee for all excise taxes that are imposed on him under section 4999 and any income and excise taxes that are payable by Mr. Forsee as a result of any reimbursements for section 4999 excise taxes. The total section 4999 tax gross-up amount in the above table assumes that Mr. Forsee is entitled to a full reimbursement by us of (i) any excise taxes that are imposed upon Mr. Forsee as a result of parachute payments received in connection with a change of control and (ii) any additional income and excise taxes that are imposed upon Mr. Forsee as a result of our reimbursement of Mr. Forsee for any excise taxes. Mr. Forsee is not entitled to reimbursement for income taxes attributable to payments or benefits related to a change of control except those payments for reimbursement of excise taxes imposed under section 4999. The calculation of the section 4999 gross-up amount in the above table is based upon a section 4999 excise tax rate of 20%, a 35% federal income tax rate, and applicable Medicare, Social Security and state income tax rates. For purposes of the section 4999 excise tax reimbursement calculation, it is assumed that no amounts will be discounted as attributable to reasonable compensation and no value will be attributed to Mr. Forsee executing a non-competition agreement.


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Additional Retirement Benefit
 
For a description of assumptions regarding the additional retirement benefit, see “— Pension Benefits.”
 
Voluntary Termination of Employment or Termination for Cause
 
Had Mr. Forsee voluntarily terminated his employment with us without good reason (as defined in Mr. Forsee’s employment agreement) or been terminated by us for cause (as defined in Mr. Forsee’s employment agreement) on December 29, 2006, he would have been entitled to a $414,120 short-term incentive payment for the fiscal year based on our actual performance, with payment being made after the HC&CC determined whether targets were achieved.
 
Normal (Age 65) Retirement
 
At Mr. Forsee’s normal (age 65) retirement, he will be entitled to receive:
 
  •  a pro-rata portion of his annual short-term incentive payment for the year of termination, based on our actual performance for the year, with payment being made after the HC&CC has determined whether targets have been achieved;
 
  •  life-long participation in our medical plans; and
 
  •  acceleration of options granted and RSUs awarded to Mr. Forsee that have been outstanding for at least one year as of the date of retirement, pursuant to our 1997 Long-Term Stock Incentive Program.
 
Termination as a Result of Death or Disability
 
Had Mr. Forsee’s employment been terminated by reason of death or disability on December 29, 2006, he would have been entitled to receive:
 
  •  a $414,120 short-term incentive payment based on our actual performance for the year, with payment being made after the HC&CC determined whether targets were achieved;
 
  •  for death or defined disabilities occurring on or after December 31, 2006, $1,250,000 representing a pro-rata portion of his Integration Overachievement Plan target award, paid on the same schedule as other participants; and
 
  •  acceleration of $55,106,314 of options granted and RSUs awarded and outstanding as of the date of death or disability, pursuant to our 1997 Long-Term Stock Incentive Program, with the value of accelerated options based on the intrinsic value of the options, and the value of accelerated RSUs based on the market value of our stock, on December 29, 2006.
 
Conditions Applicable to the Receipt of Severance Payments and Benefits
 
As a condition to Mr. Forsee’s entitlement to receive the amounts referenced in the above table, except for the Integration Overachievement Plan award, Mr. Forsee will:
 
  •  be required to execute a release in favor of us;
 
  •  be subject to confidentiality and non-disparagement provisions on a permanent basis following the termination of his employment;
 
  •  for the 24-month period following the termination of his employment, be prohibited from:
 
  •  engaging in certain employment activities with a competitor of ours;
 
  •  soliciting our employees and certain other parties doing business with us to terminate their relationships with us; and
 
  •  soliciting or assisting any party to undertake any action that would be reasonably likely to, or is intended to, result in a change of control or seek to control our board of directors.


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  If Mr. Forsee breaches any of these obligations, he will have no rights in, and we will have no obligation to provide, any pension benefits; he will have no right to any severance benefits yet to be paid or provided under his employment agreement; and any outstanding equity-based award granted under his employment agreement will terminate immediately.
 
Mr. Saleh
 
The following table and narrative describe the potential payments upon termination of employment for Paul N. Saleh, our Chief Financial Officer, assuming the date of termination of employment was December 29, 2006. Mr. Saleh’s employment agreement does not provide for different benefits if Mr. Saleh is terminated as a result of a change in control.
 
                                 
    Termination Without
    Termination for
             
Executive Benefits and
  Cause or for Good
    Good Reason
             
Payments Upon Termination
  Reason     Due to Relocation     Disability     Death  
 
Compensation:
                               
Base Salary
  $ 1,500,000     $ 750,000     $ 750,000     $ 750,000  
Short Term Incentive — 2006
  $ 937,500     $ 937,500     $ 157,500     $ 157,500  
Short Term Incentive Plan — Target
  $ 1,875,000     $ 937,500     $ 0     $ 0  
Long Term Incentive — Accelerated Vesting(1)
  $ 4,331,663     $ 4,331,663     $ 4,331,663     $ 4,331,663  
Integration Overachievement Plan(2)
  $ 500,000     $ 0     $ 500,000     $ 500,000  
Benefits:
                               
Health and Welfare Benefits
  $ 29,751     $ 14,876     $ 14,876     $ 0  
Outplacement Services
  $ 50,000     $ 0     $ 0     $ 0  
 
 
(1) The value of accelerated options is based on the intrinsic value of the options, and the value of accelerated RSUs is based on the market value of our stock, on December 29, 2006.
 
(2) Table gives effect to the Integration Overachievement Plan. This plan provides for a pro-rata payout only for involuntary terminations without cause, or in the case of death or disability, that occur on or after December 31, 2006.
 
Termination Without Cause or For Good Reason (Other than Relocation)
 
Had Mr. Saleh’s employment been terminated on December 29, 2006, whether or not in connection with a change in control, either by us without cause or by Mr. Saleh for good reason, other than for relocation (as these terms are defined in Mr. Saleh’s employment agreement), Mr. Saleh would have been entitled to receive:
 
  •  an amount equal to his then-current base salary and benefits for a two-year period, through periodic p