DEF 14A 1 a2012proxy.htm 2012 PROXY STATEMENT 2012 Proxy


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
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Clearwire Corporation

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NOTICE OF 2012 ANNUAL MEETING OF STOCKHOLDERS

To Be Held on June 14,2012
Dear Stockholder:

You are cordially invited to attend the 2012 Annual Meeting of Stockholders, which we refer to as the Annual Meeting of Clearwire Corporation, a Delaware corporation, which we refer to as the Company or Clearwire. The Annual Meeting will be held on Thursday, June 14, 2012 at 8:00 a.m., Pacific Daylight Time at the Clearwire Headquarters, 1475 120th Ave NE, Bellevue, Washington 98005 for the following purposes:

1.
Elect the twelve director candidates described in the proxy statement to serve until the next annual meeting or until their respective successors are elected and qualified;

2.
Ratify the selection of Deloitte & Touche LLP as the Company's independent registered public accounting firm for fiscal year 2012; 

3.
Hold an advisory vote to approve the compensation of the Company's named executive officers;

4.
To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

These items of business are more fully described in the proxy statement accompanying this notice.

The record date for the Annual Meeting is April 16, 2012. Only stockholders of record at the close of business on that date may vote at the Annual Meeting or any adjournment or postponement thereof.

In accordance with the rules approved by the Securities and Exchange Commission, we will send a Notice of Internet Availability of Proxy Materials on or about April 30, 2012, and we will provide access to our proxy materials over the Internet, beginning on or about April 30, 2012, for the holders of record and beneficial owners of our Class A and Class B common stock as of the close of business on the record date.

Your vote is important. We urge you to review the accompanying materials carefully and to vote by Internet or telephone as promptly as possible. Alternatively, you may request a proxy card, which you may complete, sign, and return by mail. Voting on the Internet or by telephone is fast and convenient, and your vote is immediately confirmed and tabulated. Using the Internet or telephone helps save the Company money by reducing postage and proxy tabulation costs.

On Behalf of the Board of Directors,


Jillian Harrison
Secretary
Bellevue, Washington
April 30, 2012




Table of Contents

 
 
 
Page
 
 
Proxy Statement for 2012 Annual Meeting of Stockholders
General Information
Proposal 1 — Election of Directors
Nominees
Corporate Governance
Director Independence; Controlled Company
Board of Directors
Code of Ethics
Board Leadership Structure
Board’s Role in Risk Oversight
Board Meetings and Committees
Audit Committee
Report of the Audit Committee
Audit and Non-Audit Fees
Compensation Committee
Nominating and Governance Committee
Operations Strategy Advisory Committee
Strategic Committee
Compensation of the Board of Directors
Indemnification of Officers and Directors
Executive Officers
Section 16(a) Beneficial Ownership Reporting Compliance
Stockholder Communications with Board of Directors
Security Ownership of Certain Beneficial Owners and Management
Executive Compensation
Compensation Discussion and Analysis
Summary Compensation Table
Grants of Plan Based Awards
Offer Letters
Outstanding Equity Awards at 2011 Fiscal Year End
Option Exercises and Stock Vested
Potential Payments on Termination or Change in Control
Report of the Compensation Committee on Executive Compensation
Risk Considerations in Our Compensation Policies and Practices
Equity Compensation Plan Information
Related Party Transactions
Proposal 2 — Ratification of Selection of Independent Registered Public Accounting Firm
Proposal 3 — Advisory Vote to Approve the Compensation of Our Named Executive Officers
Other Business
Parking Facility and Driving Directions

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CLEARWIRE CORPORATION
1475 120th AVE NE
BELLEVUE, WASHINGTON 98005

PROXY STATEMENT FOR 2012 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 14, 2012



GENERAL INFORMATION

This proxy statement is being furnished to you in connection with the solicitation of proxies by the Board of Directors of Clearwire, which we refer to as the Board of Directors or the Board, for use at our 2012 Annual Meeting. In this proxy statement, references to “Clearwire,” the “Company,” “we,” “us,” “our” and similar expressions refer to Clearwire Corporation, unless the context of a particular reference requires otherwise.

2012 Annual Meeting Date and Location

Clearwire's 2012 Annual Meeting will be held at the Clearwire Headquarters, 1475 120th Ave NE, Bellevue, Washington 98005, on Thursday, June 14, 2012, at 8:00 a.m. Pacific Daylight Time, or at such other time and place to which the Annual Meeting may be adjourned. References in this proxy statement to the Annual Meeting also refer to any adjournments or changes in location of the meeting, to the extent applicable.

Explanatory Note Regarding Transactions with Sprint and Strategic Investors

On November 28, 2008, Clearwire completed the transactions contemplated by the Transaction Agreement and Plan of Merger, which we refer to as the Transaction Agreement, dated as of May 7, 2008 (as amended by Amendment No. 1 to the Transaction Agreement, dated as of November 21, 2008), by and among the former Clearwire (which, upon consummation of the transactions contemplated by the Transaction Agreement, which we refer to as the Transactions, became Clearwire Legacy LLC), which we refer to as Old Clearwire; Sprint Nextel Corporation, which we refer to as Sprint; Comcast Corporation, which we refer to as Comcast; Time Warner Cable Inc., which we refer to as Time Warner Cable; Bright House Networks, LLC, which we refer to as Bright House Networks; Google Inc., which we refer to as Google; and Intel Corporation, which we refer to as Intel. In this proxy statement, we refer to Comcast, Time Warner Cable and Bright House Networks collectively as the Strategic Investors, and to the Strategic Investors, together with Intel, as the Investors. Each of Sprint, Eagle River Holdings, LLC, which we refer to as Eagle River, and the Investors are a party to the Equityholders' Agreement, dated November 28, 2008, entered into with us, which we refer to as the Equityholders' Agreement, which contains certain provisions regarding our corporate governance and the composition of our Board of Directors. In this proxy statement we refer to the completion of the Transactions as the Closing.

Delivery of Proxy Materials

We made these materials available to you over the Internet or, upon your request, have delivered paper versions of these materials to you by mail, in connection with the solicitation of proxies by the Board for the 2012 Annual Meeting. Stockholders may request to receive proxy materials in paper form by mail or electronically by e-mail during the voting period. Choosing to receive your future proxy materials by e-mail will save us the cost of printing and mailing documents to you, as well as solicitation costs. If you choose to receive future proxy materials by e-mail, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by e-mail will remain in effect until you terminate it.

On or about April 30, 2012, we will mail a Notice of Internet Availability of Proxy Materials to stockholders containing instructions on how to access the proxy statement and vote online. Each registered stockholder (you own shares in your own name on the books of our transfer agent) will receive one copy of each such Notice per account even if at the same address, while most banks and brokers will deliver only one copy of such Notice to consenting street-name stockholders (you own shares beneficially in the name of a bank, broker or other nominee) who share the same address. This procedure reduces our printing and distribution costs. Those who wish to receive

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separate copies may do so by contacting their bank, broker or other nominee. Similarly, most street-name stockholders who receive multiple copies of the Notice at a single address may request that only a single copy be sent to them in the future by contacting their bank, broker or other nominee. In the alternative, stockholders may give instructions to receive separate copies or discontinue multiple mailings by contacting the third party that mails annual meeting materials for most banks and brokers by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717, or telephoning (800) 542‑1061. Your instructions must include the name of your bank or broker and your account number.

Procedural Matters

Only stockholders of record as of the close of business on April 16, 2012 will be entitled to receive notice of, to attend, and to vote at the Annual Meeting on the basis of one vote for each share of Clearwire Class A common stock, which we refer to as Class A Common Stock, held and one vote for each share of Clearwire Class B common stock, which we refer to as Class B Common Stock, held. On April 16, 2012, there were 492,523,786 shares of Class A Common Stock outstanding, held of record by 113 stockholders and 839,702,592 shares of Class B Common Stock outstanding held of record by thirteen stockholders. Stockholders do not have cumulative voting rights.

For all matters to be voted on at the Annual Meeting, the holders of Class A Common Stock and Class B Common Stock, which we refer to together as Common Stock, will vote together as one class. As of April 16, 2012, Sprint beneficially owned approximately 47.1% of the voting power of Clearwire's outstanding Common Stock. In addition, the Investors collectively own approximately 17.8% and Eagle River owns approximately 2.5% of the voting power of Clearwire's outstanding Common Stock. The Equityholders' Agreement governs the voting of shares of Common Stock held by each of the parties thereto in certain circumstances, including with respect to the election of the directors. As a result, regardless of the vote of any other stockholder, these persons generally have control over the vote relating to all matters to be voted on at the Annual Meeting.

Voting Procedures

Registered Stockholders: Registered stockholders may vote their shares or submit a proxy to have their shares voted by one of the following methods:

By Internet.  You may submit a proxy electronically on the Internet by following the instructions provided in the Notice of Internet Availability of Proxy Materials. Please have the Notice of Internet Availability of Proxy Materials in hand when you log onto the website. Internet voting facilities will be available twenty-four hours a day and will close at 11:59 p.m. Eastern Daylight Time, on June 13, 2012.
By Telephone.  If you request paper copies of the proxy materials by mail, you may submit a proxy by telephone (from U.S. and Canada only) using the toll-free number listed on the proxy card. Please have your proxy card in hand when you call. Telephone voting facilities will be available twenty-four hours a day and will close at 11:59 p.m. Eastern Daylight Time, on June 13, 2012.
By Mail.  If you request paper copies of the proxy materials by mail, you may indicate your vote by completing, signing and dating your proxy card and returning it in the business reply envelope.
In Person.  You may vote in person at the Annual Meeting by completing a ballot; however, attending the meeting without completing a ballot will not count as a vote.

If you are a stockholder of record and have submitted a proxy, you can change your vote by attending the Annual Meeting and voting in person. You may also revoke your proxy at any time before it is voted by sending a written notice of revocation or by submitting a signed proxy card bearing a later date to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. To be effective, any such revocation of proxy must be received by 5:00 p.m. Eastern Daylight time, on June 13, 2012, for it to be effective. If you vote by telephone or on the Internet and wish to change your vote, you should call the toll-free number or go to the Internet site, whichever method you used earlier, and follow the directions for changing your vote before 11:59 p.m. Eastern Daylight time, on June 13, 2012.

The Company is incorporated under Delaware law, which specifically permits electronically transmitted proxies, provided that each such proxy contains or is submitted with information from which the inspector of election can determine that such proxy was authorized by the stockholder (Delaware General Corporation Law, Section 212(c)). The electronic voting procedures provided for the Annual Meeting are designed to authenticate each

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stockholder by use of a control number to allow stockholders to vote their shares and to confirm that their instructions have been properly recorded.

Street-name Stockholders: Street-name stockholders may generally vote their shares or submit a proxy to have their shares voted by one of the following methods:

By Mail.  If you request paper copies of the proxy materials by mail, you may indicate your vote by completing, signing and dating the voting instruction form provided by your bank, broker or other nominee and returning it as instructed on the form.
By Methods Listed on Voting Instruction Form.  Please refer to your voting instruction form or other information forwarded by your bank, broker or other nominee to determine whether you may submit a proxy electronically on the Internet or by telephone, following the instructions on the voting instruction form or other information provided by the record holder.
In Person with a Proxy from the Record Holder.  A street-name stockholder who wishes to vote in person at the meeting will need to obtain a legal proxy from their bank, broker or other nominee. Please consult the voting instruction form or other information sent to you by your bank, broker or other nominee to determine how to obtain a legal proxy in order to vote in person at the Annual Meeting.

If you are a beneficial owner, you may change your vote by submitting new voting instructions to your broker, trustee or other nominee as set forth in the voting instruction form. If you have obtained a legal proxy from your broker, trustee or nominee giving you the right to vote your shares, you can change your vote by attending the Annual Meeting and voting in person.

Vote Required

Vote Required to Elect the Directors (Proposal 1; Item 1 on the Proxy Card): Directors will be elected by a plurality of the votes cast by holders of shares of Common Stock entitled to vote and present in person or represented by proxy at the Annual Meeting.

Vote Required to Ratify the Selection of Our Independent Registered Public Accounting Firm (Proposal 2; Item 2 on the Proxy Card): The affirmative vote of the holders of a majority of the shares of Common Stock entitled to vote and present in person or represented by proxy at the annual meeting, is required to ratify the selection of Deloitte & Touche LLP, which we refer to as Deloitte & Touche, as our independent registered public accounting firm.

Vote Required to Approve, on an Advisory Basis, the Compensation of our Named Executive Officers (Proposal 3; Item 3 on the Proxy Card): The affirmative vote of the holders of a majority of the shares of our Common Stock, present in person or represented by proxy at the annual meeting, is required to approve, on an advisory basis, the compensation of our named executive officers, as disclosed in the proxy statement.

Tabulation of Votes

Votes cast by proxy or in person at the Annual Meeting will be tabulated by Broadridge Financial Solutions, Inc., which we refer to as Broadridge. A representative from Broadridge will also serve as Inspector of Elections for the Annual Meeting.

Quorum and Effect of an Abstention and Broker Non-Votes

The presence, in person or by a duly submitted proxy, of the holders of a majority in total number of votes of the issued and outstanding shares of Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum in order to transact business at such meeting. If you are a stockholder of record and do not vote by proxy card, by telephone, via the Internet or in person at the Annual Meeting, your shares will not be voted at the Annual Meeting and will not be included in determining the presence of a quorum at the Annual Meeting. If you are the beneficial owner of your shares and have not provided voting instructions, your bank, broker or other nominee may vote your shares only on those proposals on which it has discretion to vote, such as Proposal No. 2 (ratification of the selection of Deloitte & Touche as our independent registered public accounting firm for 2012). Under NASDAQ rules, your bank, broker or other nominee does not have discretion to vote your shares on non-routine matters such as Proposals 1 and 3. When a bank, broker or other nominee votes a client's shares on some but not all of the proposals at a meeting, the missing votes are referred to as "broker non-votes." Shares

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represented by abstentions and broker non-votes will be included in determining the presence of a quorum at the Annual Meeting. With respect to Proposal 1, only votes For or Withheld will affect the outcome. Abstentions and broker non-votes will have no effect on the outcome of Proposal 1. Broker non-votes will have no effect on the outcome of Proposal 3.  Abstentions with respect to Proposals 2 and 3 will have the same effect as a vote against these proposals.
 
Vote Confidentiality

Clearwire has a confidential voting policy to protect our stockholders' voting privacy. Under this policy, ballots, proxy forms, and voting instructions returned to brokerage firms, banks and other holders are kept confidential. Only the proxy tabulator and Inspector of Elections have access to the ballots, proxy forms, and voting instructions. The proxy tabulator will disclose information taken from the ballots, proxy forms, and voting instructions only if there is a proxy contest, if the stockholder authorizes disclosure, to defend legal claims, or as otherwise required by law.

Annual Meeting Admission

Attendance at the Annual Meeting is limited to stockholders and a guest. Admission to the Annual Meeting is on a first-come, first-served basis. Registration begins at 7:30 a.m. Pacific Daylight Time, and you will be asked to present a valid picture identification and proof of Clearwire stock ownership as of the record date. If you hold Clearwire stock in a brokerage account (“street name”), you must bring a copy of a brokerage account statement reflecting your stock ownership as of the record date. If you plan to attend as the proxy of a stockholder, you must present valid proof of proxy. Submitting your proxy now will not prevent you from voting your shares at the Annual Meeting if you desire to do so, as your proxy is revocable at your option. The use of cameras at the Annual Meeting is prohibited and they will not be allowed into the Annual Meeting or any other related areas, except by credentialed media. We realize that many cellular phones have built-in digital cameras, and while these phones may be brought into the meeting room, they may not be used at any time.



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PROPOSAL 1

ELECTION OF DIRECTORS
(Item 1 on Proxy Card)

Clearwire's business and affairs are managed under the direction of our Board of Directors, which is currently comprised of twelve members. The size of our Board shall not be less than five and not more than thirteen as fixed from time to time by the Board or by the stockholders as provided in our by-laws, which we refer to as the Clearwire Bylaws. The size of our Board is currently set at thirteen members in accordance with the Equityholders' Agreement. We currently have one vacancy on our Board. The Equityholders' Agreement grants rights to specified stockholders to nominate persons to fill the vacancy and they have not yet done so. As a result, there is one fewer nominee for election to the Board than there are available seats on the Board. Regardless of these vacancies, proxies may not be voted for more than the twelve nominees nominated by the Board.

Twelve directors are to be elected at the Annual Meeting to hold office until the next annual meeting of stockholders, or until their successors are elected and qualified. All of the nominees are currently serving as directors. The accompanying proxy will be voted in favor of the nominees named below to serve as directors unless the stockholder indicates to the contrary on the proxy.

In the unexpected event that a nominee is unable or unwilling to serve as a director at the time of the Annual Meeting, the persons named as proxies may vote for a substitute nominee chosen by us. Alternatively, the Board of Directors may decide to reduce the size of the Board of Directors. Each person nominated for election has agreed to serve if elected, and we have no reason to believe that any nominee will be unable or unwilling to serve.

The Equityholders' Agreement provides for the nomination by each of Eagle River, Intel, Sprint, and the Strategic Investors as a group, of a certain number of members of our Board of Directors as described under the section of this proxy statement titled Related Party Transactions - Relationships among Certain Stockholders, Directors, and Officers of Clearwire - The Equityholders' Agreement. For so long as the Equityholders' Agreement remains effective, the Nominating and Corporate Governance Committee will nominate candidates for election to the Board in accordance with the terms of the Equityholders' Agreement. Thus, our director nomination process is largely driven by our corporate governance structure. All director nominees, whether chosen by the Nominating and Governance Committee or the Strategic Investors, should have the appropriate skills and characteristics required of Board members, assessed in the context of the perceived needs of the Board at the time. In selecting candidates, the Nominating and Corporate Governance Committee and the Board seek to ensure a representation of diverse skills, expertise and perspectives, although the Company's nominating procedures and policies do not prescribe specific standards for diversity.

Unless a director resigns, dies or is removed, each director elected will hold office for the longer of one year or until that director's successor is elected and qualified.

Our Board of Directors has approved the nomination of the twelve persons named in the following table to be elected as directors, and, as indicated in the table, some of them were also nominated by shareholders who are parties to the Equityholders' Agreement.

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OUR BOARD RECOMMENDS A VOTE “FOR” THE ELECTION TO THE BOARD OF EACH OF THE FOLLOWING NOMINEES:
Name
 
Position with Clearwire
 
Age
 
Nominated By
John W. Stanton
 
Executive Chairman
 
56
 
Sprint
William R. Blessing
 
Director
 
56
 
Sprint
Bruce A. Chatterley
 
Director
 
50
 
Intel
Mufit Cinali
 
Director
 
54
 
Sprint
Jose A. Collazo
 
Director
 
68
 
Sprint
Hossein Eslambolchi
 
Director
 
54
 
Sprint
Dennis S. Hersch
 
Director
 
65
 
Strategic Investors
Brian P. McAndrews
 
Director
 
53
 
Sprint
Erik E. Prusch
 
Director, President & Chief Executive Officer
 
45
 
Eagle River
Kathleen H. Rae
 
Director
 
55
 
Nominating Committee
Theodore H. Schell
 
Director
 
67
 
Strategic Investors
Jennifer L. Vogel
 
Director
 
50
 
Sprint

The following is a brief biography of each of our nominees and a description of specific experiences, qualifications and skills considered in connection with their nomination:

John W. Stanton.  Mr. Stanton has served as a director of Clearwire since November 2008, as Executive Chairman of the Board since August 2011, as Interim Chief Executive Officer from March 2011 to August 2011 and as Chairman of the Board from January 2011 to August 2011. He has served as Managing Director of Trilogy Partners LLC, a private investment firm, Trilogy International Partners LLC, an operator of wireless systems in South and Central America, and Trilogy Equity Partners LLC, an investor in small wireless-related companies, since 2005. Mr. Stanton served as Chairman and Chief Executive Officer of Western Wireless Corporation, a wireless telecommunications company, from 1992 until shortly after its acquisition by Alltel Corporation in 2005. Mr. Stanton was Chairman and a director of T-Mobile USA, formerly VoiceStream Wireless Corporation (“T-Mobile USA”), a mobile telecommunications company, from 1994 to 2004 and was Chief Executive Officer of T-Mobile USA from 1998 to 2003. Mr. Stanton is a member of the board of directors of Columbia Sportswear, Inc., a manufacturer of active outdoor apparel and footwear.

Mr. Stanton was nominated to continue to serve as a director due to his experience as a chief executive officer for public and private companies, his current and past public company director experience, his extensive experience in the telecommunications industry and his insights into global operations, strategic planning and financial matters.

William R. Blessing.  Mr. Blessing has served as a director of Clearwire since December 2010.  He served as Senior Vice President, Corporate Strategy and Development for Embarq Corporation, an integrated communications services provider, from 2005 to 2007. Prior to that, he served as Sprint's Senior Vice President, Corporate Strategy and Development from 2003 to 2005, and held various executive positions with Sprint and related companies from 1981 to 2003. He currently serves as a board member of Kansas City Life Insurance (and as a member of its executive and compensation committees).

Mr. Blessing was nominated to continue to serve as a director due to his lengthy experience in the telecommunications industry, his current and prior experience as a director, his experience with corporate strategy and development, and his extensive corporate leadership.

Bruce A. Chatterley. Mr. Chatterley has served as a director of Clearwire since June 2011. In March 2012, Mr. Chatterley was appointed President and CEO of Broadvox, a hosted VoIP and hosted communications provider. He formerly served as President - Business Markets of Megapath, Inc., a nationwide competitive local exchange carrier, from August 2010 until April 2011. From May 2007 to August 2010, Mr. Chatterley served as President and Chief Executive Officer of Speakeasy, a division of Best Buy Co., Inc. ("Best Buy") and a Vice President of Best Buy. From September 2003 to May 2007, Mr. Chatterley served as President and Chief Executive Officer and as a

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director of Speakeasy, Inc., a nationwide provider of broadband-based voice and data communication services, until its sale to Best Buy. Prior to that, he was CEO of ViAir Inc., a developer of wireless mobile messaging software, until its sale in 2003. Prior to ViAir Inc., Mr. Chatterley served as President Small and Mid Markets for Concur Technologies, Inc. ("Concur"), a developer of travel and expense management services. Before starting at Concur in 1999, Mr. Chatterley served in a variety of executive and management positions for a number of public companies including Ameritech Corporation, US West, Inc., General Electric Company and IBM.

Mr. Chatterley was nominated to continue to serve as a director due to his experience as an executive officer for a public company and his extensive experience in telecommunications, technology and software development industries.

Mufit Cinali.  Mr. Cinali has served as a director of Clearwire since December 2010. He is a Managing Director with Springwell Capital Partners, LLC, a restructuring and transaction advisory firm. Prior to co-founding Springwell Capital Partners in 2001, he was the Corporate Vice President, Strategy and Business Development with Hughes Electronic Corporation, the parent of DirecTV, PanAmSat, and Hughes Satellite Manufacturing businesses. Mr. Cinali was a Vice President of Mergers and Acquisitions with AT&T Corporation from 1995 to 1999, and previously spent six years with GE Capital Corporation in the LBO, Equity and Corporate Merger and Acquisitions groups. Before joining GE Capital Corporation in 1989, Mr. Cinali was a strategy consultant with Bain and Company.

Mr. Cinali was nominated to continue to serve as a director due to his experience as an executive officer for public and private companies, his finance and operational experience across communications, technology and financial services industries, and his knowledge of business development and strategic planning.

Jose A. Collazo.  Mr. Collazo has served as a director of Clearwire since November 2008. He has served as President - Products and Partners of BT Global Services, a division of BT Group plc, the world's oldest telecommunications company, since 2007. Previously, Mr. Collazo served as Chairman, Chief Executive Officer and President of Infonet Services Corporation, a provider of international data, fax and voice communications solutions, from 1971.

Mr. Collazo was nominated to continue to serve as a director due to his experience as a chief executive officer for a public company in the telecommunications industry, his public company director experience, and his experience with both the high growth computer services environment and value added data communication services.

Hossein Eslambolchi, Ph.D.  Dr. Eslambolchi has served as a director of Clearwire since December 2010. He is currently a consultant to Ericsson Corporation, a provider of telecommunications equipment and services. Previously, he served in various senior executive roles at AT&T Corporation, a telecommunications company, from 2001 to 2006, including global Chief Technology Officer, global Chief Information Officer, and President and Chief Executive Officer of AT&T Labs and AT&T Global Network Services. He is currently the Chairman of 2020 Venture Partners, which provides technology and operations consulting services to clients in areas including telecommunications and all IP communications. Dr. Eslambolchi also serves on the board of directors of PureWave Networks, Inc., Real Dice, Inc., and Verecloud.

Dr. Eslambolchi was nominated to continue to serve as a director due to his extensive experience in the telecommunications industry, his engineering and technical expertise, and his prior service as chief information officer, chief technology officer, and chief executive officer of major telecommunication companies.

Dennis S. Hersch.  Mr. Hersch has served as a director of Clearwire since November 2008. Mr. Hersch is President of N.A. Property, Inc., a real estate and investment entity, and has held such position since February 2008. He was a Managing Director of JPMorgan Securities, Inc., an investment bank, from December 2005 to January 2008, where he served as the Global Chairman of its Mergers & Acquisitions Department. Mr. Hersch was a partner of Davis Polk & Wardwell, a New York law firm, from 1978 until December 2005. He is also a director of Limited Brands, Inc.

Mr. Hersch was nominated to continue to serve as a director due to his experience in the investment banking industry, his lengthy experience as a partner at a leading New York law firm, his recognized expertise on mergers and acquisitions, and his current and past public company director experience.


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Brian P. McAndrews.   Mr. McAndrews has served as a director of Clearwire since February 2009. He is currently a Venture Partner with Madrona Venture Group, a venture capital firm. Mr. McAndrews served as CEO of aQuantive Inc., a digital marketing company, from 1999 to 2007. aQuantive was acquired by Microsoft in August of 2007, at which time Mr. McAndrews joined Microsoft Corporation, to lead the Advertiser and Publisher Solutions Group until December 2008. Prior to joining aQuantive, Mr. McAndrews worked for ABC Inc., a broadcasting and communications company, holding executive positions at ABC Sports, ABC Entertainment, and ABC Television Network and; eventually becoming Executive Vice President and General Manager for ABC Sports. Mr. McAndrews currently sits on the Board of Directors for Fisher Communications Inc.

Mr. McAndrews was nominated to continue to serve as a director due to his experience as a chief executive officer for a public company in the technology industry, his current and past public company director experience, and his digital media experience.

Erik E. Prusch. Mr. Prusch has served as a director of Clearwire since February 2012. Prior to being appointed as Chief Executive Officer in August 2011, Mr. Prusch served as Chief Operating Officer from March 2011 to August 2011, and Chief Financial Officer from August 2009 to March 2011. Prior to that, Mr. Prusch served as President and Chief Executive Officer of Borland Software from December 2008 to July 2009. He served as Chief Financial Officer of Borland from November 2006 to December 2008. Prior to Borland, he was Vice President of Finance in Intuit's Turbo Tax division from January 2004 to November 2006. Prior to Intuit, he served as Chief Financial Officer of Identix Incorporated. Before that, Prusch served as Vice President, Finance and Operations at Gateway Computers, Incorporated. He began his career at Touche Ross and PepsiCo.

Mr. Prusch was nominated to continue to serve as a director due to his ongoing contributions to the Company as its President and Chief Executive Officer and his experience in executive and financial management for other public and private companies.

Kathleen H. Rae.  Ms. Rae has served as a director of Clearwire since June 2011. Ms. Rae is a retired business executive with twenty-five years of experience in operations and financial management in various executive roles. She served as President and Chief Operating Officer at InfoSpace, Inc., a mobile media and online search company with operations in the United States and Europe, from 2003 to 2005. Prior to InfoSpace, Ms. Rae was a partner at Ignition Partners, a venture capital firm, from 2000 to 2001. From 1996 to 1999, Ms. Rae was a founding executive for NEXTLINK Communications, Inc., now XO Communications, a provider of voice and data services to businesses, where she served as Chief Financial Officer for four years. From 1987 to 1995, she served in various executive positions at Alaska Airlines and Horizon Air, and most recently, Ms. Rae served as President and Chief Executive Officer of Horizon Air, one of the country's premier regional carriers. While at Alaska Airlines, Ms. Rae was Vice President and Controller. She began her career at Arthur Andersen & Co.

Ms. Rae was nominated to continue to serve as a director due to her experience as an executive officer with several public companies, her ability to qualify as an audit committee financial expert, her strong background in operations and financial management, her familiarity with the telecommunications industry, and her experience with increasing revenues and growing businesses.

Theodore H. Schell.  Mr. Schell has served as a director of Clearwire since January 2009. He is currently a Managing Director at Associated Partners LP, a private equity firm focusing on all aspects of media and telecommunications. Prior to joining Associated Partners LP, he was a General Partner at Apax Partners where he oversaw U.S. investments in telecommunications, wireless and related technology companies. Mr. Schell is also a founder of Enforta, a WiMax operator that provides broadband access in more than 100 cities across Russia. Prior to joining Apax, Mr. Schell served for eleven years at Sprint as its Senior Vice President for Strategy and Corporate Development. Before joining Sprint, Mr. Schell was the founder, President and CEO of Realcom Communications Corporation, established in 1983.

Mr. Schell was nominated to continue to serve as a director due to his experience as an executive officer for public and private companies, his current and past public company director experience, and his experience in the media, financial services and telecommunications industries.

Jennifer L. Vogel.  Ms. Vogel has served as a director of Clearwire Corporation since June 2011. Ms. Vogel served as General Counsel, Secretary and Chief Compliance Officer of Continental Airlines, Inc. from 2001 until 2010, when it merged with United Airlines, and served as a Senior Vice President of Continental from 2003 to

11



2010. She also served on Continental's Management Committee and its Diversity Council and chaired its Ethics and Compliance Committee. Prior to joining Continental in 1995, she began her career at Vinson & Elkins LLP, a law firm, in its Corporate Finance and Securities Department where she specialized in mergers and acquisitions, international project finance, and public debt and equity issuances. Ms. Vogel currently serves on the national Board of Directors of the General Counsel Forum, serving as Chair in 2010.

Ms. Vogel was nominated to continue to serve as a director due to her significant experience serving as general counsel of several public companies and her strong background in corporate governance, mergers and acquisitions, corporate finance, and ethics and compliance matters.

CORPORATE GOVERNANCE


Director Independence; Controlled Company

As of April 16, 2012, Sprint beneficially owned approximately 47.1% of the voting power of Clearwire's outstanding Common Stock. In addition, the Investors collectively own approximately 17.8% and Eagle River owns approximately 2.5% of the voting power of Clearwire's outstanding Common Stock. The Equityholders' Agreement governs the voting of shares of the Common Stock held by each of the parties thereto in certain circumstances, including with respect to the election of the individuals nominated to the Board of Directors by Sprint, Eagle River and the Investors.

As a result of the combined voting power of the Common Stock held by Sprint, Eagle River and the Investors and the Equityholders' Agreement, from time to time we may rely on exemptions from certain NASDAQ corporate governance standards. Under the NASDAQ Marketplace Rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain NASDAQ corporate governance requirements, including the requirements that

a majority of the board of directors consist of independent directors;
the compensation of officers be determined, or recommended to the board of directors for determination, by a majority of the independent directors or a compensation committee comprised solely of independent directors; and
director nominees be selected, or recommended for the board of directors' selection, by a majority of the independent directors or a nominating committee comprised solely of independent directors with a written charter or board resolution addressing the nomination process.

While we currently meet the above requirements, due to the provisions of the Equityholders' Agreement and our current ownership structure, we may elect to use these exemptions available to controlled companies at a future time.

Regardless of whether a company is a “controlled company,” the NASDAQ Marketplace Rules require that a company have an audit committee of at least three members, each of whom must

be independent as defined under the NASDAQ Marketplace Rules;
meet the criteria for independence set forth in the applicable rules of the Securities and Exchange Commission, which we refer to as the SEC, (subject to applicable exemptions);
not have participated in the preparation of the financial statements of the company or any current subsidiary of the company at any time during the past three years; and
be able to read and understand financial statements, including a balance sheet, income statement, and cash flow statement.

Additionally, at least one member of the audit committee must have past employment experience in finance or accounting, a requisite professional certificate in accounting, or other comparable experience or a background that results in the individual's “financial sophistication,” including being or having been a senior officer with financial oversight responsibilities.

    

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The Board has determined that our Audit Committee members meet the applicable SEC and NASDAQ requirements relating to audit committee membership, including independence requirements.

The Nominating and Governance Committee and the Board consider the relationships our non-management directors have with the Company and determine whether such directors are independent of the Company and management. After considering relevant facts and circumstances, the Board determined that all the directors, with the exception of Mr. Prusch, are independent as defined under and required by the federal securities law and the NASDAQ Marketplace Rules. The independent directors of the Company meet regularly in executive session, i.e., without management present. Executive sessions of the independent directors will be called and chaired by the Chairman of the Board, if the Chairman is an independent director, or otherwise by the Chair of the Audit Committee.

Board of Directors

The information relating to our Board of Directors is set forth in the section titled “Proposal 1 - Election of Directors” of this proxy statement is incorporated by reference into this section.

Code of Ethics

The Company has adopted the Clearwire Code of Conduct and Ethics that applies to all of the Company's employees, including its principal executive officer, principal financial officer and principal accounting officer, and its Board of Directors. The Code of Conduct and Ethics is available on the corporate governance page of the Company's website at www.clearwire.com, under “Investor Relations” or in hard copy upon request to the Corporate Secretary. If the Company makes any substantive amendments to the Code of Conduct and Ethics or grants any waiver from a provision of the Code of Conduct and Ethics to any executive officer or director, the Company will promptly disclose the nature of the amendment or waiver on its website.

Board Leadership Structure

Our Board of Directors is led by the Executive Chairman of the Board. This role is not occupied by the person serving as our Chief Executive Officer. The Board of Directors has determined that having a non-employee director serve as our Executive Chairman of the Board is in the best interest of the Company's stockholders at this time. Mr. Stanton currently serves as the Executive Chairman of the Board, and Mr. Prusch currently serves as our Chief Executive Officer and sits on the Board. The Board feels that this division is appropriate because it believes that our Chief Executive Officer's responsibility is the day-to-day management of the Company, while the primary responsibility of our Board is to oversee the Chief Executive Officer's performance of his function and to provide oversight of the management of the Company. Having different individuals serve as the Executive Chairman, on the one hand, and the Chief Executive Officer, on the other, allows the Chief Executive Officer to focus on his operational responsibilities, while keeping a measure of independence between the oversight function of our Board and those operating decisions. However, the Board of Directors does not have a formal policy regarding the separation of the roles of Chief Executive Officer and Executive Chairman of the Board, as the Board of Directors believes it is in the best interests of the Company to make the determination regarding how to fulfill these functions based on the position and direction of the Company and the membership of the Board of Directors at the pertinent time.

Board's Role in Risk Oversight

The Board believes that effective risk management and control processes are critical to the Company's ability to predict and manage the challenges that the Company faces. Management is responsible for implementing Clearwire's risk assessment and management functions and for reporting to the Board on its processes and assessments with respect to the management of risk. The Board, in turn, both directly and through its committees, is responsible for overseeing management's risk assessment and management functions. The Audit Committee monitors the processes by which management assesses and manages risk. The Chief Financial Officer and the Director of Internal Audit, who oversees risk management, each meet with, or provide reports to, the Audit Committee at least once per quarter and also meet separately with the Audit Committee throughout the year on a periodic basis without other members of management present. The Director of Internal Audit meets at least once per quarter with the Audit Committee, as appropriate, to review the Company's enterprise risk profile and other risk topics. In addition, the Chief Financial Officer meets at least quarterly with the Audit Committee or the full Board to discuss Clearwire's market risk, liquidity risk, financial results and financial forecasts. The Compensation Committee

13



reviews periodic reports from management with respect to whether our compensation programs and policies are reasonably likely to have a material adverse effect on the Company. Throughout the year, the full Board also regularly receives strategic presentations, operational and financial updates, as well as reports, agendas and minutes of the proceedings of its standing committees and, in this way, remains apprised of the principal risks of the Company's business.

Board Meetings and Committees

During the last fiscal year, which started on January 1, 2011 and ended on December 31, 2011, the Board of Directors held a total of thirteen meetings. All of our current directors attended more than 75% of the aggregate number of Board meetings and meetings of committees of the Board on which that director served during 2011.

In accordance with the Equityholders' Agreement, we have established five standing committees: an Audit Committee, a Compensation Committee, a Nominating and Governance Committee, a Strategic Committee and an Operations Strategy Advisory Committee. The Operations Strategy Advisory Committee was disbanded on October 27, 2011. To the extent that our Board of Directors delegates any authority to any other committee, then each of Sprint, Intel, Eagle River and the Strategic Investors will be entitled to designate at least one designee to any such committee for so long as it has the right to nominate at least one director, unless such designation would, in the good faith determination of a majority of the independent directors, be inappropriate as a result of a conflict of interest on the part of such designee, the party designating such designee or any of their respective affiliates. The Audit Committee, Compensation Committee and Nominating and Governance Committee are each governed by a written charter, and a current copy of each such charter is available to our stockholders on our website at www.clearwire.com. The Strategic Committee has such responsibilities and authority as have been delegated by resolution of the Board of Directors and are outlined below.

Audit Committee

The primary responsibilities of the Audit Committee are to oversee the accounting and financial reporting processes of Clearwire, as well as its affiliated and subsidiary companies, and to oversee the internal and external audit processes. The Audit Committee assists our Board of Directors in fulfilling its oversight responsibilities by reviewing the financial information that is provided to stockholders and others, and the system of internal controls that management and our Board of Directors have established. The Audit Committee oversees the Company's independent registered public accounting firm, including their independence and objectivity. However, the Audit Committee members do not act as professional accountants or auditors, and their functions are not intended to duplicate or substitute for the activities of management and the Company's independent registered public accounting firm. The Audit Committee is empowered to retain independent legal counsel and other advisors as it deems necessary or appropriate to assist the Audit Committee in fulfilling its responsibilities, and to approve the fees and other retention terms of legal counsel and the advisors. The Audit Committee met thirteen times during 2011.

The Audit Committee currently consists of three directors, including Ms. Rae, the independent director designated by our Nominating and Governance Committee. Directors Cinali, Rae and Schell currently serve as our Audit Committee members, and Ms. Rae serves as the Chair of the Audit Committee. Our Board of Directors has determined that Directors Cinali, Rae and Schell are independent, as defined under and required by the federal securities laws and the NASDAQ Marketplace Rules. Our Board of Directors also determined that each current member of the Audit Committee has the financial sophistication required under the NASDAQ Marketplace Rules. In addition, our Board of Directors has determined that Ms. Rae qualifies as an audit committee financial expert under the federal securities laws and and the applicable professional experience requirements under the NASDAQ Marketplace Rules.

Pursuant to the Equityholders' Agreement, the approval of a majority of the Audit Committee will be required to approve any matter before the Audit Committee.

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Report of the Audit Committee

In accordance with its charter, the Audit Committee assists the Board in fulfilling its responsibility for oversight of the Company's accounting and financial reporting processes and its internal and external audit processes. The Audit Committee has implemented procedures to ensure that it devotes the attention necessary to each of the matters assigned to it under its charter.

In discharging its oversight responsibility, the Audit Committee has reviewed and discussed the Company's audited consolidated financial statements and related footnotes for the fiscal year ended December 31, 2011, and the independent registered public accounting firm's report on those financial statements with our management and with Deloitte & Touche, our independent registered public accounting firm. Management represented to the Audit Committee that our financial statements were prepared in accordance with generally accepted accounting principles. Deloitte & Touche presented the matters required to be discussed with the Audit Committee by Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.

The Audit Committee recognizes the importance of maintaining the independence of the Company's independent registered public accounting firm. Consistent with its charter, the Audit Committee has evaluated Deloitte & Touche's qualifications, performance, and independence, including that of the lead audit partner. In addition, Deloitte & Touche has provided the Audit Committee with the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm's communications with the Audit Committee concerning independence, and the Audit Committee has engaged in dialogue with Deloitte & Touche about their independence.
 
Based on the review and discussions described above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, for filing with the SEC, and selected Deloitte & Touche as the independent registered public accounting firm for the fiscal year 2012.
AUDIT COMMITTEE
 
Kathleen H. Rae (Chair)
Theodore H. Schell
Mufit Cinali

Audit and Non-Audit Fees

The following table sets forth the aggregate fees billed to the Company for the audit and other services provided by Deloitte & Touche during the years ended December 31, 2011 and 2010 (in thousands):
 
2011 ($)
 
2010 ($)
Audit Fees(1)
3,015

 
3,000

Audit Related Fees(2)

 
62

Tax Fees(3)
196

 
219

All Other Fees

 

Total Fees
3,211

 
3,281


(1)
Audit Fees: This category represents fees for the audit of our annual consolidated financial statements; the reviews of our interim consolidated financial statements, the audit of the Company's internal control over financial reporting, subsidiary audits performed in connection with statutory or regulatory requirements, and services incurred in conjunction with the preparation of SEC registration statements and private securities offering memoranda.
(2)
Audit Related Fees: This category represents fees for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements, including attest services not required by statute or regulations.
(3)
Tax Fees: This category represents tax compliance and tax advisory services, including foreign tax return preparation and requests for rulings or technical advice from tax authorities.

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Pre-Approval Policies and Procedures
 
The Audit Committee has adopted policies and procedures for the pre-approval of audit and non-audit services rendered by our independent registered public accounting firm. These policies require that all audit and non-audit services provided by Deloitte & Touche to us must be pre-approved in advance by our Audit Committee unless the following conditions are met:


The service is one of a set of permitted services that the independent registered public accountant is allowed to provide; and
The services are brought to the attention of the Audit Committee and approved prior to the completion of the annual audit.

All other permitted services must be pre-approved by either the Audit Committee or a delegate of the Audit Committee. If pre-approval is obtained from a delegate of the Audit Committee, the service may be performed provided that the service must be presented to the Audit Committee at the next scheduled meeting.

Compensation Committee

The primary responsibilities of the Compensation Committee are to periodically review and approve the compensation and other benefits for our employees, officers and independent directors, including reviewing and approving corporate goals and objectives relevant to the compensation of our executive officers in light of those goals and objectives, and setting compensation for these officers based on those evaluations. The Compensation Committee also administers and has discretionary authority over the issuance of stock awards under each of our stock compensation plans. The Compensation Committee met eight times during 2011.

Except as provided under the Equityholders' Agreement, the Compensation Committee may delegate authority to review and approve the compensation of Clearwire's employees to certain of Clearwire's executive officers, including with respect to stock option or stock appreciation rights grants made under each of Clearwire's stock option plans, stock compensation plans or stock appreciation rights plans.

Pursuant to the Equityholders' Agreement and subject to certain limitations and qualifications, the Compensation Committee has sole authority to, among other things, determine compensation for the Chief Executive Officer of Clearwire and Clearwire Communications LLC, which we refer to as Clearwire Communications, and all executive officers of Clearwire and Clearwire Communications who report directly to the Chief Executive Officer.

In accordance with the Equityholders' Agreement, the Compensation Committee will consist of four members, including one of Sprint's designated directors, one of the Strategic Investors' designated directors, Eagle River's designated director and an independent director. Directors Cinali, McAndrews and Vogel currently serve as our Compensation Committee members, and Mr. McAndrews serves as Chair of the Compensation Committee. Benjamin Wolff served as a director and as a member of the Compensation Committee during a portion of 2011. He resigned from the Board on October 24, 2011.

Nominating and Governance Committee

The Nominating and Governance Committee assists Clearwire's Board of Directors with respect to: the organization, membership, and function of the Board of Directors, including the identification and recommendation of director nominees and the structure and membership of each committee of the Board of Directors, corporate governance principles applicable to Clearwire and, Clearwire's policies and programs that relate to matters of corporate responsibility. The Nominating and Governance Committee reviews and makes recommendations to the Board of Directors regarding the composition of the Board of Directors and the structure, format, and frequency of the meetings. The Nominating and Governance Committee has not formally established any specific, minimum qualifications that must be met by each candidate for the Board of Directors or specific qualities or skills that are necessary for one or more of the members of the Board of Directors to possess. However, the Nominating and Governance Committee, when considering a potential candidate, does factor into its determination the following qualities of a candidate, among others: professional experience, educational background, knowledge of our business, integrity, professional reputation, independence, wisdom, and ability to represent the best interests of our

16



stockholders. The Nominating and Governance Committee met six times during 2010.

The Nominating and Governance Committee reviews and makes recommendations to the Board of Directors regarding the nature, composition and duties of the committees of the Board of Directors. The Nominating and Governance Committee reviews and considers stockholder recommended candidates for nomination to the Board of Directors. The Board of Directors has established a policy whereby stockholders may propose nominees for consideration by the Nominating and Governance Committee by submitting the names and other relevant information to the Corporate Secretary at the following address: Clearwire Corporation, 1475 120th Ave NE, Bellevue, WA 98005.

Pursuant to the Equityholders' Agreement and subject to certain limitations and qualifications, Clearwire's Nominating and Governance Committee consists of five members, including two of Sprint's designated directors, Eagle River's designated director, one of the Strategic Investors' designated directors and Intel's designated director. Messrs. Blessing, Chatterley, Collazo and Hersch currently serve as our Nominating and Governance Committee members, and Mr. Hersch serves as the Chair of the Nominating and Governance Committee. On October 27, 2011 Mr. Wolff resigned from the Board.

Operations Strategy Advisory Committee

The Operations Strategy Advisory Committee was established by the Board of Directors in February 2011 and was disbanded on October 27, 2011. The primary responsibilities of the Operations Strategy Advisory Committee were to advise the Company's officers on issues related to the development and implementation of the Company's operating plans and to assist the Board in its review and understanding of any operating plans proposed by Management.

Pursuant to the Equityholders' Agreement and subject to certain limitations and qualifications, each of Sprint, Intel, Eagle River, and the Strategic Investor Group was entitled to designate at least one designee to the Operations Strategy Advisory Committee. Until it was disbanded, the Committee consisted of Messrs. Blessing, Collazo, Eslambolchi and Schell. Mr. Schell served as the Chair of the Committee. The Operations Strategy Advisory Committee met six times during 2011.

Strategic Committee

The Strategic Committee was established by the Board of Directors in September 2010. The primary responsibilities of the Strategic Committee are to review, evaluate, negotiate and/or recommend for approval by the Board, or the disinterested or non related party directors, as applicable possible strategic transactions. Pursuant to the Equityholders' Agreement and subject to certain limitations and qualifications, Clearwire's Strategic Committee consists of five members, and may be expanded to include a director designated by each of Intel and the Strategic Investor Group. Directors Chatterley, Cinali, Hersch and Stanton currently serve as members of the Committee, and Mr. Stanton serves as the Chair of the Committee. The Strategic Committee met twenty-two times during 2011.

Compensation of the Board of Directors

Compensation Program for Non-Employee Directors

The Clearwire non-employee director compensation program that the payments described below were made under, was adopted in January 2009 by the Compensation Committee. TIn developing this program, the Compensation Committee was assisted by its compensation consultant, Towers Watson, who provided advice and perspective regarding peer group practices (using the peer companies identified in the Compensation Discussion and Analysis) and broader market trends. Under this program, directors receive an initial restricted stock unit award and follow-on annual stock awards. Annual stock awards are generally made in the first calendar quarter of each year at the same time as awards are granted to employees. In addition, the Executive Chairman of the Board receives an annual cash retainer of $75,000 plus additional cash compensation of $5,000 per Board meeting and $1,000 per committee meeting. The Audit Committee Chair receives an annual cash retainer of $50,000 plus additional cash compensation of $2,000 per Board meeting and $1,000 per committee meeting. The Compensation and Nominating and Governance Committee Chairs each receive an annual cash retainer of $45,000 plus additional cash compensation of $2,000 per Board meeting and $1,000 per committee meeting. All other directors receive an annual cash retainer of $35,000 plus additional cash compensation of $2,000 per Board meeting and $1,000 per committee meeting. Any director who serves as chair of a special purpose committee receives an

17



additional retainer equal to $10,000, prorated for the period in which such committee is actively meeting. Cash compensation is paid quarterly and directors are also reimbursed for actual out-of-pocket expenses.
Mr. Prusch does not participate in the compensation program for non-employee directors. He is compensated as an executive officer, as described in the section Executive Compensation. Fees earned by Mr. Sodhani were paid to his employer, Intel, in accordance with the terms of the Equityholders' Agreement.

Fiscal 2011 Compensation for Non-Employee Directors
The following table sets forth fiscal 2011 compensation for non-employee directors.
 
 
Fees Earned or
 
Stock
Awards
 
Option
Awards
 
 
 
 
Name(1)
 
Paid in Cash ($)(2)
 
($)(3)
 
($)
 
Total ($)
 
 
William R. Blessing
 
71,000

 
120,750

 

 
191,750

 
 
Bruce A. Chatterley
 
38,938

 
90,250

 

 
129,188

 
 
Mufit Cinali
 
87,000

 
120,750

 

 
207,750

 
 
Jose A. Collazo
 
69,000

 
99,933

 

 
168,933

 
(5)
Peter L.S. Currie
 
50,911

 
99,933

 

 
150,844

 
(5)
Hossein Eslambolchi
 
61,000

 
120,750

 

 
181,750

 
 
Dennis S. Hersch
 
106,630

 
99,933

 

 
206,563

 
(5)
Frank Ianna
 
31,500

 
99,933

 

 
131,433

 
(5)
Brian P. McAndrews
 
78,000

 
99,933

 

 
177,933

 
(5)
Kathleen H. Rae
 
54,054

 
90,250

 

 
144,304

 
 
Theodore H. Schell
 
104,082

 
99,933

 

 
204,015

 
(5)
Arvind Sodhani
 
9,836

 

 

 
9,836

 
(4)
John W. Stanton
 
157,647

 
124,952

 

 
282,599

 
(5)
Jennifer L. Vogel
 
36,938

 
90,250

 

 
127,188

 
 
Benjamin G. Wolff
 
74,307

 
120,750

 

 
195,057

 
 

(1)
Messrs. Currie and Ianna served as directors until June 14, 2011. Mr. Sodhani resigned as a director on February 10, 2011. Mr. Wolff who resigned as a director on October 27, 2011, had an advisory services agreement with the Company that terminated on June 11, 2011. No compensation was paid to Mr. Wolff under this agreement.
(2)
Amounts in this column represent retainers, meeting fees and chair fees.
(3)
Amounts in this column represent the grant date fair value of the awards, computed in accordance with FASB ASC Topic 718.
(4)
A total of $5,000 earned by Mr. Sodhani was paid directly to his employer, Intel, in accordance with the terms of the Equityholders' Agreement. Mr. Sodhani resigned from the Board of Directors in February 2011.
(5)
As of December 31, 2011, the aggregate number of shares of Clearwire Class A Common Stock underlying outstanding unvested restricted stock unit awards for each non-employee director were: Directors Blessing, Chatterley, Cinali, Eslambolchi, Rae and Vogel - 25,000 shares each; Directors Collazo, McAndrews and Schell - 29,190 shares each; and Mr. Stanton - 34,370 shares.

Director Stock Ownership Guidelines
    
Our Board has adopted stock ownership guidelines for directors in order to align the interests of directors and stockholders. Each director who receives equity compensation is expected to hold at least 25,000 shares of Class A Common Stock of the Company within three years of joining the Board and retain at least 50% of all shares of restricted stock or restricted stock units granted by the Company as compensation until their service with the Company ends. The Board will evaluate whether exceptions should be made for any director on whom this requirement would impose a financial hardship.

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Indemnification of Officers and Directors

Our Amended and Restated Certificate of Incorporation, which we refer to as the Clearwire Charter, requires us to indemnify our officers and directors to the fullest extent permitted by the Delaware General Corporation Law, which we refer to as the DGCL, against all loss and liability suffered and expenses reasonably incurred in connection with any suit or other proceeding to which the officer or director is made or threatened to be made a party by reason of the fact that he or she is or was an officer or director of the Company or, while an officer or director, is or was serving in certain specified roles with other entities. In addition, the Clearwire Charter requires us to advance expenses incurred by such persons in connection with such suit or proceeding to the fullest extent permitted by the DGCL.

The Clearwire Charter also provides that Clearwire may purchase and maintain insurance on behalf of any person who is entitled to indemnification as described above. We have and intend to maintain director and officer liability insurance, if available on reasonable terms.

Further, on December 4, 2008, we entered into indemnification agreements with each of our directors and executive officers then in office, which we refer to as the Indemnification Agreements. Additionally, all director and executive officers joining us after that date have also executed Indemnification Agreements. Under the Indemnification Agreements, we have agreed to indemnify each director and executive officer against liability arising out of the individual's performance of his or her duties to Clearwire. The Indemnification Agreements provide indemnification in addition to the indemnification provided by the Clearwire Charter and applicable law. Among other things, the Indemnification Agreements indemnify each director and executive officer for certain expenses (including attorneys' fees), judgments, fines and settlement amounts actually and reasonably incurred by the director or executive officer from any claims relating to any event or occurrence arising out of or in connection with the director's or executive officer's service to us or to any other entity to which the director or executive officer provides services at our request. Further, we have agreed to advance expenses the director or executive officer may spend as a result of any proceeding against the director or executive officer as to which such individual could be indemnified. Notwithstanding the other provisions of the Indemnification Agreements, we are not obligated to indemnify the director or executive officer: (1) for claims initiated by the director or executive officer; (2) for claims relating to payment of profits in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act; (3) if a final court decision determines that such indemnification is not lawful; and (4) if the director or executive officer did not act in good faith or the best interest of Clearwire, engaged in unlawful conduct, or is adjudged to be liable to Clearwire.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, which we refer to as the Securities Act, may be permitted to directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Executive Officers

The following sets forth certain information, as of April 30, 2012, about Clearwire's current executive officers, with respect to their service as executive officers of Clearwire.

Name
 
Age
 
Position
Erik E. Prusch
 
45
 
President and Chief Executive Officer
Hope F. Cochran
 
40
 
Chief Financial Officer and Senior Vice President
John C.B. Saw
 
50
 
Chief Technology Officer and Senior Vice President
Broady R. Hodder
 
40
 
General Counsel and Senior Vice President
Dow Draper
 
42
 
Senior Vice President and GM of Retail
Don A. Stroberg
 
46
 
Senior Vice President of Strategic Partnerships and Wholesale
Steve A. Ednie
 
44
 
Chief Accounting Officer

    



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Erik E. Prusch - President and Chief Executive Officer. Prior to being appointed as Chief Executive Officer in July 2011, Mr. Prusch served as Chief Operating Officer from March 2011 to July 2011, and Chief Financial Officer from August 2009 to March 2011. Prior to that, Mr. Prusch served as President and Chief Executive Officer of Borland Software from December 2008 to July 2009. He served as Chief Financial Officer of Borland from November 2006 to December 2008. Prior to Borland, he was Vice President of Finance in Intuit's Turbo Tax division from January 2004 to November 2006. Prior to Intuit, he served as Chief Financial Officer of Identix Incorporated. Before that, Prusch served as Vice President, Finance and Operations at Gateway Computers, Incorporated. He began his career at Touche Ross and PepsiCo.

Hope F. Cochran - Chief Financial Officer. Prior to being appointed as Clearwire's Chief Financial Officer in March 2011, Ms. Cochran served as Senior Vice President, Finance and Treasurer since November 2008, and as Old Clearwire's Senior Vice President, Finance since August 2008 and as Treasurer since June 2006. From November 2005 to August 2008, Ms. Cochran was Old Clearwire's Vice President, Finance. Previously, from May 2003 to August 2005, Ms. Cochran served as the Chief Financial Officer of Evant Incorporated, a planning and logistics software developer. From May 2001 to May 2003, Ms. Cochran served as the Controller of the Americas - Sales Operations for PeopleSoft, Inc. Before 2001, Ms. Cochran was a founder and served as the Chief Financial Officer of SkillsVillage, a contractor supply chain management software provider, until its sale to PeopleSoft, Inc. In both chief financial officer positions, Ms. Cochran managed corporate finance, accounting, human resources, legal and facilities. Ms. Cochran began her career as an auditor at Deloitte & Touche.

John C.B. Saw - Chief Technology Officer and Senior Vice President. Prior to being appointed as our Chief Technology Officer and Senior Vice President in November 2008, Dr. Saw served as Old Clearwire's Chief Technology Officer since July 2007. From October 2003 to July 2007, Dr. Saw served as Old Clearwire's Vice President of Engineering. Before joining Old Clearwire, from 2002 to 2003, Dr. Saw was Senior Vice President and General Manager of Fixed Wireless Access at Netro Corp (now SR Telecom) where he initiated the rollout of Netro's broadband wireless product in Europe. From 1997 to 2002 Dr. Saw served as Chief Engineer and Vice President of Engineering at AT&T Wireless (now AT&T). At AT&T Wireless, Dr. Saw was instrumental in the development and rollout of the company's digital broadband wireless service, one of the earliest orthogonal frequency-division multiplexing (OFDM)-based wireless systems deployed and foreshadowed the subsequent development of the WiMAX 802.16 standards. Before joining AT&T Wireless, Dr. Saw spent nine years in various leadership positions at Nortel where he was involved in the development of TDMA, GSM, CDMA, fixed wireless cellular infrastructure and microwave radio products.

Broady R. Hodder - General Counsel and Senior Vice President. Prior to being appointed as Clearwire's Senior Vice President and General Counsel in November 2008, Mr. Hodder served as Old Clearwire's Vice President and General Counsel since May 2006. Previously, Mr. Hodder served as Old Clearwire's Corporate Counsel from November 2004 to November 2005 and Vice President Legal, Finance and Corporate Development from November 2005 to May 2006. Before joining Old Clearwire, from April 2001 to November 2004, Mr. Hodder was a lawyer with Davis Wright Tremaine LLP, where he became a partner in January 2004. Before joining Davis Wright Tremaine LLP, Mr. Hodder was a lawyer with Gray Cary Ware & Freidenrich LLP and Lionel Sawyer and Collins Ltd.

Dow Draper - Senior Vice President and General Manager of Retail. Prior to be appointed as our Senior Vice President and General Manager of Retail in October 2011, Mr. Draper served as the Senior Vice President of Marketing and Products since February 2009. Before joining Clearwire, Mr. Draper held various roles at Alltel Wireless including Senior Vice President of Device and Data Services from January 2008 to March 2009 and Senior Vice President of Financial Planning and Analysis from August 2005 to December 2007. Mr. Draper was also a part of a small executive team that oversaw Alltel's sale to TPG and Goldman Sachs. From July 2004 to August 2005, he was Executive Director of Financial Planning and Analysis at Western Wireless. Prior to that he worked at McKinsey and Company and was involved in strategic and marketing business engagements for various industries including Software, Automotive, Commercial Aviation and Telecommunications.

Don A. Stroberg - Senior Vice President of Strategic Partnerships and Wholesale. Prior to being appointed Clearwire's Senior Vice President of Strategic Partnerships and Wholesale, Mr. Stroberg served as Senior Vice President of Wholesale since November 2008. From August 2005 to November 2008, Mr. Stroberg served in multiple roles at Sprint including Vice President of 4G Sales, Vice President of Customer Experience, and Vice President of Consumer Strategy & Business Development. Before Sprint, Mr. Stroberg was a Senior Manager in Deloitte's Consulting Telecommunications practice.


20



Steve A. Ednie - Chief Accounting Officer. Prior to being made Clearwire's Chief Accounting Officer in January 2011, Mr. Ednie served as the Vice President of Tax and Chief Tax Officer since August 2004. Before working at Clearwire, Mr. Ednie worked at Expedia, Inc. from 2002 to 2004 and XO Communications, Inc. from 1997 to 2002. Mr. Ednie started his career with Coopers & Lybrand, LLP as a Certified Public Accountant.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company's directors and executive officers, and persons who own more than 10% of a registered class of the Company's equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Our employees prepare these reports for certain of our directors and all of our executive officers on the basis of information obtained from the Company's records. Based on information available to us during fiscal year 2011, we believe that all applicable Section 16(a) filing requirements were met, other than one late filing each for Messrs. Blessing and Collazo.

STOCKHOLDER COMMUNICATIONS WITH BOARD OF DIRECTORS

Any matter intended for the Board of Directors, or for any individual member or members of the Board of Directors, should be delivered to the Company's Secretary at 1475 120th Ave NE, Bellevue, WA 98005 or by e-mail to investorrelations@clearwire.com, with a request to forward the same to the intended recipient. Each communication should identify the general topic of the communication. In general, all stockholder communication delivered to the Company's Secretary for forwarding to the Board of Directors or specified members will be initially received and processed by the Company before being forwarded in accordance with the stockholder's instructions. Communications may also be referred to other departments within the Company. The Company will generally not forward to the directors a communication that it determines to be primarily commercial in nature or related to an improper or irrelevant topic, or that requests general information about the Company.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table shows information regarding the beneficial ownership of shares of Class A Common Stock and Class B Common Stock as of March 31, 2012 and shows the number of and percentage owned by:

each person who is known by us to own beneficially more than 5% of Class A Common Stock or Class B Common Stock;
each member of our Board of Directors and each nominee for director;
each of our named executive officers listed in the Summary Compensation Table; and
all current members of our Board of Directors and our executive officers as a group.

Information provided for each of FMR LLC and Chesapeake Partners Management Co., Inc. is based on the latest Schedule 13G reports that such investor had filed with the SEC as of the date of this Proxy Statement. Except as indicated in the footnotes to this table, each person has sole voting and investment power with respect to all shares attributable to such person and each person’s address is c/o Clearwire Corporation, 1475 120th Ave NE, Bellevue, Washington 98005.

21



 
Class A(1)
 
% of Class A
 
Class B
 
% of Class B
 
% Voting
5% Stockholders:
 
 
 
 
 
 
 
 
 
Sprint HoldCo LLC (2)(3)
705,359,348

 
58.9
%
 
627,645,914

 
74.8
%
 
47.1
%
Intel Capital Corporation (2)(4)
94,076,878

 
16.9
%
 
65,644,812

 
7.8
%
 
7.1
%
Comcast Corporation (2)(5)
88,504,132

 
15.2
%
 
88,504,132

 
10
%
 
6.6
%
Eagle River Holdings, LLC (2)(6)
34,026,470

 
6.9
%
 
2,728,512

 
*

 
2.5
%
Time Warner Cable, Inc. (2)(7)
46,404,782

 
8.6
%
 
46,404,782

 
5.5
%
 
3.5
%
FMR LLC (8)
71,365,577

 
14.5
%
 

 

 
5.4
%
Chesapeake Partners Management Co., Inc. (9)
28,268,059

 
5.7
%
 

 

 
2.1
%
Named Executive Officers and Directors:
 

 
 

 
 

 
 

 
 

John W. Stanton (10)
4,612,505

 
*

 

 

 
*

William R. Blessing
18,250

 
*

 

 

 
*

Bruce A. Chatterley

 
*

 

 

 
*

Mufit Cinali
8,250

 
*

 

 

 
*

Jose A. Collazo
121,890

 
*

 

 

 
*

Hossein Eslambolchi
8,250

 
*

 

 

 
*

Dennis S. Hersch
63,890

 
*

 

 

 
*

Brian P. McAndrews (11)
63,930

 
*

 

 

 
*

Kathleen H. Rae

 
*

 

 

 
*

Theodore H. Schell
83,890

 
*

 

 

 
*

Jennifer L. Vogel

 
*

 

 

 
*

Erik E. Prusch
166,380

 
*

 

 

 
*

Hope F. Cochran (12)
126,579

 
*

 

 

 
*

John C.B. Saw (13)
159,737

 
*

 

 

 
*

Dow Draper (14)
46,900

 
*

 

 

 
*

Broady R. Hodder (15)
140,291

 
*

 

 

 
*

William T. Morrow
100,000

 
*

 

 

 
*

Teresa L. Elder
57,872

 
*

 

 

 
*

G. Michael Sievert

 
*

 

 

 
*

All directors and executive officers as a group (21 persons)
5,917,241

 
1.2
%
 

 

 
*

/

*Less than 1%

(1)
Shares of Class A Common Stock beneficially owned and the respective percentages of beneficial ownership of Class A Common Stock assumes the conversion of all shares of Class B Common Stock beneficially owned by such person or entity into Class A Common Stock, and the exercise of all options, warrants and other securities convertible into common stock beneficially owned by such person or entity currently exercisable or exercisable within sixty days of March 31, 2012. Shares issuable pursuant to the conversion of Class B Common Stock or the exercise of stock options and warrants exercisable within sixty days are deemed outstanding and held by the holder of such shares of Class B Common Stock, options or warrants for computing the percentage of outstanding common stock beneficially owned by such person, but are not deemed outstanding for computing the percentage of outstanding common stock beneficially owned by any other person. The respective percentages of beneficial ownership of Class A Common Stock beneficially owned is based on 492,523,548 shares of Class A Common Stock and 839,702,592 shares of Class B Common Stock outstanding as of March 31, 2012.
(2)
Pursuant to the Equityholders’ Agreement, which includes a voting agreement under which the parties to the Equityholders’ Agreement and their respective affiliates share the ability to elect a majority of Clearwire directors, each of Sprint, Comcast, Eagle River, Bright House Networks, Time Warner Cable and Intel may be deemed to beneficially own the shares beneficially owned by each other, including through their subsidiaries or affiliates, including, 627,945,914 shares of Class B Common Stock issued to Sprint HoldCo LLC, which we refer to as the Sprint Shares; 12,352,941 shares of Class B Common Stock issued to Comcast Wireless Investment I, Inc., which we refer to as the Comcast I Shares,

22



12,352,941 shares of Class B Common Stock issued to Comcast Wireless Investment II, Inc., which we refer to as the Comcast II Shares, 12,352,941 shares of Class B Common Stock issued to Comcast Wireless Investment III, Inc., which we refer to as the Comcast III Shares, 12,352,941 shares of Class B Common Stock issued to Comcast Wireless Investment IV, Inc., which we refer to as the Comcast IV Shares, 12,352,941 shares of Class B Common Stock issued to Comcast Wireless Investment V, Inc., which we refer to as the Comcast V Shares, and 26,739,427 shares issued to Comcast Wireless Investment VI, Inc., which we refer to as the Comcast VI Shares, which together with the Comcast I Shares, the Comcast II Shares, the Comcast III Shares, the Comcast IV Shares, and the Comcast V Shares we refer to as the Comcast Shares; 30,922,958 shares of Class A Common Stock and 2,728,512 shares of Class B Common Stock issued to Eagle River Holdings LLC, which we refer to as the Eagle River Shares; 15,468,261 shares of Class B Common Stock issued to TWC Wireless Holdings I LLC, which we refer to as the TWC I Shares, 15,468,261 shares of Class B Common Stock issued to TWC Wireless Holdings II LLC, which we refer to as the TWC II Shares, and 15,468,260 shares of Class B Common Stock issued to TWC Wireless Holdings III LLC, which we refer to as the TWC III Shares, which, together with the TWC I and TWC II Shares, we refer to as the Time Warner Cable Shares; and 3,333,333 shares of Class A Common Stock beneficially owned by Intel Capital (Cayman) Corporation, which we refer to as the Intel Cayman Shares, 25,098733 shares of Class A Common Stock beneficially owned by Intel Capital Corporation, a subsidiary of Intel, which we refer to as the Intel Capital Shares, 65,644,812 shares of Class B Common Stock issued to Intel Capital Wireless Investment Corporation 2008A, which we refer to as the Intel 2008A Shares, which together with the Intel Cayman Shares, the Intel Capital Shares, and the Intel 2008A Shares. Each of the above-referenced stockholders disclaims beneficial ownership of the shares of capital stock held by such other stockholder, except to the extent of his pecuniary interest therein.
(3)
Includes 627,945,914 shares of Class B Common Stock issued to Sprint HoldCo LLC and 77,413,434 shares of Class B common stock issuable to Sprint HoldCo, LLC at par value pursuant to that certain Equityholders Agreement between the Company and certain strategic investors dated November 28, 2008. The address of such stockholder is 6200 Sprint Parkway, Overland Park, Kansas 66251.
(4)
Includes the Intel Shares. The address of each holder of Intel Shares is 2200 Mission College Boulevard, Santa Clara, California 95054-1549.
(5)
Includes the Comcast Shares. The address of each holder of Comcast Shares is One Comcast Center, 1701 John F. Kennedy Boulevard, Philadelphia, Pennsylvania 19103.
(6)
Includes 30,922,958 shares of Class A Common Stock, 375,000 shares of Class A Common Stock issuable on exercise of warrants, and 2,728,512 shares of Class B Common Stock. The address of such stockholder is 2300 Carillon Point, Kirkland, Washington 98033.
(7)
Includes the Time Warner Cable Shares. The address of each holder of Time Warner Cable Shares is 60 Columbus Circle, New York, New York 10023.
(8)
The address of such stockholder is 82 Devonshire Street, Boston, Massachusetts 02109.
(9)
The address of such stockholder 2800 Quarry Lake Drive, Suite 300, Baltimore, Maryland 21209.
(10)
Includes 588,235 shares of Class A Common Stock issued in the name of CW Investments Holdings LLC, an affiliate of the stockholder, 100,000 shares of Class A Common Stock issued in the name of The Aven Foundation, 100,000 shares of Class A Common Stock issued in the name of The Stanton Family Trust, and 100 shares held in the name of the stockholder's son. Mr. Stanton shares control of The Aven Foundation and disclaims beneficial ownership of the securities held by this entity. Mr. Stanton shares control of The Stanton Family Trust and disclaims beneficial ownership of these securities except to the extent of his pecuniary interest and investment control therein.
(11)
Includes forty shares of Class A Common Stock issued in the name of LKM Investments LLC, an entity managed by the stockholder.
(12)
Includes 25,000 shares of Class A Common Stock subject to options granted to Ms. Cochran and exercisable within sixty days of March 31, 2012.
(13)
Includes 69,166 shares of Class A Common Stock subject to options granted to Dr. Saw and exercisable within sixty days of March 31, 2012.
(14)
Includes 46,900 shares of Class A Common Stock subject to options granted to Mr. Draper and exercisable within sixty days of March 31, 2012.
(15)
Includes 60,832 shares of Class A Common Stock subject to options granted to Mr. Hodder and exercisable within sixty days of March 31, 2012.

23




EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis describes the compensation policies and decisions of the Compensation Committee of our Board of Directors for 2011 for the executive officers who are named in the Summary Compensation Table (the “named executive officers”). These named executive officers are:

Current Named Executive Officers
Erik E. Prusch, President and Chief Executive Officer
Hope F. Cochran, Chief Financial Officer and Senior Vice President
John C.B. Saw, Chief Technology Officer and Senior Vice President
Dow Draper, Senior Vice President and General Manager of Retail
Broady R. Hodder, General Counsel and Senior Vice President

Former Named Executive Officers
John W. Stanton, former Interim Chief Executive Officer*
William T. Morrow, former Chief Executive Officer
Teresa L. Elder, former President of Strategic Partnerships and Wholesale
G. Michael Sievert, former Chief Commercial Officer

*Mr. John Stanton, Executive Chairman of the Board of Directors, served as Interim Chief Executive Officer from March 11 through August 8, 2011. Although Mr. Stanton is required by SEC rules to be named as a former executive officer in the Summary Compensation Table, he received no compensation for his service as Interim Chief Executive Officer, other than amounts he received as a director. See Compensation of the Board of Directors for a description of the compensation Mr. Stanton received as a director in 2011.

The information in this discussion provides perspective and analysis relating to, and should be read along with, the executive compensation tables and narrative discussion set forth below.

Overview

Compensation Philosophy and Objectives

Our compensation program reflects our philosophy to pay all of our employees, including our named executive officers, in ways that:

Attract and retain the best talent;
Ensure each employee’s total compensation package is competitive with our peers;
Align employee incentives with the best interests of our stockholders through long-term equity incentives;
Encourage pay for performance through annual bonus and equity awards that are tied to achievement of specified performance objectives, and;
Support our mission, values and guiding principles.

To achieve these objectives for Clearwire’s named executive officers, the Compensation Committee reviews and determines all components of executive officer compensation. These components tie a substantial portion of our executive officers’ overall compensation to key strategic, financial and operational goals for the Company, such as our cash receipts, our cash spend, our retail and wholesale business strategy, cost cutting and outsourcing initiatives, development of our network, and network performance.

At our annual meeting of stockholders in June 2011, we held our first stockholder vote on an advisory resolution to approve the compensation of our named executive officers (commonly known as “say-on-pay”). The 2010 compensation of our named executive officers reported in our 2011 proxy statement was approved by over 95% of the votes cast at the 2011 annual meeting. Given the strong stockholder support of the Company's executive compensation programs, the Compensation Committee has followed a similar approach to compensation in 2011. The Committee will continue to be mindful of say-on-pay votes when making future compensation decisions for the named executive officers.


24




Elements of Compensation and Pay Mix

Compensation for our named executive officers consists of the following elements:

Base pay
Short-term incentive compensation (annual cash performance-based bonus)
Long-term incentive compensation (equity compensation such as stock options and restricted stock units)
Health and welfare benefits

Our pay elements are in keeping with our culture and we believe align with current practice of our peers. The annual compensation received by our named executive officers, specifically their annual performance bonuses and equity compensation, is determined by the Compensation Committee after reviewing either the performance of the Company, the individual performance of the executives themselves, or both factors.

Role of Compensation Committee, Compensation Consultants and Management

The Compensation Committee has primary responsibility for determining the compensation provided to our executive officers. The committee receives information and advice from its compensation consultant and from management and makes a determination of executive officer compensation.

The Compensation Committee has retained Towers Watson (“Towers”) since 2009 for advice regarding compensation. Towers reports directly to the committee and does not provide services to Clearwire management. Towers is a nationally recognized consulting firm with extensive experience in the area of executive compensation. Towers closely monitors executive compensation practices and trends and maintains an extensive executive compensation survey database covering industry trends. The services provided by Towers to the committee regarding 2011 compensation is more fully discussed below in Overview of Compensation Setting Process.
In September 2011, Clearwire management engaged Compensation Venture Group, an independent compensation consulting firm, to assist with developing recommendations for executive, incentive, and equity compensation programs.

Our Chief Executive Officer and human resources leaders regularly attend Compensation Committee meetings and consult periodically with the committee to review our executive compensation practices against our defined comparative framework. These members of management review and comment on the market compensation data provided by our human resources department, including the makeup of market comparison groups and the description of comparable officer positions, utilizing the competitive market data, along with other factors related to an executive officer’s position, experience, and individual performance, to develop proposed compensation levels for each executive officer. These members of management also review and recommend performance goals and goal weightings for our short-term and long-term incentive plans, and present these compensation proposals to the committee, which reviews and takes into account such proposals in its determination of executive compensation plans.

Overview of Compensation Setting Process

The Compensation Committee evaluates individual executive officers’ experience and performance with a goal of setting compensation at levels the committee believes are comparable with the levels of compensation provided to executive officers in other companies with whom we compete for executive talent or that are of similar size or industry profile, while taking into account our relative performance and our own strategic goals.

To assist the Compensation Committee, the Company periodically retains compensation consultants to review our policies and procedures with respect to executive officers’ salary, short-term incentives and long-term incentives. We compile data and participate in the most directly relevant compensation surveys conducted by independent third parties.

We review both cash and equity compensation with respect to the available market data at least annually.





25



In our 2011 review, we compared our executives’ compensation structure and levels to those of comparable companies using the Radford Global Technology Survey, focusing on peer companies meeting these two criteria:

Scope: Revenue between $1 billion and $3 billion
Industry: In one of the following sectors:
Network products/services
Computer/peripherals
Software products/services
Telecommunications

The peer companies in the Radford Global Technology Survey that met these criteria were as follows:
ABB USA
 
Echostar Technologies
 
NetApp
Acer America
 
Epson America
 
NII Holdings
AcXiom
 
Experion
 
OCE North America
ADC Telecommunications*
 
Fidelity National Information Svcs
 
Plexus
Adobe Systems
 
Fiserve
 
Ricoh Electronics
Alliance Data Systems
 
Flir Systems
 
Ricoh USA
Amdocs
 
Global Crossing
 
Rockwell Automation
America Tower
 
HTC
 
Salesforce.com
Arris Group
 
Hughes Network Systems
 
Sandia National Labs
AutoDesk
 
Intellectual Ventures
 
Sensata Technologies
Avaya
 
Intelsat
 
Sony Corporation of America
Bell Microproducts
 
Intuit
 
Space Systems/Loral
BMC Software
 
Invensys
 
Sumco Phoenix
Bose
 
Itron
 
Sybase
Brocade Communications
 
JDS Uniphase
 
Synopsys
CA
 
Juniper Networks
 
Tellabs
Ceridian Human Resources Solutions
 
Lawrence Livermore Nat’l Lab
 
Teredata
Cerner
 
Level 3 Communications
 
Toshiba America Information Systems
Citrix Systems
 
Lexmark International
 
Trimble Navigation
Coinstar
 
Logitech
 
TSYS
Commscope
 
Los Alamos National Laboratory
 
TW Telecom
Compucom Systems
 
McAfee
 
U.S. Cellular
Convergys
 
MEMC Electronic Materials
 
Underwriter Labs
Cricket Communications
 
MISYS
 
Verisign
Crown Castle
 
Molex
 
VMware
DST Systems
 
NCR
 
Windstream Communications

*This company is no longer publicly traded and will not be included in the peer group in the future.

The criteria that the Company used for determining the peer group in 2011 is the same as was used in the 2010 review. However, the composition of the Radford Global Technology Survey peer group has changed from 2010 due to the companies that chose to participate in the survey in 2011.

Towers recommended an additional peer group of technology and telecommunications companies of similar size, industry and life-cycle that the Compensation Committee used to benchmark equity grant practices, overhang, burn rate, non-employee director compensation and executive severance practices. The companies in this peer group are as follows:

26



Adobe Systems
 
Compuware
 
Synopsys
Autodesk
 
Earthlink
 
Tellabs
BMC Software
 
Hughes Communications
 
UTStarcom
Brocade Communications
 
Intuit
 
Verisign
Cadence Design Systems
 
JDS Uniphase
 
VMware
Citrix Systems
 
Leap Wireless International
 
 

Several factors were considered in selecting this peer group, including industry, products and services offered, revenue level, and competitors for executive talent in our labor markets.

The Compensation Committee evaluated 2011 compensation decisions in light of the peer company analysis to ensure that named executive officer compensation is competitive with the identified peer group and is sufficient to recruit and retain qualified executives. Base salaries were benchmarked at the fiftieth percentile and annual incentive award targets were benchmarked at the sixty-fifth percentile of compensation paid by other companies. For 2011 compensation, we also targeted long-term equity compensation at the sixty-fifth percentile of the Radford Global Technology Survey companies, as described below under Equity Compensation. The committee considered peer group compensation as one factor in making its compensation decisions. Other factors included the criticality, experience and scope of position for the executive. Base salaries were adjusted for 2011 as described below. Based on the peer group analysis, base salaries are generally positioned at median, and we have a higher-than-median approach to short-term incentives (annual performance bonuses) and long-term equity compensation for our named executive officers. This approach is intended to offset the perceived risk of joining a developing technology company operating within a capital intensive industry, such as Clearwire.

As a result of the Committee's review in January 2012, a new comparator peer group was approved, as shown below. Given the evolving business strategy of the Company, we believe the new comparator peer group is more reflective of the industry sectors and company size from which we recruit executive talent. This peer group results in a median revenue of $1.381 billion, which is within a desired range of Clearwire's 2011 revenue and projected 2012 revenue. The new comparator peer group meets the complex set of objectives for corporate governance, business strategy, and talent management.

Adobe Systems
 
Earthlink
 
Progress Software
Akamai Technologies
 
Echostar
 
Rovi
AOL
 
Equinix
 
SBA Communications
Arris Group
 
Fair Isaac
 
Synopsys
BMC Software
 
IAC/Interactive
 
Tellabs
Brocade Communications Systems
 
Juniper Networks
 
TW Telecom
Cincinnati Bell
 
Leap Wireless INTL
 
US Cellular
Comtech Telecommunications
 
Loral Space and Communications
 
Viasat
Comverse Technology
 
MetroPCS Communications
 
Windstream
Crown Castle INTL
 
Nuance Communications
 
 

The former comparator peer group was used by the Compensation Committee in connection with its fiscal 2011 cash and equity compensation decisions. Beginning with our fiscal 2012 year, the new comparator peer group will be used by the Compensation Committee in connection with cash and equity compensation decisions.











27



Elements of Executive Compensation Programs

Elements of Compensation and Pay Mix

The compensation packages for our named executive officers include a mix of cash and equity-based compensation. The major compensation components are:

Base pay, which forms a stable part of our named executive officers’ compensation packages
Annual cash bonuses that are based on our short-term strategic, operational and financial performance measured against specific pre-established goals
Long-term equity incentive compensation such as stock options and restricted stock units
Health and welfare benefits

Base Salary

We set base salaries for our executive officers at levels that we believe are competitive based on the scope of their responsibilities, taking into account competitive market compensation paid by other companies for similar positions. We compare executive officer base salaries to the median or fiftieth percentile of salaries paid by comparable companies for comparable positions. With our named executive officers, we set base salaries based on level of responsibility, span of control, and experience. Each year the Compensation Committee determines whether to approve merit increases to our executive officers’ base salaries based on their individual performance and the recommendations of our Chief Executive Officer. The Chief Executive Officer does not participate in the discussion or decisions regarding his own compensation. Base salaries are reviewed annually, as well as at the time of hire, promotion or changes in responsibility. Base salaries may also be adjusted from time to time to realign salaries with market levels. Base salary changes also impact target bonus amounts and actual bonus payouts, which are based on a percentage of base salary.

For 2011, the Chief Executive Officer recommended pay increases based upon market survey data, the difficulty of the job and individual performance of the executives. The Compensation Committee also took into consideration the total Company-wide merit increase budget of 3%. The committee approved the following pay increases for our continuing named executive officers. These salary increases were effective in February 2011, except for Mr. Hodder, whose increase was effective in January 2011.
Name
 
Prior Salary ($)
 
2011 Increased Salary ($)
 
2011 Increase Percentage
Erik E. Prusch (1)
 
479,750
 
496,541
 
3.5%
Hope F. Cochran (2)
 
275,000
 
283,250
 
3%
John C.B. Saw
 
378,750
 
388,219
 
2.5%
Dow Draper (3)
 
244,195
 
251.521
 
3%
Broady R. Hodder (4)
 
306,000
 
325,000
 
6%

(1)
On March 10, 2011, Mr. Prusch was promoted to Chief Operating Officer, and his salary was increased to $505,000 and on August 8, 2011 Mr. Prusch was promoted to Chief Executive Officer, and his salary was increased to $700,000.
(2)
On March 10, 2011 Ms. Cochran was promoted to Chief Financial Officer, and her annual salary was increased to $400,000.
(3)
On March 31, 2011, Mr. Draper was promoted to Senior Vice President, Marketing and Product, and his annual salary was increased to $275,000. Mr. Draper was then promoted to the title of Senior Vice President and General Manager of Retail on October 27, 2011.
(4)
Mr. Hodder's salary increase was a result of his performance and to align his pay with competitive levels.

Annual Performance Bonus Plan

The Compensation Committee has the authority to award performance-based bonuses to our executive officers under the terms of our 2010 Annual Performance Bonus Plan payable in whole or in part in cash, in our Class A Common Stock or in other property. Pursuant to the plan, the Compensation Committee selects, at its discretion, those executive officers of the Company or its subsidiaries who are to participate in the plan. The Compensation Committee in its discretion also establishes the terms and conditions applicable to any award

28



granted under the plan and whether a participant will be eligible to receive an award under the plan in accordance with such terms and conditions, and takes all other actions necessary for the plan’s administration.

The 2010 Annual Performance Bonus Plan approved effective February 10, 2010 contains recoupment provisions in the event of a material inaccuracy in the Company’s financial statements that would result in a change in a performance bonus payout that was tied to the achievement of one or more earnings targets. The recoupment would apply regardless of a participant's misconduct or fault, and only if the demand for recoupment is made not later than three years following the payment of the applicable bonus.

Performance Measurement

Annual, performance-based awards are intended to compensate executive officers for achieving Company-wide financial and operational goals and objectives. These objectives generally relate to important, strategic factors discussed below.

Generally, bonuses are paid annually in the first quarter following completion of a given fiscal year provided a plan participant is then employed by the Company or any of its subsidiaries. The actual amount of any bonuses awarded will be determined by the Compensation Committee in its sole discretion. While the committee may elect to award bonuses based on the attainment of Company objectives, the committee, at its discretion, may elect to forgo awarding any bonuses or to increase or decrease the amount of any bonuses awarded based on each executive officer’s individual performance and contribution to our strategic goals. For 2011, the Company chose not to take into account any individual objectives or goals in determining the amount of the annual performance-based awards. The Company elected to limit annual performance bonuses to a maximum of 150% of the target annual bonus payout, and all named executive officers received the same percentage payout of their bonus.

For 2011, we focused on three key metrics of organizational success to determine our overall discretionary bonus pool. The table below summarizes the metrics and weightings for Company performance in 2011, followed by an explanation of each metric.
Measure
 
Minimum
Target to
Receive
Payout (50%
of Targeted Bonus)
 
FY10
Target
(100% of
Targeted Bonus)
 
Target for
Maximum
Payout
(150% of
Targeted Bonus)
 
2011 Actual
 
Weighting
 
Achieved
 
Payout Factor
 
 
 
 
 
 
 
Cash Receipts target of $1.104 billion
 
883.2M
 
1,104M
 
1,324.8M
 
1,233M
 
40%
 
112%
 
130%
Cash Usage target of $2.552 billion
 
2,041.6M
 
2,552M
 
3,062.4M
 
2,511M
 
40%
 
98%
 
105%
Subjective Measure
 
 
 
 
125%
 
20%
 
125%
 
125%
 
 
 
 
 
 
 
 
 
 
100%
 
 
 
119%

Cash Receipts target is a measure of how much domestic cash is received from both our retail and wholesale operations. In April 2011, we entered into a revised wholesale agreement with Sprint that changed the payment collection process and capped the amount of funds available to be received by us in 2011. Under the old payment methodology (that assumed thirty day payment terms), we would have received $37 million more in cash receipts in 2011, which under the revised agreement with Sprint were delayed until 2012. Because the cash receipts target for the annual incentive bonus plan was established under the old methodology, the Compensation Committee determined that it was appropriate to include the deferred $37 million in cash for purposes of determining the level of achievement of the 2011 cash receipts performance metric. This adjustment increased the payout factor for this performance metric by four percentage points.
Cash Usage target represents a measure of how cost effectively we use corporate funds to run our business.
The Subjective Measure consisted of a review of operational measures tied to the successful transformation of the Company in 2011, including developing a new retail strategy, outsourcing the network and customer care operations, and leveraging the existing network infrastructures of strategic partners. This measure was intended to give the Compensation Committee flexibility due to the evolution of the 2011 business strategy. In approving a payout factor of 125% for the Subjective Measure, the committee felt that management, as well as the entire employee base, exceeded expectations in their efforts, and the committee wanted to recognize the significant efforts and operational and financial results that were achieved during the year. The committee felt that 2011 was a year of significant changes, as the 2011

29



budget and operating business plans were reviewed and modified throughout the year. In 2011, the employee headcount was reduced from 3,498 to 914, which included a reduction of the Company's executive officers from eleven to seven, and the committee wanted to acknowledge the work that was done by the Company's employees to accomplish more with fewer resources and the success of implementing many initiatives to control cash, refocus the business, optimize the network cost structure, maximize performance and enable a leaner but more effective organization.

For the 2011 fiscal year, based on the performance of the Company against the performance goals, the weighted payout factor for annual performance bonuses for all employees was equal to 119% of the target bonuses. The Compensation Committee elected to award annual bonuses to the executive officers based on this percentage and did not exercise discretion to increase or decrease the percentage of any executive officer’s annual bonus target earned.

Cash Incentives Paid for 2011

Each named executive officer is eligible for an annual performance bonus that is based on a specified percentage of such named executive officer’s base salary. The table below shows the fiscal 2011 target bonus as compared to the actual performance bonuses paid for each of the named executive officers.
Name
 
Annual
Incentive
Bonus
Target as a % of Base Salary
 
Salary
as of
12/31/11 ($)
 
Annual
Incentive Bonus Target (1)
 
Actual
Incentive Bonus Payout ($)
 
Actual Payout as a % of Target
 
 
 
 
 
Erik E. Prusch
 
100%
 
700,000
 
700,000
 
833,000
 
119%
Hope F. Cochran
 
75%
 
400,000
 
300,000
 
357,000
 
119%
John C.B. Saw
 
50%
 
388,219
 
194,110
 
230,990
 
119%
Dow Draper
 
68%
(2)
275,000
 
187,500
 
223,125
 
119%
Broady R. Hodder
 
60%
 
325,000
 
195,000
 
232,050
 
119%

(1) Based on salary at 2011 year end.
(2) The bonus target for Mr. Draper is 50% of his base salary plus $50,000.

Mr. Morrow, Ms. Elder and Mr. Sievert were not employed as of December 31, 2011 and were not eligible for a 2011 annual bonus payout.

Equity Compensation

We believe that strong long-term performance is best achieved through fostering an ownership mentality among our employees. We primarily use stock and stock-based awards to create an ownership culture among our employees that is aligned with our stockholders’ interests. We provide long-term incentive compensation to our executive officers and other selected employees through the 2008 Stock Compensation Plan, which was adopted by our Board of Directors and approved by the stockholders of the Company in 2008.

Our equity compensation program is intended to provide the principal method for our executive officers to acquire equity or equity-linked interests in the Company. We used a combination of methodologies in reviewing peer data, including comparable industry and company size to establish an appropriate balance of cash compensation and equity ownership. The Compensation Committee’s general policy is to review and approve equity grants to executive officers based on:

A review of competitive compensation data;
Assessment of individual and company performance;
A review of each executive officer’s existing long-term incentives; and
Retention considerations.



30



We determined the target equity values for each executive officer based on the sixty-fifth percentile of the comparative peer group of companies from the Radford Executive Survey described above under Overview of Compensation Setting Process.

In recommending to the Compensation Committee that the restricted stock unit grants be awarded to executive officers in March 2011, the Chief Executive Officer, Mr. Morrow at the time, took into consideration company performance against financial and operational goals and individual performance relative to the target award value. The Compensation Committee determined the actual March 2011 grant awarded to Mr. Morrow.

The Company historically used a blended equity compensation package, including stock options and restricted stock units. Equity grants were generally made at the commencement of employment and then on a semi-annual basis thereafter. Occasionally, equity grants are granted following a significant change in job responsibilities or to meet other special retention or performance objectives. Beginning with the 2010 performance period, grants were made solely in the form of restricted stock units. We believe that restricted stock units are a more effective retention and long-term incentive vehicle than stock options, and that stock options were not delivering the intended value. Restricted stock units granted to executive officers in 2011 generally vest 25% per year, based on continued employment. In consultation with the Compensation Committee’s compensation consultant, we applied a 20% reduction to the option value to convert the stock option component to restricted stock units for the March 2011 grant related to the last half of the 2010 performance period in order to recognize the benefit of receiving full value shares in the form of restricted stock units that have intrinsic value at grant rather than stock option which have no intrinsic value at grant. The Compensation Committee determined in September 2010 to make equity grants in the future only once a year, in the first calendar quarter beginning in 2011.

Although the Company has shifted from blended semi-annual grants of stock options and restricted stock units to annual grants consisting solely of restricted stock units, periodic stock option grants may continue to be made to eligible employees, including in connection with a significant change in job responsibilities or to meet other special retention or performance objectives.

Stock option grants made under each of our plans have an exercise price equal to the fair market value of the Class A Common Stock on the date of grant (closing price on date of grant). Typically, stock option grants vest 25% per year, based on continued employment over a four-year period, and expire ten years after the date of grant. Certain executive officers have different vesting terms pursuant to their offer letters.

We continually evaluate which equity award vehicles achieve the best balance between our aims to reward and retain key contributors and create and maintain long-term stockholder value.

Performance Based Restricted Stock Units for 2012

On February 9, 2012 the Compensation Committee approved a 2012 Performance Based Restricted Stock Unit program for executive officers. Under the program, each executive is assigned a target long-term incentive dollar amount that will be paid out in time-vested restricted stock units based on achievements of the following performance goals:

75% of the executives' long-term incentive target amount will be paid out based on the attainment against target of Company performance measures during a one-year performance period beginning on January 1, 2012. The payout will range from 80% to 120% of the target amount for 90% to 110% achievement. Achievement below 90% will result in 80% pay-out. The earned restricted stock units will be issued after the end of the performance period, in March 2013 and will vest in three annual installments beginning one year after the date the restricted stock units are issued.

25% of the executives' long-term incentive target amount will be paid out based on the attainment against target of a wholesale performance measure during a two year performance period beginning on January 1, 2012. The payout will range from 25% to 150% of the target amount for 25% to 125% achievement. Achievement below 25% will result in 0% payout. The earned restricted stock units will be issued after the end of the performance period, in March 2014, and will vest in two annual installments beginning one year after the date the restricted stock units are issued.




31



Exchange Offer

On June 7, 2011, we completed our Exchange Offer. This program allowed our employees, including our named executive officers other than Mr. Morrow, to exchange eligible options with an exercise price greater than $7.00 for a lesser number of restricted stock units. The replacement restricted stock units have new vesting schedules, depending on the portion of the exchanged option that was vested. For options that were 100% vested, the replacement restricted stock units vest in two equal annual installments. For options that were 75% vested, the replacement restricted stock units vest in three equal annual installments. For options that were 0% to 50% vested, the replacement restricted stock units vest in four equal annual installments. Our Exchange Offer was designed to:

Provide our employees holding underwater outstanding stock options (stock options with exercise prices higher than the current market price per share of our Class A Common Stock) with the opportunity to receive new restricted stock units that may have a greater retentive and incentive value than the exchanged options because restricted stock units may provide value to an employee even if our stock price declined between the grant date and the date on which the restricted stock units vest. The additional vesting periods on the new awards were also designed to maximize the retention value of the program.
Better align the interests of our employees and stockholders to maximize stockholder value.
Enable us to recapture the value of compensation costs and realize the intended benefits of the original options that we granted, without any material increase in compensation expense.

The number of replacement restricted stock units received by each named executive officer pursuant to our Exchange Offer is set forth in the Grants of Plan-Based Awards in 2011 table below. Further details about our Exchange Offer are included in the Schedule TO-I that we filed with the SEC on May 9, 2011.

Perquisites and Benefits

Our executive officers are eligible to participate in the same benefit programs as all other employees. These benefits include the following:

Medical and dental care plans
Dependent and health care Flexible Spending Accounts
Life, accidental death and dismemberment and disability insurance
Employee Assistance Programs (confidential counseling)
Short-term and long-term disability programs
401(k) plan
Voluntary and Discount Programs
Patent Award Program
Paid time off

Starting in 2010, the Company introduced executive wellness benefits, such as executive physicals and health club memberships, and financial and tax planning assistance benefits for executive officers. The wellness benefit is capped at $7,500 per year and financial/tax planning assistance is capped at $15,000 per year. In addition, every three years, the Company will reimburse up to $1,000 in legal fees incurred in having estate planning documents reviewed or revised. The Company does not provide a full gross-up on the taxes relating to such benefits, but instead provides tax assistance on the value of the benefits received. The tax assistance is based on a 25% federal supplemental tax rate and Medicare tax rate of 1.45%. State tax rates for supplemental payments vary. We believe these benefits are reasonable in scope and amount and are in line with the benefits typically offered by other companies we compete with for executive talent.

Consistent with our compensation philosophy, we intend to maintain our current benefits for our executive officers. However, the Compensation Committee in its discretion may revise, amend, reduce or add to the executive officers’ benefits if it deems it advisable.








32



Post-Termination Compensation

Qualified Retirement Plan

Our executive officers are eligible to participate in our 401(k) plan on the same basis as other eligible employees. Clearwire makes a company match of 50% of employees’ contributions on the first 6% of eligible pay, up to 3% of employees’ eligible compensation each pay period. These company matching contributions vest over a three-year period commencing on the employees’ hire date. Employee-deferral contributions are always 100% vested.

The Company does not offer a defined benefit pension plan or any other qualified retirement plan arrangements. None of our named executive officers participates in or has account balances in any other qualified or non-qualified defined benefit plans sponsored by us.

Non-qualified Deferred Compensation

None of our named executive officers participates in or has account balances in any deferred compensation plans maintained by the Company. The Compensation Committee may elect in the future to provide our executive officers and other employees with non-qualified defined contribution or deferred compensation benefits if it determines that doing so is in our best interests.

Severance and Change in Control Benefits

The Company’s 2010 Executive Continuity Plan provides for severance pay and benefits for certain types of terminations for executive officers and is intended to help retain, incentivize and focus highly qualified executives. Except for Mr. Morrow, the 2010 Executive Continuity Plan replaced the prior Change in Control Severance Plan and the severance provisions contained in the individual offer letters of participating executive officers. Among other provisions, the 2010 Executive Continuity Plan eliminated the full excise tax gross-up in the Change in Control Severance Plan and generally reduced the amounts of severance payments and benefits. See Potential Payments on Termination or Change in Control for additional information about severance and change in control benefits for the named executive officers.

Additional Considerations

Equity Granting Practices

The Compensation Committee recognizes the importance of adhering to specific practices and procedures in the granting of equity awards. In July 2009, the committee adopted a Stock Compensation Policy, which was most recently amended in March 2011. The Stock Compensation Policy is designed to ensure that the timing of grants is done on a consistent schedule and that the terms of the grants are standard across the Company. Historically, we typically made our annual long-term incentive grants semi-annually, at the time of the regular meetings of the committee in March and September, so that vesting occurred in an open trading window following our earnings announcements. In the first quarter of 2011, the committee determined to make equity grants in the future only once a year, in the first calendar quarter, based on full prior year performance. We plan to continue to make the grants with vesting dates scheduled to occur in an open trading window.

The Compensation Committee is responsible for approving equity awards to our executive officers. The committee has also delegated authority to grant certain other awards to non-executive officers within specified limits and on specified terms and conditions to our Chief Executive Officer, acting together with one of the following officers: the Chief Financial Officer or the General Counsel. Grants made under this delegation are generally for the purpose of recruiting new hires, and are made throughout the year on the first day of the calendar quarter or the following business day. All stock option grants will have an exercise price equal to the fair market value of our Class A Common Stock on the grant date. This policy applies to all stock compensation awards granted by the Company under the 2008 Stock Compensation Plan.

Accounting and Tax Implications

The Compensation Committee considers the accounting and tax impact reflected in our financial statements when establishing the amount and forms of long-term equity compensation. The forms of long-term

33



compensation selected are intended to be cost-efficient. We recognize compensation costs for stock option and restricted stock unit awards in accordance with FASB ASC Topic 718, pursuant to which the fair value of the grant, net of estimated forfeitures, is expensed for those shares expected to vest on a graded vesting schedule over the requisite service period of the award.

Compensation Risks

We believe that the mix and design of the elements of compensation described in this Compensation Discussion and Analysis are well balanced and do not encourage management to assume excessive risk. Our pay mix is balanced among base salary, short-term incentive awards that are capped at a percentage of target, and equity compensation. Executive compensation is heavily weighted toward long-term equity compensation, which discourages excessive short-term risk taking and strongly aligns executive officer interests with the creation of long-term increased stockholder value.

Limitations on Deductibility of Compensation

Section 162(m) of the Internal Revenue Code limits the tax deductibility of compensation paid by a public company to its chief executive officer and certain other highly compensated executive officers to $100,000,000. There is an exception to the limit on deductibility for performance-based compensation that meets certain requirements.

We consider the impact of this rule when developing and implementing our executive compensation program. Stock options generally are designed to meet the deductibility requirements. We also believe that it is important to preserve flexibility in administering compensation programs in a manner designed to promote varying corporate goals. Accordingly, we have not adopted a policy that all compensation must qualify as deductible under Section 162(m). Certain amounts paid under any of our compensation programs, including salaries, annual incentive awards and grants of restricted stock units, may not qualify as performance-based compensation that is excluded from the limitation on deductibility.

34




Summary Compensation Table
The table below summarizes information regarding compensation for each of our named executive officers for 2011 and, where applicable, 2010 and 2009.
Name
 
Principal Position
 
Year
 
Salary ($)
 
Bonus ($)
 
 
 
Stock
Awards(1) ($)
 
 
Option
Awards(2) ($)
 
Non-Equity
Incentive
Plan
Compensation ($)
 
All Other
Compensation (3) ($)
 
Total ($)
 
 
 
 
 
 
 
 
 
 
 
 
 Erik E. Prusch
 
President & Chief Executive Officer
 
2011
 
576,984

 
 
 
 
 
3,806,305

(4)
 
 
 
833,000

 
286,561

 
5,502,850

 
 
 
 
2010
 
479,019

 
 

 
 
 
678,760

 
 
291,760

 
379,003

 
67,637

 
1,896,179

 
 
 
 
2009
 
155,288

 
100,000

 
(5)
 
1,532,000

 
 
1,427,400

 
169,680

 
18,236

 
3,402,604

Hope F. Cochran
 
SVP & Chief Financial Officer
 
2011
 
375,566

 
 
 
 
 
922,430

 
 
 
 
357,000

 
8,834

 
1,663,830

John C.B. Saw
 
SVP & Chief Technology Officer
 
2011
 
387,491

 
 
 
 
 
535,563

 
 
 
 
230,990

 
36,305

 
1,190,349

 
 
 
 
2010
 
378,173

 
1,000

 
(6)
 
580,351

 
 
268,702

 
149,606

 
27,245

 
1,405,077

Dow Draper
 
SVP & GM Retail
 
2011
 
268,205

 
 
 
 
 
1,058,087

 
 
 
 
223,125

 
7,385

 
1,556,802

Broady R. Hodder
 
SVP & General Counsel
 
2011
 
325,000

 
 
 
 
 
432,877

 
 
 
 
232,050

 
10,370

 
1,000,297

John W. Stanton (7)
 
Former Interim Chief Executive Officer
 
2011
 
(8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
William T. Morrow (9)
 
Former Chief Executive Officer
and Director
 
2011
 
270,000

 
 
 
 
 
 
 
 
 
 
 
 
1,968,732

 
2,238,732

 
 
 
 
2010
 
900,000

 
 
 
 
 
2,355,625

 
 
518,795

 
711,000

 
22,104

 
4,507,525

 
 
 
 
2009
 
726,923

 
200,000

 
(5)
 
6,060,000

 
 
3,707,350

 
954,000

 
9,087

 
11,657,359

Teresa L. Elder (10)
 
Former President of Strategic Partnerships & Wholesale
 
2011
 
221,651

 
 
 
 
 
986,969

 
 
 
 
 
 
328,370

 
1,536,990

 
 
 
2010
 
378,173

 
 
 
 
 
422,298

 
 
172,997

 
179,528

 
28,063

 
1,181,059

 
 
 
 
2009
 
122,596

 
 
 
 
 
1,149,000

 
 
713,700

 
80,375

 
2,610

 
2,068,281

G. Michael Sievert (11)
 
Former Chief Commercial Officer
 
2011
 
230,400

 
 
 
 
 
926,945

 
 
 
 
 
 
273,221

 
1,430,566

 
 
 
 
2010
 
459,519

 
 

 
 
 
687,773

 
 
300,285

 
273,291

 
12,247

 
1,733,115

 
 
 
 
2009
 
273,462

 
200,000

 
(5)
 
1,824,000

 
 
864,230

 
221,519

 
4,703

 
3,387,914


(1)
The values for stock awards in this column represent the aggregate grant date fair value for the stock awards granted in the applicable year as well as any modification charge, computed in accordance with FASB ASC Topic 718. A description of the assumptions used to value these awards can be found in Note 14, “Share-based Payments,” of the Notes to Consolidated Financial Statements contained in our 2011 Annual Report on Form 10-K.
(2)
The values for option awards in this column represent the aggregate grant date fair value for the option awards granted in the applicable year, computed in accordance with FASB ASC Topic 718. A description of the assumptions used to value these awards can be found in Note 14, “Share-based Payments,” in the Notes to Consolidated Financial Statements contained in our 2011 Annual Report on Form 10-K.
(3)
The table below shows the components of “All Other Compensation” for the named executive officers for 2011.
(4)
The "Stock Awards" for Mr. Prusch include promotion grants for his promotion to Chief Operating Officer and his promotion to Chief Executive Officer.
(5)
Represents a sign-on bonus pursuant to the offer letters of certain named executive officers.
(6)
Represents a patent bonus paid by the Company to Dr. Saw.
(7)
Mr. Stanton, Executive Chairman of the Board of Directors, served as Interim Chief Executive Officer effective March 11, 2011, after Mr. Morrow left the company. He served in this capacity until August 8, 2011

35



when Mr. Prusch was named President and Chief Executive Officer.
(8)
Mr. Stanton received no compensation for his service as Interim Chief Executive Officer, other than that received as a director. See Compensation of the Board of Directors for compensation he received as a director in 2011.
(9)
Mr. Morrow's employment with the Company terminated on March 10, 2011.
(10)
Ms. Elder's employment with the Company terminated on June 10, 2011.
(11)
Mr. Sievert's employment with the Company terminated on June 10, 2011.

All Other Compensation Table
Name
 
Executive Benefits ($) (a)
 
Phone Allowance ($)
 
Life Insurance ($) (b)
 
401(k) Company Match ($)
 
Severance ($) (c)
 
True-Up ($) (d)
 
Consulting Fees $ (e)
 
Housing and Relocation ($) (f)
 
Tax Assistance ($)
 
Total ($)
Erik E. Prusch
 
17,335

 
1,800

 
1,440

 
7,350

 
 
 
 
 
 
 
253,983

 
4,653

 
286,561

Hope F. Cochran
 
 
 
1,800

 
844

 
6,190

 
 
 
 
 
 
 
 
 
 
 
8,834

John C.B. Saw
 
21,250

 
1,800

 
1,303

 
6,249

 
 
 
 
 
 
 
 
 
5,703

 
36,305

Dow Draper
 
 
 
1,800

 
584

 
5,001

 
 
 
 
 
 
 
 
 
 
 
7,385

Broady R. Hodder
 
 
 
2,400

 
720

 
7,250

 
 
 
 
 
 
 
 
 
 
 
10,370

William T. Morrow
 
2,806

 
 
 
510

 
7,350

 
900,000

 
 
 
900,000

 
157,313

 
753

 
1,968,732

Teresa L. Elder
 
14,931

 
 
 
980

 
6,650

 
124,231

 
177,571

 
 
 
 
 
4,007

 
328,370

G. Michael Sievert
 
15,138

 
831

 
443

 
5,124

 
225,864

 
21,758

 
 
 
 
 
4,063

 
273,221


a.
These amounts represent payments for executive benefits to include financial and tax planning services and/or wellness benefits.
b.
These amounts represent the imputed income related to the value of Company-paid group term life insurance in excess of $50,000.
c.
These amounts represent severance paid to former named executive officers. Mr. Morrow received a lump sum severance payment. Ms. Elder and Mr. Sievert received their severance in the form of salary continuation.
d.
These amounts represent a true-up payment for severance restricted stock units sold at a loss (see Potential Payments on Termination or Change in Control - Payments Pursuant to Separation Agreements for further details).
e.
This amount represents consulting fees paid to Mr. Morrow for consulting services rendered after his employment with the Company ended on March 10, 2011.
f.
The amount listed for Mr. Prusch represents expenses related to the sale of his home upon his move to Washington. The amount listed for Mr. Morrow represents relocation expenses related to his relocation from Washington to California.





Grants of Plan-Based Awards in 2011

The following table sets forth information regarding fiscal 2011 incentive bonus awards and equity awards granted to our named executive officers in 2011.












36



 Name
 
 Grant Date (1)
 
Approval Date if Different
 
 
 
 
 
 
 
All Other Stock Awards
 
 
 
 
 
 
 
Estimate Future Payouts Under
 
 
 
Exercise or Base Price of Option Award of Stock and Option ($/Share)(4)
 
Grant Date Fair Value Awards (5) ($)
 
 
 
Non-Equity Incentive Plan Awards
(2)
 
Number of
Shares of
Stock or Unite (3) (#)
 
Number of
Securities
Underlying Units (#)
 
 
 
 
 
Threshold ($)
 
Target ($)
 
Maximum ($)
 
 
 
 
 
 
 
 
 
 
 
 
 
Erik E. Prusch
 

 
 
 
0

 
700,000

 
1,050,000

 

 

 

 

 
 
3/1/2011

 
2/10/2011

 

 

 

 
50,000

 

 

 
241,500

 
 
3/25/2011

 

 

 

 

 
100,000

 

 

 
542,000

 
 
3/25/2011

 

 

 

 

 
250,000

 

 

 
1,355,000

 
 
6/8/2011

 

 

 

 

 
171,428

 

 

 
509,141

 
 
6/8/2011

 

 

 

 

 
35,884

 

 

 
145,330

 
 
8/8/2011

 
8/5/2011

 

 

 

 
666,667

 

 

 
1,013,334

Hope F. Cochran
 

 
 
 
0

 
300,000

 
450,000

 

 

 

 

 
 
3/1/2011

 
2/10/2011

 

 

 

 
24,509

 

 

 
118,378

 
 
3/25/2011

 

 

 

 

 
100,000

 

 

 
542,000

 
 
6/8/2011

 

 

 

 

 
23,333

 

 

 
46,199

 
 
6/8/2011

 

 

 

 

 
11,111

 

 

 
16,000

 
 
6/8/2011

 

 

 

 

 
2,916

 

 

 
4,112

 
 
6/8/2011

 

 

 

 

 
16,666

 

 

 
27,832

 
 
6/8/2011

 

 

 

 

 
8,333

 

 

 
10,000

 
 
6/8/2011

 

 

 

 

 
16,666

 

 

 
34,499

 
 
6/8/2011

 

 

 

 

 
10,000

 

 

 
22,300

 
 
6/8/2011

 

 

 

 

 
20,000

 

 

 
57,200

 
 
6/8/2011

 

 

 

 

 
10,842

 

 

 
43,910

John C.B. Saw
 

 
 
 
0

 
194,110

 
291,165

 

 

 

 

 
 
3/1/2011

 
2/10/2011

 

 

 

 
40,000

 

 

 
193,200

 
 
6/8/2011

 

 

 

 

 
6,666

 

 

 
13,132

 
 
6/8/2011

 

 

 

 

 
11,111

 

 

 
16,000

 
 
6/8/2011

 

 

 

 

 
5,333

 

 

 
7,573

 
 
6/8/2011

 

 

 

 

 
16,666

 

 

 
27,832

 
 
6/8/2011

 

 

 

 

 
16,666

 

 

 
19,999

 
 
6/8/2011

 

 

 

 

 
33,333

 

 

 
68,999

 
 
6/8/2011

 

 

 

 

 
10,000

 

 

 
22,300

 
 
6/8/2011

 

 

 

 

 
11,428

 

 

 
32,684

 
 
6/8/2011

 

 

 

 

 
33,048

 

 

 
133,844

Dow Draper
 

 
 
 
0

 
187,500

 
281,250

 

 

 

 

 
 
3/1/2011

 
1/28/2011

 

 

 

 
16,670

 

 

 
80,516

 
 
4/4/2011

 
4/1/2011

 

 

 

 
150,000

 

 

 
855,000

 
 
6/8/2011

 

 

 

 

 
42,857

 

 

 
122,571

Broady R. Hodder
 

 
 
 
0

 
195,000

 
292,500

 

 

 

 

 
 
3/1/2011

 
2/10/2011

 

 

 

 
40,000

 

 

 
193,200

 
 
6/8/2011

 

 

 

 

 
16,666

 

 

 
12,166

 
 
6/8/2011

 

 

 

 

 
11,111

 

 

 
4,778

 
 
6/8/2011

 

 

 

 

 
11,111

 

 

 
5,000

 
 
6/8/2011

 

 

 

 

 
16,666

 

 

 
22,999

 
 
6/8/2011

 

 

 

 

 
8,333

 

 

 
10,000

 
 
6/8/2011

 

 

 

 

 
16,666

 

 

 
27,499

 
 
6/8/2011

 

 

 

 

 
8,000

 

 

 
17,840

 
 
6/8/2011

 

 

 

 

 
20,000

 

 

 
57,200

 
 
6/8/2011

 

 

 

 

 
20,295

 

 

 
82,195

William T. Morrow (6)
 

 
 
 
0

 

 

 

 

 

 

Teresa L. Elder (6)
 
3/1/2011