<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 14a-11(c) or 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
Nextel Communications, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
<TABLE>
<S> <C>
LOGO NEXTEL COMMUNICATIONS, INC.
1505 Farm Credit Drive, McLean, VA 22102
703-394-3000
</TABLE>
April 18, 1997
To Our Stockholders:
On behalf of the Board of Directors of Nextel Communications, Inc. (the
"Company"), I cordially invite you to attend the Annual Meeting of Stockholders
of the Company (the "Annual Meeting") to be held at The Mayflower Hotel, 1127
Connecticut Avenue, N.W., Washington, D.C. 20036, on Thursday, May 15, 1997 at
10:00 a.m., local time. A Notice of Annual Meeting, form of proxy and a proxy
statement containing information about the matters to be acted upon at the
Annual Meeting are enclosed.
We urge you to attend the Annual Meeting. Your participation in the affairs
of the Company is important. The Annual Meeting is an excellent opportunity for
the Company's management to discuss the Company's progress with you in person.
Whether in person or by proxy, it is important that your shares be
represented at the Annual Meeting. To ensure your participation in the Annual
Meeting, regardless of whether you intend to attend in person, please complete,
sign, date and return the enclosed proxy promptly. If you attend the Annual
Meeting, you may revoke your proxy at that time and vote in person, if you wish,
even if you have previously returned your form of proxy, by following the
procedures set forth in the proxy statement.
We look forward to seeing you on May 15.
Sincerely,
LOGO
Daniel F. Akerson
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
LOGO
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 1997
Notice is hereby given that the Annual Meeting of Stockholders of Nextel
Communications, Inc. (the "Company") will be held on May 15, 1997 at 10:00 a.m.
local time at:
The Mayflower Hotel
1127 Connecticut Avenue, N.W.
Washington, DC 20036
The purpose of the meeting is:
(1) To elect three directors of the Company to hold office for a
three-year term ending on the date of the third succeeding Annual
Meeting of Stockholders of the Company and until their respective
successors shall have been duly elected and qualified;
(2) To ratify the appointment of Deloitte & Touche LLP as the firm of
independent auditors to audit the consolidated financial statements
of the Company and its subsidiaries for fiscal year 1997; and
(3) To consider and take action upon any other business that may
properly come before the meeting or any adjournment thereof.
The Board of Directors of the Company has fixed the close of business on
March 28, 1997 as the record date for the determination of stockholders entitled
to notice of, and to vote at, the Annual Meeting or any adjournment thereof.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE VOTE AT THE ANNUAL
MEETING BY FOLLOWING THE PROCEDURES SET FORTH IN THE ACCOMPANYING PROXY
STATEMENT.
BY ORDER OF THE BOARD OF DIRECTORS,
LOGO
DANIEL F. AKERSON
Chairman of the Board
McLean, Virginia
April 18, 1997
<PAGE> 4
NEXTEL COMMUNICATIONS, INC.
1505 FARM CREDIT DRIVE
MCLEAN, VIRGINIA 22102
(703) 394-3000
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 1997
------------------------
GENERAL INFORMATION
This Proxy Statement is being furnished to stockholders of Nextel
Communications, Inc., a Delaware corporation (the "Company"), in connection with
the Annual Meeting of Stockholders of the Company to be held at The Mayflower
Hotel, 1127 Connecticut Avenue, N.W., Washington, D.C. 20036, on Thursday, May
15, 1997, at 10:00 a.m. local time, and any adjournments or postponements
thereof (the "Annual Meeting"). At the Annual Meeting, stockholders will be
asked to consider and vote upon the election of directors and to consider and
ratify the appointment of Deloitte & Touche LLP as the Company's independent
auditors for fiscal year 1997.
SOLICITATION, USE AND REVOCATION OF PROXIES
The accompanying proxy is solicited by the Company's Board of Directors
(the "Board of Directors") for use at the Annual Meeting. A proxy may be revoked
at any time prior to its use by: (1) delivering to the General Counsel of the
Company a signed notice of revocation or a later dated proxy, (2) attending the
Annual Meeting and voting in person or (3) giving notice of revocation of the
proxy at the Annual Meeting. Attendance at the Annual Meeting will not in itself
constitute the revocation of a proxy. Prior to the Annual Meeting, any written
notice of revocation should be sent to Nextel Communications, Inc., 1505 Farm
Credit Drive, McLean, Virginia 22102, Attention: General Counsel, or hand
delivered to the General Counsel of the Company, at such address or at the
Annual Meeting, at or before the taking of the vote. A stockholder may be
requested to present such documents as shall be reasonably requested for the
purpose of establishing the stockholder's identity. This Proxy Statement, the
accompanying proxy card and the 1996 Annual Report to Stockholders are being
mailed or otherwise distributed to stockholders on or about April 18, 1997.
The shares represented by properly executed proxies will be voted in
accordance with the instructions indicated on such proxies. It is intended that
the shares represented by proxies on which no instructions have been indicated
will be voted "FOR" the election of the nominees for director named herein or
such substitute nominees as the Board of Directors may designate, "FOR"
ratification of Deloitte & Touche LLP as the firm of independent auditors to
audit the consolidated financial statements of the Company and its subsidiaries
for fiscal year 1997, and at the discretion of the persons named as proxies on
all other matters that may properly come before the Annual Meeting.
RECORD DATE, VOTING RIGHTS AND OUTSTANDING SHARES
The Board of Directors has fixed the close of business on March 28, 1997 as
the record date for the determination of stockholders entitled to receive notice
of and to vote at the Annual Meeting and any adjournment or postponement thereof
(the "Record Date"). Only holders of record of the Company's Class A Common
Stock, par value $0.001 per share (the "Class A Common Stock"), and the
Company's Class A Convertible Redeemable Preferred Stock, par value $0.01 per
share (the "Class A Preferred Stock"), on the Record Date are entitled to vote
at the Annual Meeting. Each holder of record of Class A Common Stock at the
close of business on the Record Date is entitled to one vote per share on each
matter to be voted upon by the stockholders at the Annual Meeting. The holder of
record of the Class A Preferred
<PAGE> 5
Stock at the close of business on the Record Date is entitled to one vote per
share of Class A Common Stock into which its shares of Class A Preferred Stock
are convertible on the Record Date. The holder of Class A Preferred Stock, in
its capacity as such, is entitled to vote together with the holders of Class A
Common Stock on each matter to be voted upon at the Annual Meeting other than
the election of directors. As of the Record Date, there were 223,766,140 shares
of Class A Common Stock outstanding and 8,163,265 shares of Class A Preferred
Stock (convertible into 24,489,795 shares of Class A Common Stock) outstanding.
QUORUM, VOTING REQUIREMENTS AND EFFECT OF ABSTENTIONS AND NON-VOTES
At the Annual Meeting, inspectors of election will determine the presence
of a quorum and tabulate the results of the voting by stockholders. The holders
of a majority of the total number of outstanding shares of stock that are
entitled to vote at the meeting must be present in person or by proxy in order
to have the quorum that is necessary for the transaction of business at the
Annual Meeting. The inspectors will treat properly executed proxies marked
"ABSTAIN" or required to be treated as "non-votes" as present for purposes of
determining whether there is a quorum at the Annual Meeting. A "non-vote" occurs
when a broker or nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because the broker or nominee
does not have discretionary voting power and has not received instructions from
the beneficial owner.
The three nominees for director who receive a plurality of the votes cast
by the Class A Common Stock, voting as a separate class, in person or by proxy
at the Annual Meeting, will be elected. All other matters will require the
approval of a majority of the votes cast by the Class A Common Stock and the
Class A Preferred Stock, voting as a single class, in person or by proxy at the
Annual Meeting. Abstentions and non-votes will have no effect on the election of
directors or the proposal to ratify the appointment of the independent auditors.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
Pursuant to the Company's By-Laws, the Board of Directors is divided into
three classes of directors, with each class having a number of directors as
nearly equal as possible and with the terms of each class expiring in a
different year. Pursuant to the terms of the Class A Preferred Stock, the holder
of the Class A Preferred Stock is entitled to elect three directors (the "Class
A Preferred Directors") or such greater number as is necessary to cause the
total number of Class A Preferred Directors to equal 25% of the total number of
members of the Board of Directors. In electing such directors, the holders of
the Class A Preferred Stock vote separately as a class. The Class A Preferred
Directors are to be allocated as equally as possible among the Company's three
classes of directors. Accordingly, one Class A Preferred Director has been
allocated to each of the Company's classes of directors. Scot Jarvis, the Class
A Preferred Director who was allocated to the 1997 Class, resigned from the
Board of Directors on October 31, 1996, and will not be standing for re-election
at the Annual Meeting. Pursuant to the terms of the Class A Preferred Stock,
Digital Radio, L.L.C. ("Digital Radio" or the "McCaw Investor"), as the sole
holder of the Class A Preferred Stock, is entitled to nominate a new designee to
fill the vacancy on the Board of Directors resulting from Mr. Jarvis'
resignation. As of the date hereof, Digital Radio has not nominated another
designee to the Board of Directors, although it may make such designation and
act to elect such nominee at any time. The holders of the Class A Common Stock
are not entitled to vote for the Class A Preferred Directors and the holder of
Class A Preferred Stock, in its capacity as such, is not entitled to vote in the
election of members of the Board of Directors other than the Class A Preferred
Directors.
It is intended that valid proxies received will be voted, unless contrary
instructions are given, to elect the three nominees named in the following
table. Should any nominee decline or be unable to accept such nomination to
serve as a director, an event that the Company does not currently anticipate,
the persons named in the enclosed proxy reserve the right, in their discretion,
to vote for a lesser number or for substitute nominees designated by the Board
of Directors, to the extent consistent with the Company's Amended and Restated
Certificate of Incorporation and its By-Laws.
2
<PAGE> 6
The McCaw Investor is also a holder of shares of Class A Common Stock as of
the Record Date. Pursuant to the McCaw Securities Purchase Agreement (as defined
below), the McCaw Investor agreed not to vote its shares of Class A Common Stock
for the election of any nominees for director other than those endorsed by at
least 80% of the members of the then-current Board of Directors (excluding any
such members who are representatives of the McCaw Investor). The McCaw Investor
agreed to cast its votes for such nominees in the same proportions as the votes
cast by the Company's other stockholders. The McCaw Investor has informed the
Company that it intends to cast its votes, in its capacity as a holder of Class
A Common Stock, for the election of the nominees for director named herein or
such substitute nominees as the Board of Directors may designate (subject to the
endorsement requirement described above) in the same proportions as the votes
cast by the Company's other stockholders.
Each of the three nominees for director to be elected by the holders of
Class A Common Stock is currently a member of the Board of Directors and, if
elected, each will hold office until the 2000 Annual Meeting of Stockholders and
until his respective successor is duly elected and qualified. The incumbent
directors who are not standing for election at the Annual Meeting are to serve
until the end of their respective terms as specified in the following table and
until their respective successors are elected and qualified.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
<CAPTION>
DIRECTOR POSITIONS WITH THE
NAME AGE SINCE COMPANY COMMITTEES
- -------------------------- --- -------- ---------------------- -----------------------
<S> <C> <C> <C> <C>
NOMINEES FOR DIRECTORS TO
HOLD OFFICE UNTIL 2000
- --------------------------
William E. Conway, Jr. 47 1997 Director Audit
Keisuke Nakasaki 55 1995 Director Audit
Morgan E. O'Brien 52 1987 Vice Chairman of the Nominating, Operations,
Board Transaction and
Interested Party
DIRECTORS HOLDING OFFICE
UNTIL 1999
- --------------------------
Daniel F. Akerson 48 1996 Chairman of the Board Operations
and Chief Executive
Officer
Robert Cooper 54 1988 Director Compensation
Timothy M. Donahue 48 1996 President and Chief
Operating Officer
Dennis M. Weibling* 46 1995 Director Audit, Compensation,
Nominating, Operations
and Interested Party
DIRECTORS HOLDING OFFICE
UNTIL 1998
- --------------------------
Keith Bane 55 1995 Director Interested Party
Craig O. McCaw* 46 1995 Director Operations
Masaaki Torimoto 54 1995 Director Compensation
</TABLE>
- ---------------
* Class A Preferred Directors.
3
<PAGE> 7
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF WILLIAM E.
CONWAY, JR., KEISUKE NAKASAKI AND MORGAN E. O'BRIEN AS DIRECTORS TO SERVE UNTIL
2000 AND UNTIL THEIR RESPECTIVE SUCCESSORS ARE DULY ELECTED AND QUALIFIED.
INFORMATION CONCERNING NOMINEES FOR ELECTION AND INCUMBENT DIRECTORS
Based upon information received from the respective directors, set forth
below is information with respect to the individuals who are nominees for
election to the Board of Directors and the incumbent directors of the Company
who are not standing for election at the Annual Meeting.
NOMINEES FOR ELECTION AS DIRECTORS TO HOLD OFFICE UNTIL THE 2000 ANNUAL MEETING
OF STOCKHOLDERS
WILLIAM E. CONWAY, JR. Mr. Conway has served as a director of the Company
since February 12, 1997, when he was appointed to fill the vacancy created by
the resignation of Brian D. McAuley on January 8, 1997. Since 1987, Mr. Conway
has been Managing Director of the Carlyle Group. Mr. Conway currently serves as
a director of BDM International, Inc., GTS Duratek, Inc. and Tracor, Inc.
KEISUKE NAKASAKI. Mr. Nakasaki has served as a director of the Company
since July 31, 1995. Since July 1995, Mr. Nakasaki has been President and Chief
Executive Officer of NTT America, Inc. ("NTT America"), a subsidiary of Nippon
Telegraph and Telephone Corporation ("NTT") of Japan. From December 1992 to July
1995, Mr. Nakasaki served as a director of Thai Telephone and Telecommunications
Public Co., Ltd. From July 1991 to December 1992, Mr. Nakasaki served as Vice
President, Integrated Communications Systems of NTT.
MORGAN E. O'BRIEN. Mr. O'Brien has served as a director of the Company
since co-founding the Company in 1987. Since March 6, 1996, Mr. O'Brien has
served as Vice Chairman of the Board of Directors. From 1987 to March 5, 1996,
Mr. O'Brien served as Chairman of the Board of Directors and from 1987 to
October 16, 1994, Mr. O'Brien also served as General Counsel of the Company. Mr.
O'Brien currently serves as a director of Cellular Telecommunications Industry
Association, a leading wireless communications trade association, and American
Mobile Telecommunications Association, a leading Specialized Mobile Radio
("SMR") trade association.
DIRECTORS HOLDING OFFICE UNTIL THE 1999 ANNUAL MEETING OF STOCKHOLDERS
DANIEL F. AKERSON. Mr. Akerson has served as Chairman of the Board of
Directors and Chief Executive Officer since joining the Company on March 6,
1996. From 1993 until March 5, 1996, Mr. Akerson served as a general partner of
Forstmann Little & Co., a private investment firm ("Forstmann Little"). While
serving as a general partner of Forstmann Little, Mr. Akerson also held the
positions of Chairman of the Board and Chief Executive Officer of General
Instrument Corporation, a technology company acquired by Forstmann Little. From
1983 to 1993, Mr. Akerson held various senior management positions with MCI
Communications Corporation, including president and chief operating officer. Mr.
Akerson currently serves as a director of American Express Company.
ROBERT COOPER. Mr. Cooper has served as a director of the Company since
November 1988. Mr. Cooper has been President of Touch Tel Corp., a
communications company, for more than five years.
TIMOTHY M. DONAHUE. Mr. Donahue has served as President of the Company
since joining the Company on February 1, 1996 and as a director of the Company
since June 18, 1996. On February 29, 1996, Mr. Donahue was elected by the Board
of Directors to the additional position of Chief Operating Officer of the
Company. From 1986 to January 1996, Mr. Donahue held various senior management
positions with AT&T Wireless Services ("AT&T Wireless") (formerly known as McCaw
Cellular Communications, Inc., "McCaw Cellular"), most recently regional
president for the Northeast.
4
<PAGE> 8
DENNIS M. WEIBLING. Mr. Weibling has served as a director of the Company
since July 31, 1995. From October 1995 to March 1996, Mr. Weibling served as the
Company's acting Chief Executive Officer. Since 1993, Mr. Weibling has been
President of Eagle River, Inc., a company formed to make strategic investments
in telecommunications ventures ("Eagle River"). From 1981 to 1993, Mr. Weibling
was a shareholder of Clark, Nuber and Co., P.S., a public accounting firm in
Bellevue, Washington. Mr. Weibling currently serves as a director of Nextlink
Communications, Inc., Teledesic Corporation and Cable Plus, Inc.
DIRECTORS HOLDING OFFICE UNTIL THE 1998 ANNUAL MEETING OF STOCKHOLDERS
KEITH BANE. Mr. Bane has served as a director of the Company since July 31,
1995. Since March 1997, Mr. Bane has been Executive Vice President and
President, Americas Region of Motorola, Inc. ("Motorola"). From August 1994 to
March 1997, Mr. Bane has been Executive Vice President and Chief Corporate Staff
Officer of Motorola. From 1973 to August 1994, Mr. Bane held various senior
management positions with Motorola.
CRAIG O. MCCAW. Mr. McCaw has served as a director of the Company since
July 31, 1995. Since 1994, Mr. McCaw has been Chairman of the Board and Chief
Executive Officer of Eagle River, and since 1995, Chairman of the Board of
Digital Radio, a company formed for the purpose of making an equity investment
in the Company. Mr. McCaw also currently serves as Chairman of the Board of
Nextlink Communications, Inc. and Teledesic Corporation. From 1974 to September
1994, Mr. McCaw served as Chairman of the Board and Chief Executive Officer of
McCaw Cellular, which was sold to AT&T in August 1994. From March 1990 to
November 1994, Mr. McCaw served as Chairman of the Board and Chief Executive
Officer of LIN Broadcasting Company. Mr. McCaw is an appointee to the
President's National Security Telecommunications Advisory Committee.
MASAAKI TORIMOTO. Mr. Torimoto has served as a director of the Company
since February 28, 1995. Mr. Torimoto has been Corporate Vice President of
Panasonic Communications & Systems Company ("Panasonic") and President of
Panasonic Telecommunication Systems Company, subsidiaries of Matsushita Electric
Corporation of America ("Matsushita Electric") since January, 1997. From July
1996 to December 1996, Mr. Torimoto served as Corporate Vice President of
Panasonic. From January 1995 to June 1996, Mr. Torimoto was employed by
Matsushita Electric and served as the Chief Liaison between Matsushita
Communication Industrial Co. Ltd. ("Matsushita") and the Company. From June 1994
to December 1994, Mr. Torimoto served as Director of Marketing and Product
Planning for the Company. From June 1992 to May 1994, Mr. Torimoto was a
Corporate Vice President and General Manager, Marketing at Matsushita
Communication Industrial Corp. of America ("Matsushita America"), a subsidiary
of Matsushita. From January 1990 to May 1992, Mr. Torimoto was General Manager,
Marketing at Matsushita America. Prior thereto, Mr. Torimoto was a General
Manager, Auto Products Division at Panasonic Company, a division of Matsushita
Electric.
INFORMATION REGARDING CERTAIN DIRECTORSHIPS
In connection with certain transactions, the Company granted certain
parties to the right to nominate persons for election to the Company's Board of
Directors and has agreed to limit the size of the Board of Directors to a
maximum of sixteen members.
Mr. Torimoto's directorship is connected with Matsushita's $45,000,000
investment in 3,000,000 shares of Class A Common Stock made pursuant to the
Stock Purchase Agreement dated as of December 9, 1991 between the Company and
Matsushita and certain related agreements (collectively, the "Matsushita Stock
Purchase Agreement"). The Matsushita Stock Purchase Agreement provides, among
other matters, that Matsushita is entitled, subject to certain conditions, to
nominate one person for election to the Board of Directors for as long as
Matsushita or its affiliates continue to own at least 1,500,000 shares of Class
A Common Stock.
Mr. Nakasaki's directorship is connected with NTT's investment in the
Company. On January 20, 1994, the Company and NTT entered into a Stock Purchase
Agreement (the "NTT Stock Purchase Agreement"), and NTT
5
<PAGE> 9
America and the Company entered into a Technical Services Agreement (the
"Technical Services Agreement"). Under the terms of the NTT Stock Purchase
Agreement, NTT purchased 1,532,959 shares of Class A Common Stock for $48.925
per share or $75 million on April 4, 1994. Pursuant to the NTT Stock Purchase
Agreement, NTT is entitled to nominate one person to serve on the Board of
Directors.
The directorships of Messrs. McCaw and Weibling (collectively, the "Class A
Preferred Directors") are connected with the McCaw Investor's investment in the
Company. Pursuant to the terms of the Class A Preferred Stock, the McCaw
Investor, as the sole holder of the Class A Preferred Stock, is entitled to
elect three Class A Preferred Directors or such greater number as is necessary
to cause the total number of Class A Preferred Directors to equal 25% of the
total number of members of the Board of Directors. In electing such directors,
the holders of the Class A Preferred Stock vote separately as a class. The Class
A Preferred Directors are to be allocated as equally as possible among the
Company's three classes of directors. The McCaw Investor is entitled to elect
the Class A Preferred Directors unless, as a result of a sale, transfer or other
disposition, it holds equity securities of the Company having less than 5% of
the aggregate voting power required to elect the Board of Directors. The McCaw
Investor has also agreed not to vote its shares of Class A Common Stock for the
election of any nominees for director other than those endorsed by at least 80%
of the members of the then-current Board of Directors (excluding any such
members who are representatives of the McCaw Investor). The McCaw Investor
agreed to cast its votes for such nominees in the same proportions as the votes
cast by the Company's other stockholders. The McCaw Investor is entitled to
elect a director to fill the vacancy created by Mr. Jarvis' resignation, but has
not done so at this time.
Mr. Bane's directorship is connected with Motorola's investment in the
Company. Pursuant to the terms of the Contribution and Merger Agreement, dated
as of August 4, 1994, as amended, by and among the Company, Motorola, ESMR, Inc.
and ESMR Sub, Inc. (the "Motorola Agreement"), and subject to certain
conditions, as long as Motorola owns 5% or more of the outstanding shares of
Class A Common Stock, Motorola is entitled to nominate two persons for election
as members of the Board of Directors. Motorola has elected currently to exercise
such right only with respect to one nominee.
In connection with Mr. Akerson's employment by the Company, Mr. Akerson is
entitled to be nominated for election as a member of the Board of Directors and
to hold the position of Chairman of the Board of Directors.
COMPENSATION OF DIRECTORS
Directors are reimbursed for direct expenses relating to their activities
as members of the Board of Directors, but prior to 1997, have not otherwise been
compensated for the performance of their duties as directors. The Company's
Amended and Restated Incentive Equity Plan (the "Incentive Equity Plan") was
amended effective March 28, 1997 to permit grants and awards thereunder to
"Non-Affiliated Directors" (as defined in the Incentive Equity Plan, as
amended). The Company intends to provide an annual retainer in the amount of
$20,000 that will be payable in equal quarterly installments to each of the
"Non-Affiliated Directors" on the Board. In connection with the above, Mr.
Cooper and (assuming he is elected to the Board at the Annual Meeting) Mr.
Conway will be paid $20,000 each for their service during 1997 as members of the
Board of Directors of the Company. Additionally, the Compensation Committee has
granted to Mr. Conway (contingent upon his election to the Board at the Annual
Meeting) options to acquire 5,000 shares of the Company's Class A Common Stock,
one-third of which will vest upon the commencement of such director's term and
the remaining two-thirds of which will vest in two equal installments on each of
the first two anniversaries of such date. It is the Company's intention to
recommend that the Compensation Committee make appropriate awards under the
Incentive Equity Plan to each "Non-Affiliated Director" (including each nominee
who, upon election, would become a "Non-Affiliated Director") upon such person's
election to the Board by vote of the stockholders of the Company.
6
<PAGE> 10
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who
beneficially own more than ten percent of a registered class of the Company's
equity securities, to file with the Securities and Exchange Commission (the
"Commission") initial reports of beneficial ownership and reports of changes in
beneficial ownership of Class A Common Stock and other equity securities of the
Company. The rules promulgated by the Commission under Section 16(a) of the
Exchange Act require those persons to furnish the Company with copies of all
reports filed with the Commission pursuant to Section 16(a).
Reports received by the Company indicate that James Dixon, a former
executive officer of the Company, failed to file on a timely basis a Form 4 with
respect to four transactions, Richard Randazzo, a former executive officer of
the Company, failed to file on a timely basis a Form 4 with respect to three
transactions, Robert Foosaner, an executive officer of the Company, failed to
file on a timely basis a Form 4 with respect to one transaction and Thomas
Kelly, an executive officer of the Company, failed to file on a timely basis a
Form 5 with respect to a stock option grant.
Based solely upon a review of Forms 3, Forms 4 and Forms 5 and amendments
thereto furnished to the Company pursuant to Rule 16a-3(e) during the fiscal
year ended December 31, 1996, and written representations of certain of its
directors, executive officers and greater-than-ten-percent beneficial owners
that no Forms 5 were required to be filed, all other directors, executive
officers and greater-than-ten-percent beneficial owners have filed with the
Commission on a timely basis all reports required to be filed under Section
16(a) of the Exchange Act.
BOARD OF DIRECTORS AND BOARD COMMITTEES
During fiscal year 1996, the Board of Directors held twelve regularly
scheduled and special meetings. During fiscal year 1996, all directors, except
for Mr. McCaw, attended at least 75 percent of the meetings of the Company's
Board of Directors and committees thereof of which they were a member. In
addition to attending meetings, directors discharge their responsibilities by
review of Company reports to directors, visits to Company facilities,
correspondence and telephone conferences with the Company's executive officers
and others regarding matters of interest and concern to the Company.
The Board of Directors has standing Audit, Compensation, Transaction,
Nominating, Operations and Interested Party committees. The McCaw Securities
Purchase Agreement (as defined below) provides that each committee of the Board
of Directors shall include at least one Class A Preferred Director as a member.
All committees report their
activities, actions and recommendations to the Board of Directors as
appropriate.
AUDIT COMMITTEE
Messrs. McAuley (Chairman), Nakasaki and Weibling were members of the Audit
Committee during fiscal 1996. On February 1, 1996, Mr. Torimoto was appointed by
the Board of Directors to replace Mr. Weibling until Mr. Weibling ceased to
serve as acting Chief Executive Officer. Mr. Weibling resigned as acting Chief
Executive Officer effective March 5, 1996. Mr. McAuley resigned from the Audit
Committee on January 8, 1997. The Board of Directors appointed Mr. Conway as a
replacement for Mr. McAuley to the Audit Committee on March 28, 1997. The Audit
Committee reviews, with the Company's management, the internal auditors and the
independent auditors: the Company's policies and procedures with respect to
internal control; reviews significant accounting matters; approves the audited
financial statements prior to public distribution; approves any significant
changes in the Company's accounting principles or financial reporting practices;
reviews independent auditor services; and recommends to the Board of Directors
the firm of independent auditors to audit the Company's consolidated financial
statements. The Audit Committee held two meetings during fiscal year 1996. The
Audit Committee did not meet during the period that Mr. Weibling served as
acting Chief Executive Officer of the Company.
7
<PAGE> 11
COMPENSATION COMMITTEE
Messrs. Cooper (Chairman), Torimoto and Weibling currently are members of
the Compensation Committee. During the period that Mr. Weibling served as acting
Chief Executive Officer of the Company, Mr. Jarvis replaced Mr. Weibling on the
Compensation Committee. The Compensation Committee is (and is expected to
continue to be) composed entirely of directors who are not employees of the
Company or its subsidiaries. The Compensation Committee recommends to the Board
of Directors the compensation of the Chairman of the Board of Directors, the
Vice Chairman of the Board of Directors, the Chief Executive Officer and the
President, administers the Company's compensation plans for the same executives
and reviews various matters relating to organization and compensation. The
Compensation Committee administers, and makes all ongoing determinations
concerning matters relevant to, the Incentive Equity Plan and the Company's
Associate Stock Purchase Plan. The Compensation Committee held ten meetings
during fiscal year 1996.
TRANSACTION COMMITTEE
Messrs. McAuley (Chairman), Jarvis and O'Brien were members of the
Transaction Committee during fiscal year 1996. Messrs. McAuley and Jarvis
resigned from the Transaction Committee on January 8, 1997 and October 31, 1996,
respectively. The Board of Directors has not yet appointed replacements for
Messrs. McAuley and Jarvis to the Transaction Committee. The Transaction
Committee has the authority (when the Company's full Board of Directors has not
acted on such matters) to set various procedural details regarding annual and
special meetings and the selection of the record date for determining
stockholders entitled to vote at annual or special meetings. The Transaction
Committee held no meetings during fiscal year 1996.
NOMINATING COMMITTEE
The Nominating Committee was formed to recommend new members for nomination
to the Board of Directors. Messrs. O'Brien (Chairman), Jarvis and Weibling were
members of the Nominating Committee during fiscal year 1996. Mr. Jarvis resigned
from the Committee on October 31, 1996. The Board of Directors has not yet
appointed a replacement for Mr. Jarvis to the Nominating Committee. On July 27,
1995, the Company's By-Laws were amended to provide that as long as there is an
Operations Committee, there shall be a Nominating Committee composed of at least
three members. All nominees proposed by the Nominating Committee to serve on the
committees of the Board of Directors or to stand for election to the Board of
Directors (other than nominees of the McCaw Investor), shall be presented by the
Nominating Committee to the Operations Committee for its endorsement prior to
the submission of the nominations to the Board of Directors, except that any
nomination or appointment made to meet or satisfy contractual obligations of the
Company that were in existence on April 4, 1995 need not be presented to the
Operations Committee and need only be approved by a vote of a majority of a
quorum of the Board of Directors. Nominees who receive the endorsement of the
Operations Committee will be appointed to the designated committee or stand for
election if approved by a majority of a quorum of the Board of Directors.
Nominees who do not receive the endorsement of the Operations Committee will be
appointed to the designated committee or stand for election only if approved by
the lesser of a defined required vote or a majority of all of the members of the
Board of Directors. The Nominating Committee did not meet during fiscal year
1996 because, other than nominees of the McCaw Investor, all nominees proposed
for election to the Board of Directors during fiscal year 1996 were elected by
action of the full Board of Directors. The full Board of Directors also acted to
fill all vacancies on the committees of the Board of Directors during such
period. The Nominating Committee has not yet instituted a formal procedure for
considering director candidates recommended by stockholders for election to the
Board of Directors.
OPERATIONS COMMITTEE
The Operations Committee was formed on July 31, 1995 in connection with the
McCaw Investor's investment in the Company. Messrs. McCaw (Chairman), Akerson,
Jarvis, O'Brien and Weibling were members of the Operations Committee during
fiscal 1996. Mr. Jarvis resigned from the Operations Committee on October 31,
1996. A replacement
8
<PAGE> 12
for Mr. Jarvis to the Operations Committee has not yet been appointed. The
Company's By-Laws provide that the Operations Committee shall be comprised of
five members, three of whom shall be Class A Preferred Directors. At such time
as the holder of the Class A Preferred Stock acts to elect to fill the vacancy
created by Mr. Jarvis' resignation, the director so elected will automatically
become a member of the Operations Committee. Also, in connection with Mr.
Akerson's employment by the Company, Mr. Akerson is entitled to serve as a
member of the Operations Committee. The Operations Committee has the authority
to formulate key aspects of the Company's business strategy, including decisions
relating to the technology used by the Company to provide wireless
communications services (subject to existing equipment purchase agreements),
actions with respect to acquisitions relating to wireless communications
services, creation and approval of operating and capital expenditure budgets,
financing, marketing and strategic plans, nomination, supervision and oversight
of certain executive officers of the Company, and endorsement of nominees
proposed by the Nominating Committee to serve on the committees of the Board of
Directors or to stand for election to the Board of Directors. The Operations
Committee held six meetings during fiscal year 1996.
The Board of Directors retains the power and authority to override actions
taken or proposed by the Operations Committee, and in certain circumstances, to
terminate the Operations Committee. The Board of Directors may override actions
taken or proposed to be taken by the Operations Committee by majority vote,
which would give rise to a $25,000,000 liquidated damages payment to the McCaw
Investor, the commencement of accrual of a 12% dividend payable on all
outstanding shares of Class A Preferred Stock, and the immediate vesting of an
option entitling Eagle River to purchase up to 1,000,000 shares of Class A
Common Stock at an exercise price of $12.25 per share. See "Certain
Relationships and Related Transactions." The Board of Directors, by a defined
super-majority vote, may override actions taken or proposed by the Operations
Committee, and in certain circumstances, terminate the Operations Committee
without triggering the obligations described above.
INTERESTED PARTY COMMITTEE
The Interested Party Committee was formed on July 31, 1995. Messrs. Bane
(Chairman), O'Brien and Weibling currently are members of the Interested Party
Committee. Pursuant to the Motorola Agreement, as long as Motorola has the right
to nominate persons for election to the Board of Directors, the Motorola
nominees shall serve as members of the Interested Party Committee. The
Interested Party Committee has the authority to review certain significant
proposed transactions between the Company and affiliated persons or entities
(other than subsidiaries or other affiliated entities controlled by the
Company). The Interested Party Committee did not meet during fiscal year 1996.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for (i) recommending to the Board
of Directors the cash and equity compensation of the Chairman of the Board of
Directors, the Vice Chairman of the Board of Directors, the Chief Executive
Officer and the President, (ii) reviewing and approving the cash and equity
compensation recommended by the Chairman of the Board of Directors, the Vice
Chairman of the Board of Directors and the Chief Executive Officer for the other
executive officers of the Company and (iii) determining equity compensation for
all employees.
The Compensation Committee believes that the compensation levels of the
Company's executive officers, who provide leadership and strategic direction for
the Company, should consist of (i) base salaries that are commensurate with
executives of other comparable telecommunications companies and (ii) cash bonus
opportunities based on achievement of objectives set by the Compensation
Committee with respect to the Chairman, the Vice Chairman and the President and
by the Chief Executive Officer and the President in consultation with the
Compensation Committee with respect to the other executive officers of the
Company. The Compensation Committee also believes that it is important to
provide the Company's executive officers with significant stock-based incentive
compensation, which increases in value in direct correlation with improvement in
the performance of the Company's Class A Common Stock, thereby aligning
management's interest with those of the Company's stockholders.
9
<PAGE> 13
The Compensation Committee considers the following factors (ranked in order
of importance) when determining compensation of executive officers: (i) the
Company's performance measured by attainment of specific strategic objectives,
stock price performance, and operating cash flow results, (ii) the individual
performance of each executive officer, (iii) comparative industry compensation
levels, (iv) historical cash and equity compensation levels, and (v)
recommendations of professional compensation consultants. The comparative
industry compensation data considered by the Compensation Committee in
establishing 1996 compensation was based on public telecommunications companies,
two-thirds of which are included in the Nasdaq Telecommunications Index, which
was chosen as the peer group for the Stockholder Return Performance Graph
included herein, and the remainder of which are listed on either the New York
Stock Exchange or the American Stock Exchange.
For fiscal years beginning after January 1, 1994, Section 162(m) of the
Internal Revenue Code generally disallows a tax deduction to a publicly-held
company for compensation in excess of $1,000,000 paid to the Company's chief
executive officer and its four other most highly compensated executive officers,
unless the plan and awards pursuant to which any portion of the compensation is
paid meet certain requirements. The Incentive Equity Plan does not meet those
requirements, and the Compensation Committee has determined that meeting such
requirements may not necessarily be in the best interest of the Company.
Accordingly, the Compensation Committee has decided not to recommend any
amendment to the Incentive Equity Plan to satisfy those requirements at this
time. In any event, the Company does not anticipate having taxable income
against which a deduction could be taken in the near future.
CASH COMPENSATION
The salaries of certain executive officers were set initially by their
respective employment agreements. Each of the employment agreements provide that
the Company may increase the executive officer's base salary throughout the term
or any renewal term of such employment agreement, and each agreement is
consistent with the Company's compensation policy as set forth herein.
As stated above, the compensation of executive officers is also based in
part upon individual performance and comparative industry compensation levels.
Early in each fiscal year, a performance plan is established. Each such annual
plan sets forth overall goals to be achieved by the Company, as well as specific
performance goals to be achieved by each of its executive officers according to
his or her duties and responsibilities, for the relevant fiscal year. For fiscal
year 1996, the overall goals were (i) the completion of the Company's previously
announced merger and acquisition transactions, (ii) the meeting of targets
relating to the acquisition and construction of antenna sites for the Company's
advanced mobile communications systems employing digital technology ("Digital
Mobile networks"), (iii) the continuation with Motorola, the Company's equipment
supplier and the developer of the proprietary technology currently deployed by
the Company in its Digital Mobile networks, of system development and technology
optimization activities with respect to the Digital Mobile networks, (iv) the
facilitation of the development of nationwide compatible Digital Mobile networks
and the achievement of a North American footprint, (v) the continuation of the
integration of acquired companies, (vi) the enhancement of strategic
relationships, (vii) the meeting of targets for development, implementation,
subscribers, budgets and cash flow, (viii) the strengthening of operations by
hiring senior operations executives for key positions and (ix) the achievement
of appreciation in the Company's stock price.
The Compensation Committee determined that most, but not all, of the
overall goals for fiscal year 1996 were met. Accordingly, Mr. Akerson received a
bonus in the amount of $300,000. Mr. Akerson's base salary was set under his
employment agreement (see "Employment Contracts, Termination of Employment and
Change-In-Control Agrrangements "). Mr. Donahue received a commencement bonus of
$300,000 pursuant to his employment agreement and a performance bonus of
$206,250. Mr. Donahue's base salary was set under his employment agreement (see
"Employment Contracts, Termination of Employment and Change-In-Control
Agrrangements"). Mr. O'Brien received a bonus in the amount of $200,000, which
related to fiscal year 1995 performance, and a bonus in the amount of $150,000
for fiscal year 1996 performance. Mr. O'Brien's base salary was $357,000 for
fiscal year 1996. Mr. McAuley received a bonus in the amount of $200,000 for
fiscal year 1995 performance and his salary was set at $350,000 for fiscal year
1996. Mr. Foosaner received a bonus in the amount of $50,000 and his salary was
set at $350,000 for fiscal year 1996. Most of
10
<PAGE> 14
the other executive officers of the Company received salary increases and
bonuses based on their achievement of overall and specific performance goals
during fiscal year 1996. On average, the cash compensation for executive
officers of the Company is near the median of comparative industry salary and
bonus levels.
EQUITY COMPENSATION
The Compensation Committee administers and authorizes all grants and awards
made under the Incentive Equity Plan. Periodically, the Compensation Committee
authorizes grants of options to purchase Class A Common Stock under the
Incentive Equity Plan to all employees. The Compensation Committee also
authorizes awards for new employees as incentive to join the Company. In
determining whether and in what amount to grant stock options or other equity
compensation in fiscal year 1996, the Compensation Committee considered the
amount and date of vesting of currently outstanding incentive equity
compensation granted previously to each of the Company's executive officers. The
Compensation Committee believes that continued grants of equity compensation to
key executives is an important tool to retain and motivate
exceptionally-talented executives who are necessary to achieve the Company's
long-term goals, especially at a time of significant growth and competition in
the wireless communications industry.
During fiscal year 1996, the Compensation Committee granted equity
compensation to Messrs. Akerson and Donahue in connection with the commencement
of their employment and granted equity compensation to Messrs. O'Brien and
Foosaner. The Committee did not grant equity compensation to Mr. McAuley. The
Compensation Committee approved grants of equity compensation to certain of the
other executive officers of the Company, consistent with the Compensation
Committee's overarching policy of granting equity compensation to key executives
and employees.
The Compensation Committee is comprised of three members. From October 2,
1995 to March 6, 1996, the members of the Committee were Messrs. Cooper, Jarvis
and Torimoto. Mr. Weibling, who had resigned as a member of the Compensation
Committee on October 2, 1995, when he was named acting Chief Executive Officer
of the Company, rejoined the Compensation Committee in March 1996 when Mr.
Akerson was named Chief Executive Officer and Chairman of the Board of
Directors. Mr. Jarvis served on the Compensation Committee during the period
that Mr. Weibling served as acting Chief Executive Officer.
The Compensation Committee
Robert Cooper, Chairman
Masaaki Torimoto
Dennis M. Weibling
Scot Jarvis (member from October 2,
1995 to March 6, 1996)
11
<PAGE> 15
EXECUTIVE COMPENSATION
The following table and discussion summarize the compensation of each
person who served as the Chief Executive Officer of the Company during fiscal
year 1996 and each of the four other most highly compensated executive officers
of the Company (the "Named Executive Officers") for the fiscal year ended March
31, 1994, the nine months ended December 31, 1994 ("Transition 1994" or "T1994")
and the fiscal years ended December 31, 1995 and December 31, 1996, during which
such persons were employed by the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------------
AWARDS
----------------------- PAYOUTS
NAME AND ANNUAL COMPENSATION OTHER RESTRICTED SECURITIES ---------
PRINCIPAL POSITION --------------------------- ANNUAL STOCK UNDERLYING LTIP ALL OTHER
AS OF DECEMBER 31, SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
1996(1) YEAR ($) ($) ($)(2) ($)(3) (#) ($) ($)(4)
- ------------------- ------ ------- ------- ------------ ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Daniel F.
Akerson.......... 1996 328,725(5) 300,000 -- 15,375,000 1,000,000 -- 3,000
Chief Executive
Officer and
Chairman of the
Board
Dennis M.
Weibling......... 1996 -- -- -- -- -- -- --
Chief Executive 1995 -- -- -- -- -- -- --
Officer(6)
Morgan E.
O'Brien.......... 1996 364,086 350,000(7) -- -- 100,000 -- 3,000
Vice Chairman of 1995 350,000 262,500 -- -- -- -- 4,716
the Board T1994 272,597(8) 350,000 -- -- -- -- --
1994 336,000 250,000 -- -- 400,000 (9) 1,290,000(10) --
Brian D. McAuley... 1996 350,000 200,000 -- -- -- -- 3,000
Executive Vice 1995 350,000 262,500 -- -- -- -- 4,716
President T1994 272,597(8) 350,000 -- -- -- -- 5,142
Emeritus 1994 336,000 250,000 -- -- 400,000 (9) 1,290,000(10) 4,000
Timothy M.
Donahue.......... 1996 252,076(11) 506,250(12) 76,428(13) -- 400,000 -- 3,000
President and
Chief Operating
Officer
Robert S.
Foosaner......... 1996 355,227 59,630 -- 1,537,500 -- -- 3,000
Senior Vice
President 1995 325,000 94,500 -- -- -- -- 4,716
T1994 239,152(8) 110,000 -- -- 20,000 -- 4,410
1994 260,000 90,000 -- -- 40,000 -- 1,000
</TABLE>
- ---------------
(1) See "Employment Contracts, Termination of Employment and Change-In-Control
Arrangements" for more information concerning the terms of employment of
the Named Executive Officers.
(2) Except for Mr. Donahue, the amount of "Other Annual Compensation" for the
Named Executive Officers did not meet the threshold reporting requirements
under the rules of the Commission.
(3) Values of the deferred stock awards shown in the Summary Compensation Table
are based on the closing price of the Class A Common Stock on the date of
grant. Mr. Akerson's award is based on 1,000,000 shares times $15.375 per
share, which was the closing price of the Class A Common Stock on March 4,
1996. The shares covered by Mr. Akerson's deferred stock award vest 100% on
March 5, 1999. The value of the shares covered by Mr. Akerson's deferred
stock award as of December 31, 1996 was $13,062,500 (1,000,000 shares times
$13.0625, the closing price of the Class A Common Stock on such date).
Subsequent to December 31, 1996, the Company and Mr. Akerson agreed to
alternative arrangements replacing a grant of 2,000,000 deferred shares
made to Mr. Akerson. Such alternative arrangements are described below
under the heading "Employment Contracts, Termination of Employment and
Change in Control Arrangements," and basically provide that, although the
first 1,000,000 deferred shares covered by such grant will continue to vest
on March 5, 1999, an option to acquire 1,000,000 shares, vesting on March
5, 2006, together with a special cash bonus of $14,750,000 payable after
Mr. Akerson has completed 10 years of service with the Company (or earlier
upon a change in
12
<PAGE> 16
control) are substituted for the second 1,000,000 deferred shares covered
by the earlier grant. Such second 1,000,000 deferred shares thus are not
included in the Summary Compensation Table. Mr. Foosaner's award is based
on 100,000 shares times $15.375 per share, which was the closing price of
the Class A Common Stock on March 4, 1996. During fiscal 1996, 25,000
shares of Mr. Foosaner's deferred stock award vested. The value of the
remainder of Mr. Foosaner's deferred stock award as of December 31, 1996
was $979,688 (75,000 shares times $13.0625, the closing price of the Class
A Common Stock on such date). The shares covered by Mr. Foosaner's deferred
stock award vest 25% six months after the date of grant and 25% on each of
the first three anniversaries of the date of grant or such later date as
may be selected by Mr. Foosaner under certain circumstances.
(4) "All Other Compensation" is comprised of the Company's contributions to the
Section 401(k) Plan on behalf of the Named Executive Officers.
(5) Mr. Akerson joined the Company on March 6, 1996; therefore, the
compensation received by him for fiscal 1996 is for the nine-month period
ended December 31, 1996.
(6) Mr. Weibling was acting Chief Executive Officer of the Company from October
2, 1995 through March 6, 1996. Mr. Weibling, a member of the Board of
Directors, was not paid a salary or any other compensation for his services
as acting Chief Executive Officer.
(7) Includes a performance bonus in the amount of $200,000 for fiscal year 1995
performance and a performance bonus in the amount of $150,000 for fiscal
year 1996 performance.
(8) Reflects nine months of salary paid during Transition 1994.
(9) Messrs. O'Brien and McAuley each received options on December 28, 1993 for
150,000 shares of Class A Common Stock, vesting 20% per year over a
five-year period, and 250,000 performance options, vesting 100% when the
Class A Common Stock price during any 30 consecutive trading days averages
more than twice the closing price of the Class A Common Stock on December
28, 1993, the date of the grant. The closing price of the Class A Common
Stock on such date was $40.25.
(10) These payments were made in connection with stock appreciation rights
("SARs") that were granted to Messrs. O'Brien and McAuley in 1991. The
Company was required to make payments under the SARs equal to the
difference between the base price of the SARs ($5.00 per share) and the
fair market value of the Class A Common Stock on the payment dates, the
last of which was in November 1993.
(11) Mr. Donahue joined the Company on February 1, 1996; therefore, the
compensation received by him during fiscal 1996 is for the eleven-month
period ended December 31, 1996.
(12) Includes an employment commencement bonus pursuant to Mr. Donahue's
employment agreement in the amount of $300,000 and a fiscal 1996
performance bonus in the amount of $206,250.
(13) Represents Mr. Donahue's allowance for relocation expenses upon accepting
employment with the Company.
13
<PAGE> 17
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options to
purchase Class A Common Stock that were granted in fiscal year 1996 to the Named
Executive Officers. The Company did not grant SARs in fiscal year 1996.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE PRESENT
OPTIONS EMPLOYEES PRICE EXPIRATION GRANT DATE
NAME GRANTED(#) IN FY96 ($/SHARE) DATE VALUE($)(3)
- ---------------------------------------- ---------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Daniel F. Akerson....................... 1,000,000(1) 16.1% 15.125 03/04/06 10,230,000
Dennis M. Weibling...................... -- -- -- -- --
Morgan E. O'Brien....................... 100,000(2) 1.6% 15.125 03/04/06 1,023,000
Brian D. McAuley........................ -- -- -- -- --
Timothy M. Donahue...................... 400,000(2) 6.4% 13.50 01/22/06 3,552,000
Robert S. Foosaner...................... -- -- -- -- --
</TABLE>
- ---------------
(1) These options were granted on March 4, 1996 and vest over a five-year period
at a rate of 20% per year from the date of grant.
(2) These options vest over a four-year period at a rate of 25% per year from
the date of grant. Mr. O'Brien's options were granted on March 4, 1996, and
Mr. Donahue's options were granted on January 22, 1996.
(3) The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions:
<TABLE>
<S> <C>
Expected stock price volatility............... 55%
Risk-free interest rate....................... 5.7% - 7.1%
Expected life of options...................... 8 years
Expected dividend yield....................... 0.00%
</TABLE>
The Company's stock options are not transferable, and the actual value of
the stock options that an employee may realize, if any, will depend on the
excess of the market price on the date of exercise over the exercise price. The
Company has based its assumption for stock price volatility on the variance of
weekly closing prices of the Company's stock from its initial offering date to
the present. The risk-free rate of return used equals the yield on ten-year zero
coupon U.S. Treasury issues on the grant date. No discount was applied to the
value of the grants for non-transferability or risk of forfeiture.
14
<PAGE> 18
OPTION AND SAR EXERCISES IN FISCAL YEAR 1996 AND FISCAL YEAR-END VALUES
The following table sets forth information concerning the exercise by the
Named Executive Officers of options to purchase Class A Common Stock during
fiscal year 1996 and unexercised options to purchase Class A Common Stock held
by the Named Executive Officers as of the end of fiscal year 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL
SHARES ACQUIRED VALUE AT FISCAL YEAR-END(#) YEAR-END($)(2)
ON EXERCISE REALIZED ------------------------------ ------------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- --------------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Daniel F. Akerson -- -- 200,000 800,000(3) N/A N/A
Dennis M. Weibling -- -- -- -- -- --
Morgan E. O'Brien 237,587 2,629,989 807,492 410,000 5,706,779 N/A
Brian D. McAuley 369,016 5,262,359 656,063 310,000 4,275,883 N/A
Timothy M. Donahue -- -- 75,000 325,000 N/A N/A
Robert S. Foosaner -- -- 152,000 68,000 N/A N/A
</TABLE>
- ---------------
(1) The value realized equals the aggregate amount of the excess of the fair
market value on the date of exercise (the closing price of Class A Common
Stock as reported by the Nasdaq Stock Market for the exercise date) over the
relevant exercise price(s).
(2) Only Messrs. McAuley and O'Brien had exercisable in-the-money options. The
unexercisable options of Messrs. McAuley and O'Brien, as well as both the
exercisable and unexercisable options of the other Named Executive Officers,
were not in the money as of December 31, 1996. The value of the in-the-money
options is based on the closing price of the Company's Class A Common Stock
as reported by the Nasdaq Stock Market on December 31, 1996, which was
$13.0625 per share, times the aggregate number of shares, less the aggregate
exercise prices, which range from $1.25 to $7.00 per share.
(3) Subsequent to December 31, 1996, the Company and Mr. Akerson agreed to
alternative arrangements replacing a grant of 2,000,000 deferred shares made
to Mr. Akerson. Such alternative arrangements are described below under the
heading "Employment Contracts, Termination of Employment and Change in
Control Arrangements," and basically provide that, although the first
1,000,000 deferred shares covered by such grant will continue to vest on
March 5, 1999, an option to acquire 1,000,000 shares, vesting on March 5,
2006, together with a special cash bonus of $14,750,000 payable after Mr.
Akerson has completed 10 years of service with the Company (or earlier upon
a change in control), are substituted for the second 1,000,000 deferred
shares covered by the earlier grant. Such second 1,000,000 deferred shares
are not included in the Summary Compensation Table, nor are the replacement
options (which were granted by the Compensation Committee on March 28, 1997)
included in the table relating to option grants in the last fiscal year or
in the above table. However, at December 31, 1996, such replacement options
(which have an exercise price of $14.75 per share) would not have been in
the money.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company entered into an employment agreement with Mr. Akerson that
provides for his employment as Chairman of the Board and Chief Executive Officer
through March 5, 1999. The employment agreement provides for continuation of the
term, which may be terminated upon twelve months notice. The employment
agreement with Mr. Akerson provides for an annual base salary of $400,000, which
may be increased annually by the Company and an annual bonus of up to 75% of his
base salary. The employment agreement further provides that Mr. Akerson will be
granted 1,000,000 deferred shares of Class A Common Stock that vest on March 5,
1999, a grant of options to purchase 1,000,000 shares of Class A Common Stock
that vest 20% per year beginning March 4, 1997, and a grant of options to
purchase 1,000,000 shares of Class A Common Stock that vest on March 5, 2006,
provided that such vesting may occur
15
<PAGE> 19
earlier or be deferred by Mr. Akerson under certain circumstances and will occur
automatically upon a change-in-control of the Company. Under the agreement, Mr.
Akerson is also entitled to receive a special bonus in the amount of
$14,750,000, provided he continues to be employed by the Company through March
5, 2006 which special bonus is also payable in the event of a change-in-control
of the Company prior to such date.
The Company entered into an employment agreement with Mr. Donahue that
provides for his employment as President and Chief Operating Officer through
February 1, 1999. The agreement provides for continuation of its initial term,
which may be terminated upon twelve months notice. The agreement provides for an
annual base salary of $275,000, which may be increased annually by the Company,
and an annual bonus. The agreement further provides for an employment
commencement bonus in the amount of $300,000. The agreement also provides for a
grant of options to purchase 300,000 shares of Class A Common Stock that vest
25% per year and will automatically vest upon a change-in-control of the
Company. The agreement further provides for a grant of options to purchase
100,000 shares of Class A Common Stock that vest upon the election by Mr.
Donahue to waive a long-term performance bonus in the amount of $1,600,000 to be
paid at Mr. Donahue's election but not earlier than January 31, 1999 or later
than January 3, 2000 (the "Long-Term Bonus"). While the agreement provides for
the Company to loan Mr. Donahue $400,000 in the event Mr. Donahue's outstanding
loan from his former employer is not forgiven, the agreement has been amended to
provide, under certain circumstances, that the Company's obligation to make a
loan to Mr. Donahue will be reduced to $100,000. See "Certain Relationships and
Related Transactions."
The employment agreements with Messrs. Akerson and Donahue also provide
that, in the event of permanent disability affecting such officers during the
employment term, the Company will pay such officers their existing base salary
for a period of twelve months and will make all benefit payments on behalf of
such officers for a period of twelve months. In addition, each agreement further
provides that the officer will be subject to certain confidentiality and
non-competition restrictions during the employment term and for a period of two
years after the termination thereof. For purposes of the employment agreements
with Messrs. Akerson and Donahue, a change-in-control of the Company will be
deemed to have occurred (i) if the Company transfers substantially all of its
assets or is merged into another entity and, as a result less than a majority of
the combined voting power of such entity is held by the holders of the voting
securities of the Company, (ii) if 51% or more of the outstanding voting stock
of the Company is acquired by a person, entity or "group" (within the meaning of
Rule 13d-5(b) under the Exchange Act), (iii) if the Operations Committee ceases
to exist, (iv) if representatives of Digital Radio cease to control the
Operations Committee or Mr. McCaw ceases to own or control a majority of the
voting power of Digital Radio, or (v) upon the occurrence of similar
transactions or events.
The Company entered into employment agreements with Messrs. O'Brien and
McAuley on June 15, 1987, which provided for their employment as Chairman of the
Board of Directors and as President of the Company, respectively, for five-year
terms. The employment agreements with Messrs. O'Brien and McAuley provide for
automatic extensions of the term for successive one-year periods unless, two
years prior to the expiration of the then-current term, the Company or such
officer elects not to have the term so extended. The agreements with Messrs.
O'Brien and McAuley provide that each will receive an annual base salary of
$300,000, which may be increased annually by the Board of Directors. The
employment agreements with Messrs. O'Brien and McAuley also provide that, in the
event of the officer's disability during the term of the agreement, the Company
will make monthly payments of such officer's monthly salary for six months.
Thereafter, such monthly payments will decrease to 50% of such officer's salary
during the next ensuing twelve-month period and will decrease by 15% during each
subsequent twelve-month period. The payments continue so long as the disability
continues and will be paid until the retirement or death of the officer. Each
agreement provides further that the officer will be subject to certain
confidentiality and non-competition restrictions during the employment term and
for a period of two years after the termination thereof. The Company is
negotiating a new employment agreement with Mr. O'Brien to reflect his new
position as Vice Chairman of the Board of Directors. Mr. McAuley's agreement was
effectively amended to reflect the change in his positions by virtue of his
resignation as a director and executive officer of the Company, and his
assumption of the title of Executive Vice President Emeritus.
16
<PAGE> 20
The Company entered into an employment agreement with Mr. Foosaner on March
26, 1992, which provides for his employment as Senior Vice President of the
Company for a three-year term. The employment agreement with Mr. Foosaner
provides for automatic extensions of the term for successive one-year periods
unless, two years prior to the expiration of the then-current term, the Company
or Mr. Foosaner elects not to have the term so extended. The agreement with Mr.
Foosaner provides for an annual salary of $250,000, which may be increased
annually by the Company. Under Mr. Foosaner's agreement, any stock options
outstanding will automatically become vested and exercisable in full upon a
filing pursuant to any federal or state law in connection with any tender offer,
or the execution of any agreement relating to a merger, consolidation or
reorganization of the Company, or the sale of substantially all of the assets of
the Company to another entity if, in the opinion of the Board of Directors, such
action would result in the creation of a single majority controlling interest in
the Company.
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<PAGE> 21
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Class A Common Stock of the Company during the fiscal years ended March 31,
1992, March 31, 1993, March 31, 1994, the nine-month transition period ended
December 31, 1994 the fiscal year ended December 31, 1995 and the fiscal year
ended December 31, 1996, with the cumulative total stockholder return of
companies comprising the Nasdaq (U.S.) Stock Market Index and the total
stockholder return of a peer group of companies comprising the Nasdaq
Telecommunications Index, which includes wireless telecommunications companies
of comparable market capitalization traded on the Nasdaq Stock Market. The
Company will provide stockholders a list of the companies included in the Nasdaq
Telecommunications Index upon request. The graph was prepared by the Company
with data provided by Research Data Group. The graph assumes an initial
investment of $100 on January 27, 1992 and reinvestment of all dividends.
The Company commenced public trading on January 27, 1992, and, therefore,
the graph and table include data only since such date. Additionally, effective
December 31, 1994, the Company changed its fiscal year-end from March 31 to
December 31, which resulted in a nine-month transition period from April 1 to
December 31, 1994.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
NEXTEL COMMUNICATIONS, INC.,
THE NASDAQ STOCK MARKET (US) INDEX
AND THE NASDAQ TELECOMMUNICATIONS INDEX
<TABLE>
<CAPTION>
NEXTEL NASDAQ
MEASUREMENT PERIOD COMMUNICATIONS, NASDAQ STOCK TELECOMMUNICATIONS
(FISCAL YEAR COVERED) INC. MARKET (US) INDEX INDEX
<S> <C> <C> <C>
27-JAN-92 100 100 100
MAR-92 93 97 99
MAR-93 176 112 132
MAR-94 262 121 158
DEC-94 96 123 152
DEC-95 98 174 199
DEC-96 87 214 204
</TABLE>
18
<PAGE> 22
SECURITIES OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 21, 1997 (the "Ownership
Date"), the amount and percentage of shares of each class of the Company's
capital stock that are deemed under the rules of the Commission to be
"beneficially owned" by (i) each director or director-nominee of the Company,
(ii) each of the Named Executive Officers, (iii) all directors and executive
officers of the Company as a group and (iv) each person or "group" (as such term
is used in Section 13(d)(3) of the Exchange Act) known by the Company to be the
beneficial owner of more than five percent of the outstanding shares of each
class of the Company's capital stock.
<TABLE>
<CAPTION>
TITLE OF CLASS OF AMOUNT AND NATURE
THE COMPANY'S OF BENEFICIAL APPROXIMATE %
NAME OF BENEFICIAL OWNER CAPITAL STOCK OWNERSHIP(1) OF CLASS(2)
- -------------------------------------- --------------------- ----------------- -------------
<S> <C> <C> <C>
Daniel F. Akerson..................... Class A Common Stock 200,000(3) *
Brian D. McAuley...................... Class A Common Stock 1,617,427(4) *
Morgan E. O'Brien..................... Class A Common Stock 1,307,640(5) *
Keith J. Bane......................... Class A Common Stock 0(6) *
Robert Cooper......................... Class A Common Stock 50,000 *
Timothy M. Donahue.................... Class A Common Stock 76,000(7) *
William E. Conway, Jr. ............... Class A Common Stock 82,993 *
Craig O. McCaw........................ Class A Common Stock 65,083,723(8) 19.1%
Keisuke Nakasaki...................... Class A Common Stock 0(9) *
Masaaki Torimoto...................... Class A Common Stock 0(10) *
Dennis M. Weibling.................... Class A Common Stock 65,083,723(11) 19.1%
Robert S. Foosaner.................... Class A Common Stock 217,000(12) *
All directors and executive........... Class A Common Stock 68,955,671(13) 20.0%
officers as a group (21 persons)
5% Stockholders:
Digital Radio, L.L.C.................. Class A Common Stock 65,083,723(14) 19.1%
Class A Preferred
2320 Carillon Point................... Stock 8,163,265 100.0%
Class B Preferred
Kirkland, Washington 98033............ Stock 82 100.0%
Motorola, Inc......................... Class A Common Stock 60,700,000(15) 18.0%
1303 East Algonquin Road.............. Class B Common Stock 17,830,000 100.0%
Schaumburg, Illinois 60196
Putnam Investments, Inc............... Class A Common Stock 15,340,145(16) 5.3%
1 P.O. Box Square
Boston, Massachusetts 02109
</TABLE>
- ---------------
* Less than one percent (1%).
(1) Under the rules of the Commission, a person is deemed to be the beneficial
owner of a security if such person, directly or indirectly, has or shares
the power to vote or direct the voting of such security or the power to
dispose or direct the disposition of such security. A person is also deemed
to be a beneficial owner of any securities if that person has the right to
acquire beneficial ownership within 60 days of the Ownership Date.
Accordingly, more than one person may be deemed to be a beneficial owner of
the same securities. Unless otherwise indicated by footnote, the named
individuals have sole voting and investment power with respect to the
shares of the Company's capital stock beneficially owned.
(2) Represents the voting power of the number of shares of each class of
capital stock beneficially owned as of the Ownership Date by each named
person or group, expressed as a percentage of (a) all shares of the
Company's capital stock of the indicated class actually outstanding as of
such date (in the case of the Class A Common Stock, giving effect to the
conversion of the Company's preferred stock and the Company's Class B
Non-Voting Common
19
<PAGE> 23
Stock, par value $0.001 per share (the "Class B Common Stock")), plus (b)
all other shares of capital stock deemed outstanding as of such date
pursuant to Rule 13d-3(d)(1) under the Exchange Act.
(3) Includes 200,000 shares of Class A Common Stock obtainable as of the
Ownership Date or within 60 days thereafter by Mr. Akerson upon the
exercise of non-qualified stock options.
(4) Includes 454,000 shares of Class A Common Stock obtainable as of the
Ownership Date or within 60 days thereafter by Mr. McAuley upon the
exercise of non-qualified stock options. Also includes ownership of 18,000
shares of Class A Common Stock that are held by Mr. McAuley's minor
children.
(5) Includes 548,477 shares of Class A Common Stock obtainable as of the
Ownership Date or within 60 days thereafter by Mr. O'Brien upon the
exercise of non-qualified stock options.
(6) Mr. Bane, who is Executive Vice President and President, Americas Region of
Motorola, disclaims beneficial ownership of all securities of the Company
held by Motorola. See note 15.
(7) Includes 75,000 shares of Class A Common Stock obtainable as of the
ownership date or within 60 days thereafter by Mr. Donahue upon the
exercise of non-qualified stock options.
(8) Mr. McCaw, who is an equity owner and controlling person of the McCaw
Investor, disclaims beneficial ownership of all securities of the Company
held by the McCaw Investor, except to the extent of his pecuniary interest
therein. See note 14.
(9) Mr. Nakasaki, who is President and Chief Executive Officer of NTT America,
disclaims beneficial ownership of all shares of Class A Common Stock held
by NTT. As of the Ownership Date, NTT held 1,532,959 shares.
(10) Mr. Torimoto, who is Vice President of Panasonic Communications and Systems
Company, disclaims beneficial ownership of all shares of Class A Common
Stock held by Matsushita. As of the Ownership Date, Matsushita held
3,000,000 shares.
(11) Mr. Weibling, who is President of Eagle River, an affiliate of the McCaw
Investor, disclaims beneficial ownership of all securities of the Company
held by the McCaw Investor, except to the extent of his pecuniary interest
therein. See note 14.
(12) Comprised of 25,000 shares of Class A Common Stock which are the subject of
a deferred share grant made to Mr. Foosaner. Also includes 192,000 shares
of Class A Common Stock obtainable as of the Ownership Date or within 60
days thereafter by Mr. Foosaner upon the exercise of non-qualified stock
options.
(13) Includes an aggregate of 2,176,510 shares of Class A Common Stock
obtainable as of the Ownership Date or within 60 days thereafter by
directors and executive officers as a group upon the exercise of
non-qualified stock options or other stock purchase rights. See also notes
14 and 15.
(14) Comprised of (i) 5,593,846 shares of Class A Common Stock beneficially
owned by the McCaw Investor, (ii) 35,000,000 shares of Class A Common Stock
obtainable as of the Ownership Date or within 60 days thereafter upon the
exercise of certain options and (iii) 24,489,877 shares of Class A Common
Stock, which represents the conversion of the 8,163,265 shares of Class A
Preferred Stock and the 82 shares of the Company's Class B Convertible
Preferred Stock, par value $0.01 per share (the "Class B Preferred Stock")
held by the McCaw Investor.
(15) Assumes conversion of the Class B Common Stock held by Motorola. Comprised
of (i) 40,170,000 shares of Class A Common Stock beneficially owned by
Motorola, (ii) 17,830,000 shares of Class B Common Stock beneficially owned
by Motorola and (iii) 2,700,000 shares of Class A Common Stock obtainable
as of the Ownership Date or within 60 days thereafter upon exercise of a
warrant. Excludes 300,000 shares of Class A Common Stock as to which such
warrant is not exercisable during such period. Of the total of 3,000,000
shares subject to such warrant, Motorola has transferred a portion relating
to 110,000 shares to a third party. Motorola granted the McCaw Investor an
option to acquire 9,000,000 shares included herein, which option is not
currently exercisable.
20
<PAGE> 24
(16) As reported in the most recent Schedule 13G filed by Putnam Investments,
Inc. ("Putnam"). As noted in its most recently filed Schedule 13G, Putnam
does not have sole voting power over the Company's Class A common shares
beneficially owned by Putnam.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and AT&T Wireless are in negotiations concerning a potential
arrangement whereby the Company would pre-pay AT&T Wireless certain site rental
and other amounts under site leases and/or collocation arrangements from time to
time in place between the Company and AT&T Wireless. Such pre-payment
arrangements, if implemented, also would operate as a full settlement of a claim
that AT&T Wireless has made regarding a loan made to Mr. Donahue by AT&T
Wireless. During his employment by AT&T Wireless, Mr. Donahue received a loan in
the amount of $300,000 that would be forgiven if Mr. Donahue remained employed
by AT&T Wireless for a certain period of time (the "AT&T Loan"). Mr. Donahue
terminated his employment with AT&T Wireless six months prior to the time the
AT&T Loan was to be forgiven in order to accept employment with the Company.
Pursuant to Mr. Donahue's employment agreement, the Company agreed to provide
Mr. Donahue with a loan in the same amount in the event Mr. Donahue was required
to repay the AT&T Loan. Accordingly, the Company proposes to effect a settlement
of such claims relating to the AT&T Loan to Mr. Donahue and also reduce the
Company's obligations to loan funds to Mr. Donahue, by prepaying $300,000 of
site rent or other amounts under lease and/or collocation agreements with AT&T
Wireless where the Company is renting certain space from AT&T Wireless for
antenna sites for the Company's digital mobile networks. The rental or other
payments under such lease or collocation agreements would be the same amounts
that would be due under the existing terms of the relevant agreements and would
simply represent a pre-payment in advance of the Company's obligation to pay
amounts it would otherwise owe to AT&T Wireless over the course of such
agreements.
Mr. O'Brien has received a secured, non-interest bearing loan of $70,000
from the Company, which was repayable on February 20, 1996. The loan has been
repaid by Mr. O'Brien.
Steven Shindler, the Company's Chief Financial Officer, has received a loan
from the Company in the amount of $250,000 bearing interest at a rate of six
percent per year that is due January 3, 2000.
Mr. Foosaner received a loan from the Company in the amount of $226,875
bearing interest at a rate of 5.4 percent per year, which was repayable on
September 23, 1996. The loan has been repaid by Mr. Foosaner.
On April 4, 1995, the Company, the McCaw Investor and Mr. McCaw entered
into the Securities Purchase Agreement (as amended, the "McCaw Securities
Purchase Agreement") and certain other related agreements (the "McCaw
Transaction"), pursuant to which the McCaw Investor made a significant equity
investment in the Company. Concurrently with the execution of the McCaw
Securities Purchase Agreement, the Company entered into a Management Support
Agreement (the "Support Agreement") with Eagle River, an affiliate of the McCaw
Investor that is also controlled by Mr. McCaw, pursuant to which Eagle River
provides management and consulting services to the Company and the Board of
Directors and the Operations Committee from time to time as requested. In
consideration of the services to be provided to the Company under the Support
Agreement, the Company granted an option to purchase an aggregate of 1,000,000
shares of Class A Common Stock at an exercise price of $12.25 per share to Eagle
River. The option expires on April 4, 2005, and is exercisable for 400,000
shares on April 4, 1997 and an additional 200,000 shares in each of the three
years thereafter. Additionally, the Company agreed to reimburse Eagle River for
all out-of-pocket costs, plus up to $200,000 per year for all allocable overhead
costs reasonably incurred by Eagle River in connection with the performance of
its obligations under the Support Agreement. Payments in the amount of $348,000
were made to Eagle River pursuant to the Support Agreement during fiscal year
1996.
On April 11, 1997, the Company and the McCaw Investor reached an agreement
pursuant to which the McCaw Investor committed to exercise in full on July 28,
1997, its option to purchase 15,000,000 shares of Class A Common Stock for an
aggregate purchase price of $232,500,000 and to provide up to $50,000,000 in
debt financing. In
21
<PAGE> 25
consideration of such commitments, the Company agreed to issue to the McCaw
Investor a contingent equity instrument (the "CEI") which may be converted, for
no additional consideration, into additional shares of Class A Common Stock
based on the average market price of Class A Common Stock for the 20 days prior
to the July 28 option exercise (the "Average Trading Price"). The number of
shares of Class A Common Stock into which the CEI may be converted ranges from a
minimum of no shares, if the Average Trading Price is equal to $15.50 or more,
to a maximum of 1,607,143 shares if the Average Trading Price is $14.00 or less.
In a related transaction, the Company reached an agreement with an affiliate of
Mr. McCaw (the "Purchaser"), pursuant to which the Purchaser will acquire, for
an aggregate purchase price of $25,000,000, an option to purchase up to
25,000,000 shares of Class A Common Stock, 15,000,000 of which would be
purchasable at an exercise price of $16.00 per share and the remaining
10,000,000 of which would be purchasable at an exercise price of $18.00 per
share at any time through July 28, 1998. Shares issuable upon exercise of the
options will be entitled to certain registration rights. In addition, the
Purchaser may grant to one non-affiliated transferee of at least 10,000,000 of
such shares a right to designate one nominee for election to the Company's Board
of Directors. The transactions are subject to certain conditions, including the
negotiation of definitive agreements and the receipt of certain approvals,
including the Company's receipt of consents to certain amendments of the
Company's public indentures.
The Company, Motorola and others are parties to definitive agreements,
which became effective September 30, 1996, with respect to the amendment,
restatement and consolidation of previously existing financing arrangements
among the parties (the "Vendor Credit Facility"). The credit agreement related
to the Vendor Credit Facility provides for borrowings of up to $345,000,000. At
December 31, 1996, the Company had indebtedness of $150,000,000 under the Vendor
Credit Facility. The Company and Motorola also reached a related understanding
regarding the terms and conditions on which Motorola will provide financing for
Nextel's purchases of equipment and services provided by Motorola, in addition
to the amounts contemplated by Motorola's financing commitments under the Vendor
Credit Facility. Pursuant to the additional Motorola financing commitment,
Motorola has agreed to make up to an additional $450,000,000 in secured
financing available to the Company. Availability of the additional financing is
subject to a number of conditions.
The Company purchases Motorola-manufactured infrastructure and subscriber
equipment from Motorola pursuant to certain equipment purchase agreements.
During fiscal year 1996, the Company purchased approximately $490,800,000 of
infrastructure and other equipment, warranties and services from Motorola.
Pursuant to existing equipment purchase agreements between the Company and
Motorola and subject to certain conditions, the Company has agreed to purchase a
significant amount of additional infrastructure equipment from Motorola.
As a result of arrangements that either existed at the time of the
acquisition of certain companies or resulted from such acquisitions, the Company
utilizes antenna sites owned by Mr. Cooper. Net rental expense under such
arrangements was approximately $149,400 in fiscal year 1996. The Company
believes that such rent expense is at or below prevailing market rates.
APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL NO. 2)
A proposal will be presented at the Annual Meeting to ratify the
appointment of the firm of Deloitte & Touche LLP as independent auditors to
audit the consolidated financial statements of the Company and its subsidiaries
for the fiscal year ending December 31, 1997. Although such ratification is not
required by law, the Board of Directors believes that stockholders should be
given this opportunity to express their views on the subject. While not binding
on the Board of Directors, the failure of the stockholders to ratify the
appointment of Deloitte & Touche LLP as the Company's independent auditors would
be considered by the Board in determining whether to continue the engagement of
Deloitte & Touche LLP. It is expected that representatives of Deloitte & Touche
LLP WILL ATTEND THE ANNUAL MEETING, WITH THE OPPORTUNITY TO MAKE A STATEMENT IF
THEY SO DESIRE, AND WILL BE AVAILABLE TO ANSWER APPROPRIATE QUESTIONS.
22
<PAGE> 26
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL TO RATIFY THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
ANNUAL REPORT
The Company's 1996 Annual Report to Stockholders, including financial
statements for the year ended December 31, 1996, is being distributed to all
stockholders of the Company together with this Proxy Statement, in satisfaction
of the requirements of the Commission. Additional copies of such report are
available upon request. To obtain such additional copies, please contact the
Company's Investor Relations Department at (703) 394-3500.
EXPENSE OF SOLICITATION OF PROXIES
The cost of soliciting proxies will be paid by the Company. In addition to
solicitation by mail, solicitations may also be made by telephone, telecopy or
in person. Arrangements will be made with brokerage houses and other custodians,
nominees and fiduciaries to send proxies and proxy material to their principals,
and the Company will reimburse them for their expenses in so doing. Officers and
other employees of the Company, as yet undesignated, may also request the return
of proxies by telephone, telecopy or in person.
OTHER BUSINESS
It is not anticipated that any other matters will be brought before the
Annual Meeting for action. If any such other matters shall properly come before
the Annual Meeting, however, it is intended that the persons authorized under
the proxies may, in the absence of instructions to the contrary, vote or act
thereon in accordance with their best judgment.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, stockholders of the Company
may present proper proposals for inclusion in the Company's proxy statement and
for consideration at the next annual meeting by submitting their proposals to
the Company in a timely manner. Any stockholder of the Company who wishes to
present a proposal for the inclusion in the proxy statement for action at the
1998 Annual Meeting of Stockholders must comply with the Company's By-Laws and
the rules and regulations of the Commission then in effect. Such proposal must
have been mailed to the Company at its offices at 1505 Farm Credit Drive,
McLean, Virginia 22102, Attention: Secretary, and must be received by the
Company before December 18, 1997.
IMPORTANT
TO ASSURE YOUR REPRESENTATION AND A QUORUM FOR THE TRANSACTION OF BUSINESS
AT THE ANNUAL MEETING, THE COMPANY URGES YOU TO PLEASE COMPLETE, SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD PROMPTLY.
23
<PAGE> 27
NEXTEL COMMUNICATIONS, INC.
ANNUAL MEETING OF STOCKHOLDERS, MAY 15, 1997
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR USE AT THE
ANNUAL MEETING OF STOCKHOLDERS. The undersigned hereby appoints Thomas J.
Sidman, Steven M. Shindler and Lisa A. Zappala, and each of them, as Proxies,
each with the power to appoint his or her substitutes, and hereby authorizes
them to represent and to vote, as designated below and in accordance with their
judgment upon any other matter properly presented, all the shares of Class A
Common Stock, par value $0.001 per share (the "Class A Common Stock"), of
Nextel Communications, Inc. (the "Company") held of record by the undersigned
at the close of business on March 28, 1997, at the Annual Meeting of
Stockholders to be held on May 15, 1997 or any adjournment or postponement
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES NAMED
HEREIN AS DIRECTORS OF THE COMPANY AND FOR RATIFICATION OF DELOITTE & TOUCHE
LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR FISCAL YEAR 1997.
Should any nominee decline or be unable to accept such nomination to serve as a
director, an event that the Company does not currently anticipate, the persons
named in the enclosed proxy reserve the right, in their discretion, to vote for
a lesser number or for substitute nominees designated by the Board of Directors.
PLEASE MARK, SIGN, DATE AND RETURN THIS FORM PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE> 28
PLEASE MARK YOUR
[X] VOTES AS INDICATED
IN THIS EXAMPLE.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted FOR the election of the nominees named herein and FOR proposal 2.
FOR WITHHELD
1. Election of Directors to serve until the [ ] [ ]
2000 Annual Meeting of Stockholders.
Nominees: William E. Conway, Jr.
Keisuke Nakasaki
Morgan F. O'Brien
FOR, except vote withheld for the following nominee(s):
- -----------------------------------------------------
2. Ratification of the appointment of FOR AGAINST ABSTAIN
Deloitte & Touche LLP
[ ] [ ] [ ]
- -------------------------------------------------
PRINT NAME OF STOCKHOLDER
