<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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 14a-11(c) or 14a-12
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
[NEXTEL LOGO] NEXTEL COMMUNICATIONS, INC.
1505 Farm Credit Drive, McLean, VA 22102
703-394-3000
April 7, 1999
To Our Stockholders:
On behalf of the Board of Directors of Nextel Communications, Inc.
("Nextel"), I cordially invite you to attend the Annual Meeting of Stockholders
of Nextel (the "Annual Meeting") to be held at Hyatt Regency Reston, Reston Town
Center, 1800 Presidents Street, Reston, Virginia 20190 on Tuesday, May 11, 1999
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 Nextel is important. The Annual Meeting is an excellent opportunity for
Nextel's management to discuss Nextel'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.
We look forward to seeing you on May 11.
Sincerely,
/s/ DANIEL F. AKERSON
Daniel F. Akerson
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
[NEXTEL LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 11, 1999
Notice is hereby given that the Annual Meeting of Stockholders of Nextel
Communications, Inc. ("Nextel") will be held on May 11, 1999 at 10:00 A.M. local
time at:
Hyatt Regency Reston
Reston Town Center
1800 Presidents Street
Reston, Virginia 20190
The purpose of the meeting is:
(1) To elect three directors of Nextel to hold office for a three-year
term ending on the date of the third succeeding Annual Meeting of
Stockholders of Nextel 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 Nextel and its subsidiaries for 1999; 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 has established the close of business on March 17,
1999, as the record date for determining stockholders entitled to notice of, and
to vote at, the Annual Meeting and 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. YOUR PROXY MAY BE REVOKED 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,
/s/ DANIEL F. AKERSON
DANIEL F. AKERSON
Chairman of the Board
McLean, Virginia
April 7, 1999
<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 11, 1999
------------------------
GENERAL INFORMATION
This proxy statement is being furnished to stockholders of Nextel
Communications, Inc., a Delaware corporation, as of March 17, 1999, the record
date established by Nextel's Board of Directors, in connection with the Annual
Meeting of Stockholders of Nextel to be held at the Hyatt Regency Reston, Reston
Town Center, 1800 Presidents Street, Reston, Virginia 20190, on Tuesday, May 11,
1999 at 10:00 a.m. local time, and any adjournments or postponements of the
Annual Meeting.
At the Annual Meeting, stockholders will be asked to consider and vote upon
the election of directors and to ratify the appointment of Deloitte & Touche LLP
as Nextel's independent auditors for fiscal year 1999.
SOLICITATION, USE AND REVOCATION OF PROXIES
Nextel's Board of Directors solicits the accompanying proxy for use at the
Annual Meeting. A proxy may be revoked at any time prior to its use by:
- delivering to Nextel's General Counsel a signed notice of revocation or a
later dated proxy;
- attending the Annual Meeting and voting in person; or
- giving notice of revocation of the proxy at the Annual Meeting.
Attendance at the Annual Meeting does not 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. Any notice of revocation that is delivered at
the Annual Meeting should be hand delivered to Nextel's General Counsel before a
vote is taken on each matter. You may be asked to present documents for the
purpose of establishing your identity as a Nextel stockholder. This proxy
statement, the accompanying proxy card and the 1998 Annual Report to
Stockholders are being mailed or otherwise distributed to you on or about April
9, 1999.
The shares represented by properly executed proxies will be voted according
to the instructions indicated on those proxies. Properly executed proxies
received with no instructions will be voted:
- "FOR" the election of the nominees for director named in this proxy
statement or substitute nominees the Board of Directors may designate,
- "FOR" ratification of Deloitte & Touche LLP as the firm of independent
accountants to audit the consolidated financial statements of Nextel and
its subsidiaries for 1999, and
- at the discretion of the persons named as proxies on all other matters
that may properly come before the Annual Meeting.
<PAGE> 5
RECORD DATE, VOTING RIGHTS AND OUTSTANDING SHARES
The Board of Directors has established the close of business on March 17,
1999 as the record date for determining stockholders entitled to receive notice
of and vote on proposals at the Annual Meeting or any adjournment or
postponement of the Annual Meeting.
Only holders of record of Nextel's Class A Common Stock, par value $0.001
per share (the "Common Stock") and Nextel'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 Common Stock at the close of business on March 17,
1999 is entitled to one vote per share on each matter to be voted upon by the
stockholders at the Annual Meeting other than the election of the director
nominated by the holder of the Class A Preferred Stock (the "Class A Preferred
Director"). The holder of record of the Class A Preferred Stock at the close of
business on the record date is entitled to one vote per share of Common Stock
into which its shares of Class A Preferred Stock are convertible on the record
date. The holder of Class A Preferred Stock is entitled to vote those shares
together with the holders of Common Stock on each matter to be voted upon at the
Annual Meeting other than the election of directors. The holder of the Class A
Preferred Stock is entitled to vote those shares as a separate class on the
election of the Class A Preferred Director. As of the record date, there were
274,369,629 shares of Common Stock issued and outstanding and 7,905,981 shares
of Class A Preferred Stock (convertible into 23,717,943 shares of Common Stock)
issued and 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. A quorum
exists when holders of a majority of the total number of outstanding shares of
Common Stock that are entitled to vote at the Annual Meeting are present at the
Annual Meeting in person or by proxy. A quorum 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 (other than the Class A Preferred Director)
who receive a plurality of the votes cast by the holders of the Common Stock,
voting as a separate class, and the nominee for Class A Preferred Director who
receives a plurality of the votes cast by the holder of the Class A Preferred
Stock, voting as a separate class, in each case 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 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
the same effect as a vote against the proposal to ratify the appointment of the
independent auditors.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
Pursuant to Nextel'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.
As provided in the terms of the Class A Preferred Stock, the 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 holder of the Class A Preferred Stock votes
separately as a class. The Class A Preferred Directors are to be allocated as
equally as possible
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<PAGE> 6
among Nextel's three classes of directors. Prior to November 18, 1998 there were
only two Class A Preferred Directors and no Class A Preferred Director allocated
to the class of directors whose term ends in 2000. Pursuant to the terms of the
Class A Preferred Stock, on November 18, 1998, Digital Radio, L.L.C. (the "McCaw
Investor"), as the sole holder of the Class A Preferred Stock, appointed William
A. Hoglund as the third Class A Preferred Director. The holders of the Common
Stock are not entitled to vote for the Class A Preferred Directors and the
holder of Class A Preferred Stock is not entitled to vote those shares in the
election of members of the Board of Directors other than the Class A Preferred
Directors.
The McCaw Investor has informed Nextel that it intends to vote all of the
Class A Preferred Stock to elect the Class A Preferred Director-nominee named in
the following table. It is intended that valid proxies received will be voted,
unless contrary instructions are given, to elect the other 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 Nextel does not currently
anticipate, the persons named in the enclosed proxy reserve the right, in their
discretion, to vote for a lesser number of or for substitute nominees designated
by the Board of Directors, to the extent consistent with Nextel's Amended and
Restated Certificate of Incorporation and its By-Laws. As of the date of this
proxy, the total number of directors, including the Class A Preferred Directors,
eligible to serve in such capacity is ten.
Each of the three nominees for director to be elected by the holders of
Common Stock is currently a member of the Board of Directors and, if elected,
will hold office until the 2002 Annual Meeting of Stockholders and until his
respective successor is duly elected and qualified. The nominee for Class A
Preferred Director is currently a member of the Board of Directors and, if
elected, will hold office until the 2002 Annual Meeting of Stockholders and
until his 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 duly elected and qualified.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE POSITIONS WITH NEXTEL COMMITTEES
---- --- -------- --------------------- ----------
<S> <C> <C> <C> <C>
NOMINEES FOR DIRECTORS TO
HOLD OFFICE UNTIL 2002
- -------------------------
Daniel F. Akerson 50 1996 Chairman of the Board of Operations and
Directors and Chief Nominating
Executive Officer
Timothy M. Donahue 50 1996 President and Chief Finance
Operating Officer and
Director
Frank M. Drendel 54 1997 Director Compensation
Dennis M. Weibling* 47 1995 Director Audit, Compensation,
Finance, Nominating,
Operations and
Interested Party
DIRECTORS HOLDING OFFICE
UNTIL 2001
- -------------------------
Keith Bane 59 1995 Director Interested Party
Craig O. McCaw* 49 1995 Director Operations
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE POSITIONS WITH NEXTEL COMMITTEES
---- --- -------- --------------------- ----------
<S> <C> <C> <C> <C>
DIRECTORS HOLDING OFFICE
UNTIL 2000
- -------------------------
William E. Conway, Jr. 49 1997 Director Audit, Compensation,
Finance and
Interested Party
Keisuke Nakasaki 57 1995 Director Audit
Morgan E. O'Brien 54 1987 Vice Chairman of the Operations and
Board of Directors Nominating
William A. Hoglund* 45 1998 Director Operations
</TABLE>
- ---------------
* Class A Preferred Director.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" INCUMBENT DIRECTORS DANIEL
F. AKERSON, TIMOTHY M. DONAHUE AND FRANK M. DRENDEL.
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 Nextel who are
not standing for election at the Annual Meeting.
NOMINEES FOR ELECTION AS DIRECTORS TO HOLD OFFICE UNTIL THE 2002 ANNUAL
MEETING OF STOCKHOLDERS
DANIEL F. AKERSON. Mr. Akerson has served as Chairman of the Board of
Directors and Chief Executive Officer since joining Nextel 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 ("General Instrument"), 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 the American
Express Company, America OnLine, Inc., and Nextel International, Inc., a
substantially wholly owned subsidiary of Nextel ("Nextel International").
FRANK M. DRENDEL. Mr. Drendel has served as a director of Nextel since
August 20, 1997. Mr. Drendel has served as Chairman and Chief Executive Officer
of CommScope, Inc., ("CommScope") a manufacturer of coaxial cable and supplier
of high-performance electronics cables, since 1976. Mr. Drendel currently serves
as a director of General Instrument.
TIMOTHY M. DONAHUE. Mr. Donahue has served as President of Nextel since
joining Nextel on February 1, 1996, and as a director of Nextel since June 18,
1996. On February 29, 1996, the Board of Directors elected Mr. Donahue to the
additional position of Chief Operating Officer of Nextel. From 1986 to January
1996, Mr. Donahue held various senior management positions with AT&T Wireless
Services, Inc. including Regional President for the Northeast. Mr. Donahue
currently serves as a director of Nextel International.
DENNIS M. WEIBLING. Mr. Weibling has served as a director of Nextel since
July 31, 1995. From October 1995 to March 1996, Mr. Weibling served as Nextel's
acting Chief Executive Officer. Since 1993, Mr. Weibling has been an officer of
Eagle River, Inc. ("Eagle River"), a company formed to make strategic
investments in telecommunications ventures. Mr. Weibling currently serves as a
director of Nextel International and NEXTLINK Communications, Inc. ("NEXTLINK").
4
<PAGE> 8
DIRECTORS HOLDING OFFICE UNTIL THE 2001 ANNUAL MEETING OF STOCKHOLDERS
KEITH BANE. Mr. Bane has served as a director of Nextel 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 Nextel 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 the McCaw
Investor, a company formed for the purpose of making an equity investment in
Nextel. From 1974 to September 1994, Mr. McCaw served as Chairman of the Board
and Chief Executive Officer of McCaw Cellular Communications, which was sold to
AT&T Corp. in August 1994. Mr. McCaw currently serves as a director of Nextel
International and NEXTLINK.
DIRECTORS HOLDING OFFICE UNTIL THE 2000 ANNUAL MEETING OF STOCKHOLDERS
WILLIAM E. CONWAY, JR. Mr. Conway has served as a director of Nextel since
February 12, 1997. Since 1987, Mr. Conway has been Managing Director of the
Carlyle Group. Mr. Conway currently serves as a director of Global Crossing Inc.
and Howmet International, Inc.
KEISUKE NAKASAKI. Mr. Nakasaki has served as a director of Nextel 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.
MORGAN E. O'BRIEN. Mr. O'Brien has served as a director of Nextel since
co-founding it 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. From 1987 to October 1994, Mr.
O'Brien also served as General Counsel of Nextel.
WILLIAM A. HOGLUND. Mr. Hoglund has served as a director of Nextel since
November 18, 1998. Since January 1996, Mr. Hoglund has been Vice President and
Chief Financial Officer of Eagle River. From 1978 until joining Eagle River, Mr.
Hoglund was with J.P. Morgan & Co. in its investment-banking group most recently
as Managing Director, focusing for the last nine years on clients in the
telecommunications, cable and media industries. Mr. Hoglund currently serves as
a director of NEXTLINK.
INFORMATION REGARDING CERTAIN DIRECTORSHIPS
In connection with a number of Nextel's transactions, Nextel granted
parties the right to nominate persons for election to Nextel's Board of
Directors. Additionally, Nextel has agreed to limit the size of the Board of
Directors to a maximum of sixteen members.
Mr. Nakasaki's directorship is connected with NTT's investment in Nextel.
On January 20, 1994, Nextel and NTT entered into a Stock Purchase Agreement (the
"NTT Stock Purchase Agreement"), and NTT America and Nextel entered into a
Technical Services Agreement (the "Technical Services Agreement"). In March
1999, Nextel and NTT America terminated the Technical Services Agreement. Under
the terms of the NTT Stock Purchase Agreement, NTT purchased 1,532,959 shares of
Common Stock for $48.925 per share, or $75 million, on April 4, 1994. Pursuant
to the NTT Stock Purchase Agreement, so long as NTT owns all or substantially
all of such shares, NTT is entitled to nominate one person to serve on the Board
of Directors.
The directorships of Messrs. McCaw, Weibling and Hoglund (collectively, the
"Class A Preferred Directors") are connected with the McCaw Investor's
investment in Nextel. 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 directors or such greater number as is necessary to cause the
total number of directors elected by the holder of the Class A Preferred Stock
to equal 25%
5
<PAGE> 9
of the total number of members of the Board of Directors. The McCaw Investor has
designated three directors, the current maximum number to which it is entitled.
In electing such directors, the holder of the Class A Preferred Stock votes
separately as a class.
The directors elected by the holder of the Class A Preferred Stock are to
be allocated as equally as possible among Nextel's three classes of directors.
Accordingly, one Class A Preferred Director has been allocated to each of the
three classes. The McCaw Investor, as the sole holder of the Class A Preferred
Stock, 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 Nextel
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 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 has agreed to cast its votes for such nominees in the same proportions
as the votes cast by Nextel's other stockholders.
Mr. Bane's directorship is connected with Motorola's investment in Nextel.
Pursuant to the terms of the Contribution and Merger Agreement, dated as August
4, 1994, as amended, by and among Nextel, 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 Common Stock and Class B
Non-Voting 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 Nextel, Mr. Akerson is
entitled to be nominated to serve on 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. Nextel's Amended and Restated Incentive
Equity Plan (the "Incentive Equity Plan") permits grants and awards thereunder
to "Nonaffiliate Directors", as defined in the Incentive Equity Plan. Currently,
the only Nonaffiliate Directors are Messrs. Conway and Drendel. During 1997, the
Compensation Committee granted to each of Messrs. Conway and Drendel options to
acquire 5,000 shares of Nextel's Common Stock, one-third of which vested 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 Nextel's intention to make appropriate awards under the
Incentive Equity Plan to each Nonaffiliate Director upon such person's election
to the Board. Nextel also provides for an annual stock option grant covering
1,000 shares of Nextel's Common Stock to each Nonaffiliate Director who is a
director at the time of any stock option grant to management of Nextel, on terms
identical to the standard equity option grants made to Nextel employees, except
for a three year vesting schedule. In addition, a Nonaffiliate Director who is a
chairman of a committee formally established by the Board of Directors will
receive an annual cash payment of $5,000 for each committee of which he is
chairman, in addition to an annual retainer in the amount of $20,000 which is
payable to each Nonaffiliate Director.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires Nextel's directors and executive officers, and persons who own more
than ten percent (10%) of a registered class of Nextel'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 Common Stock and other equity securities of Nextel. The rules promulgated by
the Commission under Section 16(a) of the Exchange Act require those persons to
furnish Nextel with copies of all reports filed with the Commission pursuant to
Section 16(a).
Reports received by Nextel indicate that Mr. McCaw failed to file on a
timely basis a Form 4 with respect to one transaction and Mr. Hoglund failed to
file on a timely basis a Form 3 upon his election as a director.
6
<PAGE> 10
Based solely upon a review of Forms 3, Forms 4 and Forms 5 and amendments
thereto furnished to Nextel pursuant to Rule 16a-3(e) during the fiscal year
ended December 31, 1998, and written representations of certain of its directors
and executive officers that no Forms 5 were required to be filed, Nextel
believes that, except as specified in the preceding paragraph, all directors,
executive officers and beneficial owners of more than 10% of the Common Stock
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 1998, the Board of Directors held eleven regularly scheduled and
special meetings. During 1998, all current directors attended at least
seventy-five percent (75%) of those meetings held by Nextel's Board of Directors
and the respective committees on which the directors were members. In addition
to attending meetings, directors also discharge their responsibilities by review
of Nextel's reports to directors, visits to its facilities, correspondence and
telephone conferences with Nextel's executive officers and others regarding
matters of interest and concern to Nextel.
The Board of Directors has standing Audit, Compensation, Finance,
Nominating, Operations and Interested Party committees. Pursuant to the terms of
the securities purchase agreement entered into by the McCaw Investor in April
1995, each committee of the Board of Directors includes 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. Weibling (Chairman), Nakasaki and Conway currently are members of
the Audit Committee. The Audit Committee reviews with Nextel's management, the
internal auditors and the independent auditors, Nextel'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 Nextel'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 Nextel's consolidated
financial statements. The Audit Committee held two meetings during 1998.
COMPENSATION COMMITTEE
Messrs. Drendel (Chairman), Weibling and Conway currently are members of
the Compensation Committee. The Compensation Committee is (and is expected to
remain) composed entirely of directors who are not employees of Nextel or its
subsidiaries. The Compensation Committee recommends to the Board of Directors
the compensation and cash bonus opportunities based on the achievement of
objectives set by the Compensation Committee with respect to the Chairman of the
Board of Directors and Chief Executive Officer, the Vice Chairman of the Board
of Directors and the President; administers Nextel's compensation plans for the
same executives; determines equity compensation for all employees; reviews and
approves the cash compensation and bonus objectives recommended by the Chairman
of the Board of Directors and Chief Executive Officer and the President for the
other executive officers of Nextel; and reviews various matters relating to
employee compensation and benefits. The Compensation Committee administers, and
makes all ongoing determinations concerning matters relevant to, the Incentive
Equity Plan, Nextel's Associate Stock Purchase Plan and Nextel's Cash
Compensation Deferral Plan. The Compensation Committee held seven meetings
during 1998.
FINANCE COMMITTEE
Messrs. Conway (Chairman), Weibling and Donahue currently are members of
the Finance Committee. The Finance Committee was formed to review and, if
appropriate, authorize Nextel to pursue potential opportunities to raise funding
through the incurrence of indebtedness, the issuance of equity securities and
such other matters or topics related thereto. The Finance Committee is
authorized to engage or consult from time to time, as appropriate, at Nextel's
expense, one or more investment banking firms or other professional financial
advisors to advise and assist the committee,
7
<PAGE> 11
independent legal counsel for the committee and such other experts and advisors
as it considers necessary, appropriate or advisable in the discharge of its
responsibilities. The Finance Committee held one meeting during 1998.
NOMINATING COMMITTEE
The Nominating Committee was formed to recommend new members for nomination
to the Board of Directors. Messrs. O'Brien (Chairman), Akerson and Weibling
currently are members of the Nominating Committee. On July 27, 1995, Nextel's
By-Laws were amended to provide that as long as there is an Operations
Committee, there shall be a Nominating Committee composed of 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
Nextel 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 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 met once during 1998. All nominees proposed
for election to the Board of Directors during 1998 were elected by action of the
full Board of Directors. The Nominating Committee has not yet adopted a policy
with respect to the consideration of, nor has it 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 Nextel. Messrs. McCaw (Chairman), Akerson,
Hoglund, O'Brien and Weibling currently are members of the Operations Committee.
Nextel's Bylaws provide that the Operations Committee shall be comprised of five
members, three of whom shall be Class A Preferred Directors. Also, in connection
with Mr. Akerson's employment by Nextel, Mr. Akerson is entitled to serve as a
member of the Operations Committee. The Operations Committee has the authority
to formulate key aspects of Nextel's business strategy, including decisions
relating to the technology used by Nextel 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 and of marketing,
strategic and financing plans; nomination, supervision and oversight of certain
executive officers of Nextel; and endorsement of nominees proposed by the
Nominating Committee to serve on the Board of Directors and/or committees
thereof. The Operations Committee did not meet during 1998 but took actions by
unanimous written consent on four occasions.
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 the
unvested portion of an option entitling Eagle River to purchase up to 1,000,000
shares of 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.
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<PAGE> 12
INTERESTED PARTY COMMITTEE
The Interested Party Committee was formed on July 31, 1995. Messrs. Bane
(Chairman), Conway 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
nominee(s) shall serve as members of the Interested Party Committee. The
Interested Party Committee has the authority to review certain significant
proposed transactions between Nextel and affiliated persons or entities (other
than subsidiaries or other affiliated entities controlled by Nextel). The
members of the Interested Party Committee determined to permit certain
transactions in 1998 among Nextel, Nextel International and each of Motorola and
certain controlled affiliates of Mr. McCaw to be presented to, and acted upon
by, the full Board of Directors (with appropriate abstentions in each case).
Accordingly, the Interested Party Committee did not meet during 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Weibling is a current member of the Compensation Committee, and also
serves as an officer of Eagle River, which Nextel paid about $111,400 in 1998.
In addition, Mr. Weibling is an officer of Option Acquisition, L.L.C. ("Option
Acquisition"), which currently holds 9,953,821 shares of Common Stock acquired
from the cashless exercise of options to purchase 25,000,000 shares of Nextel's
Common Stock. Mr. Drendel, who currently serves as a member of the Compensation
Committee, also serves as an officer of CommScope. In 1998, Nextel purchased
about $7.6 million of coaxial cable and related equipment for its antenna sites
from CommScope. See "Certain Relationships and Related Transactions."
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee believes that the compensation levels of
Nextel's executive officers, who provide leadership and strategic direction for
Nextel, should consist of (1) base salaries that are commensurate with
executives of other comparable telecommunications companies and (2) 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 Nextel.
The Compensation Committee also believes that it is important to provide
Nextel's executive officers with significant stock-based incentive compensation,
which increases in value in direct correlation with improvement in the
performance of Nextel's Common Stock, thereby aligning management's interests
with those of Nextel's stockholders.
The Compensation Committee considers the following factors (ranked in order
of importance) when determining compensation of executive officers:
(1) Nextel's performance measured by attainment of specific strategic
objectives, stock price performance and operating results;
(2) the individual performance of each executive officer including the
achievement by the executive or such executive's functional group
of identified goals; and
(3) historical cash and equity compensation levels.
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 such a 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 Nextel's
best interest. 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, Nextel does not anticipate having
taxable income against which a deduction could be taken in the near future.
9
<PAGE> 13
CASH COMPENSATION
The salaries of certain executive officers were initially set by their
respective employment agreements, which provide that Nextel may increase such
executive officer's base salary throughout the term or any renewal term of such
employment agreement. Each such agreement is consistent with Nextel's
compensation policy as set forth in this proxy statement.
As stated above, the compensation of executive officers is also based in
part upon individual performance and comparative industry compensation levels.
Early in each year, a performance plan is established. Each such annual plan
sets forth overall goals to be achieved by Nextel, 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 year. For 1998, the
overall goals were:
(1) the meeting of targets relating to the acquisition and construction
of antenna sites for Nextel's advanced mobile communications
systems employing digital technology ("Digital Mobile Network");
(2) the achievement of certain Digital Mobile Network coverage goals;
(3) the meeting of cash flow, expense, and other budgetary targets;
(4) the continuation, with Motorola, Nextel's equipment supplier and
the developer of the proprietary technology currently deployed by
Nextel in its Digital Mobile Network, of system development and
technology optimization activities with respect to the Digital
Mobile Network;
(5) the meeting of targets relating to the addition and retention of
subscribers on the Digital Mobile Network and relating to average
subscriber revenues;
(6) the enhancement of strategic relationships; and
(7) to achieve appreciation in Nextel's stock price.
The base salaries of each of the executive officers identified below were
either set by, or determined by reference to, such executives' employment
agreements (see "Executive Compensation -- Employment Agreements"). Bonus
compensation for such executives was determined based on a formula that ties 75%
of the target bonus objective (which in most instances is established as a
percentage of base salary) to the achievement by Nextel of overall corporate
goals (some of which were met or exceeded in 1998) and the remaining 25% of the
target bonus objective to the achievement of specified individual or functional
area goals. Under this formula, the executive officers' bonus amounts could be
greater or less than the target bonus objective based on Nextel's and the
executives' performance against such goals. Applying these standards, in 1998,
Mr. Akerson received a bonus in the amount of $400,000, Mr. Donahue received a
bonus of $300,000, Mr. O'Brien received a bonus in the amount of $157,175, Mr.
Sidman received a bonus in the amount of $175,000, and Mr. Foosaner received a
bonus in the amount of $154,007. Other executive officers of Nextel received
salary increases and bonuses based on the achievement of overall corporate goals
and their individual and functional goals during 1998. On average, the
Compensation Committee believes the cash compensation for executive officers of
Nextel is comparable to 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 Common Stock under the Incentive Equity
Plan to all employees who have been with Nextel during the preceding year. The
Compensation Committee also authorizes awards for new employees as incentives to
join Nextel. In determining whether and in what amount to grant stock options or
other equity compensation to Nextel's executive officers in 1998, the
Compensation Committee considered the amount and date of vesting of currently
outstanding incentive equity compensation granted previously to each of Nextel'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
10
<PAGE> 14
necessary to achieve Nextel's long-term goals, especially at a time of
significant growth and competition in the wireless communications industry.
During 1998, the Compensation Committee granted equity compensation to all
the executive officers named in the Summary Compensation Table below and
approved grants of equity compensation to other specific executive officers of
Nextel, consistent with the Compensation Committee's overarching policy of
granting equity compensation to key executives and to Nextel's employees in
general.
During 1998 the Compensation Committee was comprised of three members,
Messrs. Drendel (who serves as Chairman), Weibling and Masaaki Torimoto, (who
served as a member during that period prior to his resignation on February 4,
1999 and who was replaced on February 18, 1999 as a member of the Compensation
Committee by William E. Conway, Jr.).
The Compensation Committee
Frank M. Drendel, Chairman
Dennis M. Weibling
11
<PAGE> 15
EXECUTIVE COMPENSATION
The following table and discussion summarizes the compensation of the Chief
Executive Officer of Nextel and each of the four other most highly compensated
executive officers of Nextel during 1998 (collectively, the "Named Executive
Officers") for the fiscal years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS
----------------------------------- -------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)(1)
------------------ ---- ------- ------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Daniel F. Akerson 1998 400,008 400,000 -- -- 1,000,000 15,576
Chief Executive Officer 1997 400,008 300,000 -- -- 1,200,000 8,858
and
Chairman of the Board 1996 328,725(2) 300,000 -- 15,375,000(3) 1,000,000 3,000
Timothy Donahue 1998 357,508 300,000 -- -- 200,000 4,000
President and Chief 1997 312,504 206,250 -- -- 175,000 3,200
Operating
Officer 1996 252,076(4) 506,250(5) 76,428(6) -- 400,000 3,000
Morgan E. O'Brien 1998 357,216 157,175 -- -- 50,000 5,000
Vice Chairman of the 1997 357,216 150,000 -- -- 50,000 3,200
Board
1996 364,086 350,000(7) -- -- 100,000 3,000
Robert S. Foosaner 1998 350,016 154,007 -- -- 25,000 4,052
Vice President and 1997 350,016 50,000 -- -- 25,000 3,200
Chief Regulatory Officer 1996 355,227 59,630 -- 1,537,000(8) -- 3,000
Thomas J. Sidman 1998 288,035 175,000 -- -- 75,000 5,000
Vice President and 1997 265,764 137,000 -- -- 60,000 3,200
General Counsel 1996 260,931 128,000 138,556(9) -- 100,000 3,000
</TABLE>
- ---------------
(1) "All Other Compensation" is comprised of Nextel's contributions to Nextel's
401(k) Plan on behalf of the Named Executive Officers. Mr. Akerson's,
additional compensation also included $5,658 and $12,909 for 1997 and 1998,
respectively, representing the value of benefits received related to his use
of Nextel's plane.
(2) Mr. Akerson joined Nextel on March 6, 1996 and the compensation received by
him for fiscal 1996 is for the ten-month period ended December 31, 1996.
(3) Mr. Akerson's deferred stock award granted in 1996 is based on 1,000,000
shares times $15.375 per share, which was the closing price of Nextel's
Common Stock on March 4, 1996, the date of award. The shares covered by Mr.
Akerson's deferred stock award vested 100% on March 5, 1999. The value of
the shares covered by Mr. Akerson's deferred stock award as of December 31,
1998 was $23,625,000 (1,000,000 shares times $23.625, the closing price of
the Common Stock on that date). In early 1997, Nextel and Mr. Akerson agreed
to alternative arrangements replacing a grant of 1,000,000 of 2,000,000
deferred shares made to Mr. Akerson with options to purchase an equivalent
number of shares. This alternative arrangement provided that 1,000,000
deferred shares covered by the original grant will continue to vest and
would become distributable to him (subject to further deferral elections by
him) on March 5, 1999. Mr. Akerson and Nextel amended the terms of his
employment agreement in effect on March 5, 1996, as previously amended by a
letter agreement dated March 24, 1998 on February 26, 1999 (the employment
agreement, as amended through February 26, 1999 is referred to as the
"Amended Employment Agreement"). Pursuant to the Amended Employment
Agreement, Mr. Akerson elected to further defer receipt of the 1,000,000
deferred shares covered under the original grant. Additionally, pursuant to
the Amended Employment Agreement, Mr. Akerson and Nextel reached certain
other agreements principally relating to the extension of the term of his
employment for an additional year. (See "Executive
Compensation -- Employment Agreements).
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<PAGE> 16
(4) Mr. Donahue joined Nextel on February 1, 1996 and the compensation received
by him during fiscal year 1996 is for the eleven-month period ended December
31, 1996.
(5) Includes an employment commencement bonus pursuant to Mr. Donahue's
employment agreement in the amount of $300,000 and a fiscal year 1996
performance bonus in the amount of $206,250.
(6) Represents Mr. Donahue's allowance for relocation expenses upon accepting
employment with Nextel.
(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) Mr. Foosaner's deferred stock award in 1996 is based on 100,000 shares times
$15.375 per share, which was the closing price of the Common Stock on March
4, 1996, the date of award. During each of fiscal year 1996, 1997 and 1998,
25,000 shares of Mr. Foosaner's deferred stock award vested for a total
vested amount of 75,000 shares. The value of the remainder of Mr. Foosaner's
deferred stock award as of December 31, 1998 was $590,625 (25,000 shares
times $23.625, the closing price of the Common Stock on such date). The
shares covered by Mr. Foosaner's deferred stock award vest 25% six months
after the date of grant and 25% on each of the first three anniversaries of
the date of grant or such later date as may be selected by Mr. Foosaner
under certain circumstances.
(9) Represents Mr. Sidman's allowance for relocation expenses.
OPTION GRANTS IN 1998
The following table sets forth certain information concerning options to
purchase Common Stock that were granted in 1998 to the Named Executive Officers.
Nextel did not grant stock appreciation rights in 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED EXERCISE GRANT DATE
UNDERLYING TO OR BASE PRESENT
OPTIONS EMPLOYEES PRICE EXPIRATION DATE VALUE
NAME GRANTED(#)(1) IN 1998 ($/SHARE) DATE ($)(2)
---- -------------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Daniel Akerson....................... 1,000,000 12.04% $26.5625 02/11/08 16,805,000
Timothy Donahue...................... 200,000 2.41% $26.5625 02/11/08 3,361,000
Morgan E. O'Brien.................... 50,000 .60% $26.5625 02/11/08 840,250
Robert S. Foosaner................... 25,000 .30% $26.5625 02/11/08 420,125
Thomas Sidman........................ 75,000 .90% $26.5625 02/11/08 1,260,375
</TABLE>
- ---------------
(1) The specified options were granted on February 11, 1998 and vest over a
four-year period at a rate of 25% per year from the date of grant.
(2) The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following assumptions:
<TABLE>
<S> <C>
Expected stock price volatility............... 51%
Risk-free interest rate....................... 4.6% - 6.7%
Expected life of options...................... 8 years
Expected dividend yield....................... 0.00%
</TABLE>
Nextel's stock options are nontransferable (except to family members or by
will, as provided in Nextel's Incentive Equity Plan), and the actual value of
the stock options that an employee may realize, if any, will depend on the
excess of the market price on the date of exercise over the exercise price.
Nextel has based its assumption for stock price volatility
13
<PAGE> 17
on the variance of weekly closing prices of Nextel's stock for the past 5 years.
The risk-free rate of return used equals the yield on 10-year zero-coupon U.S.
Treasury issues on the grant date. No discount was applied to the value of the
grants for restrictions on transferability or risk of forfeiture.
OPTION EXERCISES IN 1998 AND YEAR-END VALUES
The following table sets forth information concerning the exercise by the
Named Executive Officers of options to purchase Nextel's Common Stock during
1998 and unexercised options to purchase Nextel's Common Stock held by the Named
Executive Officers as of December 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL
VALUE AT FISCAL YEAR-END (#) YEAR-END ($)(2)
SHARES ACQUIRED REALIZED --------------------------- ---------------------------
NAME ON EXERCISE(#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Daniel F. Akerson...... -- -- 450,000 2,750,000 3,825,000 15,250,000
Timothy Donahue........ -- -- 193,750 481,250 1,890,625 2,634,375
Morgan E. O'Brien...... 255,015 4,270,866 395,962 137,500 3,885,230 743,750
Robert S. Foosaner..... -- -- 222,250 47,750 1,595,125 199,875
Thomas J. Sidman....... 10,000 196,875 202,000 203,000 1,601,750 940,750
</TABLE>
- ---------------
(1) The value realized is calculated by determining the difference between the
market price of Common Stock underlying the options and the relevant
exercise price(s) of the options, at the time of exercise.
(2) The value of the in-the-money options is based on the closing price of
Nextel's Common Stock as reported by the Nasdaq Stock Market on December 31,
1998, which was $23.625 per share, less the total exercise price, multiplied
by the total number of shares underlying such options.
EMPLOYMENT AGREEMENTS
A. MR. AKERSON. Nextel entered into an employment agreement with Mr.
Akerson that originally provided for his employment as Chairman of the Board and
Chief Executive Officer through March 5, 1999. The employment agreement provides
for an annual base salary of $400,000, which may be increased annually by
Nextel, and for an annual bonus as determined by the Board of Directors in their
discretion. For 1998, there was no increase in Mr. Akerson's base salary. Mr.
Akerson's employment agreement also originally provided that Mr. Akerson be:
- granted 1,000,000 deferred shares of Common Stock that vest on March 5,
1999;
- granted options to purchase 1,000,000 shares of Common Stock that vest
20% per year beginning March 4, 1997; and
- granted options to purchase 1,000,000 shares of Common Stock that vest on
March 5, 2006, provided that vesting (a) may occur earlier, (b) be
deferred by Mr. Akerson under specific circumstances, and (c) will occur
automatically upon a change in control of Nextel.
14
<PAGE> 18
Under Mr. Akerson's employment 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 Nextel through March 5, 2006. The special bonus is also payable
in the event of a change in control of Nextel prior to March 5, 2006 and in some
circumstances prior to that time.
On February 26, 1999, Mr. Akerson and Nextel entered into a letter
agreement, which made certain amendments to the terms of his original employment
agreement, as previously amended. The material changes effected by such letter
agreement and now reflected in the Amended Employment Agreement are briefly
summarized below:
- Mr. Akerson agreed to extend the term of his employment for an additional
year until March 5, 2000;
- Mr. Akerson elected to defer receipt of the 1,000,000 deferred shares,
which on March 5, 1999 vested (in accordance with the original grant
terms);
- The calculation used to determine the vested portion of the original
grant of 1,000,000 option shares scheduled to vest on March 5, 2006
(assuming continuation of Mr. Akerson's employment with Nextel) was
modified. As revised, in the event Mr. Akerson's employment is terminated
prior to March 5, 2000, the vesting of such option shares is based on a
five-year vesting schedule beginning from March 5, 1996;
- Certain post-termination consulting relationship and benefits
continuation arrangements were agreed to between Nextel and Mr. Akerson;
and
- In partial consideration of Mr. Akerson's agreement to extend the term of
his employment and defer receipt of the deferred shares, Nextel agreed to
cause one of its subsidiaries to advance Mr. Akerson a loan in the amount
of $500,000. Such loan was made on March 10, 1999, bears simple interest
(payable annually) at a rate of 4.75% and is due on March 10, 2002. The
loan provides that it is to be forgiven upon any termination of Mr.
Akerson's employment prior to such date, and that Mr. Akerson is
responsible for discharging all tax obligations associated with any such
loan forgiveness.
B. MR. DONAHUE. Nextel entered into an employment agreement with Mr.
Donahue that provides for his employment as President and Chief Operating
Officer through February 1, 1999, and thereafter unless terminated upon twelve
months notice, for an annual base salary of $275,000, which may be increased
annually by Nextel, and for an annual bonus payable as determined by the Board
of Directors in their discretion. For 1998, Mr. Donahue's annual salary was
increased to $357,508. The agreement also provides that Mr. Donahue be:
- awarded an employment commencement bonus in the amount of $300,000 (which
was paid in 1996);
- granted options to purchase 300,000 shares of Common Stock that vest 25%
per year commencing February 1997 and will automatically vest upon a
change in control of Nextel; and
- granted options to purchase 100,000 shares of 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").
C. ADDITIONAL TERMS OF EMPLOYMENT AGREEMENTS WITH MESSRS. AKERSON AND
DONAHUE. The employment agreements with Messrs. Akerson and Donahue also
provide:
- that in the event of permanent disability affecting such officers during
the employment term, Nextel 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; and
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<PAGE> 19
- Messrs. Akerson and Donahue will be subject to specific confidentiality
and non-competition restrictions during the employment term and for a
period of two years after the termination of the employment term.
For purposes of the employment agreements with Messrs. Akerson and Donahue,
a change in control of Nextel will be deemed to have occurred if:
- Nextel 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 Nextel;
- 51% or more of the outstanding voting stock of Nextel is acquired by a
person, entity or "group" (within the meaning of Rule 13d-5(b) under the
Exchange Act);
- the Operations Committee ceases to exist;
- representatives of the McCaw Investor cease to control the Operations
Committee or Mr. McCaw ceases to own or control a majority of the voting
power of the McCaw Investor; or
- upon the occurrence of similar transactions or events.
D. MR. O'BRIEN. Mr. O'Brien's employment with Nextel is not pursuant to any
written agreement. For 1998, Mr. O'Brien's annual salary was $357,216.
E. MR. FOOSANER. Nextel entered into an employment agreement with Mr.
Foosaner in March 1992, which provides for his employment for an initial term
until March 1995 with automatic extensions for successive one year terms unless,
two years prior to the expiration of the then-current term, Nextel or Mr.
Foosaner elects not to have the term extended. The employment agreement with Mr.
Foosaner provides for an annual salary of $250,000, which may be increased by
the Board of Directors. For 1998, Mr. Foosaner's annual salary was $350,016.
Under Mr. Foosaner's employment agreement, certain stock options granted
thereunder that remain 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;
- the execution of any agreement relating to a merger, consolidation or
reorganization of Nextel; or
- the sale of substantially all of the assets of Nextel to another entity
if, in the opinion of the Board of Directors, these actions would result in the
creation of a single majority controlling interest in Nextel.
F. MR. SIDMAN. Nextel entered into an employment agreement with Mr. Sidman
effective in October 1994, which provides for his employment for an initial term
until January 1998 with automatic extensions for successive one year terms
unless Mr. Sidman or Nextel, not later than the first day of any successive
one-year term, elects not to have the term extended. The employment agreement
with Mr. Sidman provides for an annual salary of $250,000, which may be
increased by the Board of Directors. Mr. Sidman's salary for 1998 was $288,035.
Under Mr. Sidman's employment agreement, certain stock options or deferred
shares granted thereunder that remain 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;
- the execution of any agreement relating to a merger, consolidation or
reorganization of Nextel; or
- the sale of substantially all of the assets of Nextel to another entity
if, in the opinion of the Board of Directors, these actions would result in the
creation of a single majority controlling interest in Nextel.
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<PAGE> 20
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 17, 1999 (the "Ownership
Date"), the amount and percentage of shares of each class of Nextel's capital
stock that are deemed under the rules of the Commission to be "beneficially
owned" by (i) each director of Nextel, (ii) each of the Named Executive Officers
employed by Nextel as of the Ownership Date, (iii) all directors and executive
officers of Nextel 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 Nextel to be the
beneficial owner of more than 5% of the outstanding shares of each class of
Nextel's capital stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
TITLE OF CLASS OF OF BENEFICIAL APPROXIMATE %
NAME OF BENEFICIAL OWNER NEXTEL CAPITAL STOCK OWNERSHIP(1) OF CLASS (2)
------------------------ ----------------------- ----------------- -------------
<S> <C> <C> <C>
Daniel F. Akerson..................... Class A Common Stock 2,550,000(3) *
Morgan E. O'Brien..................... Class A Common Stock 807,961(4) *
Keith J. Bane......................... Class A Common Stock 0(5) *
Frank M. Drendel...................... Class A Common Stock 11,834(6) *
Timothy M. Donahue.................... Class A Common Stock 363,500(7) *
William E. Conway, Jr. ............... Class A Common Stock 121,975(8) *
William A. Hoglund.................... Class A Common Stock 63,012,607(9) 20.1%
Craig O. McCaw........................ Class A Common Stock 63,062,607(10) 20.1%
Keisuke Nakasaki...................... Class A Common Stock 0(11) *
Dennis M. Weibling.................... Class A Common Stock 63,012,607(12) 20.1%
Robert S. Foosaner.................... Class A Common Stock 260,750(13) *
Thomas J. Sidman...................... Class A Common Stock 266,943(14) *
All directors and executive
Officers as a group (18 persons).... Class A Common Stock 67,976,953(15) 20.2%
5% Stockholders (not listed above):
Motorola, Inc......................... Class A Common Stock 58,890,000(16) 20.0%(17)
1303 East Algonquin Road.............. Class B Common Stock 17,830,000 100.0%
Schaumburg, Illinois 60196
Digital Radio, L.L.C.................. Class A Common Stock 52,258,786(18) 16.7%(19)
2300 Carillon Point................... Class A Preferred Stock 7,905,981 100.0%
Kirkland, Washington 98033............ Class B Preferred Stock 82 100.0%
FMR Corp.............................. Class A Common Stock 14,034,982(20) 5.1%
82 Devonshire Street
Boston, Massachusetts 02109
Wendy P. McCaw........................ Class A Common Stock 14,809,937(21) 5.3%
c/o Ampersand Telecom, LLC
1301 Santa Barbara Street
Santa Barbara, California 93101
</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
17
<PAGE> 21
footnote, the named individuals have sole voting and investment power with
respect to the shares of Nextel capital stock beneficially owned.
(2) Unless otherwise indicated, represents the voting power of the number of
shares of each of 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 Nextel capital stock of the indicated class actually
outstanding as of such date, plus (b) all other shares of Nextel capital
stock deemed outstanding as of such date pursuant to Rule 13d-3(d)(1) under
the Exchange Act.
(3) Comprised of 1,000,000 vested deferred shares of Common Stock obtainable as
of the Ownership Date and 1,350,000 shares of Common Stock obtainable as of
the Ownership Date or within 60 days thereafter by Mr. Akerson upon the
exercise of non-qualified stock options and 200,000 shares of Common Stock
held through a limited liability company wholly owned by Mr. Akerson and
members of his immediate family and obtainable as of the Ownership Date or
within 60 days thereafter upon the exercise of nonqualified stock options.
Mr. Akerson disclaims beneficial ownership of all shares of Common Stock
held by such limited liability company, except to the extent of his
pecuniary interest therein.
(4) Includes 445,962 shares of Common Stock obtainable as of the Ownership Date
or within 60 days thereafter by Mr. O'Brien upon the exercise of
nonqualified stock options.
(5) Mr. Bane, who is Executive Vice President and President, Americas Region of
Motorola, disclaims beneficial ownership of all securities of Nextel held
by Motorola. See note 16.
(6) Includes 3,334 shares of Common Stock obtainable as of the Ownership Date
or within 60 days thereafter by Mr. Drendel upon the exercise of
non-qualified stock options.
(7) Includes 362,500 shares of 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) Includes 5,000 shares of Common Stock obtainable as of the Ownership Date
or within 60 days thereafter by Mr. Conway upon the exercise of
non-qualified stock options. Includes 71,266 shares of Common Stock
directly held by Mr. Conway and 45,709 shares of Common Stock held through
various entities with respect to which Mr. Conway disclaims beneficial
ownership except to the extent of his pecuniary interest therein.
(9) Mr. Hoglund, who is an officer of the McCaw Investor, Option Acquisition
and Eagle River, disclaims beneficial ownership of all securities of Nextel
held by the McCaw Investor, Option Acquisition and Eagle River except to
the extent of his pecuniary interest therein. See notes 10 and 18.
(10) Comprised of (i) 50,000 shares of Common Stock beneficially owned by Mr.
McCaw; (ii) 52,258,786 shares of Common Stock beneficially owned by the
McCaw Investor, (iii) 800,000 shares of Common Stock obtainable as of or
within 60 days of the Ownership Date upon the exercise of a portion of an
option granted to Eagle River, and (iv) 9,953,821 shares of Common Stock
beneficially owned by Option Acquisition. Mr. McCaw, who is an equity owner
and controlling person of Eagle River, the McCaw Investor and Option
Acquisition, disclaims beneficial ownership of all securities of Nextel
held by Eagle River, the McCaw Investor and Option Acquisition, except to
the extent of his pecuniary interest therein. See note 18.
(11) Mr. Nakasaki, who is President and Chief Executive Officer of NTT America,
disclaims beneficial ownership of all shares of Common Stock held by NTT.
As of the Ownership Date, NTT held 1,532,959 shares of Common Stock.
(12) Mr. Weibling, who is an officer of the McCaw Investor, Option Acquisition
and Eagle River, disclaims beneficial ownership of all securities of Nextel
held by the McCaw Investor, Option Acquisition and Eagle River, except to
the extent of his pecuniary interest therein. See notes 10 and 18.
(13) Includes 234,750 shares of Common Stock obtainable as of the Ownership Date
or within 60 days thereafter by Mr. Foosaner upon the exercise of
nonqualified stock options.
18
<PAGE> 22
(14) Includes 167,000 shares of Common Stock obtainable as of the Ownership Date
or within 60 days thereafter by Mr. Sidman upon the exercise of
nonqualified stock options and 93,750 shares of Common Stock obtainable as
of the Ownership Date or within 60 days thereafter by his spouse upon the
exercise of nonqualified stock options. Mr. Sidman disclaims beneficial
ownership of all shares of Common Stock held by his spouse, except to the
extent of his pecuniary interest therein.
(15) Includes an aggregate of 4,392,297 shares of 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 nonqualified stock options or
other stock purchase rights. See also notes 10, 16, 17, 18 and 19.
(16) Comprised of (i) 38,170,000 shares of Common Stock beneficially owned by
Motorola, (ii) 17,830,000 shares of Class B Non-Voting Common Stock
beneficially owned by Motorola and (iii) 2,890,000 shares of Common Stock
obtainable as of the Ownership Date or within 60 days thereafter upon
exercise of a warrant.
(17) Assuming conversion of the Class B Non-Voting Common Stock held by Motorola
and exercise of a warrant by Motorola.
(18) Comprised of (i) 13,458,039 shares of Common Stock beneficially owned by
the McCaw Investor, (ii) 15,082,722 shares of Common Stock obtainable as of
the Ownership Date or within 60 days thereafter upon the exercise of
certain options and (iii) 23,718,025 shares of Common Stock, which
represents the conversion of the 7,905,981 shares of Class A Preferred
Stock and the 82 shares of Class B Preferred Stock held by the McCaw
Investor. Eagle River Investments, L.L.C., the manager of the McCaw
Investor, also reports beneficial ownership of the shares beneficially
owned by the McCaw Investor. Excludes 4,917,278 shares of Common Stock
obtainable as of the Ownership Date upon the exercise of certain options
currently held by Wendy P. McCaw that the McCaw Investor has the right to
exercise in the event Wendy P. McCaw does not elect to exercise such
options. See note 21.
(19) Assuming conversion of Class A Preferred Stock and Class B Preferred Stock
into Common Stock and the exercise of options held by the McCaw Investor.
(20) As reported in the most recent Schedule 13G filed by FMR Corp. ("FMR"), on
behalf of itself, Fidelity Management & Research Company ("Fidelity"),
Fidelity American Special Situations Trust ("FASST"), Fidelity Management
Trust Company ("FMT"), Edward C. Johnson, 3rd, Abigail P. Johnson and
Fidelity International Limited ("FIL") a former subsidiary of Fidelity: (i)
Fidelity and FMT are wholly-owned by FMR and FASST is a unit trust whose
investment adviser is FIL, an entity in which Mr. Johnson owns about 40% of
the voting power through a partnership, (ii) FMR and Mr. Johnson have sole
dispositive power with respect to 12,041,003 shares beneficially owned by
Fidelity and neither FMR nor Mr. Johnson has sole power to vote or direct
the voting of such shares; FIL, FMR and FASST each has sole power to vote
and dispose of the 29,400 shares held by FASST; (iii) Mr. Johnson and FMR,
through control of FMT, each has sole dispositive power over 1,181,553
shares and sole power to vote or direct voting of 996,138 shares and no
power to vote or direct the voting of 185,415; (iv) Mr. Johnson and Ms.
Johnson are chairman and director of FMR, respectively; (v) FMR is the
beneficial owner of 707,826 shares and has sole dispositive power and no
power to vote or direct the voting of the 707,826 shares; and (vi) FIL has
sole power to vote and dispose of 75,200 shares.
(21) As reported in the most recent amendment to the Schedule 13D of Wendy P.
McCaw, The Ampersand Telecom Trust, a trust of which Wendy P. McCaw is the
sole beneficiary ("Ampersand Trust") and Ampersand Telecom, LLC, a limited
liability company ("Ampersand LLC") of which Ampersand Trust is the
managing member, Wendy P. McCaw has sole voting and dispositive power with
respect to 9,892,659 shares of Common Stock and shared voting and
dispositive power with Ampersand Trust and Ampersand LLC with respect to
4,917,278 shares of Common Stock obtainable as of the Ownership Date or
within 60 days thereafter upon the exercise of certain options held by
Ampersand LLC. Excludes 7,619,677 shares of Common Stock obtainable as of
the Ownership Date upon the exercise of certain options currently held by
the McCaw Investor that Wendy P. McCaw has the right to exercise in the
event the McCaw Investor does not elect to exercise such options. See note
18.
19
<PAGE> 23
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Common Stock of Nextel beginning December 31, 1993, during the nine-month
transition period ended December 31, 1994 and the fiscal years ended December
31, 1995, December 31, 1996, December 31, 1997 and December 31, 1998 with the
cumulative total stockholder return of companies comprising the Standard &
Poor's 500 Stock Index ("S&P 500 Stock Index), Nasdaq Stock (US) 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. This
Performance Graph includes S&P 500 Stock Index as a result of Nextel's inclusion
in the S&P 500 in April 1998. Nextel will provide stockholders a list of the
companies included in the Nasdaq Telecommunications Index upon request. The
graph was prepared by Nextel with data provided by Research Data Group. The
graph assumes an initial investment of $100 in Nextel's Common Stock on December
31, 1993 and reinvestment of all dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG NEXTEL COMMUNICATIONS, INC.,
THE STANDARD & POOR'S 500 STOCK INDEX
THE NASDAQ STOCK MARKET (US) INDEX
AND THE NASDAQ TELECOMMUNICATIONS INDEX
<TABLE>
<CAPTION>
NEXTEL STANDARD & NASDAQ STOCK NASDAQ
COMMUNICATIONS, POOR'S 500 MARKET (US) TELECOMMUNICATIONS
INC. STOCK INDEX INDEX INDEX
<S> <C> <C> <C> <C>
31-DEC-93 100 100 100 100
31-DEC-94 39 101 98 83
31-DEC-95 40 139 138 109
31-DEC-96 35 171 170 112
31-DEC-97 70 229 209 165
31-DEC-98 63 294 293 270
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A. NEXTEL, THE MCCAW INVESTOR AND MR. MCCAW: On April 4, 1995, Nextel, the
McCaw Investor and Mr. McCaw entered into the Securities Purchase Agreement (as
amended, the "McCaw Securities Purchase Agreement")
20
<PAGE> 24
and certain other related agreements (the "McCaw Transaction"), pursuant to
which the McCaw Investor made a significant equity investment in Nextel.
Concurrently with the execution of the McCaw Securities Purchase Agreement,
Nextel 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 Nextel, the Board of Directors and the Operations Committee from
time to time as requested.
In consideration of the services to be provided to Nextel under the Support
Agreement, Nextel granted an option to purchase an aggregate of 1,000,000 shares
of Common Stock at an exercise price of $12.25 per share to Eagle River. The
option expires on April 4, 2005, is currently exercisable for 800,000 shares and
becomes exercisable for an additional 200,000 shares on April 4, 2000.
Additionally, Nextel 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 about $111,400 were made
to Eagle River pursuant to the Support Agreement during 1998.
On January 2, 1998, an affiliate of Mr. McCaw sold an aircraft to Nextel
Aviation, Inc. for $8.15 million in cash and 50,000 shares of Common Stock.
On July 28, 1998, Option Acquisition, L.L.C., an entity controlled by Mr.
McCaw, exercised options to purchase 9,953,821 shares of Common Stock in a
cashless exercise transaction as permitted by the terms of such option.
Messrs. McCaw, Hoglund and Weibling, directors of Nextel, are officers of
Eagle River, the McCaw Investor and Option Acquisition, L.L.C.
B. NEXTEL AND MOTOROLA: Nextel purchases Motorola-manufactured
infrastructure and subscriber equipment from Motorola pursuant to certain
equipment purchase agreements. During 1998, Nextel purchased approximately $1.54
billion of infrastructure and other equipment, warranties and services from
Motorola. Pursuant to existing equipment purchase agreements between Nextel and
Motorola and subject to certain conditions, Nextel has agreed to purchase a
significant amount of additional infrastructure equipment from Motorola.
In October 1997, McCaw International (Brazil), Ltd. ("Nextel Brazil") and
Motorola Credit Corporation a subsidiary of Motorola ("Motorola Credit"),
entered into an equipment financing agreement whereby Motorola Credit agreed to
provide up to $125.0 million in revolving loans (the "Brazil Motorola
Financing") to Nextel Brazil to be used to acquire infrastructure equipment and
related services from Motorola. The Brazil Motorola Financing is repayable in
U.S. dollars in semiannual installments over 42 months beginning June 30, 2000
and bears interest at an adjustable rate based on either the prime rate or the
London Interbank Offered Rate ("LIBOR"). The loans are secured by a first
priority lien on substantially all of Nextel Brazil's assets, a pledge of all of
the stock of Nextel Brazil and its subsidiaries, and guarantees by Nextel
International and Motorola International Development Corporation ("Motorola
International") of 93.9% and 6.1%, respectively, of Nextel Brazil's obligations
under such financing. The Brazil Motorola Financing contains certain financial
and operating covenants. In the event of noncompliance with certain financial
covenants, Nextel Brazil may cure any noncompliance by receiving additional
equity contributions. The availability of borrowings under the Brazil Motorola
Financing is subject to the satisfaction or waiver of certain applicable
borrowing conditions.
On August 27, 1998, Nextel International and Motorola Credit entered into a
financing agreement (the "Motorola Bridge Financing Agreement"), pursuant to
which Motorola Credit agreed to provide up to $12.0 million in term loans to
Nextel International to (i) finance the cost of equipment and services
(including ancillary products and services) purchased from Motorola by Infocom
Communications Network, Inc. ("Nextel Philippines") and (ii) to reimburse Nextel
International for payments made by it to Motorola for the purchase of equipment
and related services for the benefit of Nextel Philippines (the "Philippines
Motorola Bridge Financing"). Loans under the Philippines Motorola Bridge
Financing are unsecured, bear interest at rates based upon the U.S. prime rate
plus 2.5%. These loans were repaid in full, including all accrued and unpaid
interest, in February 1999, in conjunction with the initial funding of loans to
21
<PAGE> 25
Nextel International under financing arrangements entered into between Nextel
International and Motorola Credit (the "International Motorola Financing
Facility") described below.
On October 30, 1998, Nextel International exercised a put right and sold
shares representing about 10% of the outstanding shares of Communicaciones
Nextel del Peru S.A. ("Nextel Peru") to Motorola International for a purchase
price of about $6.0 million. As of December 31, 1998, Nextel International and
Motorola International each hold about 62.1% and 30.9% of Nextel Peru,
respectively.
On February 4, 1999, Nextel International and Motorola Credit entered into
the International Motorola Financing Facility, which provides for up to $225
million in incremental term loans to finance the cost of qualifying purchases of
equipment and related services by or for the benefit of specified entities in
which Nextel International holds an equity interest and which have been
designated by agreement between Nextel International and Motorola Credit (the
"Borrowing Affiliates") and to repay the principal amounts outstanding under the
Philippines Motorola Bridge Financing and certain existing financing facilities
between Motorola Credit and Nextel Philippines. Loans under the International
Motorola Financing Facility will be repaid in eight equal semiannual
installments beginning June 30, 2001 and will mature December 31, 2004. Loans
under the International Motorola Financing Facility bear interest at variable
rates based upon either the U.S. prime rate or LIBOR and are secured by, among
other things, a pledge of the shares of stock of the Borrowing Affiliates held
by Nextel International, a pledge of the shares of stock of certain other direct
and indirect subsidiaries of Nextel International and a pledge of the shares of
stock of the Borrowing Affiliates held by certain third party shareholders. The
availability of borrowings under the International Motorola Financing Facility
is subject to the satisfaction or waiver of certain applicable borrowing
conditions. As of February 28, 1999, approximately $102.3 million had been
borrowed under the International Motorola Financing Facility and $122.7 million
remained available for future borrowings.
Mr. Bane, a director of Nextel, is an officer of Motorola.
C. NEXTEL AND COMMSCOPE: During 1998, Nextel purchased approximately $7.6
million of coaxial cables and related equipment from CommScope for its antenna
sites. Mr. Drendel, a director of Nextel, is an officer of CommScope.
D. OTHER TRANSACTIONS: Steven M. Shindler, Nextel's Chief Financial
Officer, has received a loan from Nextel in the amount of $250,000 bearing
interest at a rate of 6% per year that is due January 3, 2000.
Mr. Akerson has received a loan from Nextel in the amount of $500,000
bearing simple interest at a rate of 4.75% per year that is due March 10, 2002
(See "Executive Compensation -- Employment Agreements -- A. Mr. Akerson").
RATIFICATION OF 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 Nextel and its subsidiaries for
the year ending December 31, 1999. 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 Nextel'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, have the opportunity to make a statement if they desire, and
be available to answer appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO RATIFY THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS NEXTEL'S INDEPENDENT AUDITORS.
22
<PAGE> 26
ANNUAL REPORT
Nextel's 1998 Annual Report to Stockholders, including financial statements
for the year ended December 31, 1998, is being distributed to all stockholders
of Nextel together with this proxy statement, in satisfaction of the
requirements of the Commission. Additional copies of such report are available
upon request. To obtain additional copies of such Annual Report, please contact
Nextel's Investor Relations Department at (703) 394-3588.
EXPENSE OF SOLICITATION OF PROXIES
Nextel will pay the cost of soliciting proxies. 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
Nextel will reimburse them for their expenses in so doing. Officers and other
employees of Nextel, 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 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
Proposals by stockholders intended to be presented at the 2000 Annual
Meeting must be forwarded in writing and received at the principal executive
office of Nextel (which is scheduled to be relocated to 2001 Edmund Halley
Drive, Reston, Virginia 20910 during the second quarter of 1999) no later than
December 11, 1999, directed to the attention of the Corporate Secretary, for
consideration for inclusion in Nextel's proxy statement for the Annual Meeting.
Moreover, with respect to any proposal by a stockholder not seeking to have a
proposal included in the proxy statement but seeking to have a proposal
considered at the 2000 Annual Meeting, if such stockholder fails to notify the
Corporate Secretary in the manner set forth above no later than February 24,
2000, then the persons who are appointed as proxies may exercise their
discretionary voting authority with respect to such proposal, if the proposal is
considered at the 2000 Annual Meeting, even if stockholders have not been
advised of the proposal in the proxy statement for the 2000 Annual Meeting. Any
proposals submitted by stockholders must comply in all respects with the rules
and regulations of the Commission then in effect and the provisions of Nextel's
Certificate of Incorporation, Bylaws and of Delaware law.
IMPORTANT
TO ASSURE YOUR REPRESENTATION AND A QUORUM FOR THE TRANSACTION OF BUSINESS
AT THE ANNUAL MEETING, NEXTEL 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 11, 1999
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, Gary D. Begeman and Ried R. Zulager, 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 17, 1999, at the Annual Meeting of Stockholders to be
held on May 11, 1999 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 1999.
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.
<TABLE>
<S> <C>
FOR WITHHELD
1. Election of Directors to serve until [ ] [ ] [ ] Please indicate by a check mark whether you plan
the 2002 Annual Meeting of Stockholders. to attend the Annual Meeting of Stockholders.
Nominees: Daniel F. Akerson
Timothy M. Donahue
Frank M. Drendel Please sign your name below. When shares are held by
joint tenants, both should sign. When signing as
EXCEPT, for vote withheld from for the following nominee(s): attorney, executor, administrator, trustee or
guardian, please give the full title or capacity. If
- ------------------------------------------------------------ a corporation, please sign in corporate name by an
authorized officer and give title. If a partnership,
FOR AGAINST ABSTAIN please sign in partnership name by an authorized
person.
2. The proposal to ratify the appointment [ ] [ ] [ ]
of Deloitte & Touche LLP as the Company's ----------------------------------------------------
independent auditors for fiscal year 1999. PRINT NAME OF STOCKHOLDER
----------------------------------------------------
SIGNATURE(S) DATE
</TABLE>
