def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
NEXTEL PARTNERS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the
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statement number, or the Form or Schedule and the date of its filing. |
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Date Filed: |
4500 Carillon Point
Kirkland, Washington 98033
425-576-3600
April 8, 2005
To Our Stockholders:
On behalf of the board of directors of Nextel Partners, Inc., I
cordially invite you to attend our annual meeting of
stockholders to be held at the Coast Bellevue Hotel,
625 116th Avenue N.E., Bellevue, Washington 98004 on
Thursday, May 12, 2005 at 10:00 a.m., local time. A
notice of the annual meeting, a proxy statement containing
information about the matters to be acted upon at the annual
meeting and a proxy card are enclosed.
We urge you to attend our annual meeting. Your participation in
the affairs of Nextel Partners is important. Our annual meeting
is an excellent opportunity for our management to discuss our
progress with you in person.
Whether in person or by proxy, it is important that your shares
be represented at our annual meeting. To ensure your
participation, regardless of whether you plan to attend in
person, please complete, sign, date and return the enclosed
proxy card promptly or otherwise vote by using the toll-free
number or visiting the website listed on the proxy card.
We look forward to seeing you on May 12th.
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Sincerely, |
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John Chapple |
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President, Chief Executive Officer and |
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Chairman of the Board of Directors |
NEXTEL PARTNERS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on May 12, 2005, 10:00 a.m. Local
Time
TO THE STOCKHOLDERS:
Notice is hereby given that the 2005 Annual Meeting of
Stockholders of Nextel Partners, Inc., a Delaware corporation,
will be held on Thursday, May 12, 2005 at 10:00 a.m.,
local time, at the Coast Bellevue Hotel,
625 116th Avenue N.E., Bellevue, Washington 98004 for
the following purposes:
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1. |
To elect eight directors to serve until the next annual
stockholders meeting or until their respective successors
have been duly elected or appointed. |
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2. |
To ratify the appointment of KPMG LLP as our independent public
accountants for the fiscal year ending December 31, 2005. |
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3. |
To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof. |
The foregoing items of business are more fully described in the
proxy statement accompanying this notice.
The board of directors has fixed the close of business on
March 25, 2005 as the record date for the determination of
stockholders entitled to vote at this meeting. Only stockholders
of record at the close of business on March 25, 2005 are
entitled to notice of and to vote at the meeting and any
adjournment thereof.
All stockholders are cordially invited to attend the meeting in
person. However, to ensure your representation at the meeting,
you are urged to submit your proxy. You may do so by mail, over
the Internet or by telephone, by following the instructions on
the proxy card. Any stockholder attending the meeting may vote
in person even if the stockholder has previously submitted a
proxy.
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By Order of the Board of Directors |
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John Chapple |
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President, Chief Executive Officer and |
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Chairman of the Board of Directors |
4500 Carillon Point
Kirkland, Washington 98033
425-576-3600
April 8, 2005
TABLE OF CONTENTS
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i
NEXTEL PARTNERS, INC.
4500 Carillon Point
Kirkland, Washington 98033
425-576-3600
PROXY STATEMENT FOR 2005 ANNUAL MEETING OF STOCKHOLDERS
PROCEDURAL MATTERS
General
Nextel Partners, Inc., a Delaware corporation, solicits the
enclosed proxy for use at the 2005 Annual Meeting of
Stockholders (the Annual Meeting) to be held on
Thursday, May 12, 2005 at 10:00 a.m., local time, and
at any adjournment thereof, for the purposes set forth herein
and in the accompanying Notice of Annual Meeting of
Stockholders. The Annual Meeting will be held at the Coast
Bellevue Hotel, 625 116th Avenue N.E., Bellevue, Washington
98004.
These proxy solicitation materials were mailed on or about
April 8, 2005 to all stockholders entitled to vote at the
Annual Meeting.
Record Date and Outstanding Shares
Only stockholders of record at the close of business on
March 25, 2005 (the Record Date) are entitled
to notice of and to vote at the Annual Meeting. Our only
outstanding securities entitled to vote at the Annual Meeting
are shares of Class A common stock, $0.001 par value
per share (the Class A common stock), and
Class B convertible common stock, $0.001 par value per
share (the Class B common stock, and together
with the Class A common stock, the common
stock). The Class B common stock is convertible into
shares of Class A common stock at any time on a one-for-one
basis upon a transfer thereof to a person other than Nextel
Communications, Inc. (Nextel Communications), a
majority-owned Nextel Communications subsidiary or a person or
entity controlling Nextel Communications, and is subject to
restrictions on transfer contained in our restated certificate
of incorporation, as amended (our Certificate), and
in our amended and restated shareholders agreement.
As of the Record Date, 183,523,185 shares of our
Class A common stock were issued and outstanding and held
of record by 253 stockholders and 84,632,604 shares of our
Class B common stock were issued and outstanding and held
of record by one stockholder, Nextel WIP Corp., a wholly owned
subsidiary of Nextel Communications (Nextel WIP).
See Security Ownership of Certain Beneficial Owners and
Management below for information regarding beneficial
owners of more than five percent of our common stock.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked or
changed by the person giving it at any time prior to its use by
delivering to our Corporate Secretary a written instrument
revoking the proxy, submitting a proxy bearing a later date or
attending the Annual Meeting and voting in person. Proxies may
be changed in any manner regardless of the method used to submit
the proxy. However, changing a proxy by telephone or Internet
will require the stockholder to retain a record of the unique
control number that appears on the proxy card.
Voting and Solicitation
The holders of the common stock are entitled to one vote per
share on all matters on which they are entitled to vote.
1
We are making this solicitation of proxies, and all related
costs will be borne by us. In addition, we may reimburse
brokerage firms and other persons representing beneficial owners
of shares for their expenses in forwarding solicitation material
to such beneficial owners. Certain of our directors, officers
and regular employees, without additional compensation, may also
solicit proxies personally or by telephone.
Quorum; Abstentions; Broker Non-Votes
At the Annual Meeting, the inspector of elections 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. Abstentions and
broker non-votes will be included for the purpose of determining
the presence of a quorum at the Annual Meeting. Broker non-votes
occur when a person holding shares in street name, meaning
through a bank or brokerage account, does not provide
instructions as to how his or her shares should be voted and the
bank or broker does not have discretion to vote those shares or,
if the bank or broker has discretion to vote such shares, does
not exercise such discretion.
The eight nominees for election to the board of directors who
receive the greatest number of votes cast for the election of
directors by the shares present, in person or by proxy, will be
elected to the board of directors. For the election of
directors, abstentions and broker non-votes will have the effect
of neither a vote for nor a vote against the nominee and thus
will have no effect on the outcome. Stockholders are not
entitled to cumulate votes in the election of directors.
Approval of all other matters that properly come before the
Annual Meeting, including the proposal to ratify our appointment
of independent public accountants, requires the vote of a
majority of the shares present in person or by proxy at the
Annual Meeting. Abstentions will have the same effect as votes
against these proposals, because they are treated as present and
entitled to vote for the purpose of determining the pool of
votable shares, but do not contribute to the affirmative votes
required to approve the proposals. Proxies that reflect broker
non-votes will not be considered present for the purpose of
determining the votes for these proposals, and will therefore
not have the effect of either a vote for or a vote against these
proposals.
All shares entitled to vote and represented by properly
submitted, unrevoked proxies received prior to the Annual
Meeting will be voted at the Annual Meeting in accordance with
the instructions indicated on those proxies. If no instructions
are indicated on a properly submitted proxy, the shares
represented by that proxy will be voted as recommended by the
board of directors. If any other matters are properly presented
for consideration at the Annual Meeting, including, for example,
consideration of a motion to adjourn the Annual Meeting to
another time or place (including, without limitation, for the
purpose of soliciting additional proxies), the persons named in
the enclosed proxy and acting thereunder will have discretion to
vote on those matters in accordance with their best judgment. We
do not currently anticipate that any matters other than the
election of directors and the ratification of auditors will be
raised at the Annual Meeting. Signing and returning the proxy
card, or submitting your proxy by Internet or telephone, does
not affect your right to revoke your proxy or to vote in person
at the Annual Meeting.
Deadline for Receipt of Stockholder Proposals and
Nominations
Stockholders who intend to present proposals or nominations at
our 2006 annual meeting pursuant to Rule 14a-8 under the
Securities Exchange Act of 1934, as amended (the Exchange
Act), must ensure that such proposals are received by us
no later than December 6, 2005. Such proposals or
nominations must meet the requirements of the Securities and
Exchange Commission (the SEC) to be eligible for
inclusion in our proxy materials. We strongly encourage any
stockholder interested in submitting a proposal or nomination to
contact our Corporate Secretary in advance of this deadline to
discuss any proposal or nomination he or she is considering, and
stockholders may want to consult knowledgeable counsel with
regard to the detailed requirements of applicable securities
laws. Submitting a stockholder proposal or nomination does not
guarantee that we will include it in our proxy statement. In
order for a proposal or nomination submitted outside of
Rule 14a-8 to be considered timely within the
meaning of Rule 14a-4(c) of the Exchange Act, we must
receive such proposal or nomination no later than
February 11, 2006. Any stockholder proposals or
2
nominations must be submitted to our Corporate Secretary in
writing at 4500 Carillon Point, Kirkland, Washington 98033.
The board of directors has adopted additional requirements
applicable to stockholder nominations for the election of
directors. See Proposal One Election of
Directors Director Nomination Process.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information with respect
to the beneficial ownership of shares of our common stock as of
December 31, 2004 by:
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each stockholder known to us to be a beneficial owner of more
than 5% of the outstanding shares of our common stock; |
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each of our directors; |
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each of our named executive officers (as defined
below); and |
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all of our executive officers and directors as a group. |
Beneficial ownership is determined in accordance with the rules
of the SEC. Shares subject to options, warrants and securities
convertible into common stock that are exercisable as of
December 31, 2004 or exercisable within 60 days
thereof are shown separately in the column labeled Number
of Shares Underlying Options and are deemed outstanding
for the purposes of computing the number of shares beneficially
owned and the percentage ownership of that person. Except as
indicated in the footnotes to this table, we believe that each
stockholder named in the table has sole voting and investment
power with respect to the shares set forth opposite such
stockholders name, except to the extent shared by a spouse
under applicable law. This table is based on information
supplied to us by our officers, directors and principal
stockholders and by filings made with the SEC. As of
December 31, 2004, there were 266,189,709 shares of
common stock outstanding, of which 181,557,105 shares were
Class A common stock and 84,632,604 shares were
Class B common stock.
Unless otherwise noted, the address for each stockholder below
is: c/o Nextel Partners, Inc., 4500 Carillon Point,
Kirkland, Washington 98033.
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Percentage of | |
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Number of | |
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Underlying | |
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Name and Address |
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Outstanding | |
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Parties to Amended and Restated Shareholders Agreement(1)
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110,880,785 |
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14.5 |
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41.7 |
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Nextel WIP Corp.
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84,632,604 |
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31.8 |
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2001 Edmund Halley Drive
Reston, VA 20191 |
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FMR Corp.(2)
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23,675,471 |
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13.0 |
% |
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8.9 |
% |
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82 Devonshire Street
Boston, MA 02109 |
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T. Rowe Price Associates, Inc.(3)
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13,320,979 |
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7.3 |
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5.0 |
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100 E. Pratt Street
Baltimore, MD 21202 |
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William H. Gates III(4)
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12,776,106 |
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7.0 |
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4.8 |
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One Microsoft Way
Redmond, WA 98052 |
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Madison Dearborn Capital
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12,349,179 |
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6.8 |
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4.6 |
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Partners II, L.P(5)
Three First National Plaza,
Suite 3800
Chicago, IL 60602 |
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Percentage of | |
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Number of | |
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Underlying | |
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Name and Address |
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Options | |
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Outstanding | |
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Eagle River Investments, LLC(6)
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10,054,112 |
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5.5 |
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3.8 |
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2300 Carillon Point
Kirkland, WA 98033 |
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John Chapple(7)
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2,228,863 |
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902,500 |
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1.7 |
% |
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1.2 |
% |
David Aas
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894,287 |
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470,000 |
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Barry Rowan
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50,000 |
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56,250 |
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* |
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Mark Fanning
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385,947 |
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396,250 |
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Donald Manning
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62,000 |
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443,750 |
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Adam Aron
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45,000 |
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15,000 |
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* |
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Caroline H. Rapking
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45,000 |
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15,000 |
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Dennis M. Weibling(8)
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175,656 |
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15,000 |
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* |
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Timothy Donahue(9)
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84,765,604 |
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31.8 |
% |
James N. Perry, Jr.(10)
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12,349,179 |
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6.8 |
% |
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4.6 |
% |
Steven B. Dodge
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70,000 |
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66,250 |
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* |
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Arthur W. Harrigan, Jr.
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49,300 |
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Directors and officers as a group (14 persons)(11)
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101,140,898 |
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2,695,750 |
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13.4 |
% |
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38.6 |
% |
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(1) |
The following stockholders are parties to an amended and
restated shareholders agreement that contains an agreement
by all of the parties, except Eagle River Investments, LLC
(Eagle River Investments), to vote for director
candidates nominated by certain of our stockholders and imposes
restrictions on all of the parties with respect to the sale,
transfer or other disposition of our capital stock by these
parties: Nextel WIP, Madison Dearborn Capital Partners II,
L.P. (Madison Dearborn Partners), Eagle River
Investments, Motorola, Inc. (Motorola) and John
Chapple, David Aas and Mark Fanning, each of whom (with respect
to the individuals listed) is a member of our senior management.
The amended and restated shareholders agreement terminates
on January 29, 2014. See Proposal One
Election of Directors General for a
description of this agreement. All parties to this agreement
disclaim beneficial ownership of shares not owned directly by
them or by an entity otherwise affiliated with them. |
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(2) |
Based on information provided in a first amendment to
Schedule 13G filed on February 14, 2005 by FMR Corp.
(FMR), Edward C. Johnson 3d, Abigail P. Johnson and
Fidelity Management & Research Company, a wholly-owned
subsidiary of FMR. The Schedule 13G/ A states that FMR has
sole voting power with respect to 1,512,496 of these shares and
sole dispositive power with respect to all of these shares.
Certain of these shares are beneficially owned by individuals
and entities related to FMR, including certain FMR subsidiaries. |
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(3) |
Based on information provided by T. Rowe Price Associates, Inc.
(T. Rowe) in a first amendment to Schedule 13G
filed on February 14, 2005, T. Rowe, in its capacity as
investment adviser, has sole voting power with respect to
3,736,979 of these shares and sole dispositive power with
respect to all of these shares. The shares reported are owned of
record by clients of T. Rowe. Those clients have the right to
receive, or the power to direct the receipt of, dividends from,
or the proceeds from the sale of, such securities. According to
the Schedule 13G/ A, none of T. Rowes clients is
known to have such right or power with respect to more than five
percent of our securities. |
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(4) |
Based on information provided by William H. Gates III in a
first amendment to Schedule 13G filed jointly by
Mr. Gates and Cascade Investment, L.L.C.
(Cascade) on February 13, 2003. The reported
shares include 8,725,236 shares of Class A common
stock owned by Cascade and 4,040,870 shares of Class A
common stock owned by Mente, L.L.C. (Mente). All
common stock held by Cascade or |
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Mente may be deemed to be beneficially owned by Mr. Gates
as the sole member of each of Cascade and Mente. The manager and
executive officer of each of Cascade and Mente, Michael Larson,
has voting and investment power with respect to all of the
reported shares. Mr. Larson disclaims beneficial ownership
of all of the reported shares. |
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(5) |
Based on information provided by Madison Dearborn Partners in a
fourth amendment to Schedule 13G filed on February 15,
2005. |
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(6) |
Based on information provided by Eagle River Investments in
Amendment No. 6 to Schedule 13G filed February 9,
2005. Eagle River Investments reported that it had sole voting
power over 10,054,112 shares and sole dispositive power
over 9,054,112 shares of our Class A common stock. In
addition, Eagle River Investments reported that the Craig and
Susan McCaw Foundation held 1,989,413 of these shares, over
which Eagle River Investments retains the sole power to vote and
direct the disposition, but has no beneficial interest therein. |
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(7) |
Includes 736,666 shares held by JRC Coho LLC, an entity
controlled by Mr. Chapple, and 145,000 shares held by
Panther Lake LLC, an entity controlled by Mr. Chapple and
John Thompson. |
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(8) |
Includes 3,600 shares held by On Eagle Wings, LLC,
119,556 shares held by Weibling Family Trust,
7,500 shares held by Dennis Weibling Rollover IRA and
45,000 shares held by Mr. Weibling directly. |
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(9) |
Includes shares held by Nextel WIP, of which Mr. Donahue is
president, chief executive officer and a director.
Mr. Donahue disclaims beneficial ownership of such shares.
Also includes 5,000 shares held by Al Donahue Soundview
Trust, an entity in which Mr. Donahue has a 50% interest.
Also includes 93,000 shares held by Mr. Donahue,
25,000 shares held by Mr. Donahues spouse and
12,500 shares held jointly by Mr. Donahue and his
spouse. |
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(10) |
Consists of shares held by Madison Dearborn Partners, of which
Mr. Perry serves as a director. Mr. Perry disclaims
beneficial ownership of such shares. |
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(11) |
See footnotes 7 through 10 above. Includes John Chapple,
Adam Aron, Timothy Donahue, Steven B. Dodge, Caroline H.
Rapking, James N. Perry, Jr., Dennis M. Weibling, Arthur W.
Harrigan, Jr., Barry Rowan, David Aas, Mark Fanning, Donald
J. Manning, James Ryder and Philip Gaske. |
PROPOSAL ONE ELECTION OF DIRECTORS
General
We currently have eight directors on our board of directors.
Except for Eagle River Investments, the parties to our amended
and restated shareholders agreement have agreed to vote
their shares of common stock to elect as directors the persons
listed below:
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one person selected by Madison Dearborn Partners: currently,
James N. Perry, Jr.; |
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one person selected by Nextel WIP: currently, Timothy
Donahue; and |
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our chief executive officer: currently, John Chapple. |
The current parties to the amended and restated
shareholders agreement include Nextel WIP, Madison
Dearborn Partners, Eagle River Investments, Motorola and the
following stockholders who are members of our senior management:
John Chapple, David Aas and Mark Fanning. The parties who have
agreed to vote in this manner together owned approximately 38.3%
of our outstanding common stock as of December 31, 2004.
All directors will hold office until the next annual meeting of
stockholders or until their successors have been duly elected or
appointed.
Unless otherwise instructed, the proxy holders will vote the
proxies received by them for our nominees named below. The
proxies cannot be voted for a greater number of persons than the
number of nominees named. If any of our nominees is unable or
declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee who is
designated by the nominating committee of the board of directors
to fill the vacancy. We do not expect that any nominee will be
unable or will decline to serve as a
5
director. If additional persons are nominated for election as
directors, the proxy holders intend to vote all proxies received
by the proxy holders in such a manner as will assure the
election of as many of the nominees listed below as possible,
and in such event, the specific nominees to be voted for will be
determined by the proxy holders.
Vote Required for Election of Directors
If a quorum is present and voting, the eight nominees who
receive the greatest number of votes will be elected to the
board of directors. The nominating committee of the board of
directors has nominated Adam Aron, John Chapple, Steven B.
Dodge, Timothy Donahue, Arthur W. Harrigan, Jr., James N.
Perry, Jr., Caroline H. Rapking and Dennis M. Weibling to
serve as directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR EACH OF THE NOMINEES LISTED BELOW.
Nominees
The names of the nominees and certain information about them as
of the Record Date are set forth below:
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Director | |
Name of Nominee |
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Age | |
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Positions with Nextel Partners |
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Since | |
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John Chapple
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51 |
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President, Chief Executive Officer and Chairman of the Board of
Directors |
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1998 |
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Adam Aron
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50 |
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Director |
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2002 |
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Steven B. Dodge
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59 |
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Director |
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2000 |
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Timothy Donahue
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55 |
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Director |
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1999 |
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Arthur W. Harrigan, Jr.
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61 |
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Director |
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2005 |
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James N. Perry, Jr.
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44 |
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Director |
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2003 |
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Caroline H. Rapking
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46 |
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Director |
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2002 |
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Dennis M. Weibling
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54 |
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Director |
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1999 |
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John Chapple worked to organize Nextel Partners
throughout 1998 and has been the president, chief executive
officer and chairman of the board of us and our subsidiaries
since August 1998. Mr. Chapple was elected to our board of
directors pursuant to the terms of our amended and restated
shareholders agreement. Mr. Chapple, a graduate of
Syracuse University and Harvard Universitys Advanced
Management Program, has 22 years of experience in the cable
television and wireless communications industries. From 1978 to
1983, he served on the senior management team of Rogers
Cablesystems, before moving to American Cablesystems, where he
was senior vice president of operations from 1983 to 1988. From
1988 to 1995, he served as executive vice president of
operations for McCaw Cellular Communications, and subsequently
AT&T Wireless Services following the merger of those
companies. From 1995 to 1997, Mr. Chapple was the president
and chief operating officer for Orca Bay Sports and
Entertainment in Vancouver, B.C. During Mr. Chapples
tenure, Orca Bay owned and operated Vancouvers National
Basketball Association and National Hockey League sports
franchises in addition to the General Motors Place sports arena
and retail interests. Mr. Chapple is the past chairman of
Cellular One Group and the Personal Communications Industry
Association, past vice-chairman of the Cellular
Telecommunications Industry Association and has been on the
Board of Governors of the NHL and NBA. Mr. Chapple
currently serves on the Fred Hutchinson Cancer Research Business
Alliance Board of Governors, the Advisory Board for the Maxwell
School of Syracuse University and on the Board of Directors of
Cbeyond Communications LLC, a provider of broadband
communications applications.
Adam Aron has been a director of Nextel Partners since
2002. Mr. Aron was named chairman of the board and chief
executive officer of Vail Resorts, Inc. in July 1996. Vail
Resorts owns and operates Vail, Beaver Creek, Breckenridge,
Keystone and Heavenly, all of which rank among the best ski
resorts in North America, along with the Grand Teton Lodge
Company in Jackson Hole, Wyoming. In November 2001 Vail Resorts
acquired a majority interest in RockResorts, with 10 luxury
resort hotels throughout the United
6
States. Vail Resorts also manages extensive hospitality, dining,
retail and real estate businesses. Vail Resorts has
approximately 15,000 employees and approximately
$700 million in annual revenues. Mr. Aron previously
served as president and chief executive officer of Norwegian
Cruise Line, senior vice president of marketing for United
Airlines and senior vice president-marketing for Hyatt Hotels
Corporation. In addition to serving on our board of directors,
Mr. Aron serves on the board of directors of Carey
International and Rewards Network, as well as on the Vail
Resorts board of directors. He also serves on the board of
directors of the Steadman Hawkins Research Foundation, Bravo
Vail Valley Music Festival, Beaver Creek Arts Foundation and the
Vail Valley Foundation. He is a member of the Council on Foreign
Relations, Business Executives for National Security, the Travel
Business Roundtable and the Young Presidents Organization.
In 2000, he was appointed by the U.S. Secretary of
Agriculture to serve on the board of directors of the National
Forest Foundation. Mr. Aron holds an M.B.A. with
distinction from the Harvard Business School and a B.A. cum
laude in Government from Harvard College.
Steven B. Dodge has been a director of Nextel Partners
and Nextel Partners Operating Corp. (OPCO), our
wholly owned subsidiary, since February 2000. Mr. Dodge has
been a principal of Windover Development LLC, a real estate
development company, since 2004. From 1995 to February 2004,
Mr. Dodge was chairman of American Tower Corporation, a
leading independent owner and operator of communications towers
in the United States. Mr. Dodge was also chief executive
officer of American Tower Corporation from June 1998 to October
2003. American Tower Corporation was organized in July 1995 as a
subsidiary of American Radio Systems Corporation, of which
Mr. Dodge was the founder and chief executive officer. In
June 1998, American Tower Corporation was spun off to the
American Radio stockholders at the time of American Radios
merger with CBS. At that time, American Tower Corporation began
trading publicly. Prior to his involvement with American Radio,
Mr. Dodge was the founder and chief executive officer of
American Cablesystems, a publicly traded cable television
company, which was merged into Continental Cable in 1988, and is
now a part of Comcast. Mr. Dodge also serves on the boards
of directors of Sothebys Holdings, Inc., an auctioneer of
fine arts, antiques and collectibles and Sensitec, Inc., a
supplier of environmentally sensitive products. Mr. Dodge
also serves as a trustee of the Dana Farber Cancer Institute.
Timothy Donahue has been a director of Nextel Partners
and its subsidiaries since January 1999. Mr. Donahue was
elected to our board of directors as the designee of Nextel WIP
pursuant to the terms of our amended and restated
shareholders agreement. Mr. Donahue has been a
director of Nextel Communications since June 1996, was the
President and Chief Operating Officer from February 1996 to July
1999, and has been the President and Chief Executive Officer
since August 1999. From 1986 to January 1996, Mr. Donahue
held various senior management positions with AT&T Wireless
Services. Mr. Donahue has served on the board of directors
of Eastman Kodak Company, a company focused on helping people
take, share, view and print images, since October 2001.
Arthur W. Harrigan, Jr. has been one of our
directors since January 2005. Mr. Harrigan is a partner of
Danielson Harrigan Leyh & Tollefson LLP, a
Seattle-based law firm that specializes in commercial
litigation, which he helped found in 1986. In 1975,
Mr. Harrigan served as senior counsel to the Senate Select
Committee on Intelligence Activities and headed its
investigation of IRS intelligence operations. Mr. Harrigan
is also a former member of Eagle River Investments and is a
Fellow of the America College of Trial Lawyers. He is a graduate
of Harvard College and holds a law degree from Columbia
University.
James N. Perry, Jr. was elected to the board of
directors of Nextel Partners and OPCO in July 2003.
Mr. Perry was elected to our board of directors as the
designee of Madison Dearborn Partners pursuant to the terms of
our amended and restated shareholders agreement.
Mr. Perry is currently a managing director of Madison
Dearborn Partners, which he co-founded in 1993. From 1985 to
1993, Mr. Perry was at First Chicago Venture Capital, the
predecessor firm to Madison Dearborn Partners, where he most
recently served as senior investment manager. He currently
serves on the boards of directors of Band-X Limited, a trading
exchange for telecom capacity, Cbeyond Communications, LLC, a
provider of broadband communications applications, Madison River
Telephone Company, LLC, a rural local telephone company, and
Intelsat, Ltd., a provider of fixed satellite services.
7
Caroline H. Rapking has been one of our directors since
July 2002. Since 1983, Ms. Rapking has been a vice
president with CGI-AMS (formerly American Management Systems),
an international business and information technology consulting
firm headquartered in Fairfax County, Virginia. CGI-AMS is a
subsidiary of CGI Group, headquartered in Montreal, Canada.
Ms. Rapking is active in a number of public sector
professional organizations including the National Association of
State Auditors, Comptrollers and Treasurers (NASACT), the
National Association of State Chief Information Officers
(NASCIO), and the National Association of State Budget Officers
(NASBO). Ms. Rapking has served as a director and chairman
of the Marketing Committee of Voices for Virginias
Children, a childrens advocacy organization. A graduate of
West Virginia Wesleyan College, Ms. Rapking has helped
shape the schools marketing and communications program
through her service on the WVWC National Presidents
Advisory Council. Ms. Rapking earned an M.P.A. in Public
Finance from the Maxwell School of Citizenship and Public
Affairs, Syracuse University, where she serves on the Maxwell
School Advisory Board.
Dennis M. Weibling has been a director of Nextel Partners
and OPCO since January 1999. Mr. Weibling was initially
elected to our board of directors as the designee of Eagle River
Investments pursuant to the terms of our amended and restated
shareholders agreement. Mr. Weibling was the
President of Eagle River, Inc. from October 1993 through
December 2001 and Vice Chairman of Eagle River Investments from
January 2002 through November 2003. Mr. Weibling is
currently the chief executive officer and a member of the board
of directors of Rally Capital LLC, a venture capital firm. From
1995 to 2004, Mr. Weibling was a director of Nextel
Communications and a member of that companys operations,
audit, finance and compensation committees. Mr. Weibling
serves as an executor for the estate of Keith W. McCaw and
trustee of related trusts. He also serves on various non-profit
boards including Seattle Pacific University, Bellevue Christian
School and the Institute for Business Technology and Ethics.
The Board, Board Committees and Corporate Governance
The board of directors has determined that, after consideration
of all relevant factors, Ms. Rapking and Messrs. Aron,
Dodge, Harrigan, Perry and Weibling, constituting a majority of
our board of directors, qualify as independent
directors as defined under applicable rules of The Nasdaq Stock
Market, Inc. (Nasdaq) and that such directors do not
have any relationship with us that would interfere with the
exercise of their independent business judgment.
Our board of directors held a total of four regular meetings
during 2004. All directors are expected to attend each meeting
of the board of directors and the committees on which he or she
serves. No director attended fewer than 75% of the aggregate of
the total number of meetings of the board of directors and
committees thereof, if any, upon which such director served
during the period for which he or she was a director or
committee member during 2004. Our independent directors intend
to meet in executive sessions in 2005.
Our board of directors currently has four standing committees:
the audit committee, the compensation committee, the finance
committee and the nominating committee. We also have a special
committee that has been formed to consider issues related to the
pending merger between Sprint Corporation and Nextel
Communications. Each of the standing committees has a written
charter approved by the board of directors. A copy of the audit
and nominating committee charters can be found under the
Investor Relations section of
8
our website at www.nextelpartners.com. The members of the
standing committees, including the chairperson of each
committee, are identified in the following table.
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Audit | |
|
Compensation | |
|
Finance | |
|
Nominating | |
Director |
|
Committee | |
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Committee | |
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Committee | |
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Committee | |
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Adam Aron
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M |
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CH |
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M |
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Steven B. Dodge
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M |
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M |
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Arthur W. Harrigan, Jr.
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M |
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James N. Perry, Jr.
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M |
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Caroline H. Rapking
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M |
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CH |
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Dennis M. Weibling
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CH |
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CH |
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M member
CH chairperson
All committees report their activities, actions and
recommendations to the board of directors as appropriate.
The audit committee has been appointed by the board of directors
to oversee the processes of our accounting and financial
reporting and audits of our consolidated financial statements.
The audit committee is directly responsible for the appointment,
compensation, retention and oversight of the work of our
independent auditors. Among other responsibilities, the audit
committee pre-approves all auditing and permissible non-auditing
services of the independent auditor (subject to de minimus
exceptions); reviews the audited consolidated financial
statements with management; obtains, reviews and discusses
reports from the independent auditor; reviews major proposed
changes to our accounting and auditing policies suggested by the
independent auditor; reviews with management correspondence from
regulators that raise material accounting policy issues;
assesses the independence of the auditors; reviews and discusses
with management and the independent auditor the adequacy of our
internal controls, internal audit procedures and disclosure
controls and procedures; reviews and approves all related-party
transactions; and annually reviews the audit committee charter,
a copy of which can be found under the Investor
Relations section of our website at www.nextelpartners.com.
The board of directors has determined that, after consideration
of all relevant factors, each member of the audit committee
qualifies as an independent director under
applicable rules of Nasdaq and the SEC. Each member of the audit
committee is able to read and understand fundamental financial
statements, including our consolidated balance sheets,
statements of operations and statements of cash flow. Further,
no member of the audit committee has participated in the
preparation of our financial statements or those of any of our
current subsidiaries at any time during the past three years.
The board of directors has designated Mr. Weibling as the
audit committee financial expert as defined under
applicable SEC rules. Mr. Weibling possesses the requisite
financial sophistication required under applicable
Nasdaq rules. During 2004, the audit committee held five
meetings.
The compensation committee evaluates the compensation of our
executive officers to ensure that they are compensated
effectively and in a manner consistent with our stated
compensation policies, internal equity considerations and
competitive practices. The compensation committee also evaluates
and makes recommendations regarding director compensation.
Pursuant to the compensation committee charter, which was
adopted by the board of directors on January 22, 2004, the
compensation committees responsibilities include:
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Annually evaluating the compensation (and performance relative
to compensation) of the chief executive officer; determining the
amounts and individual elements of total compensation for the
chief executive officer consistent with our corporate goals and
objectives; and communicating to the |
9
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stockholders through the compensation committee report the
factors and criteria on which the chief executive officers
compensation was based, including the relationship of our
performance to the chief executive officers compensation. |
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Annually evaluating (in consultation with the chief executive
officer) the compensation (and performance relative to
compensation) of other executive officers; approving the
individual elements of total compensation for each such person
and communicating in the compensation committee report to
stockholders the specific relationship of our performance to
executive compensation. |
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Periodically evaluating the terms and administration of our
annual and long-term incentive plans to assure that they are
structured and administered in a manner consistent with our
goals and objectives as to participation in such plans. |
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Periodically evaluating (and approving any proposed amendments
to) existing equity-related compensation plans; evaluating and
approving the adoption of any new equity-related compensation
plans; and determining when it is necessary or desirable (after
consultation with counsel as needed): (a) to modify,
discontinue or supplement any such plans; or (b) to submit
such amendment or adoption to a vote of the full board of
directors and/or our stockholders. |
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Periodically evaluating the cash and stock compensation of
directors, including for service on committees of the board of
directors, taking into account the compensation of directors at
other comparable companies; and making recommendations to the
board of directors regarding any adjustments in director
compensation that the committee considers appropriate. |
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Periodically evaluating our employee benefits programs and
approving any significant changes therein and determining when
it is necessary or desirable (after consultation with counsel as
needed) to submit any such changes to a vote of the full board
of directors and/or our stockholders. |
The board of directors has determined that each member of the
compensation committee (a) is a non-employee
director for purposes of Rule 16b-3 of the Exchange
Act, (b) satisfies the requirements of an outside
director for purposes of Rule 162(m) of the Internal
Revenue Code of 1986, as amended (the Code), and
(c) is an independent director under applicable
Nasdaq rules. The compensation committee held three meetings in
2004.
The finance committees role is to monitor the present and
future capital requirements and opportunities pertaining to our
business and to review and provide guidance to the board of
directors and management about all proposals concerning our
major financial policies. The principal responsibilities and
functions of the finance committee are as follows:
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Reviewing and providing guidance to the full board of directors
and management about all proposals concerning our major
financial policies, including: (a) our financial strategies
and capital structure, cash needs, stockholder distributions,
share repurchases and investments; (b) significant monetary
issues, including hedging policies; (c) tax planning;
(d) proposed mergers, acquisitions, divestitures and
strategic investments (other than mergers with or acquisitions
by Nextel Communications or any of our subsidiaries); and
(e) other transactions or financial issues that management
desires to have reviewed by the finance committee. |
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Designating our officers and employees who can execute documents
and act on our behalf in the ordinary course of business
pursuant to previously approved banking, borrowing, and other
financing agreements. |
The membership of the committee consists of at least two
directors, each of whom is to be free of any relationship that,
in the opinion of the board of directors, would interfere with
his or her exercise of independent judgment. The finance
committee held one meeting in 2004.
10
The nominating committee identifies individuals qualified to
become members of our board of directors and recommends
(a) whether incumbent directors should be nominated for
re-election to the board of directors upon the expiration of
their terms (other than Designated Directors (as defined
below)); (b) whether the size of our board of directors
should be increased or decreased; (c) candidates to fill
any newly created director positions or board of directors
vacancies (other than vacancies for Designated Directors); and
(d) directors to serve on committees of the board of
directors.
The board of directors has concluded that each of the members of
the nominating committee is an independent director
under applicable Nasdaq rules. The nominating committee held one
meeting in 2004.
Director Nomination Process
The nominating committees goal is to assemble a board of
directors that brings to us a variety of perspectives and skills
derived from high quality business and professional experience.
In making its recommendations, the nominating committee will
consider such factors as it deems appropriate to assist in
developing a board of directors and committees that are diverse
in nature and comprised of experienced and seasoned advisors.
These factors may include judgment, knowledge, skill, diversity
(including factors such as race, gender or experience),
integrity, experience with businesses and other organizations of
comparable size, including experience in telecommunications,
business, finance, administration or public service, the
interplay of a candidates experience with the experience
of other board members, familiarity with national and
international business matters, experience with accounting rules
and practices, the desire to balance the considerable benefit of
continuity with the periodic injection of the fresh perspective
provided by new members and the extent to which a candidate
would be a desirable addition to the board of directors and any
committees of the board of directors. In addition, directors are
expected to be able to exercise their best business judgment
when acting on our behalf and our stockholders, act ethically at
all times and adhere to the applicable provisions of our Code of
Conduct.
Other than consideration of the foregoing, there are no stated
minimum criteria, qualities or skills for director nominees,
although the nominating committee may also consider such other
factors as it may deem are in our best interests and the best
interests of our stockholders. The nominating committee does,
however, believe it appropriate for at least one, and preferably
several, members of the board of directors to meet the criteria
for an audit committee financial expert as defined
by SEC rules, and for a majority of the members of the board of
directors meet the definition of independent
director under Nasdaq rules. In addition, the nominating
committee must consider that we are subject to the amended and
restated shareholders agreement (which has been in effect
since February 2000). Specifically, the parties to our amended
and restated shareholders agreement (other than Eagle River
Investments) have agreed to vote their shares of common stock to
elect as directors (each, a Designated Director):
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one person selected by Madison Dearborn Partners; |
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one person selected by Nextel WIP; and |
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our chief executive officer. |
With respect to nominees other than Designated Directors, the
nominating committee identifies nominees by first evaluating the
current members of the board of directors willing to continue in
service. Current members of the board of directors with skills
and experience that are relevant to our business and who are
willing to continue in service are considered for re-nomination,
balancing the value of continuity of service by existing members
of the board of directors with that of obtaining a new
perspective. The nominating committee will also take into
account an incumbent directors performance as a board
member. If any member of the board of directors does not wish to
continue in service or if the nominating committee or the board
of directors decides not to re-nominate a member for
re-election, or if the nominating committee decides to recommend
that the size of the our board of directors be increased, the
nominating committee shall identify the desired skills and
experience of a new nominee in light of the criteria described
above. Current members of the nominating committee, other
members of the board of directors and management are polled
11
for suggestions as to individuals meeting the criteria of the
nominating committee. Research may also be performed to identify
qualified individuals.
It is the policy of the nominating committee to consider
suggestions for persons to be nominated for director (other than
Designated Directors) that are submitted by stockholders. The
nominating committee will evaluate stockholder suggestions for
director nominees in the same manner that it evaluates
suggestions for director nominees made by management,
then-current directors or other sources. Stockholders suggesting
persons as director nominees should deliver information about a
proposed nominee to the our Corporate Secretary at our address
not less than ninety (90) days and at not more than one
hundred twenty (120) days prior to the anniversary of the
prior years annual meeting. This information should be in
writing and should include a signed statement by the proposed
nominee that he or she is willing to serve as our director, a
description of the nominees relationship to the
stockholder and any information that the stockholder feels will
fully inform the board of directors about the proposed nominee
and his or her qualifications. The nominating committee may
request further information from the proposed nominee and the
nominating stockholder (including proof of ownership and holding
period of our stock) and may also seek the consent of both the
nominee and the nominating stockholder to be identified in our
proxy statement.
To date, we have not engaged third parties to identify, evaluate
or assist in identifying potential director nominees, although
we reserve the right in the future to retain a third-party
search firm, if appropriate.
We did not receive any recommendations from stockholders of
director candidates for the Annual Meeting. All of the nominees
for election at the Annual Meeting, with the exception of Arthur
W. Harrigan, Jr., are standing for re-election by the
stockholders. Mr. Harrigan was appointed to our board of
directors in January 2005. In October 2004, our board of
directors determined that it was in our best interest to
increase the size of our board of directors from seven members
to eight members. With the approval of the board of directors
and the stockholders who are parties to our amended and restated
shareholders agreement, we amended that agreement and our
bylaws to increase the size of our board of directors to eight
members. In consultation with other members of the board of
directors, Mr. Chapple and Mr. Weibling identified
Mr. Harrigan as a candidate with the appropriate skills and
experience to fill the newly created vacancy on the board of
directors, and the nominating committee concurred. By unanimous
written consent, the board of directors elected
Mr. Harrigan to serve on our board of directors, effective
January 3, 2005.
Stockholder Communications with the Board of Directors and
Board Attendance at Annual Stockholder Meetings
Our stockholders may, at any time, communicate in writing with
any member or group of members of our board of directors by
sending a written communication to the attention of our
Corporate Secretary by regular mail at our corporate offices,
email to stockholders@nextelpartners.com or facsimile at
425-576-3666, Attention: Corporate Secretary. Copies of written
communications received by the Corporate Secretary will be
provided to the relevant director(s) unless such communications
are considered, in the reasonable judgment of the Corporate
Secretary, to be improper for submission to the intended
recipient(s). Examples of stockholder communications that would
be considered improper for submission include, without
limitation, customer complaints, solicitations, communications
that do not relate directly or indirectly to us or our business,
or communications that relate to improper or irrelevant topics.
The chairperson of the board of directors is expected to make
every reasonable effort to attend our annual stockholder
meetings in person. If the chairperson is unable to attend an
annual stockholder meeting for any reason, at least one other
member of the board of directors is expected to attend in
person. Other members of the board of directors will make
reasonable efforts to attend our annual stockholder meetings in
person if it is reasonably anticipated that a significant number
of stockholders will be in attendance. Mr. Chapple attended
our 2004 annual meeting of stockholders.
Director Compensation
As non-employee directors who are not affiliated with our
strategic stockholders, Ms. Rapking and Messrs. Aron,
Dodge and Weibling received compensation for 2004 of
$2,500 per quarter, plus $1,000 for each
12
board of directors meeting and separate committee meeting
attended in person, and $500 for each such meeting attended by
telephone. In 2004, Mr. Dodge and Mr. Aron each
received a total of $16,000, Ms. Rapking received a total
of $16,500 and Mr. Weibling received a total of $17,500.
These directors, and Mr. Harrigan, who is also a
non-employee director who is not affiliated with any of our
strategic stockholders, will receive the same quarterly and
meeting-specific compensation in 2005. All directors are
reimbursed for their reasonable out-of-pocket expenses
associated with serving on the board of directors.
We also grant options to purchase shares of our Class A
common stock to our non-employee directors who are not
affiliated with our strategic stockholders. These options are
granted pursuant to our Third Amended and Restated Nonqualified
Stock Option Plan (the Plan). The exercise price of
the options is equal to the fair market value of our
Class A common stock on the date of grant. During 2004, we
granted each non-employee director who is not affiliated with
one of our strategic stockholders an option to purchase a total
of 25,000 shares at an exercise price of $15.89 per
share.
Our board of directors created a special committee of the board
of directors for the purpose of advising and consulting
management with respect to issues related to the announced
merger between Sprint Corporation and Nextel Communications. The
special committee consists of Ms. Rapking and
Messrs. Dodge, Aron, Harrigan, Perry and Chapple. On
January 27, 2005, we granted each member of the special
committee, other than Mr. Chapple, an option to purchase a
total of 15,000 shares of our Class A common stock at
an exercise price of $20.10 per share as compensation for
the additional work that would be required by the members of the
special committee. In addition, on January 27, 2005, we
granted Mr. Weibling, as chair of the audit committee, an
option to purchase a total of 7,500 shares at an exercise
price of $20.10. These options vest in three equal annual
installments commencing on the one year anniversary of the
vesting commencement date.
In addition, Ms. Rapking and Messrs. Dodge, Aron and
Weibling, each a non-employee director who is not affiliated
with one of our strategic stockholders, were each issued 45,000
restricted shares of our Class A common stock in July 2002.
Mr. Harrigan was issued 7,500 restricted shares of our
Class A common stock in January 2005. All of these shares
vest in equal annual installments over a three-year period.
These shares are subject to the terms and conditions of our
restricted stock plan.
PROPOSAL TWO RATIFICATION OF INDEPENDENT
AUDITORS
A proposal will be presented at the Annual Meeting to ratify the
appointment by the audit committee of the firm of KPMG LLP
as independent public accountants to audit our consolidated
financial statements for the fiscal year ending
December 31, 2005. Although ratification is not required by
law, the audit committee believes that stockholders should be
given this opportunity to express their views on the subject.
While not binding on the audit committee, the failure of the
stockholders to ratify the appointment of KPMG as our
independent public accountant would be considered by the audit
committee in determining whether to continue the engagement of
KPMG.
KPMG served as our independent public accountant for the fiscal
year ended December 31, 2004 and has also been selected by
our audit committee to serve as the independent public
accountant for the current fiscal year. A representative of KPMG
will be present at the Annual Meeting and will have an
opportunity to make a statement, if he or she so desires, and
will be available to respond to appropriate questions.
Auditor Fees and Services
The aggregate fees billed by KPMG for professional services
rendered for the audit of our annual consolidated financial
statements for fiscal years 2004 and 2003 and quarterly reviews
of the consolidated financial statements included in our
Forms 10-Q for fiscal years 2004 and 2003 were
approximately $1,280,406 and $624,327, respectively. The 2004
audit fees include services rendered for the attestation and
related reviews of our internal control over financial reporting
as required under Section 404 of the Sarbanes-Oxley Act of
2002.
13
The aggregate fees billed for fiscal years 2004 and 2003 for
assurance and related services by KPMG that were reasonably
related to the performance of its audit of our consolidated
financial statements and not reported under the caption
Audit Fees were approximately $41,855 and $31,671,
respectively. For fiscal years 2004 and 2003, these fees were
for the audit of our employee benefit plan, agreed-upon
procedures reports related to state regulatory agencies, and
services related to the compliance of our internal controls and
procedures with federal securities laws.
KPMG provided no professional services for tax compliance, tax
advice or tax planning to us in fiscal years 2004 or 2003.
There were no fees billed for services rendered to us by KPMG,
other than fees for audit and audit-related services, for fiscal
years 2004 and 2003.
The audit committee pre-approves all audit and non-audit
services performed by our independent public accountants and the
fees to be paid in connection with these services in order to
ensure that the provision of these services does not impair the
independent public accountants independence. Unless the
audit committee provides general pre-approval of a service to be
provided by the independent public accountant and the related
fees, the service and fees must receive specific pre-approval
from the audit committee. All general pre-approvals of services
and fees are made under the terms of a written audit committee
pre-approval policy, which describes the services subject to
general pre-approval and the maximum fees that we will pay the
independent public accountant for such services. The term of any
general pre-approval is twelve (12) months unless otherwise
specified by the audit committee. The audit committee annually
reviews and generally pre-approves the services that may be
provided by, and the fees that may be paid to, the independent
public accountant without obtaining specific pre-approval. The
audit committee most recently made such review and general
pre-approvals at a meeting it held on March 15, 2005. The
audit committee will review and revise the list of general
pre-approved services from time to time as necessary.
Audit Committee Report
The audit committee operates pursuant to a written charter and
is responsible for monitoring and overseeing our internal
controls and financial reporting processes, as well as the
independent audit of our consolidated financial statements by
our independent public accountant during fiscal year 2004, KPMG.
As part of fulfilling its responsibilities, the audit committee
reviewed and discussed the audited consolidated financial
statements for fiscal year 2004 with management and discussed
those matters required to be discussed by Statement on Auditing
Standards No. 61 (Communication with Audit Committees) with
KPMG. The audit committee received the written disclosures and
the letter required by Independent Standards Board Standard
No. 1 (Independence Discussions with Audit Committee) from
KPMG, discussed that firms independence with
representatives of the firm and considered the compatibility of
non-audit services with KPMGs independence. In addition,
the audit committee reviewed and reassessed the adequacy of its
charter.
As part of its review of our financial statements for fiscal
year 2004, the audit committee reviewed our accounting practices
with respect to lease transactions based on recent clarification
from the SEC. The audit committee discussed this issue with KPMG
and determined that we should modify our accounting practices in
this area. Following numerous discussions with KPMG and
management, the audit committee determined that the
modifications should be made as a restatement of prior periods,
including periods covered by our financial statements for fiscal
year 2004.
14
Based upon the audit committees review of the audited
consolidated financial statements and its discussions with
management and KPMG, the audit committee recommended that the
board of directors include the audited consolidated financial
statements for the fiscal year ended December 31, 2004 in
our Annual Report on Form 10-K filed with the SEC.
|
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Respectfully submitted, |
|
Adam Aron |
|
Caroline H. Rapking |
|
Dennis M. Weibling |
Vote Required for Ratification of Independent Auditors
If a quorum is present and voting, the vote of a majority of the
shares represented in person or by proxy at the Annual Meeting
is required to approve the ratification of the independent
auditors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THE PROPOSAL TO RATIFY THE APPOINTMENT BY
THE AUDIT COMMITTEE OF KPMG AS OUR INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2005.
ADDITIONAL INFORMATION RELATING TO
DIRECTORS AND OFFICERS OF THE COMPANY
Compensation of Executive Officers
Summary Compensation Table. The following table sets
forth the compensation paid by us during the years ended
December 31, 2004, 2003 and 2002 to (i) our chief
executive officer and (ii) our other four most highly
compensated executive officers who were serving in such
capacities at the end of 2004 and whose salary and bonus for
2004 exceeded $100,000 in the aggregate (collectively, the
named executive officers).
Summary Compensation Table
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Long-Term Compensation | |
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Annual Compensation | |
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Restricted | |
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Securities | |
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Base | |
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Stock | |
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Underlying | |
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All Other | |
Name, Principal Position |
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Year | |
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Salary ($) | |
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Bonus ($)(1) | |
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Awards | |
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Options (#) | |
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Compensation ($)(5) | |
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John Chapple
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2004 |
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$ |
537,500 |
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$ |
557,875 |
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350,000 |
(2) |
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$ |
7,400 |
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President, Chief |
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2003 |
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350,961 |
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396,000 |
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400,000 |
(3) |
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6,260 |
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Executive Officer |
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2002 |
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239,423 |
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177,525 |
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300,000 |
(4) |
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4,678 |
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and Chairman of |
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the Board of Directors |
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David Aas
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2004 |
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$ |
264,230 |
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$ |
199,325 |
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200,000 |
(2) |
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$ |
7,400 |
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Vice President, Chief |
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2003 |
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226,153 |
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183,375 |
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150,000 |
(3) |
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5,286 |
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Technology Officer |
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2002 |
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203,269 |
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149,525 |
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150,000 |
(4) |
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2,930 |
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Barry Rowan
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2004 |
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$ |
292,115 |
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$ |
340,225 |
(6) |
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225,000 |
(2) |
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$ |
5,961 |
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Vice President, Chief |
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2003 |
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109,057 |
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328,913 |
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$ |
432,500 |
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300,000 |
(7) |
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2,755 |
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Financial Officer and Treasurer |
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Mark Fanning
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2004 |
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$ |
239,230 |
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$ |
180,387 |
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100,000 |
(2) |
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$ |
4,729 |
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Vice President, People |
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2003 |
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208,077 |
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167,625 |
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125,000 |
(3) |
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4,782 |
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Development |
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2002 |
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194,231 |
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142,525 |
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112,500 |
(4) |
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4,355 |
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Donald Manning
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2004 |
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$ |
239,230 |
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$ |
180,387 |
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100,000 |
(2) |
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$ |
6,693 |
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Vice President, Secretary |
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2003 |
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206,154 |
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167,625 |
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125,000 |
(3) |
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4,794 |
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and General Counsel |
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2002 |
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186,153 |
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135,525 |
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112,500 |
(4) |
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4,131 |
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(1) |
The bonus amounts are identified by the year in which they were
earned by the named executive officer. We typically pay bonuses
in the first quarter of the year following the year in which
they were earned. Our |
15
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SEC filings prior to our disclosure of 2003 compensation in our
2004 proxy statement disclosed bonuses in the year they were
paid. The amounts shown for 2002 have been recalculated to
conform to the 2004 and 2003 presentation. |
|
(2) |
Represents options to purchase Class A common stock granted
on January 22, 2004, which options have an exercise price
of $13.86 per share and vest in four equal installments
commencing on December 31, 2004. |
|
(3) |
Represents options to purchase Class A common stock granted
on January 16, 2003, which options have an exercise price
of $6.67 per share and vest in four equal installments
commencing on January 16, 2004. |
|
(4) |
Represents options to purchase shares of Class A common
stock granted on January 17, 2002, which options have an
exercise price of $8.00 per share and vest in four equal
annual installments commencing on January 17, 2003. |
|
(5) |
Represents contributions made by us to the named executive
officers 401(k) plan accounts and imputed income for life
insurance policies purchased by us for the benefit of the named
executive officers. |
|
(6) |
Includes $50,000 payment made in 2004 as second installment of
bonus awarded to Mr. Rowan in connection with his
acceptance of our offer of employment. |
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(7) |
Represents an option to purchase 250,000 shares of our
Class A common stock granted on July 17, 2003, which
option has an exercise price of $8.66 per share and vests
in four equal installments commencing on July 17, 2004 and
an option to purchase 50,000 shares of our
Class A common stock granted on August 18, 2003, which
option has an exercise price of $8.65 per share and vests
in four equal installments commencing on August 18, 2004. |
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Option Grants in Fiscal Year 2004 |
The following table sets forth certain information with respect
to stock options granted to each of our named executive officers
during the year ended December 31, 2004. In accordance with
the rules of the SEC, also shown below is the potential
realizable value over the term of the option (the period from
the grant date to the expiration date) based on assumed rates of
stock appreciation of 5% and 10%, compounded annually. These
calculations are mandated by the SEC and do not represent our
estimate of future stock price. Actual gains, if any, on stock
option exercises will depend on the future performance of our
Class A common stock. In 2004, we granted options to
acquire up to an aggregate of 7,125,960 shares of
Class A common stock to employees, all under our stock
option plan and all at an exercise price equal to the fair
market value of our Class A common stock on the date of
grant.
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Potential Realizable Value | |
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Number of | |
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Percent of | |
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at Assumed Annual Rates | |
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Securities | |
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Total Options | |
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of Stock Price Appreciation | |
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Underlying | |
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Granted to | |
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for Option Term | |
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|
Options | |
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Employees in | |
|
Exercise Price | |
|
Expiration | |
|
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Name |
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Granted (#) | |
|
Fiscal 2004 | |
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per Share | |
|
Date | |
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5% ($) | |
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10% ($) | |
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John Chapple
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350,000 |
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4.9 |
% |
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$ |
13.86 |
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1/22/14 |
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$ |
3,050,768 |
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$ |
7,731,245 |
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David Aas
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200,000 |
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2.8 |
% |
|
$ |
13.86 |
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1/22/14 |
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$ |
1,743,296 |
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$ |
4,417,854 |
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Barry Rowan
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225,000 |
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3.2 |
% |
|
$ |
13.86 |
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1/22/14 |
|
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$ |
1,961,208 |
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$ |
4,970,086 |
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Mark Fanning
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|
100,000 |
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|
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1.4 |
% |
|
$ |
13.86 |
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1/22/14 |
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$ |
871,648 |
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$ |
2,208,927 |
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Donald Manning
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100,000 |
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1.4 |
% |
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$ |
13.86 |
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1/22/14 |
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$ |
871,648 |
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$ |
2,208,927 |
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16
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Aggregate Option Exercises in Fiscal 2004 and Fiscal
Year-End Option Values |
With respect to our named executive officers, the following
table sets forth information concerning options exercised in
2004 and exercisable and unexercisable options held as of
December 31, 2004. The Value of Unexercised
In-the-Money Options at December 31, 2004 is based
upon a price of $19.54 per share, which was the closing
price of our Class A common stock on Nasdaq on
December 31, 2004, minus the per share exercise price,
multiplied by the number of shares underlying the
in-the-money option.
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Number of | |
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Securities Underlying | |
|
Value of Unexercised | |
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Unexercised Options | |
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In-the-Money Options | |
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at December 31, 2004 | |
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at December 31, 2004 ($) | |
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Shares Acquired | |
|
Value | |
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Name |
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on Exercise (#) | |
|
Realized ($) | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
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| |
John Chapple
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727,500 |
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787,500 |
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$ |
8,729,000 |
|
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$ |
8,147,250 |
|
David Aas
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395,000 |
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375,000 |
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$ |
4,453,700 |
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$ |
3,697,500 |
|
Barry Rowan
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75,000 |
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|
$ |
638,095 |
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56,250 |
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|
|
393,750 |
|
|
$ |
319,500 |
|
|
$ |
3,406,875 |
|
Mark Fanning
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|
|
|
|
|
|
|
|
|
|
336,875 |
|
|
|
253,125 |
|
|
$ |
4,119,194 |
|
|
$ |
2,680,781 |
|
Donald Manning
|
|
|
162,500 |
|
|
$ |
2,028,000 |
|
|
|
384,375 |
|
|
|
253,125 |
|
|
$ |
4,513,819 |
|
|
$ |
2,680,781 |
|
Executive Employment Contracts and Termination of Employment
Arrangements
We entered into employment agreements dated as of
February 24, 2003, as amended on February 24, 2004
with Messrs. Chapple, Aas, Rowan, Fanning and Manning.
Under these agreements, each officer has agreed that while
employed by us and for one year thereafter, he will not compete
against, or solicit employees or business from, us or any of our
direct or indirect subsidiaries. Each agreement has an initial
term of one year and automatically extends for successive
one-year terms unless the employee or the board of directors
provides written notice of termination to the other party at
least thirty (30) calendar days prior to the end of the
then-current term. Each agreement other than
Mr. Chapples currently provides that if the employee
is terminated without cause or resigns for good reason, as
defined in the agreements, the employee will be entitled to
receive up to one years base salary plus an amount equal
to the employees most recent annual bonus.
Mr. Chapples employment agreement provides him
severance equal to two years salary and bonus if he is
terminated without cause or resigns for good reason. We intend
to amend each of these employment agreements to provide that if
the executive officer is terminated without cause or resigns for
good reason after a change in control of us, then the terms and
conditions of the Retention and Severance Plan adopted by the
compensation committee and effective January 27, 2005 shall
control. The Retention and Severance Plan is discussed below.
Mr. Rowans employment agreement provides that if
there is a Change of Control of Nextel Partners (as
that term is defined in his restricted stock purchase agreement,
dated July 17, 2003) prior to January 1, 2008, then we
shall pay Mr. Rowan a one-time lump sum payment of $350,000
at the closing of the Change of Control. According
to his employment agreement, this $350,000 lump-sum payment is a
credit against any other severance payment owed to
Mr. Rowan under his employment agreement or any other
agreement between him and us.
Restricted Stock Purchase Agreements and Change of Control
Arrangements
On November 20, 1998, we entered into restricted stock
purchase agreements with each of Messrs. Chapple, Aas and
Fanning in consideration of their employment, which agreements
were amended on January 29, 1999. On September 9,
1999, we entered into a restricted stock purchase agreement with
Donald Manning. All of these agreements were amended and
restated on May 18, 2000 and further amended on
October 17, 2002. Pursuant to these agreements, we sold an
aggregate of 4,804,998 shares of Class A common stock
to these executive officers at a price of $0.002 per share.
These shares were subject to certain vesting provisions, but as
of December 31, 2002, 100% of these shares had vested.
Subject to certain conditions, vested shares may be repurchased
by us at fair market value upon termination for cause or
resignation without good reason.
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On August 18, 2003, we entered into a restricted stock
purchase agreement with Mr. Rowan. Pursuant to this
agreement, we sold 50,000 shares of our Class A common
stock to Mr. Rowan at a per share price of $0.001. The
shares sold to Mr. Rowan vest annually in four equal
installments commencing on August 1, 2004 so long as he is
continuously employed by us or one of our subsidiaries. Vesting
of these shares is accelerated 100% upon the occurrence of
certain events, including a change of control of us or Nextel
Communications, a termination of employment due to death,
disability or without cause or upon resignation by
Mr. Rowan for good reason. If Mr. Rowan resigns
without good reason prior to August 1, 2007, the number of
shares considered vested will be determined based on a four year
equal annual installment vesting schedule set forth in the
agreement, with the first 25% of the shares vested on
August 1, 2004. We have the option to repurchase vested
shares at fair market value for 90 days after
Mr. Rowans termination for cause or resignation
without good reason.
Restricted Stock Plan
Our restricted stock plan authorizes the grant of shares of our
Class A common stock to our directors and officers and the
directors and officers of our subsidiaries. We use this plan to
recruit and retain talented directors and officers and to
stimulate their active interest in our growth, development and
financial success by closely aligning their interests with our
interests. The restricted stock plan was adopted by our board of
directors in March 2003 and approved by our stockholders in May
2003. A total of 375,000 shares of our Class A common
stock (subject to adjustment in connection with any stock
dividend, stock split, reverse stock split, combination of
shares, recapitalization, merger, consolidation or other
corporate reorganization) are reserved for issuance under the
restricted stock plan. The maximum value of an award under the
restricted stock plan to any participant for any year is
$500,000. The restricted stock plan is administered by the
compensation committee of the board of directors. Shares that
are forfeited as a result of a participants termination of
employment or termination of participation on the board of
directors again become available for award.
The compensation committee has the authority to determine any
vesting schedule, rights of repurchase and other terms,
conditions and restrictions on the Class A common stock
awarded under the restricted stock plan. These terms, conditions
and restrictions are set forth in the applicable award agreement
entered into with each participant. Such terms may include, but
are not limited to, acceleration of vesting or termination of
rights to repurchase shares upon events such as death or
disability of a participant or change in control of the company
or related entities. Unless otherwise provided in an award
agreement, shares subject to a right of repurchase by the
company may not be transferred. A participant to whom an award
is made will generally have all the rights of a stockholder with
respect to the shares awarded, including the right to vote and
to receive dividends, except as otherwise set forth in the
applicable award agreement.
The restricted stock plan may be amended or terminated by the
board of directors at any time, subject to the stockholder
approval required (i) to maintain the qualification of
awards under the restricted stock plan as
performance-based compensation under
Section 162(m) or (ii) as required under any other
applicable laws, rules or regulations.
The compensation committee may designate whether any award being
granted is intended to be performance-based
compensation under Section 162(m) of the Code. Any
such awards are conditioned on the achievement of one or more
performance measures, which may be selected by the compensation
committee based on any one or more of the following: total
stockholder return, stock price, profit margin (gross or net),
sales growth, return on investment, earnings per share, return
on equity, operating cash flow, net income, market share,
working capital, customer satisfaction and employee
satisfaction. For awards intended to qualify as
performance-based compensation, the grant of the
awards and the establishment of the performance goals are to be
made in compliance with the requirements of Section 162(m).
Retention and Severance Program
Prompted by the announcement of the proposed merger between
Nextel Communications and Sprint Corporation, effective as of
January 27, 2005 the compensation committee of our board of
directors adopted a
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Retention and Severance Program. It is anticipated that the
closing of the Sprint Nextel Communications merger
will trigger rights of holders of our Class A common stock
to vote to sell their shares to Nextel Communications in
accordance with the terms of our Certificate (the Put
Right). The objectives of the Retention and Severance
Program are: (i) to retain officers and critical employees
during the period leading up to any potential change in control
of us, including a change of control caused by the exercise of
the Put Right; and (ii) to provide an incentive for
officers and employees to maximize our value prior to a
potential change in control of us.
Under the Retention and Severance Program, all of our executive
officers will be eligible to receive a cash incentive payment
equal to 100% of their base salary and annual performance bonus
if there is a change in control of us (the Retention
Payment). The actual amount of the Retention Payment is
tied to the achievement of certain 2005 operating objectives and
may increase or decrease depending on achievement of these
goals. For executive officers, 50% of the Retention Payment is
payable at the time of a change in control of us. The balance of
the Retention Payment is payable on the earlier of: (i) the
date the executive officer is terminated without cause or
resigns for good reason after a change in control or
(ii) six months after a change in control.
In addition to the Retention Payment, if an executive officer is
involuntarily terminated other than for cause or resigns for
good reason within one year after a change in control, the
executive officer will receive a cash severance payment equal to
200% of his base salary and annual performance bonus plus
medical and dental benefits for two years. If an executive
officer is involuntarily terminated other than for cause or
resigns for good reason within 12 to 18 months after a
change in control, the executive officer will receive a cash
severance payment equal to 100% of his base salary and annual
performance bonus plus medical and dental benefits for one year.
Any cash severance payment will be made on the last day worked.
If an executive officer voluntarily resigns without good reason
or his employment is terminated for cause, the executive officer
will not receive any cash severance payment or additional
benefits.
In addition to the cash Retention Payment, stock options granted
to our executive officers on January 27, 2005, vest in four
equal annual installments beginning on the first anniversary of
the date of grant; however, in the event of a change in control
of us, these options will automatically vest in full if we have
achieved our 2005 operating cash flow objectives.
Our Retention and Severance Program also provides other
employees with cash retention incentives and cash severance.
Third Amended and Restated Nonqualified Stock Option Plan
The Plan is used by us to recruit and retain talented employees
and to stimulate their active interest in our growth,
development and financial success by closely aligning their
interests with our interests. Approximately 74% of our current
employees, including all of our executive officers, own shares
or hold options to purchase shares under the Plan.
The number of shares of our Class A common stock reserved
for issuance under the Plan is 34,545,354; provided that this
number shall be increased by the number of shares that have been
issued to senior managers pursuant to a restricted stock
purchase agreement and subsequently repurchased by us upon
termination of such senior manager. We issued
8,834,994 shares of Class A common stock pursuant to
the restricted stock purchase agreements, and to date none of
those shares have been repurchased by us. Of this amount,
4,804,998 shares of Class A common stock remain
subject to repurchase pursuant to the restricted stock purchase
agreements.
Unless otherwise provided by the terms of a specific option
agreement, options granted under the Plan prior to an amendment
of the Plan on October 17, 2001 vested over three years in
three equal annual installments and options granted after the
October 17, 2001 amendment vest over four years in four
equal annual installments, in each case generally beginning one
year from the date of grant. Pursuant to the authority granted
to it under the Plan, on January 27, 2005, our compensation
committee determined that all options held by employees (but not
senior managers) granted prior to January 27, 2005 shall
immediately vest
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in full upon the occurrence of a defined change of control of
us. In addition, all options granted on January 27, 2005 to
employees (including senior managers) will immediately vest in
full upon a change of control of us if, at the time of such
change of control event, we have achieved our 2005 operating
cash flow targets as established by the compensation committee
in its sole discretion. Option agreements entered into between
us and the senior managers prior to 2005 provide for
acceleration on any change of control of us or Nextel
Communications.
Any option that has not been exercised, exchanged or converted,
as the case may be, at or prior to the closing of any purchase
by Nextel WIP of all of our outstanding capital stock (in
accordance with the provisions of our restated Certificate),
shall be canceled and become unexercisable upon such closing.
Grants of options to senior managers under the Plan (other than
grants to the chief executive officer) are to be based on
criteria established by the compensation committee and the chief
executive officer, and grants to employees other than senior
managers shall be made subject to the same performance criteria
as senior managers, or such additional or different criteria as
the board of directors may establish. The Plans stated
intention is that approximately twenty-five percent (25%) of the
options subject to the Plan will be granted in connection with
recruitment of new employees other than senior managers and that
senior managers shall receive in the aggregate up to twenty
percent (20%), and not less than ten percent (10%) without the
consent of the affected senior manager(s), of the total number
of options granted in each year. See Option Grants in
Fiscal Year 2004 for the percentage of total option grants
to employees in 2004 that were made to named executive officers.
James Ryder was granted options to purchase an aggregate of
165,000 shares of our Class A common stock in 2004.
Philip Gaske was granted options to purchase an aggregate of
100,000 shares of our Class A common stock in 2004. Of
the total number of options granted to employees in 2004, the
options granted to Messrs Ryder and Gaske equal 2.3% and 1.4%,
respectively. Each of the named executive officers and
Messrs. Ryder and Gaske are considered senior
managers for purposes of the Plan.
The Plan states that it is the duty of the board of directors
(or a committee thereof) to conduct the general administration
of the Plan. The board of directors has delegated this duty to
the compensation committee.
The board of directors may amend the Plan in whole or in part
without obtaining approval from our stockholders except when
such approval is required under Rule 16b-3 of
Section 16 of the Exchange Act or under any other legal or
regulatory requirement; provided that the board of directors may
not amend or modify the Plan if the proposed modification or
amendment would be materially adverse to the senior managers as
a group or to any individual participating employee without
obtaining prior written consent of the senior managers or
optionee, as the case may be.
The board of directors (or a committee thereof) may waive any
conditions or rights under, amend the terms of, or alter,
suspend, discontinue, cancel or terminate any option granted
under the Plan, prospectively or retroactively, provided that
any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that adversely
affects the rights of an optionee or any holder or beneficiary
of any option previously granted shall not become effective
without the consent of the affected optionee, holder or
beneficiary.
According to the Plan, each option granted under the Plan is
evidenced by a stock option agreement, containing terms and
conditions determined by the administrator of the Plan. All
stock option agreements entered into by each of the named
executive officers initially contained a right for us to
repurchase all vested options or shares purchased upon exercise
of vested options if the named executive officer was either
terminated for cause or voluntarily quit without good reason.
The repurchase price varied depending upon the date of the
repurchase and certain other factors and, as of June 2004, the
repurchase price was, for vested options, 100% of the excess of
the fair market value of the shares issued upon exercise of the
option over the exercise price and, in the case of already
issued shares, 100% of the fair market value of the already
issued shares. On June 10, 2004, the compensation committee
eliminated our repurchase right with respect to the vested
options or shares purchased upon exercise of vested options for
each of our named executive officers.
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Employee Stock Purchase Plan
Our employee stock purchase plan was adopted by our board of
directors in January 2000 and was approved by our stockholders
in February 2000. Initially, a total of 3,000,000 shares of
Class A common stock has been reserved for issuance under
the employee stock purchase plan. The employee stock purchase
plan, which is intended to qualify under Section 423 of the
Code, is administered by our board of directors. Our employees,
including officers and employee directors, are eligible to
participate in the employee stock purchase plan if they are
employed by us or our subsidiaries for at least 20 hours
per week.
The employee stock purchase plan is implemented by quarterly
offering periods. Our board of directors may change the timing
or duration of the offering periods. The employee stock purchase
plan permits eligible employees to purchase shares of
Class A common stock through payroll deductions at 85% of
the lesser of the fair market value per share of the
Class A common stock on the first day of the offering
period or on the purchase date. Participants generally may not
purchase shares if, immediately after the grant, the participant
would own shares or options to purchase shares of Class A
common stock totaling 5% or more of the total combined voting
power of all of our outstanding capital stock, or have purchased
more than $25,000 of our outstanding capital stock in any
calendar year. The purchase price is the lower of the market
price of the shares on the first or last day of each fiscal
quarter.
Nonqualified Deferred Compensation Plan
In October 2004, we adopted a nonqualified deferred compensation
plan effective January 1, 2005 to provide a means by which
certain key management employees may elect to defer receipt of
current compensation in order to provide retirement and other
benefits. The plan is intended to be an unfunded plan maintained
primarily for the purpose of providing deferred compensation
benefits for a select group of key management employees under
Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee
Retirement Income Security Act of 1974 and the provisions of
Section 409A of the Internal Revenue Code.
In connection with our nonqualified deferred compensation plan,
we established a Rabbi Trust to aid in accumulating amounts
necessary to satisfy our contractual liability to pay benefits
under the terms of the plan and intend to make contributions to
this trust. The trust is intended to be a Grantor
Trust with the results that the income and assets are
treated as our assets and income pursuant to Sections 671
through 679 of the Internal Revenue Code. The trust shall at all
times be subject to the claims of our creditors.
Any employee of ours whose base salary is $100,000 or more and
holds a General Manager title may participate in the deferred
compensation plan. Currently, approximately 90 employees are
eligible to participate.
Participants may voluntarily elect to defer between 5% and 80%
of base salary and commission, and between 10% to 100% of
quarterly or annual incentive bonus, or a percentage above a
stated amount. Deferrals may be allocated to retirement,
education or in-service accounts.
Participants may elect a different payout election for each type
of account. Participants are paid in annual installments
commencing ninety (90) days following the distribution
event and on the anniversary of the distribution event
thereafter (a 6-month delay applies to terminated key
employees). Accounts are paid out on the distribution events as
follows:
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Retirement (age 55 or greater with 10 yrs of service or
age 65): lump sum or up to 10 annual installments |
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Termination or death: lump sum or up to five annual installments |
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In-service: lump sum upon specified date no earlier than three
years following January 1of the year the deferral election was
made; re-deferral election allowed |
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Hardship withdrawal: IRS 401(k) safe harbor criteria is applied |
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Account balances less than $25,000 distributed in lump sum |
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If no payout election specified, then default is lump sum |
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Distribution payout election may be changed if made at least
12 months in advance of payout event (except for death);
re-deferral election must be effective for at least five years,
unless preceded by termination or death; no acceleration of
benefits is allowed |
Participants may choose from among 15 mutual fund indices.
Earnings are credited to their account based upon the
performance of the funds selected by the participant. Plan
assets are invested in these same funds and we intend to
rebalance the portfolio periodically to match the investment
allocation of the participants.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Exchange Act requires our executive
officers, directors and persons who own more than ten percent of
a registered class of our equity securities to file reports of
ownership on Form 3 and changes in ownership on Form 4
and Form 5 with the SEC. Executive officers, directors and
greater than ten percent stockholders are required by SEC
regulation to furnish us with copies of all Section 16(a)
forms they file. As a matter of practice, we assist our
directors and executive officers by preparing initial ownership
reports and reporting ownership changes, and typically file
these reports on their behalf.
Based solely on our review of the copies of such forms in our
possession, and on written representations from certain
reporting persons, we believe that, during 2004, all filing
requirements applicable to our executive officers, directors,
and persons who own more than ten percent of a registered class
of our equity securities have been complied with, with the
following exceptions: Form 4s reporting the grant in
January 2004 by us of an option to purchase Class A common
stock to each of Messrs. Aas, Chapple, Fanning, Manning and
Rowan were not timely filed; Form 4s reporting the sale of
Class A common stock by each of Messrs. Chapple,
Fanning and Manning in February 2004 were not timely filed; and
a Form 4 reporting a distribution of certain shares owned
indirectly by Mr. Weibling in January 2004 was not timely
filed. In each case, corrective filings have been made.
Compensation Committee Report on Executive Compensation
The information contained in this report shall not be deemed
to be soliciting material or to be filed
with the SEC, and such information shall not be incorporated by
reference into any future filing under the Securities Act or the
Exchange Act, except to the extent that we specifically
incorporate it by reference into such filing.
The compensation committee oversees and evaluates the
compensation of our executive officers. The overall goals of the
committee are to align executive compensation with individual
performance and the performance of Nextel Partners and to
attract and retain executives who can significantly contribute
to our success in a competitive industry. All of the members of
the committee are independent directors. The committee is
governed by a charter approved by the board of directors and
reviewed annually by the committee. In accordance with its
charter, the committee may engage outside advisors, such as
compensation consultants. The committee holds regular meetings
and evaluates and approves executive compensation each year.
Our executive compensation structure is designed to:
(i) reward our executive officers appropriately for their
contributions to our growth, profitability and other goals;
(ii) align the interests of our executive officers with the
long-term interests of our stockholders through a mix of
long-and short-term incentives, which involve downside risk as
well as upside potential; and (iii) encourage retention by
maintaining our competitiveness in the relevant labor markets.
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Components of Compensation |
The committee believes that the compensation levels of our
executive officers should consist of a combination of the
following fixed and variable elements:
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base salaries that are commensurate with those of executives of
comparable telecommunications companies; |
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cash bonus opportunities based on achievement of objectives set
by (i) the committee, with respect to our chief executive
officer, and (ii) our chief executive officer in
consultation with the committee, with respect to our other
executive officers; and |
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equity-related incentive compensation, which is intended to
align management and stockholder interests. |
In general, the committee considers the following factors when
determining the compensation of our executive officers:
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our financial performance as measured by attainment of specific
financial objectives and operating results, including customer
satisfaction scores and growth in revenues, operating cash flow,
adjusted EBITDA and number of subscribers; |
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our performance against long-range business plans and strategic
initiatives; |
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the individual performance of each executive officer, including
the achievement of identified goals by the executive or his or
her functional group; |
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other relevant factors, such as the overall labor market for
qualified executives in the wireless industry and the overall
economic conditions both in the wireless industry and the
country as a whole; and |
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historical cash and equity compensation levels. |
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Review of Each Component of Executive Compensation |
The committee has reviewed the aggregate amounts and cumulative
mix of all of the components of our executive officers
compensation, including salary, bonus, equity compensation,
accumulated realized and unrealized stock option and restricted
stock gains, medical and other insurance benefits, the value to
the executive and the cost to us of personal benefits, including
perquisites, if any, and the projected payout obligations under
our executive retirement plan and under potential severance and
change of control scenarios.
The 2004 base salaries for Messrs. Chapple, Rowan, Aas,
Fanning, and Manning were set by their individual employment
agreements. These agreements were entered into by each of these
executive officers other than Barry Rowan in February 2003, and
were subsequently amended on February 24, 2004.
Mr. Rowan joined Nextel Partners, and entered into an
employment agreement with us, in July 2003. This agreement was
subsequently amended on February 24, 2004. The level of
base salary for each executive officer was determined by
reference to officers salaries at similarly-situated
companies with operating results that compare with ours.
Effective July 22, 2004, Messrs. Ryder and Gaske were
promoted to executive officer positions. Employment agreements
were not signed with either of these two officers in 2004. We
anticipate that employment agreements with Messrs. Ryder
and Gaske will be executed in 2005.
The executive officers bonus compensation for 2004 was
determined in accordance with a formula that ties a target bonus
to the achievement of our overall goals. In most instances, the
target bonus is established as a percentage of base salary,
ranging from 75% for certain officers to 100% for other
officers, including the chief executive officer. The employment
agreements provide the committee the authority to grant a bonus
above these percentages. In addition, for as long as each
employment agreement is renewed, each year the committee is
required to review the executives base salary and bonus
payment in light of the performance of
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the executive and Nextel Partners, and the committee may then
increase (but not decrease) the base salary and bonus payment by
an amount it determines to be appropriate.
Each year we develop a performance plan with our overall annual
goals, as required by the employment agreements. The target
bonus compensation described above is determined by the extent
to which these goals are met. For 2004, the overall goals were
to:
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meet targets relating to the addition and retention of
subscribers on the Nextel digital mobile network; |
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meet revenue targets; |
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meet operating cash flow targets; and |
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meet customer satisfaction targets. |
In 2004, all of these performance goals were exceeded, with the
exception of the customer satisfaction goal, as to which we
achieved 99% of the target rate of customer satisfaction. As a
result, for 2004 all of the executive officers, including the
chief executive officer, were paid cash bonuses that were
greater than their target bonuses.
The committee believes the cash compensation paid to our
executive officers is comparable to industry salary and bonus
levels.
The committee administers and authorizes grants and awards to
our executive officers made under our stock option and
restricted stock plans. Periodically, the committee authorizes
grants of options to purchase Class A common stock under
our stock option plan to all employees who have been with us for
a specified length of service. The committee also authorizes
awards for new employees as incentives to join the company.
Options are generally granted under the stock option plan at the
then-current market price and are generally subject to four-year
vesting periods to encourage employees to remain with us.
The committee established a pool of options available for grant
to key employees, including executive officers, in January 2004
subject to the achievement of stated goals for 2004. By
achieving 101% of the stated goals, 101% of the pool was
available for grant to these key employees for our 2004
performance. However, given the possibility that grants of
options will be required to be treated as an expense, the
committee elected to make a smaller option pool available for
grant for 2004 performance. In addition, the committee
determined that option grants would be made from this pool not
only to key employees, but also to certain of our other
employees, in order to increase the incentives of those
employees to remain with us and to focus on achieving operating
objectives.
The stock option and restricted stock plans are intended to
provide incentives to executive officers to meet our goals,
maximize stockholder value and encourage retention.
Exceptionally talented executives are necessary to the
achievement of our long-term goals, especially at a time of
significant growth and competition in the wireless industry. In
determining whether and in what amount to grant stock options or
other equity compensation to our executive officers for
performance in 2004, the committee considered each
executives projected contribution to our long-term growth
and profitability and to the achievement of our primary business
objectives for 2004, including revenue growth, customer
additions, operating cash flow and customer satisfaction. The
committee also considered the amount and date of vesting of
currently outstanding incentive equity compensation granted to
each of the executive officers.
Certain option grants were made to employees, including
executive officers, on January 27, 2005. All of these
options will immediately vest in full upon a change of control
of us if, at the time of such change of control event, we have
achieved our 2005 operating cash flow targets as established by
the committee in its sole discretion. Option agreements entered
into between us and our executive officers prior to 2005 provide
for acceleration on any change of control of us or Nextel
Communications.
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Compensation of the Chief Executive Officer |
John Chapple, our president and chief executive officer,
received total cash compensation of $1,095,374 for his services
in 2004, including annual salary payments totaling $537,500. The
committee considered several factors in determining
Mr. Chapples annual salary for 2004, including the
fact that we significantly outperformed our revenue growth and
operating cash flow goals for 2003, and Mr. Chapples
contributions to our strategic focus, market position, corporate
culture and seamless operations with Nextel Communications. In
particular, the committee noted that we achieved 96% of the 2003
net customer addition target, 102% of the revenue target and
106% of the operating cash flow target. The committee noted that
under Mr. Chapples leadership, we achieved a
consolidated annual growth rate of subscribers from 2000 to the
end of 2003 of 63% and a consolidated annual growth rate in
service revenues during the same four years of 78%. The
committee further noted that during 2003 we continued to lead
the wireless industry in lifetime revenue per subscriber.
Mr. Chapple was also awarded bonus payments totaling
$557,875 for services in 2004. $2,375 of this bonus amount was
paid to Mr. Chapple in connection with bonuses paid to all
employees for satisfying quarterly customer satisfaction
targets. The bonus amount also includes $555,500 paid to
Mr. Chapple in February 2005, $55,500 of which
Mr. Chapple contributed to our deferred compensation plan.
This payment was made based on the companys performance in
relation to the 2004 corporate goals identified above in this
report under the heading Cash Compensation.
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2005 Compensation and the Retention and Severance
Program |
With respect to compensation for 2005, the committee has placed
particular importance on the need to retain key employees in
light of the expectation that our Class A common
stockholders will possess the Put Right after the closing of the
proposed Nextel Communications merger with Sprint Corporation.
As described elsewhere in this proxy statement, the Put Right,
if exercised by a vote of the Class A common stockholders,
allows those stockholders to sell their shares to Nextel
Communications in the event of a change of control of Nextel
Communications. The committee considered the unique
circumstances surrounding the Put Right, including the
possibility that there may be a long period between the date
that Sprint Corporation and Nextel Communications announced
their proposed merger and the date on which the Put Right may be
exercised. The uncertainty inherent in this process, and the
length of time before the uncertainty is resolved, have the
potential to distract management and employees and could lead to
an increase in employee attrition rates. The committee
recognized the need to retain talent in the period leading up to
a potential change of control of Nextel Partners and recognized
the substantial disruptions that would result if senior
management were to leave us, including the difficulties faced in
trying to recruit senior management to a company that may be
sold in the near term.
In light of these circumstances, the committee adopted a
Retention and Severance Program that was effective as of
January 27, 2005, the terms of which are described
elsewhere in this proxy statement. The objectives of the
Retention and Severance Program are:
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to retain officers and critical employees during the period
leading up to a potential change in control of Nextel Partners; |
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to provide an incentive for officers and employees to maximize
our value prior to a potential change in control; and |
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to successfully complete a change in control if the Put Right is
exercised. |
Before its adoption, the Retention and Severance Program was
reviewed by an external consultant with expertise in executive
compensation matters. This consultant concluded that the program
was appropriate, given our business circumstances and the
performance-based nature of the program.
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Deductibility Limit on Executive Compensation |
Section 162(m) of the Code generally disallows a tax
deduction to a publicly held company for compensation in excess
of $1 million paid to its chief executive officer or any of
its four other most highly
25
compensated executive officers, unless the plan and awards under
which any portion of the compensation is paid meet specified
requirements. Our incentive equity plans do not meet those
requirements, and we have determined that meeting these
requirements may not be in the best interest of the company and
our stockholders. Accordingly, the committee will not recommend
any amendments to our incentive equity plans to satisfy those
requirements at this time.
The committee believes that our compensation policies have been
successful in attracting and retaining qualified employees and
in linking compensation directly to corporate performance
relative to our goals and guiding principles. Our compensation
policies will continue to evolve over time as we strive to
attain our near-term goals while maintaining our focus on
building long-term stockholder value.
Compensation Committee Interlocks and Insider
Participation
All members of the compensation committee during 2004 were
independent directors, and none of them were our employees or
former employees. None of our executive officers has ever served
on the compensation committee (or equivalent), or the board of
directors, of another entity whose executive officer(s) have
served on our compensation committee or board of directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Amended and Restated Shareholders Agreement. On
January 29, 1999, we entered into a shareholders
agreement with Nextel WIP, DLJ Merchant Banking
Partners II, L.P., Madison Dearborn Partners, Eagle River
Investments, Motorola, our senior management stockholders and
all of the other parties who were stockholders prior to our
initial public offering. In that agreement, the parties agreed
to certain matters relating to our management and operations and
the sale, transfer or other disposition of our capital stock by
these stockholders. This agreement also granted Nextel WIP
certain preemptive rights to purchase shares of stock offered to
the public by us, DLJ Merchant Banking or Madison Dearborn
Partners. In addition, pursuant to this agreement, we granted to
DLJ Merchant Banking and Madison Dearborn Partners certain
demand registration rights and to all of the parties
piggyback registration rights. This agreement was
amended and restated in February 2000 in connection with the
initial public offering of our Class A common stock and has
subsequently been amended several times. The current parties to
the amended and restated shareholders agreement are Nextel
WIP, Madison Dearborn Partners, Eagle River Investments,
Motorola and the following stockholders who are also part of our
senior management: John Chapple, David Aas and Mark Fanning. The
amended and restated shareholders agreement terminates on
January 29, 2014.
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Nextel Communications Operating Agreements |
We, through our principal subsidiary, entered into agreements
with Nextel WIP that govern the build-out and operation of our
portion of the Nextel digital mobile network. As of the Record
Date, Nextel WIP held 31.6% of our outstanding common stock, and
one of our directors is affiliated with it. Except as
specifically set forth below, these operating agreements were
executed on January 29, 1999 and, in some cases, were
amended on September 9, 1999 and again on
September 27, 2000, and have an initial term of ten years,
which may be extended for up to an additional two and a half
years and renewed for up to four ten-year renewal terms at our
option.
Joint Venture Agreement. Our joint venture agreement with
Nextel WIP requires us to build and operate our portion of the
Nextel digital mobile network on time, make it compatible with
Nextel Communications systems, meet or exceed quality
standards applicable from time to time to Nextel
Communications subsidiaries operating in the United
States, and offer a set of core service features and upgrade our
system to comply with future Nextel Communications standards.
This agreement also governs the transfer of licenses from Nextel
WIP to us. To the extent that we require additional frequencies
to operate our business, the joint venture agreement sets forth
the terms under which
26
we may acquire such frequencies from Nextel WIP, from third
parties or in auctions of spectrum by the Federal Communications
Commission. All of the frequencies we acquired or may acquire
from Nextel WIP are subject to transfer restrictions and rights
of first refusal in favor of Nextel WIP.
Additional terms of the joint venture agreement are as follows:
Nextel WIP has agreed to assist us with securing vendor
discounts; we have agreed to obtain Nextel WIPs approval
prior to taking certain significant actions, including making a
material change to our business objectives or technology; with
limited exceptions, Nextel WIP has agreed that during the term
of the joint venture agreement, Nextel Communications and/or our
subsidiaries will not provide digital mobile wireless
communications services within our markets using the Nextel
brand name; Nextel WIP has agreed to negotiate with us to give
us the first right in our territories to own and operate
businesses using the 900 MHz frequency that Nextel
Communications currently holds; and we are generally required to
adhere to the same standards for pricing structure, advertising,
promotions, customer care, telemarketing and related activities
as the Nextel Communications subsidiaries operating in the
United States.
As described in further detail below, in the event of a
termination of the joint venture agreement, Nextel WIP could, in
certain circumstances, purchase or be forced to purchase all of
our outstanding stock. If that happens, Nextel WIP, at its
option, would be entitled to pay the purchase price for our
stock in cash or in shares of Nextel Communications common stock.
Other Operating Agreements. We have also entered into
operating agreements with Nextel WIP with respect to: the
license to Nextel Communications trademarks and service marks;
the ability of each partys subscribers to roam in the
other partys territory; Nextel Communications use of
analog systems and services in our territories; access to
telecommunications towers space; access to information systems;
and telecommunications switching services. For the year ended
December 31, 2004, we paid to Nextel WIP approximately
$139.6 million for such services and received from Nextel
WIP approximately $158.7 million in roaming revenue.
Agreement Specifying Obligations and Limiting Liability of,
and Recourse to, Nextel Communications. All of our operating
agreements are with Nextel WIP, not Nextel Communications.
Pursuant to the terms of the agreement specifying obligations
and limiting liability of, and recourse to, Nextel
Communications, the maximum cumulative, aggregate cash liability
of Nextel Communications and our controlled affiliates, other
than Nextel WIP, for any and all actual or alleged claims or
causes of action arising in connection with any aspect of the
agreements governing or otherwise relating to the operating
agreements is capped at $200 million, subject to
adjustments for amounts previously advanced. Some significant
Nextel Communications obligations, including any commitments
that Nextel Communications may make in the future to enable
Nextel WIP to subsidize required upgrades and to buy our stock
from our other stockholders under certain circumstances, will
not be subject to the cap.
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Certain Obligations Under our Charter |
Our Certificate, under certain circumstances, allows Nextel WIP,
or allows holders of our Class A common stock to cause
Nextel WIP, to purchase all of our outstanding Class A
common stock. In any such event, Nextel WIP will have the choice
of paying for any shares of Class A common stock in cash,
in shares of Nextel Communications common stock, or in a
combination of cash and Nextel Communications common stock.
Events that trigger these rights and obligations include:
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January 29, 2008, subject to certain postponements by our
board of directors; |
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If Nextel Communications changes its digital transmission
technology, the change is materially adverse to us and Nextel
WIP determines not to provide us free of charge the equipment
necessary to provide our subscribers with service comparable to
what they had been receiving; |
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If Nextel WIP requires a change in our business, operations or
systems, the change is materially adverse to us, Nextel WIP does
not subsidize us for the costs of such change and we decline to
implement the required change; or |
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Termination of our operating agreements with Nextel WIP as a
result of our breach. |
The holders of our Class A common stock may cause Nextel
WIP to purchase all outstanding Class A common stock upon
the occurrence of certain triggering events. If a triggering
event occurs and the holders of our Class A common stock
determine to require Nextel WIP to purchase all of our
outstanding Class A common stock, all stockholders will be
required to sell their shares to Nextel WIP. In any such event,
Nextel WIP will have the choice of paying for any shares of
Class A common stock in cash, in shares of Nextel
Communications common stock, or in a combination of cash and
Nextel Communications common stock. Events that trigger these
rights and obligations include:
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Change of control of Nextel Communications; |
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If we do not implement a change in our business, operations or
systems required by Nextel WIP, the change is materially adverse
to us, and our board of directors provides non-Nextel
Communications affiliated stockholders with the opportunity to
require Nextel WIP to buy their shares of Class A common
stock and a majority of the stockholders vote to do so; or |
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Termination of our operating agreements with Nextel WIP as a
result of a breach by Nextel WIP. |
On December 15, 2004, Sprint Corporation and Nextel
Communications announced that their boards of directors had
unanimously approved a definitive agreement for a merger between
the two companies. These companies also announced that they
expect the merger to close in the second half of 2005. The
merger is subject to many conditions, including a vote by the
stockholders of both companies as well as various federal and
state regulatory approvals. We believe that if the Sprint-Nextel
Communications transaction is successfully consummated as
currently structured, it will, upon a closing of the
transaction, trigger a right of holders of our Class A
common stock to call a special meeting of the holders of our
Class A common stock and, as set forth above, vote on
whether to sell all, but not less than all, of their shares of
Class A common stock to Nextel Communications at fair
market value, which, as defined in our Certificate, includes a
control premium. The holders of our Class A common stock
also have the right to postpone any such vote for up to
545 days. If the holders of our Class A common stock
vote to sell their shares to Nextel Communications, our
Certificate sets forth the procedures to be used to determine
fair market value. You many find more information about this Put
Right, including the specific procedures for determining fair
market value and the definition of fair market value, in our
Certificate, which is available on our website at
www.nextelpartners.com under the investor relations and select
corporate documents link.
Holders of our Class A common stock also have the right
and/or obligation to participate in any sale by Nextel WIP of
all of its shares of our capital stock to a third party
occurring after January 29, 2011. Pursuant to the amended
and restated shareholders agreement, prior to
January 29, 2011, Nextel WIP cannot transfer its shares of
our capital stock to a third party. In the event that the
holders of a majority of the Class A common stock elect to
participate in such sale, then pursuant to our Certificate, all
holders of Class A common stock will be required to
participate.
In the ordinary course of business, we have leased tower space
from American Tower Corporation, of which Mr. Dodge, one of
our directors, is a stockholder, and was formerly chief
executive officer (from June 1998 to October 2003) and chairman
of the board of directors (from June 1998 to February 2004).
Mr. Dodge currently provides services to American Tower
Corporation from time to time on a part-time basis. During 2004,
we paid American Tower Corporation $10.9 million for tower
leases.
28
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Other Transactions with Directors and Senior
Management |
During the year ended December 31, 2004, we granted options
to purchase shares of Class A common stock under the Plan
to the following officers and directors on the date, for the
number of shares and with an exercise price indicated opposite
each persons name:
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Number of Shares | |
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Exercise | |
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Grant Date | |
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Underlying Options | |
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Price | |
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John Chapple
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1/22/04 |
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350,000 |
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$ |
13.86 |
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David Aas
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1/22/04 |
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200,000 |
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$ |
13.86 |
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Barry Rowan
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1/22/04 |
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225,000 |
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$ |
13.86 |
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Mark Fanning
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1/22/04 |
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100,000 |
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$ |
13.86 |
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Donald J. Manning
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1/22/04 |
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100,000 |
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$ |
13.86 |
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James Ryder
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1/22/04 |
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65,000 |
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$ |
13.86 |
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James Ryder
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7/9/04 |
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100,000 |
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$ |
15.80 |
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Philip Gaske
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1/22/04 |
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50,000 |
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$ |
13.86 |
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Philip Gaske
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7/9/04 |
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50,000 |
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$ |
15.80 |
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Dennis M. Weibling
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8/2/04 |
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25,000 |
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$ |
15.89 |
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Adam Aron
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8/2/04 |
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25,000 |
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$ |
15.89 |
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Caroline H. Rapking
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8/2/04 |
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25,000 |
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$ |
15.89 |
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Steven B. Dodge
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8/2/04 |
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25,000 |
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$ |
15.89 |
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Options shown above vest in four equal annual installments
commencing on the first anniversary of the grant date, except
for the options granted to the non-employee directors on
August 2, 2004, which vest in three equal installments
commencing on August 2, 2005.
29
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return
on our Class A common stock commencing February 23,
2000, the first trading date following the effective date of our
initial public offering, and ending December 31, 2004, with
the cumulative total stockholder return of companies comprising
the Nasdaq Stock Market (US) Index and the total return of
a peer group of companies comprising the Nasdaq
Telecommunications Index, which includes wireless
telecommunication companies traded on the Nasdaq Stock Market.
Comparison of Cumulative Total Return
Among Nextel Partners, Inc.,
Nasdaq Stock Market (US Companies) Index and
Nasdaq Telecommunications Index
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February 23, |
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December 31, |
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December 31, |
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December 31, |
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December 31, |
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December 31, |
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2000 |
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2000 |
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2001 |
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2002 |
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2003 |
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2004 |
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Nextel Partners, Inc.
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$ |
100.00 |
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$ |
55.79 |
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$ |
39.83 |
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$ |
20.15 |
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$ |
44.64 |
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$ |
64.85 |
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Nasdaq Stock Market (US) Index
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$ |
100.00 |
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$ |
54.30 |
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$ |
42.87 |
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$ |
29.35 |
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$ |
44.03 |
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$ |
47.80 |
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Nasdaq Telecom Index
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$ |
100.00 |
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$ |
41.83 |
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$ |
21.36 |
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$ |
9.82 |
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$ |
16.57 |
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$ |
17.87 |
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The graph above assumes that $100 was invested on
February 23, 2000 in our Class A common stock and in
each index, and that all dividends were reinvested. Stockholder
returns over the indicated period should not be considered
indicative of future returns.
TRANSACTION OF OTHER BUSINESS
Our board of directors knows of no other matters to be submitted
at the Annual Meeting. If any other matters come before the
Annual Meeting, it is the intention of the persons named in the
accompanying form of proxy to vote the shares they represent as
the board of directors may recommend.
30
ANNUAL REPORT TO STOCKHOLDERS AND FORM 10-K
Our Annual Report to Stockholders for the year ended
December 31, 2004 (which is not a part of our proxy
soliciting materials) is being mailed to our stockholders with
this proxy statement. A copy of our Annual Report on
Form 10-K, without exhibits, is included with the Annual
Report to Stockholders and is also available to any stockholder
free of charge upon request by writing to Investor Relations at
our corporate address.
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By Order of the Board of Directors |
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John Chapple |
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President, Chief Executive Officer and Chairman of the |
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Board of Directors |
Kirkland, Washington
April 8, 2005
31
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
NEXTEL PARTNERS, INC.
Proxy for 2005 Annual Meeting of Stockholders
May 12, 2005
The undersigned stockholder of NEXTEL PARTNERS, INC. (the Company) hereby acknowledges
receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement for the 2005 Annual
Meeting of Stockholders of the Company to be held on Thursday, May 12, 2005 at 10:00 a.m., local
time at the Coast Bellevue Hotel, 625 116th Avenue N.E., Bellevue, Washington 98004, and hereby
revokes all previous proxies and appoints John Chapple or Donald J. Manning, or either of them,
with full power of substitution, Proxies and Attorneys-in-Fact, on behalf and in the name of the
undersigned, to vote and otherwise represent all of the shares registered in the name of the
undersigned at said Annual Meeting, or any adjournments thereof, with the same effect as if the
undersigned were present and voting such shares, on the following matters and in the following
manner:
TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK, SIGN AND DATE THIS PROXY AND
RETURN IT AS PROMPTLY AS POSSIBLE.
(Continued, and to be marked, dated and signed, on the other side)
Address Change/Comments (Mark the corresponding box on the reverse side)
5 FOLD AND DETACH HERE 5
You can now access your Nextel Partners, Inc. account online.
Access your Nextel Partners, Inc. stockholder account online via Investor ServiceDirect® ISD).
Mellon Investor Services LLC, Transfer Agent for Nextel Partners, Inc., now makes it easy and
convenient to get current information on your stockholder account.
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View account status |
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View certificate history |
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View book-entry information |
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View payment history for dividends |
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Make address changes |
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Obtain a duplicate 1099 tax form |
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Establish/change your PIN |
Visit us on the web at http://www.melloninvestor.com
For Technical Assistance Call 1-877-978-7778 between
9am-7pm Monday-Friday Eastern Time
Investor ServiceDirect® is a registered trademark of Mellon Investor Services LLC
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Mark Here
for Address
Change or
Comments
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SEE REVERSE SIDE |
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FOR |
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nominees |
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AUTHORITY |
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listed below |
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to vote for all |
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that are crossed out) |
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listed below |
1. |
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ELECTION OF DIRECTORS
Eight directors are to be elected at the Annual
Meeting for a one-year term ending in 2006. The
nominating committee of the board of directors has
nominated Adam Aron, John Chapple, Steven B. Dodge,
Timothy Donahue, Arthur W. Harringan, Jr., James N.
Perry, Jr., Caroline H. Rapking and Dennis M.
Weibling for election as directors. If you wish to
withhold authority to vote for any individual
nominee, cross out that nominees name in the list
below: |
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Nominees: |
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01 Adam Aron
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05 Arthur W. Harrigan, Jr. |
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02 John Chapple
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06 James N. Perry, Jr. |
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03 Steven B. Dodge
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07 Caroline H. Rapking |
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04 Timothy Donahue
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08 Dennis M. Weibling |
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2.
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RATIFICATION
OF THE
APPOINTMENT BY
THE AUDIT
COMMITTEE OF
INDEPENDENT
PUBLIC
ACCOUNTANTS
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You are being asked to vote to ratify the
appointment by the audit committee of KPMG
LLP as the Companys independent public
accountants for the fiscal year ending
December 31, 2005. |
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In their discretion, the Proxies are
entitled to vote upon such other matters as
may properly come before the Annual Meeting
or any adjournments thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED IN ACCORDANCE WITH THE SPECIFICATION
MADE. IF NO SPECIFICATION IS MADE, THE
SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED FOR EACH OF THE ABOVE NOMINEES, FOR A
RATIFICATION OF THE APPOINTMENT BY THE AUDIT
COMMITTEE OF INDEPENDENT PUBLIC ACCOUNTANTS,
AND FOR SUCH OTHER MATTERS AS MAY PROPERLY
COME BEFORE THE MEETING AS THE PROXYHOLDERS
DEEM ADVISABLE.
(This proxy should be marked, dated and signed by each stockholder exactly as such
stockholders name appears hereon, and return promptly in the enclosed envelope. Persons signing in
a fiduciary capacity should so indicate. A corporation is requested to sign its name by its
president or other authorized officer, with the office held designated. If shares are held by joint
tenants or as community property, both holders should sign.)
5 FOLD AND DETACH HERE 5
Vote by Internet or Telephone or Mail
24 Hours a Day, 7 Days a Week
Internet and telephone voting is available through 11:59 PM Eastern Time
the day prior to annual meeting day.
Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
Internet
http://www.proxyvoting.com/nxtp
Use the Internet to vote your proxy.
Have your proxy card in hand when
you access the web site.
Telephone
1-866-540 5760
Use any touch tone telephone to
vote your proxy. Have your proxy card
in hand when you call.
Mail
Mark sign and date
your proxy card
and return it in the
enclosed postage-paid
envelope.
If you vote your proxy by Internet or by telephone, you do
NOT need to mail back your proxy card.