Sprint Corp. and Nextel Communications Inc. are offering bonuses of more than a year's salary for some senior executives who stay at least a year after the companies' planned $35 billion merger.
Sprint disclosed its bonus plans in a filing yesterday with the Securities and Exchange Commission. "We did it in order to continue to promote business and leadership continuity," said Nicholas Sweers, a Sprint spokesman. "We want to make sure we have the best people in place to complete the merger and beyond."
Sprint and Nextel announce plans to pay bonuses to top executives that stay through the merger of the two wireless companies.
(Jeff Chiu -- AP)
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A Nextel spokeswoman said the company has long had a similar plan in place to retain executives through the uncertainty of a merger.
Also yesterday, the cellular phone companies filed applications with federal antitrust regulators, the first in a series of steps required to win approval for their merger.
The applications were filed with the Justice Department and the Federal Trade Commission, which must review whether the combination of the third- and sixth-biggest wireless carriers would undermine competition. The applications were not made public. The companies are expected to file more detailed information with the Federal Communications Commission by early next month making their case for the deal.
Under Sprint's bonus plan, 11 senior executives would receive the pay as an incentive to stay in their jobs, the Overland Park, Kan.-based company said. The executives would collect a bonus equal to half a year's salary upon completion of the merger and another bonus of the same size a year after that. At that point, the executives also would receive an additional incentive bonus based on a formula the company did not disclose. Chief executive Gary D. Forsee and president and chief operating officer Len J. Lauer would not be eligible for the bonus plan.
A Nextel spokeswoman said the Reston-based company has had a plan since 1999 to pay senior executives bonuses to stay through a merger.
Under Nextel's plan, top executives would collect their annual base salaries and annual performance bonuses, plus one-time payments equal to 150 percent of salaries and bonuses. Half of the extra money would be paid at the close of the merger and the other half a year later, according to the company's annual filing in 2001. A second tier of executives would get 100 percent of both salary and bonus paid in similar fashion, while other senior managers would get 50 percent of salary and bonus. The company declined to disclose how many executives would receive retention payments.
Nextel chief executive Timothy M. Donahue, who would become executive chairman of the combined company, will receive a separate employment retention agreement, said Audrey Schaefer, a spokeswoman for Nextel. Donahue was one of the Washington area's highest-paid executives last year, at $29.4 million, including salary, bonus and the value of his stock options.
The Sprint-Nextel merger, announced last month, follows the 2004 combination of Cingular Wireless LLC and AT&T Wireless Services Inc., which formed the nation's largest wireless carrier. Regulators approved the deal after requiring the companies to shed limited assets. Analysts and sources close to the regulatory agencies say the Sprint-Nextel combination, which would become the third-largest carrier, is not expected to trigger antitrust concerns.