def14a
SCHEDULE 14A INFORMATION
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:
|
|
|
o Preliminary
Proxy Statement |
|
|
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
þ Definitive Proxy
Statement |
o Definitive
Additional Materials |
o Soliciting
Material Pursuant to §240.14a-12 |
NII HOLDINGS, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No
fee required.
|
|
o |
Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11. |
|
|
(1) |
Title of each class of securities to which transaction applies: |
|
|
(2) |
Aggregate number of securities to which transaction applies: |
|
|
(3) |
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined): |
|
|
(4) |
Proposed maximum aggregate value of transaction: |
|
|
o |
Fee paid previously with preliminary materials. |
|
o |
Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the form or
schedule and the date of its filing. |
|
|
(1) |
Amount Previously Paid: |
|
|
(2) |
Form, Schedule or Registration Statement No.: |
NII
Holdings, Inc.
10700 Parkridge Boulevard, Suite 600
Reston, VA 20191
www.nii.com
March 24, 2006
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
APRIL 26, 2006
We will hold the Annual Meeting of Stockholders of NII Holdings,
Inc. (the “Company” or “NII Holdings”) on
April 26, 2006, at 10:00 a.m. local time at the
Sheraton Reston Hotel, 11810 Sunrise Valley Drive, Reston,
Virginia 20191 (703-620-9000).
The purpose of the Annual Meeting is to consider and take
action on the following:
1. Election of three directors, Carolyn Katz, Donald E.
Morgan and George A. Cope, each for a three-year term ending
2009;
2. Approval of an amendment to our Restated Certificate of
Incorporation to increase the number of authorized shares of
common stock from 300,000,000 to 600,000,000;
3. Ratification of the appointment of
PricewaterhouseCoopers LLP as the Company’s independent
registered public accounting firm for fiscal year 2006;
4. Approval of an adjournment of the Annual Meeting to a
later date or dates, if necessary, in order to permit the
further solicitation of proxies; and
5. Any other business that properly comes before the Annual
Meeting and any adjournments thereof.
Stockholders of record as of March 21, 2006 can vote at the
Annual Meeting. This proxy statement, the accompanying proxy
card, and the 2005 Annual Report on
Form 10-K
are being mailed or otherwise distributed to you on or about
March 24, 2006. Please vote before the Annual Meeting in
one of the following ways:
1. Use the toll-free number shown on your proxy card (if
eligible);
2. Visit the website shown on your proxy card to vote via
the Internet (if eligible); or
3. Complete, sign, date and return the enclosed proxy card
in the enclosed postage-paid envelope.
Your vote is very important. Please vote before the
meeting using one of the methods above to ensure that your vote
will be counted. Your proxy may be revoked at any time before
the vote at the Annual Meeting by following the procedures
outlined in the accompanying proxy statement.
By Order of the Board of Directors,
Steven M. Shindler
Chief Executive Officer and
Chairman of the Board of Directors
TABLE OF
CONTENTS
|
|
|
|
|
|
|
Page
|
|
|
General Information About Proxies
and Voting
|
|
|
3
|
|
Proposal
I — Election of Directors
|
|
|
4
|
|
Governance of the Company
|
|
|
6
|
|
Executive Compensation
|
|
|
10
|
|
Securities Ownership
|
|
|
15
|
|
Certain Relationships and Related
Transactions
|
|
|
18
|
|
Performance Graph
|
|
|
20
|
|
Proposal II — Approval
of Amendment to our Restated Certificate of Incorporation
|
|
|
21
|
|
Audit Information
|
|
|
22
|
|
Proposal III — Ratification
of Appointment Independent Registered Public Accounting Firm
|
|
|
23
|
|
Proposal
IV — Approval of Proposal for Adjournment
|
|
|
24
|
|
Stockholder Proposals For
2007 Annual Meeting
|
|
|
24
|
|
Appendix A — Audit
Committee Charter
|
|
|
A-1
|
|
Appendix
B — Amendment to the Restated Certificate of
Incorporation
|
|
|
B-1
|
|
|
|
|
|
|
2
GENERAL
INFORMATION ABOUT PROXIES AND VOTING
Solicitation,
Use and Revocation of Proxies
Our Board of Directors solicits the accompanying proxy for use
at the 2006 Annual Meeting of Stockholders (the “Annual
Meeting”). Giving your proxy means that you authorize the
persons indicated on the proxy card to vote your shares at the
Annual Meeting in the manner you direct. If you sign, date and
return the enclosed proxy card but do not specify how to vote,
your shares will be voted (1) for the election of the
nominees designated below to serve for three-year terms ending
2009, (2) for approval of an amendment to our Restated
Certificate of Incorporation to increase the number of
authorized shares of common stock that we would have authority
to issue from 300 million to 600 million, (3) for
ratification of the appointment of PricewaterhouseCoopers LLP as
the Company’s independent registered public accounting firm
for fiscal year 2006, (4) for approval of the proposal for
adjournment in order to permit further solicitation of proxies
and (5) at the discretion of the persons indicated on the
proxy card, on all other matters that may properly come before
the Annual Meeting or any adjournments thereof. You may revoke
your proxy at any time before it is voted at the Annual Meeting
by:
1. voting over the telephone or Internet if eligible to do
so — your latest dated vote before the Annual
Meeting will be the vote counted;
2. delivering to our Vice President, General Counsel and
Secretary a signed notice of revocation or a new proxy card with
a later date; or
3. voting in person at the Annual Meeting.
The cost of soliciting proxies for the Annual Meeting will be
borne by us. We have hired Georgeson Shareholder Communications,
Inc. to help us send out the proxy materials and solicit proxies
on behalf of the Board of Directors. Georgeson’s fee for
this service is $6,500 plus expenses. In addition, certain of
our officers and regular employees, without additional
compensation, may use their personal efforts, by telephone or
otherwise, to obtain proxies. We may also reimburse banks,
brokerage firms and other custodians, nominees and fiduciaries
for their reasonable
out-of-pocket
expenses in forwarding proxy materials to the beneficial owners
of shares of common stock.
Stockholders whose shares are registered in the name of a bank
or brokerage firm may be eligible to vote through the Internet
or by telephone. The enclosed proxy card provides instructions
for eligible stockholders. Stockholders not wishing to vote
through the Internet or by telephone, or who own shares through
a broker and their proxy card does not mention information about
Internet or telephone voting, should complete the enclosed paper
proxy card and return it in the enclosed postage-paid envelope.
Signing and returning the proxy card or submitting the proxy via
the Internet or by telephone does not affect your right to
revoke your proxy or to vote in person at the Annual Meeting.
Your attendance at the Annual Meeting by itself does not
constitute revocation of your proxy. Before the Annual Meeting,
any written notice of revocation should be sent to NII Holdings,
Inc., 10700 Parkridge Boulevard, Suite 600, Reston,
Virginia 20191, Attention: Vice President, General Counsel and
Secretary. Any notice of revocation that is delivered at the
Annual Meeting should be hand delivered to our Vice President,
General Counsel and Secretary before a vote is taken. You may be
asked to present documents for the purpose of establishing your
identity as a NII Holdings stockholder.
Two-for-One
Common Stock Split
On October 27, 2005, we announced a
two-for-one
common stock split to be effected in the form of a stock
dividend, which was paid on November 21, 2005 to
stockholders of record as of November 11, 2005. All share
amounts presented in this Proxy Statement have been adjusted to
reflect the
two-for-one
stock split.
Record
Date, Voting Rights and Outstanding Shares
Our Board of Directors has established the close of business on
March 21, 2006, as the record date for determining
stockholders entitled to receive notice of and to vote on
proposals at the Annual Meeting or any
3
adjournment or postponement of the Annual Meeting. Only holders
of record of our common stock on the record date are entitled to
vote at the Annual Meeting. Holders of common stock on the
record date are entitled to one vote per share on each matter
voted upon at the Annual Meeting. As of the record date, there
were 152,187,266 shares of common stock outstanding.
Quorum,
Voting Requirements and Effect of Abstentions and Broker
Non-Votes
A quorum is necessary for the transaction of business at the
Annual Meeting. A quorum exists when holders of a majority of
the total number of issued and outstanding shares of common
stock that are entitled to vote at the Annual Meeting are
present in person or by proxy. At the Annual Meeting, inspectors
of election will determine the presence of a quorum and tabulate
the results of the voting by stockholders. The inspectors will
treat valid proxies marked “abstain” or proxies
required to be treated as broker “non-votes” as
present for purposes of determining whether there is a quorum at
the Annual Meeting. A broker “non-vote” occurs when a
broker or nominee holding shares for a beneficial owner votes on
one proposal, but does not vote on another proposal because the
broker or nominee does not have discretionary voting power and
has not received instructions from the beneficial owner of the
shares. Abstentions with respect to any matter will have the
same effect as a vote against that proposal.
A plurality of the votes of the holders of the common stock
present at the Annual Meeting, in person or represented by
proxy, and entitled to vote on the election of directors, is
required for the election of directors. This means that the
nominees for director who receive the greatest number of votes
cast will be elected. The amendment of our Restated Certificate
of Incorporation requires approval by the holders of a majority
of the outstanding shares of common stock entitled to vote on
the amendment. All other matters will require the approval of a
majority of the votes of the record holders present at the
meeting, in person or represented by proxy, and entitled to vote
on such matters.
Management and the Board of Directors are not aware of any
matters to be presented for action at the Annual Meeting other
than the matters stated in the Notice of Annual Meeting of
Stockholders. If any such matter requiring a vote of the
stockholders should properly come before the Annual Meeting,
unless otherwise instructed, it is the intention of the persons
named in the proxy card to vote such proxy in accordance with
their best judgment.
PROPOSAL I
ELECTION
OF DIRECTORS
General
Our Amended and Restated Bylaws set our Board of Directors at
nine members divided into three classes, with each class having
three directors. Our Board currently consists of nine members.
On February 14, 2006, John Donovan, President and
Chief Executive Officer of inCode, a wireless consulting firm,
was elected a director by the Board of Directors to fill a
vacancy. The three-year terms of each class are staggered so
that the term of one class expires at each Annual Meeting. The
Board of Directors, upon the recommendation of the Nominating
Committee, has nominated Carolyn Katz, Donald E. Morgan and
George A. Cope, each of whom is an incumbent director, for
reelection to the board for three-year terms ending 2009.
If any nominee is unable to serve as a director, the persons
named in the enclosed proxy reserve the right to vote for a
lesser number of directors or for a substitute nominee
designated by our Board of Directors, to the extent consistent
with our Restated Certificate of Incorporation and our Amended
and Restated Bylaws. All of the nominees listed above have
consented to be nominated and to serve if elected. We do not
expect that any nominee will be unable to serve.
Directors
Standing for Reelection — To Hold Office Until
2009
Carolyn Katz, (44), has served as a director on the board
of NII Holdings since 2002. Ms. Katz has been an
independent consultant, providing advisory services to
communications companies, since 2001. She was a principal at
Providence Equity Partners, a $5 billion private equity
firm specializing in media and telecommunications, from 2000 to
2001. From 1984 to 2000, Ms. Katz worked for Goldman Sachs,
an investment bank, and most recently as
4
managing director. Ms. Katz is on the board of directors of
American Tower Corporation, a provider of wireless and broadcast
communications infrastructure.
Donald E. Morgan, (37), has served as a director on the
board of NII Holdings since 2002. Until March 2006, he had been
senior managing director and co-head of the Fixed Income-High
Yield Division of MacKay Shields LLC since 2001 and had held
other positions with MacKay Shields since 1997. Prior to joining
MacKay Shields, Mr. Morgan was a high yield analyst with
Fidelity Management & Research, an affiliate of the
mutual fund company, where he worked from 1994 to 1997.
George A. Cope, (44), has served as a director on the
board of NII Holdings since July 2004. A Canadian citizen,
Mr. Cope currently serves as President and Chief Operating
Officer of Bell Canada Corporation. He was, until 2005,
executive vice president of TELUS Corp. and president and chief
executive officer of TELUS Mobility. From 1987 to 2000, he
served as president and chief executive officer of Clearnet
Communications. Prior to joining Clearnet, Mr. Cope served
as vice president, Corporate Development at Lenbrook, Inc., a
distributor of electronic components, audio and two-way radio
products.
Our Board of Directors recommends that the holders of
common stock vote “FOR” incumbent directors Carolyn
Katz, Donald E. Morgan and George A. Cope.
Directors
Not Standing for Reelection — To Hold Office
Until 2008
Neal P. Goldman, (36), has served as a director on the
board of NII Holdings since 2002. Mr. Goldman is currently
a managing director in the High Yield Division of MacKay Shields
LLC, an investment advisor registered with the United States
Securities and Exchange Commission. He joined MacKay Shields LLC
in 2001 from Banc of America Securities where he was a principal
in the Special Situations Group from 1999 to 2001. He was
previously with Salomon Smith Barney, an investment bank, from
1995 to 1999 where he last served as a vice president on the
High Yield Trading Desk.
Charles M. Herington, (46), has served as a director on
the board of NII Holdings since 2003. He is Senior Vice
President, Latin America of Avon Products, Inc., a global beauty
company, since February 2006. Prior thereto, he was the
president and chief executive officer of AOL Latin America since
1999. From 1998 until 1999, he served as president of Revlon
America Latina. From 1990 through 1997, he held a variety of
senior management positions with PepsiCo Restaurants
International. Mr. Herington is on the board of directors
of Molson Coors Brewing Company (formerly Adolph Coors Company),
and ADVO, Inc.
John W. Risner, (46), has served as a director on the
board of NII Holdings since 2002. He is currently the President
of The Children’s Tumor Foundation (formerly The National
Neuro Fibromatosis Foundation), which he joined in 2002. From
1999 to 2002, he served as senior vice president- portfolio
manager at AIG/SunAmerica Asset Management, a money management
firm. Prior to that, Mr. Risner was vice president-senior
portfolio manager at Value Line Asset Management, a money
management firm, where he worked from 1991 to 1999.
Directors
Not Standing for Reelection — To Hold Office
Until 2007
John Donovan, (45), has served as a director on the board
of NII Holdings since February 2006. Mr. Donovan has been
the Chairman and Chief Executive Officer of inCode, a wireless
and technology consulting firm since 2000. Prior to joining
inCode, he was a partner with Deloitte Consulting.
Steven P. Dussek, (49), has served as a director on the
board of NII Holdings since 1999. He is President and Chief
Executive Officer of Dobson Communications Corporation, a
wireless telecommunications company, since 2005. From 1999 until
2000, Mr. Dussek was the chief executive officer of NII
Holdings. Mr. Dussek was the president and chief operating
officer of NII Holdings from March 1999 until September 1999.
From 1996 until 2002, Mr. Dussek served in various senior
management positions with Nextel Communications, most recently
as executive vice president and chief operating officer. From
1995 to 1996, Mr. Dussek served as vice president and
general manager of the northeast region for the PCS division of
AT&T Wireless Services. From 1993 to 1995, Mr. Dussek
served as senior vice president and chief operating officer of
Paging Networks, Inc., a paging company.
5
Steven M. Shindler, (43), has been a director on the
board of NII Holdings since 1997, chief executive officer since
2000 and chairman of the board since 2002. Mr. Shindler
also served as executive vice president and chief financial
officer of Nextel Communications from 1996 until 2000. From 1987
to 1996, Mr. Shindler was an officer with Toronto Dominion Bank,
a bank where he was a managing director in its communications
finance group.
GOVERNANCE
OF THE COMPANY
Our business and affairs are managed under the direction of the
Board of Directors in accordance with the Delaware General
Corporation Law and our Restated Certificate of Incorporation
and Amended and Restated Bylaws. Members of the Board of
Directors are kept informed of our business through discussions
with management, by reviewing materials provided to them, and by
participating in meetings of the Board of Directors and its
committees. The corporate governance practices that we follow
are summarized below.
Independence
The Board of Directors has determined that eight of its nine
current members are independent as defined by The Nasdaq Stock
Market (“Nasdaq”) listing standards, including the
following: George A. Cope, John Donovan, Steven P. Dussek, Neal
P. Goldman, Charles M. Herington, Carolyn Katz, Donald E. Morgan
and John W. Risner.
Code of
Ethics
The Board of Directors has approved a Code of Business Conduct
for our directors, Chief Executive Officer, Chief Financial
Officer, principal financial and accounting officers, officers
and employees, and each of our subsidiaries and controlled
affiliates. The Code of Business Conduct addresses such topics
as protection and proper use of our assets, compliance with
applicable laws and regulations, accuracy and preservation of
records, accounting and financial reporting, conflicts of
interest and insider trading.
Meeting
Attendance
Board
and Committee Meetings
During 2005, each member of the Board of Directors attended at
least 75% of the aggregate meetings (during the periods for
which they served) of the Board of Directors and the committees
on which they served. In addition to attending meetings,
directors also discharge their responsibilities by attending, in
person or telephonically, sessions at which they are briefed
about the status of particular matters, by review of our reports
to directors, by visits to our facilities, and by correspondence
and telephone conferences with our executive officers and others
regarding matters of interest and concern to us.
Annual
Meeting of Stockholders
We encourage members of the Board of Directors to attend the
Annual Meeting. Each of the directors then serving on the Board
of Directors attended the 2005 Annual Meeting of Stockholders.
Executive
Sessions of the Board
It is the practice of our Board of Directors to have executive
sessions where non-employee directors meet on an informal basis
at the beginning or end of each regularly scheduled meeting of
the Board of Directors. During these executive sessions,
directors can meet with and question employees of the Company
outside the presence of employee directors or management.
6
Committees
of the Board
The standing committees of the Board of Directors are the Audit
Committee, the Compensation Committee, the Finance Committee and
the Nominating Committee. Membership on the Board of Directors
and each standing committee, as of March 24, 2006, was as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Board
|
|
|
Audit
|
|
|
Compensation
|
|
|
Nominating
|
|
|
Finance
|
|
|
Steven M. Shindler
|
|
|
X
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
Steven P. Dussek
|
|
|
X
|
|
|
|
X
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
Neal P. Goldman
|
|
|
X
|
|
|
|
|
|
|
|
X
|
|
|
|
X
|
|
|
|
|
|
Charles M. Herington
|
|
|
X
|
|
|
|
|
|
|
|
X
|
*
|
|
|
X
|
|
|
|
|
|
Carolyn Katz
|
|
|
X
|
|
|
|
X
|
*
|
|
|
|
|
|
|
X
|
|
|
|
X
|
|
Donald E. Morgan
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
John W. Risner
|
|
|
X
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
George A. Cope
|
|
|
X
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
John Donovan
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of Meetings in
2005
|
|
|
10
|
|
|
|
13
|
(1)
|
|
|
7
|
|
|
|
1
|
|
|
|
2
|
|
|
|
|
* |
|
Chairman |
|
(1) |
|
During 2005, the Audit Committee also held private meetings with
PricewaterhouseCoopers LLP. |
Audit
Committee
The Audit Committee assists the Board of Directors in its
oversight of the quality and integrity of the accounting,
auditing, and reporting practices of the Company. The Audit
Committee’s role includes discussing with management the
Company’s processes to manage business and financial risk,
and for compliance with significant applicable legal, ethical,
and regulatory requirements. The Audit Committee is responsible
for the appointment, replacement, compensation, and oversight of
the independent registered public accounting firm engaged to
prepare or issue audit reports on the financial statements of
the Company. The Audit Committee relies on the expertise and
knowledge of management and the internal auditors in carrying
out its oversight responsibilities. The specific
responsibilities in carrying out the Audit Committee’s
oversight role are delineated in the written charter last
amended by the Board in February, 2006. The Audit Committee
Charter is set forth in Appendix A to this proxy statement.
The Board of Directors, in its business judgment, has determined
that all of the members of the Audit Committee are independent
as defined by regulations of the Securities and Exchange
Commission and the Nasdaq listing standards. The Board of
Directors has also determined that all of the members of the
Audit Committee have sufficient knowledge in financial and
auditing matters to serve on the Audit Committee and that Steven
P. Dussek, Carolyn Katz and John W. Risner each qualifies as an
“audit committee financial expert” as defined by
regulations of the Securities and Exchange Commission.
The Audit Committee is authorized to engage or consult from time
to time, as appropriate, at our expense, independent legal
counsel and other experts and advisors it considers necessary,
appropriate or advisable in the discharge of its
responsibilities.
Compensation
Committee
The primary responsibilities of the Compensation Committee are
to (a) review and approve the compensation of the Chief
Executive Officer and other executive officers of the Company,
(b) review executive bonus plan allocations,
(c) oversee and advise the Board of Directors on the
adoption of policies that govern the Company’s compensation
programs, (d) oversee the Company’s administration of
its equity-based compensation and other benefit plans, and
(c) approve grants of stock options and stock awards to
directors, officers and employees of the Company under its stock
plan. The Compensation Committee’s role includes producing
the report on executive compensation required by the rules and
regulations of the Securities and Exchange Commission. The
7
Compensation Committee is authorized to engage or consult from
time to time, as appropriate, at our expense, consultants,
independent legal counsel and other experts and advisors it
considers necessary, appropriate or advisable in the discharge
of its responsibilities. The Compensation Committee operates
under a written charter. All members of our Compensation
Committee are independent, as defined in the Nasdaq listing
standards.
Nominating
Committee
The Nominating Committee develops qualifications for director
candidates and recommends to the Board of Directors persons to
serve as directors of the Company. The Nominating Committee
operates under a written charter adopted by the Board in April
2004 and which was included as Appendix A to the
Company’s definitive proxy statement for the 2005 Annual
Meeting of Stockholders. All members of the Nominating Committee
are independent, as defined in the Nasdaq listing standards.
The Nominating Committee has set forth guidelines for the
evaluation of potential nominees. These guidelines set forth
standards by which potential nominees are to be evaluated,
including the following:
|
|
|
|
•
|
the ability of the prospective nominee to represent the
interests of the stockholders of the Company;
|
|
|
•
|
the prospective nominee’s standards of integrity,
commitment and independence of thought and judgment;
|
|
|
•
|
the prospective nominee’s ability to dedicate sufficient
time, energy and attention to the diligent performance of his or
her duties, including the prospective nominee’s service on
other public company boards; and
|
|
|
•
|
the extent to which the prospective nominee contributes to the
range of talent, skill and expertise appropriate for the Board
of Directors.
|
Stockholders entitled to vote for the election of directors may
submit candidates for consideration if we receive written
notice, in proper form, for each such recommended nominee. If
the notice is not written and in proper form, then the
Nominating Committee cannot consider the nominee. To be in
proper form, the notice must include (1) each
nominee’s written consent to be named as a nominee and to
serve, if elected, (2) the name and address of the
stockholder making the nomination and evidence of share
ownership pursuant to the requirements of
Rule 14a-8
of the Securities and Exchange Commission relating to
stockholder proposals, and (3) information about the person
nominated for election conforming with the Securities and
Exchange Commission’s biographical requirements for
directors. All stockholder nominations should be sent to:
Robert J. Gilker
Vice President, General Counsel and Secretary
NII Holdings, Inc.
10700 Parkridge Boulevard, Suite 600
Reston, Virginia 20191
Finance
Committee
The Board of Directors established a standing Finance Committee
in February 2004. The members of the Finance Committee
previously served on the Company’s ad hoc pricing
committee, which was created to approve the specific terms of
various financing transactions. The primary responsibilities of
the Finance Committee are to consult with and provide guidance
to management with respect to the Company’s capital
requirements and financing efforts. The Board of Directors may
also delegate its power to the Finance Committee to approve the
pricing and other terms of various financing transactions.
Communications
with the Board of Directors
Stockholders may communicate directly with the Board of
Directors. All communications should be directed to the
Company’s Vice President, General Counsel and Secretary at
the address below and should prominently indicate on the outside
of the envelope that it is intended for the Board of Directors,
or for non-management directors. If no party is specified, the
communication will be forwarded to the entire Board of
Directors. Each communication intended for the Board of
Directors and received by the Vice President, General Counsel
and Secretary will be forwarded to the specified party following
its clearance through normal security procedures used
8
for regular mail. The communication will not be opened, but
rather will be forwarded unopened to the intended recipient.
Stockholder communications to the Board of Directors should be
sent to:
Robert J. Gilker
Vice President, General Counsel and Secretary
NII Holdings, Inc.
10700 Parkridge Boulevard, Suite 600
Reston, Virginia 20191
Director
Compensation
Base
Compensation
Each non-employee director receives an annual retainer of
$50,000 and a fee of $2,000 per board or $2,000 per
committee meeting attended, other than telephonic meetings of
less than an hour in duration. In addition, non-employee
directors receive the following annual retainer for serving on
the specified committees, and the chairman of such committees
receives twice the retainer set forth below. All retainers are
payable in arrears in quarterly installments.
|
|
|
|
|
Audit Committee
|
|
$
|
9,000
|
|
Compensation Committee
|
|
$
|
6,000
|
|
Finance Committee
|
|
$
|
4,000
|
|
Nominating Committee
|
|
$
|
4,000
|
|
The Company also reimburses directors for travel expenses
incurred in connection with attending board, committee and
stockholder meetings and for other related expenses. Directors
who are also employees of NII Holdings receive no additional
compensation for service as a director or committee member.
Certain of the directors and, in one case, a family member of a
director participate in the employee phone program that pays the
cost of mobile phone services for such participants.
Option
Grants
The Company grants each non-employee director 15,000 stock
options upon becoming a director. In addition, the Company may
grant additional stock options to non-employee directors. The
following table contains information concerning grants of stock
options to non-affiliate directors during the fiscal year ended
December 31, 2005.
2005
Non-affiliate Director Option Grants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
Director
|
|
Grant Date
|
|
|
Underlying Options
Granted
|
|
|
Exercise Price($)
|
|
|
George A. Cope
|
|
|
April 27, 2005
|
|
|
|
20,000
|
|
|
|
26.20
|
|
Steven P. Dussek
|
|
|
April 27, 2005
|
|
|
|
20,000
|
|
|
|
26.20
|
|
Charles M. Herington
|
|
|
April 27, 2005
|
|
|
|
20,000
|
|
|
|
26.20
|
|
Carolyn Katz
|
|
|
April 27, 2005
|
|
|
|
20,000
|
|
|
|
26.20
|
|
John W. Risner
|
|
|
April 27, 2005
|
|
|
|
20,000
|
|
|
|
26.20
|
|
9
EXECUTIVE
COMPENSATION
In the table and discussion below, we summarize the compensation
earned during the last three fiscal years by: (1) our chief
executive officer and (2) each of our four other most
highly compensated executive officers who earned more than
$100,000 in salary and bonuses for services rendered in all
capacities during 2005, collectively referred to as the
“named executive officers.”
The equity awards reflected in the table below include stock
options that were granted by us under our 2004 Incentive
Compensation Plan.
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term
|
|
|
|
|
|
|
|
|
|
Annual Compensation
|
|
|
Compensation Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Annual
|
|
|
Restricted Stock
|
|
|
Underlying
|
|
|
All Other
|
|
Name and Principal
Position
|
|
Year
|
|
|
Salary($)
|
|
|
Bonus($)
|
|
|
Compensation(1)
|
|
|
Awards($)(2)
|
|
|
Options(#)
|
|
|
Compensation($)(3)
|
|
|
Steven M. Shindler
|
|
|
2005
|
|
|
|
568,563
|
|
|
|
514,976
|
|
|
|
—
|
|
|
|
—
|
|
|
|
300,000
|
|
|
|
8,400
|
|
Chief executive officer
|
|
|
2004
|
|
|
|
517,000
|
|
|
|
484,000
|
|
|
|
—
|
|
|
|
3,794,000
|
|
|
|
400,000
|
|
|
|
8,000
|
|
|
|
|
2003
|
|
|
|
413,500
|
|
|
|
384,560
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,000
|
|
Lo van Gemert
|
|
|
2005
|
|
|
|
387,656
|
|
|
|
263,340
|
|
|
|
—
|
|
|
|
—
|
|
|
|
200,000
|
|
|
|
8,400
|
|
President and chief
|
|
|
2004
|
|
|
|
369,734
|
|
|
|
247,500
|
|
|
|
—
|
|
|
|
2,845,500
|
|
|
|
260,000
|
|
|
|
6,250
|
|
operating officer
|
|
|
2003
|
|
|
|
350,125
|
|
|
|
244,215
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,747
|
|
Byron R. Siliezar
|
|
|
2005
|
|
|
|
346,306
|
|
|
|
235,250
|
|
|
|
—
|
|
|
|
—
|
|
|
|
150,000
|
|
|
|
8,400
|
|
Vice president and
|
|
|
2004
|
|
|
|
323,094
|
|
|
|
221,100
|
|
|
|
—
|
|
|
|
1,897,000
|
|
|
|
200,000
|
|
|
|
8,000
|
|
chief financial officer
|
|
|
2003
|
|
|
|
284,281
|
|
|
|
198,289
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,000
|
|
Jose Felipe
|
|
|
2005
|
|
|
|
343,891
|
|
|
|
206,611
|
|
|
|
387,948
|
(4)
|
|
|
—
|
|
|
|
150,000
|
|
|
|
8,400
|
|
President, Nextel
|
|
|
2004
|
|
|
|
321,636
|
|
|
|
186,875
|
|
|
|
348,943
|
(4)
|
|
|
1,138,200
|
|
|
|
160,000
|
|
|
|
4,502
|
|
Cono Sur
|
|
|
2003
|
|
|
|
294,882
|
|
|
|
174,383
|
|
|
|
338,271
|
(4)
|
|
|
—
|
|
|
|
90,000
|
|
|
|
5,548
|
|
Robert J. Gilker
|
|
|
2005
|
|
|
|
325,631
|
|
|
|
221,206
|
|
|
|
—
|
|
|
|
—
|
|
|
|
88,000
|
|
|
|
8,400
|
|
Vice president and
|
|
|
2004
|
|
|
|
308,094
|
|
|
|
207,900
|
|
|
|
—
|
|
|
|
1,403,780
|
|
|
|
125,000
|
|
|
|
8,000
|
|
general counsel
|
|
|
2003
|
|
|
|
284,281
|
|
|
|
198,289
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,000
|
|
|
|
|
(1) |
|
Except as otherwise indicated, the dollar value of perquisites
and other personal benefits received by each of the named
executive officers did not exceed the lesser of $50,000 or
10 percent of the total amount of annual salary and bonus
reported for any named individual. |
|
(2) |
|
The 2004 amounts in this column are the dollar values, based on
the $18.97 closing price of a share of common stock on
April 28, 2004, as reported on the NASDAQ National Market,
of the following number of shares of restricted stock awarded on
such date to the named executive officers:
Mr. Shindler — 200,000; Mr. van
Gemert — 150,000;
Mr. Siliezar — 100,000; Mr.
Felipe — 60,000; and
Mr. Gilker — 74,000. The closing price on
April 28, 2004 and the number of shares of restricted stock
awarded have been adjusted to reflect the
two-for-one
stock split paid on November 21, 2005. The restricted stock
vests on April 28, 2007, the third anniversary of the grant
date. The aggregate number of shares of restricted stock held by
each of the named executive officers on December 31, 2005,
and the dollar value of such shares on such date based on the
$43.68 closing price of a share of our common stock, as reported
on the NASDAQ National Market, were as follows:
Mr. Shindler — 200,000, $8,736,000;
Mr. van Gemert — 150,000, $6,552,000;
Mr. Siliezar — 100,000, $4,368,000;
Mr. Felipe — 60,000, $2,620,800; and
Mr. Gilker — 74,000, $3,232,320. |
|
(3) |
|
Unless otherwise indicated, amount represents employer 401(k)
matching contributions. |
|
(4) |
|
Each amount includes a housing allowance, utilities
reimbursements, a foreign services premium, foreign tax
gross-ups and personal travel costs reimbursements to
Mr. Felipe as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Housing
|
|
|
Foreign Services
|
|
|
Foreign Taxes
|
|
|
Personal
|
|
|
|
|
Year
|
|
|
and Utilities
|
|
|
Differential
|
|
|
Gross-Ups
|
|
|
Travel Costs
|
|
|
Total
|
|
|
|
2005
|
|
|
$
|
72,898
|
|
|
$
|
240,973
|
|
|
$
|
2,340
|
|
|
$
|
71,737
|
|
|
$
|
387,948
|
|
|
2004
|
|
|
|
63,640
|
|
|
|
240,562
|
|
|
|
2,216
|
|
|
|
42,525
|
|
|
|
348,943
|
|
|
2003
|
|
|
|
63,841
|
|
|
|
230,520
|
|
|
|
16,013
|
|
|
|
27,897
|
|
|
|
338,271
|
|
10
Option
Grants in Fiscal Year 2005
The following table contains information concerning grants of
stock options to each of the named executive officers during the
fiscal year ended December 31, 2005. No stock appreciation
rights (SARs) were granted during fiscal year 2005, and there
are no outstanding SARs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Options
|
|
|
|
|
|
|
|
|
Potential Realized Value at
|
|
|
|
Securities
|
|
|
Granted to
|
|
|
Exercise
|
|
|
|
|
|
Assumed Annual Rates of
|
|
|
|
Underlying
|
|
|
Employees
|
|
|
or Base
|
|
|
|
|
|
Stock Price Appreciation for
|
|
|
|
Options
|
|
|
in Fiscal
|
|
|
Price
|
|
|
Expiration
|
|
|
Option Term
|
|
Name
|
|
Granted(#)(1)
|
|
|
Year
|
|
|
($/Sh)(2)
|
|
|
Date(3)
|
|
|
5%($)(4)
|
|
|
10%($)(4)
|
|
|
Steven M. Shindler
|
|
|
300,000
|
|
|
|
4.27
|
|
|
|
26.20
|
|
|
|
4/27/2015
|
|
|
|
4,943,112
|
|
|
|
12,526,816
|
|
Lo van Gemert
|
|
|
200,000
|
|
|
|
2.85
|
|
|
|
26.20
|
|
|
|
4/27/2015
|
|
|
|
3,295,408
|
|
|
|
8,351,210
|
|
Byron R. Siliezar
|
|
|
150,000
|
|
|
|
2.14
|
|
|
|
26.20
|
|
|
|
4/27/2015
|
|
|
|
2,471,556
|
|
|
|
6,263,408
|
|
Jose Felipe
|
|
|
150,000
|
|
|
|
2.14
|
|
|
|
26.20
|
|
|
|
4/27/2015
|
|
|
|
2,471,556
|
|
|
|
6,263,408
|
|
Robert J. Gilker
|
|
|
88,000
|
|
|
|
1.25
|
|
|
|
26.20
|
|
|
|
4/27/2015
|
|
|
|
1,449,979
|
|
|
|
3,674,533
|
|
|
|
|
(1) |
|
The options granted to the named executive officers contain a
provision whereby the right to exercise such options vests at a
rate of 25% of the aggregate number of shares of common stock of
the Company covered by such options on each of the first four
successive anniversary dates of the date of grant. |
|
(2) |
|
The exercise price for the options listed in the table was the
closing price of a share of our common stock, as reported on the
NASDAQ National Market, on April 27, 2005, which was the
date of grant. The exercise price may be paid in cash, in shares
of common stock of the Company valued at fair market value on
the date of exercise or pursuant to a cashless exercise
procedure under which the optionee provides irrevocable
instructions to a brokerage firm to sell the purchased shares
and to remit to the Company, out of the sale proceeds, an amount
equal to the exercise price plus all required withholding and
other deductions. |
|
(3) |
|
The options listed in the table expire ten years from the date
of grant. An earlier expiration date may apply in the event of
the optionee’s termination of employment, retirement, death
or disability. |
|
(4) |
|
The potential realized value is based on the difference between
the exercise price compounded annually over the ten year option
term at 5% and 10% and the exercise price, times the number of
shares. |
Aggregated
Option Exercises in Fiscal Year 2005 and Year-End Option
Values
In the table below, we list information on the exercise of
options during the year ended December 31, 2005, and the
unexercised option values as of December 31, 2005, for each
of the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Underlying
|
|
|
Value of Unexercised
|
|
|
|
Shares
|
|
|
|
|
|
Unexercised Options
|
|
|
In-the-Money
Options
|
|
|
|
Acquired on
|
|
|
Value
|
|
|
at Fiscal Year-End
|
|
|
at Fiscal
Year-End($)(2)
|
|
Name
|
|
Exercise(#)
|
|
|
Realized($)(1)
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Steven M. Shindler
|
|
|
790,000
|
|
|
|
21,472,915
|
|
|
|
120,000
|
|
|
|
600,000
|
|
|
|
5,191,608
|
|
|
|
12,657,000
|
|
Lo van Gemert
|
|
|
605,000
|
|
|
|
16,872,209
|
|
|
|
—
|
|
|
|
395,000
|
|
|
|
—
|
|
|
|
8,314,450
|
|
Byron R. Siliezar
|
|
|
410,000
|
|
|
|
11,576,904
|
|
|
|
—
|
|
|
|
300,000
|
|
|
|
—
|
|
|
|
6,328,500
|
|
Jose Felipe
|
|
|
310,000
|
|
|
|
8,044,014
|
|
|
|
—
|
|
|
|
279,000
|
|
|
|
—
|
|
|
|
5,939,190
|
|
Robert J. Gilker
|
|
|
180,000
|
|
|
|
5,219,470
|
|
|
|
91,250
|
|
|
|
181,750
|
|
|
|
3,367,992
|
|
|
|
3,854,803
|
|
|
|
|
(1) |
|
The value realized represents the difference between the
exercise price of the option and the fair market value of the
Company’s common stock on the date of exercise, times the
number of shares acquired upon exercise. |
|
(2) |
|
The value of the unexercised
in-the-money
options is based on the closing price of NII Holdings’
common stock as reported by the NASDAQ National Market System on
December 31, 2005, which was $43.68 per share, less
the aggregate exercise price, times the aggregate number of
shares issuable upon exercise of those options. |
11
Equity
Compensation Plan Information
The following table sets forth information as of
December 31, 2005, with respect to compensation plans under
which shares of our common stock are authorized for issuance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
To Be Issued Upon
|
|
|
Weighted Average
|
|
|
Number of Securities
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Remaining Available For
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
Future Issuance Under Equity
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Compensation Plans(1)
|
|
|
Equity compensation plans approved
by stockholders 2004 Incentive Compensation Plan
|
|
|
10,668,524
|
|
|
$
|
23.78
|
|
|
|
26,538,904
|
(2)
|
Equity compensation plans not
approved by stockholders 2002 Management Incentive Plan(3)
|
|
|
601,695
|
|
|
$
|
3.48
|
|
|
|
0
|
(4)
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amounts exclude any securities to be issued upon exercise of
outstanding options, warrants and rights. |
|
(2) |
|
The 2004 Incentive Compensation Plan permits the grant of one or
more of the following awards: options, stock appreciation rights
(“SAR”), stock awards, performance stock awards,
incentive awards and stock units. As of December 31, 2005,
up to 39,889,712 shares of common stock were authorized for
issuance under the 2004 Incentive Compensation Plan. The number
of shares authorized to be issued under the 2004 Incentive
Compensation Plan will be reduced by 1 share of common
stock for each share of common stock issued pursuant to a stock
option or SAR and by
11/2
shares of common stock for each share of common stock issued
pursuant to all other awards. |
|
(3) |
|
The 2002 Management Incentive Plan, which we refer to as the
2002 MIP, was adopted pursuant to the Revised Third Amended
Joint Plan of Reorganization and became effective on
November 12, 2002. The 2002 MIP provides equity and
equity-related incentives to directors, officers or key
employees of, and consultants to, NII Holdings up to a maximum
of 13,333,332 shares of common stock subject to
adjustments. The 2002 MIP is administered by NII Holdings’
Board of Directors. The 2002 MIP provides for the issuance of
options for the purchase of shares of common stock, as well as
grants of shares of common stock where the recipient’s
rights may vest upon the fulfillment of specified performance
targets or the recipient’s continued employment by NII
Holdings for a specified period, or in which the
recipient’s rights may be subject to forfeiture upon a
termination of employment. The 2002 MIP also provides for the
issuance to non-affiliate directors, officers or key employees
of, and consultants to, NII Holdings of stock appreciation
rights whose value is tied to the market value per share, as
defined in the 2002 MIP, of the common stock, and performance
units which entitle the recipients to payments upon the
attainment of specified performance goals. The 2002 MIP provides
for the issuance of incentive stock options in compliance with
Section 422 of the Internal Revenue Code, as well as
“non-qualified” options which do not purport to
qualify for treatment under Section 422. All options issued
under the 2002 MIP vest as determined by the Board of Directors. |
|
(4) |
|
In 2004, the Board of Directors recommended, and the
stockholders approved, the 2004 Incentive Compensation Plan to
succeed the 2002 MIP. As a result, no shares are available for
any future awards or grants under the 2002 MIP. |
Severance
Plans
Change
of Control Severance Plan
Each of our named executive officers participates in our change
of control severance plan. Under this Company plan, if we
terminate an executive officer’s employment without cause
(as defined in the plan) after a change in control within the
earlier of eighteen months or death (as defined in the plan) of
NII Holdings, or if the executive officer terminates his
employment during this period for good reason (as defined in the
plan), then that executive officer will receive an amount equal
to (i) a multiple of either 200% or 250% of that
individual’s base salary and that individual’s target
bonus for the year, (ii) the cost of providing outplacement
assistance through an outside management assistance service for
a period of six months, and (iii) if applicable, a
gross-up
payment (as defined in
12
the plan), and the individual’s insurance and medical
benefits will be continued for eighteen months from termination.
Any amounts payable to the executive officer in accordance with
the preceding sentence shall be reduced by any cash severance
payable pursuant to any other Company severance plan.
Severance
Plan
Each of our named executive officers participates in our
severance benefits plan. Under this plan, in the event of a
specified involuntary separation of employment that is intended
to be permanent, as defined in the plan, each executive officer
will receive severance pay equal to nine months annual earnings,
as defined in the plan, plus one month of annual earnings for
each full or partial year of service to us, up to a maximum of
12 months annual earnings. In addition, these executives
would receive a payment equal to any annual bonus payment that
is unpaid for the previous fiscal year and an additional payment
equal to the prorated portion of the annual bonus payment for
the period ending on that executive’s termination.
Compensation
Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors reviews and
establishes the salary and other compensation of the
Company’s executive officers, including the named executive
officers. The Committee consists entirely of independent
directors who are not officers or employees of the Company.
Compensation
Philosophy and Practice
The Compensation Committee has adopted a
pay-for-performance
policy for executive officers that focuses on an executive
officer’s total compensation, including cash and non-cash
compensation, from all sources. The Committee’s
compensation philosophy is to provide our executive officers
with competitive levels of base salary, annual cash incentives
based on performance objectives and long-term equity incentives,
each of which is comparable to market levels of compensation as
determined by the Committee.
The objectives of the Company’s executive compensation
policies are the following:
|
|
|
|
•
|
align executive pay with stockholders’ interest;
|
|
|
•
|
recognize individual initiative and achievements;
|
|
|
•
|
attract and retain highly qualified executives; and
|
|
|
•
|
unite the entire executive management team to a common objective.
|
Components
of Executive Compensation
The compensation program for executive officers consists of the
following components:
Base Salary: The Committee’s policy is to
provide a base salary for executives that is comparable to
market levels of compensation as determined by the Committee and
that reflects the executive’s corporate level of
responsibility and individual performance.
Annual Cash Bonus Award: Executives have the
opportunity to earn an annual bonus up to a predetermined
percentage of base salary based on achievement of operating
company or consolidated performance goals. While the bonus award
varies from one executive to another depending on level of
responsibility and which entity is being measured, the
measurements are the same and all executives are provided
incentives to exceed the Company’s or their operating
company’s annual objectives and targets approved by the
Board. In addition to promoting the achievement of corporate
performance goals, the bonus awards are designed to align the
interests of senior management into a common objective.
Stock-Based Incentives: The Company has one
equity-based incentive plan, the 2004 Incentive Compensation
Plan, which was adopted by the Board and approved by the
stockholders in 2004 to replace the 2002 Management Incentive
Plan, which had been adopted in connection with the
Company’s emergence from Chapter 11 reorganization in
November 2002. The primary objective of issuing stock-based
incentives is to encourage significant investment in stock
ownership by management and to provide long-term financial
rewards
13
linked directly to the market performance of the Company’s
stock. The Committee believes that significant ownership of
stock by senior management achieves the purpose of aligning the
interests of management and the stockholders. In furtherance of
these goals, the Committee in April 2005 made grants of stock
options to executive officers, including each of the named
executive officers, pursuant to the 2004 Incentive Compensation
Plan.
Stock Ownership Program: In October 2004, the
Company adopted an executive target ownership program that
requires members of executive management who were granted
restricted stock in 2004 to attain certain stock ownership
levels, and therefore maintain a vested interest in the equity
performance of the Company. Over a five-year period, the
executives covered by the program are expected to reach certain
ownership levels based on specific share targets per executive
officer level.
How
Executive Pay Levels are Determined
The Compensation Committee annually, or more frequently, reviews
the Company’s executive compensation program. To assist it,
the Compensation Committee hired AON Consulting as its
independent executive compensation consultant. All decisions by
the Compensation Committee relating to the compensation of the
Company’s senior management are reported to the full Board.
In determining the compensation of our executive officers, the
Committee evaluates total overall compensation, as well as the
appropriate mix of salary, cash bonus incentives and equity
incentives, using a number of factors including the following:
|
|
|
|
•
|
the Company’s financial and operating performance, measured
by attainment of specific strategic objectives and operating
results;
|
|
|
•
|
the duties, responsibilities and performance of each executive
officer, including the achievement of identified goals for the
year as they pertain to the areas of Company operations for
which the executive is personally responsible and accountable;
|
|
|
•
|
historical cash and equity compensation levels; and
|
|
|
•
|
comparative industry market data to assess compensation
competitiveness.
|
With respect to comparative industry data, the Committee reviews
executive salaries and evaluates compensation structures and the
financial performance of comparable companies in a designated
peer group established by the Committee, with assistance from
its executive compensation consultants. The peer group used for
comparison purposes focuses principally on public companies in
the telecommunications or related industries. The Committee may
also review data from published compensation surveys or from
companies of similar size in other industry sectors.
The Committee considers the recommendations of the chairman and
chief executive officer in evaluating the compensation of other
executive officers of the Company.
Compensation
of our Chairman and Chief Executive Officer
After a review and evaluation by the Committee of
Mr. Shindler’s personal performance in light of his
management responsibilities, the Company’s financial
performance in 2004, his past compensation for service as
chairman and chief executive officer and the competitiveness of
his annual base salary to those of other chief executive
officers of comparable companies, Mr. Shindler’s base
salary was set at $574,750, effective April 1, 2005.
Mr. Shindler also received a cash bonus of $514,976 for
fiscal year 2005 under the Company’s 2005 Bonus Plan. His
annual incentive bonus was based on the achievement of 112% of
the targets set forth in the 2005 Bonus Plan based on the
following performance criteria:
|
|
|
|
•
|
consolidated EBITDA;
|
|
|
•
|
consolidated net subscriber additions; and
|
|
|
•
|
not exceeding the approved capital budget target.
|
14
On April 26, 2005, the Committee made an award to
Mr. Shindler under the 2004 Incentive Compensation Plan of
stock options exercisable for 300,000 shares of Company
common stock. The stock options vest 25% per year over a
four year period following the date of the award. In determining
the amount of Mr. Shindler’s equity compensation
award, the Committee evaluated the same factors used in
determining Mr. Shindler’s base salary as well as the
relative mix of cash and equity-based compensation to be paid to
Mr. Shindler for 2005.
Tax
Deductibility under Section 162(m)
Section 162(m) of the Internal Revenue Code imposes a
limitation on the deductibility of nonperformance-based
compensation in excess of $1 million paid to named
executive officers of public companies. As noted above, the
Compensation Committee has adopted a policy of
pay-for-performance
and has taken appropriate steps to cause grants and awards under
the 2004 Incentive Compensation Plan to be performance-based.
The Company intends to qualify executive compensation for
deductibility under Section 162(m) to the extent consistent
with the best interests of the Company. Since corporate
objectives may not always be consistent with the requirements of
full deductibility, it is conceivable that the Company may enter
into compensation arrangements in the future under which
payments are not deductible under Section 162(m). The
Compensation Committee currently believes that the Company
should be able to continue to manage its executive compensation
program for named executive officers to preserve the related
federal income tax deductions, although individual exceptions
may occur.
Compensation Committee
Charles M. Herington, Chairman
George A. Cope
Steven P. Dussek
Neal P. Goldman
Compensation
Committee Interlocks and Insider Participation
No member of the Compensation Committee is a current or former
officer of the Company or any of its subsidiaries, except that
Steven P. Dussek served as the Company’s chief executive
officer from 1999 until 2000 and as its president and chief
operating officer from March 1999 until September 1999. In
addition, there are no compensation committee interlocks with
other entities with respect to any such member.
SECURITIES
OWNERSHIP
Securities
Ownership of Certain Beneficial Owners
The table below lists each person or group, as that term is used
in Section 13(d)(3) of the Securities Exchange Act of 1934,
known by us to be the beneficial owner of more than 5% of our
outstanding common stock as of March 1, 2006.
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of
|
|
|
Percent of
|
|
Name and Address of Beneficial
Owner
|
|
Beneficial Ownership
|
|
|
Class(1)
|
|
|
FMR Corp.(2)
|
|
|
20,966,378
|
|
|
|
13.8
|
%
|
82 Devonshire Street
Boston, Massachusetts 02109
|
|
|
|
|
|
|
|
|
Sprint Nextel Corporation(3)
|
|
|
14,712,128
|
|
|
|
9.7
|
%
|
Nextel Communications, Inc.
Unrestricted Subsidiary Funding Company
|
|
|
|
|
|
|
|
|
2001 Edmund Halley Drive
Reston, Virginia 20191
|
|
|
|
|
|
|
|
|
LMM, LLC(4)
|
|
|
13,188,800
|
|
|
|
8.7
|
%
|
Legg Mason Capital Management, Inc.
|
|
|
|
|
|
|
|
|
100 Light Street
Baltimore, Maryland 21202
|
|
|
|
|
|
|
|
|
15
|
|
|
(1) |
|
Based on 152,147,641 shares of Common Stock issued and
outstanding on March 1, 2006. |
|
(2) |
|
According to a Schedule 13G/A3 filed with the Securities
and Exchange Commission on February 14, 2006, FMR Corp.
reported that it, through its wholly owned subsidiaries, has
sole power to vote 769,976 shares and to dispose of
20,966,378 shares of the Company’s common stock. Of
that amount, Fidelity Management & Research Company
(“Fidelity”), a wholly owned subsidiary of FMR Corp.,
in its role as investment adviser to various investment
companies, is the beneficial owner of 20,388,688 shares of
the Company’s common stock. Through their control of
Fidelity, Edward C. Johnson 3d, Chairman of FMR Corp., and FMR
Corp. each have sole power to dispose of, but not to vote, the
20,388,688 shares beneficially owned by Fidelity. Fidelity
Management Trust Company (“Fidelity Management”), a
wholly-owned subsidiary of FMR Corp., is the beneficial owner of
214,800 shares of the Company’s common stock as a
result of its serving as investment manager of certain
institutional accounts. Edward C. Johnson 3d and FMR Corp. each
has sole dispositive and voting power over the
214,800 shares beneficially owned by Fidelity Management.
Members of the Edward C. Johnson 3d family own approximately 49%
of the voting power of FMR Corp. and are subject to a voting
agreement, which together may make them a controlling group of
FMR Corp. Fidelity International Limited (“Fidelity
International”), a former subsidiary of Fidelity, is the
beneficial owner of, and has the sole power to vote and dispose
of, 362,800 shares of the Company’s common stock. A
partnership controlled by Edward C. Johnson 3d and members of
his family controls approximately 38% of the voting stock of
Fidelity International. FMR Corp and Fidelity International do
not believe they are required to attribute to each other the
beneficial ownership of securities beneficially owned by the
other corporation, but have voluntarily reported the ownership
on a joint basis. |
|
(3) |
|
According to a Schedule 13G/A2 filed with the Securities
and Exchange Commission on August 22, 2005, Nextel
Communications, as the sole stockholder of USFCo, may be deemed
to be the beneficial owner of all shares beneficially owned by
USFCo, which constitute an aggregate of 16,331,106 shares
of the Company’s common stock, as well as the
8,381,022 shares Nextel Communications owns directly. As a
result, Nextel Communications may be deemed to be the beneficial
owner of all of the foregoing shares, constituting an aggregate
of 24,712,128 shares of the Company’s common stock.
Nextel Communications has shared power to vote or direct the
vote of, and shared power to dispose or direct the disposition
of, the 16,331,106 shares owned directly by USFCo. In
addition, Nextel Communications has sole voting and dispositive
power with respect to the 8,381,022 shares it owns
directly. Sprint Nextel, as the ultimate parent entity of Nextel
Communications and USFCo, may be deemed to be the beneficial
owner of an aggregate of 24,712,128 shares of the
Company’s common stock. The number of shares of Company
common stock reflected in the table above reflects the
24,712,128 shares identified in the above referenced
Schedule 13G/A2, minus 10,000,000 shares of Company
common stock sold on September 13, 2005. |
|
(4) |
|
According to a Schedule 13G/A3 filed with the Securities
and Exchange Commission on February 14, 2006, Legg Mason
Capital Management, Inc. (“Legg Mason Capital”) and
LMM, LLC through Legg Mason Opportunity Trust, a portfolio of
Legg Mason Investment Trust, Inc. and managed by LMM, LLC,
reported, as a group, shared voting and dispositive power over
13,188,800 shares of the Company’s common stock. More
specifically, Legg Mason Capital and LMM, LLC each reported
shared voting and dispositive power over, 6,188,800, and
7,000,000 shares of the Company’s common stock,
respectively. |
Securities
Ownership of Management
In the table and the related footnotes below, we list, as of
March 1, 2006, except as otherwise stated, the amount and
percentage of shares of our common stock that are deemed under
the rules of the Securities and Exchange Commission to be
beneficially owned by:
|
|
|
|
•
|
each person who served as one of our directors as of that date;
|
|
|
•
|
each of the named executive officers; and
|
|
|
•
|
all directors and named executive officers as a group.
|
16
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of
|
|
|
Percent of
|
|
Name of Beneficial
Owner
|
|
Beneficial
Ownership(1)
|
|
|
Class(2)
|
|
|
George A. Cope
|
|
|
12,500
|
(3)
|
|
|
*
|
|
John Donovan
|
|
|
—
|
|
|
|
—
|
|
Steven P. Dussek
|
|
|
18,000
|
(3)
|
|
|
*
|
|
Jose Felipe
|
|
|
166,500
|
(3)(4)
|
|
|
*
|
|
Robert J. Gilker
|
|
|
231,500
|
(3)(4)
|
|
|
*
|
|
Neal P. Goldman
|
|
|
—
|
|
|
|
—
|
|
Charles M. Herington
|
|
|
45,910
|
(3)
|
|
|
*
|
|
Carolyn Katz
|
|
|
45,000
|
(3)
|
|
|
*
|
|
Donald E. Morgan
|
|
|
—
|
|
|
|
—
|
|
John W. Risner
|
|
|
42,000
|
(3)
|
|
|
*
|
|
Steven M. Shindler
|
|
|
614,080
|
(3)(4)
|
|
|
*
|
|
Byron R. Siliezar
|
|
|
201,500
|
(3)(4)
|
|
|
*
|
|
Lo van Gemert
|
|
|
285,000
|
(3)(4)
|
|
|
*
|
|
All directors and executive
officers as a group (21 persons)
|
|
|
2,385,940
|
(3)(4)
|
|
|
1.57
|
%
|
|
|
|
* |
|
Less than one percent (1%) |
|
(1) |
|
Under the rules of the Securities and Exchange Commission, a
person is deemed to be the beneficial owner of a security if
that person, directly or indirectly, has or shares the power to
direct the voting of the security or the power to dispose or
direct the disposition of the security. Accordingly, more than
one person may be deemed to be a beneficial owner of the same
securities. A person is also deemed to be a beneficial owner of
any securities if that person has the right to acquire
beneficial ownership within 60 days of the relevant date.
Unless otherwise indicated by footnote, the named individuals
have sole voting and investment power with respect to
beneficially owned shares of stock. |
|
(2) |
|
Based on 152,147,641 shares of Common Stock issued and
outstanding on March 1, 2006. |
|
(3) |
|
Includes shares of common stock that could be acquired through
the exercise of stock options within 60 days after
March 1, 2006 as follows: Mr. Cope 12,500;
Mr. Dussek 18,000; Mr. Felipe 86,500; Mr. Gilker
144,500; Mr. Herington 42,000; Ms. Katz 27,000;
Mr. Risner 19,500; Mr. Shindler 295,000;
Mr. Siliezar 87,500; Mr. van Gemert 115,000; and
1,219,250 held by all directors and executive officers as a
group. |
|
(4) |
|
Includes restricted shares of common stock as follows:
Mr. Felipe 60,000; Mr. Gilker 74,000;
Mr. Shindler 200,000; Mr. Siliezar 100,000;
Mr. van Gemert 150,000; and 874,000 held by all directors
and executive officers as a group. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires our directors and executive officers, and persons who
own more than 10% of a registered class of our equity
securities, to file with the Securities and Exchange Commission
initial reports of beneficial ownership and reports of changes
in beneficial ownership of our equity securities. Based solely
upon a review of Forms 3, Forms 4 and Forms 5
furnished to us under
Rule 16a-3(e)
during 2005, and written representations of our directors and
executive officers that no Forms 5 were required to be
filed, we believe that all directors, executive officers and
beneficial owners of more than 10% of our common stock have
filed with the Securities and Exchange Commission on a timely
basis all reports required to be filed under Section 16(a)
of the Securities Exchange Act, except for the following:
Charles M. Herington inadvertently filed late a report on
Form 4 covering the acquisition of common stock in May
2005, Daniel E. Freiman inadvertently filed late a report on
Form 4 covering the grant of restricted stock in December
2005, Roberto Peon inadvertently filed late a report on
Form 4 covering the grant of stock options and restricted
stock in January 2006, John Donovan inadvertently filed late a
report on Form 4 covering the grant of stock options in
February 2006, John W. Risner
17
inadvertently filed late a report on Form 5 covering a gift
of common stock he made in December 2005 and Steven M. Shindler
inadvertently filed late a report on Form 5 covering a gift
of common stock he made in December 2005.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Nextel
Communications, Inc.
Following Nextel Communications’ sale of
18,000,000 shares of our common stock on November 13,
2003, Nextel Communications owned 24,712,128 shares of our
common stock, either directly or indirectly, which represented
approximately 17.9% and 17.7% of our issued and outstanding
shares of common stock as of December 31, 2003 and 2004,
respectively.
Following Nextel Communications’ sale of
10,000,000 shares of our common stock on September 7,
2005, Nextel Communications owned, as of December 31, 2005,
either directly or indirectly, 14,712,128 shares of our
common stock, which represents approximately 9.7% of our issued
and outstanding shares of common stock.
The following are descriptions of other significant transactions
consummated with Nextel Communications on November 12, 2002
under our confirmed plan of reorganization.
Spectrum
Use and Build-Out Agreement
On November 12, 2002, we entered into a spectrum use and
build-out agreement with Nextel Communications. Under this
agreement, certain of our subsidiaries committed to complete the
construction of our network in the Baja region of Mexico in
exchange for proceeds from Nextel Communications of
$50.0 million, of which $25.0 million was received in
each of 2002 and 2003. We recorded the $50.0 million as
deferred revenues. We commenced service on our network in Baja
Mexico in September 2003. As a result, during 2005, we
recognized $3.2 million in revenues related to this
arrangement.
Tax
Cooperation Agreement
We had a tax sharing agreement with Nextel Communications, dated
January 1, 1997, which was in effect through
November 11, 2002. On November 12, 2002, we terminated
the tax sharing agreement and entered into a tax cooperation
agreement with Nextel Communications under which we and Nextel
Communications agreed to retain, for 20 years following the
effective date of our plan of reorganization, books, records,
accounting data and other information related to the preparation
and filing of consolidated tax returns filed for Nextel
Communications’ consolidated group.
Amended
and Restated Overhead Services Agreement
We had an overhead services agreement with Nextel Communications
in effect through November 11, 2002. On November 12,
2002, we entered into an amended and restated overhead services
agreement, under which Nextel Communications will provide us,
for agreed upon service fees, certain (i) information
technology services, (ii) payroll and employee benefit
services, (iii) procurement services, (iv) engineering
and technical services, (v) marketing and sales services,
and (vi) accounts payable services. Either Nextel
Communications or we can terminate one or more of the other
services at any time with 30 days advance notice. Effective
January 1, 2003, we no longer use Nextel
Communications’ payroll and employee benefit services,
procurement services or accounts payable services. During fiscal
year 2005, we did not utilize the overhead services agreement
and, effective February 15, 2006, we terminated in its
entirety the overhead services agreement with Nextel
Communications.
Third
Amended and Restated Trademark License Agreement
On November 12, 2002, we entered into a Third Amended and
Restated Trademark License Agreement with Nextel Communications,
which superseded a previous trademark license agreement. Under
the new agreement, Nextel Communications granted to us an
exclusive, royalty-free license to use within Latin America,
excluding Puerto Rico, certain trademarks, including but not
limited to the mark “Nextel.” The license continues
indefinitely unless terminated by Nextel Communications upon
60 days notice if we commit any one of several specified
18
defaults and fail to cure the default within a 60 day
period. Under a side agreement, until the sooner of
November 12, 2007 or the termination of the new agreement,
Nextel Communications agreed to not offer iDEN service in
Latin America, other than in Puerto Rico, and we agreed to
not offer iDEN service in the United States.
Standstill
Agreement
As part of our Revised Third Amended Joint Plan of
Reorganization, we entered into a Standstill Agreement with
Nextel Communications and certain of our noteholders pursuant to
which Nextel Communications and its affiliates agreed not to
purchase (or take any other action to acquire) any of our equity
securities, or other securities convertible into our equity
securities, that would result in Nextel Communications and its
affiliates holding, in the aggregate, more than 49.9% of the
equity ownership of us on a fully diluted basis, which we refer
to as the “standstill percentage,” without prior
approval of a majority of the non-Nextel Communications members
of the Board of Directors. We agreed not to take any action that
would cause Nextel Communications to hold more than 49.9% of our
common equity on a fully diluted basis. If, however, we take
action that causes Nextel Communications to hold more than 49.9%
of our common equity, Nextel is required to vote all shares in
excess of the standstill percentage in the same proportions as
votes are cast for such class or series of our voting stock by
stockholders other than Nextel Communications and its affiliates.
During the term of the Standstill Agreement, Nextel
Communications and its controlled affiliates have agreed not to
nominate to our Board of Directors, nor will they vote in favor
of the election to the Board of Directors, any person who is an
affiliate of Nextel Communications if the election of such
person to the Board of Directors would result in more than two
affiliates of Nextel Communications serving as directors. Nextel
Communications has also agreed that if at any time during the
term of the Standstill Agreement more than two of its affiliates
are directors, Nextel Communications will use its reasonable
efforts to cause such directors to resign to the extent
necessary to reduce the number of directors on our Board of
Directors that are affiliates of Nextel Communications to two.
Registration
Rights Agreement
In connection with our emergence from Chapter 11
reorganization in November 2002, we entered into a Registration
Rights Agreement with Nextel Communications and certain of our
other security holders. Under the terms of the Registration
Rights Agreement, we agreed to register with the Securities and
Exchange Commission, in the aggregate, 68,767,698 shares of
our common stock and $98,219,990 principal amount of our
13% senior secured discount notes due 2009, of which Nextel
Communications owned 42,712,128 shares of the common stock
and $50,900,000 principal amount of the notes. In accordance
with the Registration Rights Agreement and the related
registration statement, Nextel Communications sold 18,000,000
and 10,000,000 shares of common stock in a fully
underwritten registered offering in November 2003 and September
2005, respectively. During 2004, we purchased or defeased all of
our 13% senior secured discount notes due 2009.
inCode
On February 14, 2006, we elected Mr. John Donovan,
President and Chief Executive Officer of inCode, a wireless
business and technology consulting company, to our Board of
Directors in order to fill a vacancy. During 2005, we paid
inCode approximately $0.2 million to perform various
consulting services for us.
19
PERFORMANCE
GRAPH
The following graph compares the cumulative total stockholder
return on our common stock from our listing on the Over-the
Counter Bulletin Board on November 20, 2002, our move
to the NASDAQ National Market on February 28, 2003, through
December 31, 2005, with the cumulative total stockholder
return on the NASDAQ 100 Index and the Company-constructed Peer
Group Index. The Peer Group Index tracks the price (weighted by
market capitalization) of the common stock of the following
companies that we consider market competitors: America Movil,
S.A. de C.V., Grupo Iusacell S.A. de C.V., Telefonica Moviles,
S.A. and Telesp Celular Participacoes SA. The graph assumes an
initial investment of $100 on November 20, 2002 in our
common stock and in each of the comparative indices, and that
all dividends were reinvested.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period Ended
|
|
Index
|
|
11/20/02
|
|
|
12/31/02
|
|
|
12/31/03
|
|
|
12/31/04
|
|
|
12/31/05
|
|
NII Holdings, Inc.
|
|
|
100.00
|
|
|
|
139.05
|
|
|
|
883.20
|
|
|
|
1,684.62
|
|
|
|
3,101.54
|
|
NASDAQ 100 Index
|
|
|
100.00
|
|
|
|
88.20
|
|
|
|
131.53
|
|
|
|
145.26
|
|
|
|
147.75
|
|
Peer Group Index
|
|
|
100.00
|
|
|
|
93.91
|
|
|
|
157.30
|
|
|
|
209.25
|
|
|
|
219.05
|
|
20
CERTIFICATE OF INCORPORATION
The Board of Directors has approved, and recommends that our
stockholders approve an amendment to our Restated Certificate of
Incorporation to increase the number of authorized shares of
common stock that we would have the authority to issue from
300,000,000 to 600,000,000 shares.
This change requires stockholder approval and, as a result, we
are presenting the amendment to our Restated Certificate of
Incorporation, in its entirety, for stockholder approval. The
complete text of the amendment to our Restated Certificate of
Incorporation is attached to this Proxy Statement as
Appendix B.
Purposes
and Effects of the Increase in Number of Authorized Shares of
Common Stock
Of the 300,000,000 shares of common stock currently
authorized, as of March 1, 2006, 152,147,641 shares
were issued and outstanding. The additional shares of common
stock for which authorization is sought would be a part of the
existing class of common stock and, if and when issued, would
have the same rights and privileges as the shares of common
stock presently outstanding. No holder of common stock has any
preemptive rights. We have no plans for the issuance of any
shares of common stock at the present time, except in connection
with employee benefit plans.
On October 27, 2005, we announced a
two-for-one
stock split of our common stock to be effected in the form of a
stock dividend. The stock dividend was paid on November 21,
2005 to stockholders of record as of November 11, 2005.
After giving effect to the common stock split, on March 1,
2006, we had 36,392,619 shares reserved for issuance upon
exercise of outstanding stock options and upon conversion of our
convertible notes and 26,538,904 shares available to be
granted under the 2004 Incentive Compensation Plan. Therefore,
after excluding the reserved shares and the shares available for
grant under the 2004 Incentive Compensation Plan, we had less
than 85,000,000 authorized shares of common stock available for
issuance on March 1, 2006.
The Board of Directors believes that an increase in the number
of shares of authorized common stock as contemplated by the
amendment to our Restated Certificate of Incorporation would
benefit us and our stockholders by giving us needed flexibility
in our corporate planning and in responding to developments in
our business, including possible acquisition transactions,
financings, stock splits or stock dividends and other general
corporate purposes. Having such authorized shares available for
issuance in the future would give us greater flexibility and
allow shares of common stock to be issued without the expense
and delay of a special stockholders’ meeting.
Unless otherwise required by applicable law or regulation, the
shares of common stock to be authorized in the amendment to our
Restated Certificate of Incorporation will be issuable without
further stockholder action and on such terms and for such
consideration as may be determined by the Board of Directors.
However, the Nasdaq National Market, on which our common stock
is listed, currently requires stockholder approval as a
prerequisite to listing shares in several instances, including
acquisition transactions, where the present or potential
issuance of shares could result in an increase of
20 percent or more in the number of shares of common stock
outstanding.
The Board of Directors could use the additional shares of common
stock to discourage an attempt to change control of us by
selling a substantial number of shares of our common stock to
persons who have an arrangement with us concerning the voting of
such shares or by distributing common stock or rights to receive
such stock to the stockholders, even though a change in control
might be perceived as desirable by some stockholders. The Board
of Directors, however, has no present intention of issuing any
shares of common stock or rights to acquire common stock for
such purposes, and there are no arrangements with any person for
the purchase of shares of common stock in the event of an
attempted change of control.
Vote
Required
The amendment to our Restated Certificate of Incorporation must
be approved by the record holders of a majority of the
outstanding shares of common stock entitled to vote on the
amendment. Abstentions and broker “non-votes” will
have the same effect as a vote against the proposal.
Our Board of Directors recommends a vote “FOR”
the proposed amendment to our Restated Certificate of
Incorporation.
21
AUDIT
INFORMATION
PricewaterhouseCoopers LLP has audited our consolidated
financial statements for the fiscal years ended
December 31, 2005 and December 31, 2004.
Fees Paid
to Independent Registered Public Accounting Firm
The following information is furnished with respect to the fees
billed by our principal accountant for each of the last two
fiscal years.
Audit
Fees
The aggregate amount of fees billed and expected to be billed to
the Company by PricewaterhouseCoopers LLP for professional
services rendered in connection with the audit of the
Company’s annual financial statements for the fiscal years
ended December 31, 2004 and December 31, 2005 were
$4,924,000 and $7,204,000, respectively. Separately, the amount
of fees billed by PricewaterhouseCoopers LLP related to the
restatement detected during the 2004 audit of the Company’s
consolidated financial statements for the year ended
December 31, 2003 and the 2003 and 2004 quarterly financial
statements was $1,131,000. Additional fees related to the
restatement billed in 2005 were approximately $65,000.
Expenses billed to the Company by PricewaterhouseCoopers LLP
related to the years ended December 31, 2004 and 2005 were
approximately $140,000 and $150,000, respectively. Additionally,
expenses billed related to the aforementioned restatement
process were approximately $37,000.
Audit fees consist of those fees rendered for the audit of our
annual consolidated financial statements, audit of the
effectiveness of internal controls over financial reporting,
review of financial statements included in our quarterly reports
and for services normally provided in connection with statutory
and regulatory filings or engagements, such as comfort letters
or attest services.
Audit
Related Fees
The aggregate amount of fees billed to the Company by
PricewaterhouseCoopers LLP for professional services for
assurance and related services that are reasonably related to
the review of the Company’s financial statements and not
reported under the heading “Audit Fees” above for the
fiscal years ended December 31, 2004 and December 31,
2005 were $455,000 and $411,000, respectively. The fees billed
by PricewaterhouseCoopers LLP included fees for consultations on
accounting and reporting standards in 2004 and 2005,
Sarbanes-Oxley implementation in 2004 and financial and tax due
diligence services in 2004 and 2005. Expenses billed to the
Company by PricewaterhouseCoopers LLP related to the years ended
December 31, 2004 and 2005 were approximately $0 and
$34,000, respectively.
Tax
Fees
The aggregate amount of fees billed to the Company by
PricewaterhouseCoopers LLP for professional services for tax
compliance, tax advice, tax planning, transfer pricing and
ex-patriate tax services for the fiscal years ended
December 31, 2004 and December 31, 2005 were
$1,101,000 and $659,000, respectively. Tax fees consist of those
fees billed by the independent registered public accounting
firm’s tax department, except those services related to the
audit. Expenses billed to the Company by PricewaterhouseCoopers
LLP related to the years ended December 31, 2004 and 2005
were approximately $1,000 in both years.
All
Other Fees
The aggregate amount of fees billed to the Company by
PricewaterhouseCoopers LLP for services other than those
described above for the fiscal years ended December 31,
2004 and December 31, 2005 were $3,000 and $13,000,
respectively. All other fees are those fees billed for permitted
services other than the services described above. There were no
expenses billed to the Company by PricewaterhouseCoopers LLP
related to the years ended December 31, 2004 and 2005.
22
Audit
Committee Pre-Approval Policies and Procedures
It is the policy of the Audit Committee that the Company’s
independent registered public accounting firm may provide only
those services that have been pre-approved by the Audit
Committee. Unless a type of service to be provided by the
independent registered public accounting firm has received
general pre-approval, it requires specific pre-approval by the
Audit Committee. The term of any general pre-approval is
eighteen months from the date of pre-approval, unless the Audit
Committee or a related engagement letter specifically provides
for a different period. The Audit Committee will annually review
and pre-approve the services that may be provided by the
independent registered public accounting firm without obtaining
specific pre-approval. The Audit Committee has delegated its
pre-approval authority to Carolyn Katz, the chairwoman of the
Audit Committee.
Requests or applications to provide services that require
specific approval by the Audit Committee must be submitted to
the Audit Committee by both the independent registered public
accounting firm and the Chief Financial Officer, Treasurer or
Controller, and must include a joint statement as to whether, in
their view, the request or application is consistent with the
Securities and Exchange Commission’s rules on auditor
independence.
Audit
Committee Report
No portion of this Audit Committee Report shall be deemed to be
incorporated by reference into any filing under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, through any general statement incorporating by
reference in its entirety the Proxy Statement in which this
report appears, except to the extent that we specifically
incorporate this report or a portion of it by reference. In
addition, this report shall not be deemed to be filed under
either the Securities Act or the Exchange Act.
The Board of Directors has adopted a written audit committee
charter. In addition, all members of our Audit Committee are
independent, as defined in the Nasdaq listing standards.
The Audit Committee has reviewed and discussed with our
management and PricewaterhouseCoopers LLP, our independent
registered public accounting firm, our audited financial
statements contained in our annual report on
Form 10-K
for the fiscal year ended December 31, 2005. The Audit
Committee has also discussed with our independent auditors the
matters required to be discussed pursuant to Statement on
Auditing Standards No. 61, as amended, “Communication
with Audit Committees.”
The Audit Committee has received and reviewed the written
disclosures and the letter from PricewaterhouseCoopers LLP
required by Independence Standards Board Standard No. 1,
“Independence Discussions with Audit Committees,” and
has discussed with PricewaterhouseCoopers LLP their independence.
In addition, the Audit Committee reviewed key initiatives and
programs aimed at strengthening the effectiveness of our
internal and disclosure control structure. As part of this
process, the Audit Committee continued to monitor the scope and
adequacy of our internal auditing program, reviewing staffing
levels and steps taken to implement recommended improvements in
internal procedures and controls.
Based on the review and discussions referred to above, the Audit
Committee recommended to our Board of Directors that the audited
financial statements be included in our annual report on
Form 10-K
for fiscal year 2005 filed with the Securities and Exchange
Commission. By recommending to the Board of Directors that the
audited financial statements be so included, the Audit Committee
is not opining on the accuracy, completeness or presentation of
the information contained in the audited financial statements.
Audit Committee
Carolyn Katz, Chairman
Steven P. Dussek
John W. Risner
PROPOSAL III
RATIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
PricewaterhouseCoopers LLP, independent registered public
accounting firm, served as our independent registered public
accounting firm for the fiscal year ended December 31,
2005, and has been selected by the Audit
23
Committee to serve as our independent registered public
accounting firm for the current fiscal year. Representatives of
PricewaterhouseCoopers LLP will be present at the Annual Meeting
and available to respond to appropriate questions from
stockholders and may make a statement if they so desire.
Although our Amended and Restated Bylaws do not require
stockholder ratification or otherwise, as a matter of good
corporate governance, the Board of Directors is requesting that
shareholders ratify the selection of PricewaterhouseCoopers LLP
as the Company’s independent registered public accounting
firm for the fiscal year ending December 31, 2006.
The Board of Directors recommends that the shareholders
vote “FOR” the Proposal for Ratification of the
Appointment of PricewaterhouseCoopers LLP.
PROPOSAL IV
APPROVAL
OF PROPOSAL FOR ADJOURNMENT
Due to the voting requirements on one or more proposals that we
are presenting to stockholders for approval at the Annual
Meeting, we have included an additional proposal with respect to
the adjournment of the Annual Meeting. It is possible that we
may not receive by the date of the Annual Meeting a sufficient
number of votes to (i) constitute a quorum for the conduct
of business or (ii) approve one or more proposals being
presented. In either event, we would consider adjourning the
Annual Meeting to a later date or dates in order to permit the
further solicitation of proxies. Accordingly, we are submitting
the question of adjournment to our stockholders as a separate
proposal for their consideration, if necessary, in order to
allow proxies that we have received at the time of the Annual
Meeting to be voted for an adjournment.
Upon any adjournment of the Annual Meeting, no written notice of
such adjourned meeting is required to be given to stockholders
if an announcement is made at the Annual Meeting of the place,
date and time to which the Annual Meeting is adjourned, the
adjournment is for no more than thirty days and no new record
date is fixed for the adjourned meeting.
Vote
Required
The Proposal for Adjournment must be approved by the affirmative
vote of a majority of the votes of holders of record of the
Company’s common stock present at the meeting and entitled
to vote on the proposal. Abstentions and broker
“non-votes” will have the same effect as a vote
against the proposal.
The Board of Directors recommends that the shareholders
vote “FOR” the Proposal for Adjournment.
STOCKHOLDER
PROPOSALS FOR 2007 ANNUAL MEETING
Proposals by stockholders intended to be presented at the 2007
Annual Meeting must be forwarded in writing and received at our
principal executive office at 10700 Parkridge Boulevard, Suite
600, Reston, Virginia 20191 no later than November 24,
2006, directed to the attention of our Vice President and
General Counsel, for consideration for inclusion in our proxy
statement for that Annual Meeting. Moreover, with respect to any
proposal by a stockholder not seeking to have a proposal
included in our proxy statement but seeking to have a proposal
considered at the 2007 Annual Meeting, if that stockholder fails
to notify our Vice President, General Counsel and Secretary in
the manner set forth above no later than February 7, 2007,
then the persons who are appointed as proxies may exercise their
discretionary voting authority with respect to that proposal, if
the proposal is considered at the 2007 meeting, even if
stockholders have not been advised of the proposal in the proxy
statement for the 2007 Annual Meeting. Any proposals submitted
by stockholders must comply in all respects with the rules and
regulations of the Securities and Exchange Commission then in
effect and Delaware law.
24
IMPORTANT
To assure your representation and a quorum for the
transaction of business at the Annual Meeting, we urge you to
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 if you are
eligible to do so.
OUR ANNUAL REPORT ON
FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005, INCLUDING
FINANCIAL STATEMENTS, IS BEING MAILED TO STOCKHOLDERS WITH THIS
PROXY STATEMENT. ADDITIONAL COPIES OF OUR ANNUAL REPORT ON
FORM 10-K
MAY BE OBTAINED WITHOUT CHARGE BY: (1) WRITING TO NII
HOLDINGS, INC., 10700 PARKRIDGE BOULEVARD, SUITE 600,
RESTON, VIRGINIA 20191, ATTENTION: VICE PRESIDENT, GENERAL
COUNSEL AND SECRETARY, OR (2) BY CONTACTING OUR INVESTOR
RELATIONS DEPARTMENT AT 703-390-5113. THE ANNUAL REPORT IS NOT
PART OF THE PROXY SOLICITATION MATERIALS.
25
Appendix A
NII
HOLDINGS, INC.
AUDIT
COMMITTEE CHARTER
Mission
The Audit Committee (the “Committee”) is a committee
of the Company’s Board of Directors (the
“Board”). Its mission is to assist the Board in
fulfilling its oversight responsibilities by assessing and
monitoring the Company’s financial information, potential
financial, legal and regulatory exposures, systems of internal
controls and the independence and performance of the
Company’s internal and external auditors.
Membership
The Committee shall be elected by the Board of Directors and
shall consist of at least three Directors (including a Committee
Chairperson) all of whom shall be “independent” as
defined by federal securities law and the listing requirements
of the Nasdaq Stock Market and any securities exchanges on which
the Company’s securities are listed. The duties and
responsibilities of a member of the Committee are in addition to
those duties assumed as a member of the Board of Directors. At
least one member of the Committee shall have a
financial/accounting background and qualify as an
“expert” in accounting matters as defined by the
Securities and Exchange Commission.
Meetings
The Committee shall meet at least four times per year (usually
in conjunction with regularly scheduled meetings of the Board of
Directors) and shall maintain minutes of each meeting. In
addition to the members of the Committee, the Company’s
Chief Executive Officer, Chief Financial Officer, Controller,
Internal Auditor, General Counsel and independent public
accountants shall attend all regular meetings of the Committee.
Other persons may be invited to attend as appropriate. During
each of the regular meetings, the Committee members shall meet
separately with the Company’s independent public
accountants with no members of management present. The Committee
shall report to the Board on the major items covered at each
Committee meeting and shall make recommendations to the Board
and management as appropriate.
Primary
Responsibilities
Independent
Auditors
|
|
|
|
•
|
Appoint and establish the compensation of the Company’s
independent auditors, and oversee their work.
|
|
|
•
|
Approve in advance and periodically review all audit and
non-audit services to be performed by the Company’s
independent auditors.
|
|
|
•
|
Review, confirm and assure the independence of the independent
accountants by reviewing non-audit services performed by
external accountants. Annually obtain a signed independence
letter from the independent auditors.
|
|
|
•
|
Review with the Company’s Chief Financial Officer and the
independent public accountants the audit scope and audit plan of
the independent public accountants. Review the experience and
qualifications of the senior members of the independent auditor
team and the quality control procedures of the independent
auditor.
|
|
|
•
|
Resolve disagreements between management and the Company’s
independent public accountants regarding financial reporting.
|
|
|
•
|
Facilitate communication between the independent public
accountants and the Board.
|
|
|
•
|
Evaluate annually the performance of the independent auditor and
whether it is appropriate to adopt a policy of rotating
independent auditors on a regular basis.
|
A-1
Financial
Reporting
|
|
|
|
•
|
Oversee financial reporting processes of the Company with a view
to the fulfillment of its responsibilities for the fair and
accurate presentation of financial statements in accordance with
generally accepted accounting principles in the United States
(US GAAP) and SEC regulations.
|
|
|
•
|
Periodically review and discuss with management and the
independent public accountants the Company’s selection,
application and disclosure of critical accounting policies, any
significant changes in the Company’s accounting policies
and any proposed changes in accounting or financial reporting
that may have a significant impact on the Company particularly,
about the degree of aggressiveness or conservatism of its
accounting principles and underlying estimates. Review any
off-balance sheet structures on the Company’s financial
statements. When appropriate, the Committee will consider the
effect of alternative GAAP methods on the Company’s
financial statements.
|
|
|
•
|
Review with the Company’s General Counsel legal,
environmental and regulatory matters that may have a material
impact on the financial statements, the Company’s
compliance policies and any material reports or inquiries
received from regulators or governmental agencies.
|
|
|
•
|
At least annually review and approve the procedures established
by the Company for collecting and processing information
required to be included in its periodic reports filed with the
Securities and Exchange Commission.
|
|
|
•
|
Review the Company’s annual report on
Form 10-K,
quarterly reports on
Form 10-Q,
related earnings press releases, and discuss such reports with
management and the Company’s independent public accountants
prior to their respective filing with the SEC. Review the annual
audited financial statements with management, including major
issues regarding accounting and auditing principles and
practices as well as the adequacy of internal controls that
could significantly affect the Company’s financial
statements.
|
|
|
•
|
Review with management and the independent public accountants at
the completion of the annual audit:
|
|
|
|
|
•
|
The independent public accountant’s audit of the
Company’s financial statements and the report thereon
including recommended changes in reporting policies or internal
controls.
|
|
|
•
|
Assurance that Section 10A of the Securities Exchange Act
of 1934 has not been implicated.
|
|
|
•
|
Any significant changes required in the independent public
accountant’s audit plan.
|
|
|
•
|
Any significant difficulties or disputes with management during
the course of the audit.
|
|
|
•
|
Any Summary of Aggregated Deficiencies schedule (SAD) provided
by the auditor and the Company’s response to that letter.
|
|
|
•
|
Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61
relating to the conduct of the audit.
|
|
|
•
|
Other matters related to the audit which is to be communicated
to the Committee under generally accepted auditing standards.
|
|
|
|
|
•
|
Review with the Board of Directors the results of the annual
audit including the scope, effectiveness and cost of the audit
and recommend to the Board the appointment or replacement of the
independent auditor, which firm is ultimately accountable to the
Audit Committee and the Board.
|
|
|
•
|
Prepare the report required by the rules of the Securities and
Exchange Commission to be included in the Company’s annual
proxy statement.
|
Internal
Controls
|
|
|
|
•
|
Oversee the accounting processes of the Company including the
maintenance of adequate systems of internal controls
encompassing staffing, processes and management information
systems and a code of business conduct. In addition, review
compliance with these controls as well as significant proposed
changes.
|
A-2
|
|
|
|
•
|
Assess with management and the independent public accountants
significant risks and exposures and evaluate measures management
has implemented to reduce such risks including pre-approving all
related party transactions.
|
|
|
•
|
Review internal audit function including:
|
|
|
|
|
•
|
The appointment and replacement of the senior internal auditing
executive.
|
|
|
•
|
Status of the significant observations identified by the
internal auditing department and the related management’s
responses.
|
|
|
•
|
The internal audit department charter, budget and staffing.
|
|
|
•
|
Any changes in the planned scope of the internal audit program
|
|
|
|
|
•
|
Obtain reports from management, the Company’s senior
internal auditing executive and the independent auditor that the
Company’s subsidiary/foreign affiliated entities are in
conformity with applicable legal requirements and the
Company’s Code of Conduct, including disclosures of insider
and affiliated party transactions.
|
|
|
•
|
Establish procedures for (i) processing complaints
regarding accounting, internal controls or auditing matters and
(ii) confidential, anonymous submissions by employees of
concerns regarding questionable accounting or auditing matters.
|
|
|
•
|
Review the hiring of the CEO, CFO, and Controller and Principal
Accounting officer to ensure they were not employed by the
company’s audit firm during the
1-year
period preceding the audit.
|
|
|
•
|
Meet with the Chief Financial Officer, the senior Internal
Auditing executive and the independent auditor in separate
executive sessions.
|
Administrative
|
|
|
|
•
|
Report Committee actions to the Board of Directors with such
recommendations as the Committee may deem appropriate.
|
|
|
•
|
At least annually, review and update the Committee’s
Charter.
|
|
|
•
|
The Committee shall perform such other functions as required by
the Company’s charter or bylaws, the Board of Directors or
applicable laws, rules and regulations, including the rules of
the SEC and the NASDAQ stock exchange. The Committee shall have
the power to conduct or authorize investigations into any
matters within the Committee’s scope of responsibilities.
|
|
|
•
|
The Committee shall be empowered to retain independent counsel,
accountants or others to the extent the Committee considers
necessary to carry out its duties. The Company will pay the
expenses associated with all advisors to the Committee.
|
While the Audit Committee has the responsibilities and authority
set forth in this Charter, it is not the duty of the Audit
Committee to plan or conduct audits or to determine that the
Company’s financial statements are complete and accurate
and are in accordance with generally accepted accounting
principles. These are the responsibilities of management and the
independent auditor.
A-3
Appendix B
AMENDMENT
TO THE RESTATED CERTIFICATE OF INCORPORATION OF
NII HOLDINGS, INC.
The Restated Certificate of Incorporation is amended by deleting
the first paragraph of the Fourth Article thereof (beginning
with “The total authorized number of
shares. . .” and ending with
“. . ., the “Preferred Stock”).”)
in its entirety and replacing therewith the following:
The total authorized number of shares of all classes of capital
stock which the Corporation has authority to issue is six
hundred ten million one (610,000,001) shares, divided into three
classes as follows:
Six hundred million (600,000,000) shares of common stock, par
value $0.001 per share (the “Common Stock”);
One (1) share of preferred stock, par value $1.00 per
share (“Special Director Preferred Stock”); and
Ten million (10,000,000) shares of preferred stock, par value
$0.001 per share (the “Undesignated Preferred Stock”,
and, together with the Special Director Preferred Stock, the
“Preferred Stock”).
B-1
PROXY - NII HOLDINGS, INC.
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints Steven M. Shindler, Lo van Gemert, Robert J. Gilker, and Byron
R. Siliezar, and each or any of them, proxies for the undersigned, with power of substitution, to
vote all the shares of common stock of NII Holdings, Inc. held of record by the undersigned on
March 21, 2006, at the Annual Meeting of Stockholders of NII Holdings, Inc. to be held at 10:00
a.m. on April 26, 2006, and at any adjournments thereof, upon the matters listed on the reverse
side, as more fully set forth in the Proxy Statement, and for the transaction of such other
business as may properly come before the Annual Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON THE REVERSE SIDE
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES
IN PROPOSAL 1 AND FOR PROPOSALS 2, 3 and 4.
PLEASE VOTE, DATE, AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
(continued, and to be DATED and SIGNED on reverse side)
|
|
|
|
|
|
|
|
|
|
|
o
|
|
Mark this box with an X if you have made changes to your name or address details above. |
Annual Meeting Proxy Card
1. The Board of Directors recommends a vote FOR the listed nominees.
|
|
|
|
|
|
|
|
For |
|
Withhold |
|
01 - Carolyn Katz |
|
o
|
|
o
|
|
02 - Donald E. Morgan |
|
o
|
|
o
|
|
03 - George A. Cope |
|
o
|
|
o
|
|
The Board of Directors recommends a vote FOR the following proposals.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For |
|
Against |
|
Abstain |
|
2. |
|
APPROVAL OF AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION. |
|
o |
|
o |
|
o |
|
|
|
|
|
|
|
|
|
|
|
3. |
|
RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2006. |
|
o |
|
o |
|
o |
|
|
|
|
|
|
|
|
4. |
|
APPROVAL OF ADJOURMENT. |
|
o |
|
o |
|
o |
|
C |
Authorized Signatures - Sign Here - This section must be completed for your instructions to be executed. |
Please sign exactly as name appears. When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or guardian, please give full title of
such. If a corporation, please sign in corporation’s name by President or other authorized
officer. If a partnership, please sign in partnership’s name by authorized person.
|
|
|
|
|
Signature 1 - Please keep signature within the box
|
|
Signature 2 - Please keep signature within the box
|
|
Date (mm/dd/yyyy) |
|
|
|
|
|
/ / |