Date,
Time and Place
The
annual meeting will be held on May 14, 2008, at 10:00 a.m. local time at
NextWave’s
office located at 3611 Valley Centre Drive, Kilroy Centre, San Diego, California
92130.
Matters
to be Considered
At the
meeting, stockholders will be asked to consider and vote (1) to elect two Class
II directors, (2) to approve the issuance of up to 7.5 million shares of
our common stock to the former stockholders of IPWireless, Inc. and participants
in the Amended and Restated IPWireless, Inc. Employee Incentive Plan (the
“IPWireless EIP”) in respect of any future earn-out payments under the merger
agreement pursuant to which NextWave
acquired IPWireless and (3) to ratify the selection of our independent
registered public accounting firm. See “ELECTION OF DIRECTORS,” “
ISSUANCE OF UP TO 7.5 MILLION SHARES OF OUR COMMON STOCK TO FORMER STOCKHOLDERS
OF IPWIRELESS, INC. AND PARTICIPANTS IN THE IPWIRELESS EIP” and “RATIFICATION OF
SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.” The Board of
Directors does not know of any matters to be brought before the meeting other
than as set forth in the notice of meeting. If any other matters
properly come before the meeting, the persons named in the enclosed form of
proxy or their substitutes will vote in accordance with their best judgment on
such matters.
Record
Date; Stock Outstanding and Entitled to Vote
Stockholders
as of the record date, i.e., the close of business
on March 28, 2008, are entitled to notice of and to vote at the
meeting. Our common stock and preferred stock vote as one class, with
each share of common stock entitled to one vote and each share of preferred
stock entitled to 95 votes (equivalent to the number of shares issuable upon
conversion of such preferred stock as of the record date). As of the
record date, there were 102,002,603 shares of common stock and 355,000 shares of
preferred stock outstanding and entitled to vote, representing in the aggregate
137,285,508 eligible votes.
Required
Votes
In order
for the annual meeting to be held, the holders of a majority in voting power of
our outstanding shares of stock as of the record date must be present in person
or by proxy duly authorized. Assuming that such a quorum is present,
our stockholders may take action at the annual meeting with the votes described
below.
Election of
Directors. Under Delaware law and our certificate of
incorporation, the affirmative vote of a plurality of the votes cast by the
holders of our shares of common stock and preferred stock, voting as one class,
is required to elect each director. Consequently, only shares that
are voted in favor of a particular nominee will be counted toward such nominee’s
achievement of a plurality.
Issuance of up to 7.5 million shares
of our common stock to former stockholders of IPWireless and participants in the
IPWireless EIP. Under Nasdaq rules, the affirmative vote of a
majority of votes cast by holders of our shares of common stock and preferred
stock, voting as a single class, entitled to vote at the annual meeting is
required to issue any additional shares of our common stock to the former
stockholders of IPWireless and participants in the IPWireless EIP in respect of
any earn-out payments under the merger agreement pursuant to which NextWave
acquired IPWireless.
Ratification of the selection of
Ernst & Young LLP as independent registered public accounting
firm. The affirmative vote of the holders of a majority of the
voting power of our shares of common stock and preferred stock, voting as a
single class, entitled to vote at the annual meeting is required to ratify the
selection of Ernst & Young LLP as our independent registered public
accounting firm.
Other Matters. If
any other matters are properly presented at the meeting for action, including a
question of adjourning or postponing the meeting from time to time, the persons
named in the proxies and acting there under will have discretion to vote on such
matters in accordance with their best judgment.
Effect
of Abstentions and Broker Non-Votes
If you
are the beneficial owner of shares held for you by a broker, your broker must
vote those shares in accordance with your instructions. If you do not give
voting instructions to your broker, your broker may vote your shares for you on
any discretionary items of business to be voted upon at the annual meeting, such
as the election of directors and the ratification of the appointment of Ernst
& Young LLP. The approval of the proposed issuance of up to 7.5
million shares of our common stock to the former stockholders of IPWireless and
participants in the IPWireless EIP, however, is considered a non-discretionary
item and therefore, your broker may not vote your shares without instructions
from you. If you do not provide voting instructions on a non-discretionary
item, the shares will be treated as “broker non-votes.”
For
purposes of the annual meeting, abstentions and broker non-votes will be
included in the number of shares present for purposes of constituting a quorum,
assuming such broker has submitted a proxy or attends the annual
meeting. With respect to the election of directors and the issuance
of up to 7.5 million shares of our common stock to the former stockholders of
IPWireless and participants in the IPWireless EIP, abstentions and broker
non-votes will not have any effect on the outcome. With respect to
the ratification of the selection of Ernst & Young LLP, abstentions and
broker non-votes will have the effect of a vote against such
proposal.
Voting
and Revocation of Proxies
Shares of
our common stock represented by properly executed proxies that are received by
us and are not revoked will be voted at the meeting in accordance with the
instructions contained therein. If instructions are not given, such
proxies will be voted FOR election of each nominee
for director named herein, FOR
approval of the issuance of up to 7.5 million shares of our common stock to the
former stockholders of IPWireless and participants in the IPWireless EIP and
FOR
ratification of the selection of Ernst & Young LLP as our independent
registered public accounting firm.
If your
shares are held in the name of a bank, broker or other intermediary, follow the
voting instructions on the form you receive directly from your bank, broker or
other intermediary.
If a
stockholder does not return a signed proxy card, and does not attend the meeting
and vote in person, his or her shares will not be voted.
Any proxy
signed and returned by a stockholder may be revoked at any time before it is
exercised by giving written notice of revocation to the Secretary of the
Company, at our address set forth herein, by executing and delivering a
later-dated proxy or by voting in person at the meeting. Attendance
at the meeting will not, in and of itself, constitute revocation of a
proxy.
Proxy
Solicitation
We will
bear the costs of solicitation of proxies for the meeting, including
preparation, assembly, printing and mailing of this Proxy Statement, the proxy
card and any additional information furnished to stockholders. Copies
of solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of common stock
beneficially owned by others to forward to such beneficial owners. The
Company may reimburse persons representing beneficial owners of common stock for
their costs of forwarding solicitation material to such beneficial
owners. In addition, the Company has retained Financial Balloting
Group, LLC to act as proxy solicitor in conjunction with the
meeting. The Company has agreed to pay that firm a base fee of $5,000
plus customary call-based fees and reasonable out of pocket expenses for proxy
solicitation services. Solicitation of proxies by mail may be
supplemented by telephone, telegram or personal solicitation by directors,
officers, or other regular employees of the Company. No additional
compensation will be paid to directors, officers or other regular employees for
such services.
Householding
The
Securities and Exchange Commission (SEC) has adopted rules that permit companies
and intermediaries such as brokers to satisfy delivery requirements for Proxy
Statements and annual reports with respect to two or more stockholders sharing
the same address by delivering a single Proxy Statement or annual report, as
applicable, addressed to those stockholders. This process, which is commonly
referred to as "householding," potentially provides extra convenience for
stockholders and cost savings for companies. Brokers household our proxy
materials and annual reports, delivering a single Proxy Statement and annual
report to multiple stockholders sharing an address unless contrary instructions
have been received from the affected stockholders.
If at any
time you no longer wish to participate in householding and would prefer to
receive a separate Proxy Statement or annual report, or if you are receiving
multiple copies of either document and wish to receive only one, please contact
the bank, broker or nominee directly or contact us at 75 Holly Hill Lane,
Greenwich, Connecticut 06830, Attention Investor Relations (203-742-2571) We
will deliver promptly upon written or oral request a separate copy of our annual
report and/or Proxy Statement to a stockholder at a shared address to which a
single copy of either document was delivered.
Independent
Registered Public Accounting Firm
We have
been advised that representatives of Ernst & Young LLP, our independent
registered public accounting firm for the year ended December 29, 2007, will
attend the meeting, will have an opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions.
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
NextWave has a
classified board of directors, divided into three classes, and the term of the
Class II directors will expire on the date of the meeting. The
nominees to be elected as Class II directors with a three-year term expiring at
the 2011 Annual Meeting of Stockholders are described below. Both Mr. Rosen and
Dr. Jones are currently serving as Class II directors. The Board of Directors
has nominated each of the candidates for election. The Board of Directors
expects that each of the nominees will be available for election as a
director. However, if by reason of an unexpected occurrence, one or
more of the nominees is not available for election, the persons named in the
form of proxy have advised that they will vote for such substitute nominees as
the Board of Directors may propose.
Nominees
for Election
Name
and present position,
if
any, with the Company
|
Age,
period served as a director, other business experience
|
Jack
Rosen
|
Mr.
Rosen, 61, has served as a director of the Company since its
inception. Mr. Rosen is chief executive of several commercial
and residential real estate firms and the current Chairman of the American
Jewish Congress. In addition, Mr. Rosen oversees a wide array of
healthcare, cosmetic and telecommunications business ventures throughout
the U.S., Europe and Asia. Active in international government and
political affairs, Mr. Rosen has participated in numerous commissions and
councils for President Bush and former President Clinton. Mr. Rosen is
currently a member of the Council on Foreign Relations.
|
|
|
William
J. Jones Ph.D.
|
Dr.
Jones, 47, has served as a director of the Company since May 2007. Dr.
Jones is the Chief Executive Officer of NextWave
Network Products and was a co-founder of IPWireless. He is responsible for
the overall development and delivery of NextWave’s
mobile broadcast and wireless broadband network
products. Since 1984, Dr. Jones has worked in both research and
product development roles on FDMA, TDMA, and CDMA wireless technologies.
In 1988, he joined AT&T (which became Lucent Technologies) where he
managed Lucent's AirLoop and GSM Microcell product lines and played
a lead role in developing Lucent's European wireless standards
strategy. Dr. Jones has published numerous articles and holds
patents on CDMA technology. He holds a First Class Honours degree in
Electrical and Electronic Engineering and a Ph.D. in Radio Frequency (RF)
Engineering from University of Bradford, England.
|
The
Board of Directors recommends a vote FOR the above named nominees.
Other
Members of the Board of Directors
Including
the nominees, the Board of Directors currently consists of 7 directors, each of
whom, other than the nominees, is described below. The term of the
Class III directors shall expire at the 2009 Annual Meeting of Stockholders,
subject to the valid election and qualification of their respective
successors. The term of the Class I directors shall expire at the
2010 Annual Meeting of Stockholders, subject to the valid election and
qualification of their respective successors.
Name
|
Position
|
Class
III Directors
|
Allen
Salmasi
|
Mr.
Salmasi, 53, has served as the Chairman of the Board of Directors, Chief
Executive Officer and President since the inception of our Company.
Previously, Mr. Salmasi served as Chairman and CEO of NextWave Telecom,
Inc. (“NextWave Telecom”) which he founded in 1995 and subsequently sold
to Verizon Wireless in 2005. Prior to NextWave Telecom, Mr. Salmasi was a
member of the Board of Directors, President of the Wireless
Telecommunications Division, and Chief Strategic Officer of QUALCOMM Inc.
He joined QUALCOMM in 1988 as a result of the merger of QUALCOMM and
Omninet Corporation, which Mr. Salmasi founded in 1984. He initiated and
led the development of CDMA technologies, standards and the associated
businesses at QUALCOMM until 1995. At Omninet, he conceived and led the
development of the first OmniTRACS system, which provides two-way
messaging and position reporting services to mobile users. From 1979 to
1984, Mr. Salmasi held several technical and management positions at the
National Aeronautics and Space Administration Jet Propulsion
Laboratory.
|
|
|
Douglas
F. Manchester
|
Mr.
Manchester, 65, has served as a director of the Company since its
inception. He is also chairman of Manchester Financial Group, LP. Mr.
Manchester is one of San Diego’s leading private developers. His
development projects include hotels, high-rise office buildings,
residential properties, industrial parks and championship golf courses and
resorts.
|
|
|
Robert
T. Symington
|
Mr.
Symington, 44, has served as a director of the Company since its
inception. Mr. Symington is a Portfolio Manager at Avenue Capital Group.
Mr. Symington, through his prior management positions at M.D. Sass
Investor Services and Resurgence Asset Management, was an early investor
in NextWave
Telecom.
|
|
|
Class
I Directors
|
James
C. Brailean, Ph.D
|
Dr.
Brailean, 46, has served as a director of the Company since May 2007. He
is Chief Executive Officer of NextWave
Mobile Products. Dr. Brailean was co-founder of PacketVideo and serves as
its Chief Executive Officer. Under Dr. Brailean's leadership,
PacketVideo has become the largest independent supplier of embedded
multimedia solutions for mobile phones and other devices in the
world. A scientist who led the development of the MPEG-4
standards for transmission of video and audio over wireless networks, Dr.
Brailean holds 16 key U.S. patents that enable advanced multimedia
communications. From 1993 to 1998, he served as the chairman of the Error
Resilience Video Compression Ad Hoc Group within MPEG-4. Prior to
co-founding PacketVideo in 1998, Dr. Brailean was a principal staff
engineer within Motorola Corporate Research and Development Laboratories
in Chicago where he managed the Advanced Video Algorithm Group,
responsible for the design and development of advanced video compression
and imaging algorithms. He was also a communication system engineer for
Hughes Aircraft, Space and Communications Group. Dr. Brailean received his
doctorate in electrical engineering from Northwestern University. He holds
a Master's of Science degree in Electrical Engineering from the University
of Southern California and a Bachelor's of Science degree in Electrical
Engineering from the University of Michigan.
|
|
|
William
H. Webster
|
Judge
Webster, 84, has served as a director of the Company since its
inception. Judge Webster is a senior partner in Milbank, Tweed,
Hadley & McCloy LLP's Washington office, where he specializes in
arbitration, mediation and internal investigation.
Prior
to joining Milbank in 1991, Judge Webster began a long and illustrious
career in public service. Judge Webster was U.S. Attorney for the Eastern
District of Missouri, then a member of the Missouri Board of Law
Examiners. In 1970, he was appointed a judge of the U.S. District Court
for the Eastern District of Missouri, and then elevated to the U.S. Court
of Appeals for the Eighth Circuit. Judge Webster resigned the judgeship to
head the Federal Bureau of Investigation for nine years. In 1987, he was
sworn in as Director of the Central Intelligence Agency. He led the CIA
until his retirement from public office in 1991. Judge Webster has
received numerous awards for public service and law enforcement and holds
honorary degrees from several colleges and universities. Judge Webster
currently serves as Chairman of the Homeland Security Advisory
Council.
|
|
|
CORPORATE
GOVERNANCE
Independence
Standards for Directors
Our Board
of Directors is required to affirmatively determine that a majority of our
directors are independent under the listing standards of The Nasdaq Stock Market
LLC (“Nasdaq”), the principal securities exchange on which our common stock is
traded.
During
its annual review of director and nominee independence, our Board of Directors
considers all information it deems relevant, including without limitation, any
transactions and relationships between each director or any member of his
immediate family and the Company and its subsidiaries and
affiliates. The purpose of this review is to determine whether any
relationships or transactions with NextWave
impair such director or nominee’s ability to exercise independent judgment in
carrying out the responsibilities of a director. The Board of
Directors has not adopted any categorical standards for assessing independence,
preferring instead to consider all relevant facts and circumstances in making an
independence determination, including without limitation, applicable
independence standards promulgated by Nasdaq. The Board of Directors considered
the transactions and relationships described below, in addition to the
transactions described under “TRANSACTIONS WITH RELATED PERSONS,” in making its
determination that all directors and nominees other than Mr. Salmasi and Drs.
Brailean Jones are independent under the listing standards of
Nasdaq.
Mr.
Manchester is the controlling shareholder and the general partner of Manchester
Financial Group L.P. (“Manchester Financial”). Manchester Financial
participated in our March 2007 preferred stock private placement described in
greater detail under “TRANSACTIONS WITH RELATED PERSONS” and together with its
affiliates currently holds 10,373,621 shares of common stock and 50,000 shares
of preferred stock In addition, Mr. Manchester’s son-in-law is
employed by NextWave in a
non-executive capacity. These transactions and relationships were
considered by our Board of Directors in making its determination that Mr.
Manchester is independent under the listing standards of Nasdaq.
Mr.
Symington is a Portfolio Manager at Avenue Capital Group. Avenue
Capital Group and its affiliates hold an investment in our 7% Senior Secured
Notes due 2010 (the “Notes”) in the aggregate principal amount of $175 million,
warrants issued in connection with the Notes to purchase 1,935,990 shares of our
common stock for $0.01 per share and 100,000 shares of preferred stock purchased
in our March 2007 private placement. The participation of affiliates
of Avenue Capital Group in the Notes and preferred stock private placement
transactions, including the recent amendment to the purchase agreement governing
our Notes in which a pro rata consent fee of $1.75 million was paid to Avenue
Capital Group. were considered by our Board of Directors in making its
determination that Mr. Symington is independent under the listing standards of
Nasdaq.
Board
Committees
Our Board
of Directors has three standing committees: an Audit Committee, a Compensation
Committee and a Nominating and Corporate Governance Committee. Our
Board of Directors has adopted charters for each of its standing
committees. Copies of our committee charters are available without
charge upon request directed to Investor Relations, 75 Holly Hill Drive,
Greenwich, CT 06830, and from our website at www.nextwave.com.
Audit
Committee
Our Audit
Committee assists the Board of Directors in fulfilling its responsibility
relating to (a) the integrity of our financial statements, (b) our compliance
with legal and regulatory requirements, (c) application of our codes of conduct
and ethics as established by the Board of Directors, (d) our independent
registered public accounting firm’s qualifications, engagement, compensation and
performance, their conduct of the annual audit of our financial statements, and
their engagement to provide any other services, (e) performance of our system of
internal controls, (f) preparation of the Audit Committee report, as required
pursuant to SEC rules and (g) maintenance and oversight of procedures for
addressing complaints about accounting matters. In discharging its duties, the
Audit Committee has the sole authority to select (subject to stockholder
ratification, which ratification is not binding on the Audit Committee),
compensate, evaluate and replace the independent accountants, review and approve
the scope of the annual audit, review and pre-approve the engagement of our
independent accountants to perform audit and non-audit services, meet
independently with our independent accountants and senior management, review the
integrity of our financial reporting process and review our financial statements
and disclosures and certain SEC filings.
The Board
of Directors has determined that all three members of the Audit Committee, Mr.
Douglas F. Manchester, Mr. Robert T. Symington and
Judge William H. Webster are independent, and that Mr. Symington is qualified as
an “audit committee financial expert”, applying the listing standards of Nasdaq
and in accordance with applicable rules of the SEC as of the date of this Proxy
Statement. Mr. Symington serves as chairman of the Audit
Committee. Mr. Symington qualifies as an “audit committee financial
expert” because of his relevant experience in the area of finance and financial
matters, including management positions at various investment companies such as
M.D. Sass and Avenue Capital and advanced academic study in finance and
accounting.
The Audit
Committee met 12 times in 2007. The Audit Committee regularly holds
meetings at which it meets with our independent registered public accounting
firm and without management present.
Compensation
Committee
Our
Compensation Committee (a) administers our executive compensation program, (b)
determines and approves targeted total compensation, as well as each individual
compensation component for our executive officers, (c) determines and
recommends to the Board of Directors equity-based plans and (d) reviews and
approves any employee retirement plans, other benefit plans or any amendments
thereto.
The
members of our Compensation Committee are Mr. Rosen, Judge Webster and Mr.
Symington, who serves as the chairman of the Compensation
Committee. The Board of Directors has determined that all three
members of the Compensation Committee are independent pursuant to the listing
standards of Nasdaq. Mr. Manchester served on the Compensation
Committee until April 9, 2007, when he resigned from the Committee and was
replaced by Mr. Rosen.
Our Board
of Directors has delegated to the Compensation Committee sole decision-making
authority with respect to all compensation decisions for our executive officers,
including determinations of annual incentive award payments and grants of equity
awards. The Compensation Committee approves these payments and awards
after considering our corporate performance and the individual performance of
our executives (and considers the recommendations of our Chief Executive Officer
in this regard). The Compensation Committee is also responsible for evaluating
the performance of Mr. Salmasi, our Chief Executive Officer, in light of our
corporate performance and his individual performance.
The
Compensation Committee’s decisions are made with input from Mr. Salmasi, our
Chief Executive Officer (except with respect to his own compensation) and, where
appropriate, other senior executives. The Compensation Committee also
considers information provided by and the input of our Human Resources
department, which evaluates publicly available compensation information along
with other sources of data. The Committee also considers our overall
executive compensation policies and goals in making its decisions. A
discussion and analysis of the Company's compensation policies and decisions
regarding the Company’s named executive officers as identified in the Summary
Compensation Table on page 21 of this Proxy Statement is contained in the
Compensation Discussion and Analysis on page 13 of this Proxy
Statement.
To assist
in performing its duties, the Compensation Committee has the authority to engage
external compensation consultants and other advisors. In 2007, the
Compensation Committee did not retain any consultants or advisors to assist it
in formulating or making executive compensation decisions.
The
Compensation Committee reviews and discusses with management the Compensation
Discussion and Analysis included in this Proxy Statement and determines whether
to recommend to the Board of Directors that the Compensation Discussion and
Analysis be included in this Proxy Statement and the Company’s Annual Report on
Form 10-K. This recommendation is set forth in the Compensation
Committee Report on page 30 of this Proxy Statement.
The
Compensation Committee met 11 times in 2007.
Nominating
and Corporate Governance Committee
Our
Nominating and Corporate Governance Committee (a) identifies and recommends to
the Board of Directors individuals qualified to serve as directors of our
company and on committees of the Board of Directors, (b) reviews corporate
governance, (c) reviews and recommends changes to the size of the Board of
Directors, (d) reviews the manner in which conflicts of interest are addressed
and (e) recommends to the Board of Directors any changes in director
compensation.
The
members of our Nominating and Corporate Governance Committee are Mr. Manchester,
Mr. Rosen and Judge Webster, who serves as its chairman. As
indicated, the Board of Directors has determined that all three members of the
Nominating and Corporate Governance Committee are independent pursuant to the
listing standards of Nasdaq.
The
Nominating and Corporate Governance Committee met 2 times in 2007.
Stockholder
Nominations
A
stockholder entitled to vote in the election of directors may nominate one or
more persons for election as director at a meeting if written notice of that
stockholder’s intent to make the nomination has been given to us, with respect
to an election to be held at an annual meeting of stockholders (A) not later
than the close of business on the 90th day nor
earlier than the close of business on the 120th day
prior to the first anniversary of the date that our Proxy Statement is released
to stockholders in connection with the previous year's annual meeting of
stockholders, or (B) (i) if no annual meeting was held in the previous year or
(ii) the date of the annual meeting is more than 30 calendar days before or more
than 60 days after such anniversary date, notice by the stockholders to be
timely must be so delivered not earlier than the close of business on the
120th day
prior to such annual meeting and not later than the close of business on the
later of the 90th day
prior to such annual meeting or the 10th day
following the day on which the date of the annual meeting is publicly announced
by the Company. With respect to an election to be held at a special
meeting of stockholders, written notice of that stockholder’s intent to make the
nomination shall have been given to us not less than ten (10) and not more than
sixty (60) days before the date of the special meeting.
The
notice shall include the name and address of the stockholder and his or her
nominees, a representation that the stockholder is entitled to vote at the
meeting and intends to nominate the person, a description of all arrangements or
understandings between the stockholder and each nominee, other information as
would be required to be included in a Proxy Statement soliciting proxies for the
election of the stockholder’s nominees, and the consent of each nominee to serve
as a director of the Company if so elected. We may require any
proposed nominee to furnish other information as we may reasonably require to
determine the eligibility of the proposed nominee to serve as a director of the
Company. See “PROPOSALS BY STOCKHOLDERS” on page 37 of this Proxy
Statement for the deadline for nominating persons for election as directors for
the 2009 annual meeting of stockholders.
As
described above, the Company’s By-Laws contain provisions which address the
process by which a stockholder may nominate an individual to stand for election
to the Board at the Company’s annual meeting of stockholders. The
Board has also adopted a formal policy concerning stockholder recommendations of
Board candidates to the Nominating and Corporate Governance
Committee. This policy is set forth in the Company’s Nominating and
Corporate Governance Committee charter, which is available on the Company’s
website at www.nextwave.com. Under
this policy, the Nominating and Corporate Governance Committee considers
director candidates recommended by stockholders who satisfy the notice,
information and consent requirements set forth in the Company’s
By-Laws.
We may
require any proposed nominee to furnish other information as we may reasonably
require to determine the eligibility of the proposed nominee to serve as a
director of the Company. See “PROPOSALS BY STOCKHOLDERS” on page 37
of this Proxy Statement for the deadline for nominating persons for election as
directors for the 2009 annual meeting of stockholders.
Attendance
at Board and Committee Meetings
It is our
policy that directors are expected to dedicate sufficient time to the
performance of their duties as a director, including by attending meetings of
the stockholders, Board of Directors and committees of which they
are a member.
In 2007,
the Board of Directors held 14 meetings (including regularly scheduled and
special meetings). All directors attended 100% of the total number of meetings
of the Board of Directors and committees of the Board of Directors on which such
director served. All directors attended our 2007 annual meeting of
stockholders.
Stockholder
Communications with the Board of Directors
Our Board
provides a process for stockholders to send communications to the Board of
Directors.
Stockholders
and other parties interested in communicating directly with the Board of
Directors as a group, may do so by writing to the Board of Directors, c/o
Secretary, 12670 High Bluff Drive, San Diego, California 92130.
The Secretary will review all correspondence and regularly forward to the Board
of Directors a summary of all such correspondence that, in the opinion of the
Secretary, deals with the functions of the Board of Directors or committees
thereof or that the Secretary otherwise determines requires
attention. Concerns relating to accounting, internal controls or
auditing matters will immediately be brought to the attention of the Chairman of
the Audit Committee. We have adopted a Whistleblower Policy, which establishes
procedures for submitting these types of concerns, either personally or
anonymously through a toll free telephone “hotline” operated by an independent
party. A copy of our Whistleblower Policy is available on our website at www.nextwave.com.
Executive
Officers
The
following persons serve as our executive officers in the capacities indicated
below. Our executive officers are responsible for the management of
our operations, subject to the oversight of the Board of Directors.
Chairman,
President, and Chief Executive Officer
|
Allen
Salmasi
|
|
|
Chief
Executive Officer, NextWave
Mobile Products
|
James
Brailean
|
|
|
Chief
Executive Officer, NextWave Network
Products
|
William
Jones
|
|
|
Executive
Vice President, Chief Legal Counsel
|
Frank
A. Cassou
|
|
|
Executive
Vice President, Chief Financial Officer
|
George
C. Alex
|
|
|
Executive
Vice President, Corporate Marketing & Communications
|
Roy
D. Berger
|
|
|
Executive
Vice President, Chief Compliance Officer
|
Kevin
M. Finn
|
Executive
Vice President, Chief Business Development Officer
|
James
Madsen
|
|
|
Executive
Vice President, Chief Administrative Officer
|
R.
Andrew Salony
|
|
|
Executive
Vice President, Chief Accounting Officer
|
Francis
J. Harding
|
Code
of Business Conduct and Ethics
We have
adopted a Code of Business Conduct and Ethics (the "Code”), that applies to all
of our directors, officers and employees, including our principal executive
officer, principal financial officer and principal accounting
officer. Copies of our Code are available without charge upon
requests directed to Investor Relations, 75 Holly Hill Drive, Greenwich, CT
06830, and from our website at www.nextwave.com. Any
amendments to, or waivers under, our Code which are required to be disclosed by
the rules promulgated by the SEC will be disclosed on the Company’s website
at www.nextwave.com.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires our executive officers and
directors, and persons who beneficially own more than 10% of a registered class
of our equity securities, to file reports of ownership and changes in ownership
with the SEC. Based solely upon a review of the copies of such forms
furnished to us and written representations from our executive officers,
directors and greater than 10% beneficial stockholders, we believe that during
the year ended December 29, 2007, all persons subject to the reporting
requirements of Section 16(a) filed the required reports on a timely basis,
except as otherwise disclosed below.
A Form 4
for each of Messrs. Manchester, Rosen, Symington and Judge Webster regarding
options granted for board member services on February 26, 2007 were filed on
March 29, 2007. A Form 4 for Dr. William J. Jones regarding an option
grant to purchase 5,874 shares of common stock granted on September 25, 2007 was
filed on January 24, 2008.
Compensation
Committee Interlocks and Insider Participation
All
members of the Compensation Committee are independent directors, and none of
them are present or past employees or officers of ours or any of our
subsidiaries. No member of the Compensation Committee has had any relationship
with us requiring disclosure under Item 404 of Regulation S-K of the Securities
Exchange Act of 1934. None of our executive officers currently serves, or in the
past fiscal year has served, on the Board of Directors or Compensation Committee
(or other committee serving an equivalent function) of an entity whose executive
officers served on our Board or Compensation Committee.
The
information contained in this Proxy Statement with respect to the charters of
the Audit Committee, Compensation Committee and Nominating and Corporate
Governance Committee, the description of the Audit Committee and the
independence of the non-management members of the Board of Directors shall not
be deemed to be “soliciting material” or to be “filed” with the Securities and
Exchange Commission, nor shall such information be incorporated by reference
into any future filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company specifically
incorporates it by reference in a filing.
BENEFICIAL
OWNERSHIP OF OUR COMMON STOCK
Set forth
below is certain information as of March 28, 2008, with respect to the
beneficial ownership determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, as amended, of our common stock by (a) each
person who, to our knowledge, is the beneficial owner of more than 5% of our
outstanding common stock and our outstanding preferred stock, (b) each director
and nominee for director, (c) each of the executive officers named in the
Summary Compensation Table on page 21 of this Proxy Statement and (d) all of our
executive officers and directors as a group. Unless otherwise stated,
the business address of each person listed is c/o NextWave
Wireless Inc., 12670 High Bluff Drive, San Diego, California
92130.
|
|
Securities
Beneficially Owned
|
|
Name
and Address
of
Beneficial Owner
|
|
Shares
Beneficially
Owned
|
|
|
Percentage
of Shares Outstanding
|
|
|
|
|
|
|
|
|
Principal
Security Holders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Navation
Inc. (1)
|
|
|
19,882,057 |
|
|
|
18.6
|
% |
Manchester
Financial Group, LP (2)
|
|
|
15,269,735 |
|
|
|
14.3
|
% |
Avenue
Capital Group (3)
|
|
|
11,600,272 |
|
|
|
10.2
|
% |
Davidson
Kempner Partners (4)
|
|
|
8,569,524 |
|
|
|
8.4
|
% |
|
|
|
|
|
|
|
|
|
Officers,
Directors and Nominees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George
C. Alex (5)
|
|
|
784,818 |
|
|
|
1
|
% |
James
C. Brailean (6)
|
|
|
168,055 |
|
|
|
* |
|
Frank
A. Cassou (7)
|
|
|
3,309,152 |
|
|
|
3.2
|
% |
Kevin
M. Finn (8)
|
|
|
1,395,576 |
|
|
|
1.4
|
% |
William
J. Jones (9)
|
|
|
202,928 |
|
|
|
* |
|
Douglas
F. Manchester (10)
|
|
|
15,269,735 |
|
|
|
14.3
|
% |
Jack
Rosen (11)
|
|
|
253,686 |
|
|
|
* |
|
Allen
Salmasi (12)
|
|
|
28,814,305 |
|
|
|
26.9
|
% |
Robert
T. Symington (13)
|
|
|
108,598 |
|
|
|
* |
|
William
H. Webster (14)
|
|
|
210,729 |
|
|
|
* |
|
All
Others
|
|
|
3,475,414 |
|
|
|
3.4
|
% |
All
directors and officers as a group
|
|
|
53,992,996 |
|
|
|
50.88
|
% |
* Less
than 1%
The
shares beneficially owned and ownership percentages reflected in the table above
are based on the inclusion in the calculations for each individual or entity of
(i) options held by such individual or entity that are exercisable within a
period of 60 days from the record date, (ii) preferred stock held by such
individual or entity that is convertible within a period of 60 days from the
record date and
(iii) warrants held by such individual or entity that are exercisable within a
period of 60 days from the record date, as applicable.
(1)
|
The
address for Navation, Inc. is c/o Mr. Alain Tripod, 15, rue
Général-Dufour, Case Postale 5556, CH - 1211 Genéve 11, Switzerland.
Includes 4,788,183 shares issuable upon conversion of preferred
stock.
|
|
|
(2)
|
The
address for Manchester Financial Group, LP is One Market Place, 33rd
Floor, San Diego, California 92101. Includes 4,788,183 shares
issuable upon conversion of preferred stock.
|
|
|
(3)
|
The
address for Avenue Capital Group is 535 Madison Avenue, 14th
Floor, New York, NY 10022. Robert T. Symington, a member of the
NextWave
Board of Directors, is a portfolio manager. Includes 9,576,366
shares issuable upon conversion of preferred stock, 1,935,990 shares
issuable upon the exercise of warrants and 87,916 shares underlying
options held by Mr. Symington that are exercisable within 60
days. Marc Lasry is the managing member of Avenue Capital
Management II GenPar, LLC, the general partner of Avenue Capital II and
exercises voting and investment power over the securities beneficially
owned by Avenue Capital II and by the funds
thereof.
|
(4)
|
The
address for Midtown Acquisition LLC is c/o MH Davidson & Co., 885
Third Avenue, Suite 3300, New York, New York 10022. Thomas L.
Kempner, Jr. , Marvin H. Davidson, Stephen M. Dowicz, Scott E. Davidson,
Michael J. Leffell, Timothy I. Levart, Robert J. Brivio, Eric P. Epstein,
Anthony A. Yoseloff and Avram Z. Friedman have voting and/or investment
control over the shares held by Midtown Acquisition
LLC.
|
|
|
(5)
|
Represents
shares held by George C. Alex directly and indirectly through each of
George C Alex Grantor Retained Annuity Trust and The Alex Family
Foundation. Includes 297,772 shares underlying options that are
exercisable within 60 days, including 57,292 shares that are restricted
and subject to forfeiture prior to vesting.
|
|
|
(6)
|
Includes
168,055 shares underlying options that are exercisable within 60
days.
|
|
|
(7)
|
Represents
shares held by Frank Cassou directly and indirectly through the Cassou
2008 Annuity Trust. Includes 387,783 shares underlying options
that are exercisable within 60 days, of which 76,389 shares would be
restricted and subject to forfeiture prior to vesting.
|
|
|
(8)
|
Represents
shares held by Kevin M. Finn directly and indirectly through KFMF Co. and
The Kevin Finn and Madeline Marin-Finn Living Trust. Includes
255,775 shares underlying options that are exercisable within 60 days, of
which 57,292 shares would be restricted and subject to forfeiture prior to
vesting. Includes 191,527 shares issuable upon conversion of preferred
stock.
|
|
|
(9)
|
Includes
55,000 shares underlying options that are exercisable in 60
days.
|
|
|
(10)
|
Represents
shares held by Douglas F. Manchester directly and indirectly through each
of Manchester Financial Group, LP and Manchester Grand Resorts, LP.
Includes 12,743 shares underlying options to purchase our common stock,
arising from the conversion of options to purchase CYGNUS common stock
that were converted into NextWave
options in November 2006 upon the quotation of our common stock on the
Over-the-Counter Bulletin Board. Includes 4,788,183 shares issuable upon
conversion of preferred stock and 107,931 shares underlying options that
are exercisable within 60 days.
|
|
|
(11)
|
Includes
78,520 shares underlying options that are exercisable within 60
days.
|
|
|
(12)
|
Allen
Salmasi is Chief Executive Officer of Navation, Inc. Mr. Salmasi may be
deemed to beneficially own the shares of common stock held or record by
Navation, Inc. Represents shares held by Allen Salmasi directly and
indirectly through Navation, Inc. Includes 4,788,183 shares issuable upon
conversion of preferred stock and 528,082 shares underlying options that
are exercisable within 60 days, of which 95,486 shares would
be restricted and subject to forfeiture prior to
vesting.
|
|
|
(13)
|
Includes
87,916 shares underlying options that are exercisable within 60
days.
|
|
|
(14)
|
Includes
102,396 shares underlying options that are exercisable within 60
days
|
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
This
section provides information regarding the compensation program in place for Mr.
Salmasi, our Chief Executive Officer (“CEO”), Mr. Alex, our Chief Financial
Officer (“CFO”), Mr. Cassou and Drs. Brailean and Jones, the three
most highly-compensated individuals other than our CEO and CFO who were serving
as executive officers at the end of fiscal 2007 (these executive officers are
referred to in this Compensation Discussion and Analysis and in the Summary
Compensation Table on page 21 of this Proxy Statement as the “Named Executive
Officers”).
Introduction
We are a
wireless technology company that supplies advanced mobile broadband
and wireless multimedia products and technologies to many of the largest mobile
operators and handset manufacturers in the world.
We
operate in a highly complex and competitive business environment, which is being
constantly reshaped by sweeping technological advances, rapidly changing market
requirements, and the emergence of new competitors. To thrive in this
environment, we must continuously develop and refine new products and
technologies, devise new business models, and demonstrate an ability to quickly
identify and capitalize on new business opportunities. To achieve
these objectives, we need a highly talented and seasoned team of technical and
business professionals.
The
wireless communications industry is widely recognized as a highly competitive
market for talented engineers and other employees with the skills and experience
to develop and commercialize mobile broadband products and
technologies. Many of our direct competitors are well-established,
international leaders in the wireless communications industry that have
significantly greater financial, technical development, and marketing resources
than we do. As a result, the compensation packages that we must use
to attract and retain skilled employees are often influenced by the compensation
practices of these other organizations.
The
market is equally competitive for talented executives with the integrity,
skills, and dedication necessary to oversee a dynamic and growing organization
and the vision to anticipate and respond to emerging market
developments. An important part of our long-term business strategy is
to pursue acquisitions of and investments in businesses and technologies that
will expand our business and enhance our technology development
capabilities. Consequently, our executives must be capable of
fulfilling this strategy, identifying complementary businesses and technologies,
determining the most advantageous form of investment, negotiating acquisitions
and strategic relationships, and successfully blending these
businesses and technologies into our business.
Our
executive compensation program is designed to foster practices that will enable
us to attract, retain, motivate, and appropriately reward our executives to
successfully execute our business strategy. While the following
discussion is focused on the application of our executive compensation program
to our Named Executive Officers, it also reflects our overall approach to
compensating all of our executives.
Recent
History
We have
experienced rapid growth over the past three years. In April 2005, we
emerged from the Chapter 11 reorganization of NextWave
Telecom, Inc. and its subsidiaries as a new wireless technology company with
approximately 35 employees. As of March 28, 2008, we had a total of
1,175 employees and 240 independent contractors. During this
three-year period, we have consummated several acquisitions of other businesses
and focused on internal hiring to assemble a core research and development team
as well as a corporate infrastructure. We became a reporting company
under the Securities Exchange Act of 1934 on June 30, 2006 and were listed on
the Nasdaq Global Market on January 3, 2007 under the trading symbol
“WAVE.”
Compensation
Philosophy and Policies
We
compensate our executives through a mix of base salary, annual incentive awards,
and long-term incentive compensation (in the form of equity awards) that is
designed to be competitive with well-established companies in the Semiconductor,
Software, Telecommunications, and Infrastructure industries operating within our
geographic regions with whom we compete for executive talent. In
allocating compensation among these components, we believe that the compensation
of our executives, the individuals who have the greatest ability to influence
our performance, should be predominately performance-based.
The
market for experienced executives is highly competitive in the various
industries in which we operate, and includes several well-established,
international organizations, as well as our direct business
competitors. Consequently, we have historically monitored the
compensation practices of these companies, as well as those within our
industries generally, to ensure that our executive compensation program reflects
current market trends. In fiscal 2007, as in past years, our Human
Resources department prepared compensation market data for our management and
the Compensation Committee of our Board of Directors to use, based on
information that it compiled from publicly-available proxy statements and survey
data for comparable industry positions. Our Human Resources
department screens
the survey data to confirm that the information is appropriate given our size,
type, and mix of businesses, and the industries in which we compete for
executive talent.
It is
important to note that the compensation market data prepared by our Human
Resources department provides only a reference point for our management in
formulating compensation proposals and the Compensation Committee in making
executive pay decisions. In particular, the Compensation Committee
uses this information solely to validate the range of competitive pay for our
executives. It is not used to determine an executive’s total compensation or any
individual compensation component. The Compensation Committee’s
decisions about an executive’s compensation relative to the market considers the
scope, complexity, and responsibility of the executive’s position in relation to
positions in the sources of data. The Compensation Committee
exercises its judgment in interpreting the compensation market
data. As a result, an executive’s actual compensation relative to the
compensation market data is a result of the Compensation Committee's
assessment of our financial results, current business condition, and the
individual performance factors described below. In the future, as we continue to grow, we
expect to conduct periodic benchmarking reviews to ensure that our executive
compensation, both in terms of targeted total compensation, as well as the mix
and amounts of individual compensation components, is competitive within the
industries in which we compete for executive talent.
We set
the total cash compensation for our executives (that is, the sum of base salary
plus target annual incentive award opportunities) at levels that we believe are
comparable to and competitive with the companies with whom we compete for
executive talent. Consequently, the targeted total cash compensation
for Mr. Salmasi, our CEO, was set at $1,443,384, consisting of his
then-base salary of $721,692 and a target annual incentive award opportunity
equal to 100% of his base salary. The Compensation Committee believed
that, at this level, Mr. Salmasi’s targeted total cash compensation was in line
with the prevailing market practices and the importance of his individual
contributions to the Company. In the case of the other Named
Executive Officers, their targeted total cash compensation ranged from
approximately $450,000 to approximately $800,000. The Compensation
Committee believed that the targeted total cash compensation of Messrs. Alex
and Cassou and Drs. Brailean and Jones was consistent with that of
comparable positions at other companies as reflected in the compensation market
data and their individual contributions and roles during the 2007 fiscal
year. For fiscal
2007, Mr. Cassou had a target annual incentive award opportunity equal to 75% of
his base salary while Mr. Alex and Dr. Brailean had target annual incentive
award opportunities equal to 50% of their base salaries. As Dr. Jones
joined the Company in fiscal 2007 in connection with the acquisition of
IPWireless, he was not eligible to receive an annual incentive award
payment. The targeted total cash compensation of Drs. Brailean and
Jones has been increased for fiscal 2008 to reflect their new positions and
responsibilities as Chief Executive Officer – NextWave
Mobile Products and Chief Executive Officer – NextWave
Network Products, respectively.
We
believe that these total cash compensation opportunities are consistent with our
overall compensation philosophy. However, because we have typically
paid our annual incentive awards in stock rather than in cash, the
total equity awards of our executives may, in some instances, be greater than
those provided by some of the companies with whom we compete for executive
talent.
We
followed a flexible approach to compensation which involves establishing salary
grades and target annual incentive award opportunities for all of our
employees, including our executives, and evaluating performance after fiscal
year-end to determine actual incentive award payments. For the
past three years, fiscal 2005 through 2007, our annual incentive awards have
been determined after the end of our fiscal year based on the size of a fixed
bonus pool which is then allocated among our employees, including our
executives, based on their salary grade and an assessment of
corporate and individual performance in accordance with our CEO’s
recommendations (except with respect to his own award). We expect
that our approach to compensation for fiscal 2008 performance will be consistent
with this approach.
As an
early stage company, equity awards have formed an important component of our
compensation program. We grant equity awards to all new hires,
including new executives, based on their salary grade to provide them with an
appropriate long-term incentive compensation opportunity. Our
founding executives received such baseline awards upon our emergence from the
Chapter 11 reorganization in April 2005 as a new wireless technology
company. Drs. Brailean and Jones received baseline awards following
our acquisitions of PacketVideo in July 2005 and IPWireless in May 2007,
respectively. In addition, a significant portion of the annual
incentive awards paid in respect of performance for the short fiscal 2005
period, fiscal 2006 and fiscal 2007 were paid in equity, reflecting our desire
to tie compensation more closely to our long-term performance and to conserve
our cash resources for the growth of our business.
Oversight
of Executive Compensation Program
The
Compensation Committee administers our executive compensation
program. The Compensation Committee determines and approves targeted
total cash compensation, as well as each individual compensation component,
based on its review and evaluation of the proposals and recommendations
presented by Mr. Salmasi, our CEO (except with respect to his own
compensation). Our CEO is typically present at Committee meetings
where executive compensation and corporate and individual performance are
discussed and evaluated (except where his own compensation and performance are
discussed). Only Compensation Committee members are allowed to vote
on decisions regarding executive compensation.
In
determining targeted total compensation, the Compensation Committee reviews each
component and the mix of compensation that comprises each executive’s total
compensation package. This process includes comparing the compensation market
data prepared by our Human Resources department to our executives as a group, or
individually in the case of our CEO. To support our compensation
objectives, the Compensation Committee may make adjustments to our executives’
compensation components to bring them closer to that of the companies with whom
we compete for executive talent. For example, we do not offer our
employees retirement benefits and therefore almost none of our executives’ total
compensation is attributed to retirement pay. We believe that this is
an appropriate departure from the practices of many of the larger companies with
whom we compete for executive talent because we provide a larger
allocation of equity compensation, which provides significant long-term income
potential. In addition to adjusting the allocation among compensation
components for our executives, or the CEO, as the case may be, individual pay
may differ for any executive based on individual performance, tenure, and a
subjective assessment of future potential. Adjustments also may be
made to base salary or incentive compensation based on internal equity among our
executives.
For a
more complete description of the responsibilities of the Compensation Committee,
see “COMPENSATION COMMITTEE” on page 7 of this Proxy Statement, and the
Compensation Committee’s charter, which is posted on our website at www.nextwave.com.
Compensation
Components
In fiscal
2007, the primary components of our executive compensation program
were:
§
|
base
salary
|
§
|
annual
incentives
|
§
|
equity
compensation
|
§
|
other
benefits
|
Base
Salary
We use
base salary to fairly and competitively compensate our executives, including the
Named Executive Officers, for the jobs we ask them to perform. We
view base salary as the most stable component of our executive compensation
program, as this amount is not at risk.
We
believe that the base salaries of our executives should be targeted at or above
the median of base salaries for executives in similar positions with similar
responsibilities at comparable companies, consistent with our compensation
philosophy. Because of our emphasis on performance-based compensation
for executives, base salary adjustments are generally made only when we believe
there is a significant deviation from the market or an increase in
responsibility. The Compensation Committee reviews the base salary levels of our
executives each year to determine whether an adjustment is warranted or
necessary.
Fiscal 2007
Decisions. The Compensation Committee reviewed the
base salaries of our executives for fiscal 2007, including the Named Executive
Officers, in April 2007. At that time, base salaries were adjusted to
reflect the increases that the Compensation Committee deemed necessary to
maintain our executives’ salaries at a competitive
level. In making these adjustments, the Compensation
Committee took into account the scope of each executive’s responsibilities, his
experience, and his prior performance, and balanced these factors against the
compensation market data. In adjusting each executive’s base salary,
the Compensation Committee also considered internal equity among our
executives.
Specifically,
Mr. Salmasi’s annual base salary was increased to $780,000, Mr. Alex’s annual
base salary was increased to $364,000, Mr. Cassou’s annual base salary was
increased to $468,000, and Dr. Brailean’s annual base salary was increased to
$298,393. Dr. Jones annual base salary was set when he joined the
Company in connection with the acquisition of IPWireless in May
2007.
The base
salaries paid to the Named Executive Officers during fiscal 2007 are reported in
the Summary Compensation Table on page 21 of this Proxy Statement.
Fiscal 2008
Decisions. The Compensation Committee reviewed the base
salaries of our executives for fiscal 2008, including the Named Executive
Officers, in March 2008. At that time, base salaries were
adjusted to reflect the increases that the Compensation Committee deemed
necessary to maintain our executives’ salaries at a competitive
level. In making these adjustments, the Compensation Committee took
into account the scope of the executive’s responsibilities, his experience, and
his prior performance, and balanced these factors against the compensation
market data. In adjusting each executive’s base salary, the
Compensation Committee also considered internal equity among our
executives.
Specifically,
Mr. Salmasi’s annual base salary was increased to $819,000, Mr. Alex’s annual
base salary was increased to $378,560, Mr. Cassou’s annual base salary was
increased to $500,760, Dr. Brailean’s annual base salary was increased to
$390,000, and Dr. Jones annual base salary was increased to
$390,000. While the increases for Messrs. Salmasi, Alex, and Cassou
were primarily intended to keep their base salaries at or near the market
median, the increases for Drs. Brailean and Jones were largely in recognition of
the increased responsibilities and duties of their new positions as Chief
Executive Officer – NextWave
Mobile Products and Chief Executive Officer – NextWave
Network Products, respectively.
The base
salaries paid to the Named Executive Officers during fiscal 2008 will be
reported in the Summary Compensation Table in next year’s Proxy
Statement.
Annual
Incentives
The
Compensation Committee has the authority to make discretionary annual incentive
awards to our executives, including the Named Executive Officers, after the end
of the fiscal year, once the financial results for the year are
available. While we do not have a formal bonus plan for making these
awards, typically we follow the same general process for making the awards each
year. Using the target annual incentive award opportunities and the
Company’s financial and operational performance for the completed fiscal
year, Mr. Salmasi, our CEO, establishes a proposed total bonus pool
amount and tentative award allocations among our employees, including our
executives (except with respect to his own award). The proposed total
bonus pool amount and the tentative award allocations are subject to the
approval of the Compensation Committee. These awards are intended to
reward our employees and executives for achieving strategic and operational
objectives during the year. Mr. Salmasi also evaluates the performance of
each of our executives in order to formulate award recommendations for the
Compensation Committee.
Fiscal 2007 Decisions. The
target annual incentive award opportunities for our executives, including the
Named Executive Officers, determined in Fiscal 2007 for fiscal 2006 performance
were established as a percentage of their base salaries, so as to achieve
targeted total cash compensation at the median of the compensation market
data. Mr. Salmasi’s target annual incentive award opportunity was
100% of his base salary; Mr. Cassou had a target annual incentive award
opportunity equal to 75% of his base salary while Mr. Alex had a target annual
incentive award opportunity equal to 50% of his base salary. Dr.
Jones was not an executive officer of the Company in fiscal 2006, and Dr.
Brailean did not participate in the incentive award opportunity in
2006. Following discussion and review of recommendations provided by
Mr. Salmasi, the Compensation Committee determined that each executive had
performed during fiscal 2006 in a manner that warranted the payment of the
targeted annual incentive award. In reaching this decision, the
Compensation Committee also considered the milestones that the Company had
achieved in fiscal 2006, including its acquisitions and financing activities, as
well as the completion of the Company’s Nasdaq listing. In
addition, the Compensation Committee conducted independent evaluation of Mr.
Salmasi’s performance
The form
of payment for our annual incentive awards is subject to the discretion of the
Compensation Committee, and may be paid in either cash or stock. In
fiscal 2007, the Compensation Committee elected to pay out the annual incentive
awards for fiscal 2006 performance in the form of fully-vested stock, with some
opportunity to receive cash. Accordingly, each of the Named Executive
Officers who was eligible to receive an annual incentive award, except Mr. Alex,
was granted an award for the number of shares of the Company’s common stock that
had a grant date fair market value as determined by the closing sale price of
the Company’s common stock on May 18, 2007 ($9.22 per share) that equaled the
amount of his or her targeted annual incentive awarded. Because Mr.
Alex elected to receive 40% of his annual incentive award in cash, he was
granted an award for the number of shares of the Company’s common stock that had
a grant date fair market value as determined by the closing sale price of the
Company’s common stock on May 18, 2007 ($9.22 per share) that equaled 60% of his
annual incentive award.
In
addition to their targeted annual incentive awards, in recognition of their
extraordinary efforts during fiscal 2006, the Compensation Committee
awarded Mr. Salmasi an additional 50,000 shares of the Company’s
common stock as part of his annual incentive award for fiscal 2006, while Mr.
Cassou was awarded an additional 20,000 shares of the Company’s common stock as
part of his annual incentive award for fiscal 2006.
Dr.
Jones joined the Company in May 2007 in connection with the acquisition of
IPWireless and accordingly was not eligible for an annual incentive award for
the Company’s fiscal 2006 performance. However Dr. Jones was eligible
for and did receive a stock bonus award in fiscal 2007 pursuant to the
IPWireless, Inc. Employee Stock Bonus Plan (the “IPWireless Stock Bonus Plan”)
established by the Company as an employment inducement plan in connection with
the acquisition of IPWireless. The IPWireless Stock Bonus Plan
provides IPWireless employees with the opportunity to earn shares of the
Company’s common stock having an aggregate value of up to $7 million, depending
on the achievement of certain revenue milestones. For more
information on this award, see IPWireless Stock Bonus Plan on page 24 of this
Proxy Statement.
The
annual incentive award payments made to the Named Executive Officers in fiscal
2007 for fiscal 2006 performance, and the award made to Dr. Jones under the
IPWireless Stock Bonus Plan are reported in the Summary Compensation Table on
page 21 of this Proxy Statement. Additional information about these
awards is reported in the Grants of Plan-Based Awards Table on page 23 of this
Proxy Statement.
Fiscal 2008 Decisions. The
target annual incentive award opportunities for our executives, including the
Named Executive Officers, determined in fiscal 2008 for fiscal 2007 performance
were established as a percentage of their base salaries. Mr. Salmasi’s target
annual incentive award opportunity was 100% of his base salary; Mr. Cassou had a
target annual incentive award opportunity equal to 75% of his base salary while
Mr. Alex and Drs. Brailean and Jones had target annual incentive award
opportunities equal to 50% of their base salaries. Following
discussion and review of recommendations provided by Mr. Salmasi, in March 2008
the Compensation Committee determined that each executive had performed during
fiscal 2007 in a manner that warranted the payment of an annual incentive
award. In reaching this decision, the Compensation Committee
considered the milestones that the Company had achieved in fiscal 2007,
including product development achievements and its acquisitions and
financing activities, as well as its integration of IPWireless into the
Company. In recognition of the stage of development of the Company’s
business, bonuses were paid at less than the full target incentive award
levels. The Compensation Committee conducted an independent
evaluation of Mr. Salmasi’s performance for fiscal 2007.
The form
of payment for our annual incentive awards is subject to the discretion of the
Compensation Committee. The Compensation Committee elected to pay out
the annual incentive awards for fiscal 2007 performance in the form of
fully-vested shares of the Company’s common stock and cash. The stock portion of
the award will make up 60%, while the cash portion of the award will make up the
remaining 40%.
The
annual incentive awards made to the Named Executive Officers in fiscal 2008 for
fiscal 2007 performance are reported in the Summary Compensation Table on page
21 of this Proxy Statement. Additional information about these awards
is reported in the Grants of Plan-Based Awards Table on page 23 of this Proxy
Statement.
Equity
Compensation
We use
equity compensation to promote an ownership culture that encourages long-term
decision-making and building shareholder value. Through our equity
compensation plan, we provide designated employees, including our executives,
with equity incentives that help align their interests with those of our
shareholders. Our practice has been to grant equity awards to new
hires in an amount appropriate to their job level and
responsibilities. Additional equity awards have been granted in
connection with promotions (to make the total long term equity incentive held by
such individual commensurate with other individuals in their new pay grade) and
in lieu of annual cash incentive awards.
We
believe that the opportunity to acquire equity creates and maintains an
environment that motivates our employees to stay with the organization and
provides a key incentive to them to promote our long-term success and build
shareholder value. By providing employees a direct stake in our
economic success, equity compensation assures a closer identification of their
interests with those of the Company and our shareholders, stimulate their
efforts on our behalf, and strengthen their desire to remain with
us.
Although
the accounting treatment for stock options changed for the Company in 2006 as a
result of the implementation of Statement of Financial Accounting Standards No.
123 (revised 2004), Share-based Payment “SFAS
123(R)”, making them an expense item for financial reporting purposes, given our
current financial position, as well as the compensation practices used in our
industry, we continue to use stock options as the primary means of providing
equity to our employees.
Fiscal 2007
Decisions. In fiscal 2007, other than the equity awards
granted to Dr. Jones in connection with the acquisition of IPWireless, we did
not make equity awards to our executives, including the Named Executive Officers
(other than in connection with the payment of the annual incentive awards for
fiscal 2006 performance). In the future, we may consider making
one-time or annual ongoing equity awards to our executives to remain
competitive, support our ownership culture and increase retention.
The
equity awards made to the Named Executive Officers in fiscal 2007 are reported
in the Summary Compensation Table on page 21 of this Proxy Statement. Additional
information about these awards, including the number of shares subject to each
award and the award’s grant date fair value, is reported in the Grants of
Plan-Based Awards Table on page 23 of this Proxy Statement.
Acquisition-Related
Payments
Dr. Brailean. In
connection with the Company’s acquisition of PacketVideo in July 2005, Dr.
Brailean was awarded a cash retention bonus in the amount of $600,000 that would
be payable in July 2007 if he remained employed with the Company until that
date. In July 2007, Dr. Brailean satisfied the vesting conditions of
this award and received the stipulated payment.
Dr. Jones. In
connection with the Company’s acquisition of IPWireless in May 2007, the
shareholders of IPWireless, including Dr. Jones, agreed that a portion of the
acquisition consideration would be payable only if earned upon the achievement
of certain revenue milestones relating to IPWireless's public safety business
and TDtv business during the fiscal 2007 to fiscal 2009 timeframe as specified
in the merger agreement for the transaction (the "Earn-out
Payments). Some of this consideration was potentially payable during
fiscal 2007, with other amounts potentially payable in fiscal 2008, 2009, and
2010. As provided in the merger agreement, if earned, a specified amount of this
additional consideration would be payable in cash or shares of the Company’s
common stock at its election, and a lesser specified amount of this additional
consideration would be payable in cash or shares of the Company’s common stock
at the election of the representative of the IPWireless shareholders. In
addition, some of this additional consideration would be placed in escrow for 12
months from the closing date of the acquisition in order to compensate us for
any indemnifiable losses the Company may incur as a result of any breach of the
representations and warranties or covenants of IPWireless contained in the
merger agreement.
As
previously disclosed by the Company, some of the specified revenue milestones
were achieved during fiscal 2007 and, accordingly, Dr. Jones received a payment
in fiscal 2008 determined in accordance with the formulas contained in the
merger agreement.
Equity
Award Grant Practices
Our
practice has been to determine the level of equity compensation that we want to
provide to an employee and then to grant an option for the number of shares of
the Company’s common stock with an exercise price equal to the closing sale
price of the common stock on the grant date (or on the last preceding trading
date if the shares are not traded on the option grant date). We
generally make stock option grants at each meeting of the Compensation Committee
to newly-hired employees, as well as to existing employees who have recently
been promoted to new positions.
Generally,
it is our policy to make grants of stock options for new hires on the dates of
scheduled Compensation Committee meetings after the date of hire. The
proximity of any awards to earnings announcements or other market events is
coincidental to the schedule established for Compensation Committee
meetings. We try to make stock option grants at times when they will
not be influenced by scheduled releases of information. We do not
grant options that are “in-the-money” or that have exercise prices that are
below market value on the date of grant.
Going
forward, we intend to assess the desirability of granting other forms of equity
compensation, such as restricted stock awards and restricted stock units, to our
employees, including the Named Executive Officers. Among other
things, we intend to consider the motivation effects of these alternative forms
of equity compensation, as well as their dilutive effect on our outstanding
capitalization.
Other
Benefits
Historically,
we have not provided retirement benefits to our executives, including the Named
Executive Officers. However, we offer all of our U.S. employees,
including the Named Executive Officers, the opportunity to participate in our
tax-qualified defined contribution plan, a Section 401(k) savings
plan. This plan serves as the primary vehicle for our employees to
accumulate retirement benefits. Currently, we do not match any
employee contributions (including contributions of the Named Executive Officers)
made to the Section 401(k) plan. We believe that the total amount of
retirement benefits made available to our executives, including the Named
Executive Officers, under this plan, when added to our equity awards, is
consistent with the level of total compensation that we seek to provide to our
executives.
We
provide medical, disability and life insurance benefits to our executives,
including the Named Executive Officers, on the same terms and conditions as are
generally available to all of our salaried employees.
Except as
noted in the following sentence, we do not provide perquisites or other personal
benefits to our executives, including the Named Executive Officers. Mr. Alex,
our CFO, receives an annual vehicle allowance. This benefit is provided to
offset his extraordinary commuting costs given the distance of his residence
from our location in Connecticut, where Mr. Alex maintains his office.
Employment,
Severance and Change-in-Control Agreements
Our
executives, including the Named Executive Officers (other than Dr. Jones), are
not parties to employment, severance or change in control
agreements. Following the May 2007 acquisition of IPWireless, we
assumed the obligations under pre-existing employment arrangements between
IPWireless and Dr. Jones in order to retain his services as an executive of the
Company. These employment arrangements provide for Dr. Jones to
receive certain compensation and benefits in the event of termination of his
employment under certain circumstances.
Specifically,
the employment agreement with Dr. Jones provides for specified severance
payments and benefits in the event of the termination of his employment by the
Company without cause, including (a) a lump cash payment in an amount equal to
his annual base salary, subject to applicable tax withholding requirements, (b)
the extension of his post-termination stock option exercise period for one year
following the date of his termination of employment and (c) a continued right to
receive payment, if applicable, under the IPWireless EIP.
For more
information about this arrangement, see the discussion of Potential Payments
Upon Termination or Change in Control and the accompanying narrative on page 26
of this Proxy Statement.
Both the
NextWave
Wireless Inc. 2005 Stock Incentive Plan (the “2005 Stock Incentive Plan”) and
the NextWave
Wireless 2007 New Employee Stock Incentive Plan (the “2007 New Employee Stock
Incentive Plan”) provide for immediate and full vesting of all outstanding stock
options upon a change in control of the Company (as defined in the
plans). This provision applies to all of the outstanding stock
options held by our executives, including the Named Executive
Officers. We believe that this arrangement is important as a
recruitment and retention device, as most of the companies with which we compete
for executive talent have similar agreements in place for their senior
employees.
Rule
10b5-1 Trading Plans
Our
executives, including the Named Executive Officers, may implement a trading plan
under Exchange Act Rule 10b5-1 subject to pre-clearing the plan with the
Company’s Vice President—Investor Relations. Such plans may be implemented as
long as they are entered into (i) when the executive is not in possession of
material nonpublic information about the Company and (ii) during one of the
Company’s an open trading periods.
Tax
Deductibility of Executive Compensation
Section
162(m) of the U.S. Federal tax code prevents the Company from taking a tax
deduction for certain non-performance-based compensation in excess of $1 million
in any fiscal year paid to the chief executive officer and the three other most
highly compensated named executive officers (excluding the chief financial
officer). While we generally seek to ensure the deductibility of the
incentive compensation paid to our executives, the Compensation Committee
retains the flexibility necessary to provide cash and equity compensation in
line with competitive practice, our compensation philosophy and the best
interests of stockholders even if these amounts are not fully tax
deductible.
2007
Summary Compensation Table
The following table
sets forth information with respect to the compensation of our Named Executive
Officers for services in all capacities to us and our subsidiaries.
Name
and
Principal Position
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
(1)
|
|
|
Stock
Awards
($)(2)
|
|
|
Option
Awards
($)(3)
|
|
|
All
Other Compensation
($)(4)
|
|
|
Total
($)
|
|
Allen
Salmasi
President,
CEO & Chairman of
the
Board of Directors
|
2007
|
|
$ |
770,769 |
|
|
$ |
390,000 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
16,522 |
|
|
|
1,177,291 |
|
|
2006
|
|
$ |
723,692 |
|
|
$ |
375,000 |
|
|
$ |
461,000 |
|
|
$ |
179,945 |
|
|
$ |
17,238 |
|
|
$ |
1,756,875
|
|
George
C. Alex
EVP,
Chief Financial Officer
|
2007
|
|
$ |
359,692 |
|
|
$ |
84,812 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
31,582 |
|
|
$ |
476,086 |
|
|
2006
|
|
$ |
330,304 |
|
|
$ |
87,500 |
|
|
$ |
0 |
|
|
$ |
77,155 |
|
|
$ |
32,238 |
|
|
$ |
527,197 |
|
William
J. Jones(5)
Chief
Executive Officer, NextWave
Network Products
|
2007
|
|
$ |
198,024 |
|
|
$ |
84,659 |
|
|
$ |
389,043 |
|
|
$ |
113,283 |
|
|
$ |
1,503,675 |
|
|
$ |
2,288,684
|
|
|
2006
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
James
C. Brailean
Chief
Executive Officer, NextWave
Mobile Products
|
2007
|
|
$ |
279,197 |
|
|
$ |
676,478 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
13,152 |
|
|
$ |
968,827
|
|
|
2006
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Frank
A. Cassou
EVP,
Chief Legal Counsel & Secretary
|
2007
|
|
$ |
462,462 |
|
|
$ |
196,279 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
16,582 |
|
|
$ |
658,741 |
|
|
2006
|
|
$ |
435,839 |
|
|
$ |
168,750 |
|
|
$ |
184,400 |
|
|
$ |
87,941 |
|
|
$ |
17,238 |
|
|
$ |
894,168
|
|
|
1.
|
The
amounts reported in this column for the Messrs. Salmasi, Alex, and Cassou
and Dr. Brailean for fiscal 2007 represent the discretionary annual
incentive award earned by each executive for fiscal 2007 performance that
was paid in fiscal 2008. Each executive will receive 40% of his
incentive award payment in cash with the balance payable in fully vested
shares of the Company’s common stock.
|
|
|
|
|
|
The
amount reported in this column for Dr. Brailean for fiscal 2007 also
reflects the payment of a $600,000 retention bonus that was offered to Dr.
Brailean in July 2005 in consideration of his continued employment with
PacketVideo following the acquisition of PacketVideo by the
Company.
|
|
|
|
|
|
The
amounts reported in this column for Messrs. Salmasi, Alex and Cassou for
fiscal 2006 represent the discretionary annual incentive award earned by
each executive for fiscal 2006 performance that was paid in fiscal
2007. Each executive had the option to
elect to receive up to 40% of his incentive award payment in cash with the
balance payable in fully vested shares of the Company’s common stock.
Messrs. Salmasi and Cassou elected to receive 100% of their incentive
award payments in shares of common stock. Mr. Alex elected to
receive 40% of his incentive award payment in cash and the balance in
shares of the Company’s common stock. Consequently, Mr. Salmasi
received 40,672 shares and Mr. Cassou received 18,302 shares and Mr. Alex
received 5,694 shares. The number of shares received by each
executive was determined by dividing his incentive award payment by the
closing sale price of the Company’s common stock ($9.22 per share) on the
award date
|
|
|
|
|
2.
|
The
amounts reported in this column represent the portion of the grant date
fair value of the stock awards granted to the Named Executive Officers
during fiscal 2006 and fiscal 2007 that was recognized for financial
reporting purposes with respect to fiscal 2007 in accordance with
Statement of Financial Accounting Standards No.123(revised 2004) “Share Based Payment”
SFAS123(R). The amounts reported for Messrs. Salmasi and Cassou
for fiscal 2006 represent the grant date fair value of the additional
stock awards granted to each of them above their targeted annual incentive
award opportunity. The amount reported for Dr. Jones for fiscal
2007 represents the grant date fair value of the stock bonus award granted
to him pursuant to the IPWireless Stock Bonus Plan as described
on page 24 of this Proxy Statement. Pursuant to SEC rules, the
amounts reported exclude the impact of estimated forfeitures related to
service-based vesting conditions. See the Grants of Plan-Based
Awards Table on page 23 of this Proxy Statement for additional information
on the stock awards granted in fiscal 2007. Note that the
amounts reported in this column reflect the Company’s accounting cost for
these awards, and do not correspond to the actual economic value that will
be received by the Named Executive Officers from the
awards.
|
|
3.
|
The
amounts reported in this column represent the portion of the grant date
fair value of the stock options granted to the Named Executive Officers
during fiscal 2007 and in prior years that was recognized for financial
reporting purposes with respect to fiscal 2006 and fiscal 2007 in
accordance with SFAS 123(R). The amount reported for Dr. Jones
represents the stock options granted to him pursuant to the NextWave
Wireless 2007 New Employee Stock Incentive Plan, an employment
inducement plan. Pursuant to SEC rules, the amounts reported
exclude the impact of estimated forfeitures related to service-based
vesting conditions. The assumptions made in calculating the
grant date fair value amounts for the stock options granted in fiscal 2007
and in prior years are incorporated herein by reference to the discussion
of those assumptions in footnote 9 to the Company’s financial statements
as contained in the Company’s Annual Report on Form 10-K filed with the
SEC on March 13, 2008. See the Grants of Plan-Based Awards
Table on page 23 of this Proxy Statement for additional information on the
stock options granted in fiscal 2007. Note that the amounts
reported in this column reflect the Company’s accounting cost for these
options, and do not correspond to the actual economic value that will be
received by the Named Executive Officers from the
options.
|
|
|
|
|
4.
|
The
amounts reported in this column comprise the following items: Mr. Salmasi,
$16,522 for health, disability, and life insurance premiums; Dr. Brailean,
$13,152 for health, disability, and life insurance premiums; Mr. Cassou,
$16,582 for health, disability, and life insurance premiums; Mr. Alex,
$15,000 for a vehicle allowance and $16,582 for health, disability, and
life insurance premiums. Dr. Jones, $20,377, which represents the
reimbursement of ₤10,000 per year for the cost of procuring his own
health, disability, and life insurance premiums. $1,463,286 in connection
with the IPWireless EIP (which was paid in cash in the amount of $217,040
and in 198,463 shares of the Company’s common stock), and $20,011 for his
Fiscal 2007 Earn-Out Payment. Of the amount paid in connection
with the IPWireless EIP, $362,765 is being held in escrow for 12 months
from the closing date of the acquisition in order to compensate us for any
indemnifiable losses the Company may incur as a result of any breach of
the representations and warranties or covenants of IPWireless contained in
the merger agreement. Accordingly, some or all of this escrowed
amount may not be paid to Dr. Jones.
|
|
|
|
|
5.
|
The
amounts reported for Dr. Jones represent his total compensation for the
period from May 11, 2007, when he joined the Company, through December 29,
2007. For purposes of this table, the amounts reported for Dr.
Jones have been converted into US Dollars at the 2007 yearly average
foreign currency exchange rate of
2.0019.
|
2007
Grants of Plan-Based Awards Table
The
following table sets forth, for the fiscal year ended December 29, 2007,
information concerning the equity awards granted to each of the Named Executive
Officers in fiscal 2007 under any plan. There were no non-equity
incentive plan compensation awards granted to any of the Named Executive
Officers in fiscal 2007.
|
|
Estimated
future payouts under non-equity
incentive plan awards
|
Estimated
future payouts under equity incentive
plan awards
|
|
All
other stock awards:
Number
of shares
of stock
|
|
All
other option awards:
Number
of securities
underlying
options
|
|
Exercise
or base
price of
option
awards
|
Grant
date fair value of stock
and option awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
Grant
date
|
Threshold
|
Target
|
Maximum
|
Threshold
|
Target
|
Maximum
|
|
or
units
|
|
(#)
|
|
($/Sh)
|
|
|
|
($)
|
($)
|
($)
|
(#)
|
(#)
|
(#)
|
|
(#)
|
|
|
|
|
|
|
|
Allen
Salmasi
|
5/18/07
|
|
|
|
|
|
|
|
40,672 |
|
|
|
|
|
$ |
375,000 |
|
|
5/18/07
|
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
$ |
461,000 |
|
George
C. Alex
|
5/18/07
|
|
|
|
|
|
|
|
5,694 |
|
|
|
|
|
$ |
52,500 |
|
William
J. Jones
|
5/11/07
|
|
|
|
|
|
|
|
53,448 |
|
|
|
$ |
9.98 |
|
$ |
533,411 |
|
|
6/10/07
|
|
|
|
|
|
|
|
|
|
214,126 |
|
$ |
10.04 |
|
$ |
894,953 |
|
|
9/24/07
|
|
|
|
|
|
|
|
|
|
5,874 |
|
$ |
5.82 |
|
$ |
13,387 |
|
James
C. Brailean
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frank
A. Cassou
|
5/18/07
|
|
|
|
|
|
|
|
18,302 |
|
|
|
|
|
|
$ |
168,750 |
|
|
5/18/07
|
|
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
|
$ |
184,400 |
|
|
1.
|
The
awards issued to Messrs. Salmasi, Cassou and Alex represent stock awards
made in lieu of their annual cash incentive awards. The stock
award issued to Dr. Jones was made in conjunction with the acquisition of
IPWireless under the IPWireless EIP and the options issued to him were
issued under the 2007 New Employee Stock Incentive
Plan.
|
|
|
|
|
The
assumptions made in calculating the grant date fair value amounts for the
plan-based awards granted in fiscal 2007 are incorporated herein by
reference to the discussion of those assumptions in footnote 9 to the
Company’s financial statements as contained in the Company’s Annual Report
on Form 10-K filed with the SEC on March 13,
2008. |
Narrative
to Summary Compensation Table and Grants of Plan-Based Awards Table
Some of
the elements of compensation, including equity awards, reported in the Summary
Compensation Table and the Grants of Plan-Based Awards Table above for Dr. Jones
are a result of the employment agreements that the Company has assumed in
connection with the retention of Dr. Jones following the Company’s acquisition
of IPWireless. The following narrative summarizes the material terms of these
employment agreements. None of the other Named Executive Officers have
employment agreements with the Company.
The
material terms of Dr. Jones’ employment agreement are as follows:
Compensation
and Benefits. During the term of the agreements, Dr. Jones is
eligible to receive the following compensation and benefits:
Base
Salary. An annual base salary of ₤158,610, which is payable in
monthly installments. Dr. Jones‘s base salary was ₤158,610 as of
December 29, 2007.
Annual
Incentive. An annual performance-based incentive award of up
to 50% of his base salary, based on IPWireless’s achievement of certain
enumerated performance objectives, and Dr. Jones’s achievement of certain
individual performance objectives, as determined by the Board of Directors
of NextWave in its
discretion.
Additional
Benefits. An additional payment equal to 10% of his base
salary reimburse him for the cost of procuring his own insurance
benefits. Such benefits are paid directly by the Company to Dr.
Jones.
Stock
Options. Stock options to purchase shares of the Company’s
common stock may be granted at the discretion of the Board of
Directors.
Employee Incentive Plan
Entitlement. IPWireless had an existing Employee Incentive
Plan, pursuant to which participants were eligible to receive an incentive bonus
upon the consummation of a change in control of IPWireless. In
connection with the acquisition of IPWireless by NextWave, a
portion of the total merger consideration payable was allocated to participants
in the IPWireless EIP, including Dr. Jones. Subject to the
achievement by IPWireless of certain revenue benchmarks, Dr. Jones may be
entitled to receive up to a maximum of $3,998,559 through 2010 as a result of
his participation in the IPWireless EIP.
IPWireless Stock Bonus Plan
Entitlement. In connection with the acquisition of IPWireless, NextWave
established the IPWireless Stock Bonus Plan as an inducement for employees of
IPWireless to join NextWave and
continue with the business following the acquisition of IPWireless. Up to $7
million payable in shares of common stock of NextWave may
be issued pursuant to the IPWireless Stock Bonus Plan if certain operational
milestones are achieved by IPWireless, the first of which was achieved in
January 2008. In connection with his participation in the IPWireless
Stock Bonus Plan, Dr. Jones may be entitled to receive up to $864,359, payable
in common stock, subject to the achievement of certain revenue benchmarks by
IPWireless.
Termination. Under
specified circumstances, he or the Company may terminate his employment prior to
the end of the term of the agreement. These circumstances, and any
payments and benefits triggered by the termination, are described under
Potential Payments Upon Termination or Change in Control on page 26 of this
Proxy Statement.
Additional
Provisions. Dr. Jones’ most recent employment agreement was
executed in connection with his responsibilities as Chief Operating Officer of
IPWireless. Dr. Jones now serves as the Chief Executive Officer of
NextWave
Network Products.
2007
Outstanding Equity Awards at Fiscal Year-End Table
The
following table sets forth information as to the number and value of equity
awards held by each of the Named Executive Officers as of the end of
fiscal 2007, measured in terms of the last reported sale price for shares of the
Company’s common stock on December 29, 2007 ($5.27 per share) as reported by
Nasdaq.
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(1)
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable(2)
|
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
Allen
Salmasi
|
|
|
|
|
|
|
|
|
|
|
April
13, 2005
|
|
|
416,666 |
|
|
|
0 |
|
|
$ |
6.00 |
|
4/12/15
|
April
27, 2006
|
|
|
111,416 |
|
|
|
0 |
|
|
|
6.00 |
|
4/26/16
|
George
C. Alex
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April
13, 2005
|
|
|
250,000 |
|
|
|
0 |
|
|
$ |
6.00 |
|
4/12/15
|
April
27, 2006
|
|
|
47,772 |
|
|
|
0 |
|
|
|
6.00 |
|
4/26/16
|
William
J. Jones
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
10, 2007
|
|
|
214,126 |
|
|
|
214,126 |
|
|
$ |
10.04 |
|
6/9/17
|
September
25, 2007
|
|
|
5,874 |
|
|
|
5,874 |
|
|
|
5.82 |
|
9/24/17
|
James
C. Brailean
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July
20, 2005
|
|
|
366,666 |
|
|
|
145,139 |
|
|
$ |
6.00 |
|
7/19/12
|
Frank
A. Cassou
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April
13, 2005
|
|
|
333,333 |
|
|
|
0 |
|
|
$ |
6.00 |
|
4/12/15
|
April
27, 2006
|
|
|
54,450 |
|
|
|
0 |
|
|
|
6.00 |
|
4/26/16
|
(1)
|
The
stock options granted on April 13, 2005 are immediately exercisable in
full as of the option grant date, subject to an unvested share repurchase
right (at the option exercise price) in favor of the Company in the event
that the Named Executive Officer terminates employment with the Company
for any reason prior to the fourth anniversary of the date of
grant. This repurchase right expires in 48 equal monthly
installments over a four year period commencing on the date of grant,
beginning on May 13, 2005. As of December 29, 2007, Mr.
Salmasi’s stock option had 138,889 shares that were still subject to this
repurchase right, Mr. Alex’s stock option had 83,334 shares that were
still subject to this repurchase right, and Mr. Cassou’s stock option had
111,111 shares that were still subject to this repurchase right. The stock
options granted on April 27, 2006 were granted in lieu of a cash incentive
award for performance in fiscal 2005 and were vested in full as of the
option grant date.
|
|
|
(2)
|
The
stock option granted on July 20, 2005 is exercisable in 48 equal monthly
installments over a four year period commencing on the date of grant,
beginning on August 20, 2005. The option granted on June 10,
2007 is exercisable as to 25% of the underlying shares eleven months after
the date of grant and thereafter in 36 equal monthly installments. The
option granted on September 25, 2007 is exercisable as to 25% of the
underlying shares eight months after the date of grant and thereafter in
36 equal monthly installments.
|
2007
OPTION EXERCISES AND STOCK VESTED TABLE
None of
our Named Executive Officers exercised options to purchase our common stock or
held restricted stock awards subject to vesting during fiscal 2007.
2007
PENSION BENEFITS TABLE
The
Company did not sponsor any defined benefit pension plans for its employees,
including the Named Executive Officers, during fiscal 2007.
2007
NONQUALIFIED DEFERRED COMPENSATION TABLE
The
Company did not maintain any nonqualified defined contribution plan for its
employees, including the Named Executive Officers, during fiscal
2007.
POTENTIAL
PAYMENTS UPON TERMINATION
OR
CHANGE IN CONTROL
Except
with respect to Dr. Jones, the Company does not maintain any contracts,
agreements, plans, or arrangements that provide for payments to the Named
Executive Officers at, following, or in connection with any termination of
employment, including, without limitation, resignation, severance, retirement,
or a constructive termination of a Named Executive Officer, or a change in
control of the Company or a change in the Named Executive Officers
responsibilities, except for the accelerated vesting of equity awards under the
circumstances described below.
Upon the
voluntary termination of employment of any of our executives, including the
Named Executive Officers, any unvested portion of any outstanding stock options
held by an executive is cancelled and the employee has 90 days from the date of
termination of employment in which to exercise the vested portion of any such
options. After the expiration of the 90-day period, the vested
portion of any such options that remains unexercised is
cancelled. The Company may, in the discretion of our Board of
Directors of the Company and the Compensation Committee of the Board, accelerate
the vesting of any unvested portion of any outstanding stock option upon an
executive’s termination of employment.
Both the
Company’s 2005 Stock Incentive Plan and 2007 New Employee Stock Incentive Plan
provide that, in the event of a change in control of the Company (as defined in
the respective plan), any unvested portion of any outstanding stock option shall
immediately vest in full. This provision applies to all of the
outstanding stock options held by our employees, including the Named Executive
Officers. We believe that this arrangement is an important
recruitment and retention device, as most of the companies with which we compete
for talent have similar arrangements in place for their senior
employees.
The
following table sets forth the potential estimated payments and benefits to
which each Named Executive Officer would be entitled upon a change in control of
the Company, as a result of this vesting acceleration provision.
Name
|
Number
of Unvested
Option
Shares
(#)
|
Intrinsic
Value of Options
Shares
Based on Accelerated
Vesting
as of December 29,
2007
($)
(1)
|
Allen
Salmasi
|
138,889
|
$0.00
|
George
C. Alex
|
83,334
|
$0.00
|
William
J. Jones
|
220,000
|
$0.00
|
James
C. Brailean
|
236,805
|
$0.00
|
Frank
A. Cassou
|
111,111
|
$0.00
|
|
(1)
|
For
purposes of this calculation, the following assumptions were
used: |
|
|
|
|
|
|
§
|
the
date of the change in control of the Company was December 29,
2007;
|
|
|
§
|
the
market price per share of the Company’s common stock on the date of the
change in control was equal to the last reported sale price for the shares
of the Company’s common stock on December 28, 2007 ($5.27 per
share);
|
|
|
§
|
the
number of unvested shares of the Company’s common stock as of December 29,
2007 was the number of shares that were subject to the Company’s unvested
share repurchase right as of that date; and
|
|
|
§
|
the
value of the accelerated vesting of outstanding stock options is the
intrinsic value of the options as of December 29, 2007 (that is, the value
based upon the last reported sale price for the shares of the Company’s
common stock on December 28, 2007 less the option exercise
price).
|
The
amounts reported in the table above do not include payments and benefits to the
extent they may be provided on a non-discriminatory basis to all of the
Company’s salaried employees generally upon termination of
employment. These payments and benefits may include accrued salary
and vacation pay and welfare benefits provided to all former employees,
including medical and dental insurance and life insurance coverage.
Arrangements with Dr.
Jones
Under our
employment agreements with Dr. Jones, he is entitled to certain payment and
benefits upon his termination of employment for specified reasons. The
information below describes and quantifies certain compensation that would be
payable to Dr. Jones under the arrangements if his employment had terminated on
December 29, 2007, based on his compensation as of that date and, if applicable,
based on the closing market price of the Company’s common stock on December 28,
2007 ($5.27 per share), the last trading day of the Company’s fiscal
year. These benefits are in addition to the benefits generally
available to the Company’s salaried employees.
Termination
without Cause. If Dr. Jones employment is terminated by
IPWireless without Cause (as defined), he is eligible to receive the
following payments and benefits:
|
·
|
a
lump sum cash payment in an amount equal to his annual base salary,
subject to applicable tax withholding requirements;
|
|
·
|
an
extension in his post-termination stock option exercise period to one year
following the termination date; and
|
|
·
|
the
right to continue to remain a participant in IPWireless
EIP.
|
For these
purposes, “Cause” means this (i) repeated failure or neglect, willful
misconduct or gross negligence in the performance of his duties, including his
failure to follow IPWireless policies as set forth in writing from time to time,
or his failure to follow the legal and reasonable directives of IPWireless’s
Board of Directors or the Chief Executive Officer; (ii) his conviction of or
plea of guilty or no contest to a felony or to any other violation of law
involving fraud, dishonesty or moral turpitude; (iii) his commission of fraud,
misappropriation or embezzlement against IPWireless, a deliberate attempt to do
an injury to IPWireless, or conduct that materially discredits IPWireless or is
materially detrimental to the reputation of IPWireless or (iv) his breach of any
term of his confidentiality agreement or employment agreement with
IPWireless.
Conditions
to Payment. The payments and benefits provided in the event of
a termination of employment without Cause are contingent upon Dr. Jones
executing a customary release of all claims in favor of IPWireless.
Executive
Covenants. As provided in his employment agreements, Dr. Jones
is subject to (i) confidentiality provisions that prohibit him from disclosing
any information regarding the terms of the agreement, except to his family and
advisors and (ii) confidentiality provisions that prevent him from disclosing
any information with respect to the products and operations of
IPWireless.
If Dr. Jones had been terminated
without Cause as of December 29, 2007, we estimate that the value of the
benefits under his employment agreements in connection such termination would
have been as follows:
Executive
Payments and Benefits
|
|
Termination
without Cause
|
|
Accelerated
vesting of stock options
|
|
$ |
0.00 |
(1) |
Severance
payment
|
|
$ |
317,521 |
(2) |
TOTAL
|
|
$ |
317,521 |
(3)(4) |
(1)
Represents the intrinsic value of options held by Dr. Jones to purchase 220,000
shares of our common stock, based on the accelerated vesting of awards under the
2007 New Employee Stock Incentive Plan as of December 29, 2007.
(2) If
Dr. Jones were to be terminated without Cause, he is entitled to receive a lump
sum payment, equal to his annual salary of £158,610. For purposes of this
table, the amounts reported for Dr. Jones have been converted into US Dollars at
the 2007 yearly average foreign currency exchange rate of 2.0019.
(3) Dr.
Jones would remain a participant in the IPWireless EIP and, subject to the
achievement by IPWireless of certain revenue benchmarks, may receive up to a
maximum of $3,998,559 through 2010 as a result of his participation in the plan.
Such amounts are not set forth in this table due to their contingent
nature.
(4) Dr.
Jones would be entitled to a stock bonus under the IPWireless Stock Bonus
Plan payable with respect to any milestone period ending within 90
days of such termination, as if he had remained in continuous employment until
the last day of the milestone period. He would have no rights to any
such bonus with respect to a milestone period ending more than 90 days after any
such termination of employment. Such amounts are not set forth in
this table due to their contingent nature.
2007
Director Compensation Table
The
following table sets forth, for the fiscal year ended December 29, 2007, the
total compensation of the non-employee members of the Company’s Board of
Directors. (1)
Name
|
|
Fees
Earned or Paid in Cash
($) (2)
|
|
|
Option
Awards
($)
(3)(4)
|
|
|
Total
($)
|
|
Douglas
F. Manchester
|
|
$ |
28,000 |
|
|
$ |
115,373 |
|
|
$ |
143,373 |
|
Jack
Rosen
|
|
$ |
25,500 |
|
|
$ |
82,616 |
|
|
$ |
108,116 |
|
Robert
T. Symington
|
|
$ |
33,250 |
|
|
$ |
97,935 |
|
|
$ |
131,185 |
|
William
H. Webster
|
|
$ |
36,000 |
|
|
$ |
101,871 |
|
|
$ |
137,871 |
|
(1)
|
As
employees of the Company, Mr. Salmasi and Drs.Brailean and Jones receive
no compensation for serving as members of the Company’s Board of
Directors. Messrs Cassou and Finn, who also are employees of the Company,
served on the Company’s Board of Directors through May
2007.
|
|
|
(2)
|
The
Company’s standard fee arrangements for non-employee directors are as
follows: a $2,000 cash fee for each Board meeting attended in person, a
$1,000 cash fee for each telephonic Board meeting attended, and a $750
cash fee for each Board committee meeting attended. In
addition, in fiscal 2007, non-employee directors also received an annual
stock option grant of 35,000 shares of the Company’s common stock for
service on the Board of Directors and an annual stock option grant of
8,500 shares of the Company’s common stock for service on each Board
committee. This equity award policy was adopted beginning in
July 2005.
|
(3)
|
The
amounts reported in the Option Awards column represent the portion of the
grant date fair value of the stock options granted to the non-employee
directors during fiscal 2007 and in prior years that was recognized for
financial reporting purposes with respect to fiscal 2007 in accordance
with Statement of Financial Accounting Standards No. 123 (revised 2004)
Share Based
Payment “SFAS 123(R)”. Pursuant to SEC rules, the
amounts reported exclude the impact of estimated forfeitures related to
service-based vesting conditions. The assumptions made in
calculating the grant date fair value amounts for the options granted in
fiscal 2007 and in prior years are incorporated herein by reference to the
discussion of those assumptions in footnote 9 to the Company’s financial
statements as contained in the Company’s Annual Report on Form 10-K filed
with the SEC on March 13, 2008. Note that the amounts reported in this
column reflect the Company’s accounting cost for these options, and do not
correspond to the actual economic value that will be received by the
non-employee directors from the options.
|
|
|
(4)
|
The
grant date fair value of the stock options granted to the non-employee
directors during fiscal 2007 are as follows: Mr. Manchester and Judge
Webster, $250,111; Mr. Symington $214,971; and Mr. Rosen
$206,577.
|
|
|
|
The
aggregate number of stock options outstanding as of December 29, 2007 for
each of the non-employee directors was as
follows:
|
Name
|
Number
of Shares
Underlying
Outstanding
Options
|
Douglas
F. Manchester (a)
|
123,076
|
Jack
Rosen (b)
|
93,666
|
Robert
T. Symington (c)
|
101,999
|
William
H. Webster (d)
|
118,833
|
|
(a)
|
Includes
an option to purchase 12,743 shares of the Company’s common stock with an
exercise price of $1.96 per share, granted on September 15, 2004; an
option to purchase 50,000 shares of the Company’s common stock with an
exercise price of $6.00 per share, granted on April 13, 2005; an option to
purchase 8,333 shares of the Company’s common stock with an exercise price
of $6.00 per share, granted on April 27, 2006; and an option to purchase
52,000 shares of the Company’s common stock with an exercise price of
$11.80 per share granted on February 26, 2007.
|
|
|
|
|
(b)
|
Includes
an option to purchase 33,333 shares of the Company’s common stock with an
exercise price of $6.00 per share, granted on April 13, 2005; an option to
purchase 8,333 shares of the Company’s common stock with an exercise price
of $6.00 per share, granted on April 27, 2006; an options to purchase
43,500 shares of the Company’s common stock with an exercise price of
$11.80 per share granted on February 26, 2007; and an option to purchase
8,500 shares of the Company’s common stock with an exercise price of $9.00
per share granted on May 24, 2007.
|
|
|
|
|
(c)
|
Includes
an option to purchase 33,333 shares of the Company’s common stock with an
exercise price of $6.00 per share, granted on April 13, 2005; an option to
purchase 16,666 shares of the Company’s common stock with an exercise
price of $6.00 per share, granted on April 27, 2006; and an option to
purchase 52,000 shares of the Company’s common stock with an exercise
price of $11.80 per share granted on February 26, 2007.
|
|
|
|
|
(d)
|
Includes
an option to purchase 50,000 shares of the Company’s common stock with an
exercise price of $6.00 per share, granted on April 13, 2005; an option to
purchase 8,333 shares of the Company’s common stock with an exercise price
of $6.00 per share, granted on April 27, 2005; and an option to purchase
60,500 shares of the Company’s common stock with an exercise price of
$11.80 per share granted on February 26,
2007.
|
For a
description of our equity award grant practices for the non-employee directors,
see “Equity Award Grant Practices” in the Compensation Discussion and Analysis
on page 19 of this Proxy Statement.
Perquisites
and other personal benefits provided to each of the non-employee directors in
fiscal 2007 were, in the aggregate, less than $10,000 per director.
TRANSACTIONS
WITH RELATED PERSONS
On March
28, 2007, we issued and sold 355,000 shares of our Series A Senior Convertible
Preferred Stock at a price of $1,000 per share in a private placement
transaction. Certain of our directors and executive officers had a direct or
indirect material interest in this transaction. Navation, Inc., an
entity owned by Allen Salmasi, our Chairman and CEO, purchased 50,000 shares of
preferred stock for $50 million. Manchester Financial Group, L.P., an
entity indirectly owned and controlled by Douglas F. Manchester, a member of our
Board of Directors, purchased 50,000 shares of preferred stock for $50 million.
An entity owned by Kevin Finn, our Chief Compliance Officer and a member of our
Board of Directors, purchased 2,000 shares of preferred stock for $2
million. Our process for the approval of this transaction is
described below under “Procedure for Approval of Related Party
Transactions.”
Procedures
for Approval of Related Party Transactions
Pursuant
to our Audit Committee Charter, the Audit Committee reviews, discusses with
management and our independent registered public accounting firm and approves
any transactions or courses of dealing with related parties (including
significant stockholders, directors, corporate officers or other members of
senior management or their family members) that are significant in size or
involve terms or other aspects that differ from those that would likely be
negotiated with independent parties, including any safeguards or additional
procedures to be applied in such circumstances.
On March
28, 2007, we completed a preferred stock private placement, as described
herein. The purchasers of the preferred stock included, in addition
to other investment funds and institutional investors, Navation, Inc., an entity
owned by Allen Salmasi, our Chairman and Chief Executive Officer, Manchester
Financial Group, L.P., an entity indirectly owned and controlled by Douglas F.
Manchester, a member of our Board of Directors, an entity owned by Kevin Finn,
our Chief Compliance Officer and a member of our Board of
Directors. and affiliates of Avenue Capital, of which a member of our
Board of Directors, Robert Symington, is a portfolio manager. Because two
members of our Audit Committee were associated with entities involved in the
private placement, our Board of Directors formed an independent committee
consisting of Messrs. Rosen and Webster to review and approve the transaction
and obtained a fairness opinion from Houlihan Lokey with respect to the
transaction. None of our affiliates received any compensation in
connection with the financing and all investors were subject to the same terms
and conditions in connection with the investment.
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis (“CD&A”) contained in the Company’s 2008 Proxy Statement and
discussed that CD&A with management. Based on the Compensation Committee’s
review of, and discussions with management, the Compensation Committee
recommended to the Board of Directors, and the Board of Directors has approved,
that the CD&A be included in the Company’s Annual Report on Form 10-K and
this Proxy Statement for filing with the SEC.
Respectfully
submitted by the Compensation Committee of the Board of Directors.
Robert T.
Symington, Chairman
Jack
Rosen
William
H. Webster
The
information contained in the foregoing report shall not be deemed to be “filed”
or to be “soliciting material” with the Securities and Exchange Commission, nor
shall such information be incorporated by reference into any future filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates it by reference in a
filing.
REPORT
OF THE AUDIT COMMITTEE
The
following is the report of our Audit Committee with respect to our audited
financial statements for the fiscal year ended December 29, 2007.
Review
with Management
The Audit
Committee reviewed and discussed our audited financial statements with
management.
Review
and Discussions with Independent Registered Public Accounting Firm
The Audit
Committee reviewed and discussed the Company’s audited financial statements with
management, which has primary responsibility for the financial
statements. Ernst & Young LLP, our independent registered public
accounting firm, is responsible for expressing an opinion on the conformity of
the Company’s audited financial statements with accounting principles generally
accepted in the United States of America. The Audit Committee
discussed with Ernst & Young LLP the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees)
regarding the auditor’s judgments about the quality of the Company’s accounting
principles as applied in its financial reporting.
The Audit
Committee also received the written disclosures and the letter from Ernst
&Young LLP required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and has discussed with Ernst
& Young LLP their independence. The Audit Committee also
concluded that Ernst & Young LLP’s provision of audit and non-audit services
to the Company and its subsidiaries, as described in this Proxy Statement, is
compatible with Ernst & Young LLP’s independence.
Conclusion
Based
upon the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that its audited consolidated financial
statements be included in our Annual Report on Form 10-K for the year ended
December 29, 2007 for filing with the Securities and Exchange
Commission.
Respectfully
submitted by the Audit Committee of the Board of Directors.
Robert T.
Symington, Chairman
Douglas
F. Manchester
William
H. Webster
The
information contained in the foregoing report shall not be deemed to be “filed”
or to be “soliciting material” with the Securities and Exchange Commission, nor
shall such information be incorporated by reference into any future filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates it by reference in a
filing.
PRINCIPAL
ACCOUNTING FEES AND SERVICES
The
following table sets forth the aggregate fees (in thousands) for services
related to fiscal years 2007 and 2006 provided by Ernst & Young LLP, our
principal accountants.
|
|
Fiscal
2007
|
|
|
Fiscal
2006
|
|
Audit
Fees (1)
|
|
$ |
1,713 |
|
|
$ |
1,047 |
|
Audit-Related
Fees (2)
|
|
$ |
105 |
|
|
$ |
29 |
|
Tax
Fees (3)
|
|
$ |
0 |
|
|
$ |
9 |
|
All
Other Fees (4)
|
|
$ |
0 |
|
|
$ |
0 |
|
|
(1)
|
Audit
Fees represent fees billed for professional services rendered for the
audit of our annual consolidated financial statements, including reviews
of our quarterly financial statements, as well as audit services provided
in connection with other regulatory filings in connection with our fiscal
2007 and 2006 filings of registration statements on Form 10, Form S-1,
Form S-3, Form S-4, Form S-8 and Form 8-K.
|
|
|
|
|
(2)
|
Audit-Related
Fees represent fees billed for assurance services related to the audit of
our financial statements.
|
|
|
|
|
(3)
|
Tax
Fees represent fees for professional services related to tax reporting,
compliance and transaction services assistance.
|
|
|
|
|
(4)
|
All
Other Fees represent fees for services provided to us not otherwise
included in the categories above.
|
The Audit
Committee of the Board of Directors has adopted a formal policy concerning the
approval of audit and non-audit services to be provided by our principal
accountant, Ernst & Young LLP. The policy requires that all services Ernst
& Young LLP may provide to us, including audit services and permitted
audit-related and non-audit services, be pre-approved by the Audit Committee.
The Audit Committee pre-approved all audit and non-audit services provided by
Ernst & Young LLP during fiscal 2007 and fiscal 2006.
Securities
Authorized for Issuance Under Equity Compensation Plan
The
Company granted options exercisable to purchase 9,627,880 shares of common stock
through 970 stock option awards under all of its compensation plans during the
fiscal year ended December 29, 2007. It did not grant any performance
based deferred stock option awards during the fiscal year ended December 29,
2007.
Information
about our equity compensation plans at December 29, 2007 is as
follows:
Equity
Compensation Plan Information
Plan
Category
|
|
Number of Securities
to be
issued
upon exercise
of
outstanding
options,
warrants
and
rights
|
|
|
Weighted
Average exercise
price
of
outstanding
options,
warrants
and
rights
|
|
Number of securities
remaining available
for
future issuance
under
equity
compensation
plans
|
|
Equity
compensation plans approved by security holders (1)
|
|
|
6,428,369 |
|
|
$ |
7.35 |
|
|
|
12,288,452 |
|
Equity
compensation plans not approved by security holders (2)
|
|
|
14,913,366 |
|
|
$ |
6.96 |
|
|
|
753,890 |
|
Total
|
|
|
21,341,735 |
|
|
$ |
7.08 |
|
|
|
13,042,342 |
|
(1)
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In
June 2006, NextWave
Wireless LLC unit holders approved 20 million Units (approximately
3,333,333 shares of our common stock) issuable upon the exercise of
options to be granted pursuant to the NextWave
Wireless LLC 2005 Units Plan (the “2005
Units Plan”). The remaining Units issuable pursuant to
the 2005 Units Plan were approved by the Bankruptcy Court in April 2005 in
connection with the plan of reorganization of NextWave
Telecom, Inc. and its subsidiaries, including NextWave
Wireless LLC. On November 13, 2006, NextWave
Wireless LLC merged with and into NextWave
Wireless Inc, and the 2005 Units Plan was assumed by NextWave
Wireless Inc., becoming the 2005 Stock Incentive Plan. In May
of 2007, NextWave
Wireless Inc. shareholders approved an amendment to the 2005 Stock
Incentive Plan to increase the number of shares of common stock available
for issuance from 12,500,000 to 27,500,000. Thus, 15,333,333
shares of our common stock issued or available for issuance pursuant to
grants under the 2005 Stock Incentive Plan have been approved by
stockholders.
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(2)
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The
remaining 9,166,666 shares of common stock issuable pursuant to the grant
of options under the 2005 Stock Incentive Plan were approved in April 2005
by the Bankruptcy Court in connection with the plan of reorganization as
described above. The 2005 Stock Incentive Plan provides for the
issuance of nonqualified stock options, or restricted, performance-based,
bonus, phantom or other stock-based awards to directors, employees and
consultants of NextWave.
Thus, 9,166,666 shares of our common stock issued or available for
issuance pursuant to grants under the 2005 Stock Incentive Plan have not
been approved by shareholders.
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In
September 2005, we issued a warrant to purchase up to 500,000 shares of
our common stock to Station 4, LLC, a private advisory company, as partial
consideration for services to be provided to the Company under a
three-year advisory services agreement. The warrants have an exercise
price of $6.00 per share, and were issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act as a transaction by
an issuer not involving a public offering. Stockholders did not
approve the issuance of the warrants.
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In
July 2005, NextWave
acquired PacketVideo Corporation, which became a wholly-owned subsidiary
of the Company following the closing of the acquisition. In
August 2005, the Board of Directors of PacketVideo Corporation adopted the
PacketVideo Corporation 2005 Equity Incentive Plan (the “PacketVideo Plan”), pursuant to which
employees of PacketVideo Corporation were authorized to receive
up to 1,375,000 shares of our common stock upon the exercise of stock
options and similar rights (after giving effect to the conversion
described below). The PacketVideo Plan was subsequently amended
on two occasions to increase the aggregate number of authorized shares to
a total of 1,833,333 shares of our common stock. Pursuant to the terms of
the PacketVideo Plan, on January 3, 2007, when we listed our common stock
on the Nasdaq Global Market, each outstanding option, exercised or not,
under the PacketVideo Plan was automatically converted from an option or
other award to purchase PacketVideo common stock into an option or other
award to purchase shares of NextWave
common stock. The PacketVideo Plan was not approved by our
stockholders.
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Under
the NASDAQ Marketplace Rules, listed issuers are permitted to grant
compensatory equity to new employees for the purpose of inducing such
persons to enter into an employment relationship with the issuer without
stockholder approval. Each of the GO Networks Employee Stock
Bonus Plan, the IPWireless Stock Bonus Plan and the 2007 New Employee
Stock Incentive Plan described below were adopted by NextWave
without stockholder approval pursuant to the inducement
exemption.
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In
connection with the acquisition by NextWave
of GO Networks, Inc. in February 2007, NextWave
adopted the GO Networks Employee Stock Bonus Plan, whereby a select group
of employees of GO Networks, Inc. may receive up to an aggregate of $5.0
million in shares of NextWave
common stock upon the achievement of certain operational milestones in the
18-month period subsequent to the closing of the
acquisition. No shares have been issued under the Go Networks
Employee Stock Bonus Plan
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In
connection with the acquisition by NextWave
of IPWireless in May 2007, NextWave
adopted the IPWireless Stock Bonus Plan, whereby a select group of
employees of IPWireless may receive up to an aggregate of $7.0 million in
shares of NextWave
common stock upon the achievement of certain operational milestones
measured for fiscal 2007, 2008 and 2009. For the fiscal 2007
performance period, 543,486 shares were earned under the IPWireless Stock
Bonus Plan. On March 24, 2008 a net of 320,698 shares were paid
out to participants. 222,788 Shares were withheld due to
withholding tax payment
obligations.
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In
February 2007, NextWave
adopted the 2007 New Employee Stock Incentive Plan to offer shares of
NextWave
common stock for equity awards to new hires of the Company and its
subsidiaries, including new employees who have joined the Company in
connection with acquisitions. The 2007 New Employee Stock
Incentive Plan is administered by the Compensation Committee of the Board
of Directors of NextWave,
and provides for the grant of up to 2,500,000 shares of NextWave
common stock to new hires of the Company as compensatory equity aimed at
inducing such persons to enter into an employment relationship with the
Company. This plan was then amended to provide up to 5,000,000
shares of NextWave
common stock to new hires of the Company.
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In
2007, options to acquire a total of 4,580,111 shares of common stock have
been granted under the 2007 New Employee Stock Incentive Plan, leaving
419,889 options available for future grant under the
plan
|
PROPOSAL
NO. 2
ISSUANCE
OF UP TO 7. 5 MILLION SHARES OF OUR COMMON STOCK TO FORMER
STOCKHOLDERS
OF IPWIRELESS, INC. AND PARTICIPANTS IN THE IPWIRELESS EIP
On May
11, 2007, we acquired all of the outstanding shares of IPWireless, and
IPWireless became our wholly owned subsidiary. Under the terms of the agreement
by which we acquired IPWireless, which we refer to as the acquisition agreement,
the former IPWireless stockholders and participants in the IPWireless EIP were
entitled to consideration consisting of approximately $100 million that was paid
at the closing of the acquisition in a combination of $25 million in cash and
$75 million in shares of our common stock, which at the time of the closing
resulted in issuing 7.7 million shares to these stockholders and IPWireless EIP
participants. As specified in the acquisition agreement, the former IPWireless
stockholders and participants in the IPWireless EIP are entitled to additional
consideration of up to $135 million upon the achievement of certain revenue
milestones relating to IPWireless’ public safety business and TDtv business
during the 2007 to 2009 timeframe. The acquisition agreement provides for
potential payments of up to $50 million in late 2007 or early 2008, up to $7.5
million in 2008, up to $24.2 million in 2009, and up to $53.3 million in
2010. We refer to theses potential payments as the additional
consideration. Payment of the additional consideration may be made in
cash and/or shares of our common stock, with the Company being allowed to
determine the mix of cash and stock with respect to the entire amount of the
potential $50 million payment and 75% of the other potential payments. A
representative of the former IPWireless stockholders has the right to make that
determination with respect to the remaining amount. The value of the shares
issued under the acquisition agreement for the future payments is determined by
averaging the closing price of a share of our stock during the 30 consecutive
trading days ending with the third trading day preceding the date on which
payment is made.
Under the
IPWireless EIP. a portion of the acquisition proceeds otherwise payable to the
former stockholders of IPWireless are payable to current and former employees of
IPWireless who are entitled to participate in the IPWireless EIP. The
precise portion of the acquisition proceeds that is payable to IPWireless EIP
participants depends on the aggregate proceeds payable to the former IPWireless
stockholders under the acquisition agreement. As the acquisition proceeds
increase (as a result of the payment of additional consideration), so does the
portion payable under the IPWireless EIP. If the maximum amount of acquisition
proceeds of $235 million (which includes the amount paid at closing and the
additional consideration) were to become payable under the acquisition
agreement, the portion payable to participants in the IPWireless EIP would
collectively equal 7.5% of that amount. Dr. Jones is a
participant under the IPWireless EIP. If the maximum amount of
acquisition proceeds of $235 million (which includes the amount paid at closing
and the additional consideration) were to become payable under the acquisition
agreement, Dr. Jones would be entitled to receive up to a maximum amount of
$3,998,358.51 as a result of his participation in the IPWireless
EIP. Dr. Jones would be entitled to his pro rata share in any
proceeds payable to under the IPWireless EIP whether such amounts are paid in
cash or stock.
On March
21, 2008, we announced that IPWireless had achieved revenue milestones for 2007,
triggering payment of $50 million in additional consideration to the former
stockholders of IPWireless. We elected to pay $4.38 million of that amount in
cash and the remainder in stock, issuing 9.1 million shares of our common stock.
As a result of the issuance of the 9.1 million shares, in addition to the 7.7
million issued at the closing of the acquisition, we have issued all of the
shares of common stock that we are allowed to issue in respect of the
acquisition under the Nasdaq rules without obtaining stockholder approval. We
still could be required to pay up to $85 million in additional consideration.
All future payments of additional consideration that may become payable to the
former IPWireless stockholders and IPWireless EIP participants will therefore
have to be paid in cash unless our stockholders approve of the issuance of
additional shares.
We
believe it is very important to maintain the flexibility to issue shares of our
common stock in order satisfy our future payment obligations to the former
IPWireless stockholders and IPWireless EIP participants pursuant to the
acquisition agreement, rather than making payments in cash. In order
to retain that flexibility, the Board recommends that stockholders approve of
the issuance of up to an additional 7.5 million shares of our common stock to
the former shareholders of IPWireless and IPWireless EIP participants should
such payments become due under the acquisition agreement, which, based on the
current value of our common stock, would allow us to pay up to approximately
$38.55 million of any additional consideration in shares of our common
stock.
The
Board of Directors recommends a vote FOR this proposal.
PROPOSAL
NO. 3
RATIFICATION
OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board
of Directors recommends that the stockholders ratify the selection of Ernst
& Young LLP, as the independent registered public accounting firm to audit
our accounts and those of our subsidiaries for 2008. The Audit
Committee approved the selection of Ernst & Young LLP as our independent
registered public accounting firm for 2008. Ernst & Young LLP is
currently our independent registered public accounting firm.
The
Board of Directors recommends a vote FOR this proposal.
ANNUAL
REPORT AND COMPANY INFORMATION
A copy of
our 2007 Annual Report to stockholders is being furnished to stockholders
concurrently herewith.
PROPOSALS
BY STOCKHOLDERS
In order
to include information with respect to a stockholder proposal in the Company’s
Proxy Statement and related form of proxy for a stockholder’s meeting,
stockholders must provide notice as required by the regulations promulgated
under the Securities Exchange Act of 1934 (the “Exchange
Act”).
Proposals
that stockholders wish to include in our Proxy Statement and form of proxy for
presentation at our 2009 annual meeting of stockholders must be received by us
at 12670 High Bluff Drive, San Diego, California 92130, Attention of Frank A.
Cassou, Secretary, no later than December 19, 2008. Any stockholder
proposal submitted for inclusion must be eligible for inclusion in our Proxy
Statement in accordance with the rules and regulations promulgated by the
SEC.
With
respect to proposals submitted by a stockholder other than for inclusion in our
Proxy Statement and related form of proxy for our 2009 annual meeting of
stockholders, timely notice of any stockholder proposal must be received by us
in accordance with our By-Laws and our rules and regulations no earlier than
December 13, 2008 and no later than January 12, 2009, unless the date of the
annual meeting is more than 30 days before or 60 days after the anniversary of
the 2008 annual meeting. Any proxies solicited by the Board of
Directors for the 2009 annual meeting may confer discretionary authority to vote
on any proposals notice of which is not timely received. In order to
include information with respect to a stockholder proposal in our Proxy
Statement and form of proxy for a stockholder's meeting, stockholders must
provide notice as required by the regulations promulgated under the Exchange
Act.
The
notice shall set forth as to each matter the stockholder proposes to bring
before the annual meeting: (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and address, as they appear on the
Company’s books, of the stockholder proposing such business, (iii) the class and
number of shares of the Corporation which are beneficially owned by the
stockholder, (iv) any material interest of the stockholder in such business and
(v) any other information that is required to be provided by the stockholder
pursuant to Regulation 14A under the Exchange Act, in his capacity as a
proponent to a stockholder proposal.
Stockholder's
notice relating to nomination for directors shall set forth as to each person,
if any, whom the stockholder proposes to nominate for election or re-election as
a director: (A) the name, age, business address and residence address of such
person, (B) the principal occupation or employment of such person, (C) the class
and number of shares of the Company which are beneficially owned by such person,
(D) a description of all arrangements or understandings between the stockholder
and each nominee and any other person(s) (naming such person(s)) pursuant to
which the nominations are to be made by the stockholder and (E) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Exchange Act (including without
limitation such person's written consent to being named in our Proxy Statement,
if any, as a nominee and to serving as a director if elected); and as to such
stockholder giving notice, the information required to be provided as set forth
in the preceding paragraph and our By-laws. No person shall be eligible for
election as a director of the Company, unless nominated in accordance with the
procedures set forth herein and in our By-laws, as amended.
It
is important that your proxy be returned promptly. The proxy may be
revoked at any time by you before it is exercised. If you attend the
meeting in person, you may withdraw any proxy and vote your own
shares.
|
By
Order of the Board of Directors.
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FRANK
A. CASSOU
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Secretary
and Chief Legal Counsel
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|
Annual Meeting Proxy
Card
|
Please mark your
vote as indicated in this example. x |
|
|
To vote by mail,
simply mark, sign and date your proxy card and return it in the
postage-paid envelope. |
A.
Election
of Directors
1.
|
The
Board of Directors recommends a vote FOR the listed
nominees.
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For
|
Withhold
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01
- Jack Rosen
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o
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o
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02
- William J. Jones
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o
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o
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B.
Proposals
|
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The
Board of Director recommends a vote FOR the following
proposal.
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For
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Against
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Abstain
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2.
|
Approve
the issuance of up to 7.5 million shares of our common stock to the former
stockholders of IPWireless Inc. and participants in the IPWireless, Inc.
Employee Incentive Plan in respect of any future earn-out payments under
the merger agreement pursuant to which NextWave acquired
IPWireless.
|
o
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o
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o
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3.
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Ratify
the selection of Ernst & Young LLP as independent registered public
accounting firm to audit the consolidated financial statements of
NextWave and
its subsidiaries for the year ending December 27, 2008.
|
o
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o
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o
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C.
Non-Proposals
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If
you plan on attending the meeting, please mark the box to the right with
an X. o
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An
admission ticket, which is required for entry to the
Annual Meeting, is attached to this proxy card. If you plan to attend the
meeting, please keep the admission ticket and bring it to the
meeting.
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As
of July 1, 2007, SEC rules permit companies to send you a Notice
indicating that their proxy materials are available on the Internet and
how you can request a mailed copy. Check the box to the right if you want
to receive future proxy materials by mail at no cost to you. Even if you
do not check the box, you will still have the right to request a free set
of proxy materials upon receipt of a Notice.
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o
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D.
Authorized Signatures - Sign Here - This section must be completed for
your instructions to be executed.
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NOTE:
Please your name(s) EXACTLY as your name(s) appear(s) on this proxy. All
joint holders must sign. When signing as attorney, trustee, executor,
administrator, guardian
or corporate officer, please provide your FULL
title.
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Signature
1 - Please keep signature within the box
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Signature
2 -Please keep signature within the box
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Date
(mm/dd/yyyy)
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Admission
Ticket
This
ticket is required for entry to the NextWave
Annual
Meeting. Please detach and bring with
you
if you wish to attend.
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PROXY
|
NextWave Wireless Inc.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The
undersigned does hereby constitute and appoint GEORGE C. ALEX and FRANK A.
CASSOU with
power of substitution, proxies for and in the name, place and stead of the
undersigned, to vote all shares votable by the undersigned at the shareholders’
annual meeting of NextWave
Wireless Inc. to be held at NextWave’s
offices located at 3611 Valley Center Drive, Kilroy Centre, San Diego,
California 92130 on May 14, 2008 at 10 a.m. Pacific Daylight Time and at any
adjournment
thereof.
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED HEREIN. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF
NEXTWAVE’S
BOARD OF DIRECTORS FOR ALL THE NOMINEES IN ITEM 1 AND FOR THE PROPOSALS IN ITEMS
2 AND 3 AND, AS
SAID PROXY HOLDER SHALL DEEM ADVISABLE, ON SUCH OTHER BUSINESS AS MAY PROPERLY
COME
BEFORE THE MEETING.
(Continued
and to be Signed on Reverse Side.)