In proxy materials filed Monday with the Securities
and Exchange Commission, the Overland Park-based company
(NYSE: S) said it will ask shareholders at its annual meeting on May 11
to approve a value-for-value exchange of employee stock options.

Sprint, like many companies, has for years offered stock options as
an incentive to retain and encourage good workers. An option is the
opportunity to buy a share of stock at a predetermined price, usually
the price on the day the option is awarded. The option gains value if
the stock price at the time the employee “exercises” the option and buys
the stock is higher than when it was granted.

But Sprint’s shares have gone in the opposite direction as the company
has lost millions of customers amid the ultra-competitive wireless
industry.

The company estimated that the exchange program would affect 33.2
million options that have an average value of $18.28 each. Sprint shares
closed at $3.79 in Monday trading.

“At a time when we need our employees’ motivation to be at its peak,
the stock options that have comprised a significant portion of their
compensation have become demotivating,” the company wrote in the proxy.

Through the options exchange, employees would have the opportunity to
swap their current options for a smaller number of new options tied to
current stock prices. People with options priced between $6.08 and
$13.17 would get a single new option for every two old options
submitted; those with options valued at $13.18 or more would receive a
single new option for every 4.5 old options.

The exchange would apply only to options granted at least a year
before the exchange began, not about to expire and not priced less than
the 52-week high, which is $5.94, according to Yahoo
Finance. It also wouldn’t apply to Sprint’s top executives.

Sprint said the exchange, if approved, also would reduce the
company’s “overhang,” or number of potential shares that could be
triggered in the future and dilute the value of current shares.

Other than the options exchange, shareholders will be asked to elect
10 board members to one-year terms and ratify the appointment of KPMG
LLP as Sprint’s auditor.

The shareholders also will be asked to vote on three items being
proposed by other investors. They include requiring Sprint to file
annual reports about the company’s political activities, allowing an
advisory vote by shareholders about executive compensation and allowing
shareholders to approve corporate decisions by written consent instead
of having to wait for a regular shareholder meeting.

Sprint’s board advocated against the three items, saying they were
unnecessary or would create an extra burden for the company.

The meeting will be May 11 at The Ritz Charles in Overland Park.