UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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☐ | Soliciting Material pursuant to § 240.14a-12 |
T-Mobile US, Inc.
(Name of Registrant as Specified In Its Charter)
N/A
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Place: Four Seasons Hotel 99 Union Street Seattle, WA 98101
Date: June 13, 2019
Time: 8:00 a.m. PDT
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Agenda:
∎ Elect 12 director nominees named in the Proxy Statement to the Companys Board of Directors; ∎ Ratify the appointment of PricewaterhouseCoopers LLP as the Companys independent registered public accounting firm for the fiscal year ending December 31, 2019; ∎ Vote on one stockholder proposal, if properly presented at the Annual Meeting; and ∎ Consider any other business that is properly brought before the Annual Meeting or any continuation, adjournment or postponement of the Annual Meeting.
Record Date: You can vote your shares if you were a stockholder of record at the close of business on April 18, 2019.
YOUR VOTE IS VERY IMPORTANT. Please vote as soon as possible by internet, by telephone or by signing and returning your proxy card if you received a paper copy of the proxy card by mail.
By Order of the Board of Directors,
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Timotheus Höttges Chairman of the Board of Directors April 26, 2019 |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 13, 2019
The Proxy Statement and Annual Report to Stockholders are available at
https://t-mobile.com/Proxy2019 and https://www.proxyvote.com.
This summary highlights information you will find in this Proxy Statement. As it is only a summary, please review the complete Proxy Statement before you vote.
2019 Annual Meeting Information
Date and Time: Thursday, June 13, 2019 at 8:00 a.m. (PDT) |
Location: Four Seasons Hotel 99 Union Street Seattle, WA 98101 |
Record Date: April 18, 2019 |
Proxy Mail Date: On or about April 26, 2019 |
How to Vote
By Internet: Visit the website listed on your proxy card |
By Phone: Call the telephone number on your proxy card |
By Mail: Sign, date and return your proxy card in the enclosed envelope
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In Person: Attend the Annual Meeting in Seattle, Washington |
Voting: | Each share of common stock is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted on. | |
Admission: | Admission to the Annual Meeting is limited to stockholders as of the record date. To be admitted to the Annual Meeting, you must present government-issued picture identification and proof of ownership of T-Mobile stock on the record date. This can be any of the following:
∎ Notice of Internet Availability of Proxy Materials ∎ Admission ticket enclosed with the paper copy of the proxy materials ∎ Legal proxy, account statement or other documentation confirming your T-Mobile stock holdings from the broker, bank or other institution that holds your shares |
Annual Meeting Agenda and Vote Recommendations:
Matter |
Board Vote Recommendation |
Page Reference (for more details) | ||||||
Proposal 1 |
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FOR | 14 | |||||
Proposal 2 |
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FOR | 23 | ||||
Proposal 3 |
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AGAINST | 54 |
In this Proxy Statement, we, our, us, T-Mobile and the Company refer to T-Mobile US, Inc. and the Annual Meeting refers to the 2019 Annual Meeting of Stockholders. We first made this Proxy Statement and form of proxy card available to stockholders on or about April 26, 2019.
PROXY SUMMARY STATEMENT
Good Corporate Governance Practices
Governance is real at T-Mobile. In connection with the business combination with MetroPCS Communications, Inc. completed in 2013 (the Metro Combination), T-Mobile became a publicly traded company with a significant stockholder, Deutsche Telekom AG (Deutsche Telekom). Deutsche Telekom has the right to designate a number of our directors, and as a result, we have stockholder representation on our Board. Directors approach each Board decision with a mindset that is intellectually independent from management. In addition, our Board has structured our corporate governance program to promote the long-term interest of stockholders, strengthen the Boards and managements accountability and help build public trust in the Company.
Unclassified Board and Annual Election of Directors |
Annual Board and Committee Self-Evaluations | |||||
12 Director Nominees |
No Poison Pill | |||||
Separation of Chairman and Chief Executive Officer Roles |
Stockholder Right to Call Special Meeting and Act by Written Consent | |||||
Lead Independent Director |
Anti-Hedging, Anti-Short Sale and Anti-Pledging Policies | |||||
Independent Chairs of the Audit, Compensation and Nominating and Corporate Governance Committees |
Executive Compensation Driven by Pay for Performance | |||||
Regular Executive Sessions of Independent Directors |
Stock Ownership Guidelines for Executive Officers and Directors | |||||
Comprehensive Risk Oversight by the Board and its Committees |
Clawback Policy to Recapture Incentive Payments |
T-Mobile Had Record Financial Results and Strong Customer Growth in 2018 and Proved, Once Again, That Taking Care of Customers Is Also Good for Stockholders
T-Mobile had record financial results in 2018, including record service revenues, record total revenues, strong net income, record fourth quarter Adjusted EBITDA, strong net cash from operating activities and record free cash flow. We added 7.0 million total net customers in 2018, marking the fifth year in a row of more than 5 million total net customer additions. We ended the year with 79.7 million total customers.
Our customer growth translated into industry-leading revenue growth. Service revenue of $32.0 billion for 2018 grew at 6.1% year over year. Net income of $2.9 billion for 2018 was down 36.3% year over year, due to the impact from the Tax Cuts and Jobs Act (the Tax Act), which resulted in an income tax benefit of $2.2 billion in 2017, and grew 22.6% year over year excluding the impact from the Tax Act. Adjusted EBITDA of $12.4 billion grew 10.6% year over year.
As of December 31, 2018, T-Mobile covered more than 325 million people with 4G LTE. Our stock price increased by 285.0% from May 1, 2013 (the first day of trading after the Metro Combination) through December 31, 2018. Looking back three years, our stock price has increased 63.3% (January 4, 2016 through December 31, 2018).
Adjusted EBITDA is a non-GAAP financial measure. This non-GAAP financial measure should be considered in addition to, but not as a substitute for, the information provided in accordance with U.S. generally accepted accounting principles (GAAP). A reconciliation to the most directly comparable GAAP financial measure is provided in Appendix A to this Proxy Statement.
2 | T-Mobile 2019 Proxy Statement |
PROXY SUMMARY STATEMENT
Executive Compensation Highlights Paying for Performance
Our executive compensation program is aligned with our business strategy and is designed to attract and retain top talent, reward short-term and long-term business results and exceptional individual performance, and, most importantly, maximize stockholder value.
Key Features of Our Executive Compensation Program |
T-Mobile 2019 Proxy Statement | 3 |
Corporate Governance at T-Mobile
Governance Highlights |
Unclassified Board and Annual Election of Directors |
Annual Board and Committee Self-Evaluations | |||||
12 Director Nominees
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No Poison Pill | |||||
Separation of Chairman and Chief Executive Officer Roles
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Stockholder Right to Call Special Meeting and Act by Written Consent | |||||
Lead Independent Director
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Anti-Hedging, Anti-Short Sale and Anti-Pledging Policies | |||||
Independent Chairs of the Audit, Compensation and Nominating and Corporate Governance Committees | Executive Compensation Driven by Pay for Performance | |||||
Regular Executive Sessions of Independent Directors | Stock Ownership Guidelines for Executive Officers and Directors | |||||
Comprehensive Risk Oversight by the Board and Its Committees | Clawback Policy to Recapture Incentive Payments |
Key Governance Materials |
Certificate of Incorporation |
Charter for Each Board Committee | |||||
Bylaws |
Code of Business Conduct | |||||
Corporate Governance Guidelines |
Code of Ethics for Senior Financial Officers | |||||
Stockholders Agreement |
Speak Up Policy (f.k.a. Whistleblower Protection Policy) |
These documents are available under the Governance section of our website at http://investor.t-mobile.com or are listed as exhibits to the Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC).
4 | T-Mobile 2019 Proxy Statement |
CORPORATE GOVERNANCE AT T-MOBILE
ANNUAL BOARD AND COMMITTEE EVALUATIONS
The Nominating and Corporate Governance Committee oversees the annual Board and committee self-evaluation process. In 2018, the Committee engaged an outside consultant to coordinate and provide insight on the annual self-evaluation process.
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The Board is committed to a comprehensive self-evaluation process to review the Boards and each committees overall effectiveness. |
Noted below are the high-level steps of the Board and Committee self-evaluation process.
Board Evaluation Process
STEP 1 Begin Evaluation Process The Chair of the Nominating and Corporate Governance Committee initiates, with the assistance of the Corporate Secretary, the annual evaluation process by engaging an outside evaluation consultant STEP 2 Evaluation Working closely with management, the outside consultant distributes comprehensive questionnaires to each director soliciting feedback on the Board's and each relevant Committee's effectiveness, covering topics such as: Strategic Oversight Scope & Content of Presentations Risk Management Succession Planning STEP 3 Analysis The outside consultant reviews the responses and prepares an executive summary for the Board and each Committee, which includes an overview of director responses and guidance on any material issues. The Chair of the Nominating and Corporate Governance Committee reviews the reports together with management and works directly with the consultant to evaluate the findings. STEP 4 Results and Findings The Nominating and Corporate Governance chair, with assistance from the outside consultant, presents the results and findings to the Board. Each committee reviews the committee results and findings. STEP 5 Follow Up Results requiring additional consideration are addressed at subsequent board and committee meetings and reported back to the Board, where appropriate. STEP 1 Begin Evaluation Process The Chair of the Nominating and Corporate Governance Committee initiates, with the assistance of the Corporate Secretary, the annual evaluation process by engaging an outside evaluation consultant. STEP 2 Evaluation Working closely with management, the outside consultant distributes comprehensive questionnaires to each director soliciting feedback on the Board's and each relevant Committee's effectiveness, covering topics such as: Strategic Oversight Scope & Content of Presentations Risk Management Succession Planning STEP 3 Analysis The outside consultant reviews the responses and prepares an executive summary for the Board and each Committee, which includes an overview of director responses and guidance on any material issues. The Chair of the Nominating and Corporate Governance Committee reviews the reports together with management and works directly with the consultant to evaluate the findings. STEP 4 Results and Findings The Nominating and Corporate Governance chair, with assistance from the outside consultant, presents the results and findings to the Board. Each committee reviews the committee results and findings. STEP 5 Follow Up Results requiring additional consideration are addressed at subsequent board and committee meetings and reported back to the Board, where appropriate.
HOW TO COMMUNICATE WITH OUR BOARD
You may contact the Chairman of the Board, the Board as a whole, the lead independent director, or any individual director as follows:
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T-Mobile US, Inc. The Board of Directors c/o Corporate Secretary 12920 SE 38th Street Bellevue, Washington 98006
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After receipt, communications will generally be forwarded to the Chairman of the Board, the whole Board, the lead independent director or specific directors as the Corporate Secretary deems appropriate based on the content of, and the matters raised in, the communications. Communications that are unrelated to the duties and responsibilities of the Board or are unduly hostile, threatening, potentially illegal or similarly unsuitable will not be forwarded. Responses to letters and any communications that are excluded are maintained by the Company and are available to any director upon request.
6 | T-Mobile 2019 Proxy Statement |
CORPORATE GOVERNANCE AT T-MOBILE
BOARD COMMITTEES AND RELATED MATTERS
Our Board has four standing committees: Audit, Compensation, Executive, and Nominating and Corporate Governance. The Board makes committee and committee chair assignments annually at its meeting immediately following the Annual Meeting of Stockholders, although further changes may be made from time to time as deemed appropriate by the Board.
Each committee has a Board-approved charter, which is reviewed annually by the respective committee. Recommended changes, if any, are submitted to the Board for approval. Each committee may retain and compensate consultants or other advisors as necessary for it to carry out its duties, without consulting with or obtaining the approval of the Board or the Company. A copy of the charter for each standing committee can be found on the Investor Relations section of our website at http://investor.t-mobile.com by selecting Governance Documents under the Governance tab.
Audit Committee
Chair: Srikant M. Datar
Additional Members
Teresa A. Taylor Kelvin R. Westbrook
Meetings Held in 2018: 11 |
As more fully described in its charter, the primary responsibilities of the Audit Committee are to:
∎ Assist the Board in oversight of the integrity of the Companys financial statements and the financial reporting process, disclosure controls and procedures and internal audit functions ∎ Directly appoint, compensate and retain our independent auditor, including the evaluation of the independent auditors qualifications, performance and independence ∎ Pre-approve the retention of the independent auditor for all audit and such non-audit services as the independent auditor is permitted to provide the Company and approve the fees for such services ∎ Discuss the Companys risk assessment and risk management policies, as well as annually review the implementation and effectiveness of our compliance and ethics programs ∎ Develop and oversee compliance with the Code of Ethics for Senior Financial Officers and the Code of Business Conduct for all employees, officers and directors ∎ Establish procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters ∎ Review and approve all related person transactions pursuant to the Companys Related Person Transaction Policy
Our Board has determined that each member of the Audit Committee meets all of the requirements for audit committee members under applicable NASDAQ rules and each of Messrs. Datar and Westbrook is an audit committee financial expert as defined in applicable SEC rules.
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T-Mobile 2019 Proxy Statement | 7 |
CORPORATE GOVERNANCE AT T-MOBILE
Compensation Committee
Chair: Kelvin R. Westbrook
Additional Members
Lawrence H. Guffey Dr. Christian P. Illek Raphael Kübler Olaf Swantee
Meetings Held in 2018: 6
Section 16 Subcommittee:
Lawrence H. Guffey Kelvin R. Westbrook
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As more fully described in its charter, the primary responsibilities of the Compensation Committee are to:
∎ Review and approve the Companys executive compensation philosophy and its programs, policies and practices ∎ Review and approve corporate goals and objectives relevant to the Chief Executive Officers compensation, evaluate the Chief Executive Officers performance in light of those goals and objectives and determine and approve the Chief Executive Officers compensation ∎ Review and approve compensation for the Companys executive officers ∎ Oversee the development of succession plans for the Chief Executive Officer and senior management ∎ Assist the Board in reviewing the results of any shareholder advisory votes, or responding to other shareholder communications, that relate to executive officer compensation, and consider whether to make or recommend adjustments to the Companys policies and practices as a result of such votes or communications ∎ Review a report from management regarding potential material risks, if any, created by the Companys compensation policies and practices ∎ The Section 16 Subcommittee has sole authority to approve all awards granted to the Companys officers who are subject to Section 16 of the Securities Exchange Act of 1934, as amended (the Exchange Act) that are intended to qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended
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8 | T-Mobile 2019 Proxy Statement |
CORPORATE GOVERNANCE AT T-MOBILE
Executive Committee
Chair: Timotheus Höttges
Additional Members
Lawrence H. Guffey Dr. Christian P. Illek Bruno Jacobfeuerborn Raphael Kübler Thorsten Langheim John J. Legere
Meetings Held in 2018: 0*
*Per the Executive Committees charter, the Committee meets as often as it determines necessary
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As more fully described in its charter, the primary responsibilities of the Executive Committee are to:
∎ Monitor the Companys operating performance relative to its operating objectives, strategy, plans and actions ∎ Provide management with feedback regarding the Companys operating objectives, strategy, plans, and actions, as well as the Companys operating performance ∎ Consider strategic operating goals, opportunities and risks ∎ Recommend changes to the Companys operating objectives, strategy, plans, and actions for consideration by the Board, as appropriate
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Nominating and Corporate Governance Committee
Chair: Teresa A. Taylor
Additional Members
Lawrence H. Guffey Thorsten Langheim
Meetings Held in 2018: 5
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As more fully described in its charter, the primary responsibilities of the Nominating and Corporate Governance Committee are to:
∎ Subject to the terms of the Companys certificate of incorporation and the Stockholders Agreement, review, approve and recommend for Board consideration director candidates based on the director selection guidelines then in effect, and advise the Board with regard to the nomination or appointment of such director candidates ∎ Periodically review and make recommendations to the Board regarding the appropriate size, role and function of the Board ∎ Develop and oversee a process for an annual evaluation of the Board and its committees ∎ Monitor the process for preparing agendas for, organizing and running Board meetings (including the occurrence of regular executive sessions) in coordination with the Chairman of the Board and Chief Executive Officer ∎ Recommend to the Board, as appropriate, the number, type, functions, and structure of committees of the Board, and the chairperson of each such committee ∎ Periodically review the Companys director orientation program and recommend changes, as appropriate ∎ Monitor, plan and support continuing education activities of the directors ∎ Develop, update as necessary and recommend to the Board corporate governance principles and policies
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T-Mobile 2019 Proxy Statement | 9 |
CORPORATE GOVERNANCE AT T-MOBILE
Elements of Non-Employee Director Compensation |
Amount ($) | |||
Annual cash retainer |
120,000 | |||
Additional annual cash retainer for: |
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Lead Independent Director |
35,000 | |||
Audit Committee Chair |
50,000 | |||
Compensation Committee Chair |
25,000 | |||
Nominating and Corporate Governance Committee Chair |
15,000 | |||
Additional Retainer for Audit Committee Members (Other Than Chair) |
15,000 | |||
Annual award of Restricted Stock Units |
195,000 | |||
Additional cash amounts for each Board and committee meeting in excess of 10 meetings per year: |
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In person |
2,000 | |||
By telephone |
1,000 | |||
T-Mobile 2019 Proxy Statement | 11 |
CORPORATE GOVERNANCE AT T-MOBILE
2018 Non-Employee Director Compensation Table
During fiscal year 2018, the Companys non-employee directors received the following compensation for their services:
Name
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Fees Earned or
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Stock
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All Other
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Total ($)
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W. Michael Barnes (1) |
70,750 | 178,798 | 7,221 | 256,769 | ||||||||||||
Srikant M. Datar |
198,000 | 178,798 | 4,195 | 380,993 | ||||||||||||
Lawrence H. Guffey |
137,000 | 178,798 | 9,471 | 325,269 | ||||||||||||
Olaf Swantee (2) |
65,918 | | | 65,918 | ||||||||||||
Teresa A. Taylor |
193,250 | 178,798 | 11,217 | 383,265 | ||||||||||||
Kelvin R. Westbrook |
174,500 | 178,798 | 12,445 | 365,743 | ||||||||||||
(1) | Mr. Barnes was not nominated for re-election and his Board service ended on June 13, 2018, the date of the 2018 Annual Meeting of Stockholders. |
(2) | Mr. Swantee was elected to the Board on June 13, 2018, the date of the 2018 Annual Meeting of Stockholders. |
(3) | Includes meeting fees earned as an Independent Committee member. |
(4) | The value of stock awards is determined using the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, CompensationStock Compensation, or ASC 718, excluding the effect of any estimated forfeitures. These amounts reflect the Companys accounting expense and do not correspond to the actual value that will be realized by the directors. See Note 1 to the Consolidated Financial Statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2018 for a summary of the assumptions we apply in calculating these amounts. As of December 31, 2018, each director held 3,324 unvested time-based RSUs. |
(5) | Includes (i) phone perquisites under the Board of Directors Phone Perquisite Program, (ii) personal and spousal travel expenses in connection with a Board meeting, and (iii) reimbursement of taxes associated with the personal and spousal travel expenses. |
DIRECTOR NOMINATION, SELECTION AND QUALIFICATIONS
12 | T-Mobile 2019 Proxy Statement |
CORPORATE GOVERNANCE AT T-MOBILE
T-Mobile 2019 Proxy Statement | 13 |
Proposal 1 - Election of Directors
2019 Director Nominees
The Board has nominated 12 directors for election at the Annual Meeting to serve as directors for terms that would end at the 2020 Annual Meeting of Stockholders. Olaf Swantee has not been nominated for re-election and his Board service will end on the date of the Annual Meeting. The Board would like to recognize Mr. Swantee for his services and contributions as a member of the Board. The Board has nominated a new director for election, Srini Gopalan. If elected, Mr. Gopalans term will begin on June 13, 2019. Other than Dr. Illek and Mr. Gopalan, all nominees were elected at the 2018 Annual Meeting of Stockholders.
Each nominee was nominated by the Board on the recommendation of the Nominating and Corporate Governance Committee. The Board has found each nominee to be qualified based on his or her qualifications, experience, attributes, skills and whether he or she meets the applicable independence standards. Each of the nominees has consented to stand for election and we do not anticipate any candidate will be unavailable to serve. In the event that any of the nominees should be unavailable for election as a result of an unexpected occurrence, shares may be voted for the election of such substitute nominee as the Board may nominate. In the alternative, if a vacancy remains, the Board may fill such vacancy at a later date or reduce the size of the Board, subject to certain requirements in our certificate of incorporation. The Board knows of no reason why any of the nominees would be unavailable or unable to serve.
Messrs. Höttges, Gopalan, IIlek, Jacobfeuerborn, Kübler, Langheim and Westbrook and Ms. Taylor were designated for nomination by Deutsche Telekom pursuant to its rights under our certificate of incorporation and the Stockholders Agreement.
Required Vote
Under our bylaws, directors are elected by a plurality of the votes cast by stockholders entitled to vote on the election of directors at the Annual Meeting. Shares represented by executed proxies received by the Company will be voted, unless otherwise marked withheld, FOR the election of each of the nominees.
Our Board of Directors recommends a vote FOR the election to the Board of each of the nominees listed below |
Director Since: 2013
Age: 65
Other Public Company Boards: ∎ Novartis AG ∎ ICF International Inc. ∎ Stryker Corporation
Board Committees: ∎ Audit (Chair) |
Srikant M. Datar Arthur Lowes Dickinson Professor at the Graduate School of Business Administration at Harvard University; Senior Associate Dean for University Affairs
Biography:
Mr. Datar is the Arthur Lowes Dickinson Professor at the Graduate School of Business Administration at Harvard University. Mr. Datar is a Chartered Accountant and planner in industry, and has been a professor of accounting and business administration at Harvard since July 1996; he previously served as a professor at Stanford University and Carnegie Mellon University. Mr. Datar received gold medals upon his graduation from the Indian Institute of Management, Ahmedabad, and the Institute of Cost and Works Accountants of India.
Mr. Datar holds a Masters degree in Statistics and Economics and a Ph.D. in Business from Stanford University.
Qualifications and Skills Supporting Election to the Board:
∎ Expertise in accounting, governance and risk management ∎ Public company director and committee experience ∎ Academic and commercial perspective on complex issues
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14 | T-Mobile 2019 Proxy Statement |
PROPOSAL 1 - ELECTION OF DIRECTORS
Nominee
Age: 48
Other Public Company Boards: ∎ Hellenic Telecommunications Organization (OTE) |
Srini Gopalan Member of the Board of Management Deutsche Telekom AG for Europe
Biography:
Since January 1, 2017, Mr. Gopalan has served as a member of the Board of Management Deutsche Telekom AG, our majority stockholder and a leading integrated telecommunications company. He is responsible for the Europe segment of the company. From September 2013 to September 2016, he served as the Consumer Director at Bharti Airtel in India, where he was responsible for consumer business that covered broadband connections and satellite TV, in addition to mobile communications. Prior to joining Bharti Airtel, from August 2010 to August 2013, he was the Consumer Director at Vodafone UK. Prior to that, from June 2009 to August 2010, he was the Chief Marketing Officer at T-Mobile UK and was part of the management team that led T-Mobile UK to the joint venture with Orange Communications SA, everything-everywhere. Prior to that, between 1999 and 2009, Mr. Gopalan worked at Capital One in several functions starting as Senior Vice President, Head of UK Card and leaving as Managing Director UK.
Mr. Gopalan studied Business Administration at St. Stephens College in New Delhi, India and later received a Master of Business Administration at Indian Institute of Management Ahmedabad in Ahmedabad, India.
Qualifications and Skills Supporting Election to the Board:
∎ Expertise in global telecommunications ∎ Core business, management and leadership skills
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Director Since: 2013
Age: 51
Board Committees: ∎ Compensation ∎ Executive ∎ Nominating and Corporate Governance |
Lawrence H. Guffey Chief Executive Officer of LG Capital Investors LLC
Biography:
Mr. Guffey is Chief Executive Officer of LG Capital Investors LLC, a single family office formed in 2014, and Managing Partner of Twin Point Capital, the principal investment arm of the family office. From 1991 to 2013, Mr. Guffey was with The Blackstone Group, an asset management and financial services company, most recently serving as Senior Managing Director (Partner) in the Private Equity Group. Mr. Guffey led many of The Blackstone Groups media and communications investment activities and managed Blackstone Communications Advisors. Mr. Guffey was a member of the Supervisory Board at Deutsche Telekom, our majority stockholder and a leading integrated telecommunications company, from June 2006 to October 2013. He was a Director of New Skies Satellites Holdings Ltd. from January 2005 to December 2007, Axtel SA de CV from May 2000 to June 2013, FiberNet L.L.C. from 2001 to 2003, iPCS Inc. from August 2000 to September 2002, PAETEC Holding Corp. from February 2000 to 2002, and Commnet Cellular Inc. from February 1998 to December 2001. Mr. Guffey also served as a Director of TDC A/S from February 2006 to March 2013 and Wind Mobile from 2014 to 2016.
He holds a Bachelor of Arts and graduated magna cum laude from Rice University, where he was elected to Phi Beta Kappa.
Qualifications and Skills Supporting Election to the Board:
∎ Core financial and business skills ∎ Experience overseeing investments in media and communications industries ∎ Public company director and committee experience
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T-Mobile 2019 Proxy Statement | 15 |
PROPOSAL 1 - ELECTION OF DIRECTORS
Director Since: 2013
Age: 56
Other Public Company Boards: ∎ Henkel AG & Co. KGaA ∎ BT Group plc
Board Committees: ∎ Executive (Chair) |
Timotheus Höttges Chief Executive Officer of Deutsche Telekom
Biography:
Since January 2014, Mr. Höttges has served as Chief Executive Officer of Deutsche Telekom, our majority stockholder and a leading integrated telecommunications company. From March 2009 to December 2013, he served as Deutsche Telekoms Chief Financial Officer and a member of the Board of Management. From December 2006 to March 2009, he was a member of the Board of Management responsible for the T-Home Unit (fixed network and broadband business, as well as integrated sales and service in Germany). From January 2003 to December 2006, Mr. Höttges headed European operations as a member of the Board of Management of T-Mobile International.
Mr. Höttges studied Business Administration at the University of Cologne.
Qualifications and Skills Supporting Election to the Board:
∎ Chief executive officer of major global communications company ∎ Core finance, business and leadership skills
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Director Since: 2018
Age: 54
Board Committees: ∎ Compensation ∎ Executive |
Christian P. Illek Chief Financial Officer of Deutsche Telekom
Biography:
Dr. Illek has served as the Chief Financial Officer of Deutsche Telekom, our majority stockholder and a leading integrated telecommunications company, since January 2019.
Since April 2015, he has served as Chief Human Resources Officer and Member of Management Board of Deutsche Telekom. Dr. Illek has also served as Chairman of the Supervisory Board for T-Systems International GmbH since November 2016 (a subsidiary of Deutsche Telekom). Prior to that, Dr. Illek was Chairman of Management Board at Microsoft Germany from September 2012 to March 2015. From April 2010 to September 2012, he was Director of Marketing at Telekom Deutschland GmbH. In this position, he was responsible for all marketing activities for both consumers and business customers in Germany. He was also in charge of the Wholesale Center and the Value-Added Services Center, as well as international product development for Deutsche Telekoms fixed-network, IPTV, a convergent and business customer portfolio. Before joining Deutsche Telekom, Dr. Illek held various managerial positions at Bain & Company and at Dell, in both Germany and in Switzerland.
Dr. Christian P. Illek studied chemistry and business administration in Düsseldorf and Munich, beginning his career at the University of Munich in 1989.
Qualifications and Skills Supporting Election to the Board:
∎ Expertise in global telecommunications industry ∎ Expertise in human resources, business and finance
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16 | T-Mobile 2019 Proxy Statement |
PROPOSAL 1 - ELECTION OF DIRECTORS
Director Since: 2014
Age: 58
Board Committees: ∎ Executive |
Bruno Jacobfeuerborn Chief Executive Officer of DFMG Deutsche Funkturm GmbH and Chief Executive Officer of Comfortcharge GmbH
Biography:
Mr. Jacobfeuerborn has been Chief Executive Officer of DFMG Deutsche Funkturm GmbH since January 2017 and Chief Executive Officer of Comfortcharge GmbH since January 2018. Previously, he served as the Chief Technology Officer of Deutsche Telekom AG from February 2012 to December 2017. Deutsche Telekom AG is our majority stockholder and a leading integrated telecommunications company. He also served as the Director of Technology Telekom Deutschland GmbH from April 2010 to December 2016. Prior to that, Mr. Jacobfeuerborn was Director of Technology of T-Mobile Deutschland and T-Home in Germany from July 2009 to March 2010. In this dual role, he was responsible for the technology business (both mobile and fixed network) in Germany. From April 2007 to July 2009, he was Managing Director of Technology, IT and Procurement at Polska Telefonica Cyfrowa. Mr. Jacobfeuerborn joined what is now Deutsche Telekom AG in 1989 and has held several positions with increasing responsibility within the group.
Qualifications and Skills Supporting Election to the Board:
∎ Expertise in global telecommunications industry ∎ Wireless network and technology expertise ∎ Core finance, business and leadership skills
|
|||
Director Since: 2013
Age: 56
Other Public Company Boards: ∎ Ströer SE & Co. KGaA ∎ Hellenic Telecommunications Organization (OTE) (2013-2018)
Board Committees: ∎ Compensation ∎ Executive
|
Raphael Kübler Senior Vice President of the Corporate Operating Office of Deutsche Telekom
Biography:
In January 2014, Mr. Kübler assumed the position of Senior Vice President of the Corporate Operating Office of Deutsche Telekom, our majority stockholder and a leading integrated telecommunications company, and he reports directly to the Chief Executive Officer of Deutsche Telekom. From July 2009 to December 2013, Mr. Kübler served as Senior Vice President Group Controlling at Deutsche Telekom. In this position, he was responsible for the financial planning, analysis and steering of the overall Deutsche Telekom Group as well as the financial management of central headquarters and shared services. From November 2003 to June 2009, Mr. Kübler served as Chief Financial Officer of T-Mobile Deutschland GmbH, the mobile operations of Deutsche Telekom in Germany now known as Telekom Deutschland GmbH (a wholly owned subsidiary of Deutsche Telekom).
Mr. Kübler studied Business Administration at H.E.C. in Paris and the Universities of Bonn and Cologne. He holds a doctoral degree from the University of Cologne.
Qualifications and Skills Supporting Election to the Board:
∎ Expertise in global telecommunications industry ∎ Core business, management and leadership skills ∎ Complex financial management experience
|
T-Mobile 2019 Proxy Statement | 17 |
PROPOSAL 1 - ELECTION OF DIRECTORS
Director Since: 2013
Age: 53
Board Committees: ∎ Executive ∎ Nominating and Corporate Governance |
Thorsten Langheim Member of the Deutsche Telekom AG Board of Management, USA and Group Development
Biography:
Thorsten Langheim joined the Board of Management of Deutsche Telekom, our majority stockholder and a leading integrated telecommunications company, on January 1, 2019, where he is responsible for the USA and Group Development Board department, overseeing Deutsche Telekoms U.S. business as well as corporate development, portfolio strategy and group M&A activities. This includes overseeing Deutsche Telekoms 12% stake in BT Group as well as the management of Deutsche Telekoms subsidiaries T-Mobile Netherlands and Deutsche Funkturm. In addition, Mr. Langheim also serves as the Chairman and Co-founder of Deutsche Telekom Capital Partners, where he is responsible for the venture capital and private equity activities of Deutsche Telekom.
Prior to that, from 2009 to December 2018, he first served as Senior Vice President of Corporate Development and then as Executive Vice President Group Development at Deutsche Telekom. Prior to his roles at Deutsche Telekom, Mr. Langheim was Managing Director at the Private Equity Group of The Blackstone Group, an asset management and financial services company, from May 2004 to June 2009, primarily focusing on private equity investments in Germany. Before that, Mr. Langheim was Investment Banker and Vice President European M&A at J.P. Morgan in London and Assistant Director at WestLB in Düsseldorf between 1995 and 2004.
Mr. Langheim is a member of the Supervisory Board of Deutsche Sporthilfe as well as Chairman of T-Mobile Netherlands and Deutsche Funkturm.
Mr. Langheim holds a Master of Science degree in International Securities, Investment and Banking from the ISMA Centre for Education and Research at the University of Reading and a bachelors degree (Hons) in European Finance and Accounting from the University of Bremen (Germany) and Leeds Business School (United Kingdom).
Qualifications and Skills Supporting Election to the Board:
∎ Expertise in global telecommunications industry ∎ Experience overseeing telecommunications and technology investments ∎ Corporate strategy and M&A experience
|
|||
Director Since: 2013
Age: 60
Board Committees: ∎ Executive
|
John J. Legere Chief Executive Officer of T-Mobile US, Inc.
Biography:
Mr. Legere joined T-Mobile USA in September 2012 as President and Chief Executive Officer and became our President and Chief Executive Officer on April 30, 2013 upon the consummation of the Metro Combination. Mr. Legere has over 38 years experience in the U.S. and global telecommunications and technology industries. Prior to joining T-Mobile USA, Mr. Legere served as Chief Executive Officer of Global Crossing Limited, a telecommunications company, from October 2001 to October 2011. Before joining Global Crossing, he served as Chief Executive Officer of Asia Global Crossing; as president of Dell Computer Corporations operations in Europe, the Middle East, and Africa; as President, Asia-Pacific for Dell; as president of AT&T Asia Pacific; as head of AT&Ts outsourcing program and as head of AT&T global strategy and business development. Mr. Legere serves on the CTIA Board of Directors.
Mr. Legere holds a bachelors degree in Business Administration from the University of Massachusetts, a Master of Science degree as an Alfred P. Sloan Fellow at the Massachusetts Institute of Technology, and a Master of Business Administration degree from Fairleigh Dickinson University. He also completed Harvard Business Schools Program for Management Development.
Qualifications and Skills Supporting Election to the Board:
∎ Chief Executive Officer of T-Mobile ∎ Expertise in telecommunications and technology industries
|
18 | T-Mobile 2019 Proxy Statement |
PROPOSAL 1 - ELECTION OF DIRECTORS
Director Since: 2018
Age: 49
Other Public Company Boards: ∎ Shaw Communications |
G. Michael (Mike) Sievert President and Chief Operating Officer of T-Mobile US, Inc.
Biography:
Mr. Sievert serves as our President and Chief Operating Officer. Mr. Sievert is responsible for guiding all customer-facing operations across the business, including marketing, product development, retail management, sales and customer care for all of our direct and indirect channels and each of our brands. Mr. Sievert served as our Executive Vice President and Chief Marketing Officer from April 2013 to February 2015, and from November 2012 to April 2013, Mr. Sievert was Executive Vice President and Chief Marketing Officer of T-Mobile USA.
Prior to joining T-Mobile USA, Mr. Sievert was an entrepreneur and investor involved with several Seattle-area start-up companies. From April 2009 to June 2011, he was Chief Commercial Officer at Clearwire Corporation, a broadband communications provider, responsible for all customer-facing operations. From February 2008 to January 2009, Mr. Sievert was co-founder and Chief Executive Officer of Switchbox Labs, Inc., a consumer technologies developer, leading up to its sale to Lenovo. He also served from January 2005 to February 2008 as Corporate Vice President of the worldwide Windows group at Microsoft Corporation, responsible for global product management and P&L performance for that unit. Prior to Microsoft, he served as Executive Vice President and Chief Marketing Officer at AT&T Wireless for three years. He also served as Chief Sales and Marketing Officer at E*TRADE Financial and began his career with management positions at Procter & Gamble and IBM. He has served on the boards of Rogers Wireless Communications in Canada, Switch & Data Corporation, and a number of technology start-ups.
Mr. Sievert holds a bachelors degree in Economics from the Wharton School at the University of Pennsylvania.
Qualifications and Skills Supporting Election to the Board:
∎ President and Chief Operating Officer of T-Mobile ∎ Expertise in telecommunications and technology industries
|
|||
Director Since: 2013
Age: 55
Lead Independent Director
Other Public Company Boards: ∎ First Interstate BancSystem, Inc. ∎ Black Hills Corporation ∎ NiSource Inc. (2012 to 2015)
Board Committees: ∎ Nominating and Corporate Governance (Chair) ∎ Audit |
Teresa A. Taylor Chief Executive Officer of Blue Valley Advisors, LLC
Biography:
Since April 2011, Ms. Taylor has served as Chief Executive Officer of Blue Valley Advisors, LLC, an advisory firm. Ms. Taylor served as Chief Operating Officer of Qwest Communications, Inc., a telecommunications carrier, from August 2009 to April 2011. She served as Qwests Executive Vice President, Business Markets Group, from January 2008 to April 2009 and served as its Executive Vice President and Chief Administrative Officer from December 2005 to January 2008. Ms. Taylor served in various positions with Qwest and the former US West beginning in 1987. During her 24-year tenure with Qwest and US West, she held various leadership positions and was responsible for strategic planning and execution, sales, marketing, product, network, information technology, human resources and corporate communications.
Ms. Taylor holds a Bachelor of Science degree from the University of Wisconsin-LaCrosse.
Qualifications and Skills Supporting Election to the Board:
∎ Expertise in technology, media and telecommunications industries ∎ Expertise in strategic planning and execution, technology development, human resources, labor relations and corporate communications ∎ Public company director and committee experience
|
|||
T-Mobile 2019 Proxy Statement | 19 |
PROPOSAL 1 - ELECTION OF DIRECTORS
Director Since: 2013
Age: 63
Other Public Company Boards: ∎ Archer Daniels Midland Company ∎ Camden Property Trust ∎ The Mosaic Company ∎ Stifel Financial Corp. (2007 to 2018)
Board Committees: ∎ Compensation (Chair) ∎ Audit |
Kelvin R. Westbrook President and Chief Executive Officer of KRW Advisors, LLC
Biography:
Mr. Westbrook is President and Chief Executive Officer of KRW Advisors, LLC, a consulting and advisory firm, a position he has held since October 2007. Mr. Westbrook also served as Chairman and Chief Strategic Officer of Millennium Digital Media Systems, L.L.C. (MDM), a broadband services company that later changed its name to Broadstripe LLC, from September 2006 until October 2007. Mr. Westbrook was also President and Chief Executive Officer of MDM from May 1997 until October 2006. Broadstripe LLC (formerly MDM) and certain of its affiliates filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in January 2009, approximately 15 months after Mr. Westbrook resigned.
Mr. Westbrook holds an undergraduate degree in Business Administration from the University of Washington and a Juris Doctor degree from Harvard Law School.
Qualifications and Skills Supporting Election to the Board:
∎ Expertise in the telecommunications industry ∎ Core legal, media, marketing and risk analysis skills ∎ Public company director and committee experience
|
20 | T-Mobile 2019 Proxy Statement |
The following sets forth information regarding the executive officers of the Company. Biographical information pertaining to Messrs. Legere and Sievert, who are both executive officers and directors of the Company, can be found in the Section entitled Proposal 1Election of Directors.
Name |
Age |
Position | |||||
John J. Legere |
|
60 |
Chief Executive Officer | ||||
G. Michael Sievert |
|
49 |
President and Chief Operating Officer | ||||
David R. Carey |
|
65 |
Executive Vice President, Corporate Services | ||||
J. Braxton Carter |
|
60 |
Executive Vice President and Chief Financial Officer | ||||
Peter A. Ewens |
|
56 |
Executive Vice President, Corporate Strategy | ||||
Thomas C. Keys |
|
60 |
President, MetroPCS | ||||
David A. Miller |
|
58 |
Executive Vice President, General Counsel and Secretary | ||||
Neville R. Ray |
|
56 |
Executive Vice President and Chief Technology Officer | ||||
Elizabeth A. McAuliffe |
|
56 |
Executive Vice President, Human Resources |
T-Mobile 2019 Proxy Statement | 21 |
EXECUTIVE OFFICERS
22 | T-Mobile 2019 Proxy Statement |
PROPOSAL 2 - RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANYS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2019
24 | T-Mobile 2019 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (CD&A) describes our 2018 executive compensation program for the following executive officers (collectively, the Named Executive Officers): | ||||||||
∎ John J. Legere |
∎ J. Braxton Carter |
∎ G. Michael Sievert |
∎ Neville R. Ray |
∎ David R. Carey | ||||
Chief Executive Officer |
Executive Vice
|
President and Chief Operating Officer |
Executive Vice |
Executive Vice
President, |
During 2018, Mr. Legere served as our President and Chief Executive Officer, and Mr. Sievert served as our Chief Operating Officer, through April 29, 2018 (as ratified by the Board on June 13, 2018). Thereafter, Mr. Legere served as our Chief Executive Officer and Mr. Sievert served as our President and Chief Operating Officer.
T-Mobile Had Record Financial Results and Strong Customer Growth in 2018 and Proved, Once Again, That Taking Care of Customers Is Also Good For Stockholders
T-Mobile had record financial results in 2018, including record service revenues, record total revenues, strong net income, record fourth quarter Adjusted EBITDA, strong net cash from operating activities and record free cash flow. We added 7.0 million total net customers in 2018, marking the fifth year in a row of more than 5 million total net customer additions. We ended the year with 79.7 million total customers.
Our customer growth translated into industry-leading revenue growth. Service revenue of $32.0 billion for 2018 grew at 6.1% year over year. Net income of $2.9 billion for 2018 was down 36.3% year over year, due to the impact from the Tax Act, which resulted in an income tax benefit of $2.2 billion in 2017, and grew 22.6% year over year excluding the impact from the Tax Act. Adjusted EBITDA of $12.4 billion grew 10.6% year over year.
As of December 31, 2018, T-Mobile covered more than 325 million people with 4G LTE. Our stock price increased by 285.0% from May 1, 2013 (the first day of trading after the Metro Combination) through December 31, 2018. Looking back three years, our stock price has increased 63.3% (January 4, 2016 through December 31, 2018).
Adjusted EBITDA is a non-GAAP financial measure. This non-GAAP financial measure should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. A reconciliation to the most directly comparable GAAP financial measure is provided in Appendix A to this proxy statement.
Our executive compensation program emphasizes pay for performance. As a result, our 2018 Named Executive Officer compensation reflects T-Mobiles strong 2018 operational and financial performance.
T-Mobile 2019 Proxy Statement | 25 |
EXECUTIVE COMPENSATION
Executive Compensation Program
Our executive compensation program is aligned with our business strategy and is designed to attract and retain top talent, reward short-term and long-term business results and exceptional performance, and most importantly, maximize stockholder value. Our program is competitive in the marketplace and highly incentive-based, with Company performance determining a significant portion of total compensation.
Key Features of Our Executive Compensation Program |
Goals of Compensation Program
What We Pay and Why: Goals and Elements of Compensation
Emphasis on pay for performance |
Attract, retain and motivate talented and experienced executives within the highly competitive and dynamic wireless communications industry
|
Recognize and reward executives whose skill and performance are critical to our success |
Align interests of our executives with our stockholders |
Encourage appropriate risk taking |
Elements of Total Direct Compensation
Summary of Named Executive Officer Average Target Compensation as of December 31, 2018
Long-Term Incentive (LTI) Performance-based restricted stock units (PRSUs) and time-based restricted stock units (RSUs) Emphasis on long-term Company performance Retains and engages executive officers Aligns executive officer interests with our stockholders Approximately 73% of target total direct compensation Number of PRSUs that can be earned is capped at 200% of target Benefits and Perquisites Executive officers are generally not eligible for any additional benefits or perquisites beyond what is provided to the general employee population.Base Salary Competitive fixed base of cash compensation Amount based on individual factors such as scope of responsibility, experience and strategic impact Annual Short-Term Incentive (STI) Cash Award Based entirely on Company performance; not guaranteed Aligned with Company near-term objectives, while also supporting our long-term strategic plan Award opportunities established at threshold, target and maximum values Each measure capped at 200% of target The Compensation Committee considers input from its independent compensation consultant, compensation survey data, and internal comparators among the officer positions when setting target compensation. When setting base salaries, the Compensation Committee also considers the impact of base salary on other compensation elements.
26 | T-Mobile 2019 Proxy Statement |
EXECUTIVE COMPENSATION
To promote a performance-based culture that further aligns the interests of management and stockholders, in 2018 the executive compensation program focused extensively on variable, performance-based compensation. As illustrated in the charts below, the substantial majority of our Chief Executive Officers and other Named Executive Officers actual total compensation as reported in the 2018 Summary Compensation Table was in the form of variable compensation (short-term and long-term).
Summary of Named Executive Officer Compensation as Reported in the Summary Compensation Table
CEO 2018 Pay Mix Named Executive Officer 2018 Average Pay Mix (Excluding CEO) (1) The value of stock awards is determined using the aggregate grant date fair value computed in accordance with ASC 718.
T-Mobile 2019 Proxy Statement | 27 |
EXECUTIVE COMPENSATION
The following chart shows T-Mobiles 2018 peer group of 14 companies and each such companys revenue as of fiscal year-end and market capitalization as of December 31, 2018. Our peer group for 2019 has not changed.
TMUS executive compensation peer group peer company revenue (in billions) as of peer fiscal year-end market capitalization (in billions) as of December 31, 2018 AT&T, Inc. $170.76 $207.71 CenturyLink, Inc. $23.44 $16.37 Charter Communications, Inc. $43.63 $65.23 Cisco Systems, Inc. $49.33 $194.81 Comcast corp. $94.51 $154.91 Dish network corp. $13.62 $11.68 Frontier Communications Corporation $8.61 $0.25 Intel Corp. $70.85 $214.19 Liberty Global plc $11.96 $15.71 Microsoft corporation $110.36 $779.80 Motorola Solutions, Inc. $7.34 $18.81 QUALCOMM incorporated $22.73 $68.98 Sprint Corp. $32.41 $23.73 Verizon Communications Inc. $130.86 $232.30 Median $38.02 $67.11 T-Mobile US, Inc. $43.24 $53.97 10th percentile 25th percentile 50th percentile 75th percentile 90th percentile peer revenue TMUS: $43.24 $9.6 $15.9 $38.0 54th percentile $88.6 $124.7 Market Capitalization TMUS: $53.97 $12.9 $17.0 44th Percentile $67.1 $204.5 $226.9
The following table shows, as of December 31, 2018, the target total direct compensation established for each Named Executive Officer.
Officer |
Base Salary ($) |
Target STIP Percent (1) |
Target STIP Value ($) |
Total Target Cash ($) |
Target LTIP Percent (2) |
Target LTIP Value ($) |
Target Total Direct Compensation ($) |
|||||||||||||||||||||
John J. Legere (3) |
2,000,000 | 200% | 4,000,000 | 6,000,000 | | 17,250,000 | 23,250,000 | |||||||||||||||||||||
J. Braxton Carter |
900,000 | 150% | 1,350,000 | 2,250,000 | 250% | 5,625,000 | 7,875,000 | |||||||||||||||||||||
G. Michael Sievert (4) |
1,200,000 | 200% | 2,400,000 | 3,600,000 | | 10,350,000 | 13,950,000 | |||||||||||||||||||||
Neville R. Ray |
900,000 | 200% | 1,800,000 | 2,700,000 | 250% | 6,750,000 | 9,450,000 | |||||||||||||||||||||
David R. Carey (5) |
775,000 | 125% | 968,750 | 1,743,750 | | 4,359,375 | 6,103,125 |
(1) | Target STIP Percent as a percent of base salary. |
(2) | Target LTIP Percent as a percent of total target cash. |
(3) | Target STIP value and LTIP value for Mr. Legere are as specified in his employment agreement. |
(4) | Target LTIP value for Mr. Sievert as specified in his term sheet. |
(5) | Target LTIP value for Mr. Carey as specified in his term sheet. |
28 | T-Mobile 2019 Proxy Statement |
EXECUTIVE COMPENSATION
Eligible Earnings Target Percentage Target STIP Opportunity Total Service Revenue (20%) Branded Net Adds (20%) Adjusted EBITDA (20%) Operating Free cash Flow (30%) Adjusted EBIT (10%) Corporate Performance Attainment Annual Incentive Amount
These measures were aligned with the operational objectives of the Companys business. Attainment of the minimum threshold performance level for at least one of the performance metrics was required in order for the executives to receive any payment under the 2018 STIP. If none of the minimum performance thresholds had been achieved during 2018, no awards would have been paid.
Metric |
Weight | Minimum (in millions) |
Target (in millions) |
Maximum (in millions) |
Actual (in millions) |
|||||||||||||||
Total Service Revenue |
20 | % | $ | 30,223 | $ | 31,814 | $ | 32,609 | $ | 32,027 | ||||||||||
Branded Net Additions |
20 | % | 1.143 | 2.858 | 3.997 | 4.919 | ||||||||||||||
Adjusted EBITDA |
20 | % | $ | 10,411 | $ | 11,316 | $ | 11,969 | $ | 12,000 | ||||||||||
Operating Free Cash Flow |
30 | % | $ | 4,015 | $ | 5,300 | $ | 5,814 | $ | 5,413 | ||||||||||
Adjusted EBIT |
10 | % | $ | 4,714 | $ | 5,124 | $ | 5,397 | $ | 5,514 |
The Company performed above target levels with respect to all five performance metrics in 2018. Overall performance under the 2018 STIP, determined based on actual performance for each performance metric and the relative weighting of each such metric (as disclosed in the table above), was achieved at 162% of target. The 2018 actual results do not include the impacts of the new revenue standard, consistent with the 2018 STIP design and targets. The following table shows the payouts under the 2018 STIP for each Named Executive Officer based on these performance results.
Officer |
Base Earnings (1) ($) | Target 2018 STIP Percent (as a % of Base Earnings) |
Target 2018 STIP Value ($) |
Company Attainment |
Total 2018 STIP Payout Value ($) |
|||||||||||||||
John J. Legere (2) |
1,878,205 | | 3,784,475 | 162% | 6,130,849 | |||||||||||||||
J. Braxton Carter |
898,077 | 150.00% | 1,347,115 | 162% | 2,182,327 | |||||||||||||||
G. Michael Sievert |
1,108,654 | 200.00% | 2,217,308 | 162% | 3,592,039 | |||||||||||||||
Neville R. Ray (3) |
879,808 | 181.73% | 1,598,874 | 162% | 2,590,177 | |||||||||||||||
David R. Carey |
774,038 | 125.00% | 967,548 | 162% | 1,567,428 |
(1) | Base earnings reflect annual salary paid from December 17, 2017 to December 15, 2018 as reported by T-Mobile payroll and vary slightly from target 2018 base salaries. |
(2) | Mr. Legeres employment agreement provides that his short-term incentive value will be targeted at not less than $3,784,475. |
(3) | Mr. Rays target 2018 STIP percent reflects an increase from 150% to 200% effective April 29, 2018. |
T-Mobile 2019 Proxy Statement | 29 |
EXECUTIVE COMPENSATION
PRSU achievement can range from 0% to 200% of target based on relative performance against our peer group, and payouts are determined by multiplying the target number of PRSUs by an adjustment percentage based on the RTSR percentile performance of the Company, as set forth in the following table. No payout will be made if performance is attained below the 25th percentile.
2018-2021 PRSU award relative total shareholder return design RTSR percentile ranking adjustment percentage 1 Below 25th percentile o% 25th percentile 25% 50th percentile 100% 75th percentile 125% 100th percentile 200% 1 company total shareholder return for the performance period must be positive in order for the adjustment percentage to be greater than 100% PRSU adjustment Percentage 0 25 50 75 100 125 150 175 200 Poor Performance < 25th percentile No payout y=0 25th to 49th percentile y=3x-50 50th to 75th percentile slope (1:1) y=x+50 High performance 76th to 100th percentile y=3x-100 0 25 50 75 100 Relative TSR percentile Result Relative position at the conclusion of the performance period calculated as percentile rank based on linear interpolation beginning price means the average of the closing prices of the applicable stock for the 30 days prior to the start of the performance period Ending price means the average of the closing prices of the applicable stock for the last 30 days of the performance period total shareholder return for a given company means: [(ending price beginning price) + Dividends] divided by [Beginning price] (applicable dividend inclusion based on ex-dividend date; dividends re-invested for TSR calculation)
30 | T-Mobile 2019 Proxy Statement |
EXECUTIVE COMPENSATION
The total 2018 target long-term incentive grant value and the number of annual PRSUs and RSUs awarded are shown below for each Named Executive Officer. The number of annual PRSUs and RSUs awarded was established as the total grant-date target value multiplied by the award mix and divided by the average closing price of our common stock for the 30 calendar-day period ending five business days prior to the grant date.
Officer
|
Total 2018 Grant
|
Target Number of PRSUs (#)
|
Number of
|
|||||||||
John J. Legere |
|
15,000,000 |
|
|
173,283 |
|
|
63,012 |
| |||
J. Braxton Carter |
|
5,625,000 |
|
|
44,306 |
|
|
44,306 |
| |||
G. Michael Sievert |
|
7,125,000 |
|
|
56,121 |
|
|
56,121 |
| |||
Neville R. Ray |
|
5,312,500 |
|
|
41,844 |
|
|
41,844 |
| |||
David R. Carey |
|
4,359,375 |
|
|
34,337 |
|
|
34,337 |
|
(1) | Named Executive Officers received half of the aggregate target value of their long-term incentive awards in the form of PRSUs and half of such value in the form of RSUs, except for Mr. Legere who received approximately 3/4 of his target award in the form of PRSUs. |
In connection with the execution of the Business Combination Agreement, effective as of April 29, 2018 (and commencing with annual awards granted in calendar year 2019), we increased certain Named Executive Officers target annual long-term incentive grant values as follows: Mr. Legere: $17,250,000; Mr. Sievert: $10,350,000. See Employment Arrangements below for additional details.
Special Equity Awards in 2018
In February 2018, to stabilize our senior leadership team and to incentivize continued high performance during a period of significant organizational uncertainty related to potential M&A activity, the Company granted one-time special PRSUs with a target value equal to $3,000,000 to Messrs. Ray and Carey. These PRSUs are subject to the same vesting schedule and other terms and conditions applicable to the annual awards of PRSUs granted to the Named Executive Officers on February 15, 2018 (see Long-Term Incentive Awards Granted in 2018 above for additional information), except that in order to further align the executives with stockholder value creation, the threshold level of attainment was increased such that no payout will be made if performance is attained below the 50th percentile (rather than the 25th percentile). The number of special PRSUs awarded to Messrs. Ray and Carey is shown below.
Officer
|
Grant
|
Total Grant
|
Target Number of PRSUs (#)
|
|||||||||
Neville R. Ray |
|
2/15/2018 |
|
|
3,000,000 |
|
|
47,259 |
| |||
David R. Carey |
|
2/15/2018 |
|
|
3,000,000 |
|
|
47,259 |
|
In April 2018, in connection with the execution of the Business Combination Agreement and given the immense regulatory and advocacy work associated with a merger of this size and in this industry and related business planning activities, all while continuing to deliver business results to ensure alignment with stockholders during a critical period of potential value creation, the Compensation Committee, following discussion with its independent compensation consultant and management, approved special awards of PRSUs (the Transaction PRSUs) to Messrs. Legere, Sievert, Ray and Carey, which vest based on T-Mobiles total shareholder return during the applicable performance period. The mechanics of RTSR make certain that any eventual value at vest aligns with the relative value provided to stockholders. The details of these Transaction PRSUs are outlined below. The Transaction PRSUs are generally subject to the same terms and conditions as the annual PRSUs granted to the Named Executive Officers on February 15, 2018 (see Long-Term Incentive Awards Granted in 2018 above for additional information), except that (i) for Mr. Legere, 50% of his Transaction PRSUs will vest upon the earlier of the closing of the Sprint Combination or April 30, 2020, and the remaining 50% of his Transaction PRSUs will vest on April 30, 2020, (ii) for Mr. Carey, 50% of his Transaction PRSUs will vest upon the earlier of the closing of the Sprint Combination or April 29, 2020, and the remaining 50% of his Transaction PRSUs will vest on April 29, 2020, and (iii) for Messrs. Sievert and Ray, 50% of their Transaction PRSUs will vest upon the earlier of the closing of the Sprint Combination or April 29, 2021, and the remaining 50% of their Transaction PRSUs will vest on April 29, 2021, subject, in each case, to the applicable Named Executive Officers continued employment through the applicable vesting date (except as otherwise provided in the applicable employment arrangement and/or award agreement). The total target grant values and the number of Transaction PRSUs awarded to each Named Executive Officer is shown below.
T-Mobile 2019 Proxy Statement | 31 |
EXECUTIVE COMPENSATION
If the Sprint Combination fails to close, 100% of the Transaction PRSUs will vest on the second vesting date. The delay in vesting, coupled with the actual value at vest of the Transaction PRSUs being entirely dependent on our RTSR, ensures recipients will be incented to refocus at that time and maximize shareholder value creation within the context of the resulting stand-alone Company.
Officer
|
Grant
|
Total Grant Target Value
|
Target Number of PRSUs (#)
|
|||||||||
John J. Legere |
|
4/29/2018 |
|
|
37,000,000 |
|
|
598,029 |
| |||
G. Michael Sievert |
|
4/29/2018 |
|
|
20,000,000 |
|
|
323,259 |
| |||
Neville R. Ray |
|
4/29/2018 |
|
|
12,187,500 |
|
|
196,986 |
| |||
David R. Carey |
|
4/29/2018 |
|
|
5,719,000 |
|
|
92,436 |
|
Performance-Based Long-Term Incentive Awards Vested in 2018
The annual PRSUs granted to each of the Named Executive Officers in 2015 had a three-year performance period that ended on February 25, 2018. Based on the Companys RTSR at the end of the performance period, an adjustment percentage of 179% was earned for each Named Executive Officer. The number of 2015 PRSUs earned by each Named Executive Officer and paid in 2018 is set forth in the table below.
Officer |
Target 2015 PRSUs ($) |
RTSR Adjustment Percentage (%) |
Earned PRSUs (#) |
|||||||||
John J. Legere |
260,163 | 179% | 465,691 | |||||||||
J. Braxton Carter |
56,911 | 179% | 101,870 | |||||||||
G. Michael Sievert |
65,041 | 179% | 116,423 | |||||||||
Neville R. Ray |
39,025 | 179% | 69,854 | |||||||||
David R. Carey |
36,098 | 179% | 64,615 |
32 | T-Mobile 2019 Proxy Statement |
EXECUTIVE COMPENSATION
T-Mobile 2019 Proxy Statement | 33 |
EXECUTIVE COMPENSATION
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with Company management. Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Companys Proxy Statement and incorporated by reference into the 2018 Form 10-K.
The Compensation Committee:
Kelvin R. Westbrook, Chair
Christian P. Illek
Lawrence H. Guffey
Raphael Kübler
Olaf Swantee
34 | T-Mobile 2019 Proxy Statement |
EXECUTIVE COMPENSATION
2018 Summary Compensation Table
The following table sets forth certain information with respect to compensation for the years ended December 31, 2018, 2017 and 2016 earned by or paid to our Named Executive Officers.
Name and Principal Position |
Year | Salary ($) |
Bonus ($) |
Stock Awards (1) ($) |
Option Awards ($) |
Non-Equity Incentive Plan Compensation (2) ($) |
All Other Compensation (3) ($) |
Total ($) |
||||||||||||||||||||||||
John J. Legere |
2018 | 1,878,205 | | 58,494,969 | | 6,130,849 | 34,183 | 66,538,207 | ||||||||||||||||||||||||
Chief Executive Officer |
2017 | 1,618,590 | | 16,278,923 | | 5,666,666 | 67,027 | 23,631,206 | ||||||||||||||||||||||||
2016 | 1,500,000 | | 12,898,115 | | 5,610,000 | 51,800 | 20,059,915 | |||||||||||||||||||||||||
J. Braxton Carter |
2018 | 898,077 | | 5,374,318 | | 2,182,327 | 11,803 | 8,466,524 | ||||||||||||||||||||||||
Executive Vice President and Chief Financial Officer |
2017 | 845,192 | | 8,128,113 | | 2,155,241 | 28,192 | 11,156,737 | ||||||||||||||||||||||||
2016 | 724,135 | | 4,339,167 | | 1,692,665 | 10,600 | 6,766,567 | |||||||||||||||||||||||||
G. Michael Sievert |
2018 | 1,108,654 | | 30,937,145 | | 3,592,039 | 11,534 | 35,649,372 | ||||||||||||||||||||||||
President and Chief Operating Officer |
2017 | 944,231 | | 14,699,399 | | 3,210,384 | 36,729 | 18,890,743 | ||||||||||||||||||||||||
2016 | 800,000 | | 5,320,028 | | 2,244,000 | 10,600 | 8,374,628 | |||||||||||||||||||||||||
Neville R. Ray |
2018 | 879,808 | | 22,293,403 | | 2,590,177 | 11,511 | 25,774,898 | ||||||||||||||||||||||||
Executive Vice President and Chief Technology Officer |
2017 | 796,154 | | 5,222,303 | | 2,030,192 | 11,468 | 8,060,117 | ||||||||||||||||||||||||
2016 | 696,539 | | 4,189,514 | | 1,628,159 | 10,600 | 6,524,811 | |||||||||||||||||||||||||
David R. Carey |
2018 | 774,038 | | 13,501,485 | | 1,567,428 | 11,025 | 15,853,977 | ||||||||||||||||||||||||
Executive Vice President, Corporate Services |
(1) | The value of stock awards (consisting of RSUs and PRSUs at target level) is determined using the aggregate grant date fair value computed in accordance with ASC 718, excluding the effect of any estimated forfeitures. These amounts reflect the Companys accounting expense and do not correspond to the actual value that will be realized by the Named Executive Officer. See Note 1 to the Consolidated Financial Statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2018 for a summary of the assumptions we apply in calculating these amounts. The aggregate grant date fair value of the PRSUs granted to our Named Executive Officers during 2018, assuming maximum performance, would be as follows: Mr. Legere, $109,373,048 (including $15,339,641 (for his annual PRSUs), $5,752,365 (for his Incremental PRSUs (as defined and discussed below)), and $88,281,041 (for his Transaction PRSUs)); Mr. Carter, $5,392,926; Mr. Sievert, $55,090,384 (including $6,831,048 (for his annual PRSUs) and $48,259,336 (for his Transaction PRSUs)); Mr. Ray, $39,528,704 (including $5,093,252 (for his annual PRSUs), $5,027,412 (for his February special one-time award of PRSUs), and $29,408,040 (for his Transaction PRSUs)); and Mr. Carey, $22,852,314 (including $4,179,500 (for his annual PRSUs), $5,027,412 (for his February special one-time award of PRSUs), and $13,645,402 (for his Transaction PRSUs)). |
(2) | For 2018, represents amounts paid by the Company under the 2018 STIP, based on the achievement of certain Company performance measures during the year. For additional information, please see Annual Short-Term Incentives above. |
(3) | Amounts included in the All Other Compensation column are detailed in the table below. |
Officer |
401k ($) |
Legal Fee ($) |
Security ($) |
Spousal Travel (1) ($) |
Other (2) ($) |
Total ($) |
||||||||||||||||||
John J. Legere |
| 18,375 | 15,784 | | 25 | 34,183 | ||||||||||||||||||
J. Braxton Carter |
11,000 | | | 509 | 294 | 11,803 | ||||||||||||||||||
G. Michael Sievert |
11,000 | | | 509 | 25 | 11,534 | ||||||||||||||||||
Neville R. Ray |
11,000 | | | 486 | 25 | 11,511 | ||||||||||||||||||
David R. Carey |
11,000 | | | | 25 | 11,025 |
(1) | Converted from Euro to US Dollars using the exchange rate of 1.1680 as of September 18, 2018, 1.1671 as of September 19, 2018, and 1.1779 as of September 20, 2018. |
(2) | Amounts reflect the value of gifts provided to the Named Executive Officers at employee recognition events (i.e. T-shirts, sunglasses, etc.). |
T-Mobile 2019 Proxy Statement | 35 |
EXECUTIVE COMPENSATION
2018 Grants of Plan-Based Awards Table
The following table sets forth certain information with respect to grants of plan-based awards for the year ended December 31, 2018, to the Named Executive Officers.
Name |
Type of |
Grant |
Approval |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) |
Estimated Future Payouts Under Equity Incentive Plan Awards (2) |
All Other (#) |
Grant Date of Stock |
|||||||||||||||||||||||||||||||||||||||
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
|||||||||||||||||||||||||||||||||||||||||
John J. Legere |
STIP | 189,224 | 3,784,475 | 7,568,950 | | | | | | |||||||||||||||||||||||||||||||||||||
PRSU | 2/15/2018 | 2/14/2018 | | | | 31,506 | 126,024 | 252,048 | | 7,669,821 | ||||||||||||||||||||||||||||||||||||
RSU | 2/15/2018 | 2/14/2018 | | | | | | | 63,012 | 3,808,445 | ||||||||||||||||||||||||||||||||||||
PRSU | 2/15/2018 | 2/14/2018 | | | | 11,815 | 47,259 | 94,518 | | 2,876,183 | ||||||||||||||||||||||||||||||||||||
PRSU | 4/29/2018 | 4/27/2018 | | | | 149,507 | 598,029 | 1,196,058 | | 44,140,520 | ||||||||||||||||||||||||||||||||||||
J. Braxton Carter |
STIP | 67,356 | 1,347,115 | 2,694,230 | | | | | | |||||||||||||||||||||||||||||||||||||
PRSU | 2/15/2018 | 2/14/2018 | | | | 11,077 | 44,306 | 88,612 | | 2,696,463 | ||||||||||||||||||||||||||||||||||||
RSU | 2/15/2018 | 2/14/2018 | | | | | | | 44,306 | 2,677,855 | ||||||||||||||||||||||||||||||||||||
G. Michael Sievert |
STIP | 110,865 | 2,217,308 | 4,434,616 | | | | | | |||||||||||||||||||||||||||||||||||||
PRSU | 2/15/2018 | 2/14/2018 | | | | 14,030 | 56,121 | 112,242 | | 3,415,524 | ||||||||||||||||||||||||||||||||||||
RSU | 2/15/2018 | 2/14/2018 | | | | | | | 56,121 | 3,391,953 | ||||||||||||||||||||||||||||||||||||
PRSU | 4/29/2018 | 4/27/2018 | | | | 80,815 | 323,259 | 646,518 | | 24,129,668 | ||||||||||||||||||||||||||||||||||||
Neville R. Ray |
STIP | 79,944 | 1,598,874 | 3,197,749 | | | | | | |||||||||||||||||||||||||||||||||||||
PRSU | 2/15/2018 | 2/14/2018 | | | | 10,461 | 41,844 | 83,688 | | 2,546,626 | ||||||||||||||||||||||||||||||||||||
RSU | 2/15/2018 | 2/14/2018 | | | | | | | 41,844 | 2,529,051 | ||||||||||||||||||||||||||||||||||||
PRSU | 2/15/2018 | 2/14/2018 | | | | 11,815 | 47,259 | 94,518 | | 2,513,706 | ||||||||||||||||||||||||||||||||||||
PRSU | 4/29/2018 | 4/27/2018 | | | | 49,247 | 196,986 | 393,972 | | 14,704,020 | ||||||||||||||||||||||||||||||||||||
David R. Carey |
STIP | 48,377 | 967,548 | 1,935,096 | | | | | | |||||||||||||||||||||||||||||||||||||
PRSU | 2/15/2018 | 2/14/2018 | | | | 8,584 | 34,337 | 68,674 | | 2,089,750 | ||||||||||||||||||||||||||||||||||||
RSU | 2/15/2018 | 2/14/2018 | | | | | | | 34,337 | 2,075,328 | ||||||||||||||||||||||||||||||||||||
PRSU | 2/15/2018 | 2/14/2018 | | | | 11,815 | 47,259 | 94,518 | | 2,513,706 | ||||||||||||||||||||||||||||||||||||
PRSU | 4/29/2018 | 4/27/2018 | | | | 23,109 | 92,436 | 184,872 | | 6,822,701 |
(1) | Represents the threshold, target and maximum amounts of annual cash incentive compensation that might have become payable to each Named Executive Officer for performance under the 2018 STIP. |
(2) | Represents the threshold, target and maximum number of shares that might be paid pursuant to PRSU awards granted during 2018. |
(3) | The value of RSUs and PRSUs (at target level) is determined using the aggregate grant date fair value computed in accordance with ASC 718, excluding the effect of any estimated forfeitures. These amounts reflect the Companys accounting expense and do not correspond to the actual value that will be realized by the Named Executive Officer. See Note 1 to the Consolidated Financial Statements included in the Companys Annual Report on Form 10-K for the year ended December 31, 2018 for a summary of the assumptions we apply in calculating these amounts. |
36 | T-Mobile 2019 Proxy Statement |
EXECUTIVE COMPENSATION
T-Mobile 2019 Proxy Statement | 37 |
EXECUTIVE COMPENSATION
38 | T-Mobile 2019 Proxy Statement |
EXECUTIVE COMPENSATION
Outstanding Equity Awards at 2018 Fiscal Year-End Table
The following table sets forth certain information with respect to all outstanding equity awards held by the Named Executive Officers as of December 31, 2018. The number of PRSUs (and related market value) set forth below assume attainment of maximum Company performance (200% of target). As a result, the values disclosed are materially higher than the actual trending value as of December 31, 2018. Actual value received at vest will be based on Company performance at that time.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||
Name |
|
Type of Award |
|
|
Grant Date |
|
|
Number of |
|
|
Number of
|
|
|
Option Exercise Price ($) |
|
|
Option Expiration |
|
|
Value of Unexercised In-the- Money Options/ SARs at Year-End ($) |
|
|
Number of Shares or Units of Stock Not Vested (#) |
|
|
Market Value of Shares or Units of Stock That Have Not Vested (7) ($) |
|
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested |
|
|
Equity Incentive Plan Awards: Value of Units or Rights That Not Vested (7) ($) |
| |||||||||||||||||||
Exercisable |
Unexercisable |
|||||||||||||||||||||||||||||||||||||||||||||||||||
John J. Legere |
PRSU | 4/29/2018 | (1) | | | | | | | | 598,029 | 76,081,249 | ||||||||||||||||||||||||||||||||||||||||
RSU | 2/15/2018 | (3) | | | | | | 63,012 | 4,008,193 | | | |||||||||||||||||||||||||||||||||||||||||
PRSU | 2/15/2018 | (2) | | | | | | | | 47,259 | 6,012,290 | |||||||||||||||||||||||||||||||||||||||||
PRSU | 2/15/2018 | (2) | | | | | | | | 126,024 | 16,032,773 | |||||||||||||||||||||||||||||||||||||||||
PRSU | 4/1/2017 | (2) | | | | | | | | 48,757 | 6,202,866 | |||||||||||||||||||||||||||||||||||||||||
PRSU | 2/25/2017 | (2) | | | | | | | | 130,018 | 16,540,890 | |||||||||||||||||||||||||||||||||||||||||
RSU | 2/25/2017 | (3) | | | | | | 43,340 | 2,756,857 | | | |||||||||||||||||||||||||||||||||||||||||
PRSU | 2/25/2016 | (2) | | | | | | | | 215,112 | 27,366,549 | |||||||||||||||||||||||||||||||||||||||||
RSU | 2/25/2016 | (3) | | | | | | 35,852 | 2,280,546 | | | |||||||||||||||||||||||||||||||||||||||||
J. Braxton Carter |
PRSU | 2/15/2018 | (2) | | | | | | | | 44,306 | 5,636,609 | ||||||||||||||||||||||||||||||||||||||||
RSU | 2/15/2018 | (3) | | | | | | 44,306 | 2,818,305 | | | |||||||||||||||||||||||||||||||||||||||||
RSU | 12/22/2017 | (4) | | | | | | 40,545 | 2,579,067 | | | |||||||||||||||||||||||||||||||||||||||||
PRSU | 2/25/2017 | (2) | | | | | | | | 43,170 | 5,492,087 | |||||||||||||||||||||||||||||||||||||||||
RSU | 2/25/2017 | (3) | | | | | | 28,780 | 1,830,696 | | | |||||||||||||||||||||||||||||||||||||||||
PRSU | 2/25/2016 | (2) | | | | | | | | 54,829 | 6,975,345 | |||||||||||||||||||||||||||||||||||||||||
RSU | 2/25/2016 | (3) | | | | | | 18,277 | 1,162,600 | | | |||||||||||||||||||||||||||||||||||||||||
G. Michael Sievert |
PRSU | 4/29/2018 | (1) | | | | | | | | 323,259 | 41,125,010 | ||||||||||||||||||||||||||||||||||||||||
PRSU | 2/15/2018 | (2) | | | | | | | | 56,121 | 7,139,714 | |||||||||||||||||||||||||||||||||||||||||
RSU | 2/15/2018 | (3) | | | | | | 56,121 | 3,569,857 | | | |||||||||||||||||||||||||||||||||||||||||
PRSU | 2/25/2017 | (5) | | | | | | | | 57,899 | 7,365,911 | |||||||||||||||||||||||||||||||||||||||||
RSU | 2/25/2017 | (6) | | | | | | 38,600 | 2,455,346 | | | |||||||||||||||||||||||||||||||||||||||||
PRSU | 2/25/2017 | (2) | | | | | | | | 57,899 | 7,365,911 | |||||||||||||||||||||||||||||||||||||||||
RSU | 2/25/2017 | (3) | | | | | | 57,899 | 3,682,955 | | | |||||||||||||||||||||||||||||||||||||||||
PRSU | 2/25/2016 | (2) | | | | | | | | 67,223 | 8,552,110 | |||||||||||||||||||||||||||||||||||||||||
RSU | 2/25/2016 | (3) | | | | | | 22,408 | 1,425,373 | | | |||||||||||||||||||||||||||||||||||||||||
Neville R. Ray |
PRSU | 4/29/2018 | (1) | | | | | | | | 196,986 | 25,060,559 | ||||||||||||||||||||||||||||||||||||||||
PRSU | 2/15/2018 | (2) | | | | | | | | 47,259 | 6,012,290 | |||||||||||||||||||||||||||||||||||||||||
PRSU | 2/15/2018 | (2) | | | | | | | | 41,844 | 5,323,394 | |||||||||||||||||||||||||||||||||||||||||
RSU | 2/15/2018 | (3) | | | | | | 41,844 | 2,661,697 | | | |||||||||||||||||||||||||||||||||||||||||
PRSU | 2/25/2017 | (2) | | | | | | | | 40,631 | 5,169,076 | |||||||||||||||||||||||||||||||||||||||||
RSU | 2/25/2017 | (3) | | | | | | 27,088 | 1,723,068 | | | |||||||||||||||||||||||||||||||||||||||||
PRSU | 2/25/2016 | (2) | | | | | | | | 52,938 | 6,734,772 | |||||||||||||||||||||||||||||||||||||||||
RSU | 2/25/2016 | (3) | | | | | | 17,646 | 1,122,462 | | | |||||||||||||||||||||||||||||||||||||||||
David R. Carey |
PRSU | 4/29/2018 | (1) | | | | | | | | 92,436 | 11,759,708 | ||||||||||||||||||||||||||||||||||||||||
PRSU | 2/15/2018 | (2) | | | | | | | | 47,259 | 6,012,290 | |||||||||||||||||||||||||||||||||||||||||
PRSU | 2/15/2018 | (2) | | | | | | | | 34,337 | 4,368,353 | |||||||||||||||||||||||||||||||||||||||||
RSU | 2/15/2018 | (3) | | | | | | 34,337 | 2,184,177 | | | |||||||||||||||||||||||||||||||||||||||||
PRSU | 2/25/2017 | (2) | | | | | | | | 30,854 | 3,925,246 | |||||||||||||||||||||||||||||||||||||||||
RSU | 2/25/2017 | (3) | | | | | | 20,570 | 1,308,458 | | | |||||||||||||||||||||||||||||||||||||||||
PRSU | 2/25/2016 | (2) | | | | | | | | 34,956 | 4,447,102 | |||||||||||||||||||||||||||||||||||||||||
RSU | 2/25/2016 | (3) | | | | | | 11,652 | 741,184 | | |
(1) | Transaction PRSUs which vest based on the relative performance of the Companys TSR compared to that of the peer group, subject to continued service through the applicable vesting date (except as otherwise provided in the applicable award or employment agreement), as follows: (i) for Mr. Legere, 50% of the Transaction PRSUs vest on the earlier of the closing of the Sprint Combination or April 30, 2020, and the remaining 50% vest on April 30, 2020, (ii) for Mr. Carey, 50% of the Transaction PRSUs vest upon the earlier of the closing of the Sprint Combination or April 29, 2020, and the remaining 50% vest on April 29, 2020, and (iii) for Messrs. Sievert and Ray, 50% of the Transaction PRSUs vest upon the earlier of the closing of the Sprint Combination or April 29, 2021, and the remaining 50% vest on April 29, 2021. For additional information, see Special Equity Awards in 2018 above. |
(2) | PRSUs which vest upon the conclusion of a three-year performance period commencing on the grant date based on the relative performance of the Companys TSR compared to that of the peer group over the performance period, subject to continued service through the end of the performance period (except as otherwise provided in the applicable award or employment agreement) (with the exception of Mr. Legeres 2017 True-Up PRSUs which vest on February 25, 2020). |
T-Mobile 2019 Proxy Statement | 39 |
EXECUTIVE COMPENSATION
(3) | RSUs vest in annual installments with respect to one-third of the shares on each of the first three anniversaries of the grant date, subject to continued service through the applicable vesting date (except as otherwise provided in the applicable award or employment agreement). |
(4) | RSUs which vested in full on March 1, 2019. |
(5) | PRSUs which vested on February 25, 2019 based on the relative performance of the Companys TSR compared to that of the peer group from February 25, 2017 through February 25, 2019. |
(6) | RSUs which vested in full on February 25, 2019. |
(7) | Calculated based on the number of PRSUs that may be earned upon achievement of the maximum performance level or number of time-based RSUs, as applicable, multiplied by the closing price of our common stock on December 31, 2018 of $63.61 per share. In calculating the number of PRSUs and their value, we are required by SEC rules to compare the Companys performance through 2018 under each outstanding PRSU grant against the threshold, target, and maximum performance levels for the grant and report in this column the applicable potential payout amount. If the performance is between levels, we are required to report the potential payout at the next highest level. For example, if the previous fiscal years performance exceeded target, even if it is by a small amount and even if it is highly unlikely that we will pay the maximum amount, we are required by SEC rules to report the awards using the maximum potential payouts. |
Option Exercises and Stock Vested for Fiscal Year 2018 Table
The following table sets forth certain information with respect to restricted stock units vesting during the fiscal year ended December 31, 2018, with respect to the Named Executive Officers. There were no option exercises during the fiscal year ended December 31, 2018.
Option Awards | Stock Awards | |||||||||||||||||||
Name |
Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting (1) ($) |
||||||||||||||||
John J. Legere |
| | 566,573 | 34,028,374 | ||||||||||||||||
J. Braxton Carter |
| | 153,507 | 9,219,630 | ||||||||||||||||
G. Michael Sievert |
| | 179,811 | 10,799,449 | ||||||||||||||||
Neville R. Ray |
| | 114,052 | 6,849,963 | ||||||||||||||||
David R. Carey |
| | 98,584 | 5,920,955 |
(1) | Included in the amount listed in this column is vesting of deferred RSUs by Mr. Ray in the amount of $187,988 with payment deferred until after retirement. |
2018 Non-Qualified Deferred Compensation
The following table shows the contributions, earnings and the aggregate balance of total deferrals as of December 31, 2018.
Name |
Executive Contributions in |
Aggregate Earnings in Last Fiscal Year ($) |
Aggregate Balance at Last Fiscal Year-End (2)($) |
|||||||||
John J. Legere |
| | | |||||||||
J. Braxton Carter |
| (74,839 | ) | 2,567,421 | ||||||||
G. Michael Sievert |
| | | |||||||||
Neville R. Ray |
187,988 | (385,487 | ) | 5,810,246 | ||||||||
David R. Carey |
234,147 | (61,348 | ) | 837,381 |
(1) | Of the amounts listed in this column, the following aggregate amounts were reported in the Summary Compensation Table for 2018: Mr. Carey, $234,147. |
(2) | Of the amounts listed in this column, the following aggregate amounts were reported in the Summary Compensation Tables in proxy statements for 2016 and 2017: Mr. Carter, $677,066. |
40 | T-Mobile 2019 Proxy Statement |
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T-Mobile 2019 Proxy Statement | 41 |
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42 | T-Mobile 2019 Proxy Statement |
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44 | T-Mobile 2019 Proxy Statement |
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Name |
Termination in Connection with Restructuring Before a Change in Control ($) |
Termination Without Cause or for Good Reason in Connection with or After a Change in Control (1) ($) |
Death or Disability ($) |
|||||||||
John J. Legere |
||||||||||||
Cash Severance |
12,000,000 | 12,000,000 | | |||||||||
Time-Based RSUs |
9,045,596 | 9,045,596 | 9,045,596 | |||||||||
Performance-Based RSUs |
74,118,308 | 74,118,308 | 74,118,308 | |||||||||
2018 STIP |
6,130,849 | 6,130,849 | 6,130,849 | |||||||||
Office & Assistant |
450,000 | 450,000 | | |||||||||
Medical Coverage |
10,148 | 10,148 | | |||||||||
Outplacement Services |
6,500 | 6,500 | | |||||||||
Total Estimated Value |
101,761,402 | 101,761,402 | 89,294,754 | |||||||||
J. Braxton Carter |
||||||||||||
Cash Severance |
4,500,000 | 4,500,000 | | |||||||||
Time-Based RSUs |
5,596,450 | 8,390,668 | 8,390,668 | |||||||||
Performance-Based RSUs |
5,822,968 | 9,052,021 | 9,052,021 | |||||||||
2018 STIP |
2,182,327 | 2,182,327 | 2,182,327 | |||||||||
Bonus |
2,155,963 | 2,155,963 | 2,155,963 | |||||||||
Medical Coverage |
14,512 | 14,512 | | |||||||||
Outplacement Services |
6,500 | 6,500 | | |||||||||
Total Estimated Value |
20,278,720 | 26,301,991 | 21,780,979 | |||||||||
G. Michael Sievert |
||||||||||||
Cash Severance |
7,200,000 | 7,200,000 | | |||||||||
Time-Based RSUs |
11,133,531 | 11,133,531 | 11,133,531 | |||||||||
Performance-Based RSUs |
35,774,328 | 35,774,328 | 35,774,328 | |||||||||
2018 STIP |
3,592,039 | 3,592,039 | 3,592,039 | |||||||||
Medical Coverage |
29,910 | 29,910 | | |||||||||
Outplacement Services |
6,500 | 6,500 | | |||||||||
Total Estimated Value |
57,736,307 | 57,736,307 | 50,499,897 | |||||||||
Neville R. Ray |
||||||||||||
Cash Severance |
5,400,000 | 5,400,000 | | |||||||||
Time-Based RSUs |
2,871,207 | 5,507,227 | 5,507,227 | |||||||||
Performance-Based RSUs |
9,261,889 | 24,150,045 | 24,150,045 | |||||||||
2018 STIP |
2,590,177 | 2,590,177 | 2,590,177 | |||||||||
Medical Coverage |
21,875 | 21,875 | | |||||||||
Outplacement Services |
6,500 | 6,500 | | |||||||||
Total Estimated Value |
20,151,648 | 37,675,824 | 32,247,448 | |||||||||
David R. Carey |
||||||||||||
Cash Severance |
3,487,500 | 3,487,500 | | |||||||||
Time-Based RSUs |
2,123,450 | 4,233,818 | 4,233,818 | |||||||||
Performance-Based RSUs |
6,816,865 | 15,256,350 | 15,256,350 | |||||||||
2018 STIP |
1,567,428 | 1,567,428 | 1,567,428 | |||||||||
Medical Coverage |
15,021 | 15,021 | | |||||||||
Outplacement Services |
6,500 | 6,500 | | |||||||||
Total Estimated Value |
14,016,764 | 24,566,617 | 21,057,595 |
(1) | Upon Mr. Careys voluntary resignation from the Company as of December 31, 2018, he would have been entitled to: (i) 2018 pro-rata STIP (valued at $1,567,428 reflecting full year corporate performance (See -Annual Short-Term Incentives for more information)), (ii) continued vesting of his RSUs following retirement (valued at $4,233,818 reflecting market value of all outstanding RSUs as of December 31, 2018), (iii) continued vesting of his PRSUs except for his Special and Transaction PRSUs following retirement (valued at $6,370,351 reflecting market value of all such included outstanding PRSUs as of December 31, 2018), (iv) company-paid group medical and dental benefits for up to 18 months following termination, and (v) continued eligibility for the Companys employee mobile service discount program (the cost of which depends on a variety of factors, including the future cost and duration of Mr. Careys mobile phone plan, and cannot be quantified at the time). |
T-Mobile 2019 Proxy Statement | 45 |
EXECUTIVE COMPENSATION
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2018, with respect to outstanding equity awards and shares available for future issuance under our equity compensation plans.
Plan Category |
Number of Securities to of Outstanding
Options, (a) |
Weighted Average (b) |
Number of Securities (c) |
|||||||||
Equity Compensation Plans Approved by Stockholders |
27,838,984 | (5) | ||||||||||
Stock Options |
284,811 | (1) | $ | 14.58 | | |||||||
RSUs |
14,862,189 | (2)(3) | | (4) | | |||||||
Equity Compensation Plans Not Approved by Stockholders |
| | | |||||||||
Total |
15,147,000 | $ | 14.58 | (4) | 27,838,984 | (5) |
(1) | Granted under the Amended and Restated MetroPCS Communications, Inc. 2004 Equity Incentive Compensation Plan, the MetroPCS Communications, Inc. 2010 Equity Incentive Compensation Plan, and the Layer3 TV, Inc. 2013 Stock Plan. |
(2) | Granted under the 2013 Omnibus Incentive Plan, including 354,459 shares of restricted shares issued in connection with the acquisition of Layer3 TV, Inc. (Layer3) pursuant to that certain Agreement and Plan of Merger, by and among the subsidiary of the Company, Layer3 and certain other parties named therein. |
(3) | Includes performance-based RSUs assuming target performance. |
(4) | RSUs do not have an exercise price and are not included in the weighted average exercise price. The weighted average exercise price is also determined without considering outstanding rights under the Companys ESPP. |
(5) | As of December 31, 2018, the number of securities remaining available for future issuance under the 2013 Omnibus Incentive Plan was 25,485,241 and under the ESPP was 2,353,743 (of which 1,172,511 were purchased on March 31, 2019 for the offering period that included December 31, 2018). In addition to RSUs, the 2013 Omnibus Incentive Plan authorizes the award of stock options, stock appreciation rights, restricted stock and other stock-based awards. The ESPP allows eligible employees to purchase shares at 85% of the lower of the fair market value on the first or last trading day of the six-month offering period. Although our ESPP includes an annual automatic increase of the number of shares available under the plan, since adoption of the plan in 2014, the Compensation Committee has determined that no additional shares were necessary to be added to the plan. Pursuant to the terms of our ESPP, the number of shares available for issuance under the ESPP will increase each year on the first day of our fiscal year in an amount equal to the lesser of (i) 5,000,000 shares and (ii) such smaller number as determined by the Compensation Committee, if any. |
46 | T-Mobile 2019 Proxy Statement |
Security Ownership of Principal Stockholders and Management
Common Stock Beneficially Owned | ||||||||
Number | Percentage | |||||||
Directors, Nominees and Named Executive Officers (1) |
||||||||
David A. Carey |
|
226,795 |
|
|
* |
| ||
J. Braxton Carter |
|
211,601 |
|
|
* |
| ||
Srikant M. Datar (2) |
|
28,782 |
|
|
* |
| ||
Lawrence H. Guffey |
|
20,782 |
|
|
* |
| ||
Timotheus Höttges |
|
|
|
|
* |
| ||
Christian P. Illek |
|
|
|
|
* |
| ||
Bruno Jacobfeuerborn |
|
|
|
|
* |
| ||
Raphael Kübler |
|
|
|
|
* |
| ||
Thorsten Langheim |
|
|
|
|
* |
| ||
John J. Legere |
|
1,673,089 |
|
|
* |
| ||
Neville R. Ray (3) |
|
272,743 |
|
|
* |
| ||
G. Michael Sievert |
|
405,743 |
|
|
* |
| ||
Olaf Swantee |
|
|
|
|
* |
| ||
Teresa A. Taylor |
|
20,782 |
|
|
* |
| ||
Kelvin R. Westbrook |
|
20,782 |
|
|
* |
| ||
All directors and executive officers as a group (19 persons) |
|
3,421,265 |
|
|
* |
| ||
Beneficial Owners of More Than 5%: |
||||||||
Deutsche Telekom AG (4) Friedrich-Ebert-Alle 140 53113 Bonn, Germany
|
|
538,590,941
|
|
|
63.0
|
%
|
* | Represents less than 1% |
(1) | Unless otherwise indicated, the address of each person is c/o T-Mobile US, Inc., 12920 SE 38th Street, Bellevue, Washington 98006. |
(2) | Includes 8,000 shares of common stock held by Datar Investment LLC and 13,424 shares held by Safari LLC. Mr. Datar is a co-manager of Datar Investment LLC and Safari LLC and has shared voting and investment power over the securities held by these entities. |
(3) | Includes 6,250 shares of common stock from vested RSUs that have been deferred. |
(4) | According to the Schedule 13D/A filed by Deutsche Telekom on April 29, 2018, reflecting ownership of 538,590,941 shares of common stock as of April 29, 2018. The shares are held of record Deutsche Telekom Holding B.V., which is a direct wholly owned subsidiary of T-Mobile Global Holding GmbH, which is a direct wholly owned subsidiary of T-Mobile Global Zwischenholding GmbH, which in turn is a direct wholly owned subsidiary of Deutsche Telekom. |
T-Mobile 2019 Proxy Statement | 47 |
TRANSACTIONS WITH RELATED PERSONS AND APPROVAL
T-Mobile 2019 Proxy Statement | 49 |
TRANSACTIONS WITH RELATED PERSONS AND APPROVAL
Series |
Largest principal amount outstanding during 2018 |
Principal amount as of March 31, 2019 |
Interest payment dates |
Maturity | Optional redemption |
Optional redemption with equity proceeds |
Principal paid in 2018 |
Interest paid in 2018 |
Other amounts paid or (received) in 2018 (1) |
|||||||||||||||||||
5.300% Senior Notes due 2021 |
$ | 2,000,000,000 | $ | 2,000,000,000 | March 15 and September 15 |
March 15, 2021 | March 15, 2018 | Prior to March 15, 2018, up to 35% | $ | 0 | $ | 106,000,000 | $ | 0 | ||||||||||||||
4.000% Senior Notes due 2022-1 |
$ | 1,000,000,000 | $ | 1,000,000,000 | April 15 and October 15 |
April 15, 2022 | March 16, 2022 | Not applicable | $ | 0 | $ | 40,000,000 | $ | 0 | ||||||||||||||
9.332% Senior Reset Notes due 2023(2) |
$ | 600,000,000 | $ | 600,000,000 | April 28 and October 28 |
April 28, 2023 | April 28, 2019 | Prior to April 28, 2016, up to 35% | $ | 0 | $ | 55,992,000 | $ | 0 | ||||||||||||||
6.000% Senior Notes due 2024 |
$ | 2,000,000,000 | $ | 2,000,000,000 | April 15 and October 15 |
April 15, 2024 | April 15, 2019 | Prior to April 15, 2019, up to 35% | $ | 0 | $ | 120,000,000 | $ | 0 | ||||||||||||||
5.125% Senior Notes due 2025-1 |
$ | 1,250,000,000 | $ | 1,250,000,000 | April 15 and October 15 |
April 15, 2025(3) | April 15, 2020 | Prior to April 15, 2020, up to 40% | $ | 0 | $ | 64,062,500 | $ | 0 | ||||||||||||||
4.500% Senior Notes due 2026-1 |
$ | 1,000,000,000 | $ | 1,000,000,000 | February 1 and August 1 |
February 1, 2026 | February 1, 2021 | Prior to February 1, 2021, up to 40% | $ | 0 | $ | 23,250,000 | $ | (11,875,000 | ) | |||||||||||||
5.375% Senior Notes due 2027-1 |
$ | 1,250,000,000 | $ | 1,250,000,000 | April 15 and October 15 |
April 15, 2027(3) | April 15, 2022 | Prior to April 15, 2020, up to 40% | $ | 0 | $ | 67,187,500 | $ | 0 | ||||||||||||||
4.750% Senior Notes due 2028-1 |
$ | 1,500,000,000 | $ | 1,500,000,000 | February 1 and August 1 |
February 1, 2028 | February 1, 2023 | Prior to February 1, 2021, up to 40% | $ | 0 | $ | 36,812,500 | $ | (18,802,083 | ) | |||||||||||||
8.097% Senior Reset Notes due 2021 |
$ | 1,250,000,000 | $ | 0 | April 28 and October 28 |
April 28, 2021 | April 28, 2018 | Prior to April 28, 2016, up to 35% | $ | 1,250,000,000 | $ | 50,606,250 | $ | 50,606,250 | ||||||||||||||
8.195% Senior Reset Notes due 2022 |
$ | 1,250,000,000 | $ | 0 | April 28 and October 28 |
April 28, 2022 | April 28, 2018 | Prior to April 28, 2016, up to 35% | $ | 1,250,000,000 | $ | 51,218,750 | $ | 51,218,750 |
(1) | Other amounts consist of redemption premium paid of $50,606,250 with respect to the 8.097% Senior Reset Notes due 2021 and $51,218,750 with respect to the 8.195% Senior Reset Notes due 2022 as well as interest received of $11,875,000 with respect to 4.500% Senior Notes due 2026-1 and $18,802,083 with respect to 4.750% Senior Notes due 2028-1. |
(2) | The 9.332% Senior Reset Notes have been called for redemption effective April 28, 2019. |
(3) | Effective immediately prior to the consummation of the Sprint Combination, the maturity date applicable to the 5.125% Senior Notes due 2025-1 will be amended to April 15, 2021, and the maturity date applicable to the 5.375% Senior Notes due 2027-1 will be amended to April 15, 2022. See Transactions with Related Persons and Approval Transactions with Deutsche Telekom Financing Matters Agreement for more information. |
50 | T-Mobile 2019 Proxy Statement |
TRANSACTIONS WITH RELATED PERSONS AND APPROVAL
T-Mobile 2019 Proxy Statement | 51 |
TRANSACTIONS WITH RELATED PERSONS AND APPROVAL
52 | T-Mobile 2019 Proxy Statement |
TRANSACTIONS WITH RELATED PERSONS AND APPROVAL
T-Mobile 2019 Proxy Statement | 53 |
Proposal 3 - Stockholder Proposal for Limitations on Accelerated Vesting of Equity Awards in the Event of a Change of Control
AmalgaTrust, a division of Amalgamated Bank of Chicago, on behalf of the AFL-CIO Reserve Fund, 815 16th St., N.W., Washington, D.C. 20006, a beneficial owner of 200 shares of the Companys common stock, has advised us that it intends to submit the following proposal at the Annual Meeting.
54 | T-Mobile 2019 Proxy Statement |
PROPOSAL 3 - STOCKHOLDER PROPOSAL FOR LIMITATIONS ON ACCELERATED VESTING OF EQUITY AWARDS IN THE EVENT OF A CHANGE OF CONTROL
For the reasons above, the Board recommends a vote AGAINST this proposal. |
T-Mobile 2019 Proxy Statement | 55 |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Proposal |
Recommended Vote |
Vote Required |
Withhold Votes/Abstentions |
Broker Non-Votes | ||||||
1. |
Election of Directors | FOR |