Director Since: 2013 Age: 54 Lead Independent Director
The lead independent director, a position currently held by Teresa A. Taylor, coordinates the activities of our independent directors, calls and presides over the executive sessions of the independent directors and functions as a liaison between such independent
directors and the Chairman of the Board and/or the Chief Executive Officer. The lead independent director provides input on the flow of information to the Board, including the Board’s agenda and schedule.
| Controlled Company ExemptionsCommittee |
We qualify as a “controlled company” under the NYSE listing standards because Deutsche Telekom beneficially owns a majority of our outstanding shares of common stock (approximately 65.95% as of March 31, 2015). As a controlled company, we are eligible for certain exemptions from the NYSE rules. Specifically, we are not required to have:
A majority of independent directors;
A nominating and corporate governance committee composed entirely of independent directors; or
A compensation committee composed entirely of independent directors.
In addition, we are exempt from the rules adopted by the Securities and Exchange Commission (the “SEC”) pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and related NYSE rules relating to compensation committee member independence and compensation committee consultants.
We have availed ourselves of all of the above exemptions.
| | | | | | | | 
6Chair: Timotheus Höttges
Additional Members Thomas Dannenfeldt Lawrence H. Guffey Bruno Jacobfeuerborn Raphael Kübler Thorsten Langheim John J. Legere Meetings Held in 2017: 0* *Per the Executive Committee’s charter, the Committee meets as often as it determines necessary | | As more fully described in its charter, the primary responsibilities of the Executive Committee are to: ∎ Monitor the Company’s operating performance relative to its operating objectives, strategy, plans and actions ∎ Provide management with feedback regarding the Company’s operating objectives, strategy, plans, and actions, as well as the Company’s operating performance ∎ Consider strategic operating goals, opportunities and risks ∎ Recommend changes to the Company’s operating objectives, strategy, plans, and actions for consideration by the Board, as appropriate | | |
CORPORATE GOVERNANCE
Board Meetings and Director Attendance
Directors are expected to attend all meetings of the Board of Directors and each committee on which they serve, as well as our Annual Meeting of Stockholders. In 2014, our Board, as then constituted, met nine times. During 2014, each director attended at least 75% of the total number of meetings of the Board and Board committees on which he or she served, during the period that he or she served. All of our continuing directors other than Mr. Dannenfeldt attended our 2014 Annual Meeting of Stockholders. Mr. Dannenfeldt joined our Board in November 2013 and had a pre-existing conflict that prevented him from attending the 2014 Annual Meeting of Stockholders.
Executive sessions, or meetings of outside (non-management) directors without management present, are held at each regularly
scheduled Board meeting or more frequently if necessary. Our Chairman or the lead independent director presides over these executive sessions. The executive sessions provide an opportunity for outside directors to review any matters of interest raised by the Chairman of the Board, the lead independent director or the other non-management members of the Board, including strategic, operational, or financial issues and management performance and succession.
In addition, our corporate governance guidelines require the independent directors to meet at least once each year in executive session, with the lead independent director presiding at such executive session.
Communications with Directors
Interested persons may contact the Chairman of the Board, the Board as a whole, the lead independent director, or any individual director as follows:
T-Mobile US, Inc.
The Board of Directors
c/o Corporate Secretary
12920 SE 38th Street
Bellevue, Washington 98006
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 facts and circumstances outlined in the communication. 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.
Board Committees and Related Matters
The Board of Directors 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 charters for each standing committee can be found on the Investor Relations section of our website atGovernance Committeehttp://investor.t-mobile.com by selecting “Governance Documents” under the “Corporate Governance” tab.
| | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement | | 7 |
CORPORATE GOVERNANCE
Audit Committee
| | | Chair:
Chair: Srikant M. DatarKelvin R. Westbrook Additional Members Lawrence H. Guffey Thorsten Langheim Meetings Held in 2017: 6 | | 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 Company’s certificate of incorporation and the Stockholder’s 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 Company’s 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 | | | |
Additional Members: W. Michael Barnes, Kelvin R. Westbrook*
| | | | | Meetings Held in 2014: 8
| | T-Mobile 2018 Proxy Statement | | Independence:9 Each member of the Audit Committee is independent under applicable SEC regulations and NYSE rules.Audit Committee Financial Literacy and Expertise: Our Board has determined that all of the members are financially literate under applicable NYSE rules and are “audit committee financial experts” as defined in applicable SEC rules.
|
* | James N. Perry, Jr., whose term expired as of the date of our 2014 Annual Meeting of Stockholders, served on the Audit Committee from May 1, 2013 to June 5, 2014, at which time Mr. Westbrook was appointed to the Audit Committee.
|
CORPORATE GOVERNANCE AT T-MOBILE BOARD RISK OVERSIGHT Management of the Company, including the Chief Executive Officer and other executive officers, is primarily responsible for managing the risks associated with the business, operations, and financial and disclosure controls. Management conducts a quarterly enterprise-wide risk assessment and considers financial, strategic, IT, technology, operational, compliance, legal/regulatory, and reputational risks to the Company. The results of these assessments are considered in connection with the operational, financial, and business activities of the Company. Management Has Established an Enterprise Risk and Compliance Committee and an Information Security and Privacy Council The Enterprise Risk and Compliance Committee oversees activities in the areas of risk management and compliance as a means of bringing risk issues to the attention of senior management. Responsibilities for risk management and compliance are distributed throughout various functional areas of the business, and the Enterprise Risk and Compliance Committee regularly reviews the Company’s activities in these areas. The Information Security and Privacy Council, with support from the Senior Vice President, Digital Security, who serves as the Chief Information Security Officer, and the Vice President, Chief Privacy Officer, oversees the strategic governance and prioritization of the Company’s information security and privacy initiatives. Selective Delegation of Risk Oversight to Committees While the full Board has overall responsibility for risk oversight, the Board has delegated risk oversight responsibility for certain risks to committees of the Board. On a regular basis, reports of all committee meetings are presented to the Board and the Board periodically conducts deep dives on key enterprise risks. Audit Committee The Audit Committee represents and assists the Board in its oversighthas primary responsibility relating to the integrity offor overseeing the Company’s financial statements and the financial reporting process, disclosure controls and procedures and internal audit functions. The Audit Committee also oversees the appointment, compensation and retention of our independent registered public accounting firm, including the performance by the independent registered public accounting firm of permissible audit, audit-related, and non-audit services, and the associated fees. The Audit Committee periodically reviews the Company’svarious risk assessment and risk management policies. The Audit Committee considers and discusses policies with respect to risk assessment and risk management, including the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures.
To assist the Audit Committee with its risk assessment function, the Senior Vice President, Internal Audit & Risk Management, who serves as the Chief Audit Executive, and the Vice President, Chief Compliance Officer have direct reporting channels to the Audit Committee, and have regular meetings with the Audit Committee and/or its members. They provide a quarterly enterprise-wide risk assessment and annual fraud and compliance risk assessments to the Audit Committee and update the Audit Committee on significant issues raised by the Enterprise Risk and Compliance Committee. The Audit Committee reviews all risk assessments, provides feedback to executive management and shares the risk assessments with the Board. The Audit Committee also has other responsibilities with respect to the Company’s internal audit and SOX Compliance program, as well as ourother compliance and ethics programs. The Audit Committee develops and oversees compliance with the code of ethics for senior financial officers and the code of business conduct for all employees, officers and directors. The Committee is also responsible for establishing procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. In addition, the Committee reviews and approves all related person transactions. | | | Chair: Teresa A. Taylor
| | | programs, as more fully set out in its charter. Additional Members: W. Michael Barnes*, Thomas Dannenfeldt, Lawrence H. Guffey, Raphael Kübler
| Meetings Held in 2014: 7
| | | Section 16 Subcommittee Members: Teresa A. Taylor, Lawrence H. Guffey
| Independence: Ms. Taylor and Messrs. Barnes and Guffey are independent under applicable NYSE rules.
Compensation Committee Interlock and Insider Participation: No members of the Compensation Committee who served during 2014 were officers or employees of the Company or any of its subsidiaries during the year, were formerly Company officers or had any relationship otherwise requiring disclosure as a compensation committee interlock.
|
* | Mr. Westbrook served on the Compensation Committee from May 1, 2013 to June 5, 2014, at which time Mr. Barnes was appointed to the Committee.
|
The Compensation Committee has overall responsibility for evaluating and approving compensation plans, policies and programs applicable primarily to the Company’s executive officers, including executive compensation philosophy, and Chief Executive Officer compensation. The Compensation Committee is also responsible for certain compensation programs affecting the Company’s employees generally, such as equity compensation plans, and annually reviews with management risks arising from such programs. In addition, the Committee reviews and oversees the independent director compensation policies. A significant focus area of the Compensation Committee is succession plan development for senior management.
The Compensation Committee has established the Section 16 Subcommittee, which has sole authority to approve all awards grantedcertain responsibilities with respect to the assessment of risk in connection with our compensation programs. The Compensation Committee periodically reviews with management an assessment of whether risks arising from the Company’s compensation policies and practices for all employees are reasonably likely to have a material adverse effect on the Company, as well as the means by which any potential risks may be mitigated, such as through governance and oversight policies. The Company designs the compensation programs to encourage appropriate risk taking while discouraging behavior that may result in unnecessary or excessive risk. In this regard, the following elements have been incorporated in our compensation programs for executive officers: | ∎ | | Use of multiple metrics in the annual incentive plan and use of two long-term incentive vehicles (time-based and performance-based) for executive officers |
| ∎ | | Annual incentive award payouts capped at 200% of target |
| ∎ | | Performance-based long-term incentive awards capped at 200% of target |
| ∎ | | Emphasis on long-term and performance-based compensation |
| ∎ | | Compensation Committee has discretion to reduce incentive awards, as appropriate |
| ∎ | | Alignment of interests of our executive officers with the long-term interests of our stockholders through stock ownership guidelines that call for significant share ownership by our executive officers |
| ∎ | | Formal clawback policy applicable to both cash and equity compensation |
| ∎ | | Generally, long-term incentive awards vest ratably over three years or at the end of a three-year performance period |
| ∎ | | No excessive perquisites for executive officers |
| ∎ | | Based on an assessment conducted by management consultant Willis Towers Watson, which was presented to and discussed with the Compensation Committee, management concluded that our compensation policies and practices for all employees do not create risks that are reasonably likely to have a material adverse effect on the Company. |
Executive Committee The Executive Committee reviews and provides guidance to senior management regarding the Company’s strategy, operating plans and operating performance. The Executive Committee also plays a key role in helping the Board perform its risk oversight function by considering strategic operating goals, opportunities and risks. Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee oversees Board process and corporate governance-related risks. | | | | | | 10 | | T-Mobile 2018 Proxy Statement | | |
CORPORATE GOVERNANCE AT T-MOBILE DIRECTOR COMPENSATION Non-Employee Director Compensation Program Our “non-employee directors”—directors who are subject to Section 16not employees of the Securities Exchange ActCompany or officers or employees of 1934, as amended (the “Exchange Act”) (“Section 16 officers”) that Deutsche Telekom—are intendedeligible to qualify as performance-basedparticipate in the Company’s non-employee director compensation for purposesprogram, described below. The Compensation Committee periodically reviews the compensation of Section 162(m)our non-employee directors. As part of the Internal Revenue Code of 1986, as amended (the “Code”), and unless otherwise determined byreview, the Compensation Committee authorityengages Mercer to approve all equity or equity-based awardsassess our non-employee director compensation program in comparison to our peer group (see “—Executive Compensation—Factors Considered in Determining Executive Compensation—Executive Compensation Peer Group” for more information on our peer group). Based on such assessment, the Company’s Section 16 officers. The Compensation Committee has delegated authority to the Company’s Executive Vice President, Human Resources, to make awards to employees who are not Section 16 officers.non- employee director compensation program is adjusted as appropriate to ensure alignment with market practices. Key Features of Our Non-Employee Director Compensation Consultant. The Committee has retained Mercer (a wholly owned subsidiary of Marsh & McLennan Companies, Inc.), a well-recognized employee benefits and compensation consulting firm, as its independent compensation consultant to advise the Compensation Committee in its evaluation of the compensation and benefits provided to the Chief Executive Officer and the other executive officers. At the request of the Committee, a consultant from Mercer generally attends the Committee meetings at which executive officer compensation is discussed and provides information, research and analysis pertaining to executive compensation as requested by the Committee. Mercer also updates the Committee on market trends.Program In connection with its engagement of Mercer, the Compensation Committee considered various factors bearing upon Mercer’s independence including, but not limited to, the amount of fees received by Mercer from the Company, Mercer’s policies and procedures designed to prevent conflicts of interest, and the existence of any business or personal relationship that could impact Mercer’s independence. After reviewing these and other factors, the Compensation Committee determined that Mercer was independent and that its engagement did not present any conflicts of interest. Mercer also determined that it was independent from management and confirmed this in a written statement delivered to the Compensation Committee. During 2014, Mercer provided executive compensation services to the
| ∎ | | A larger allocation of total director compensation to equity-based compensation rather than cash compensation |
| ∎ | | All equity-based compensation is subject to a vesting period |
| ∎ | | Substantial stock ownership guidelines of five times the non-employee director’s annual cash retainer |
| | | | | Elements of Non-Employee Director Compensation | | 8Amount ($) | | Annual cash retainer | | | 120,000 | | Additional annual cash retainer for: | | | | | Lead Independent Director | | | 35,000 | | Audit Committee Chair | | | 50,000 | | Compensation Committee Chair | | | 25,000 | | Chair of Independent Director Committee | | | 25,000 | | Nominating and Corporate Governance Committee Chair | | | 15,000 | | Additional Retainer for Audit Committee Members | | | 15,000 | | Independent Committee Member Annual Retainer | | | 50,000 | | Annual award of Restricted Stock Units | | | 195,000 | | Additional cash amounts for each Board and committee meeting in excess of ten meetings per year: | | | | | In person | | | 2,000 | | By telephone | | | 1,000 | |
The annual award of restricted stock units (“RSUs”) is made immediately after each Annual Meeting of Stockholders. The RSUs vest on the one-year anniversary of the grant date or, for directors not standing for re-election, on the date of the next Annual Meeting of Stockholders, subject to continued service as a non-employee director through the vesting date. In the event of a director’s termination of service prior to vesting, all RSUs are automatically forfeited. The RSUs immediately vest on the date of a change in control of the Company. Annual cash retainers and the annual RSU award are prorated for any person who becomes a non-employee director and/or committee chair, or who otherwise becomes entitled to an additional annual cash retainer as described above, at any time of the year other than the date of the Company’s Annual Meeting of Stockholders. Non-employee directors also receive reimbursement of expenses incurred in connection with their Board service and are eligible to receive up to two handsets per year and up to ten lines of U.S. service pursuant to the Board of Directors Phone Perquisite Program. Our Directors Are Required to Acquire and Maintain Ownership of Shares of T-Mobile Under our stock ownership guidelines, each non-employee director is expected to acquire and maintain ownership of shares of common stock equal in value to five times his or her annual cash retainer for Board service measured as of the later of (i) the date we adopted the policy (May 1, 2013) and (ii) the date on which he or she becomes a non-employee director. Each non-employee director is expected to meet the ownership guidelines within the later of (a) five years from the date we adopted the policy and (b) the date on which he or she became a non-employee director, and is expected to retain at least 50% of the net shares of common stock acquired through equity awards until the ownership threshold is met. | ∎ | | As of December 31, 2017, all non-employee directors were in compliance with our stock ownership guidelines |
| | | | | | | T-Mobile 2018 Proxy Statement | | 11 |
CORPORATE GOVERNANCE AT T-MOBILE 2017 Non-Employee Director Compensation Table During fiscal year 2017, the Company’s non-employee directors received the following compensation for their services: | | | | | | | | | | | | | | | | | Name | | Fees Earned or
Paid in Cash(1)
($) | | | Stock
Awards (2)
($) | | | All Other
Compensation (3)
($) | | | Total ($) | | W. Michael Barnes | | | 241,598 | | | | 195,038 | | | | 35,332 | | | | 471,969 | | Srikant M. Datar | | | 272,000 | | | | 195,038 | | | | 4,533 | | | | 471,571 | | Lawrence H. Guffey | | | 212,000 | | | | 195,038 | | | | 2,355 | | | | 409,393 | | Teresa A. Taylor | | | 287,371 | | | | 195,038 | | | | 18,057 | | | | 500,467 | | Kelvin R. Westbrook | | | 260,129 | | | | 195,038 | | | | 24,413 | | | | 479,580 | |
| (1) | Includes fees earned as an Independent Committee member as described above under “Elements of Non-Employee Director Compensation”. |
| (2) | The value of stock awards is determined using the aggregate grant date fair value computed in accordance with FASB Accounting Standards Codification Topic 718, “Compensation–Stock Compensation,” or ASC 718, excluding the effect of any estimated forfeitures. These amounts reflect the Company’s 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 Company’s Annual Report onForm 10-K for the year ended December 31, 2017 for a summary of the assumptions we apply in calculating these amounts. As of December 31, 2017, each director held 3,047 unvested time-based RSUs. |
| (3) | 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 Qualifications and Diversity Subject to Deutsche Telekom’s board designation rights, the Nominating and Corporate Governance Committee is responsible for identifying and evaluating director nominees and recommending to the Board a slate of nominees for election at each Annual Meeting of Stockholders. The Board has adopted director selection guidelines, which the Nominating and Corporate Governance Committee considers in evaluating each director candidate. The Nominating and Corporate Governance Committee considers, among others, the following factors: | ∎ | | Professional experience, industry knowledge, skills and expertise |
| ∎ | | Leadership qualities, public company board and committee experience and non-business-related activities and experience |
| ∎ | | High standard of personal and professional ethics, integrity and values |
| ∎ | | Training, experience and ability at making and overseeing policy in business, government and/or education sectors |
| ∎ | | Willingness and ability to: |
| ∎ | | keep an open mind when considering matters affecting interests of the Company and its constituents |
| ∎ | | devote the required time and effort to effectively fulfill the duties and responsibilities related to Board and committee membership |
| ∎ | | serve on the Board for multiple terms, if nominated and elected, to enable development of a deeper understanding of the Company’s business affairs |
| ∎ | | Willingness not to engage in activities or interests that may create a conflict of interest with a director’s responsibilities and duties to the Company and its constituents |
| ∎ | | Willingness to act in the best interests of the Company and its constituents and to objectively assess Board, committee and management performances |
Diversity is one of many factors under our director selection guidelines that the Nominating and Corporate Governance Committee considers when evaluating potential director candidates. However, we do not have a formal policy with respect to diversity on the Board. Our director selection guidelines define diversity broadly to include not just factors such as gender and race, but also factors such as age, ethnic, geographic, cultural and professional diversity. In connection with its general responsibility to monitor and advise the Board on the size, role, function and composition of the Board, the Nominating and Corporate Governance Committee will periodically consider whether the Board represents the overall mix of skills and characteristics described in the director selection guidelines, including diversity and the other factors described above. Subject to Deutsche Telekom’s board designation rights, the selection process for director candidates is intended to be flexible, and the Nominating and Corporate Governance Committee, in the exercise of its discretion, may deviate from the selection process when particular circumstances warrant a different approach. Nomination Process In addition to candidates designated by Deutsche Telekom, the Nominating and Corporate Governance Committee may consider possible director candidates from a number of sources, including those recommended by stockholders, directors, or officers. In addition, the Nominating and Corporate Governance Committee may engage the services of outside consultants and search firms to identify potential director candidates. A stockholder who wishes to suggest a director candidate for consideration by the Nominating and Corporate Governance Committee should submit the suggestion to the Chair of the Nominating and Corporate Governance Committee, care of our Corporate Secretary, at 12920 SE 38th Street Bellevue, Washington 98006, and include the candidate’s name, biographical data, relationship to the stockholder and other relevant information. The Nominating and Corporate Governance Committee may request additional information about the suggested candidate and the proposing stockholder. Subject to Deutsche Telekom’s board designation rights, the full Board of Directors will approve all final nominations after considering the recommendations of the Nominating and Corporate Governance Committee. | | | | | | 12 | | T-Mobile 2018 Proxy Statement | | |
Proposal 1 - Election of Directors 2018 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 2019 Annual Meeting of Stockholders. W. Michael Barnes 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. Barnes for his service and his immense contributions as a member of the Board over the last 14 years, and to wish him well in his retirement. The Board has nominated as a new director for election, Olaf Swantee. If elected, Mr. Swantee’s term will begin on June 13, 2018. Other than Messrs. Sievert and Swantee, all nominees were elected at the 2017 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. Dannenfeldt, Höttges, Jacobfeuerborn, Kübler, Langheim, Swantee and Westbrook and Ms. Taylor were designated for nomination by Deutsche Telekom pursuant to its rights under our certificate of incorporation and the Stockholder’s 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 voteFOR the election to the Board of each of the nominees listed below |
| | | | | 
Director Since: 2013 Age: 51 Board Committees: ∎ Compensation ∎ Executive | | Thomas Dannenfeldt Chief Financial Officer of Deutsche Telekom Biography: Mr. Dannenfeldt has served as the Chief Financial Officer of Deutsche Telekom, our majority stockholder and a leading integrated telecommunications company, since January 2014. He was Finance Director of Telekom Deutschland from April 2010 to December 2013. From July 2009 to April 2010, he was the CFO of T-Mobile Deutschland. From January 2010 to April 2010, he was also responsible for the fixed line part of Deutsche Telekom as a member of the T-Home Board of Management. Mr. Dannenfeldt started his career at Deutsche Telekom in 1992 and has gained more than 20 years of experience in various leadership roles in sales, marketing and finance in the national and international mobile and fixed line telecommunications business. He also served on the Board of Directors of Virgin Mobile in the UK in 2003 and 2004, as well as the Chairman of the Board of Directors of EE Limited in 2014 and 2015. Qualifications and Skills Supporting Election to the Board: ∎ Expertise in global telecommunications industry ∎ Expertise in strategy, business and finance ∎ Experience in accounting and internal controls | | | | | | | |
| | | | | | | T-Mobile 2018 Proxy Statement | | 13 |
CORPORATE GOVERNANCE
PROPOSAL 1 - ELECTION OF DIRECTORS Company. The aggregate fees for such services were approximately $190,000. In addition, Mercer provided services to the Company for investment and benefits consulting and retirement plan consulting. The aggregate fees for such services were approximately $113,000.
The Compensation Committee sets compensation levels based on the skills, experience and achievements of each executive officer,
taking into account market analysis and input provided by its compensation consultant and the compensation recommendations of our Chief Executive Officer, except with respect to his own position. The Compensation Committee believes that input from both its consultant and our Chief Executive Officer provides useful information and points of view to assist the Compensation Committee in determining the appropriate compensation.
| | | | | 
Director Since: 2013 Age: 64 Other Public Company Boards: ∎ Novartis AG ∎ ICF International Inc. ∎ Syryker Corporation ∎ HCL Technologies
(2012-2014) Board Committees: ∎ Audit (Chair) | | Srikant M Datar Arthur Lowes Dickinson Professor at the Graduate School of Business Administration at Harvard University 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 received a Master’s 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 | | |
| | | | | 
Director Since: 2013 Age: 50 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 investment office formed in 2014. 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 Group’s 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, from June 2006 until October 2013. He was a Director of New Skies Satellites Holdings Ltd. from January 2005 to December 2007, Axtel SA de CV since October 2000, FiberNet L.L.C. from 2001 until 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. He holds a Bachelor of Arts magna cum laude degree 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 | | | | | | | |
| | | | | | 14 | | T-Mobile 2018 Proxy Statement | | |
PROPOSAL 1 - ELECTION OF DIRECTORS | | | | |
Director Since: 2013 Age: 55 Other Public Company Boards: ∎ Henkel AG & Co. KGaA ∎ BT 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 Telekom’s 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 | | |
| | | | | 
Director Since: 2014 Age: 57 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 (CTO) 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 double 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 | | | | | | | |
| | | | | | | T-Mobile 2018 Proxy Statement | | 15 |
PROPOSAL 1 - ELECTION OF DIRECTORS | | | | | 
Director Since: 2013 Age: 55 Other Public Company Boards: ∎ Hellenic Telecommunications Organization 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 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 | | |
| | | | | 
Director Since: 2013 Age: 52 Board Committees: ∎ Executive ∎ Nominating and Corporate Governance | | Thorsten Langheim Executive Vice President, Group Corporate Development of Deutsche Telekom Biography: Mr. Langheim has served as Executive Vice President Group Corporate Development of Deutsche Telekom, our majority stockholder and a leading integrated telecommunications company since July 2016. In his current role, he manages Deutsche Telekom’s Corporate Development, Investment Strategy and Group M&A activities. Mr. Langheim has also served as the Chairman and Co-founder of Deutsche Telekom Capital Partners, managing the venture capital and private equity activities of Deutsche Telekom since June 2015. From 2009 to June 2016, he served as Senior Vice President of Group Development and M&A. 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. Prior to that, Mr. Langheim was the Vice President of 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 T-Systems and Deutsche Sporthilfe. 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. Mr. Langheim holds a bachelor’s degree 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 | | | | | | | |
| | | | | | 16 | | T-Mobile 2018 Proxy Statement | | |
PROPOSAL 1 - ELECTION OF DIRECTORS | | | | | 
Director Since: 2013 Age: 59 Board Committees: ∎ Executive | | John J. Legere President and 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 Business Combination. Mr. Legere has over 37 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 Corporation’s 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&T’s outsourcing program and as head of AT&T global strategy and business development. Mr. Legere serves on the CTIA Board of Directors. Mr. Legere received a bachelor’s 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 and he completed Harvard Business School’s Program for Management Development. Qualifications and Skills Supporting Election to the Board: ∎ Chief Executive Officer of T-Mobile ∎ Expertise in telecommunications and technology industries | | |
| | | | | 
Director Since: 2018 Age: 48 Other Public Company Boards: ∎ Shaw Communications | | G. Michael (Mike) Sievert Chief Operating Officer of T-Mobile US, Inc. Biography: Mr. Sievert serves as our 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 received a bachelor’s degree in Economics from the Wharton School at the University of Pennsylvania. Qualifications and Skills Supporting Election to the Board: ∎ Chief Operating Officer of T-Mobile ∎ Expertise in telecommunications and technology industries | | | | | | | |
| | | | | | | T-Mobile 2018 Proxy Statement | | 17 |
PROPOSAL 1 - ELECTION OF DIRECTORS | | | | | 
Nominee Age: 52 Other Public Company Boards: ∎ Telia Company AB ∎ Legal & General Group PLC (2014 to 2016) | | Olaf Swantee Chief Executive Officer of Sunrise Communications Group AG Biography: Since May 2016, Mr. Swantee has served as Chief Executive Officer of Sunrise Communications Group AG, a private Swiss telecommunications provider. From 2011 to May 2016, he served as Chief Executive Officer of EE Limited, a British mobile network and telecommunications provider. From 2007 to 2011, Mr. Swantee held executive positions at Orange-France Telecom, first as Executive Vice President Europe and Mobile WW and then as Executive Vice President Europe and Purchasing WW, while also serving as a member of the global management committee. He held various senior positions from 2002 to 2007 at Hewlett-Packard (Switzerland) LLC. Mr. Swantee received a Master of Business Administration degree from the European School of Management in Paris, France. Qualifications and Skills Supporting Election to the Board: ∎ Expertise in global telecommunications and technology industries ∎ Chief executive officer of major global communication companies ∎ Public company director and committee experience | | |
| | | | |
Director Since: 2013 Age: 54 Executive Committee | | | | | | | |
Chair:Chair: Timotheus Höttges
| | | Additional Members*:Members Thomas Dannenfeldt Lawrence H. Guffey Bruno Jacobfeuerborn Raphael Kübler Thorsten Langheim John J. Legere Thomas Dannenfeldt, Lawrence H. Guffey, Bruno Jacobfeuerborn, Raphael Kübler, Thorsten Langheim | Meetings Held in 2014:2017: 20* *Per the Executive Committee’s charter, the Committee meets as often as it determines necessary | | As more fully described in its charter, the primary responsibilities of the Executive Committee are to: ∎ Monitor the Company’s operating performance relative to its operating objectives, strategy, plans and actions ∎ Provide management with feedback regarding the Company’s operating objectives, strategy, plans, and actions, as well as the Company’s operating performance ∎ Consider strategic operating goals, opportunities and risks ∎ Recommend changes to the Company’s operating objectives, strategy, plans, and actions for consideration by the Board, as appropriate | | | Independence: Mr. Guffey is independent in accordance with NYSE rules.
|
* | James N. Perry, Jr., whose term expired as of the date of our 2014 Annual Meeting of Stockholders, served on the Executive Committee from May 1, 2013 to June 5, 2014, at which time Messrs. Guffey and Jacobfeuerborn were appointed to the Committee.
|
The Executive Committee has been established by our Board of Directors to review and provide guidance to our senior management regarding our strategy, operating plans and operating performance.
Nominating and Corporate Governance Committee | | | | | | | | Chair:
Chair: Kelvin R. Westbrook Additional Members Lawrence H. Guffey Thorsten Langheim Meetings Held in 2017: 6 | | | As more fully described in its charter, the primary responsibilities of the Nominating and Corporate Governance Committee are to: Additional Members:∎ Subject to the terms of the Company’s certificate of incorporation and the Stockholder’s 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
Lawrence H. Guffey, Thorsten Langheim∎ 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 Company’s 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 | | | Meetings Held in 2014: 4
| | | Independence: Messrs. Guffey and Westbrook are independent in accordance with NYSE rules.
|
The Nominating and Corporate Governance Committee has primary responsibility for oversight of the Company’s corporate governance needs and assists the Board with the process of identifying, recruiting, evaluating, and nominating candidates for membership to
our Board. In addition, the Committee oversees the functions and needs of the Board and its committees, including leading the annual Board and committee performance review.
| | | | | | | T-Mobile Notice of 2015 Annual Meeting and2018 Proxy Statement | | 9 |
CORPORATE GOVERNANCE AT T-MOBILE Board’s Role in Risk ManagementBOARD RISK OVERSIGHT
Management of the Company, including ourthe Chief Executive Officer and other executive officers, is primarily responsible for managing the risks associated with ourthe business, operations, and financial and disclosure controls. Financial,Management conducts a quarterly enterprise-wide risk assessment and considers financial, strategic, IT, technology, operational, compliance, legal/regulatory, and reputational risks to the CompanyCompany. The results of these assessments are considered by management when it conducts its quarterly enterprise-wide risk assessment and are reviewed and updated regularly in connection with the operational, financial, and business activities of the Company. Management of the Company has establishedHas Established an Enterprise Risk and Compliance Committee to overseeand an Information Security and Privacy Council The Enterprise Risk and Compliance Committee oversees activities in the areas of risk management and compliance as a means of bringing risk issues to the attention of senior management. Responsibilities for risk management and compliance are distributed throughout various functional areas of the business, and the Enterprise Risk and Compliance Committee regularly reviews the Company’s activities in these areas. OurThe Information Security and Privacy Council, with support from the Senior Vice President, Digital Security, who serves as the Chief Information Security Officer, and the Vice President, Chief Privacy Officer, oversees the strategic governance and prioritization of the Company’s information security and privacy initiatives.
Selective Delegation of Risk Oversight to Committees While the full Board of Directors assesses Company risks and strategieshas overall responsibility for risk mitigation, and it manages itsoversight, the Board has delegated risk oversight function primarily, but not exclusively, through the Audit Committeeresponsibility for certain risks to committees of the Board. As such,On a regular basis, reports of all committee meetings are presented to the Board and the Board periodically conducts deep dives on key enterprise risks. Audit Committee The Audit Committee has primary responsibility for overseeing the Company’s various risk assessment and risk management policies. In performing this function, theThe Audit Committee considers and discusses policies with respect to risk assessment and risk management, including the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures. To assist the Audit Committee with its risk assessment function, the Senior Vice President, Internal Audit & Risk Management, who serves as the Chief Audit Executive, and the Vice President, Chief Compliance Officer reporthave direct reporting channels to the Audit Committee, and have regular meetings with the Audit Committee and/or its members. They provide a quarterly enterprise-wide risk assessment and annual fraud and compliance risk assessments to the Audit Committee and update the Audit Committee on significant issues raised by the Enterprise Risk and Compliance Committee. The Audit Committee reviews all risk assessments, provides feedback to executive management and shares the risk assessments with the Board. The Audit Committee also has other responsibilities with respect to the Company’s internal audit and SOX Compliance program, as well as other compliance and ethics programs, as more fully set out in its charter. Compensation Committee The Compensation Committee has certain responsibilities with respect to the assessment of risk in connection with our compensation programs. The Executive Committee of the Board of Directors, charged with reviewing and providing guidance to senior management of the Company regarding the Company’s strategy, operating plans and operating performance, also plays a key role in helping the Board perform its risk oversight function by considering strategic operating goals, opportunities and risks. In addition, the Nominating and Corporate Governance Committee of the Board of Directors oversees Board process and corporate governance-related risks. Finally, a report of all committee meetings are presented to the Board on a regular basis.
Risk Assessment of Compensation Programs. The Compensation Committee of the Board of Directors designs our compensation programs to encourage appropriate risk taking while discouraging behavior that may result in unnecessary or excessive risk. In this regard, the following elements have been incorporated in our compensation programs for executive officers:
Use of multiple metrics in annual incentive plan and use of two long-term incentive vehicles for executive officers
Each annual incentive award metric capped at 200%
Performance-based share awards capped at 200%
Emphasis on long-term and performance-based compensation
Compensation Committee has discretion to reduce incentive awards, as appropriate
Long-term incentive awards vest ratably over three years or performance vest at end of performance period
Formal clawback policies applicable to both cash and equity compensation
Alignment of interests of our executive officers with the long-term interests of our stockholders through stock ownership guidelines that call for significant share ownership
Generally no supplemental benefits or perquisites for executive officers
The Compensation Committee periodically reviews with management an assessment of whether risks arising from the Company’s compensation policies and practices for all employees are reasonably likely to have a material adverse effect on the Company, as well as the means by which any potential risks may be mitigated, such as through governance and oversight policies. The Company designs the compensation programs to encourage appropriate risk taking while discouraging behavior that may result in unnecessary or excessive risk. In this regard, the following elements have been incorporated in our compensation programs for executive officers: | ∎ | | Use of multiple metrics in the annual incentive plan and use of two long-term incentive vehicles (time-based and performance-based) for executive officers |
| ∎ | | Annual incentive award payouts capped at 200% of target |
| ∎ | | Performance-based long-term incentive awards capped at 200% of target |
| ∎ | | Emphasis on long-term and performance-based compensation |
| ∎ | | Compensation Committee has discretion to reduce incentive awards, as appropriate |
| ∎ | | Alignment of interests of our executive officers with the long-term interests of our stockholders through stock ownership guidelines that call for significant share ownership by our executive officers |
| ∎ | | Formal clawback policy applicable to both cash and equity compensation |
| ∎ | | Generally, long-term incentive awards vest ratably over three years or at the end of a three-year performance period |
| ∎ | | No excessive perquisites for executive officers |
| ∎ | | Based on an assessment conducted by management consultant Willis Towers Watson, which was presented to and discussed with the Compensation Committee, management concluded that our compensation policies and practices for all employees do not create risks that are reasonably likely to have a material adverse effect on the Company. |
Executive Committee The Executive Committee reviews and provides guidance to senior management regarding the Company’s strategy, operating plans and operating performance. The Executive Committee also plays a key role in helping the Board perform its risk oversight function by considering strategic operating goals, opportunities and risks. Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee oversees Board process and corporate governance-related risks. | | | | | | 10 | | T-Mobile 2018 Proxy Statement | | |
CORPORATE GOVERNANCE AT T-MOBILE Director CompensationDIRECTOR COMPENSATION
Non-Employee Director Compensation Program Each directorOur “non-employee directors”—directors who isare not an employeeemployees of the Company or an officerofficers or employeeemployees of Deutsche Telekom (a “non-employee director”) isTelekom—are eligible to participate in the non-employee director compensation program. Elements of theCompany’s non-employee director compensation program, are outlined indescribed below. The Compensation Committee periodically reviews the table below. Fees are subjectcompensation of our non-employee directors. As part of the review, the Compensation Committee engages Mercer to proration for any person who becomes aassess our non-employee director and/or committee chair at any time ofcompensation program in comparison to our peer group (see “—Executive Compensation—Factors Considered in Determining Executive Compensation—Executive Compensation Peer Group” for more information on our peer group). Based on such assessment, the year other than the date of the Company’s Annual Meetingnon-
employee director compensation program is adjusted as appropriate to ensure alignment with market practices. Key Features of Stockholders. Directors also receive reimbursement of expenses incurred in connection with their Board service.Our Non-Employee Director Compensation Program Immediately after each Annual Meeting of Stockholders, each non-employee director automatically receives an award of time-based restricted stock units (“RSUs”) with a value of $150,000 (rounded up to the nearest share number), with pro rata awards for non-employee
| ∎ | | A larger allocation of total director compensation to equity-based compensation rather than cash compensation |
| ∎ | | All equity-based compensation is subject to a vesting period |
| ∎ | | Substantial stock ownership guidelines of five times the non-employee director’s annual cash retainer |
CORPORATE GOVERNANCE
directors joining the Board at any time other than the date of the Annual Meeting of Stockholders. The time-based RSUs vest on the one-year anniversary of the grant date or on the date of the next Annual Meeting of Stockholders for directors not standing for re-election. In the event of a director’s termination of service prior to vesting, all RSUs are automatically forfeited to the Company. The
RSUs immediately vest on the date of a change in control of the Company.
Non-employee directors are eligible to receive up to two handsets per year and up to ten lines of U.S. service pursuant to our Board of Directors Phone Perquisite Program.
The following table summarizes the compensation payable to the Company’s non-employee directors:
| | | | | | Elements of Non-Employee Director Compensation | | Amount
($) | | Annual cash retainer | | | 100,000120,000 | | Additional annual cash retainer for: | | | | | Lead Independent Director | | | 25,00035,000 | | Audit Committee Chair | | | 50,000 | | Compensation Committee Chair | | | 25,000 | | Chair of Independent Director Committee | | | 25,000 | | Nominating and Corporate Governance Committee Chair | | | 10,00015,000 | | Annual award of time-based RSUsAdditional Retainer for Audit Committee Members | | | 150,00015,000 | | Independent Committee Member Annual Retainer | | | 50,000 | | Annual award of Restricted Stock Units | | | 195,000 | | Additional cash amounts for each Board and committee meeting in excess of ten meetings per year: | | | | | In person | | | 2,000 | | By telephone | | | 1,000 | |
The annual award of restricted stock units (“RSUs”) is made immediately after each Annual Meeting of Stockholders. The RSUs vest on the one-year anniversary of the grant date or, for directors not standing for re-election, on the date of the next Annual Meeting of Stockholders, subject to continued service as a non-employee director through the vesting date. In the event of a director’s termination of service prior to vesting, all RSUs are automatically forfeited. The RSUs immediately vest on the date of a change in control of the Company. Annual cash retainers and the annual RSU award are prorated for any person who becomes a non-employee director and/or committee chair, or who otherwise becomes entitled to an additional annual cash retainer as described above, at any time of the year other than the date of the Company’s Annual Meeting of Stockholders. Non-employee directors also receive reimbursement of expenses incurred in connection with their Board service and are eligible to receive up to two handsets per year and up to ten lines of U.S. service pursuant to the Board of Directors Phone Perquisite Program. 2014Our Directors Are Required to Acquire and Maintain Ownership of Shares of T-Mobile
Under our stock ownership guidelines, each non-employee director is expected to acquire and maintain ownership of shares of common stock equal in value to five times his or her annual cash retainer for Board service measured as of the later of (i) the date we adopted the policy (May 1, 2013) and (ii) the date on which he or she becomes a non-employee director. Each non-employee director is expected to meet the ownership guidelines within the later of (a) five years from the date we adopted the policy and (b) the date on which he or she became a non-employee director, and is expected to retain at least 50% of the net shares of common stock acquired through equity awards until the ownership threshold is met. | ∎ | | As of December 31, 2017, all non-employee directors were in compliance with our stock ownership guidelines |
| | | | | | | T-Mobile 2018 Proxy Statement | | 11 |
CORPORATE GOVERNANCE AT T-MOBILE 2017 Non-Employee Director Compensation Table During fiscal year 2014,2017, the Company’s non-employee directors received the following compensation for their services.services: | | Name | | Fees Earned or
Paid in Cash
($) | | | Stock
Awards
($) (1) | | | All Other
Compensation
($) (2) | | | Total ($) | | | Fees Earned or
Paid in Cash(1)
($) | | | Stock
Awards (2)
($) | | | All Other
Compensation (3)
($) | | | Total ($) | | | W. Michael Barnes | | | 102,000 | | | | 150,002 | | | | 16,180 | | | | 268,182 | | | | 241,598 | | | | 195,038 | | | | 35,332 | | | | 471,969 | | | Srikant M. Datar | | | 150,000 | | | | 150,002 | | | | 2,916 | | | | 302,918 | | | | 272,000 | | | | 195,038 | | | | 4,533 | | | | 471,571 | | | Lawrence H. Guffey | | | 108,000 | | | | 150,002 | | | | 2,422 | | | | 260,424 | | | | 212,000 | | | | 195,038 | | | | 2,355 | | | | 409,393 | | | James N. Perry, Jr. (3) | | | 42,857 | | | | — | | | | — | | | | 42,857 | | | | Teresa A. Taylor | | | 150,000 | | | | 150,002 | | | | 10,098 | | | | 310,100 | | | | 287,371 | | | | 195,038 | | | | 18,057 | | | | 500,467 | | | Kelvin R. Westbrook | | | 120,000 | | | | 150,002 | | | | 15,272 | | | | 285,274 | | | | 260,129 | | | | 195,038 | | | | 24,413 | | | | 479,580 | |
| (1) | Includes fees earned as an Independent Committee member as described above under “Elements of Non-Employee Director Compensation”. |
| (2) | The value of stock awards is determined using the aggregate grant date fair value computed in accordance with FASB Accounting Standards Codification Topic 718, “Compensation–Stock Compensation,” or ASC 718, excluding the effect of any estimated forfeitures. These amounts reflect the Company’s accounting expense and do not correspond to the actual value that will be realized by the directors. See Note 101 to the Consolidated Financial Statements included in the Company’s Annual Report onForm 10-K for the year ended December 31, 20142017 for a summary of the assumptions we apply in calculating these amounts. As of December 31, 2014,2017, each director held 4,4793,047 unvested time-based RSUs. |
(2)(3) | Includes (i) phone perquisites under the Board of Directors Phone Perquisite Program, (ii) personal and spousal travel expenses in connection with a Board meeting for Mr. Barnes, Ms. Taylor and Mr. Westbrook and (iii) reimbursement of taxes associated with the personal and spousal travel expenses in the amounts of $7,074, $3,765 and $4,963 for Mr. Barnes, Ms. Taylor and Mr. Westbrook, respectively. |
(3) | Mr. Perry served on our Board from January 1, 2014 to June 5, 2014.
expenses. |
Non-Employee Director Stock Ownership GuidelinesDIRECTOR NOMINATION, SELECTION AND QUALIFICATIONS
Under our stock ownership guidelines, each non-employee director is expected to acquire and maintain ownership of shares of common stock equal in value to five times his or her annual retainer measured as of May 1, 2013 for non-employee directors serving on that date or as of the date Board service commences for any non-employee director joining the Board after May 1, 2013. Each non-employee
director is expected to meet the ownership guidelines within five years from the applicable measurement date, and is expected to retain at least 50% of the net shares of common stock acquired through the Company’s equity compensation plans until the ownership threshold is met.
| | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement | | 11 |
CORPORATE GOVERNANCE
Director Nomination, Selection and Qualifications
Qualifications and Diversity Subject to Deutsche Telekom’s board designation rights, the Nominating and Corporate Governance Committee is responsible for identifying and evaluating director nominees and recommending to the Board a slate of nominees for election at each Annual Meeting of Stockholders. The Board has adopted director selection guidelines, which the Nominating and Corporate Governance Committee considers in evaluating each director candidate. The Nominating and Corporate Governance Committee considers, among others, the following factors: Professional experience, industry knowledge, skills and expertise;
| ∎ | | Professional experience, industry knowledge, skills and expertise |
| ∎ | | Leadership qualities, public company board and committee experience and non-business-related activities and experience |
| ∎ | | High standard of personal and professional ethics, integrity and values |
| ∎ | | Training, experience and ability at making and overseeing policy in business, government and/or education sectors |
| ∎ | | Willingness and ability to: |
| ∎ | | keep an open mind when considering matters affecting interests of the Company and its constituents |
| ∎ | | devote the required time and effort to effectively fulfill the duties and responsibilities related to Board and committee membership |
| ∎ | | serve on the Board for multiple terms, if nominated and elected, to enable development of a deeper understanding of the Company’s business affairs |
| ∎ | | Willingness not to engage in activities or interests that may create a conflict of interest with a director’s responsibilities and duties to the Company and its constituents |
| ∎ | | Willingness to act in the best interests of the Company and its constituents and to objectively assess Board, committee and management performances |
Leadership qualities, public company board and committee experience and non-business-related activities and experience;
High standard of personal and professional ethics, integrity and values;
Training, experience and ability at making and overseeing policy in business, government and/or education sectors;
Willingness and ability to keep an open mind when considering matters affecting interests of the Company and its constituents;
Willingness and ability to devote the required time and effort to effectively fulfill the duties and responsibilities related to Board and committee membership;
Willingness and ability to serve on the Board for multiple terms, if nominated and elected, to enable development of a deeper understanding of the Company’s business affairs;
Willingness not to engage in activities or interests that may create a conflict of interest with a director’s responsibilities and duties to the Company and its constituents; and
Willingness to act in the best interests of the Company and its constituents and to objectively assess Board, committee and management performances.
Our Board of Directors does not have a formal policy with respect to diversity on the Board. Rather, diversityDiversity is one of many factors under our director selection guidelines that the Nominating and Corporate Governance Committee considers when
evaluating potential director candidates. However, we do not have a formal policy with respect to diversity on the Board. Our director selection guidelines do not narrowly define diversity by referencebroadly to include not just factors such as gender and race; rather, diversity is broadly interpreted to include otherrace, but also factors such as age, ethnic, geographic, cultural and professional diversity. In connection with its general responsibility to monitor and advise the Board on the size, role, function and composition of the Board, the Nominating and Corporate Governance Committee will periodically consider whether the Board represents the overall mix of skills and characteristics described in the director selection guidelines, including diversity and the other factors described above. Subject to Deutsche Telekom’s board designation rights, the selection process for director candidates is intended to be flexible, and the Nominating and Corporate Governance Committee, in the exercise of its discretion, may deviate from the selection process when particular circumstances warrant a different approach. Nomination Process In addition to candidates designated by Deutsche Telekom, the Nominating and Corporate Governance Committee may consider possible director candidates from a number of sources, including those recommended by stockholders, directors, or officers. In addition, the Nominating and Corporate Governance Committee may engage the services of outside consultants and search firms to identify potential director candidates. A stockholder who wishes to suggest a director candidate for consideration by the Nominating and Corporate Governance Committee should submit the suggestion to the Chair of the Nominating and Corporate Governance Committee, care of our Corporate Secretary, at 12920 SE 38th Street Bellevue, Washington 98006, and include the candidate’s name, biographical data, relationship to the stockholder and other relevant information. The Nominating and Corporate Governance Committee may request additional information about the suggested candidate and the proposing stockholder. Subject to Deutsche Telekom’s board designation rights, the full Board of Directors will approve all final nominations after considering the recommendations of the Nominating and Corporate Governance Committee. | | | | | | 12 | | T-Mobile 2018 Proxy Statement | | |
Proposal 1 - Election of Directors 2018 Director Nominees The following persons, eachBoard has nominated 12 directors for election at the Annual Meeting to serve as directors for terms that would end at the 2019 Annual Meeting of whom is currentlyStockholders. W. Michael Barnes 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. Barnes for his service and his immense contributions as a member of the Board over the last 14 years, and to wish him well in his retirement. The Board has nominated as a new director for election, Olaf Swantee. If elected, Mr. Swantee’s term will begin on June 13, 2018. Other than Messrs. Sievert and Swantee, all nominees were elected at the 2017 Annual Meeting ofT-Mobile, have been Stockholders. Each nominee was nominated by the Board of Directors on the recommendation of the Nominating and Corporate Governance Committee for election at the Annual Meeting to serve as a director for a term that would end at the 2016 Annual Meeting of Stockholders.Committee. The Board has found each nominee to be qualified based on his or her qualifications, experience, attributes, skills and overall service during the director’s term, including the number of meetings attended, his or her level of participation, the quality of his or her performance and whether he or she meets the applicable independence standards. Each of the nominees has consented to stand for election and has indicated that, if elected, he or she planswe do not anticipate any candidate will be unavailable to serve and will hold office until the later of the 2016 Annual Meeting of Stockholders or until his or her successor is elected and qualified, unless the nominee earlier resigns, retires, passes away or otherwise no longer serves as a director.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 of Directors 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. Dannenfeldt, Höttges, Jacobfeuerborn, Kübler, Langheim, Swantee and Westbrook and Ms. Taylor were designated for nomination by Deutsche Telekom pursuant to its rights under our certificate of incorporation and the Stockholder’s 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. Nominees
| | | | | Our Board of Directors recommends a voteFOR the election to the Board of each of the nominees listed below |
| | | | |
W. Michael BarnesDirector Since:
| | | | | 
| | Age: 722013
Director since:Age: 2004
51 Board committees: Audit, CompensationCommittees: ∎ Compensation Other public company directorships:
•∎ Advanced Micro Devices, Inc. (2003 to 2015)
| | Qualifications and skills to serve as a director:
• Complex financial management experience
• Extensive knowledge of technology industry
• Experience as public company chief financial officer, director and committee member
| | Mr. Barnes held several positions at Rockwell International Corporation, a multi-industry company in high technology businesses including aerospace, commercial and defense electronics, telecommunication equipment, industrial automation systems and semiconductor products manufacturing, between 1968 and 2001, including Senior Vice President, Finance & Planning, and Chief Financial Officer from 1991 through 2001. Mr. Barnes holds a Ph.D. in operations research from Texas A&M University. He also holds Bachelor’s and Master’s degrees in industrial engineering from Texas A&M University. |
| | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement | | 13 |
PROPOSAL 1 – ELECTION OF DIRECTORS
| | | | | Thomas Dannenfeldt
| | | 
| | Age: 48Thomas Dannenfeldt
Chief Financial Officer of Deutsche Telekom Director since: 2013Biography:
Board committees: Compensation, Executive
| | Qualifications and skills to serve as a director:
• Expertise in global telecommunications industry
• Expertise in strategy, business and finance
• Experience in accounting and internal controls
| | | Mr. Dannenfeldt has served as the Chief Financial Officer of Deutsche Telekom, our majority stockholder and a leading integrated telecommunications company, since January 2014. He was Finance Director of Telekom Deutschland from April 2010 to December 2013. From July 2009 to April 2010, he was the CFO of T-Mobile Deutschland. From January 2010 to April 2010, he was also responsible for the fixed line part of Deutsche Telekom as a member of the T-Home Board of Management. Prior to that, he was on the T-Home Board of Management responsible for the Market and Quality Management since January 2007. Mr. Dannenfeldt started his career at Deutsche Telekom in 1992 and has gained more than 20 years of experience in various leadership roles in sales, marketing and finance in the national and international mobile and fixed line telecommunications business. He also served on the Board of Directors of Virgin Mobile in the UK in 2003 and 2004.2004, as well as the Chairman of the Board of Directors of EE Limited in 2014 and 2015. Qualifications and Skills Supporting Election to the Board: ∎ Expertise in global telecommunications industry ∎ Expertise in strategy, business and finance ∎ Experience in accounting and internal controls | | | | | | | |
| | | | | Srikant M. Datar
| | T-Mobile 2018 Proxy Statement | | 13 |
PROPOSAL 1 - ELECTION OF DIRECTORS | | | | |
| | Age: 612013
Director since:Age:
64 2013Other Public
Company Boards: ∎ Novartis AG ∎ ICF International Inc. ∎ Syryker Corporation ∎ HCL Technologies
(2012-2014) Board committee:Committees: ∎ Audit (Chair) Other public company directorships:
• Novartis AG
• ICF International Inc.
• Stryker Corporation
• HCL Technologies (2012 to 2014)
• KPIT Technologies (2007 to 2012)
| | Qualifications and skills to serve as a director:
Srikant M Datar Arthur Lowes Dickinson Professor at the Graduate School of Business Administration at Harvard University • Expertise in accounting, governance and risk managementBiography:
• Public company director and committee experience
• Academic and commercial perspective on complex issues
| | | 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 received a MastersMaster’s 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 | | |
| | | | | |
14
| | | |
PROPOSAL 1 – ELECTION OF DIRECTORSDirector Since:
| | | | | Lawrence H. Guffey
| | | 
| | Age: 472013
Director since:Age: 2013
50 Board committees:Committees: ∎ Compensation ∎ Executive ∎ Nominating and Corporate Governance | | Qualifications and skills to serve as a director:
Lawrence H. Guffey Chief Executive Officer of LG Capital Investors LLC • Core financial and business skillsBiography:
• Experience overseeing investments in media and communications industries
• Public company director and committee experience
| | Mr. Guffey is Chief Executive Officer of LG Capital Investors LLC, a single-family investment office formed in 2014. From 1991 to 2014,2013, 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 Group’s 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, from June 2006 until October 2013. He was a Director of New Skies Satellites Holdings Ltd. from January 2005 to December 2007, Axtel SA de CV since October 2000, FiberNet L.L.C. from 2001 until 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.He holds a Bachelor of Arts magna cum laude degree 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 | | | | | | | |
| | | | | Timotheus Höttges14
| | T-Mobile 2018 Proxy Statement | | |
PROPOSAL 1 - ELECTION OF DIRECTORS | | | | |
| | Age: 522013
Director since:Age:
55 2013Other Public
Company Boards: ∎ Henkel AG & Co. KGaA ∎ BT plc Board committee:Committees: ∎ Executive (Chair) | | Qualifications and skills to serve as a director:
Timotheus Höttges Chief Executive Officer of Deutsche Telekom • Chief executive officer of major global communications companyBiography:
• Core finance, business and leadership skills
| | 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 Telekom’s Chief Financial Officer (CFO) 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(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: T-Mobile Notice∎ Chief executive officer of 2015 Annual Meetingmajor global communications company
∎ Core finance, business and Proxy Statementleadership skills | | 15 |
PROPOSAL 1 – ELECTION OF DIRECTORS
| | | | |
Bruno JacobfeuerbornDirector Since:
| | | 
| | Age: 542014
Director since:Age: 2014
57 Board committee: ExecutiveCommittees: ∎ Executive | | Qualifications
Bruno Jacobfeuerborn Chief Executive Officer of DFMG Deutsche Funkturm GmbH and skills to serve as a director:Chief Executive Officer of Comfortcharge GmbH • Expertise in global telecommunications industryBiography:
• Wireless network and technology expertise
• Core business, management and leadership skills
| | 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 Director of Technology Telekom Deutschland since April 2010. In addition, he has been the Chief Technology Officer (CTO) of Deutsche Telekom AG from February 2012 to December 2017. Deutsche Telekom AG is our majority stockholder and a leading integrated telecommunications company, since February 2012. Previously,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.Germany from July 2009 to March 2010. In this double role, he was responsible for the technology business (both mobile and fixed network) in Germany from July 2009 to March 2010.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 | | | | | | | |
| | | | | Raphael Kübler
| | T-Mobile 2018 Proxy Statement | | 15 |
PROPOSAL 1 - ELECTION OF DIRECTORS | | | | |
| | Age: 522013
Director since:Age:
55 2013Other Public
Company Boards: ∎ Hellenic Telecommunications Organization Board committees: Compensation, ExecutiveCommittees: Other public company directorships:
∎ Compensation •∎ Hellenic Telecommunications OrganizationExecutive
| | Qualifications and skills to serve as a director:
Raphael Kübler Senior Vice President of the Corporate Operating Office of Deutsche Telekom • Expertise in global telecommunications industryBiography:
• Core business, management and leadership skills
• Complex financial management experience
| | 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 reports directly to the Chief Executive Officer of Deutsche Telekom. From July 2009 to December 2013, Mr. Kübler served as a 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 | | |
| | | | | |
16
| | | |
PROPOSAL 1 – ELECTION OF DIRECTORSDirector Since:
| | | | | Thorsten Langheim
| | | 
| | Age: 492013
Director since:Age: 2013
52 Board committees:Committees: ∎ Executive ∎ Nominating and Corporate Governance | | Qualifications and skills to serve as a director:
Thorsten Langheim Executive Vice President, Group Corporate Development of Deutsche Telekom • Expertise in global telecommunications industryBiography:
• Experience overseeing telecommunications and technology investments
• Corporate strategy and M&A experience
| | Mr. Langheim serveshas served as SeniorExecutive Vice President Group Corporate Development of Deutsche Telekom, our majority stockholder and a leading integrated telecommunications company a position he has held since November 2009.July 2016. In his current role, he manages Deutsche Telekom’s Corporate Development, Investment Strategy and Group M&A activities. Mr. Langheim has also served as the Chairman and Co-founder of Deutsche Telekom Capital Partners, managing the venture capital and private equity activities of Deutsche Telekom since June 2015. From 2009 to June 2016, he served as Senior Vice President of Group Development and M&A. Prior to his positionroles 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. Prior to that, Mr. Langheim was the Vice President of 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 Scout24. Previously, Mr. Langheim served on the boards of STRATO AGT-Systems and T-Venture Holding GmbH. Deutsche Sporthilfe.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. Mr. Langheim holds a Bachelor’sbachelor’s degree in European Finance and Accounting from the University inof 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 | | | | | | | |
| | | | | John J. Legere16
| | T-Mobile 2018 Proxy Statement | | |
PROPOSAL 1 - ELECTION OF DIRECTORS | | | | |
| | Age: 562013
Director since:Age: 2013
59 Board committee:Committees: ∎ Executive | | Qualifications
John J. Legere President and skills to serve as a director: • Chief Executive Officer of T-Mobile US, Inc.
• Expertise in telecommunications and technology industriesBiography:
| | 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 Business Combination. Mr. Legere has over 3337 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 Corporation’s operations in Europe, the Middle East, and Africa; as presidentPresident, Asia-Pacific for Dell; as president of AT&T Asia Pacific; as head of AT&T’s outsourcing program and as head of AT&T global strategy and business development. Mr. Legere serves on the CTIA Board of Directors. Mr. Legere received a Bachelor’sbachelor’s 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 and he completed Harvard Business School’s Program for Management Development. |
| | | Qualifications and Skills Supporting Election to the Board: T-Mobile Notice∎ Chief Executive Officer of 2015 Annual MeetingT-Mobile
∎ Expertise in telecommunications and Proxy Statementtechnology industries | | 17 |
PROPOSAL 1 – ELECTION OF DIRECTORS
| | | | |
Teresa A. TaylorDirector Since:
2018 Age: 48 Other Public Company Boards: ∎ Shaw Communications | | G. Michael (Mike) Sievert Chief Operating Officer of T-Mobile US, Inc. Biography: Mr. Sievert serves as our 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 received a bachelor’s degree in Economics from the Wharton School at the University of Pennsylvania. Qualifications and Skills Supporting Election to the Board: ∎ Chief Operating Officer of T-Mobile ∎ Expertise in telecommunications and technology industries | | | | | | | | |
| | | | | | | T-Mobile 2018 Proxy Statement | | 17 |
PROPOSAL 1 - ELECTION OF DIRECTORS | | | | |
Age: 51Nominee
Director since: 2013Age:
Board committee: Compensation (Chair)52
Other public company directorships:Public Company Boards: •∎ First Interstate BancSystem, Inc.
Telia Company AB •∎ NiSource, Inc.Legal & General Group PLC (2014 to 2016)
| | Olaf Swantee Chief Executive Officer of Sunrise Communications Group AG Biography: Since May 2016, Mr. Swantee has served as Chief Executive Officer of Sunrise Communications Group AG, a private Swiss telecommunications provider. From 2011 to May 2016, he served as Chief Executive Officer of EE Limited, a British mobile network and telecommunications provider. From 2007 to 2011, Mr. Swantee held executive positions at Orange-France Telecom, first as Executive Vice President Europe and Mobile WW and then as Executive Vice President Europe and Purchasing WW, while also serving as a member of the global management committee. He held various senior positions from 2002 to 2007 at Hewlett-Packard (Switzerland) LLC. Mr. Swantee received a Master of Business Administration degree from the European School of Management in Paris, France. Qualifications and skillsSkills Supporting Election to serve as a director:the Board: •∎ Expertise in technology, mediaglobal telecommunications and telecommunicationstechnology industries
∎ Chief executive officer of major global communication companies • Expertise in strategic planning and execution, technology development, human resources, labor relations and corporate communications
•∎ Public company director and committee experience
| | |
| | | | |
Director Since: 2013 Age: 54 Lead Independent Director Other Public Company Boards: ∎ First Interstate BancSystem, Inc. ∎ Black Hills Corporation Board Committees: ∎ Compensation (Chair) | | 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 Qwest’s 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 received 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 | | | | | | | |
| | | | | Kelvin R. Westbrook18
| | T-Mobile 2018 Proxy Statement | | |
PROPOSAL 1 - ELECTION OF DIRECTORS | | | | |
| | Age: 592013
Director since:Age:
62 2013Other Public
Company Boards: ∎ Archer Daniels Midland Company ∎ Stifel Financial Corp. (not standing for re-election at its 2018 annual meeting of stockholders) ∎ Camden Property Trust ∎ The Mosaic Company Board committees:Committees: ∎ Audit ∎ Nominating and Corporate Governance Committee (Chair) Other public company directorships:
• Archer-Daniels-Midland Company
• Stifel Financial Corp.
• Camden Property Trust
| | Qualifications
Kelvin R. Westbrook President and skills to serve as a director:Chief Executive Officer of KRW Advisors, LLC • Expertise in the telecommunications industryBiography:
• Core legal, media, marketing and risk analysis skills
• Public company director and committee experience
| | 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 fifteen15 months after Mr. Westbrook resigned.Mr. Westbrook received 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 | | |
The Board of Directors recommends that you vote
“FOR”
the election of each of the above named nominees.
| | | | | | 18 | | T-Mobile 2018 Proxy Statement | | 19 |
Executive Officers The following sets forth information regarding the executive officers of the Company. Biographical information pertaining to Mr.Messrs. Legere and Sievert, who isare both an executive officerofficers and a directordirectors of the Company, can be found in the Section entitled “Proposal 1—Election of Directors”.Directors.” | | | | | | | | | Name | | Age | | Age | Position | John J. Legere | | | 59 | | Position | President and Chief Executive Officer | G. Michael Sievert | | | 48 | | | Chief Operating Officer | David R. Carey | | | 64 | | 61 | | | | Executive Vice President, Corporate Services | J. Braxton Carter | | | 59 | | 56 | | | | Executive Vice President and Chief Financial Officer | Peter A. Ewens | | | 55 | | 52 | | | | Executive Vice President, Corporate Strategy | Thomas C. Keys | | | 59 | | 56 | | | | President, T-Mobile Indirect ChannelsMetroPCS | Gary A. King
| | | | 57 | | | | Executive Vice President, Chief Information Officer | David A. Miller | | | 57 | | 54 | | | | Executive Vice President, General Counsel and Secretary | Larry L. MyersNeville R. Ray
| | | 55 | | 60 | | | | Executive Vice President, Human Resources | Neville R. Ray | | | | 52 | | | | Executive Vice President and Chief Technology Officer | G. Michael (Mike) SievertElizabeth A. McAuliffe
| | | 55 | | 45 | | | | Chief Operating OfficerExecutive Vice President, Human Resources |
David R. Carey Mr. Carey serves as our Executive Vice President, Corporate Services and is responsible for leading the Enterprise Program Office, Corporate Communications, Corporate Real Estate, Corporate Responsibility, Corporate Security and a broad range of responsibilities in leading the Chief Executive Officer Staff.Office of the CEO. Mr. Carey has also served in the same role withT-Mobile USA, Inc., the wholly-owned subsidiary of the Company(“T-Mobile USA”), since MarchFebruary 2013. Mr. Carey’s career spans 43 years in the telecom and energy services industry. Before joining T-Mobile USA, from October 2011 to MarchFebruary 2013, Mr. Carey served as the Chief Executive Officer and Founder of TeleScopeTelescope Advisors, LLC, an advisory firm specializing in telecommunications. From September 1999 to October 2011, Mr. Carey served asin various executive positions, including Executive Vice President, Chief Marketing Officer, Head of Global Sales, Strategy and Corporate Development and Chief Ethics Officer at Global Crossing Limited, a telecommunications company, from September 1999company. In addition to October 2011. Mr. Carey’s career spans 35 years in the telecom and energy services industries. HisGlobal Crossing, his experience in telecom includes executive leadership positions at AT&T, LG&E Energy and Frontier Communications and Global Crossing. He currently serves on the advisory board of Hewlett-Packard Corporation.Communications. Mr. Carey holds a Master of Science in Management Science from the Massachusetts Institute of Technology, where he was appointed to a Sloan Fellowship, and received his Bachelor of Science degree at Clarkson University. He has also attended executive programs at the Harvard Business School and the Wharton School at the University of Pennsylvania. J. Braxton Carter Mr. Carter serves as our Executive Vice President and Chief Financial Officer, and is responsible for leading the financial functions of the Company. Mr. Carter served as MetroPCS’sMetroPCS Communications, Inc.’s Chief Financial Officer from March 2005 until the consummation of the Business Combination. Mr. Carter also served as MetroPCS’sMetroPCS Communications Inc.’s Vice Chairman from May 2011 until the consummation of the Business Combination. From February 2001 to March 2005 he was Vice President, Corporate Operations of MetroPCS.MetroPCS Communications, Inc. Mr. Carter also has extensive senior management experience in the wireless and retail industry and spent ten years in public accounting. Mr. CarterHe is a certified public accountant. Mr. Carter presently serves on the Board of Directors and as Chairman of the Audit Committee of Research Now, and serves on the Board of Alumni for the Leeds School of Business of the University of Colorado. Mr. Carter received a Bachelor of Science degree from the University of Colorado with a major in accounting. Peter A. Ewens Mr. Ewens serves as our Executive Vice President, Corporate Strategy. He leads the Company’s corporate strategy, business development and M&A activities, which include spectrum strategy and acquisitions and co-brand partnerships, and T-Mobile’s participation as a founding partner in the Isis mobile commerce joint venture with AT&T and Verizon Wireless.partnerships. Mr. Ewens has also served as Executive Vice President and Chief Strategy Officer of T-Mobile USA since July 2010. From April 2008 until July 2010, Mr. Ewens was Senior Vice President, Corporate Strategy at T-Mobile USA. Before joining T-Mobile USA, Mr. Ewens was Vice President of OEM Business at Sun Microsystems, a computer software and information technology services company, from June 2006 through March 2008. Before that, Mr. Ewens was a partner at McKinsey & Company, a global management consulting firm. Mr. Ewens received a Master of Science in Management from the Sloan School at Massachusetts Institute of Technology, and Master’s and Bachelor’sbachelor’s degrees in Electrical Engineering from the University of Toronto. Thomas C. Keys Mr. Keys serves as our President, T-Mobile Indirect Channels,MetroPCS, and is responsible for leading our partner relationships, including dealers, for the T-Mobile and MetroPCS brands.business. Previously, Mr. Keys served as our Executive Vice President and Chief Operating Officer, MetroPCS Business, from April 2013 to February 2015. Mr. Keys served as MetroPCS’sMetroPCS Communications Inc.’s President from May 2011 until the consummation of the Business Combination, and as Chief Operating Officer since June 2007. Mr. Keys also served as MetroPCS’sMetroPCS Communications Inc.’s President from June 2007 to December 2007, Senior Vice President, Market Operations, West, from January 2007 until June 2007, and as Vice President and General Manager, Dallas, from April 2005 until January 2007. Mr. Keys received a Bachelor of Arts degree from the State University of New York at Oswego, and a Master of Arts from Syracuse University. Gary A. King serves as our Executive Vice President, Chief Information Officer, and is responsible for managing the development of information technology systems. Prior to joining T-Mobile, Mr. King served as Executive Vice President and Chief Information Officer of Chico’s FAS, Inc. from October 2004 to April 2013. Previously, he was the Chief Information officer of Barnes & Noble Inc. from May 2002 to October 2004 and also served as its Vice President. Prior to that, Mr. King served as Executive Vice President-Operations of Barnesandnoble.com since December 31, 2001 and its Chief Technology Officer from January 1999 to May 2002. Prior to that, he spent ten years from 1988 to 1999 with Avon Products, Inc., and served as its Vice President, Global Information Technology from 1996 to 1999. He also held various systems management positions with Unisys Corporation and Burroughs Corporation from 1982 to 1987. Mr. King serves on the Advisory Board of Center for the Supply Chain Management at the University of Florida. Mr. King received a Bachelor of Science degree from the University of Florida with a major in computer science.
| | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement | | 19 |
EXECUTIVE OFFICERS
David A. Miller Mr. Miller serves as our Executive Vice President, General Counsel and Secretary. Mr. Miller oversees all legal affairs and government affairs functions of the Company. Mr. Miller has also served as T-Mobile USA’s Chief Legal Officer, Executive Vice President, General Counsel and Secretary. Mr. Miller was appointed Senior Vice President and General | | | | | | 20 | | T-Mobile 2018 Proxy Statement | | |
Counsel of T-Mobile USA in April 2002 and Executive Vice President in January 2011. Previously, Mr. Miller served as Director of Legal Affairs for Western Wireless (a predecessor to T-Mobile USA) from March 1995 to May 1999, and he became Vice President of Legal Affairs of VoiceStream in May 1999 following its spin-off from Western Wireless. VoiceStream was acquired by Deutsche Telekom in May 2001, when it became T-Mobile USA. Prior to joining Western Wireless, Mr. Miller was an attorney with the law firm of Lane Powell and began his law career as an attorney with the firm McCutchen, Doyle, Brown and Enersen. Mr. Miller serves on the Board of Directors of the Competitive Carriers Association and is a member of its Executive Committee. Mr. Miller received a Bachelor’sbachelor’s degree in Economics from the University of Washington and a Juris Doctor from Harvard Law School. Larry L. Myers serves as our Executive Vice President, Human Resources. Mr. Myers is responsible for leading the human resources function that supports our employees across the country. Mr. Myers has also served as Executive Vice President of Human Resources and Chief People Officer of T-Mobile USA since June 2008. From January 2001 to May 2008, Mr. Myers served as senior vice president of human resources for Washington Group International, a corporation which provided integrated engineering, construction, and management services to businesses and governments around the world. Mr. Myers has more than 35 years of experience in human resources management. Mr. Myers received degrees in sociology and business administration from Idaho State University.
Neville R. Ray Mr. Ray serves as our Executive Vice President and Chief Technology Officer. Mr. Ray joined T-Mobile USA then VoiceStream,(then VoiceStream) in April 2000 and since December 2010 has served as its Chief Technology Officer, responsible for the national management and development of the T-Mobile USA wireless network and the company’s ITinformation technology services and operations. Prior to joining T-Mobile USA, from September 1996 to September 1999, Mr. Ray served as Network Vice President for Pacific Bell Mobile Services. He currently serves on the Board of Directors of Next Generation Mobile Networks Alliance, a mobile telecommunications association of mobile operators, vendors, manufacturers and research institutes, and as the Chairperson of 4Gthe Board of Governors of 5G Americas, which promotesa mobile telecommunications association of mobile operators, vendors, and facilitatesmanufacturers. Both associations have a focus on the seamless deployment throughout the Americasadvancement and development of the 3GPP family of5G technologies including HSPA, HSPA+, and LTE.services. He has alsopreviously served as a member of the National Telecommunications and Information Administration’s Commerce Spectrum Management Advisory Committee and the Federal Communications Commission’s Communications Security, Reliability and Interoperability Council. Mr. Ray is an honors graduate of The City, University of London and a member of the Institution of Electrical and Electronic Engineers and the Institution of Civil Engineers. Elizabeth A. McAuliffe G. Michael (Mike) SievertMs. McAuliffe serves as our Chief Operating Officer. Mr. Sievert is responsible for guiding all customer-facing operations across the business, including marketing, 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, most recently serving as Chief Executive Officer of Discovery Bay Games, a maker of accessories and add-onsHuman Resources. Ms. McAuliffe is responsible for tablet computers, from April 2012 to November 2012.leading the human resources function that supports our employees across the country. From April 2009January 2014 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 also2016 she served from January 2005 to February 2008 as CorporateSenior Vice President of the worldwide Windows groupTotal Rewards and Operations, encompassing leadership of all compensation, Rewards & Recognition, benefits, payroll, human resources systems and human resources operations. From June 2013 to January 2014, she served as Vice President, CHRO Regions, at Microsoft Corporation, responsible for global product management and P&L performance for that unit.Providence Health & Services, a nonprofit health system. From January 2011 to June 2013 she served as Senior Vice President, Human Resources at T-Mobile. 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 managementjoiningT-Mobile, Ms. McAuliffe held various positions at ProcterStarbucks Coffee Company, a coffee retailer, in both the Law & GambleCorporate Affairs department and IBM. He has served on the boards of Rogers Wireless in Canada, Switch & Data Corporation, and a number of technology start-ups. Mr. SievertHuman Resources department. Ms. McAuliffe received a Bachelor’sbachelor’s degree in Economics from the Wharton School at the University of Pennsylvania.Massachusetts, Amherst and a Juris Doctor from Northeastern University School of Law.
| | | | | | 20 | | T-Mobile 2018 Proxy Statement | | 21 |
Proposal 2 - Ratification of the Appointment of PricewaterhouseCoopers LLP as the Company’s Independent Registered Public Accounting Firm for Fiscal Year 2018 The Audit Committee has appointed PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2015.2018. Although ratification of the appointment of PricewaterhouseCoopers LLP by our stockholders is not required, the Board of Directors is submitting the selection of PricewaterhouseCoopers LLP to our stockholders for ratification as a matter of good corporate governance. If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm. We expect representatives of PricewaterhouseCoopers LLP to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and are expected to be available to respond to appropriate questions by stockholders. | | | | | Our Board of Directors recommends a voteFOR the ratification of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal year 2018 |
Required Vote ApprovalThe affirmative vote of the proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2015 requires that the number of votes cast “FOR” the proposal represents a majority of the total
votes cast on theis required to approve this proposal. If the stockholders do not ratify the appointment of PricewaterhouseCoopers LLP, the Audit Committee will reconsider the appointment but is under no obligation to appoint a different independent registered public accounting firm. Audit Committee Pre-Approval PolicyProcess
The Audit Committee is responsible for reviewing and, if appropriate, pre-approving all audit, audit-related and non-audit services to be performed by our independent registered public accounting firm. The Audit Committee charter authorizes the Audit Committee to establish a policy and related procedures regarding the pre-approval of audit, audit-related and non-audit services to be performed by our independent registered public accounting firm. The Audit Committee has delegated its pre-approval authority to the Chair of the Audit Committee, who is authorized to pre-approve services to be performed by our independent registered public accounting firm and the compensation to be paid for such services if it is impracticable to delay the review and approval of such services and compensation until the next regularly scheduledregularly-scheduled meeting of the Audit Committee, provided that in such case the Chair shall provide a report to the Audit Committee at its next regularly scheduledregularly-scheduled meeting of any services and compensation approved by the Chair pursuant to the delegated authority. Audit and All Other Fees Paid to PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP was paid the following fees for services rendered during fiscal years 20142017 and 2013:2016, all of which were approved in conformity with the Audit Committee’s pre-approval process, as described above under “Pre-Approval Process”: | | | | 2014 ($) | | | 2013 ($) | | | 2017 ($) | | | 2016 ($) | | | Audit Fees(1) | | | 6,993,000 | | | | 6,499,000 | | | | 9,330,000 | | | | 8,398,000 | | | Audit-Related Fees(2) | | | 47,000 | | | | 254,000 | | | | 748,000 | | | | 414,000 | | | Tax Fees(3) | | | 361,000 | | | | 95,000 | | | | 163,000 | | | | 738,000 | | | All Other Fees(4) | | | 355,000 | | | | 190,000 | | | | 79,000 | | | | 61,000 | | | Total Fees | | | 7,756,000 | | | | 7,038,000 | | | | 10,320,000 | | | | 9,611,000 | |
| (1) | Audit feesFees relate to professional services rendered in connection with the audit of the Company’s annual financial statements and internal control over financial reporting, quarterly review of financial statements included in the Company’s Quarterly Reports on Form 10-Q and audit services provided in connection with other statutory and regulatory filings. |
| (2) | Audit-Related Fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under Audit Fees. This category includes fees related to audit and attest services not required by statute or regulations, and consultations concerning financial accounting and reporting standards. |
| (3) | Tax Fees consist of fees for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and international tax compliance. |
| (4) | All Other Fees consist of fees for permitted services other than those that meet the criteria above and include fees to assess mobile advertising for a joint venture and research subscriptions. |
| | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement | | 21 |
PROPOSAL 2 – RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP
AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2015
Audit Committee Report In the performance of its oversight responsibilities, the Audit Committee (1) reviewed and discussed with management and the independent registered public accounting firm the Company’s audited financial statements for the fiscal year ended December 31, 2014;2017; (2) discussed with the Company’s independent registered public accounting firm the matters required to be discussed by the Public Company Accounting Oversight Board (PCAOB)(the “PCAOB”) Auditing Standard No. 16,1301,Communications with Audit Committees; (3) received the written disclosures and the letter from the Company’s independent registered public accounting firm required by the applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerningregarding independence; and (4) discussed with the Company’s independent registered public accounting firm any relationships that may impact its objectivity and independence and satisfied itself as to the firm’s independence. | | | | | | 22 | | T-Mobile 2018 Proxy Statement | | |
PROPOSAL 2 - RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2018 Company management is responsible for the assessment and determination of risks associated with the Company’s business, financials,financial reporting, operations and contractual obligations. The Audit Committee, together with the Board of Directors, is responsible for oversight of the Company’s management of risks. As part of its responsibilities for oversight of the Company’s management of risk,risks, the Audit Committee has reviewed and discussed the Company’s enterprise-wide risk assessment, and the Company’s policies with respect to risk assessment and risk management, including discussions of individual risk areas as well as an annual summary of the overall process. The Audit Committee has discussed with the Company’s Internal Audit Department and its independent registered public accounting firm the overall scope of and plans for their respective audits. The Committee regularly meets with the head of the Company’s Internal Audit Department and representatives of the independent registered public accounting firm, in regular and executive sessions, to discuss the results of their examinations, thetheir evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting and compliance programs. Management is responsible for the Company’s financial reporting process, including establishing and maintaining adequate internal control over financial controlsreporting and the preparation of the Company’s financial statements. The Company’s independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements and expressing an opinion on the conformity of the Company’s audited financial statements with U.S. generally accepted accounting principles. The Company’s independent registered public accounting firm also is responsible for performing an independent audit of the effectiveness of the Company’s internal controlscontrol over financial reporting and issuing a report thereon. The Committee relies,We rely, without independent verification, on the information provided to itus and on the representations made by management and the Company’s independent registered public accounting firm. Based on the review and discussion and the representations made by management and the Company’s independent registered public accounting firm, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements for the fiscal year ended December 31, 20142017 be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.2017. The Audit Committee: Srikant M. Datar, ChairPh.D., Chairman W. Michael Barnes, Ph.D. Kelvin R. Westbrook The material contained in this Audit Committee Report does not constitute soliciting material, is not deemed filed with the SEC, and is not incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made on, before, or after the date of this Proxy Statement and irrespective of any general incorporation language in such filing, except to the extent that the Company specifically incorporates the Audit Committee Report by reference therein. The Board of Directors recommends that you vote
“FOR”
the ratification of the appointment of PricewaterhouseCoopers LLP
as our independent registered public accounting firm for fiscal year 2015.
| | | | | | 22 | | T-Mobile 2018 Proxy Statement | | 23 |
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation program for the following 2014 executive officers (collectively, the “Named Executive Officers”):
John J. Legere, President and Chief Executive OfficerCompensation
COMPENSATION DISCUSSION AND ANALYSIS J. Braxton Carter, Executive Vice President and Chief Financial Officer
| | | | | | | | | | | This Compensation Discussion and Analysis (“CD&A”) describes our 2017 executive compensation program for the following executive officers (collectively, the “Named Executive Officers”): | | | | | | •∎JohnJ.Legere
| | G. Michael Sievert, Chief Operating Officer∎(1)J.BraxtonCarter
|
• | | James ∎G.MichaelSievert
| | ∎NevilleR.Ray | | ∎ThomasC. Alling, former Executive Vice Keys | President and Chief Operating Executive Officer T-Mobile Business(2) |
Gary A. King, Executive Vice President and Chief Information Officer
(1) | Effective February 13, 2015, Mr. Sievert assumed the role of Chief Operating Officer. Previously, Mr. Sievert was the Company’s Executive Vice
President and Chief Marketing Financial Officer. |
(2) | Mr. Alling resigned from the Company effective March 13, 2015.Chief Operating Officer
| | Executive Vice President and Chief Technology Officer | | President, MetroPCS |
T-Mobile Achieved aHad Record YearFinancial Results Across the Board in 2017 and Proved that Taking Care of Growth in 2014 and Delivered Strong Financial and Operational PerformanceCustomers is Also Good for Stockholders T-Mobile had an extraordinary yearrecord financial results in 2014.2017, including service revenues, total revenues, net income, Adjusted EBITDA, net cash from operating activities and free cash flow. We delivered a record yearadded 5.7 million total net customers in 2017 and captured the majority of the industry’s postpaid phone growth in 2014 as our Un-carrier initiatives continued to resonate with consumers. Since launching Un-carrier in 2013,T-Mobile has transformedfor the wireless industry with consumer-friendly offers that resolve customer pain points and differentiateT-Mobile from the competition.fourth consecutive year. We continued to deliver strong customer growth in 2014 and ended the year with more than 5572.6 million total customers, reflecting totalcustomers. Our customer growth translated into industry-leading revenue and cash flow growth. Service revenue of $30.2 billion for 2017 grew at an industry-leading 8.3% year over year. Net income of $4.5 billion for 2017 grew 211% year over year, net customer additionsincome of 8.3 million in 2014, an 89% increase$2.3 billion (excluding impact from the priorTax Cuts and Jobs Act of $2.2 billion) for 2017 grew 62% year makingT-Mobile America’s fastest growing wireless company. The strong performance is underpinned by the Company’s network, which continued to expand at a breakneck pace. At the endover year and Adjusted EBITDA of 2014,T-Mobile’s 4G LTE network$11.2 billion grew 5.4% year over year. As of December 31, 2017, T-Mobile covered 265322 million people exceeding our original year-end target of 250 million. In addition to strong customer growth, T-Mobile delivered outstanding financial results. Service revenues in 2014with 4G LTE. Our stock price increased by 9.0% year-over-year, and total revenues increased by 13.1% year-over-year. Adjusted EBITDA amounted to $5.636 billion in 2014, up 6.0% year-over-year. Since the Business Combination, we have significantly grown TSR. From284% from May 1, 2013 (the first day of trading after the Business Combination) through March 31, 2015,T-Mobile TSR outpaced 17 of our19 peer companies. OurDecember 29, 2017 and 10.4% during 2017 alone. Looking back three years, our stock price has increased by 92% from May133% (January 1, 20132015 through March 31, 2015.December 29, 2017).
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.pay for performance. As a result, our 20142017 Named Executive Officer compensation reflects T-Mobile’s strong 20142017 operational and financial performance. 
| | | | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement24 | | 23T-Mobile 2018 Proxy Statement | | |
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 individual performance, and most importantly, maximize stockholder value. Our executive compensation 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 |
| | | | | Key Features of our Executive Compensation Program
| | | | What We Do | | | What we do |  | | What we don’t do | | | | | 
| | Emphasis on pay for performance | | 
| | No short-selling, hedging or pledging of Company securities
| | | | | | | Independent compensation consultant | | |
| | | Independent compensation consultant
| |
| | No excise tax gross ups
Executive and director stock ownership guidelines | | | | |
| | | Minimum stock ownership guidelines
| |
| | No special executive retirement program
| | | | |
| | Clawback policy to recapture incentive payments | |
| | No acceleration of compensation upon retirement
| | | | |
| | | | Use of multiple performance measures and caps on potential incentive payments | | | | | |
| Substantial majority of target total compensation is variable | | | | | | | Use of executive compensation statements (“tally sheets”) | | | | | | | Annual risk assessment of compensation programs |
| | | | | | | | | What We Don’t Do | | | |  | | | No short-selling, hedging or pledging of Company’s securities | | | | | | | No excise tax gross ups | | | | | | | No special executive retirement program | | | | | | | No acceleration of compensation upon retirement | | | | | | | No single-trigger vesting of equity awards upon a change in control | | | | | | | No significant perquisites |
GOALS OF COMPENSATION PROGRAM WHAT WE PAY AND WHY: GOALS AND ELEMENTS OF COMPENSATION | | | | | | | | | | | | | | | | |
| | Substantial majority of target total compensation is variableEmphasis on pay
| |
| | No excessive perquisites
| | | | |
| | Use of executive compensation statements (“tally sheets”)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 |
What We Pay and Why: Goals and Elements of CompensationELEMENTS OF TOTAL DIRECT COMPENSATION
SUMMARY OF AVERAGE TARGET NAMED EXECUTIVE OFFICER COMPENSATION AS OF DECEMBER 31, 2017  
| | | | | | 24 | | T-Mobile 2018 Proxy Statement | | 25 |
To promote a performance-based culture that further aligns the interests of management and stockholders, in 20142017 the executive compensation program focused extensively on variable, performance-based compensation. As illustrated in the charts below, the substantial majority of our Chief Executive Officer’s and other Named Executive Officers’ actual total compensation as reported in the 20142017 Summary Compensation Table was in the form of variable compensation (short-term and long-term).  
Factors Considered in Determining Executive Compensation Compensation Consultant and Management The Compensation Committee sets compensation levels based on the skills, experience and achievements of each executive officer, taking into account market analysis, input by its compensation consultant and the compensation recommendations of our Chief Executive Officer, except with respect to his own position. The Chief Executive Officer provides recommended target annual compensation adjustments for the Named Executive Officers to base salaries, target annual short-term incentive opportunity and target long-term incentive opportunity. The Compensation Committee believes that input from both its independent compensation consultant and our Chief Executive Officer provides useful information and points of view to assist the Compensation Committee in determining appropriate compensation. Market Analysis We use comparative executive officer compensation data publicly disclosed by a peer group of public companies in addition to compensation survey data to evaluate the competitiveness of our executive officer compensation and to guide the compensation for newly hired executive officers. We believe a competitive total compensation package is necessary to attract and retain an executive management team with the appropriate abilities and experience required to lead the Company and execute on our strategic business plan. In analyzing this information, we compare theour executive compensation program as a whole to the programs of our peer group companies and compare the pay of our individual executives to that of the executive officers of our peer group companies if we believe the positions are sufficiently similar to make meaningful comparisons. We do not target a specific percentile in the range of comparative data for each individual or for each component of compensation. In determining the amount of base salary, target incentive award and level of equity compensation for each Named Executive Officer, we review the comparative compensation data and consider each executive’s level of responsibility, prior experience, past job performance, contribution to the Company’s success and results achieved. The Compensation Committee exercises its business judgment and discretion and does not apply formulas or assign these factors specific mathematical weights. | | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement | | 25 |
EXECUTIVE COMPENSATION
Executive Compensation Peer Group Our 19 companyWe select our peer group for 2014 was selected based on similarity to us in terms of relative size based onof revenue and market capitalization, industry and the ability to compete with us for talent at the executive officer level. The Compensation Committee reviews the Company’s peer group on an annual basis. Initially, our 2017 peer group was the same as our 2016 peer group. This peer group, which is described below, was used to set compensation for 2017. In November 2017, upon its acquisition by CenturyLink, Level 3 Communications was removed from our peer group. T-Mobile was ranked near the median of the peer group for 2017 both in terms of revenue and market capitalization.
The following chart shows T-Mobile’s 2017 peer group of 14 companies and each such company’s revenue as of fiscal year-end and market capitalization as of December 31, 2017 (other than with respect to Level3 Communications, which, as noted, was removed from our peer group in November 2017 due to its acquisition). Our peer group for 2018 has not changed. | | | | | | 26 | | T-Mobile 2018 Proxy Statement | | |
Analysis of Executive Officer Compensation The key components of our annual target total compensation package for executive officers are base salary, annual cash-based short-term incentive and long-term incentive awards, including performance-based restricted stock units (“PRSUs”) and time-based restricted stock units (“RSUs”). Base SalaryTarget Total Direct Compensation
The Compensation Committee reviewedreviews the base salariescompensation of ourthe Named Executive Officers based on a market analysis prepared by management and reviewed byin partnership with the Compensation Committee’s independent compensation consultant, and determined that no adjustments would be made for 2014. Base salaries for Messrs. Legere, Cartercompensation consultant. Based on the Compensation Committee’s assessment of each Named Executive Officer in relation to peer and Sievert were established priorsurvey market data as well as the executive officer’s contribution to the Business Combination through negotiated employment agreements or term sheet and Mr. King’sCompany’s ongoing strategy, the Compensation Committee increased the total target compensation of each of our Named Executive Officers for 2017, including increases to base salary, was set atannual short-term incentive opportunity and target long-term incentive opportunity. Increases to target compensation supported the timecontinued retention and engagement of hire.
our Named Executive Officers. The following table shows the 2014 base salary of2017 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) | | | 1,666,667 | | | | — | | | | 3,333,333 | | | | 5,000,000 | | | | — | | | | 15,000,000 | | | | 20,000,000 | | J. Braxton Carter | | | 850,000 | | | | 150 | % | | | 1,275,000 | | | | 2,125,000 | | | | 250 | % | | | 5,312,500 | | | | 7,437,500 | | G. Michael Sievert | | | 950,000 | | | | 200 | % | | | 1,900,000 | | | | 2,850,000 | | | | 250 | % | | | 7,125,000 | | | | 9,975,000 | | Neville R. Ray | | | 800,000 | | | | 150 | % | | | 1,200,000 | | | | 2,000,000 | | | | 250 | % | | | 5,000,000 | | | | 7,000,000 | | Thomas C. Keys | | | 750,000 | | | | 125 | % | | | 937,500 | | | | 1,687,500 | | | | 250 | % | | | 4,218,750 | | | | 5,906,250 | |
| (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. |
| | | | | Officer | | T-Mobile 2018 Proxy Statement | | Base Salary ($)27 | | John J. Legere
| | | 1,250,000 | | J. Braxton Carter
| | | 650,000 | | G. Michael Sievert
| | | 550,000 | | James C. Alling
| | | 600,000 | | Gary A. King
| | | 500,000 | |
EXECUTIVE COMPENSATIONAnnual Base Salaries
Base salary is designed to provide a competitive fixed component of income. Base salaries for our Named Executive Officers are set by the Compensation Committee, with assistance from the independent compensation consultant, after consideration of various factors including individual performance, executive experience and skill set and market data. In particular, the Compensation Committee focuses on how base salary levels may impact the market competitiveness of an executive’s total compensation opportunity. See further discussion under “— Factors Considered in Determining Executive Compensation-Market Analysis” above. Annual Short-Term Incentives Our executive officers are eligible for annual cash-based short-term incentives under the 2013 Omnibus Incentive Plan. The Compensation Committee sets the valuestarget value of theeach executive’s short-term incentive award opportunitiesopportunity as a percentage of anthe executive’s base salary. TheseThe final award is based on the eligible base earnings for the performance period. Award opportunities for each metric evaluated under the plan are established at threshold, target and maximum levels. The maximum level for each metric is capped at 200% of target. The 20142017 short-term incentive plan (the “2014“2017 STIP”) awards for executive officers, including the Named Executive Officers, were based entirely on Company performance, which was measured by: Total Service Revenue, Branded Net Adds,Additions (Total Branded Customer Additions), Adjusted EBITDA, and Operating Free Cash Flow. Adjusted EBITDA and Operating Free Cash Flow are non-GAAP measures.measures and Operating Free Cash Flow is not provided in our earnings materials. Please seeAppendix BA for more information. information on how these measures are calculated. 
These measures were aligned with the operational objectives of the Company’s business. AThe minimum threshold had to be achieved onperformance level for at least one of the performance metrics was required to generate awards.be attained in order for the executives to receive any payment under the 2017 STIP. If none of the minimum performance thresholds had been achieved during 2017, no awards would have been paid. If the minimum threshold for any metric was achieved, then the results were applied | | | | | | | | | | | | | | | | | | | | | Metric | | Weight | | | Minimum
Performance (in millions) | | | Target
Performance (in millions) | | | Maximum
Performance (in millions) | | | Actual
Performance (in millions) | | Total Service Revenue | | | 30% | | | $ | 28,032 | | | $ | 29,507 | | | $ | 30,244 | | | $ | 30,160 | | Branded Net Customer Additions | | | 20% | | | | 1.470 | | | | 3.674 | | | | 5.139 | | | | 4.475 | | Adjusted EBITDA | | | 20% | | | $ | 9,470 | | | $ | 10,294 | | | $ | 10,843 | | | $ | 11,213 | | Operating Free Cash Flow | | | 30% | | | $ | 3,409 | | | $ | 4,500 | | | $ | 4,936 | | | $ | 4,677 | |
The Company performed above target levels with respect to the participants’ target awards. | | | | | | | | | | | | | | | | | | | | | | Metric | | Weight | | | Minimum
Performance (In millions) | | | Target
Performance (In millions) | | | Maximum
Performance (In millions) | | | Actual
Performance (In millions) | | | Total Service Revenue | | | 30% | | | $ | 21,003 | | | $ | 21,866 | | | $ | 22,441 | | | $ | 22,375 | | | Branded Net Adds | | | 30% | | | | 1.02 | | | | 2.64 | | | | 3.66 | | | | 6.13 | | | Adjusted EBITDA | | | 20% | | | $ | 5,520 | | | $ | 6,000 | | | $ | 6,320 | | | $ | 5,636 | | | Operating Free Cash Flow | | | 20% | | | $ | 926 | | | $ | 1,226 | | | $ | 1,376 | | | $ | 1,298 | |
all four performance metrics in 2017. Overall performance under the 20142017 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 155%170% of target. The following table shows the payouts under the 20142017 STIP offor each Named Executive Officer.Officer based on these performance results. | | Officer | | Base Salary ($) | | Target 2014
STIP Percent
(as a % of Base
Salary) | | Target 2014
STIP Value ($) | | Company Attainment | | Total 2014 STIP Payout Value ($) | | | Base Earnings (1) ($) | | | Target 2017
STIP Percent
(as a % of Base
Earnings) | | | Target 2017
STIP Value ($) | | | Company
Attainment | | | Total 2017 STIP
Payout Value ($) | | John J. Legere | | | 1,250,000 | | | | 120% | | | | 1,500,000 | | | | 155% | | | | 2,325,000 | | | | 1,618,590 | | | | — | | | | 3,333,333 | | | | 170 | % | | | 5,666,666 | | | J. Braxton Carter | | | 650,000 | | | | 100% | | | | 650,000 | | | | 155% | | | | 1,007,500 | | | | 845,192 | | | | 150 | % | | | 1,267,789 | | | | 170 | % | | | 2,155,241 | | | G. Michael Sievert | | | 550,000 | | | | 85% | | | | 467,500 | | | | 155% | | | | 724,625 | | | | 944,231 | | | | 200 | % | | | 1,888,461 | | | | 170 | % | | | 3,210,384 | | | James C. Alling | | | 600,000 | | | | 100% | | | | 600,000 | | | | 155% | | | | 930,000 | | | | Gary A. King(1) | | | 488,462 | | | | 75% | | | | 366,346 | | | | 155% | | | | 567,837 | | | Neville R. Ray | | | | 796,154 | | | | 150 | % | | | 1,194,231 | | | | 170 | % | | | 2,030,192 | | Thomas C. Keys | | | | 749,038 | | | | 125 | % | | | 936,298 | | | | 170 | % | | | 1,591,707 | |
| (1) | Reflects actualBase earnings for 2014. reflect eligible earnings as reported by T-Mobile payroll and vary slightly from target 2017 base salaries.
|
| (2) | Mr. King’s annualized 2014 base salary was $500,000.Legere’s employment agreement targeted his short-term incentive value at not less than $3,333,333. |
Long-Term Incentives
| | | | | | 28 | | T-Mobile 2018 Proxy Statement | | |
Long-Term Incentives We grant our executive officers long-term incentive compensation in the form of performance-based RSUs and time-based RSUs under the 2013 Omnibus Incentive Plan. In connection with the Business Combination, the Company granted Performance-based RSUs are measured based on our relative total shareholder return (“RTSR”) over a one-time “Founders Grant” designed to give executivesthree-year performance period. We believe it is an appropriate performance measure because RTSR inherently reflects relevant financial and employees at all levels an ownership stake in the Company and to align their interests with thoseoperational results as share price is a reflection of our stockholders. For retentioncurrent and expected future performance and directly links a significant portion of executive officer compensation to shareholder value creation.
Long-Term Incentive Awards Granted in 2017 On February 25, 2017, we granted long-term incentive purposes, the Founders Grant made in June 2013awards to the Named Executive Officers had longer vesting periods for time-based RSUs and a higher target value than were anticipated for future annual equity grants and was in lieuOfficers. With the exception of Mr. Legere, the 2014 annual grant. It was contemplated at the time, however, that targeted interim supplemental equity awards may be made in 2014 to retain high-performing leaders, reward exceptional performance or recognize expanded responsibility. The following supplemental equity awards were granted to Named Executive Officers in 2014.
Mr. Legere. To reward exceptional performance and incentivize continued strong performance, Mr. Legere received a performance-based RSU award in December 2014 with a targethalf of the aggregate value of $12their 2017 long-term incentive awards in the form of performance-based RSUs and half of such value in the form of time-based RSUs. We believe this mix
million,emphasizes long-term Company performance as well as the retention and engagement of which $4 million is basedthe Named Executive Officers. To further align Mr. Legere’s compensation with stockholder value creation, Mr. Legere’s 2017 long-term incentive award had a greater emphasis on achievementperformance-based RSUs, with approximately 3/4 of an operating free cash flow goal (the “OFCF RSUs”)the award consisting of performance-based RSUs (including his True-Up PRSUs described below) and $8 million is based on Relative TSR (the “RTSR RSUs”).
The OFCF RSUs may be earned based on achievementroughly 1/4 consisting of an operating free cash flow goal over a measurement period from January 1, 2015 through December 31, 2015,time-based RSUs. In addition to their annual awards, each of Messrs. Legere, Sievert and may be earned from 0% to 200% of target based on attainment of threshold, target and maximum performance. Any earned RSUs will beCarter were granted one-time special long-term incentive awards, as discussed below under “— Special Equity Awards in 2017.” Time-based RSU awards for 2017 generally vest annually in three equal tranches beginning February 2018, subject to time-vesting based onthe Named Executive Officer’s continued service through December 31, 2016.the applicable vesting date. The Compensation Committee selected operating free cash flow because it provides a direct correlation between potential payoutsperformance-based RSU awards for 2017 generally cliff vest at the conclusion of the three-year performance period ending February 25, 2020, subject to the Named Executive Officer’s continued service through the vesting date and the Company’s 2015 focus on balancing growth with profitability.
The RTSR RSUs may be earned based on the relativelevel of RTSR attained during the performance of the Company’s TSR compared to the TSR of companies that constitute our peer group over a measurement period from January 1, 2015 through December 31, 2016. The Compensation Committee selected relative TSR because it provides a direct correlation between potential payouts and future stock performance, delivering strong objective alignment between Mr. Legere and our stockholders.period.
| | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement | | 27 |
EXECUTIVE COMPENSATION
RTSRPerformance-based RSU achievement can range from 0% to 200% of target based on relative performance against our peer group, and ispayouts are determined by multiplying the target number of performance-based RSUs by an adjustment percentage based on the TSRRTSR percentile performance of the Company, relative to ouras follows:
The peer group for the 2017 performance-based RSU awards against which RTSR is measured originally consisted of the following 15 companies: AT&T, CenturyLink, Charter Communications, Cisco Systems, Comcast, Dish Network, Frontier Communications, Intel, Level 3 Communications, Liberty Global, Microsoft, Motorola Solutions, Qualcomm, Sprint, and Verizon Communications. Under the terms of the award, if one or more members of the peer group cease to be a publicly traded entity during the performance period, then that company will be removed from the peer group. In such an event, no additional companies will be added to the peer group for purposes of determining any earned performance-based RSU awards. Level 3 Communications was removed from the peer group upon acquisition by CenturyLink on November 1, 2017, and will not be taken into account in measuring RTSR with respect to the 2017 performance-based RSU awards. The total 2017 target long-term incentive grant value and the number of performance-based and time-based RSUs awarded are shown below for each Named Executive Officer. The number of RSUs awarded was established as follows: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. | | | | | RTSR Percentile Ranking | | T-Mobile 2018 Proxy Statement | | Adjustment
Percentage29 | |
| | | | | | | | | | | | | Officer | | Total 2017 Grant
Target Value (1) ($) | | | Target Number of
Performance- Based RSUs (#) | | | Number of Time-Based
RSUs (#) | | John J. Legere | | | 15,000,000 | | | | 178,775 | | | | 65,009 | | J. Braxton Carter | | | 5,312,500 | | | | 43,170 | | | | 43,170 | | G. Michael Sievert | | | 7,125,000 | | | | 57,899 | | | | 57,899 | | Neville R. Ray | | | 5,000,000 | | | | 40,631 | | | | 40,631 | | Thomas C. Keys | | | 4,218,750 | | | | 34,283 | | | | 34,283 | |
Below 25th percentile(1) | | | 0% | | 25th percentile | | | 25% | | 50th percentile | | | 100% | | 75th percentile | | | 125% | | 100th percentile | | | 200% | Named Executive Officers received half of the aggregate target value of their long-term incentive awards in the form of performance-based RSUs and half of such value in the form of time-based RSUs, except for Mr. Legere who received approximately 3/4 of his target award in the form of performance-based RSUs (including his True-Up PRSUs described below). |
Special Equity Awards in 2017 In April 2017, the Company entered into an amended and restated employment agreement with Mr. Legere, pursuant to which Mr. Legere was granted a one-time award of performance-based RSUs with a target value equal to $3,000,000 (the “True-Up PRSUs”). The Adjustment Percentage will be interpolatedaward was intended to bring Mr. Legere’s 2017 annual award to $15,000,000 pursuant to his amended and restated employment agreement. The True-Up PRSUs are subject to the same vesting schedule and other terms and conditions applicable to the annual award of performance-based RSUs granted to Mr. Legere on a linear basis, except that the Adjustment Percentage will equal 0%February 25, 2017 (see “— Long-Term Incentive Awards Granted in 2017” above for a ranking below the 25th percentile.additional information). In February 2017, to recognize Mr. Sievert. To recognize hisSievert’s role and impact in transformingincentivize continued strong performance, the Company under the Un-carrier initiatives,entered into an amended and to bring his long-term incentive value to a level consistentrestated compensation term sheet with our other comparable executive officers, Mr. Sievert, receivedpursuant to which he was granted a one-time award of performance-based RSUs with a target value equal to $3,562,500 and a one-time award of time-based RSURSUs with a target value equal to $3,562,500. Subject to Mr. Sievert’s continued employment through such date, the performance-based RSUs cliff vest at the conclusion of a two-year performance period ending February 25, 2019 (based on the level of RTSR attained during the performance period against our peer group) and the time-based RSUs vest in full on February 25, 2019. In December 2017, to recognize Mr. Carter’s role and incentivize continued strong performance, the Company entered into an amended and restated employment agreement with Mr. Carter, pursuant to which he was granted a one-time award in June 2014of time-based RSUs with a target value of $1 million, which$2,500,000. Subject to Mr. Carter’s continued employment through such date, the award vests in three equalfull on March 1, 2019. The annual installments beginning on June 5, 2015. Mr. King. Mr. King joined the Companyand special time-based and performance-based RSUs granted during 2017 are subject to accelerated vesting in December 2013certain circumstances as Executive Vice President and Chief Information Officer. As part of his new hire compensation package, Mr. King received (i) a 2014 time-based RSU awarddescribed below under “— Potential Payments upon Termination or in Connection with a target value of $546,875, which vests over a three year period beginning on February 25, 2015 and (ii) a 2014 performance-based RSU award with a target value of $546,875, which has the same performance periods and measures as the Founders Grant.
Change in Control”. Perquisites We generally do not haveprovide perquisites forto any executive officer, including the Named Executive Officers, beyond what all other employees may be eligible to receive. In 2017, we provided personal security for other than relocation benefits.Mr. Legere due to the range of security issues encountered by chief executive officers of large public companies, particularly with respect to high-profile chief executive officers such as Mr. Legere. For fiscal year 2017, we paid approximately $48,000 toward Mr. Legere’s personal security. We also reimbursed Messrs. Legere, Sievert and Carter for legal fees and expenses (capped at $25,000 for each executive) incurred in connection with the negotiation and preparation of each such executive’s amended and restated employment agreement or term sheet, as applicable. In 2017, the Company also permitted the spouses of executive officers, including the Named Executive Officers, to attend one Board meeting and paid for certain incremental costs (excluding travel costs) associated with such attendance. Comprehensive Benefits Package We provide a competitive benefits package to all full-time employees, including the Named Executive Officers, that includes health and welfare benefits, such as medical, dental, vision care, disability insurance, life insurance benefits and a 401(k) savings plan.plan (with an employer match up to 4%). We provide a non-qualified deferred compensation plan under which eligible participants may defer up to 75% of their base salary and 100% of their short-term incentive and long-term cash incentive as well asannual RSUs. We do not provide any employer matching or discretionary allocations under the non-qualified deferred compensation plan. Severance and Change-in-Control Benefits We provide severance pay and other termination benefits to eligible executive officers, including the Named Executive Officers, whose employment is terminated, including through involuntary termination by us without cause or due to corporate restructuring, and, in some cases, due to involuntary termination by us without cause, due to our non-renewal of the executive’s employment term or due to the voluntary termination by the executive for good reason. These arrangements provide security of transition income and benefit replacement that allow such executives to focus on our prospective business priorities that create value for stockholders. We believe the level of severance and termination benefits provided by these arrangements is consistent with the practices of our peer group and is necessary to attract and retain key employees. These benefits are provided pursuant to our Severance Guidelines, Executive Continuity Plan, and 2013 Omnibus Incentive Plan, andlong-term incentive award agreements and, for each of Messrs. Legere, CarterSievert and Sievert,Carter, pursuant to a written agreements.employment agreement or term sheet, as applicable. These arrangements do not include any gross up for excise taxes imposed as a result of severance or other payments that are deemed made in connection with a change in control. The potential payments and benefits available under these arrangements are discussed further under “—“ — Potential Payments upon Termination or in Connection with a Change in Control.” | | | | | | 30 | | T-Mobile 2018 Proxy Statement | | |
Other Matters Tax and Accounting Considerations Tax Considerations
Section 162(m) of the Code. The Internal Revenue Code (the “Code”) Section 162(m) generally disallows an income tax deduction to public companies for annual compensation in excess of $1 million paid to the chief executive officer and other “covered employees.” For taxable years beginning on or before December 31, 2017, this deduction limit included an exception for “qualified performance-based compensation”. The recently-enacted Tax Act amended certain provisions of Code Section 162(m), including eliminating the three other most highly compensated named executive officers (excluding the chief financial officer). Compensationexemption for “qualified performance-based compensation” for tax years beginning after December 31, 2017. The Tax Act includes a grandfather provision, pursuant to which compensation that qualifies as “performance-based”is provided pursuant to a written binding contract in effect on November 2, 2017, and which has not been modified in any material respect on or satisfies another exception is excluded for purposes of calculating the amount of compensationafter that date, will not be subject to the $1 million limit. Whileamendments made to Code Section 162(m) by the Tax Act. We believe that maintaining the discretion to evaluate the performance of our executive officers through the use of performance-based compensation is an important part of our responsibilities and benefits our stockholders, even if it may be non-deductible under Code Section 162(m). The Compensation Committee considershas historically considered the potential impact of Code Section 162(m) as well as other tax and accounting consequences inwhen developing and implementing ourthe Company’s executive compensation program,programs. However, the Compensation Committee believesretains the discretion and flexibility to design and administer compensation programs that are in the best interests of the Company and its stockholders, and, in light of the repeal of the performance-based compensation exception to Code Section 162(m), the Compensation Committee may in the future approve compensation that would not have qualified as performance-based compensation under Code Section 162(m) as in effect prior to the Tax Act.
Section 280G of the Code. Code Section 280G disallows a tax deduction with respect to excess parachute payments to certain executives of companies which undergo a change in control. In addition, Code Section 4999 imposes a 20% excise tax on the individual with respect to the excess parachute payment. Parachute payments are compensation linked to or triggered by a change in control and may include, but are not limited to, bonus payments, severance payments, certain fringe benefits, and payments and acceleration of vesting from long-term incentive plans including stock options and other equity-based compensation. Excess parachute payments are parachute payments that exceed a threshold determined under Code Section 280G based on the executive’s prior compensation. As discussed above, we do not provide tax gross-ups on income attributable to change in control and other executive arrangements. Section 409A of the Code. Code Section 409A requires that “nonqualified deferred compensation” be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose employees and directors to accelerated income tax liabilities, substantial additional taxes and interest on their vested compensation under such plans. Accordingly, as a general matter, it should retain flexibility in awardingis our intention to design and administer our compensation toand benefit plans and arrangements for all of our employees and directors, including our Named Executive Officers, and thus has not adopted a policyso that all compensation must be deductible for federal income tax purposes.they are either exempt from, or satisfy the requirements of, Code Section 409A.
EXECUTIVE COMPENSATIONAccounting for Stock-Based Compensation. We follow Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC Topic 718, for stock-based compensation awards. ASC Topic 718 requires companies to calculate the grant date “fair value” of their stock-based awards using a variety of assumptions. ASC Topic 718 also requires companies to recognize the compensation cost of their stock-based awards in their income statements over the period that an employee is required to render service in exchange for the award. Grants of performance-based RSUs, time-based RSUs and other equity-based awards under equity incentive award plans have been and will be accounted for under ASC Topic 718. We expect that we will regularly consider the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives. For further information on our accounting for our stock-based compensation awards, refer to our Annual Report on Form 10-K for the year ended December 31, 2017.
Securities Trading Policy Our insiderpolicy on securities trading policy prohibits our directors, officers and employees from trading in our securities during certain designated blackout periods and otherwise while they are aware of material non-public information, and from engaging in hedging transactions or short sales and trading in puts and callsoptions with respect to our securities. The policy also prohibits holding our securities in a margin account or pledging our securities as collateral for a loan. Clawback Provisions In 2014, the Compensation Committee adopted a policy of recoupment of compensation in certain circumstances. The policy provides that in the event the Company issues a restatement of its financial statements due to its material noncompliance with financial reporting requirements under U.S. securities laws, the Company will, to the extent permitted by governing law, require reimbursement from current and former executive officers for excess incentive compensation received at any time during the three-year period preceding the date on which the Company is required to prepare the accounting restatement if a lower payment would have occurred based on the restated results, regardless of whether the executive officer engaged in misconduct or otherwise caused or contributed to the requirement for the restatement. The policy is administered by the Section 16 Subcommittee, which has the sole discretion to seek recovery from an executive officer and may consider whether seeking recovery would be in the best interests of the Company, including the costs and benefits of seeking recovery and whether doing so may prejudice the interests of the Company, including in any related proceeding or investigation. All awards granted under the 2013 Omnibus Incentive Plan are subject to the requirements of Section 954 of the Dodd-Frank Act regarding the recovery of erroneously awarded compensation as well as any implementing rules and regulations under the Dodd-Frank Act, any policies adopted by the Company to implement such requirements,requirement, and any other compensation recovery policies that may be adopted from time to time by the Company. | | | | | | | T-Mobile 2018 Proxy Statement | | 31 |
Stock Ownership Guidelines and Broad-basedBroad-Based Stock Ownership Under our stock ownership guidelines, forthe Chief Executive Officer and all executive officers each executive officer isreporting to the Chief Executive Officer are expected to acquire and maintain ownership of ourshares of common stock equal in value to a specified multiple of the executive officer’s base salary measured as of May 1, 2013, for executives in office on that date, and asthe later of (i) the date we adopted the stock ownership guidelines (May 1, 2013) and (ii) the date on which he or she became an executive takes office for executives hired after that date. The multiple for our Chief Executive Officer is five times base salary and the multiple for our other executive officers is three times base salary. officer. | | | | | Position | | Ownership
Requirement | | Chief Executive Officer | | | 5x base salary | | Executive Officers reporting to the CEO | | | 3x base salary | |
Each executive officer is expected to meet the ownership guidelines within the later of (i) five years from the date we adopted the policyguidelines and (ii) the date on which he or she became an executive officer, and is expected to retain at least 50% of the net shares of common stock acquired through equity awards granted after the Business Combination until the ownership thresholds are met. | ∎ | | As of December 31, 2017, our Chief Executive Officer and each of the executive officers reporting to the Chief Executive Officer were in compliance with our stock ownership guidelines |
We believe that all employees should have a stake in the Company’s performance. Therefore,Accordingly, we implementedutilize a Company-wide annual equity award program. Our Board also approvedIn addition, we implemented an Employee Stock Purchase Plan (“ESPP”) in 2015 to provide employees with a cost-effective vehicle to purchase stock and we are asking stockholders to approve the ESPP as further described in Proposal 3.stock. Equity Granting Practices The Compensation Committee has adopted an equity grant policy pursuant to which the Compensation Committee (or a subcommittee) approvesmay approve annual grants to executive officers and other members of the executive leadership team at a specified time.time each year. In addition to the annual grants, equity awards may be granted on a quarterly basis to new hires. We may also grant supplemental equity awards from time to time to retain high-performing leaders, reward exceptional performance or recognize expanded responsibility. The Compensation Committee has delegated authority to the Company’s Executive Vice President, Human Resources, subject to certain terms and limitations as established by the Compensation Committee, to makegrant awards to employees who are not Section 16 officers. Results of Stockholder Advisory Approval of Named Executive Officer Compensation At the 20142017 Annual Meeting of Stockholders, stockholders were asked to approve, on an advisory basis, the Named Executive Officer compensation for 20132016 as reported in the proxy statement. This say-on-pay proposal was approved by over 97%99% of the shares present and entitled to vote.vote, and the Compensation Committee believes this affirms our stockholders’ strong support of our executive compensation program. TheAccordingly, while the Compensation Committee considered the results of the 20142017 advisory vote along with stockholder input and other factors discussed in this CD&A, andit concluded that no changes to our compensation policies and practices were warranted in response to the stockholder advisory vote. The Board has previously determined to hold advisory say-on-pay votes every three years. Accordingly, the next advisory say-on-pay stockholder vote will occur in connection with the 2020 Annual Meeting of Stockholders.
Compensation Committee ReportCOMPENSATION COMMITTEE REPORT
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 Company’s Proxy Statement and incorporated by reference into the 20142017 Form 10-K. The Compensation Committee: Teresa A. Taylor, Chair W. Michael Barnes Thomas Dannenfeldt Lawrence H. Guffey Raphael Kübler | | | | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement32 | | 29T-Mobile 2018 Proxy Statement | | |
EXECUTIVE COMPENSATION Executive Compensation Tables TABLES
20142017 Summary Compensation Table
The following table sets forth certain information with respect to compensation for the years ended December 31, 2014, 20132017, 2016 and 20122015 earned by or paid to our ChiefNamed Executive Officer, our Chief Financial Officer and our three other most highly-compensated executive officers who were serving as executive officers at the end of 2014.Officers. | | Name and Principal Position | | Year | | Salary ($) | | Bonus ($) | | Stock
Awards (1) ($) | | Option
Awards ($) | | Non-Equity
Incentive Plan
Compensation (2) ($) | | All Other
Compensation ($) | | Total ($) | | | Year | | Salary ($) | | Bonus
($) | | Stock
Awards (1)
($) | | Option
Awards
($) | | Non-Equity
Incentive Plan
Compensation (2)
($) | | All Other
Compensation (3)
($) | | Total ($) | | | John J. Legere | | | 2014 | | | | 1,250,000 | | | | — | | | | 10,658,668 | | | | — | | | | 6,658,333 | | | | — | | | | 18,567,001 | | | 2017 | | | 1,618,590 | | | | — | | | 16,278,923 | | | | — | | | 5,666,666 | | | 67,027 | | | 23,631,206 | | President and Chief Executive Officer | | | 2013 | | | | 1,250,000 | | | | 525,000 | | | | 22,500,050 | | | | — | | | | 4,833,333 | | | | 137,325 | | | | 29,245,708 | | | 2016 | | | 1,500,000 | | | | — | | | 12,898,115 | | | | — | | | 5,610,000 | | | 51,800 | | | 20,059,915 | | | | | | | | | | | | | | | | | | | | | 2015 | | | 1,492,358 | | | | — | | | 13,675,485 | | | | — | | | 9,253,101 | | | 37,043 | | | 24,457,987 | | | J. Braxton Carter | | | 2014 | | | | 650,000 | | | | — | | | | — | | | | — | | | | 1,424,167 | | | | 10,400 | (3) | | | 2,084,567 | | | 2017 | | | 845,192 | | | | — | | | 8,128,113 | | | | — | | | 2,155,241 | | | 28,192 | | | 11,156,737 | | Executive Vice President and Chief Financial Officer | | | 2013 | | | | 605,426 | | | | — | | | | 9,493,794 | | | | 931,855 | | | | 1,701,747 | | | | 99,997 | | | | 12,832,819 | | | 2016 | | | 724,135 | | | | — | | | 4,339,167 | | | | — | | | 1,692,665 | | | 10,600 | | | 6,766,567 | | | | | 2012 | | | | 538,000 | | | | — | | | | 907,250 | | | | 1,042,879 | | | | 481,700 | | | | 2,500 | | | | 2,972,329 | | | | 2015 | | | 698,462 | | | | — | | | 3,907,509 | | | | — | | | 2,895,959 | | | 10,600 | | | 7,512,530 | | G. Michael Sievert(4) | | | 2014 | | | | 550,000 | | | | — | | | | 1,022,919 | | | | — | | | | 1,063,792 | | | | 10,400 | (3) | | | 2,647,111 | | | 2017 | | | 944,231 | | | | — | | | 14,699,399 | | | | — | | | 3,210,384 | | | 36,729 | | | 18,890,743 | | Chief Operating Officer | | | | | | | | | | | | | | | | | | 2016 | | | 800,000 | | | | — | | | 5,320,028 | | | | — | | | 2,244,000 | | | 10,600 | | | 8,374,628 | | | James C. Alling (5) | | | 2014 | | | | 600,000 | | | | — | | | | — | | | | — | | | | 2,056,667 | | | | 10,400 | (3) | | | 2,667,067 | | | Former Executive Vice President and Chief Operating Officer, T-Mobile Business | | | 2013 | | | | 630,769 | | | | 1,400,000 | | | | 6,323,980 | | | | — | | | | 2,604,871 | | | | 10,423 | | | | 10,970,043 | | | | Gary A. King (6) | | | 2014 | | | | 488,462 | | | | 300,000 | (7) | | | 1,432,725 | | | | — | | | | 567,837 | | | | 23,623 | (8) | | | 2,812,647 | | | Executive Vice President and Chief Information Officer | | | | | | | | | | | | | | | | | | | | | | Chief Operating Officer | | | | 2015 | | | 792,308 | | | | — | | | 4,465,715 | | | | — | | | 2,751,128 | | | 10,600 | | | 8,019,751 | | | | 2017 | | | 796,154 | | | | — | | | 5,222,303 | | | | — | | | 2,030,192 | | | 11,468 | | | 8,060,117 | | Executive Vice President and Chief Technology Officer | | | 2016 | | | 696,539 | | | | — | | | 4,189,514 | | | | — | | | 1,628,159 | | | 10,600 | | | 6,524,811 | | | | | 2015 | | | 598,462 | | | | — | | | 2,679,457 | | | | — | | | 2,409,960 | | | 10,600 | | | 5,698,479 | | Thomas C. Keys | | | 2017 | | | 749,038 | | | | — | | | 4,406,394 | | | | — | | | 1,591,707 | | | 11,037 | | | 6,758,176 | | President, MetroPCS | | | 2016 | | | 724,136 | | | | — | | | 3,857,046 | | | | — | | | 1,354,135 | | | 10,600 | | | 5,945,917 | | | | | 2015 | | | 700,000 | | | | — | | | 3,907,509 | | | | — | | | 2,565,333 | | | 10,600 | | | 7,183,442 | |
| (1) | The value of stock awards (consisting of time-based RSUs and performance-based RSUs 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 Company’s accounting expense and do not correspond to the actual value that will be realized by the Named Executive Officer. For stock awards granted after the Business Combination, seeSee Note 101 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20142017 for a summary of the assumptions we apply in calculating these amounts. The aggregate grant date fair value includes the probable value of the performance-based RSUs granted to Messrs. Legere and King in 2014. The aggregate grant date fair valueour Named Executive Officers during 2017, assuming maximum performance, would be as follows: Mr. Legere, $21,317,336$24,469,425 (including $17,245,588 (for his February performance-based RSUs) and $7,223,837 (for his True-Up PRSUs)); Mr. Carter, $5,726,069; Mr. Sievert, $14,991,209 (including $7,679,723 (for his annual performance-based RSUs) and $7,311,486 (for his special one-time award of performance-based RSUs)); Mr. Ray, $5,389,296 and Mr. King, $1,796,258.Keys, $4,547,297. |
| (2) | For 2017, represents amounts paid by the Company under the respective annual STIP, based on the achievement of certain Company performance measures during the year. For additional information, please see “—Annual Short-Term Incentives” above. |
| (3) | Amounts included in the “All Other Compensation” column are detailed in the table below. |
| | | | | | | | | | | | | | | | | | | | | | | | | Officer | | 401k
Employer Match
($) | | | Legal Fee
Reimbursement
($) | | | Security
Arrangements
($) | | | Spousal Travel (1) ($) | | | Other
($) | | | Total
($) | | John J. Legere | | | — | | | | 18,750 | | | | 48,101 | | | | — | | | | 176 | | | | 67,027 | | J. Braxton Carter | | | 10,800 | | | | 16,047 | | | | — | | | | 459 | | | | 887 | | | | 28,192 | | G. Michael Sievert | | | 10,800 | | | | 25,000 | | | | — | | | | 398 | | | | 531 | | | | 36,729 | | Neville R. Ray | | | 10,800 | | | | — | | | | — | | | | — | | | | 668 | | | | 11,468 | | Thomas C. Keys | | | 10,800 | | | | — | | | | — | | | | — | | | | 237 | | | | 11,037 | |
(2) | Consists(1)
| Converted from Euro to US Dollars using the exchange rate of (a) payouts1.1941 as of annual short-term incentive awards and (b) payouts of long-term incentive awards granted under the legacy T-Mobile USA LTIP* (before taking into account any elective deferrals of such compensation). The 2014 payouts are as follows:September 21, 2017. |
| | | | | | | | | | Name | | T-Mobile 2014 STIP ($) | | | Legacy T-Mobile USA LTIP ($) | | John J. Legere | | | 2,325,000 | | | | 4,333,333 | | J. Braxton Carter | | | 1,007,500 | | | | 416,667 | | G. Michael Sievert | | | 724,625 | | | | 339,167 | | James C. Alling | | | 930,000 | | | | 1,126,667 | | Gary A. King | | | 567,837 | | | | — | |
* | The legacy T-Mobile USA Long-Term Incentive Plan (the “legacy T-Mobile USA LTIP”) consisted of cash awards because T-Mobile USA was a wholly-owned subsidiary of Deutsche Telekom at the time the legacy T-Mobile USA LTIP was adopted. Executives received performance awards (with a three-year performance period) based on Company goals. To the extent earned, half of each performance award vested in three equal annual tranches beginning with the end of the first year of the performance period, with the other half of the award cliff vesting at the end of the three-year performance period. In 2014, two cycles of legacy T-Mobile USA LTIP awards were outstanding. As a result of the Business Combination, outstanding awards continue to vest as scheduled with both tranche and cliff portions paying at the end of the respective performance periods, subject to continued employment, with the amount of payment fixed at 100% of target. Final payout of the legacy T-Mobile USA LTIP will occur in February 2016. Non-Equity Incentive Plan Compensation includes amounts deferred at the Named Executive Officer’s election.
|
(3) | Includes $10,400 in matching contributions to the Company’s 401(k) plan.
|
(4) | Effective February 13, 2015, Mr. Sievert assumed the role of Chief Operating Officer. Previously, Mr. Sievert was the Company’s Executive Vice President and Chief Marketing Officer.
|
(5) | Mr. Alling resigned from the Company effective March 13, 2015.
|
(6) | Mr. King became our Executive Vice President and Chief Information Officer in December 2013.
|
(7) | Consists of a sign-on bonus for Mr. King.
|
(8) | Includes $14,873 in relocation assistance and $8,750 in matching contributions to the Company’s 401(k) plan.
|
| | | | | | 30 | | T-Mobile 2018 Proxy Statement | | 33 |
20142017 Grants of Plan-Based Awards Table
The following table sets forth certain information with respect to grants of plan-based awards for the year ended December 31, 20142017, to the Named Executive Officers. | | Name | | Type of
Award | | Grant Date | | | Approval
Date | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other
Stock
Awards:
Number of Shares of Stock or Units (#) | | | Grant Date Fair Value of Stock Awards (3) ($) | | | Type of
Award | | | Grant
Date | | | Approval
Date | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | All Other
Stock Awards:
Number of Shares
of Stock or Units (#) | | | Grant-Date
Fair Value of Stock
Awards (3)
($) | | | | | Threshold ($) | | Target (1) ($) | | Maximum (1)
($) | | Threshold (#) | | Target (2) (#) | | Maximum (2) (#) | | | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | | John J. Legere | | STIP | | | — | | | | 1,500,000 | | | | 3,000,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | STIP | | | | | | | 166,667 | | | 3,333,333 | | | 6,666,666 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | PRSU | | | 12/16/2014 | | | | 12/16/2014 | | | | — | | | | — | | | | — | | | | — | | | | 424,479 | | | | 848,958 | | | | — | | | | 10,658,668 | | | PRSU | | | 2/25/2017 | | | 2/16/2017 | | | | — | | | | — | | | | — | | | 32,505 | | | 130,018 | | | 260,036 | | | | — | | | 8,622,794 | | | | | RSU | | | 2/25/2017 | | | 2/16/2017 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 65,009 | | | 4,044,210 | | | | | PRSU | | | 4/1/2017 | | | 3/27/2017 | | | | — | | | | — | | | | — | | | 12,189 | | | 48,757 | | | 97,514 | | | | — | | | 3,611,919 | | | J. Braxton Carter | | STIP | | | | | | | — | | | | 650,000 | | | | 1,300,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | STIP | | | | | | | 63,389 | | | 1,267,789 | | | 2,535,577 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | PRSU | | | 2/25/2017 | | | 2/16/2017 | | | | — | | | | — | | | | — | | | 10,793 | | | 43,170 | | | 86,340 | | | | — | | | 2,863,034 | | | | | RSU | | | 2/25/2017 | | | 2/16/2017 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 43,170 | | | 2,685,606 | | | | | RSU | | | 12/22/2017 | | | 12/15/2017 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 40,545 | | | 2,579,473 | | | G. Michael Sievert | | STIP | | | | | | | — | | | | 467,500 | | | | 935,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | STIP | | | | | | | 94,423 | | | 1,888,461 | | | 3,776,923 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | RSU | | | 6/5/2014 | | | | 6/5/2014 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 30,544 | | | | 1,022,919 | | | PRSU | | | 2/25/2017 | | | 2/16/2017 | | | | — | | | | — | | | | — | | | 14,475 | | | 57,899 | | | 115,798 | | | | — | | | 3,839,862 | | | James C. Alling | | STIP | | | | | | | — | | | | 600,000 | | | | 1,200,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | Gary A. King | | STIP | | | | | | | — | | | | 366,346 | | | | 732,692 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | PRSU | | | 2/25/2014 | | | | 2/12/2014 | | | | — | | | | — | | | | — | | | | — | | | | 17,545 | | | | 35,090 | | | | — | | | | 898,129 | | | RSU | | | 2/25/2017 | | | 2/16/2017 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 57,899 | | | 3,601,897 | | | | | RSU | | | 2/25/2014 | | | | 2/12/2014 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 17,545 | | | | 534,596 | | | PRSU | | | 2/25/2017 | | | 2/16/2017 | | | | — | | | | — | | | | — | | | 14,475 | | | 57,899 | | | 115,798 | | | | — | | | 3,655,743 | | | | | RSU | | | 2/25/2017 | | | 2/16/2017 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 57,899 | | | 3,601,897 | | Neville R. Ray | | | STIP | | | | | | | 59,712 | | | 1,194,231 | | | 2,388,462 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | PRSU | | | 2/25/2017 | | | 2/16/2017 | | | | — | | | | — | | | | — | | | 10,158 | | | 40,631 | | | 81,262 | | | | — | | | 2,694,648 | | | | | RSU | | | 2/25/2017 | | | 2/16/2017 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 40,631 | | | 2,527,655 | | Thomas C. Keys | | | STIP | | | | | | | 46,815 | | | 936,298 | | | 1,872,596 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | PRSU | | | 2/25/2017 | | | 2/16/2017 | | | | — | | | | — | | | | — | | | 8,571 | | | 34,283 | | | 68,566 | | | | — | | | 2,273,649 | | | | | RSU | | | 2/25/2017 | | | 2/16/2017 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 34,283 | | | 2,132,745 | |
| (1) | Represents the threshold, target and maximum amounts of annual cash incentive compensation that might have been paidbecome payable to each Named Executive Officer for performance under the 20142017 STIP. The actual amounts paid for 2014 are shown in footnote (2) to the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. |
| (2) | Represents the threshold, target and maximum number of shares that might be paid to Messrs. Legere and King pursuant to performance-based RSU awards. awards granted during 2017. |
| (3) | The value of stock awardstime-based and performance-based RSUs (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 Company’s accounting expense and do not correspond to the actual value that will be realized by the Named Executive Officer. For stock awards granted after the Business Combination, seeSee Note 101 to the Consolidated Financial Statements included in the Company’s Annual Report on Form10-K for the year ended December 31, 20142017 for a summary of the assumptions we apply in calculating these amounts. |
Employment Arrangements
Employment Arrangements 2012 Employment Agreement with Mr. LegereLegere.. The As of January 1, 2017, the Company entered intowas party to an employment agreement with Mr. Legere effective(dated September 22, 2012 (which wasand amended on October 23, 2013 and February 25, 2015) providing for his employment as Chief Executive Officer and his appointment to the Board of Directors. The initial term of the agreement ends on September 22, 2017 and automatically extends for successive one-year terms. Either the Company or Mr. Legere may give notice that the term will not be extended. Pursuant to the amendment entered into on February 25, 2015,employment agreement, Mr. Legere iswas entitled (effective January 1, 2015) to a minimum (i) an annual base salary of $1,500,000, (ii) an annual incentive plan target award of $3,000,000 (with a maximum award equal to 200% of target), and (iii) annual long-term incentive plan target awardawards of $12,000,000. Previously, 2017 Employment Agreement with Mr. Legere. Effective April 1, 2017, the Company entered into an amended and restated employment agreement with Mr. Legere, which superseded Mr. Legere’s prior employment agreement provided that he would receive a minimumin its entirety. The current term of the amended and restated employment agreement extends through April 1, 2019, and automatically extends for successive one-year terms thereafter (unless either party provides notice of non-renewal). Pursuant to the amended and restated employment agreement, Mr. Legere is entitled to (i) an annual base salary of $1,250,000$1,666,667, effective as of April 1, 2017, (ii) commencing with fiscal year 2017, an annual incentive plan target award of $1,500,000no less than $3,333,333 (with a maximum award equal to 200% of target), and (iii) employee benefits to the same extent and on the same terms as such benefits are provided generally by the Company to its senior managers. Following the entrance into the amended and restated employment agreement, Mr. Legere received a one-time grant of True-Up PRSUs under the 2013 Omnibus Incentive Plan, with a target value equal to $3,000,000. See “— Long-Term Incentive Awards Granted in 2017” above for additional information. Commencing with calendar year 2018, Mr. Legere is entitled to annual long-term incentive planawards with a target awardvalue equal to $15,000,000, allocated as follows: (i) $3,000,000 of $6,000,000.such value will be granted in the form of performance-based RSUs (the “Incremental PRSUs”); and (ii) with respect to the remaining $12,000,000 of such value, (a) one-third of such remaining value (or $4,000,000) will be granted in the form of time-based RSUs and (b) two-thirds of such remaining value (or $8,000,000) will be granted in the form of performance-based RSUs. In addition, Mr. Legere is entitled upon request to certain Company-paid financial planning advice in connection with potential change in control payments under Code Section 280G. 2017 Term Sheet with Mr. CarterSievert.. Effective MayJanuary 1, 2013, Mr. Carter2017, the Company entered into aan amended and restated term sheet with Mr. Sievert. Pursuant to the Company that provides for2017 term sheet, Mr. Sievert is entitled to (i) an annual base salary of $650,000$950,000, (ii) an annual incentive plan target of 200% of his base salary, (iii) an annual long-term incentive plan award with a target value of $7,125,000, and (iv) eligibility to receive any employee benefits provided broadly to executives at his level in the future
| | | | | | 34 | | T-Mobile 2018 Proxy Statement | | |
(except as would result in a duplication of benefits). Following the entrance into the 2017 term sheet, Mr. Sievert received a one-time special equity award comprised of time-based and performance-based RSUs, with an aggregate value equal to $7,125,000. See “— Long-Term Incentive Awards Granted in 2017” above for additional information. 2013 Term Sheets with Messrs. Carter and Keys. Effective May 1, 2013, Messrs. Carter and Keys entered into term sheets with the Company, which confirmed their post-Business Combination roles and compensation. 2017 Employment Agreement with Mr. Carter. Effective December 22, 2017, the Company entered into an amended and restated employment agreement with Mr. Carter which superseded his 2013 term sheet in its entirety. Pursuant to his amended and restated employment agreement, Mr. Carter is entitled to receive (i) an annual bonus for 2014 equal to 100% of base salary and aof $850,000, (ii) an annual incentive plan target of 150% of his eligible base earnings, (iii) an annual long-term incentive plan award for 2014 with a target value of 250% of total target cash compensation. Term Sheet with Mr. Sievert. Effective January 1, 2015, the Company entered into a term sheet pursuant to which Mr. Sievert will receive an (i) annual base salary of $800,000, (ii) annual incentive plan target of 100% of his base salary and (iii) an annual long-term incentive plan target of 250% of his total target cash compensation. Previously,compensation, (iv) a one-time special cash bonus equal to $2,500,000, payable in a single lump-sum amount on or within 15 days following March 1, 2019 (subject to his continued employment through such date, except as described below), which Mr. Sievert hadCarter received following entrance into the amended and restated employment agreement, and (v) employee benefits to the same extent and on the same terms as such benefits are provided generally by the Company to its similarly-situated executives.
Following entrance into the amended and restated employment agreement, Mr. Carter received a term sheet stating that he would receive an (i) annual base salaryone-time grant of $550,000, (ii) annual incentive plantime-based RSUs under the 2013 Omnibus Incentive Plan with a target of 85% of his base salary and (iii) an annual long-term incentive plan target of 200% of his total target cash compensation.value equal to $2,500,000. See “— Long-Term Incentive Awards Granted in 2017” above for additional information. See “— Potential Payments upon Termination or in Connection with a Change in Control.”Control” for information regarding payments payable upon termination of employment of the Named Executive Officers. Cash and Incentive Compensation Non-Equity Incentive Plan AwardsAwards.. The 2017 Summary Compensation Table includes payments received under the 20142017 STIP as well as payments underfor the legacy T-Mobile USA LTIP that were paid at 100% of target with respect to performance periodsperiod ended in 2013 and 2014. For Mr. Carter, the Summary Compensation Table also includes payments under the legacy MetroPCS short-term incentive plan for 2013.December 31, 2017. The 20142017 Grants of Plan-Based Awards Table includes the range of potential payouts of awards granted under the 20142017 STIP. Equity Incentive Plan AwardsAwards.. Mr. Legere All of the Named Executive Officers received a performance-based RSU awardequity awards consisting of both time-based RSUs that vest in 2014 that vests one-third based on achievement of an Operating Free Cash Flow goal over a measurement period ending December 31, 2015 and further time vesting based onthree annual installments beginning in February 2018, subject to continued service through December 31, 2016,the applicable vesting dates, and two-thirdsperformance-based RSUs that vest based on the relative performance of the Company’s TSR compared to that of the peer group over a three-year measurement period ending on December 31, 2016. Mr. Sievert received an RSU award in 2014 that vests in three annual installments beginning one year afterFebruary 25, 2020, subject to continued service through the dateend of grant.the measurement period (in each case, except as described below). See “— Long-Term Incentives” above.above for more information.
| | | | | | | T-Mobile Notice of 2015 Annual Meeting and2018 Proxy Statement | | 3135 |
Outstanding Equity Awards at 20142017 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, 2014.2017. | | | | | | | Option Awards | | | Stock Awards | | | | | | | | Option Awards | | | | | | Stock Awards | | | Name | | Type | | | | | Number of
Securities
Underlying
Unexercised
Options | | Number of
Securities
Underlying Unexercised
Options | | | Option
Exercise | | Option | | Value of
Unexercised
In-the-
Money
Options/
SARs at
Fiscal | | Number of Shares or Units of Stock That Have
Not | | Market
Value of
Shares or
Units of
Stock That
Have Not | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other Rights That Have Not | | Equity
Incentive
Plan Awards:
Market or
Payout Value of Unearned
Shares,
Units or
Other Rights That Have | | |
| Type of
Award |
| |
| Grant
Date |
| |
| Number of
Securities
Underlying
Unexercised
Options |
| | | |
| Number of
Securities
Underlying
Unexercised
Options |
| |
| Option
Exercise
Price ($) |
| |
| Option
Expiration
Date |
| |
| Value of
Unexercised
In-the- Money Options/ SARs at
Fiscal Year-End ($) |
| | | |
| Number
of
Shares
or Units or Stock
That
Have Not Vested (#) |
| |
| Market
Value of
Shares or
Units of
Stock That
Have Not
Vested (7) ($) |
| |
| Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#) |
| |
| Equity
Incentive
Plan
Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights That
Have Not Vested (7) ($) |
| | | of
Award | | Grant Date | | Exercisable (#) | | Unexercisable (#) | | Price ($) | | Expiration
Date | | Year-End ($) (6) | | Vested (#) | | Vested ($) (7) | | Vested (#) | | Not Vested ($) (7) | | | | Exercisable
(#) | | | | Unexercisable
(#) | | | John J. Legere | | PRSU | | | 12/16/2014 (1) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 282,986 | | | | 7,623,643 | | | PRSU | | | | 4/1/2017 | (1) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 48,757 | | | 6,193,114 | | | | | PRSU | | | | 2/25/2017 | (2) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 130,018 | | | 16,514,886 | | | | | RSU | | | | 2/25/2017 | (3) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 65,009 | | | 4,128,722 | | | | — | | | | — | | | | | PRSU | | | | 2/25/2016 | (2) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 215,112 | | | 27,323,526 | | | | PRSU | | | 12/16/2014 (2) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 141,493 | | | | 3,811,821 | | | RSU | | | | 2/25/2016 | (3) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 71,704 | | | 4,553,921 | | | | — | | | | — | | | | PRSU | | | 6/10/2013 (3) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 453,996 | | | | 12,230,652 | | | PRSU | | | | 2/25/2015 | (2) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 260,163 | | | 33,045,904 | | | | RSU | | | 6/10/2013 (4) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 272,398 | | | | 7,338,402 | | | | — | | | | — | | | RSU | | | | 2/25/2015 | (3) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 43,361 | | | 2,753,857 | | | | — | | | | — | | | J. Braxton Carter | | PRSU | | | 6/10/2013 (3) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 147,549 | | | | 3,974,970 | | | RSU | | | | 12/22/2017 | (4) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 40,545 | | | 2,575,013 | | | | — | | | | — | | | | RSU | | | 6/10/2013 (4) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 147,549 | | | | 3,974,970 | | | | — | | | | — | | | PRSU | | | | 2/25/2017 | (2) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 43,170 | | | 5,483,453 | | | | Option | | | 2/5/2013 (5) | | | | 95,000 | | | | — | | | | 11.49 | | | | 2/5/2023 | | | | 1,467,750 | | | | — | | | | — | | | | — | | | | — | | | RSU | | | | 2/25/2017 | (3) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 43,170 | | | 2,741,727 | | | | — | | | | — | | | | Option | | | 2/7/2012 (5) | | | | 54,000 | | | | — | | | | 11.01 | | | | 2/7/2022 | | | | 860,220 | | | | — | | | | — | | | | — | | | | — | | | PRSU | | | | 2/25/2016 | (2) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 54,829 | | | 6,964,380 | | | | Option | | | 2/28/2011 (5) | | | | 105,000 | | | | — | | | | 20.71 | | | | 2/28/2021 | | | | 654,150 | | | | — | | | | — | | | | — | | | | — | | | RSU | | | | 2/25/2016 | (3) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 36,553 | | | 2,321,481 | | | | — | | | | — | | | | Option | | | 3/4/2009 (5) | | | | 90,000 | | | | — | | | | 20.77 | | | | 3/4/2019 | | | | 555,300 | | | | — | | | | — | | | | — | | | | — | | | PRSU | | | | 2/25/2015 | (2) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 56,911 | | | 7,228,835 | | | | Option | | | 3/7/2008 (5) | | | | 125,000 | | | | — | | | | 24.31 | | | | 3/7/2018 | | | | 328,750 | | | | — | | | | — | | | | — | | | | — | | | RSU | | | | 2/25/2015 | (3) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 18,971 | | | 1,204,848 | | | | — | | | | — | | | | Option | | | 4/18/2007 (5) | | | | 145,500 | | | | — | | | | 37.91 | | | | 4/18/2017 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | Option | | | 12/22/2006 (5) | | | | 47,300 | | | | — | | | | 14.57 | | | | 12/22/2016 | | | | 585,101 | | | | — | | | | — | | | | — | | | | — | | | | G. Michael Sievert | | RSU | | | 6/5/2014 (4) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 30,544 | | | | 822,855 | | | | — | | | | — | | | PRSU | | | | 2/25/2017 | (5) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 57,899 | | | 7,354,331 | | | | PRSU | | | 6/10/2013 (3) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 92,389 | | | | 2,488,960 | | | RSU | | | | 2/25/2017 | (6) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 57,899 | | | 3,677,165 | | | | — | | | | — | | | | RSU | | | 6/10/2013 (4) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 92,389 | | | | 2,488,960 | | | | — | | | | — | | | PRSU | | | | 2/25/2017 | (2) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 57,899 | | | 7,354,331 | | | James C. Alling | | PRSU | | | 6/10/2013 (3) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 108,959 | | | | 2,935,355 | | | | | RSU | | | 6/10/2013 (4) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 108,959 | | | | 2,935,355 | | | | — | | | | — | | | RSU | | | | 2/25/2017 | (3) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 57,899 | | | 3,677,165 | | | | — | | | | — | | | Gary A. King | | PRSU | | | 2/25/2014 (3) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 17,545 | | | | 472,662 | | | | | | RSU | | | 2/25/2014 (4) | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 17,545 | | | | 472,662 | | | | — | | | | — | | | PRSU | | | | 2/25/2016 | (2) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 67,223 | | | 8,538,665 | | | | | RSU | | | | 2/25/2016 | (3) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 44,816 | | | 2,846,264 | | | | — | | | | — | | | | | PRSU | | | | 2/25/2015 | (2) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 65,041 | | | 8,261,508 | | | | | RSU | | | | 2/25/2015 | (3) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 21,681 | | | 1,376,960 | | | | — | | | | — | | Neville R. Ray | | | PRSU | | | | 2/25/2017 | (2) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 40,631 | | | 5,160,950 | | | | | RSU | | | | 2/25/2017 | (3) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 40,631 | | | 2,580,475 | | | | — | | | | — | | | | | PRSU | | | | 2/25/2016 | (2) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 52,938 | | | 6,724,185 | | | | | RSU | | | | 2/25/2016 | (3) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 35,292 | | | 2,241,395 | | | | — | | | | — | | | | | PRSU | | | | 2/25/2015 | (2) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 39,025 | | | 4,956,956 | | | | | RSU | | | | 2/25/2015 | (3) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 13,009 | | | 826,202 | | | | — | | | | — | | Thomas C. Keys | | | PRSU | | | | 2/25/2017 | (2) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 34,283 | | | 4,354,627 | | | | | RSU | | | | 2/25/2017 | (3) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 34,283 | | | 2,177,313 | | | | — | | | | — | | | | | PRSU | | | | 2/25/2016 | (2) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 48,737 | | | 6,190,574 | | | | | RSU | | | | 2/25/2016 | (3) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 32,492 | | | 2,063,567 | | | | — | | | | — | | | | | PRSU | | | | 2/25/2015 | (2) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | — | | | 56,911 | | | 7,228,835 | | | | | RSU | | | | 2/25/2015 | (3) | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | | 18,971 | | | 1,204,848 | | | | — | | | | — | |
| (1) | Performance-based RSUs (“PRSU” in the table above)These “True-Up PRSUs” vest based on the relative performance of the Company’s TSR compared to that of the peer group over a measurement period from January 1, 2015 to December 31, 2016.
February 25, 2017 through February 25, 2020. |
| (2) | PRSUs may be earned based on the operating free cash flow for the period from January 1, 2015 through December 31, 2015 and earned PRSUs are then subject to time-based vesting on continued service through December 31, 2016.
|
(3) | PRSUs vest based on the relative performance of the Company’s TSR compared to that of the peer group over a measurement period from May 1, 2013 to December 31, 2015. of three years. |
(4)(3) | RSUs vest in annual installments with respect to 1/3one-third of the shares on February 25 of each of the three calendar years following the calendar year in which the grant occurred. |
(5)(4) | In connection with the consummation of the Business Combination, all outstanding stock options held by Mr. Carter automatically vested and became exercisable effective April 30, 2013.
RSUs vest in full on March 1, 2019. |
(6)(5) | CalculatedPRSUs vest based on the difference betweenrelative performance of the applicable stock option exercise price andCompany’s TSR compared to that of the closing price of our common stockpeer group from February 25, 2017 through February 25, 2019.
|
| (6) | RSUs vest in full on December 31, 2014 of $26.94 per share.February 25, 2019. |
| (7) | Calculated based on the number of PRSUs that may be earned upon achievement of targetthe maximum performance level or number of time-based RSUs, as applicable, multiplied by the closing price of our common stock on December 31, 201429, 2017 of $26.94$63.51 per share. In calculating the number of PRSUs and their value, we are required by SEC rules to compare the Company’s performance through 2017 under each outstanding PRSU grant against the threshold, target, and maximum performance levels for the grant and report in this column the applicable potential payout amount. If the performance is between levels, we are required to report the potential payout at the next highest level. For example, if the previous fiscal year’s performance exceeded target, even if it is by a small amount and even if it is highly unlikely that we will pay the maximum amount, we are required by SEC rules to report the awards using the maximum potential payouts. |
| | | | | | 36 | | T-Mobile 2018 Proxy Statement | | |
Option Exercises and Stock Vested for Fiscal Year 20142017 Table The following table sets forth certain information with respect to option exercises and restricted stock vesting during the fiscal year ended December 31, 20142017, with respect to the Named Executive Officers. | | | | Option Awards | | | Stock Awards | | | Option Awards | | | | | | Stock Awards | | | Name | | Number of Shares
Acquired on
Exercise (#) | | | Value Realized on Exercise ($) | | | Number of Shares
Acquired on
Vesting (#) | | | Value Realized on
Vesting ($) | | | Number of Shares
Acquired on
Exercise (#) | | | Value Realized on
Exercise ($) | | | | | | Number of Shares
Acquired on
Vesting (#) | | | Value Realized on
Vesting(1)($) | | John J. Legere | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 170,013 | | | | 10,576,509 | | J. Braxton Carter | | | 46,400 | | | | 892,206 | | | | — | | | | — | | | | 500 | | | | 13,515 | | | | | | 86,429 | | | | 5,376,748 | | G. Michael Sievert | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 85,066 | | | | 5,344,800 | | James C. Alling | | | — | | | | — | | | | — | | | | — | | | Gary A. King | | | — | | | | — | | | | — | | | | — | | | Neville R. Ray | | | | — | | | | — | | | | | | 61,451 | | | | 3,822,867 | | Thomas C. Keys | | | | 200,000 | | | | 1,362,192 | | | | | | 85,912 | | | | 5,344,586 | |
| (1) | | | | | | 32 | | | Included in the amount listed in this column is vesting of deferred RSUs by Mr. Ray in the amount of $202,307 with payment deferred until after retirement. |
EXECUTIVE COMPENSATION
20142017 Non-Qualified Deferred Compensation
The following table shows the contributions, earnings and the aggregate balance of total deferrals as of December 31, 2017. | | | | | | | | | | | | | Name | | Executive Contributions in
Last Fiscal Year ($) | | | Aggregate
Earnings in Last
Fiscal Year ($) | | | Aggregate Balance
at Last Fiscal
Year-End(1)($) | | John J. Legere | | | — | | | | — | | | | — | | J. Braxton Carter | | | — | | | | 251,790 | | | | 2,642,259 | | G. Michael Sievert | | | — | | | | — | | | | — | | Neville R. Ray | | | 194,406 | | | | 850,487 | | | | 6,007,745 | | Thomas C. Keys | | | — | | | | — | | | | — | |
| (1) | Of the amounts listed in this column, the following aggregate amounts were reported in the Summary Compensation Tables in proxy statements for prior years: Mr. Carter, $1,368,783 and Mr. Ray, $1,332,250. |
All of the Named Executive Officers are eligible to participate in the Company’s non-qualified deferred compensation plan (the “Deferred Compensation Plan”). However, only Mr.Messrs. Carter hasand Ray have elected to do so. Under the terms of the Deferred Compensation Plan, participants are eligible to defer up to 75% of their base salary, 100% of their annual incentive compensation and 100% of annual RSU awards (beginning in 2015).awards. All amounts attributable to participant deferrals under the Deferred Compensation Plan are fully vested at all times. We did not provide any employer matching or discretionary allocations under the Deferred Compensation Plan for 2014.2017. Participants choose how their deferrals (and their account balances) will be allocated among the national investment funds available under the Deferred Compensation Plan. For 20142017, there were 1618 funds for deferral of base salary and incentive compensation, which did not include a Company stock fund. Any deferred RSUs would be credited to a Company stock fund. A participant’s account balancesbalance under the Deferred Compensation Plan will be distributed in a lump-sum distribution when the participant terminates employment, unless termination is due to retirement or disability, in which case the participant can elect annual installments over two to fifteen15 years. For this purpose, “retirement” means termination of employment on or after either (i) the date on which the sum of the participant’s age and years of service equals 65 or (ii) the date on which the participant completes ten years of service. Participants may also elect to have amounts attributable to their deferrals for a particular year distributed (or commence to be distributed) as of a specified date in a lump sum or in annual installments over two to five years, even if they are still employed by the Company on that date. Generally, the specified date for base salary and incentive compensation distribution may not be earlier than the first day of the second year beginning after the year in which such amounts are deferred and for RSUs may not be earlier than the first day of the fourth year beginning after the year in which such amounts are deferred. If a participant’s employment with the Company terminates prior to the in-service distribution date specified by the participant or while in-service distribution installment payments are being made, then any portions of the participant’s account balances that are subject to specified distribution date elections will be distributed upon termination of employment, as described above. If a participant dies before his or her entire interest under the Deferred Compensation Plan has been distributed, his or her remaining interest will be distributed in a lump sum to his or her beneficiary. If a participant’s employment terminates within 24 months following a change in control (as defined in the Company’s 2013 Omnibus Incentive Plan), then all amounts credited to his accounts under the Deferred Compensation Plan will be paid to the participant in a lump sum within 90 days after such termination. Similarly, if a change in control occurs after a participant retires or becomes disabled, any undistributed amounts remaining in such participant’s accounts under the Deferred Compensation Plan will be distributed in a lump sum within 90 days after the change in control. Notwithstanding the foregoing, if a participant is a “specified employee” for purposes of Code Section 409A of the Code at the time his or her employment with the Company terminates, then distributions on account of termination of employment will not be made (or commence to be made) prior to the earlier of the participant’s death or the six-month anniversary of the participant’s termination of employment. Each of the Named Executive Officers is a specified employee for this purpose. Distributions are made in cash or stock, as applicable. The following table shows the contributions, earnings and the aggregate balance of total deferrals as of December 31, 2014.
| | | | | | | T-Mobile 2018 Proxy Statement | | 37 |
EXECUTIVE COMPENSATION | | | | | | | | | | | | | | Name | | Executive
Contributions in Last Fiscal Year (1)($) | | | Aggregate Earnings in Last Fiscal Year ($) | | | Aggregate Balance
at Last Fiscal Year-End ($) | | John J. Legere | | | — | | | | — | | | | — | | J. Braxton Carter | | | 467,500 | | | | 12,007 | | | | 479,507 | | G. Michael Sievert | | | — | | | | — | | | | — | | James C. Alling | | | — | | | | — | | | | — | | Gary A. King | | | — | | | | — | | | | — | |
(1) | The amounts listed in this column are also included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table for 2014. Amounts included in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table for Mr. Carter in 2013 were $467,500.
The Deferred Compensation Plan is an unfunded plan for tax purposes and for purposes of the Employee Retirement Income Security Act of 1974, as amended. We have established a “rabbi trust” to satisfy our obligations under the Deferred Compensation Plan. |
Potential Payments upon Termination or in Connection with a Change in Control The following describes and quantifies the estimated amount of potential incremental payments and benefits that would be provided to each of our current Named Executive Officers under the Company’s compensation plans and agreements in the event of a termination of employment and/or change in control of the Company. The amounts shown assume that Named Executive Officers are subject to covenants regarding protection of confidential information, a non-compete and certain other restrictive covenants regarding solicitation of employees or customers for a period through one year after termination of employment. For Mr. Legere, this period is two years after termination of employment. Termination Due to Death or Disability Upon a termination of the termination was effectiveapplicable executive’s employment due to death or disability, each Named Executive Officer is entitled to receive (i) unpaid annual incentive award from the preceding fiscal year (if any); (ii) target annual incentive award for the current fiscal year; and (iii) for Mr. Carter, a prorated portion of his special cash bonus (discussed above under “Employment Arrangements — 2017 Employment Agreement with Mr. Carter”). In addition, (a) any unearned time-based long-term incentive awards (“LTI awards”) then-held by the Named Executive Officer will become immediately earned and vested, and (b) any performance-based LTI awards will vest and be paid at target as of December 31, 2014 and that the pricedate of our common stock as of termination was the closing price of $26.94 on December 31, 2014. The actual amounts can be determined only following the officer’s termination and the conclusion of all relevant incentive plan performance periods. If an executive officer voluntarily leavesexecutive’s separation from service. Termination Without Cause or for Good Reason (No Change in Control) Under their respective employment arrangements with the Company, upon a termination of the applicable executive’s employment by us without “cause,” by the executive officer is notfor “good reason” (or, for Mr. Sievert, due to a “constructive termination”) (each, as defined in the applicable employment arrangement), or, in the case of Mr. Legere, due to the Company’s non-renewal of his then-current employment term, each of Messrs. Legere, Sievert and Carter will (subject to his timely execution and non-revocation of a release of claims in favor of the Company and, for Mr. Legere, his compliance with certain restrictive covenants) be entitled to any severance compensation.receive: | ∎ | | a lump-sum cash payment equal to two times the sum of his annual base salary and then-current target annual incentive award; |
| ∎ | | for Messrs. Legere and Sievert, his unpaid annual incentive award from the preceding fiscal year (if any); |
| ∎ | | a prorated portion of his annual incentive award for the current fiscal year, based on actual performance (except that Mr. Legere’s 2012 employment agreement, which was effective through April 1, 2017, provided for payment of a prorated annual incentive award based on target if his termination occurred within three months prior to a change in control (and prior to payment of annual awards for such year)); |
| ∎ | | for Mr. Carter, a prorated portion of his special cash bonus; and |
| ∎ | | with respect to their LTI awards: |
| ∎ | | Under the 2017 employment arrangements for Messrs. Sievert and Carter and the 2012 employment agreement for Mr. Legere (which was in effect through April 1, 2017), (a) accelerated vesting of the |
| | next tranche of any time-based LTI awards and (b) pro-rata vesting of any performance-based LTI awards (subject to adjustment based on actual performance during the applicable performance period). |
| ∎ | | Under Mr. Legere’s 2017 employment agreement (which became effective on April 1, 2017), (a) full vesting of any then-outstanding time-based LTI awards and (b) with respect to any performance-vesting LTI awards (including any performance-based RSUs), such awards will become vested and earned as of the date of termination based on actual performance through the termination date, except that the accelerated vesting of Mr. Legere’s True-Up PRSUs and Incremental PRSUs, described above, will be subject to Mr. Legere’s satisfactory participation and cooperation in, and assistance with, succession planning (including his satisfactory and orderly transition of duties and responsibilities to his successor) after any notice of qualifying termination or non-renewal is provided until the termination date, with such determination to be made by the Section 16 Subcommittee in its good faith sole discretion. |
Termination in Connection with a Corporate Restructuring, Business Combination or Change in Control John J. Legere Under Mr. Legere’s Employment Agreement. Mr. Legere’s2012 employment agreement provides for the following termination benefits. Uponand LTI award agreements, upon termination by us without “cause” or“cause,” by Mr. Legere for “good reason” notor due to the Company’s non-renewal of the employment agreement, in any case, within three months prior to or two years after a change in control, Mr. Legere would have received (subject to his timely execution and non-revocation of a release of claims in favor of the Company and compliance with certain restrictive covenants) the benefits described above under “— Termination Without Cause or for Good Reason – Employment Arrangements,” except that: (i) he would have been entitled to receive a prorated portion of his annual incentive award for the current fiscal year based on target performance (instead of actual performance) unless such termination occurred within three months before a change in control and after annual incentive awards were paid for such year (in which case such prorated award would have been based on actual performance results); and (ii) if such termination occurred within 12 months after a change in control, Mr. Legere’s time-based LTI awards would have vested in full upon such termination and his performance-based LTI awards would have vested at the greater of target or actual performance through the change in control.
Under Mr. Legere’s 2017 employment agreement, upon termination by us without “cause,” by Mr. Legere for “good reason” or due to the Company’s non-renewal of the employment agreement in connection with a change in control, he will receive: (i)would be entitled to receive (subject to his timely execution of a lump-sum cash payment equal to two timesrelease of claims in favor of the sum ofCompany and compliance with certain restrictive covenants) the benefits described above under “—Termination Without Cause or for Good Reason,” except that: (a) if such termination occurs on or within 24 months after a change in control, his prorated annual base salary and then-current target annual incentive award; (ii) his annualshort-term incentive award from the preceding fiscal year that remains unpaid; (iii) a prorated portion of his annual performance bonus for the current fiscal year will be paid at target; and (b) if such termination occurs on or within 12 months after a change in control, his performance-vesting LTI awards (including any performance-based RSUs) will vest based on the Company’sgreater of target or actual performance results; (iv) any unpaid, but earned, tranche or cliff vesting legacyT-Mobile USA LTIP awards; (v)through the portion of any outstanding legacy T-Mobile USA LTIP awards that vestchange in annual tranches, at target and prorated over the one-year vesting period; and (vi) the portion of any outstanding legacy T-Mobile USA LTIP awards that cliff vest at the end of the three-year vesting period, at target for the current year and prorated over the three-year vesting period.control. | | | | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement38 | | 33T-Mobile 2018 Proxy Statement | | |
EXECUTIVE COMPENSATION Upon termination by the Company without cause or by Mr. Legere for good reason within a period beginning three months prior to the entering into of an agreement that leads to a change in control and ending on the second anniversary of the change in control, Mr. Legere would receive, in addition to the benefits described in the preceding paragraph, the difference between the full amount, at target, of any outstanding legacy T-Mobile USA LTIP awards that he has not yet earned, and the amounts described in subsections (v) and (vi) of the preceding paragraph. See “— 2013 Omnibus Incentive Plan” below for the treatment of Mr. Legere’s RSUs.
“Good reason” is defined as any of the following:
a material diminution in base compensation, annual performance bonus target, or long-term incentive target orNamed Executive Officers (Other Than Mr. Legere)
Each of Messrs. Sievert, Carter, Ray and Keys participates in the maximum potential amount payable with respect to any annual bonus or long-term incentive bonus award provided for under his employment agreement; a material diminution in authority, duties or responsibilities, including, without limitation, any change in title or the appointment of any person as a result of which Mr. Legere ceases to be the Company’s sole Chief Executive Officer, provided that it will not be good reason if, in connection with a change in control, Mr. Legere reports to the Board of Directors rather than the Chairman of the Board;
a material diminution in the authority, duties or responsibilities of the supervisor to whom Mr. Legere is required to report (including a requirement that he report to a corporate officer or employee instead of reporting directly to the Chairman of the Board);
a change of 50 miles or greater in the principal geographic location at which he must perform services; or
any other action or inaction that constitutes a material breach by the Company or the successor company, as applicable, of any agreement under which Mr. Legere provides services to the Company or the successor company, as applicable.
“Cause” has generally the same definition as in the Executive Continuity Plan, discussed below, except that the employment agreement’s definition also includes breach of a nonsolicitation covenant as well as unlawful discrimination, harassment, or retaliation, assault or other violent act toward any employee or third party, or other act or omission that, in each case, in the view of the Board of Directors constitutes a material breach of the Company’s written policies or code of business conduct.
“Change in control” has the same definition as in the 2013 Omnibus Incentive Plan, discussed below.
Mr. Sievert’s Term Sheet. Mr. Sievert’s term sheet provides that he is entitled to two times the sum of his base salary and annual incentive plan target in the event he is terminated without cause or constructively discharged.
“Cause” generally has the same definition as in the Executive Continuity Plan, discussed below.
“Constructive discharge” has generally the same definition as “constructive termination” in the Executive Continuity Plan, discussed below, except that the definition of “constructive discharge” in the term sheet also includes a change in reporting relationship such that Mr. Sievert reports to anyone below the CEO level as an additional condition.
Executive Severance Benefit Guidelines. Under the Company’s 2014 Executive Severance Benefit Guidelines (“Severance Guidelines”), if as a result of a corporate restructuring or business
combination in which an executive is terminated or resigns after being offered a new position that would:
result in a greater than 5% reduction in total compensation, or
require a move to a work location more than 50 miles from the executive’s current work location
the executive may be considered for the following benefits: (i) a cash payment of two times total target cash (composed of annual salary and target annual bonus); (ii) a prorated portion of the annual short-term incentive for the current fiscal year, based on the Company’s actual performance results; (iii) COBRA benefit payments for up to 12 months; (iv) 12 months of executive outplacement services valued at $7,750; (v) an amount equal to the tranche of each legacy T-Mobile USA LTIP award that would have vested at the end of the year in which the separation occurs, prorated at target by the ratio of the number of days in the tranche year preceding the date of the separation to the number of days in the tranche year; and (vi) an amount equal to the cliff-vesting portion of each legacy T-Mobile USA LTIP award prorated at target by the ratio of the number of days in the performance period preceding the date of the separation to the total number of days in the entire performance period.
Executive Continuity Plan. The Company’s Executive Continuity Plan, which provides that our Named Executive Officersparticipants who are terminated within the period of 24 months following a change in control byof the Company without cause or by the participant as the result ofdue to a constructive termination or for good reason are entitled to receive (subject to the Named Executive Officer’s timely execution and non-revocation of a release of claims in favor of the Company) two times the sum of (a) the executive’s base salary plus (b) the greater of the executive’s target annual bonus percentageshort-term incentive award (i) at the time of termination, or (ii) immediately prior to the change in control.
“Cause” is definedcontrol, payable in a lump-sum amount within 60 days following termination. Any cash severance paid under the Executive Continuity Plan as any one of the following:
the participant’s gross neglect or willful material breach of participant’s principal employment responsibilities or duties;
a final judicial adjudication that the participant is guilty of any felony (other than a law, rule or regulation relating to a traffic violation or other similar offense that has no material adverse effect on the Company or any of its affiliates);
the participant’s breach of any non-competition or confidentiality covenant between the participant and the Company or any affiliate of the Company;
fraudulent conduct, as determined by a court of competent jurisdiction, in the course of the participant’s employment with the Company or any of its affiliates; and
the material breach by the participant of any other obligation which continues uncured for a period of 30 days after notice thereof by the Company or any of its affiliates and which is demonstrably injurious to the Company or its affiliates.
For the Named Executive Officers, other than Mr. Legere, “constructive termination” or “good reason” means the occurrence, after a change in control, of any of the following conditions:
a material diminution in the participant’s duties, authority or responsibilities;
a material reduction in the participant’s base salary, target short-term incentive opportunity, or target long-term incentive opportunity as in effect immediately prior to the change in control, except for across-the-board salary reductions based on the Company’s and its subsidiaries’ financial performance similarly affecting all or substantially all management employees of the Company and its subsidiaries;
EXECUTIVE COMPENSATION
a material reduction in the kind or level of qualified retirement and welfare employee benefits from the like kind benefits to which the participant was entitled immediately prior to a change in control with the result that the participant’s overall benefits package is materially reduced without similar action occurring to other eligible comparably situated employees;
the relocation of the office at which the participant was principally employed immediately prior to a change in control to a location more than 50 miles from the location of such office, or the participant being required to be based anywhere other than such office, except to the extent the participant was not previously assigned to a principal location and except for required travel on business to an extent substantially consistent with the participant’s business travel obligations at the time of the change in control; or
such other event, if any, as is set forth in the participant’s agreement regarding executive continuity benefits.
For Mr. Legere, “good reason” has the same definition as in his employment agreement described above.
“Change in control” in the Executive Continuity Plan has the same definition as in the 2013 Omnibus Incentive Plan.
The cash severance payments pursuant to the above-described severance plans or agreements will be reduced by any cash severance payments otherwise required to be provided to a participantpayable pursuant to any other severance plans or agreements except that any rights or payments(including amounts payable under the employment arrangements for Messrs. Sievert and Carter).
In addition, pursuant to the 2013 Omnibus Incentive Plan or any other long-term incentive plan or bonus plan will not reduce any such cash severance payments. 2013 Omnibus Incentive Plan. Under the terms of the 2013 Omnibus Incentive Plan and the award agreements applicable to our Named Executive Officers, ingoverning the event ofLTI awards for Messrs. Sievert, Carter, Ray and Keys, if (i) a change in control in whichoccurs and outstanding awards are assumed, converted or replaced by the resulting entity, and (ii) on or after the change in control and within one year after the change in control, the executive’s employment or service is terminated by the Company other than for cause or by the executive for good reason, then: (a) all time-based RSUsLTI awards will become fully vested, and (b) all performance-based RSUsLTI awards will vest and be deemed to be satisfied and paid at the greater of target or actual performance determined as of the last trading day prior to the change in control (without proration) if, oncontrol. In addition, unless more favorable treatment is provided under the Executive Continuity Plan, each such Named Executive Officer’s annual incentive award will vest and be paid at the greater of target or afteractual performance determined as of the last trading day prior to the change in control and within one year aftercontrol.
Executive Severance Benefit Guidelines Under the changeCompany’s Executive Severance Benefit Guidelines (“Severance Guidelines”), which covers all Named Executive Officers, if, as a result of a corporate restructuring or business combination in control, the participant’s employment or servicewhich a Named Executive Officer is terminated or resigns after being offered a new position that would: (i) result in a greater than 5% reduction in total cash compensation, (ii) require a move to a work location more than 50 miles from the executive’s current work location, or (iii) significantly reduce their duties and responsibilities (including such a change to their existing position), then, in any such case, we will consider providing the applicable executive with the following benefits: (i) a lump-sum cash payment of two times the executive’s total target cash (composed of annual salary and target annual bonus); (ii) a pro-rated annual short-term incentive for the current fiscal year, based on actual performance; (iii) COBRA benefit payments for up to 12 months following termination; and (iv) 12 months of outplacement services valued at $6,500. Any cash severance paid under the Severance Guidelines will be reduced by any cash severance payments payable pursuant to any other severance plans or agreements (including amounts payable under the Company other thanapplicable executive’s employment arrangement and/or the Executive Continuity Plan (as applicable)). “Best Pay” Provisions The employment arrangements for causeeach of Messrs. Legere, Sievert and Carter, as well as our Executive Continuity Plan, include “best pay” provisions under Code Section 280G, pursuant to which any “parachute payments” that become payable to the applicable Named Executive Officer will either be paid in full or byreduced so that such payments are not subject to the participant for good reason. Inexcise tax under Code Section 4999, whichever results in the better after-tax treatment to the Named Executive Officer. Change in Control (No Termination) Pursuant to our 2013 Omnibus Incentive Plan and award agreements thereunder, in the event of a change in control of the Company in which outstanding awards are not assumed, converted or replaced by the resulting entity, (i) all time-based RSUsLTI awards will become vested, and(ii) all performance-based RSUsLTI awards will be deemed to be satisfied and paid at the greater of target or actual performance as of the last trading day prior to the change in control prorated up to and including the date of the change in control. The award agreements under the 2013 Omnibus Incentive Plan also provide that, in the case of death or total and permanent disability, any unearned time-based RSUs become immediately earned and vested and any performance-based RSUs will be paid at target as of the date of the executive’s separation from service.
For our Named Executive Officers, other than Mr. Legere, under the terms of the 2013 Omnibus Incentive Plan and the applicable award agreements, in the event of a termination of employment in connection with a workforce reduction or divestiture, time-based RSUs that are scheduled to vest at the next scheduled vesting date will become earned and vested immediately. For performance-based RSUs, the number of performance adjusted units would be determined after the end of the performance period and multiplied by the pro rata fraction (as defined below).
“Pro rata fraction” is defined as a fraction, the numerator of which is the number of days from the grant date of the award to the date of separation from service and the denominator of which is the number of days from the grant date through the end of the performance period.
“Divestiture” is defined as a separation from service as the result of a divestiture or sale of a business unit.
“Workforce reduction” is defined as the executive’s separation from service as a result of a reduction in force, realignment or similar measure.
Mr. Legere’s award agreements also provide that if he is terminated by the Company other than for cause, or if he leaves for good reason, he would be entitled to any unearned time-based RSUs scheduled to vest on the next vesting date. The number of performance-based RSUs will be determined following the end of the performance period and multiplied by the pro rata fraction, as defined above.
Mr. Legere’s award agreements provide that, from the period following a change in control but before the first anniversary of the change in control, upon termination other than for cause or for separation for good reason, any unearned time-based RSUs will become immediately earned and vested and any performance-based RSUs will become immediately earned and vested as of the date of such separation from service at the greater of target or actual performance immediately prior to the change in control.
Beginning with the 2015 performance-based RSU awards (and Mr. Legere’s 2014 performance-based RSU award), under the 2013 Omnibus Incentive Plan, the award agreements provide that in the event of a change in control, and continuation of service by an executive, the performance cycles outstanding upon a change in control under performance-based RSU(iii) all annual incentive awards will be paid at the greater of target or actual performance as of the end of the performance period.
Potential Payments upon Death or Disability. Under the terms of the 2014 STIP, in the case of death or disability, a Named Executive Officer (or his/her dependent) would be eligible for an incentive payout for the performance period in which the executive died or was disabled. Any such incentive payout would be pro-rated at 100% achievement and calculated using the executive’s target incentive payout percentage and annual salary prorated for the number of weeks employed during the performance period.
Under the legacy T-Mobile USA LTIP, a Named Executive Officer who dies or becomes disabled is entitledlast trading day prior to the payment for tranche-vestingchange in control prorated up to and cliff-vesting of the award for the calendar year in which the executive dies or becomes disabled as if the executive were employed throughincluding the date of payment.the change in control.
Definitions For each of the Named Executive Officers, “cause” generally has the following meaning: | ∎ | | the executive’s gross neglect or willful material breach of the executive’s principal employment responsibilities or duties; |
| ∎ | | a final judicial adjudication that the participant is guilty of any felony (other than a law, rule or regulation relating to a traffic violation or other similar offense that has no material adverse effect on the Company or any of its affiliates); |
| ∎ | | the executive’s breach of any non-competition or confidentiality covenant between the participant and the Company or any affiliate of the Company; |
| ∎ | | fraudulent conduct, as determined by a court of competent jurisdiction, in the course of the executive’s employment with the Company or any of its affiliates; |
| ∎ | | the material breach by the executive of any other obligation that continues uncured for a period of 30 days after notice thereof by the Company or any of its affiliates and that is demonstrably injurious to the Company or its affiliates; and |
| ∎ | | for Mr. Legere, his breach of his nonsolicitation covenant, or his unlawful discrimination, harassment, or retaliation, assault or other violent act toward any employee or third party, or other act or omission that, in each case, in the view of the Board of Directors, constitutes a material breach of the Company’s written policies or Code of Conduct. |
For Mr. Legere, “good reason” is defined as any of the following: | ∎ | | a material diminution in base compensation, annual performance bonus target, or long-term incentive target or in the maximum potential amount payable with respect to any annual bonus or long-term incentive bonus award provided for under his 2017 employment agreement; |
| ∎ | | a material diminution in authority, duties or responsibilities, including, without limitation, any change in title or the appointment of any person as a result of which Mr. Legere ceased to be the Company’s sole Chief Executive Officer, provided that it would not be good reason if, in connection with a change in control, Mr. Legere reported to the Board of Directors rather than the Chairman of the Board; |
| ∎ | | a material diminution in the authority, duties or responsibilities of the supervisor to whom Mr. Legere is required to report (including a requirement that he report to a corporate officer or employee instead of reporting directly to the Chairman of the Board); |
| | | | | | | T-Mobile 2018 Proxy Statement | | 39 |
| ∎ | | a change of 50 miles or greater in the principal geographic location at which he must perform services; or |
| ∎ | | any other action or inaction that constitutes a material breach by the Company or the successor company, as applicable, of any agreement under which Mr. Legere provides services to the Company or the successor company, as applicable. |
For Messrs. Sievert and Carter, “good reason” or “constructive discharge” generally has the same definition as in the Executive Continuity Plan, discussed below, except that it includes: | ∎ | | for Mr. Sievert, (a) in the event of a change in control, Mr. Sievert does not become the sole Chief Operating Officer of the principal entity resulting from such change in control, (b) any reduction (rather than a material reduction) in total target direct compensation (which consists of base salary, long term incentive and short-term incentive), (c) a change in reporting relationship such that Mr. Sievert would report to anyone other than Mr. Legere or the Board of Directors and (d) in the event of a change in control, Mr. Sievert does not become Chief Executive Officer of the principal entity resulting from such change in control within six months after the change in control; and |
| ∎ | | for Mr. Carter, (a) a reduction by more than five percent (rather than a material reduction) in Mr. Carter’s then-effective total target direct compensation (which consists of his then-effective base salary, short-term incentive award and long-term incentive award) and (b) a change in reporting relationship such that Mr. Carter would report to anyone other than the Chief Executive Officer of the Company or the Board. In addition to the foregoing, neither the appointment or hiring of a new Chief Financial Officer (or the related change in Mr. Carter’s title) nor the requirement that Mr. Carter engage in any transition duties under his employment agreement will constitute good reason. |
For purposes of the Executive Continuity Plan, “constructive termination” or “good reason” means, with respect to our Named Executive Officers (other than Mr. Legere), the occurrence, after a change in control, of any of the following conditions (as modified, for Messrs. Sievert and Carter, by their employment arrangements, as discussed above): | ∎ | | a material diminution in the participant’s duties, authority or responsibilities; |
| ∎ | | a material reduction in the participant’s base salary, target short-term incentive opportunity, or target long-term incentive opportunity as in effect immediately prior to the change in control, except for across-the-board salary reductions based on the Company’s and its subsidiaries’ financial performance similarly affecting all or substantially all management employees of the Company and its subsidiaries; |
| ∎ | | a material reduction in the kind or level of qualified retirement and welfare employee benefits from the like kind benefits to which the participant was entitled immediately prior to a change in control with the result that the participant’s overall benefits package is materially reduced without similar action occurring to other eligible comparably situated employees; |
| ∎ | | the relocation of the office at which the participant was principally employed immediately prior to a change in control to a location more than 50 miles from the location of such office, or the participant being |
| | required to be based anywhere other than such office, except to the extent the participant was not previously assigned to a principal location and except for required travel on business to an extent substantially consistent with the participant’s business travel obligations at the time of the change in control; or |
| ∎ | | such other event, if any, as is set forth in the participant’s agreement regarding executive continuity benefits. |
For each of our Named Executive Officers, “change in control” generally has the meaning set forth in the 2013 Omnibus Incentive Plan. Estimated Payments The following table presents the estimated incremental compensation payable to each of the Company’s Named Executive Officers if a termination of employment and/or change in control (as applicable) had occurred as of December 31, 20142017 under the circumstances described above. The amounts shown with respect to RSUs are based on the closing price of our common stock ($63.51 per share) on December 29, 2017. The estimated incremental compensation is presented in the following benefit categories: •∎ | | Cash Severance: reflects cash severance (i) in the case of termination in connection with a corporate restructuring or a termination without cause (including, for Mr. Legere, our non-renewal of his then-current employment term) or for good reason before a change in control under the Severance Guidelines, pursuant to Mr. Legere’sthe 2017 employment agreementarrangements with Messrs. Legere, Sievert or pursuant to Mr. Sievert’s term sheet,Carter and (ii) in the case of termination without cause or for good reason in connection with or after a change in control, under ourthe Executive Continuity Plan; |
| | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement∎ | | 35 |
EXECUTIVE COMPENSATION
• | | Time-Based RSUs: market value, as of December 31, 2014,29, 2017, of unvested time-based RSUs that would vest pursuant to the 2013 Omnibus Incentive Plan, and related award agreements; agreements and/or respective employment agreement or term sheet; |
•∎ | | Performance-Based RSUs: market value, as of December 31, 2014,29, 2017, of unvested performance-based RSUs that would vest pursuant to the 2013 Omnibus Incentive Plan, and related award agreements (assuming performance at target); and/or respective employment agreement or term sheet; |
•∎ | | 20142017 STIP: prorated portion of 2017 short-term cash incentives that would be paid (i) pursuant to the 20142017 STIP or (ii) under Mr. Legere’sthe 2017 employment agreement;
arrangements with Messrs. Legere, Sievert or Carter; |
•∎ | | Legacy T-Mobile USA LTIPBonus: prorated portion of long-termspecial cash incentivesbonus that would be paid pursuant to (i) the Severance Guidelines or (ii) under Mr. Legere’sCarter’s 2017 employment agreement;
|
•∎ | | Medical Coverage: estimated value of payment for continued medical coverage under COBRA (i) pursuant to the terms of (i) our Severance Guidelines, or (ii) under Messrs. Legere’sMr. Carter’s 2017 employment agreement; and Carter’s employment agreements; and |
•∎ | | Outplacement Services: estimated potential value of this service. service under the terms of our Severance Guidelines. |
The actual amounts that may become payable to our Named Executive Officers can be determined only following the officer’s termination and the conclusion of all relevant incentive plan performance periods. If an executive officer voluntarily leaves the Company, the executive officer is not entitled to any severance compensation. | | | | | | | | | | | | | | | | Termination in
Connection with
Restructuring
Before a Change
in Control ($)(1) | | | Termination
Without Cause or
for Good Reason in
Connection with or
After a Change
in Control ($) | | | Death or Disability ($) | | | John J. Legere | | | | | | | | | | | | | Cash Severance | | | 5,500,000 | | | | 5,500,000 | | | | — | | Time-Based RSUs | | | 2,446,125 | | | | 7,338,402 | | | | 7,338,402 | | Performance-Based RSUs | | | 7,701,068 | | | | 23,666,117 | | | | 23,666,117 | | 2014 STIP | | | 2,325,000 | | | | 2,325,000 | | | | 2,325,000 | | Legacy T-Mobile USA LTIP | | | 9,191,667 | | | | 11,191,667 | | | | 9,191,667 | | Medical Coverage | | | 10,994 | | | | 10,994 | | | | — | | Outplacement Services | | | 7,750 | | | | 7,750 | | | | — | | Total Estimated Incremental Value | | | 27,182,604 | | | | 50,039,930 | | | | 42,521,186 | | | J. Braxton Carter | | | | | | | | | | | | | Cash Severance | | | 2,600,000 | | | | 2,600,000 | | | | — | | Time-Based RSUs | | | 1,324,990 | | | | 3,974,970 | | | | 3,974,970 | | Performance-Based RSUs | | | 2,423,253 | | | | 3,974,970 | | | | 3,974,970 | | 2014 STIP | | | 1,007,500 | | | | 1,007,500 | | | | 1,007,500 | | Legacy T-Mobile USA LTIP | | | 1,250,000 | | | | 1,250,000 | | | | 416,667 | | Medical Coverage | | | 11,706 | | | | 11,706 | | | | — | | Outplacement Services | | | 7,750 | | | | 7,750 | | | | — | | Total Estimated Incremental Value | | | 8,625,199 | | | | 12,826,896 | | | | 9,374,107 | | | G. Michael Sievert | | | | | | | | | | | | | Cash Severance | | | 2,035,000 | | | | 2,035,000 | | | | — | | Time-Based RSUs | | | 1,103,920 | | | | 3,311,815 | | | | 3,311,815 | | Performance-Based RSUs | | | 1,517,342 | | | | 2,488,960 | | | | 2,488,960 | | 2014 STIP | | | 724,625 | | | | 724,625 | | | | 724,625 | | Legacy T-Mobile USA LTIP | | | 1,017,500 | | | | 1,017,500 | | | | 339,167 | | Medical Coverage | | | 19,148 | | | | 19,148 | | | | — | | Outplacement Services | | | 7,750 | | | | 7,750 | | | | — | | Total Estimated Incremental Value | | | 6,425,285 | | | | 9,604,798 | | | | 6,864,567 | | | Gary A. King | | | | | | | | | | | | | Cash Severance | | | 1,750,000 | | | | 1,750,000 | | | | — | | Time-Based RSUs | | | 157,545 | | | | 472,662 | | | | 472,662 | | Performance-Based RSUs | | | 217,083 | | | | 472,662 | | | | 472,662 | | 2014 STIP | | | 567,837 | | | | 567,837 | | | | 567,837 | | Legacy T-Mobile USA LTIP | | | — | | | | — | | | | — | | Medical Coverage | | | 19,265 | | | | 19,265 | | | | — | | Outplacement Services | | | 7,750 | | | | 7,750 | | | | — | | Total Estimated Incremental Value | | | 2,719,480 | | | | 3,290,176 | | | | 1,513,161 | |
| | | | | (1)40 | Reflects cash severance amounts in connection with termination without cause or for good reason to Mr. Legere pursuant to his employment agreement and Mr. Sievert pursuant to his term sheet and reflects incentive amounts in connection with termination without cause or for good reason to Mr. Legere. Also reflects RSU amounts payable to Mr. Legere in connection with termination without cause or for good reason pursuant to outstanding award agreements.
| T-Mobile 2018 Proxy Statement | | |
| | | | | | | | | | | | | Name | | Termination in
Connection with
Restructuring
Before a Change
in Control ($) | | | Termination
Without Cause or
for Good Reason in
Connection with or
After a Change in
Control ($) | | | Death or
Disability ($) | | John J. Legere | | | | | | | | | | | | | Cash Severance | | | 10,000,000 | | | | 10,000,000 | | | | — | | Time-Based RSUs | | | 11,436,500 | | | | 11,436,500 | | | | 11,436,500 | | Performance-Based RSUs | | | 41,538,716 | | | | 41,538,716 | | | | 41,538,716 | | 2017 STIP | | | 5,666,666 | | | | 5,666,666 | | | | 5,666,666 | | Medical Coverage | | | 6,516 | | | | 6,516 | | | | — | | Outplacement Services | | | 6,500 | | | | 6,500 | | | | — | | Total Estimated Value | | | 68,654,897 | | | | 68,654,897 | | | | 58,641,881 | | J. Braxton Carter | | | | | | | | | | | | | Cash Severance | | | 4,250,000 | | | | 4,250,000 | | | | — | | Time-Based RSUs | | | 5,854,415 | | | | 8,843,069 | | | | 8,843,069 | | Performance-Based RSUs | | | 6,351,318 | | | | 9,838,334 | | | | 9,838,334 | | 2017 STIP | | | 2,155,241 | | | | 2,155,241 | | | | 2,155,241 | | Bonus | | | 63,073 | | | | 63,073 | | | | 63,073 | | Medical Coverage | | | 13,912 | | | | 13,912 | | | | — | | Outplacement Services | | | 6,500 | | | | 6,500 | | | | — | | Total Estimated Value | | | 18,694,459 | | | | 25,170,129 | | | | 20,899,717 | | G. Michael Sievert | | | | | | | | | | | | | Cash Severance | | | 5,700,000 | | | | 5,700,000 | | | | — | | Time-Based RSUs | | | 7,702,810 | | | | 11,577,555 | | | | 11,577,555 | | Performance-Based RSUs | | | 9,150,330 | | | | 15,754,418 | | | | 15,754,418 | | 2017 STIP | | | 3,210,384 | | | | 3,210,384 | | | | 3,210,384 | | Medical Coverage | | | 19,316 | | | | 19,316 | | | | — | | Outplacement Services | | | 6,500 | | | | 6,500 | | | | — | | Total Estimated Value | | | 25,789,341 | | | | 36,268,173 | | | | 30,542,358 | | Neville R. Ray | | | | | | | | | | | | | Cash Severance | | | 4,000,000 | | | | 4,000,000 | | | | — | | Time-Based RSUs | | | 2,806,951 | | | | 5,648,071 | | | | 5,648,071 | | Performance-Based RSUs | | | 5,153,709 | | | | 8,421,045 | | | | 8,421,045 | | 2017 STIP | | | 2,030,192 | | | | 2,030,192 | | | | 2,030,192 | | Medical Coverage | | | 20,975 | | | | 20,975 | | | | — | | Outplacement Services | | | 6,500 | | | | 6,500 | | | | — | | Total Estimated Value | | | 14,018,329 | | | | 20,126,784 | | | | 16,099,309 | | Thomas C. Keys | | | | | | | | | | | | | Cash Severance | | | 3,375,000 | | | | 3,375,000 | | | | — | | Time-Based RSUs | | | 2,962,233 | | | | 5,445,728 | | | | 5,445,728 | | Performance-Based RSUs | | | 5,953,237 | | | | 8,887,018 | | | | 8,887,018 | | 2017 STIP | | | 1,591,707 | | | | 1,591,707 | | | | 1,591,707 | | Medical Coverage | | | 19,395 | | | | 19,395 | | | | — | | Outplacement Services | | | 6,500 | | | | 6,500 | | | | — | | Total Estimated Value | | | 13,908,072 | | | | 19,325,348 | | | | 15,924,453 | |
In addition to the items described above, the Named Executive Officers are entitled to receive amounts earned during the term of employment.employment through the date of termination. These amounts, which are not included in the table, include earned base salary, vested awards under our long-term incentive awards, any vested entitlements under our applicable employee benefit plans, including vested 401(k) plan balances, and rights to continuation of coverage under our group medical plans. In addition, if Mr. Carter had voluntarily terminated his employment before January 31, 2015 (within 21 months afterplans at the Business Combination), he would have been entitled to (i) payment of an amount equal to two times the sum of his legacy MetroPCS salary and target annual bonus effective immediately prior to the Business Combination, (ii) payment at target for his 2013 legacy MetroPCS short-term incentive award, prorated by the number of days in 2013 prior to the closing of the business combination and (iii) a 24-month continuation of medical and dental insurance for him and his dependents. If Mr. Carter had voluntarily terminated on December 31, 2014, such amounts would have been approximately $2,025,360, $147,972 and $36,122, respectively. Mr. Alling is not included in the table above because he voluntarily left the Company effective March 13, 2015.Named Executive Officer’s expense.
| | | | | | | T-Mobile 2018 Proxy Statement | | 3641 |
Pay Ratio As required by Section 953(b) of the Dodd-Frank Act and Item 402(u) of Regulation S-K, we are providing the following information regarding the relationship of the annual total compensation of our employees and the annual total compensation of Mr. Legere, our Chief Executive Officer. We have calculated the median of our employees’ 2017 total annual compensation (excluding our Chief Executive Officer) to be $55,739. Our Chief Executive Officer’s 2017 total annual compensation, as set forth in the 2017 Summary Compensation Table above (adjusted to include his employer-paid health benefits with respect to 2017), was $23,636,334. As a result, the estimated ratio of the total compensation of Mr. Legere to the median of the annual total compensation of our employees (other than the Chief Executive Officer) was 424 to 1. We believe this pay ratio is a reasonable estimate calculated in a manner consistent with applicable rules of the Securities and Exchange Commission. This information is being provided for compliance purposes. Neither the Compensation Committee nor management of the Company used the pay ratio measure in making compensation decisions. We identified the median employee by preparing a listing of all 51,300 individuals (excluding our Chief Executive Officer) who were employed by us on December 31, 2017, the last day of the calendar year, and examining the 2017 total compensation paid to each such individual as reflected in our payroll records as reported to the Internal Revenue Services on Form W-2 for 2017. We included all employees (other than the Chief Executive Officer), whether employed on a full-time, part-time, or seasonal basis who received a paycheck in the final pay period of the year. We did not make any assumptions, adjustments, or estimates with respect to total compensation paid, and we did not annualize the compensation for any full-time employees that were not employed by us for all of 2017. We believe the use of total compensation paid for all employees as reflected in our payroll records is a consistently applied compensation measure due to our large part-time, retail and customer service employee population and practice of granting annual equity awards across our broad employee base. The gross pay used for purposes of calculating the total annual compensation of our employees reflects the value of long-term equity incentive compensation granted to our employees, in addition to the hours worked by such employees and the cash compensation paid to such employees with respect to 2017. Using the method described above, we identified a small sample of 16 employees, consisting of the median employee and 15 other employees whose gross pay was very close to the median employee’s gross pay (“median group”). We then calculated annual total compensation for such employees using the same methodology we use for our Named Executive Officers as set forth in the 2017 Summary Compensation Table in this proxy statement, taking into account employer-paid costs for 2017 health benefits, and selected the median employee from this median group. We believe that our median employee’s compensation reasonably reflects the actual annual compensation of our employees generally in terms of realized pay and benefits. EQUITY COMPENSATION PLAN INFORMATION The following table provides information as of December 31, 2017, with respect to outstanding equity awards and shares available for future issuance under our equity compensation plans. | | | | | | | | | | | | | Plan Category | | Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights (#) (a) | | | Weighted Average
Exercise Price of
Options, Warrants
and Rights ($) (b) | | | Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))(#) (c) | | Equity Compensation Plans Approved by Stockholders | | | | | | | | | | | 20,689,169 | (5) | Stock Options | | | 373,158 | (1) | | $ | 16.36 | | | | — | | RSUs | | | 13,695,543 | (2)(3) | | | — | (4) | | | — | | Equity Compensation Plans Not Approved by Stockholders | | | — | | | | — | | | | — | | Total | | | 14,068,701 | | | $ | 16.36 | (4) | | | 20,689,169 | (5) |
| (1) | Granted under the Amended and Restated MetroPCS Communications, Inc. 2004 Equity Incentive Compensation Plan and the MetroPCS Communications, Inc. 2010 Equity Incentive Compensation Plan. |
| (2) | Granted under the 2013 Omnibus Incentive Plan. |
| (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 Company’s ESPP. |
| (5) | As of December 31, 2017, the number of securities remaining available for future issuance under the 2013 Omnibus Incentive Plan was 15,187,831 and under the ESPP was 5,501,338 (of which 1,069,495 were purchased on March 31, 2018 for the offering period that included December 31, 2017). 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. |
| | | | | | 42 | | T-Mobile 2018 Proxy Statement | | |
Proposal 3 - Approval of an Amendment to the Company’s 2013 Omnibus Incentive Plan We are asking our stockholders to approve the Amendment (the “Amendment”) to the Company’s 2013 Omnibus Incentive Plan (as amended from time to time, the “2013 Omnibus Incentive Plan”), which amends the 2013 Omnibus Incentive Plan to increase the number of shares available for issuance thereunder by 18,500,000 shares to a total of 81,775,000 shares. As of February 28, 2018, 7,768,482 shares remained available for future grants under the 2013 Omnibus Incentive Plan. Our Compensation Committee and our Board believes that this share increase is necessary to ensure that the Company has a sufficient reserve of shares available to attract and retain the services of key individuals essential to the Company’s long-term growth and success. No other changes to the 2013 Omnibus Incentive Plan are proposed. A copy of the Amendment is attached to this Proxy Statement asAnnex A, and the discussion in this proposal is qualified in its entirety by the full text of the Amendment. The Amendment was adopted by the Board on February 14, 2018, subject to stockholder approval. Currently, the 2013 Omnibus Incentive Plan provides that the maximum number of shares available for issuance pursuant to awards issued thereunder is 63,275,000 shares of our common stock. If the stockholders do not approve the Amendment, the Amendment will not become effective, the 2013 Omnibus Incentive Plan will continue in effect (without giving effect to the Amendment), and we will be subject to the current share limit set forth in the 2013 Omnibus Incentive Plan. Because certain of our directors and executive officers may be eligible to receive awards under the 2013 Omnibus Incentive Plan, such directors and executive officers may be considered to have an interest in this proposal. | | | | | Our Board of Directors recommends a voteFOR the approval of the Amendment to the T-Mobile US, Inc. 2013 Omnibus Incentive Plan |
Required Vote The affirmative vote of a majority of the shares is required to approve this proposal. Rationale for the Amendment During the beginning of 2018, in its determination to recommend that the Board adopt the Amendment, the Compensation Committee considered advice and input presented by management with the assistance of Willis Towers Watson and reviewed by the Compensation Committee’s independent compensation consultant. As of February 28, 2018, a total of 7,768,482 shares remained available for issuance under the 2013 Omnibus Incentive Plan, which is our only incentive award plan with shares available for issuance. Outstanding awards under all plans (consisting of our 2013 Omnibus Incentive Plan, Layer3 TV, Inc. 2013 Stock Plan and MetroPCS 2004 and 2010 stock plans) included 435,670 stock options with a weighted average exercise price of $15.54 and weighted average term of 4.46 years as well as an aggregate of 17,253,455 full value awards. The Compensation Committee also considered several factors including the following: | ∎ | | the number of shares available for issuance under the 2013 Omnibus Incentive Plan, both currently and after giving effect to the Amendment; |
| ∎ | | the Company’s desire to have what it expects to be sufficient capacity under the 2013 Omnibus Incentive Plan to grant equity awards for the next three years (noting that future circumstances, grant practices and other conditions, which we cannot predict at this time, may result in a different outcome); and |
| ∎ | | the Company’s burn rate, overhang and dilution data (described below). |
Burn Rate The following table sets forth the Company’s three-year average burn rate: | | | | | | | | | Year | | Number of Shares
Subject to Awards (1) | | | Burn Rate
(%) | | 2015 | | | 10,369,763 | | | | 1.25 | % | 2016 | | | 8,316,018 | | | | 1.01 | % | 2017 | | | 6,580,084 | | | | 0.81 | % | Average Three-Year Burn Rate | | | | 1.02 | % |
| (1) | Shares subject to awards include options and RSUs granted, and performance-based awards earned, in the given year. |
Dilution and Overhang As noted above, as of February 28, 2018, approximately 7,768,482 shares remained available for issuance under the 2013 Omnibus Incentive Plan, which is our only incentive award plan with shares available for issuance. Additionally, an aggregate of 17,689,125 shares were outstanding under all equity plans (including our 2013 Omnibus Incentive Plan, Layer3 TV, Inc. 2013 Stock Plan and MetroPCS 2004 and 2010 stock plans) and 5,501,338 shares remained available for issuance under our Employee Stock Purchase Plan. This represented approximately 3.48% of our fully diluted common shares outstanding (our “overhang percentage”). If our stockholders approve the Amendment, the 18,500,000 additional shares proposed to be reserved for issuance under the 2013 Omnibus Incentive Plan would increase our overhang percentage to approximately 5.76%. | | | | | | | T-Mobile 2018 Proxy Statement | | 43 |
PROPOSAL 3 - APPROVAL OF AN AMENDMENT TO THE COMPANY’S 2013 OMNIBUS INCENTIVE PLAN The following table provides details on shares available and outstanding under all equity plans and our Employee Stock Purchase Plan: | | | | | | | | | | | | Potential Dilution as of
February 28, 2018 | | | Potential Dilution
After Giving Effect
to the Amendment | | Available for Issuance (all under 2013 Omnibus Incentive Plan) | | | 7,768,482 | | | | 7,768,482 | | Unvested RSUs | | | 14,668,551 | | | | 14,668,551 | | Unvested Performance RSUs | | | 2,230,194 | | | | 2,230,194 | | Unvested RSAs | | | 354,459 | | | | 354,459 | | Options Outstanding | | | 435,670 | | | | 435,670 | | Restricted Stock Awards | | | 251 | | | | 251 | | Employee Stock Purchase Plan | | | 5,501,338 | | | | 5,501,338 | | Additional Shares Requested | | | | | | | 18,500,000 | | Total | | | 30,958,945 | | | | 49,458,945 | |
Based on its review of the considerations noted above, including the fact that the Company’s three-year average burn rate was lower when compared to the Institutional Shareholder Services benchmark of 7.10% for the telecommunications services industry group (GICS 5010 & Russell 3000), the Compensation Committee determined that the proposed share increase to the 2013 Omnibus Incentive Plan is in line with our peers as well as necessary to retain equity compensation as an important recruiting and retention tool. The Compensation Committee determined in light of these factors, among others, that it was appropriate to recommend that the Board adopt the Amendment. Stockholder Approval The 2013 Omnibus Incentive Plan initially received stockholder approval on June 4, 2013. The 2013 Omnibus Incentive Plan provides a means to attract and retain highly-qualified persons to serve as officers, non-employee directors, key employees and consultants and advisors of the Company and to promote greater ownership in the Company by such individuals in order to align their interests more closely with the interests of the Company’s stockholders. Stockholder approval of the Amendment is necessary in order for us to meet the stockholder approval requirements of the NASDAQ Global Select Market, to enable the Company to grant awards under the 2013 Omnibus Incentive Plan that are designed to qualify for special tax treatment under Code Section 422, and to enable the Company to receive a federal income tax deduction for certain compensation paid under the 2013 Omnibus Incentive Plan under Code Section 162(m). If our stockholders approve the Amendment, we intend to register the additional shares issuable pursuant to the 2013 Omnibus Incentive Plan, as amended by the Amendment, under the Securities Act of 1933, as amended, as soon as practicable following such approval. Material Features of the 2013 Omnibus Incentive Plan, as Amended by the Amendment Following is a summary of the material terms of the 2013 Omnibus Incentive Plan, as amended by the Amendment. This summary is qualified in its entirety by reference to the full text of the Amendment, which is attached to this Proxy Statement asAnnex A, and the full text of the 2013 Omnibus Incentive Plan, which is incorporated by reference to Exhibit 10.20 of the Company’s Current Report on Form 10-Q filed on August 8, 2013. Effectiveness As noted above, the Amendment will become effective upon approval thereof by the stockholders. If the stockholders do not approve the Amendment, the 2013 Omnibus Incentive Plan will continue in effect without giving effect to the Amendment. Eligibility Awards may be granted under the 2013 Omnibus Incentive Plan to officers, employees, consultants and advisors of the Company and its affiliates and to non-employee directors of the Company. Incentive stock options may be granted only to employees of the Company or its subsidiaries. As of February 28, 2018, approximately 51,500 employees (including nine executive officers) and five non-employee directors were eligible to receive grants under the 2013 Omnibus Incentive Plan. Administration The Board of Directors has the authority to administer the 2013 Omnibus Incentive Plan and to delegate its authority to administer the 2013 Omnibus Incentive Plan to a committee or subcommittee appointed by the Board, subject to the satisfaction of any applicable stock exchange requirements (each referred to as the “Committee”). The Committee has | | | | | | 44 | | T-Mobile 2018 Proxy Statement | | |
PROPOSAL 3 - APPROVAL OF AN AMENDMENT TO THE COMPANY’S 2013 OMNIBUS INCENTIVE PLAN the authority to select individuals to whom awards may be granted, the type of awards granted and the terms of any such awards (subject to the following limitations). The Board of Directors has delegated its authority to the Compensation Committee to administer the 2013 Omnibus Incentive Plan. The Compensation Committee has established the Section 16 Subcommittee, unless otherwise determined by the Compensation Committee, has the sole authority to approve all equity or equity-based awards to the Company’s Section 16 officers. The Compensation Committee has also delegated authority to the Company’s Executive Vice President, Human Resources, to grant awards to employees who are not Section 16 officers. Number of Authorized Shares The number of shares originally authorized for issuance under the 2013 Omnibus Incentive Plan was equal to (i) 63,275,000 shares of our common stock plus (ii) any shares that, as of June 4, 2013, were subject to outstanding awards under the MetroPCS Communications, Inc. 2004 Equity Incentive Compensation Plan or the MetroPCS Communications, Inc. 2010 Equity Incentive Compensation Plan (together, the “Predecessor Plans”) that, following June 4, 2013, are (or were, as applicable) canceled, terminated, expired or lapse for any reason without the issuance of shares (the “Predecessor Plan Shares”). If the stockholders approve the Amendment, the number of shares authorized for issuance under the 2013 Omnibus Incentive Plan, as amended by the Amendment, will be increased by 18,500,000 shares to a total of 81,775,000 shares of our common stock (plus any Predecessor Plan Shares). As of February 28, 2018, 316,951 shares of common stock remained subject to outstanding awards under the Predecessor Plans. A total of approximately 17,253,204 shares of the common stock were outstanding under the 2013 Omnibus Incentive Plan as of February 28, 2018. The shares of common stock issuable under the 2013 Omnibus Incentive Plan, as amended by the Amendment, may consist of authorized and unissued shares, shares purchased on the open market or shares now held or subsequently acquired by the Company as treasury shares. As of March 29, 2018, the closing price of our common stock was $61.04 per share. If any award is canceled, terminates, expires or lapses for any reason prior to the issuance of shares the shares subject to such awards will not count against the aggregate number of shares of common stock available for grant under the 2013 Omnibus Incentive Plan. In addition, the following items will not count against the aggregate number of shares of common stock available for grant under the 2013 Omnibus Incentive Plan: (a) the payment in cash of dividends or dividend equivalents under any outstanding award, (b) any award that is settled in cash rather than by issuance of shares of common stock, or (c) awards granted in assumption of or in substitution for awards previously granted by an acquired company. Shares tendered or withheld to pay the exercise price of any option or to satisfy tax withholding requirements with respect to any award will continue to count against the aggregate number of shares of common stock available for grant under the 2013 Omnibus Incentive Plan. Limits on Awards The 2013 Omnibus Incentive Plan originally provided that 63,275,000 shares of common stock may be issued under incentive stock options. If the stockholders approve the Amendment, a total of 81,775,000 shares may be issued under incentive stock options. No more than $400,000 may be granted in equity-based awards during any one year to a non-employee member of the Board, based on the grant date fair value for accounting purposes in the case of stock options or stock appreciation rights and based on the fair market value of the common stock underlying the award on the grant date for other equity-based awards. Adjustments If certain changes in the common stock occur by reason of any recapitalization, reclassification, stock split, reverse split, combination of shares, exchange of shares, stock dividend or other distribution payable in stock, or other increase or decrease in the common stock without receipt of consideration by the Company, or if there occurs any spin-off, split-up, extraordinary cash dividend or other distribution of assets by the Company, the number and kind of securities for which stock options and other stock-based awards may be made under the 2013 Omnibus Incentive Plan, including any applicable individual award limits, shall be equitably adjusted by the Company. In addition, if there occurs any spin-off, split-up, extraordinary cash dividend or other distribution of assets by the Company, the number and kind of securities subject to any outstanding awards and the exercise price of any outstanding stock options or SARs shall be equitably adjusted by the Company. Types of Awards The 2013 Omnibus Incentive Plan permits the granting of any or all of the following types of awards: Stock Options. Stock options entitle the holder to purchase a specified number of shares of common stock at a specified price (the exercise price), subject to the terms and conditions of the stock option grant. The Committee may grant either incentive stock options, which must comply with Code Section 422, or nonqualified stock options. The Committee sets exercise prices and terms, except that stock options must be granted with an exercise price not less than 100% (or, with respect to incentive stock options granted to individuals who hold more than 10% of our stock, 110%) of the fair market value of the common stock on the date of grant (excluding stock options granted in connection with assuming or substituting stock options in acquisition transactions). Unless the Committee determines otherwise, fair market value means, as of a given date, the closing price of the common stock. At the time of grant, the Committee determines the terms and conditions of stock options, including the quantity, exercise price, vesting periods, term (which cannot exceed ten years or, with respect to incentive stock options granted to individuals who hold more than 10% of our stock, five years) and restrictions on exercise. Stock Appreciation Rights. The Committee may grant SARs, either in tandem with the number of shares underlying stock options or other awards granted under the 2013 Omnibus Incentive Plan or as a freestanding award. Upon exercise, SARs entitle the holder to receive payment per share in stock or cash, or in a combination of stock and cash, equal to the excess of the fair market value of a share on the date of exercise over the exercise price of the SAR. The exercise price of a tandem SAR must equal the exercise price of the related stock option and the grant price for a freestanding SAR is determined by the Committee (but generally may be no less than the fair market value of a share on the date of grant). The term of a SAR is determined by the Committee but cannot exceed ten years. Restricted Stock, Restricted Stock Units. The Committee may grant awards of restricted stock, which are shares of common stock subject to specified restrictions, and restricted stock units, which represent the right to receive shares of the common stock in the future. These awards may be made subject to repurchase, forfeiture or vesting restrictions at the | | | | | | | T-Mobile 2018 Proxy Statement | | 45 |
PROPOSAL 3 - APPROVAL OF AN AMENDMENT TO THE COMPANY’S 2013 OMNIBUS INCENTIVE PLAN Committee’s discretion. The restrictions may be based on continuous service with the Company and/or the attainment of specified performance goals, as determined by the Committee. Unless otherwise determined by the Committee, holders of restricted stock will have rights as stockholders of the Company, including voting and dividend rights. Holders of restricted stock units will not have any rights as stockholders unless and until the shares underlying such restricted stock units are paid to the holder (unless otherwise determined by the Committee). Restricted stock units may be paid in stock or cash or a combination of stock and cash, as determined by the Committee. Other Stock-Based Awards. The Committee may also grant other stock-based awards, which are awards valued in whole or in part by reference to, or otherwise based on, our common stock, subject to the terms of the 2013 Omnibus Incentive Plan and any other terms and conditions determined by the Committee. Other stock-based awards may be granted in lieu of cash or other compensation. Performance Awards. The Committee may grant performance awards, which entitle participants to receive a payment from the Company, the amount of which is based on the attainment of performance goals established by the Committee over a specified performance period of not less than one year. Performance awards may be denominated in shares of common stock or in cash, and may be paid in stock or cash or a combination of stock and cash, as determined by the Committee. Performance awards include annual incentive awards, which are cash-based awards with a performance period equal to the Company’s fiscal year (or another 12-month period approved by the Committee). No Repricing Without prior stockholder approval, the Committee may not (a) lower the exercise or grant price of a stock option or SAR after it is granted, except in connection with certain adjustments to our corporate or capital structure permitted by the 2013 Omnibus Incentive Plan, such as stock splits, (b) take any other action that is treated as a “repricing” under generally accepted accounting principles, or (c) cancel a stock option or SAR at a time when its exercise price exceeds the fair market value of the underlying stock, in exchange for cash, another stock option or SAR, restricted stock, restricted stock units or other equity award, unless the cancellation and exchange occur in connection with a change in capitalization or other similar change permitted by the 2013 Omnibus Incentive Plan. Clawback All cash and equity awards granted under the 2013 Omnibus Incentive Plan will be subject to the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act regarding the recovery of erroneously awarded compensation, any implementing rules and regulations under such act, any policies adopted by the Company to implement such requirements, and any other compensation recovery policies as may be adopted from time to time by the Company. Performance-Based Compensation under Code Section 162(m) Performance Goals and Criteria. Under Code Section 162(m), we generally are prohibited from deducting compensation paid to our principal executive officer and other “covered employees” in excess of $1 million per person in any year. For taxable years beginning on or before December 31, 2017, this deduction limit included an exception for “qualified performance- based compensation”. As discussed in “Executive Compensation—Other Matters—Tax and Accounting Considerations”, the recently-enacted Tax Act eliminated the exemption for “qualified performance-based compensation” for tax years beginning after December 31, 2017. The Tax Act includes a grandfather provision, pursuant to which compensation that is provided pursuant to a written binding contract in effect on November 2, 2017, and which has not been modified in any material respect on or after that date, will not be subject to the amendments made to Code Section 162(m) by the Tax Act. If the Committee intended an award previously granted under the 2013 Omnibus Incentive Plan to qualify as “performance-based” compensation under Code Section 162(m), the performance goals selected by the Committee were based on the attainment of specified levels of one, or any combination, of the following performance criteria for the Company on a consolidated basis, and/or specified subsidiaries, divisions business segments or business units (except with respect to the total stockholder return and earnings per share criteria): (a) cash flow; (b) earnings per share, as adjusted for any stock split, stock dividend or other recapitalization; (c) earnings measures; (d) return on equity; (e) total shareholder return; (f) share price performance, as adjusted for any stock split, stock dividend or other recapitalization; (g) return on capital; (h) revenue; (i) income; (j) profit margin; (k) return on operating revenue; (l) brand recognition/acceptance; (m) customer satisfaction; (n) productivity; (o) expense targets; (p) market share; (q) cost control measures; (r) balance sheet metrics; (s) strategic initiatives; (t) implementation, completion or attainment of measurable objectives with respect to recruitment or retention of personnel or employee satisfaction; or (u) any other business criteria established by the Committee, except that such business criteria shall include any derivations of business criteria listed above (e.g., income shall include pre-tax income, net income, operating income, etc.). Performance goals could be absolute or relative to the performance of one or more comparable companies or indices, and could, in the Committee’s discretion, exclude the impact of charges for restructuring, discontinued operations, extraordinary items, and other unusual non-recurring items, and the cumulative effects of tax or accounting changes (each as defined by generally accepted accounting principles and as identified in the Company’s financial statements or other SEC filings). Limitations Subject to certain adjustments for changes in our corporate or capital structure described above, participants who were previously granted awards intended to qualify as “performance-based” compensation under Code Section 162(m) could not be granted stock options or stock appreciation rights covering more than 5,000,000 shares in any calendar year or more than 2,000,000 shares for all share-based performance awards in any calendar year. The maximum dollar value of cash-based performance awards granted under the 2013 Omnibus Incentive Plan in any calendar year to any employee that were intended to satisfy the requirements for “performance-based compensation” under Code Section 162(m) could not exceed $10 million for any annual incentive award and $10 million for all other cash-based performance awards. Transferability Awards granted under the 2013 Omnibus Incentive Plan generally are not transferable other than by will or the laws of descent and distribution, except that in certain instances transfers may be made to or for the benefit of designated family members of the participant for no value. | | | | | | 46 | | T-Mobile 2018 Proxy Statement | | |
PROPOSAL 3 - APPROVAL OF AN AMENDMENT TO THE COMPANY’S 2013 OMNIBUS INCENTIVE PLAN Transactions; Change in Control Effect of Transactions. Subject to the change in control provisions below, in the event of a liquidation or dissolution of the Company or a reorganization, merger, exchange or consolidation of the Company or involving our common stock, each outstanding award will be treated as provided in the applicable definitive transaction agreement, or, if not so provided in such agreement, the holders of outstanding awards will be entitled to receive the transaction consideration with respect to the shares of common stock underlying their awards (subject to the satisfaction of any vesting or other restrictions as determined by the Committee). Effect of Change in Control. Under the 2013 Omnibus Incentive Plan, in the event of a change in control of the Company (as defined in the 2013 Omnibus Incentive Plan) in which outstanding awards are not assumed, converted or replaced by the resulting entity, then upon the change in control all outstanding awards other than performance awards will become fully exercisable, all restrictions will lapse, and such awards will become vested and nonforfeitable, and all performance awards will be deemed to be satisfied and paid at the greater of (a) target or (b) the actual level of performance determined as if the applicable performance period had ended as of (i) the last trading day immediately preceding the change in control or (ii) if determined by the Compensation Committee to be necessary or appropriate based on the applicable performance goal, as of another specified date preceding the change in control (e.g., the Company’s preceding fiscal quarter end), prorated up to and including the date of the change in control. In the event of a change in control in which outstanding awards are assumed, converted or replaced by the resulting entity, all outstanding awards other than performance awards will become fully exercisable, all restrictions will lapse, and such awards will become vested and nonforfeitable, and all performance awards will be deemed to be satisfied and paid at the greater of (a) target or (b) the actual level of performance determined as if the applicable performance period had ended as of (i) the last trading day immediately preceding the change in control or (ii) if determined by the Compensation Committee to be necessary or appropriate based on the applicable performance goal, as of another specified date preceding the change in control (e.g., the Company’s preceding fiscal quarter end) (without proration) if, within one year after the change in control the participant’s employment or service is terminated by the Company other than for cause or by the participant for good reason. Notwithstanding the foregoing, in the event of a change in control, all outstanding awards held by non-employee directors will become fully exercisable, all restrictions will lapse, and such awards will become vested and nonforfeitable, and any specified performance goals will be deemed to be satisfied at the greater of (a) target or (b) the actual level of performance determined as if the applicable performance period had ended as of (i) the last trading day immediately preceding the change in control or (ii) if determined by the Compensation Committee to be necessary or appropriate based on the applicable performance goal, as of another specified date preceding the change in control (e.g., the Company’s preceding fiscal quarter end). Term; Termination and Amendment of the 2013 Omnibus Incentive Plan Unless earlier terminated by the Board, the 2013 Omnibus Incentive Plan will terminate on, and no further awards may be granted after, June 4, 2023, which is ten years after the date on which the 2013 Omnibus Incentive Plan was originally approved by stockholders. The Board may amend, suspend or terminate the 2013 Omnibus Incentive Plan at any time, except that, if required by applicable law, regulation or stock exchange rule, stockholder approval will be required for any amendment. The amendment, suspension or termination of the 2013 Omnibus Incentive Plan or the amendment of an outstanding award generally may not, without a participant’s consent, materially impair the participant’s rights under an outstanding award. Federal Income Tax Information The following is a brief summary of the U.S. federal income tax consequences of the 2013 Omnibus Incentive Plan generally applicable to the Company and to participants in the 2013 Omnibus Incentive Plan who are subject to U.S. federal taxes. The summary is based on the Code, applicable Treasury Regulations and administrative and judicial interpretations thereof, each as in effect on the date of this Proxy Statement, and is, therefore, subject to future changes in the law, possibly with retroactive effect. The summary is general in nature and does not purport to be legal or tax advice. Furthermore, the summary does not address issues relating to any U.S. gift or estate tax consequences or the consequences of any state, local or foreign tax laws. This summary is not intended as tax advice to participants, who should consult their own tax advisors. Nonqualified Stock Options. A participant generally will not recognize taxable income upon the grant or vesting of a nonqualified stock option. Upon the exercise of a nonqualified stock option, a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the stock option on the date of exercise and the exercise price of the stock option. The basis that participants have in shares of common stock, for purposes of determining their gain or loss on subsequent disposition of such shares of common stock, generally will be the fair market value of the shares of common stock on the date the participants exercise their options. Any subsequent gain or loss will be generally taxable as capital gains or losses. Incentive Stock Options. A participant generally will not recognize taxable income upon the grant or exercise of an incentive stock option. However, the amount by which the fair market value of the shares of common stock at the time of exercise exceeds the option exercise price will be an “item of adjustment” for purposes of the alternative minimum tax. If a participant sells or otherwise disposes of the shares acquired upon exercise of an incentive stock option after the later of (a) one year from the date the participant exercised the option and (b) two years from the grant date of the stock option, the participant generally will recognize long-term capital gain or loss equal to the difference between the amount the participant received in the disposition and the exercise price of the stock option. If a participant sells or otherwise disposes of shares acquired upon exercise of an incentive stock option before these holding period requirements are satisfied, the disposition will constitute a “disqualifying disposition,” and the participant generally will recognize taxable ordinary income in the year of disposition equal to the excess of the fair market value of the shares on the date of exercise over the exercise price of the stock option (or, if less, the excess of the amount realized on the disposition of the shares over the exercise price of the stock option). The balance of the participant’s gain on a disqualifying disposition, if any, will be taxed as short-term or long-term capital gain, as the case may be. | | | | | | | T-Mobile 2018 Proxy Statement | | 47 |
PROPOSAL 3 - APPROVAL OF AN AMENDMENT TO THE COMPANY’S 2013 OMNIBUS INCENTIVE PLAN Incentive stock options exercised more than three months after a participant terminates employment, other than by reason of death or disability, will be taxed as a non-qualified stock option, and the participant will have been deemed to have received income on the exercise taxable at ordinary income rates. Stock Appreciation Rights. A participant generally will not recognize taxable income upon the grant or vesting of an SAR. Upon the exercise of an SAR, a participant generally will recognize compensation taxable as ordinary income (and we will be entitled to a deduction) in an amount equal to the difference between the fair market value of the shares underlying the SAR on the date of exercise and the exercise price of the SAR. Restricted Stock Units. A participant generally will not have taxable income upon the grant of restricted stock units. Instead, the participant will recognize ordinary income at the time of vesting or payout equal to the fair market value (on the vesting or payout date) of the shares or cash received. Other Awards. The current federal income tax consequences of other awards authorized under the 2013 Omnibus Incentive Plan generally follow certain basic patterns: nontransferable restricted stock subject to a substantial risk of forfeiture results in income recognition equal to the excess of the fair market value over the price paid, if any, only at the time the restrictions lapse (unless the recipient elects to accelerate recognition as of the date of grant); stock-based performance awards and other types of awards are generally subject to income tax at the time of payment, vesting or settlement based on the fair market value of the award on that date. Compensation otherwise effectively deferred will generally be subject to income taxation when paid. In each of the foregoing cases, we will generally have a corresponding deduction at the time the participant recognizes income. Tax Consequences to the Company. In the foregoing cases, we generally will be entitled to a deduction at the same time, and in the same amount, as a participant recognizes ordinary income, subject to certain limitations imposed under the Code. Code Section 409A. We intend that awards granted under the 2013 Omnibus Incentive Plan comply with, or be exempt from, Code Section 409A, but make no representation or warranty to that effect. To the extent determined necessary or appropriate by the Board or Committee, the 2013 Omnibus Incentive Plan and applicable award agreements may be amended to further comply with Code Section 409A or to exempt the applicable awards from Code Section 409A. Code Section 162(m) Code Section 162(m) denies a deduction to any publicly held corporation for compensation paid to certain “covered employees” in a taxable year to the extent that compensation to such covered employee exceeds $1,000,000. However, for taxable years beginning on or before December 31, 2017, this deduction limit included an exception for “qualified performance-based compensation”. As discussed in “Executive Compensation—Other Matters—Tax and Accounting Considerations”, the recently-enacted Tax Act eliminated the exemption for “qualified performance-based compensation” for tax years beginning after December 31, 2017. In order to qualify for the “qualified performance-based compensation” exemption, Code Section 162(m) (as in effect prior to the Tax Act) generally requires that (1) the award is granted by a compensation committee composed solely of two or more “outside directors,” (2) the plan contains a per-employee limitation on the number of awards which may be granted during a specified period, (3) the material terms of the plan are disclosed to and approved by the stockholders, (4) for stock options and SARs, the amount of compensation an employee could receive is based solely on an increase in the value of the stock after the date of the grant (which requires that the exercise price of the option is not less than the fair market value of the stock on the date of grant), and for awards other than options and SARs, established performance criteria that must be met before the award actually will vest or be paid, and (5) in the case of awards other than stock options and stock appreciation rights, the compensation committee has certified that the performance goals have been met prior to payment. The 2013 Omnibus Incentive Plan was designed to permit the Committee to grant awards intended to qualify as “performance-based compensation” under Code Section 162(m); and the Committee has historically considered the potential impact of Code Section 162(m) when granting performance awards under the 2013 Omnibus Incentive Plan. In light of the repeal of the performance-based compensation exception to Code Section 162(m), the Committee may in the future approve compensation that would not have qualified as performance-based compensation under Code Section 162(m) as in effect prior to the Tax Act. Tax Withholding. We are authorized to deduct or withhold from any award granted or payment due under the 2013 Omnibus Incentive Plan, or require a participant to remit to us, the amount of any withholding taxes due in respect of the award or payment and to take such other action as may be necessary to satisfy all obligations for the payment of applicable withholding taxes. We are not required to issue any shares of common stock or otherwise settle an award under the 2013 Omnibus Incentive Plan until all tax withholding obligations are satisfied. Plan Benefits Certain tables in this Proxy Statement under the heading “Compensation Discussion and Analysis,” including the Summary Compensation Table for 2017, Grants of Plan-Based Awards for 2017 table and Outstanding Equity Awards at Fiscal Year-End for 2017 table set forth information with respect to prior awards granted to our individual named executive officers under the 2013 Omnibus Incentive Plan. The grant of any award is within the discretion of the Committee. Therefore, it is not possible to determine the benefits that will be received in the future by participants under the 2013 Omnibus Incentive Plan, as amended by the Amendment. | | | | | | 48 | | T-Mobile 2018 Proxy Statement | | |
PROPOSAL 3 - APPROVAL OF AN AMENDMENT TO THE COMPANY’S 2013 OMNIBUS INCENTIVE PLAN Awards Granted The following table provides information with respect to awards granted under the 2013 Omnibus Incentive Plan to our named executive officers, directors and employees since its inception through March 31, 2018. As stated above, it is not possible to determine the amounts of awards that will be granted in the future to participants under the 2013 Omnibus Incentive Plan, as amended by the Amendment. | | | | | | | | | Name and Position | | Shares Underlying Restricted Stock Units Grants | | | Restricted Stock Granted | | John J. Legere, President & CEO | | | 3,359,768 | | | | — | | J. Braxton Carter, EVP & Chief Financial Officer | | | 904,450 | | | | — | | G. Michael Sievert, Chief Operating Officer | | | 953,600 | | | | — | | Neville R. Ray, EVP & Chief Technology Officer | | | 690,272 | | | | — | | Thomas C. Keys, President, MetroPCS | | | 874,207 | | | | — | | All current executive officers as a group | | | 8,417,637 | | | | — | | Thomas Dannenfeldt, Director | | | — | | | | — | | Srikant M. Datar, Director | | | 20,782 | | | | — | | Lawrence H. Guffey, Director | | | 20,782 | | | | — | | Timotheus Höttges, Director | | | — | | | | — | | Bruno Jacobfeuerborn, Director | | | — | | | | — | | Raphael Kübler, Director | | | — | | | | — | | Thorsten Langheim, Director | | | — | | | | — | | Teresa A. Taylor, Director | | | 20,782 | | | | — | | Kelvin R. Westbrook, Director | | | 20,782 | | | | — | | Olaf Swantee, Nominee for election as a Director | | | — | | | | — | | All current non-executive directors as a group | | | 99,106 | | | | — | | All non-executive officer employees as a group | | | 53,828,516 | | | | 354,459 | |
*The closing price of the Company’s common stock as of March 29, 2018 was $61.04 per share. | | | | | | | T-Mobile 2018 Proxy Statement | | 49 |
Security Ownership of Principal Stockholders and Management The following table sets forth information as of March 31, 20152018 regarding the beneficial ownership of T-Mobile US, Inc.our common stock by: each of our Named Executive Officers;
all of our directors and executive officers as a group; and
each person known by us to beneficially own more than 5% of the outstanding shares of our common stock.
| ∎ | | each of the Named Executive Officers; |
| ∎ | | all of our directors and executive officers as a group; and |
| ∎ | | each person known by us to beneficially own more than 5% of the outstanding shares of our common stock. |
The beneficial ownership information has been presented in accordance with SEC rules and is not necessarily indicative of any other purpose. Unless otherwise indicated below and except to the extent authority is shared by spouses under applicable law, to our knowledge, each of the persons set forth below has sole voting and investment power with respect to all shares of common stock shown as beneficially owned by him or her. The number of shares of common stock used to calculate each listed person’s percentage ownership of each such class includes the shares of common stock underlying options or other convertible securities held by such person that are exercisable or vest within 60 days after March 31, 2015. None of our directors or executive officers owns any of our outstanding shares of 5.50% Mandatory Convertible Preferred Stock, Series A, as of March 31, 2015.2018. | | | | Common Stock Beneficially Owned | | | Common Stock Beneficially Owned | | | | | Number | | | Percentage | | | Number | | | Percentage | | | Directors, Nominees and Named Executive Officers (1) | | | | | | | | | | James C. Alling | | | 21,083 | | | | | | W. Michael Barnes(2) | | | 200,719 | | | | * | | | | 141,167 | | | | * | | | J. Braxton Carter(3) | | | 585,364 | | | | * | | | J. Braxton Carter | | | | 175,222 | | | | * | | | Thomas Dannenfeldt | | | — | | | | * | | | | — | | | | * | | | Srikant M. Datar(4) | | | 12,804 | | | | * | | | Srikant M. Datar (3) | | | | 25,735 | | | | * | | | Lawrence H. Guffey | | | 4,804 | | | | * | | | | 17,735 | | | | * | | | Timotheus Höttges | | | — | | | | * | | | | — | | | | * | | | Bruno Jacobfeuerborn | | | — | | | | * | | | | — | | | | * | | | Gary A. King | | | 4,248 | | | | | Thomas C. Keys | | | | 333,444 | | | | * | | | Raphael Kübler | | | — | | | | * | | | | — | | | | * | | | Thorsten Langheim | | | — | | | | * | | | | — | | | | * | | | John J. Legere | | | 52,708 | | | | * | | | | 1,473,051 | | | | * | | Neville R. Ray(4) | | | | 204,369 | | | | * | | | G. Michael Sievert | | | 8,938 | | | | | | 294,753 | | | | * | | | Teresa A. Taylor | | | 4,804 | | | | * | | | | 17,735 | | | | * | | | Kelvin R. Westbrook | | | 4,804 | | | | * | | | | 17,735 | | | | * | | | All directors and executive officers as a group (21 persons) | | | 1,471,577 | | | | * | | | | Olaf Swantee | | | | — | | | | * | | All directors and executive officers as a group (19 persons) | | | | 3,151,143 | | | | * | | | Beneficial Owners of More Than 5%: | | | | | | | | | Deutsche Telekom AG(5) Friedrich-Ebert-Alle 140 53113 Bonn, Germany | | | 535,286,077 | | | | 65.95 | % | | | 538,590,941 | | | | 63.14 | % |
| (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 122,74333,600 shares of common stock issuable upon exercise of options. |
| (3) | Includes 512,800 shares of common stock issuable upon exercise of options.
|
(4) | 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. |
(5)(4) | Includes 6,250 shares of common stock from vested RSU’s that have been deferred. |
| (5) | According to the Schedule 13D/A filed by Deutsche Telekom on January 15, 2014,March 16, 2018, reflecting ownership of 535,286,077538,590,941 shares of common stock as of December 31, 2013.March 6, 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 Notice of 2015 Annual Meeting and Proxy Statement50 | | 37T-Mobile 2018 Proxy Statement | | |
Transactions with Related Persons and Approval RELATED PERSON TRANSACTIONS Since the Business Combination, we have not been a participant in any related person transactions (as defined in the Related Person Transaction Policy described below) other than as described below in “Transactions with Deutsche Telekom”. We have adoptedare party to a written policy on the review and approvalnumber of related person transactions with our majority stockholder, Deutsche Telekom and its affiliates. These transactions include important financing arrangements and commercial arrangements pursuant to which we obtain or provide various services and/or license intellectual property or technology. Each of the related personsperson transactions with Deutsche Telekom or its affiliates described below that were entered into from and after the consummation of the Business Combination was reviewed and approved in accordance with our current Related Person Transaction Policy (the “Related Person Transaction Policy”). , which includes consideration of whether the terms are comparable to those generally available in arm’s-length transactions with unaffiliated third parties and whether the related person transaction is consistent with the best interests of the Company. All factors that are considered by the Audit committee are described below. RELATED PERSON TRANSACTION POLICY Under the Company’s written Related Person Transaction Policy, any proposed or existing transaction, arrangement or relationship involving a director, director nominee, executive officer, or a member of the immediate family of any of the foregoing, or a greater than 5% owner of our stock (a “related person”) must be reviewed by our General Counsel to determine whether such transaction is a related person transaction. A “related person transaction” is any transaction, arrangement or relationship or any series of transactions, arrangements or relationships in which: the Company, or any of its subsidiaries, is, was or will be a participant;
the aggregate amount involved exceeds, or may be expected to exceed, $120,000; and
any related person has, had or will have a direct or indirect material interest.
| ∎ | | the Company, or any of its subsidiaries, is, was or will be a participant; |
| ∎ | | the aggregate amount involved exceeds, or may be expected to exceed, $120,000; and |
| ∎ | | any related person has, had or will have a direct or indirect material interest. |
A transaction, arrangement or relationship that is determined to be a related person transaction must be submitted to our Audit Committee for review, approval or ratification based on certain factors, including the following: the nature and terms of the related person transaction and the terms of the related person transaction;
| ∎ | | the nature of the related person transaction and the terms of the related person transaction; |
the extent of the related person’s interest in the transaction;
the business reasons for the Company to enter into the related person transaction;
whether the transaction involves the provision of goods or services to the Company that are available from unaffiliated third-parties;
whether the terms are comparable to those generally available in arms’-length transactions with unaffiliated third parties;
whether the related person transaction is consistent with the best interests of the Company; and
in the case of any related person transaction involving an outside director of the Company, the potential impact of such related person transaction on such outside director’s independence and the Company’s continued compliance with the requirements under the Exchange Act, the listing rules of the NYSE or any other exchange on which the Company’s securities are traded, or other applicable laws and regulations.
| ∎ | | the extent of the related person’s interest in the transaction; |
| ∎ | | the business reasons for the Company to enter into the related person transaction; |
| ∎ | | whether the transaction involves the provision of goods or services to the Company that are available from unaffiliated third parties; |
| ∎ | | whether the terms are comparable to those generally available in arm’s-length transactions with unaffiliated third parties; |
| ∎ | | whether the related person transaction is consistent with the best interests of the Company; and |
| ∎ | | in the case of any related person transaction involving an outside director of the Company, the potential impact of such related person transaction on such outside director’s independence and the Company’s continued compliance with the requirements under the Exchange Act, the NASDAQ rules, or other applicable rules, laws and regulations. |
If the proposed related person transaction is with Deutsche Telekom or any of its affiliates while the Stockholder’s Agreement is in effect, the Audit Committee must unanimously approve such transaction or must submit such transaction to the full Board of Directors for approval. Transactions with Deutsche TelekomTRANSACTIONS WITH DEUTSCHE TELEKOM
Certain of the related person transactions with Deutsche Telekom or its affiliates described below were not required to be approved in accordance with our current Related Person Transaction Policy because they were entered into prior to or in connection with the consummation of the Business Combination, at which time Deutsche Telekom became a “related person” and our current Related Person Transaction Policy became effective. Each of the related person transactions with Deutsche Telekom or its affiliates described below that were entered into from and after the consummation of the Business Combination were reviewed and approved in accordance with our current Related Person Transaction Policy. Stockholder’s Agreement Pursuant to the Stockholder’s Agreement we entered into with Deutsche Telekom on April 30, 2013 in connection with the Business Combination, we granted certain governance and other rights to Deutsche Telekom and Deutsche Telekom agreed to certain restrictions, as outlined below: So long as Deutsche Telekom’s stock ownership percentage is at least 10%, Deutsche Telekom has the right to designate as nominees for election to our Board of Directors a number of individuals in proportion to its stock ownership percentage, rounded to the nearest whole number. We and Deutsche Telekom have agreed to use our reasonable best efforts to cause the Deutsche Telekom designees to be elected to our Board.
Each committee of the Board shall include in its membership a number of Deutsche Telekom designees in proportion to its stock
| ∎ | | So long as Deutsche Telekom’s stock ownership percentage is at least 10%, Deutsche Telekom has the right to designate as nominees for |
| | | election to our Board a number of individuals in proportion to its stock ownership percentage, rounded to the nearest whole number. We and Deutsche Telekom have agreed to use our reasonable best efforts to cause the Deutsche Telekom designees to be elected to our Board. |
| ∎ | | Each committee of the Board shall include in its membership a number of Deutsche Telekom designees in proportion to its stock ownership percentage, rounded to the nearest whole number, except to the extent such membership would violate applicable securities laws or stock exchange rules. No committee of the Board may consist solely of directors who are also officers, employees, directors or affiliates of Deutsche Telekom. We and Deutsche Telekom have agreed to use our reasonable best efforts to cause at least three members of our Board to be considered “independent” under SEC and NYSENASDAQ rules, including for purposes of Rule 10A-3 promulgated under the Exchange Act. |
| ∎ | | So long as Deutsche Telekom beneficially owns 30% or more of the outstanding shares of our common stock, without Deutsche Telekom’s |
So long as Deutsche Telekom beneficially owns 30% or more of the outstanding shares of our common stock, without Deutsche Telekom’s consent we are not permitted to take certain actions, including the incurrence of debt (excluding certain permitted debt) if our consolidated ratio of debt to cash flow for the most recently
| | | | | | 38 | | T-Mobile 2018 Proxy Statement | | 51 |
TRANSACTIONS WITH RELATED PERSONS AND APPROVAL | | | consent we are not permitted to take certain actions, including the incurrence of debt (excluding certain permitted debt) if our consolidated ratio of debt to cash flow for the most recently ended four full fiscal quarters for which financial statements are available would exceed 5.25 to 1.0 on a pro forma basis, the acquisition of any business, debt or equity interests, operations or assets of any person for consideration in excess of $1 billion, the sale of any of the Company’s or its subsidiaries’ divisions, businesses, operations or equity interests for consideration in excess of $1 billion, any change in the size of our Board, of Directors, the issuances of equity securities in excess of 10% of our outstanding shares or to repurchasefor the purpose of redeeming or purchasing debt held by Deutsche Telekom, the repurchase or redemption of equity securities or the declaration of extraordinary or in-kind dividends or distributions other than on a pro rata basis, or the termination or hiring of our Chief Executive Officer. |
We must notify Deutsche Telekom any time it is reasonably likely that we will default on any indebtedness with a principal amount greater than $75 million and Deutsche Telekom will have the right, but not the obligation, to provide us new debt financing up to the amount of the indebtedness that is the subject of the potential default plus any applicable prepayment or other penalties, on the same terms and conditions as such indebtedness (together with any waiver of the potential default).
As long as Deutsche Telekom beneficially owns 10% or more of the outstanding shares of our common stock, we must provide Deutsche Telekom with certain information and consultation rights, subject to certain confidentiality restrictions.
During the term of the Stockholder’s Agreement, Deutsche Telekom is not permitted to, and is required to cause the Deutsche Telekom designees then serving as directors on our Board of Directors not to, support, enter into or vote in favor of any controlling stockholder transaction, unless such transaction is approved by a majority of the directors on our Board, which majority includes a majority of the directors on our Board that are not affiliates of Deutsche Telekom. In August 2013, the Company (upon the approval of a majority of the directors on our Board, which included a majority of directors not affiliated with Deutsche Telekom) and Deutsche Telekom agreed to waive the approval requirement described above with respect to (i) any controlling stockholder transaction in which the amount involved does not exceed, or is not expected to exceed, $120,000; or (ii) any controlling stockholder transaction in which the amount involved exceeds, or is expected to exceed, $120,000 that has been unanimously approved by the Audit Committee.
| ∎ | | We must notify Deutsche Telekom any time it is reasonably likely that we will default on any indebtedness with a principal amount greater than $75 million and Deutsche Telekom will have the right, but not the obligation, to provide us new debt financing up to the amount of the indebtedness that is the subject of the potential default plus any applicable prepayment or other penalties, on the same terms and conditions as such indebtedness (together with any waiver of the potential default). |
| ∎ | | As long as Deutsche Telekom beneficially owns 10% or more of the outstanding shares of our common stock, we must provide Deutsche Telekom with certain information and consultation rights, subject to certain confidentiality restrictions. |
| ∎ | | During the term of the Stockholder’s Agreement, Deutsche Telekom is not permitted to, and is required to cause the Deutsche Telekom designees then serving as directors on our Board not to, support, enter into or vote in favor of any controlling stockholder transaction, unless such transaction is approved by a majority of the directors on our Board, which majority includes a majority of the directors on our Board that are not affiliates of Deutsche Telekom. In August 2013, the Company (upon the approval of a majority of the directors on our Board, which included a majority of directors not affiliated with Deutsche Telekom) and Deutsche Telekom agreed to waive the approval requirement described above with respect to (i) any controlling stockholder transaction in which the amount involved does not exceed, or is not expected to exceed, $120,000; or (ii) any controlling stockholder transaction in which the amount involved exceeds, or is expected to exceed, $120,000 that has been unanimously approved by the Audit Committee. |
| ∎ | | Deutsche Telekom and its affiliates are generally prohibited from acquiring more than 80.1% of the outstanding shares of our common stock unless they make an offer to acquire all of the then-remaining outstanding shares of our common stock at the same price and on the same terms and conditions as the proposed acquisition from all other stockholders of the Company, which is either (i) accepted or approved by the majority of the directors, which majority includes a majority of the directors that are not affiliates of Deutsche Telekom, or (ii) accepted or approved by holders of a majority of our common stock held by stockholders other than Deutsche Telekom or its affiliates. |
| ∎ | | Deutsche Telekom is prohibited from transferring any shares of the Company’s common stock in any transaction that would result in the transferee owning more than 30% of the outstanding shares of the Company’s common stock unless such transferee offers to acquire all of the then-outstanding shares of the Company’s common stock at the same price and on the same terms and conditions as the proposed transfer. |
Deutsche Telekom and its affiliates are generally prohibited from acquiring more than 80.1% of the outstanding shares of our common stock unless it makes an offer to acquire all of the then remaining outstanding shares of our common stock at the same price and on the same terms and conditions as the proposed acquisition from all other stockholders of the Company, which is either (i) accepted or approved by the majority of the directors, which majority includes a majority of the directors that are not affiliates of Deutsche Telekom, or (ii) accepted or approved by holders of a majority of our common stock held by stockholders other than Deutsche Telekom or its affiliates.
Deutsche Telekom is prohibited from transferring any shares of the Company’s common stock in any transaction that would result in the transferee’s owning more than 30% of the outstanding shares of the Company’s common stock unless such transferee offers to acquire all of the then outstanding shares of the Company’s common stock at the same price and on the same terms and conditions as the proposed transfer.
We have granted Deutsche Telekom certain demand and piggyback registration rights for shares of our common stock and debt securities of the Company and its subsidiaries beneficially owned by Deutsche Telekom and acquired in connection with the Business Combination or in the future.
Deutsche Telekom’s ability to compete with the Company in the United States, Puerto Rico and the territories and protectorates of the United States is subject to certain restrictions during the period beginning on the date of the closing of the Business Combination and ending on the date that is two years after the date on which Deutsche Telekom beneficially owns less than 10% of the outstanding shares of the Company’s common stock. In addition, for the period that commenced at the closing of the Business Combination and expires on the first anniversary of the termination of the trademark license in accordance with its terms, Deutsche Telekom may not manufacture, market or distribute any products or services under, or use in any way, the trademark T-Mobile in connection with certain specified activities, other than by the Company and its affiliates in accordance with the terms of the trademark license. The trademark license is more fully described below.
| ∎ | | We have granted Deutsche Telekom certain demand and piggyback registration rights for shares of our common stock and debt securities of the Company and its subsidiaries beneficially owned by Deutsche Telekom and acquired in connection with the Business Combination or in the future. |
| ∎ | | Deutsche Telekom’s ability to compete with the Company in the United States, Puerto Rico and the territories and protectorates of the United States is subject to certain restrictions during the period beginning on the date of the closing of the Business Combination and ending on the date that is two years after the date on which Deutsche Telekom beneficially owns less than 10% of the outstanding shares of the Company’s common stock. In addition, for the period that commenced at the closing of the Business Combination and expires on the first anniversary of the termination of the trademark license in accordance with its terms, Deutsche Telekom may not manufacture, market or distribute any products or services under, or use in any way, the trademark T-Mobile in connection with certain specified activities, other than by the Company and its affiliates in accordance with the terms of the trademark license. The trademark license is more fully described below. |
Trademark License In connection with the Business Combination, we and Deutsche Telekom entered into a trademark license, pursuant to which we received (a) a limited, exclusive, non-revocable and royalty-bearing license to certain T-Mobile trademarks (including Internetinternet domains) for use in connection with telecommunications and broadband products and services in the United States, Puerto Rico and the territories and protectorates of the United States, (b) a limited, non-exclusive, non-revocable and royalty-bearing license to use certain other trademarks for use in connection with telecommunications and broadband products and services in the United States, Puerto Rico and the territories and protectorates of the United States, and (c) free of charge, the right to use the trademark “T-Mobile” as a name for the Company. The initial term of the trademark license ends on December 31, 2018, subject to automatic renewal for successive five-year terms unless we provide notice of our intent not to renew the trademark license prior to the expiration of the then-current term. Thereafter, the trademark license automatically renews for subsequent five-year periods unless we provide 12 months’ notice prior to the expiration of the then-current term. We may terminate the trademark license at any time upon one year’s12-months’ prior notice, and Deutsche Telekom can terminate the trademark license if we abandon the trademarks licensed thereunder or if we commit a material breach. We and Deutsche Telekom are obligated to negotiate a new trademark license when (a) Deutsche Telekom has 50% or less of the voting power of the outstanding shares of capital stock of the Company or (b) any third-party owns or controls, directly or indirectly, 50% or more of the voting power of the outstanding shares of capital stock of the Company, or otherwise has the power to direct or cause the direction of the management and policies of the Company. If we | | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement | | 39 |
TRANSACTIONS WITH RELATED PERSONS AND APPROVAL
and Deutsche Telekom fail to agree on a new trademark license, either we or Deutsche Telekom may terminate the trademark license and such termination shall be effective, in the case of clause (a) above, on the third anniversary after notice of termination and, in the case of clause (b) above, on the second anniversary after notice of termination. We have the right to continue to sell products under the licensed trademarks for a period of one year12 months after termination or expiration of the trademark license. Additionally, we have the right to continue to use advertising materials bearing the licensed | | | | | | 52 | | T-Mobile 2018 Proxy Statement | | |
TRANSACTIONS WITH RELATED PERSONS AND APPROVAL trademarks for a period of up to six months after termination or expiration of the trademark license. We are obligated to pay Deutsche Telekom a royalty in an amount equal to 0.25%, which we refer to as the royalty rate, (the “royalty rate”) of the net revenue (as defined in the trademark license) generated by products and services sold by the Company under the licensed trademarks. In 2014,2017, we paid Deutsche Telekom royalties totaling approximately $57.8$78.9 million under the terms of the trademark license. On the fifth anniversary of the trademark license, the Company and Deutsche Telekom have agreed to adjust the royalty rate to the royalty rate found under similar licenses for trademarks in the field of wireless telecommunication, broadband and information products and services in the territory through a binding benchmarking process. The trademark license contains certain quality control requirements, branding guidelines and approval processes that the Company is obligated to maintain. Deutsche Telekom is obligated to indemnify us against trademark infringement claims with respect to certain licensed T-Mobile marks and has the right (but not the obligation) to indemnify us against trademark infringement claims with respect to certain other licensed trademarks. If Deutsche Telekom chooses not to defend us against trademark infringement claims with respect to certain other licensed trademarks, we have the right to defend ourselfourselves against such claim. We are obligated to indemnify Deutsche Telekom against third-party claims due to the Company’s advertising or anti-competitive use by the Company of the licensed trademarks. Except for indemnification obligations and intentional misconduct, the liability of the Company and Deutsche Telekom is limited to€1 million per calendar year. Financing Arrangements Senior Unsecured Notes Senior Reset Notes In connection with the Business Combination, on April 28, 2013,T-Mobile USA issued senior unsecured notes in an aggregate principal amount of $11.2 billion to Deutsche Telekom pursuant to an indenture between T-Mobile USA, the guarantors party thereto, and Deutsche Bank Trust Company Americas, as trustee.trustee (the “April 2013 Indenture”). These notes were issued as part of a recapitalization of T-Mobile USA pursuant to which, among other things, certain previously outstanding notes payable to Deutsche Telekom were retired. The new notes are guaranteed by the Company and by all of T-Mobile USA’s wholly ownedwholly-owned domestic restricted subsidiaries (other than certain designated special purpose entities, a certain reinsurance subsidiary and immaterial subsidiaries), all of T-Mobile USA’s restricted subsidiaries that guarantee certain of T-Mobile USA’s indebtedness, and any future subsidiary of the Company that directly or indirectly owns any of T-Mobile USA’s equity interests.interests (collectively, the “Guarantors”). The notes originally issued to Deutsche Telekom were comprised of five series of senior unsecured notes with interest rates that remain constant through maturity (the “non-reset notes”) and five series of senior unsecured notes with interest rates that will be reset at various intervals (the “reset notes”), having tenors ranging from six to ten years. In October 2013, Deutsche Telekom sold the non-reset notes to third parties in a secondary public offering. In April 2017, $2.5 billion in outstanding aggregate principal amount of reset notes were redeemed in exchange for the issuance to Deutsche Telekom of additional senior unsecured notes, as described below. The Company paid Deutsche Telekom approximately $79.1 million in early redemption fees for the notes redeemed. The no-call period with respect to each series of reset notes ranges from four to six years after the issuance thereof, which is two or three years after the applicable interest reset date of such series. Each series of the reset notes has an initial aggregate principal amount of $1.25 billion, except that the series of reset notes with a tenor of ten years has an initial aggregate principal amount of $600 million. The interest rates applicable to the reset notes were determined at the closing of the Business Combination. The interest raterates applicable to the reset notes will bewere reset at the applicable time,times, according to a formula specified in the indenture governing the reset notes. The indenture governing the reset notes contains customary events of default, covenants and other terms, including, among other things, covenants that restrict the ability of the issuer and its subsidiaries to, among other things, pay dividends and make certain other restricted payments, incur indebtedness and issue preferred stock, create liens on assets, sell or otherwise dispose of assets, enter into transactions with affiliates and enter new lines of business. These covenants include certain customary baskets, exceptions and incurrence-based ratio tests. The indenture does not contain any financial maintenance covenants. Pursuant to a Noteholder Agreement entered into by T-Mobile USA and Deutsche Telekom upon the closing of the Business Combination, Deutsche Telekom has certain special rights, and is subject to certain special restrictions, that do not apply to other persons who may become holders of the reset notes, including among other things (i) a more broadly defined change in control put right, (ii) restrictions on its ability to tender the notes into a change-in-control offer following a change in control resulting from a transfer of common stock of the Company by Deutsche Telekom unless all holders of common stock are required or entitled to participate on the same terms, (iii) a right to consent to equity issuances the proceeds of which would be used to redeem reset notes held by Deutsche Telekom, and (iv) a right to consent to any redemption of the reset notes held by Deutsche Telekom with the proceeds of any equity issuance by T-Mobile USA or the Company. During 2014, we2017, the Company paid Deutsche Telekom approximately $321.0$338.7 million in interest on the reset notes. April and September 2017 Issuances On April 27, 2017 and on April 28, 2017, pursuant to the terms of a purchase agreement, dated as of March 13, 2017, among T-Mobile USA, the guarantors party thereto (including the Company), and Deutsche Telekom (the “March Purchase Agreement”), T-Mobile USA issued to Deutsche Telekom (i) $500.0 million in aggregate principal amount of its 4.000% Senior Notes due 2022-1 (the “Initial 2022 Notes”), (ii) an additional $500.0 million in aggregate principal amount of its 4.000% Senior Notes due 2022-1 (the “Additional 2022 Notes” and, together with the Initial 2022 Notes, the “2022 Notes”), (iii) $1.25 billion in aggregate principal amount of its 5.125% Senior Notes due 2025-1 (the “2025 Notes”) and (iv) $750.0 million in aggregate principal amount of its 5.375% Senior Notes due 2027-1 (the “Initial 2027 Notes” and, together with the 2022 Notes and the 2025 Notes, the “April Notes”). Concurrently with the issuance, T-Mobile USA redeemed through net settlement $2.5 billion in outstanding aggregate principal amount of reset notes (the “DT Exchange Notes”). T-Mobile USA paid Deutsche Telekom $158 million in early redemption fees and accrued interest due on the DT Exchange Notes. | | | | | | 40 | | T-Mobile 2018 Proxy Statement | | 53 |
TRANSACTIONS WITH RELATED PERSONS AND APPROVAL In addition, in September 2017, we issued to Deutsche Telekom $500 million in aggregate principal amount of 5.375% Senior Notes due 2027 (the “Additional 2027 Notes”, together with the Initial 2027 Notes, the “2027 Notes” and together with the April Notes, the “March Purchase Agreement Notes”), which is the final tranche of the notes to be issued pursuant to the March Purchase Agreement. T-Mobile USA was not required to pay any upfront fees, underwriting fees, new issuance concession or other consideration to Deutsche Telekom in connection the issuance and sale of the March Purchase Agreement Notes. The March Purchase Agreement Notes were issued pursuant to the April 2013 Indenture, as amended and supplemented on or prior to the date of such issuance. The 2022 Notes bear interest at a rate of 4.000% per year and mature on April 15, 2022. The 2025 Notes bear interest at a rate of 5.125% per year and mature on April 15, 2025. The 2027 Notes bear interest at a rate of 5.375% per year and mature on April 15, 2027. T-Mobile USA pays interest on each series of the March Purchase Agreement Notes semiannually in arrears on each April 15 and October 15. The March Purchase Agreement Notes are guaranteed on a senior unsecured basis by the Guarantors. The April 2013 Indenture contains covenants that, among other things, restrict the ability of T-Mobile USA and its restricted subsidiaries to incur more debt, pay dividends and make distributions, make certain investments, repurchase stock, create liens or other encumbrances, enter into transactions with affiliates, enter into agreements that restrict dividends or distributions from subsidiaries, and merge, consolidate or sell, or otherwise dispose of, substantially all of their assets. The April 2013 Indenture also contains customary events of default. These covenants, events of default and other limitations are subject to a number of important qualifications and exceptions. In addition, if at any time T-Mobile USA exercises any rights with respect to its March 16, 2017 publicly issued 4.000% Senior Notes due 2022, 5.125% Senior Notes due 2025 or 5.375% Senior Notes due 2027, T-Mobile USA is required to exercise the same rights under the corresponding series of the March Purchase Agreement Notes. During 2017, the Company paid Deutsche Telekom approximately $69.0 million in interest on the March Purchase Agreement Notes. May 2017 Issuances On May 9, 2017, pursuant to the terms of several purchase agreements dated March 6, 2016, April 25, 2016 and April 29, 2016, respectively, in each case among T-Mobile USA, the guarantors party thereto (including the Company), and Deutsche Telekom (the “2016 Purchase Agreements”), T-Mobile USA issued to Deutsche Telekom (i) $2.0 billion in aggregate principal amount of T-Mobile USA’s 5.300% Senior Notes due 2021 (the “2021 Notes”) for a purchase price of $2.000 billion, (ii) $1.350 billion in aggregate principal amount of T-Mobile USA’s 6.000% Senior Notes due 2024 (the “$1.350B 2024 Notes”) for a purchase price of approximately $1.390 billion and (iii) $650 million in aggregate principal amount of T-Mobile USA’s 6.000% Senior Notes due 2024 (the “$650M 2024 Notes”, together with the $1.350B 2024 Notes, the “2024 Notes” and together with the 2021 Notes, the “May Notes”) for a purchase price of approximately $674 million. T-Mobile USA used the proceeds from the issuance of the May Notes to fund a portion of the purchase price of spectrum licenses won in the FCC 600 MHz spectrum auction due to the FCC. T-Mobile USA was not required to pay any commitment fees, underwriting fees, new issuance concession or other compensation to Deutsche Telekom in connection with the issuance and sale of the May Notes, but was required to reimburse Deutsche Telekom for its hedging costs related to its commitments under the 2016 Purchase Agreements. The 2021 Notes and the 2024 Notes were issued pursuant to the April 2013 Indenture, as amended and supplemented on or prior to the date of such issuance. The 2021 Notes bear interest at a rate of 5.300% per year and mature on March 15, 2021. T-Mobile USA pays interest on the 2021 Notes semiannually in arrears on each March 15 and September 15. The 2024 Notes bear interest at a rate of 6.000% per year and mature on April 15, 2024. T-Mobile USA pays interest on each series of 2024 Notes semiannually in arrears on each April 15 and October 15. The May Notes are guaranteed on a senior unsecured basis by the Guarantors. The April 2013 Indenture contains covenants that, among other things, restrict the ability of T-Mobile USA and its restricted subsidiaries to incur more debt, pay dividends and make distributions, make certain investments, repurchase stock, create liens or other encumbrances, enter into transactions with affiliates, enter into agreements that restrict dividends or distributions from subsidiaries, and merge, consolidate or sell, or otherwise dispose of, substantially all of their assets. The April 2013 Indenture also contains customary events of default. These covenants, events of default and other limitations are subject to a number of important qualifications and exceptions. During 2017, the Company paid Deutsche Telekom approximately $89.1 million in interest on the May Notes and approximately $11.8 million in hedge expenses. Working Capital Facility On December 29, 2016, T-Mobile USA entered into a new three-year $2.5 billion revolving credit facility (the “working capital facility”) with Deutsche Telekom. The working capital facility is comprised of (i) a three-year $1.0 billion senior unsecured revolving credit agreement (the “unsecured working capital facility”) and (ii) a three-year $1.5 billion senior secured revolving credit agreement (the “secured working capital facility”). UponT-Mobile USA was not required to pay any upfront fees or other consideration to Deutsche Telekom in connection with the closing of the Business Combination,working capital facility. Interest on outstanding borrowings, and commitment fees, under the working capital facility is based on the Company’s leverage profile, which is determined on a quarterly basis in accordance with a debt to cash flow ratio similar to the leverage test included in its Existing Secured Term Loan Facility (as defined below).
The interest rate on borrowings under the unsecured working capital facility is the eurodollar rate plus an applicable margin. The applicable margin for the unsecured working capital facility ranges from 2.00% to 3.25% per annum for eurodollar rate loans. The commitment fee for the unsecured working capital facility ranges from 0.25% to 0.625% per annum. | | | | | | 54 | | T-Mobile 2018 Proxy Statement | | |
TRANSACTIONS WITH RELATED PERSONS AND APPROVAL The interest rate on borrowings under the secured working capital facility is the eurodollar rate plus an applicable margin. The applicable margin for the secured working capital facility ranges from 1.00% to 1.75% per annum for eurodollar rate loans. The commitment fee for the secured working capital facility is 0.25% per annum. The working capital facility does not contain financial maintenance covenants and only contains certain limited covenants on the Company’s and T-Mobile USA’s (and certain of their subsidiaries’) ability to incur liens, sell assets and extend loans and/or guaranties. The working capital facility also contains customary events of default. If Deutsche Telekom ceases to own and control more than 50% of the voting stock of the Company, T-Mobile USA may draw any remaining capacity under the working capital facility and (i) in the case of the secured working capital facility, at T-Mobile’s option, convert the outstanding loans to secured term debt and/or issue senior unsecured high-yield notes to Deutsche Telekom in satisfaction of outstanding loans under the secured working capital facility, in either case, with a tenor equal to the remaining tenor under the secured working capital facility, in an aggregate amount not to exceed the loans then outstanding under the secured working capital facility and (ii) in the case of the unsecured working capital facility, issue senior unsecured high-yield notes to Deutsche Telekom in satisfaction of the outstanding loans under the unsecured working capital facility, with a tenor equal to the remaining tenor under the unsecured working capital facility in an aggregate amount not to exceed the loans then outstanding under the unsecured working capital facility. The working capital facility has the benefit of guarantees from the same entities that are guarantors under the Existing Secured Term Loan Facility. The obligations of T-Mobile USA and Deutsche Telekom entered into a credit agreement pursuant to which Deutsche Telekom made available to T-Mobile USA a revolving credit facility with a maximum principal amount of $500 million, to be used forthe guarantors under the secured working capital facility are secured by a first priority lien on substantially all of T-Mobile USA’s and other general corporate purposes (the “working capital facility”). such guarantors’ assets, subject to certain exceptions. In addition, T-Mobile USA’s obligations under the credit agreement are unsecured but are guaranteed by the Company and each ofT-Mobile USA’s wholly owned domestic restricted subsidiaries (other than certain designated special purpose entities, a certain reinsurance subsidiary and immaterial subsidiaries). The term of thesecured working capital facility is five years after the closing dateare subject to a first priority pledge of the Business Combination. equity interests held by T-Mobile USA may borrow from timeand substantially all of its direct and indirect subsidiaries, subject to timecertain exceptions. The obligations of T-Mobile USA, and the guarantees under the unsecured working capital facility during the term. Outstanding borrowings under the facility bear interest at a variable rate based on the prime rate or eurodollar rate plus a margin ranging from 2.5%are effectively subordinated to 3.0% (for eurodollar rate loans) or 1.5% to 2.0% (for base rate loans) (depending onall of T-Mobile USA’s debt-to-cash flow ratio). Atand the endGuarantors’ existing and future secured indebtedness to the extent of the five-year term,assets securing such indebtedness, and are structurally subordinated to all amounts outstanding under the working capital facility will be due and payable. Loans under the working capital facility may be prepaid without penalty or premium (other than customary eurodollar breakage costs) at any time. The working capital facility requires the payment of additional commitment fees ranging from 0.25% to 0.50% (depending onT-Mobile USA’s debt-to-cash flow ratio) of the amountliabilities and preferred stock of any of T-Mobile USA’s subsidiaries that do not guarantee the undrawn commitment, payable quarterly in arrears. notes.
In 2014,2017, we paid to Deutsche Telekom commitment fees of approximately $2.5 million. The credit agreement governing the working capital facility contains customary events of default, covenants$6.2 million and other terms, including, among other things, restrictionsapproximately $8.4 million in interest on payment of dividends and the making of certain other restricted payments, incurrence of indebtedness and issuance of preferred stock, creation of liens on assets, sales or other dispositions of assets, entry into transactions with affiliates and entry into new lines of business. If loans are outstanding under the working capital facility, then T-Mobile USA is required to maintain a debt-to-cash flow ratio, tested quarterly, as set forth in the credit agreement.
On September 3, 2014, T-Mobile and T-Mobile USA entered into Amendment No. 2 to the credit agreement with Deutsche Telekom and JP Morgan Chase Bank, N.A. (the “Amendment”). The Amendment sets the maximum debt-to-cash flow ratio at 5.00 to 1.00 for fiscal periods ending on or prior to December 31, 2014, 4.50 to 1.00 for fiscal periods ending after December 31, 2014 and on or prior to June 30, 2015 and 4.00 to 1.00 for fiscal periods ending after June 30, 2015. We had no borrowings under the working capital facility in 2014.2017.
On March 29, 2018, T-Mobile USA amended the terms of (a) its secured working capital facility and (b) its unsecured working capital facility. Following these amendments, (i) the range of applicable margin payable under the secured working capital facility is 1.05% to 1.80%, (ii) the range of the applicable margin payable under the unsecured working capital facility is 2.05% to 3.05%, (iii) the undrawn commitment fee applicable to the secured working capital facility is 0.25% to 0.45%, (iv) the range of the undrawn commitment fee applicable to the unsecured working capital facility is 0.20% to 0.575% and (v) the maturity date of the working capital facility is December 29, 2020. The amendments also modify the facility to update certain covenants and other provisions to make them substantially consistent, subject to certain additional carveouts, with T-Mobile USA’s most recently publicly issued bonds. As of March 31, 2018, $455.0 million under the working capital facility was outstanding. Secured Term Loan On January 25, 2017, T-Mobile USA entered into a Second Incremental Facility Amendment among T-Mobile USA, as borrower, Deutsche Bank AG New York Branch (“DB”), as administrative agent, the guarantors party thereto and Deutsche Telekom, as the initial incremental term loan lender, which amended its existing Term Loan Credit Agreement, dated November 9, 2015, as amended by that certain First Incremental Facility Amendment dated as of December 29, 2016 (the “Existing Secured Term Loan Facility”), among the Company, T-Mobile USA, DB and the lenders party thereto pursuant to which Deutsche Telekom agreed to (1) increase its incremental term loan commitment provided to T-Mobile USA under that certain First Incremental Facility Amendment dated as of December 29, 2016 from $660 million to $2 billion and (2) provide to T-Mobile USA an additional $2 billion incremental term loan commitment (collectively, the “Incremental Secured Term Loan Facility”). T-Mobile USA was not required to pay any upfront fees, underwriting fees, original issue discount or other consideration to Deutsche Telekom in connection with the Incremental Secured Term Loan Facility. The loans under the Incremental Secured Term Loan Facility were drawn in two tranches on January 31, 2017 (i) $2 billion of which bear interest at a rate equal to a per annum rate of LIBOR plus a margin of 2.00% and mature on November 9, 2022 and (ii) $2 billion of which bear interest at a rate equal to a per annum rate of LIBOR plus a margin of 2.25% and mature on January 31, 2024. In July 2017, we repriced the $2.0 billion Incremental Secured Term Loan Facility maturing on January 31, 2024, by reducing the interest rate to a per annum rate of LIBOR plus a margin of 2.00%. There is a 0% LIBOR floor under each tranche of the Incremental Secured Term Loan Facility. The loans under the Incremental Secured Term Loan Facility may be prepaid and terminated by T-Mobile USA at any time on any interest payment date without penalty or premium; provided that T-Mobile USA would have to pay a 1% premium in connection with certain refinancings of the Incremental Secured Term Loan Facility with third parties resulting in a lower pricing level. In 2017, we paid to Deutsche Telekom approximately $113.3 million in interest under the Incremental Secured Term Loan Facility. On March 29, 2018, T-Mobile USA amended the terms of the Incremental Secured Term Loan Facility. Following this amendment, the applicable margin payable on LIBOR indexed loans is 1.50% under the $2.0 billion the Incremental Secured Term Loan Facility maturing on November 9, 2022 and 1.75% under the $2.0 billion the Incremental Secured Term Loan Facility maturing on January 31, 2024. The amendments also modify the Incremental Secured Term Loan Facility to (a) include a soft-call prepayment premium of 1.00% of the outstanding principal amount of the loans under the Incremental Secured Term Loan Facility payable to DT upon certain refinancings of such loans by T-Mobile USA with lower priced debt prior to a date that is six months after March 29, 2018 and (b) update certain covenants and other provisions to make them substantially consistent, subject to certain additional carveouts, with T-Mobile USA’s most recently publicly issued bonds. Guarantees
| | | | | | | T-Mobile 2018 Proxy Statement | | 55 |
TRANSACTIONS WITH RELATED PERSONS AND APPROVAL Guarantee in Favor of Liberty Mutual Insurance Company
In June 2011,Commitment to Purchase Senior Unsecured Notes
New DT Notes On January 22, 2018, T-Mobile USA, the Company, and the guarantors party thereto (including the Company) entered into a purchase agreement (the “2018 Purchase Agreement”) with Deutsche Telekom, mandated Deutsche Bank Colognepursuant to providewhich T-Mobile USA has agreed to issue and sell to Deutsche Telekom, and Deutsche Telekom has agreed to purchase, $1.0 billion in aggregate principal amount of 4.500% senior notes due 2026 and $1.5 billion in aggregate principal amount of 4.750% senior notes due 2028 (collectively, the “New DT Notes”) directly from T-Mobile USA. T-Mobile USA is not required to pay any upfront fees, underwriting fees, new issuance concession or other consideration to Deutsche Telekom in connection with the issuance and sale of the New DT Notes. The New DT Notes will have substantially the same terms and conditions as each of T-Mobile USA’s 4.500% senior notes due 2026 and T-Mobile USA’s 4.750% senior notes due 2028 issued pursuant to a guaranteepublic offering on January 25, 2018 (collectively, the “2018 Public Notes”), as applicable, other than issue date, registration rights and CUSIP. In addition, the New DT Notes will be issued under separate supplemental indentures and will each constitute a separate series from the 2018 Public Notes for all purposes, including voting; provided that if T-Mobile USA exercises its rights in favorrespect of Liberty Mutual Insurance Companya series of 2018 Public Notes, T-Mobile USA will exercise the same rights in respect of the New DT Notes of the corresponding series on an equal and ratable basis. T-Mobile USA expects to use the issuance and sale of the New DT Notes to refinance existing indebtedness by exchanging the New DT Notes for $2.5 billion of reset notes. In connection with the exchange, T-Mobile USA will pay DT in cash the premium portion of the redemption price set forth in the amount of $58 million. T-Mobile USA agreedindenture governing the reset notes, plus accrued but unpaid interest on such reset notes to, pay Deutsche Telekom a guarantee fee of 0.16%but not including, the exchange date. The closing of the guarantee commitment per year, payable on June 30issuance and December 31 of each year. The original term sale of the guarantee expiredNew DT Notes is expected to occur on December 31, 2011, but it was subject to automatic renewals of one-year terms. We terminated the agreement in October 2014. In 2014, we paid Deutsche Telekom guarantee fees in the aggregate amount of $0.5 million.or about April 30, 2018.
Other Agreements The related person transactions described below consist of ongoing arrangements under which the execution of transactions or the provision of services, and the payments related thereto, may vary from period to period or may only occur from time to time, depending on the circumstances of the parties involved and the terms of the applicable arrangements. Management Agreement, between Deutsche TelekomBetween T-Systems andT-Mobile USA The Management Agreement covers certain international multinational corporation (“MNC”) services that T-Systems International GmbH (“T-Systems”), a wholly-owned subsidiary of Deutsche Telekom, provides to T-Mobile USA in the MNC segment. These services include sales, business development and account management services, marketing and bid management services, business strategy and ITinformation technology services, and business solicitation services aimed toward multinational enterprises. The Management Agreement was initially entered into between the Company and Deutsche Telekom. In March 2015, the parties entered into an amendment toJuly 2016, Deutsche Telekom transferred its rights and obligations under the Management Agreement, which updated the commissions payableas amended to Deutsche Telekom.T-Systems. The Management Agreement may be terminated by either party on 12 months’ notice. During 2014,2017, T-Mobile USA incurred approximately $3.3 million$9,000 in expenses for Deutsche Telekom’sT-Systems’ services under the Management Agreement.
| Discount Agreements on Inter-operator Tariffs |
Discount Agreements on Inter-Operator Tariffs T-Mobile USA has entered into Discount Agreements on Inter-operatorInter-Operator Tariffs with certain Deutsche Telekom affiliates. The Discount Agreements establish a reciprocal discount scheme for roaming charges based on inter-operator tariffs to be paid by the Home Public Mobile Network operator to the Visited Public Mobile Network operator according to their respective international roaming agreements. The Discount Agreements expirehad an initial term ending on December 31, 2014 or December 31, 20152016 with yearly renewal terms thereafter. During 2014,2017, T-Mobile USA received approximately $3.7$1.8 million in net revenue and incurred approximately $2.1$4.6 million in net expenses for Deutsche Telekom’s and its affiliates’ services under these agreements. | | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement | | 41 |
TRANSACTIONS WITH RELATED PERSONS AND APPROVAL
Agreement on Commercial Roaming Broker Services betweenBetween Deutsche Telekom and T-Mobile USA Under this agreement, Deutsche Telekom negotiates, for the benefit of certain of its wireless affiliates, including T-Mobile USA referred to as “NatCos,”(“NatCos”), the terms of group roaming discount agreements with third-party network/service operators, or roaming partners. This agreement has an indefinite term, but by September 30 of each year, T-Mobile USA has the right to elect to participate or decline to participate under the broker arrangement for the following calendar year, and the parties negotiate the scope of roaming partners with which Deutsche Telekom is entitled to negotiate for T-Mobile USA’s benefit. If T-Mobile USA agrees to be a participating NatCo in a given calendar year, T-Mobile USA will receive and/or provide roaming services according to the terms of the group roaming discount agreements during such calendar year, and at the end of a specified settlement period, Deutsche Telekom will receive from, or make payments to, the roaming partners for T-Mobile USA and the other participating NatCos, pursuant to the payment terms of the roaming agreements. Intercompany payments are made between Deutsche Telekom and T-Mobile USA to settle any amounts due to, or owed by, T-Mobile for roaming services under the roaming agreements. Deutsche Telekom may realize volume discounts for roaming services based on the NatCos’ participation in the group roaming discount agreements. Deutsche Telekom also allocates its commercial roaming costs, which consist of certain strategic and financial planning costs associated with roaming transactions, to the NatCos, including T-Mobile USA. During 2014,2017, T-Mobile USA experienced an approximately $7.0$0.2 million reductionincrease in roaming revenues (primarily as a result of minimum revenue commitment payments to T-Mobile USA from certain partners) and received approximately $60.8$0.1 million of expense discounts for roaming usage provided to, or delivered by, third-party operators under this agreement. In September 2014,2017, T-Mobile USA elected to participate in the roaming broker arrangement for calendar year 2015. 2018. Frame Agreement for the Provision and Marketing of “Mobile Device Management” between Deutsche Telekom and T-Mobile USA
Pursuant to the Frame Agreement for the Provision and Marketing of “Mobile Device Management,” Deutsche Telekom granted toT-Mobile USA the right to market, resell, and license certain mobile device management services and agreed to provide support related
to these services. The agreement expired on January 7, 2015. During 2014, T-Mobile USA did not incur any expenses for Deutsche Telekom’s services under this agreement.
Framework Agreement for the Provision and Marketing of “Global Corporate Access” between Deutsche Telekom and T-Mobile USA
Pursuant to the Framework Agreement for the Provision and Marketing of “Global Corporate Access,” Deutsche Telekom provides a specific global corporate access service, based on products offered by iPass Inc., and WiFi network access services to T-Mobile USA for the purpose of resale to T-Mobile USA’s business customers in the United States. The initial term of the agreement
expired on February 28, 2015 and automatically renews for additional one-year terms, unless earlier terminated in accordance with the terms of the agreement. During 2014, T-Mobile USA incurred approximately $130,800 in expenses for Deutsche Telekom’s services under the Framework Agreement.
Telecom Master Services Agreement betweenBetween Deutsche Telekom North America, Inc. andT-Mobile USA Pursuant to the Master Services Agreement, Deutsche Telekom North America, a wholly ownedwholly-owned subsidiary of Deutsche Telekom, provides international long-distance and IP transit (internet connectivity) services to T-Mobile USA. The Master Services Agreement will remain in effect for so long as there remain statements of work pending. In December 2017 and February 2018, the Company entered into amendments to the Master Services Agreement to enable new services over other carrier networks. During 2014,2017, T-Mobile USA incurred approximately $1.9$55.0 million in | | | | | | 56 | | T-Mobile 2018 Proxy Statement | | |
TRANSACTIONS WITH RELATED PERSONS AND APPROVAL expenses for Deutsche Telekom North America’s services under the Master Services Agreement. Services Agreement, Between T-Systems andT-Mobile USA AmendedT-Mobile USA and Restated Application Service Provider Agreement between T-Systems North America, Inc. and T-Mobile USA
T-Systems North America, Inc. (“T-Systems”), is a wholly ownedwholly-owned subsidiary of Deutsche Telekom. Pursuant to the Service Provider Agreement, T-Mobile USA is permitted to use certain e-bidding tools for construction bids on certain facilities. The initial term of the Services Agreement with Telekom (“T-Systems ended in 2006, but
automatically renews for successive one-year terms, unless either party gives 30 days’ notice prior to the end of the term. During 2014, T-Mobile USA did not incur any expenses for T-Systems’ services under the Services Agreement.
Services Agreement, between T-Systems and T-Mobile USA
T-Mobile USA and T-SystemsNorth America”), entered into a Services Agreement on January 4, 2008, which governs the terms of certain IT support services provided by T-Systems North America to T-Mobile USA. In general, specificThe agreement expired on January 31, 2017 and the parties entered into a Statement of Work, pursuant to which T-Systems North America would provide termination assistance to transition IT support services to be provided under the Services Agreement are governed by statements of work entered into by the parties from time to time. The Services Agreement will remain in effect for so long as there remain statements of work pending. The statements of work currently pending under the Services Agreement have varying expiration terms, but they may generally be terminated upon 30 days’
notice, except for certain scopes of work in which the parties agree to limit that right.a new vendor. During 2014,2017, T-Mobile USA incurred approximately $20.9$12.3 million in aggregate expenses for T-Systems North America’s services under the agreement.
In December 2014, the parties renewed the Services Agreement pursuant to a statement of work for a term terminating on January 31, 2017 unless extended by mutual written agreement by the parties.
TRANSACTIONS WITH RELATED PERSONS AND APPROVAL
Master Agreement, between Detecon, Inc. and T-Mobile USA
Under the Master Agreement, Detecon, Inc., a wholly owned subsidiary of Deutsche Telekom, provides management consulting services, primarily with regard to customer relationship and channel
management. The Master Agreement term ends on April 30, 2015. During 2014, T-Mobile USA incurred approximately $145,700 in expenses under the Master Agreement.
Agreement for TIBCO Software Sub-License and Support Services between T-Systems International GmbH and T-Mobile USA
T-Systems International GmbH (“T-Systems International”) is a wholly owned subsidiary of Deutsche Telekom. Pursuant to this agreement, T-Systems International grants to T-Mobile USA a sublicense to use IT network middleware software licensed by T-Systems International
from TIBCO Software B.V. and provides certain support services related thereto. The agreement expires on November 24, 2015. During 2014, T-Mobile USA incurred approximately $1.8 million in expenses under the agreement.
Insurance Brokerage Services Provided by DeTeAssekuranz-Deutsche Telekom Assekuranz-Vermittlungsgesellschaft mbH (DeTeAssekuranz) DeTeAssekuranz, a wholly ownedwholly-owned subsidiary of Deutsche Telekom, provides certain insurance brokerage services for T-Mobile USA. During 2014,2017, T-Mobile USA incurred approximately $1.0$2.8 million in expenses for DeTeAssekuranz’s services under this arrangement. SOX Tool Provided by Deutsche Telekom In November 2013, the Company entered into an arrangement with Deutsche Telekom whereby Deutsche Telekom modified its ICCSInternal Control Compliance System tool to enable the Company to use it for its Sarbanes-OxleySarbanes- Oxley Act compliance. This arrangement was terminated in August 2017. During 2014,2017, the Company incurred approximately $53,000$34,000 in expenses for Deutsche Telekom’s services under the arrangement. Data Reseller Agreement betweenBetween Deutsche Telekom and T-Mobile USA In April 2014, T-Mobile USA and Deutsche Telekom entered into a Data Reseller Agreement, pursuant to which Deutsche Telekom may purchase data services from T-Mobile USA for resale to its enterprise customers in the U.S.United States. The Data Reseller Agreement terminates in April 2019 and automatically renews on monthly terms unless terminated upon sixty (60)60 days’ prior written notice by either party. T-Mobile USA did not receive any revenue in 2017 under the Data Reseller Agreement. Services Agreement betweenBetween Deutsche Telekom and T-Mobile In February 2015, T-Mobile entered into a services agreementServices Agreement effective as of January 1, 2014 with Deutsche Telekom pertaining to the provision by T-Mobile of certain financial, tax and accounting- relatedaccounting-related services to Deutsche Telekom and the payment by Deutsche Telekom for such services. The services relate to certain operating and financial data and other information that Deutsche Telekom may request from T-Mobile. In December 2016, the parties entered into an Amendment updating the fees and services schedule. Pursuant to the services agreement,Services Agreement, as amended, T-Mobile has billed Deutsche Telekom $1.15$10.0 million for such services in 2014.2017. Connected Car Agreement Between Mojioand T-Mobile In November 2016, T-Mobile entered into a Connected Car Agreement effective as of November 18, 2016 with Mojio, Inc. (“Mojio”), a company in which an affiliate of Deutsche Telekom at the time owned an approximately 14% equity interest. The agreement enables Mojio to provide cloud platform and software support to the Company for the connected car devices purchased by the Company. In addition, the agreement provides for the possibility of monetization of data collected by the connected car devices. During 2017, the Company incurred approximately $2.7 million in expenses under the arrangement. Equipment Supply Amendment Between ZTEand T-Mobile In February 2016, T-Mobile entered into an Equipment Addendum to the ZTE Handset and Accessory Supply Agreement with ZTE USA, Inc. (“ZTE”), as amended in March 2017 by the Amendment (the “Equipment Supply Amendment”) to OBD II Connected Car Equipment Addendum, pursuant to which ZTE provides connected car devices to T-Mobile. Pursuant to the Equipment Supply Amendment, with respect to a limited number of units of the connected car device purchased by T-Mobile, ZTE is required to remit a portion of the purchase price for the device to Mojio, a company in which an affiliate of Deutsche Telekom at the time owned an approximately 14% equity interest, for Mojio’s provision of client applications and cloud services associated with T-Mobile’s connected car offering. The Company branded connected car equipment includes ZTE firmware and Mojio software that allows such devices to connect over the Company’s network to a cloud service and related client applications provided by Mojio or a successor provider. During 2017, the Company incurred approximately $12.4 million in expenses under the arrangement, of which approximately $1.8 million was remitted by ZTE to Mojio. Purchase Order Between Deutsche Telekomand T-Mobile In February 2017, T-Mobile entered into a purchaser order with Deutsche Telekom, pursuant to which Deutsche Telekom will sell to the Company 1,000 smartphone devices in a one-time transaction for an aggregate purchase price of approximately $635,070, plus tariffs and shipping. Indemnification
We indemnify our directors and our officers to the fullest extent permitted by law so that they will be free from undue concern about personal liability in connection with their service to the Company. This is required under our certificate of incorporation, and we have also entered into agreements with our directors and executive officers which require us to indemnify and advance expenses to such directors and executive officers to the fullest extent permitted by applicable law if the person is or is threatened to be made a party to any threatened, pending or completed action, suit, hearing,
arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether formal or informal, governmental or non-governmental, or civil, criminal, administrative or investigative, provided such director or executive officer acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Company or in a manner otherwise expressly permitted under our certificate of incorporation, bylaws or the Stockholder’s Agreement.
| | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement | | 43 |
On October 30, 2014, the Board of Directors approved the T-Mobile US, Inc. 2014 Employee Stock Purchase Plan (the “ESPP”) upon recommendation of the Compensation Committee. The Board is now seeking stockholder approval of the ESPP in accordance with the requirements of Section 423 of the Code. The Board recommends that stockholders approve the ESPP, which allows employees to purchase shares of our common stock at a discount using payroll deductions, subject to limits set by the Code and the ESPP. Sales of shares under the ESPP are generally made pursuant
to a series of six-month offerings. On April 1, 2015, an offering commenced subject to stockholder approval of the ESPP. If stockholder approval is not obtained, the offering will be cancelled and the ESPP will be terminated.
A copy of the ESPP is attached to this Proxy Statement as Appendix A. The description below is a summary and not intended to be a complete description of the ESPP. Please read the ESPP for more detailed information.
Description of the ESPP
The purpose of the ESPP is to provide employees with an opportunity to acquire an equity ownership interest in the Company and to encourage employees to remain in the employ of the Company.
The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code. The provisions of the ESPP,
accordingly, will be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code.
Administration
The ESPP will be administered by the Compensation Committee of our Board of Directors or any other committee appointed by the Board to administer the ESPP (the “Committee”). The Committee has the full and exclusive discretionary authority to construe and interpret the ESPP and the rights granted under it, to establish rules and regulations for the administration of the ESPP, to establish offering
and purchase periods under the ESPP, to designate from time-to-time which of our subsidiaries will participate in the ESPP, and to amend the ESPP to satisfy applicable laws, to obtain any exemption under such laws or to reduce or eliminate any unfavorable legal, accounting or other consequences.
Shares Authorized
Subject to adjustment for changes in capitalization, the number of shares of common stock reserved for sale and authorized for issuance under the ESPP will be 10 million shares, plus an annual increase commencing in 2016 of the lesser of 5 million shares or an amount as determined by the Committee. If an offering terminates for
any reason without shares having been purchased, the shares of common stock not purchased under the offering will again become available for the ESPP. The authorized share amounts were determined in consultation with our external management consultant and counsel.
Eligibility
Generally, all employees are eligible to participate in the ESPP, although the Committee may impose additional eligibility requirements consistent with the Code. However, any employee who would own or have the right to acquire 5% or more of the total
combined voting power or value of all classes of stock of the Company or any subsidiary is excluded from participating in the ESPP. As of March 31, 2015, there were approximately 45,000 employees eligible to participate in the ESPP.
Offerings
The ESPP provides for separate six-month offerings, commencing on April 1 and October 1 of each year. Each offering has a single co-terminus six-month purchase period. The Committee may establish
different offering periods, and purchase periods within offering periods, consistent with the Code.
Payroll Deductions, Purchase Price, and Shares Purchased
Pursuant to procedures established by the Committee, eligible employees may elect to have a portion of their compensation used to purchase shares of common stock. ESPP participants may authorize
payroll deductions from 1% to 15% of all base gross earnings, cash bonuses, commissions and overtime to be applied toward the purchase of the Company’s common stock.
| | | | | | 44 | | T-Mobile 2018 Proxy Statement | | 57 |
PROPOSAL 3 — APPROVAL OF THE T-MOBILE 2014 EMPLOYEE STOCK PURCHASE PLAN
Proposal 4 - Stockholder Proposal for Implementation of Proxy Access The Marco Consulting Group Trust I, 550 W. Washington Blvd., Suite 900, Chicago, Illinois 60661, a beneficial owner of 933 shares of the Company’s common stock, has advised us that it intends to submit the following proposal at the Annual Meeting. Purchases of shares of common stock are made on the last trading day of the offering period with compensation amounts withheld from employees during the purchase period.
On each purchase date, the last trading day of each offering period, any amounts withheld from an employee’s compensation during the applicable offering period for purposes of the ESPP will be used to purchase the greatest number of whole shares of common stock that can be purchased with such amounts. The purchase price for a share of common stock will be set, unless the Committee determines higher percentages for future offerings, at the lesser of (i) 85% of the fair market value of a share of common stock on the first trading day of the offering period and (ii) 85% of the fair market value of a share of common stock on the last trading day of the offering period. For purposes of the ESPP, “fair market value” generally means the closing sales price of a share of common stock for the day. As of March 31, 2015, the closing sales price of a share of our common stock as reported on the NYSE was $31.69 per share.
Subject to adjustment for changes in capitalization, no employee may purchase more than 4,000 shares of common stock during a single
offering period, although the Committee may determine other limits for future offerings. In addition, the Code limits the aggregate fair market value of the shares of common stock (determined as of the beginning of a purchase period) that any employee may purchase under the ESPP during any calendar year to $25,000, subject to carryover for offering periods that span calendar years. We will be notified if shares of common stock are disposed of in a disposition that does not satisfy the holding period requirements of Section 423 of the Code (generally, as discussed below, two years from the beginning of the applicable offering period).
We will pay the administrative costs associated with the operation of the ESPP. The employees will pay any brokerage commissions that result from their sales of shares of common stock.
We may deduct or withhold or require employees to pay to us any federal, state, local and other taxes we are required to withhold with respect to any event arising as a result of the ESPP. We may also deduct those amounts from the employees’ wages or compensation.
Withdrawal and Termination of Employment
Pursuant to procedures established by the Committee, employees may withdraw with respect to an offering period by submitting a withdrawal notice within a designated period prior to the purchase date or from a future offering. If an employee withdraws from a future offering, the employee may not recommence withholding of compensation for the purchase of shares of common stock until the following offering period. Upon termination of employment for any reason, the employee’s participation in the ESPP will immediately terminate and the payroll deductions credited to the employee’s account will be returned to him or her and such employee’s right to purchase will automatically terminate.
The ESPP provides for adjustment of the number of shares of common stock that may be granted under the ESPP as well as the purchase price per share of common stock and the number of shares of common stock covered by each right to purchase for any increase or decrease in the number of shares of common stock resulting from a stock split, reverse stock split, stock dividend, extraordinary cash dividend, combination or reclassification of the common stock or recapitalization, reorganization, consolidation,
split-up, spin-off or any other increase or decrease in the number of shares of common stock effected without receipt of consideration by us.
In the event of any merger, consolidation or similar corporate transaction, the Committee may make such adjustment it deems appropriate to prevent dilution or enlargement of rights in the ESPP, in the number, class of or price of shares of common stock available for purchase under the ESPP and in the number of shares of common stock that an employee is entitled to purchase and any other adjustments it deems appropriate. In the event of any such transaction, the Committee may elect to have the rights to purchase under the ESPP assumed or such rights to purchase substituted by a successor entity, to set an earlier purchase date, prior to the consummation of such corporate transaction, to terminate all outstanding rights to purchase either prior to their expiration or upon completion of the purchase of shares of common stock on the next purchase date, or to take such other action deemed appropriate by the Committee.
Amendment or Termination
The Board of Directors may amend the ESPP at any time, provided such amendment does not cause rights to purchase issued under the ESPP to fail to meet the requirements of Section 423 of the Code. Moreover, any amendment for which stockholder approval is required under Section 423 of the Code or any securities exchange
on which the shares are traded must be submitted to the stockholders for approval. The Board may suspend or terminate the ESPP any time. Unless sooner terminated by the Board of Directors, the ESPP shall terminate on October 30, 2024.
| U.S. Federal Income Tax Consequences |
The following discussion is only a brief summary of the U.S. federal income tax consequences to us and our employees under the ESPP. It is based on the Code as in effect as of the date of this Proxy Statement. The discussion relates only to United States federal income tax treatment; state, local, foreign, estate, gift and other tax consequences are not discussed. The summary is not intended to be a complete analysis or discussion of all potential tax consequences.
The amounts deducted from an employee’s pay pursuant to the ESPP will be included in the employee’s compensation and be
subject to federal income and employment tax. Generally, no additional income will be recognized by the employee either at the beginning of the offering period when rights to purchase are granted pursuant to the ESPP or at the time the employee purchases shares of common stock pursuant to the ESPP.
If the shares of common stock are disposed of at least two years after the first day of the offering period to which the shares of common stock relate and at least one year after the shares of common stock were acquired under the ESPP (the “holding period”), or if the
| | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement | | Our Board of Directors recommends a vote45AGAINST the proposal for Implementation of Proxy Access |
PROPOSAL 3 — APPROVAL OF THE T-MOBILE 2014 EMPLOYEE STOCK PURCHASE PLAN
employee dies while holding the shares of common stock, the employee (or in the case of the employee’s death, the employee’s estate) will recognize ordinary income in the year of disposition or death in an amount equal to the lesser of (a) the excess of the fair market value of the shares of common stock on the first trading day of the offering period over the purchase price of the shares of common stock, or (b) the excess of the fair market value of the shares of common stock at the time of such disposition over the purchase price of the shares of common stock.
If the shares of common stock are sold or disposed of, including by way of most gifts, before the expiration of the holding period, the employee will recognize ordinary income in the year of sale or disposition in an amount equal to the excess of the sales price over the purchase price. Even if the shares of common stock are sold for less than their fair market value on the purchase date, the same amount of ordinary income is included in income.
In addition, the employee generally will recognize capital gain or loss in an amount equal to the difference between the amount realized
upon the sale of shares of common stock and the employee’s tax basis in the shares of common stock, which is generally the amount the employee paid for the shares of common stock plus the amount, if any, taxed as ordinary income. Capital gain or loss recognized on a disposition of shares of common stock will be long-term capital gain or loss if the employee’s holding period for the shares of common stock exceeds one year. The purchase date begins the holding period for determining whether the gain or loss realized is short or long term.
If the employee disposes of shares of common stock purchased pursuant to the ESPP after the holding period, we will not be entitled to any federal income tax deduction with respect to the shares of common stock issued under the ESPP. If the employee disposes of such shares of common stock prior to the expiration of the holding period, we generally will be entitled to a federal income tax deduction in an amount equal to the amount of ordinary income recognized by the employee as a result of such disposition.
New Plan Benefits
Participation in the ESPP is entirely within the discretion of the eligible employees. Because we cannot presently determine the participation levels by employees, the rate of contributions by employees and the eventual purchase price under the ESPP, it is not possible to
determine the value of benefits which may be obtained by executive officers and other employees under the ESPP. Non-employee directors are not eligible to participate in the ESPP.
Required Vote Approval of the stockholder proposal relating to the ESPPfor implementation of proxy access requires that the number of votes cast “FOR” the proposal represents a majority of the total votes cast on the proposal. The Board of Directors recommends that you vote
“FOR”
the Proposal to Approve the T-Mobile US, Inc. 2014 Employee Stock Purchase Plan.
PROPOSAL 3 — APPROVAL OF THE T-MOBILE 2014 EMPLOYEE STOCK PURCHASE PLAN
Equity Compensation Plan Information
The following table provides information as of December 31, 2014 with respect to outstanding equity awards and shares available for future issuance under our equity compensation plans, not including the ESPP which the stockholders are being asked to approve.
| | | | | | | | | | | | | | Plan Category | | Number of
Securities to Be Issued upon Exercise of
Outstanding Options,
Warrants and Rights (a)(#) | | | Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights ($) | | | Number of Securities
Remaining Available for
Future Issuance
Under Equity
Compensation Plans
(excluding securities
reflected in Column (a))(#) | | | Equity Compensation Plans Approved by Stockholders: | | | | | | | | | | | | | | Stock Options | | | 4,348,912 | (1) | | $ | 24.96 | | | | — | | | RSUs | | | 19,952,089 | (2)(3) | | | — | (4) | | | — | | | Equity Compensation Plans Not Approved by Stockholders | | | — | | | | — | | | | — | | | Total | | | 24,301,001 | | | $ | 24.96 | | | | 36,938,364 | (5) |
(1) | Granted under the Second Amended and Restated 1995 Stock Option Plan of MetroPCS, Inc., the Amended and Restated MetroPCS Communications, Inc. 2004 Equity Incentive Compensation Plan and the MetroPCS Communications, Inc. 2010 Equity Incentive Compensation Plan (the “MetroPCS Plans”).
|
(2) | Granted under the 2013 Omnibus Incentive Plan.
|
(3) | Includes performance-vested awards assuming target performance.
|
(4) | RSUs do not have an exercise price.
|
(5) | Number of securities remaining available for future issuance under the 2013 Omnibus Incentive Plan. 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.
|
| | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement | | 47 |
Ms. Heather Slavkin Corzo, on behalf of the AFL-CIO Reserve Fund, 815 Sixteenth St. N.W., Washington, D.C. 20006, a beneficial owner
of 200 shares of the Company’s common stock, has advised us that she intends to submit the following proposal at the Annual Meeting.
Proposal RESOLVED, that stockholders of T-Mobile US, Inc. (“T-Mobile”) urge the Board of Directors to report to stockholders, at reasonable cost and omitting proprietary information, on T-Mobile’s process for identifying and analyzing potential and actual human rights risks ofT-Mobile’s services, operations and supply chain (referred to herein as a “human rights risk assessment”) addressing the following:
Human rights principles used to frame the assessment
Methodology used to track and measure performance
Nature and extent of consultation with relevant stakeholders in connection with the assessment
How the results of the assessment are incorporated into company policies and decision making
The report should be made available on T-Mobile’s website no later than the 2016 annual meeting of stockholders.
Supporting Statement
As long-term stockholders, we favor policies and practices that protect and enhance the value of our investments. There is increasing recognition that company risks related to human rights violations, such as litigation, reputational damage, and production disruptions, can adversely affect shareholder value. To manage such risks effectively, we believe companies must assess the risks posed by human rights practices in their operations and supply chain, as well as by the use of their products.
The importance of human rights risk assessment is reflected in the United Nations Guiding Principles on Business and Human Rights (the “UN Guiding Principles”) approved by the UN Human Rights Council in 2011 and informally known as the Ruggie Principles. The UN Guiding Principles urge that “business enterprises should carry out human rights due diligence assessing actual and potential human rights impacts, integrating and acting upon the findings, tracking responses, and communicating how impacts are addressed.”(http://www.business-humanrights.org/media/documents/ruggie/ruggie-guiding-principles-21-mar-2011.pdf.)
A 2012 report titled “Unacceptable: We Expect Better,” by the unions ver.di and Communications Workers of America have shown evidence of suspected labor rights violations at T-Mobile’s
predecessor T-Mobile USA since 2001. T-Mobile has been criticized for violating its employees’ freedom of association rights to organize and bargain collectively in at least two other reports:
A 2009 report by the American Rights at Work Education Fund, “Lowering The Bar or Setting The Standard?” stated “T-Mobile USA has conducted a systematic campaign to prevent employees from exercising their right to form a union.”
A 2010 report by Human Rights Watch, “A Strange Case,” found that “T-Mobile USA’s harsh opposition to workers’ freedom of association in the United States betrays Deutsche Telekom’ s purported commitment to social responsibility, impedes constructive dialogue with employee representatives, and in several cases, has violated ILO and OECD labor and human rights standards.”
We are also concerned that human rights violations may occur inT-Mobile’s operations outside the United States and in the vendors it uses internationally. A human rights assessment of T-Mobile’s operations and supply chain could reveal serious existing risks to shareholder value, risks that could be ameliorated before they materialize.
PROPOSAL 4 — STOCKHOLDER PROPOSAL RELATED TO HUMAN RIGHTS RISK ASSESSMENT
Board of Directors’ Response to Proposal 4
The Board recommends a vote “AGAINST” Proposal 4.
The Company is committed to supporting and maintaining the highest standards of ethical conduct and respect for human rights. Our Code of Business Conduct (our “Code”) articulates our standards for integrity and respect for our customers, our co-workers and third-parties alike. Our Code requires, among other things, that our employees and officers:
Comply with all applicable federal, state and local laws and regulations.
Provide a safe workplace by preventing or eliminating health and safety risks and providing employees with appropriate safety training.
Ensure that neither the Company nor any officer, employee, contractor, subcontractor, or agent of the Company retaliates against or takes any action harmful to the person reporting violations of the law or our Code.
Moreover, the Company believes it fully complies with U.S. employment and labor laws, including the right of its employees to support, organize and join a labor union. The Company does not prevent any of its employees from supporting, organizing or joining a union, and it prohibits discrimination and retaliation against such individuals. We believe that the three union-sponsored reports that are the source of the criticism at the core of the stockholder proposal are inaccurate and without merit and do not justify the cost and effort of the proposed human rights risk assessment.
In addition to our Code, we also maintain a Supplier Code of Conduct (our “Supplier Code”) that reinforces our expectation that our vendors, dealers, and other business partners share our commitment to full legal compliance and uncompromised ethics in how they do
business. We require our suppliers to fully comply with our Supplier Code and ensure that their employees and subcontractors comply with the requirements.
Our Supplier Code requires suppliers to share the Company’s commitment to human rights and equal opportunity in the work place and to conduct their employment practices in full compliance with all applicable laws and regulations. Our Supplier Code prohibits involuntary or child labor and non-compliance with applicable wage and hour laws.
The Company’s demonstrated commitment to high human rights standards and ethical conduct has been recognized repeatedly by others. For example, the Company was recently recognized as one of the 2015 World’s Most Ethical Companies by Ethisphere Institute, an independent center of research, best practices and thought leadership that promotes best practices in corporate ethics. This was the seventh straight year we received this award, which validates our constant focus on integrity and our values.
In addition to our recognized commitment to the highest ethical and human rights standards, the Company also maintains a robust risk assessment program. As more fully discussed in “Corporate Governance – Board’s Role in Risk Management”, our management regularly conducts enterprise-wide risk assessments, where risks, including legal, compliance, regulatory and reputational risks, are considered by management. These assessments are regularly reviewed with the Audit Committee of the Board of Directors.
The proposed human rights risk assessment is unnecessary in light of the Company’s demonstrated and independently verified commitment to human rights and ethical conduct. The proposal represents a diversion of resources and a duplication of effort with no corresponding benefit to the Company or its stockholders, employees or customers.
Required Vote
Approval of the stockholder proposal related to human rights risk assessment requires that the number of votes cast “FOR” the proposal represents a majority of the total votes cast on the proposal.
The Board of Directors recommends that you vote
“AGAINST”
the proposal related to human rights risk assessment.
| | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement | | 49 |
Mr. Greg A. Kinczewski, on behalf of Marco Consulting Group Trust I, 550 W. Washington Blvd., Suite 900, Chicago, Illinois 60661, a
beneficial owner of 5,546 shares of the Company’s common stock, has advised us that he intends to submit the following proposal at the Annual Meeting.
Proposal
RESOLVED: Shareholders of T-Mobile US, Inc. (the “Company”) ask the board of directors (the “Board”) to adopt, and present for shareholder approval, a “proxy access” bylaw. Such bylaw shall require the Company to include in proxy materials prepared for a shareholder meeting at which directors are to be elected the name, Disclosure and Statement (as defined herein) of any person nominated for election to the board by a sharehodler [sic]shareholder or group (the “Nominator”) that meets the criteria established below. The Company shall allow shareholders to vote on such nominee on the Company’s proxy card. The number of shareholder-nomined [sic]shareholder-nominated candidates appearing in proxy materials shall not exceed one quarter of the directors then serving. This bylaw, which shall supplement existing rights under Company bylaws, should provide that a Nominator must: | a) | have beneficially owned 3% or more of the Company’s outstanding common stock continuously for at least three years before submitting the nomination; |
| b) | given the Company, within the time period identified in its bylaws, written notice of the information required by the bylaws and any Securities and Exchange Commission rules about (i) the nominee, including |
| consent to being named in the proxy materials and to serving as director if elected; and (ii) the Nominator, including proof it owns the required shares (the “Disclosure”); and
|
| c) | certify that (i) it will assume liability stemming from any legal or regulatory violation arising out of the Nominator’s communications with the Company shareholders, including the Disclosure and Statement; (ii) it will comply with all applicable laws and regulations if it uses soliciting material other than the Company’s proxy materials; and (c) to the best of its knowledge, the required shares were acquired in the ordinary course of business and not to change or influence control at the Company. |
The Nominator may submit with the Disclosure a statement not exceeding 500 words in support of the nominee (the “Statement”). The Board shall adopt procedures for promptly resolving disputes over whether notice of a nomination was timely, whether the Disclosure and Statement satisfy the bylaw and applicable federal regulations, and the priority to be given to multiple nominations exceeding the one-quarter limit. Supporting Statement We believe proxy access is a fundamental shareholder right that will makemakes directors more accountable and contributecontributes to increased shareholder value. The CFA Institute’s 2014 assessment of pertinent academic studies and the use of proxy access in other markets similarly concluded that proxy access: | ∎ | | Would “benefit both the markets and corporate boardrooms, with little cost of disruption.” |
| ∎ | | Has the potential to raise overall US market capitalization by up to $140.3 billion if adopted market-wide. (http://www.cfapubs.org/dio/pdf/10.2469/ccb.v2014.n9.1) [sic] |
Shareholders would benefit from this reform, which would provide outside shareholders with a meaningful voice given Deutsche Telekom’s controlling shareholder status. It is also the marketsdefault policy in Germany where Deutsche Telekom is based, and corporate boardrooms, with little cost of disruption.” Has the potential to raise overall US market capitalization by up to $140.3 billion if adopted market-wide. (http://www.cfapubs.org/dio/pdf/10.2469/ccb.v2014.n9.1)
The proposed bylaw terms enjoy strong investor support – votes for similar shareholder proposals averaged 55% from 2012 through September 2014 – and similar bylaws havehas already been adopted by U.S. companies of various sizes across industries, including Chesapeake Energy, Hewlett-Packard, Western Unionindustries.
The Board’s Response to Proposal 4 This marks the fourth time the proponent has submitted this or a similar proxy access proposal. Having again carefully considered the matter, for similar reasons as with prior proposals, the Board believes that adoption of this proposal is not in the best interests of the Company and Verizon. We urge shareholdersits stockholders. Although this proposal recommends that the Company adopt what is becoming a common form of proxy access for typical public companies, we believe that it raises policy and practical considerations that are unique to vote FORour Company and that are neither acknowledged nor addressed in the proposal. As disclosed elsewhere in this proposal.Proxy Statement, and as we have previously communicated with the proponent, T-Mobile is a controlled company. Our controlling stockholder, Deutsche Telekom, currently owns approximately 63% of our outstanding shares of common stock and is entitled to certain governance rights pursuant to our certificate of incorporation and the publicly filed Stockholder’s Agreement described elsewhere in this Proxy Statement. Among these rights, Deutsche Telekom may designate a number of nominees for election to our Board in proportion to its share ownership percentage, which currently corresponds to designation rights for eight of the 12 seats on the T-Mobile Board. Thus, the proponent’s proxy access proposal raises unique considerations for a controlled company like T-Mobile, such as how proxy access would interact with Deutsche Telekom’s existing director designation rights, how Deutsche Telekom’s status as a greater than 3% stockholder would be addressed or managed under a proxy access bylaw, and whether it is appropriate for the board of a controlled company to further reduce its oversight of the director nomination process by adopting proxy access when there is already significant stockholder influence in place pursuant to the Stockholder’s Agreement. Also, contrary to the proponent’s assertion that proxy access would benefit minority holders, proxy access may in fact be detrimental to the Company’s minority holders. If the Company were to adopt proxy access, Deutsche Telekom could potentially use proxy access to designate additional Board members beyond its current rights under the Stockholder’s Agreement. | | | | | | 5058 | | T-Mobile 2018 Proxy Statement | | |
PROPOSAL 5 –4 - STOCKHOLDER PROPOSAL RELATED TOFOR IMPLEMENTATION OF PROXY ACCESS Board of Directors’ Response to Proposal 5
The Board recommends a vote “AGAINST” Proposal 5.
Our NominatingGiven these considerations, the proponent has not meaningfully addressed how or why it believes our stockholders would benefit from proxy access, since we believe that the interests of Deutsche Telekom are properly aligned with those of other long-term stockholders. Importantly, since the Business Combination, the directors designated by Deutsche Telekom (which will include three independent directors) and Corporate Governance Committee and Board of Directorsour other directors have fostered a diverse and experienced Board. Under the Board’s oversight,successfully guided the Company has created significant stockholderto enhance value sincefor all stockholders. Since the completion of our Business Combination on May(May 1, 2013. Specifically,2013) through December 29, 2017, our stock price has increased by 92% from the Business Combination to March 31, 2015. Stockholders have supported the Company’s performance and corporate governance structure, including our director recruitment and nomination policies, as evidenced by the significant support our director nominees received at the 2014 Annual Meeting of Stockholders.284%.
This proposal does not articulate any specific concerns regarding our governance or performance and does not include an explanation as to why implementation of the requested additional board nomination procedures is necessary at the Company. Outside of this proposal by this single stockholder, no stockholder has expressed concern toFurthermore, the Company regarding the director nomination processhas a number of existing governance practices that are designed to ensure effective oversight of management and to
generally orsupport the Nominating and Corporate Governance Committee’s considerationaccountability of any specific nominee.
Theour Board has adopted criteriato our stockholders. Such practices include the annual election of all directors, an audit committee consisting solely of independent directors, independent committee chairpersons of our three core Board committees and a process for identifying candidates for election to the Board, as described in “Corporate Governance – Director Nomination, Selection and Qualifications”. As part of this process, the Nominating and Corporate Governance Committee is able to consider prospective director candidates recommended by our stockholders. The Nominating and Corporate Governance Committee and the Board are in the best position to assess the characteristics and qualifications of potential director nominees and determine whether they will contribute to a well-rounded and effectively functioning Board that can operate freely and collaboratively, while providing effective oversight over management and representing the interest of all stockholders.lead independent director.
We believe implementation ofthat proxy access is neither necessary nor appropriate for us at this proposal will not create tangible benefits fortime due to the Company’s stockholders and instead could undermine important corporate governance protections and require the Companycircumstances set forth above that are unique to incur costs for a process for which there is no demonstrated need.our controlled company status. | | | | | Therefore, the Board recommends a voteAGAINST this proposal. |
| | | | | | | T-Mobile 2018 Proxy Statement | | 59 |
Proposal 5 - 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 Sixteenth St. N.W., Washington, D.C. 20006, a beneficial owner of 200 shares of the Company’s common stock, has advised us that it intends to submit the following proposal at the Annual Meeting. | | | | | Our Board of Directors recommends a voteAGAINST the proposal for Limitations on Accelerated Vesting of Equity Awards in the Event of a Change of Control |
Required Vote Approval of the stockholder proposal related to proxy accessfor limitations on accelerated vesting of equity awards in the event of a change of control requires that the number of votes cast “FOR” the proposal represents a majority of the total votes cast on the proposal. TheProposal
RESOLVED: Shareholders urge the Board of Directors recommendsof T-Mobile US Inc. (the “Company”) to adopt a policy that you votein the event of a change in control of the Company, as defined under any applicable employment agreement, equity incentive plan or other plan, there shall be no acceleration of vesting of any equity award granted to any senior executive. However, under this policy the Compensation Committee may provide in an applicable grant or purchase agreement that any unvested award will vest on a partial,pro rata basis up to the time of the senior executive’s termination, with such qualifications for an award as the Compensation Committee may determine. The policy should be implemented so as not to violate any contractual obligations in existence on the date adopted. Supporting Statement The Company allows senior executives to receive accelerated equity awards under certain conditions after a change in control of the Company. These accelerated equity awards can significantly increase the total value of senior executives’ “golden parachutes” after a change in control. We do not question that a reasonable amount of severance payments may be appropriate for senior executives and other employees. We are concerned, however, that current practices at our Company may permit windfall awards to senior executives. As of December 31, 2016, our Company’s CEO John Legere had $43.7 million in unvested time-based and performance-based restricted stock units subject to acceleration following a change in control. This amount of accelerated equity is in addition to a lump sum of $9 million in cash severance and $5.6 million in short term cash incentives that Legere would have been entitled to receive if his employment was terminated after a change on control. We note that many companies use a “double trigger” system to determine eligibility for accelerated vesting of equity awards – there must be a change in control, and the executive must be involuntarily terminated. While we support the use of double triggers, we are not convinced that executives deserve to receive all unvested awards after a termination event. We do believe, however, that an affected executive should be eligible to receive vesting of equity awards on apro rata basis as of his or her termination date, with the details of anypro rata award to be determined by the Compensation Committee. Other leading companies, including Apple Inc., Chevron Corporation, Exxon Mobil Corporation, International Business Machines Corporation, Intel Corporation, Microsoft Corporation and Occidental Petroleum Corporation impose limitations on accelerated vesting of equity, such as providingpro rata awards or simply forfeiting unearned awards. We urge you to vote FOR this proposal. “AGAINST”The Board’s Response to Proposal 5
This marks the third time the proponent has submitted this or a similar proposal. Having again carefully considered the matter, for similar reasons as with prior proposals, the Board believes that adoption of this proposal is not in the best interests of the Company and its stockholders. None of the Company’s outstanding equity awards provides for automatic accelerated vesting of awards in connection with a change in control unless an acquirer or successor does not assume or replace such awards in connection with the change in control. Instead, equity awards granted to our executives are subject to “double-trigger” vesting, meaning that equity awards vest only upon a qualifying termination of employment, either for good reason (such as material diminution of duties, material reduction of compensation or other specified events) or without cause, in connection with a change in control, which effectively aligns the interests of our executive officers with those of our stockholders by encouraging our executive officers to continue in employment with the Company through the consummation of a change in control. Notwithstanding the assertions in the proposal, relatedeliminating the executives’ “double-trigger” arrangements upon adoption of the proposal would place the Company outside the practice of its peers and lead to proxy access.a competitive disadvantage when competing for executive talent. We also do not believe that adoption of this proposal is appropriate given our existing compensation practices and programs, which have received strong support from stockholders as demonstrated by the fact that our most recent say-on-pay proposal was approved by 99.5% of the votes cast on the proposal. We provide our executives with benefits, including severance and change in control benefits, that the Compensation Committee believes are competitively necessary, customary and in the best interests of the Company and its stockholders. As noted above, providing for “double-trigger” accelerated vesting of equity awards upon a qualifying termination of employment in connection with a change in control aligns the interests of the Company’s executives with those of its stockholders by encouraging continued stability of our executive team through a change in control. No windfall is created because an executive will not receive accelerated vesting based solely on a change in control, nor would an executive be entitled to receive accelerated vesting upon a termination of employment | | | | | | 60 | | T-Mobile 2018 Proxy Statement | | |
PROPOSAL 5 - STOCKHOLDER PROPOSAL FOR LIMITATIONS ON ACCELERATED VESTING OF EQUITY AWARDS IN THE EVENT OF A CHANGE OF CONTROL unless the executive terminates for good reason or the Company terminates the executive without cause. Allowing for double-trigger accelerated vesting ensures that executives are not penalized with a loss of then-unvested equity awards due to an involuntary termination of employment in connection with the consummation of a transaction that, while outside the control of any individual executive, is in the best interests of stockholders. We believe that accelerated vesting in appropriate circumstances permits management to remain objective and focused on protecting stockholder rights and maximizing stockholder value during a potential change in control event. In addition, the double-trigger provision in our equity awards ensures that executives are not distracted by a potential loss of employment and remain with the Company through the transaction, thereby reducing deal uncertainty. | | | | | For the reasons above, the Board recommends a voteAGAINST this proposal. |
| | | | | | | T-Mobile Notice of 2015 Annual Meeting and2018 Proxy Statement | | 5161 |
Questions and Answers About the Annual Meeting and Voting Why did I receive these materials? As a holder of common stock of T-Mobile US, Inc. at the close of business on April 10, 2015,17, 2018, the record date, you are entitled to vote at the Annual Meeting. We are providing you with these proxy materials in connection with the solicitation of proxies by our Board of Directors to be used at the Annual Meeting. These proxy materials will be were first made available to our stockholders on or about April 22, 2015.26, 2018. This Proxy Statement describes the proposals to be voted on at the Annual Meeting by the holders of record of our common stock on the record date and includes information required to be disclosed to our stockholders.
Who may vote at the Annual Meeting? If you are a holder of record of our common stock as of the record date (April 10, 2015)17, 2018), you may vote your shares on the matters to be voted on at the Annual Meeting. You will receive only one proxy card for all the shares of common stock you hold in certificate and book-entry form. If, as of the record date, you hold shares of our common stock in “street name” – that is, through an account with a bank, broker or other institution – you may direct the registered holder how to vote your shares at the Annual Meeting by following the instructions that you will receive from the registered holder. How do proxies work? You may vote by authorizing the persons selected by us as your proxy to vote your shares at the Annual Meeting according to your instructions on the matters discussed in this Proxy Statement, and according to their discretion on any other business that may properly come before the Annual Meeting. We have designated two of our executive officers as proxies for the Annual Meeting: John J. Legere, our President and Chief Executive Officer, and J. Braxton Carter, our Executive Vice President and Chief Financial Officer. How do I vote? By InternetInternet.. Go towww.proxyvote.com, available 24 hours a day, seven days a week, and follow the on-screen instructions to submit your proxy. You will need to have your proxy card available and use the Company number and account number shown on your proxy card to cast your vote. This method of voting will be available until 11:59 p.m. Eastern Daylight Time, or EDT, on June 1, 2015,12, 2018, or the date immediately before any date to which the Annual Meeting may be continued, adjourned or postponed. By Mail. You may submit your proxy by mail by returning your executed proxy card. You should sign your proxy card using exactly the same name as appears on the card, date your proxy card and indicate your voting preference on each proposal. You should mail your proxy card in plenty of time to allow delivery prior to the Annual Meeting. Proxy cards received after 9:308:00 a.m. PDTPacific Daylight Time on June 2, 2015 13, 2018 may not be considered unless the Annual Meeting is continued, adjourned or postponed and then only if such proxy cards are received before the date and time the continued, adjourned or postponed Annual Meeting is held. By Phone. You also may submit your proxy by phone from the United States and Canada, using the toll-free number on the proxy card and the procedures and instructions described on the proxy card. Telephone voting will be considered at the Annual Meeting if completed prior to 11:59 p.m. EDT on June 1, 2015,12, 2018, or the date immediately before any date to which the Annual Meeting may be continued, adjourned or postponed. In Person. You also may vote in person at the Annual Meeting. See “What do I need in order to attend the Annual Meeting?” below. How are the votes recorded? What is the effect if I do not vote? If you are a registered holder and we receive a valid proxy card from you by mail or receive your vote by phone or Internet, your shares will be voted by the named proxy holders as indicated in your voting preference selection.
If you return your signed and dated proxy card without indicating your voting preference on one or more of the proposals to be considered at the Annual Meeting, or you otherwise do not indicate your voting preference via phone or Internet on one or more of the proposals to be considered at the Annual Meeting, your shares will be voted on the proposals for which you did not
| ∎ | | If you are a registered holder and we receive a valid proxy card from you by mail or receive your vote by phone or internet, your shares will be voted by the named proxy holders as indicated in your voting preference selection. |
| ∎ | | If you return your signed and dated proxy card without indicating your voting preference on one or more of the proposals to be considered at the Annual Meeting, or you if otherwise do not indicate your voting preference via phone or internet on one or more of the proposals to be considered at the Annual Meeting, your shares will be voted on the proposals for which you did not indicate your voting preference in accordance with the recommendations of the Board of Directors.Board. |
If you hold your shares in street name and want your shares to be voted, you must instruct your broker, bank or other institution how to vote such shares. Absent your specific instructions, NYSE rules do not permit brokers and banks to vote your shares on a discretionary basis for non-routine corporate governance matters, such as the election of directors, the approval of the 2014 Employee Stock Purchase Plan and the stockholder proposals, but your shares can be voted without your instructions on the
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
| | If you hold your shares in street name and want your shares to be voted, you must instruct your broker, bank or other institution how to vote such shares. Absent your specific instructions, NASDAQ rules do not permit brokers and banks to vote your shares on a discretionary basis for non-routine corporate governance matters, such as the election of directors, the amendment to the Company’s 2013 Omnibus Incentive Plan and the stockholder proposals (resulting in a “broker non-vote”), but your shares can be voted without your instructions on the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm because this is considered a routine matter. |
If you indicate that you wish to withhold authority or abstain from voting on a proposal, your shares will not be voted and will have no
| ∎ | | If you indicate that you wish to withhold authority or abstain from voting on a proposal, your shares will not be voted and will have no direct effect on the outcome of that proposal. Your shares, however, will count toward the quorum necessary to hold the Annual Meeting. |
| | | | | | 62 | | T-Mobile 2018 Proxy Statement | | |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING | | | | | | | | | | | Proposal | | Recommended
Vote | | Vote
Required
| | Withhold Votes/Recommended
AbstentionsVote | | UninstructedVote
SharesRequired | | Withhold
Votes/Abstentions | | Broker
Non-Votes | 1. | | Election of Directors | | “FOR”FOR | | Plurality | | No Effect | | Not votedNo Effect | 2. | | Ratification of the Appointment of PricewaterhouseCoopers LLP as the Company’s Independent Registered Public Accounting Firm for Fiscal Year 2018 | | “FOR”FOR | | Majority* | | No Effect | | Discretionary
vote** | 3. | | Approval of an Amendment to the T-Mobile US, Inc. 2014 Employee Stock PurchaseCompany’s 2013 Omnibus Incentive Plan | | “FOR”FOR | | Majority* | | No Effect | | Not votedNo Effect | 4. Stockholder Proposal regarding Human Rights Risk Assessment | | “AGAINST”Stockholder Proposal for Implementation of Proxy Access | | AGAINST | | Majority* | | No Effect | | Not votedNo Effect | 5. Stockholder Proposal regarding Proxy Access | | “AGAINST”Stockholder Proposal for Limitations on Accelerated Vesting of Equity Awards in the Event of a Change of Control | | AGAINST | | Majority* | | No Effect | | Not votedNo Effect |
| * | Under our bylaws, the ratification of the appointment of our independent registered public accounting firm theand approval of the 2014 Employee Stock Purchase Plan and the stockholder proposals are decided by the vote of a majority of the votes cast in person or by proxy at the Annual Meeting by the holders of our shares of common stock entitled to vote thereon. Under this voting standard, any matter or proposal for which the vote required is a “majority” will, if presented, be approved if a majority of the votes cast “FOR” such proposal exceed the number of votes cast “AGAINST” such proposal. Neither abstentions nor broker non-votes will count as votes cast “FOR” or “AGAINST” the proposal. Therefore, abstentions and broker non-votes will have no direct effect on the outcome of the proposal. |
| ** | Broker non-votes are not expected for this proposal. |
Can I change my vote or revoke my proxy? Yes. If you are a holder of record of our common stock, you may revoke your proxy at any time prior to the voting deadlines referred to in “How do I vote?” above by: delivering to our Corporate Secretary at our principal executive office located at 12920 SE 38th Street, Bellevue, Washington 98006, a written revocation prior to the date and time of the Annual Meeting;
submitting another valid proxy card with a later date by mail;
submitting another proxy by phone or Internet; or
attending the Annual Meeting in person and giving the Company’s Inspector of Elections notice of your intent to vote your shares in person.
| ∎ | | delivering to our Corporate Secretary at our principal executive office located at 12920 SE 38th Street, Bellevue, Washington 98006, a written revocation prior to the date and time of the Annual Meeting; |
| ∎ | | submitting another valid proxy card with a later date by mail; |
| ∎ | | submitting another, later-dated proxy by phone or internet; or |
| ∎ | | attending the Annual Meeting in person and giving the Company’s Inspector of Elections notice of your intent to vote your shares in person. |
Attendance at the Annual Meeting will not, by itself, revoke a proxy. If your shares are held in street name, you must contact your broker or other registered holder in order to revoke your previously submitted voting instructions. Such revocation should be made sufficiently in advance of the Annual Meeting to ensure that the revocation of the proxy card submitted by your registered holder is received by our Corporate Secretary prior to the date and time of the Annual Meeting. What is required for a quorum at the Annual Meeting? To transact business at the Annual Meeting, a majority of the shares of our common stock outstanding on the record date and entitled to vote at the Annual Meeting must be present, in person or by proxy, at the Annual Meeting. If a quorum is not present at the Annual Meeting, no business can be transacted at that time, and the meeting will be continued, adjourned or postponed to a later date. On the record date there were 811,674,813849,014,938 shares of our common stock outstanding and entitled to vote at the Annual Meeting. A stockholder’s instruction to “withhold authority,” abstentions, and broker non-votes will be counted as present and entitled to vote at the Annual Meeting for purposes of determining a quorum. What do I need in order to attend the Annual Meeting? If you are a record holder of shares of our common stock, you must bring either the Notice of Internet Availability of Proxy Materials or the admission ticket enclosed with the paper copy of the proxy materials. However, if you hold your shares of common stock in street name, you must ask the broker, bank or other institution (registered holder) that holds your shares to provide you with a legal proxy, a copy of your account statement, or a letter from the registered holder confirming that you beneficially own or hold shares of our common stock as of the close of business on April 10, 2015.17, 2018. You can obtain an admission ticket by presenting this confirming documentation from your broker, bank or other institution at the Annual Meeting. Every attendee of the Annual Meeting will be required to show a valid, government-issued picture identification that matches his or her Notice of Internet Availability of Proxy Materials, admission ticket, legal proxy and/or confirming documentation to gain admission to the Annual Meeting. Seating is limited and will be available on a first-come, first-served basis. For safety and security purposes, we do not permit any stockholder to bring cameras, video or audio recording equipment, large bags, briefcases or packages into the meeting room or to otherwise record or photograph the Annual Meeting. We also ask that all stockholders attending the Annual Meeting turn off all cell phones pagers, and other electronic devices during the Annual Meeting. We reserve the right to inspect any bags, purses or briefcases brought into the Annual Meeting. | | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement | | 53 |
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Who will tabulate and count the votes? Representatives of Broadridge Financial Solutions will tabulate the votes and act as the Company’s Inspector of Elections. Where can I find the voting results for each proposal? We will file a Current Report on Form 8-K within four business days after the Annual Meeting to announce the preliminary results of voting. Who bears the cost of the proxy solicitation? Who | bears the cost of the proxy solicitation? |
We will bear all of the costs of soliciting proxies, including the preparation, assembly, printing and distribution of all proxy materials. We also reimburse brokers, banks, fiduciaries, custodians and other institutions for their costs in forwarding the proxy materials to the beneficial owners or holders of our common stock. Our directors, officers and employees also may solicit proxies by mail, personally, by telephone, by email or by other appropriate means. No additional compensation will be paid to directors, officers or other employees for such services. | | | | | | 54 | | T-Mobile 2018 Proxy Statement | | 63 |
Other Information and Business Company InformationCOMPANY INFORMATION
Our website contains the Company’s current corporate governance guidelines,Corporate Governance Guidelines, committee charters, codeCode of business conduct, codeBusiness Conduct, Code of ethicsEthics for senior financial officersSenior Financial Officers and SEC filings. You may view or download any of these documents free of charge on the Investor Relations section of our website athttp://investor.t-mobile.comby selecting “Governance Documents” under the “Corporate Governance” tab. By selecting “SEC Filings” under the “Financial Performance” tab, you will also find a copy of this Proxy Statement, a copy of the 20142017 Annual Report to Stockholders, a Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014,2017, and copies of the Company’s quarterly reports on Form 10-Q and current reports on Form 8-K.You may obtain a copy of any of the above-listed documents, including the Company’s Annual Report on Form 10-K, upon request, free of charge, by sending a request in writing to the Company’s Investor Relations department at T-Mobile US, Inc., 1 Park Avenue, 14th Floor, New York, NY 10016. Duplicate Mailings (Householding)DUPLICATE MAILINGS (HOUSEHOLDING)
We have adopted a procedure called “householding,” which has been approved by the SEC. Under this procedure, we willmay deliver only one copy of our Notice of Internet Availability of Proxy Materials, and for those stockholders that received a paper copy of proxy materials in the mail, one copy of this Proxy Statement and our 20142017 Annual Report to Stockholders, to multiple stockholders who share the same address (if they appear to be members of the same family) unless we have received contrary instructions from an affected stockholder. If you received only one copy of this Proxy Statement and the 20142017 Annual Report to Stockholders or Notice of Internet Availability of Proxy Materials and wish to receive a separate copy for each stockholder at your household, or if you wish to participate in householding, please contact Broadridge Financial Solutions, Inc. either by calling toll free at (800) 542-1061(866) 540-7095 or by writing to Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, New York, NY 11717. We will promptly deliver, upon written or oral request to the address or telephone number above by stockholders at a shared address to which a single copy of the documents was delivered, a separate copy of the Proxy Statement and the 2017 Annual Report to Stockholders. A number of brokerage firms have instituted householding. If you hold your shares in street name, please contact your bank, broker or other holder of record to request information on householding. Stockholder Proposals for the 2016 Annual Meeting of StockholdersSTOCKHOLDER PROPOSALS FOR THE 2019 ANNUAL MEETING OF STOCKHOLDERS
Proposals Pursuant to Rule 14a-8. Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present proper proposals for inclusion in our Proxy Statement and for consideration at our 20162019 Annual Meeting of Stockholders. To be eligible for inclusion in our 20162019 Proxy Statement under Rule 14a-8, your proposal must be received by us no later than the close of business on December 24, 2015,27, 2018, and must otherwise comply with Rule 14a-8. While the Board of Directors will consider stockholder proposals, we reserve the right to omit from our proxy statementProxy Statement stockholder proposals that we are not required to include under the Exchange Act, includingRule 14a-8. Business Proposals and Nominations Pursuant to Our Bylaws. Under our bylaws, in order to nominate a director or bring any other business before the stockholders at the 20162019 Annual Meeting of Stockholders that will not be included in our Proxy Statement pursuant to Rule 14a-8, you must comply with the procedures and timing specifically described in our bylaws. In addition, assuming the date of the 20162019 Annual Meeting of Stockholders is not more than 30 days before and not more than 60 days after the anniversary date of the 20152018 Annual Meeting, you must notify us in writing, and such written notice must be delivered to our secretary no earlier than February 3, 2016,13, 2019, and no later than March 4, 2016.15, 2019. A copy of our bylaws setting forth the requirements for the nomination of director candidates by stockholders and the requirements for proposals by stockholders may be obtained free of charge from our Corporate Secretary at 12920 SE 38th Street, Bellevue, Washington 98006. A nomination or proposal that does not comply with the above procedures will be disregarded. Compliance with the above procedures does not require the Company to include the proposed nominee or proposal in the Company’s proxy solicitation material. | | | | | T-Mobile Notice of 2015 Annual Meeting and Proxy Statement64 | | 55T-Mobile 2018 Proxy Statement | | |
OTHER INFORMATION AND BUSINESS Section 16(a) Beneficial Ownership Reporting ComplianceSECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and holders of 10% or more of our outstanding common stock to file reports concerning their ownership (Form 3) and changes in ownership (Form 4 and Form 5) of Company equity securities with the SEC. Based solely upon our review of such reports, the Company believes that all persons filed on a timely basis all reports required by Section 16(a). Other BusinessOTHER BUSINESS
Management does not know of any other items or business, other than those in the accompanying Notice of Annual Meeting of Stockholders that may properly come before the Annual Meeting or other matters incident to the conduct of the Annual Meeting. As to any other item or proposal that may properly come before the Annual Meeting, including voting on a proposal omitted from this Proxy Statement pursuant to the rules of the SEC, it is intended that proxies will be voted in accordance with the discretion of the proxy holders. | | | | | By Order of the Board of Directors, 
David A. Miller
Executive Vice President, General Counsel and Secretary
|
David A. Miller Executive Vice President, General Counsel and Secretary | | | | | | 56 | | T-Mobile 2018 Proxy Statement | |
T-MOBILE US, INC.
2014 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. PURPOSE
The purposes of the Plan are to provide employees of the Company and its Designated Companies with an opportunity to acquire an equity ownership interest in the Company and to encourage employees to remain in the employ of the Company and its Designated Companies.
The Company intends that the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code, but it makes no representation of such status, nor does it undertake to maintain such status. The provisions of the Plan will be construed so as to extend and limit Plan participation in a uniform and nondiscriminatory basis consistent with the requirements of Section 423 of the Code.
SECTION 2. DEFINITIONS
Certain capitalized terms used in the Plan have the meanings set forth inAppendix A.
SECTION 3. ADMINISTRATION
3.1 | Administration by Committee65 |
The Plan shall be administered by the Committee. The Committee shall have the authority to delegate duties to officers, directors or employees of the Company as it deems advisable.
3.2 | Authority of Committee |
Subject to the provisions of the Plan, the Committee shall have the full and exclusive discretionary authority to construe and interpret the Plan and options granted under it; to establish, amend, and revoke rules and regulations for administration and operation of the Plan (including, without limitation, the determination and change of Offering Periods, Purchase Periods and payment procedures, and the requirement that shares of Common Stock be held by a specified broker); to determine all questions of eligibility, disputed claims and policy that may arise in the administration of the Plan; and, generally, to exercise such powers, perform such acts and make such determinations as the Committee deems necessary or expedient to administer and operate the Plan, including, but not limited to, designating from time to time which Subsidiaries of the Company shall be Designated Companies. The Committee’s determinations as to the interpretation and operation of the Plan shall be final and conclusive, and each action of the Committee shall be binding on all persons.
3.3 | Administrative Modifications |
The Plan provisions relating to the administration of the Plan may be modified by the Committee from time to time as may be desirable to satisfy any requirements of or under the
securities and/or other applicable laws of the United States or other jurisdiction, to obtain any exemption under such laws, to reduce or eliminate any unfavorable legal, accounting or other consequences or to achieve any other purpose deemed appropriate by the Committee.
SECTION 4. NUMBER OF SHARES
Subject to adjustment from time to time as provided in Section 10, the number of shares of Common Stock reserved for sale and authorized for issuance pursuant to the Plan is:
(a) 10,000,000 shares; plus
(b) an annual increase to be added as of the first day of the Company’s fiscal year beginning in 2016 equal to the lesser of (i) 5,000,000 shares, and (ii) an amount determined by the Committee; provided that any shares from any such increases in previous years that are not actually issued shall continue to be available for issuance under the Plan.
If any option granted under the Plan shall for any reason terminate without having been exercised, the shares of Common Stock not purchased under such option shall again be available for issuance under the Plan. The shares of Common Stock purchased under the Plan may be authorized but unissued shares or shares now held or subsequently acquired by the Company as treasury shares.
SECTION 5. OFFERINGS
(a) Except as otherwise set forth below, the Plan shall be implemented by a series of Offerings (each, an “Offering”) during which shares of Common Stock may be purchased by Participants. The first Offering Period shall begin on April 1, 2015 and shall end on September 30, 2015. Subsequent Offering Periods shall run from October 1 through March 31 and April 1 through September 30 of each year.
(b) Notwithstanding the foregoing, the Committee may establish (i) a different term for one or more Offerings and (ii) different commencing and ending dates for such Offerings; provided, however, that an Offering Period may not exceed five (5) years; and provided, further, that if the Purchase Price may be less than eighty-five percent (85%) of the Fair Market Value of the Common Stock on the Purchase Date, the Offering Period may not exceed twenty-seven (27) months.
(c) The Committee may further designate separate Offerings under the Plan (the terms of which need not be identical and which may be overlapping or consecutive) in which Eligible Employees of one or more Employers may participate, and the provisions of the Plan will separately apply to each Offering, including the limitations set forth in Section 5.1(b) regarding the maximum length of Offering Periods.
(d) In the event that the first or the last day of an Offering Period is not a regular business day, then the first day of the Offering Period shall be deemed to be the next regular business day and the last day of the Offering Period shall be deemed to be the last preceding regular business day.
(a) Each Offering Period shall consist of one or more consecutive purchase periods (each, a “Purchase Period”). The last day of each Purchase Period shall be the purchase date (a “Purchase Date”) for such Purchase Period. Except as otherwise set forth below, the first Purchase Period shall begin on April 1, 2015 and shall end on September 30, 2015. Subsequent Purchase Periods shall run from October 1 through March 31 and April 1 through September 30 of each year.
(b) Notwithstanding the foregoing, the Committee may establish (i) a different term for one or more Purchase Periods within an Offering Period and (ii) different commencing and ending dates for any such Purchase Period.
(c) In the event that the first or last day of a Purchase Period is not a regular business day, then the first day of the Purchase Period shall be deemed to be the next regular business day and the last day of the Purchase Period shall be deemed to be the last preceding regular business day.
SECTION 6. ENROLLMENT
An Eligible Employee may enroll in the Plan for an Offering Period by completing and signing an enrollment election form or by such other means as the Committee shall prescribe and submitting such enrollment election to the Company (or completing such other established enrollment procedure) in accordance with procedures established by the Committee on or before the Cut-Off Date with respect to such Offering Period.
6.2 | Continuing Effectiveness of Enrollment Election |
Unless otherwise determined by the Committee, the enrollment election and the designated rate of payroll deduction or contribution by a Participant shall continue for future Offering Periods unless the Participant changes or cancels, in accordance with procedures established by the Committee, the enrollment election or designated rate of payroll deduction or contribution prior to the Cut-Off Date with respect to a future Offering Period or elects to withdraw from the Plan in accordance with Section 9.1.
6.3 | Initial Eligibility During Offering Period; Participation in Multiple Offering Periods |
An employee who becomes eligible to participate in the Plan after an Offering Period has begun shall not be eligible to participate in such Offering Period but may participate in any subsequent Offering Period, provided that such employee is still an Eligible Employee as of the commencement of any such subsequent Offering Period and completes the enrollment procedures set forth in this Section 6. Eligible Employees may not participate in more than one Offering at a time.
SECTION 7. GRANT OF OPTIONS ON ENROLLMENT
(a) Enrollment by an Eligible Employee in the Plan as of an Enrollment Date will constitute the grant by the Company to such Participant of an option on such Enrollment Date to purchase shares of Common Stock from the Company pursuant to the Plan.
(b) Notwithstanding any other provision of the Plan to the contrary, no Eligible Employee shall be granted an option under the Plan to the extent that, immediately after the grant, such Eligible Employee would own, directly or indirectly, an aggregate of five percent (5%) or more of the total combined voting power or value of all outstanding shares of all classes of stock of the Company or any Parent or Subsidiary (and for purposes of this Section 7.1(b), the rules of Section 424(d) of the Code shall apply, and stock that the employee may purchase under outstanding options shall be treated as stock owned by the employee).
(a) Notwithstanding any other provision of the Plan to the contrary, unless the Committee determines otherwise for a future Offering Period or Purchase Period, no Participant may purchase during a single Offering Period more than 4,000 shares of Common Stock, subject to adjustment as provided in the Plan.
(b) Notwithstanding any other provision of the Plan to the contrary, no Participant shall purchase Common Stock with a Fair Market Value in excess of the following applicable limit:
(i) In the case of Common Stock purchased during an Offering Period that commenced in the current calendar year, the limit shall be equal to (A) $25,000 minus (B) the Fair Market Value of the Common Stock that the Participant previously purchased in the current calendar year (under the Plan and all other employee stock purchase plans of the Company or any Parent or Subsidiary of the Company);
(ii) In the case of Common Stock purchased during an Offering Period that commenced in the immediately preceding calendar year, the limit shall be equal to (A) $50,000 minus (B) the Fair Market Value of the Common Stock that the Participant previously purchased in the preceding year (under the Plan and all other employee stock purchase plans of the Company or any Parent or Subsidiary of the Company); or
(iii) In the case of Common Stock purchased during an Offering Period that commenced two (2) calendar years prior, the limit shall be equal to (A) $75,000 minus (B) the Fair Market Value of the Common Stock that the Participant
previously purchased in such preceding years (under the Plan and all other employee stock purchase plans of the Company or any Parent or Subsidiary of the Company).
For purposes of this Section 7.2(b), the Fair Market Value of Common Stock shall be determined in each case as of the beginning of the Offering Period in which such Common Stock is purchased.
(c) The Company shall have the authority to take all necessary action, including but not limited to suspending the payroll deductions or contributions of any Participant, in order to ensure compliance with this Section 7.2. Any payments made by a Participant in excess of the limitations of this Section 7.2 shall be returned to the Participant in accordance with procedures established by the Committee, without interest, except as otherwise required by local law. Any payroll deductions or contributions suspended as a result of the limits of this Section 7.2 shall automatically resume at the beginning of the earliest Purchase Period for which the foregoing limits will not be exceeded, which for purposes of Section 7.2(b) will end in the next calendar year (if the individual is then an Eligible Employee and has not otherwise terminated participation in the Plan), provided that when the Company automatically resumes such payroll deductions or contributions, the Company shall apply the rate in effect immediately prior to such suspension.
Notwithstanding any other provision of the Plan to the contrary, an option granted pursuant to the Plan shall be subject to obtaining all necessary governmental approvals and qualifications of the Plan and the issuance of options and sale of Common Stock pursuant to the Plan.
Notwithstanding any other provision of the Plan to the contrary, the Plan and the exercisability of options granted under the Plan will be subject to stockholder approval of the Plan within twelve (12) months before or after the date the Plan is adopted by the Board.
SECTION 8. PURCHASE PRICE; PAYMENT
The purchase price (“Purchase Price”) at which shares of Common Stock may be acquired in an Offering pursuant to the exercise of all or any portion of an option granted under the Plan shall be eighty-five percent (85%) of the lesser of:
(a) the Fair Market Value of the Common Stock on the first day of such Offering; and
(b) the Fair Market Value of the Common Stock on the Purchase Date;
provided, however, that the Committee may change the Purchase Price to be anywhere from eighty-five percent (85%) to one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the first day of an Offering or the Purchase Date for a future Offering Period, subject to compliance with Section 423 of the Code, as applicable.
(a) An option held by a Participant that was granted under the Plan and that remains outstanding as of a Purchase Date shall be deemed to have been exercised on such Purchase Date for the number of whole shares that the funds accumulated in the Participant’s Account as of the Purchase Date will purchase at the applicable Purchase Price (but not in excess of the number of shares for which options have been granted to the Participant pursuant to Section 7.2).
(b) During the Purchase Period, shares of Common Stock that are to be acquired pursuant to the exercise of all or any portion of an option shall be paid for by means of payroll deductions from Participants’ Eligible Compensation. Unless the Committee determines otherwise for a future Purchase Period, any payroll deductions must be in one percent (1%) increments constituting not less than one percent (1%) and not more than fifteen percent (15%) of a Participant’s Eligible Compensation received on each payday during the Purchase Period. Payment amounts shall be credited on a bookkeeping basis to a Participant’s Account under the Plan. All payroll deductions or contributions received or held by the Company may be used by the Company for any purpose and the Company shall have no obligation to segregate such funds. No interest accrues on payroll deductions or contributions by a Participant.
(c) Any payroll deductions for a Participant shall commence on the first payday following the Enrollment Date and shall end on the last payday prior to the Purchase Date.
(d) Notwithstanding any provision in the Plan to the contrary, the Committee may allow Eligible Employees to participate in the Plan via cash contributions instead of payroll deductions if the Committee determines that cash contributions are permissible under Section 423 of the Code.
8.3 | Refund of Excess Amount |
If, after a Participant’s exercise of an option under Section 8.2, an amount remains credited to the Participant’s Account as of a Purchase Date (including after return of any amount pursuant to Section 7.2), then the remaining amount shall be returned to the Participant, except that any amounts that are not sufficient to purchase a full share of Common Stock will be retained in the Participant’s Account for the subsequent Purchase Period or Offering Period, subject to earlier withdrawal by the Participant as provided in Section 9.1.
If the total number of shares for which options are or could be exercised on any Purchase Date in accordance with this Section 8, when aggregated with all shares for which options have been previously exercised under the Plan, exceeds the maximum number of shares reserved in Section 4, the Company may allocate the shares available for delivery and distribution in the ratio that the balance in each Participant’s Account bears to the aggregate balances of all Participants’ Accounts, and the remaining balance of the amount credited to the Account of each Participant under the Plan shall be returned to him or her as promptly as possible.
If a Participant or former Participant who is subject to United States federal income tax sells, transfers, or otherwise makes a disposition of shares of Common Stock purchased pursuant to an option granted under the Plan, then such Participant or former Participant shall notify the Company or the Employer in writing of such sale, transfer or other disposition within ten (10) days of the consummation of such sale, transfer or other disposition. Without limitation on the Participant or former Participant’s ability to sell, transfer or otherwise make a disposition of shares and without limitation on Section 3.2, Participants and former Participants must maintain any shares purchased pursuant to an option granted under the Plan within two (2) years after the date such option is granted or within one (1) year after the date such shares were transferred to the Participant at the broker designated by the Committee, unless the Committee determines otherwise.
SECTION 9. WITHDRAWAL FROM THE PLAN, TERMINATION
OF EMPLOYMENT, AND LEAVE OF ABSENCE
9.1 | Withdrawal From the Plan |
A Participant may withdraw all funds accumulated in the Participant’s Account from the Plan during any Purchase Period by delivering a notice of withdrawal to the Company or the Employer (in a manner prescribed by the Committee) at such time in advance of the Purchase Date as the Committee may require. If notice of complete withdrawal from the Plan as described in the preceding sentence is timely received, the Company or the Employer will cease the Participant’s payroll withholding, or other contributions to the Plan, and in accordance with procedures established by the Committee, either all funds then accumulated in the Participant’s Account shall be used to purchase shares on the Purchase Date for such Purchase Period or all funds then accumulated in the Participant’s Account shall not be used to purchase shares but shall instead be distributed to the Participant as soon as administratively feasible. An employee who has withdrawn from a Purchase Period may not contribute additional funds to the Company or the Employer during that Purchase Period and require the Company or the Employer to apply those funds to the purchase of shares. Any Eligible Employee who has withdrawn from the Plan in accordance with this Section 9.1 may, however, reenroll in the Plan by the next subsequent Enrollment Date, if any, in accordance with Section 6.1.
9.2 | Termination of Participation |
Participation in the Plan terminates immediately on the date on which a Participant ceases to be employed by the Company or the Employer for any reason whatsoever or otherwise ceases to be an Eligible Employee, and all funds then accumulated in the Participant’s Account shall not be used to purchase shares of Common Stock but shall instead be distributed to the Participant (or in case of the Participant’s death, to his or her estate, beneficiary or heirs, as applicable) as soon as administratively feasible, without interest.
If a Participant takes a leave of absence, such Participant shall have the right, in accordance with procedures prescribed by the Committee, to elect to withdraw from the Plan in accordance with Section 9.1. To the extent determined by the Committee or required by Section 423 of the Code, certain leaves of absence may be treated as cessations of employment for purposes of the Plan.
SECTION 10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION,
DISSOLUTION, LIQUIDATION, MERGER OR ASSET SALE
10.1 | Adjustments Upon Changes in Capitalization |
Subject to any required action by the stockholders of the Company, the right to purchase shares covered by a current Offering Period, the number of shares that have been authorized for issuance under the Plan for any future Offering Period, the maximum number of shares each Participant may purchase in each Offering Period or Purchase Period (pursuant to Section 7.2(a)), as well as the price per share and the number of shares covered by each right under the Plan that have not yet been purchased, shall be proportionately adjusted in the sole discretion of the Committee for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, extraordinary cash dividend, combination or reclassification of the Common Stock, or recapitalization, reorganization, consolidation, split-up, spin-off, or any other increase or decrease in the number of shares effected without receipt of consideration by the Company. Except as expressly provided otherwise by the Committee, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock.
10.2 | Adjustment Upon Dissolution, Liquidation, Merger or Asset Sale |
Without limitation on the preceding provisions, in the event of any dissolution, liquidation, merger, consolidation, sale of all or substantially all of the Company’s outstanding voting securities, sale, lease, exchange or other transfer of all or substantially all of the Company’s assets, or any similar transaction as determined by the Committee in its sole discretion, the Committee may make such adjustment it deems appropriate to prevent dilution or enlargement of rights in the number and class of shares that may be delivered under
Section 4, in the number, class or price of shares available for purchase under the Plan and in the number of shares that a Participant is entitled to purchase and any other adjustments it deems appropriate. Without limiting the Committee’s authority under the Plan, in the event of any such transaction, the Committee may elect to have the options hereunder assumed or such options converted or substituted by a successor entity (or its Parent), to terminate all outstanding options either prior to their expiration or upon completion of the purchase of shares on the next Purchase Date, to shorten the Offering Period by setting a new Purchase Date, or to take such other action deemed appropriate by the Committee.
SECTION 11. DESIGNATION OF BENEFICIARY
Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom the amount in his or her Account is to be paid in case of his or her death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee, and shall be effective only when filed by the Participant in writing with the Company during the Participant’s lifetime. In the absence of any such designation, any Account balance remaining unpaid at the Participant’s death shall be paid to the executor or administrator of the Participant’s estate.
SECTION 12. MISCELLANEOUS
12.1 | Restrictions on Transfer |
Options granted under the Plan to a Participant may not be exercised during the Participant’s lifetime other than by the Participant. Neither amounts credited to a Participant’s Account nor any rights with respect to the exercise of an option or to receive shares of Common Stock under the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way by the Participant other than by will or the laws of descent and distribution or by a beneficiary designation as permitted by Section 11. Any such attempted assignment, transfer, pledge, or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw from the Plan in accordance with Section 9.1.
12.2 | Administrative Assistance |
If the Committee in its discretion so elects, it may retain a brokerage firm, bank, or other financial institution to assist in the purchase of shares, delivery of reports, or other administrative aspects of the Plan. If the Committee so elects, each Participant shall (unless prohibited by applicable law) be deemed upon enrollment in the Plan to have authorized the establishment of an account on his or her behalf at such institution. Shares purchased by a Participant under the Plan shall be held in such account in the Participant’s name, or if the Participant so indicates in the enrollment form, in the Participant’s name together with the name of his or her spouse in joint tenancy with right of survivorship or spousal community property, or in certain forms of trust approved by the Committee. The Company may require that shares be retained with a broker or agent for a designated period of time and/or may establish other procedures to permit tracking of disqualifying dispositions of such shares.
In the event of a Participant’s death prior to the delivery to him or her of any shares or cash held by the Company for the account of the Participant, and to the extent permitted by local law, the Company shall deliver such shares or cash to the Participant’s estate, beneficiary or heirs, as applicable.
The Company or any Employer shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company or any member of the Employer, an amount sufficient to satisfy federal, state and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan.
12.5 | Equal Rights and Privileges |
All Eligible Employees shall have equal rights and privileges with respect to the Plan so that the Plan qualifies as an “employee stock purchase plan” within the meaning of Section 423 or any successor provision of the Code and the related regulations. Notwithstanding the express terms of the Plan, any provision of the Plan that is intended to comply with Section 423 that is inconsistent with Section 423 or any successor provision of the Code shall without further act or amendment by the Company or the Committee be reformed to comply with the requirements of Section 423 of the Code. This Section 12.5 shall take precedence over all other provisions in the Plan.
The Plan shall be governed by the substantive laws (excluding the conflict of laws rules) of the State of Delaware.
12.7 | Amendment, Suspension and Termination |
The Board may amend, suspend or terminate the Plan at any time; provided, however, that (a) the Plan may not be amended in a way that will cause rights issued under the Plan to fail to meet the requirements of Section 423 of the Code; and (b) no amendment that would amend or modify the Plan in a manner requiring stockholder approval under Section 423 of the Code or the requirements of any securities exchange on which the shares are traded shall be effective unless such stockholder approval is obtained. No options may be granted during any period of suspension of the Plan.
If the Plan is terminated, the Committee may elect to terminate all outstanding options either prior to their expiration or upon completion of the purchase of shares on the next Purchase Date, or may elect to permit options to expire in accordance with their terms (and participation to continue through such expiration dates). If the options are terminated prior to expiration, all funds accumulated in Participants’ Accounts as of the date the options are terminated shall be returned to the Participants as soon as administratively feasible.
12.8 | No Right of Employment |
Neither the grant nor the exercise of any rights to purchase shares under the Plan nor anything in the Plan shall impose upon the Company or any member of the Employer any obligation to employ or continue to employ any employee or Participant. The right of the Company or a member of the Employer to terminate any employee shall not be diminished or affected because any rights to purchase shares of Common Stock have been granted to such employee. The grant of an option hereunder during any Offering Period shall not give a Participant any right to similar grants hereunder.
12.9 | Rights as Stockholder |
No Participant shall have any rights as a stockholder with respect to shares of Common Stock acquired under the Plan unless and until such shares of Common Stock have been issued to him or her (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). Until such shares are issued, a Participant will only have the rights of an unsecured creditor with respect to such shares.
Without amending the Plan, the Committee may establish procedures to grant options or otherwise provide benefits to Eligible Employees of Designated Companies on such terms and conditions different from those specified in this Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan and shall have the authority to adopt such modifications, procedures, separate Offerings, subplans and the like as may be necessary or desirable (a) to comply with provisions of the laws or regulations or conform to the requirements to operate the Plan in a qualified or tax or accounting advantageous manner in other jurisdictions in which the Company or any Designated Companies may operate or have employees, (b) to ensure the viability of the benefits from the Plan to Eligible Employees employed in such jurisdictions and (c) to meet the objectives of the Plan. Notwithstanding anything to the contrary herein, any such actions taken by the Committee with respect to Eligible Employees of any Designated Companies may be treated as a separate Offering under Section 423 of the Code or a subplan outside of an “employee stock purchase plan” under Section 423 of the Code and not subject to the requirements of Section 423 set forth in the Code and this Plan.
12.11 | Governmental Regulation |
The Company’s obligation to sell and deliver shares of Common Stock under the Plan is subject to the approval of any governmental authority required in connection with the authorization, issuance, or sale of such shares. The Company shall not be required to issue shares of Common Stock with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all the applicable provisions of law, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the shares may then be listed.
The Plan is exempt from the application of Section 409A of the Code, and any ambiguities herein will be interpreted to so be exempt from Section 409A of the Code. In furtherance of the foregoing and notwithstanding any other provision in the Plan to the contrary, if the Committee determines that an option granted under the Plan may be subject to Section 409A of the Code or that any provision of the Plan would cause an option under the Plan to be subject to Section 409A of the Code, the Committee may amend the terms of the Plan and/or of an outstanding option granted under the Plan, or take such other action that the Committee determines is necessary or appropriate, in each case, without the Participant’s consent, to exempt any outstanding option or future option that may be granted under the Plan from or to allow any such options to comply with, Section 409A of the Code. Notwithstanding the foregoing, the Company shall have no liability to a Participant or any other party if the option to purchase Common Stock under the Plan that is intended to be exempt from or compliant with Section 409A of the Code is not so exempt or compliant or for any action taken by the Committee with respect thereto. The Company makes no representation that any option to purchase Common Stock under the Plan is compliant with Section 409A of the Code.
12.13 | Condition for Participation |
As a condition to participation in the Plan, Eligible Employees agree to be bound by the terms of the Plan (including, without limitation, the notification and holding requirements of Section 8.5) and the determinations of the Committee.
Unless sooner terminated by the Board, the Plan shall automatically terminate on the tenth anniversary of the date the Board adopts the Plan. After the Plan terminates in accordance with the foregoing sentence, no future options may be granted under the Plan, but options previously granted shall remain outstanding in accordance with their terms and conditions and the Plan’s terms and conditions.
The Plan is effective as of the Effective Date.
APPENDIX A DEFINITIONS
As used in the Plan,
“Account” means a recordkeeping account maintained for a Participant to which Participant payroll deductions or contributions, if applicable, shall be credited. No interest shall be paid on any contributions credited to such Account, unless required by local law.
“Board” means the Board of Directors of the Company.
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“Committee” means the Board or the Compensation Committee or any other committee (which committee need not be composed of members of the Board) appointed by the Board to administer the Plan.
“Common Stock” means the Common Stock, $0.00001 par value, of the Company.
“Company” means T-Mobile US, Inc., a Delaware corporation.
“Cut-Off Date”means the date established by the Committee from time to time by which enrollment forms must be received prior to an Enrollment Date.
“Designated Company” means any Subsidiary or Parent of the Company that has been designated by the Committee from time to time in its sole discretion as eligible to participate in the Plan and which has adopted the Plan with the approval of the Committee in its sole discretion. A Designated Company shall cease to be a Designated Company on the earlier of (a) the date the Committee determines that such entity is no longer a Designated Company and (b) the date such Designated Company ceases for any reason to be a “parent corporation” or “subsidiary corporation” as defined in Sections 424(e) and 424(f), respectively, of the Code.
“Effective Date”means the date on which the Plan is approved by the Board.
“Eligible Compensation” means all base gross earnings, cash bonuses, commissions and overtime, including such amounts of gross earnings as are deferred by an Eligible Employee (a) under a qualified cash or deferred arrangement described in Section 401(k) of the Code or (b) to a plan qualified under Section 125 of the Code. Eligible Compensation does not include severance pay, hiring and relocation bonuses, pay in lieu of vacation, sick leave, gain from stock option exercises and other equity compensation income, imputed income arising under any Company group insurance or benefit program or any other special payments. The Committee, in its discretion, may establish a different definition of Eligible Compensation for a subsequent Offering Period.
“Eligible Employee” means an employee providing services to the Company or a Designated Company.
The Committee, in its discretion, may determine from time to time, prior to an Enrollment Date for all options to be granted on such Enrollment Date in an Offering (on a uniform and nondiscriminatory basis or as otherwise permitted by Treasury Regulation Section 1.423-2), that the definition of Eligible Employee shall be subject to additional eligibility requirements, consistent with Section 423 of the Code.
“Employer” means the Company or any Designated Company by which an employee is employed.
“Enrollment Date” means the first day of an Offering Period.
“Fair Market Value” means, with respect to the Common Stock, as of any date, unless the Committee determines otherwise with respect to a future Offering:
(a) if the principal market for the Common Stock (as determined by the Committee if the Common Stock is listed or admitted to trading on more than one exchange or market) is a national securities exchange or an established securities market, the official closing price per share of Common Stock for the regular market session on that date on the principal exchange or market on which the Common Stock is then listed or admitted to trading or, if no sale is reported for that date, on the last preceding day for which a sale was reported;
(b) if the principal market for the Common Stock is not a national securities exchange or an established securities market, the average of the highest bid and lowest asked prices for the Common Stock on that date as reported on a national quotation system or, if no prices are reported for that date, on the last preceding day for which prices were reported; or
(c) if the Common Stock is neither listed or admitted to trading on a national securities exchange or an established securities market, nor quoted by a national quotation system, the value determined by the Committee in good faith by the reasonable application of a reasonable valuation method.
“Offering”means an offer under the Plan of an option that may be exercised during an Offering Period as further described in Section 5.
“Offering Period” means each period designated by the Committee, as further described in Section 5.
“Parent”means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.
“Participant” means an Eligible Employee who has enrolled in the Plan pursuant to Section 6.
“Plan” means this T-Mobile US, Inc. 2014 Employee Stock Purchase Plan.
“Purchase Date” means the last day of each Purchase Period.
“Purchase Period” means each period designated by the Committee, as further described in Section 5.
“Purchase Price” has the meaning set forth in Section 8.1.
“Subsidiary” means a corporation, domestic or foreign, whether now or hereafter existing, as defined in Section 424(f) of the Code.
Reconciliation of Non-GAAP Financial Measures Certain of the financial metrics applicable to the 2014 short-term incentive plan2017 Short Term Incentive Plan described under “Executive Compensation – Analysis of Executive Officer Compensation” are non-GAAP financial measures. Below is a description of these non-GAAP financial measures. “Adjusted EBITDA”: Earnings before interest expense, (netnet of interest income),income, income tax expense, depreciation and amortization expense, non-cash stock-based compensation and certain expenses not reflective of T-Mobile’s ongoing operating performance. Adjusted EBITDA is reconciled to net income (loss) as follows: | | | | | | | | | | | | | | | | | | | | | | (in millions) | | Q1 2014 | | | Q2 2014 | | | Q3 2014 | | | Q4 2014 | | | Year Ended
December 31,
2014 | | | Net income (loss) | | $ | (151 | ) | | $ | 391 | | | $ | (94 | ) | | $ | 101 | | | $ | 247 | | | Adjustments: | | | | | | | | | | | | | | | | | | | | | | Interest expense to affiliates | | | 18 | | | | 85 | | | | 83 | | | | 92 | | | | 278 | | Interest expense | | | 276 | | | | 271 | | | | 260 | | | | 266 | | | | 1,073 | | Interest income | | | (75 | ) | | | (83 | ) | | | (97 | ) | | | (104 | ) | | | (359 | ) | Other expense (income), net | | | 6 | | | | 12 | | | | 14 | | | | (21 | ) | | | 11 | | Income tax expense (benefit) | | | (102 | ) | | | 286 | | | | (117 | ) | | | 99 | | | | 166 | | | Operating income (loss) | | | (28 | ) | | | 962 | | | | 49 | | | | 433 | | | | 1,416 | | Depreciation and amortization | | | 1,055 | | | | 1,129 | | | | 1,138 | | | | 1,090 | | | | 4,412 | | Cost of MetroPCS business combination | | | 12 | | | | 22 | | | | 97 | | | | 168 | | | | 299 | | Stock-based compensation(1) | | | 49 | | | | 63 | | | | 45 | | | | 54 | | | | 211 | | Gains on disposal of spectrum licenses(1) | | | — | | | | (731 | ) | | | 11 | | | | — | | | | (720 | ) | Other, net(1) | | | — | | | | 6 | | | | 6 | | | | 6 | | | | 18 | | | | | | | | | | | | | | | | | | | | | | | Adjusted EBITDA | | $ | 1,088 | | | $ | 1,451 | | | $ | 1,346 | | | $ | 1,751 | | | $ | 5,636 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Quarter | | | Year Ended
December 31, | | (in millions) | | Q1
2016 | | | Q2
2016 | | | Q3
2016 | | | Q4
2016 | | | Q1
2017 | | | Q2
2017 | | | Q3
2017 | | | Q4
2017 | | | 2016 | | | 2017 | | Net income | | $ | 479 | | | $ | 225 | | | $ | 366 | | | $ | 390 | | | $ | 698 | | | $ | 581 | | | $ | 550 | | | $ | 2,707 | | | $ | 1,460 | | | $ | 4,536 | | Adjustments: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Interest expense | | | 339 | | | | 368 | | | | 376 | | | | 335 | | | | 339 | | | | 265 | | | | 253 | | | | 254 | | | | 1,418 | | | | 1,111 | | Interest expense to affiliates | | | 79 | | | | 93 | | | | 76 | | | | 64 | | | | 100 | | | | 131 | | | | 167 | | | | 162 | | | | 312 | | | | 560 | | Interest income(1) | | | (3 | ) | | | (3 | ) | | | (3 | ) | | | (4 | ) | | | (7 | ) | | | (6 | ) | | | (2 | ) | | | (2 | ) | | | (13 | ) | | | (17 | ) | Other income, net | | | 2 | | | | 3 | | | | 1 | | | | — | | | | (2 | ) | | | 92 | | | | (1 | ) | | | (16 | ) | | | 6 | | | | 73 | | Income tax expense (benefit) | | | 272 | | | | 147 | | | | 232 | | | | 216 | | | | (91 | ) | | | 353 | | | | 356 | | | | (1,993 | ) | | | 867 | | | | (1,375 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Operating income(1) | | | 1,168 | | | | 833 | | | | 1,048 | | | | 1,001 | | | | 1,037 | | | | 1,416 | | | | 1,323 | | | | 1,112 | | | | 4.050 | | | | 4,888 | | Depreciation and amortization | | | 1,552 | | | | 1,575 | | | | 1,568 | | | | 1,548 | | | | 1,564 | | | | 1,519 | | | | 1,416 | | | | 1,485 | | | | 6,243 | | | | 5,984 | | Cost of MetroPCS business combination(2) | | | 36 | | | | 59 | | | | 15 | | | | (6 | ) | | | — | | | | — | | | | — | | | | — | | | | 104 | | | | — | | Stock-based compensation(3) | | | 53 | | | | 61 | | | | 57 | | | | 64 | | | | 67 | | | | 72 | | | | 83 | | | | 85 | | | | 235 | | | | 307 | | Other, net(4) | | | 5 | | | | 1 | | | | 1 | | | | — | | | | — | | | | 5 | | | | — | | | | 29 | | | | 7 | | | | 34 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjusted EBITDA(1) | | $ | 2,814 | | | $ | 2,529 | | | $ | 2,689 | | | $ | 2,607 | | | $ | 2,668 | | | $ | 3,012 | | | $ | 2,822 | | | $ | 2,711 | | | $ | 10,639 | | | $ | 11,213 | |
| (1) | The amortized imputed discount on EIP receivables previously recognized as Interest income has been retrospectively reclassified as Other revenues. See the Effect of Change in Accounting Principle table in our Investor Factbook on Form 8-K filed on February 8, 2018 for further detail. |
| (2) | Beginning Q1 2017, we no longer separately present Cost of MetroPCS business combination as it is insignificant. |
| (3) | Stock-based compensation includes payroll tax impacts and may not agree to stock based compensation expense in the condensed consolidated financial statements. Gains on disposal of spectrum licenses and |
| (4) | Other, net transactions may not agree in total to the Gains on disposal of spectrum licenses and Other, net in the Consolidated Statements of Comprehensive Income (Loss) primarily due to certain routinenon-routine operating activities, such as insignificant or routine spectrum license exchangesother special items that would not be expected to reoccur, and are therefore includedexcluded in Adjusted EBITDA. |
Adjusted EBITDA is a non-GAAP financial measure utilized by T-Mobile’s management to monitor the financial performance of our operations. T-Mobile uses Adjusted EBITDA internally as a metric to evaluate and compensate its personnel and management for their performance, and as a benchmark to evaluate T-Mobile’s operating performance in comparison to its competitors. Management believes analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate overall operating performance and facilitate comparisons with other wireless communications companies because it is indicative of T-Mobile’s ongoing operating performance and trends by excluding the impact of interest expense from financing, non-cash depreciation and amortization from capital investments, non-cash stock-based compensation, network decommissioning costs as they are not indicative of T-Mobile’s ongoing operating performance and certain other nonrecurring income and expenses. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for income from operations, net income or any other measure of financial performance reported in accordance with U.S. generally accepted accounting principles (“GAAP”). In Q1 2017, we made an accounting change to include imputed interest associated with EIP receivables in Other revenues which are included in Adjusted EBITDA. “Operating Free Cash Flow”: Operating free cash flow is a non-GAAP financial measure as defined and used under the 20142017 STIP. It is generally equal to Adjusted EBITDA as defined above,(calculated using net income determined in accordance with IFRS, which is different from GAAP net income) further adjusted for the change in working capital assets and liabilities (other than those with Deutsche Telekom AG and its affiliates) and non-cash items included in Adjusted EBITDA, less cash paid for capital expenditures (other than spectrum licenses) and other non-recurring cash items that are not representative of normal ongoing operations. | | | | | | B-1 | | T-Mobile 2018 Proxy Statement | | A-1 |
ANNEX A Amendment to T-Mobile US, Inc. 2013 Omnibus Incentive Plan THIS AMENDMENT (this “Amendment”) to the T-Mobile US, Inc. 2013 Omnibus Incentive Plan, is made and adopted by the Board of Directors (the “Board”) of T-Mobile US, Inc., a Delaware corporation (the “Company”), effective as of the Effective Date (as defined below). All capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Plan (as defined below). RECITALS WHEREAS, the Company has previously adopted, and the Company’s stockholders have previously approved, the T-Mobile US, Inc. 2013 Omnibus Incentive Plan (as amended from time to time, the “Plan”); WHEREAS, pursuant to Section 5.2 of the Plan, the Board has the authority to amend the Plan to increase the maximum aggregate number of shares of Common Stock available for issuance pursuant to Awards thereunder (the “Share Limit”), subject to approval of the Company’s stockholders; WHEREAS, the Board believes it is in the best interests of the Company and its stockholders to amend the Plan to increase the Share Limit under the Plan as set forth herein; and WHEREAS, this Amendment shall become effective upon the approval of this Amendment by the Company’s stockholders (the date of such approval, the “Effective Date”). NOW, THEREFORE, BE IT RESOLVED, that the Plan is hereby amended as follows, effective as of the Effective Date: AMENDMENT | 1. | The first sentence of Section 4.1 of the Plan is hereby deleted and replaced in its entirety with the following: |
| “Subject to adjustment underSection 15, the aggregate number of shares of Common Stock that may be initially issued pursuant to the Plan is 81,775,000 shares.” |
| 2. | Section 4.3.1 of the Plan is hereby deleted and replaced in its entirety with the following: |
| “Subject to adjustment underSection 15, all 81,775,000 of such shares of Common Stock available for issuance under the Plan shall be available for issuance under Incentive Stock Options.” |
| 3. | This Amendment shall be and is hereby incorporated into and forms a part of the Plan. |
| 4. | Except as expressly provided herein, all terms and conditions of the Plan shall continue in full force and effect. |
| | | | | | | T-Mobile 2018 Proxy Statement | | Annex-1 |
| | | T-MOBILE US, INC.
ATTN: MARC ROME
12920 SE 38TH STREET
BELLEVUE, WA 98006
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge,
51 Mercedes Way, Edgewood, NY 11717.
T-MOBILE US, INC. ATTN: MARC ROME 12920 SE 38TH STREET BELLEVUE, WA 98006 | | VOTE BY INTERNET -www.proxyvote.com | | Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on June 12, 2018. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. | | ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS | | If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. | | VOTE BY PHONE - 1-800-690-6903 | | Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on June 12, 2018. Have your proxy card in hand when you call and then follow the instructions. | | VOTE BY MAIL | | Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: M88848-P60033E45163-P08446 KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
DETACH AND RETURN THIS PORTION ONLY T-MOBILE US, INC.THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | T-MOBILE US, INC. | | For All | | Withhold All | | For All Except | | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR the following: | | | | | | | | | | | | | | | | | | | 1. | | Election of Directors | | ☐ | | ☐ | | ☐ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nominees: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 01) Thomas Dannenfeldt | | 07) Thorsten Langheim | | | | | | | | | | | | | | | | | | | | | | | | | | | 02) Srikant M. Datar | | 08) John J. Legere | | | | | | | | | | | | | | | | | | | | | | | | | | | 03) Lawrence H. Guffey | | 09) G. Michael Sievert | | | | | | | | | | | | | | | | | | | | | | | | | | | 04) Timotheus Höttges | | 10) Olaf Swantee | | | | | | | | | | | | | | | | | | | | | | | | | | | 05) Bruno Jacobfeuerborn | | 11) Teresa A. Taylor | | | | | | | | | | | | | | | | | | | | | | | | | | | 06) Raphael Kübler | | 12) Kelvin R. Westbrook | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR proposals 2 and 3. | | For | | Against | | | Abstain | | | | | | | | | | | | | | | | | | 2. | | Ratification of the Appointment of PricewaterhouseCoopers LLP as the Company’s Independent Registered Public Accounting Firm for Fiscal Year 2018. | | ☐ | | ☐ | | | ☐ | | | | | | | | | | | | | | | | | | 3. | | Approval of an Amendment to the Company’s 2013 Omnibus Incentive Plan. | | ☐ | | ☐ | | | ☐ | | | | | | | | | | | | | | | | | The Board of Directors recommends you vote AGAINST proposals 4 and 5. | | For | | Against | | | Abstain | | | | | | | | | | | | | | | | | | 4. | | Stockholder Proposal for Implementation of Proxy Access. | | ☐ | | ☐ | | | ☐ | | | | | | | | | | | | | | | | | | 5. | | Stockholder Proposal for Limitations on Accelerated Vesting of Equity Awards in the Event of a Change of Control. | | ☐ | | ☐ | | | ☐ | | | | | | | | | | | | | | | | | | NOTE: Consider any other business that is properly brought before the Annual Meeting or any continuation, adjournment or postponement of the Annual Meeting. | | | | | | | | | | | | | | | | | | | | | | | | | | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | Signature (Joint Owners) | | Date | | | | |
For All Withhold All For All Except
The Board of Directors recommends you vote FOR the following:
1. Election of Directors
Nominees:
01) W. Michael Barnes 07) Raphael Kübler 02) Thomas Dannenfeldt 08) Thorsten Langheim 03) Srikant M. Datar 09) John J. Legere 04) Lawrence H. Guffey 10) Teresa A. Taylor 05) Timotheus Höttges 11) Kelvin R. Westbrook 06) Bruno Jacobfeuerborn
The Board of Directors recommends you vote FOR proposals 2 and 3. For Against Abstain
2. Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal year 2015.
3. Proposal to Approve the T-Mobile US, Inc. 2014 Employee Stock Purchase Plan.
The Board of Directors recommends you vote AGAINST proposals 4 and 5. For Against Abstain
4. Stockholder Proposal Related to Human Rights Risk Assessment.
5. Stockholder Proposal Related to Proxy Access.
NOTE: Consider any other business that is properly brought before the Annual Meeting or any continuation, adjournment or postponement of the Annual Meeting.
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
Signature [PLEASE SIGN WITHIN BOX] Date
Signature (Joint Owners) Date
20152018 ANNUAL MEETING ADMISSION TICKET
ANNUAL MEETING OF STOCKHOLDERS OF T-MOBILE US, INC. Tuesday,Wednesday, June 2, 201513, 2018
9:30 a.m.8:00 A.M., Pacific Daylight Time
Four Seasons Hotel Bellevue 11200 Southeast 6th99 Union Street
Bellevue,Seattle, Washington 9800498101
At the Annual Meeting, stockholders will vote upon the proposals outlined in the Notice of 20152018 Annual Meeting of Stockholders of T-Mobile US, Inc. and any other business as may properly come before the Annual Meeting. We look forward to your participation. Upon arrival please present this Admission Ticket, together with a valid government-issued picture identification to enter the Annual Meeting. This Admission Ticket only admits the stockholder identified on the reverse side and is non-transferable. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.www.proxyvote.com. M88849-P60033— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
T-MOBILE US, INC.E45164-P08446
Annual Meeting of Stockholders
June 2, 2015 9:30 AM,
| | | T-MOBILE US, INC. Annual Meeting of Stockholders June 13, 2018 8:00 A.M., Pacific Daylight Time This proxy is solicited by the Board of Directors The stockholder(s) hereby appoint(s) John J. Legere and J. Braxton Carter, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of T-MOBILE US, INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 9:30 AM, PDT, on Tuesday, June 2, 2015, at the Hotel Bellevue, 11200 Southeast 6th Street, Bellevue, WA 98004.
This proxy, when properly executed, will be voted in the manner directed herein and, in the proxyholders’ discretion, upon any other business that properly comes before the meeting. If no direction is made, this proxy will be voted in accordance with the recommendation of the Board of Directors
The stockholder(s) hereby appoint(s) John J. Legere and J. Braxton Carter, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of T-MOBILE US, INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholders to be held at 8:00 A.M., PDT on Wednesday, June 13, 2018 at the Four Seasons Hotel, 99 Union Street, Seattle, WA 98101. This proxy, when properly executed, will be voted in the manner directed herein and, in the proxyholders’ discretion, upon any other business that properly comes before the meeting. If no direction is made, this proxy will be voted in accordance with the recommendation of the Board of Directors: FOR the election of the nominees to the Board, FOR Proposal 2, and FOR Proposal 3, all of which are proposals of T-Mobile, and AGAINST Proposal 4 and AGAINST Proposal 5. Continued and to be signed on reverse side | | |
|
|
