Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
On March 9, 2023, T-Mobile US, Inc. ("T-Mobile" or the "Company") entered into
an amended and restated employment agreement (the "A&R Employment Agreement")
with G. Michael Sievert, its President and Chief Executive Officer, that extends
the term for five years. The A&R Employment Agreement supersedes and replaces
the prior employment agreement between T-Mobile and Mr. Sievert, dated as of
November 15, 2019, as amended. The term of A&R Employment Agreement continues
through April 1, 2028, subject to automatic one-year extensions thereafter
unless at least ninety (90) days' prior notice of non-renewal is given by either
party.
Pursuant to the A&R Employment Agreement, Mr. Sievert is entitled to (i) an
annual base salary initially equal to $1,750,000, effective as of January 1,
2023, which will automatically increase to (a) effective January 1, 2024, the
greater of (x) $1,850,000 or (y) the then-current median annual base salary for
chief executive officers in T-Mobile's then-current compensation peer group (the
"Peer Group"), (b) effective January 1, 2025, the greater of (x) $1,900,000 or
(y) the then-current median annual base salary for chief executive officers in
T-Mobile's Peer Group, and (c) effective each of January 1, 2026 and January 1,
2027, the greater of (x) $2,000,000 or (y) the then-current median annual base
salary for chief executive officers in T-Mobile's Peer Group; (ii) commencing
with calendar year 2023, an annual short-term cash incentive targeted at no less
than 250% of his base salary (with a maximum award equal to 200% of target),
payable based on the attainment of pre-established performance goals; and
(iii) employee benefits to the same extent and on the same terms as such
benefits are provided generally by T-Mobile to its senior executives.
In addition, pursuant to the A&R Employment Agreement, commencing with calendar
year 2023, Mr. Sievert will be entitled to annual long-term incentive awards
("LTI awards") with a target grant-date value (the "Annual LTI Target Value")
that is no less than $18,500,000, which will be allocated as follows: 50% of
such value will be granted in the form of performance-based restricted stock
units ("PRSUs") and the remaining 50% of such value will be granted in the form
of time-based restricted stock units ("RSUs"). Mr. Sievert's Annual LTI Target
Value will automatically increase to (i) for LTI awards granted during calendar
year 2024, the greater of (a) $19,000,000, (b) the 60th percentile of the
aggregate target grant-date value of annual equity incentive awards for chief
executive officers in T-Mobile's Peer Group, or (c) the Annual LTI Target Value
for the immediately preceding calendar year; and (ii) for LTI grants made during
calendar years 2025, 2026, 2027 and 2028, the greater of (a) $19,000,000, (b)
the 65th percentile of the aggregate target grant-date value of annual equity
incentive awards for chief executive officers in T-Mobile's Peer Group, and
(c) the Annual LTI Target Value in effect for the applicable prior calendar
year. With respect to 60% of the total time-based RSUs granted to Mr. Sievert as
annual LTI awards during each of calendar years 2023 through 2028 (i.e., 30% of
the total Annual LTI Target Value for each such year), the total length of the
vesting schedule of such RSUs will be no longer than the length of the median
total length of the vesting schedules of annual time-based equity incentive
awards for chief executive officers in T-Mobile's Peer Group at the time of
grant. In satisfaction of T-Mobile's obligation under the A&R Employment
Agreement to grant Mr. Sievert LTI awards with an Annual LTI Target Value of
$18,500,000 for fiscal year 2023, on April 1, 2023, Mr. Sievert will be granted
one-time awards of RSUs and PRSUs under the Company's 2013 Omnibus Incentive
Plan (as amended, the "Plan"), with respect to a total target number of shares
of T-Mobile common stock equal to the quotient of $2,333,333 divided by the
average closing price of T-Mobile common stock over the thirty calendar day
period ending five days before February 15, 2023, rounded up to the nearest
whole share (the "True-Up Awards"). The True-Up Awards will be subject to the
same vesting schedules and other terms and conditions (including, with respect
to the PRSUs, performance goals) applicable to the awards of RSUs and PRSUs
granted to Mr. Sievert under the Plan on February 15, 2023.
The A&R Employment Agreement provides that, on April 1, 2023, Mr. Sievert will
be granted a one-time award of PRSUs (the "Special PRSUs") under the Plan, with
respect to a target number of shares of T-Mobile common stock equal to the
quotient of $10,000,000 divided by the average closing price of T-Mobile common
stock over the thirty calendar day period ending five days before the grant
date. The Special PRSUs will cliff-vest on the second anniversary of the grant
date, based on T-Mobile's total shareholder return relative to its Peer Group
during the applicable performance period and subject to Mr. Sievert's continued
employment through such date (except as otherwise noted below and in the PRSU
award agreement).
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The A&R Employment Agreement provides that if Mr. Sievert's employment is
terminated by T-Mobile other than for "cause" (as defined in the A&R Employment
Agreement), by Mr. Sievert for "good reason" (as defined in the A&R Employment
Agreement), or due to T-Mobile's non-renewal of the A&R Employment Agreement
(each, a "qualifying termination"), then, subject to his timely execution
and non-revocation of a release and continued compliance with applicable
restrictive covenants, he will be entitled to receive:
• a lump-sum payment equal to two times the sum of (i) his then-current
base salary plus (ii) his then-current target short-term incentive;
• any earned, unpaid short term incentive for the last completed fiscal
year of T-Mobile preceding the termination date (a "Prior Year STI");
• a pro rata short-term incentive for the fiscal year in which the
qualifying termination occurs (a "Pro-Rata STI"), based on actual
performance results for such year;
• with respect to Mr. Sievert's then-outstanding LTI awards, and
notwithstanding anything to the contrary in the applicable award
agreement(s):
• full vesting of time-based LTI awards (including any RSUs); and
• with respect to performance-based LTI awards (including any PRSUs),
(i) a portion of each performance-based LTI award, determined by
multiplying (x) the total number of shares or units, as
applicable, subject to such award by (y) a fraction, the
numerator of which is the number of days between the
commencement of the applicable performance period in effect
as of Mr. Sievert's termination of employment through the
date of such termination, and the denominator of which is
the number of days in the full performance period, will vest
based on actual performance through the termination date;
and
(ii) a portion of each performance-based LTI award, determined
by multiplying (x) the total number of shares or units, as
applicable, subject to such award by (y) a fraction, the
numerator of which is the number of days between the date
of Mr. Sievert's termination of employment and the end of
the applicable performance period in effect as of such
termination, and the denominator of which is the number of
days in the full performance period, will vest at the
greater of target or actual performance as of such
termination date;
• Company-paid health and dental benefit coverage (the "Continued Health
Coverage") for up to eighteen (18) months following such termination;
• Company reimbursement for an exclusive office and exclusive executive
assistant for up to eighteen (18) months following such termination
(capped at $25,000 per month) (the "Continued Office/Assistant
Benefits"); and
• continued eligibility for T-Mobile's employee mobile service discount
program (the "Continued Mobile Discounts").
Additionally, the A&R Employment Agreement provides that Mr. Sievert may retire
on or after the end of the 5-year term, or April 1, 2028, by providing at least
12 months' written notice to the Company of his "proposed retirement date" (as
defined in the A&R Employment Agreement) and receive substantially the same
compensation and benefits as he would receive in a qualifying termination.
Mr. Sievert also has the option upon 12 months' written
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notice to retire on or after April 1, 2026, but he would receive only 60% of the
retirement compensation if his proposed retirement date is on or after April 1,
2026 but before April 1, 2027, or 75% if his proposed retirement date is on or
after April 1, 2027 but before April 1, 2028, respectively.
The A&R Employment Agreement further provides that if Mr. Sievert's employment
is terminated due to his death or disability, he will be entitled to receive the
following:
• any Prior Year STI;
• a Pro-Rata STI, based on the greater of target or actual performance
results for the fiscal year in which such termination occurs;
• the vesting of any LTI award or other equity award granted by T-Mobile
will be governed by the terms of the applicable equity incentive plan and
the applicable award agreement, which terms shall be no less favorable
than those applicable to all other executive-level employees of T-Mobile;
and
• the Continued Mobile Discounts.
In addition, to the extent that any payment or benefit received by Mr. Sievert
pursuant to the A&R Employment Agreement or otherwise would be subject to an
excise tax under Internal Revenue Code Section 4999, such payments and/or
benefits will be subject to a "best pay cap" reduction if such reduction would
result in a greater net after-tax benefit to Mr. Sievert than receiving the full
amount of such payments.
The foregoing description of the A&R Employment Agreement with Mr. Sievert is
qualified in its entirety by the full text of the A&R Employment Agreement, a
copy of which will be subsequently filed with the Securities and Exchange
Commission.
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