Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
On November 18, 2019, the Board of Directors (the "Board") of T-Mobile US, Inc.
("T-Mobile" or the "Company"), following a multi-year, comprehensive leadership
succession planning process, announced that G. Michael Sievert, age 50, has been
appointed as Chief Executive Officer ("CEO") of T-Mobile, effective as of May 1,
2020. John Legere, the current CEO, will cease to serve as CEO of T-Mobile
effective as of April 30, 2020, upon the conclusion of his current employment
agreement with T-Mobile. Mr. Legere will continue to serve as CEO of T-Mobile
and as a member of the Board through such date, and will continue to serve as a
member of the Board thereafter. In connection with Mr. Sievert's appointment as
CEO, on and effective as of November 15, 2019, T-Mobile entered into an
employment agreement (the "Sievert Employment Agreement") with Mr. Sievert,
which supersedes and replaces the prior compensation term sheet between T-Mobile
and Mr. Sievert, dated as of January 1, 2017, as amended. Information regarding
Mr. Sievert's business experience, qualifications and other biographical data,
including his experience over the past five years, is incorporated by reference
to T-Mobile's Definitive Proxy Statement relating to T-Mobile's 2019 Annual
Meeting of Stockholders, filed on Schedule 14A with the Securities and Exchange
Commission (the "SEC") on April 26, 2019.
In addition, (i) on November 15, 2019, T-Mobile adopted a third amendment to the
amended and restated employment agreement, dated as of December 20, 2017, with
J. Braxton Carter, the Company's Executive Vice President and Chief Financial
Officer (the "Carter Amendment") and (ii) on November 14, 2019, T-Mobile adopted
a Compensation Term Sheet with Neville Ray, currently the Company's Executive
Vice President and Chief Technology Officer (the "Ray Term Sheet"). The Carter
Amendment and the Ray Term Sheet each became effective as of November 15, 2019.
The material terms of the Sievert Employment Agreement, the Carter Amendment and
the Ray Term Sheet are described below.
Sievert Employment Agreement
Pursuant to the Sievert Employment Agreement, Mr. Sievert will continue to serve
as T-Mobile's President and Chief Operating Officer through April 30, 2020.
Effective May 1, 2020, Mr. Sievert will serve as T-Mobile's President and CEO.
The Sievert Employment Agreement provides for an initial employment term through
the third anniversary of the date on which Mr. Sievert becomes CEO, subject to
automatic one (1)-year extensions thereafter unless at least ninety (90) days'
prior notice of non-renewal is given by either party.
Pursuant to the Sievert Employment Agreement, Mr. Sievert is entitled to (i) an
annual base salary initially equal to $1,200,000, which will automatically
increase to (a) $1,400,000 effective as of January 1, 2020, (b) $1,500,000
effective as of January 1, 2021 and (c) the greater of (x) $1,600,000 or (y) the
then-current median annual base salary for chief executive officers in
T-Mobile's then-current peer group (the "Peer Group") effective as of January 1,
2022; (ii) commencing with calendar year 2020, an annual short-term incentive
("STI") targeted at 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.
Following the date on which Mr. Sievert becomes CEO, he is also eligible for a
one-time cash payment of $3,500,000 (the "Retention Payment"), payable on or
within thirty (30) days following the earlier to occur of (a) the date on which
the transactions contemplated by the Business Combination Agreement, dated
April 29, 2018, between T-Mobile, Sprint Corporation and certain other parties
named therein (collectively, the "Transaction") close, (b) the date on which the
Transaction is abandoned or terminated or (c) December 1, 2020, subject to
Mr. Sievert's continued employment through such date.
Pursuant to the Sievert Employment Agreement, commencing with calendar year
2020, 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 $13,500,000, 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) $14,250,000 for LTI awards granted
during 2021 and (ii) for LTI awards granted on or after January 1, 2022, the
greater of (a) $15,000,000 and (b) the then-current median target grant-date
value of annual equity incentive awards for chief executive officers in
T-Mobile's then-current Peer Group. With respect to 60% of the total time-based
RSUs granted to Mr. Sievert as annual LTI awards during each of calendar years
2020, 2021 and 2022 (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 then-current Peer Group at the time of grant.
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In connection with his commencement as CEO, within fifteen (15) days following
the date on which Mr. Sievert becomes CEO, Mr. Sievert will be granted
a one-time award of PRSUs (the "Special PRSUs") under the Company's 2013 Omnibus
Incentive Plan (as amended, the "Plan"), with respect to a target number of
shares of T-Mobile common stock equal to the quotient of $20,000,000 divided by
the average closing price of T-Mobile common stock over the period commencing on
November 18, 2019 and ending on the date on which Mr. Sievert becomes CEO (such
average closing price, the "Starting Price"). The Special PRSUs will cliff-vest
on the third anniversary of the date on which Mr. Sievert becomes CEO, based on
T-Mobile's total shareholder return relative to its then-current 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). In order for more than 100% of the target number of Special
PRSUs to vest, there must be at least a 20% increase in T-Mobile's stock price
during the period beginning on the date on which Mr. Sievert becomes CEO (with
T-Mobile's stock price as of such date deemed to equal the Starting Price) and
ending on the vesting date (with T-Mobile's stock price as of such date
determined based on the average closing price of T-Mobile common stock over the
thirty (30)-day period preceding such vesting date).
The Sievert Employment Agreement provides that if Mr. Sievert's employment is
terminated by T-Mobile other than for "cause" (as defined in the Sievert
Employment Agreement), by Mr. Sievert for "good reason" (as defined in the
Sievert Employment Agreement), or due to T-Mobile's non-renewal of the Sievert
Employment Agreement (each, a "qualifying termination"), then, subject to his
timely execution and non-revocation of a release, he will be entitled to
receive:
• a lump-sum payment equal to two (2) times the sum of (i) his
then-current base salary plus (ii) his then-current target STI;
• any earned, unpaid STI for the last completed fiscal year of T-Mobile
preceding the termination date (a "Prior Year STI");
• a pro rata STI 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
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(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
. . .
Item 7.01 Regulation FD Disclosure.
On November 18, 2019, T-Mobile issued a press release announcing that
Mr. Legere, the current CEO, will cease to serve as CEO of T-Mobile effective as
of April 30, 2020, and that Mr. Sievert will succeed Mr. Legere as CEO of
T-Mobile, effective as of May 1, 2020. A copy of the press release is attached
hereto as Exhibit 99.1.
The information contained in Item 7.01 and the exhibit attached hereto, shall
not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), or otherwise subject to the
liabilities of that section, nor shall they be deemed incorporated by reference
in any filing under the Securities Act of 1933, as amended or the Exchange Act,
except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
Exhibit
Number Description
99.1 Press Release, dated November 18, 2019
104 Cover Page Interactive Data File (the cover page XBRL tags are
embedded within the Inline XBRL document)
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