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Item 5.02
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Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
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On February 17, 2017,
T-Mobile
US, Inc. (the “Company”) entered into an amended
compensation term sheet (the “Term Sheet”) with G. Michael Sievert, pursuant to which Mr. Sievert will continue to serve as the Company’s Chief Operating Officer. The Term Sheet supersedes and replaces the prior compensation term
sheet between the Company and Mr. Sievert, dated as of February 17, 2015.
Pursuant to the Term Sheet, effective as of
January 1, 2017, Mr. Sievert is entitled to (i) an annual base salary equal to $950,000, (ii) an annual short-term incentive targeted at 200% of his base salary, payable based on the attainment of
pre-established
performance goals, and (iii) annual long-term incentive awards with a target grant-date value equal to $7,125,000. Mr. Sievert will also generally be eligible to receive any employee
benefits that are provided broadly to executives at his level in the future (except as would result in a duplication of benefits).
In
connection with entering into the Term Sheet, Mr. Sievert will be granted a
one-time
special equity award (the “Special Award”) under the Company’s 2013 Omnibus Incentive Plan (the
“Plan”), with an aggregate grant date value equal to $7,125,000. Fifty percent (50%) of the aggregate value of the Special Award will be granted in the form of time-based restricted stock units (“RSUs”) and the remaining fifty
percent (50%) of the aggregate value of the Special Award will be granted in the form of performance-based restricted stock units (“PRSUs”) which will vest based on the Company’s achievement of relative total shareholder return goals
during the applicable performance period. The RSUs and PRSUs will cliff-vest on the second anniversary of the applicable grant date, subject to Mr. Sievert’s continued service through the applicable vesting date and, with respect to the
PRSUs, subject to the attainment of the applicable relative total shareholder return performance goals.
The Term Sheet provides that if
Mr. Sievert’s employment is terminated by the Company other than for cause or if he is constructively discharged (each, a “qualifying termination”), then, subject to his timely execution and
non-revocation
of a release, he will be entitled to receive:
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a
lump-sum
payment equal to two times the sum of (i) his then-current annual base salary plus (ii) his then-current target short-term incentive;
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any earned, unpaid short term incentive for the last completed fiscal year of the Company preceding the termination date (a “Prior Year STI”);
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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; and
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with respect to Mr. Sievert’s then-outstanding long-term incentive awards (each, an “LTI Award”), unless the applicable award agreement provides for more favorable treatment:
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for time-based LTI Awards, Mr. Sievert will vest in that portion of the award that would otherwise vest on the next scheduled vesting date following such qualifying termination; and
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pro-rata
vesting of any performance-vesting LTI Awards at the end of the applicable performance period (based on actual performance during the applicable performance period and
the length of Mr. Sievert’s employment during the applicable performance period).
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The severance benefits described above will be
offset by any amounts payable to Mr. Sievert under any other severance program maintained by the Company.
The Term Sheet further
provides that if Mr. Sievert’s employment is terminated due to his death or disability, he will be entitled to receive the following:
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a Pro Rata STI, based on the greater of target or actual performance results for the fiscal year in which such termination occurs; and
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the vesting of any LTI Award or other equity award granted under the Plan will be governed by the terms of the Plan and the applicable award agreement, which terms shall be no less favorable than those applicable to all
other executive-level employees of the Company.
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In addition, to the extent that any payment or benefit received by
Mr. Sievert pursuant to the Term Sheet 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 Term Sheet also provides that the Company will reimburse Mr. Sievert for up to $25,000 in legal fees incurred by him
in connection with the Term Sheet.
The foregoing description of the Term Sheet with Mr. Sievert is qualified in its entirety by the
full text of the Term Sheet, a copy of which will be subsequently filed with the Securities and Exchange Commission.