Form 4: Caterpillar CEO Joseph Creed Reports Acquisition of Phantom Stock Units in Deferred Compensation Plan

Caterpillar Inc. Chief Executive Officer Joseph E. Creed reported the acquisition of 44 phantom stock units as part of the company's deferred compensation plan, bringing his total beneficial ownership to 10,508 units.

Summary

• Joseph E. Creed, Chief Executive Officer of Caterpillar Inc., acquired 44 phantom stock units on May 23, 2025.
• These units were acquired under the company's Supplemental Deferred Compensation Plan.
• Of the acquired units, 22 were credited to Mr. Creed's account at a price of $343.39 per share.
• The remaining 22 units were contributed to his account for no consideration.
• Each phantom stock unit is generally the economic equivalent of one share of Caterpillar Inc. common stock.
• The phantom stock units are designed to be settled 100% in cash upon Mr. Creed's retirement or separation from service.
• Following this transaction, Mr. Creed's beneficial ownership of phantom stock units totals 10,508, which includes accrued dividends.
• The number of phantom stock units may fluctuate as they represent interests in an unfunded unitized company stock fund comprised of both stock and cash.

Sentiment

Score: 7

Explanation: The acquisition of phantom stock units by the CEO is generally a positive signal of alignment with company performance, even if it's part of a deferred compensation plan. There are no negative operational or financial disclosures within this filing.

Positives

• The acquisition of additional phantom stock units by the CEO indicates continued alignment of executive interests with the company's long-term performance, albeit through a deferred compensation mechanism.
• The inclusion of accrued dividends in the total beneficial ownership suggests a benefit from the company's ongoing financial performance.

Negatives

• The phantom stock units are settled in cash rather than actual shares, meaning they do not directly increase the CEO's equity stake in the company.
• The number of phantom stock units can change due to the fluctuating percentages of cash and stock within the underlying unitized fund, introducing some variability in reported holdings.

Risks

• The value of the phantom stock units is directly tied to the performance of Caterpillar Inc.'s common stock, exposing the holder to market fluctuations.
• As part of an unfunded plan, these phantom stock units represent general unsecured obligations of the company, which carries a degree of credit risk.

Future Outlook

The document primarily reports a past transaction and does not provide explicit forward-looking statements or guidance regarding company performance or future strategic direction. The settlement of phantom stock units is tied to the reporting person's future retirement or separation from service.

Management Comments

• "Each phantom stock unit under the company's non-qualified deferred compensation plan as reported is generally the economic equivalent of one share of Caterpillar Inc. common stock."
• "This total includes 22 shares that were credited to the reporting person's account under the Supplemental Deferred Compensation Plan ('the Plan') at a price per share of $343.39 and 22 shares that were contributed to the reporting person's account pursuant to the terms of the Plan for no consideration."
• "The phantom stock units are to be settled for 100% in cash upon the reporting person's retirement or separation from service."
• "Includes dividends accrued. Moreover, phantom stock units represent interests in an unfunded unitized company stock fund comprised of stock and cash, and therefore the number of phantom stock units the reporting person is deemed to own may change between any given dates due to differences in the percentages of cash and stock in the unitized fund on those dates."

Industry Context

This Form 4 filing is a routine disclosure of executive compensation and beneficial ownership changes within the heavy machinery and equipment manufacturing industry. It reflects standard practices for deferred compensation plans for senior executives in large, publicly traded companies like Caterpillar Inc. It does not provide specific insights into broader industry trends or competitive dynamics beyond the company's internal compensation structure.

Comparison to Industry Standards

• The acquisition of phantom stock units as part of a non-qualified deferred compensation plan is a common practice among large industrial companies.
• While specific plan details vary, the use of phantom stock to align executive incentives with shareholder value, with cash settlement upon separation, is consistent with compensation strategies observed in peers such as Deere & Company (DE), Komatsu Ltd. (KMTUY), and CNH Industrial N.V. (CNHI).
• The specific value of $343.39 per unit reflects Caterpillar's stock price at the time of the transaction, which is competitive within the sector for executive compensation.

Stakeholder Impact

• Shareholders: The transaction aligns the CEO's long-term interests with the company's stock performance, potentially benefiting shareholders through improved governance and strategic decisions.
• Employees: No direct impact on general employees is indicated by this filing.

Next Steps

• Settlement of phantom stock units upon Joseph E. Creed's retirement or separation from service.

Key Dates

Keywords

Caterpillar Inc., CAT, Joseph E. Creed, Phantom Stock Units, Deferred Compensation, SEC Form 4, Insider Transaction, Executive Compensation, Beneficial Ownership