Form 4: Caterpillar Group President Acquires Additional Phantom Stock Units

Caterpillar Group President Denise C. Johnson acquired 23 phantom stock units, equivalent to common stock, under a pre-arranged deferred compensation plan.

Summary

• Denise C. Johnson, Group President of Caterpillar Inc. (CAT), acquired 23 phantom stock units on July 25, 2025.
• These units are part of the company's non-qualified deferred compensation plan and are generally the economic equivalent of one share of Caterpillar Inc. common stock.
• Of the 23 units, 12 were credited to Johnson's account at a price of $433.75 per unit.
• The remaining 11 units were contributed to her account pursuant to the terms of the Plan for no consideration.
• Following this transaction, Johnson beneficially owns a total of 30,021 phantom stock units.
• The transaction was made pursuant to a Rule 10b5-1(c) contract, instruction, or written plan.
• Phantom stock units are to be settled 100% in cash upon Johnson's retirement or separation from service.
• The total number of phantom stock units owned may fluctuate due to differences in the percentages of cash and stock in the unitized fund.

Sentiment

Score: 7

Explanation: The filing reports a routine, pre-planned executive compensation transaction, which is generally positive as it aligns executive interests with company performance. No negative surprises or significant new information.

Positives

• Acquisition of additional phantom stock units by a Group President indicates continued alignment of executive interests with shareholder value.
• The transaction was conducted under a Rule 10b5-1(c) plan, suggesting a pre-planned and systematic approach to executive compensation and investment.

Risks

• Phantom stock units are settled in cash, not actual shares, meaning the holder does not directly participate in voting rights or direct equity ownership.
• The value of phantom stock units is tied to the company's common stock price, exposing the holder to market fluctuations.
• The number of phantom stock units owned may change between any given dates due to differences in the percentages of cash and stock in the unitized fund.

Future Outlook

Phantom stock units are designed to be settled 100% in cash upon the reporting person's retirement or separation from service, linking future compensation to the company's stock performance.

Industry Context

This Form 4 filing is a routine disclosure of executive compensation and insider holdings, common across publicly traded companies. It reflects standard practices for aligning executive incentives with company performance through equity-linked compensation plans, specifically deferred compensation.

Comparison to Industry Standards

• Many large industrial companies, including peers like Deere & Company (DE) or Komatsu Ltd. (KMTUY), utilize similar non-qualified deferred compensation plans and phantom stock arrangements to retain and incentivize key executives.
• The structure of these units, being cash-settled and tied to common stock value, is a common mechanism for deferred compensation without direct equity issuance, aligning with typical industry practices for executive incentive programs.

Corporate Governance

Stakeholder Impact

• Shareholders: Executive's increased phantom stock holdings align their interests with shareholder value, potentially fostering long-term growth.

Next Steps

• Phantom stock units are to be settled for 100% in cash upon the reporting person's retirement or separation from service.

Key Dates

Recommendation

This Form 4 filing reports a routine, pre-planned executive compensation transaction and does not contain new information that would significantly alter the investment thesis for Caterpillar Inc. It reflects standard corporate governance and compensation practices, reinforcing executive alignment but not providing a basis for a change in investment recommendation.

Keywords

Caterpillar Inc., CAT, SEC Form 4, Insider Transaction, Phantom Stock Units, Deferred Compensation, Executive Compensation, Denise C. Johnson, Rule 10b5-1