Form 4: Caterpillar Group President Denise Johnson Acquires Additional Phantom Stock Units

Caterpillar Inc. Group President Denise C. Johnson has increased her beneficial ownership of phantom stock units, a form of deferred compensation, through a recent transaction.

Summary

• Denise C. Johnson, Group President at Caterpillar Inc. (CAT), acquired 19 additional phantom stock units on May 23, 2025.
• Of these, 10 units were credited to her account under the Supplemental Deferred Compensation Plan at a price of $343.39 per unit.
• The remaining 9 units were contributed to her account under the same plan for no consideration.
• Each phantom stock unit is generally the economic equivalent of one share of Caterpillar Inc. common stock.
• These units are designed to be settled 100% in cash upon Ms. Johnson's retirement or separation from service.
• Following this transaction, Ms. Johnson beneficially owns a total of 30,392 phantom stock units, which includes accrued dividends.
• Phantom stock units represent interests in an unfunded unitized company stock fund, meaning the number of units owned can fluctuate due to changes in the percentages of cash and stock in the fund.

Sentiment

Score: 7

Explanation: The document reports a routine executive compensation event involving the acquisition of phantom stock units. This is generally a positive signal of executive alignment with company performance and long-term commitment, though it's a standard part of compensation rather than a discretionary investment.

Positives

• The acquisition of additional phantom stock units indicates continued alignment of executive compensation with company performance.
• The increase in beneficial ownership by a Group President can be viewed as a positive signal of management's long-term commitment to the company.

Risks

• The value of phantom stock units is tied to Caterpillar's common stock performance, meaning their ultimate cash settlement value is subject to market fluctuations.
• The number of phantom stock units beneficially owned may change due to differences in the percentages of cash and stock in the unitized fund, introducing some variability.

Future Outlook

The phantom stock units are to be settled for 100% in cash upon the reporting person's retirement or separation from service, indicating a future cash payout tied to the company's stock performance.

Industry Context

This Form 4 filing details an executive compensation event, which is a standard practice across publicly traded companies in all industries, including the industrial machinery and equipment sector where Caterpillar operates. It reflects an ongoing compensation structure for senior management.

Comparison to Industry Standards

• The use of phantom stock units as a component of executive deferred compensation is a common practice among large, established corporations, aligning executive interests with long-term shareholder value without direct equity ownership until settlement.
• Companies like Deere & Company (DE) and Komatsu Ltd. (KMTUY) also utilize various forms of equity-linked compensation and deferred compensation plans for their executives, making this transaction consistent with industry norms for executive incentives.

Related Party Transactions

• The transaction involves the acquisition of phantom stock units by a Group President from Caterpillar Inc., which is a related party transaction as it pertains to executive compensation.

Stakeholder Impact

• Shareholders: The transaction represents a component of executive compensation, which is a cost to the company but also aims to align management's interests with shareholder value over the long term. The issuance of phantom units does not directly dilute existing shares until settled, and even then, it's a cash settlement.
• Employees: This transaction is specific to executive compensation and does not directly impact the broader employee base, though it reflects the company's overall compensation philosophy for senior leadership.

Next Steps

• The phantom stock units will be settled in cash upon Denise C. Johnson's retirement or separation from service.

Key Dates

Keywords

Caterpillar, CAT, SEC Form 4, Insider Transaction, Phantom Stock Units, Deferred Compensation, Executive Compensation, Beneficial Ownership, Denise C. Johnson