Form 4: TDS Executive Hanley Acquires Performance Share Units Based on Key Metric Achievement

Joseph R. Hanley, SVP at Telephone & Data Systems Inc., reports acquisition of performance share units tied to company performance metrics.

Summary

• Joseph R. Hanley, SVP of Strategy & Corporate Development at Telephone & Data Systems Inc. (TDS), filed a Form 4.
• The filing reports the acquisition of 8,312 performance share units on March 12, 2025.
• These units were granted on June 11, 2024, and are based on the performance of three key metrics.
• One of the three metrics was certified at 145.9% on March 12, 2025, by the Compensation Human Resources Committee based on company performance at December 31, 2024.
• The performance shares representing the one metric were certified and are now adjusted for performance and are time-based and will vest on June 11, 2027.
• The second metric will be measured over a two-year period ending December 31, 2025, and the final metric over a three-year period ending December 31, 2026.
• Each performance share unit represents the contingent right to receive one common share, and they have been accumulating quarterly dividend equivalents.
• The payout for the performance share units could range from 0% to 192% of the target based on the achievement of the key metrics.

Sentiment

Score: 6

Explanation: The document is neutral. It reports a standard executive compensation transaction. The certification of one metric at 145.9% is a slightly positive indicator, but the overall impact is limited.

Positives

• The certification of one performance metric at 145.9% suggests positive performance in that area.
• The accumulation of quarterly dividend equivalents on the performance share units is a potential benefit for the reporting person.

Risks

• The ultimate value of the performance share units depends on the achievement of the remaining two key metrics, which will be measured in the future.
• The payout could be reduced to 0% if the key metrics are not achieved.

Future Outlook

The ultimate value of the performance share units depends on the company's performance against the remaining two key metrics, which will be measured on December 31, 2025, and December 31, 2026, respectively.

Industry Context

Executive compensation packages often include performance-based equity awards to align management's interests with those of shareholders. The use of multiple key metrics is a common practice to incentivize performance across different areas of the business.

Comparison to Industry Standards

• Performance-based equity compensation is a standard practice among publicly traded companies, including TDS's peers in the telecommunications industry such as Verizon, AT&T, and T-Mobile.
• The specific metrics used and the payout ranges (0% to 192% of target) are likely determined based on industry benchmarks and the company's specific strategic goals.
• Companies like Lumen Technologies and Frontier Communications also utilize similar performance-based equity awards to incentivize their executives.

Stakeholder Impact

• Shareholders: The performance share units align executive compensation with company performance, potentially benefiting shareholders.
• Employees: The achievement of performance metrics can lead to increased payouts for executives, which may indirectly motivate other employees.
• Management: The performance share units provide an incentive for management to achieve key strategic goals.

Next Steps

• Measurement of the second key metric on December 31, 2025.
• Measurement of the final key metric on December 31, 2026.
• Vesting of the certified performance shares on June 11, 2027.

Key Dates