Form 4: TDS Executive Kroll's Performance Share Units Certified

TELEPHONE & DATA SYSTEMS Inc. reports the certification of performance share units for VP, Controller & CAO Anita J Kroll, based on company performance metrics.

Summary

• Anita J Kroll, VP, Controller & CAO of TELEPHONE & DATA SYSTEMS INC /DE/ (TDS), had performance share units (PSUs) certified on February 25, 2026.
• For PSUs granted on May 21, 2025, two of three financial metrics were certified at 71.5%, leading to 1,375 PSUs becoming time-based and vesting on December 31, 2027. The final metric remains subject to future performance and approval.
• For PSUs granted on June 11, 2024, the second metric was certified at 83.8% and the first at 145.9%, resulting in 2,129 PSUs becoming time-based and vesting on June 11, 2027. The final metric is measured through December 31, 2026, and is subject to approval.
• For PSUs granted on May 17, 2023, the third and final metric was certified at 200%, leading to 6,458 PSUs becoming time-based and vesting on May 17, 2026.
• All certified PSUs represent the contingent right to receive one common share each and have been accumulating quarterly dividend equivalents.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a moderately positive development, reflecting the successful certification of a significant portion of executive performance share units, with some metrics exceeding targets, which aligns executive incentives with company performance.

Positives

• Certification of performance share units indicates that company performance met certain targets, leading to the vesting of equity awards for a key executive.
• One metric for the May 17, 2023 grant was certified at 200%, exceeding the target payout.
• One metric for the June 11, 2024 grant was certified at 145.9%, also exceeding the target payout.
• All performance share units have been accumulating quarterly dividend equivalents, which will be paid out upon vesting.

Negatives

• Two metrics for the May 21, 2025 grant were certified at 71.5%, below the target performance.
• One metric for the June 11, 2024 grant was certified at 83.8%, below the target performance.
• Remaining metrics for the May 21, 2025 and June 11, 2024 grants are still subject to future performance and approval, with potential forfeiture of accrued dividend equivalents if minimum performance is not attained.

Risks

• Forfeiture of accrued dividend equivalents and potential non-vesting of performance share units if remaining future performance metrics do not achieve minimum attainment.
• The contingent nature of performance share units means the actual number of shares received can vary based on performance and are not guaranteed until vesting.

Future Outlook

Remaining performance metrics for the May 21, 2025, and June 11, 2024 grants are still subject to future performance measurement periods ending December 31, 2027, and December 31, 2026, respectively, and require subsequent approval by the Compensation Human Resources Committee.

Management Comments

• The Compensation Human Resources Committee certified on February 25, 2026, two of the three metrics at 71.5% for the May 21, 2025 grant.
• The Compensation Human Resources Committee certified on February 25, 2026, the second metric at 83.8% for the June 11, 2024 grant, following the first metric's certification on March 12, 2025, at 145.9%.
• The Compensation Human Resources Committee certified the third and final metric on February 25, 2026, at 200% for the May 17, 2023 grant.

Industry Context

StockSavvy.ai notes that performance share units are a common executive compensation tool designed to align management incentives with long-term shareholder value creation by tying equity awards to specific financial or operational performance targets. This filing reflects a routine step in the lifecycle of such awards.

Comparison to Industry Standards

• Performance share unit programs are a widely adopted practice in executive compensation across various industries, particularly in large, publicly traded companies. While specific performance metrics and payout structures vary by company and industry, the general mechanism of linking equity awards to multi-year performance targets is consistent with global benchmarks for incentivizing executive performance. No specific comparable companies or projects are detailed in this filing to allow for a direct quantitative comparison.

Corporate Governance

Related Party Transactions

• The certification and future vesting of performance share units for Anita J Kroll, a VP, Controller & CAO, constitutes an executive compensation transaction between the company and a key management person.

Stakeholder Impact

• Shareholders: The performance-based nature of these awards aims to align executive interests with shareholder value creation. The certification indicates progress towards previously set goals.
• Employees (Executive): Anita J Kroll will receive common shares upon vesting of the certified performance share units, representing a significant component of her long-term incentive compensation.

Next Steps

• Vesting of the May 17, 2023 PSUs on May 17, 2026.
• Vesting of the June 11, 2024 PSUs on June 11, 2027.
• Vesting of the May 21, 2025 PSUs on December 31, 2027.
• Measurement and approval of the final performance metric for the June 11, 2024 grant by December 31, 2026.
• Measurement and approval of the final performance metric for the May 21, 2025 grant by December 31, 2027.

Key Dates

Recommendation

This Form 4 filing details routine executive compensation events related to the certification of performance share units. While it provides insight into the company's performance against specific internal metrics, it does not offer broad financial results or strategic shifts that would warrant a change in investment recommendation. It's a standard disclosure for an executive's equity awards.

Keywords

TDS, TELEPHONE & DATA SYSTEMS INC, Form 4, SEC filing, insider transaction, executive compensation, performance share units, PSUs, equity awards, vesting, corporate governance