Form 4: TDS President and CEO Carlson Reports Changes in Beneficial Ownership

Leroy T. Carlson Jr., President and CEO of Telephone & Data Systems Inc., reports transactions involving common shares, including the vesting of performance share units and shares withheld for tax payments.

Summary

• On February 21, 2025, Leroy T. Carlson Jr., President and CEO of Telephone & Data Systems Inc. (TDS), reported changes in his beneficial ownership of TDS common shares.
• These changes include the vesting of performance share units and shares withheld to cover tax obligations.
• Carlson was granted financial-based performance share units on May 19, 2022, which were measured over a three-year period.
• The payout was contingent on the achievement of key metrics, with a potential range from 0% to 200% of the target.
• On February 21, 2025, the Compensation Human Resources Committee certified that Carlson was entitled to 85.0% of his target opportunity.
• This resulted in the vesting of 212,053 performance shares, adjusted for performance.
• Additionally, 91,908 common shares were disposed of to cover tax obligations at a price of $37.96 per share.
• Following these transactions, Carlson directly owns 130,812 common shares.
• Carlson also has indirect ownership through various trusts, including a 2024 Trust (473,113 shares), his wife's trust (105,521.32 shares), and other trusts (78,943 and 211,758 shares respectively).
• He also has indirect ownership through a voting trust (1,812,782 shares) and a family partnership (693,620 shares).

Sentiment

Score: 6

Explanation: The sentiment is neutral. The vesting of performance shares is a positive sign of company performance, but the disposal of shares for tax obligations is a routine event.

Positives

• The vesting of performance share units indicates that the company achieved a significant portion of its performance goals, resulting in an 85.0% payout for the CEO.

Negatives

• The disposal of 91,908 shares to cover tax obligations could be perceived negatively, although it's a common practice.

Risks

• The value of the performance share units is tied to the company's performance, so future performance fluctuations could impact the value of these holdings.
• Changes in tax laws could affect the tax implications of share-based compensation.

Future Outlook

The document does not contain specific forward-looking statements, but the vesting of performance share units suggests an expectation of continued company performance.

Industry Context

This filing is a routine disclosure related to insider transactions and provides limited insight into broader industry trends. However, it reflects the standard practice of compensating executives with performance-based equity.

Comparison to Industry Standards

• Performance-based equity compensation is a common practice among publicly traded companies, particularly in the technology and telecommunications sectors.
• Companies like Verizon and AT&T also utilize performance share units as part of their executive compensation packages.
• The specific metrics used to determine payout percentages vary by company, but often include financial performance, operational efficiency, and strategic goals.

Stakeholder Impact

• The vesting of performance share units could positively impact shareholder sentiment, as it indicates that the company is achieving its performance goals.
• The transactions have no immediate impact on employees, customers, suppliers, or creditors.

Key Dates