Following reports that embattled co-working start-up WeWork was hoping to poach T-Mobile (NASDAQ:TMUS) CEO John Legere, the wireless carrier announced this week that Legere would be stepping down at the end of his contract. The eccentric chief executive reportedly isn't interested in taking the top job at WeWork, and on a conference call to discuss the transition denied that he ever engaged in "discussions to run WeWork."
After engineering a wildly successful turnaround at T-Mobile over the course of seven years, Legere deserves some time off. Here's what T-Mobile investors need to know.
An "enormously successful run"
The Un-carrier said that COO Mike Sievert will take over as CEO on May 1, 2020, after Legere's contract concludes on April 30, 2020. T-Mobile had named Sievert COO back in early 2015, and the executive joined the board of directors last year. After the transition, Legere will remain on T-Mobile's board.
"John Legere has had an enormously successful run as CEO," Deutsche Telekom CEO Tim Hottges said in a statement. "As the architect of the Un-carrier strategy and the company's complete transformation, John has put T-Mobile US in an incredibly strong position."
In a release, Legere said:
I hired Mike in 2012 and I have great confidence in him. I have mentored him as he took on increasingly broad responsibilities, and he is absolutely the right choice as T-Mobile's next CEO. Mike is well prepared to lead T-Mobile into the future. He has a deep understanding of where T-Mobile has been and where it needs to go to remain the most innovative company in the industry.
The wireless carrier that Legere created is virtually unrecognizable from the one he took charge of in 2012. Back then, T-Mobile had less than 9 million subscribers and was the clear No. 4 player behind Sprint (NYSE:S). Less than a month after naming Legere CEO, T-Mobile announced it would merge with MetroPCS. Fast-forward to today, T-Mobile has grown to over 84 million subscribers and is in the process of acquiring Sprint after overtaking it as the No. 3 carrier in 2015.
Speaking of Sprint...
When T-Mobile announced in early 2018 that it planned to merge with Sprint, it amended Legere's employment contract to extend his employment from April 1, 2019 to April 30, 2020 while boosting his base compensation and granting him special performance-based restricted stock units tied to the Sprint deal ("Transaction PRSUs"). Those nearly 600,000 Transaction PRSUs were valued at $37 million at the time, and half would vest upon closing the Sprint deal with the other half vesting at the end of Legere's contract on April 30, 2020.
The proposed megamerger has cleared all relevant regulatory hurdles, but still faces a multistate lawsuit that is seeking to block the deal on anti-competitive grounds. The case is set to go to trial next month, and T-Mobile remains confident that it can defeat the legal challenge in order to close the merger in early 2020. Regardless of the outcome, Legere will still get his payday.
"If the Sprint Combination fails to close, 100% of the Transaction PRSUs will vest on the second vesting date [of April 30, 2020]," according to T-Mobile's 2019 proxy.