T-Mobile had an extraordinary year in 2014. We delivered a record year of growth in 2014 as our Un-carrier initiatives continued to resonate with consumers. Since launching Un-carrier in 2013, T-Mobile has transformed the wireless industry with consumer-friendly offers that resolve customer pain points and differentiate T-Mobile from the competition. We continued to deliver strong customer growth in 2014 and ended the year with more than 55 million total customers, reflecting total net customer additions of 8.3 million in 2014, an 89% increase from the prior year, making T-Mobile America’s fastest growing wireless company. The strong performance is underpinned by the Company’s network, which continued to expand at a breakneck pace. At the end of 2014, T-Mobile’s 4G LTE network covered 265 million people, exceeding our original year-end target of 250 million.

In addition to strong customer growth, T-Mobile delivered outstanding financial results. Service revenues in 2014 increased by 9.0% year-over-year, and total revenues increased by 13.1% year-over-year. Adjusted EBITDA amounted to $5.636 billion in 2014, up 6.0% year-over-year. Since the Business Combination¹, we have significantly grown total stockholder return (“TSR”). From May 1, 2013 through March 31, 2015, T-Mobile TSR outpaced 17 of our 19 peer companies. Our stock price has increased by 92% from May 1, 2013 through March 31, 2015.

Our executive compensation program emphasizes pay for performance. As a result, our 2014 Named Executive Officer compensation reflects T-Mobile’s strong 2014 operational and financial performance.

The Company is committed to good corporate governance, which promotes the long-term interests of stockholders, strengthens Board and management accountability and helps build public trust. Our Board of Directors has established a boardroom dynamic that encourages meaningful and robust discussions based on each director’s unique and diverse background, resulting in informed decision-making that seeks to maximize stockholder value and

promotes stockholder interests. Directors exercise thorough oversight of decisions regarding the Company’s strategy and outlook. The Board regularly reviews developments in corporate governance and updates its practices and governance materials as it deems necessary and appropriate. The dashboard below highlights key aspects of the Company’s corporate governance program.

Governance Dashboard

Key Governance Materials

Certificate of Incorporation

 

By-Laws

 

Corporate Governance Guidelines

 

Stockholder’s Agreement

Charter for Each Board Committee

 

Code of Business Conduct

 

Code of Ethics for Senior Financial Officers

You can access the key governance materials on the Investor Relations section of our website at http://investor.t-mobile.com by selecting “Governance Documents” under the “Corporate Governance” tab. Instructions on how to obtain copies of the Company’s corporate governance materials can also be found on page 55. Certain of the key governance materials are also available via www.sec.gov.

Governance Highlights

Unclassified Board and Annual Election of Directors

 

11 Director Nominees

 

Separation of Chairman and Chief Executive Officer Roles

 

Lead Independent Director

 

Independent Audit, Compensation and Nominating and Corporate Governance Committee Chairs

 

Regular Executive Sessions of Independent Directors

 

Risk Oversight

Regular Board and Committee Self-Evaluations

 

Stockholder Right to Call Special Meeting

 

Anti-Hedging, Anti-Short Sale and Anti-Pledging Policies

 

Executive Compensation Driven by Pay For Performance Philosophy

 

Share Ownership Guidelines for Executives and Directors

 

Cash and Equity Awards with Clawback Provisions

Our Board of Directors established our corporate governance guidelines, which, together with our certificate of incorporation, our bylaws and the Stockholder’s Agreement with Deutsche Telekom, set forth the framework within which the Board and its committees direct the affairs of the Company. See “Transactions with Related Persons and Approval — Transactions with Deutsche Telekom — Stockholder’s Agreement” for more information regarding the

Stockholder’s Agreement. The Board also adopted our Code of Business Conduct, which establishes the standards of ethical conduct applicable to all of our directors, officers and employees. In addition, we have a Code of Ethics for Senior Financial Officers. In the event of a waiver of any Code of Business Conduct or Code of Ethics provisions applicable to directors or executive officers, we will promptly disclose the Board’s actions on our website.

The size of our Board of Directors has been fixed at eleven. The size of our Board may be changed pursuant to our bylaws, subject to the provisions of our certificate of incorporation and the Stockholder’s Agreement between the Company and Deutsche Telekom, which beneficially owns a majority of our outstanding shares of common stock (approximately 65.95% as of March 31, 2015).

Pursuant to our certificate of incorporation and the Stockholder’s Agreement, Deutsche Telekom has certain rights to designate director nominees and to have such designees serve on the committees of the Board. See “Transactions with Related Persons and Approval — Transactions with Deutsche Telekom — Stockholder’s Agreement” for more information.

The Board of Directors evaluates the independence of each director, including nominees for election to the Board, in accordance with applicable laws and regulations, New York Stock Exchange (“NYSE”) rules and our corporate governance guidelines. As a “controlled company” under NYSE rules, we are exempt from the requirement to have a majority of independent directors on our Board. However, pursuant to our certificate of incorporation, the Stockholder’s Agreement and our corporate governance guidelines, the Board is required to have at least three directors, including all the members of the Audit Committee, who meet the director independence standards under NYSE rules. We have five directors who our Board has determined are independent. The Board considers all relevant facts and circumstances in determining independence, including, among other things, making an affirmative determination that the

director has no material relationship with the Company directly or as an officer, stockholder, or partner of an organization that has a material relationship with the Company. For certain types of relationships, NYSE rules require us to consider a director’s relationship with the Company, and also with any parent or subsidiary in a consolidated group with the Company, which includes Deutsche Telekom and its affiliates.

The Board of Directors has determined that Messrs. Barnes, Datar, Guffey and Westbrook and Ms. Taylor are independent under NYSE rules and our corporate governance guidelines. In addition, the Board has determined that each member of the Audit Committee meets the heightened independence criteria applicable to audit committee members under NYSE rules.

Our Board of Directors has chosen to separate the roles of Chairman of the Board and Chief Executive Officer, and it has appointed Timotheus Höttges, Deutsche Telekom’s Chief Executive Officer, as the Chairman of the Board.

We believe that separating the roles of Chief Executive Officer and Chairman of the Board is appropriate for the Company and in the best interests of the Company and its stockholders at this time. Our Chairman manages the overall Board function, and his current responsibilities include chairing all regular sessions of the Board; establishing the agenda for each Board meeting in consultation with the lead independent director, our Chief Executive Officer and other

senior management as appropriate; and helping to establish, coordinate and review the criteria and methods for evaluating, at least annually, the effectiveness of the Board and its committees. The separation of the offices allows Mr. Höttges to focus on management of Board matters and allows our Chief Executive Officer to focus on managing our business. Additionally, we believe the separation of the roles ensures the objectivity of the Board in its management oversight role, specifically with respect to reviewing and assessing our Chief Executive Officer’s performance. The Board believes that its role in risk oversight did not impact the leadership structure chosen by the Board.

The lead independent director, a position currently held by Teresa A. Taylor, coordinates the activities of our independent directors, calls and presides over the executive sessions of the independent directors and functions as a liaison between such independent

directors and the Chairman of the Board and/or the Chief Executive Officer. The lead independent director provides input on the flow of information to the Board, including the Board’s agenda and schedule.

We qualify as a “controlled company” under the NYSE listing standards because Deutsche Telekom beneficially owns a majority of our outstanding shares of common stock (approximately 65.95% as of March 31, 2015). As a controlled company, we are eligible for certain exemptions from the NYSE rules. Specifically, we are not required to have:

In addition, we are exempt from the rules adopted by the Securities and Exchange Commission (the “SEC”) pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and related NYSE rules relating to compensation committee member independence and compensation committee consultants.

We have availed ourselves of all of the above exemptions.

Directors are expected to attend all meetings of the Board of Directors and each committee on which they serve, as well as our Annual Meeting of Stockholders. In 2014, our Board, as then constituted, met nine times. During 2014, each director attended at least 75% of the total number of meetings of the Board and Board committees on which he or she served, during the period that he or she served. All of our continuing directors other than Mr. Dannenfeldt attended our 2014 Annual Meeting of Stockholders. Mr. Dannenfeldt joined our Board in November 2013 and had a pre-existing conflict that prevented him from attending the 2014 Annual Meeting of Stockholders.

Executive sessions, or meetings of outside (non-management) directors without management present, are held at each regularly

scheduled Board meeting or more frequently if necessary. Our Chairman or the lead independent director presides over these executive sessions. The executive sessions provide an opportunity for outside directors to review any matters of interest raised by the Chairman of the Board, the lead independent director or the other non-management members of the Board, including strategic, operational, or financial issues and management performance and succession.

In addition, our corporate governance guidelines require the independent directors to meet at least once each year in executive session, with the lead independent director presiding at such executive session.

Interested persons may contact the Chairman of the Board, the Board as a whole, the lead independent director, or any individual director as follows:

T-Mobile US, Inc.

The Board of Directors

c/o Corporate Secretary

12920 SE 38th Street

Bellevue, Washington 98006

After receipt, communications will generally be forwarded to the Chairman of the Board, the whole Board, the lead independent director or specific directors as the Corporate Secretary deems appropriate based on the facts and circumstances outlined in the communication. Communications that are unrelated to the duties and responsibilities of the Board or are unduly hostile, threatening, potentially illegal or similarly unsuitable will not be forwarded. Responses to letters and any communications that are excluded are maintained by the Company and are available to any director upon request.

The Board of Directors has four standing committees: Audit, Compensation, Executive and Nominating and Corporate Governance. The Board makes committee and committee chair assignments annually at its meeting immediately following the Annual Meeting of Stockholders, although further changes may be made from time to time as deemed appropriate by the Board.

Each committee has a Board-approved charter, which is reviewed annually by the respective committee. Recommended changes, if

any, are submitted to the Board for approval. Each committee may retain and compensate consultants or other advisors as necessary for it to carry out its duties, without consulting with or obtaining the approval of the Board or the Company. A copy of the charters for each standing committee can be found on the Investor Relations section of our website at http://investor.t-mobile.com by selecting “Governance Documents” under the “Corporate Governance” tab.

The Audit Committee represents and assists the Board in its oversight responsibility relating to the integrity of the Company’s financial statements and the financial reporting process, disclosure controls and procedures and internal audit functions. The Audit Committee also oversees the appointment, compensation and retention of our independent registered public accounting firm, including the performance by the independent registered public accounting firm of permissible audit, audit-related, and non-audit services, and the associated fees. The Audit Committee periodically

reviews the Company’s risk assessment and risk management policies, as well as our compliance and ethics programs. The Audit Committee develops and oversees compliance with the code of ethics for senior financial officers and the code of business conduct for all employees, officers and directors. The Committee is also responsible for establishing procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. In addition, the Committee reviews and approves all related person transactions.

The Compensation Committee has overall responsibility for evaluating and approving compensation plans, policies and programs applicable primarily to the Company’s executive officers, including executive compensation philosophy, and Chief Executive Officer compensation. The Compensation Committee is also responsible for certain compensation programs affecting the Company’s employees generally, such as equity compensation plans, and annually reviews with management risks arising from such programs. In addition, the Committee reviews and oversees the independent director compensation policies. A significant focus area of the Compensation Committee is succession plan development for senior management.

The Compensation Committee has established the Section 16 Subcommittee, which has sole authority to approve all awards granted to the Company’s officers who are subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (“Section 16 officers”) that are intended to qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and unless otherwise determined by the Compensation Committee, authority to approve all equity or equity-based awards to the Company’s Section 16 officers. The Compensation Committee has delegated authority to the Company’s Executive Vice President, Human Resources, to make awards to employees who are not Section 16 officers.

Compensation Consultant.    The Committee has retained Mercer (a wholly owned subsidiary of Marsh & McLennan Companies, Inc.), a well-recognized employee benefits and compensation consulting firm, as its independent compensation consultant to advise the Compensation Committee in its evaluation of the compensation and benefits provided to the Chief Executive Officer and the other executive officers. At the request of the Committee, a consultant from Mercer generally attends the Committee meetings at which executive officer compensation is discussed and provides information, research and analysis pertaining to executive compensation as requested by the Committee. Mercer also updates the Committee on market trends.

In connection with its engagement of Mercer, the Compensation Committee considered various factors bearing upon Mercer’s independence including, but not limited to, the amount of fees received by Mercer from the Company, Mercer’s policies and procedures designed to prevent conflicts of interest, and the existence of any business or personal relationship that could impact Mercer’s independence. After reviewing these and other factors, the Compensation Committee determined that Mercer was independent and that its engagement did not present any conflicts of interest. Mercer also determined that it was independent from management and confirmed this in a written statement delivered to the Compensation Committee. During 2014, Mercer provided executive compensation services to the

Company. The aggregate fees for such services were approximately $190,000. In addition, Mercer provided services to the Company for investment and benefits consulting and retirement plan consulting. The aggregate fees for such services were approximately $113,000.

The Compensation Committee sets compensation levels based on the skills, experience and achievements of each executive officer,

taking into account market analysis and input provided by its compensation consultant and the compensation recommendations of our Chief Executive Officer, except with respect to his own position. The Compensation Committee believes that input from both its consultant and our Chief Executive Officer provides useful information and points of view to assist the Compensation Committee in determining the appropriate compensation.

The Nominating and Corporate Governance Committee has primary responsibility for oversight of the Company’s corporate governance needs and assists the Board with the process of identifying, recruiting, evaluating, and nominating candidates for membership to

our Board. In addition, the Committee oversees the functions and needs of the Board and its committees, including leading the annual Board and committee performance review.

Management of the Company, including our Chief Executive Officer and other executive officers, is primarily responsible for managing the risks associated with our business, operations, and financial and disclosure controls. Financial, strategic, IT, technology, operational, compliance, legal/regulatory and reputational risks to the Company are considered by management when it conducts its quarterly enterprise-wide risk assessment and are reviewed and updated regularly in connection with the operational, financial and business activities of the Company.

Management of the Company has established an Enterprise Risk and Compliance Committee to oversee activities in the areas of risk management and compliance as a means of bringing risk issues to the attention of senior management. Responsibilities for risk management and compliance are distributed throughout various functional areas of the business, and the Enterprise Risk and Compliance Committee regularly reviews the Company’s activities in these areas.

Our Board of Directors assesses Company risks and strategies for risk mitigation, and it manages its risk oversight function primarily, but not exclusively, through the Audit Committee of the Board. As such, the Audit Committee has primary responsibility for overseeing the Company’s various risk assessment and risk management policies. In performing this function, the Audit Committee considers and discusses policies with respect to risk assessment and risk management, including the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures. To assist the Audit Committee with its risk assessment function, the Vice President, Internal Audit & Risk Management, who serves as the Chief Audit Executive, and the Vice President, Chief Compliance Officer report to the Audit Committee, and have regular meetings with the Audit Committee and/or its members. They provide a quarterly enterprise-wide risk assessment and annual fraud and compliance risk assessments to the Audit Committee and update the Audit Committee on significant issues raised by the Enterprise Risk and Compliance Committee. The Audit Committee reviews all risk assessments, provides feedback to executive management and shares the risk assessments with the Board. The Audit Committee also has other responsibilities with respect to the Company’s internal audit, compliance and ethics programs, as more fully set out in its charter. The Compensation Committee has certain responsibilities with respect to the assessment of risk in connection with our compensation programs. The Executive Committee of the Board of Directors, charged with reviewing and providing guidance to senior management of the Company regarding the Company’s strategy, operating plans and operating performance, also plays a key role in helping the Board

perform its risk oversight function by considering strategic operating goals, opportunities and risks. In addition, the Nominating and Corporate Governance Committee of the Board of Directors oversees Board process and corporate governance-related risks. Finally, a report of all committee meetings are presented to the Board on a regular basis.

Risk Assessment of Compensation Programs. The Compensation Committee of the Board of Directors designs our compensation programs to encourage appropriate risk taking while discouraging behavior that may result in unnecessary or excessive risk. In this regard, the following elements have been incorporated in our compensation programs for executive officers:

The Compensation Committee periodically reviews with management an assessment of whether risks arising from the Company’s compensation policies and practices for all employees are reasonably likely to have a material adverse effect on the Company, as well as the means by which any potential risks may be mitigated, such as through governance and oversight policies. Based on an assessment conducted by management consultant Towers Watson, which was presented to and discussed with the Compensation Committee, management concluded that our compensation policies and practices for all employees do not create risks that are reasonably likely to have a material adverse effect on the Company.

Each director who is not an employee of the Company or an officer or employee of Deutsche Telekom (a “non-employee director”) is eligible to participate in the non-employee director compensation program. Elements of the non-employee director compensation program are outlined in the table below. Fees are subject to proration for any person who becomes a non-employee director and/or committee chair at any time of the year other than the date of the Company’s Annual Meeting

of Stockholders. Directors also receive reimbursement of expenses incurred in connection with their Board service.

Immediately after each Annual Meeting of Stockholders, each non-employee director automatically receives an award of time-based restricted stock units (“RSUs”) with a value of $150,000 (rounded up to the nearest share number), with pro rata awards for non-employee

directors joining the Board at any time other than the date of the Annual Meeting of Stockholders. The time-based RSUs vest on the one-year anniversary of the grant date or on the date of the next Annual Meeting of Stockholders for directors not standing for re-election. In the event of a director’s termination of service prior to vesting, all RSUs are automatically forfeited to the Company. The

RSUs immediately vest on the date of a change in control of the Company.

Non-employee directors are eligible to receive up to two handsets per year and up to ten lines of U.S. service pursuant to our Board of Directors Phone Perquisite Program.

Under our stock ownership guidelines, each non-employee director is expected to acquire and maintain ownership of shares of common stock equal in value to five times his or her annual retainer measured as of May 1, 2013 for non-employee directors serving on that date or as of the date Board service commences for any non-employee director joining the Board after May 1, 2013. Each non-employee

director is expected to meet the ownership guidelines within five years from the applicable measurement date, and is expected to retain at least 50% of the net shares of common stock acquired through the Company’s equity compensation plans until the ownership threshold is met.

Subject to Deutsche Telekom’s board designation rights, the Nominating and Corporate Governance Committee is responsible for identifying and evaluating director nominees and recommending to the Board a slate of nominees for election at each Annual Meeting of Stockholders. The Board has adopted director selection guidelines, which the Nominating and Corporate Governance Committee considers in evaluating each director candidate. The Committee considers, among others, the following factors:

Our Board of Directors does not have a formal policy with respect to diversity on the Board. Rather, diversity is one of many factors under our director selection guidelines that the Nominating and Corporate Governance Committee considers when evaluating potential director candidates. Our director selection guidelines do not narrowly define diversity by reference to gender and race; rather, diversity is broadly interpreted to include other factors such as age, geographic and professional diversity. In connection with its general responsibility to monitor and advise the Board on the size, role, function and composition of the Board, the Nominating and Corporate Governance Committee will periodically consider whether the Board represents the overall mix of skills and characteristics described in the director selection guidelines, including diversity and the other factors described above. Subject to Deutsche Telekom’s board designation rights, the selection process for director candidates is intended to be flexible, and the Nominating and Corporate Governance Committee, in the exercise of its discretion, may deviate from the selection process when particular circumstances warrant a different approach.

In addition to candidates designated by Deutsche Telekom, the Nominating and Corporate Governance Committee may consider possible director candidates from a number of sources, including those recommended by stockholders, directors, or officers. In addition, the Nominating and Corporate Governance Committee may engage the services of outside consultants and search firms to identify potential director candidates.

A stockholder who wishes to suggest a director candidate for consideration by the Nominating and Corporate Governance

Committee should submit the suggestion to the Chair of the Nominating and Corporate Governance Committee, care of our Corporate Secretary, and include the candidate’s name, biographical data, relationship to the stockholder and other relevant information. The Nominating and Corporate Governance Committee may request additional information about the suggested candidate and the proposing stockholder. Subject to Deutsche Telekom’s board designation rights, the full Board will approve all final nominations after considering the recommendations of the Nominating and Corporate Governance Committee.

The following persons, each of whom is currently a director of T-Mobile, have been nominated by the Board of Directors on the recommendation of the Nominating and Corporate Governance Committee for election at the Annual Meeting to serve as a director for a term that would end at the 2016 Annual Meeting of Stockholders. The Board has found each nominee to be qualified based on his or her qualifications, experience, attributes, skills and overall service during the director’s term, including the number of meetings attended, his or her level of participation, the quality of his or her performance and whether he or she meets the applicable independence standards. Each of the nominees has consented to stand for election and has indicated that, if elected, he or she plans to serve and will hold office until the later of the 2016 Annual Meeting of Stockholders or until his or her successor is elected and qualified, unless the nominee earlier resigns, retires, passes away or otherwise no longer serves as a director. In the event that any of the nominees should be unavailable for election as a result of an unexpected

occurrence, shares may be voted for the election of such substitute nominee as the Board of Directors may nominate. In the alternative, if a vacancy remains, the Board may fill such vacancy at a later date or reduce the size of the Board, subject to certain requirements in our certificate of incorporation. The Board knows of no reason why any of the nominees would be unavailable or unable to serve.

Messrs. Dannenfeldt, Höttges, Jacobfeuerborn, Kübler, Langheim and Westbrook and Ms. Taylor were designated for nomination by Deutsche Telekom pursuant to its rights under our certificate of incorporation and the Stockholder’s Agreement.

Under our bylaws, directors are elected by a plurality of the votes cast by stockholders entitled to vote on the election of directors at the Annual Meeting. Shares represented by executed proxies received by the Company will be voted, unless otherwise marked withheld, “FOR” the election of each of the nominees.

The Audit Committee has appointed PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2015. Although ratification of the appointment of PricewaterhouseCoopers LLP by our stockholders is not required, the Board of Directors is submitting the selection of PricewaterhouseCoopers LLP to our stockholders for ratification as a matter of good corporate governance. If the selection is not ratified,

the Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm.

We expect representatives of PricewaterhouseCoopers LLP to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and are expected to be available to respond to appropriate questions by stockholders.

Approval of the proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for fiscal year 2015 requires that the number of votes cast “FOR” the proposal represents a majority of the total

votes cast on the proposal. If the stockholders do not ratify the appointment of PricewaterhouseCoopers LLP, the Audit Committee will reconsider the appointment but is under no obligation to appoint a different independent registered public accounting firm.

The Audit Committee is responsible for reviewing and, if appropriate, pre-approving all audit, audit-related and non-audit services to be performed by our independent registered public accounting firm. The Audit Committee charter authorizes the Audit Committee to establish a policy and related procedures regarding the pre-approval of audit, audit-related and non-audit services to be performed by our independent registered public accounting firm. The Audit Committee has delegated its pre-approval authority to the Chair of the Audit Committee, who is authorized to pre-approve services to be

performed by our independent registered public accounting firm and the compensation to be paid for such services if it is impracticable to delay the review and approval of such services and compensation until the next regularly scheduled meeting of the Audit Committee, provided that in such case the Chair shall provide a report to the Audit Committee at its next regularly scheduled meeting of any services and compensation approved by the Chair pursuant to the delegated authority.

In the performance of its oversight responsibilities, the Audit Committee (1) reviewed and discussed with management and the independent registered public accounting firm the Company’s audited financial statements for the fiscal year ended December 31, 2014; (2) discussed with the Company’s independent registered public accounting firm the matters required to be discussed by Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 16, Communications with Audit Committees; (3) received the written disclosures and the letter from the Company’s independent registered public accounting firm required by the applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence; and (4) discussed with the Company’s independent registered public accounting firm any relationships that may impact its objectivity and independence and satisfied itself as to the firm’s independence.

Company management is responsible for the assessment and determination of risks associated with the Company’s business, financials, operations and contractual obligations. The Committee, together with the Board, is responsible for oversight of the Company’s management of risks. As part of its responsibilities for oversight of the Company’s management of risk, the Committee has reviewed and discussed the Company’s enterprise-wide risk assessment and the Company’s policies with respect to risk assessment and risk management, including discussions of individual risk areas as well as an annual summary of the overall process.

The Committee has discussed with the Company’s Internal Audit Department and its independent registered public accounting firm the overall scope of and plans for their respective audits. The Committee regularly meets with the head of the Company’s Internal Audit Department and representatives of the independent registered public accounting firm, in regular and executive sessions, to discuss the results of their examinations, the evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting and compliance programs.

Management is responsible for the Company’s financial reporting process, including establishing and maintaining adequate internal financial controls and the preparation of the Company’s financial statements. The Company’s independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements and expressing an opinion on the conformity of the Company’s audited financial statements with U.S. generally accepted accounting principles. The Company’s independent registered public accounting firm also is responsible for performing an independent audit of the effectiveness of the Company’s internal controls over financial reporting and issuing a report thereon. The Committee relies, without independent verification, on the information provided to it and on the representations made by management and the Company’s independent registered public accounting firm. Based on the review and discussion and the representations made by management and the Company’s independent registered public accounting firm, the Committee recommended to the Board of Directors that the audited consolidated financial statements for the fiscal year ended December 31, 2014 be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

The Audit Committee:

Srikant M. Datar, Chair

W. Michael Barnes

Kelvin R. Westbrook

The material contained in this Audit Committee Report does not constitute soliciting material, is not deemed filed with the SEC, and is not incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made on, before, or after the date of this Proxy Statement and irrespective of any general incorporation language in such filing, except to the extent that the Company specifically incorporates the Audit Committee Report by reference therein.

T-Mobile had an extraordinary year in 2014. We delivered a record year of growth in 2014 as our Un-carrier initiatives continued to resonate with consumers. Since launching Un-carrier in 2013, T-Mobile has transformed the wireless industry with consumer-friendly offers that resolve customer pain points and differentiate T-Mobile from the competition. We continued to deliver strong customer growth in 2014 and ended the year with more than 55 million total customers, reflecting total net customer additions of 8.3 million in 2014, an 89% increase from the prior year, making T-Mobile America’s fastest growing wireless company. The strong performance is underpinned by the Company’s network, which continued to expand at a breakneck pace. At the end of 2014, T-Mobile’s 4G LTE network covered 265 million people, exceeding our original year-end target of 250 million.

In addition to strong customer growth, T-Mobile delivered outstanding financial results. Service revenues in 2014 increased by 9.0% year-over-year, and total revenues increased by 13.1% year-over-year. Adjusted EBITDA amounted to $5.636 billion in 2014, up 6.0% year-over-year. Since the Business Combination, we have significantly grown TSR. From May 1, 2013 through March 31, 2015, T-Mobile TSR outpaced 17 of our 19 peer companies. Our stock price has increased by 92% from May 1, 2013 through March 31, 2015.

Our executive compensation program emphasizes pay-for-performance. As a result, our 2014 Named Executive Officer compensation reflects T-Mobile’s strong 2014 operational and financial performance.

Compensation Consultant and Management

The Compensation Committee sets compensation levels based on the skills, experience and achievements of each executive officer, taking into account market analysis, input by its compensation consultant and the compensation recommendations of our Chief Executive Officer, except with respect to his own position. The Compensation Committee believes that input from both its independent consultant and our Chief Executive Officer provides useful information and points of view to assist the Compensation Committee in determining appropriate compensation.

Market Analysis

We use comparative executive officer compensation data publicly disclosed by a peer group of public companies in addition to compensation survey data to evaluate the competitiveness of our executive officer compensation and to guide the compensation for

newly hired executive officers. We believe a competitive total compensation package is necessary to attract and retain an executive management team with the appropriate abilities and experience required to lead the Company and execute on our strategic business plan. In analyzing this information, we compare the executive compensation program as a whole and compare the pay of individual executives if we believe the positions are sufficiently similar to make meaningful comparisons. We do not target a specific percentile in the range of comparative data for each individual or for each component of compensation. In determining the amount of base salary, target incentive award and level of equity compensation for each Named Executive Officer, we review the comparative compensation data and consider each executive’s level of responsibility, prior experience, past job performance, contribution to the Company’s success and results achieved. The Compensation Committee exercises its business judgment and discretion and does not apply formulas or assign these factors specific mathematical weights.

The Compensation Committee reviewed the base salaries of our Named Executive Officers based on a market analysis prepared by management and reviewed by the Committee’s independent compensation consultant, and determined that no adjustments

would be made for 2014. Base salaries for Messrs. Legere, Carter and Sievert were established prior to the Business Combination through negotiated employment agreements or term sheet and Mr. King’s base salary was set at the time of hire.

Our executive officers are eligible for annual cash-based short-term incentives under the 2013 Omnibus Incentive Plan. The Compensation Committee sets the values of the short-term incentive award opportunities as a percentage of an executive’s base salary. These award opportunities are established at threshold, target and maximum levels. The maximum level for each metric is capped at 200% of target. The 2014 short-term incentive plan (the “2014 STIP”) awards for executive officers, including the Named Executive Officers, were based entirely on Company performance, which was measured by: Total Service Revenue, Branded Net Adds, Adjusted

EBITDA, and Operating Free Cash Flow. Adjusted EBITDA and Operating Free Cash Flow are non-GAAP measures. Please see Appendix B for more information. These measures were aligned with the operational objectives of the Company’s business. A minimum threshold had to be achieved on at least one of the metrics to generate awards. If none of the minimum performance thresholds had been achieved, no awards would have been paid. If the minimum threshold for any metric was achieved, then the results were applied to the participants’ target awards.

We grant our executive officers long-term incentive compensation in the form of performance-based RSUs and time-based RSUs under the 2013 Omnibus Incentive Plan.

In connection with the Business Combination, the Company granted a one-time “Founders Grant” designed to give executives and employees at all levels an ownership stake in the Company and to align their interests with those of our stockholders. For retention and incentive purposes, the Founders Grant made in June 2013 to the Named Executive Officers had longer vesting periods for time-based RSUs and a higher target value than were anticipated for future annual equity grants and was in lieu of the 2014 annual grant. It was contemplated at the time, however, that targeted interim supplemental equity awards may be made in 2014 to retain high-performing leaders, reward exceptional performance or recognize expanded responsibility.

The following supplemental equity awards were granted to Named Executive Officers in 2014.

Mr. Legere.     To reward exceptional performance and incentivize continued strong performance, Mr. Legere received a performance-based RSU award in December 2014 with a target value of $12

million, of which $4 million is based on achievement of an operating free cash flow goal (the “OFCF RSUs”) and $8 million is based on Relative TSR (the “RTSR RSUs”).

The OFCF RSUs may be earned based on achievement of an operating free cash flow goal over a measurement period from January 1, 2015 through December 31, 2015, and may be earned from 0% to 200% of target based on attainment of threshold, target and maximum performance. Any earned RSUs will be subject to time-vesting based on continued service through December 31, 2016. The Compensation Committee selected operating free cash flow because it provides a direct correlation between potential payouts and the Company’s 2015 focus on balancing growth with profitability.

The RTSR RSUs may be earned based on the relative performance of the Company’s TSR compared to the TSR of companies that constitute our peer group over a measurement period from January 1, 2015 through December 31, 2016. The Compensation Committee selected relative TSR because it provides a direct correlation between potential payouts and future stock performance, delivering strong objective alignment between Mr. Legere and our stockholders.

The Adjustment Percentage will be interpolated on a linear basis, except that the Adjustment Percentage will equal 0% for a ranking below the 25th percentile.

Mr. Sievert.     To recognize his role and impact in transforming the Company under the Un-carrier initiatives, and to bring his long-term incentive value to a level consistent with our other comparable executive officers, Mr. Sievert received a time-based RSU award in June 2014 with a target value of $1 million, which vests in three equal annual installments beginning on June 5, 2015.

Mr. King.    Mr. King joined the Company in December 2013 as Executive Vice President and Chief Information Officer. As part of his new hire compensation package, Mr. King received (i) a 2014 time-based RSU award with a target value of $546,875, which vests over a three year period beginning on February 25, 2015 and (ii) a 2014 performance-based RSU award with a target value of $546,875, which has the same performance periods and measures as the Founders Grant.

We provide a competitive benefits package to all full-time employees, including the Named Executive Officers, that includes health and welfare benefits, such as medical, dental, vision care, disability insurance, life insurance benefits and a 401(k) savings plan. We provide a non-qualified deferred compensation plan under which

eligible participants may defer up to 75% of their base salary and 100% of their short-term incentive and long-term cash incentive as well as RSUs. We do not provide any employer matching or discretionary allocations under the non-qualified deferred compensation plan.

We provide severance pay and other benefits to executive officers, including the Named Executive Officers, whose employment is terminated, including through involuntary termination by us without cause or due to corporate restructuring, and, in some cases, voluntary termination by the executive for good reason. These arrangements provide security of transition income and benefit replacement that allow such executives to focus on our prospective business priorities that create value for stockholders. We believe the level of severance and benefits provided by these arrangements is consistent with the practices of our peer group and is necessary to

attract and retain key employees. These benefits are provided pursuant to our Severance Guidelines, Executive Continuity Plan and 2013 Omnibus Incentive Plan and award agreements and, for Messrs. Legere, Carter and Sievert, pursuant to written agreements. These arrangements do not include any gross up for excise taxes imposed as a result of severance or other payments deemed made in connection with a change in control. The potential payments and benefits available under these arrangements are discussed further under “— Potential Payments upon Termination or in Connection with a Change in Control.”

Section 162(m) of the Code generally disallows an income tax deduction to public companies for annual compensation in excess of $1 million paid to the chief executive officer and the three other most highly compensated named executive officers (excluding the chief financial officer). Compensation that qualifies as “performance-based” or satisfies another exception is excluded for purposes of calculating the amount of compensation subject to the $1 million

limit. While the Compensation Committee considers tax and accounting consequences in developing and implementing our executive compensation program, the Committee believes it should retain flexibility in awarding compensation to our Named Executive Officers and thus has not adopted a policy that all compensation must be deductible for federal income tax purposes.

Our insider trading policy prohibits our directors and employees from trading in our securities during certain designated blackout periods and otherwise while they are aware of material non-public information, and from engaging in hedging transactions or

short sales and trading in puts and calls with respect to our securities. The policy also prohibits holding our securities in a margin account or pledging our securities as collateral for a loan.

In 2014, the Compensation Committee adopted a policy of recoupment of compensation in certain circumstances. The policy provides that in the event the Company issues a restatement of its financial statements due to its material noncompliance with financial reporting requirements under U.S. securities laws, the Company will, to the extent permitted by governing law, require reimbursement from current and former executive officers for incentive compensation received at any time during the three-year period preceding the date on which the Company is required to prepare the accounting restatement if a lower payment would have occurred based on the restated results, regardless of whether the executive officer engaged in misconduct or otherwise caused or contributed to the requirement for the restatement. The policy is administered by the

Section 16 Subcommittee, which may consider whether seeking recovery would be in the best interests of the Company, including the costs and benefits of seeking recovery and whether doing so may prejudice the interests of the Company, including in any related proceeding or investigation. All awards granted under the 2013 Omnibus Incentive Plan are subject to the requirements of Section 954 of the Dodd-Frank Act regarding the recovery of erroneously awarded compensation, as well as any implementing rules and regulations under the Dodd-Frank Act, any policies adopted by the Company to implement such requirements, and any other compensation recovery policies that may be adopted from time to time by the Company.

Under our stock ownership guidelines for executive officers, each executive officer is expected to acquire and maintain ownership of our common stock equal in value to a specified multiple of the executive officer’s base salary measured as of May 1, 2013, for executives in office on that date, and as of the date the executive takes office for executives hired after that date. The multiple for our Chief Executive Officer is five times base salary and the multiple for our other executive officers is three times base salary. Each executive officer is expected to meet the ownership guidelines within the later of five years from the date we adopted the policy and the date on which

he or she became an executive officer, and is expected to retain at least 50% of the net shares of common stock acquired through equity awards granted after the Business Combination until the ownership thresholds are met.

We believe that all employees should have a stake in the Company’s performance. Therefore, we implemented a Company-wide annual equity award program. Our Board also approved an Employee Stock Purchase Plan (“ESPP”) to provide employees with a cost-effective vehicle to purchase stock and we are asking stockholders to approve the ESPP as further described in Proposal 3.

The Compensation Committee has adopted an equity grant policy pursuant to which the Compensation Committee (or a subcommittee) approves annual grants to executive officers and other members of the executive leadership team at a specified time. In addition to the annual grants, equity awards may be granted on a quarterly basis to new hires. We may also grant supplemental equity

awards from time to time to retain high-performing leaders, reward exceptional performance or recognize expanded responsibility. The Compensation Committee has delegated authority to the Company’s Executive Vice President, Human Resources, subject to certain terms and limitations as established by the Committee, to make awards to employees who are not Section 16 officers.

At the 2014 Annual Meeting of Stockholders, stockholders were asked to approve, on an advisory basis, the Named Executive Officer compensation for 2013 as reported in the proxy statement. This say-on-pay proposal was approved by over 97% of the shares present and entitled to vote.

The Compensation Committee considered the results of the 2014 advisory vote along with stockholder input and other factors discussed in this CD&A and concluded that no changes to our compensation policies and practices were warranted in response to the stockholder advisory vote.