EXHIBIT 10.1

 

UNITED STATES CELLULAR CORPORATION

2014 EXECUTIVE OFFICER ANNUAL INCENTIVE PLAN

Effective January 1, 2014

I.             PURPOSE

Ø   To provide incentive for the executive officers of U.S. Cellular to extend their best efforts towards achieving superior results in relation to key business measures;

Ø   To reward U.S. Cellular executive officers in relation to their success in meeting and exceeding the performance targets; and

Ø   To help U.S. Cellular attract and retain talented leaders in positions of critical importance to the success of the Company.

 

II.            ELIGIBLE PARTICIPANTS

All U.S. Cellular Executive Officers are eligible to participate in the Plan.  Executive officers includes all Executive Vice Presidents and the Senior Vice President  - Chief Human Resources Officer

 

III.          PERFORMANCE MEASURES & WEIGHTINGS

 

Performance Measures	Component Weighting	Overall Plan Weighting
Consolidated Total  Revenues	40%	24%
Consolidated Adjusted Income Before Income Taxes	35%	21%
Consolidated Capital Expenditures	25%	15%
Company Performance		60%
Chairman Assessment on Strategic Initiatives		10%
Individual Performance		30%

 

IV.          PERFORMANCE MEASURES DEFINITIONS

 

Company Performance - Weighting 60%:    

 

Consolidated Total Revenues: Actual total revenues measured against targeted total revenues determined on a consolidated company-wide basis and in a manner consistent to U.S. Cellular's presentation of total revenues for external reporting purposes.  

 

Consolidated Adjusted Income Before Income Taxes (AIBIT):   Actual AIBIT measured against targeted AIBIT determined on a consolidated company-wide basis and in a manner consistent to U.S. Cellular's presentation of AIBIT for external reporting purposes.  AIBIT will be determined from the Consolidated Statement of Operations, and is defined as income before income taxes, adjusted for depreciation, amortization and accretion, net gain or loss on sale of business and other exit costs (if any), and interest expense. 

 

Consolidated Capital Expenditures:  Actual capital expenditures measured against targeted capital expenditures determined on a consolidated company-wide basis and in a manner consistent to U.S. Cellular's presentation of capital expenditures for external reporting purposes.  The measurement of actual capital expenditures against targeted capital expenditures may not be sufficiently comprehensive since it would measure what is spent, but not necessarily the efficiency and/or productivity of what is spent.  Therefore, if warranted, the measurement of actual expenditures vs. targeted expenditures will incorporate an adjustment for spending efficiency/productivity which could include an assessment of the “degree of completion” of certain projects.  Such an assessment will be made and recommended by senior management and will be subject to the review and approval of the Chairman.

 

 

Notes:

§   Results associated with acquisitions and / or divestitures, will be evaluated on a case-by-case basis to determine whether adjustments to target or actual results are warranted.

§   The Chairman in his discretion may adjust targets to reflect unanticipated events.

 

 

Chairman Assessment on Strategic Initiatives - Weighting: 10%:    

 

 

The Chairman in his qualitative and subjective assessment of U.S. Cellular’s overall company performance during the year will consider the following key factors and any other information he deems relevant in determining the level of attainment for this measure:

§   Achievement of key goals and objectives provided to the U.S. Cellular board of directors

§   Accomplishing / making commendable progress on major initiatives for the year to the extent not covered under the key goals and objectives provided to the board of directors

§   Developing and enhancing strategies and plans that strengthen the company’s ability to successfully compete in the marketplace

 

Individual Performance - Weighting: 30%:    

 

Each officer’s overall performance for the year will be assessed by the President and CEO based on such officer’s effectiveness/success with regard to:

 

§   Carrying out his/her ongoing responsibilities and key initiatives during the performance year.

§   Executive level leadership and teamwork.

§   Identification and development of key talent for succession planning purposes.

§   Associate engagement as measured in a large part by the company’s culture survey.

 

In making these assessments, the President and CEO will also take into consideration:

 

§   Evaluation of the officer’s performance in the above areas.

§   Performance feedback received on the officer. 

§   The officer’s report on his/her activities/accomplishments for the performance year.

 

 

V.            MISCELLANEOUS PROVISIONS

 

The Plan is subject to the Administrative Guidelines attached hereto as Exhibit A.  U.S. Cellular reserves the right to amend or discontinue the Plan at any time, with or without notice. 

 

There are no oral or written agreements or understandings between U.S. Cellular and the participants affecting or relating to this Plan not referenced herein.  If the participant fails to adhere to the ethical and legal standards as referenced by U.S. Cellular policy, U.S. Cellular shall have the right to revoke this Plan, reduce or eliminate compensation as it applies to the violator, or any other remedy as provided by corporate policy or law.

 

Any compensation earned or paid pursuant to this Plan is subject to forfeiture, recovery by U.S. Cellular or other action pursuant to any clawback or recoupment policy which U.S. Cellular may adopt from time to time, including without limitation any such policy which U.S. Cellular may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.

 

This program shall not be construed as an employment contract or as a promise of continuing employment between U.S. Cellular and the associate.  Employment with U.S. Cellular is terminable at will, i.e., either the participant or U.S. Cellular may terminate the relationship at any time, with or without cause. 

 

Kenneth R. Meyers		8/19/14
President and CEO		Date
LeRoy T. Carlson, Jr.		8/19/14
Chairman		Date

 

 

 

VI.          BONUS RANGES AS A PERCENT OF TARGET

 

The bonus ranges were set to reinforce the Company’s pay for performance culture.  Minimum performance levels for each component need to be achieved before any bonus is earned.  The narrow ranges result in substantial reductions in bonuses when targets are not achieved, and greater rewards for above target performance.

 

Company Performance Measures:

 

Performance Measure	Minimum	Maximum
Consolidated Total Revenues	90%	110%
Consolidated Adjusted Income Before Income Taxes	80%	120%
Consolidated Capital Expenditures	105%	90%

 

Bonus Payouts As A Percent Of Target At Minimum, And Maximum Performance Levels:

 

Performance Measure	Minimum	Target	Maximum
Consolidated Total Revenues	50%	100%	225%
Consolidated Adjusted Income Before Income Taxes	50%	100%	225%
Consolidated Capital Expenditures	50%	100%	225%

 

Bonus payouts between the minimum and target and between target and maximum target performance levels will be computed by interpolation.  Any bonus for performance below the minimum percentage will be at the discretion of the Chairman.

 

Chairman Assessment on Strategic Initiatives: 

 

Performance Criteria	% Payout of Target
Far exceeds target performance: Performance greatly exceeded that which was planned and expected.	150% - 200%
Significantly exceeds target performance: Performance substantially exceeds that which was planned and expected.	120% - 150%
Somewhat exceeds/fully meets / almost fully meets target performance :  Performance was close to that which was planned and expected.	80% - 120%
Partially meets target performance: Given the conditions that prevailed, performance was sufficient to merit a partial bonus	Up to 80%
Well below target performance: Given the conditions that prevailed, performance was not sufficient to merit any bonus across all components of the plan.	0%

 

Individual Performance: 

 

Performance Criteria	% Payout of Target
Far exceeds target performance : Performance greatly exceeded that which was planned and expected.	130% - 150%
Significantly exceeds target performance: Performance substantially exceeds that which was planned and expected.	110% - 130%
Somewhat exceeds/fully meets / almost fully meets target performance :  Performance was close to that which was planned and expected.	80% -110%
Partially meets target performance: Given the conditions that prevailed, performance was not sufficient to merit a bonus for the individual performance component of the plan.	0%
Well below target performance: Given the conditions that prevailed, performance was not sufficient to merit any bonus	0%

 

 

 

Exhibit A

Administrative Guidelines

 

PLAN YEAR EFFECTIVE DATES:	January 1, 2014 – December 31, 2014
GENERAL ADMINISTRATION:	The target annual bonus payout for plan participants will be based on the associate’s base salary as of December 31, 2014.
VESTING	The bonus does not vest and no bonus shall be paid unless the associate remains employed through the actual bonus payout date. Special rules apply to those associates who retire or die before the actual bonus payout date (see below).   To the extent and only to the extent that any bonus is paid for the plan year, such bonus shall be deemed to have been earned on December 31, 2014.
SEPARATION PRIOR TO PAYOUT VESTING DATE	Not eligible for a payout unless separation is because of retirement or death (see below), or unless approved by the President and CEO
RETIREMENT / DEATH      Prior to Payout Vesting Date	Payout based on a proration for time worked during the plan year.
LOA (APPROVED FMLA)   During Plan Year:     LOA (Non-FMLA) During Plan Year:	Associates on approved  FMLA are eligible for payout based on individual performance and the plan component attainment percentages. No proration will be applied.    Associates on denied  FMLA are eligible for payout based on proration for time worked during the plan year, individual performance and the plan component attainment percentages.
MILITARY LEAVE During Plan Year:	Associates on military leave are eligible for payout based on individual performance, and plan component attainment percentages.  No proration will be applied.
TRANSFERS/PROMOTIONS DURING PLAN YEAR Within/ Between Annual Plans:         Between an Annual Plan and a Quarterly or Monthly Plan:	If an associate is promoted / transferred within or between annual incentive plan(s), no prorations will be made in determining the associate’s target bonus.  The associate’s target bonus will be based on the associate’s plan as of 12/31/14.    Prorated payouts from both positions/plans will be determined following the end of the plan year.   The following factors will be considered in the determination of the payout: both plans’ attainment percentages, individual performance in each job/plan,  the last base salary from each position occupied during the plan year (if applicable), target incentive assigned for each position’s pay grade, and percentage of time worked in each position/plan during the plan year.
NEW HIRES DURING THE PLAN YEAR	Associates hired during the plan year will be eligible to participate in the Plan and the calculation will be based on CEO discretion.
TRANSFERS TO/ FROM TDS DURING THE PLAN YEAR	If an associate transfers to/from another TDS business unit, he/she will receive a prorated payout based on the factors listed above.
BONUS PAYOUT DATE	Bonuses are to be paid during the period commencing on January 1, 2015 and ending on March 15, 2015. Historically bonuses have been paid in March on or before March 15 th of the year following the end of the plan year (12/31).   Notwithstanding the foregoing, in the event that payment by March 15, 2015 is administratively impracticable and such impracticability was unforeseeable (in each case, such that the payment continues to qualify as a “short-term deferral” within the meaning of section 409A of the Internal Revenue Code), payment will be made as soon as administratively practicable after March 15, 2015, but in no event later than December 31, 2015.  Payment will be in the form of a lump sum.

 

 

 

Exhibit 10.2

 

UNITED STATES CELLULAR CORPORATION

 

GUIDELINES FOR THE DETERMINATION OF ANNUAL BONUS

FOR PRESIDENT AND CHIEF EXECUTIVE OFFICER

(Effective for Performance Years Commencing

On or After January 1, 2014)

 

I.    PURPOSE

►      To provide incentive for the President and Chief Executive Officer (the “President”) of United States Cellular Corporation (the “Company”) to extend his best efforts toward achieving superior results with respect to Company performance;

►      To reward the President in relation to his success in meeting and exceeding performance targets and otherwise contributing to the success of the Company; and

►      To help the Company retain the President, a talented leader in a position of critical importance to the success of the Company.

 

II.   BONUS AMOUNT

The Chairman of the Company (the “Chairman”) in his sole discretion determines whether an annual bonus will be payable to the President for a performance year and, if so, the amount of such bonus.  Factors that may be considered by the Chairman in making such determination include the following:

►      the level of achievement of the Company, on a short-term and long-term basis, measured against performance objectives and compared with that of peer companies;

►      the President’s individual performance, on a short-term and long-term basis, with respect to his leadership of the Company, the development and maintenance of effective working relationships across the enterprise, his stated personal objectives and his other duties and responsibilities;

►      the total cash compensation paid to chief executive officers of peer companies, including those which are divisions or subsidiaries of parent companies; and

►      other factors that the Chairman in the exercise of his judgment and discretion determines relevant.

No single factor shall be determinative and no factor shall be applied mechanically to calculate any portion of the President’s bonus.  The entire amount of the bonus is discretionary.  The President shall have no right or expectation with respect to any bonus and no bonus shall vest until the date the bonus is paid.  To the extent and only to the extent that any bonus is paid for a performance year, such bonus shall be deemed to have been earned on December 31 of that performance year.

 

III.  BONUS PAYMENT

Any bonus awarded with respect to a performance year shall be paid during the period commencing on the January 1 immediately following the performance year and ending on the March 15 immediately following the performance year.  Notwithstanding the foregoing, in the event that payment by such March 15 ^th is administratively impracticable and such impracticability was unforeseeable (in each case, such that the payment continues to qualify as a “short-term deferral” within the meaning of section 409A of the Internal Revenue Code), payment will be made as soon as administratively practicable after such March 15 ^th , but in no event later than the December 31 immediately following the performance year.  Payment will be in the form of a lump sum.  

 

Notwithstanding any provision of these guidelines to the contrary, the President does not have a legally binding right to a bonus unless and until the bonus amount, if any, is paid.

 

IV.  AMENDMENT AUTHORITY

The Chairman reserves the right to amend the guidelines set forth herein at any time for any reason.

 

                APPROVED by the CHAIRMAN of UNITED STATES CELLULAR CORPORATION on this 19 ^th day of August, 2014.