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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 4, 2023
UNITED STATES CELLULAR CORPORATION
(Exact name of registrant as specified in its charter)
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| Delaware | | 001-09712 | | 62-1147325 |
| (State or other jurisdiction of incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
8410 West Bryn Mawr, Chicago, Illinois 60631
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (773) 399-8900
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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| Securities registered pursuant to Section 12(b) of the Act: |
| Title of each class | | Trading Symbol | | Name of each exchange on which registered |
| Common Shares, $1 par value | | USM | | New York Stock Exchange |
| 6.25% Senior Notes due 2069 | | UZD | | New York Stock Exchange |
| 5.50% Senior Notes due 2070 | | UZE | | New York Stock Exchange |
| 5.50% Senior Notes due 2070 | | UZF | | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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| ☐ | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
This Current Report on Form 8-K is being filed by United States Cellular Corporation (UScellular) to describe and file as an Exhibit the UScellular 2023 Annual Incentive Plan (the 2023 Plan) with respect to "named executive officers" of UScellular as specified in paragraph (e) of Item 5.02 of Form 8-K.
As of April 4, 2023, the 2023 Plan was approved both by UScellular’s Chair and by UScellular’s President and Chief Executive Officer (CEO). The 2023 Plan covers all UScellular officers, including the President and CEO. The UScellular Chair does not participate in the 2023 Plan.
The purpose of the 2023 Plan is to motivate and reward associates for performance that drives achievement of UScellular's business goals.
The Plan has the following two performance components for officers:
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| Plan Component | Component Weighting |
| Company Performance | 80% (1) |
| Individual Performance | 20% |
(1) 70% weighted on UScellular company performance as measured against financial metrics and 10% weighted on the UScellular Chair's Assessment of UScellular's performance.
The Plan company performance is measured by performance against the following three financial metrics with the following weightings:
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| Company Performance Metric | Metric Weighting |
| Consolidated Total Service Revenues | 50% |
| Consolidated Operating Cash Flow | 40% |
| Consolidated Capital Expenditures | 10% |
Under the provisions of the 2023 Plan, no bonus is due unless an officer remains employed through the bonus payout date except that an officer who separates due to retirement or death is eligible for a pro-rated bonus. The President and CEO may approve a bonus, or a pro-rated bonus, for an officer who is not employed through the bonus payout date.
The foregoing description is qualified by reference to the 2023 Plan which is attached hereto as Exhibit 10.1 and incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
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| Exhibit Number | | Description of Exhibits |
| 10.1 | | |
| 104 | | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
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| SIGNATURES |
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| Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. |
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| | | UNITED STATES CELLULAR CORPORATION |
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| Date: | April 7, 2023 | By: | /s/ Douglas W. Chambers |
| | | | Douglas W. Chambers |
| | | | Executive Vice President, Chief Financial Officer and Treasurer |
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Exhibit 10.1
2023 Annual Incentive Plan
Effective January 1, 2023
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| ANNUAL INCENTIVE PLAN PURPOSE |
The 2023 Annual Incentive Plan is intended to motivate and reward associates for performance that drives achievement of UScellular’s business goals. We measure performance using both financial and non-financial goals that are tied to our business strategy. Incentive awards are based on performance results for UScellular and each participant’s individual performance and behavior as exemplified by the Company’s Dynamic Organization (“D.O.”) values.
All UScellular associates hired on or before September 30, 2023 are eligible to participate in this 2023 Annual Incentive Plan (“Plan”) unless they:
•are classified as a temporary associate or contractor; or
•are in jobs classified as non-exempt in the customer service or financial services functions within the Customer Support Division; or
•participate in any other incentive compensation plan at USCC.
Plan eligibility is also conditioned on satisfaction of any additional eligibility requirements set forth in the attached Administrative Guidelines. Eligibility for the Plan is not a guarantee of an incentive award payment.
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| ANNUAL INCENTIVE COMPONENTS & WEIGHTINGS |
The 2023 Annual Incentive Plan has two performance components (company and individual performance for the plan year) which come together to determine an associate’s award. The Plan components and weightings are provided below:
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| Plan Component | Component Weighting |
| Officers | Associates |
| Company Performance | 80% (1) | 60% |
| Individual Performance | 20% | 40% |
(1)70% weighted on UScellular company performance as measured against financial metrics and 10% weighted on the UScellular Chair's Assessment of UScellular's performance (refer to UScellular Chair Assessment section below)
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| COMPANY PERFORMANCE METRICS |
The 2023 Annual Incentive Plan company performance is measured by performance against the following three financial metrics with weightings and definitions provided below. Actual performance will be assessed against the targeted performance for each performance metric.
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| Company Performance Metric | Metric Weighting |
| Consolidated Total Service Revenues | 50% |
| Consolidated Operating Cash Flow | 40% |
| Consolidated Capital Expenditures | 10% |
Consolidated Total Service Revenues: Total service revenues determined on a consolidated company-wide basis and in a manner consistent with UScellular’s presentation of total service revenues for external reporting purposes.
Consolidated Operating Cash Flow: Operating cash flow determined on a consolidated company-wide basis and in a manner consistent with UScellular’s presentation of Adjusted OIBDA (Operating income before depreciation, amortization, accretion, gains and losses) for external reporting purposes, and further adjusted to remove expenses associated with the annual incentive and performance share unit plans.
Consolidated Capital Expenditures: Capital expenditures determined on a consolidated company-wide basis and in a manner consistent with UScellular’s presentation of capital expenditures for external reporting purposes.
Incentive Payouts as a Percent of Target at Minimum and Maximum Performance Levels
The incentive payouts will be determined by the level of achievement against each metric. If any metric is not achieved at the minimum level, there will be no incentive paid with respect to that metric. The minimum and maximum payout levels reinforce the Company’s pay for performance philosophy.
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| Performance Measure | Minimum | Target | Maximum |
| Consolidated Total Service Revenues | 50% | 100% | 200% |
| Consolidated Operating Cash Flow | 50% | 100% | 200% |
| Consolidated Capital Expenditures | 50% | 100% | 150% |
Incentive payouts between the minimum and target performance levels and between the target and maximum performance levels will be computed by interpolation.
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| INDIVIDUAL PERFORMANCE METRICS |
Each associate’s performance will be evaluated and a performance rating assigned based on achievement of individual performance goals established for the plan year. Any incentive for individual performance will be payable according to the guidelines shown in the table below, subject to appropriate approval.
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| Individual Performance Rating | % Payout Range |
| Far Exceeds Expectations (FE) | 140% - 160% |
| Exceeds Expectations (EE) | 115% - 135% |
| Meets Expectations (ME) | 90% - 110% |
| Partially Meets Expectations (PM) | 0% |
| Fails to Meet Expectations (FM) | 0% |
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| OFFICER MEASURE: USCELLULAR CHAIR ASSESSMENT |
The UScellular Chair assesses UScellular’s overall company performance for the plan year and may consider the following factors and other information deemed relevant in determining the level of attainment for this measure.
•Achievement of key goals and objectives provided to the UScellular 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.
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| Assessment Criteria | % Payout Range |
Far exceeds target performance: Performance greatly exceeded that which was planned and expected. | 130% - 160% |
Exceeds target performance: Performance exceeded that which was planned and expected. | 110% - 130% |
Meets target performance: Performance was essentially equivalent to that which was planned and expected. | 90% - 110% |
Partially meets target performance: Given the conditions that prevailed, performance was sufficient to merit a partial incentive. | Up to 90% |
Fails to partially meet target performance: Given the conditions that prevailed, performance was not sufficient to merit any incentive. | 0% |
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| MISCELLANEOUS PROVISIONS & REGULATORY REQUIREMENTS |
The Plan is subject to the Administrative Guidelines attached. There are no oral or written agreements or understandings between UScellular and the participants affecting or relating to this Plan not referenced herein. If any participant fails to adhere to the ethical, legal and other standards as referenced by UScellular policy, UScellular 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 UScellular or other action pursuant to any clawback or recoupment policy which UScellular may adopt from time to time, including without limitation any such policy which UScellular 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 Plan shall not be construed as an employment contract or as a promise of continuing employment between UScellular and the associate. Employment with UScellular is terminable at will, i.e., either the participant or UScellular may terminate the relationship at any time, with or without cause.
The 2023 Annual Incentive Plan, as set forth in this document, represents the general guidelines UScellular intends to utilize to determine the incentives, if any, that will be paid. 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 UScellular Chair in his/her/their discretion may adjust targets or actual results to reflect unanticipated events. UScellular reserves the right to modify or terminate the Plan at its sole discretion, at any time (including during or following the applicable plan year) and for any reason, with or without written notification and without regard to the effect that any such action may have on any associate’s incentive or potential incentive. UScellular shall have the full power and authority to interpret and administer the Plan and shall be the sole arbiter of all matters of interpretation and application of the Plan.
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| /s/ Laurent C. Therivel | | April 4, 2023 | | |
| President and CEO | | Date | | |
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| /s/ LeRoy T. Carlson, Jr. | | April 4, 2023 | | |
| Chair | | Date | | |
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| ADMINISTRATIVE GUIDELINES |
| PLAN YEAR EFFECTIVE DATES | January 1, 2023 – December 31, 2023 |
| GENERAL ADMINISTRATION | Exempt Associates: The target annual incentive payout for exempt participants will be based on the associate’s base earnings paid during the plan year (in the case of a mid-year rehire, starting from their rehire date). Base Earnings are defined as base wages, paid time off taken, and any differential pay (excludes Short-term disability pay, Long-term disability pay, Paid Parental Leave, Military Service Leave of Absence, any Paid Personal Leave of Absence, incentives, merit-related lump sum payments, equity, on call pay and any additional compensation not related to base earnings). Non-Exempt Associates: The target annual incentive payout for non-exempt participants will be based on the associate’s base earnings and over-time (OT) earnings paid during the plan year (in the case of a mid-year rehire, starting from their rehire date). Base Earnings are defined as base wages, paid time off taken and any differential pay (excludes Short-term disability pay, Long-term disability pay, Paid Parental Leave, Military Service Leave of Absence, any Paid Personal Leave of Absence, incentives, merit-related lump sum payments, equity, on call pay and any additional compensation not related to base earnings). |
| VESTING | The incentive does not vest and no incentive shall be paid unless the associate remains employed through the actual incentive payout date (however, in the event of retirement / death prior to the actual incentive payout date see Separation Prior to Payout Date below). |
| NEW HIRE ELIGIBILITY | Associates must be hired on or before September 30th of the plan year in order to be eligible for a prorated annual incentive payout. |
| INDIVIDUAL PERFORMANCE | Any associate who receives an annual individual performance rating of Far Exceeds Expectations, Exceeds Expectations, or Meets Expectations is eligible for an incentive payout. No incentive will be paid to any associate who receives an annual individual performance rating of Partially Meets Expectations or Fails to Meet Expectations, regardless of company performance, unless otherwise approved by the President and CEO and/or the Chair of UScellular as appropriate. |
SEPARATION PRIOR TO PAYOUT DATE
| Not eligible for a payout unless separation is due to retirement or death under the circumstances described below (or unless approved by the President and CEO and/or the Chair of UScellular as appropriate).
Associate must be at least age 55 and have a minimum of 10 years of total combined adjusted service within UScellular and any other TDS business units to be eligible for a retirement payout (unless otherwise approved by the President and CEO and/or the Chair of UScellular as appropriate).
In the event of death or retirement during the plan year (1/1 – 12/31) a prorated incentive for time worked at target (100% Plan attainment) will be paid provided that the associate has been employed through at least January 31st of the plan year. An associate who is not employed through at least January 31st of the plan year will not be eligible to receive any incentive payout. The payout will be made as soon as administratively possible following the date of the event (but no later than the Incentive Payout Date, as described below).
In the event of death or retirement after the plan year, but before the payout date for the plan year, a participant will be eligible to receive an incentive for that year based upon actual Plan attainment for company performance (including the chair’s assessment, if applicable). Individual performance will be paid out at 100% of target. The payout will be made as soon as administratively possible following the date of the event and after receiving actual Plan attainment (but no later than the Incentive Payout Date, as described below). |
| RETIREMENT OR DEATH PRIOR TO PAYOUT DATE |
| TRANSFERS/PROMOTIONS WITHIN COMPANY DURING PLAN YEAR | Within this Plan: If an associate is promoted / transferred within this Plan, no prorations will be made in determining the associate’s incentive. The associate’s incentive will be based on the associate’s effective position as of 09/30/23.
Between this Plan and a Quarterly or Monthly Plan: Prorated payouts from both 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 plan, eligible base earnings from each position occupied during the plan year (if applicable), target incentive assigned for each plan, and percentage of time worked in each plan during the plan year. |
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| TRANSFERS TO/ FROM TDS DURING THE PLAN YEAR | If an associate transfers to/from another TDS business unit, he/she/they will be eligible to receive a prorated payout under this Plan based on time worked at UScellular and performance while at UScellular. However, as with transfers/promotions within the company during the plan year, any incentive for those who transfer to/from another TDS business during the plan year will be based on the associate’s effective position at UScellular as of 09/30/23 or their official system transfer date of record, whichever is later. |
| INCENTIVE PAYOUT DATE | The incentive will be paid no later than March 15th of the year following the end of the plan year (12/31/2023). Associate must be actively employed on the payment date to receive their incentive award. Notwithstanding the foregoing, in the event that payment by March 15, 2024 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, 2024, but in no event later than December 31, 2024. Payment will be in the form of a lump sum. |
