2017 Proxy Statement Summary

Annual Meeting Information
	Time and Date	May 25, 2017, at 9:00 a.m. central time
	Place	The Standard Club 320 S outh Plymouth Court Chicago, IL 60604
	Record Date	March 29, 2017
	Webcast	investors.tdsinc.com

 

Strong Corporate Governance Practices Annual election of all directors   Annual "Say on Pay"   Executive sessions with only independent directors present   Policy prohibiting pledging and hedging of company shares   Charter and bylaws can be amended by a simple majority vote   Authority to retain independent advisors by each committee   The positions of (i)   Chairman of the Board and (ii)   President and Chief Executive Officer are separate   Guidelines recommending that TDS Directors limit to three the number of other public company boards they serve on   Succession planning sessions are held in Executive Session at least annually   Establishment of a Technology Advisory Group to review, monitor and inform the full Board on technology matters Cyber security oversight by the full Board, the Audit Committee and the Technology Advisory Group   Stock ownership requirements for board members Annual self-assessment of board

TDS has a Corporate Governance and Nomin ating Committee (CGNC) even though, as a controlled company, TDS is not required to do so. The CGNC operates under a formal charter and in a manner that is intended to reflect good corporate governance and other best practices, including an effective self- assessment process. The TDS Compensation Committee, which is comprised entirely of independent directors, operates under a formal charter. To better align with shareholder interests, the Compensation Committee added performance-based shares to the 2016 Lon g-Term Incentive Program in response to shareholder feedback and best practices. The TDS Audit Committee, which is comprised entirely of independent directors, operates under a formal charter and continues to earn high scores on Audit Quality from proxy ad visory services. Shareholder Engagement TDS has an open-door policy for its shareholders to meet with management. Our goal is ongoing engagement with our shareholders and we value the views and opinions of our shareholders. TDS has a shareholder engagement program to hold conversations with our shareholders to better understand their priorities regarding corporate governance practices and to encourage dialogue regarding ongoing improvements.   Board Refreshment in 2017 TDS believes that new perspectives can be important to a well-run Board.  At the same time, it is equally important to benefit from the valuable experience that longer-serving Directors bring to the Boardroom.  After assessing the Board’s composition, TDS embarked on an initiative to refresh th e board.   Our long-serving director Herbert S. Wander is retiring from the board of directors as of the 2017 Annual Meeting.  We are pleased that Kim D. Dixon has agreed to join TDS’ Board.  Ms. Dixon will bring valuable insight and direction to the TDS b oard along with strong operational experience. TDS thanks Mr. Wander for his years of service and looks forward to his contributions serving as Director Emeritus.

 

 

Voting Matters and Board Recommendations
	Voting Matters			Board's Recommendations			Rationale		Page Reference
​	Election of 12 Director nominees			FOR all TDS Board nominees			Broad, relevant expertise Progress on strategic initiatives		9
	Ratify independent registered public accountants			FOR			Independent		29
	Approve the Telephone and Data Systems, Inc. Incentive Plan			FOR			Strong oversight by compensation committee Further aligns incentive pay with performance		32
​	Approve, on an advisory basis, the compensation of named executive officers ("Say on Pay")			FOR			Strong oversight by C ompensation C ommittee Aligned with shareholders through a mix of cash and equity Added performance-based shares to 2016 Long-Term Incentive Plan		35
	Provide an advisory vote on whether future Say-on-Pay votes should be held every year, every two years or every three years			EVERY YEAR			Strong oversight by C ompensation C ommittee		36
	Proposal submitted by a shareholder			AGAINST			The TDS Voting Trust opposes and intends to vote against this proposal		97

 

Proposal 1 – Director Nominees

 

Our Board of Directors has nominated 12 directors for election at the 2017 Annual Meeting (Proxy Item No.   1) beginning on page   9 .

Each of the four TDS Board Common Share nominees brings a broad range of experiences and necessary skills to provide effective oversight of the Board.  See biographies on pages   11-17. The board of directors unanimously recommends that you vote "FOR" the nominated directors.

					Committee Memberships
Director Name	Since	Age	Primary Occupation	Independent	AC	CC	CGNC
LeRoy T. Carlson, Jr.	1968	70	President and CEO, TDS				x
Letitia G. Carlson, MD	1996	56	Physician and Associate Clinical Professor at George Washington University Medical Faculty Associates	​	​	​	​
Prudence E. Carlson	2008	65	Private Investor
Walter C. D. Carlson	1981	63	Partner at Sidley Austin   LLP	​	​	​	C
Clarence A. Davis*	2009	75	Former Director and CEO of Nestor,   Inc.	x	FE
Kim D. Dixon*	N/A	54	Executive Vice President and Chief Operating Officer at FedEx Office	x
Kenneth R. Meyers	2007	63	President and CEO, U.S. Cellular		​	​	​
Christopher D. O'Leary	2006	57	Executive Vice President, Strategic Advisor, General Mills Inc.	x	x	C
George W. Off	1997	70	Former Chairman and CEO of Checkpoint Systems,   Inc.	x	C	x	​
Mitchell H. Saranow*	2004	71	Chairman of The Saranow Group   LLC	x	FE		x
Gary L. Sugarman*	2009	64	Managing member-Richfield Capital Partners	x	​	x	​
David A. Wittwer	2014	56	President and CEO, TDS Telecom	​	​	​	​
*To be elected by Common Shares     C - Chairperson    FE - Designated Financial Expert as such term is defined by the SEC

Proposal 2 – Independent Public Accountant

 

As a matter of good corporate governance and consistent with our past practices, we are requesting shareholders to ratify the selection of PricewaterhouseCoopers   LLP as our independent registered public accounting firm for the fiscal year ending December   3 1, 2017 . The board of directors unanimously recommends that you vote "FOR" this proposal.

Proposal 3 – Approve the Telephone and Data Systems, Inc. Incentive Plan

We are adopting the Telephone and Data Systems, Inc. Incentive Plan and requesting shareholders to approve the plan, including the material terms of the performance measures to be used for certain incentive compensation awards under the plan, so that certain compensation paid under the plan may qualify as performance-based compensation and be deductible under Section   162(m) of the Internal Revenue Code.

Proposal 4 – Approve, on an advisory basis, the compensation of named executive offic ers ( " Say on Pay " )

 

Executive Compensation Programs Our executive compensation programs are designed to attract and retain high-quality executives. We believe that our compensation practices are transparent and reflect our commitment to align compensation with our business strategy and our short- and long-term performance. Introduced  Performance Share Awards In response to feedback from shareholders, beginning  in 2016 the Compensation Committee added Performance Share awards to the long-term equity mix f or senior executives.   Return on Capital, Total Revenue and Relative Total Shareholder Return will be measured over a three year performance period with a target opportunity in TDS Common shares equal to 0% to 200% based on performance.

Compensation Beli efs Compensation should be attractive and fiscally responsible   Compensation is a mix of salary, cash bonuses and equity-based long-term incentive awards   Link individual compensation with attainment of individual performance goals and with attainment of b usiness unit and TDS objectives Compensation programs designed to motivate executive officers to act in the long-term interests of TDS   Compensation Committee utilizes services of both an independent compensation consultant (Compensation Strategies) and TD S' compensation consultant (Willis Towers Watson)   Few perquisites

 

Proposal 5 – Advisory Vote on Frequency of Say-on-Pay Votes or Say-on-Frequency

 

As required by Dodd-Frank, p rovide an advisory vote on whether future Say-on-Pay votes should be held every year, every two years or every three years (commonly known as Say-on-Frequency).   The board of directors unanimously recommends that you vote for holding future Say-on-Pay votes " EVERY YEAR " .

Proposal 6 – Shareholder Proposal

 

As required by the rul es of the SEC, the 2017 Proxy Statement includes a proposal submitted by a shareholder of TDS calling for the board of directors to take steps to adopt a plan for all of TDS' outstanding stock to have one vote per share. The board of directors unanimously recommends that you vot e "AGAINST" this proposal.

 

Communicating with Board of Directors Any interested party with germane matters can communicate with an individual director or the full Board of Directors by sending a letter to TDS Board of Directors, c/o Corporate Secretary, TDS, 30 N. LaSalle Street, Suite   4000, Chicago, IL 60602.

Governance Documents Governance documents, such as the Corporate Governance Guidelines, the Board Committee Charters, and the Officer   & Director Code of Conduct can be found in the Corporate Governance section of investors.tdsinc.com.   These documents are also available at no cost by writing the Corporate Secretary, TDS, 30 N. LaSalle Street, Suite   4000, Chicago, IL 60602.

 

 

NOTICE OF   2017 ANNUAL MEETING OF SHAREHOLDERS AND 2017 PROXY STATEMENT

 

TO THE SHAREHOLDERS OF

TELEPHONE AND DATA SYSTEMS,   INC.

 

The 2017 Annual Meeting of Shareholders (" 2017 Annual Meeting") of Telephone and Data Systems,   Inc., a Del aware corporation, will be held at The Standard Club, 320 S. Plymouth Court, Chicago, Illinois, on Thursday , May 25, 2017 , at 9:00   a.m., central time, for the following pur poses:

1. To elect members of the board of directors nominated by your board of directors and named in this proxy statement. Your board of directors unanimously recommends that you vote FOR the directors nominated by the TDS board of directors.
2. To consider an d ratify the selection of PricewaterhouseCoopers   LLP as our independent registered public accountants for the year ending December   31, 2017 . Your board of directors unanimously recommends that you vote FOR this proposal.
3. To approve the Telephone and Data Systems, Inc. Incentive Plan.
4. To approve, on an advisory basis, the compensation of our named executive officers as disclosed herein (commonly known as "Say-on-Pay"). Your board of directors unanimously recommend s that you vote FOR the Say-on-Pay proposal.
5. To approve, on an advisory basis, the Say-on-Pay frequency.  Your board of directors unanimously recommends that you vote EVERY YEAR on the Say-on-Pay frequency proposal.
6. If properly presented at the 2017 Annual Meeting, to consider and vote upon a proposal submitted by a shareholder of TDS calling for the board of directors to take steps to adopt a plan for all of TDS' outstanding stock to have one vote per share. Your b oard of directors unanimously recommends that you vote AGAINST this proposal.
7. To transact such other business as may properly be brought before the meeting or any postponement, adjournment or recess thereof by or at the direction of the TDS board of directors.

We have fixed the close of business on March 29, 2017, as the record date for the determination of shareholders entitled to notice of, and to vote at, the 2017 Annual Meeting or any adjournments thereof.

We are first sending this Notice of 2017 Annual Meeting of Shareholders and 2017 Proxy Statement (" 2017 Proxy Statement"), togeth er with our 2016 Annual Report to Shareholders (" 2016 Annual Report"), on or about April 12, 2017 to shareholders who are receiving a paper copy of the proxy materials. We made arrangements to commence mailing a Notice of Internet Availability of Proxy Materials on or about April 12, 2017 to other shareholders as discussed below.

IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 25, 2017

 

The following information about the Internet availability of proxy mat erials is being provided under Rule   14a-16 of the Securities and Exchange Commission ("SEC"):

Effective as of April 12, 2017 , the following documents are available at www.tdsinc.com under Investo r Relations—Proxy Vote, or at investors.tdsinc.com/proxyvote:

 

1.    2017 Proxy Statement

2.    2016 Annual Report

3.    Forms of Proxy Cards

4.    Notice of Internet Availability of Proxy Materials

Under SEC rules, proxy materials are being furnished to many of our shareholders via the Internet, instead of mailing printed copies of those materials to each shareholder. Beginning April 12, 2017 , TDS made arrangements to commence sending certain shareholders a Notice of Internet Availability of Proxy Materials (the "Notice") containing instructions on how to access our proxy materials, including our 2017 Proxy Statement and 2016 Annual Report. The Notice also instructs shareholders on how to vote through the Internet.

This process is designed to reduce the environmental impac t and expense associated with our annual meeting and help conserve resources. However, if a shareholder prefers to receive printed proxy materials at no additional cost, on a one-time or ongoing basis, instructions for doing so are included in the Notice o r at investors.tdsinc.com/proxyvote.

If you have previously elected to receive our proxy materials electronically or in paper format, you will continue to receive these materials in accordance with your election until you elect otherwise.

We encourage you to formally consent to receive all proxy materials electronically in the future. If you wish to receive these materials electronically next year, please follow the instructions at investors.tdsinc.com/proxyvote.

 

If you received a Notice, any control/ident ification numbers that you need to access the proxy materials and vote are set forth on your Notice.

If you received printed materials, any control/identification numbers that you need to vote are set forth on your proxy card(s) if you are a record holder, or on your voting instruction card if you hold shares through a broker, dealer or bank.

In addition, all additional soliciting materials sent to shareholders or made public after this Notice has been sent will be made publicly accessible at the above webs ite address no later than the day on which such materials are first sent to shareholders or made public.

The location where the 2017 Annual Meeting will be held is The Standard Club in Chicago, Illinois. This is located in the Chicago loop area between Jackson Boulevard and Van Buren Street at 320 South Plymouth Court, which is between State Street and Dearborn Street.

TELEPHONE AND DA TA SYSTEMS,   INC .

2017 PROXY STATEMENT

TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS		2
PROPOSAL 1: ELECTION OF DIRECTORS		9
CORPORATE GOVERNANCE		18
EXECUTIVE OFFICERS		27
PROPOSAL 2: INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		29
FEES PAID TO PRINCIPAL ACCOUNTANTS		30
AUDIT COMMITTEE REPORT		30
PROPOSAL 3: APPROVE THE TELEPHONE AND DATA SYSTEMS, INC. INCENTIVE PLAN		32
PROPOSAL 4: ADVISORY VOTE ON EXECUTIVE COMPENSATION		35
PROPOSAL 5: ADVISORY VOTE ON FREQUENCY OF SAY-ON-PAY VOTES		36
EXECUTIVE AND DIRECTOR COMPENSATION		37
Compensation Discussion and Analysis		37
Compensation Committee Report		57
Risks from Compensation Policies and Practices		58
Compensation Tables		59
2016 Summary Compensation Table		60
2016 Grants of Plan-Based Awards		66
2016 Outstanding Equity Awards at Fiscal Year-End		71
2016 Option Exercises and Stock Vested		76
2016 Nonqualified Deferred Compensation		79
2016 Table of Potential Payments upon Termination or Change in Control		85
2016 Director Compensation		88
Compensation Committee In terlocks and Insider Participation		90
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS		92
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		93
SECTION   16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE		97
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		97
PROPOSAL 6: SHAREHOLDER PROPOSAL THAT IS OPPOSED BY THE BOARD OF DIRECTORS		97
SHAREHOLDER PROPOSALS FOR 2018 ANNUAL MEETING		98
SOLICITATION OF PROXIES		99
FINANCIAL AND OTHER INFORMATION		99
FORWARD LOOKING STATEMENTS		99
OTHER BUSINESS		99

QUESTIONS AND ANSWERS

The following are questions and answers relating to the actions being taken at the 2017 Annual Meeting and do not include all of the information that may be important to you. You should carefully read this entire 2017 Proxy Statement and not rely solely on the following questions and answers.

Proposal 1—Election of Directors

Under TDS' Restated Certificate of Incorporation, as amended, the terms of all incumbent directors w ill expire at the 2017 Annual Meeting.

Holders of Series   A Common Shares and Preferred Shares, voting as a group, will be entitled to elect eight directors. Your board of directors has nominated the following incum bent directors for election by the holders of Series   A Common Shares and Preferred Shares: LeRoy T. Carlson, Jr., Letitia G. Carlson, MD, Prudence E. Carlson, Walter C. D. Carlson, Kenneth R. Meyers, Christopher D. O'Leary, George W. Off and David A. Wittw er.

Holders of Common Shares will be entitled to elect four directors. Your board of directors has nominated the following  directors for election by the holders of Common Shares: Clarence A. Davis, Kim D. Dixon, Mitchell H. Saranow and Gary L. Sugarman.

N one of the nominees have been nominated pursuant to any agreement or other arrangement. Clarence A. Davis and Gary L. Sugarman were initially nominated for election as directors in 2009 pursuant to a Settlement Agreement, which we refer to as the "Settleme nt Agreement," between TDS and GAMCO Asset Management,   Inc. which we refer to, together with its affiliates, as "GAMCO," but the obligations thereunder expired in 2010. Nevertheless, the TDS board of directors has continued to nominate Clarence A. Davis an d Gary L. Sugarman as directors of TDS at subsequent annual meetings, including at the 2017 Annual Meeting, as discussed below.

Your board of directors unanimously recommends that you vote FOR its nominees for elec tion as directors on the enclosed proxy card(s), including its nominees for election by the holders of Common Shares.

Proposal 2—Ratification of Independent Registered Public Accounting Firm for 2017

As in prior ye ars, shareholders are being asked to ratify PricewaterhouseCoopers   LLP as our independent registered public accounting firm for the year ending December 31, 2017 .

Your board of directors unanimously recommends that you vote FOR this proposal.

Proposal 3—Approve the Telephone and Data Systems, Inc. Incentive Plan

We are adopting the Telephone and Data Systems, Inc. Incentive Plan and requesting shareholders to approve the plan, including the material terms of the performance measures to be used for certain incentive compensation awards under the plan, so that certain compensation paid under the plan may qualify as performance-based compensation and be deductible under Sect ion   162(m) of the Internal Revenue Code.

Your board of directors unanimously recommends that you vote FOR this proposal.

Proposal 4 —Advisory Vote on Executive Compensation or "Say-on-Pay"

As required by the Dodd - Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), at the 2017 Annual Meeting shareholders are being asked to approve, on an advisory basis, the compensation of our named executive officer s for 2016 as disclosed in this 2017 Proxy Statement.

Your board of directors unanimously recommends that you vote FOR this proposal.

Proposal   5 —Advisory Vote on Frequency of Say-on-Pay Votes or "Say-on-Frequency"

As required by the Dodd-Frank Act, shareholders are being asked to vote to advise whether future Say-on-Pay votes should be held every one, two or three years.        

Your board of directors unanimously recommends tha t you vote for holding future Say-on-Pay votes EVERY YEAR .

Proposal 6 —Proposal Submitted by a Shareholder

As required by the rules of the SEC, this 2017 Proxy Statement includes a proposal submitted by a shareholder of TDS calling for the board of directors to take steps to adopt a plan for all of TDS' outstanding stock to have one vote per share.

Your board of directors unanimously recommends that you vote AGAINST this proposal.

What is the record date for the meeting?

The close of business on March 29, 2017 is the record date for the determination of shareholders entitled to notice of, and to vote at, the 2017 Annual Mee ting or any postponement, adjournment or recess thereof.

A complete list of shareholders entitled to vote at the 2017 Annual Meeting, arranged in alphabetical order and by voting group, showing the address of and n umber of shares held by each shareholder, will be made available at the offices of TDS, 30 North LaSalle Street, 40th   Floor, Chicago, Illinois 60602, for examination by any shareholder, for any purpose germane to the 2017 Annual Meeting, during normal business hours, for a period of at least ten days prior to the 2017 Annual Meeting.

What shares of stock entitle holders to vote at the meeting?

We have the following classes o f stock outstanding, each of which entitles holders to vote at the meeting:

•     Common Shares;
•     Series   A Common Shares; and
•     Preferred Shares.

The Common Shares are listed on the New York Stock Exchange ("NYSE") under the symbol "TDS."

There is generally no public trading of the Series   A Common Shares on the over-the-counter market, but the Series   A Common Shares are convertible on a share-for-share basis into Common Shares, which are publicly-traded on the NYSE.

No public market exists for th e Preferred Shares. The Preferred Shares are not convertible into any class of common stock and will be redeemed in April 2017 .   All holders of Preferred Shares vote together with the holders of Common Shares and Series   A Common Shares, except in the elect ion of directors. In the election of directors, all holders of Preferred Shares vote together with the holders of Series   A Common Shares.

What is the voting power of the outstanding shares in the election of directors?

The following shows information relat ing to the outstanding shares and voting power of such shares in the election of directors as of the record date of March 29, 2017 :

 

Class of Stock	Outstanding Shares		Votes per Share		Voting Power		Total Number of Directors Elected by Voting Group and Standing for Election
Series   A Common Shares	7,228,556		10		72,285,560
Preferred Shares	8,228		1		8,228
Subtotal					72,293,788		8
Common Shares	102,982,175		1		102,982,175		4
Total Directors							12

 

Accordingly, holders of Series   A Common Shares and Preferred Shares, voting as a group, will be entitled to elect eight directors and holders of Common Shares will be entitled to elect four directors.

Director Voting Sunset Provision   

As noted above, holders of Series   A Common Shares and Preferred Shares, on the one hand, and holders of Common Shares, on the other hand, currently vote separately in the election of directors. However, pursuant to the Restated Charter (as defined below), if the number of Series   A Common Shares issued and outstanding at any time falls below 500,000, because of the conversion of Series   A Common Shares into Common Shares or otherwise, th e holders of Series   A Common Shares would lose the right to vote as a separate class (together with the holders of any outstanding Preferred Shares which have voting rights), and thereafter the holders of Series   A Common Shares, with ten votes per share, a nd the holders of Common Shares, with one vote per share, (together with the holders of any outstanding Preferred Shares which have voting rights), would vote as a single class in the election of all directors. 

What is the voting power of the outstanding shares in matters other than the election of directors?

The following shows information relating to the outstanding shares and voting power of such shares in matters other than the election of directors as of the record date of March 29, 2017 :

Class of Stock	Outstanding Shares		Votes per Share		Total Voting Power		Percent
Series   A Common Shares	7,228,556		10		72,285,560		56.7%
Common Shares	102,982,175		0.535693		55,166,830		43.3%
Preferred Shares	8,228		1		8,228		*
					127,460,618		100%
* Less than .1%

 

Pursuant to the Restated Certificate of Incorporation for TDS (the "Restated Charter"), which effected a reclassification of TDS shares during 2012 (the "Reclassification"), the aggregate voting power of Series   A Common Shares and Common Shares in matters other than the election of directors was set at approximately 56.7% and 43.3% , respectively. The initial percentages will be adjusted under certain circumstances, except that the aggregate voting percenta ge of the Series   A Common Shares cannot increase above the initial fixed percentage voting power of approximately 56.7% .

Based on shares outstanding on March 29, 2017 , the per share votin g power of the Common Shares for the 2017 Annual Meeting is .535693 votes per share, calculated pursuant to Section   B.9 of Article   IV of the Restated Charter. See the Restated Charter which explains how the relative voting percentages are calculated.

Voting Power Sunset Provision

As noted above, the aggregate voting power of Series   A Common Shares in matters other than the election of directors can be adjusted, but cannot increase above approximately 56.7% . However, this percentage could decrease. For inst ance, this could occur if holders of Series   A Common Shares convert such shares into Common Shares in order to be able to sell such shares on the NYSE. Accordingly, the Restated Charter effectively has a sunset provision for voting in matters other than th e election of directors because, if a sufficient number of Series   A Common Shares are converted into Common Shares, the voting power of Series   A Common Shares could decline below 50%.

How may shareholders vote with respect to the election of directors in P roposal 1?              

Shareholders may, with respect to directors to be elected by such shareholders:

• vote FOR the election of such director nominees, or
• WITHHOLD authority to vote for such director nominees.

Your board of directors unanimously recommends a v ote FOR its nominees for election as directors.

How may shareholders vote with respect to the ratification of our independent registered public accounting firm for 2017 in Proposal 2?

Shareholders may, with respect to Proposal 2:

• vote FOR,
• vote AGAINST, or
• ABSTAIN from voting on this proposal.

Your board of directors unanimously recommends a vote FOR this proposal.

How may shareholders vote with respect to the approval of the Telephone and Data Systems, Inc. Inc entive Plan in Proposal 3?

Shareholders may, with respect to Proposal 3:

• vote FOR,
• vote AGAINST, or
• ABSTAIN from voting on this proposal.

Your board of directors unanimously recommends a vote FOR this proposal.

How may shareholders vote with respect to Say-on-Pay in Proposal 4 ?

Shareholders may, with respect to Proposal 4 :

• vote FOR,
• vote AGAINST, or
• ABSTAIN from voting on this proposal.

Your board of directors unanimously recommends a vote FOR this proposal.

How may shareholders v ote with respect to Say-on-Frequency in Proposal   5 ?

Shareholders may, with respect to Say-on-Frequency in Proposal   5 , vote for the Say-on-Pay vote to be held:

• Every year , or
• Every two years , or
• Every three years , or
• ABSTAIN from voting on this proposal.

Your board of directors unanimously recommends a vote for holding future Say-on-Pay votes EVERY YEAR .

How may shareholders vote with respect to the shareholder proposal in Proposal 6 ?

  Shareholders may, with respect to Proposal 6 :

• vote FOR,
• vote AGAINST, or
• ABSTAIN from voting on this proposal.

Your board of directors unanimously recommends a vote AGAINST this proposal.

How does the TDS Voting Trust intend to vote?

The Voting Trust under Agreement dated June   30, 1989, as amended (the "TDS Voting Trust" ), held 6,848,246 Series   A Common Shares on the record date, representing approximately 94.7% of the Series   A Common Shares. By reason of such holding, the TDS Voting Trust had the voting power to elect all of the directors to be elected by the holders of Series   A Common Shares and Preferred Shares and had approximately 53.7% of the voting power with respect to matters other than the election of directors. The TDS Voting Trust al so held 6,163,389 Common Shares on the record date, representing approximately 6.0% of the Common Shares. By reason of such holding, the TDS Voting Trust had approximately 6.0% of the voting power with respect to the election of directors elected by the holders of Common Shares and an additional 2.6% of the voting power in matters other than the election of directors. Accordingly, the TDS Voting Trust had an aggregate of 56.3% of the voting power in matters other than the election of directors. The TDS Voting Trust does not currently own Preferred Shares.

The TDS Voting Trust has advised us that it intends to vote:

• FOR the board of directors' nominees for election by the holder s of Series   A Common Shares and Preferred Shares, and FOR the board of directors' nominees for election by the holders of Common Shares,
• FOR the proposal to ratify the selection of PricewaterhouseCoopers   LLP as our independent registered public accounting firm for 2017 ,
• FOR the approval of the Telephone and Data Systems, Inc. Incentive Plan,
• FOR the Say-on-Pay proposal,
• for holding future Say-on-Pay votes EVERY YEAR, and
• AGAINST the shareholder proposal.

How do I vote?

Proxies are being requested from the holders of Common Shares in connection with the election of four directors in Proposal 1 and in connection with Proposals 2, 3 , 4 , 5 and 6 .

Proxies are being requested from the holders of Series   A Common Shares and Preferred Shares in connection with the election of eight directors in Proposal 1 and in connection with Proposals 2, 3 , 4 , 5 and 6 .

Whether or not you plan to attend the meeting, please sign, date and mail your proxy card(s) in the enclosed self-addr essed envelope to Proxy Services, c/o Computershare Trust Company, N.A., P.O.   Box   30170, College Station, TX 77842-3170, or vote on the Internet using the control/identification number on your proxy card in accordance with the instructions set forth on the proxy card.

How will proxies be voted?

All properly voted and unrevoked proxies received in the enclosed form in time for our 2017 Annual Meeting will be voted in the manner directed.

If no direction is made, a proxy given by any shareholder will be voted FOR the election of the board of directors' nominees to serve as directors in Proposal 1, FOR Proposal 2, FOR Proposal 3 , FOR Proposal 4, for holding Say-on-Pay votes EVERY YEAR in Pro posal 5 and AGAINST Proposal 6 .

If a proxy indicates that all or a portion of the votes represented by such proxy are not being voted or abstained with respect to a particular matter, and the shareholder giving such proxy does not attend the 2017 Annual Meeting, such "non-votes" will not be considered present and entitled to vote on such matter. However, the shares represented by such a proxy may be considered present and entitled to vote on other matters and will c ount for the purpose of determining the presence of a quorum.

Proxies given pursuant to this solicitation may be revoked at any time prior to the voting of the shares at the 2017 Annual Meeting by written notice to the Secretary of TDS, by submitting a later dated proxy or by attendance and voting in person at the 2017 Annual Meeting.

The board of directors has no knowledge of any other proposals that may be properly present ed at the 2017 Annual Meeting and no other proposals were received by TDS by the date specified by the advance notice provision in TDS' Bylaws. The proxy solicited by the board of directors for the 2017 Annual Meeting confers discretionary authority to the proxies named therein to vote on matters that may properly come before such meeting or any postponement, adjournment or recess thereof, in addition to the foregoing proposals, to the extent permitted by Rule   14a-4(c) under the Securities Exchange Act of 1934, as amended.

How will my shares be voted if I own shares through a broker?

If you are the beneficial owner of shares held in "street name" by a broke r, bank, or other nominee ("broker"), such broker, as the record holder of the shares, is required to vote those shares in accordance with your instructions.

  In the event that there are no contested matters at the meeting, the broker may be entitled to vo te the shares with respect to "discretionary" items but will not be permitted to vote the shares with respect to "non-discretionary" items (in which case such shares will be treated as non-votes). In addition, whether the broker can or will vote your share s with respect to discretionary items if you have not given instructions to the broker and how such shares may be voted by the broker (i.e.,   proportionately with voting instructions received by the broker from other shareholders or pursuant to the recommen dation of management, etc.) depend on the particular broker's policies. As a result, we cannot advise you whether your broker will or will not vote your shares or how it may vote the shares if it does not receive or have voting instructions from you and, a ccordingly, recommend that you contact your broker. In general, the ratification of auditors is a discretionary item. On the other hand, matters such as the election of directors, votes on Say-on-Pay, Say-on-Frequency, the approval of an equity compensatio n plan, and shareholder proposals are non-discretionary items. In such cases, if your broker does not have specific or standing instructions, your shares will be treated as non-votes and may not be voted on such matters.

Accordingly, we urge you to provide instructions to your broker so that your votes may be counted on all matters. If your shares are held in street name, your broker will include a voting instruction form with this 2017 Proxy Statement. We strongly encourage you to vote your shares by following the instructions provided on the voting instruction form. Please return your voting instruction form to your broker and/or contact your broker to ensure that a proxy card is voted on your behalf.

What constitu tes a quorum for the meeting?

A majority of the voting power of shares of capital stock in matters other than the election of directors and entitled to vote, represented in person or by proxy, will constitute a quorum to permit the 2017 Annual Meeting to proceed. Withheld votes and abstentions of shares entitled to vote and any non-votes will be treated as present in person or represented by proxy for purposes of establishing a quorum for the meeting. If such a quor um is present or represented by proxy, the meeting can proceed. If the shares beneficially owned by the TDS Voting Trust are present in person or represented by proxy at the 2017 Annual Meeting, such shares will co nstitute a quorum at the 2017 Annual Meeting to permit the meeting to proceed. In addition, where a separate vote by a class or group is required with respect to a proposal, a quorum is also required with respect to such proposal for the vote to proceed with respect to such proposal.

In the election of directors, where a separate vote by a class or voting group is required, the holders of a majority of the votes of the stock of such class or group issued and outstanding and entitled to vote with respect to such director election, prese nt in person or represented by proxy, will constitute a quorum with respect to such election. Withheld votes by shares entitled to vote with respect to a director election and non-votes with respect to such director election will be treated as present in p erson or represented by proxy for purposes of establishing a quorum for such director election. If Series   A Common Shares beneficially owned by the TDS Voting Trust are present in person or represented by proxy at the 2017 Annual Meeting, such shares will constitute a quorum at the 2017 Annual Meeting in connection with the election of directors by the holders of Series   A Common Shares and Preferred Shar es. If a quorum of the holders of Common Shares is not present at the time the 2017 Annual Meeting is convened, the chairman of the meeting or holders of a majority of the voting power in matters other than the ele ction of directors represented in person or by proxy may adjourn the 2017 Annual Meeting with respect to all proposals or only with respect to the election of directors by the holders of Common Shares.

With respect to Proposals 2, 3 , 4, 5 and 6 , the holders of a majority of the votes of the stock issued and outstanding and entitled to vote with respect to such proposals, present in person or represented by proxy, will constitute a quorum at the 2017 Annual Meeting in connection with such proposals. Abstentions from voting on such proposals by shares entitled to vote on such proposals and any non-votes with respect to such proposals will be treated as present in person or represented by proxy for purposes of establishing a quorum for such proposals. If TDS shares beneficially owned by the TDS Voting Trust are present in person or represented by proxy at the 2017 Annual Meeting, such shares will constitute a quorum at the 2017 Annual Meeting in connection with such proposals.

Even if a quorum is present, holders of a majority of the voting stock present in person or represented by proxy may adjourn the 2017 Annual Meeting. Because it holds a majority of the voting power of all classes of stock, the TDS Voting Trust has the voting power to approve an adjournment. TDS does not currently have any expectation that the 2017 Annual Meeting would be adjourned for any reason.

What vote is required to elect directors in Proposal 1?

The holders of Common Shares will vote separately with respect to the election of four directors. The holders of Series   A Common Shares and Preferred Shares will vote separately with respect to the election of eight directors.

Directors will be elected by a plurality of the votes cast in the election of directors by the class or gro up of shareholders entitled to vote in the election of such directors which are present in person or represented by proxy at the meeting.

Accordingly, if a quorum exists, the persons receiving a plurality of the votes cast by shareholders entitled to vote with respect to the election of such directors will be elected to serve as directors. Withheld votes and any non-votes with respect to the election of such directors will not be counted as votes cast for the purpose of determining if a director has receive d a plurality of the votes.

In the election of directors by holders of Common Shares, each holder of outstanding Common Shares is entitled to one vote for each Common Share held in such holder's name. In the election of directors by holders of Series   A Com mon Shares and Preferred Shares, each holder of outstanding Series   A Common Shares is entitled to ten votes for each Series   A Common Share held in such holder's name and each holder of outstanding Preferred Shares is entitled to one vote for each Preferred Share held in such holder's name. 

What vote is required with respect to Proposals 2, 3 , 4 and 6 ?

The holders of Common Shares, Preferred Shares and Series   A Common Shares will vote together as a single group with respect to Proposals 2, 3 , 4 and 6 . Base d on shares outstanding on March 29, 2017 , each holder of outstanding Common Shares was entitled to .535693 vote for each Common Share held in such holder's name. Each holder of outstanding Series   A Common Shares i s entitled to ten votes for each Series   A Common Share held in such holder's name. Each holder of outstanding Preferred Shares is entitled to one vote for each Preferred Share held in such holder's name.

If a quorum is present at the 2017 Annual Meeting, the approval of Proposals 2, 3 , 4 and 6 will require the affirmative vote of the holders of stock having a majority of the votes which could be cast by the holders of all stock entitled to vote on such question whic h are present in person or represented by proxy at the meeting. Abstentions by shares entitled to vote on such proposals will be treated as votes which could be cast that are present for such purposes and, accordingly, will effectively count as a vote cast against such proposal. Any non-votes with respect to such proposals will not be included in the total of votes which could be cast which are present for purposes of determining whether such proposals are approved, even though they may be included for purp oses of determining a quorum.

What vote is required with respect to Proposal 5 ?

The holders of Common Shares, Preferred Shares and Series   A Common Shares will vote together as a single group with respect to Proposal 5 . Based on shares outstanding on March 29, 2017 , each holder of outstanding Common Shares was entitled to 1 vote for each Common Share held in such holder's name. Each holder of outstanding Series   A Common Share s is entitled to ten votes for each Series   A Common Share held in such holder's name. Each holder of outstanding Preferred Shares is entitled to one vote for each Preferred Share held in such holder's name.

If a quorum is present at the 2017 Annual Meeting, the frequency receiving a plurality of the votes cast by shareholders entitled to vote with respect to Proposal 5 will be considered to be the shareholders’ recommendation as to the frequency of future Say-on-Pay votes. Abstentions and broker non-votes with respect to Proposal 5 will not be counted as votes cast for purposes of Proposal 5 .

What does it mean if I receive more than one proxy card?

If you hold multiple series of shares, or hold shares in multiple registrations, you will receive a proxy card for each such account. Please sign, date, and return all proxy cards you receive as described above. If you choose to vote by Internet, please vo te each proxy card you receive. Only your latest dated proxy for each account will be voted at the 2017 Annual Meeting.

Can I change my vote or revoke my proxy?

Yes. You can change your vote or revoke your proxy at any time before it is voted at the 2017 Annual Meeting by written notice to the Secretary of TDS, by voting a later-dated proxy or by voting by ballot at the me eting.

Only the latest dated proxy card you vote will be counted for voting purposes.

Who pays the solicitation expenses for this 2017 Proxy Statement and related TDS materials?

TD S does. Your proxy is being solicited by the TDS board of directors and its agents, and the cost of solicitation will be paid by TDS. Officers, directors and regular employees of TDS, acting on the behalf of the TDS board of directors, may also solicit pro xies by mail, email, advertisement, telephone, telecopy, press release, employee communication, postings on TDS' Internet website and Intranet website or in person. We will not pay such persons additional compensation for their proxy solicitation efforts. TDS has also retained MacKenzie Partners,   Inc. to assist in the solicitation of proxies. TDS will, at its expense, request brokers and other custodians, nominees and fiduciaries to forward proxy soliciting material to the beneficial owners of shares held o f record by such persons.

Who should I call if I have any questions?

If you have any questions, or need assistance voting, please contact our proxy solicitor, MacKenzie Partners,   Inc. at (800)   322-2885 (Call Toll Free) or (212)   929-5500 (Call Collect) or by email to TDS@mackenziepartners.com . 

PROPOSAL 1
ELECTION OF DIRECTORS

 

The terms of all incumbent directors will expire at the 2017 Annual Meeting. The board of directors' nominees for election of directors are identified in the tables below. Each of the nominees has consented to be named in the 2017 Proxy Statement and consented to serve if e lected. The age of the following persons is as of the date of this 2017 Proxy Statement.

To be Elected by Holders of Common Shares

 

Name		Age		Position with TDS and Principal Occupation		Served as Director since
Clarence A. Davis		75		Director of TDS, Former Director and Chief Executive Officer of Nestor,   Inc.		2009
Kim D. Dixon		54		Nominee for Director of TDS, Executive Vice President and Chief Operating Officer of FedEx Office, an operating company of FedEx Corp.		N/A
Mitchell H. Saranow		71		Director of TDS and Chairman of The Saranow Group, L.L.C.		2004
Gary L. Sugarman		64		Director of TDS, Managing Member—Richfield Capital Partners and Principal of Richfield Associates,   Inc.		2009

 

Your board of directors unanimously recommends a vote "FOR" the election of each of the above nominees for election by the holders of Common Shares on the enclosed proxy card(s).

To be Elected by Holders of S eries   A Common Shares and Preferred Shares

Name		Age		Position with TDS and Principal Occupation		Served as Director Since
LeRoy T. Carlson, Jr.		70		Director and President and Chief Executive Officer of TDS		1968
Letitia G. Carlson, MD		56		Director of TDS and Physician and Associate Clinical Professor at George Washington University Medical Faculty Associates		1996
Prudence E. Carlson		65		Director of TDS and Private Investor		2008
Walter C. D. Carlson		63		Director and non-executive Chairman of the Board of TDS and Partner, Sidley Austin   LLP, Chicago, Illinois		1981
Kenneth R. Meyers		63		Director of TDS and President and Chief Executive Officer of U.S. Cellular (a deemed executive officer of TDS)		2007
Christopher D. O'Leary		57		Director of TDS and Executive Vice President, Strategic Advisor, General Mills Inc.		2006
George W. Off		70		Director of TDS, Former Chairman and Chief Executive Officer of Checkpoint Systems, Inc.		1997
David A. Wittwer		56		Director of TDS and President and Chief Executive Officer of TDS Telecommunications Corporation (a deemed executive officer of TDS)		2014

 

Your board of directors unanimously recommends a vote "FOR" the election of each of the above nominees for election by the holders of Series   A Common Shares and Preferred Shares on the enclosed proxy card(s).

Background of Board of Directors' Nominees

The following briefly describes the business experience during at least the p ast five years of each of the nominees, including each person's principal occupation(s) and employment during at least the past five years; the name and principal business of any corporation or other organization in which such occupation(s) and employment were carried on; and whether such corporation or organization is a parent, subsidiary or other affiliate of TDS. The following also indicates any other directorships held, including any other directorships held during at least the past five years, by each nominee in any SEC registered company or any investment company, and the identity of such company.

In addition, the following also briefly discusses the specific experience, qualifications, attributes or skills that led to the conclusion that each such per son should serve as a director of TDS, in light of TDS' business and structure, including information about the person's particular areas of expertise or other relevant qualifications. Except as discussed below under "Director Nomination Process", TDS does not have any specific, minimum qualifications that the board believes must be met by a nominee for a position on the TDS board of directors, or any specific qualities or skills that the board believes are necessary for one or more of the TDS directors to possess. The TDS board believes that substantial judgment, diligence and care are required to identify and select qualified persons as directors. The TDS board has consistently sought to nominate to the board of directors eminently qualified individuals wh om the board believes would provide substantial benefit and guidance to TDS. Also, as discussed below under "Director Nomination Process", TDS believes that it is desirable for directors to have diverse backgrounds, experience, skills and other characteris tics. In addition, the conclusion of which persons should serve as directors of TDS is based in part on the fact that TDS is a controlled company with a capital structure in which different classes of stock vote for different directorships. In particular, as discussed under "Director Nomination Process", because the TDS Voting Trust has over 90% of the voting power in the election of directors elected by holders of Series   A Common Shares and Preferred Shares, nominations of directors for election by the hol ders of Series   A Common Shares and Preferred Shares are based on the recommendation of the trustees of the TDS Voting Trust.

Nominees for Election by Holders of Common Shares

Clarence A. Davis   Independent Director

Current Role:   Director Mr. Davis brings to the TDS board of directors substantial experience, expertise and qualifications as a director of TDS for several years, as a former director and chief executive officer of a public technology company, as a chief financial officer and chief operating of ficer of the American Institute of Certified Public Accountants (AICPA) and as a director or trustee of investment funds. In addition, he has substantial experience, expertise and qualifications in accounting as a result of having been a chief financial of ficer of the AICPA and a Certified Public Accountant in a public accounting firm for many years, and as a result of being or having been a member of six audit committees, including the TDS Audit Committee since 2010. Mr. Davis is a member of the board of d irectors of West Broad Street YMCA in Savannah, Georgia, and is named in Who's Who Among African Americans.  Mr. Davis has a Bachelor of Science degree in Accounting from Long Island University.		Age 75 Director since 2009, originally nominated by GAMCO TDS Board Committee Audit Committee, Designated financial expert Prior Business and other Experience Chief Executive Officer, Nestor, Inc. (2007-2009) * Chief Financial Officer, American Institute of Certified Public Accountants,  (1998-2000) Chief Operatin g Officer, American Institute of Certified Public Accountants (2000-2005)
Current Public Company Boards Gabelli Funds: (Gabelli Capital Asset Fund, since 2015 and Gabelli ESG Fund, since 2007) The GDL Fund (NYSE: GDL), since 200 7	Former Public Company B oards Nestor, Inc. (2006-2009)* Oneida, LTD (2005-2006) Pennichuck Corp. (2009-2012) Sonesta International Hotels (2009-2012)
*Within the last ten years, Nestor successfully petitioned the Rhode Island Superior Court for a court appointed receiver who assumed all aspects of the company’s operations in 2009.  The receiver sold the assets of Nestor to American Traffic Solutions in 2009.  Mr. Davis ceased to be a director of Nestor at that time.

 

Kim D. Dixon   Nominee for Independent Director

Current Role:   Executive Vice President and Chief Operating Officer of FedEx Office, an operating company of FedEx Corp., since 2010. Ms. Dixon brings substantial experience, expertise and qualifications from her executive leadership position at FedEx.  She has e xtensive operating and financial management experience.  Ms. Dixon has experience in consumer and business marketing, sales and distribution strategies.  Ms. Dixon also brings twenty years of experience in the telecommunications industry, and her experienc e in serving on the board of directors of James Avery Craftsman, Inc., a privately held jewelry designer, manufacturer and retailer.  Further, her background and attributes bring diversity to the board. Ms. Dixon has a Bachelor of Science from Shippensbur g University of Pennsylvania and an MBA from Pennsylvania State University.		Age 54 Prior Business and other Experience Sprint Nextel Corporation (1996-2010),  including several executive leadership positions most recently as Senior Vice President, Consumer Sales and Distribution GTE Wireless, Inc. (1989-1996), roles in marketing, sales and field operations
Current Public Company Boards None	Former Public Company Boards None

11

 

Mitchell H. Saranow   Independent Director

Current Role:   Director, Chairman of The Saranow Group, L.L.C. Mr. Saranow brings to the TDS board of directors substantial experience, expertise and qualifications as a director of TDS for many years, and as a result of his extensive background. Mr. Saranow is a Certified Public Accountant (inactive) and formerly was a senior lecturer in financial reporting and controls at Harvard Business School. He has been Chairman of the Saranow Group, L. L. C., a family - owned investment company, for more than five years.  He has been an attorney, accountant, and investment banker at multiple companies. Mr. Saranow has founded or co-founded, developed and sold several successful ventures. He has significant experience as CEO and CFO, respectively, of two public companies, and a s a director of five public companies, including TDS. He has been a member of the audit committees of all five of the companies on which he served as a director, and was designated an audit committee financial expert by two of such public companies, includ ing TDS. In addition, Mr. Saranow brings earlier experience from the cable television industry.  In addition, he has significant experience as a member of the TDS Corporate Governance and Nominating Committee for many years.  Mr. Saranow received his JD an d MBA degrees from Harvard Law School and Harvard Business School.		Age 71 Director since 2004 TDS Board Committees Audit Committee, Designated financial expert Corporate Governance and Nominating Committee Prior Business and other Experience Chairman, Su reTint Technologies, privately-held company,(2008-2013) Founder-Fluid Management, privately-held manufacturer Chief Financial Officer, CFS Continental (formerly OTC: CFS), Warburg, Paribas, Becker Co-Chief Executive Officer, Navigant Consulting (1999-2000 )
Current Public Company Boards None	Former Public Company Boards Navigant Consulting (1996-2000), Telular Corporation, North American Scientific and Lawson Products

Within the last ten years, Mr. Saranow served as chief executive officer of two related Dutch companies that were sold under Dutch insolvency laws in 2008.

Gary L. Sugarman   Independent Director

Current Role:  Director , Managing Member-Richfield Capital Partners and Principal of Richfield Associates, Inc. Mr. Sugarman brings to the TDS board of directors substantial experience, expertise and qualifications as a director of TDS for several years, and in the telecommunications industry as a result of his current positions at Otelco Inc. and LICT Corporation and his many years of prior experience with other companies in the telecommunications industry. He has been the Managing Member-Richfield Capital Partners and Principal of Richfield Associates, Inc. for twenty five years.  He is also currently an advisor and investor in Dezignable, I nc., an online interior design company.  Prior to that he was executive chairman of FXecosystem, Inc., a provider of outsourced connectivity services to the foreign currency and bond markets, and executive chairman and investor of Veroxity Technology Partn ers, a provider of optical data and Internet protocol connectivity solutions to service enterprise customers.  He also was chairman and chief executive officer of Mid-Maine Communications, a telecommunications company that he co-founded. In addition, he ha s experience as a member of the TDS Compensation Committee since 2010.  Mr. Sugarman has an MBA from the University at Buffalo-State University of New York.		Age 64 Director since 2009, originally nominated by GAMCO TDS Board Committee Compensation Committee Prior Business and other Experience Executive Chairman, FXecosystem (2010-2013) Executive Chairman/Investor- Veroxity Technology Partners , privately held company (2007-2010) PrairieWave Communications, privately-held over-builder providing telec ommunications  (2003-2007) Chairman and Chief Executive Officer, Mid-Maine Communications (1994-2006) LICT Corporation (1991-1993) Multiple operating roles at Rochester Telephone Company, (now known as Frontier) (1984-1991)
Current Public Company Boards OTELCO Inc. (NASDAQ: OTEL), since 2013 LICT Corporation (OTC:LICT), since 2006	Former Public Company Boards None

 

Your board of directors unanimously recommends a vote "FOR" each of the above nominees for election by the holders of Common Shares.

Nominees for Election by Holders of Series A Common Shares and Preferred Shares

LeRoy T. Carlson, Jr.   President, CEO and Non-Independent Director

Current Role:   Director; TDS President, since 1981, and Chief Executive Officer, since 1986 Mr. Carlson bring s to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS and its subsidiaries and the industries in which they operate as a result of his many years as an investor in TDS, a trustee of the TDS Voting Trust, a director and President and Chief Executive Officer of TDS, and a director and Chairman of its two principal business units. As the senior executive officer of TDS and each of its business units, the board of directors considers it essential that Mr. Carls on serve on the TDS board to provide the board with his views on strategy and operations of TDS and its business units. In addition, as a shareholder with a significant economic stake in TDS, Mr. Carlson provides to the TDS board of directors the perspecti ve of shareholders in managing and operating TDS in the long-term interests of shareholders. He also has experience as a member of the TDS Corporate Governance and Nominating Committee since 2004.  Mr. Carlson has an MBA from Harvard University. LeRoy T. C arlson, Jr. is the brother of Walter C. D. Carlson, Letitia G. Carlson, M.D. and Prudence E. Carlson.		Age 70 Director since 1968 TDS Board Committees Corporate Governance and Nominating Committee Technology Advisory Group Committee, Chairperson Prior Busi ness and other Experience Trustee of the Voting Trust
Current Public Company Boards U .S. Cellular , Chairman, since 1989	Former Public Company Boards Aerial Communications (formerly NASDAQ: AERL) American Paging (formerly AMEX: APP)

 

Letitia G. Carlson, MD , MPH, FACP   Non-Independent Director

Current Role:   Director; Physician and Associate Clinical Professor at George Washington University Medical Faculty Associates for more than five years Dr. Carlson brings to the TDS board of directors substantial exp erience, expertise and qualifications with respect to TDS and its subsidiaries and the industries in which they operate as a result of her many years as an investor in TDS, as a trustee of the TDS Voting Trust, and as a director of TDS. Further, her backgr ound and attributes bring diversity to the board. In addition, as a shareholder with a significant economic stake in TDS, Dr. Carlson provides to the TDS board of directors the perspective of shareholders in managing and operating TDS in the long-term inte rests of shareholders.  Dr. Carlson has an M D from Harvard Medical School, a Master of Public Health (MPH) from George Washington University and is a Fellow of the American College of Physicians (FACP). Dr. Carlson is the sister of LeRoy T. Carlson, Jr., W alter C. D. Carlson and Prudence E. Carlson.		Age 56 Director since 1996 Prior Business and other Experience Trustee of the Voting Trust
Current Public Company Boards None	Former Public Company Boards None

14

 

Prudence E. Carlson   Non-Independent Director

Current Role :  Director Ms.   Carlson brings to the TDS board of directors substantial experience , expertise and qualifications with respect to TDS and its subsidiaries and the industries in which they operate as a result of her many years as an investor in TDS, as a trustee of the TDS Voting Trust, and as a director of TDS. Further, her background and attributes bring diversity to the board. In addition, as a shareholder with a significant economic stake in TDS, Ms.   Carlson provides to the TDS board of direc tors the perspective of shareholders in managing and operating TDS in the long-term interests of shareholders. Ms. Carlson has a Bachelor of Arts degree from Harvard University. Ms.   Carlson is the sister of LeRoy T. Carlson, Jr., Walter C.D. Carlson and Le titia G. Carlson, M.D.		Age 65 Director since 2008 Prior Business and other Experience Trustee of the Voting Trust
Current Public Company Boards None	Former Public Company Boards None

 

Walter C. D. Carlson   Chairman of the Board and Non-Independent Director

Current Role:   Director; Partner of the law firm Sidley Austin LLP and a member of its executive committee for more than five years Mr. Carlson brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS and its subsidiaries and the industries in which they operate as a result of his many years as an investor in TDS, as a trustee of the TDS Voting Trust, as a director of TDS and U.S. Cellular, as Chairman of the Board of TDS, and as a result of hav ing represented many public and private corporate clients. In addition, as a shareholder with a significant economic stake in TDS, Mr. Carlson provides to the TDS board of directors the perspective of shareholders in managing and operating TDS in the long- term interests of shareholders. He also has experience as a member and the chairperson of the TDS Corporate Governance and Nominating Committee since 2004.  Mr. Carlson has a J.D. from Harvard University.  Walter C. D. Carlson is the brother of LeRoy T. C arlson, Jr., Letitia G. Carlson, M.D. and Prudence E. Carlson.		Age 63 Director since 1981, non-executive Chairman of the Board since 2002 TDS Board Committee Corporate Governance and Nominating Committee, Chair person Prior Business and other Experience Tr ustee of the Voting Trust
Current Public Company Boards U .S. Cellular , since 1989	Former Public Company Boards Aerial Communications, Inc. (formerly NASDAQ: AERL)

 

15

 

Kenneth R. Meyers   Non-Independent Director

Current Role:   Director; President and Chief Executive Officer of U.S. Cellular, since 2013 Mr. Meyers brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS and its subsidiaries and the industries in which they op erate as a result of his background as a director of TDS and U.S. Cellular for many years, as President and Chief Executive Officer of U.S. Cellular since 2013, as Executive Vice President and Chief Financial Officer of TDS between 2007 and 2013, and as a result of his many years in other positions at U.S. Cellular. He also brings substantial experience, expertise and qualifications in TDS' businesses and in management, finance and accounting as a result of such background. As the President and Chief Execut ive Officer of U.S. Cellular, TDS' largest business unit, the board of directors considers it appropriate and beneficial for Mr. Meyers to serve on the TDS board to provide the board with his views on strategy and operations of U.S. Cellular.  Mr. Meyers h as an MBA from Northwestern University’s J. L. Kellogg Graduate School of Management.		Age 6 3 Director since 2007 Prior Business and other Experience TDS’ executive vice president and chief financial officer (2007-2013) Former Director, TDS Telecom between 2007 and 2014 Significant leadership and operational experience since joining U.S. Cellular in 1987 including several executive leadership roles providing expertise in management, finance and accounting
Current Public Company Boards U .S. Cellular , since 1 999	Former Public Company Boards None

 

Christopher D. O’Leary   Independent Director

Current Role:   Director; Executive Vice President, Strategic Advisor, General Mills Inc.  and Former Chief Operating Officer International (2006-2016) Mr.   O'Leary brings to the TDS board of directors substantial experience, expertise and qualifications as a result of his many years as a director of TDS and as a result of his over 30   years of experience in marketing management.  In addition, Mr.   O'Leary has over 15   years of significant and high-level experience in management of large multi-national businesses with a large number of employees, including dealing with businesses outside the U.S. Because of the competitive nature of the TDS businesses, the TDS board of directors believes that it is highly desirable to have a director with significant knowledge and experience in marketing and executive leadership. In addition, Mr.   O'Leary has experience as a member of the TDS Compensation Committee for many years.  Mr. O’Leary has an MBA from New York University.		Age 5 7 Director since 2006 TDS Board Committees Audit Committee Compensation Committee, Chairperson since 2016 Technology Advisory Group Committee Prior Business and other Experience Previously president of the General Mills Meals and Betty Crocker divisions ; joined General Mills in 1997 Significant roles with leading consumer packaged goods providers, including PepsiCo (NYSE: PEP) (1980-1997)
Current Public Company Boards None	Former Public Company Boards Newell Rubbermaid (NYSE: NWL), member of Nominating/Governance Committee and Organizational Development & Compensation Committee

16

 

George W. Off Independent Director

Current Role:   Director Mr. Off brings to the TDS board of directors substantial experience, expertise and qualifications as a director of TDS for many years. He also has significant experience in marketing and management as a result of his prior positions as a director and as chief executive officer and chairman of Checkpoint Systems, Inc. and of Catalina Marketing Corporation. Because of the retail nature of the TDS businesses, the TDS board of directors believes that it is highly desirable to have a director with significant knowledge and experience in retail and marketing, as well as significan t, high-level experience in managing retail businesses. In addition, Mr. Off has significant experience as a member of the TDS Audit Committee and the TDS Compensation Committee for many years. Mr. Off has a Bachelor of Science degree from the Colorado Sch ool of Mines.		Age 70 Director since 1997 TDS Board Committees Audit Committee, Chairperson Compensation Committee Technology Advisory Group Committee Prior Business and other Experience Infinian Mobile Commerce & Analytic Solutions (2011-2012) Chief Execut ive Officer, Checkpoint Systems (2002-2009) President and Chief Executive Officer, Catalina Marketing Corporation (1994-1998)
Current Public Company Boards None	Former Public Company Boards Checkpoint Systems (2002-2009) Catalina Marketing Corporation (1998-2000)

Mr. Off, an incumbent director who was elected by the holders of Common Shares in 2016, is being nominated by the holders of Series A Common Shares and Preferred Shares at the 2017 Annual Meeting.

 

David A. Wittwer   Non-Independent Director

Current Role:   Director; President and Chief Executive Officer of TDS Telecom since 2007 Mr.   Wittwer brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS and its subsidiaries and the industries in wh ich they operate as a result of his background as President and Chief Executive Officer of TDS Telecom since 2007, and as a result of his many years in other offices and positions at TDS Telecom. He brings substantial experience, expertise and qualificatio ns in a wide range of critical areas in TDS' businesses, including management, accounting, finance, sales and marketing, regulatory affairs, engineering and network operations. As the President and Chief Executive Officer of TDS Telecom, one of TDS' two pr imary business units, the board of directors considers it appropriate and beneficial for Mr.   Wittwer to serve on the TDS board to provide the board with his views on strategy and operations of TDS Telecom and its businesses.  Mr. Wittwer holds a BBA in acc ounting from the University of Wisconsin-Whitewater, and an MS in management and human resources from the University of Wisconsin-Madison.		Age 56 Director since 2014 Prior Business and other Experience Significant leadership and operational experience since joining TDS Telecom in 1988 including several executive leadership roles providing expertise in management, accounting, finance, sales and marketing, regulatory affairs, engineering and network operat ions From 1983 to 1988 he was an internal auditor at TDS Director of TDS Telecommunications (wholly owned subsidiary of TDS)
Current Public Company Boards None	Former Public Company Boards None

 

Your board of directors unanimously recommends a vote "FOR" each of the above nominees for election by the holders of Series   A Common Shares and Preferred Shares.

Director Emeritus

Herbert S. Wander. Herbert S. Wander is a current director whose term will expire at the 2017 annual meeting. Mr. Wander will not stand for reelection as a director at the 2017 annual meeting. Mr. Wander will become a director emeritus following the 2017 annual meeting. Mr. Wander is Of Counsel at Katten Muchin Rosenman LLP.

17

 

CORPORATE GOVERNANCE

Board of Directors

The busin ess and affairs of TDS are managed by or under the direction of the board of directors. The board of directors consists of twelve members. Holders of Common Shares elect 25% of the directors rounded up plus one director, or a total of four directors based on a board size of twelve directors. Holders of Series   A Common Shares and Preferred Shares elect the remaining eight directors. As of March 29, 2017 , the TDS Voting Trust had approximately 9 4.7% of the voting power in the election of the eight directors elected by the holders of Series   A Common Shares and Preferred Shares, approximately 6.0% of the voting power in the election of the four directors elected by the holders of Common Shares and approximately 56.3% of the voting power in all other matters.

Board Leadership Structure

Under the leadership structure selected for TDS, the same person does not serve as both the Chief Executive Officer and Chairman of the Bo ard. Walter C. D. Carlson, who is not an employee or officer of TDS, serves as the non-executive Chairman of the Board and presides over meetings of the full board of directors. LeRoy T. Carlson, Jr., who is an officer and employee of TDS, serves as Presid ent and Chief Executive Officer and is responsible for day-to-day leadership and performance of TDS. This leadership structure is set forth in TDS' Bylaws. TDS has determined that this leadership structure is appropriate given the specific characteristics and circumstances of TDS. In particular, TDS considers it appropriate that the person who is the President and Chief Executive Officer of TDS also not serve as the Chairman of the Board in order to separate the executive who is primarily responsible for th e performance of the company from the person who presides over board meetings at which performance of TDS is evaluated.

Board Role in Risk Oversight

The following discloses the extent of the board of directors' role in the risk oversight of TDS, including how the board administers its oversight function, and the effect of the board's leadership structure discussed above on risk oversight.

The TDS board of directors is primarily responsible for oversight of the risk assessment and risk management process of TDS. Although the TDS board of directors can delegate this responsibility to board committees, the TDS board has not done so, and continues to have full responsibility relating to risk oversight. Although the TDS board of directors has oversight responsibi lities, the actual risk assessment and risk management is carried out by the President and Chief Executive Officer and other officers of TDS and reported to the board.

TDS has established an Enterprise Risk Management (ERM) program, which applies to TDS an d all of its business units. This program was designed with the assistance of an outside consultant and was integrated into TDS' existing management and strategic planning processes. The ERM program provides a common enterprise-wide language and discipline around risk identification, quantification and mitigation. The TDS board of directors receives periodic updates about the status and progress of this ERM program and takes action to the extent appropriate based on such updates.

Although the TDS board of d irectors has ultimate oversight authority over risk and has not delegated such responsibility to any committees, certain TDS committees also have certain responsibilities relating to risk.

Under NYSE listing standards, and as set forth in its charter, the Audit Committee is required to "discuss policies with respect to risk assessment and risk management." NYSE listing standards further provide that, "while it is the job of the CEO and senior management to assess and manage the listed company's exposure to risk, the audit committee must discuss guidelines and policies to govern the process by which this is handled. The audit committee should discuss the listed company's major financial risk exposures and the steps management has taken to monitor and control such exposures. The audit committee is not required to be the sole body responsible for risk assessment and management, but, as stated above, the committee must discuss guidelines and policies to govern the process by which risk assessment and management i s undertaken." 

Accordingly, pursuant to the foregoing requirements, the Audit Committee discusses TDS' major financial and operational risk exposures and the steps management has taken to monitor and control such exposures in connection with its review o f financial statements and related matters on a quarterly basis.

In addition, as part of the ERM program, the Audit Committee discusses guidelines and policies to govern the process by which risk assessment and risk management are handled. The Audit Committee receives updates and discusses policies with respect to risk assessment and risk management on a regular basis. The Audit Committee is not solely responsible for ERM, but the committee discusses guidelines and policies to govern the process by wh ich ERM is undertaken.

In addition, in connection with the functions of the Compensation Committee relating to the compensation of the executive officers of TDS (other than executive officers of U.S. Cellular), the Compensation Committee considers risks re lating to the compensation of executive officers of TDS, as discussed below in the Compensation Discussion and Analysis. In addition, the Compensation Committee has responsibilities under its charter and evaluates risk with respect to long-term compensatio n for all employees, which is discussed below under "Risks from Compensation Policies and Practices."

Also, the TDS Corporate Governance and Nominating Committee may consider certain risks in connection with its responsibilities relating to corporate gover nance and director nominations, as described below.

In 2015, TDS established a Technology Advisory Group. The functions of the Technology Advisory Group include review ing , monitor ing and inform ing the board of directors on technology matters, including spe ctrum, radio transmission, end user equipment, network technology, information technology, security, data storage, retrieval, and handling, and other matters relating to technology used or proposed to be used by TDS' business units and by their customers a nd by competitors of TDS' business units and by their customers, as well as developments and trends in the communication industry related to technology. This includes reviewing matters relating to technology security, threats, risks and internal controls, including safeguards, vulnerabilities, preparedness, disaster recovery plans, cybersecurity-insurance and similar matters. Related to this, the board of directors also established a Technology Advisory Group Committee of the board of directors that consist s of directors who participate in the Technology Advisory Group. See below for further information on the Technology Advisory Group Committee and the Technology Advisory Group.

TDS believes that the leadership structure described above facilitates risk ove rsight because the role of the President and Chief Executive Officer, who has primary operating responsibility to assess and manage TDS' exposure to risk, is separated from the role of the Chairman of the Board, who sets the agenda for and presides over bo ard of directors' meetings at which the TDS board exercises its oversight responsibility with respect to risk.

Board Oversight of Cybersecurity

TDS believes oversight of cybersecurity risks is the responsibility of the full board of directors and receives annual updates regarding TDS' assessment of threats and mitigation plans. The Audit Committee also exercises oversight over the control-related cybersecurity risks and mitigation plans and receives updates bi-annually. The Technology Advisory Group, as des cribed above, also reviews cybersecurity topics bi-annually.

Director Independence and New York Stock Exchange Listing Standards

TDS Common Shares are listed on the NYSE. Accordingly, TDS is subject to the listing standards applicable to companies that hav e equity securities listed on the NYSE.

Under listing standards of the NYSE, TDS is a "controlled company" as such term is defined by the NYSE. TDS is a controlled company because over 50% of the voting power for the election of directors of TDS is held by the trustees of the TDS Voting Trust (i.e.,   the TDS Voting Trust has over 90% of the voting power in the election of directors elected by the holders of Series   A Common Shares and Preferred Shares and thus has the voting power to elect eight of the twelve directors, or 66.7% of the directors). Accordingly, it is exempt from certain listing standards that require listed companies that are not controlled companies to (i)   have a board composed of a majority of directors who qualify as independent under the ru les of the NYSE, (ii)   have a compensation committee composed entirely of directors who qualify as independent under the rules of the NYSE, and (iii)   have a nominating/corporate governance committee composed entirely of directors who qualify as independent under the rules of the NYSE.

As a controlled company, TDS is required to have at least three directors who qualify as independent to serve on the Audit Committee. The TDS Audit Committee currently has f ive members , including Herbert S. Wander who is not standing for re-election in 2017 . Such directors must qualify as independent under the NYSE Listed Company Manual, including Section   303A.02(a) and Section   303A.02(b). Such directors must also qualify as independent under Section   303A.06, which incorporate s the independence requirements of Rule   10A-3 under Section   10A-3 of the Securities Exchange Act of 1934, as amended (collectively, "Section   10A-3"). Except as required by listing standards or SEC rule, TDS does not have any categorical standards of indepe ndence that must be satisfied.

Pursuant to the requirements of the NYSE Listed Company Manual, the TDS board of directors affirmatively determined that each member of the TDS Audit Committee has no material relationship with TDS or any other member of the TDS consolidated group ("TDS Consolidated Group"), either directly or as a partner, shareholder or officer of an organization that has a relationship with any member of the TDS Consolidated Group, and that each of such persons is independent (pursuant to S ection   303A.02(a), Section   303A.02(b) and Section   10A-3) considering all relevant facts and circumstances, including commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, if any.

Such relevant facts and circ umstances included the following: None of such persons is an employee or officer of TDS or any other member of the TDS Consolidated Group. None of such persons has any direct or indirect business relationships and/or fee arrangements with the TDS Consolida ted Group and none of such persons receives any compensation from the TDS Consolidated Group except compensation for his services as a director and member of board committees of TDS. None of such persons has any relationship or arrangement with the TDS Con solidated Group other than in his capacity as a director of TDS. Each of such persons qualifies as independent under each of the categorical standards in Section   303A.02(b) of the NYSE Listed Company Manual. Each of such persons qualifies as independent un der Section   10A-3 because (i)   none of such persons receives any compensatory fee from any member of the TDS Consolidated Group (excluding permitted compensation for his services as a director and member of board committees of TDS); and (ii)   none of such pe rsons is an "affiliated person" (as defined by the SEC) with respect to any member of the TDS Consolidated Group (because none of such persons is an executive officer, or the beneficial owner of more than 10% of any class of voting equity security, of TDS or any other member of the TDS Consolidated Group). None of such persons is an "immediate family member" (as defined by Section   303A.02(b)) of any person who is not independent under Section   303A.02 of the NYSE Listed Company Manual. The only relationship and/or fee arrangement which such persons have with the TDS Consolidated Group are as directors and members of board committees of TDS.

In addition, incumbent director Gary L. Sugarman and director nominee Kim D. Dixon qualify as independent directors unde r the listing standards of the NYSE. As a result, both before and after the 2017 annual meeting, six of the twelve director nominees , or 50% of the directors, have been determined to qualify as independent under the listing standards of the NYSE.

Meetings of Board of Directors

The board of directors held seven meetings during 2016 . Each incumbent director attended at least 75% of the total number of meetings of the board of directors held during 2016 (at which time such person was a director) and at least 75% of the total number of meetings held during 2016 by each committee of the board on which such person served (during the period that such person served). 

Corporate Governance Guidelines

Under NYSE listing standards, TDS is required to adopt and disclose corporate governance guidelines that address cert ain specified matters. TDS has adopted Corporate Governance Guidelines that can be found on TDS' website, www.tdsinc.com , under Corporate Governance—Governance Guidelines.

Succession Planning:   The corporate governance guidelines provide:  In the event of the absence of the President and CEO or in the event of his inability or refusal to act as President and CEO for a continuous period of three months or in the event of his death, resignation, removal or disqualification (a " permanent absence " ), the Chairma n of the Board will, automatically and without any action on the part of the Board of Directors or otherwise, succeed to and perform the duties of the President and CEO and, when so acting, will have all the powers of and be subject to all the restrictions placed upon the President and CEO set forth in the Company’s bylaws. In the event of the permanent absence of both such persons, the vacancy in the position of President and CEO will be filled with a person who is selected by the Board of Directors.

The b oard of directors receives an annual presentation regarding succession planning.

Board Self-Assessment :    TDS undertakes an annual Board self-assessment.  The assessment is performed by the Senior Vice President Corporate Relations and Corporate Secretary and discussions have traditionally been open, candid and frank.  This self-assessment covered matters relating to board meetings, board composition, committees, board oversight, and other matters. Additionally, director skills, background, characteristics and succession are discussed.  Similarly, each committee of the board of directors evaluated its performance and effectiveness in 2016 .

Corporate Governance and Nominating Committee

Under NYSE listing standards, a controlled company is not required to have a corporate governance/nominating committee. In addition, if a controlled company voluntarily establishes a corporate governance/nominating committee, it is not required to be composed entirely of independent dir ectors. TDS voluntarily established a Corporate Governance and Nominating Committee. The members of the Corporate Governance and Nominating Committee are Walter C. D. Carlson (chairperson), LeRoy T. Carlson, Jr. and Mitchell H. Saranow. Mr.   Saranow qualifi es as an independent director under NYSE listing standards. The primary function of the Corporate Governance and Nominating Committee is to advise the board on corporate governance matters, including developing and recommending to the board the corporate g overnance guidelines for TDS. In addition, the charter of the committee provides that the committee will develop selection objectives and oversee the search for qualified individuals to serve on the board of directors and recommend to the board prospective nominees and the re-nomination of incumbent directors as it deems appropriate. For a complete description of the Director Nomination process, please see "Director Nomination Process" below. A copy of the committee charter is available on TDS' website, www .tdsinc.com , under Corporate Governance—Board of Directors—Board Committees   & Charters.

The Corporate Governance and Nominating Committee held five meetings during 2016 .

Audit Committee

The purpose and primary functions of the Audit Committee are to (a)   assist the board of directors of TDS in its oversight of (1)   the integrity of TDS' financial statements, (2)   TDS' compliance with legal and regulatory requirements, (3)   the qualifications and independence of TDS' registered public accounting firm, and (4)   the performance of TDS' internal audit function and registered public accounting firm; (b)   prepare an audit committee report as required by the rules of the SEC to be included in TDS' annu al proxy statement and (c)   perform such other functions as set forth in the Audit Committee charter, which shall be deemed to include the duties and responsibilities set forth in Section   10A-3. A copy of the Audit Committee charter is available on TDS' web site, www.tdsinc.com , under Corporate Governance—Board of Directors—Board Committees   & Charters.

In addition, the Audit Committee has certain responsibilities relating to risk management as discussed above under "Board Role in Risk Oversight."

The Audit Co mmittee is currently composed of f ive members all of whom qualify as independent under NYSE listing standards, including Section   10A-3. The current members of the Audit Committee are George W. Off (chairperson), Clarence A. Davis, Christopher O’Leary, Mitc hell H. Saranow and Herbert S. Wander. The board of directors has determined that each of the members of the Audit Committee is financially literate and has "accounting or related financial management expertise" pursuant to listing standards of the NYSE. T he board has made a determination that each of Clarence A. Davis and Mitchell H. Saranow is an "audit committee financial expert" as such term is defined by the SEC.

In accordance with the SEC's safe harbor rule for "audit committee financial experts," no member designated as an audit committee financial expert shall (i)   be deemed an "expert" for any other purpose or (ii)   have any duty, obligation or liability that is greater than the duties, obligations and liabilities imposed on a member of the board or t he audit committee not so designated. Additionally, the designation of a member or members as an "audit committee financial expert" shall in no way affect the duties, obligations or liabilities of any member of the audit committee, or the board, not so des ignated.

The Audit Committee held nine meetings during 2016 . Certain of these meetings were joint meetings with the U.S. Cellular A udit C ommittee, which regularly meets with the TDS Audit Committee.

Pre-Approval Pr ocedures

The Audit Committee has adopted a policy pursuant to which all audit and non-audit services by TDS' principal independent registered public accounting firm must be pre-approved by the Audit Committee. The following describes the policy as amended. Under no circumstances may TDS' principal independent registered public accounting firm provide services that are prohibited by the Sarbanes Oxley Act of 2002 or rules issued thereunder. Non-prohibited audit related services and certain tax and other serv ices may be provided to TDS, subject to such pre-approval process and prohibitions. The Audit Committee has delegated to the chairperson together with one other member of the Audit Committee the authority to pre-approve services by the principal independen t registered public accounting firm. In the event the chairperson is unavailable, pre-approval may be given by any two members of the Audit Committee. Specified services have been pre-approved in detail up to specified dollar limits pursuant to the policy. All services are required to be reported to the full Audit Committee at each of its regularly scheduled meetings.

Review, Approval or Ratification of Transactions with Related Persons

The Audit Committee charter provides that the Audit Committee has respo nsibilities with respect to related party transactions, as such term is defined by the rules of the NYSE. Related party transactions are addressed in Section   314.00 of the NYSE Listed Company Manual.

Section   314.00 of the NYSE Listed Company Manual states that "Related party transactions normally include transactions between officers, directors, and principal shareholders and the company." In general, "related party transactions" would include transactions required to be disclosed in TDS' 201 7 Proxy Stateme nt pursuant to Item   404 of Regulation   S-K of the SEC. Pursuant to Item   404, TDS is required to disclose any transaction, which includes any financial transaction, arrangement, or relationship (including any indebtedness or guarantee of indebtedness) or a s eries of transactions, that has taken place since the beginning of TDS' last fiscal year or any currently proposed transaction in which: (1)   TDS was or is to be a participant, (2)   the amount involved exceeds $120,000 and (3)   any "related person" had or wil l have a direct or indirect material interest in the transaction during any part of the fiscal year. For this purpose, in general, the term "related person" includes any director or executive officer of TDS, any nominee for director, any beneficial owner o f more than five percent of any class of TDS' voting securities and any "immediate family member" of such persons, within the meaning of Item   404.

Section   314.00 of the NYSE Listed Company Manual provides that "Each related party transaction is to be revie wed and evaluated by an appropriate group within the listed company involved. While the NYSE does not specify who should review related party transactions, the NYSE believes that the Audit Committee or another comparable body might be considered as an appr opriate forum for this task.  Following the review, the company should determine whether or not a particular relationship serves the best interest of the company and its shareholders and whether the relationship should be continued or eliminated."

Other than the foregoing, TDS has no related party policies or procedures relating to (i)   the types of transactions that are covered by such policies and procedures; (ii)   the standards to be applied pursuant to such policies and procedures; or (iii)   the persons or groups of persons on the board of directors or otherwise who are responsible for applying such policies and procedures, and TDS does not maintain any written document evidencing such policies and procedures.

See Executive and Director Compensation—Compe nsation Committee Interlocks and Insider Participation—Certain Relationships and Related Transactions for discussion of any related party transactions since the beginning of the last fiscal year.

Compensation Committee

Although not required to do so under NYSE listing standards because it is a controlled company, TDS voluntarily has established a Compensation Committee comprised solely of directors who qualify as independent under the rules of the NYSE.

Under the Dodd-Frank Act, the SEC directed the NYSE to adopt listing standards prohibiting the listing of any equity security of an issuer that does not comply with specified listing requirements, including with respect to the independence of members of the compensation committee of the board of directors of such issuer, except that this provision of the Dodd-Frank Act expressly provides that it does not apply to an issuer that is a controlled company. In 2013, the NYSE adopted listing standards as required pursuant to such SEC direction. Although such listing standards are not applicable to TDS because it is a controlled company, the members of the Compensation Committee would qualify as independent under these listing standards of the NYSE. In particular, each member of the Compensation Committee is independe nt under the general NYSE listing standards as noted under "Director Independence and New York Stock Exchange Listing Standards" above, none of such members receives any compensation from the TDS Consolidated Group except permitted compensation for service s as a TDS director and committee member, and none of such members is affiliated with the TDS Consolidated Group by reason of being an executive officer, or the beneficial owner of more than 10% of any class of voting equity security, of any member of the TDS Consolidated Group.

The primary functions of the Compensation Committee are to discharge the board of directors' responsibilities relating to the compensation of the executive officers of TDS, other than executive officers of U.S. Cellular or any of it s subsidiaries. The responsibilities of the Compensation Committee include the review of salary, bonus, long-term compensation and all other elements of compensation of such executive officers.

For these purposes, "executive officers" means all officers th at are employees who are or will be identified in TDS' annual proxy statement as "executive officers," including the President and Chief Executive Officer of TDS Telecom and the President and Chief Executive Officer of U.S. Cellular, except that the compen sation of the President and Chief Executive Officer of U.S. Cellular is established and administered by U.S. Cellular's chairman and long-term incentive compensation committee, as d escribed in U.S. Cellular's 2017 proxy statement.

The Compensation Committe e is comprised of at least two non-employee members of TDS' board of directors, each of whom is an "outside director" within the meaning of section   162(m) of the Internal Revenue Code of 1986, as amended, and a "Non-Employee Director" within the meaning of Rule   16b-3 under the Securities Exchange Act of 1934, as amended. As noted above, such members also qualify as independent under the rules of the NYSE. The members of the Compensation Committee are Christopher D. O'Leary (chairperson), George W. Off, Gary L. Sugarman and Herbert S. Wander. These persons do not have any compensation committee interlocks and are not related to any other directors. 

The Compensation Committee charter permits it to delegate some or all of the administration of the long-term i ncentive plans or programs of TDS to the President and Chief Executive Officer or other executive officers of TDS as the committee deems appropriate, to the extent permitted by law and the applicable long-term incentive plan or program, but not regarding a ny award to the President and Chief Executive Officer. However, the Compensation Committee has not delegated any of its authority with respect to any of the officers identified in the below Summary Compensation Table.

The Compensation Committee's charter p rovides that the Compensation Committee will obtain advice and assistance from the Chief Executive Officer and the Vice President—Human Resources and from any other officer or employee of TDS, as it determines is appropriate. TDS' Human Resources Departmen t also supports the Compensation Committee in its work. As discussed below, the Compensation Committee also utilizes the services of an independent compensation consultant. See the Compensation Discussion and Analysis below for information about compensati on consultants, which information is incorporated by reference herein.   TDS’ Vice President-Human Resources retired in January 2017 and was replaced by a Senior Vice President of Human Resources.

The Compensation Committee does not approve director compens ation. It is the view of the TDS board of directors that this should be the responsibility of the full board of directors. Only non-employee directors receive compensation in their capacity as directors and, as a result, the view of the TDS board of direct ors is that all directors should participate in such compensation decisions, rather than only some or all of the non-employee directors.

A copy of the charter of the Compensation Committee is available on TDS' website, www.tdsinc.com , under Corporate Gove rnance—Board of Directors—Board Committees   & Charters.

The Compensation Committee held nine meetings during 2016 .

Pricing Committee

TDS has a Pricing Committee, consisting of LeRoy T. Carlson, Jr., as chairperson, and Kenneth R. Meyers, as a regular member. Walter C. D. Carlson is an alternate member of this committee. The Pricing Committee does not have a charter. Pursuant to resolutions of the TDS board of directors from time to time, the Pricing Committee is auth orized to take certain actions with respect to financing and capital transactions of TDS, such as the issuance, redemption or repurchase of debt or the repurchase of shares of capital stock of TDS.

Technology Advisory Group Committee

In 2015, the board of directors established the Technology Advisory Group Committee of the board of directors. The Technology Advisory Group Committee does not have a charter.

The members of the Technology Advisory Group Committee are LeRoy T. Carlson, Jr. (chair person ), George W. Off and Christopher D. O'Leary. The members of the Technology Advisory Group Committee are also members of the Technology Advisory Group, the purpose of which is to review, monitor and inform the board of directors on technology matters, including spec trum, radio transmission, end user equipment, network technology, information technology, security, data storage, retrieval, and handling, and other matters relating to technology used or proposed to be used by TDS' business units and by their customers an d by competitors of TDS' business units and by their customers, as well as developments and trends in the communications industry relating to technology. The Technology Advisory Group does not have authority to take action with respect to any technology ma tter, but serves solely in an informational and advisory role. The Technology Advisory Group Committee and the Technology Advisory Group report to the board of directors.

The Technology Advisory Group Committee held three meetings during 2016 .

Director Nomination Process

As discussed above, because TDS is a controlled company, it is not required under NYSE listing standards to have a corporate governance/nominating committee or, if it has one, that it be composed entirely of independent directors. Although not required to do so under NYSE listing standards, TDS voluntarily has established a Corporate Governance and Nominating Committee. The charter of the committee provides that the commit tee will develop selection objectives and oversee the search for qualified individuals to serve on the board of directors and recommend to the board of directors prospective nominees and the re-nomination of incumbent directors as it deems appropriate. The committee does not nominate directors. It only recommends to the board of directors prospective nominees and the re-nomination of incumbent directors as it deems appropriate. The entire board of directors determines whether to nominate prospective nominee s and re-nominate incumbent directors.

As part of developing selection objectives, the Committee will consider, among other things, whether the Board has the right mix of experience, skills, backgrounds, diversity and other characteristics, and whether the Committee should recommend that candidates with additional desired experience, skills, backgrounds and characteristics be recruited and nominated for the Board.

In 2013, the Corporate Governance and Nominating Committee established and since then follows a process relating to board refreshment and committee composition. Related to this:

• The Corporate Governance and Nominating Committee identifies and reviews the desired experience, skills, backgrounds, and characteristics of potential new board members.
   
• In its annual board assessment, the full board of directors also considers its composition and discusses expertise that may be needed in the future.
   
• In connection with the nominations of directors for election, the Corporate Governance and Nominating Com mittee and the full board of directors consider the tenure, qualifications and expertise of all of the incumbent directors.
   
• The Corporate Governance and Nominating Committee and the full board of directors also consider the appropriate composition of eac h of the committees of the board of directors on an annual basis.

 

Taking into account the above matters, as well as TDS' business and structure, the Corporate Governance and Nominating Committee embarked on board refreshment for the 2017 annual meeting.  The Board has nominated Kim D. Dixon to be elected by the holders of the Common Shares and Herbert S. Wander will be appointed Director Emeritus following the 2017 annual meeting.

TDS does not have a formal policy with regard to the consideration of any di rector candidates recommended by shareholders. However, because the TDS Voting Trust has over 90% of the voting power in the election of directors elected by the holders of Series   A Common Shares and Preferred Shares, nominations of directors for election by the holders of Series   A Common Shares and Preferred Shares are based on the recommendation of the trustees of the TDS Voting Trust. With respect to candidates for director to be elected by the holders of Common Shares, the Corporate Governance and Nomin ating Committee and/or the TDS board may from time to time informally consider candidates recommended by shareholders that hold a significant number of Common Shares. Although TDS has no formal procedures to be followed by shareholders to recommend candida tes to be nominated as directors, shareholders that desire to nominate directors must follow the procedures set forth in TDS' Bylaws.

Except to the extent provided in the next two paragraphs, TDS does not have any specific, minimum qualifications that the board believes must be met by a nominee for a position on the TDS board of directors, or any specific qualities or skills that the board believes are necessary for one or more of the TDS directors to possess. The TDS board believes that substantial judgmen t, diligence and care are required to identify and select qualified persons as directors and does not believe that it would be appropriate to place limitations on its own discretion, except to the extent provided in the next paragraph. The TDS board has co nsistently sought to nominate to the board of directors eminently qualified individuals whom the board believes would provide substantial benefit and guidance to TDS. 

Considering the importance of Federal Communications Commission ("FCC") licenses to TDS , the TDS Bylaws provide that a person will not be eligible to serve or to continue to serve as a director unless he or she is eligible to serve as a director of a company that controls licenses granted by the FCC, as determined by the TDS Corporate Govern ance and Nominating Committee or the board of directors with the advice of counsel. Another qualification requirement provides that a person will not be eligible to serve or to continue to serve as a director if he or she is or becomes affiliated with, emp loyed by or a representative of, or has or acquires a material personal involvement with, or material financial interest in, a Business Competitor (as defined in the TDS Bylaws), as determined by the TDS Corporate Governance and Nominating Committee or the board of directors. Another qualification requirement provides that a person will not be eligible to serve or to continue to serve as a director if, as determined by the TDS Corporate Governance and Nominating Committee or the board of directors with the advice of counsel, (i)   such person's election as a director would violate federal, state or foreign law or applicable stock exchange requirements (other than those related to independence) or (ii)   such person has been convicted, including a plea of guilty or nolo contendere, of any felony, or of any misdemeanor involving moral turpitude.

Section   1.15 of the TDS Bylaws provides that a person properly nominated by a shareholder for election as a TDS director shall not be eligible for election as a director un less he or she signs and returns to the Secretary of TDS, within fifteen days of a request therefor, written responses to any questions posed by the Secretary, that are intended to (i)   determine whether such person may qualify as independent and would qual ify to serve as a director of TDS under rules of the FCC, and (ii)   obtain information that would be disclosed in a proxy statement with respect to such person as a nominee for election as a director and other material information about such person.

The TDS Corporate Governance and Nominating Committee does not have a policy with regard to the consideration of diversity in identifying director nominees. However, as reflected in its Code of Business Conduct, TDS values diversity and does not discriminate on t he basis of gender, age, race, color, sexual orientation, religion, ancestry, national origin, marital status, disability, military or veteran status or citizenship status. In considering whether to recommend that individuals be nominated as director candi dates, the Corporate Governance and Nominating Committee takes into account all facts and circumstances, including diversity. For this purpose, diversity broadly means a variety of backgrounds, experience, skills, education, attributes, perspectives and ot her differentiating characteristics. TDS believes that it is desirable for a board to have directors who can bring the benefit of diverse backgrounds, experience, skills and other characteristics to permit the board to have a variety of views and insights. Accordingly, the Corporate Governance and Nominating Committee considers how director candidates can contribute to board diversity as one of the many factors it considers in identifying nominees for director.

Whether or not the Corporate Governance and No minating Committee will recommend that the TDS board re-nominate, and the TDS board will re-nominate, existing directors for re-election depend on all facts and circumstances, including views on how the director has performed and is performing his or her d uties. In the event of a vacancy on the board of a director elected by the holders of Series   A Common Shares and Preferred Shares, nominations are based on the recommendation of the trustees of the TDS Voting Trust. In the event of a vacancy on the board o f a director elected by the holders of Common Shares, TDS may use various sources to identify potential candidates, including an executive search firm. In addition, the Corporate Governance and Nominating Committee may consider recommendations by sharehold ers that hold a significant number of Common Shares. Potential candidates are initially screened by the Corporate Governance and Nominating Committee and by other persons as the Corporate Governance and Nominating Committee designates. Following this proce ss, the Corporate Governance and Nominating Committee will consider whether one or more candidates should be considered by the full board of directors. When appropriate, information about the candidate is presented to and discussed by the full board of dir ectors.

All of the incumbent nominees approved by the TDS board for inclusion on TDS’ proxy card for election at the 2016 Annual Meeting were recommended for re-nomination by the Corporate Governance and Nominating Committee.  The Corporate Governance and Nominating Committee has recommended that Herbert S. Wander be appointed Director E meritus at the expiration of his term at the 2017 annual meeting and that Kim D. Dixon be nominated for election as director to succeed Mr. Wander with the exception that Ki m D. Dixon is recommended for election by the holders of Common Shares whereas Herbert S. Wander is a director who was elected by the holders of Series A Common Shares and Preferred Shares. 

In 2016, TDS paid a fixed fee to a search firm for identificati on of potential board candidates .

Shareholder Engagement

The TDS board of directors and management value the views of our shareholders and are committed to doing what is in the best interests of all shareholders over the long term.

TDS has a long record o f shareholder engagement. Quarterly, we conduct earnings conference calls both telephonically and by webcast to discuss financial results with shareholders. Also, senior management attends and all directors are encouraged to attend each Annual Meeting of S hareholders, and shareholders have the opportunity to make comments and ask questions at such meeting. We also regularly attend investor conferences and hold one-on-one meetings with shareholders and potential investors throughout the United States as well as overseas. In addition, we have telephonic calls with shareholders and analysts on a regular basis, review correspondence submitted by shareholders to management and/or the board of directors, and have discussions with proxy advisory services.

TDS also has an open door policy. If shareholders are in the Chicago area and would like to meet members of management, the Investor Relations team will try to accommodate them, calendars permitting.

Management spend s a significant time meeting with our shareholder s, listening to their concerns and responding to their feedback on company performance, corporate governance, executive compensation and other matters. Our shareholder engagement efforts with respect to corporate governance topics are intended to occur out side of the proxy season .  Our engagement team is led by our Senior Vice President of Corporate Relations and Corporate Secretary and, depending on the particular engagement, may include independent directors of TDS, or executive officers of TDS, U.S. Cell ular and/or TDS Telecom, including the Chairman, President/CEO and/or CFO of such entities. In addition, such engagement often includes LeRoy T. Carlson, Jr., who is President and CEO of TDS and Chairman of U.S. Cellular and TDS Telecom, as well as a direc tor, a trustee of the Voting Trust that controls TDS and a beneficial owner of a significant equity interest in TDS.

TDS’ shareholder engagement program will at all times be conducted in accordance with applicable law, including Regulation   FD, and it do es not share material non-public information with any shareholder, investor or analyst. Further, our shareholder engagement program in no way replaces or diminishes other ways in which shareholders can communicate with management or the board of directors.

S hareholders have multiple avenues to provide input. TDS provide s its shareholders with the ability to voice their perspectives to management or the board of directors by mail or email, with an option to direct such communications to any individual director , a specific committee, all independent directors, all non-employee directors or all directors.

TDS encourage s you to share your opinions, interests and concerns and invite s you to write to us with your views and suggestions. TDS’ Investor Relations depart ment is the key point of contact for shareholder interaction with TDS, and shareholders are encouraged to call, write or email us with comments or questions. Shareholders may access information about TDS and obtain contact information through the Investor Relations section of our website, www.tdsinc.com . If you would like to communicate directly to our board of directors, please refer to the next section entitled "Shareholder Communication with Directors."

Shareholder Communication with Directors

Sharehold ers or other interested parties may send germane communications t o the TDS board of directors, to the Chairman of the Board, to the non-management or independent directors or to specified individual directors of TDS at any time. Shareholders or other inter ested parties should direct their communication to such persons or group in care of the Secretary of TDS at its corporate headquarters, 30 N. LaSalle St., Suite   4000, Chicago IL 60602. Any shareholder or other communications that are addressed to the board of directors, the Chairman of the Board, the non-management or independent directors or specified individual directors will be delivered by the Secretary of TDS to such persons or group.

For more information, see the instructions on TDS' website, www.tdsi nc.com , under Corporate Governance—Board of Directors—Contact the Board.

Meetings of Non-Management and Independent Directors

As required by NYSE listing standards, the non-management directors of TDS meet at regularly scheduled executive sessions without management. The TDS Chairman of the Board, Walter C. D. Carlson, a non-management director, presides at all meetings of the non-management directors. In addition, as required by NYSE listing standards, the independent directors of TDS meet at least once p er year in an executive session without management or directors who are not independent.

TDS Policy on Attendance of Directors at Annual Meeting of Shareholders

All directors are invited and encouraged to attend each Annual Meeting of shareholders, which i s normally followed by a meeting of the board of directors. In general, all directors attend each Annual Meeting of shareholders unless they are unable to do so due to unavoidable commitments or intervening events. All of the persons serving as directors a t the time, other than Dr. Letitia G. Carlson, attended the 2016 annual meeting.

Stock Ownership Guidelines

The TDS Corporate Governance Guidelines provide that, within three years after the date on which a directo r first became a director and thereafter for so long as each director remains a director of TDS, each director shall own Series   A Common Shares and/or Common Shares having a combined value of at least three times the cash retainer which is currently $80,00 0 . The board of directors reviews this minimum ownership requirement periodically and the amount was increased in 2016 . The stock ownership guidelines are included in TDS' Corporate Governance Guidelines, which have been posted to TDS' website, www.tdsinc.com , under Corporate Governance—Governance Guidelines.

Although TDS does not have stock ownership guidelines for executive officers, certain executive officers are directors and, therefore, are subject to the foregoing director stock ownership guidelines. In particular, as of February   2 8 , 201 7 , the following executive officers were directors and subject to such stock ownership guidelines and each beneficially owned considerably more shares of common stock (Common Shares and Series   A Common Share s) than required: excluding stock option awards, restricted stock units and phantom awards, LeRoy T. Carlson, Jr., President and Chief Executive Officer of TDS owned 4,064,406 shares; Kenneth R. Meyers, President and Chief Executive Officer of U.S. Cellula r owned 47,229 shares; and David A. Wittwer, President and Chief Executive Officer of TDS Telecommunications Corporation owned 9, 440 s hares.

Code of Business Conduct and Ethics Applicable to Directors

As required by Section   303A.10 of the NYSE Listed Company Manual, TDS has adopted a Code of Business Conduct and Ethics for Officers and Directors. This code has been posted to TDS' website, www.tdsinc.com , under Corporate Governance—Officer   & Director Co de of Conduct. 

EXECUTIVE OFFICERS

 

The following executive officers of TDS were identified in the above tables regarding the election of directors: LeRoy T. Carlson, Jr., President and Chief Executive Officer of TDS; Kenneth R. Meyers, President and Ch ief Executive Officer of U.S. Cellular; and David A. Wittwer, President and Chief Executive Officer of TDS Telecommunications Corporation. In addition to the executive officers identified in the tables regarding the election of directors, set forth below i s a table identifying current officers of TDS and its subsidiaries who are executive officers of TDS under SEC rules. Unless otherwise indicated, the position held is an office of TDS. The age of the following persons is as of the date of this 201 7 Proxy S tatement.

Name		Age		Position
Daniel J.  Dewitt		65		Senior Vice President of Human Resources
Joseph R. Hanley		50		Senior Vice President—Technology, Services and Strategy
Jane W. McCahon		56		Senior Vice President—Corporate Relations and Corporate Secretary
Peter L. Sereda		58		Senior Vice President—Finance and Treasurer
Douglas D. Shuma		56		Senior Vice President—Finance and Chief Accounting Officer
Kurt B. Thaus		58		Senior Vice President and Chief Information Officer
Scott H. Williamson		66		Senior Vice President—Acquisitions and Corporate Development

Daniel J. DeWitt.        Dan iel J. DeWitt was appointed Senior Vice President of Human Resources in January 2017 .  Prior to that, he was an Executive Psychologist at Shields Meneley Partners, since 2006.

Joseph R. Hanley .         Joseph R. Hanley was appointed Senior Vice President—Technology, Services and Strategy of TDS in 2012. Prior to that, he was Vice President—Technology Planning and Services of TDS for more than five years.

Jane W. McCahon.         Jane W. McCahon was appointed Senior Vice President—Corporate Relations and Corporate Secretary in 2016. Prior to that, she was Vice President—Corporate Relations and Corporate Secretary since 2013. She joined TDS as Vice President—Corporate Relations in 2009.

Peter L. Sereda.         Peter L. Sereda was appointed Senior Vice President—Finance and Treasurer of TDS in 2011. Prior to that, Mr.   Sereda was Vice President and Treasurer of TDS for more than five years. In 2014, Mr.   Sereda was appointed to the bo ard of directors of U.S. Cellular .

Douglas D. Shuma.         Douglas D. Shuma was appointed Senior Vice President—Finance and Chief Accounting Officer in March 2015. Prior to that, he was the Senior Vice President and Controller for more than five years. Pursu ant to the TDS Bylaws, Mr.   Shuma has been chief accounting officer of TDS since 2007 and has been the chief financial officer of TDS since 2013. Mr.   Shuma was appointed Chief Accounting Officer of U.S. Cellular and TDS Telecom in 2011. Mr.   Shuma is a Certi fied Public Accountant (inactive). In 2014, Mr.   Shuma was appointed to the board of directors of U.S. Cellular. He is also a director of TDS Telecom.

Kurt B. Thaus.         Kurt B. Thaus has been the Senior Vice President and Chief Information Officer of TDS f or more than five years. In 2014, Mr.   Thaus was appointed to the board of directors of U.S. Cellular.

 

Scott H. Williamson.         Scott H. Williamson has been the Senior Vice President—Acquisitions and Corporate Development of TDS for more than five years.

 

All of the executive officers devote all of their employment to the affairs of TDS and/or its subsidiaries.

Codes of Business Conduct and Ethics Applicable to Officers

As required by Section   303A.10 of the NYSE Listed Company Manual, TDS has adopted a Code of Business Conduct and Ethics for Officers and Directors, that also complies with the definition of a "code of ethics" as set forth in Item   406 of Regulation   S-K of t he SEC. The foregoing code has been posted to TDS' Internet website, www.tdsinc.com , under Corporate Governance—Officer   & Director Code of Conduct.

In addition, TDS has adopted a broad Code of Business Conduct that is applicable to all officers and emplo yees of TDS and its subsidiaries. The foregoing code has also been posted to TDS' Internet website, www.tdsinc.com , under Corporate Governance—Code of Conduct.

TDS intends to satisfy the disclosure requirement under Item   5.05 of Form   8-K regarding any ame ndment to any of the foregoing codes, by posting such information to TDS' Internet website. Any waivers of any of the foregoing codes for directors or executive officers will be approved by TDS' board of directors or an authorized committee thereof, as app licable, and disclosed in a Form   8-K that is filed with the SEC within four business days of such waiver. There were no such waivers during 2016 . 

PROPOSAL 2
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

What am I being asked to vote on in Proposal 2?

In Proposal 2, we are requesting shareholders to ratify the selection of PricewaterhouseCoopers   LLP as our independent registered public accounting firm for the fiscal year ending December   31 , 2017 . This proposal gives our shareholders the opportunity to express their views on TDS' independent registered public accounting firm for the current fiscal year.

How does the board of directors recommend that I vote on this proposa l?

The board of directors unanimously recommends a vote FOR approval of the ratification of the selection of PricewaterhouseCoopers   LLP as TDS' independent registered public accounting firm for the fiscal year ending December   31, 2017 .

We anticipate continuing the services of PricewaterhouseCoopers   LLP as our independent registered public accounting firm for the current year. Representatives of PricewaterhouseCoopers   LLP, wh ich served as our independent registered p ublic accounting firm for the last fiscal year, are expected to be present at the 2017 Annual Meeting and will have the opportunity to make a statement and to respond to appropriate questions raised by shareholders at the 2017 Annual Meeting or submitted in writing prior thereto.

Is this vote binding on the board of directors?

This vote is an advisory vote only, and therefore it will not bind TDS, our board of directors or t he Audit Committee. We are not required to obtain shareholder ratification of the selection of PricewaterhouseCoopers   LLP as our independent registered public accounting firm by our Bylaws or otherwise. However, we have elected to seek such ratification by the affirmative vote of the holders of a majority of the votes which could be cast by shares present or represented by proxy at the 2017 Annual Meeting and entitled to vote with respect to such matter. Should the shareholders fail to ratify the selection of PricewaterhouseCoopers   LLP as our independent registered public accounting firm, the Audit Committee will review whether to retain such firm for the fiscal year ending December   31, 2017 .

Your board of directors unanimously recommends a vote "FOR" the approval of Proposal 2. 

FEES PAID TO PRINCIPAL ACCOUNTANTS

 

The following sets forth the aggregate fees (including expenses) billed by TDS' principal accountants PricewaterhouseCoopers   LLP for 2016 and 2015 :

	2016			2015
Audit Fees 1	$	4,561,773		$	4,673,181
Audit Related Fees 2		285,000			352,004
Tax Fees 3		–			–
All Other Fees 4		16,740			16,740
Total Fees	$	4,863,513		$	5,041,925

1.    Represents the aggregate fees billed by PricewaterhouseCoopers   LLP for professional services rendered for the audit of the annual financial statements for the years 2016 and 2015 included in TDS' and U.S. Cellular's Forms   10-K for those years and the reviews of the financial statements included in TDS' and U.S. Cellular's Forms   10-Q for those years, including the attestation and report relating to internal control over financial reporting. Also includes fees for services that are normally incurred in connection with statutory and regulatory filings or engagements, such as comfort letters, statutory audits, attest services, consents, and review o f documents filed with th e SEC.

2.    Represents the aggregate fees billed by PricewaterhouseCoopers   LLP for assurance and related services that are reasonably related to the performance of the audit or review of TDS' and U.S. Cellular's financial statements that are not reported under Audit Fees. In both 2016 and 2015, this amount represents fees billed for audits of subsidiaries.  

3.    Represents the aggregate fees billed by PricewaterhouseCoopers LLP for tax compliance, tax advice, and tax planning, if any.

4.     R epresents the aggregate fees billed by PricewaterhouseCoopers   LLP for services, other than services described in Notes   (1) , (2) or (3), if any . In both 2016 and 2015, this amount includes the fee for access to a virtual accounting research service.

See "Corporate Gover nance—Audit Committee—Pre-Approval Procedures" above for a description of the Audit Committee's pre-approval policies and procedures with respect to TDS' independent registered public accounting firm.

AUDIT COMMITTEE REPORT

 

This report is submitted by the current members of the Audit Committee of the board of directors of TDS. The Audit Committee operates under a written charter adopted by the TDS board of directors, a copy of which is available on TDS' website, www.tdsinc.com , under Corporate Governance— Board of Directors—Board Committees   & Charters.   Christopher D. O’Leary joined the Audit Committee in August 2016.

Management is responsible for TDS' internal controls and the financial reporting process. TDS has an internal audit staff, which performs tes ting of internal controls and the financial reporting process. TDS' independent registered public accounting firm is responsible for performing an independent audit of TDS' consolidated financial statements in accordance with the standards of the Public Co mpany Accounting Oversight Board (United States) (the "PCAOB") and issuing a report thereon. The Audit Committee's responsibility is to monitor and oversee these processes.

In this context, the Audit Committee held meetings with management, the internal au dit staff and representatives of PricewaterhouseCoopers   LLP, TDS' independent registered public accounting firm for 2016 . In these meetings, the Audit Committee reviewed and discussed the audited financial statemen ts as of and for the year ended December   31, 2016 . Management represented to the Audit Committee that TDS' consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, and the Audit Committee reviewed and discussed the consolidated financial statements with management and representatives of PricewaterhouseCoopers   LLP.

The discussions with PricewaterhouseCoopers   LLP also included the matt ers required to be discussed by PCAOB Auditing Standard No.   1301 , Communications with Audit Committees, relating to information regarding the scope and results of the audit. The Audit Committee also received from PricewaterhouseCoopers   LLP written disclosures and a letter regarding its independence as required by applicable requirements of the PCAOB regarding the independent accountant's communications with the Audit Committee concerning independence, and this information was discussed with Pricewat erhouseCoopers   LLP.

Based on and in reliance upon these reviews and discussions, the Audit Committee recommended to the board of directors that the audited financial statements as of and for the year ended December   31, 2016 be included in TDS' Annual Report on Form   10-K for the year ended December   31, 2016 .

30

 

In addition to the foregoing report required by SEC rules, the following represents supplemental information voluntaril y disclosed by the Audit Committee:

The Audit Committee holds regularly scheduled meetings in person on a quarterly basis, and also holds quarterly meetings by teleconference to review and approve the financial results for the immediately preceding period. The Audit Committee reviews TDS' Quarterly and Annual Reports on Form   10-Q and Form   10-K, respectively, prior to filing with the SEC. The Audit Committee's agenda for meetings is established by the Audit Committee's chairperson and the TDS Vice President - Internal Audit.

During 2016 , at each of its regularly scheduled meetings, the Audit Committee met with the senior members of TDS' financial management team. Additionally, the Audit Committee had separate private sessions, during its regularly scheduled meetings, with TDS management, TDS' Vice President - Internal Audit, TDS' General Counsel, and representatives of PricewaterhouseCoopers   LLP, at which candid discussions regarding financial management, legal, accoun ting, auditing and internal control issues took place.

The Audit Committee is updated periodically on management's process to assess the adequacy of TDS' system of internal control over financial reporting, the framework used to make the assessment and man agement's conclusions on the effectiveness of TDS' internal control over financial reporting. The Audit Committee also discussed with PricewaterhouseCoopers   LLP TDS' internal control assessment process, management's assessment with respect thereto and its evaluation of TDS' system of internal control over financial reporting.

The Audit Committee reviewed with senior members of management, including the Vice President - Internal Audit and General Counsel, TDS' policies and procedures with respect to risk ass essment and risk management. The overall adequacy and effectiveness of TDS' legal, regulatory and ethical compliance programs, including TDS' Code of Business Conduct, were also reviewed.

The Audit Committee evaluates the performance of PricewaterhouseCoop ers   LLP, including the senior audit engagement team, each year and determines whether to reengage PricewaterhouseCoopers   LLP or consider other audit firms. In doing so, the Audit Committee considers the quality and efficiency of the services provided by th e auditors, the auditors' capabilities and the auditors' technical expertise and knowledge of TDS' operations and industry. Based on this evaluation, the Audit Committee decided to engage PricewaterhouseCoopers   LLP as TDS' independent registered public acc ountants for the year ending December   31, 2017 , and reviewed with senior members of TDS' financial management team, PricewaterhouseCoopers   LLP and the Vice President - Internal Audit, the overall audit scope and pl ans, the results of internal and external audit examinations, evaluations by management and PricewaterhouseCoopers   LLP of TDS' internal controls over financial reporting and the quality of TDS' financial reporting. Although the Audit Committee has the sole authority to appoint the independent registered public accounting firm, TDS anticipates that it will continue to request shareholders to ratify the selection of the independent registered public accounting firm at annual meetings of shareholders. Proposal 2 in this 2017 Proxy Statement includes a proposal for consideration at the 2017 Annual Meeting requesting that shareholders ratify the selection of PricewaterhouseCoopers   LLP as TDS' independent registered public accountants for the year ending December   31, 2017 .

In fulfilling its oversight responsibilities, the Audit Committee reviewed and discuss ed with management and PricewaterhouseCoopers   LLP the audited financial statements of TDS, including the quality, not just the acceptability, of the financial reporting, the reasonableness of significant accounting judgments and estimates, the clarity of d isclosures in the financial statements, and the assessment of TDS' internal controls over financial reporting.

The Audit Committee considered and concluded that the provision of non-audit services by PricewaterhouseCoopers   LLP to TDS during 2016 was compatible with their independence.

In performing all of these functions, the Audit Committee acts in an oversight capacity. In its oversight role, the Audit Committee relies on the work and assurances of TDS management, which has the primary responsibility for establishing and maintaining adequate internal control over financial reporting and for preparing the financial statements and other reports, and of PricewaterhouseCoopers   LLP, who are engaged to audit and report o n the consolidated financial statements of TDS and its subsidiaries and the effectiveness of TDS' internal control over financial reporting.

By the members of the Audit Committee of the board of directors of TDS:

George W. Off , C hair	Clarence A. Davis			Christopher D. O’Leary		Mitchell H. Saranow		Herbert S. Wander