Delaware
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001-14157
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36-2669023
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Common Shares, $.01 par value
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TDS
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New York Stock Exchange
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6.625% Senior Notes due 2045
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TDI
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New York Stock Exchange
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6.875% Senior Notes due 2059
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TDE
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New York Stock Exchange
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7.000% Senior Notes due 2060
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TDJ
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New York Stock Exchange
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5.875% Senior Notes due 2061
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TDA
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New York Stock Exchange
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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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Exhibit Number
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Description of Exhibits
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10.1
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104
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Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
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TELEPHONE AND DATA SYSTEMS, INC.
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(Registrant)
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Date:
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March 20, 2020
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By:
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/s/ Peter L. Sereda
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Peter L. Sereda
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Executive Vice President and Chief Financial Officer
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(principal financial officer)
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TDS EXECUTIVE OFFICER PARTICIPANTS:
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▪
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EVP, SVP and VP officers of TDS Corporate
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▪
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The TDS Telecom President and CEO will have the same company and individual performance weightings as the TDS executive officers. However, this officer’s company performance bonus opportunity will be based on TDS Telecom’s approved 2020 Bonus Plan, which will be aligned with the metrics in this program but may contain additional performance measures.
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•
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PERFORMANCE MEASURES AND WEIGHTINGS:
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PERFORMANCE MEASURES
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Component Weighting
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Overall Plan Weighting
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Company Performance
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80%
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Consolidated Operating Revenue
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50%
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40%
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Consolidated Adjusted Earnings before Interest, Taxes, Depreciation, Amortization and Accretion
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40%
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32%
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Consolidated Capital Expenditures
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10%
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8%
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Individual Performance
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20%
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•
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COMPANY PERFORMANCE COMPONENT – WEIGHTING 80%:
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Consolidated Operating Revenue: Revenue generation is the primary driver to long-term growth in profitability and returns. It is also an indicator of the success of past investments. Consolidated Operating Revenue will align with the externally reported metric.
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Consolidated Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization and Accretion (EBITDA): Adjusted EBITDA is a direct measure of the cash generated from the operations of the TDS businesses in a given year and the overall profitability of the company. The calculation of Adjusted EBITDA will align with the methodology used for external reporting purposes, which is currently defined as net income adjusted for income taxes, depreciation, amortization and accretion, loss on impairment of assets, gain or loss on sale of business and other exit costs, gain or loss on sale of licenses and exchanges, gain or loss on investment, gain or loss on asset disposals and interest expense.
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•
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Consolidated Capital Expenditures: The Capital Expenditure metric measures the enterprise’s management of its investments in property, plant and equipment and investment in future growth opportunities. Consolidated Capital Expenditures will align with the externally reported metric.
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▪
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Adjustments to Company Performance Component Calculations:
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•
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Acquisitions/Divestitures: Results associated with acquisitions and/or divestitures will be evaluated on a case-by-case basis to determine whether adjustments to target or actual results are warranted.
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Other Adjustments: Any adjustments to the target or actual bonus calculations will be presented to the Compensation Committee for review and approval. Adjustment recommendations will be limited to material accounting adjustments or major business decisions that, without their adjustment, would cause the calculated bonus results to differ materially from the unadjusted calculation and therefore not reflect the true performance delivered in the year. Bonus expense will be included in the Adjusted EBITDA metrics.
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Bonus Ranges: The bonus ranges were set to reinforce the Company’s pay for performance culture. The minimum performance level for a performance measure needs to be achieved before any bonus for that performance measure is earned. The ranges result in substantial reductions in bonuses when targets are not achieved, and greater rewards for above target performance.
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Company Performance Measures:
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PERFORMANCE MEASURE
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MINIMUM
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MAXIMUM
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Consolidated Operating Revenue
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90%
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110%
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Consolidated Adjusted EBITDA
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85%
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115%
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Consolidated Capital Expenditures
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105%
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90%
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Bonus Payouts As A Percent of Target At Minimum And Maximum Performance Levels:
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PERFORMANCE MEASURE
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MINIMUM
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TARGET
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MAXIMUM
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Consolidated Operating Revenue
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50%
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100%
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200%
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Consolidated Adjusted EBITDA
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50%
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100%
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200%
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Consolidated Capital Expenditures
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50%
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100%
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150%
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▪
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The Performance Targets: They will be set by the Compensation Committee each year based on the plans and objectives of the business.
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INDIVIDUAL PERFORMANCE COMPONENT: WEIGHTING 20%
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Key Objectives:
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Overall Performance:
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Carrying out his/her ongoing responsibilities and significant initiatives during the performance year (other than his/her above discussed key objectives).
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Recommending/making decisions; taking actions; and providing support, assistance and counsel to the business units.
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Providing support, assistance and counsel to corporate senior leaders and management.
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His/her evaluation of the officer’s performance in the above areas.
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The annual written performance feedback he/she receives on the executive officer from his/her peers.
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The every-other-year written performance input he receives from the executive officer’s direct reports and other key associates.
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The executive officer’s report on his/her activities/accomplishments for the performance year.
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Such other creditable input as he/she may receive during the year about an officer’s performance.
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INDIVIDUAL PERFORMANCE
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% PAYOUT OF
TARGET
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Far Exceeded Expectations: Performance greatly exceeded that which was planned and expected.
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140% - 160%
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Significantly Exceeded Expectations: Performance significantly exceeded that which was planned and expected.
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115% - 135%
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Successfully Met Expectations: Performance was close to that which was planned and expected.
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90% - 110%
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Partially Met Expectations: Performance was sufficient to merit a partial bonus.
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65% - 85%
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Did Not Meet Expectations: Performance was not sufficient to merit a bonus.
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0%
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DETERMINATION OF BONUS AWARDS:
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His/her company performance bonus. This will be the amount calculated in accordance with the terms of this program (unless the TDS President and CEO feels that there is a compelling rationale to recommend an adjustment to this amount, which he would provide to the Committee).
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His/her recommended individual performance bonus, and his/her total recommended bonus.
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REVISIONS TO THE OFFICER BONUS PROGRAM:
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BONUS CLAWBACK:
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