Exhibit 10.1

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UNITED STATES CELLULAR CORPORATION

2016 EXECUTIVE OFFICER ANNUAL INCENTIVE PLAN

Effective January 1, 2016

I. PURPOSE

 * To provide incentive for the executive officers of U.S. Cellular to extend
   their best efforts towards achieving superior results in relation to key
   business performance targets;
 * To reward U.S. Cellular executive officers in relation to their success in
   meeting and exceeding the performance targets; and
 * To attract and retain talented leaders in positions of critical importance to
   the success of the Company.

 

II. ELIGIBLE PARTICIPANTS

All U.S. Cellular Executive Officers are eligible to participate in this 2016
Executive Officer Annual Incentive Plan (“Plan”).  Executive officers include
all Executive Vice Presidents and the Senior Vice President - Chief Human
Resources Officer. 

 

III. PERFORMANCE MEASURES & WEIGHTINGS

 

Performance Measures

Component Weighting

Overall Plan Weighting

Consolidated Total Revenues

35%

21%

Consolidated Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization

30%

18%

Consolidated Capital Expenditures

20%

12%

Customer Engagement

15%

9%

Company Performance

 

60%

Chairman Assessment on Strategic Initiatives

 

10%

Individual Performance

 

30%

 

IV. PERFORMANCE MEASURES DEFINITIONS

 

Company Performance - Weighting 60%: Actual performance will be assessed against
the targeted performance for each performance measure.  The performance measures
are defined below.      

 

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

 

Consolidated Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA):  Adjusted EBITDA determined on a consolidated
company-wide basis and in a manner consistent to U.S. Cellular's presentation of
Adjusted EBITDA for external reporting purposes. 

 

Consolidated Capital Expenditures:  Capital expenditures determined on a
consolidated company-wide basis and in a manner consistent to U.S. Cellular's
presentation of capital expenditures for external reporting purposes.  The
measurement of actual capital expenditures against targeted capital expenditures
may not be sufficiently comprehensive because it would measure actual
expenditures, but not necessarily the efficiency and/or productivity of those
expenditures.  Therefore, if appropriate, the measurement of actual expenditures
against targeted expenditures could incorporate an adjustment for spending
efficiency/productivity which could include an assessment of the degree of
completion of certain projects.  The determination of whether such an adjustment
is appropriate and the amount of the adjustment will be made by the President
and CEO and will be subject to the review and approval of the Chairman.

 

Customer Engagement:  Performance against targets for the total annual company
customer engagement score.

 

Notes:

 * Results associated with acquisitions and / or divestitures, will be evaluated
   on a case-by-case basis to determine whether adjustments to target or actual
   results are warranted.
 * The Chairman in his discretion may adjust targets to reflect unanticipated
   events.

 

 

 

Chairman Assessment on Strategic Initiatives - Weighting: 10%:    

 

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

 

 * Achievement of key goals and objectives provided to the U.S. Cellular board
   of directors. 
 * Accomplishing / making commendable progress on major initiatives for the year
   to the extent not covered under the key goals and objectives provided to the
   board of directors.
 * Developing and enhancing strategies and plans that strengthen the Company’s
   ability to successfully compete in the marketplace.

 

Individual Performance - Weighting: 30%:    

 

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

 

 * Carrying out his/her ongoing responsibilities and key initiatives during the
   performance year.
 * Executive level leadership and teamwork.
 * Identification and development of key talent for succession planning
   purposes.
 * Associate engagement as measured in large part by the Company’s culture
   survey.

 

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

 

 * Evaluation of the executive officer’s performance in the above areas.
 * Performance feedback received on the executive officer. 
 * The executive officer’s report on his/her activities/accomplishments for the
   performance year.

 

V. MISCELLANEOUS PROVISIONS

 

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

 

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

 

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

 

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

 

VI. BONUS RANGES AS A PERCENT OF TARGET

 

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

 

Company Performance Measures:

 

Performance Measures

Minimum

Maximum

Consolidated Total Revenues

90%

110%

Consolidated Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization

80%

120%

Consolidated Capital Expenditures

110%

80%

Customer Engagement

80%

120%

 

 

Bonus Payouts as a Percent of Target at Minimum and Maximum Performance Levels:

 

Performance Measures

Minimum

Target

Maximum

Consolidated Total Revenues

50%

100%

225%

Consolidated Adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization

50%

100%

225%

Consolidated Capital Expenditures

50%

100%

225%

Customer Engagement

50%

100%

200%

 

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

 

Chairman Assessment on Strategic Initiatives: 

 

Performance Criteria

% Payout Range

Far exceeds target performance: Performance greatly exceeded that which was
planned and expected

150% - 200%

Significantly exceeds target performance: Performance significantly exceeded
that which was planned and expected

120% - 150%

Somewhat exceeds/fully meets/almost fully meets target: Performance was
essentially equivalent to that which was planned and expected

80% - 120%

Partially meets target performance: Given that conditions that prevailed,
performance was sufficient to merit a partial bonus

Up to 80%

Well below target performance: Given the conditions that prevailed, performance
was not sufficient across all components of the Plan to merit any bonus.

0%

 

Individual Performance: 

 

Performance Criteria

% Payout Range

Far Exceeds Expectation (FE)

130% - 150%

Exceeds Expectations (EE)

110% - 130%

Meets Expectations (ME)

80% - 110%

Partially Meets Expectations (PM)

0%

Fails to Meet Expectations (FM)

0%

 

/s/ Kenneth R. Meyers

 

6/7/2016

President and CEO

 

Date

 

 

 

/s/ LeRoy T. Carlson, Jr.

 

6/7/2016

Chairman

 

Date

 

 

Exhibit A

Administrative Guidelines

 

 

PLAN YEAR EFFECTIVE DATES

January 1, 2016 – December 31, 2016

GENERAL ADMINISTRATION

The target annual bonus payout for plan participants will be based on the
associate’s base salary as of December 31, 2016.

VESTING

The bonus does not vest and no bonus shall be paid unless the associate remains
employed through the actual bonus payout date. Special rules apply to those
associates who retire or die before the actual bonus payout date (see below).

 

To the extent and only to the extent that any bonus is paid for the plan year,
such bonus shall be deemed to have been earned on December 31, 2016. 

NEW HIRE ELIGIBILITY

Eligibility for participation in this plan and any payout will be determined at
the discretion of the President and CEO.

SEPARATION PRIOR TO PAYOUT VESTING DATE

Not eligible for a payout unless separation is due to retirement or death (see
below), or unless approved by the President and CEO.

 

 

RETIREMENT

Prior to Payout Vesting Date

Associate must be at least age 55 and have a minimum of 10 years of 401(k)
vesting service at time of retirement to be eligible for a payout (unless
otherwise approved by the President and CEO or SVP and Chief Human Resources
Officer).

 

 

DEATH

Prior to Payout Vesting Date

Payout made as soon as administratively possible upon death of associate (but no
later than the Bonus Payout Date, as described below) based on proration for
time worked during the plan yearThe actual bonus payout will vary based on the
timing of the associate’s retirement or death.

 

 

 

In the event of death or retirement during the plan year (1/1 – 12/31) a
prorated bonus for time worked at target (100% plan attainment) will be paid. 
The payout will be made as soon as administratively possible following the date
of the event (but no later than the Bonus Payout Date, as described below).

 

Payout for associates after the plan year, but before the payout date for the
plan year will receive a bonus for time worked in the prior year (prorated, if
needed) at target (100% plan attainment) or at actual plan attainment (company,
team and individual performance), if actual is available on the date of event.
The payout will be made as soon as administratively possible following the date
of the event (but no later than the Bonus Payout Date, as described below).

LEAVE OF ABSENCEs

A leave of absence includes the following:  Short-term Disability, FMLA Leave of
Absence, Unpaid Medical Leave of Absence, Military Service Leave of Absence and
Personal Leave of Absence.  Bonus payouts will be prorated for any portion of
the plan year for which the associate had unpaid hours.  Unpaid hours are
defined as those hours where accrued benefit time (i.e. sick, vacation,
personal, etc.) was NOT applied to the leave of absence.

 

 

TRANSFERS/PROMOTIONS DURING PLAN YEAR

Within/ Between Annual Plans:

 

If an associate is promoted / transferred within or between annual incentive
plan(s), no prorations will be made in determining the associate’s target
bonus.  The associate’s target bonus will be based on the associate’s plan as of
12/31/16. 

 

Between an Annual Plan and a Quarterly or Monthly Plan:

 

Prorated payouts from both positions/plans will be determined following the end
of the plan year.   The following factors will be considered in the
determination of the payout: both plan attainment percentages, individual
performance in each job/plan,  the last base salary from each position occupied
during the plan year (if applicable), target incentive assigned for each
position’s pay grade, and percentage of time worked in each position/plan during
the plan year.

TRANSFERS TO/ FROM TDS DURING THE PLAN YEAR

If an associate transfers to/from another TDS business unit, he/she will receive
a prorated payout based on the factors listed above. 

BONUS PAYOUT DATE

Bonuses are to be paid during the period commencing on January 1, 2017 and
ending on March 15, 2017. Historically, bonuses have been paid in March on or
before March 15th of the year following the end of the plan year (12/31). 
Notwithstanding the foregoing, in the event that payment by March 15, 2017 is
administratively impracticable and such impracticability was unforeseeable (in
each case, such that the payment continues to qualify as a “short-term deferral”
within the meaning of section 409A of the Internal Revenue Code), payment will
be made as soon as administratively practicable after March 15, 2017, but in no
event later than December 31, 2017.  Payment will be in the form of a lump sum.