Exhibit 10.1

TELEPHONE AND DATA SYSTEMS, INC. (TDS)

2017 OFFICER BONUS PROGRAM

 

 

This bonus program covers all TDS officers other than the President and CEO of
TDS.  Payments under this program to the TDS Telecom President and CEO and the
below listed executive officers require specific approval of the TDS
Compensation Committee.  Bonuses for other officers covered by this program
require the approval of the President and CEO of TDS.  This program does not
apply to any officer of a TDS subsidiary other than the President and CEO of TDS
Telecom. 

 * TDS EXECUTIVE OFFICER PARTICIPANTS:

 * SVP Technology, Services and Strategy
 * SVP Finance and Treasurer
 * SVP Finance and Chief Accounting Officer
 * SVP and CIO
 * SVP Acquisitions and Corporate Development
 * SVP Corporate Relations
 * SVP Human Resources

 

The TDS Telecom President and CEO (Dave Wittwer) 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 2017 Bonus Plan, which will be aligned with the metrics in this
program, but may contain additional performance measures.

 

 * COMPANY PERFORMANCE COMPONENT:

 * Weighting:  70%

 

 * Performance Measures:  The following performance measures are primary
   indicators of progress against the TDS Portfolio goal to create increasing
   results to shareholders and other stakeholders.

 

 * 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.

 

 * Consolidated Adjusted Earnings Before Interest, Taxes, Depreciation and
   Amortization (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 income before
   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.

 

 * Consolidated Capital Spending:  This capital efficiency metric is produced by
   TDS internal systems, and is the subject of annual guidance.  It measures the
   enterprise’s efficient management of its investments in plant, property and
   equipment and investment in future growth opportunities. 

 

 * The calculation of Capital Spending will follow the methodology described
   above.  The calculation of capital expenditures will focus on cash outflows
   and therefore exclude capitalized interest, which is a non-cash accounting
   adjustment.

 

Adjustments to Company Performance component calculations:

 

 * Acquisitions:

 

 * Acquisitions that occur in the second half of the fiscal year will be
   excluded from bonus calculations (target and actual).

 

 * Adjustment will be made for acquisitions that occur in the first half of the
   fiscal year, with performance judged against the valuation model and adjusted
   for any timing differences between expected and actual closing.  To the
   extent that the acquisition is not included in the targets, the targets will
   be adjusted at the time of the acquisition closing date to reflect the
   valuation model (as approved by the Board) and any known timing differences.

 

 * Transaction costs related to the acquisition will be excluded from both the
   target and actual results.

 

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 * Divestitures:

 

 * Divestitures or discontinued operations that occur in the first half of the
   fiscal year will be excluded from the bonus calculations (target and actual).

 

 * Divestitures or discontinued operations that occur in the second half of the
   fiscal year will be included in the bonus calculation.  If a divestiture or
   discontinued operation was not included in the targets, the targets will be
   adjusted at the time of the closing date to reflect the impact of the period
   of time that the divesture is not owned.  In addition, significant shifts in
   strategy will be taken into consideration when determining the appropriate
   treatment of divestitures in the bonus calculation.

 

 * Transaction costs related to the divestiture will be excluded from both the
   target and actual results.

 

 * 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.   

 

 * 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.  See Appendix A for payout
   grids.

 

PERFORMANCE MEASURE

MINIMUM

TARGET

MAXIMUM

Consolidated Operating Revenue

$4,735M

$5,261M

$5,788M

Consolidated Adjusted EBITDA

$951M

$1,119M

$1,287M

Consolidated Capital Spending

$797M

$759M

$683M

 

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

 

PERFORMANCE MEASURE

MINIMUM

TARGET

MAXIMUM

Consolidated Operating Revenue

50%

100%

200%

Consolidated Adjusted EBITDA

50%

100%

200%

Consolidated Capital Spending

50%

100%

150%

 

Bonus payouts between the minimum and target and between target and maximum
performance level for each performance measure will be computed by
interpolation.

 

Any bonus for performance below the minimum percentage for a performance measure
will be at the discretion of the Compensation Committee.

 

 * Weighting Of Performance Measures:

 

PERFORMANCE MEASURE

WEIGHTING

Consolidated Operating Revenues

50%

Consolidated Adjusted EBITDA

35%

Consolidated Capital Spending

15%

 

100%

 * 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:  30%

 

 * Segment Weighting:

 * Key Objectives:                      50%
 * Overall Performance:                 50%

 100%

 

 * Level of Performance and Percent Payout of Target:
    

INDIVIDUAL PERFORMANCE

% PAYOUT OF

TARGET

Far Exceeded Expectations:  Performance greatly exceeded that which was planned
and expected.

140% - 160%

Significantly Exceeded Expectations: Performance significantly exceeded that
which was planned and expected.

115% - 135%

Successfully Met Expectations:  Performance was close to that which was planned
and expected.

85% - 110%

Partially Met Expectations: Performance was sufficient to merit a partial bonus.

60% - 80%

Did Not Meet Expectations:  Performance was not sufficient to merit a bonus.

0%

 

 * Key Objectives:

 

With regard to this bonus opportunity, the TDS President and CEO will, with
input from the executive officer, assign the executive officer 2 to 5 or so
major initiatives to be carried out during the year, and decide how each will be
weighted.  As appropriate, these objectives will include that executive
officer’s expected individual contribution(s) toward executing the Company’s
Portfolio Management Strategy. 

 

With the approval of the TDS President and CEO, an executive officer’s
objectives and weightings may be revised during the performance year if
important new initiatives arise or circumstances with respect to an objective
have materially changed.  Performance on each selected objective will be based
on the TDS President and CEO’s assessment of the results the executive/the
executive’s team achieved in meeting the assigned objectives.

 

 * Overall Performance:

 

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

 

 * Carrying out his/her ongoing responsibilities and significant initiatives
   during the performance year (other than his/her above discussed key
   objectives).

 

 * Recommending/making decisions; taking actions; and providing support,
   assistance and counsel to the business units, and to help achieve TDS
   Corporate Portfolio Strategy agreed upon metrics and milestones.

 

 * Providing support, assistance and counsel to corporate senior leaders and
   management.

 

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

 

 * His/her evaluation of the officer’s performance in the above areas.

 

 * The annual written performance feedback he/she receives on the executive
   officer from his/her peers.

 

 * The every-other-year written performance input he receives from the executive
   officer’s direct reports and other key associates.

 

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

 

 * Such other creditable input as he/she may receive during the year about an
   officer’s performance.

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 * DETERMINATION OF BONUS AWARDS:

Once the Company performance bonus percentage is known, the TDS President and
CEO will recommend to the Compensation Committee for each participating
executive officer:

 

 * 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
   feel that there is a compelling rationale to recommend an adjustment to this
   amount, which he would provide to the Committee).

 

 * His/her recommended individual performance bonus, and his/her total
   recommended bonus.

 

The Compensation Committee will review these proposed bonus awards and either
approve them as submitted or revise some or all of them, as they deem
appropriate.  Once the Committee and TDS President and CEO finalize the
officers’ bonus awards, they may be paid. 

 

Approved bonus awards shall be paid during the period commencing on the January
1st immediately following the performance year and ending on March 15th
immediately following the performance year. Payment will be made in the form of
a lump sum.

 

Notwithstanding any provision of this bonus program to the contrary, a
participating officer does not have a legally binding right to a bonus unless
and until the bonus amount, if any, is paid and no bonus shall be paid unless
the officer remains employed through the actual bonus payout date unless
otherwise approved at the discretion of the Compensation Committee or President
and CEO of TDS, as applicable.

 

 * REVISIONS TO THE OFFICER BONUS PROGRAM:

The TDS Officer Bonus Program may be revised or discontinued at any time and for
any reason.  If and when either the Compensation Committee and/or management
determines that the TDS Officer Bonus Program should be revised, the parties
will discuss the proposed change(s) and the rationale for them, following which
the Committee will determine what, if any, changes will be made.

 

 * BONUS CLAWBACK:

Any bonus paid pursuant to this program is subject to recovery by TDS or any
other action pursuant to any clawback or recoupment policy which TDS may adopt
from time to time, including without limitation any such policy which TDS 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.

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