Exhibit 10.3


 


TELEPHONE AND DATA SYSTEMS, INC. (the “Company”)


Compensation Plan for Non-Employee Directors (the “Plan”)


As Amended, Effective May 22, 2008


 


The purpose of the
Plan is to provide appropriate compensation to non-employee directors for their
service to the Company and to ensure that qualified persons serve as
non-employee members of the Board of Directors.


 


The Plan was
approved pursuant to the authority granted in Section 2.22 of Article II
of the Company’s By-Laws, which provides that the Board of Directors shall have
authority to establish reasonable compensation of directors, including
reimbursement of expenses incurred in attending meetings of the Board of
Directors.


 


Board Service


 


Each director of
the Company who is not an employee of the Company, TDS Telecommunications
Corporation, United States Cellular Corporation or any other subsidiary of the
Company (“non-employee director”) will receive:


 


1.              An annual director’s retainer fee of $55,000 paid in
cash.


 


2.              An annual award of $55,000 paid in the form of the
Company’s Special Common Shares, which shall be distributed in March on or
prior to March 15 of each year, beginning March 15, 2009, for
services performed during the 12 month period that commences on March 1 of
the immediately preceding calendar year and ends on the last day of February of
the calendar year of payment.  The number
of shares shall be determined on the basis of the closing price of the Company’s
Special Common Shares, as reported in the New York Stock Exchange Composite
Transaction section of the Wall Street Journal for the last trading day in the
month of February of each year. 
Notwithstanding the foregoing, the annual award to be distributed in March 2009
shall be distributed $45,000 in the form of Special Common Shares and $10,000
in the form of cash.


 


3.              A director’s meeting fee of $1,750 for each meeting
attended and reimbursement of reasonable expenses incurred in connection with
attendance at meetings of the Board of Directors, paid in cash.


 


4.              The Chairperson of the Board of Directors will receive
an additional annual retainer fee of $45,000, paid in cash.


 


Audit Committee Service


 


Each non-employee
director who serves on the Audit Committee, other than the Chairperson, will
receive an annual committee retainer fee of $11,000, a committee meeting fee of
$1,750 for each meeting attended and reimbursement of reasonable expenses
incurred in connection with attendance at meetings of the Audit Committee.  The Audit Committee Chairperson will receive
an annual retainer fee of $22,000, a committee meeting fee of $1,750 for each
meeting attended and reimbursement of reasonable expenses incurred in
connection with attendance at such meeting.


 


Compensation Committee Service


 


Each non-employee
director of the Company who serves on the Compensation Committee, other than
the Chairperson, will receive an annual committee retainer fee of $7,000, a
committee meeting fee of $1,750 for each meeting attended and reimbursement of
reasonable expenses incurred in connection with attendance at each meeting of
the committee.  The Compensation
Committee Chairperson will receive an annual retainer fee of $14,000, a
committee meeting fee of $1,750 for each meeting attended and reimbursement of
reasonable expenses incurred in connection with attendance at such meeting.


 

















 


Corporate Governance Committee
Service


 


Each non-employee
director of the Company who serves on the Corporate Governance Committee, other
than the Chairperson, will receive an annual committee retainer fee of $5,000,
a committee meeting fee of $1,750 for each meeting attended and reimbursement
of reasonable expenses incurred in connection with attendance at meetings of
the Corporate Governance Committee.  The
Corporate Governance Committee Chairperson will receive an annual retainer fee
of $10,000, a committee meeting fee of $1,750 for each meeting attended and
reimbursement of reasonable expenses incurred in connection with attendance at
such meeting.


 


Miscellaneous


 


Under the Plan,
annual retainers will be paid in cash on a quarterly basis, as of the last day
of each calendar quarter, and will compensate the non-employee director for
services performed during such calendar quarter.


 


Fees for meetings
of the board and all committee meetings will be paid in cash on a quarterly basis
as of the last day of each calendar quarter, and will compensate the
non-employee director for meetings attended during such calendar quarter.


 


Non-employee
directors shall timely submit for reimbursement their reasonable expenses
incurred in connection with meeting attendance, and the Company shall reimburse
such expenses within two weeks after submission.


 


Upon approval of this amended Plan by shareholders of
the Company, directors of the Company shall have the authority without further
shareholder approval to further amend this Plan from time to time, including
amendments to increase the amount of the compensation payable in Special Common
Shares from time to time, provided that the total number of Special Common
Shares issued under the Plan shall not exceed the amount approved by
shareholders of the Company.