Document:

EXHIBIT 10.1

 

UNITED STATES
CELLULAR CORPORATION

2014 EXECUTIVE
OFFICER ANNUAL INCENTIVE PLAN

Effective January 1,
2014

I.             PURPOSE

Ø 
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 measures;

Ø 
To reward U.S. Cellular executive
officers in relation to their success in meeting and exceeding the performance
targets; and

Ø 
To help U.S. Cellular 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 the Plan.  Executive officers includes
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

  	
  40%

  	
  24%

  
	
  Consolidated Adjusted Income
  Before Income Taxes

  	
  35%

  	
  21%

  
	
  Consolidated Capital
  Expenditures

  	
  25%

  	
  15%

  
	
  Company Performance

  	
   

  	
  60%

  
	
   

  	
   

  	
   

  
	
  Chairman Assessment on
  Strategic Initiatives

  	
   

  	
  10%

  
	
   

  	
   

  	
   

  
	
  Individual Performance

  	
   

  	
  30%

  

 

IV.          PERFORMANCE MEASURES DEFINITIONS

 

Company Performance -
Weighting 60%:     

 

Consolidated
Total Revenues: Actual total revenues
measured against targeted 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 Income
Before Income Taxes (AIBIT): 
Actual AIBIT measured against targeted AIBIT determined on a consolidated
company-wide basis and in a manner consistent to U.S. Cellular's
presentation of AIBIT for external reporting purposes.  AIBIT will be
determined from the Consolidated Statement of Operations, and is defined as
income before income taxes, adjusted for depreciation, amortization and
accretion, net gain or loss on sale of business and other exit costs (if any),
and interest expense.  

 

Consolidated
Capital Expenditures: Actual
capital expenditures measured against targeted 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
since it would measure what is spent, but not necessarily the efficiency and/or
productivity of what is spent.  Therefore, if warranted, the measurement of
actual expenditures vs. targeted expenditures will incorporate an adjustment
for spending efficiency/productivity which could include an assessment of the
“degree of completion” of certain projects.  Such an assessment will be made and
recommended by senior management and will be subject to the review and approval
of the Chairman.

 

 

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
officer’s overall performance for the year will be assessed by the President
and CEO based on such 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 a large part by the company’s culture survey.

 

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

 

§ 
Evaluation of
the officer’s performance in the above areas.

§ 
Performance
feedback received on the officer.  

§ 
The 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.  

 

	
  Kenneth R.
  Meyers

  	
    

  	
  8/19/14

  	
    

  
	
  President and
  CEO

  	
    

  	
  Date

  	
    

  
	
    

  	
    

  	
    

  	
    

  	
    

  
	
  LeRoy T.
  Carlson, Jr.

  	
    

  	
  8/19/14

  	
    

  
	
  Chairman

  	
    

  	
  Date

  	
    

  
	
    

  	
    

  	
    

  	
    

  	
    

  

 

 

 

 

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 narrow ranges result in substantial reductions in bonuses when targets are
not achieved, and greater rewards for above target performance.

 

Company Performance
Measures:

 

	
  Performance Measure

  	
  Minimum

  	
  Maximum

  
	
  Consolidated
  Total Revenues

  	
  90%

  	
  110%

  
	
  Consolidated
  Adjusted Income Before Income Taxes 

  	
  80%

  	
  120% 

  
	
  Consolidated
  Capital Expenditures

  	
  105%

  	
  90%

  

 

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

 

	
  Performance Measure

  	
  Minimum

  	
  Target

  	
  Maximum

  
	
  Consolidated
  Total Revenues

  	
  50%

  	
  100%

  	
  225%

  
	
  Consolidated
  Adjusted Income Before Income Taxes

  	
  50%

  	
  100%

  	
  225%

  
	
  Consolidated
  Capital Expenditures

  	
  50%

  	
  100%

  	
  225%

  

 

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

 

Chairman Assessment on
Strategic Initiatives:  

 

	
  Performance Criteria

  	
  % Payout of Target

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

  	
  150% - 200% 

  
	
  Significantly exceeds
  target performance: Performance
  substantially exceeds that which was planned and expected.

  	
  120% - 150%  

  
	
  Somewhat exceeds/fully
  meets / almost fully meets target performance:  Performance was close to that which was planned
  and expected.

  	
  80% - 120%

  
	
  Partially meets target
  performance: Given the 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 to merit any bonus across all
  components of the plan.

  	
  0%

  

 

Individual Performance:  

 

	
  Performance Criteria

  	
  % Payout of Target

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

  	
  130% - 150% 

  
	
  Significantly exceeds
  target performance: Performance
  substantially exceeds that which was planned and expected.

  	
  110% - 130% 

  
	
  Somewhat exceeds/fully
  meets / almost fully meets target performance:  Performance was close to that which was planned
  and expected.

  	
  80% -110%

  
	
  Partially meets target
  performance: Given the conditions
  that prevailed, performance was not sufficient to merit a bonus for the
  individual performance component of the plan.

  	
  0%

  
	
  Well below target
  performance: Given the conditions
  that prevailed, performance was not sufficient to merit any bonus

  	
  0%

  

 

 

 

 

Exhibit A 

Administrative Guidelines

 

	
  PLAN
  YEAR EFFECTIVE DATES:

  	
  January 1, 2014 – December
  31, 2014

  
	
  GENERAL ADMINISTRATION:

  	
  The target annual bonus
  payout for plan participants will be based on the associate’s base salary as
  of December 31, 2014.  

   

  
	
  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, 2014.  

  
	
  SEPARATION PRIOR TO
  PAYOUT VESTING DATE

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

  
	
  RETIREMENT / DEATH    

  Prior
  to Payout Vesting Date

  	
  Payout based on a proration
  for time worked during the plan year. 

  
	
  LOA (APPROVED
  FMLA)  

  During
  Plan Year:

   

   

  LOA (Non-FMLA)

  During Plan Year:

  	
  Associates on approved 
  FMLA are eligible for payout based on individual performance and the plan
  component attainment percentages. No proration will be applied.

    

  Associates on denied 
  FMLA are eligible for payout based on proration for time worked during the
  plan year, individual performance and the plan component attainment
  percentages.                                                                                                                                  
  

  
	
  MILITARY LEAVE

  During Plan Year:

  	
  Associates on military leave are
  eligible for payout based on individual performance, and plan component
  attainment percentages.  No proration will be applied.

  
	
  TRANSFERS/PROMOTIONS DURING PLAN YEAR

  Within/ Between Annual Plans:

   

   

   

   

  Between an Annual Plan and a Quarterly or Monthly Plan:

   

   

  	
   

   

  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 12/31/14.  

   

  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
  plans’ 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.

  
	
  NEW HIRES DURING THE PLAN
  YEAR

  	
  Associates hired during the
  plan year will be eligible to participate in the Plan and the calculation
  will be based on CEO discretion.

  
	
  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, 2015 and ending on March 15, 2015. 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, 2015 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, 2015, but in no event
  later than December 31, 2015.  Payment will be in the form of a lump sum.Exhibit 10.2

 

UNITED STATES CELLULAR CORPORATION

 

GUIDELINES FOR THE DETERMINATION OF ANNUAL BONUS

FOR PRESIDENT AND CHIEF EXECUTIVE OFFICER

(Effective for Performance Years Commencing 

On or After January 1, 2014)

 

I.    PURPOSE

►      To provide incentive for the President
and Chief Executive Officer (the “President”) of United States Cellular
Corporation (the “Company”) to extend his best efforts toward achieving
superior results with respect to Company performance;

►      To reward the President in relation to
his success in meeting and exceeding performance targets and otherwise
contributing to the success of the Company; and

►      To help the Company retain the President,
a talented leader in a position of critical importance to the success of the
Company.

 

II. 
 BONUS AMOUNT

The
Chairman of the Company (the “Chairman”) in his sole discretion determines
whether an annual bonus will be payable to the President for a performance year
and, if so, the amount of such bonus.  Factors that may be considered by the
Chairman in making such determination include the following:

►      the level of achievement of the Company,
on a short-term and long-term basis, measured against performance objectives
and compared with that of peer companies;

►      the President’s individual performance,
on a short-term and long-term basis, with respect to his leadership of the
Company, the development and maintenance of effective working relationships
across the enterprise, his stated personal objectives and his other duties and
responsibilities;

►      the total cash compensation paid to chief
executive officers of peer companies, including those which are divisions or
subsidiaries of parent companies; and

►      other factors that the Chairman in the
exercise of his judgment and discretion determines relevant.

No
single factor shall be determinative and no factor shall be applied
mechanically to calculate any portion of the President’s bonus.  The entire
amount of the bonus is discretionary.  The President shall have no right or
expectation with respect to any bonus and no bonus shall vest until the date
the bonus is paid.  To the extent and only to the extent that any bonus is paid
for a performance year, such bonus shall be deemed to have been earned on
December 31 of that performance year.

 

III.  BONUS PAYMENT

Any
bonus awarded with respect to a performance year shall be paid during the
period commencing on the January 1 immediately following the performance year
and ending on the March 15 immediately following the performance year. 
Notwithstanding the foregoing, in the event that payment by such March 15th
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 such March 15th, but in no event later than the December 31
immediately following the performance year.  Payment will be in the form of a
lump sum.   

 

Notwithstanding
any provision of these guidelines to the contrary, the President does not have
a legally binding right to a bonus unless and until the bonus amount, if any,
is paid.

 

IV.  AMENDMENT AUTHORITY

The
Chairman reserves the right to amend the guidelines set forth herein at any
time for any reason.

 

                APPROVED
by the CHAIRMAN of UNITED STATES CELLULAR CORPORATION on this 19th
day of August, 2014.

 

	
    

  	
    

  	
  LeRoy T.
  Carlson, Jr.

  
	
    

  	
    

  	
  LeRoy T.
  Carlson, Jr.

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