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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant xO
Filed by a Party other than the Registrant O
Check the appropriate box:
❑ Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule 14a -6(e)
❑ (2))
❑ Definitive Proxy Statement
❑ Definitive Additional Materials
❑ Soliciting Material Pursuant to §240.14a-12
Telephone and Data Systems, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
O No fee required.
O Fee computed on table below per Exchange Act Rules 14a -6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
O Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)
(2) and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the
O date of its filing.
2013-1829
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(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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TELEPHONE AND DATA
SYSTEMS, INC.
30 North LaSalle Street
Suite 4000
Chicago, Illinois 60602
Phone: (312) 630-1900
Fax: (312) 630-9299
April 16, 2012
Dear Shareholders:
ms
You are cordially invited to attend the 2012 Annual Meeting of shareholders of Telephone and Data Systems, Inc.
("TDS") on Thursday, May 17, 2012, at 10:00 a.m., Chicago time, at the Renaissance Chicago O'Hare Suites Hotel, 8500
W. Bryn Mawr Avenue, Chicago, Illinois.
The formal notice of the meeting and our board of directors' Proxy Statement are enclosed. Also enclosed is our 2011
Annual Report to Shareholders. At our 2012 Annual Meeting, shareholders are being asked to take the following actions:
1. elect members of the board of directors nominated by the TDS board of directors and named in the attached
Proxy Statement;
2. ratify the selection of independent registered public accountants for the current fiscal year; and
3. approve, on an advisory basis, the compensation of our named executive officers as disclosed in the attached
Proxy Statement (commonly known as "Say -on -Pay").
The board of directors unanimously recommends a vote "FOR" its nominees for election as directors, "FOR" the
proposal to ratify accountants and "FOR" approval of the Say -on -Pay proposal.
In addition, as required by the rules of the Securities and Exchange Commission ("SEC"), the Proxy Statement includes
a proposal submitted by a shareholder of TDS calling for the board of directors to take steps to adopt a plan for all of TDS'
outstanding stock to have one vote per share. The board of directors unanimously recommends that you vote "AGAINST"
this proposal.
As noted above, the Say -on -Pay proposal asks shareholders to approve, on an advisory basis, the compensation of our
named executive officers as disclosed in the attached Proxy Statement.
TDS operates in highly competitive markets through its primary business units, United States Cellular Corporation ("U.S.
Cellular") and TDS Telecommunications Corporation ("TDS Telecom"), and needs to and has been able to attract and retain
high -quality executives. We believe that our compensation practices are transparent and reflect our commitment to align
compensation with our business strategy and our short- and long-term performance.
Highlights of the TDS compensation programs:
• We have a Compensation Committee, comprised solely of independent directors, that reviews and approves
the salaries, bonuses and long-term compensation of executive officers (other than executive officers of U.S.
Cellular).
• We develop our compensation programs to motivate executive officers to act in the best long-term interests of
TDS.
• We benchmark our executive officer compensation levels using market data supplied by our Compensation
Committee's independent compensation consultant, Compensation Strategies, Inc., and by our compensation
consultant, Towers Watson.
• A major compensation goal is to provide compensation and benefit programs that are both attractive and
fiscally responsible.
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• We provide few perquisites or "perks" to our officers
• We don't enter into employment contracts as a general practice.
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• We endeavor to conform with generally accepted compensation practices as defined by leading proxy advisory
firms.
• Our executive bonus program is appropriately balanced between individual and company performance. In
2011, we adjusted the company performance portion of our executive bonus program so that 70% of the target
bonus for company performance is based on a quantitative calculation of the company's financial performance,
and 30% is based on a qualitative assessment of the company's performance with respect to enhancing its
longer term value and success.
• As a general practice, we do not enter into agreements to provide substantial pre -defined termination benefits,
such as "golden parachutes".
2011 Compensation
Our executive officers' compensation comprises a mix of base salary, annual cash bonuses and equity -based, long-term
incentive awards.
• When setting base salaries, we consider the benchmarking analyses performed by our compensation
consultants, the executives' personal accomplishments and their overall contribution to the success of the
organization. Please refer to the detailed description of those considerations for each named executive in the
attached Proxy Statement under "Compensation Discussion and Analysis —Annual Cash Compensation —Base
Salary".
• Bonus awards are based on a combination of company and individual performance. For 2011, the weighting
was based 50% on individual performance and 50% on company performance. As to company performance,
using both quantitative (70%) and qualitative (30%) assessments designed to provide a balanced approach to
measuring performance for both U.S. Cellular (weighted at 75%) and TDS Telecom (weighted at 25%), we
determined that the company performance portion of the TDS bonus would be paid at 93.9% of the targeted
amount. Please refer to a description of TDS' 2011 performance in the attached Proxy Statement under
"Compensation Discussion and Analysis —Company Performance" and a description of each named executive
officer's bonus under "Compensation Discussion and Analysis —Annual Cash Compensation —Bonus".
• Long-term compensation awards for executive officers are based, in part, on company and individual
performance, with the goal of increasing long-term company performance and shareholder value. Stock
options, restricted stock units and bonus match units generally vest over several years, to reflect the goal of
relating long-term executive compensation to increases in shareholder value over the same period. Please refer
to the detailed description of those considerations for each named executive officer in the attached Proxy
Statement under "Compensation Discussion and Analysis —Long -Term Equity Compensation".
Corporate Governance
TDS endeavors to follow good corporate governance practices and other best practices. For instance, TDS has
established a fully independent Compensation Committee, even though it is not required to do so under law, SEC regulations
or New York Stock Exchange listing requirements because it is a controlled company. Good corporate governance is an
important consideration to the Compensation Committee. TDS' commitment to good corporate governance has been
recognized by Forbes and Governance Metrics International (GMI) who identified TDS as one of only 100 companies to be
named Most Trustworthy for 2012. GMI analyzed more than 8,000 companies before selecting the top 100. TDS also made
the list in 2009. For 2012, TDS had an accounting and governance risk score of 98 out of 100. Additional information relating
to TDS' good corporate governance practices and other best practices is set forth below in the Compensation Discussion and
Analysis.
We encourage you to read the Compensation Discussion and Analysis in the attached Proxy Statement for a detailed
discussion and analysis of our executive compensation program, including information about the fiscal 2011 compensation of
our named executive officers.
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We would like to have as many shareholders as possible represented at the meeting. Therefore, whether or not you
plan to attend the meeting, please sign and return the enclosed white proxy card(s), or vote on the Internet in accordance
with the instructions set forth on the proxy card(s).
We look forward to visiting with you at the Annual Meeting.
Very truly yours,
LeRoy T. Carlson, Jr.
President and Chief Executive
Officer
Walter C.D. Carlson
Chairman of the Board
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT
AND
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 17, 2012
TO THE SHAREHOLDERS OF
TELEPHONE AND DATA SYSTEMS, INC.
The 2012 Annual Meeting of shareholders of Telephone and Data Systems, Inc., a Delaware corporation, will be held at
the Renaissance Chicago O'Hare Suites Hotel, 8500 W. Bryn Mawr Avenue, Chicago, Illinois, on Thursday, May 17, 2012, at
10:00 a.m., Chicago time, for the following purposes:
1. To elect members of the board of directors nominated by the TDS board of directors and named in this Proxy
Statement. Your board of directors unanimously recommends that you vote FOR the directors nominated by the
TDS board of directors.
2. To consider and ratify the selection of PricewaterhouseCoopers LLP as our independent registered public
accountants for the year ending December 31, 2012. Your board of directors unanimously recommends that
you vote FOR this proposal.
3. To approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy
Statement (commonly known as "Say -on -Pay'). Your board of directors unanimously recommends that you
vote FOR the Say -on -Pay proposal.
4. If properly presented at the Annual Meeting, to consider and vote upon a proposal submitted by a shareholder
of TDS calling for the board of directors to take steps to adopt a plan for all of TDS' outstanding stock to have
one vote per share. Your board of directors unanimously recommends that you vote AGAINST this proposal.
5. To transact such other business as may properly come before the meeting or any adjournments thereof.
We are first mailing this Notice of Annual Meeting and Proxy Statement to you on or about April 16, 2012. We have fixed
the close of business on March 29, 2012, as the record date for the determination of shareholders entitled to notice of, and to
vote at, the Annual Meeting or any adjournments thereof.
The following additional information is being provided as required by SEC rules:
The Proxy Statement and Annual Report to Shareholders are available at www.teldta.com under Investor
Relations —Proxy Vote, or at www.teldta.com/proxyvote.
The following items have been posted to this website:
1. Proxy Statement for the 2012 Annual Meeting
2. Annual Report to Shareholders for 2011
3. Forms of Proxy Cards
Any control/identification numbers that you need to vote are set forth on your proxy card(s) if you are a record holder, or
on your voting instruction card if you hold shares through a broker, dealer or bank.
The location where the Annual Meeting will be held is the Renaissance Chicago O'Hare Suites Hotel. This hotel is
located in Chicago, Illinois at 8500 W. Bryn Mawr Avenue, just south of Interstate 90 and approximately one block west of
Cumberland Avenue.
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RECENT DEVELOPMENTS
On January 13, 2012 TDS shareholders approved certain amendments ("Charter Amendments") to the Restated
Certificate of Incorporation of TDS. A Restated Certificate of Incorporation reflecting the Charter Amendments (the "Restated
Charter) was filed by TDS on January 24, 2012 and became effective at 5:01 p.m. eastern time on such date (the "Effective
Time). The Charter Amendments were described in TDS' definitive proxy statement dated August 31, 2011 as filed with the
Securities and Exchange Commission ("SEC") on Schedule 14A on such date, and the supplement thereto dated
November 29, 2011 as filed with the SEC on such date.
Among other things, effective as of the Effective Time, the Charter Amendments reclassified (i) each issued TDS
Special Common Share, par value $0.01 per share ("Special Common Shares'), as one TDS Common Share, par value
$0.01 per share ("Common Shares'), (H) each issued Common Share as 1.087 Common Shares, and (Hi) each issued TDS
Series A Common Share, par value $0.01 per share ("Series A Common Shares') as 1.087 Series A Common Shares (the
"Reclassification").
As of January 24, 2012, immediately prior to the Reclassification, there were outstanding 6,548,932 Series A Common
Shares, 49,980,080 Common Shares, 47,012,101 Special Common Shares and 8,300 Preferred Shares.
As of January 24, 2012, immediately following the Reclassification and after reflecting the payment of cash in lieu of
fractional shares, there were outstanding 7,118,667 Series A Common Shares, 101,339,873 Common Shares and 8,300
Preferred Shares.
Beginning with the opening of trading on January 25, 2012, all new Common Shares issued in the Reclassification now
trade together with the previously existing Common Shares on the New York Stock Exchange ("NYSE") under the ticker
symbol "TDS."
The Special Common Shares, which previously traded on the NYSE under the ticker symbol "TDS.S," have ceased to
be outstanding and ceased to trade. As a result, TDS voluntarily requested that the Special Common Shares be delisted from
the NYSE.
As a result of the Charter Amendments, the TDS Compensation Committee took action to reclassify, effective as of the
Effective Time, the Special Common Shares available for issuance under the Telephone and Data Systems, Inc. 2004 Long -
Term Incentive Plan ("TDS 2004 Long -Term Incentive Plan") immediately prior to the Effective Time as an equal number of
Common Shares available for issuance under the TDS 2004 Long -Term Incentive Plan.
In addition, the TDS Compensation Committee took action to adjust outstanding awards under the TDS 2004 Long -
Term Incentive Plan.
Prior to the Effective Time, the following awards were outstanding under the TDS 2004 Long -Term Incentive Plan:
(i) stock options to purchase Special Common Shares, (H) tandem stock options to purchase an equal number of Common
Shares and Special Common Shares ("Tandem Options," and each Common Share/Special Common Share unit subject to a
Tandem Option, a "Tandem Unit"), (Hi) restricted stock unit awards to be settled in Special Common Shares, (iv) annual
bonus deferrals and related employer match awards to be settled in Special Common Shares and (v) annual bonus deferrals
and related employer match awards to be settled in part in Common Shares and in part in Special Common Shares.
As a result of the Reclassification, the TDS Compensation Committee took action to adjust outstanding awards under
the TDS 2004 Long -Term Incentive Plan as follows:
(i)
each stock option (other than a Tandem Option) to purchase Special Common Shares granted under the TDS
2004 Long -Term Incentive Plan and outstanding immediately prior to the Effective Time was adjusted, effective
as of the Effective Time, to be a stock option to purchase an equal number of Common Shares, at the same
purchase price per Common Share as in effect immediately prior to the Effective Time;
(H) each Tandem Option granted under the TDS 2004 Long -Term Incentive Plan and outstanding immediately prior
to the Effective Time was adjusted, effective as of the Effective Time, to be a
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stock option to purchase a number of Common Shares equal to the product of (i) the number of Tandem Units
subject to the Tandem Option and (H) 2.087, with a purchase price per Common Share subject to the stock
option equal to the quotient of (A) the purchase price per Tandem Unit and (B) 2.087;
(Hi) each restricted stock unit award to be settled in Special Common Shares granted under the TDS 2004 Long -
Term Incentive Plan and outstanding immediately prior to the Effective Time was adjusted, effective as of the
Effective Time, to be a restricted stock unit award to be settled in an equal number of Common Shares;
(iv) the portion of each deferred compensation account under the TDS 2004 Long -Term Incentive Plan that was
deemed to hold Special Common Shares immediately prior to the Effective Time in lieu thereof was deemed to
hold, effective as of the Effective Time, an equal number of Common Shares; and
(v) the portion of each deferred compensation account under the TDS 2004 Long -Term Incentive Plan that was
deemed to hold Common Shares immediately prior to the Effective Time in lieu thereof was deemed to hold,
effective as of the Effective Time, a number of Common Shares equal to the product of (i) the number of
Common Shares deemed to be held in such account immediately prior to the Effective Time and (H) 1.087.
Except as modified above, the terms and conditions of the TDS 2004 Long -Term Incentive Plan and related award
agreements as applied to outstanding awards under the TDS 2004 Long -Term Incentive Plan remain in effect.
The information regarding awards under the TDS 2004 Long -Term Incentive Plan reported herein for 2011 and as of
December 31, 2011 reflects information that existed as of such time, and has not been restated to reflect the effects of the
Reclassification that occurred in January 2012. The adjusted award information will be reflected in the 2013 proxy statement
for compensation earned in 2012 and as of December 31, 2012.
For the adjustments made to outstanding equity awards in connection with the Reclassification, see "Other Benefits and
Plans Available to Identified Officers—TDS 2004 Long -Term Incentive Plan —Reclassification" under "Compensation
Discussion and Analysis" below.
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SUMMARY
The following is a summary of the actions being taken at the 2012 Annual Meeting and does not include all of the
information that may be important to you. You should carefully read this entire Proxy Statement and not rely solely on the
following summary.
Proposal 1 —Election of Directors
Under TDS' Restated Certificate of Incorporation, as amended, the terms of all incumbent directors will expire at the
2012 Annual Meeting.
Holders of Series A Common Shares and Preferred Shares, voting as a group, will be entitled to elect eight directors.
Your board of directors has nominated the following incumbent directors for election by the holders of Series A Common
Shares and Preferred Shares: LeRoy T. Carlson, Jr., Letitia G. Carlson, M.D., Prudence E. Carlson, Walter C.D. Carlson,
Kenneth R. Meyers, Donald C. Nebergall, George W. Off and Herbert S. Wander.
Holders of Common Shares will be entitled to elect four directors. Your board of directors has nominated the following
incumbent directors for election by the holders of Common Shares: Clarence A. Davis, Christopher D. O'Leary, Gary L.
Sugarman and Mitchell H. Saranow.
The TDS board of directors determined to nominate Herbert S. Wander (currently a director who was elected by the
holders of Common Shares and Special Common Shares at the 2011 Annual Meeting), for election as a director by the
holders of Series A Common Shares and Preferred Shares at the 2012 Annual Meeting, and to nominate Mitchell H.
Saranow (currently a director who was elected by the holders of Series A Common Shares and Preferred Shares at the 2011
Annual Meeting), for election as a director by the holders of Common Shares at the 2012 Annual Meeting. The TDS board of
directors did this so that the independent director who serves on the TDS Corporate Governance and Nominating Committee
(Mr. Saranow) is elected by the holders of Common Shares rather than the holders of Series A Common Shares and
Preferred Shares.
Your board of directors unanimously recommends that you vote "FOR" its nominees for election as directors.
Proposal 2 —Ratification of Independent Registered Public Accounting Firm for 2012
As in prior years, shareholders are being asked to ratify PricewaterhouseCoopers LLP as our independent registered
public accounting firm for the year ending December 31, 2012.
Your board of directors unanimously recommends that you vote "FOR" this proposal.
Proposal 3 —Advisory Vote on Executive Compensation or "Say -on -Pay"
As required by the Dodd Frank Wall Street Reform and Consumer Protection Act (the "Dodd -Frank Act"), at the 2012
Annual Meeting shareholders are being asked to approve, on an advisory basis, the compensation of our named executive
officers for 2011 as disclosed in this Proxy Statement.
Your board of directors unanimously recommends that you vote "FOR" this proposal.
Proposal 4 —Proposal Submitted by a Shareholder
As required by the rules of the SEC, the Proxy Statement includes a proposal submitted by a shareholder of TDS calling
for the board of directors to take steps to adopt a plan for all of TDS' outstanding stock to have one vote per share.
Your board of directors unanimously recommends that you vote "AGAINST" this proposal.
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VOTING INFORMATION
What is the record date for the meeting?
The close of business on March 29, 2012 is the record date for the determination of shareholders entitled to notice of,
and to vote at, the Annual Meeting or any adjournments thereof.
A complete list of shareholders entitled to vote at the Annual Meeting, arranged in alphabetical order and by voting
group, showing the address of and number of shares held by each shareholder, will be made available at the offices of TDS,
30 North LaSalle Street, 40th Floor, Chicago, Illinois 60602, for examination by any shareholder during normal business
hours, for a period of at least ten days prior to the Annual Meeting.
What shares of stock entitle holders to vote at the meeting?
We have the following classes of stock outstanding, each of which entitles holders to vote at the meeting:
• Common Shares;
• Series A Common Shares; and
• Preferred Shares.
The Common Shares are listed on the New York Stock Exchange ("NYSE") under the symbol "TDS."
There is generally no public trading of the Series A Common Shares, but the Series A Common Shares are convertible
on a share -for -share basis into Common Shares, which are publicly -traded on the NYSE.
No public market exists for the Preferred Shares. The Preferred Shares are divided into series, none of which is
currently convertible into any class of common stock. All holders of Preferred Shares vote together with the holders of
Common Shares and Series A Common Shares, except in the election of directors. In the election of directors, all holders of
Preferred Shares vote together with the holders of Series A Common Shares.
What is the voting power of the outstanding shares in the election of directors?
The following shows information relating to the outstanding shares and voting power of such shares in the election of
directors as of the record date:
Class of Stock
Series A Common
Shares
Preferred Shares
Subtotal
Common Shares
Total Directors
Outstanding
Shares
Votes per
Share
Voting Power
7,118,667 10 71,186,670
8,300
1 8,300
5
Total Number of
Directors
Elected by
Voting Group
and Standing for
Election
71,194,970 8
101,361,802 4
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What is the voting power of the outstanding shares in matters other than the election of directors?
The following shows information relating to the outstanding shares and voting power of such shares in matters other
than the election of directors as of the record date:
Class of Stock
Series A Common Shares
Common Shares
Preferred Shares
Less than .1%
Outstanding Votes per Total Voting
Shares Share Power Percent
7,118,667 10 71,186,670 56.7%
101,361,802 0.535983 54,328,203 43.3%
8,300 1 8,300
125,523,173 100.0%
As a result of the Reclassification, the initial aggregate voting power of Series A Common Shares and Common Shares
in matters other than the election of directors was set at the percentages held by such shares immediately prior to the
Effective Time, of approximately 56.7% and 43.3%, respectively. The initial percentages will be adjusted under certain
circumstances, except that the aggregate voting percentage of the Series A Common Shares could not increase above the
initial fixed percentage voting power of approximately 56.7%.
As of the record date for the Annual Meeting, the per share voting power of the Common Shares is 0.535983 votes per
share, calculated as follows pursuant to Section B.9 of Article IV of the Restated Charter:
(a) The Series A Common Shares continue to have ten votes per share.
(b) Accordingly, in order to achieve the foregoing aggregate percentage voting power, the per share voting power
of the Common Shares now floats and is redetermined on the record date for each shareholder vote. The
Restated Charter provides that each Common Share shall entitle the holder thereof to cast a number of votes
and fractional votes (rounded to the nearest six decimal places) determined by dividing the Aggregate Common
Share Voting Power (as defined below) by the number of Common Shares outstanding on the record date. The
number of Common Shares outstanding on the record date of March 29, 2012 was 101,361,802.
(c) Except to the extent provided in paragraph (d) below, the Aggregate Common Share Voting Power is the
number of votes equal to the sum of the number of Common Shares outstanding immediately before the
Effective Time (49,980,080) and the number of Series A Common Shares converted into Common Shares after
the Effective Time (no Series A Common Shares were converted into Common Shares between January 25
and March 29, 2012). Accordingly, this sum is 49,980,080.
(d) The Restated Charter provides that, if the quotient determined in clause (i) below is greater than the quotient
determined in clause (H) below, the Aggregate Common Share Voting Power will not be determined as set forth
in paragraph (c) above but instead will be determined as set forth in paragraph (e) below.
(i) The quotient (rounded to the nearest six decimal places) obtained pursuant to the following formula:
(SARDx10)
(7,118,667x10)
(SA RDx10)+CSOET+AC (7,118,667x10)+49,980,080+0
- 58.750994%
(H) The quotient (rounded to the nearest six decimal places) obtained pursuant to the following formula
("SAvp"):
(SAETx 10)
(SAETx 10)+CSOET
6
(6,548,932x10)
_ = 56.715736%
(6,548,932x10)+49,980,080
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(e) If the condition in paragraph (d) is satisfied, the Aggregate Common Share Voting Power is the aggregate
number of votes determined as follows:
(SARD x 10)
(SARA x 10) _ (7,118,667 x 10) _ (7,118,667 x 10) = 54,328,178
56.715736%
SAvP
(f) For purposes of this Section:
SARD = the number of Series A Common Shares outstanding on the record date, which was 7,118,667
Series A Common Shares on March 29, 2012.
SAvP = the Aggregate Percentage of Series A Voting Power (Expressed as a Fraction) as of the Effective Time,
as defined in clause (H) of paragraph (d).
SAET = the number of Series A Common Shares outstanding immediately prior to the Effective Time, which
was 6,548,932.
AC = the total number of Common Shares issued upon conversion of Series A Common Shares after the
Effective Time. No Common Shares have been issued upon conversion of Series A Common Shares between
January 25, 2012 and March 29, 2012.
CSOET = the number of Common Shares outstanding immediately before the Effective Time, which was
49,980,080.
Accordingly, because the condition in paragraph (d) was satisfied, the per share voting power on the record date of
March 29, 2012 is equal to the Aggregate Common Share Voting Power of 54,328,178 determined in paragraph (e) divided
by the number of Common Shares outstanding on the record date of 101,361,802, or 0.535983 votes per share.
How may shareholders vote with respect to the election of directors in Proposal 1?
Shareholders may, with respect to directors to be elected by such shareholders:
• vote FOR the election of such director nominees, or
• WITHHOLD authority to vote for such director nominees.
Your board of directors unanimously recommends a vote FOR its nominees for election as directors.
How may shareholders vote with respect to the ratification of our independent registered public accounting firm for
2012 in Proposal 2?
Shareholders may, with respect to the proposal to ratify the selection of PricewaterhouseCoopers LLP as our
independent registered public accounting firm for 2012:
• vote FOR,
• vote AGAINST, or
• ABSTAIN from voting on this proposal.
Your board of directors unanimously recommends a vote FOR this proposal.
How may shareholders vote with respect to Say -on -Pay in Proposal 3?
Shareholders may, with respect to Say -on -Pay:
• vote FOR,
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• vote AGAINST, or
• ABSTAIN from voting on this proposal.
Your board of directors unanimously recommends a vote FOR this proposal.
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How may shareholders vote with respect to the shareholder proposal in Proposal 4?
Shareholders may, with respect to the shareholder proposal:
• vote FOR,
• vote AGAINST, or
• ABSTAIN from voting on this proposal.
Your board of directors unanimously recommends a vote AGAINST this proposal.
How does the TDS Voting Trust intend to vote?
The Voting Trust under Agreement dated June 30, 1989, as amended (the "TDS Voting Trust'), held 6,736,420 Series A
Common Shares on the record date, representing approximately 94.6% of the Series A Common Shares. By reason of such
holding, the TDS Voting Trust has the voting power to elect all of the directors to be elected by the holders of Series A
Common Shares and Preferred Shares and has approximately 53.7% of the voting power with respect to matters other than
the election of directors. The TDS Voting Trust also held 6,100,979 Common Shares on the record date, representing
approximately 6.0% of the Common Shares. By reason of such holding, the TDS Voting Trust has approximately 6.0% of the
voting power with respect to the election of directors elected by the holders of Common Shares and an additional 2.6% of the
voting power in matters other than the election of directors. Accordingly, the TDS Voting Trust has an aggregate of 56.3% of
the voting power in matters other than the election of directors. The TDS Voting Trust does not currently own Preferred
Shares.
The TDS Voting Trust has advised us that it intends to vote:
• FOR the board of directors' nominees for election by the holders of Series A Common Shares and Preferred
Shares, and FOR the board of directors' nominees for election by the holders of Common Shares,
• FOR the proposal to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public
accounting firm for 2012,
• FOR the Say -on -Pay proposal, and
• AGAINST the shareholder proposal.
How do I vote?
Proxies are being requested from the holders of Common Shares in connection with the election of four directors in
Proposal 1 and in connection with Proposals 2, 3, and 4.
Proxies are being requested from the holders of Series A Common Shares and Preferred Shares in connection with the
election of eight directors in Proposal 1 and in connection with Proposals 2, 3, and 4.
Whether or not you intend to be present at the 2012 Annual Meeting, please sign and mail your proxy card(s) in the
enclosed self-addressed envelope to Computershare Trust Company, N.A., P.O. Box 43126, Providence, Rhode Island
02940-5138, or vote on the Internet using the control/identification number on your proxy card(s) and in accordance with the
instructions set forth on the proxy card(s). To assure that all your shares are represented, please vote on the Internet or
return the enclosed proxy card(s) by mail. If you hold more than one class of our shares, you will find enclosed a separate
proxy card for each holding as follows.
• a proxy card for Common Shares, including Common Shares owned through the TDS dividend reinvestment
plan and through the TDS Tax -Deferred Savings Plan;
• a proxy card for Series A Common Shares, including Series A Common Shares owned through the TDS
dividend reinvestment plan; and
• a proxy card for Preferred Shares.
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How will proxies be voted?
All properly executed and unrevoked proxies received in the enclosed form in time for our 2012 Annual Meeting of
shareholders will be voted in the manner directed on the proxies.
If no direction is made on the applicable proxy card(s), a proxy by any shareholder will be voted FOR the election of the
board of directors' nominees to serve as directors in Proposal 1, FOR Proposal 2, FOR Proposal 3, and AGAINST
Proposal 4.
Proxies given pursuant to this solicitation may be revoked at any time prior to the voting of the shares at the Annual
Meeting by written notice to the Secretary of TDS, by submitting a later dated proxy or by attendance and voting in person at
the Annual Meeting.
Because the board of directors has no knowledge of any other proposals that may be properly presented at the 2012
Annual Meeting and because no other proposals were received by TDS by the date specified by the advance notice provision
in TDS' Bylaws, the proxy solicited by the board of directors for the 2012 Annual Meeting confers discretionary authority to
the proxies named therein to vote on any matter that may properly come before such meeting or any adjournment,
postponement, continuation or rescheduling thereof, in addition to the foregoing proposals, to the extent permitted by
applicable law and regulation.
How will my shares be voted if I own shares through a broker?
If you are the beneficial owner of shares held in "street name" by a broker, bank, or other nominee ("broker"), such
broker, as the record holder of the shares, is required to vote those shares in accordance with your instructions. If you do not
give specific instructions to the broker or have standing instructions on file with the broker, under Rule 452 of the NYSE,
depending on the timing of certain actions, the broker may be entitled to vote the shares with respect to "discretionary" items
but will not be permitted to vote the shares with respect to "non -discretionary" items (in which case such shares will be
treated as "broker non -votes"). In addition, whether the broker can or will vote your shares with respect to discretionary items
if you have not given instructions to the broker and how such shares may be voted by the broker (i.e., proportionately with
voting instructions received by the broker from other shareholders or pursuant to the recommendation of management, etc.)
depend on the particular broker's policies. As a result, we cannot advise you whether your broker will or will not vote your
shares or how it may vote the shares if it does not receive or have voting instructions from you and, accordingly, recommend
that you contact your broker. In general, the ratification of auditors is a discretionary item. On the other hand, matters such as
the election of directors (whether contested or not), votes on Say -on -Pay, the approval of an equity compensation plan, and
shareholder proposals are non -discretionary items. In such cases, if your broker does not have specific or standing
instructions, your shares will be treated as "broker non -votes" and will not be voted on such matters. Accordingly, we urge
you to provide instructions to your broker so that your votes may be counted on all matters. If your shares are held in street
name, your broker will include a voting instruction card with this Proxy Statement. We strongly encourage you to vote your
shares by following the instructions provided on the voting instruction card. Please return your voting instruction card to your
broker and/or contact your broker to ensure that a proxy card is voted on your behalf.
What constitutes a quorum for the meeting?
A majority of the voting power of shares of capital stock in matters other than the election of directors and entitled to
vote, represented in person or by proxy, will constitute a quorum to permit the Annual Meeting to proceed. Withheld votes
and abstentions of shares entitled to vote and broker "non -votes" will be treated as present in person or represented by proxy
for purposes of establishing a quorum for the meeting. If such a quorum is present or represented by proxy, the meeting can
proceed. If the shares beneficially owned by the TDS Voting Trust are present in person or represented by proxy at the
Annual Meeting, such shares will constitute a quorum at the Annual Meeting to permit the meeting to proceed. In addition,
where a separate vote by a class or group is required with respect to a proposal, a quorum is also required with respect to
such proposal for the vote to proceed with respect to such proposal.
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In the election of directors, the holders of a majority of the votes of the stock of such class or group issued and
outstanding and entitled to vote with respect to such director, present in person or represented by proxy, will constitute a
quorum with respect to such election. Withheld votes by shares entitled to vote with respect to a director and broker "non -
votes" with respect to such director will be treated as present in person or represented by proxy for purposes of establishing
a quorum for the election of such director. If Series A Common Shares beneficially owned by the TDS Voting Trust are
present in person or represented by proxy at the Annual Meeting, such shares will constitute a quorum at the Annual Meeting
in connection with the election of directors by the holders of Series A Common Shares and Preferred Shares. If a quorum of
the holders of Common Shares is not present at the time the Annual Meeting is convened, the chairman of the meeting or
holders of a majority of the voting power in matters other than the election of directors represented in person or by proxy may
adjourn or postpone the Annual Meeting with respect to all proposals or only with respect to the election of directors by the
holders of Common Shares.
With respect to Proposals 2, 3, and 4, the holders of a majority of the votes of the stock issued and outstanding and
entitled to vote with respect to such proposals, present in person or represented by proxy, will constitute a quorum at the
Annual Meeting in connection with such proposals. Abstentions from voting on such proposals by shares entitled to vote on
such proposals and broker "non -votes" with respect to such proposals will be treated as present in person or represented by
proxy for purposes of establishing a quorum for such proposals. If TDS shares beneficially owned by the TDS Voting Trust
are present in person or represented by proxy at the Annual Meeting, such shares will constitute a quorum at the Annual
Meeting in connection with such proposals.
Even if a quorum is present, holders of a majority of the voting stock represented in person or by proxy may adjourn or
postpone the Annual Meeting. Because it holds a majority of the voting power of all classes of stock, the TDS Voting Trust
has the voting power to approve an adjournment or postponement. TDS does not currently have any expectation that the
Annual Meeting would be adjourned or postponed for any reason. However, if there is a proposal to adjourn or postpone the
Annual Meeting by a vote of the stockholders, the persons named in the enclosed proxy will have discretionary authority to
vote with respect to such adjournment or postponement.
What vote is required to elect directors in Proposal 1?
Directors will be elected by a plurality of the votes cast in the election of directors by the class or group of stockholders
entitled to vote in the election of such directors which are present in person or represented by proxy at the meeting.
Accordingly, if a quorum exists, the persons receiving a plurality of the votes cast by shareholders entitled to vote with
respect to the election of such directors will be elected to serve as directors. Withheld votes and broker non -votes with
respect to the election of such directors will not be counted as votes cast for purposes of determining if a director has
received a plurality of the votes.
What vote is required with respect to Proposals 2, 3 and 4?
The holders of Common Shares, Preferred Shares and Series A Common Shares will vote together as a single group
with respect to Proposals 2, 3 and 4. Each holder of outstanding Common Shares or Preferred Shares is entitled to one vote
for each Common Share or Preferred Share held in such holder's name. Each holder of Series A Common Shares is entitled
to ten votes for each Series A Common Share held in such holder's name.
If a quorum is present at the Annual Meeting, the approval of Proposals 2, 3 and 4 will require the affirmative vote of the
holders of stock having a majority of the votes which could be cast by the holders of all stock entitled to vote on such
question which are present in person or represented by proxy at the meeting. Abstentions by shares entitled to vote on such
proposals will be treated as votes which could be cast that are present for such purposes and, accordingly, will effectively
count as a vote cast against such proposal. Broker non -votes with respect to such proposals will not be included in the total
of votes which could be cast which are present for purposes of determining whether such proposals are approved, even
though they may be included for purposes of determining a quorum.
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PROPOSAL 1
ELECTION OF DIRECTORS
The terms of all incumbent directors will expire at the 2012 Annual Meeting. The board of directors' nominees for
election of directors are identified in the tables below. Each of the nominees has consented to be named in the Proxy
Statement and consented to serve if elected. In the event any such nominee fails to stand for election, the persons named in
the proxy presently intend to vote for a substitute nominee if one is designated by the board of directors.
To be Elected by Holders of Common Shares
Name
Clarence A. Davis
Christopher D. O'Leary
Mitchell H. Saranow
Gary L. Sugarman
Age Position with TDS and Principal Occupation
Served as
Director
since
70 Director of TDS and Business Consultant 2009
52 Director of TDS and Executive Vice
President, Chief Operating Officer —
International of General Mills, Inc.
2006
66 Director of TDS and Chairman of The 2004
Saranow Group, L.L.C.
59 Director of TDS, Executive Chairman of
FXecosystem, Inc., Managing Member —
Richfield Capital Partners and Principal of
Richfield Associates, Inc.
To be Elected by Holders of Series A Common Shares and Preferred Shares
Name
LeRoy T. Carlson, Jr.
Letitia G. Carlson, M.D.
Age Position with TDS and Principal Occupation
2009
Served as
Director
since
65 Director and President and Chief 1968
Executive Officer of TDS
51 Director of TDS and Physician and
Associate Clinical Professor at George
Washington University Medical Center
1996
Prudence E. Carlson 60 Director of TDS and Private Investor 2008
Walter C.D. Carlson 58 Director and non -executive Chairman of 1981
the Board of TDS and Partner, Sidley
Austin LLP, Chicago, Illinois
Kenneth R. Meyers 58 Director and Executive Vice President and 2007
Chief Financial Officer of TDS
Donald C. Nebergall 83 Director of TDS and Consultant 1977
George W. Off 65 Director of TDS, Private Investor and 1997
retired Director and Chairman of
Checkpoint Systems, Inc.
Herbert S. Wander
77 Director of TDS and Partner, Katten 1968
Muchin Rosenman LLP, Chicago, Illinois
Background of Board of Directors' Nominees
The following briefly describes the business experience during at least the past five years of each of the nominees,
including each person's principal occupation(s) and employment during at least the past five years; the name and principal
business of any corporation or other organization in which such occupation(s) and employment were carried on; and whether
such corporation or organization is a parent, subsidiary or other affiliate of TDS. The following also indicates any other
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directorships held, including any other directorships held during at least the past five years, by each nominee in any SEC
registered company or any investment company, and the identity of such company.
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In addition, the following also briefly discusses the specific experience, qualifications, attributes or skills that led to the
conclusion that each such person should serve as a director for TDS, in light of TDS' business and structure, including
information about the person's particular areas of expertise or other relevant qualifications. Except as discussed below under
"Director Nomination Process", TDS does not have any specific, minimum qualifications that the board believes must be met
by a nominee for a position on the TDS board of directors, or any specific qualities or skills that the board believes are
necessary for one or more of the TDS directors to possess. The TDS board believes that substantial judgment, diligence and
care are required to identify and select qualified persons as directors. The TDS board has consistently sought to nominate to
the board of directors eminently qualified individuals whom the board believes would provide substantial benefit and
guidance to TDS. Also, as discussed below under "Director Nomination Process", TDS believes that it is desirable for
directors to have diverse backgrounds, experience, skills and other characteristics. In addition, the conclusion of which
persons should serve as directors of TDS is based in part on the fact that TDS is a controlled company with a capital
structure in which different classes of stock vote for different directorships. In particular, as discussed under "Director
Nomination Process", because the TDS Voting Trust has over 90% of the voting power in the election of directors elected by
holders of Series A Common Shares and Preferred Shares, nominations of directors for election by the holders of Series A
Common Shares and Preferred Shares are based on the recommendation of the trustees of the TDS Voting Trust.
Nominees for Election by Holders of Common Shares
Clarence A. Davis. Clarence A. Davis is currently a director who was last elected by the holders of Common Shares
(and Special Common Shares) at the 2011 Annual Meeting. He initially was nominated to the TDS board of directors
pursuant to a Settlement Agreement dated April 24, 2009 between GAMCO Asset Management, Inc. and TDS (the
"Settlement Agreement"). Although TDS initially nominated Mr. Davis to the TDS board of directors in 2009 as part of such
settlement, after observing the performance and contributions of Mr. Davis on the TDS board of directors since that time, the
TDS board of directors has re -nominated Mr. Davis to the TDS board of directors each year since 2010. In addition,
Mr. Davis was appointed to the TDS Audit Committee in 2010. The following provides information on the background of
Mr. Davis, including the specific factors that led to the conclusion that he should serve as a director of TDS.
Mr. Davis is currently a business consultant.
Mr. Davis was previously a director of Nestor, Inc., a software solutions company (formerly NASDAQ: NEST), and was a
member and the chairman of Nestor's audit committee. He was the chief executive officer and an employee of Nestor from
August 2007 until January 2009. Within the last ten years, Nestor successfully petitioned the Rhode Island Superior Court for
a court -appointed receiver who assumed all aspects of the company's operations in June 2009. The receiver sold the assets
of Nestor to American Traffic Solutions in September 2009. Mr. Davis ceased to be a director of Nestor at that time.
From May 2006 to August 2007, Mr. Davis was an independent consultant, and from September 2005 through May
2006, he served as consultant to the National Headquarters, American Red Cross.
Prior thereto, Mr. Davis was employed by the American Institute of Certified Public Accountants ("AICPA"), serving as
chief financial officer from 1998 through 2000 and chief operating officer from 2000 through 2005. Mr. Davis was an
accountant at the public accounting firm of Spicer & Oppenheim and a predecessor public accounting firm between 1967 and
1990, and was a partner at such firm between 1979 and 1990. Mr. Davis is a Certified Public Accountant (inactive). Mr. Davis
has a Bachelor of Science degree in Accounting from Long Island University.
Mr. Davis is, and has been since 2007, a member of the board of directors and board of trustees of The Gabelli SRI
Green Fund and The GDL Fund, respectively, which are registered investment companies that are managed by an affiliate of
GAMCO Asset Management, Inc. Mr. Davis is a member of the audit committee of each of such funds. (As noted above,
TDS was previously a party to a Settlement Agreement with GAMCO Asset Management, Inc. that resulted in the initial
nomination of Mr. Davis as a director of TDS in 2009.)
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In addition, between 2009 and January 2012, Mr. Davis was a director of Sonesta International Hotels (Nasdaq:
SNSTA), a company that operates hotels, and was a member of its audit committee. Sonesta International Hotels was
acquired in January 2012 and Mr. Davis is no longer a director thereof or member of its audit committee.
Between 2009 and January 2012, Mr. Davis was a director of Pennichuck Corp. (Nasdaq: PNNW), a water utility
company, and was a member of its audit committee. Pennichuck Corp. was acquired in January 2012 and Mr. Davis is no
longer a director thereof or member of its audit committee.
Mr. Davis was appointed to the TDS Audit Committee on May 26, 2010.
In 2011, Mr. Davis was appointed as a director of Bizequity.com, a private company and website that provides capital,
knowledge and talent for emerging growth companies. In October 2011, Bizequity.com announced that Mr. Davis was
appointed as its Chairman.
Between 2005 and 2006, Mr. Davis was a director of Oneida Ltd., a privately -held company which designs and
distributes stainless steel and silverplated flatware.
Mr. Davis has been a member of the Finance Council of the Diocese of Savannah, Georgia, since 2010.
Mr. Davis brings to the TDS board of directors substantial experience, expertise and qualifications as a director and
former chief executive officer of a public technology company, as a chief financial officer and chief operating officer of the
AICPA and as a director or trustee of investment funds. In addition, he has substantial experience, expertise and
qualifications in accounting as a result of having been a chief financial officer of the AICPA and a Certified Public Accountant
in a public accounting firm for many years, and as a result of being or having been a member of six audit committees,
including the TDS Audit Committee since 2010. Further, his background and attributes bring diversity to the board.
Christopher D. O'Leary. Christopher D. O'Leary is currently a director who was last elected by the holders of
Common Shares (and Special Common Shares) at the 2011 Annual Meeting. He has been a director of TDS since 2006 and
was initially nominated as a director based on a search conducted by TDS' executive search firm. He is also a member of the
TDS Compensation Committee. The following provides information on the background of Mr. O'Leary, including the specific
factors that led to the conclusion that he should serve as a director of TDS.
In June 2006, Christopher D. O'Leary was appointed executive vice president, chief operating officer —international of
General Mills, Inc. (NYSE: GIS), which manufactures and markets branded consumer foods on a worldwide basis. In this
capacity, he oversees over 14,000 employees in over 100 countries. Before that, he was a senior vice president of General
Mills since 1999. In addition, he was the president of the General Mills Meals division between 2001 and 2006 and was
president of the Betty Crocker division between 1999 and 2001. Mr. O'Leary joined General Mills in 1997.
Prior to his employment with General Mills, Mr. O'Leary was employed for 17 years with PepsiCo (NYSE: PEP), which
manufactures, markets, and sells various snacks, beverages and foods on a worldwide basis. His assignments included
leadership roles for the Walkers -Smiths business in the United Kingdom and the Hostess Frito-Lay business in Canada.
Mr. O'Leary has an MBA from New York University.
Mr. O'Leary brings to the TDS board of directors substantial experience, expertise and qualifications in retail and
marketing as a result of over 30 years experience in retail and marketing. In addition, Mr. O'Leary has over 15 years of
significant and high-level experience in management of large retail businesses with a large number of employees, including
businesses outside the U.S. Because of the retail nature of the TDS businesses, the TDS board of directors believes that it is
highly desirable to have a director with significant knowledge and experience in retail and marketing, as well as significant,
high-level experience in managing retail businesses.
Mitchell H. Saranow. Mitchell H. Saranow is currently a director who was last elected by the holders of Series A
Common Shares and Preferred Shares at the 2011 Annual Meeting. He has been a director of TDS since 2004 and has
served as a member of, and an "audit committee financial expert"
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on, TDS' Audit Committee since that time. He is also a member of the TDS Corporate Governance and Nominating
Committee. The following provides information on the background of Mr. Saranow, including the specific factors that led to
the conclusion that he should serve as a director of TDS.
Mr. Saranow is chairman of The Saranow Group, L.L.C., a family -owned investment company he founded in 1984,
through which Mr. Saranow founded or co-founded, developed and sold several successful ventures.
Mr. Saranow is chairman and a director of SureTint Systems, LLC and SureTint Technologies, LLC. These are privately -
held companies that are involved in commercializing a series of inventions in the field of hair color formulation.
Mr. Saranow was chairman of the board and co -chief executive officer of Navigant Consulting, Inc. (NYSE: NCI), which
provides consulting services to various industries on an international level, from November 1999 to June 2000.
Prior thereto, he was chairman and managing general partner of Fluid Management, L.P. for more than five years until it
was acquired in 1996. Fluid Management was a privately -held specialized equipment manufacturer which was the world
leader in designing, manufacturing and distributing dispensing and mixing equipment for the paint, coatings, ink and personal
care industries.
Within the last ten years, Mr. Saranow served as chief executive officer of two related privately -held Dutch companies
which were sold under Dutch insolvency laws in 2008.
Earlier in his career, he was an accountant, chief financial officer of two large, privately -held food manufacturers, a vice
president of finance and law of a privately -held candy manufacturer, a venture capital officer specializing in financing the
cable television industry, and an attorney with Mayer, Brown and Platt in Chicago, Illinois. Mr. Saranow is a Certified Public
Accountant (inactive).
Mr. Saranow was formerly a director of Navigant Consulting, Inc. (NYSE: NCI), Lawson Products, Inc. (Nasdaq: LAWS),
which distributes industrial maintenance and repair supplies, North American Scientific, Inc. (Nasdaq: NASM), which designs,
develops, manufactures, and sells radioisotopic products for the treatment of cancer, and Telular Corp. (Nasdaq: WRLS),
which designs, develops, manufactures and markets fixed cellular products. At Lawson Products, Mr. Saranow was a
member and chairman of the nominating and corporate governance committee and the financial strategies committee and
was a member of the audit committee and the compensation committee. Mr. Saranow also was a member of the audit
committee of Navigant Consulting, a member and an "audit committee financial expert" of the audit committee of North
American Scientific and a member and chairman of the audit committee of Telular Corp.
Mr. Saranow has a JD/MBA degree from Harvard University.
Mr. Saranow brings to the TDS board of directors substantial experience, expertise and qualifications as a result of his
extensive background. Mr. Saranow is a Certified Public Accountant (inactive) and has been an accountant, lawyer,
investment banker and a chief financial officer, chief executive officer and/or chairman at multiple companies. Mr. Saranow
has founded or co-founded, developed and sold several successful ventures. He has significant experience with public
companies and their boards of directors, having been a director of five public companies, including TDS. He has been a
member of the audit committees of all five of such companies and was designated an audit committee financial expert by two
of such companies, including TDS. In addition, Mr. Saranow brings to the board of directors experience and qualifications
with respect to TDS and the telecommunications industry as a result of his earlier experience in the cable television industry
and his service as a director of TDS and as its audit committee financial expert for over five years.
Gary L. Sugarman. Gary L. Sugarman is currently a director who was last elected by the holders of Common Shares
(and Special Common Shares) at the 2011 Annual Meeting. He initially was nominated to the TDS board of directors
pursuant to the Settlement Agreement between GAMCO Asset Management, Inc. and TDS. Although TDS initially nominated
Mr. Sugarman to the TDS board of directors in 2009 as part of such settlement, after observing the performance and
contributions of Mr. Sugarman on the TDS board of directors since that time, the TDS board of directors has
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re -nominated Mr. Sugarman to the TDS board of directors each year since 2010. In addition, Mr. Sugarman was appointed to
the TDS Compensation Committee in 2010. The following provides information on the background of Mr. Sugarman,
including the specific factors that led to the conclusion that he should serve as a director of TDS.
Mr. Sugarman founded and has been the managing member of Richfield Capital Partners, a private venture capital firm,
since 2010. Mr. Sugarman is also principal of Richfield Associates, Inc., a privately -held telecom investment/merchant
banking firm he founded in 1994.
In November 2010, Richfield Capital Partners invested in FXecosystem, Inc., a private infrastructure provider to foreign
exchange markets. In connection with this investment, Mr. Sugarman became a director and executive chairman of
FXecosystem, Inc.
Previously, Mr. Sugarman was the executive chairman of Veroxity Technology Partners, a privately -held facilities -based
fiber network provider, between December 2007 and September 2010.
Mr. Sugarman was on the board of directors of PrairieWave Communications, Inc., a privately -held over -builder
providing telecommunications and cable television service in South Dakota, Iowa and Minnesota, from 2003 until it was sold
in 2007.
Prior to that, he served as chairman and chief executive officer of Mid -Maine Communications, a privately -held facilities -
based telecom company, from the time he co-founded the company in 1994 until it was sold in 2006.
Prior thereto, Mr. Sugarman held various operating positions at Rochester Telephone Company (now known as Frontier
Corporation (NYSE: FTR)), a public telecommunications company, from 1984 to 1991, including as Director of Business
Development, in which capacity he was involved in many acquisitions and other development activities in the
telecommunications industry.
Mr. Sugarman is currently a director of LICT Corporation, a telecommunications company that is quoted on the Pink
Sheets. (Mario J. Gabelli, who is the chairman of and may be deemed to control LICT Corporation, controls GAMCO Asset
Management, Inc. As noted above, TDS was previously a party to a Settlement Agreement with GAMCO Asset
Management, Inc. that resulted in the initial nomination of Mr. Sugarman as a director of TDS in 2009.)
Mr. Sugarman has an MBA from the University at Buffalo —State University of New York.
Mr. Sugarman brings to the TDS board of directors substantial experience, expertise and qualifications in the
telecommunications industry as a result of his current position at LICT Corporation and his many years of prior experience
with other companies in the telecommunications industry. Mr. Sugarman also has management experience as executive
chairman of FXecosystem, Inc. and Veroxity Technology Partners and as chairman and chief executive officer of Mid -Maine
Communications, a company that he co-founded, has been a director of business development of a public
telecommunications company and has substantial experience in acquisitions and development activities in the
telecommunications industry.
Your board of directors unanimously recommends a vote "FOR" each of the above nominees for election by the
holders of Common Shares.
Nominees for Election by Holders of Series A Common Shares and Preferred Shares
LeRoy T. Carlson, Jr. LeRoy T. Carlson, Jr. is currently a director who was last elected by the holders of Series A
Common Shares and Preferred Shares at the 2011 Annual Meeting. He has been a director of TDS since the time that TDS
was founded. He is also a member of the TDS Corporate Governance and Nominating Committee. The following provides
information on the background of Mr. Carlson, including the specific factors that led to the conclusion that he should serve as
a director of TDS.
LeRoy T. Carlson, Jr. is TDS' President and Chief Executive Officer (an executive officer of TDS). He has been TDS'
President since 1981 and its Chief Executive Officer since 1986.
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LeRoy T. Carlson, Jr. has been a director of United States Cellular Corporation (NYSE: USM), a subsidiary of TDS
which operates and invests in wireless telephone companies and properties ("U.S. Cellular"), since 1984, and has been its
Chairman (an executive officer) since 1989. He has also been a director of TDS Telecommunications Corporation, a wholly
owned subsidiary of TDS which operates local telephone companies ("TDS Telecom"), and its Chairman (an executive
officer) for over 20 years.
Mr. Carlson was previously a director of former TDS subsidiaries Aerial Communications, Inc. (formerly Nasdaq: AERL),
which developed and operated wireless personal communications services, and American Paging, Inc. (formerly AMEX:
APP), which operated wireless paging services.
Mr. Carlson has an MBA from Harvard University.
Mr. Carlson is one of the four largest beneficial owners of TDS Series A Common Shares and also beneficially owns a
significant number of TDS Common Shares.
Mr. Carlson brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS
and the telecommunications industry as a result of his many years as a director and President and Chief Executive Officer of
TDS, and as a director and Chairman of its two principal business units. As the senior executive officer of TDS and each of
its business units, the board of directors considers it essential that Mr. Carlson serve on the TDS board to provide the board
with his views on strategy and operations of TDS and its business units. In addition, as a shareholder with a significant
economic stake in TDS, Mr. Carlson provides to the TDS board of directors the perspective of shareholders in managing and
operating TDS in the best long-term interests of shareholders.
LeRoy T. Carlson, Jr. is the son of LeRoy T. Carlson and the brother of Walter C.D. Carlson, Letitia G. Carlson, M.D.
and Prudence E. Carlson.
Letitia G. Carlson, M.D. Letitia G. Carlson, M.D. is currently a director who was last elected by the holders of
Series A Common Shares and Preferred Shares at the 2011 Annual Meeting. She has been a director of TDS since 1996.
The following provides information on the background of Dr. Carlson, including the specific factors that led to the conclusion
that she should serve as a director of TDS.
Dr. Carlson has been a physician at George Washington University Medical Center for over twenty years.
At such medical center, she was a primary care fellow between 1990 and 1992, an assistant professor between 1992
and 2001 and an assistant clinical professor between 2001 and 2003, and has been an associate clinical professor since
2003.
Dr. Carlson has an M.D. from Harvard Medical School.
Dr. Carlson is one of the four largest beneficial owners of TDS Series A Common Shares and also beneficially owns a
significant number of TDS Common Shares.
Dr. Carlson brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS
and the telecommunications industry as a result of her many years as a director of TDS. Further, her background and
attributes bring diversity to the board. In addition, as a shareholder with a significant economic stake in TDS, Dr. Carlson
provides to the TDS board of directors the perspective of shareholders in managing and operating TDS in the best long-term
interests of shareholders.
Dr. Carlson is the daughter of LeRoy T. Carlson and the sister of LeRoy T. Carlson, Jr., Walter C.D. Carlson and
Prudence E. Carlson.
Prudence E. Carlson. Prudence E. Carlson is currently a director who was last elected by the holders of Series A
Common Shares and Preferred Shares at the 2011 Annual Meeting. She has been a director of TDS since 2008 and was
initially elected as a director based on the recommendation of the trustees of the TDS Voting Trust, which holds over 90% of
the Series A Common Shares. The following provides information on the background of Ms. Carlson, including the specific
factors that led to the conclusion that she should serve as a director of TDS.
Ms. Carlson has a Bachelor of Arts degree from Harvard University.
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Ms. Carlson has been a private investor for more than five years. Ms. Carlson is one of the four largest beneficial
owners of TDS Series A Common Shares and also beneficially owns a significant number of TDS Common Shares.
Ms. Carlson is the daughter of LeRoy T. Carlson and the sister of LeRoy T. Carlson, Jr., Walter C.D. Carlson and
Letitia G. Carlson, M.D. and is a trustee of the TDS Voting Trust. Ms. Carlson was elected to the TDS board of directors in
2008 to fill the vacancy created on the board of directors by the decision of LeRoy T. Carlson not to stand for election in
2008. As a director elected by the holders of Series A Common Shares and Preferred Shares, the decision to nominate
Ms. Carlson was based primarily on the recommendation of the trustees of the TDS Voting Trust.
Ms. Carlson brings to the TDS board of directors experience with respect to TDS and the telecommunications industry
as a result of her background as an investor in TDS for many years, as a trustee of the TDS Voting Trust, and as a director of
TDS, and brings diversity of background and attributes to the board. In addition, as a shareholder with a significant economic
stake in TDS, Ms. Carlson provides to the TDS board of directors the perspective of shareholders in managing and operating
TDS in the best long-term interests of shareholders.
Walter C.D. Carlson. Walter C.D. Carlson is currently a director who was last elected by the holders of Series A
Common Shares and Preferred Shares at the 2011 Annual Meeting. He has been a director of TDS since 1981. He is also a
member and chairperson of the TDS Corporate Governance and Nominating Committee. The following provides information
on the background of Mr. Carlson, including the specific factors that led to the conclusion that he should serve as a director
of TDS.
Mr. Carlson was elected non -executive Chairman of the Board of TDS in 2002.
Mr. Carlson has been a partner of the law firm of Sidley Austin LLP for more than 20 years and is a member of its
executive committee. Mr. Carlson is an experienced litigator, and has represented various clients in a variety of types of
specialized and general commercial litigation. Mr. Carlson is the head of the Financial and Securities Litigation group in the
Chicago office of Sidley Austin LLP. The law firm of Sidley Austin LLP provides legal services to TDS, U.S. Cellular and their
subsidiaries on a regular basis. See "Certain Relationships and Related Transactions" below. Walter C.D. Carlson does not
provide legal services to TDS, U.S. Cellular or their subsidiaries.
Mr. Carlson has been a director of U.S. Cellular (NYSE: USM) since 1989.
Mr. Carlson was previously a director of former TDS subsidiary Aerial Communications, Inc. (formerly Nasdaq: AERL).
Mr. Carlson has a J.D. from Harvard University.
Mr. Carlson is one of the four largest beneficial owners of TDS Series A Common Shares and also beneficially owns a
significant number of TDS Common Shares.
Mr. Carlson brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS
and the telecommunications industry as a result of his many years as a director of TDS and U.S. Cellular and as Chairman of
the Board of TDS, and as a result of having represented many corporate clients. In addition, as a shareholder with a
significant economic stake in TDS, Mr. Carlson provides to the TDS board of directors the perspective of shareholders in
managing and operating TDS in the best long-term interests of shareholders.
Walter C.D. Carlson is the son of LeRoy T. Carlson and the brother of LeRoy T. Carlson, Jr., Letitia G. Carlson, M.D.
and Prudence E. Carlson.
Kenneth R. Meyers. Kenneth R. Meyers is currently a director who was last elected by the holders of Series A
Common Shares and Preferred Shares at the 2011 Annual Meeting. He was appointed as a director of TDS in 2007. The
following provides information on the background of Mr. Meyers, including the specific factors that led to the conclusion that
he should serve as a director of TDS.
Mr. Meyers was appointed as a director of TDS in connection with his appointment as Executive Vice President and
Chief Financial Officer of TDS (an executive officer of TDS), in 2007.
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Mr. Meyers was appointed Vice President and Assistant Treasurer of U.S. Cellular in 2011. He was Chief Accounting
Officer (an executive officer) of U.S. Cellular and Chief Accounting Officer (an executive officer) of TDS Telecom between
2007 and 2011.
Prior to his appointment to his current position at TDS in 2007, he was the Executive Vice President —Finance, Chief
Financial Officer and Treasurer of U.S. Cellular since 1999. Prior to that, Mr. Meyers was Senior Vice President -Finance
(Chief Financial Officer) and Treasurer of U.S. Cellular from 1997 to 1999 and was the Vice President -Finance (Chief
Financial Officer) and Treasurer of U.S. Cellular for more than five years prior to 1997. Mr. Meyers had been employed by
U.S. Cellular in accounting and financial capacities since 1987.
Mr. Meyers has also been a director of U.S. Cellular since 1999 and a director of TDS Telecom since 2007.
Mr. Meyers is a Certified Public Accountant (inactive) and has an MBA from Northwestern University's J. L. Kellogg
Graduate School of Management.
Mr. Meyers brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS
and the telecommunications industry as a result of his background as a director and Executive Vice President and Chief
Financial Officer of TDS since 2007, and his many years as a director and Executive Vice President —Finance, Chief
Financial Officer and Treasurer and in other positions at U.S. Cellular. He also brings substantial experience, expertise and
qualifications in management, finance and accounting as a result of such background.
Donald C. Nebergall. Donald C. Nebergall is currently a director who was last elected by the holders of Series A
Common Shares and Preferred Shares at the 2011 Annual Meeting. He has been a director of TDS since 1977. He is also a
member of the TDS Audit Committee. The following provides information on the background of Mr. Nebergall, including the
specific factors that led to the conclusion that he should serve as a director of TDS.
Mr. Nebergall has been a consultant to companies since 1988, including TDS from 1988 to 2002.
Mr. Nebergall was vice president of The Chapman Company, a privately -held registered investment advisory company
located in Cedar Rapids, Iowa, from 1986 to 1988.
Prior to that, he was the chairman of Brenton Bank 8 Trust Company, Cedar Rapids, Iowa, from 1982 to 1986, and was
its president from 1972 to 1982.
Mr. Nebergall also is or has been a board member of several private, civic and charitable organizations.
Mr. Nebergall also manages several family farms.
Mr. Nebergall has a Bachelor of Science degree in Agricultural Economics from Iowa State University.
Mr. Nebergall brings to the TDS board of directors substantial experience, expertise and qualifications with respect to
TDS and the telecommunications industry as a result of his many years as a director of TDS and his prior background as a
consultant to TDS. He also brings experience and knowledge as a result of his background in investment advisory services
and banking and as a result of his board service for several organizations.
George W. Off. George W. Off is currently a director who was last elected by the holders of Series A Common Shares
and Preferred Shares at the 2011 Annual Meeting. He has been a director of TDS since 1997 and was initially nominated as
a director based on a search conducted by TDS' executive search firm. He is also a member of the TDS Compensation
Committee and a member and chairperson of the TDS Audit Committee. The following provides information on the
background of Mr. Off, including the specific factors that led to the conclusion that he should serve as a director of TDS.
In February 2012, Mr. Off was appointed as a director of The Retail Equation, a privately -held company that provides
solutions to retailers to optimize revenues and margins.
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In May 2011, Mr. Off was appointed as a director and interim chief executive officer of Catalina Marketing Corporation, a
privately -held provider of in-store electronic marketing services, of which Mr. Off was previously an officer and director, as
discussed below. Mr. Off served as a director and interim chief executive officer until the appointment of a permanent
replacement in October 2011.
Before he retired in 2009, Mr. Off was a director of Checkpoint Systems, Inc. (NYSE: CKP) from 2002 to 2009, and was
its chairman between 2002 and 2008. He was also the chief executive officer of Checkpoint Systems, Inc. between 2002 and
2007. Checkpoint Systems is a multinational manufacturer and marketer of integrated system solutions for retail security,
labeling and merchandising.
Prior to that, Mr. Off was chairman of the board of directors of Catalina Marketing Corporation, which at the time was a
NYSE listed company (formerly NYSE: POS), from 1998 until 2000. Mr. Off served as president and chief executive officer of
Catalina from 1994 to 1998. Catalina was acquired and became privately -held in 2007.
Mr. Off is a director of Infinian Mobile Commerce & Analytic Solutions Inc., a private start-up company that provides
promotions and coupons for mobile phones.
In addition, Mr. Off has significant experience with the telecommunications industry as a director of TDS since 1997.
Mr. Off also has been a member of the TDS Audit Committee for over 10 years and a member of the TDS Compensation
Committee for over 5 years.
Mr. Off has a Bachelor of Science degree from the Colorado School of Mines
Mr. Off brings to the TDS board of directors substantial experience, expertise and qualifications in marketing and
management as a result of his prior positions as a director and as chief executive officer and chairman of Checkpoint
Systems, Inc. and of Catalina Marketing Corporation. Because of the retail nature of the TDS businesses, the TDS board of
directors believes that it is highly desirable to have directors with significant knowledge and experience in retail and
marketing, as well as significant, high-level experience in managing retail businesses. In addition, Mr. Off has significant
experience with respect to TDS and the telecommunications industry as a result of his many years as a director of TDS and
as a member of the TDS Audit Committee and the TDS Compensation Committee.
Herbert S. Wander. Herbert S. Wander is currently a director who was last elected by the holders of Common Shares
(and Special Common Shares) at the 2011 Annual Meeting. He has been on the TDS board of directors since the time that
TDS was founded in 1968. He is also a member of the TDS Audit Committee and a member and chairperson of the TDS
Compensation Committee. The following provides information on the background of Mr. Wander, including the specific
factors that led to the conclusion that he should serve as a director of TDS.
Herbert S. Wander has been a partner of the law firm of Katten Muchin Rosenman LLP for more than 30 years. He has
been a lawyer for over 50 years, concentrating on all aspects of business law, including corporate governance and business
acquisitions. Katten Muchin Rosenman LLP does not provide legal services to TDS or its subsidiaries.
In 2004, Mr. Wander was appointed by the chairman of the Securities and Exchange Commission ("SEC"), William
Donaldson, to co-chair the SEC Advisory Committee on smaller public companies, which committee delivered its final report
to the SEC in 2006.
Mr. Wander is the former chair of the Corporate Laws Committee of the American Bar Association's Business Law
Section and former chair of the Business Law Section. Mr. Wander is a frequent lecturer on topics of corporate governance.
Mr. Wander served two terms as a member of the Legal Advisory Committee to the NYSE Board of Governors and was
a member of the Legal Advisory Committee to the National Association of Securities Dealers, Inc.
In addition, Mr. Wander has significant experience with the telecommunications industry and TDS as a director of TDS
for over 40 years, as a member of the TDS Audit Committee for over 15 years and as a member of the TDS Compensation
Committee for over 5 years.
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Mr. Wander has also previously served as a director of Advance Ross Corporation (formerly Nasdaq: AROS), the
primary business of which was operating a value-added tax (VAT) refund service in Europe.
Mr. Wander has a law degree from Yale Law School.
Mr. Wander brings to the TDS board of directors substantial experience, expertise and qualifications, with a national
reputation as a corporate and acquisitions lawyer and as a corporate governance expert. He also brings to the board
substantial experience, expertise and qualifications with TDS and the telecommunications industry as a result of his many
years as a director of TDS and as a member of the TDS Audit Committee and the TDS Compensation Committee.
Your board of directors unanimously recommends a vote "FOR" each of the above nominees for election by the
holders of Series A Common Shares and Preferred Shares.
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CORPORATE GOVERNANCE
Board of Directors
The business and affairs of TDS are managed by or under the direction of the board of directors. The board of directors
consists of twelve members. Holders of Common Shares elect 25% of the directors rounded up plus one director, or a total of
four directors based on a board size of twelve directors. Holders of Series A Common Shares and Preferred Shares elect the
remaining eight directors. The TDS Voting Trust has approximately 94.6% of the voting power in the election of such eight
directors and approximately 56.3% of the voting power in all other matters.
Board Leadership Structure
Under the leadership structure selected for TDS, the same person does not serve as both the Chief Executive Officer
and Chairman of the Board. Walter C.D. Carlson, who is not an employee or officer of TDS, serves as the non -executive
Chairman of the Board and presides over meetings of the full board of directors. LeRoy T. Carlson, Jr., who is an officer and
employee of TDS, serves as President and Chief Executive Officer and is responsible for day-to-day leadership and
performance of TDS. This leadership structure is set forth in TDS' Bylaws. TDS has determined that this leadership structure
is appropriate given the specific characteristics and circumstances of TDS. In particular, TDS considers it appropriate that the
person who is the President and Chief Executive Officer of TDS also not serve as the Chairman of the Board in order to
separate the executive who is primarily responsible for the performance of the company from the person who presides over
board meetings at which performance of TDS is evaluated.
Board Role in Risk Oversight
The following discloses the extent of the board of directors' role in the risk oversight of TDS, including how the board
administers its oversight function, and the effect of the board's leadership structure discussed above on risk oversight.
The TDS board of directors is primarily responsible for oversight of risk assessment and risk management of TDS.
Although the TDS board of directors can delegate this responsibility to board committees, the TDS board has not done so,
and continues to have full responsibility relating to risk oversight. Although the TDS board of directors has oversight
responsibilities, the actual risk assessment and risk management is carried out by the President and Chief Executive Officer
and other officers of TDS and reported to the board.
TDS has established an Enterprise Risk Management (ERM) program, which applies to TDS and all of its business
units. This program was designed with the assistance of an outside consultant and was integrated into TDS' existing
management and strategic planning processes. The ERM program provides a common enterprise -wide language and
discipline around risk identification, quantification and mitigation. The TDS board of directors currently receives periodic
updates about the status and progress of this ERM program and takes action to the extent appropriate based on such
updates.
Although the TDS board of directors has ultimate oversight authority over risk and has not delegated such responsibility
to any committees, certain TDS committees also have certain responsibilities relating to risk.
Under NYSE listing standards, and as set forth in its charter, the Audit Committee is required to "discuss policies with
respect to risk assessment and risk management." NYSE listing standards further provide that, "while it is the job of the CEO
and senior management to assess and manage the listed company's exposure to risk, the audit committee must discuss
guidelines and policies to govern the process by which this is handled. The audit committee should discuss the listed
company's major financial risk exposures and the steps management has taken to monitor and control such exposures. The
audit committee is not required to be the sole body responsible for risk assessment and management, but, as stated above,
the committee must discuss guidelines and policies to govern the process by which risk assessment and management is
undertaken."
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Accordingly, pursuant to the foregoing requirements, the Audit Committee discusses TDS' major financial risk exposures
and the steps management has taken to monitor and control such exposures in connection with its review of financial
statements and related matters on a quarterly basis.
In addition, as part of the ERM program, the Audit Committee discusses guidelines and policies to govern the process
by which risk assessment and risk management are handled. The Audit Committee receives updates and discusses policies
with respect to risk assessment and risk management on a regular basis. The Audit Committee is not solely responsible for
ERM, but the committee discusses guidelines and policies to govern the process by which ERM is undertaken.
In addition, in connection with the functions of the Compensation Committee relating to the compensation of the
executive officers of TDS (other than executive officers of U.S. Cellular), the Compensation Committee considers risks
relating to compensation of executive officers of TDS, as discussed below in the Compensation Discussion and Analysis. In
addition, the Compensation Committee has responsibilities under its charter with respect to long-term compensation for all
employees, as discussed below under "Risks from Compensation Policies and Practices".
Also, the TDS Corporate Governance and Nominating Committee may consider certain risks in connection with its
responsibilities relating to corporate governance and director nominations, as described below.
TDS believes that the leadership structure described above facilitates risk oversight because the role of the President
and Chief Executive Officer, who has primary operating responsibility to assess and manage TDS' exposure to risk, is
separated from the role of the Chairman of the Board, who sets the agenda for and presides over board of directors'
meetings at which the TDS board exercises its oversight responsibility with respect to risk.
Director Independence and New York Stock Exchange Listing Standards
TDS Common Shares are listed on the NYSE. Accordingly, TDS is subject to the listing standards applicable to
companies that have equity securities listed on the NYSE.
Under listing standards of the NYSE, TDS is a "controlled company" as such term is defined by the NYSE. TDS is a
controlled company because over 50% of the voting power for the election of directors of TDS is held by the trustees of the
TDS Voting Trust (i.e., the TDS Voting Trust has the voting power to elect eight of the twelve directors, or 66.7% of the
directors). Accordingly, it is exempt from certain listing standards that require listed companies that are not controlled
companies to (i) have a board composed of a majority of directors who qualify as independent under the rules of the NYSE,
(H) have a compensation committee composed entirely of directors who qualify as independent under the rules of the NYSE,
and (Hi) have a nominating/corporate governance committee composed entirely of directors who qualify as independent
under the rules of the NYSE.
As a controlled company, TDS is required to have at least three directors who qualify as independent to serve on the
Audit Committee. The TDS Audit Committee has five members: George W. Off (chairperson), Clarence A. Davis, Donald C.
Nebergall, Mitchell H. Saranow and Herbert S. Wander. Such directors must qualify as independent under the NYSE Listed
Company Manual, including Section 303A.02(a) and Section 303A.02(b), and Section 303A.06, which incorporates the
independence requirements of Rule 10A-3 under Section 10A-3 of the Securities Exchange Act of 1934, as amended
(collectively, "Section 10A-3"). Except as required by listing standards or SEC rule, TDS does not have any categorical
standards of independence that must be satisfied.
Pursuant to the requirements of the NYSE Listed Company Manual, the TDS board of directors affirmatively determined
that each member of the TDS Audit Committee has no material relationship with TDS or any other member of the TDS
consolidated group ("TDS Consolidated Group"), either directly or as a partner, shareholder or officer of an organization that
has a relationship with any member of the TDS Consolidated Group, and that each of such persons is independent (pursuant
to Section 303A.02(a), Section 303A.02(b) and Section 10A-3) considering all relevant facts and circumstances, including
commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, if any.
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Such relevant facts and circumstances included the following: None of such persons is an employee or officer of TDS or
any other member of the TDS Consolidated Group. None of such persons has any direct or indirect business relationships
and/or fee arrangements with the TDS Consolidated Group and none of such persons receives any compensation from the
TDS Consolidated Group except for his services as a director and member of board committees of TDS. None of such
persons has any other relationship or arrangement with the TDS Consolidated Group other than in his capacity as a director
of TDS. Each of such persons qualifies as independent under each of the categorical standards in Section 303A.02(b) of the
NYSE Listed Company Manual. Each of such persons qualifies as independent under Section 10A-3 because none of such
persons receives any compensatory fee from any member of the TDS Consolidated Group and is not an "affiliated
person" (as defined by the SEC) with respect to any member of the TDS Consolidated Group. None of such persons is an
"immediate family member (as defined by Section 303A.02(b)) of any person who is not independent under Section 303A.02
of the NYSE Listed Company Manual. The only relationship and/or fee arrangement which such persons have with the TDS
Consolidated Group are as directors and members of board committees of TDS. See also "Security Ownership of Certain
Beneficial Owners and Management" below for information relating to beneficial share ownership and other relationships of
Donald C. Nebergall.
In addition, incumbent directors Christopher D. O'Leary and Gary L. Sugarman would qualify as independent directors
under the listing standards of the NYSE. As a result, seven of the twelve incumbent directors, or over 58% of the directors,
have been determined to qualify or would qualify as independent under the listing standards of the NYSE.
Meetings of Board of Directors
The board of directors held seventeen meetings during 2011. Each director attended at least 75% of the total number of
meetings of the board of directors (held during 2011 at which time such person was a director) and at least 75% of the total
number of meetings held by each committee of the board on which such person served (during the period that such person
served).
Corporate Governance Guidelines
Under NYSE listing standards, TDS is required to adopt and disclose corporate governance guidelines that address
certain specified matters. TDS has adopted Corporate Governance Guidelines that address (i) board of directors structure,
(H) director qualification standards, (Hi) director responsibilities, orientation and continuing education, (iv) director
compensation and stock ownership, (v) board resources and access to management and independent advisors, (vi) annual
performance evaluation of the board, (vii) board committees, (viii) management succession and (ix) periodic review of the
guidelines. A copy of such guidelines is available on TDS' website, www.teldta.com, under Corporate Governance —
Corporate Governance Guidelines.
Corporate Governance and Nominating Committee
Because TDS is a controlled company, it is not required under NYSE listing standards to have a corporate
governance/nominating committee or, if it has one, that the corporate governance/nominating committee be composed
entirely of independent directors. Although not required to do so under NYSE listing standards, TDS voluntarily has
established a Corporate Governance and Nominating Committee. The members of the Corporate Governance and
Nominating Committee are Walter C.D. Carlson (chairperson), LeRoy T. Carlson, Jr. and Mitchell H. Saranow. Mr. Saranow
qualifies as an independent director under NYSE listing standards. The primary function of the Corporate Governance and
Nominating Committee is to advise the board on corporate governance matters, including developing and recommending to
the board the corporate governance guidelines for TDS. In addition, the charter of the committee provides that the committee
will develop selection objectives and oversee the search for qualified individuals to serve on the board of directors and
recommend to the board prospective nominees and the re -nomination of incumbent directors as it deems appropriate. A copy
of the committee charter is available on TDS' website, www.teldta.com, under Corporate Governance —Board Committee
Charters.
The Corporate Governance and Nominating Committee held two meetings in 2011.
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Audit Committee
The purpose and primary functions of the Audit Committee are to (a) assist the board of directors of TDS in its oversight
of (1) the integrity of TDS' financial statements, (2) TDS' compliance with legal and regulatory requirements, (3) the
qualifications and independence of TDS' registered public accounting firm, and (4) the performance of TDS' internal audit
function and registered public accounting firm; (b) prepare an audit committee report as required by the rules of the SEC to
be included in TDS' annual proxy statement and (c) perform such other functions as set forth in the Audit Committee charter,
which shall be deemed to include the duties and responsibilities set forth in Section 10A-3. A copy of the Audit Committee
charter is available on TDS' website, www.teldta.com, under Corporate Governance —Board Committee Charters.
The Audit Committee is currently composed of five members who qualify as independent under NYSE listing standards,
including Section 10A-3, as discussed above. The current members of the Audit Committee are George W. Off (chairperson),
Clarence A. Davis, Donald C. Nebergall, Mitchell H. Saranow and Herbert S. Wander. The board of directors has determined
that each of the members of the Audit Committee is financially literate and has "accounting or related financial management
expertise pursuant to listing standards of the NYSE.
The board has made a determination that Mr. Saranow is an "audit committee financial expert" as such term is defined
by the SEC.
In accordance with the SEC's safe harbor rule for "audit committee financial experts," no member designated as an
audit committee financial expert shall (i) be deemed an "expert" for any other purpose or (H) have any duty, obligation or
liability that is greater than the duties, obligations and liability imposed on a member of the board or the audit committee not
so designated. Additionally, the designation of a member or members as an "audit committee financial expert" shall in no way
affect the duties, obligations or liability of any member of the audit committee, or the board, not so designated.
The Audit Committee held eight meetings during 2011.
Pre -Approval Procedures
The Audit Committee has adopted a policy pursuant to which all audit and non -audit services must be pre -approved by
the Audit Committee. The following describes the policy as amended. Under no circumstances may TDS' principal
independent registered public accounting firm provide services that are prohibited by the Sarbanes Oxley Act of 2002 or rules
issued thereunder. Non -prohibited audit related services and certain tax and other services may be provided to TDS, subject
to such pre -approval process and prohibitions. The Audit Committee has delegated to the chairperson together with one
other member of the Audit Committee the authority to pre -approve services by the principal independent registered public
accounting firm. In the event the chairperson is unavailable, pre -approval may be given by any two members of the Audit
Committee. In addition to pre -approval of specific services, specified services have been pre -approved in detail up to
specified dollar limits pursuant to the policy. All services are required to be reported to the full Audit Committee at each of its
regularly scheduled meetings. The pre -approval policy relates to all services provided by TDS' principal independent
registered public accounting firm.
Review, Approval or Ratification of Transactions with Related Persons
The Audit Committee charter provides that the Audit Committee has responsibilities with respect to related party
transactions, as such term is defined by the rules of the NYSE. Related party transactions are addressed in Section 314.00
of the NYSE Listed Company Manual.
Section 314.00 of the NYSE Listed Company Manual states that "Related party transactions normally include
transactions between officers, directors, and principal shareholders and the company." In general, "related party
transactions" would include transactions required to be disclosed in TDS' Proxy Statement pursuant to Item 404 of
Regulation S -K of the SEC. Pursuant to Item 404, TDS is required to disclose any transaction, which includes any financial
transaction, arrangement, or relationship (including any indebtedness or guarantee of indebtedness) or a series of
transactions, that has taken place since the beginning of TDS' last fiscal year or any currently proposed transaction in which:
(1) TDS was or is
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to be a participant, (2) the amount involved exceeds $120,000 and (3) any "related person" had or will have a direct or
indirect material interest in the transaction during any part of the fiscal year. For this purpose, in general, the term "related
person" includes any director or executive officer of TDS, any nominee for director, any beneficial owner of more than five
percent of any class of TDS' voting securities and any "immediate family member" of such persons, within the meaning of
Item 404.
Section 314.00 of the NYSE Listed Company Manual provides that "Each related party transaction is to be reviewed and
evaluated by an appropriate group within the listed company involved. While the Exchange does not specify who should
review related party transactions, the Exchange believes that the Audit Committee or another comparable body might be
considered as an appropriate forum for this task. Following the review, the company should determine whether or not a
particular relationship serves the best interest of the company and its shareholders and whether the relationship should be
continued or eliminated."
Accordingly, pursuant to such provisions, the TDS Audit Committee has responsibilities over transactions that are
deemed to be related -party transactions under Section 314.00 of the NYSE Listed Company Manual. Other than the
foregoing, TDS has no related party policies or procedures relating to (i) the types of transactions that are covered by such
policies and procedures; (H) the standards to be applied pursuant to such policies and procedures; or (Hi) the persons or
groups of persons on the board of directors or otherwise who are responsible for applying such policies and procedures, and
TDS does not maintain any other written document evidencing such policies and procedures.
See Executive and Director Compensation —Compensation Committee Interlocks and Insider Participation —Certain
Relationships and Related Transactions for discussion of any related party transactions since the beginning of the last fiscal
year.
Compensation Committee
Although not required to do so under NYSE listing standards because it is a controlled company, TDS voluntarily has
established a Compensation Committee comprised solely of directors who qualify as independent under the rules of the
NYSE.
Under the Dodd -Frank Act, the SEC is required to direct the NYSE to adopt listing standards prohibiting the listing of
any equity security of an issuer that does not comply with listing requirements with respect to the independence of members
of the compensation committee of the board of directors of such issuer, except that this provision of the Dodd -Frank Act
expressly provides that it does not apply to an issuer that is a controlled company. Although such listing standards have not
yet been issued, when issued, they are not expected to be generally applicable to TDS because it is a controlled company.
Nevertheless, as indicated above, the Compensation Committee is comprised solely of directors who qualify as independent
under the current listing standards of the NYSE.
The primary functions of the Compensation Committee are to discharge the board of director's responsibilities relating to
the compensation of the executive officers of TDS, other than executive officers of U.S. Cellular or any of its subsidiaries.
The responsibilities of the Compensation Committee include the review of salary, bonus, long-term compensation and all
other elements of compensation of such executive officers.
For these purposes, "executive officers" means all officers that are employees who are or will be identified in TDS'
annual proxy statement as "executive officers," including the President and Chief Executive Officer of TDS Telecom, except
that the compensation of the President and Chief Executive Officer of U.S. Cellular is established and administered by U.S.
Cellular's chairman and long-term incentive compensation committee, as described in the proxy statement of U.S. Cellular
relating to its 2012 Annual Meeting of shareholders.
The Compensation Committee is comprised of at least two non -employee members of TDS' board of directors, each of
whom is an "outside director" within the meaning of section 162(m) of the Internal Revenue Code of 1986, as amended, and
a "Non -Employee Director" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended. As
noted above, such members also qualify as independent under the rules of the NYSE. The members of the Compensation
Committee are Herbert S.
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Wander (chairperson), George W. Off, Christopher D. O'Leary and Gary L. Sugarman. These persons do not have any
compensation committee interlocks and are not related to any other directors.
The Compensation Committee charter permits it to delegate some or all of the administration of the long-term incentive
plans or programs to the President and Chief Executive Officer or other executive officers of TDS as the committee deems
appropriate, to the extent permitted by law and the applicable long-term incentive plan or program, but not regarding any
award to the President and Chief Executive Officer. However, the Compensation Committee has not delegated any of its
authority with respect to any of the officers identified in the below Summary Compensation Table.
The Compensation Committee's charter provides that it will obtain advice and assistance from the Chief Executive
Officer and the Vice President of Human Resources and from any other officer or employee of TDS, as it determines is
appropriate. TDS' Human Resources Department also supports the Compensation Committee in its work. As discussed
below, the Compensation Committee also utilizes the services of an independent compensation consultant. See the
Compensation Discussion and Analysis below for information about compensation consultants, which information is
incorporated by reference herein.
The Compensation Committee does not approve director compensation. It is the view of the TDS board of directors that
this should be the responsibility of the full board of directors. Only non -employee directors receive compensation in their
capacity as directors and, as a result, the view of the TDS board of directors is that all directors should participate in such
compensation decisions, rather than only some or all of the non -employee directors.
A copy of the charter of the Compensation Committee is available on TDS' website, www.teldta.com, under Corporate
Governance —Board Committee Charters.
The Compensation Committee held six meetings during 2011. It also took actions by unanimous written consent.
Other Committee
TDS has a Pricing Committee, consisting of LeRoy T. Carlson, Jr., as Chairman, and Kenneth R. Meyers, as a regular
member. Walter C.D. Carlson is an alternate member of this committee. The Pricing Committee does not have a charter.
Pursuant to resolutions of the TDS board of directors from time to time, the Pricing Committee is authorized to take certain
actions with respect to financing and capital transactions of TDS, such as the issuance, redemption or repurchase of debt or
the repurchase of shares of capital stock of TDS.
Director Nomination Process
As discussed above, because TDS is a controlled company, it is not required under NYSE listing standards to have a
corporate governance/nominating committee or, if it has one, that it be composed entirely of independent directors. Although
not required to do so under NYSE listing standards, TDS voluntarily has established a Corporate Governance and
Nominating Committee. The charter of the committee provides that the committee will develop selection objectives and
oversee the search for qualified individuals to serve on the board of directors and recommend to the board of directors
prospective nominees and the re -nomination of incumbent directors as it deems appropriate. The committee does not
nominate directors. It only recommends to the board of directors prospective nominees and the re -nomination of incumbent
directors as it deems appropriate. The entire board of directors determines whether to nominate prospective nominees and
re -nominate incumbent directors.
TDS does not have a formal policy with regard to the consideration of any director candidates recommended by
shareholders. However, because the TDS Voting Trust has over 90% of the voting power in the election of directors elected
by holders of Series A Common Shares and Preferred Shares, nominations of directors for election by the holders of
Series A Common Shares and Preferred Shares are based on the recommendation of the trustees of the TDS Voting Trust.
With respect to candidates for director to be elected by the holders of Common Shares, the Corporate Governance and
Nominating Committee and/or the TDS board may from time to time informally consider candidates submitted by
shareholders that hold a significant number of Common Shares. Although TDS has no formal procedures
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to be followed by shareholders in submitting recommendations of candidates for director, shareholders that desire to
nominate directors must follow the procedures set forth in TDS' Bylaws.
Except to the extent provided in the next paragraph, TDS does not have any specific, minimum qualifications that the
board believes must be met by a nominee for a position on the TDS board of directors, or any specific qualities or skills that
the board believes are necessary for one or more of the TDS directors to possess. The TDS board believes that substantial
judgment, diligence and care are required to identify and select qualified persons as directors and does not believe that it
would be appropriate to place limitations on its own discretion, except to the extent provided in the next paragraph. The TDS
board has consistently sought to nominate to the board of directors eminently qualified individuals whom the board believes
would provide substantial benefit and guidance to TDS.
Considering the importance of Federal Communications Commission ("FCC") licenses to TDS, the TDS Bylaws include
a qualification requirement providing that a candidate will not be eligible for election or continued service as a director unless
he or she is eligible to serve as a director of a company that controls licenses granted by the FCC, as determined by the TDS
Corporate Governance and Nominating Committee or the board of directors with the advice of counsel. Another qualification
requirement provides that a candidate will not be eligible for election or continued service as a director if he or she is or
becomes affiliated with, employed by or a representative of, or has or acquires a material personal involvement with, or
material financial interest in, a Business Competitor (as defined in the TDS Bylaws), as determined by the TDS Corporate
Governance and Nominating Committee or the board of directors. Another qualification requirement provides that a
candidate will not be eligible for election or continued service as a director if, as determined by the TDS Corporate
Governance and Nominating Committee or the board of directors with the advice of counsel, (i) such candidate's election as
a director would violate federal, state or foreign law or applicable stock exchange requirements (other than those related to
independence) or (H) such candidate has been convicted, including a plea of guilty or nolo contendere, of any felony, or of
any misdemeanor involving moral turpitude.
The TDS Corporate Governance and Nominating Committee does not have a policy with regard to the consideration of
diversity in identifying director nominees. However, as reflected in its Code of Business Conduct, TDS values diversity and
does not discriminate on the basis of gender, age, race, color, sexual orientation, religion, ancestry, national origin, marital
status, disability, military or veteran status or citizenship status. In considering whether to nominate individuals as director
candidates, the Corporate Governance and Nominating Committee takes into account all facts and circumstances, including
diversity. For this purpose, diversity broadly means a variety of backgrounds, experience, skills, education, attributes,
perspectives and other differentiating characteristics. TDS believes that it is desirable for a board to have directors who can
bring the benefit of diverse backgrounds, experience, skills and other characteristics to permit the board to have a variety of
views and insights. Accordingly, the Corporate Governance and Nominating Committee considers how director candidates
can contribute to board diversity as one of the many factors it considers in identifying nominees for director.
Section 1.15 of the TDS Bylaws provides that a person properly nominated by a shareholder for election as a TDS
director shall not be eligible for election as a director unless he or she signs and returns to the Secretary of TDS, within
fifteen days of a request therefor, written responses to any questions posed by the Secretary, that are intended to
(i) determine whether such person may qualify as independent and would qualify to serve as a director of TDS under rules of
the FCC, and (H) obtain information that would be disclosed in a proxy statement with respect to such person as a nominee
for election as a director and other material information about such person.
Whether or not the Corporate Governance and Nominating Committee will recommend that the TDS board re -nominate,
and the TDS board will re -nominate, existing directors for re-election depends on all facts and circumstances, including views
on how the director has performed and is performing his or her duties. In the event of a vacancy on the board of a director
elected by the Series A Common Shares and Preferred Shares, nominations are based on the recommendation of the
trustees of the TDS Voting Trust. In the event of a vacancy on the board of a director elected by the Common Shares, TDS
may use various sources to identify potential candidates, including an executive search firm. In addition, the Corporate
Governance and Nominating Committee may consider recommendations by shareholders that hold a significant number of
Common Shares. Potential candidates are initially screened by the
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Corporate Governance and Nominating Committee and by other persons as the Corporate Governance and Nominating
Committee designates. Following this process, the Corporate Governance and Nominating Committee will consider whether
one or more candidates should be considered by the full board of directors. When appropriate, information about the
candidate is presented to and discussed by the full board of directors.
All of the nominees approved by the TDS board for inclusion on TDS' proxy card for election at the 2012 Annual Meeting
are executive officers and/or directors who are standing for re-election and were recommended for re -nomination by the
Corporate Governance and Nominating Committee.
From time to time, TDS may pay a fee to an executive search firm to identify potential candidates for election as
directors. TDS did not pay a fee in 2011 or 2012 to any third party or parties to identify or evaluate or assist in identifying or
evaluating potential new nominees for election as directors at the 2012 Annual Meeting.
Non -Management Directors and Shareholder Communication with Directors
As required by NYSE listing standards, the non -management directors of TDS meet at regularly scheduled executive
sessions without management. The TDS Chairman of the Board, Walter C.D. Carlson, a non -management director, presides
at all meetings of the non -management directors. In addition, as required by NYSE listing standards, the independent
directors of TDS meet at least once per year in an executive session without management or directors who are not
independent.
Shareholders or other interested parties may send communications to the TDS board of directors, to the Chairman of
the Board, to the non -management directors or to specified individual directors of TDS at any time. Shareholders or other
interested parties should direct their communication to such persons or group in care of the Secretary of TDS at its corporate
headquarters, 30 N. LaSalle St., Suite 4000, Chicago IL 60602. Any shareholder communications that are addressed to the
board of directors, the Chairman of the Board, the non -management directors or specified individual directors will be
delivered by the Secretary of TDS to such persons or group.
For more information, see the instructions on TDS' website, www.teldta.com, under Corporate Governance —Contacting
the TDS Board of Directors.
TDS Policy on Attendance of Directors at Annual Meeting of Shareholders
All directors are invited and encouraged to attend the Annual Meeting of shareholders, which is normally followed by the
Annual Meeting of the board of directors. In general, all directors attend the Annual Meeting of shareholders unless they are
unable to do so due to unavoidable commitments or intervening events. All except one of the persons serving as directors at
the time attended the 2011 Annual Meeting of shareholders.
Stock Ownership Guidelines
The TDS Corporate Governance Guidelines provide that "Within three years after (a) March 31, 2007 or (b) the date on
which a Director first became a Director, whichever is later, and thereafter for so long as each Director remains a Director of
the Company, each Director shall own Series A Common Shares, Common Shares and/or Special Common Shares of the
Company having a combined value of at least $165,000. The Board will review this minimum ownership requirement
periodically." The stock ownership guidelines are included in TDS' Corporate Governance Guidelines, which have been
posted to TDS' website, www.teldta.com, under Corporate Governance —Corporate Governance Guidelines.
Code of Business Conduct and Ethics Applicable to Directors
As required by Section 303A.10 of the NYSE Listed Company Manual, TDS has adopted a Code of Business Conduct
and Ethics for Officers and Directors, as amended effective September 15, 2008. This code has been posted to TDS' internet
website, www.teldta.com, under Corporate Governance —Code of Business Conduct and Ethics for Officers and Directors.
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EXECUTIVE OFFICERS
The following executive officers of TDS were identified in the above tables regarding the election of directors: LeRoy T.
Carlson, Jr., President and Chief Executive Officer of TDS; and Kenneth R. Meyers, Executive Vice President and Chief
Financial Officer of TDS. In addition to the executive officers identified in the tables regarding the election of directors, set
forth below is a table identifying current officers of TDS and its subsidiaries who are executive officers of TDS under SEC
rules. Unless otherwise indicated, the position held is an office of TDS. The age of the following persons is as of the date of
this Proxy Statement.
Name
LeRoy T. Carlson
Mary N. Dillon
David A. Wittwer
Joseph R. Hanley
Peter L. Sereda
Douglas D. Shuma
Kurt B. Thaus
Scott H. Williamson
C. Theodore Herbert
Aqe Position
95 Chairman Emeritus
50 President and Chief Executive Officer of United States Cellular Corporation
51 President and Chief Executive Officer of TDS Telecommunications Corporation
45 Senior Vice President —Technology, Services and Strategy
53 Senior Vice President —Finance and Treasurer
51 Senior Vice President and Controller
53 Senior Vice President and Chief Information Officer
61 Senior Vice President —Acquisitions and Corporate Development
76 Vice President —Human Resources
LeRoy T. Carlson. LeRoy T. Carlson has been Chairman Emeritus of TDS (an executive officer of TDS) for more
than five years. He is director emeritus of TDS and is a director of U.S. Cellular. Mr. Carlson's term as a director of U.S.
Cellular expires at its 2012 annual meeting, but he will not stand for re-election as a director of U.S. Cellular at such meeting.
Mr. Carlson will become director emeritus of U.S. Cellular effective May 15, 2012, following its 2012 annual meeting.
Mr. Carlson is the father of LeRoy T. Carlson, Jr., Walter C.D. Carlson, Letitia G. Carlson, M.D. and Prudence E. Carlson.
Mary N. Dillon. Mary N. Dillon was appointed the President and Chief Executive Officer and a director of U.S. Cellular
effective June 1, 2010. Prior to that, Ms. Dillon had been employed as Executive Vice President and Global Chief Marketing
Officer of McDonald's Corporation, a global restaurant company (NYSE: MCD), since October 2005. Prior to joining
McDonald's, Ms. Dillon had been employed by PepsiCo Corporation, a global beverage company (NYSE: PEP), for
approximately five years, most recently as President of its Quaker Foods Division from September 2004 to September 2005.
David A. Wittwer. David A. Wittwer has been the President and Chief Executive Officer of TDS Telecom for more
than five years.
Joseph R. Hanley. Joseph R. Hanley was appointed Senior Vice President —Technology, Services and Strategy of
TDS in March 2012. Prior to that, he was Vice President —Technology Planning and Services of TDS for more than five
years.
Peter L. Sereda. Peter L. Sereda was appointed Senior Vice President —Finance and Treasurer of TDS on May 19,
2011. Prior to that time, Mr. Sereda was Vice President and Treasurer of TDS for more than five years.
Douglas D. Shuma. Douglas D. Shuma was appointed Senior Vice President and Controller (chief accounting officer)
of TDS on September 1, 2007. Prior to that time, Mr. Shuma was a consultant at Douglas Financial Consultants, a private
accounting consulting company that he founded, since 2006. Before that time, he was the Vice President and Controller of
Baxter International Inc., a global supplier of medical instruments and supplies (NYSE: BAX), for more than five years.
Mr. Shuma was appointed Chief Accounting Officer of U.S. Cellular and TDS Telecom in 2011. Mr. Shuma is a Certified
Public Accountant (inactive).
Kurt B. Thaus. Kurt B. Thaus has been the Senior Vice President and Chief Information Officer of TDS for more than
five years.
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Scott H. Williamson. Scott H. Williamson has been Senior Vice President —Acquisitions and Corporate Development
of TDS for more than five years.
C. Theodore Herbert. C. Theodore Herbert has been Vice President —Human Resources of TDS for more than five
years.
All of our executive officers devote all their employment time to the affairs of TDS and its subsidiaries.
Codes of Business Conduct and Ethics Applicable to Officers
As required by Section 303A.10 of the NYSE Listed Company Manual, TDS has adopted a Code of Business Conduct
and Ethics for Officers and Directors, that also complies with the definition of a "code of ethics" as set forth in Item 406 of
Regulation S -K of the SEC. The foregoing code has been posted to TDS' internet website, www.teldta.com, under Corporate
Governance —Code of Business Conduct and Ethics for Officers and Directors.
In addition, TDS has adopted a broad Code of Business Conduct that is applicable to all officers and employees of TDS
and its subsidiaries. The foregoing code has been posted to TDS' internet website, www.teldta.com, under Corporate
Governance—TDS Code of Business Conduct.
TDS intends to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any amendment to any of the
foregoing codes, by posting such information to TDS' internet website. Any waivers of any of the foregoing codes for directors
or executive officers will be approved by TDS' board of directors or an authorized committee thereof, as applicable, and
disclosed in a Form 8-K that is filed with the SEC within four business days of such waiver. There were no such waivers
during 2011.
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PROPOSAL 2
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
What am I being asked to vote on in Proposal 2?
In Proposal 2, we are requesting shareholders to ratify the selection of PricewaterhouseCoopers LLP as our
independent registered public accounting firm for the fiscal year ending December 31, 2012.
How does the board of directors recommend that I vote on this proposal?
The board of directors unanimously recommends a vote FOR approval of the ratification of the selection of
PricewaterhouseCoopers LLP as TDS' independent registered public accounting firm for the fiscal year ending December 31,
2012.
We anticipate continuing the services of PricewaterhouseCoopers LLP as our independent registered public accounting
firm for the current year. Representatives of PricewaterhouseCoopers LLP, who served as our independent registered public
accounting firm for the last fiscal year, are expected to be present at the Annual Meeting and will have the opportunity to
make a statement and to respond to appropriate questions raised by shareholders at the Annual Meeting or submitted in
writing prior thereto.
This proposal gives our shareholders the opportunity to express their views on TDS' independent registered public
accounting firm for the current fiscal year.
Is this vote binding on the board of directors?
This vote is an advisory vote only, and therefore it will not bind TDS or our board of directors. We are not required to
obtain shareholder ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public
accounting firm by our Bylaws or otherwise. However, we have elected to seek such ratification by the affirmative vote of the
holders of a majority of the votes which could be cast by shares entitled to vote with respect to such matter at the Annual
Meeting. Should the shareholders fail to ratify the selection of PricewaterhouseCoopers LLP as our independent registered
public accounting firm, the Audit Committee will review whether to retain such firm for the fiscal year ending December 31,
2012.
Your board of directors unanimously recommends a vote "FOR" the approval of Proposal 2.
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FEES PAID TO PRINCIPAL ACCOUNTANTS
The following sets forth the aggregate fees (including expenses) billed by TDS' principal accountants
PricewaterhouseCoopers LLP for 2011 and 2010:
2011 2010
Audit Fees (1)
Audit Related Fees (2)
Tax Fees (3)
All Other Fees (4)
Total Fees $ 5,091,434 $ 4,157,464
$ 3,992,655 $ 3,857,302
244,207 292,032
854,572 8,130
(1) Represents the aggregate fees billed by PricewaterhouseCoopers LLP for professional services rendered for the audit
of the annual financial statements for the years 2011 and 2010 included in TDS' and U.S. Cellular's Forms 10-K for
those years and the reviews of the financial statements included in TDS' and U.S. Cellular's Forms 10-O for those
years, including the attestation and report relating to internal control over financial reporting. Also includes fees for
services that are normally incurred in connection with statutory and regulatory filings or engagements, such as comfort
letters, statutory audits, attest services, consents, and review of documents filed with the SEC.
(2) Represents the aggregate fees billed by PricewaterhouseCoopers LLP for assurance and related services that are
reasonably related to the performance of the audit or review of TDS' and U.S. Cellular's financial statements that are
not reported under Audit Fees. In 2011 and 2010, this amount represents fees billed for audits of subsidiaries.
(3)
Represents the aggregate fees billed by PricewaterhouseCoopers LLP for 2011 and 2010 for tax compliance, tax
advice, and tax planning, if any.
(4) Represents the aggregate fees billed by PricewaterhouseCoopers LLP for services, other than services described in
Notes (1), (2) and (3). In 2011, the substantial majority of this amount represents Systems Implementation
Assessment advisory work relating to U.S. Cellular's new billing and operational support system (B/OSS) project. In
both 2011 and 2010, this amount includes the fee for access to a virtual accounting research service.
See "Corporate Governance —Audit Committee —Pre -Approval Procedures" above for a description of the Audit
Committee's pre -approval policies and procedures with respect to TDS' independent registered public accounting firm.
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AUDIT COMMITTEE REPORT
This report is submitted by the current members of the Audit Committee of the board of directors of TDS. The Audit
Committee operates under a written charter adopted by the TDS board of directors, a copy of which is available on TDS'
website, www.teldta.com, under Corporate Governance —Board Committee Charters.
Management is responsible for TDS' internal controls and the financial reporting process. TDS has an internal audit
staff, which performs testing of internal controls and the financial reporting process. The independent registered public
accounting firm is responsible for performing an independent audit of TDS' consolidated financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United States) and issuing a report thereon. The
Audit Committee's responsibility is to monitor and oversee these processes.
In this context, the Audit Committee held meetings with management, the internal audit staff and representatives of
PricewaterhouseCoopers LLP, TDS' independent registered public accounting firm for 2011. In these meetings, the Audit
Committee reviewed and discussed the audited financial statements as of and for the year ended December 31, 2011.
Management represented to the Audit Committee that TDS' consolidated financial statements were prepared in accordance
with accounting principles generally accepted in the United States of America, and the Audit Committee has reviewed and
discussed the consolidated financial statements with management and representatives of PricewaterhouseCoopers LLP.
The discussions with PricewaterhouseCoopers LLP also included the matters required to be discussed by Statement on
Auditing Standards No. 61, as amended (AICPA, Professional Standard, Vol. 1. AU Section 380), as adopted by the Public
Company Accounting Oversight Board in Rule 3200T, relating to information regarding the scope and results of the audit.
The Audit Committee also received from PricewaterhouseCoopers LLP written disclosures and a letter regarding its
independence as required by applicable requirements of the Public Company Accounting Oversight Board regarding the
independent accountant's communications with the Audit Committee concerning independence, and this information was
discussed with PricewaterhouseCoopers LLP.
Based on and in reliance upon these reviews and discussions, the Audit Committee recommended to the board of
directors that the audited financial statements as of and for the year ended December 31, 2011 be included in TDS' Annual
Report on Form 10-K for the year ended December 31, 2011.
By the members of the Audit Committee of the board of directors of TDS:
George W. Off Clarence A. Donald C. Nebergall Mitchell H. Saranow Herbert S.
Chairperson Davis Wander
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PROPOSAL 3
ADVISORY VOTE ON EXECUTIVE COMPENSATION
What am I being asked to vote on in Proposal 3?
In Proposal 3, we are providing shareholders with a vote to approve, on an advisory basis, the compensation of our
named executive officers as disclosed in this Proxy Statement pursuant to compensation disclosure rules set forth in
Item 402 of Regulation S -K of the SEC (which disclosure includes the Compensation Discussion and Analysis, the Summary
Compensation Table and the other related tables and disclosure). This vote has been required to be submitted to
shareholders since 2011 pursuant to SEC rules adopted under provisions in the Dodd -Frank Act codified in Section 14A of
the Securities Exchange Act of 1934, as amended. The advisory vote on executive compensation described in this proposal
is commonly referred to as a "Say -on -Pay" vote.
TDS is required to request shareholders to vote, on an advisory basis, on the frequency of holding Say -on -Pay votes,
commonly referred to as a "Say -on -Frequency" vote, at least once every six years. TDS held a Say -on -Frequency vote at the
2011 Annual Meeting. At that meeting, shareholders voted by a substantial majority to hold Say -on -Pay votes every year.
Based on the results of the Say -on -Frequency vote in 2011, the TDS board of directors adopted a policy to hold the Say -on -
Pay vote every year, as was previously disclosed in TDS' Current Report on Form 8-K dated May 19, 2011. Accordingly, TDS
is holding a Say -on -Pay vote in 2012 and will continue to hold a Say -on -Pay vote every year going forward unless and until
this policy is changed. TDS intends to next submit the Say -on -Frequency proposal to shareholders at the 2017 Annual
Meeting of shareholders.
How does the board of directors recommend that I vote on this proposal?
The board of directors unanimously recommends a vote FOR approval of the Say -on -Pay proposal.
TDS believes that its executive compensation program is reasonable, competitive and strongly focused on pay for
performance.
TDS' compensation objectives for executive officers are to support the overall business strategy and objectives, attract
and retain high -quality management, link compensation to both individual and company performance, and provide
compensation that is both competitive and consistent with our financial performance.
Consistent with these goals and as disclosed in the Compensation Discussion and Analysis, the Compensation
Committee has developed and approved an executive compensation philosophy to provide a framework for TDS' executive
compensation program featuring the policies and practices described in the Executive Summary of the Compensation
Discussion and Analysis below.
This proposal gives our shareholders the opportunity to express their views on the overall compensation of our named
executive officers and the philosophy, policies and practices described in this Proxy Statement.
Is this vote binding on the board of directors?
The Say -on -Pay vote is an advisory vote only, and therefore will not bind TDS or our board of directors. However, the
board of directors and the Compensation Committee will consider the voting results as appropriate when making future
decisions regarding executive compensation.
The results of the Say -on -Pay vote will be disclosed on a Form 8-K.
The next Say -on -Pay vote will occur at the 2013 Annual Meeting of shareholders.
Your board of directors unanimously recommends a vote "FOR" approval of Proposal 3.
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EXECUTIVE AND DIRECTOR COMPENSATION
The following discussion and analysis of our compensation practices and related compensation information should be
read in conjunction with the Summary Compensation Table and other tables included below, as well as our financial
statements and management's discussion and analysis of financial condition and results of operations included in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2011.
Compensation Discussion And Analysis
This Compensation Discussion and Analysis discusses the compensation awarded to, earned by, or paid to the
executive officers identified in the Summary Compensation Table.
Executive Summary
TDS provides wireless, Internet, telephone and broadband communications services in 36 states through its primary
business units, U.S. Cellular and TDS Telecom. At December 31, 2011, TDS served 5.9 million U.S. Cellular customers and
1.1 million TDS Telecom equivalent access lines. U.S. Cellular accounted for 84% of TDS' revenues in 2011, TDS Telecom
accounted for 15%, and other non -reportable segments accounted for 1%.
TDS and its business units operate in the highly competitive telecommunications industry. As the companies continue to
position themselves to compete aggressively for customers, TDS has placed greater emphasis on company performance in
the executive bonus structure, as follows:
• Prior to 2010, the bonus structure was based 60% on individual performance and 40% on company
performance.
• Bonuses related to 2010 reflected a 55% individual and 45% company performance structure.
• Bonuses related to 2011 are based equally on individual and company performance.
Compensation Philosophy and Objectives
TDS and its business units are committed to providing the very best in customer satisfaction, achieving long-term
profitable growth, and building the high -quality teams required to make this possible. As such, we focus on operating in a
fiscally responsible manner, and on recruiting and retaining talented employees who believe in the company's values and
long-term perspective.
TDS' compensation objectives for executive officers are to support the overall business strategy and objectives, attract
and retain high -quality management, link compensation to both individual and company performance, and provide
compensation that is both competitive and consistent with our financial performance.
Highlights of the TDS Compensation Programs:
• We have a Compensation Committee, comprised solely of independent directors, that reviews and approves
the salaries, bonuses and long-term compensation of executive officers (other than the President and Chief
Executive Officer of U.S. Cellular).
• We develop our compensation programs to motivate executive officers to act in the best long-term interest of
TDS.
• We benchmark our executive officer compensation levels using market data supplied by our Compensation
Committee's independent compensation consultant, Compensation Strategies, Inc., and by our compensation
consultant, Towers Watson.
• A major compensation goal is to provide compensation and benefit programs that are both attractive and
fiscally responsible.
• We provide few perquisites or "perks" to our officers.
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• We don't enter into employment contracts as a general practice.
• We endeavor to conform with generally accepted compensation practices as defined by leading proxy advisory
firms.
• Our executive bonus program is appropriately balanced between individual and company performance. In
2011, we adjusted the company performance portion of our executive bonus program so that 70% of the target
bonus for company performance is based on a quantitative calculation of the company's financial performance,
and 30% is based on a qualitative assessment of the company's performance with respect to enhancing its
longer term value and success.
• As a general practice, we do not enter into agreements to provide substantial termination benefits, such as
"golden parachutes".
2011 Compensation
Our executive officers' compensation is comprised of a mix of base salary, annual cash bonuses and equity -based, long-term
incentive awards.
• When setting base salaries, we consider the benchmarking analyses performed by our compensation
consultants, the executives' personal accomplishments and their overall contribution to the success of the
organization. Please refer to the detailed description of those considerations for each named executive under
"Compensation Discussion and Analysis —Annual Cash Compensation —Base Salary".
• Bonus awards are based on a combination of company and individual performance. For 2011, the weighting
was based 50% on individual performance and 50% on company performance. As to company performance,
using both quantitative (70%) and qualitative (30%) assessments designed to provide a balanced approach to
measuring performance for both U.S. Cellular (weighted at 75%) and TDS Telecom (weighted at 25%), we
determined that the company performance portion of the TDS bonus would be paid at 93.9% of the targeted
amount. Please refer to a description of TDS' performance under "Compensation Discussion and Analysis —
Company Performance" and a description of each named executive officer's bonus under "Compensation
Discussion and Analysis —Annual Cash Compensation —Bonus".
• Long-term compensation awards for executive officers are based, in part, on company and individual
performance, with the goal of increasing long-term company performance and shareholder value. Stock
options, restricted stock units and bonus match units generally vest over several years, to reflect the goal of
relating long-term executive compensation to increases in shareholder value over the same period. Please refer
to the detailed description of those considerations for each named executive officer under "Compensation
Discussion and Analysis —Long -Term Equity Compensation".
Corporate Governance
TDS endeavors to follow good corporate governance practices and other best practices. For instance, TDS has
established a fully independent Compensation Committee, even though it is not required to do so under law, SEC regulations
or NYSE listing requirements because it is a controlled company. Good corporate governance is also an important
consideration to the Compensation Committee. TDS' commitment to good corporate governance has been recognized by
Forbes and Governance Metrics International (GMI) who identified TDS as one of only 100 companies to be named Most
Trustworthy for 2012. GMI analyzed more than 8,000 companies before selecting the top 100. TDS also made the list in
2009. For 2012, TDS had an accounting and governance risk score of 98 out of 100. Additional information relating to TDS'
good corporate governance practices and other best practices is set forth below under "Corporate Governance and Best
Practices."
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Say -on -Pay Vote
As indicated above, TDS first included a Say -on -Pay vote in its Proxy Statement for its 2011 Annual Meeting with
respect to 2010 compensation. Beginning in 2012, SEC rules require TDS to disclose whether and, if so, how it considered
the results of the most recent Say -on -Pay vote in determining compensation policies and decisions and, if so, how that
consideration has affected its executive compensation decisions and policies.
Responsive to the foregoing requirement, the Compensation Committee considered the fact that over 88% of the votes
represented at the 2011 Annual Meeting that could be cast were cast FOR the Say -on -Pay proposal at the 2011 Annual
Meeting of shareholders with respect to 2010 compensation. Because of the substantial support from shareholders, the
Compensation Committee continued to apply principles that were substantially similar to those in 2010 in determining
compensation policies and decisions and did not make any significant changes to TDS' executive compensation decisions
and policies with respect to 2011 executive compensation as a result of the Say -on -Pay vote in 2011. The Compensation
Committee will continue to consider the results of the annual Say -on -Pay votes in their future compensation policies and
decisions.
Changes to Compensation Policies in 2011
Although not related to the Say -on -Pay vote, changes were made to certain executive compensation polices in 2011, as
follows. For bonus awards relating to 2011 performance, the weighting was based 50% on individual performance and 50%
on company performance, compared to 55% on individual performance and 45% on company performance for bonus awards
relating to 2010 performance. In addition, as described below under "Company Performance," the method of calculating
company performance for purposes of determining executive bonuses was changed to provide that (i) the quantitative
calculation of financial performance for 2011 comprises 70% rather than 100% of the company performance portion of the
bonus and is based on a weighting of the financial performance of U.S. Cellular (75%) and TDS Telecom (25%), and (H) the
remaining 30% is based on a weighting of the company performance of U.S. Cellular (75%) and TDS Telecom (25%), each
as determined qualitatively and subjectively by LeRoy T. Carlson, Jr. in his capacity as Chairman of each of U.S. Cellular and
TDS Telecom. A more detailed analysis of TDS' executive compensation decisions and policies in 2011 is set forth below.
Overview
TDS' compensation policies for executive officers are intended to provide incentives for the achievement of corporate
and individual performance goals and to provide compensation consistent with the performance of TDS, utilizing good
governance and other best practices, as discussed below.
TDS' policies establish incentive compensation performance goals for executive officers based on factors over which
such officers have control and which are important to TDS' long-term success. TDS believes compensation should be related
to the performance of TDS and should be sufficient to enable TDS to attract and retain individuals possessing the talents
required for long-term successful performance. Nevertheless, although performance influences compensation and awards,
all elements of compensation are discretionary and officers do not become entitled to any compensation or awards solely as
a result of the achievement of performance levels. References to "CEO" below refer to the Chief Executive Officer and may
refer to the President and CEO of TDS, U.S. Cellular or TDS Telecom, as indicated below. References to "CFO" below refer
to the Chief Financial Officer of TDS.
The responsibilities of the TDS Compensation Committee include the review of salary, bonus, long-term compensation
and all other elements of compensation of executive officers of TDS, other than officers of U.S. Cellular or any of its
subsidiaries. For these purposes, "executive officers" means all officers that are employees who are or will be identified in
TDS' proxy statement as "executive officers," including the President and CEO of TDS Telecom, except that the
compensation of the President and CEO of U.S. Cellular is established and administered by U.S. Cellular's chairman and
long-term incentive compensation committee, as described in the proxy statement of U.S. Cellular relating to its 2012 Annual
Meeting of shareholders. Accordingly, except as expressly indicated below, the following discussion does
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not apply to Mary N. Dillon, the President and CEO of U.S. Cellular. Also, Ms. Dillon does not receive any awards with
respect to TDS shares; all of her awards made by the U.S. Cellular long-term incentive compensation committee are with
respect to Common Shares of U.S. Cellular (NYSE: USM).
The TDS Compensation Committee's charter provides that it will obtain advice and assistance from TDS' President and
CEO and Vice President of Human Resources and from any other officer or employee of TDS, as it determines is
appropriate. As discussed below, the Compensation Committee also utilizes the services of both an independent
compensation consultant and TDS' compensation consultant.
The Compensation Committee has not delegated any of its authority with respect to any of the officers identified in the
Summary Compensation Table. The Compensation Committee's charter, however, permits it to delegate some or all of the
administration of the long-term incentive plans or programs to the TDS President and CEO or other executive officer of TDS
as the committee deems appropriate, to the extent permitted by law and the applicable long-term incentive plan or program,
but not regarding any award to the TDS President and CEO.
Corporate Governance and Best Practices
As noted above, TDS' commitment to good corporate governance has been recognized by Forbes and Governance
Metrics International (GMI) who identified TDS as one of only 100 companies to be named Most Trustworthy for 2012. GMI
analyzed more than 8,000 companies before selecting the top 100. TDS also made the list in 2009. For 2012, TDS had an
accounting and governance risk score of 98 out of 100. GMI states that its quantitative and qualitative analysis looks beyond
the raw data on companies' income statements and balance sheets to assess the true quality of corporate accounting and
management practices. GMI finds that its 100 Most Trustworthy Companies have consistently demonstrated transparent and
conservative accounting practices and solid corporate governance and management. GMI's evaluation identifies companies
with good housekeeping practices that do not have unusual or excessive executive compensation, high levels of
management turnover, substantial insider trading relative to their corporate peers, or high levels of short-term executive
compensation, which encourages management to focus on short-term results.
Following good corporate governance and best practices is also an important consideration of the Compensation
Committee. The following identifies a number of the good governance practices and other best practices adopted and
followed by TDS, even though in many cases it is not required to do so under law, SEC rules or NYSE listing requirements as
a controlled company:
(a) TDS' board of directors has a majority of independent directors.
(b) All directors are elected annually.
(c) TDS has adopted Corporate Governance Guidelines that are intended to reflect good corporate governance
and best practices.
(d) TDS has established a Corporate Governance and Nominating Committee.
(e) The Corporate Governance and Nominating Committee operates under a formal charter and in a manner that is
intended to reflect good corporate governance and best practices.
(f) The positions of (i) Chairman of the Board and (H) President and Chief Executive Officer are separated.
(g) The TDS Audit Committee, which is comprised entirely of independent directors as required, operates under a
formal charter and in a manner that is intended to reflect good corporate governance and best practices, in
addition to compliance with all legal, regulatory and NYSE requirements.
(h) TDS has established a Compensation Committee comprised solely of independent directors, as identified and
described below.
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(i)
The Compensation Committee operates under a formal charter and in a manner that is intended to reflect good
corporate governance and best practices.
(j) The Compensation Committee's charter provides that the committee has the authority to engage advisors, the
fees of which are paid by TDS.
(k) Pursuant to the foregoing authority, the Compensation Committee has retained and obtained the advice of
Compensation Strategies, Inc., a provider of executive compensation consulting services, since 2008.
Compensation Strategies is independent and does not have any other relationships with TDS or its affiliates.
(I) The Compensation Committee uses benchmark information supplied by Compensation Strategies in making
executive officer compensation decisions.
In addition to being comprised solely of independent directors, the members of the Compensation Committee are highly
experienced and eminently qualified: George W. Off, formerly chief executive officer and chairman of Checkpoint Systems,
Inc. and of Catalina Marketing Corporation, has substantial experience as the principal executive officer of such public
companies; Christopher D. O'Leary, currently executive vice president and chief operating officer —international of General
Mills, Inc., has many years of significant experience in senior management of large businesses with a large number of
employees; Gary L. Sugarman, currently executive chairman of FXecosystem, Inc. and principal of Richfield Capital Partners
and Richfield Associates, has substantial experience in management, acquisitions and business development of
telecommunications companies; and Herbert S. Wander (chairperson) is a partner of Katten Muchin Rosenman LLP with a
national reputation as a corporate and acquisitions lawyer and as a corporate governance expert.
Objectives and Reward Structure of TDS' Compensation Programs
The above Overview generally describes the objectives and reward structure of TDS' compensation programs. This
section further discusses, with respect to the officers identified in the Summary Compensation Table, (1) the objectives of
TDS' compensation programs and (2) what the compensation programs are designed to reward.
The objectives of TDS' compensation programs for executive officers are to:
• support TDS' overall business strategy and objectives;
• attract and retain high quality management;
• link individual compensation with attainment of individual performance goals and with attainment of business
unit and TDS objectives; and
• provide competitive compensation opportunities consistent with the financial performance of TDS.
The primary financial focus of TDS as a consolidated enterprise is the increase of long-term shareholder value through
growth, measured primarily in such terms as return on capital, revenues, customer units in service, operating cash flow
(operating income plus depreciation, amortization and accretion) and operating income. Operating units of TDS may have
somewhat different primary financial measures. TDS' compensation policies for executive officers are designed to reward the
achievement of such corporate performance goals. However, there is no strict relationship between elements of
compensation or total compensation and such measures of performance. Instead, compensation decisions are made
subjectively by the Compensation Committee, considering certain performance measures, as well as all other appropriate
facts and circumstances.
Each element of compensation and the total compensation of the named executive officers are determined on the basis
of the committee's analysis of multiple factors rather than specific measures of performance. The Compensation Committee
does not rely on predetermined formulas or a limited set of criteria when it evaluates the performance of the named executive
officers.
TDS' compensation programs are designed to reward performance of TDS on both a short-term and long-term basis.
With respect to the officers identified in the Summary Compensation Table, the design of
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compensation programs and performance rewarded is similar but with some differences for each of the named executive
officers depending on such officer's position and responsibilities.
The Compensation Committee evaluates the performance of the President and CEO of TDS in light of the annual and
ongoing objectives for TDS and for its primary business units and the attainment of those objectives, and sets the elements
of compensation for the President and CEO of TDS based on such performance evaluation and compensation principles, as
discussed below.
With respect to the other officers identified in the Summary Compensation Table, the Compensation Committee reviews
management's evaluation of the performance of such executive officers and determines and approves the elements of
compensation for such executive officers based on such performance evaluations and compensation principles and the
Compensation Committee's own assessment on the performance of these officers, as discussed below.
Elements of Compensation
This section discusses, with respect to the officers identified in the Summary Compensation Table, (i) each element of
compensation paid to such officers, (H) why TDS chooses to pay each element of compensation, (Hi) how TDS determines
the amount or formula for each element of pay, and (iv) how each compensation element and TDS' decisions regarding that
element fit into TDS' overall compensation objectives and affect decisions regarding other elements.
Each element of compensation paid to officers is as follows:
• Annual Cash Compensation
o Salary
o Bonus
• Long-term Equity Compensation pursuant to Long -Term Incentive Plans
o Stock Awards
Bonus Stock Match Unit Awards
Restricted Stock Unit Awards
o Stock Options
• Other Benefits and Plans Available to Identified Officers
o Deferred Compensation
o Supplemental Executive Retirement Plan ("SERP")
o Perquisites
• Other Generally Applicable Benefits and Plans
o Employee Stock Purchase Plan (terminated in 2011)
o Tax -Deferred Savings Plan
o Pension Plan
o Post -Retirement Welfare Benefits
o Health and Welfare Benefits during Employment
TDS has chosen to pay or provide these elements of compensation after considering common compensation practices
of peers and other companies with similar characteristics, in order to support TDS' overall business strategy and objectives.
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order to attract and retain high quality management, attain or exceed business objectives and targeted financial performance
and increase shareholder value. Executive compensation is intended to provide, in the judgment of the
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Compensation Committee, an appropriate balance between the long-term and short-term performance of TDS, and also a
balance between TDS' financial performance and shareholder return.
TDS does not have defined guidelines that determine the amount or formula for each element of pay. TDS also does not
have defined guidelines that determine how each compensation element and decisions regarding that element fit into TDS'
overall compensation objectives and affect decisions regarding other elements. TDS has no target levels for cash versus
equity compensation. Instead, TDS establishes elements of compensation and determines how they fit together overall and
in the manner described in the following discussion.
As noted above, the elements of executive compensation consist of both annual cash and long-term equity
compensation. Annual cash compensation consists of base salary and an annual bonus. Annual compensation decisions are
based partly on individual and corporate short-term performance and partly on the individual and corporate cumulative long-
term performance during the executive's tenure in his or her position, particularly with regard to the President and CEO.
Long-term equity compensation is intended to compensate executives primarily for their contributions to long-term increases
in shareholder value and is generally provided through the grant of stock options and restricted stock units.
The Compensation Committee determines annually each executive officer's base salary, taking into consideration:
(1) the appropriate salary range for the executive officer's position and responsibilities, (2) his or her performance during the
preceding year, (3) his or her performance during the executive's tenure in the position, (4) TDS' and its business units'
performance during the year compared to plan and compared with that of similar companies, (5) the recommendation of the
President and CEO (with respect to executive officers other than the President and CEO) and (6) such other facts and
circumstances as the committee may deem relevant. The Compensation Committee makes such determination considering
the matters described below, including advice and information from its independent compensation consultant, Compensation
Strategies, Inc. See Compensation Consultant below for information about Compensation Strategies.
In addition, the Compensation Committee determines annually the executive officer's bonus, taking into consideration:
(1) the executive officer's performance during the preceding year, including contributions to TDS and its business units, and
achievement of individual objectives, (2) TDS' and its business units' performance during the year compared to plan and
compared with that of similar companies, (3) the achievement of important corporate and business unit objectives for the
year, (4) the recommendation of the President and CEO (with respect to executive officers other than the President and
CEO) and (5) such other facts and circumstances as the committee may deem relevant.
In general, other facts and circumstances that the Compensation Committee considers in determining the annual cash
compensation of the named executive officers and/or that the President and CEO considers in his evaluation and
recommendation to the Compensation Committee with respect to the named executive officers, other than the President and
CEO, include the following: the fact that TDS is a public company; the publicly -available benchmark information of cash
compensation of TDS' publicly -held peers and other publicly -held companies, as discussed below; the fact that TDS is
primarily a regional competitor and that some of its competitors are national or global telecommunications companies that are
much larger than TDS and possess greater resources than TDS; the fact that TDS is a controlled company; and the fact that
the primary financial focus of TDS as a consolidated enterprise is the increase of long-term shareholder value through
growth. Additional facts and circumstances considered with respect to the named executive officers are discussed below in
the discussion relating to each such officer.
The Compensation Committee also determines long-term equity compensation awards to the identified executive
officers under the TDS 2004 Long -Term Incentive Plan, which include options, restricted stock units and bonus match units,
as discussed below. Grants of options, restricted stock units and bonus match units by TDS to the President and CEO and
the other executive officers are generally made to all such officers at the same time in a particular year. In 2011, options and
restricted stock units were granted on May 13, 2011. Bonus match units were granted on March 4, 2011 (the date that the
related bonus was determined). TDS may also make grants of equity awards during other times
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of the year as it deems appropriate. All option, restricted stock unit and bonus match unit awards are expensed over the
applicable vesting periods.
TDS does not backdate options or have any program, plan or practice to time the grant of awards in coordination with
the release of material non-public information.
The Compensation Committee does not consider an officer's outstanding equity awards or stock ownership levels when
determining the value of the long-term incentive award component of such officer's compensation. The Compensation
Committee makes long-term incentive awards based on performance for a particular year and other considerations as
described herein and does not consider outstanding equity awards and stock ownership to be relevant in connection
therewith.
Risks Relating to Compensation to Executive Officers
TDS does not believe that the incentives in compensation arrangements maintained by TDS encourage executive
officers to take unnecessary, excessive or inappropriate risks that could threaten the value of TDS, or that risks arising from
TDS' compensation policies and practices for executive officers are reasonably likely to have a material adverse effect on
TDS. Also, TDS does not believe that risks arising from TDS' compensation policies and practices for its employees,
including non -executive officers, are reasonably likely to have a material adverse effect on TDS. See discussion under "Risks
from Compensation Policies and Practices" below.
Compensation Consultant
Towers Watson is TDS management's primary compensation consultant. The Compensation Committee obtained the
advice of this consultant as described below.
In 2011, the role of such compensation consultant in determining or recommending the amount or form of executive
officer compensation was to provide external benchmarking data to TDS from its executive compensation survey database
and to provide recommendations on the type and amount of compensation to be granted to officers.
The nature and scope of the assignment, and the material elements of the instructions or directions given to such
consultant with respect to the performance of its duties under its engagement, were to make recommendations based on
external benchmarking data obtained from its executive compensation survey database. See "Benchmarking" below.
In addition, the Compensation Committee's charter provides that the committee shall have the authority to engage
advisors as it deems necessary to carry out its duties and that TDS shall provide appropriate funding, as determined by the
Compensation Committee, for payment of any advisor retained by the committee, as well as ordinary administrative
expenses of the committee that are necessary or appropriate in carrying out its duties. Pursuant to such authority, the
Compensation Committee has retained and obtained the advice of Compensation Strategies, Inc., a provider of executive
compensation consulting services, since 2008. Compensation Strategies is independent and does not have any other
relationships with TDS or its affiliates.
The role of Compensation Strategies in determining or recommending the amount or form of executive officer
compensation, the nature and scope of the assignment, and the material elements of the instructions or directions given to
such consultant with respect to the performance of its duties under its engagement, are to review TDS' various compensation
elements and programs and to provide independent analysis and advice to the Compensation Committee for the purpose of
evaluating such elements and programs. As discussed below under "Benchmarking", such compensation consultant
conducted a competitive review of compensation levels of TDS executive officers in 2011 as a cross-check to the information
provided by Towers Watson. In addition, Compensation Strategies reviewed the TDS 2011 Long -Term Incentive Plan and
consulted with the Compensation Committee regarding the appropriate design and provisions of the TDS 2011 Long -Term
Incentive Plan.
Other than to provide to the Compensation Committee the foregoing advice or recommendations on the amount or form
of executive compensation, neither Compensation Strategies nor its affiliates
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provided any additional services to TDS or its affiliates or to the Compensation Committee in 2011. Accordingly, the work of
Compensation Strategies does not raise any conflict of interest. Although the benchmarking provided by Towers Watson to
the Compensation Committee possibly raises a conflict of interest due to the fact that Towers Watson is retained by TDS
management and because Towers Watson also performs services other than advice and recommendations on the amount or
form of executive compensation, which may include consulting on broad -based plans and the provision of non -customized
benchmark data, this potential conflict of interest has been addressed by retaining and obtaining the advice of an
independent compensation consultant, Compensation Strategies.
Neither Towers Watson nor Compensation Strategies provides any advice as to director compensation.
Bench marking
TDS engages in benchmarking as described below.
For executive compensation purposes, market benchmark data is obtained from the Towers Watson Executive
Compensation Database. For compensation decisions in 2011, data was obtained from the 2010 database. The database
contained over 750 companies that represented a diverse range of companies across all industries, including companies
from the telecommunications, retail, financial, electronics, pharmaceutical, manufacturing and consumer products sectors.
This database was used to benchmark the ranges of annual cash compensation considered to be appropriate for the named
executive officers, as discussed below. This database also was used to benchmark the equity compensation awards of the
named executive officers, as discussed below. TDS believes this approach provides a reasonably accurate reflection of the
competitive market for such elements of compensation necessary to retain current executives and attract future executives to
positions at TDS. In addition, TDS believes this methodology is more statistically valid than solely benchmarking these
elements of compensation to the limited number of companies in the peer group used for the Stock Performance Graph that
is included in the TDS annual report to shareholders, as discussed below.
The identities of the individual component companies that are included in the Towers Watson database are neither
disclosed to nor considered by TDS or the Compensation Committee. TDS and the Compensation Committee rely upon and
consider to be material only the aggregated survey data prepared by Towers Watson. They do not obtain or consider
information on the identities of the individual companies included in the survey in connection with any compensation
decisions because this information is not considered to be material.
In 2011, the Compensation Committee also obtained peer group information from its independent compensation
consultant, Compensation Strategies. In particular, in 2011, Compensation Strategies provided market data for a peer group
for purposes of a competitive review of compensation levels of TDS' executive officers. This was done as a cross-check
against the information provided by Towers Watson in connection with the approval of compensation in 2011.
For this cross-check in 2011, Compensation Strategies created an industry peer group that consisted of 14 publicly -
traded companies of somewhat similar size to TDS from the telecommunications industry. The companies in this group were:
CenturyLink, Cincinnati Bell, Frontier Communications, Global Crossing, IDT Corp., Leap Wireless International, Level 3
Communications, MetroPCS Communications, Nil Holdings, Primus Telecommunication Group, Qwest Communications
International, tw telecom, Windstream, and XO Holdings.
TDS also generally considers compensation arrangements at the companies in the peer group index included in the
"Stock Performance Graph" that is included in the TDS annual report to shareholders, as discussed below, as well as other
companies in the telecommunications industry and other industries, to the extent considered appropriate, based on similar
size, function, geography or otherwise. This information is used to generally understand the market for compensation
arrangements for executives, but is not used for benchmarking purposes.
TDS selected the Dow Jones U.S. Telecommunications Index, a published industry index, as its peer group for the
Stock Performance Graph. As of December 31, 2010, the Dow Jones U.S.
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Telecommunications Index was composed of the following companies: AboveNet Inc., American Tower Corp. (Class A),
AT&T, CenturyLink, Cincinnati Bell, Crown Castle Communications Corp. Frontier Communications, Leap Wireless
International, Leucadia National, Level 3 Communications, MetroPCS Communications, Nil Holdings, Qwest
Communications International, SBA Communications Corp., Sprint Nextel, Telephone and Data Systems (TDS and TDS.S),
tw telecom (Class A), U.S. Cellular, Verizon Communications, Virgin Media and Windstream. As of December 31, 2011, Dow
Jones deleted the following companies from this index: American Tower Corp. (Class A) and Qwest Communications
International.
Company Performance
Each year, TDS calculates an overall percentage of TDS performance based on the performance of U.S. Cellular and
TDS Telecom. The following shows TDS' level of achievement with respect to 2011.
TDS overall company performance for 2011 was 93.9% of target. This represents the average of the U.S. Cellular
overall company performance of 88.1% and the TDS Telecom overall company performance of 111.0%, as weighted by the
percentages specified below, calculated as follows:
a Weight
Business Unit Performance:
b Quantitative Financial Performance
c Qualitative Company Performance
Calculation of Overall Business
Unit
Performance:
d Quantitative Financial Performance
e Qualitative Company Performance
f Total
Calculation of Weighted Company
Performance:
g Weighted Quantitative Financial
Performance
h Weighted Qualitative Company
Performance
Total
Formula U.S. Cellular TDS Telecom Total
75% 25% 100%
b X 70%
c X 30%
d+e
axd
axe
g+h
76.6%
115.0%
104.2% N/A
127.0% N/A
53.6% 72.9% N/A
34.5% 38.1% N/A
88.1% 111.0% N/A
40.2% 18.3%58.5%
25.9% 9.5%35.4%
93.9%
The method for determining company performance was changed from prior years. In prior years, the financial
performance measures represented 100% of the company performance portion of the bonus, but the overall level of financial
performance could be adjusted by LeRoy T. Carlson, Jr. in his capacity as Chairman of each of U.S. Cellular and TDS
Telecom, on a discretionary basis. Beginning with the 2011 bonus paid in 2012, the level of financial performance is
determined quantitatively based on financial performance measures, and comprises 70% rather than 100% of the company
performance portion of the bonus. The targets used to determine quantitative financial performance could be adjusted to
reflect unanticipated events. The remaining 30% is based on a weighting of the company performance of U.S. Cellular and
TDS Telecom as determined qualitatively and subjectively by the Chairman thereof.
Performance of U.S. Cellular is discussed in the U.S. Cellular proxy statement. As noted therein, the final quantitative
financial performance percentage for U.S. Cellular for 2011 was determined to be 76.6%. Also as noted in the U.S. Cellular
proxy statement, the qualitative company performance percentage as determined by the Chairman of U.S. Cellular was
115.0%, resulting in an overall company performance percentage for U.S. Cellular of 88.1% as calculated above.
As calculated below, the quantitative financial performance percentage for TDS Telecom for 2011 was calculated to be
104.2%. The qualitative company performance percentage as determined by the Chairman of TDS Telecom was 127.0%,
resulting in an overall company performance percentage for TDS Telecom of 111.0% as calculated above.
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The following provides information on performance metrics and achievement of TDS Telecom with respect to 2011 that
was used in calculating the quantitative financial performance for TDS Telecom. Financial information presented in the below
table is based on the performance metrics established specifically for bonus purposes and may not agree with the segment
financial information for TDS Telecom reported in TDS' 2011 Form 10-K, which is based on accounting principles generally
accepted in the United States ("GAAP"), or with other publicly disclosed information.
Actual Minimum
Results Threshold Maximum
Actual as a % Performance Performance Actual
2011 2011 of (as a % of (as a % of Target Points %
Measurement Results Target Target Target) Target) Points Earned Achieved
GROWTH
Consumer
Weighted
RGUs
(Revenue
Generating
Units) 221,819 243,170 91.2% 70% 130% 140 115 82.1%
Commercial
Weighted
RGUs 52,301 68,600 76.2% 70% 130% 140 73 52.1%
Revenue per
Account $ 138.43 $ 139.83 99.0% 90% 110% 110 103 93.6%
Hosted and
Managed
Services
(HMS)
Revenue 87.9% 100.0% 87.9% 70% 130% 50 38 76.0%
CUSTOMER
SATISFACTION
Consumer
Weighted
Churn* 1.487% 1.492% 99.7% 110% 90% 90 93 103.3%
Commercial
Weighted
Churn* 1.007% 1.139% 88.4% 120% 80% 90 142 157.8%
PRODUCTIVITY
Cost to Provide
Service per
Weighted
RGU* $ 22.48 $ 23.22 96.8% 110% 90% 100 132 132.0%
General and
Administrative
(G&A)
Expenses as a
% of Revenue* 12.1% 11.8% 102.5% 110% 90% 100 85 85.0%
OVERALL
PERFORMANCE
Return on Capital
(ROC)
Lower actual amount is better.
4.73% 4.34% 109%
80% 120% 180 261 145.0%
1,000 1,042 104.2%
If a metric does not meet the minimum threshold performance level, no target points are awarded with respect to such
metric. If maximum performance or greater is achieved, 200% of the target points are awarded. As shown above, the
minimum threshold was achieved with respect to each of the metrics, but was less than maximum performance in each case.
As a result, the target points were prorated based on the formula included in the TDS Telecom bonus plan.
A total of 1,042 actual versus 1,000 target points were achieved and, as a result, the overall percentage achieved was
104.2%.
The qualitative company performance percentage as determined by the TDS Telecom Chairman was 127.0%. In
arriving at this percentage, the Chairman considered a number of accomplishments by TDS Telecom management, including
(i) achieving growth in managedlP and digital subscriber line (DSL) customers, (H) controlling costs, (Hi) achieving several
successes with respect to the Hosted and Managed Services (HMS) business, (iv) preparing to launch Internet Protocol
Television (IPTV) in new markets, (v) maintaining high net promoter scores and (vi) developing talented employees
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As a result, the overall percentage deemed to have been achieved by TDS Telecom for company performance with
respect to 2011 was 111.0%, calculated as follows:
Percentage of Weighted
Performance Weight Performance
Quantitative Financial
Performance
Qualitative Company
Performance
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104.2% 70% 72.9%
127.0% 30% 38.1%
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Personal Objectives and Performance
In addition to TDS and/or business unit performance, the Compensation Committee may consider personal objectives
and performance. There was no minimum level of achievement of any personal objectives that was required for any cash
compensation decision. The assessment of the achievement of personal objectives is not formulaic, objective or quantifiable.
Instead, the individual performance considerations are factors, among others, that are taken into account in the course of
making subjective judgments in connection with compensation decisions.
The following summarizes the TDS corporate objectives and accomplishments applicable to the TDS President and
CEO and the other TDS corporate executive officers in 2011. As discussed above, TDS corporate oversaw and achieved
overall TDS performance for 2011 of 93.9% of target, representing the weighted average of the U.S. Cellular overall
company performance of 88.1% and the TDS Telecom overall company performance of 111.0%. In addition, in 2011 TDS
corporate: (i) contributed to and supported U.S. Cellular's efforts in developing an updated strategic plan under its new
President and CEO; (H) assisted the business units in developing sound strategies and programs to deliver high levels of
customer satisfaction, growth, and a good return on investment, including U.S. Cellular's strategic initiatives and TDS
Telecom projects; (Hi) assisted the business units in identifying and exploring attractive business opportunities, including new
services and products, and acquisitions, that will drive customer and revenue growth; (iv) assisted the business units in
identifying and realizing additional cost savings from process improvements and other efficiency initiatives; (v) assisted U.S.
Cellular in obtaining additional FCC spectrum at reasonable prices; (vi) worked with U.S. Cellular in successful legislative and
rulemaking efforts relating to FCC spectrum auctions; (vii) worked with the business units to effectively plan and execute
major 2011 technology deployments, particularly Long -Term Evolution (LTE) for U.S. Cellular and IPTV for TDS Telecom;
(viii) assisted TDS Telecom in evaluating and acquiring additional attractive companies, resulting in the successful acquisition
of OneNeck IT Services; (ix) oversaw and completed the refinancing of TDS and U.S. Cellular long-term debt at lower
interest rates; (x) evaluated long-term growth opportunities and made presentations to the board of directors;
(xi) recommended and effected a solution to the trading discount and low liquidity in the TDS Special Common Shares;
(xii) improved the internal control structure and systems; and (xiii) assessed the TDS capital structure and presented findings
to the board of directors.
The following summarizes the TDS Telecom objectives and accomplishments applicable to the TDS President and CEO
and the TDS Telecom President and CEO in 2011. As discussed above, TDS Telecom overall company performance for
2011 was 111.0%. In addition, in 2011 TDS Telecom: (i) prepared to roll -out IPTV in initial markets, and introduced other new
services to grow revenue; (H) realized cost savings and improved customer interaction through new projects; (Hi) provided
access to broadband speeds of 25 Mb or greater to almost 25% of the incumbent local exchange carrier (ILEC) addresses;
(iv) successfully integrated HMS acquisitions; (v) identified and evaluated potential acquisitions, resulting in the successful
acquisition of OneNeck IT Services; (vi) took action to achieve growth plans for the HMS businesses; (vii) continued to work
to maintain high customer satisfaction levels as measured by net promoter scores; (viii) worked to maintain legislative and
regulatory support for programs and rules that benefit TDS Telecom and its customers; and (ix) prepared to successfully
deploy stimulus funds to provide high speed data services to additional customers.
The U.S. Cellular objectives and accomplishments applicable to the TDS President and CEO and the U.S. Cellular
President and CEO in 2011 are summarized in the U.S. Cellular 2012 proxy statement for the 2012 annual meeting of
shareholders.
Annual Cash Compensation
Annual cash compensation decisions, consisting of base salary for the current year and bonus based on performance,
are generally made concurrently by the Compensation Committee each year for each of the identified executive officers.
As part of the process of determining the appropriate elements of annual cash compensation for the named executive
officers, the Compensation Committee is provided with information about the compensation of similar executive officers at
other companies, including chief executive officers of
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companies, chief executive officers and chief operating officers of their principal business units, if available, chief financial
officers and other officers with responsibilities comparable to the TDS named executive officers, as reported in proxy
statements and salary surveys. The Compensation Committee also considers recommendations from the President and CEO
of TDS regarding compensation for the named executives other than the President and CEO of TDS, each of which reports
directly to him. The Vice President —Human Resources prepares for the committee an analysis of compensation paid to
similar executive officers of other comparable companies. See "Benchmarking" above.
Annually, the nature and extent of each executive officer's personal accomplishments and contributions for the year are
determined, based on information submitted by the executive and by others familiar with his or her performance, including
the President and CEO of TDS in the case of the named executive officers other than the President and CEO of TDS. The
Compensation Committee evaluates the information in terms of the personal objectives established for such executive officer
for the performance appraisal period.
The Compensation Committee also assesses how well TDS did as a whole during the year, as discussed above, and
the extent to which the President and CEO of TDS believes the executive officers other than the President and CEO of TDS
contributed to the results, as discussed below. With respect to executive officers having primary responsibility over a certain
business unit or division of TDS, the Compensation Committee considers the performance of the business unit or division
and the contribution of the executive officer thereto.
The Compensation Committee uses these sources and makes the determination of appropriate elements of
compensation and ranges for such elements for such identified executive officers based on its informed judgment, using the
information provided to it by the Vice President —Human Resources, including information from Towers Watson. The
Compensation Committee also considers information from its independent compensation consultant, Compensation
Strategies. The elements of compensation and ranges for such elements are not based on any formal analysis nor is there
any documentation of this decision making process.
The Compensation Committee also has access to numerous performance measures and financial statistics prepared by
TDS. This financial information includes the audited financial statements of TDS, as well as internal financial reports such as
budgets and actual results, operating statistics and other analyses. The committee may also consider such other factors as it
deems appropriate in making its compensation decisions. No specific measures of performance or factors are considered
determinative in the compensation of executive officers. Instead, all the facts and circumstances are taken into consideration
by the Compensation Committee. Ultimately, it is the informed judgment of the committee, after reviewing the compensation
information provided by the Vice President —Human Resources, TDS' compensation consultant, Towers Watson, and its
independent compensation consultant, Compensation Strategies, that determines the elements of compensation and total
compensation for the executive officers.
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The following shows certain considerations relating to compensation paid in 2011:
Position at TDS
Position at U.S.
Cellular
Position at TDS
Telecom
Year Appointed
to Current
Officer Title at
TDS (TDS
Telecom for
Mr. Wittwer)
Year Employed
at TDS or its
Subsidiaries
Primary
Responsibilities
Overall
Weighted
Company
Performance for
2011 (as
applicable)
U.S. Cellular
TDS Telecom
Combined
Base Salary
LeRoy T. Carlson, Jr.
Director and President
and CEO
Director and Chairman
Director and Chairman
1981 (President)
and 1986 (CEO)
1968
Primary responsibility
for operations and
performance of TDS
and subsidiaries as
TDS CEO
Kenneth R. Meyers
Director and
Executive Vice
President and CFO
Director and Vice
President and
Assistant Treasurer
Director
2007
1987
Primary responsibility
for financial business
and financial affairs
of TDS and
subsidiaries
93.9%
Scott H. Williamson
Senior Vice
President —
Acquisitions and
Corporate
Development
N/A
N/A
1998
1995
Primary responsibility
for acquisitions and
corporate
development of TDS
and subsidiaries
David A. Wittwer
Executive Officer
N/A
Director and
President and
CEO
2006
1983
Primary
responsibility for
operations and
performance of
TDS Telecom as
TDS Telecom
CEO
111.0%
93.9% —
The base salary element of compensation of each officer is set within the range identified for this element based on an
assessment of the responsibilities and the performance of such officer, also taking into account the performance of TDS
and/or its business units or divisions, other comparable companies, the industry and the overall economy during the
preceding year. Column (c), "Salary," of the below Summary Compensation Table includes the dollar value of base salary
(cash and non -cash) earned by the identified executive officers during 2011, 2010 and 2009, whether or not paid in such
year.
The following shows certain information relating to base salary in 2011 compared to 2010. In addition, the following
discloses base salary in 2012 for information purposes. This will be reported in the Summary Compensation Table in the
2013 Proxy Statement.
2010 Base Salary
2011 Base Salary
$ Increase in 2011
% Increase in 2011
LeRoy T. Kenneth R. Scott H. David A.
Carlson, Jr. Meyers Williamson Wittwer
$ 1,313,300 $ 632,500 $ 594,500 $ 513,000
1,352,700 $ 658,500 $ 611,000 $ 533,000
39,400 $ 26,000 $ 16,500 $ 20,000
3.0% 4.1% 2.8% 3.9%
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2012 Base Salary approved in
March 2012 $ 1,352,700 $ 658,500 $ 611,000 $ 550,000
The TDS Compensation Committee reviews the base salary and the amount of the bonus on a combined basis as
described below under "Total Cash Compensation."
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Bonus
TDS has established performance guidelines and procedures for awarding bonuses to certain officers (not including the
President and CEO of each of TDS, U.S. Cellular and TDS Telecom). These guidelines and procedures, as amended and
restated, were filed by TDS as Exhibit 10.3 to TDS' Form 8-K dated November 18, 2009. The guidelines provide that each
year a specified percentage of an officer's bonus will be determined based on individual performance and that the remaining
percentage will be based on company performance. For bonuses relating to 2011 performance that were paid in 2012, 50%
of an officer's target bonus was based on the officer's individual performance and the remaining 50% was based on company
performance. The guidelines provide that, 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. In addition, the guidelines
specify that, notwithstanding any other provision of the guidelines, 100% of the bonus is discretionary, and that negative
discretion may be used to reduce the portion of any bonus calculated pursuant to the guidelines with respect to company
performance. The guidelines also specify the officers to whom the guidelines apply, and specify which officers' bonuses are
approved by the TDS Compensation Committee and which officers' bonuses are approved by the President and CEO of TDS
(or such other TDS officer to whom the President and CEO of TDS delegates such authority). The guidelines also provide
that any bonus awarded with respect to a performance year will 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.
In addition, TDS has established performance guidelines and procedures for awarding bonuses to the President and
CEO of TDS. These guidelines and procedures were filed by TDS as Exhibit 10.2 to TDS' Form 8-K dated November 19,
2008. These guidelines and procedures provide that the Compensation Committee in its sole discretion determines whether
an annual bonus will be payable to the President and CEO of TDS for a performance year and, if so, the amount of such
bonus, and describe factors that may be considered by the committee in making such determination, including any factors
that the committee in the exercise of its judgment and discretion determines relevant. The guidelines and procedures provide
that no single factor will be determinative and no factor will be applied mechanically to calculate any portion of the bonus of
the President and CEO. The entire amount of the bonus is discretionary. The guidelines and procedures provide that the
President and CEO will have no right or expectation with respect to any bonus until the committee has determined whether a
bonus will be paid for a performance year. The guidelines also provide that any bonus awarded with respect to a
performance year will 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.
The guidelines and procedures for awarding bonuses to the President and CEO of TDS and other officers were
amended effective January 1, 2009. These guidelines and procedures were filed by TDS as Exhibits to TDS' Form 8-K dated
November 18, 2009. Prior to such amendments, such guidelines and procedures provided that bonuses were not earned
until the date the bonus was paid. As a result, bonuses were not reported as earned in the Summary Compensation Table
until the year in which bonuses were paid. Effective for 2009, the foregoing guidelines and procedures were amended to
provide that, 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. For accounting purposes, TDS had been accruing bonuses
in the performance year as required by Generally Accepted Accounting Principles. The effect of the amendment to the
guidelines and procedures was that, effective for the 2009 bonus year and bonus years thereafter, TDS reports bonuses in
the performance year for purposes of the Summary Compensation Table in its Proxy Statement.
In addition, the President and CEO of TDS Telecom is a named executive officer of TDS. The TDS Telecom Chairman
and TDS Compensation Committee have established guidelines and procedures for awarding bonuses to the President and
CEO of TDS Telecom. These guidelines and procedures were filed as Exhibit 10.27 to TDS' Annual Report on Form 10-K for
the year ended December 31, 2009. These guidelines and procedures provide that the TDS Telecom Chairman and TDS
Compensation Committee in their sole discretion determine whether an annual bonus will be payable to the TDS Telecom
President and CEO for a performance year and, if so, the amount of such bonus, and describe factors that may be
considered by the TDS Telecom Chairman and TDS Compensation Committee in making such
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determination, including any factors that they in the exercise of their judgment and discretion determine relevant. The
guidelines and procedures provide that no single factor will be determinative and no factor will be applied mechanically to
calculate any portion of the bonus of the President and CEO of TDS Telecom. The entire amount of the bonus is
discretionary. The guidelines and procedures provide that the President and CEO of TDS Telecom will have no right or
expectation with respect to any bonus until the TDS Telecom Chairman and TDS Compensation Committee have determined
whether a bonus will be paid for a performance year. The foregoing guidelines also provide that, 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. The guidelines also provide that any bonus awarded with respect to a performance year will 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.
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Summary of Bonus Payments
The following shows certain information with respect to each named executive officer relating to the bonus for 2011
performance (paid in 2012) showing the amount of bonus awarded as a result of the achievement of quantitative financial
performance measures and the amount awarded on a qualitative and discretionary basis. As noted above under "Company
Performance," the overall percentage achieved with respect to company performance for 2011 was determined to be 93.9%,
comprised of weighted quantitative financial performance of 58.5% and weighted overall qualitative company performance of
35.4%.
a 2011 base salary
b Target bonus
percentage (informal
for Mr. Carlson and
Mr. Wittwer)(1)
r)(1)
LeRoy T. Kenneth R. Scott H. David A.
Formula Carlson, Jr. Meyers Williamson Wittwer
$1,352,700 $658,500 $ 611,000 $533,000
85% 60% 45% 60%
c Target bonus for 2011 a x b $1,149,795 $395,100 $ 274,950 $319,800
d Percentage of 2011
target bonus based on
company performance
e Target bonus for
company performance c x d
f Calculation of amount
reported under "Non -
Equity Incentive Plan
Compensation"
column based on
weighted quantitative
financial performance
in 2011 of 58.5%
Calculation of amount
reported under
"Bonus" column:
g Portion of bonus
based on weighted
overall qualitative
company performance
in 2011 of 35.4%
h Amount of
discretionary bonus
based on individual
performance
Discretionary bonus
(1)
Subtotal of amount
reported under
"Bonus" column
Total bonus for 2011
paid in 2012 (sum of
amount reported under
"Non -Equity Incentive
Plan Compensation"
e x 58.5%
e x 35.4%
N/A 50% 50% N/A
N/A $197,550 $ 137,475 N/A
N/A $115,567 $ 80,423 N/A
N/A $ 69,933 $ 48,666 N/A
N/A $312,200 $ 195,011 N/A
$574,900 N/A N/A $395,100
g + h + i $574,900 $382,133 $ 243,677 $395,100
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column and amount
reported under
'Bonus' column)
k Total bonus related to
company performance
(2)
Total bonus related to
company performance
as a percentage of
target
I 70% of target bonus
for company
performance relating
to quantitative financial
performance (2)
Percentage of
achievement of "Non -
Equity Incentive Plan
Compensation" (2)
f+j $574,900 $497,700 $ 324,100 $395,100
f + g
k/e
e x 70%
f/I
N/A $185,500 $ 129,089 N/A
N/A 93.9% 93.9% N/A
N/A $138,285 $ 96,233 N/A
N/A 83.6% 83.6% N/A
(1) Unlike the bonus guidelines for other executive officers, which provide that a specified percentage of an officer's bonus
will be determined based on quantitative financial performance measures (as described above) and that the remaining
percentage will be discretionary based on overall company performance and on individual performance, the bonus
guidelines for the President and CEO of TDS (LeRoy T. Carlson, Jr.) and the President and CEO of TDS Telecom
(David A. Wittwer), do not provide such specificity and provide that the entire amount
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of the bonus is discretionary. Accordingly, the entire amount of the bonus for each of LeRoy T. Carlson, Jr. and David
A. Wittwer is reported under the "Bonus" column of the Summary Compensation Table.
(2) See Note 1 under the "Grants of Plan -Based Awards" table below.
As indicated above, the TDS Compensation Committee approved the following amounts of total bonuses for the above
named executive officers with respect to 2011:
LeRoy T. Kenneth R. Scott H. David A.
Carlson, Jr. Meyers Williamson Wittwer
2011 Bonus Paid in
2012
Target Bonus
Percentage of
Target Bonus
$ 574,900 $ 497,700 $ 324,100 $ 395,100
$ 1,149,795 $ 395,100 $ 274,950 $ 319,800
50% 126% 118% 124%
Mr. Carlson's informal target bonus with respect to the 2011 bonus paid in 2012 was 85% of his 2011 base salary of
$1,352,700, or $1,149,795. Mr. Carlson's bonus of $574,900 was 50% of this target. The Compensation Committee
assessed Mr. Carlson's bonus payment for 2011 based largely on the performance of TDS rather than on Mr. Carlson's
individual performance. In the Compensation Committee's subjective judgment and based on its analysis and consultation
with Compensation Strategies, it believes that Mr. Carlson's cash bonus for 2011 should be 50% of his target.
Mr. Meyers' bonus of $497,700 represents a bonus of approximately 93.9% of his target bonus for company
performance and approximately 158% of his target bonus for individual performance. The individual performance percentage
was based on the recommendation of the TDS President and CEO, based on his subjective judgment of Mr. Meyers'
personal achievements and performance in 2011.
Mr. Williamson's bonus of $324,100 represents a bonus of approximately 93.9% of his target bonus for company
performance and approximately 142% of his target bonus for individual performance. The individual performance percentage
was based on the recommendation of the TDS President and CEO, based on his subjective judgment of Mr. Williamson's
personal achievements and performance in 2011.
Mr. Wittwer's informal target bonus with respect to the 2011 bonus paid in 2012 was 60% of his 2011 base salary of
$533,000, or $319,800. As described above, TDS Telecom's overall company performance for 2011 was 111% of target.
Mr. Wittwer's bonus of $395,100 was approximately 124% of his target for 2011. This primarily reflects TDS Telecom's
overall company performance of 111% for 2011 and the TDS Telecom Chairman's and TDS Compensation Committee's
subjective judgment of Mr. Wittwer's personal achievements and performance in 2011.
Total Cash Compensation
The following shows certain information relating to total cash compensation in 2011:
Base Salary
2011 Bonus Paid in
2012
Total Cash
Compensation in
2011
LeRoy T. Kenneth R. Scott H. David A.
Carlson, Jr. Meyers Williamson Wittwer
$ 1,352,700 $ 658,500 $ 611,000 $ 533,000
$ 574,000 $ 497,700 $ 324,100 $ 395,100
$ 1,926,700 $ 1,156,200 $ 935,100 $ 928,100
The amount reported above as Base Salary represents the 2011 base salary. As indicated above, except for David A.
Wittwer, the Compensation Committee did not change the base salaries of the other named executive officers for 2012 and,
accordingly, the above amounts are the same as the base salaries that were approved for 2012 for such officers. The
Compensation Committee, based on its analysis and consultation with Compensation Strategies, believes that total cash
compensation paid to TDS executive officers is in line with TDS' peers, but that more of the total cash compensation should
be reflected in bonus and less in salary. In the past, the Compensation Committee has moved in this direction and
determined that for 2012 it would not award salary increases (except for David A. Wittwer) and that it would place more
emphasis on the cash bonus award.
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The basis of the Compensation Committee for the above levels of compensation are as follows:
Mr. Carlson's total cash compensation represents the Compensation Committee's subjective view of the appropriate
total cash compensation considering Mr. Carlson's responsibilities, the performance of TDS and its subsidiaries and
Mr. Carlson's performance as President and CEO.
Mr. Meyers' total cash compensation represents the Compensation Committee's subjective view of the appropriate total
cash compensation considering the importance of Mr. Meyers' responsibilities, his performance at TDS since 2007, his long
period of service to U.S. Cellular and TDS and his extensive experience with and knowledge of U.S. Cellular and TDS and
the telecommunications industry.
Mr. Williamson's total cash compensation represents the Compensation Committee's subjective view of the appropriate
total cash compensation considering his many years of service, the importance of Mr. Williamson's responsibilities and his
performance over a long period of time.
Mr. Wittwer's total cash compensation represents the Compensation Committee's subjective view of the appropriate
total cash compensation considering the compensation of officers at comparable companies with similar responsibilities and
the performance of TDS Telecom and Mr. Wittwer. The TDS Compensation Committee did award Mr. Wittwer an increase in
his 2012 compensation of $17,000 effective March 1, 2012 largely as a result of his substantial responsibilities as the
President and CEO of TDS Telecom and to bring him closer to the 50th percentile of the market.
Long -Term Equity Compensation
The Compensation Committee also determines long-term equity compensation awards for the named executive officers
under the TDS long-term incentive plans. Prior to the effective time of the Reclassification discussed above, the
Compensation Committee made awards under the TDS 2004 Long -Term Incentive Plan. After the effective time of the
Reclassification, the Compensation Committee will make awards under the TDS 2011 Long -Term Incentive Plan.
The Compensation Committee may establish performance measures and restriction periods applicable to the award,
and determine the form, amount and timing of each grant of an award, the number of shares of stock subject to an award, the
purchase price or base price per share of stock associated with the award, the time and conditions of exercise or settlement
of the award and all other terms and conditions of the award.
Although the Compensation Committee has the discretion to grant various awards, it generally only grants service -
based restricted stock units and service -based options. In addition, officers may receive employer stock match awards in
connection with deferred bonus as described below under "Information Regarding Nonqualified Deferred Compensation."
The restricted stock units generally vest in full (cliff vesting) in December in the second year following the grant, subject to
continued employment. Options are exercisable until the tenth anniversary of the date of grant, subject to continued
employment. Options granted in 2011 become exercisable with respect to one-third of the number of shares subject to the
option on each of the first, second and third anniversaries of the grant date.
With respect to long-term compensation, the Vice President —Human Resources prepares for the Compensation
Committee an analysis of long-term compensation paid to similar officers of comparable companies (see Benchmarking
above). This information is presented to the committee, which approves the long-term compensation of the named executive
officers in part based on such information. The committee also looks at the mix of salary, bonus and long-term incentive
compensation, and obtains additional information from its compensation consultant, Compensation Strategies, as discussed
above.
Long-term compensation awards for executive officers are based, in part, on company and individual performance, with
the goal of increasing long-term company performance and shareholder value. Stock options, restricted stock units and
bonus match units generally vest over several years, to reflect the goal of relating long-term executive compensation to
increases in shareholder value over the same period. The President and CEO of TDS may recommend to the Compensation
Committee long-term compensation in the form of stock option and restricted stock unit grants or otherwise for executive
officers other than the President and CEO.
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Performance is also a factor in determining the number of shares subject to awards made to the executive officers. The
named executive officer receives an award of restricted stock units in the current year based primarily on the achievement of
certain levels of corporate performance in the immediately preceding year, and an award of options in the current year based
primarily on the achievement of certain levels of individual performance in the immediately preceding year.
Executive officers do not become entitled to any options or restricted stock units as a result of the achievement of any
corporate or individual performance levels. The award of options and restricted stock units is entirely discretionary and the
named executive officer has no right to any options or restricted stock units unless and until they are awarded. Pursuant to
SEC rules, awards with respect to 2010 performance granted in 2011 are included in the Summary Compensation Table
below as compensation earned in 2011. All awards are granted in consideration for future service over the vesting period of
the award.
The named executive officers received an award of restricted stock units in 2011 based on the achievement of certain
levels of corporate performance in 2010. Column (e), "Stock Awards," of the Summary Compensation Table includes the
aggregate grant date fair value computed in accordance with Financial Accounting Standards Board ("FASB") Accounting
Standards Codification ("ASC") 718, Compensation —Stock Compensation ("FASB ASC 718"). The grant date fair value of
restricted stock units is calculated using the Black-Scholes valuation model.
The named executive officers also received an award of options in 2011 based on the achievement of certain levels of
individual performance in 2010. Column (f), "Option Awards,' of the Summary Compensation Table includes the aggregate
grant date fair value computed in accordance with FASB ASC 718. The grant date fair value of stock options is calculated
using the Black-Scholes valuation model.
Stock option awards are based on an assessment of the individual's performance for the prior year. The restricted stock
unit awards are based on TDS or business unit performance for the prior year. For awards granted in 2011 based on 2010
performance, the percentages of the total target long-term incentive value are 60% for stock options and 40% for restricted
stock units. The total target long-term incentive value is determined primarily by multiplying the officer's salary by a multiple.
The multiple is determined by the officer's title and job responsibilities and the benchmarking data from Towers Watson. See
"Benchmarking" above.
The value used for stock options and restricted stock units was determined using a binomial methodology based on the
stock price for TDS Special Common Shares on April 26, 2011. The values calculated were $8.98 per TDS stock option and
$25.03 per TDS restricted stock unit. This information was updated for the Compensation Committee by Compensation
Strategies as of May 6, 2011. However, since there was no significant difference from the amounts calculated as of April 26,
2011, the values calculated on April 26, 2011 were used for purposes of making awards.
The following summarizes the option and restricted stock unit grants made by the Compensation Committee on May 13,
2011 to LeRoy T. Carlson, Jr., Kenneth R. Meyers, Scott H. Williamson and
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David A. Wittwer. The multiples used were based on the information from Towers Watson for comparable positions at the
companies included in the benchmarking data.
LeRoy T. Kenneth R. Scott H. David A.
Formula Carlson, Jr. Meyers Williamson Wittwer
a 2010 Salary $1,313,300 $ 632,500 $594,500 $ 513,000
b Multiple used 239% 225% 163% 205%
c Long -Term
Incentive Target
Value a x b $3,138,787 $1,423,125 $969,035 $1,051,650
d Options Target c x 60%/
$8.98 209,800 95,000 64,750 70266
e Approx. Individual
Performance %
for2010 110% 128% 125% 128%
f Options Granted d x e 230,000 121,200 80,800 89,600
g Target RSUs c x 40%/
$25.03 50,200 22,750 15,500 16,800
h Company/Business
Unit
Performance %
for 2010 77.5% 77.5% 77.5% 100.0%
Implied RSU
amount g x h 38,900 17,600 12,000 16,800
Actual RSUs
Granted 36,700 16,700 11,300 15,900
The individual performance percentage in the above table is based on each officer's individual performance assessment
relating to 2010. The individual performance percentage used for the TDS President and CEO was approximately 110%
based on the Compensation Committee's subjective judgment of the individual performance of the TDS President and CEO
in 2010. The individual performance percentage used for each of the TDS Executive Vice President and CFO, Senior Vice
President —Acquisitions and Corporate Development and TDS Telecom President and CEO was approximately 125 - 128%
based on the Compensation Committee's subjective judgment of the individual performance of such officers, considering the
TDS President and CEO's evaluation and recommendation to the Compensation Committee for such officers with respect to
2010.
The Company/Business Unit Performance percentage represents the overall performance of TDS or TDS Telecom, as
applicable. The overall company performance for TDS in 2010 was 77.5%. The business unit performance for TDS Telecom
in 2010 was 100.0%.
Using negative discretion, the Compensation Committee awarded a number of restricted stock units that was somewhat
less than implied by Company/business unit performance for 2010.
Analysis of Compensation
The following table identifies the percentage of each element of total compensation of each of the named executive
officers other than Mary N. Dillon based on the Summary Compensation Table for 2011:
Salary
Bonus
Stock Awards
Stock Options
Non -Equity Incentive
Plan
Compensation
Other
LeRoy T. Kenneth R. Scott H. David A.
Carlson, Jr. Meyers Williamson Wittwer
25.5% 22.7% 29.1% 23.3%
10.8% 13.2% 11.6% 17.3%
20.5% 17.3% 15.5% 20.0%
41.6% 40.1% 36.9% 37.5%
0% 4.0% 3.8% 0%
1.6% 2.7% 3.1% 1.9%
100.0% 100.0% 100.0% 100.0%
As indicated in the Summary Compensation Table, LeRoy T. Carlson, Jr.'s total compensation for 2011 was $5,300,554
and the total compensation for the other named executive officers, excluding Mary N. Dillon, for 2011 ranged from a high of
$2,905,159 to a low of $2,098,370. Mr. Carlson's total compensation for 2011 is approximately 1.82 times the total
compensation for 2011 of the next highest compensated named executive officer, other than Mary N. Dillon. Ms. Dillon's total
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2011 was $4,559,564. Including Ms. Dillon, Mr. Carlson's total compensation for 2011 is approximately 1.16 times the total
compensation for 2011 of the next highest compensated named executive officer.
The following explains the reasons for the disparity between the compensation of the TDS President and CEO and the
other named executive officers, and the disparities in compensation among the other named executive officers. As noted
herein, TDS' overall compensation objectives are to (i) support TDS' overall business strategy and objectives; (H) attract and
retain high quality management; (Hi) link individual compensation with attainment of individual performance goals and with
attainment of business unit and TDS objectives; and (iv) provide competitive compensation opportunities consistent with the
financial performance of TDS.
As noted herein, TDS determines the amount of compensation to pay or provide to each named executive officer
considering compensation practices of peers and other companies with similar characteristics, in order to support TDS'
overall business strategy and objectives. As noted herein, TDS recognizes that it must compensate its executive officers in a
competitive manner comparable to similar companies in order to attract and retain high quality management, attain or exceed
business objectives and targeted financial performance and increase shareholder value.
Considering the foregoing, TDS recognizes that it needs to and believes that it should compensate the TDS President
and CEO at a level that considers the compensation of presidents and chief executive officers of similar companies, which
compensation is higher than the compensation of other named executive officers of such companies. TDS believes that this
is necessary to attract and retain a highly qualified person to serve as the president and chief executive officer of TDS and to
compete successfully against other companies. A level of compensation similar to that paid to the TDS President and CEO is
not necessary to attract and retain, and therefore is not appropriate for, the other named executive officers. However, TDS
recognizes that it needs to and believes that it should compensate the other named executive officers at levels that reflect the
compensation of similarly situated positions at similar companies in order to attract and retain high quality persons for such
positions at TDS.
The Compensation Committee believes that the elements of compensation and total compensation of the above named
executive officers of TDS were set at an appropriate level considering the foregoing principles.
Mary N. Dillon is a party to a letter agreement dated May 3, 2010 related to her employment with U.S. Cellular effective
June 1, 2010. This letter agreement provides for the following: (i) a base salary of $725,000 per year through December 31,
2010, with a performance review following year-end 2010; (H) a one-time payment of $450,000 on the three month
anniversary of Ms. Dillon's date of employment; (Hi) a one-time payment of $250,000 on the fifteenth month anniversary of
her date of employment; (iv) a 2010 bonus of at least $580,000; (v) starting in 2011, Ms. Dillon's target bonus opportunity will
be 80% of her base salary for the year; (vi) a grant of 75,000 U.S. Cellular stock options on her first day of employment at a
strike price equal to the closing price of U.S. Cellular's stock on that date, to vest in 3 equal annual installments, on the first,
second and third anniversaries of the date of the grant; (vii) a grant of 20,000 U.S. Cellular restricted stock units on her first
day of employment, to cliff vest on the third anniversary of the date of the grant; (viii) in the event that Ms. Dillon terminates
without Cause or for Good Reason (as defined in the letter agreement) within two years of her starting date, she will fully vest
in the foregoing stock option and restricted stock unit awards, and will have one year from the date of such a termination to
exercise the options; (ix) in the event that Ms. Dillon terminates without Cause or for Good Reason within two years of her
starting date, subject to Ms. Dillon's execution of a release of all claims against TDS and U.S. Cellular, she will receive an
amount equal to one year of her then current salary; (x) a grant of an additional 75,000 U.S. Cellular stock options on her first
day of employment at a strike price equal to the closing price of U.S. Cellular's stock on that date, which will cliff vest on the
sixth anniversary of the date of the grant; (xi) a grant of an additional 25,000 U.S. Cellular restricted stock units on her first
day of employment, which will cliff vest on the sixth anniversary of the date of the grant; (xii) starting in 2011, annual grants of
U.S. Cellular stock options and restricted stock units; (xiii) the total combined value of her stock option award and restricted
stock unit award in each of 2011 and 2012 will be no less than $1,800,000; and (xiv) a seat on the U.S. Cellular Board.
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Subject to the terms of such agreement, Ms. Dillon's annual cash compensation is approved by LeRoy T. Carlson, Jr.,
the Chairman of U.S. Cellular, and long-term compensation for Ms. Dillon is approved by the long-term incentive
compensation committee of U.S. Cellular, as described in the 2012 proxy statement of U.S. Cellular.
Other Benefits and Plans Available to Identified Officers
The identified officers participate in certain benefits and plans, as described below.
As noted herein, TDS' overall compensation objectives for its executive officers are to (i) support TDS' overall business
strategy and objectives; (H) attract and retain high quality management; (Hi) link individual compensation with attainment of
individual performance goals and with attainment of business unit and TDS objectives; and (iv) provide competitive
compensation opportunities consistent with the financial performance of TDS.
To achieve these objectives, the Compensation Committee believes that the named executive officers must be offered a
competitive compensation package, including benefits and plans. TDS' compensation packages are designed to compete
with other companies for talented employees. TDS' benefits and plans are part of this package and are also designed to
enable TDS to attract and retain highly qualified employees, including the named executive officers. Thus, the benefits and
plans fit into TDS' overall compensation objectives primarily by helping TDS achieve the second objective of TDS' overall
compensation objectives, which is to attract and retain high quality management. Benefits and plans are an important part of
the mix of compensation used to attract and retain management, but do not otherwise significantly affect decisions relating to
other elements of annual or long-term compensation, which are provided consistent with the above compensation objectives,
including to support TDS' overall business strategy and objectives, link individual compensation with TDS goals and
objectives and provide competitive compensation opportunities consistent with the financial performance of TDS, as well as
attract and retain high quality management.
Deferred Salary and Bonus under Deferred Compensation Arrangements
Deferred Salary and/or Bonus Arrangements. The identified officers are permitted to defer salary and/or bonus
pursuant to deferred compensation agreements or plans. The entire amount of the salary earned is reported in the Summary
Compensation Table in column (c) under "Salary," whether or not deferred. The entire amount of the bonus earned is
reported in the Summary Compensation Table whether or not deferred. Pursuant to the agreement or plan, the officer's
deferred compensation account is credited with interest compounded monthly, computed at a rate equal to one -twelfth of the
sum of the average thirty-year Treasury Bond rate for amounts deferred as an employee of TDS or TDS Telecom, or the
twenty-year Treasury Bond rate for amounts deferred as an employee of U.S. Cellular, plus 1.25 percentage points, until the
deferred compensation amount is paid to such person. As required by SEC rules, column (h) in the Summary Compensation
Table includes any portion of such interest that exceeded the rate specified by the Internal Revenue Service that is 120% of
the applicable federal long-term rate, with compounding (as prescribed under section 1274(d) of the Internal Revenue Code)
(such specified rate, the "AFR"), at the time each monthly interest rate was set. The deferred compensation accounts are
paid at the time and in the form provided in the applicable plan or agreement, which permits certain distribution elections by
the officer.
As indicated in the below tables, certain of the named executive officers have deferred a specified portion of their
salaries or bonuses pursuant to the above -described arrangements. The executive is always 100% vested in all salary or
bonus amounts that have been deferred and any interest credited with respect thereto. Accordingly, the executive is entitled
to 100% of the amount deferred and all earnings thereon upon any termination. Such amounts are reported below in the
Nonqualified Deferred Compensation table and, because there would not be any increased benefit or accelerated vesting in
the event of any termination or change in control, are not included in the below table of Potential Payments upon Termination
or Change in Control.
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Deferred Bonus under Long -Term Incentive Plan.
The identified officers are also permitted to defer bonus pursuant to the applicable long-term incentive plan. The entire
amount of the bonus earned is reported in the Summary Compensation Table whether or not deferred. Deferred bonus was
deemed invested, as applicable, in phantom TDS Special Common Shares under the TDS 2004 Long -Term Incentive Plan
(or for deferrals for bonus years prior to 2005, an equal number of phantom TDS Special Common Shares and phantom TDS
Common Shares) and in phantom USM Common Shares under the U.S. Cellular 2005 Long -Term Incentive Plan, as
discussed below. The named executive officers employed by TDS receive a distribution of the deferred compensation
account at the earlier of the date elected by the officer and the officer's separation from service (or, with respect to amounts
subject to section 409A of the Internal Revenue Code, the seventh calendar month following the calendar month of the
officer's separation from service). The named executive officers employed by U.S. Cellular receive a distribution of the
deferred compensation account at the date elected by the officer (either the officer's separation from service, subject to any
six-month delay required by section 409A of the Internal Revenue Code, or a date specified by the officer). The identified
officers that defer bonus also receive a company match. This is discussed below under "TDS 2004 Long -Term Incentive
Plan" with respect to the identified officers other than Mary N. Dillon, who does not participate in the TDS 2004 Long -Term
Incentive Plan. Instead, she participates in the U.S. Cellular 2005 Long -Term Incentive Plan, which also has a company
match feature as described in the U.S. Cellular proxy statement for its 2012 annual meeting of shareholders.
Certain named executive officers are parties to executive deferred compensation agreements, pursuant to which they
have deferred a specified portion of their bonuses pursuant to the long-term incentive plan. The executive is always 100%
vested in all bonus amounts that have been deferred and any dividends credited with respect thereto. Such amounts are
reported below in the Nonqualified Deferred Compensation table and, because there would not be any increased benefit or
accelerated vesting of such vested amounts in the event of any termination or Change in Control, are not included in the
below table of Potential Payments upon Termination or Change in Control.
TDS 2004 Long -Term Incentive Plan
Long-term compensation awards under the TDS 2004 Long -Term Incentive Plan were discussed above in this
Compensation Discussion and Analysis. The following provides certain additional information relating to deferred bonus,
restricted stock units and stock options granted under the TDS 2004 Long -Term Incentive Plan. No additional awards will be
granted under the TDS 2004 Long -Term Incentive Plan, except as they relate to deferred bonus for calendar years
commencing prior to January 1, 2013, for which deferral elections were made prior to the date that the successor to the TDS
2004 Long -Term Incentive Plan, the TDS 2011 Long -Term Incentive Plan, became effective. The TDS 2011 Long -Term
Incentive Plan is described below.
Under the TDS 2004 Long -Term Incentive Plan, executives were permitted to elect to defer receipt of all or a portion of
their annual bonuses up to $400,000 and to receive stock unit matches on the amount deferred. Deferred compensation was
deemed invested in phantom TDS Special Common Shares (or for deferrals for bonus years prior to 2005, an equal number
of phantom TDS Special Common Shares and phantom TDS Common Shares). TDS match amounts depended on the
amount of annual bonus that was deferred into stock units. Participants received (i) a 25% stock unit match for amounts
deferred up to 50% of their total annual bonus and (H) a 33% stock unit match for amounts deferred that exceeded 50% of
their total annual bonus. The match stock units vest ratably at a rate of one-third per year over three years. Column (e),
"Stock Awards," of the Summary Compensation Table below includes the aggregate grant date fair value computed in
accordance with FASB ASC 718. Vested stock units are credited with dividends. The Summary Compensation Table does
not include any dividends (or dividend equivalents) on deferred bonus or the related match denominated in phantom TDS
stock because such dividends are not preferential under SEC rules, since they are not earned at a rate higher than dividends
on TDS' common stock.
Restricted stock units were granted under the TDS 2004 Long -Term Incentive Plan. Column (e), "Stock Awards," of the
Summary Compensation Table includes the aggregate grant date fair value
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computed in accordance with FASB ASC 718. Dividends are not earned with respect to shares underlying restricted stock
units until the award becomes vested and the shares are issued.
Stock options were granted under the TDS 2004 Long -Term Incentive Plan. Column (f), "Option Awards," of the
Summary Compensation Table includes the aggregate grant date fair value computed in accordance with FASB ASC 718.
Dividends are not earned with respect to shares underlying options until such options are exercised and the shares are
issued.
The TDS 2004 Long -Term Incentive Plan and related stock option, restricted stock unit and deferred bonus agreements
provide various rights upon termination and/or Change in Control, as summarized below.
Stock Options. The agreements with named executive officers evidencing options granted under the TDS 2004 Long -
Term Incentive Plan provide as follows:
Disability. If the officer ceases to be employed by reason of Disability (a total physical disability which prevents the
substantial performance of employment duties for a continuous period of at least six months), the option will be exercisable
only to the extent it is exercisable on the effective date of the officer's termination of employment, and after such date may be
exercised by the holder for a period of 12 months after the effective date of the officer's termination of employment or until the
option's expiration date, whichever period is shorter.
Retirement. If the officer ceases to be employed by reason of Retirement (termination of employment on or after the
officer's attainment of age 65 that does not satisfy the definition of "Special Retirement", as set forth below), the option will be
exercisable only to the extent it is exercisable on the effective date of the officer's Retirement, and after such date may be
exercised by the holder for a period of 90 days after the effective date of the Retirement or until the option's expiration date,
whichever period is shorter. However, effective for options granted in or after 2008, the option will become 100% exercisable
if at the time of termination, the officer has attained age 66 and the termination occurs subsequent to the year of grant.
Special Retirement. If the officer ceases to be employed by reason of Special Retirement, (termination of employment
on or after the later of reaching age 62 and the officer's early retirement date or normal retirement date under the TDS
Pension Plan), the option will be exercisable only to the extent it is exercisable on the effective date of the officer's Special
Retirement, and after such date may be exercised by the holder for a period of 12 months after the effective date of the
Special Retirement or until the option's expiration date, whichever period is shorter. However, effective for options granted in
or after 2008, the option will become 100% exercisable if at the time of termination, the officer has attained age 66 and the
termination occurs subsequent to the year of grant.
Resignation with Prior Consent of the Board. If the officer ceases to be employed by reason of the officer's resignation
of employment at any age with the prior consent of the board of directors of TDS, the option will be exercisable only to the
extent it is exercisable on the effective date of the officer's resignation, and after such date may be exercised by the holder
for a period of 90 days after such effective date or until the option's expiration date, whichever period is shorter.
Death. If the officer ceases to be employed by reason of death, the option will be exercisable only to the extent it is
exercisable on the date of the officer's death, and after the date of death may be exercised by the beneficiary or beneficiaries
duly designated by the deceased officer, for a period of 180 days after the date of death or until the option's expiration date,
whichever period is shorter. However, effective for options granted in or after 2008, the option will be exercisable by the
beneficiary or beneficiaries for a period of 180 days after the date of death.
Other Termination of Employment or Service. If the officer ceases to be employed for any reason other than Disability,
Retirement, Special Retirement, resignation of employment with the prior consent of the board of directors of TDS or death,
the option will be exercisable only to the extent it is exercisable on the effective date of the officer's termination of
employment, and after such date may be exercised by the holder for a period of 30 days after the effective date of the
officer's termination of employment or until the option's expiration date, whichever period is shorter.
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Extension of Option Exercise Period. The option exercise period may be extended 30 days beyond the end of a
blackout period or legally -required plan suspension in the event that the option would otherwise expire during a blackout
period or legally -required plan suspension.
Restricted Stock Unit Awards. The agreements with named executive officers evidencing restricted stock unit awards
granted under the TDS 2004 Long -Term Incentive Plan provide as follows:
Disability or Death. If the officer separates from service prior to vesting by reason of Disability or death, the restricted
stock unit award will vest upon such separation from service. The shares subject to the restricted stock unit award generally
will be issued within sixty days following the officer's separation from service. However, if the officer separates from service
by reason of Disability, and if the award is subject to section 409A of the Internal Revenue Code, then the shares subject to
the award will be issued in the seventh calendar month following the calendar month during which the officer separates from
service.
Retirement at or after Attainment of Age 66. If the officer separates from service after the calendar year in which the
restricted stock unit award was granted but prior to vesting, by reason of retirement at or after attainment of age 66, the
restricted stock unit will vest upon such separation from service. The shares subject to the restricted stock unit award will be
issued within sixty days following the officer's separation from service unless the award is subject to section 409A of the
Internal Revenue Code. If the award is subject to section 409A of the Internal Revenue Code, the shares subject to the
award will be issued in the seventh calendar month following the calendar month during which the officer separates from
service. If the officer is age 66 or older but separates from service during the calendar year in which the restricted stock unit
award was granted, or if the officer separates from service by reason of retirement prior to the attainment of age 66, the
restricted stock unit will be forfeited.
Other Separation from Service. If the officer separates from service prior to vesting for any reason other than Disability,
death or retirement at or after attainment of age 66, the restricted stock unit award will be forfeited.
Employer Match Awards. If the officer separates from service with TDS or its affiliates by reason of Disability or death,
all employer match awards within the officer's deferred compensation account shall become nonforfeitable upon such
separation from service. If the officer separates from service with TDS or its affiliates for any other reason, any unvested
employer match awards will be forfeited.
Forfeiture of Award upon Competition with or Misappropriation of Confidential Information of TDS or its Affiliates. If the
officer enters into competition with, or misappropriates confidential information of, TDS or any affiliate thereof, then all awards
held by the officer shall terminate and be forfeited.
Change in Control.
Notwithstanding any provision in the TDS 2004 Long -Term Incentive Plan or any agreement, in the event of a Change in
Control:
• any outstanding restricted stock award shall become nonforfeitable and the restriction period applicable to the
award shall lapse;
• any outstanding restricted stock unit award shall become nonforfeitable, and to the extent permissible under
section 409A of the Internal Revenue Code, the restriction period applicable to the award shall lapse;
• any outstanding performance share award shall become nonforfeitable, and to the extent permissible under
section 409A of the Internal Revenue Code, the performance period applicable to the award shall lapse;
• any performance measures applicable to any outstanding performance share award, restricted stock award or
restricted stock unit award shall be deemed to be satisfied at the target level;
• all outstanding options and SARs shall become immediately exercisable in full; and
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• all amounts in a deferred compensation account (including all employer match awards) shall become
nonforfeitable.
The foregoing outlines the effect of a Change in Control relating to all potential awards available under the TDS 2004
Long -Term Incentive Plan. However, only restricted stock units, options and phantom stock units related to deferred
compensation accounts are outstanding under the TDS 2004 Long -Term Incentive Plan, and no additional awards will be
granted under the TDS 2004 Long -Term Incentive Plan.
The definition of Change in Control is set forth in Section 8.9(b) of the TDS 2004 Long -Term Incentive Plan. The TDS
2004 Long -Term Incentive Plan was filed with the SEC as Exhibit 10.1 to TDS' Current Report on Form 8-K dated April 11,
2005, and amendments to the TDS 2004 Long -Term Incentive Plan were filed with the SEC as Exhibits to TDS' Current
Reports on Form 8-K dated December 10, 2007 and December 22, 2008.
Because certain termination events and/or a Change in Control would result in the acceleration of vesting of options,
restricted stock units and employer match awards under deferred compensation accounts, the effects of such accelerated
vesting in such event are included in the below table of Potential Payments upon Termination or Change in Control.
Reclassification.
As a result of the Reclassification described above under "Recent Developments', the TDS Compensation Committee
took action to reclassify, effective as of the Effective Time, the Special Common Shares available for issuance under the TDS
2004 Long -Term Incentive Plan immediately prior to the Effective Time as an equal number of Common Shares available for
issuance under the TDS 2004 Long -Term Incentive Plan.
In addition, the TDS Compensation Committee took action to adjust outstanding awards under the TDS 2004 Long -
Term Incentive Plan.
Prior to the Effective Time, the following awards were outstanding under the TDS 2004 Long -Term Incentive Plan:
(i) stock options to purchase Special Common Shares, (H) tandem stock options to purchase an equal number of Common
Shares and Special Common Shares ("Tandem Options," and each Common Share/Special Common Share unit subject to a
Tandem Option, a "Tandem Unit"), (Hi) restricted stock unit awards to be settled in Special Common Shares, (iv) annual
bonus deferrals and related employer match awards to be settled in Special Common Shares and (v) annual bonus deferrals
and related employer match awards to be settled in part in Common Shares and in part in Special Common Shares.
As a result of the Reclassification, the TDS Compensation Committee took action to adjust outstanding awards under
the TDS 2004 Long -Term Incentive Plan as follows:
(i) each stock option (other than a Tandem Option) to purchase Special Common Shares granted under the TDS 2004
Long -Term Incentive Plan and outstanding immediately prior to the Effective Time was adjusted, effective as of the Effective
Time, to be a stock option to purchase an equal number of Common Shares, at the same purchase price per Common Share
as in effect immediately prior to the Effective Time;
(H) each Tandem Option granted under the TDS 2004 Long -Term Incentive Plan and outstanding immediately prior to
the Effective Time was adjusted, effective as of the Effective Time, to be a stock option to purchase a number of Common
Shares equal to the product of (i) the number of Tandem Units subject to the Tandem Option and (H) 2.087, with a purchase
price per Common Share subject to the stock option equal to the quotient of (A) the purchase price per Tandem Unit and
(B) 2.087;
(Hi) each restricted stock unit award to be settled in Special Common Shares granted under the TDS 2004 Long -Term
Incentive Plan and outstanding immediately prior to the Effective Time was adjusted, effective as of the Effective Time, to be
a restricted stock unit award to be settled in an equal number of Common Shares;
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(iv) the portion of each deferred compensation account under the TDS 2004 Long -Term Incentive Plan that was
deemed to hold Special Common Shares immediately prior to the Effective Time in lieu thereof was deemed to hold, effective
as of the Effective Time, an equal number of Common Shares; and
(v) the portion of each deferred compensation account under the TDS 2004 Long -Term Incentive Plan that was
deemed to hold Common Shares immediately prior to the Effective Time in lieu thereof was deemed to hold, effective as of
the Effective Time, a number of Common Shares equal to the product of (i) the number of Common Shares deemed to be
held in such account immediately prior to the Effective Time and (H) 1.087.
Except as modified above, the terms and conditions of the TDS 2004 Long -Term Incentive Plan and related award
agreements as applied to outstanding awards under the TDS 2004 Long -Term Incentive Plan remain in effect.
The following table shows the adjustments that were made to awards outstanding at the Effective Time on January 24,
2012 held by the persons named in the Summary Compensation Table below (except for Mary N. Dillon, who does not hold
any awards in TDS shares).
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Adjustment of Equity Awards on the Effective Date of the Reclassification on January 24, 2012
Prior to Reclassification After Reclassification
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Number of
Number of Common
Number of Number of Common Shares
Special Special Shares Underlying
Common and Number of Underlying Options Number of
Shares Common Special Options that Common
Underlying Share Common (other were Shares Option
Options Units Shares than former formerly Underlying Option Exercise
(other than Underlying Underlying Tandem Tandem Stock Exercise Price After
Name and Tandem Tandem Stock Options) Options(1) Awards Price Before Reclassification
Awards Options) Options Awards [(b) x 1.000] [(c) x 2.087] [(d) x 1.000] Reclassification (2)
LeRoy T.
Carlson,
Jr.
Options:
2011
TDS.S
Options 230,000 230,000
2010
TDS.S
Options 250,000 250,000
2009
TDS.S
Options 244,000 244,000
2008
TDS.S
Options 226,425 226,425
2007
TDS.S
Options 179,653 179,653
2006
TDS.S
Options 213,333 213,333
2005
Tandem
Options 111,045 231,751
2004
Tandem
Options 67,540 140,956
2003
Tandem
Options 65,567 136,838
2002
Tandem
Options 68,215 142,365
Stock
Awards:
2011
TDS.S
RSUs 36,700 36,700
2010
TDS.S
RSUs 37,400 37,400
TDS.S
Bonus
Match
not
vested: 1,147 1,147
Total(3)(4) 1,343,411 312,367 75,247 1,343,411 651,910 75,247
Kenneth R.
Meyers
Options:
2011
TDS.S
Options 121,200 121,200
2010
TDS.S
Options 132,500 132,500
2009
TDS.S
Options 129,400 129,400
2008
TDS.S
Options 93,000 93,000
29.94 $ 29.94
26.66 $ 26.66
26.95 $ 26.95
35.35 $ 35.35
59.45 $ 59.45
49.80 $ 49.80
77.36 $ 37.07
66.00 $ 31.63
52.92 $ 25.36
60.20 $ 28.85
29.94 $ 29.94
26.66 $ 26.66
26.95 $ 26.95
35.35 $ 35.35
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2007
TDS.S
Options 52,942
Stock
Awards:
2011
TDS.S
RSUs
2010
TDS.S
RSUs
TDS.S
Bonus
Match
not
vested:
Total(3)(4) 529,042
52,942
16,700 16,700
17,000 17,000
774 774
34,474 529,042 - 34,474
Scott H.
Williamson
Options:
2011
TDS.S
Options 80,800
2010
TDS.S
Options 91,200
2009
TDS.S
Options 90,700
2008
TDS.S
Options 68,500
2007
TDS.S
Options 56,998
2006
TDS.S
Options 75,122
2005
Tandem
Options
Stock
Awards:
2011
TDS.S
RSUs
2010
TDS.S
RSUs
Total(3)(4) 463,320
80,800
91,200
90,700
68,500
56,998
75,122
24,493 51,117
11,300 11,300
11,700 11,700
24,493 23,000 463,320 51,117 23,000
63
Prior to Reclassification After Reclassification
59.45 $ 59.45
29.94 $ 29.94
26.66 $ 26.66
26.95 $ 26.95
35.35 $ 35.35
59.45 $ 59.45
38.00 $ 38.00
77.36 $ 37.07
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Number of
Number of Common
Number of Number of Common Shares
Special Special Shares Underlying
Common and Number of Underlying Options Number of
Shares Common Special Options that Common
Underlying Share Common (other were Shares Option
Options Units Shares than former formerly Underlying Option Exercise
Name (other than Underlying Underlying Tandem Tandem Stock Exercise Price After
and Tandem Tandem Stock Options) Options(1) Awards Price Before Reclassification
Awards Options) Options Awards [(b) x 1.0001 [(c) x 2.0871 [(d) x 1.0001 Reclassification (2)
David A.
Wittwer
Options:
2011
TDS.S
Options 89,600 89,600
2010
TDS.S
Options 92,800 92,800
29.94 $ 29.94
26.66 $ 26.66
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2009
TDS.S
Options 89,500 89,500
2008
TDS.S
Options 68,500 68,500
2007
TDS.S
Options 43,077 43,077
2006
TDS.S
Options 35,364 35,364
Stock
Awards:
2011
TDS.S
RSUs 15,900 15,900
2010
TDS.S
RSUs 12,200 12,200
Total(3)
(4) 418,841 — 28,100 418,841 - 28,100
(1)
(2)
(3)
(4)
Rounded to the nearest whole share for purposes of the above table.
26.95 $ 26.95
35.35 $ 35.35
59.45 $ 59.45
38.00 $ 38.00
For options that were formerly Tandem Options, this is equal to the exercise price in column (h) divided by 2.087 (rounded up to the
nearest cent).
The above table has been prepared so that the information presented above prior to the Reclassification corresponds to the
information reported in the table of "Outstanding Equity Awards at Fiscal Year -End below in order to permit comparison.
In addition to the adjustment of the above awards, the shares of common stock of TDS beneficially owned by the above persons,
including vested bonus match units, were reclassified in the Reclassification as described above under"Recent Developments". For
information about the share ownership of the above persons following the Reclassification, including ownership of vested bonus
match units, as of February 29, 2012, see the below table under "Security Ownership of Certain Beneficial Owners and
Management —Security Ownership of Management"
As a result of the effectiveness of the TDS 2011 Long -Term Incentive Plan, no additional awards will be granted under
the TDS 2004 Long -Term Incentive Plan, except in connection with annual bonus deferrals and related employer match
awards for calendar years commencing prior to January 1, 2013. Annual bonus deferrals and related employer match awards
for calendar years commencing prior to January 1, 2013 will be governed by the TDS 2004 Long -Term Incentive Plan
because that plan was in effect at the time of the employee's deferral election.
TDS 2011 Long -Term Incentive Plan
In connection with the Reclassification, TDS adopted the TDS 2011 Long -Term Incentive Plan to replace the TDS 2004
Long -Term Incentive Plan for awards granted after the Effective Time of the Reclassification. A total of six million Common
Shares were reserved for issuance under the TDS 2011 Long -Term Incentive Plan.
Under the TDS 2011 Long -Term Incentive Plan, as was the case under the TDS 2004 Long -Term Incentive Plan, TDS
is authorized to grant incentive stock options, nonqualified stock options, stock appreciation rights ("SARs"), bonus stock
awards, restricted stock awards, restricted stock unit awards, performance share awards and employer match awards for
deferred bonus.
Notwithstanding any other provision in the TDS 2011 Long -Term Incentive Plan or any agreement, in the event of a
Change in Control, the TDS board of directors (as constituted prior to the Change in Control) may in its discretion, but shall
not be required to, make such adjustments to outstanding awards under the TDS 2011 Long -Term Incentive Plan as it deems
appropriate, including without limitation:
• (i) causing some or all outstanding stock options and SARs to immediately become exercisable in full;
(H) causing some or all outstanding restricted stock awards to become nonforfeitable and the restriction periods
applicable to some or all outstanding restricted stock awards to lapse in full or in part; (Hi) causing some or all
outstanding restricted stock unit awards to become nonforfeitable, and to the extent permissible under
Section 409A of the Internal Revenue Code, causing the
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restriction periods applicable to some or all outstanding restricted stock unit awards to lapse in full or in part;
(iv) causing some or all outstanding performance share awards to become nonforfeitable, and to the extent
permissible under Section 409A of the Internal Revenue Code, causing the performance periods applicable to
some or all outstanding performance share awards to lapse in full or in part; (v) causing the performance
measures applicable to some or all outstanding performance share awards, restricted stock awards or
restricted stock unit awards (if any) to be deemed to be satisfied at the target, maximum or any other level, as
determined by the TDS board of directors (as constituted prior to such Change in Control); and (vi) causing
some or all amounts deemed to be held in deferred compensation accounts to become nonforfeitable; and/or
• substituting for some or all of the TDS Common Shares available under the TDS 2011 Long -Term Incentive
Plan, whether or not then subject to an outstanding award, the number and class of shares into which each
outstanding TDS Common Share shall be converted pursuant to such Change in Control; and/or
• requiring that outstanding awards, in whole or in part, be surrendered to TDS in exchange for a payment of
cash, shares of capital stock of the company resulting from or succeeding to the business of TDS in connection
with the Change in Control or the parent thereof, or a combination of cash and shares.
The definition of Change in Control is set forth in Section 8.9(b) of the TDS 2011 Long -Term Incentive Plan. The TDS
2011 Long -Term Incentive Plan was filed with the SEC as Exhibit 10.1 to TDS' Current Report on Form 8-K dated
January 13, 2012.
As of the date of this Proxy Statement, no awards have been granted under the TDS 2011 Long -Term Incentive Plan
and the TDS Compensation Committee has not approved the forms of award agreements to be utilized to evidence awards
to executive officers under the TDS 2011 Long -Term Incentive Plan. However, such award agreements may provide certain
rights upon certain termination events and/or a Change in Control. Any such rights, and the effect thereof, will be included in
the table of Potential Payments upon Termination or Change in Control in future years.
U.S. Cellular 2005 Long -Term Incentive Plan
Mary N. Dillon does not participate in the TDS long-term incentive plans. Instead, she participates in the U.S. Cellular
2005 Long -Term Incentive Plan. For further information about the U.S. Cellular 2005 Long -Term Incentive Plan, see the U.S.
Cellular proxy statement for its 2012 annual meeting of shareholders. In addition, see the above description of the letter
agreement between U.S. Cellular and Ms. Dillon dated May 3, 2010, which letter agreement specifies the terms of certain
equity awards granted to Ms. Dillon.
SERP
Each of the identified officers participates in a supplemental executive retirement plan or SERP, which is a non -qualified
defined contribution plan. The SERP is not intended to provide substantial benefits other than to replace the benefits which
cannot be provided under the TDS Pension Plan as a result of tax law limitations on the amount and types of annual
employee compensation which can be taken into account under a tax qualified pension plan. The SERP is unfunded. The
amount of the SERP contribution with respect to the executives identified in the Summary Compensation Table is included in
column (i), "All Other Compensation," of the Summary Compensation Table. Participants are credited with interest on
balances of the SERP. Pursuant to SEC rules, column (h) of the Summary Compensation Table includes any portion of
interest earned under the SERP to the extent the rate exceeds the AFR at the time the rate is set.
A participant is entitled to distribution of his or her entire account balance under the SERP if the participant has a
separation from service without cause, after either (a) his or her attainment of age 65; or (b) his or her completion of at least
ten years of service. If a participant has a separation from service under circumstances other than those set forth in the
preceding sentence, without cause, the participant
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will be entitled to distribution of 10% of his or her account balance for each year of service up to ten years. Upon a separation
from service under circumstances that permit payments under the SERP, the participant will be paid his or her vested
account balance in one of the following forms as elected by the participant prior to the first day of the first plan year for which
the participant commences participation in the SERP: (a) a single lump sum or (b) annual installments over a period of 5, 10,
15, 20 or 25 years. The SERP does not include any provision that would increase benefits or accelerate amounts upon any
termination or change in control and, accordingly, no amount is included in the below table of Potential Payments upon
Termination or Change in Control. The balance of the SERP as of December 31, 2011 for each named executive officer is
set forth below in the "Nonqualified Deferred Compensation" Table.
Perquisites
TDS does not provide any significant perquisites to its officers. See note (i) under "Explanation of Columns" under the
Summary Compensation Table for information about perquisites provided to the named executive officers. In addition, TDS
has no formal plan, policy or procedure pursuant to which executive officers are entitled to any perquisites following
termination or change in control. However, in connection with any termination, TDS may enter into a retirement, severance or
similar agreement that may provide for certain limited perquisites. Perquisites and personal benefits represent a relatively
insignificant portion of the named executive officers' total compensation. Accordingly, they do not materially influence the
Compensation Committee's consideration in setting compensation.
Other Generally Applicable Benefits and Plans
Employee Stock Purchase Plans
TDS previously sponsored an Employee Stock Purchase Plan that permitted eligible employees of TDS and its
subsidiaries, including U.S. Cellular, to purchase a limited number of TDS Special Common Shares on a quarterly basis. The
per share cost to each participant was 85% of the market value of a Special Common Share as of the quarterly purchase
date. Pursuant to SEC rules, the Summary Compensation Table does not include the discount amount because such
discount was available generally to all employees of TDS and its subsidiaries. This plan was terminated following the
purchase of shares for the quarter ended September 30, 2011.
U.S. Cellular also previously sponsored an Employee Stock Purchase Plan that permitted eligible employees of U.S.
Cellular and its subsidiaries to purchase a limited number of U.S. Cellular Common Shares on a quarterly basis. The per
share cost to each participant was 85% of the market value of a Common Share as of the quarterly purchase date. Pursuant
to SEC rules, the Summary Compensation Table does not include the discount amount because such discount was available
generally to all employees of U.S. Cellular and its subsidiaries. This plan was terminated following the purchase of shares for
the quarter ended September 30, 2011.
Under the TDS and U.S. Cellular Employee Stock Purchase Plans, all shares purchased were distributed quarterly and
no shares were retained for distribution upon retirement or otherwise. These plans did not discriminate in scope, terms, or
operation in favor of executive officers and were available generally to all employees of TDS or U.S. Cellular, as applicable,
and benefits were not enhanced upon any termination or change in control. Accordingly, no amounts are reported in the
below table of Potential Payments upon Termination or Change in Control.
Tax -Deferred Savings Plan
TDS sponsors the Tax -Deferred Savings Plan (TDSP), a qualified defined contribution plan pursuant to Sections 401(a)
and 401(k) of the Internal Revenue Code. This plan is available to employees of TDS and participating employer subsidiaries
of TDS which have adopted the TDSP, including U.S. Cellular. Employees contribute amounts from their compensation, and
TDS and participating employers make matching contributions to the plan in cash equal to 100% of an employee's
contributions up to the first 3% of such employee's compensation, and 40% of an employee's contributions up to the next 2%
of such employee's compensation. Participating employees have the option of investing their contributions and their employer
matching contributions in a TDS Common Share fund, a U.S. Cellular Common Share
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fund and certain unaffiliated funds. Prior to the Reclassification, a TDS Special Common Share fund was also available. As a
result of the Reclassification, this was combined with and into the TDS Common Share fund.
The amount of the matching contribution with respect to the executives identified in the Summary Compensation Table
is included in column (i), "All Other Compensation," of the Summary Compensation Table. SEC rules do not require the
Summary Compensation Table to include earnings or other amounts with respect to tax -qualified defined contribution plans.
Under the TDS Tax -Deferred Savings Plan, employees are always fully vested in their employee contributions, but are
subject to a two year graduated vesting schedule (34% vesting at one year of service and 100% vesting at two years of
service) for employer matching contributions. Vesting in employer matching contributions is not accelerated upon a Change
in Control or termination event, except a termination by reason of death, total and permanent disability, or after an employee
attains age 65. The vested portion of an employee's account becomes payable following the employee's termination of
employment as (a) a lump sum or (b) a series of annual or more frequent installments. This plan does not discriminate in
scope, terms, or operation in favor of executive officers and is available generally to all employees, and benefits are not
enhanced upon any termination (other than a termination by reason of death, total and permanent disability or after an
employee attains age 65) or Change in Control. Accordingly, no amounts are reported in the below table of Potential
Payments upon Termination or Change in Control.
Pension Plan
TDS sponsors a qualified noncontributory defined contribution Pension Plan for the employees of TDS and its
participating subsidiaries, including U.S. Cellular. Under this plan, pension costs are calculated separately for each
participant and are funded annually. The Pension Plan is designed to provide retirement benefits for eligible employees of
TDS and participating subsidiaries which have adopted the Pension Plan. TDS and its participating subsidiaries make annual
employer contributions for each eligible participant based on the applicable pension formula. The amount of the contribution
with respect to the executives identified in the Summary Compensation Table is included in column (i), "All Other
Compensation,' of the Summary Compensation Table. SEC rules do not require the Summary Compensation Table to
include earnings or other amounts with respect to tax -qualified defined contribution plans.
Benefits under the TDS Pension Plan are subject to a five year graduated vesting schedule (20% vesting at two years of
service, 40% vesting at three years of service, 60% vesting at four years of service and 100% vesting at five years of
service). Vesting is not accelerated upon a Change in Control or termination event, except a termination of employment due
to a total and permanent disability or after the employee has attained his or her Early or Normal Retirement Date as defined
in the plan. The vested portion of an employee's account becomes payable following the employee's termination of
employment as (a) an annuity or (b) a lump sum payment. This plan does not discriminate in scope, terms, or operation in
favor of executive officers and is available generally to all employees of participating employers, and benefits are not
enhanced upon any termination (except due to a total and permanent disability or after the employee has attained his or her
Early or Normal Retirement Date) or Change in Control. Accordingly, no amounts are reported in the below table of Potential
Payments upon Termination or Change in Control.
Retiree Welfare Benefits
TDS sponsors retiree medical and life insurance plans for eligible retirees of TDS and participating employer
subsidiaries of TDS which have adopted the plans. Eligible retirees are required to pay a portion or, in certain cases, all of
the premiums for the insurance coverage, dependent upon the employee's hire date and employer at the time of termination
of employment. These plans do not discriminate in scope, terms, or operation in favor of executive officers and are available
generally to all employees of participating employers, and benefits are not enhanced upon any termination or Change in
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Control. Accordingly, no amounts are reported in the below table of Potential Payments upon Termination or Change in
Control.
Welfare Benefits during Employment
TDS also provides customary health and welfare and similar plans for the benefit of its employees. These group life,
health, hospitalization, disability, medical reimbursement and/or similar plans do not discriminate in scope, terms or operation
in favor of executive officers and are available generally to all employees, and benefits are not enhanced upon any
termination or change in control. Accordingly, no amounts are reported in the below table of Potential Payments upon
Termination or Change in Control.
Impact of Accounting and Tax Treatments of Particular Forms of Compensation
The Compensation Committee considers the accounting and tax treatments of particular forms of compensation.
Accounting treatments do not significantly impact the Compensation Committee's determinations of the appropriate
compensation. The Compensation Committee considers the accounting treatments primarily to be informed and to confirm
that company personnel understand and recognize the appropriate accounting that will be required with respect to
compensation.
The Compensation Committee places more significance on the tax treatments of particular forms of compensation,
because these may involve an actual cash expense to the company or the executive. One objective of the Compensation
Committee is to maximize tax benefits to the company and executives to the extent feasible within the overall goals of the
compensation policy discussed above. In particular, one consideration is the effect of Section 162(m) of the Internal Revenue
Code.
Subject to certain exceptions, Section 162(m) of the Internal Revenue Code provides a one million dollar annual limit on
the amount that a publicly held corporation is allowed to deduct as compensation paid to each of the corporation's principal
executive officer ("PEO") and the corporation's three most highly compensated officers, exclusive of the corporation's PEO
and principal financial officer. TDS does not believe that the one million dollar deduction limitation currently has or should
have in the near future a material adverse effect on TDS' financial condition, results of operations or cash flows. If the one
million dollar deduction limitation is expected to have a material adverse effect on TDS in the future, TDS will consider ways
to maximize the deductibility of executive compensation, while retaining the discretion TDS deems necessary to compensate
executive officers in a manner commensurate with performance and the competitive environment for executive talent.
TDS does not have any arrangements with its executive officers pursuant to which it has agreed to "gross -up" payments
due to taxes or to otherwise reimburse officers for the payment of taxes, except with respect to certain perquisites as noted
below.
Clawback
Depending on the facts and circumstances, TDS may seek to adjust or recover awards or payments if the relevant TDS
performance measures upon which they are based are restated or otherwise adjusted in a manner that would reduce the size
of an award or payment. Under the Dodd -Frank Act, TDS will be required to adopt a formal clawback policy that satisfies
SEC and NYSE requirements. This will be done in 2012 or later after the SEC and NYSE issue rules relating to this
requirement.
TDS Policy on Stock Ownership
TDS does not have a formal policy relating to stock ownership by executive officers. However, because the President
and CEO and the Executive Vice President and CFO are also directors of TDS, they are subject to the stock ownership
guidelines applicable to directors. See "Corporate Governance —Stock Ownership Guidelines" above. In addition, it should
be noted that the President and CEO of TDS is a substantial shareholder of TDS. See "Security Ownership of Certain
Beneficial Owners and Management" below.
TDS' Policy Regarding Insider Trading and Confidentiality provides that persons subject to such policy may not, under
any circumstances, trade options for, pledge, or sell "short," any securities of TDS
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or U.S. Cellular, and may not enter into any hedging, monetization or margin transactions with respect to any such securities.
The Dodd -Frank Act instructs the SEC to adopt rules requiring public companies to include a proxy statement disclosure of
their policies regarding hedging of company equity securities by directors or employees. TDS will review such rules after they
are finalized to determine if it will make any changes to its policies.
Forward Looking Statements
The foregoing discussion includes statements of judgment and forward -looking statements that involve risks and
uncertainties. These forward -looking statements are based on our current expectations, estimates and projections about our
industry, our business, compensation, management's beliefs, and certain assumptions made by us, all of which are subject to
change. Forward -looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans,"
"predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar
expressions, and variations or negatives of these words and include, but are not limited to, statements regarding projected
performance and compensation. Actual results could differ significantly from those projected in the forward -looking
statements as a result of certain factors, including, but not limited to, the risk factors discussed in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2011. We assume no obligation to update the forward -looking statements.
Compensation Committee Report
The Compensation Committee of the board of directors of TDS oversees TDS' compensation program on behalf of the
board of directors. In fulfilling its oversight responsibilities, the Compensation Committee reviewed and discussed with
management the Compensation Discussion and Analysis set forth above in this Proxy Statement.
In reliance on the review and discussions referred to above, the Compensation Committee recommended to the board
of directors that the above Compensation Discussion and Analysis be included in TDS' Annual Report on Form 10-K for the
fiscal year ended December 31, 2011 and TDS' Proxy Statement related to the 2012 Annual Meeting of shareholders.
This Compensation Committee Report is submitted by Christopher D. O'Leary, George W. Off, Gary L. Sugarman and
Herbert S. Wander.
Risks from Compensation Policies and Practices
TDS does not believe that risks arising from TDS' compensation policies and practices for its employees, including non -
executive officers, are reasonably likely to have a material adverse effect on TDS. The following describes the process
undertaken to reach the conclusion, and the basis for the conclusion, that TDS' compensation policies and practices are not
reasonably likely to have a material adverse effect on TDS.
With respect to compensation in 2011, representatives of TDS took the following steps: Various elements of
compensation (including plans and arrangements) provided to executive officers, non -executive officers and all other
employees were identified and cataloged. The potential risks associated with each element of compensation were identified
and evaluated for materiality and likelihood. Controls and potential mitigating factors were then identified and evaluated.
Based on this process, documentation was prepared which maps and identifies TDS' various compensation elements,
describes their characteristics and purposes, identifies potential risks associated with each compensation element, and then
describes controls and mitigating factors. This documentation was used to evaluate the potential risks of the various
elements of compensation, which are summarized below.
In addition, TDS considered the following processes and matters. TDS has internal controls in place and has processes
to identify deficiencies, including significant deficiencies and material weaknesses. These processes have not identified any
compensation policies or practices that are reasonably likely to have a material adverse effect on TDS. TDS also has an
Enterprise Risk Management process (as described above under Corporate Governance —Board Role in Risk Oversight) that
has not identified any
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compensation policies or practices that are reasonably likely to have a material adverse effect on TDS. In addition, in
connection with its process to review and identify risks for its Annual Report on Form 10-K, TDS did not identify any
compensation policies or practices that are reasonably likely to have a material adverse effect on TDS. Furthermore, TDS
has not had any incident in which TDS' compensation policies and practices have resulted in a material adverse effect on
TDS. Although TDS' compensation policies and practices have evolved over time, their risk characteristics have not changed
in any material respect for several years. TDS does not believe that its compensation policies and practices are unusual in
any significant respect and believes that they are comparable in many respects with those of many other commercial public
companies. TDS' compensation policies and practices have been developed over time with the assistance of its nationally -
recognized compensation consultant, Tower Watson. Such policies and practices also have been reviewed by the
Compensation Committee's independent compensation consultant, Compensation Strategies.
TDS believes that its policies and practices of compensating its employees, including non -executive officers, as they
relate to risk management practices and risk -taking incentives, involve less risk than its compensation policies and practices
relating to executive officers, as discussed in the above Compensation Discussion and Analysis. As discussed therein, TDS
does not believe that its compensation policies and practices relating to executive officers are reasonably likely to have a
material adverse effect on TDS. To an even greater extent, TDS does not believe that its compensation policies and
practices relating to its employees, including non -executive officers, are reasonably likely to have a material adverse effect
on TDS, for the reasons discussed below.
As a telecommunications company, TDS faces general business risks similar to many other businesses and certain
other risks specific to a telecommunications business (as disclosed in TDS' most recent Annual Report on Form 10-K). Both
of TDS' principal business units, U.S. Cellular and TDS Telecom, are telecommunications companies, and TDS does not
have any business units that have significantly different risk profiles from TDS' risk profile (such as a business unit involved in
finance, securities, investing, speculation or similar activities), or where compensation expense is a dominant percentage of
the business unit's revenues or with a risk and reward structure that varies significantly from the overall risk and reward
structure of TDS. In general, TDS and both of its principal business units have similar compensation policies and practices.
The general design philosophy of the compensation policies and practices for employees, including non -executive
officers, of TDS and its business units is similar to the design philosophy discussed with respect to executive officers in the
Compensation Discussion and Analysis above. In addition to such executive officers, the employees whose behavior would
be most affected by the incentives established by such policies and practices are the non -executive officers and director -level
employees of TDS and each of its principal business units.
Similar to the compensation of executive officers, non -executive officers and director -level employees are compensated
using a mix of short and long-term compensation. Each such employee receives a substantial portion of compensation in the
form of a fixed salary, which does not encourage any risk taking, and may receive a portion of compensation as long-term
incentive compensation, which discourages short-term risk taking.
A portion of the long-term incentive compensation of such employees may include restricted stock units, which retain
value even if stock prices decline to some degree. As a result, as long as the stock continues to have some value, such
awards will not expire without value and, as a result, do not encourage risk taking to attempt to avoid having awards expire
without value, as could occur with stock options. Although such employees may also receive stock options, multi -year vesting
and an exercise period that is generally ten years reduce the potential for excessive risk taking and, in any event, options are
only one of several elements of compensation.
Although employees, including non -executive officers, may be entitled to an annual bonus that relates to annual
company performance, such bonuses are limited and represent only a portion of compensation. Also, such compensation is
not designed to compensate non -executive employees for results that might be achieved by taking significant risks because
non -executive employees do not have the authority to take significant risks, as compared to executive officers. In particular,
non -executive
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employees have specified and limited authority compared to executive officers. In addition, TDS and its business units are
subject to an authorization policy that requires various levels of approvals for employees to take action depending on the
dollar amount involved, and internal controls, procedures and processes to monitor and review such actions. Under such
policy, actions that could have a material effect on TDS would need to be approved by the board of directors and/or one or
more executive officers of TDS and/or such business units. TDS' compensation policies and practices relating to non -
executive employees are not designed to provide incentives to such employees to take action which they have no authority to
take. In addition, there is a significant amount of discretion in awarding bonuses as well as other compensation and, as a
result, such compensation could be reduced, or not awarded or not increased, if an employee undertook unauthorized risk.
Also, depending on the facts and circumstances, TDS may seek to adjust or recover awards or payments if the relevant
performance measures upon which they are based are restated or otherwise adjusted in a manner that would reduce the size
of an award or payment.
As a result, considering the foregoing, TDS does not believe that its compensation policies and practices for employees,
including non -executive officers, provide incentives to such employees to undertake risks that are reasonably likely to have a
material adverse effect on TDS.
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Compensation Tables
The information reported in these Compensation Tables for 2011 and as of December 31, 2011 reflects the equity
awards that existed as of such time, and does not reflect the effects on such awards of the Reclassification on January 24,
2012 because this occurred after December 31, 2011. For the adjustments made to outstanding equity awards in connection
with the Reclassification, see "Recent Developments' and "Compensation Discussion and Analysis" above. The adjusted
award information will be reflected in the Compensation Tables in the proxy statement for compensation earned in 2012 and
as of December 31, 2012.
Summary of Compensation
The following table summarizes the compensation earned by the named executive officers in 2011 and 2010 and,
except with respect to Mary N. Dillon, in 2009.
Summary Compensation Table
Name and Principal Year Salary Bonus
Position (a) (b) ($)(c) ($)(d)
LeRoy T. Carlson,
J r.
(1)(6)(7) 2011 $1,352,700 $ 574,900 $1,088,345 $2,206,689 $
President and CEO 2010 $1,313,300 $ 875,000 $ 985,846 $2,091,375 $
2009 $1,275,000 $1,480,000 $1,133,313 $2,342,475 $
Stock
Awards
($) (e)
Option
Awards
($) (f)
Non -Equity
Incentive
Plan
Change in
Pension Value
and
Nonqualified
Deferred
Compensation All Other
Compensation Earnings Compensation Total
($)(q) ($)(h) ($)(i) ($)G)
Kenneth R. Meyers
(2)(6)(7) 2011 $ 658,500 $
Executive Vice 2010 $ 632,500 $
President and CFO 2009 $ 614,000 $
Mary N. Dillon
(3)(6)(7)
President and
Chief
of U.S. Cellular
2011 $ 752,000 $
2010 $ 422,917 $
Scott H. Williamson
(4)(7) 2011 $ 611,000 $
Senior Vice 2010 $ 594,500 $
President— 2009 $ 583,000 $
Acquisitions
and Corporate
Development
382,133 $
256,416 $
583,643 $
502,429 $1,162,829 $
454,932 $1,108,428 $
495,532$1,242,280 $
650,000 $1,203,984 $1,628,123 $
580,000 $1,836,450 $2,647,736 $
243,677 $
170,961 $
439,757 $
David A. Wittwer
(5)(7) 2011 $ 533,000 $ 395,100 $
President and CEO 2010 $ 513,000 $ 297,500 $
of TDS Telecom 2009 $ 496,000 $ 464,100 $
Explanation of Columns:
(a)
(b)
325,000 $ 775,219 $
298,730 $ 762,934 $
333,884 $ 870,748 $
457,301 $ 859,649 $
311,497 $ 776,318 $
- $ 859,227 $
115,567 $
97,484 $
80,557 $
80,423 $
64,139 $
53,543 $
5,012 $
5,724 $
9,722 $
7,803 $
7,556 $
10,428 $
1,241 $
284 $
4,741 $
5,379 $
9,061 $
12,014 $
11,851 $
12,929 $
72,908 $5,300,554
78,791 $5,350,036
75,581 $6,316,091
75,898 $2,905,159
74,125 $2,631,441
74,273 $3,100,713
324,216 $4,559,564
469,467 $5,956,854
58,310 $2,098,370
68,857 $1,965,500
65,077 $2,355,070
32,953 $2,290,017
32,721 $1,942,887
31,596 $1,863,852
Includes the following "named executive officers": all individuals serving as TDS' principal executive officer or acting in a similar capacity during the
last completed fiscal year; all individuals serving as the principal financial officer or acting in a similar capacity during the last completed fiscal year;
and the three most highly compensated executive officers other than the foregoing who were serving as executive officers at the end of the last
completed fiscal year, including executive officers of subsidiaries. The determination as to which executive officers are most highly compensated is
made by reference to total compensation for the last completed fiscal year as set forth in column Q), reduced by any amount in column (h).
For additional details relating to 2010, see the TDS Proxy Statement filed with the SEC on Schedule 14A on April 14, 2011. For additional details
relating to 2009, see the TDS Proxy Statement filed with the SEC on Schedule 14A on April 23, 2010.
(c) Represents the dollar value of base salary (cash and non -cash) earned by the named executive officer during the fiscal year, whether or not paid in
such year. Kenneth R. Meyers and Mary N. Dillon deferred a portion of their 2011 base salaries, all of which salary is included in column (c) whether
or not deferred. See "Information Regarding Nonqualified Deferred Compensation" below. The other officers did not defer any base salary in 2011.
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(d)
(e)
(f)
Represents the dollar value of bonus (cash and non -cash) earned by the named executive officer during the fiscal year, whether or not paid in such
year. As discussed above, as a result of amendments to TDS' bonus guidelines and procedure, 2009 bonus includes both the bonus relating to
2008 performance that was paid in 2009 pursuant to the prior guidelines and the bonus relating to 2009 performance that was paid in 2010 pursuant
to the amended guidelines.
LeRoy T. Carlson, Jr. deferred 15% of his 2010 bonus paid in 2011. Kenneth R. Meyers deferred 25% of his 2010 bonus paid in 2011. Mary N.
Dillon deferred 50% of the portion of her 2010 bonus paid in 2011 that was eligible for deferral (only approximately 7/12 of Mary N. Dillon's bonus for
2010 paid in 2011 was eligible for deferral because she was first employed with U.S. Cellular on June 1, 2010 and accordingly employed only seven
out of the twelve months of 2010), In the case of the deferrals by Mr. Carlson and Mr. Meyers, the amount deferred was deemed invested in
phantom stock units in TDS Special Common Shares. The amount deferred by Ms. Dillon was deferred to an interest -bearing deferral account. See
"Information Regarding Nonqualified Deferred Compensation" below. The entire amount of bonus, including any amount deferred, is included in the
Summary Compensation Table above.
The following is a summary of the amount of bonus for 2010 performance paid in 2011 and the amount deferred:
LeRoy T. Kenneth
Carlson, R. Mary N. Scott H. David A.
Jr. Meyers Dillon Williamson Wittwer
Total 2010 Bonus Paid in 2011 (see
Note (7) below to the above
Summary Compensation Table for a
reconciliation of bonus amounts) $ 875,000 $ 353,900 $ 580,000 $ 235,100 $ 297,500
Amount of bonus eligible for deferral 875,000 353,900 340,055 235,100 297,500
Percentage Deferred 15% 25% 50% — —
Amount Deferred $ 131,250 $ 88,475 $ 170,027 $ — $
Deferred to Interest Account $ — $ — $ 170,027 $ — $ —
Deferred to Phantom Stock $ 131,250 $ 88,475 $ — $ — $
Number of Underlying TDS.S Shares 4,662 3,143 — — —
Company Match —see Note (e) $ 32,813 $ 22,119 $ — $ — $
Number of Underlying TDS.S Shares 1,166 786 — — —
The foregoing dollar amounts of the Company Match awarded in 2011 are included in column (e), Stock Awards. See note (e) below.
Represents the aggregate grant date fair value computed in accordance with FASB ASC 718, as reflected in the below table of "Grants of Plan -
Based Awards. In the case of restricted stock units, such value is reduced by the estimated value of the discounted cash flows of dividends that
would normally be received with respect to such shares (because restricted stock units do not receive credit for dividends prior to vesting). The
vesting period of the awards granted in 2011 is set forth under "Grants of Plan -Based Awards" below. Assumptions made in the valuation of the
stock awards in this column are incorporated by reference from Note 17 —Stock -Based Compensation in TDS' financial statements for the year
ended December 31, 2011 included in its Form 10-K for the year ended December 31, 2011.
Includes the aggregate grant date fair value computed in accordance with FASB ASC 718 relating to restricted stock units in TDS Special Common
Shares under the TDS 2004 Long -Term Incentive Plan and/or relating to restricted stock units in USM Common Shares under the U.S. Cellular
2005 Long -Term Incentive Plan. See "Information Regarding Plan -Based Awards" below for vesting and other information.
Also, as noted in note (d) above, includes the aggregate grant date fair value computed in accordance with FASB ASC 718 relating to phantom
stock bonus match units awarded to such officer in 2011 with respect to deferred bonus compensation. TDS deferred bonus was deemed invested
in phantom TDS Special Common Shares and any U.S. Cellular deferred bonus is deemed invested in phantom USM Common Shares. The TDS
phantom stock units are credited with dividend equivalents. The Summary Compensation Table does not include any dividends (or dividend
equivalents) on deferred bonus denominated in phantom TDS stock because such dividends are not preferential under SEC rules, because they are
not earned at a rate higher than dividends on TDS' common stock. U.S. Cellular does not currently pay dividends. For information relating to U.S.
Cellular, see U.S. Cellulars proxy statement for its 2012 Annual Meeting.
As noted above, LeRoy T. Carlson, Jr. and Kenneth R. Meyers deferred part of their 2010 bonus which was paid in 2011 and received a stock unit
match in phantom TDS Special Common Shares in 2011. Column (e) above includes the aggregate grant date fair value computed in accordance
with FASB ASC 718 related to awards in 2011. See "Information Regarding Nonqualified Deferred Compensation" below.
Represents the aggregate grant date fair value computed in accordance with FASB ASC 718, as reflected in the below table of "Grants of Plan -
Based Awards. The dates on which the options granted in 2011 become exercisable and expire are set forth below under "Grants of Plan -Based
Awards." Assumptions made in the valuation of the option awards in this column are incorporated by reference from Note 17 —Stock -Based
Compensation, in TDS' financial statements for the year ended December 31, 2011 included in its Form 10-K for the year ended December 31,
2011.
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(g)
(h)
(i)
Represents the portion of the bonus that represents non -equity incentive plan compensation pursuant to SEC rules. See the discussion under
"Bonus" in the above Compensation Discussion and Analysis and in Note (7) below to the above Summary Compensation Table.
As required by SEC rules, column (h) includes the portion of interest that exceeded the AFR at the time each annual interest rate was set. Each of
the identified officers participates in a supplemental executive retirement plan or SERP. The interest rate under the SERP for 2011 was set as of the
last trading date of 2010 at 5.3% per annum, based on the yield on ten year BBB rated industrial bonds at such time. Such rate exceeded the AFR
of 4.24% at such time. Accordingly, pursuant to SEC rules, column (h) of the Summary Compensation Table for 2011 includes the portion of such
interest that exceeded the AFR at the time the interest rate was set. In addition, column (h) includes interest that Ms. Dillon and Mr. Meyers received
from U.S. Cellular (in the case of Mr. Meyers, as a result of deferred salary during Mr. Meyers' employment by U.S. Cellular prior to 2007) and that
Mr. Meyers and Mr. Wittwer received from TDS (including TDS Telecom), on deferred salary or bonus that exceeded the AFR, as indicated in the
below table. The other officers have not deferred any of their salaries or bonus under interest -bearing deferral arrangements. Interest on deferred
salary or bonus is compounded monthly, computed at a rate equal to one -twelfth of the sum of the average thirty-year Treasury Bond rate for salary
or bonus deferred as an employee of TDS, or the twenty-year Treasury Bond rate for salary or bonus deferred as an employee of U.S. Cellular, plus
1.25 percentage points.
Excess Earnings
SERP
TDS Deferred Salary
USM Deferred Salary and
Bonus
Total Excess Earnings
LeRoy T.
Carlson, Jr.
$ 5,012
Kenneth R.
Meyers
Mary N.
Dillon
Scott H. David A.
Williamson Wittwer
$ 5,081 $ — $ 4,741 $ 1,585
2,471 — — 10,429
251 1,241
$ 5,012 $ 7,803 $ 1,241 $ 4,741 $ 12,014
Pursuant to SEC rules, column (h) does not include any dividends (or dividend equivalents) on deferred bonus denominated in phantom TDS stock
because such dividends are not preferential under SEC rules, because they are not earned at a rate higher than dividends on TDS' common stock.
Column (h) does not include any changes in pension values because TDS and U.S. Cellular do not have any defined benefit pension plans
(including supplemental plans). The named executive officers only participate in tax -qualified defined contribution plans and a non -qualified defined
contribution plan which, under SEC rules, are not required to be reflected in column (h). Both the TDS Tax -Deferred Savings Plan (TDSP) and the
TDS Pension Plan are tax -qualified defined contribution plans and the supplemental executive retirement plan (SERP) is a non -qualified defined
contribution plan.
In 2011, includes a one-time payment of $250,000 to Mary N. Dillon on the fifteen month anniversary of her date of employment pursuant to the
terms of the letter agreement dated May 3, 2010 between U.S. Cellular and Ms. Dillon relating to her employment.
In 2010, includes a one-time payment of $450,000 to Mary N. Dillon on the three month anniversary of her date of employment pursuant to the
terms of the letter agreement dated May 3, 2010 between U.S. Cellular and Ms. Dillon relating to her employment.
Does not include any discount amount under the TDS dividend reinvestment plans because such discounts are available generally to all security
holders of TDS.
Does not include any discount amount under the TDS or U.S. Cellular employee stock purchase plans because such discounts were available
generally to all employees of TDS or U.S. Cellular, as applicable. The per share cost to each participant was 85% of the market value of the TDS
Special Common Shares or USM Common Shares as of the issuance date, as applicable.
Does not include perquisites and other personal benefits, or property, unless the aggregate amount of such compensation is $10,000 or more.
Perquisites do not include expenditures that are used exclusively for business purposes.
Includes the following: (1) if applicable, the total of perquisites and personal benefits if they equal or exceed $10,000, summarized by type, or
specified for any perquisite or personal benefit that exceeds the greater of $25,000 or 10% of the total amount of perquisites and personal benefits
for each officer, in each case, valued on the basis of the aggregate incremental cost of such perquisite or personal benefit to TDS, including any
related tax gross up (if the total amount is less than $10,000, the following indicates "N/A" ), (2) contributions by TDS for the benefit of the named
executive officer under (a) the TDS Tax -Deferred Savings Plan, which is referred to as the TDSP, (b) the TDS Pension Plan and (c) the TDS
supplemental executive retirement plan, which is
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referred to as the SERP, and (3) the dollar value of any insurance premiums paid during the covered fiscal year with respect to director life
insurance for the benefit of the named executive:
LeRoy T. Kenneth
Carlson, R. Mary N. Scott H. David A.
Jr. Meyers Dillon Williamson Wittwer
(1)
Perquisites (if $10,000 or more):
Corporate automobile allowance
and other personal travel and
related expenses
Tax gross up relating to corporate
automobile allowance
Total Perquisites if $10,000 or more $ 14,474 $ 17,464 $ 17,866 N/A N/A
Payment per Letter Agreement $ — $ — $ 250,000 $ - $ -
$ 11,306 $ 13,512 $ 12,247
N/A N/A
3,168 3,952 5,619 N/A N/A
Contributions to Benefit Plans
TDSP
Pension Plan
SERP
Life Insurance
Total, including perquisites if $10,000
or more
$ 9,310 $ 9,310 $ 7,350 $ 9,310 $ 9,310
24,500 11,496 11,496 25,123 11,866
24,500 37,504 37,504 23,877 11,777
124 124 - - -
$ 72,908 $ 75,898 $ 324,216 $ 58,310 $ 32,953
TDS and U.S. Cellular do not provide any significant perquisites to their officers. In 2011, perquisites primarily included an automobile allowance
and/or reimbursed travel and similar expenses to certain of their executive officers. This benefit is valued based on the actual cost to TDS or U.S.
Cellular. Also, TDS and U.S. Cellular reimbursed the officers additional taxes related to the automobile allowance.
TDS and U.S. Cellular purchase tickets to various sporting, civic, cultural, charity and entertainment events. They use these tickets for business
development, partnership building, charitable donations and community involvement. If not used for business purposes, they may make these
tickets available to employees, including the named executive officers, as a form of recognition and reward for their efforts. Because such tickets
have already been purchased, we do not believe that there is any aggregate incremental cost to TDS or U.S. Cellular if a named executive officer
uses a ticket for personal purposes.
The TDSP is a tax -qualified defined contribution retirement plan that does not discriminate in scope, terms or operation in favor of executive officers
and that is available generally to all employees. Employees contribute amounts to the plan and TDS and its subsidiaries make matching
contributions in part.
The Pension Plan is a tax -qualified defined contribution retirement plan that does not discriminate in scope, terms or operation in favor of executive
officers and that is available generally to all employees. TDS and its subsidiaries make annual employer contributions for each participant.
The SERP is a non -qualified defined contribution plan that is available only to board -approved officers. This plan provides supplemental benefits to
the TDS Pension Plan to offset the reduction of benefits under the TDS Pension Plan caused by the limitation on annual employee compensation
which can be considered for tax qualified pension plans under the Internal Revenue Code. TDS and its subsidiaries make annual employer
contributions for each participant.
TDS pays premiums for $100,000 of life insurance for directors of TDS, including directors who are executive officers.
Represents the dollar value of total compensation for the fiscal year based on the sum of all amounts reported in columns (c) through (i). See the
above Compensation Discussion and Analysis for a discussion of the proportions of each of the compensation elements to total compensation.
Footnotes:
(1)
(2)
(3)
LeRoy T. Carlson, Jr., as President and CEO of TDS, is included in the above table as TDS' principal executive officer. He is also Chairman of U.S.
Cellular and TDS Telecom. TDS does not have any employment, severance or similar agreement with LeRoy T. Carlson, Jr. Mr. Carlson is the son
of Chairman Emeritus, LeRoy T. Carlson, and the brother of non -executive Chairman of the Board and director, Walter C.D. Carlson, director, Letitia
G. Carlson, M.D., and director, Prudence E. Carlson.
Kenneth R. Meyers is included in the above table because he is TDS' principal financial officer. TDS does not have any employment, severance or
similar agreement with Kenneth R. Meyers.
Mary N. Dillon, as President and CEO of U.S. Cellular, a principal business unit of TDS which operates wireless telephone companies, is deemed to
be an executive officer of TDS under SEC rules. She is one of the three most highly compensated executive officers other than the principal
executive officer or principal financial officer who was serving as an executive officer at the end of the last completed fiscal year, including executive
officers of subsidiaries. U.S. Cellular is party to a letter agreement with Ms. Dillon dated May 3, 2010 relating to her employment as President and
CEO of U.S. Cellular, as discussed in the footnotes to the Table of Potential Payments upon Termination or Change in Control. All of Ms. Dillon's
compensation is paid by U.S. Cellular, which is a public company and an SEC registrant. Further information about Ms. Dillon's compensation is
included in the 2012 proxy statement of U.S. Cellular. Only Ms. Dillon's 2011 and 2010 compensation is reported because she was not a named
executive officer or employee prior to 2010.
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(4)
(7)
Scott H. Williamson, Senior Vice President —Acquisitions and Corporate Development of TDS, is one of the three most highly compensated
executive officers other than the principal executive officer or principal financial officer of TDS who was serving as an executive officer at the end of
the last completed fiscal year, including executive officers of subsidiaries. TDS does not have any employment, severance or similar agreement with
Scott H. Williamson.
David A. Wittwer, President and CEO of TDS Telecom, is one of the three most highly compensated executive officers other than the principal
executive officer or principal financial officer of TDS who was serving as an executive officer at the end of the last completed fiscal year, including
executive officers of subsidiaries. TDS does not have any employment, severance or similar agreement with David A. Wittwer.
Each of LeRoy T. Carlson, Jr., Kenneth R. Meyers and Mary N. Dillon is also an executive officer and/or director of U.S. Cellular. Mary N. Dillon
receives all of her compensation from U.S. Cellular. LeRoy T. Carlson, Jr., director and Chairman of U.S. Cellular, and Kenneth R. Meyers, director
and Vice President and Assistant Treasurer of U.S. Cellular, did not receive any compensation from U.S. Cellular in 2011. In 2011, LeRoy T.
Carlson, Jr., and Kenneth R. Meyers were compensated by TDS in connection with their services for TDS and TDS subsidiaries, including U.S.
Cellular. A portion of their compensation expense incurred by TDS is allocated to U.S. Cellular by TDS, along with the allocation of other
compensation expense and other expenses of TDS. This allocation by TDS to U.S. Cellular is done in the form of a single management fee
pursuant to an Intercompany Agreement between TDS and U.S. Cellular. There is no identification or quantification of the compensation of such
persons to U.S. Cellular, or of any other allocated expense in this management fee. The management fee is recorded as a single expense by U.S.
Cellular, U.S. Cellular does not obtain details of the components that make up this fee and does not segregate this fee or allocate any part of the
management fee to other accounts such as compensation expense. All of the compensation of LeRoy T. Carlson, Jr. and Kenneth R. Meyers was
approved by the TDS Compensation Committee and none of it was subject to approval by any U.S. Cellular directors or officers. Accordingly, all of
such compensation expense incurred by TDS is reported in the above table by TDS and is not reported by U.S. Cellular. U.S. Cellular discloses the
amount of the management fee that it pays to TDS in its proxy statement together with a description of the Intercompany Agreement.
Effective January 1, 2009, TDS amended its guidelines and procedures for awarding bonuses. Prior to such amendments, such guidelines provided
that bonuses were not earned until the date the bonus was paid. Effective for 2009 and subsequent years, the foregoing guidelines and procedures
were amended to provide that, 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.
As a result of such amendments, with respect to the 2009 bonus, the above Summary Compensation Table includes both the bonus relating to 2008
performance that was paid in 2009 pursuant to the prior guidelines and procedures, and the bonus relating to 2009 performance that was paid in
2010 pursuant to the amended guidelines and procedures. The 2010 bonus includes only the bonus paid in 2011 relating to 2010 performance. The
2011 bonus includes only the bonus paid in 2012 relating to 2011 performance.
In addition to the foregoing change, the above Summary Compensation Table includes certain changes in the columns in which bonus is reported
as required by SEC rules. With respect to the bonus relating to 2008 performance paid in 2009, because the bonus amount was entirely
discretionary and not deemed to have been earned unless and until paid, the entire amount of the bonus is reported under the "Bonus" column.
However, with respect to subsequent performance years, certain amounts of the bonus are required to be included under the "Non -Equity Incentive
Plan Compensation" column. The portion of the bonus paid that is included in the column captioned "Non -Equity Incentive Plan Compensation" is
the amount of the bonus calculated based on quantitative financial performance. See the discussion under "Bonus" in the above Compensation
Discussion and Analysis for how this is calculated with respect to the bonus relating to performance in 2011 that was paid in 2012. The bonus
amounts that are not included in the "Non -Equity Incentive Plan Compensation" column are included in the "Bonus" column.
The following summarizes the bonus amounts in 2009 (the following does not include Mary N. Dillon because she did not begin service until June 1,
2010 and accordingly did not receive a 2009 bonus):
Bonus paid in 2010 for 2009 Performance
Bonus paid in 2009 for 2008 Performance
Subtotal
Less 2010 payment reported as Non -Equity
Incentive Plan Compensation for 2009
Total Amount reported as Bonus for 2009
The following summarizes the bonus amounts in 2010:
Bonus paid in 2011 for 2010
Performance
Less amount reported as Non -Equity
Incentive Plan Compensation
Total Amount reported as Bonus for
2010
LeRoy T. Kenneth
Carlson, R. Scott H. David A.
Jr. Meyers Williamson Wittwer
$ 825,000 $ 334,300 $ 233,800 $ 185,500
655,000 329,900 259,500 278,600
1,480,000 664,200 493,300 464,100
- (80,557) (53,543) -
$ 1,480,000 $ 583,643 $ 439,757 $ 464,100
LeRoy T. Kenneth
Carlson, R. Mary N. Scott H. David A.
Jr. Meyers Dillon Williamson Wittwer
$ 875,000 $ 353,900 $ 580,000 $ 235,100 $ 297,500
- (97,484) - (64,139) -
$ 875,000 $ 256,416 $ 580,000 $ 170,961 $ 297,500
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The following summarizes the bonus amounts in 2011:
LeRoy T. Kenneth
Carlson, R. Mary N. Scott H. David A.
Jr. Meyers Dillon Williamson Wittwer
Bonus paid in 2012 for 2011
Performance
Less amount reported as Non -Equity
Incentive Plan Compensation
Total Amount reported as Bonus for
2011
$ 574,900 $ 497,700 $ 650,000 $ 324,100 $ 395,100
- (115,567) - (80,423) -
$ 574,900 $ 382,133 $ 650,000 $ 243,677 $ 395,100
Unlike the bonus guidelines for other executive officers, which provide that a specified percentage of an officer's bonus will be determined based on
quantitative financial performance measures (as described above) and that the remaining percentage will be discretionary based on overall
company performance and on individual performance, the bonus guidelines for the President and CEO of TDS (LeRoy T. Carlson, Jr.), the
President and CEO of U.S. Cellular (Mary N. Dillon) and the President and CEO of TDS Telecom (David A. Wittwer), do not provide such specificity
and provide that the entire amount of the bonus is discretionary. Accordingly, the entire amount of the bonus for each of LeRoy T. Carlson, Jr., Mary
N. Dillon and David A. Wittwer is reported under the "Bonus" column of the Summary Compensation Table.
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Information Regarding Plan -Based Awards
The following table shows, as to the executive officers who are named in the Summary Compensation Table, certain
information regarding plan -based awards in 2011.
Grants of Plan -Based Awards
All Other
Stock All Other
Awards: Option
Estimated Possible Payouts
Number Awards: Exercise
Under Non -Equity Incentive of Number of or Base Grant Date
Plan Awards Shares of Securities Price of Fair Value
Stock or Underlying Option of Stock
Grant Units Options Awards and Option
Name Date Threshold Target Maximum (#) (#) ($/Sh) Awards
(a) (b) (c) (d) (e) (I) (j) (k) (I)
LeRoy T.
Carlson, Jr.
Non -Equity
Incentive
Plan
Awards (1)
Awards in
TDS.S
Shares (2)
TDS.S
Restricted
Stock
Units 5/13/11
TDS.S
Phantom
Stock
Match
Units
for
2010
Bonus
paid in
2011
(4) 3/4/11
Total Grant
Date Value
of Stock
Awards
TDS.S
Options 5/13/11
Total Grant
Date Value
of All
Awards
Kenneth R.
Meyers
Non -Equity
Incentive
Plan
Awards (1) 1/1/11 $ —$138,285$ 276,570
Awards in
TDS.S
Shares (2)
TDS.S
Restricted
Stock
Units 5/13/11
TDS.S
Phantom
Stock
Match
Units for
2010
Bonus
paid in
36,700 $ 1,055,532
1,166 $ 32,813
$ 1,088,345
230,000 $ 29.94 $ 2,206,689
$ 3,295,034
16,700 $ 480,310
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2011 (4) 3/4/11 786 $ 22,119
Total Grant
Date Value
of Stock
Awards $ 502,429
TDS.S
Options 5/13/11 121,200 $ 29.94 $ 1,162,829
Total Grant
Date Value
of All
Awards $ 1,665,258
Mary N.
Dillon
Non -Equity
Incentive
Plan
Awards (1)
Awards in
USM
Common
Shares (3)
USM
Restricted
Stock
Units 4/1/11 23,158 $ 1,203,984
USM
Options 4/1/11 83,300 $ 51.99 $ 1,628,123
Total Grant
Date Value
of All
Awards $ 2,832,107
Scott H.
Williamson
Non -Equity
Incentive
Plan
Awards (1) 1/1/11 $ — $ 96,233$ 192,466
Awards in
TDS.S
Shares (2)
TDS.S
Restricted
Stock
Units 5/13/11 11,300 $ 325,000
TDS.S
Options 5/13/11 80,800 $ 29.94 $ 775,219
Total Grant
Date Value
of All
Awards $ 1,100,219
David A.
Wittwer
Non -Equity
Incentive
Plan
Awards (1)
Awards in
TDS.S
Shares (2)
TDS.S
Restricted
Stock
Units 5/13/11 15,900 $ 457,301
TDS.S
Options 5/13/11 89,600 $ 29.94 $ 859,649
Total Grant
Date Value
of All
Awards $ 1,316,950
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Explanation of Columns:
(a) Includes the persons identified in the Summary Compensation Table.
(b) Represents the date on which the TDS Compensation Committee, or in the case of Ms. Dillon, the U.S. Cellular Long -Term Incentive
Compensation Committee, took action or was deemed to take action to grant the awards.
(c) —(e) These columns as set forth in SEC rules relate to non -equity incentive plan awards, as defined by SEC rules. See Note (1) below.
(f) —(h) These columns as set forth in SEC rules are not applicable because the identified officers did not receive any equity incentive plan awards, as
defined by SEC rules. Accordingly, such columns are not included above.
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(i)
(1)
Except with respect to Mary N. Dillon, includes the number of TDS Special Common Shares underlying restricted stock units awarded
pursuant to the TDS 2004 Long -Term Incentive Plan. The TDS.S restricted stock units will become vested on December 1, 2013. With respect
to Ms. Dillon, includes the number of USM Common Shares underlying restricted stock units granted to Ms. Dillon pursuant to the U.S.
Cellular 2005 Long -Term Incentive Plan. The USM restricted stock units will become vested on April 1, 2014.
Under the TDS 2004 Long -Term Incentive Plan, executives (other than Mary N. Dillon) were permitted to elect to defer receipt of all or a
portion of their annual bonuses up to $400,000 and to receive stock unit matches on the amount deferred. Deferred compensation was
deemed invested in phantom TDS Special Common Shares. Participants received (i) a 25% stock unit match for amounts deferred up to 50%
of their total annual bonus and (ii) a 33% stock unit match for amounts deferred that exceeded 50% of their total annual bonus. The match
stock units vest ratably at a rate of one-third per year over three years. The value of phantom stock bonus match units with respect to such
officer is included in column (e), "Stock Awards,' of the above Summary Compensation Table. After vesting, the match stock units are credited
with dividends. The Summary Compensation Table does not include any dividends (or dividend equivalents) on deferred bonus and match
denominated in phantom TDS stock because such dividends are not preferential under SEC rules, because they are not earned at a rate
higher than dividends on TDS' common stock. Mary N. Dillon may elect to defer bonus into phantom USM Common Shares under the U.S.
Cellular 2005 Long -Term Incentive Plan. U.S. Cellular does not currently pay dividends. For information relating to similar provisions under the
U.S. Cellular 2005 Long -Term Incentive Plan applicable to bonus deferral by Mary N. Dillon, see U.S. Cellular's proxy statement for its 2012
Annual Meeting.
Except with respect to Mary N. Dillon, represents the number of TDS Special Common Shares underlying options awarded during the year
pursuant to the TDS 2004 Long -Term Incentive Plan. The TDS.S options were granted on May 13, 2011 at an exercise price of $29.94 per
share, which was the closing price of a TDS Special Common Share on May 13, 2011. The TDS.S options become exercisable with respect to
one-third of the number of shares subject to the option on each of the first, second and third anniversaries of the grant date and are
exercisable until May 13, 2021.
In the case of Ms. Dillon, represents the number of USM Common Shares underlying options awarded during the fiscal year pursuant to the
U.S. Cellular 2005 Long -Term Incentive Plan. The USM options were granted on April 1, 2011 at an exercise price of $51.99 per share, which
was the closing price of a USM Common Share on April 1, 2011. The USM options become exercisable with respect to one-third of the
number of shares subject thereto on each of the first, second and third anniversaries of the grant date and are exercisable until April 1, 2021.
(k) Represents the per-share exercise price of the options granted in column (j). Such exercise price is not less than the closing market price of
the underlying security on the date of the grant.
(I)
Represents the aggregate grant date fair value computed in accordance with FASB ASC 718. In the case of the restricted stock units, such
value is reduced by the estimated value of the discounted cash flows of dividends that would normally be received with respect to such shares
(because restricted stock units do not receive credit for dividends prior to vesting). In the case of any adjustment or amendment of the
exercise or base price of options, stock appreciation rights ("SARs") or similar option -like instruments previously awarded to a named
executive officer, whether through amendment, cancellation or replacement grants, or any other means ("repriced"), or other material
modification of such awards, represents the incremental fair value, computed as of the repricing or modification date in accordance with FASB
ASC 718, with respect to that repriced or modified award. No options, SARs or other similar awards were repriced or materially modified in the
last fiscal year with respect to the identified executive officers. (However, as noted above, awards were modified in the Reclassification.
Because this took place in January 2012, the effect of this Reclassification will be reflected in the 2013 proxy statement.)
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Footnotes:
(1)
(2)
(3)
(4)
Represents amounts payable under the bonus guidelines and procedures. The bonus guidelines for the President and CEO of TDS, the
President and CEO of U.S. Cellular and the President and CEO of TDS Telecom do not provide for a Threshold, Target or Maximum bonus
based on specified performance measures, and no portion of the bonus payable to such individuals is considered non -equity incentive plan
compensation. The above amounts for the other officers relate to the bonus with respect to 2011 performance that was paid in 2012 that was
calculated based on quantitative financial performance. The Threshold amount is zero because there is no minimum level that is required for
quantitative financial performance before a bonus can be earned. The Target represents the bonus for quantitative financial performance that
would have been paid in 2012 if the target was achieved for each quantitative performance measure in 2011 by U.S. Cellular and TDS
Telecom. The Maximum amount represents the maximum bonus for quantitative financial performance that would have been paid in 2012 if
each quantitative performance measure for U.S. Cellular and TDS in 2011 equaled or exceeded 200% of its target in 2011. The following
shows the calculation of the actual amount of non -equity incentive plan compensation in 2011 for Kenneth R. Meyers and Scott H. Williamson
for reference for comparison to the Threshold, Target and Maximum above, representing 83.6% of the portion of the Target applicable to
quantitative financial performance (70%), based on the weighted quantitative financial performance percentage calculated above under
"Company Performance"
a 2011 base salary
b Target bonus percentage
c Target bonus for 2011
d Percentage of 2011 target
bonus based on company
performance
e Target bonus for company
performance
f Amount of target bonus for
company performance
applicable to quantitative
financial performance in 2011 of
70%
g Calculation of amount reported
under "Non -Equity Incentive
Plan Compensation" column
based on weighted quantitative
financial performance in 2011 of
83.6% (not exact due to
rounding)
Kenneth Scott H.
Formula R. Meyers Williamson
$ 658,500 $ 611,000
60% 45%
a x b $ 395,100 $ 274,950
50% 50%
c x d $ 197,550 $ 137,475
e x 70% $ 138,285 $ 96,233
f x 83.6% $ 115,567 $ 80,423
Pursuant to the TDS 2004 Long -Term Incentive Plan, on the date specified, the TDS Compensation Committee granted such executive officer
restricted stock units to be settled in TDS Special Common Shares and options to purchase TDS Special Common Shares. The aggregate
grant date fair value computed in accordance with FASB ASC 718 of the stock awards is reported in the Summary Compensation Table in
column (e) and the aggregate grant date fair value computed in accordance with FASB ASC 718 of the option awards is reported in the
Summary Compensation Table in column (f). Dividends are not earned with respect to shares underlying restricted stock units until the award
becomes vested and the shares are issued or on shares underlying options until such options are exercised and the shares are issued.
Pursuant to the TDS 2004 Long -Term Incentive Plan, executives who deferred all or a portion of their annual bonuses under the bonus
deferral and employer match program received phantom stock match units. The aggregate grant date fair value computed in accordance with
FASB ASC 718 of the phantom stock match units is reported in the Summary Compensation Table under "Stock Awards" in column (e).
Pursuant to the U.S. Cellular 2005 Long -Term Incentive Plan, on the date specified, the U.S. Cellular Long -Term Incentive Compensation
Committee granted to Mary N. Dillon restricted stock units to be settled in USM Common Shares and options to purchase USM Common
Shares. The aggregate grant date fair value computed in accordance with FASB ASC 718 of the stock awards is reported in the Summary
Compensation Table in column (e) and the aggregate grant date fair value computed in accordance with FASB ASC 718 of the option awards
is reported in the Summary Compensation Table in column (f). U.S. Cellular does not currently pay dividends.
Includes the number of phantom stock units in TDS Special Common Shares awarded to such officer with respect to the company match
related to deferred bonus compensation. The TDS 2004 Long -Term Incentive Plan provided the opportunity for the above officers (other than
Ms. Dillon) to defer receipt of a portion of their bonuses and receive TDS matching stock units. The aggregate grant date fair value computed
in accordance with FASB ASC 718 of the match stock units is reported in the Summary Compensation Table in column (e) under "Stock
Awards" and the grant date fair value is reported in the above table. The above table does not include the amount of the dividends paid on
deferred bonus and match. Such dividends are not preferential because they are not earned at a rate higher than dividends on TDS' common
stock. See the "Nonqualified Deferred Compensation" table below for bonus phantom stock and dividends credited to the named executive
officers.
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Information Regarding Outstanding Equity Awards at Year End
The following table shows, as to the executive officers who are named in the Summary Compensation Table, certain
information regarding outstanding equity awards at year end.
Outstanding Equity Awards at Fiscal Year -End
Option Awards Stock Awards
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Number Number Value of
Equity of of Unearned
Incentive Shares Unearned Shares,
Plan or Market Shares, Units
Awards: Units of Value of Units or or Other
Number of Number of Number of Stock Shares or Other Rights
Securities Securities Securities That Units of Rights That
Underlying Underlying Underlying Have Stock That Have
Unexercised Unexercised Unexercised Option Option Not That Have Not Not
Options: (#) Options: (#) Unearned Exercise Expiration Vested Have Not Vested Vested
Name Exercisable Unexercisable Options (#) Price Date (#) Vested ($) (#) ($)
(a) (b) (c) (d) (e) (f) (9) (h) (i) (i)
LeRoy T.
Carlson, Jr.
(1)
Options:
2011
TDS.S
Options
(2) 230,000
2010
TDS.S
Options
(3) 83,333 166,667
2009
TDS.S
Options
(4) 162,666 81,334
2008
TDS.S
Options
(5) 226,425
2007
TDS.S
Options
(6) 179,653
2006
TDS.S
Options
(7) 213,333
2005
Tandem
Options
(8) 111,045
2004
Tandem
Options
(9) 67,540
2003
Tandem
Options
(10) 65,567
2002
Tandem
Options
(11) 68,215
Stock
Awards:
2011
TDS.S
RSUs
(12)
2010
TDS.S
RSUs
$ 29.94 5/13/21
$ 26.66 5/25/20
$ 26.95 5/20/19
$ 35.35 5/21/18
$ 59.45 7/2/17
$ 49.80 12/13/16
$ 77.36 4/20/15
$ 66.00 5/8/14
$ 52.92 7/3/13
$ 60.20 8/19/12
36,700 $ 873,827
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(13)
TDS.S
Bonus
Match
not
vested:
(21)
Total
TDS.S 865,410
Total
Tandem
37,400 $ 890,494
1,147$ 27,310
478,001 75,247 $1,791,631
Options 312,367 — — $
Kenneth R.
Meyers (1)
Options:
2011
TDS.S
Options
(2) 121,200
2010
TDS.S
Options
(3) 44,166 88,334
2009
TDS.S
Options
(4) 86,266 43,134
2008
TDS.S
Options
(5) 93,000
2007
TDS.S
Options
(6) 52,942
2006
USM
Options
(14) 22,819
2005
USM
Options
(15) 17,200
2004
USM
Options
(16) 8,807
Stock
Awards:
2011
TDS.S
RSUs
(12)
2010
TDS.S
RSUs
(13)
TDS.S
Bonus
Match
not
vested
(21)
Total
TDS.S 276,374 252,668
Total
USM 48,826
$ 29.94 5/13/21
$ 26.66 5/25/20
$ 26.95 5/20/19
$ 35.35 5/21/18
$ 59.45 7/2/17
$ 59.43 4/3/16
$ 45.63 3/31/15
$ 38.65 3/31/14
81
16,700 $ 397,627
17,000 $ 404,770
774 $ 18,429
34,474 $ 820,826
—$
Option Awards Stock Awards
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
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Awards: Payout
Number Number Value of
Equity of of Unearned
Incentive Shares Unearned Shares,
Plan or Market Shares, Units
Awards: Units of Value of Units or or Other
Number of Number of Number of Stock Shares or Other Rights
Securities Securities Securities That Units of Rights That
Underlying Underlying Underlying Have Stock That Have
Unexercised Unexercised Unexercised Option Option Not That Have Not Not
Options: (#) Options: (#) Unearned Exercise Expiration Vested Have Not Vested Vested
Name Exercisable Unexercisable Options (#) Price Date (#) Vested ($) (#) ($)
(a) (b) (c) (d) (e) (f) (q) (h) (i) (i)
Mary N. Dillon
(1)
Options:
2011 USM
Options
(17)
Initial CEO
USM
Options
(with
accelerated
vesting)
(19)
Initial CEO
USM
Options
(without
accelerated
vesting)
(19)
Stock
Awards:
2011 USM
RSUs
(18)
Initial CEO
USM
RSUs
(with
accelerated
vesting)
(20)
Initial CEO
USM
RSUs
(without
accelerated
vesting)
(20)
83,300 $ 51.99 4/1/21
25,000 50,000
75,000
$ 40.81 6/1/20
$ 40.81 6/1/20
23,158 $1,010,384
20,000 $ 872,600
25,000 $1,090,750
Total
USM 25,000 208,300 68,158 $2,973,734
Scott H.
Williamson
(1)
Options:
2011
TDS.S
Options
(2)
2010
TDS.S
Options
(3)
2009
TDS.S
Options
(4)
2008
TDS.S
Options
(5)
2007
TDS.S
Options
(6)
2006
TDS.S
Options
(7)
80,800
30,400 60,800
60,466 30,234
68,500
56,998
75,122
$ 29.94 5/13/21
$ 26.66 5/25/20
$ 26.95 5/20/19
$ 35.35 5/21/18
$ 59.45 7/2/17
$ 38.00 6/19/16
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2005
Tandem
Options
(8) 24,493 $ 77.36 4/20/15
Stock
Awards:
2011
TDS.S
RSUs
(12)
2010
TDS.S
RSUs
(13)
Total
TDS.S 291,486 171,834
Total
Tandem
Options 24,493 —
David A.
Wittwer (1)
Options:
2011
TDS.S
Options
(2)
2010
TDS.S
Options
(3)
2009
TDS.S
Options
(4)
2008
TDS.S
Options
(5)
2007
TDS.S
Options
(6)
2006
TDS.S
Options
(7)
Stock
Awards:
2011
TDS.S
RSUs
(12)
2010
TDS.S
RSUs
(13)
Total
TDS.S
89,600
30,933 61,867
59,666 29,834
68,500
43,077
35,364
237,540 181,301
Explanation of Columns:
(a)
(b)
(c)
$ 29.94 5/13/21
$ 26.66 5/25/20
$ 26.95 5/20/19
$ 35.35 5/21/18
$ 59.45 7/2/17
$ 38.00 6/19/16
Includes the persons identified in the Summary Compensation Table.
11,300$ 269,053
11,700$ 278,577
23,000 $ 547,630
-$
15,900 $ 378,579
12,200 $ 290,482
28,100 $ 669,061
Includes, on an award -by -award basis, the number of securities underlying unexercised options, including awards that have been
transferred other than for value, that are exercisable as of December 31, 2011. No awards have been transferred. TDS awards for
2006 through 2011 represent awards with respect to TDS Special Common Shares. TDS awards prior to 2006 represent the number
of tandem TDS Common Share/ Special Common Share units subject to options. Awards to Ms. Dillon, and awards to Mr. Meyers
relating to periods prior to 2007, represent awards with respect to USM Common Shares.
Includes, on an award -by -award basis, the number of securities underlying unexercised options, including awards that have been
transferred other than for value, that are unexercisable as of December 31, 2011. No awards have been transferred. TDS awards
represent awards with respect to TDS Special Common Shares and awards to Ms. Dillon represent awards with respect to USM
Common Shares.
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This column is not applicable because the identified officers do not have any options that are equity incentive plan awards, as
defined by SEC rules.
Represents the exercise prices of the awards identified in columns (b) and (c).
Represents the expiration dates of the awards identified in columns (b) and (c).
Represents the total number of shares underlying stock awards that have not vested as of December 31, 2011
Represents the market value of shares underlying stock awards that have not vested as of December 31, 2011, calculated, for the
executive officers other than Ms. Dillon, using the closing price of TDS Special Common Shares of $23.81 on December 30, 2011,
the last trading day of 2011. With respect to Ms. Dillon, the aggregate market value of shares underlying stock awards that have not
vested as of December 31, 2011, was calculated using the closing price of USM Common Shares of $43.63 on December 30, 2011,
the last trading day of 2011.
This column is not applicable because the identified officers do not have any stock awards that are equity incentive plan awards, as
defined by SEC rules.
This column is not applicable because the identified officers do not have any stock awards that are equity incentive plan awards, as
defined by SEC rules.
Footnotes:
The following provides additional information with respect to outstanding equity awards at year end. Number references correspond to
numbers in the above table. The following discloses the date that options were scheduled to become exercisable and that restricted stock
units and phantom stock match units were scheduled to become vested.
(1)
(8)
(9)
With respect to such officer, information is presented as to the number of TDS shares or tandem units underlying options and the
number of TDS shares underlying stock awards. Awards subsequent to 2005 represent awards with respect to TDS Special
Common Shares. Awards prior to 2006 represent the number of tandem TDS Common Share/ Special Common Share units subject
to options. The tandem awards provided that upon exercise, the holder will acquire an equal number of TDS Common Shares and
TDS Special Common Shares. Dividends are not earned with respect to shares underlying restricted stock units until the award
becomes vested and the shares are issued or on shares underlying options until such options are exercised and the shares are
issued.
With respect to Mary N. Dillon, and with respect to Kenneth R. Meyers relating to periods prior to 2007, represents USM Common
Shares underlying options or stock awards. With respect to Kenneth R. Meyers for 2007 and thereafter, represents TDS Special
Common Shares underlying options or stock awards. U.S. Cellular does not currently pay any dividends.
Such 2011 TDS.S Options represent options to purchase TDS Special Common Shares, were granted on May 13, 2011, become
exercisable with respect to one third of such options on each of May 13, 2012, May 13, 2013 and May 13, 2014, and are exercisable
until May 13, 2021 at the exercise price of $29.94 per share.
Such 2010 TDS.S Options represent options to purchase TDS Special Common Shares, were granted on May 25, 2010, become
exercisable with respect to one third of such options on each of May 25, 2011, May 25, 2012 and May 25, 2013, and are exercisable
until May 25, 2020 at the exercise price of $26.66 per share.
Such 2009 TDS.S Options represent options to purchase TDS Special Common Shares, were granted on May 21, 2009, become
exercisable with respect to one third of such options on each of May 21, 2010, May 21, 2011 and May 21, 2012, and are exercisable
until May 20, 2019 at the exercise price of $26.95 per share.
Such 2008 TDS.S Options represent options to purchase TDS Special Common Shares, were granted on August 26, 2008, became
exercisable with respect to one third of such options on each of August 26, 2009, August 26, 2010 and August 26, 2011, and are
exercisable until May 21, 2018 at the exercise price of $35.35 per share.
Such 2007 TDS.S Options represent options to purchase TDS Special Common Shares, were granted on July 2, 2007, became
exercisable on December 15, 2007 and are exercisable until July 2, 2017 at the exercise price of $59.45 per share.
Such 2006 TDS.S Options represent options to purchase TDS Special Common Shares. With respect to LeRoy T. Carlson, Jr., such
2006 TDS.S Options were granted on December 13, 2006, became exercisable on December 15, 2006 and are exercisable until
December 13, 2016 at the exercise price of $49.80 per share. With respect to Scott H. Williamson and David A. Wittwer, such 2006
TDS.S Options were granted on June 19, 2006, became exercisable on December 15, 2006 and are exercisable until June 19, 2016
at the exercise price of $38.00 per share.
Such 2005 Tandem Options became exercisable on December 15, 2005 and are exercisable until April 20, 2015 at the exercise
price of $77.36 per tandem option to purchase an equal number of TDS Common Shares and TDS Special Common Shares. Such
options were originally granted as options for TDS Common Shares on April 20, 2005 and then adjusted into tandem options on
May 13, 2005. See Note (1) above.
Such 2004 Tandem Options became exercisable on December 15, 2004 and are exercisable until May 8, 2014 at the exercise price
of $66.00 per tandem option to purchase an equal number of TDS Common Shares and TDS Special Common Shares. Such
options were originally granted as options for TDS Common Shares on May 8, 2004 and then adjusted into tandem options on
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May 13, 2005. See Note (1) above.
(10) Such 2003 Tandem Options became exercisable on December 15, 2003 and are exercisable until July 3, 2013 at the exercise price
of $52.92 per tandem option to purchase an equal number of TDS Common Shares and TDS Special Common Shares. Such
options were originally granted as options for TDS Common Shares on July 3, 2003 and then adjusted into tandem options on
May 13, 2005. See Note (1) above.
(11)
Such 2002 Tandem Options became exercisable on December 15, 2002 and are exercisable until August 19, 2012 at the exercise
price of $60.20 per tandem option to purchase an equal number of TDS Common Shares and TDS Special
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Common. Such options were originally granted as options for TDS Common Shares on August 19, 2002 and then adjusted into
tandem options on May 13, 2005. See Note (1) above.
(12) Such 2011 TDS.S Restricted Stock Units were granted on May 13, 2011 and will become vested on December 1, 2013.
(13) Such 2010 TDS.S Restricted Stock Units were granted on May 25, 2010 and will become vested on December 15, 2012.
(14) The 2006 USM Options were granted to Mr. Meyers on April 3, 2006, became exercisable in annual increments of 25% on April 3 of
each year beginning in 2007 and ending in 2010, and are exercisable until April 3, 2016 at an exercise price of $59.43 per share.
(15) The 2005 USM Options were granted to Mr. Meyers on March 31, 2005, became exercisable in annual increments of 25% on
March 31 of each year beginning in 2006 and ending in 2009, and are exercisable until March 31, 2015 at an exercise price of
$45.63 per share.
(16) The 2004 USM Options were granted to Mr. Meyers on March 31, 2004, became exercisable in annual increments of 25% on
March 31 of each year beginning in 2005 and ending in 2008, and are exercisable until March 31, 2014 at an exercise price of
$38.65 per share.
(17) The 2011 USM Options were granted on April 1, 2011, become exercisable in annual increments of one third on April 1 of each year
beginning in 2012 and ending in 2014, and are exercisable until April 1, 2021 at an exercise price of $51.99 per share.
(18) The 2011 USM RSUs were granted on April 1, 2011 and become vested on April 1, 2014.
(19) The Initial CEO USM Options (with accelerated vesting, as discussed in Note 2 under the Table of Potential Payments upon
Termination or Change in Control below) were granted on June 1, 2010, become exercisable with respect to one-third of such
options on each of June 1, 2011, June 1, 2012 and June 1, 2013, and are exercisable until June 1, 2020 at an exercise price of
$40.81 per share. The Initial CEO USM Options (without accelerated vesting) were granted on June 1, 2010, become exercisable on
June 1, 2016 and are exercisable until June 1, 2020 at an exercise price of $40.81 per share.
(20) The Initial CEO USM RSUs (with accelerated vesting, as discussed in Note 2 under the Table of Potential Payments upon
Termination or Change in Control) were granted on June 1, 2010 and become vested on June 1, 2013. The Initial CEO USM RSUs
(without accelerated vesting) were granted on June 1, 2010 and become vested on June 1, 2016.
(21) Represents phantom stock match units awarded to such officer with respect to deferred bonus compensation. See "Information
Regarding Nonqualified Deferred Compensation" below. Represents the number of TDS Special Common Shares underlying
phantom stock match units that have not vested. One-third of the phantom stock bonus match units become vested on each of the
first three anniversaries of the last day of the year for which the applicable bonus is payable, provided that such officer is an
employee of TDS or an affiliate on such date.
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Information Regarding Option Exercises and Stock Vested in 2011
The following table shows, as to the executive officers who are named in the Summary Compensation Table, certain
information regarding option exercises and stock vested in 2011.
Option Exercises And Stock Vested
Option Awards Stock Awards
Name
(a)
LeRoy T. Carlson, Jr. (1)(7)
TDS/TDS.S Options Exercised
(Exercise Date):
TDS.S Stock Awards Vested:
2009 TDS.S Restricted Stock Units (3)
TDS.S Bonus Match Units (4) (5)
Total TDS.S
Kenneth R. Meyers (1)(2)(7)
TDS.S Options Exercised (Exercise
Date) (6):
TDS.S Stock Awards Vested:
2009 TDS.S Restricted Stock Units (3)
TDS.S Bonus Match Units (4)(5)
USM Options Exercised (Exercise
Date) (6):
Total TDS.S — $ — 18,422 $ 418,916
Total USM — $ — — $
Number of
Shares Number of
Acquired Value Shares Value
on Realized Acquired Realized
Exercise on Exercise on Vesting on Vesting
(#) ($) (#) ($)
(b) (c) (d) (e)
41,141 $ 935,546
1,098 $ 24,969
- $ - 42,239 $ 960,515
17,622 $ 400,724
800 $ 18,192
Mary N. Dillon (2)(7)
USM Options Exercised (Exercise
Date):
USM Stock Awards Vested:
Total USM - $
Scott H. Williamson (1)(7)
TDS/TDS.S Options Exercised
(Exercise Date):
TDS.S Stock Awards Vested:
2009 TDS.S Restricted Stock Units (3)
Total TDS.S
David A. Wittwer (1)(7)
TDS.S Options Exercised (Exercise
Date):
TDS.S Stock Awards Vested:
Total TDS.S — $
12,389 $ 281,726
— $ — 12,389 $ 281,726
Explanation of Columns:
Includes the persons identified in the Summary Compensation Table.
Represents the number of securities for which options were exercised.
Represents the aggregate dollar value realized upon exercise of options, based on the difference between the market price of the underlying
securities at exercise and the exercise or base price of the options.
Represents the number of shares of stock that have vested. This includes restricted stock units and company -match phantom stock units relating to
deferred bonus that became vested in 2011.
Represents the aggregate dollar value realized upon vesting of stock, calculated by multiplying the number of units by the market value of the
underlying securities on the vesting date.
Footnotes:
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Except with respect to Mary N. Dillon, and Kenneth R. Meyers to the extent indicated, information is presented as to the number of TDS shares
underlying options or stock awards. Except for TDS options granted prior to 2006, which represent tandem options to purchase an equal number of
TDS Common Shares and TDS Special Common Shares, the TDS awards represent awards with respect to TDS Special Common Shares.
With respect to Mary N. Dillon, and with respect to Kenneth R. Meyers to the extent indicated, represents USM Common Shares underlying options
or stock awards.
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On December 15, 2011, the 2009 TDS.S restricted stock units vested and were issued in TDS Special Common Shares. The amounts in column (e)
relating to such shares represent the market values of these shares on such date, using the closing price of $22.74 on December 15, 2011.
Pursuant to the TDS 2004 Long -Term Incentive Plan, the company -match phantom stock units related to deferred bonus vest one-third on each of
the first three anniversaries of the last day of the year for which the applicable bonus is payable, provided that the employee is an employee of TDS
or an affiliate on such date. The stock price used to calculate the value realized on vesting for TDS shares was the closing price of TDS Special
Common Shares of $23.81 on December 30, 2011, the last trading day of 2011. See "Information Regarding Nonqualified Deferred Compensation"
below.
Pursuant to SEC rules, column (h) of the Summary Compensation Table does not include any dividends (or dividend equivalents) on deferred
bonus or the related company match denominated in phantom TDS stock because such dividends are not preferential under SEC rules, because
they are not earned at a rate higher than dividends on TDS' common stock. U.S. Cellular does not currently pay dividends.
Kenneth R. Meyers received options, restricted stock units and bonus match units in USM Common Shares prior to 2007 when he was employed by
U.S. Cellular and received such awards in TDS Special Common Shares in 2007 and later years after he became employed by TDS. All restricted
stock units and bonus match units in USM Common Shares received by Mr. Meyers vested prior to 2011.
See the Outstanding Equity Awards at Fiscal Year -End Table above for a description of the awards that continued to be held by the named
executive officers at December 31, 2011.
From time to time, TDS and/or U.S. Cellular authorizes its executive officers to enter into plans under Section 10b5-1 of
the Securities Exchange Act of 1934, as amended. These plans may include specific instructions for the broker to exercise
stock options and/or sell stock on behalf of the executive based on a pre -determined schedule or formula. The purpose of
such plans is to enable executive officers to recognize the value of their compensation and sell their holdings of TDS and/or
U.S. Cellular common stock during periods in which the officer would otherwise be unable to buy or sell such stock because
important information about TDS has not been publicly released.
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Information Regarding Pension Benefits
TDS and U.S. Cellular executive officers are covered by the Tax -Deferred Savings Plan (a tax -qualified "defined
contribution" plan), the Pension Plan (a tax -qualified "defined contribution" plan) and the SERP (a non -qualified "defined
contribution" supplemental plan), as discussed above. The company contributions for each of the named executive officers
under these plans is disclosed in column (i), "All Other Compensation," of the Summary Compensation Table. TDS and U.S.
Cellular do not have any "defined benefit" pension plans (including supplemental plans). The named executive officers only
participate in tax -qualified defined contribution plans and a non -qualified defined contribution plan. Accordingly, the Pension
Benefits table required to be provided by SEC rules is not applicable.
Information Regarding Nonqualified Deferred Compensation
The following table shows, as to the executive officers who are named in the Summary Compensation Table, certain
information regarding nonqualified deferred compensation.
Nonqualified Deferred Compensation
Name
(a)
Aggregate
Executive Registrant Aggregate Aggregate Balance at
Contributions Contributions Earnings Withdrawals/ Last
in Last FY in Last FY in Last FY Distributions FYE
($) ($) ($) ($) ($)
(b) (c) (d) (e) (f)
LeRoy T. Carlson, Jr.
SERP (1)
Company contribution $
Interest up to AFR
Interest above AFR
Total Interest
Balance at year end
Bonus Deferral and
Company Match (3):
Deferral of 2010 Bonus
paid in 2011-4,662
TDS.S Shares $ 131,250
Company Match for
2010 Bonus paid in
2011 of 1,166 TDS.S
Shares $
Dividends on Deferred
Bonus and Company
Match:
655 TDS.S Shares
232 TDS Shares
Distribution in 2011-
4,789 TDS.S
Shares (4)
Changes in Value in
2011
Accumulated Balance at
Year End:
36,063 TDS.S Shares
(including 1,147
unvested shares)
13,019 TDS Shares (all
vested)
Total Value of
Accumulated Balance
Aggregate Totals (5) $ 131,250 $
Name
(a)
Kenneth R. Meyers
SERP (1)
Company contribution
24,500
32,813
$ 20,288
$ 5,012
$ 25,300
$ 15,596
$ 6,006
$ (391,149)
$ (149,470)
$ 528,284
$ 858,660
$ 337,062
$ 1,195,722
57,313 $ (344,247) $ (149,470) $ 1,724,006
87
Aggregate
Executive Registrant Aggregate Aggregate Balance at
Contributions Contributions Earnings Withdrawals/ Last
in Last FY in Last FY in Last FY Distributions FYE
($) ($) ($) ($) ($)
(b) (c) (d) (e) (f)
37,504
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Interest up to AFR
Interest above AFR
Total Interest
Balance at year end
Salary Deferral (2)
TDS
Salary deferred
Interest up to AFR
Interest above AFR
Total Interest
Balance at year end
U.S. Cellular (for
periods prior to 2007)
Interest up to AFR
Interest above AFR
Total Interest
Balance at year end
Bonus Deferral and
Company Match (3):
59,175
TDS.S Shares:
Deferral of 2010 Bonus
paid in 2011— 3,143
TDS.S Shares $ 88,475
Company Match for
2010 Bonus paid in
2011 of 786 TDS.S
Shares
Dividends on Deferred
Bonus and Company
Match of 267 TDS.S
Shares
Changes in Value in
2011
Accumulated Balance at
Year End:
15,387 TDS.S Shares
(including 774
unvested shares)
Aggregate Totals (5)
Name
(a)
Mary N. Dillon
SERP (1)
Company contribution
Balance at year end
Salary and Bonus
Deferral into Interest
Account(2)
Salary deferred
Bonus deferred
Interest up to AFR
Interest above AFR
Total Interest
Balance at year end
Aggregate Totals (5)
Scott H. Williamson
SERP (1)
Company contribution
Interest up to AFR
Interest above AFR
Total Interest
Balance at year end
Aggregate Totals (5)
22,119
$ 20,567
$ 5,081
$ 25,648
$ 11,731
$ 2,471
$ 14,202
$ 2,133
$ 251
$ 2,384
$ 6,357
$ (103,327)
147,650 $ 59,623 $ (54,736) $
88
$ 548,221
$ 310,860
$ 50,110
$ 366,364
- $ 1,275,555
Aggregate
Executive Registrant Aggregate Aggregate Balance at
Contributions Contributions Earnings Withdrawals/ Last
in Last FY in Last FY in Last FY Distributions FYE
($) ($) ($) ($) ($)
(b) (c) (d) (e) (f)
$ 151,526
$ 170,027
37,504
$ 12,969
$ 1,241
$ 14,210
321,553 $ 37,504 $ 14,210 $
23,877
$ 19,192
$ 4,741
$ 23,933
$ 37,504
$ 434,564
- $ 472,068
$ 500,453
- $ 23,877 $ 23,933 $ - $ 500,453
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David A. Wittwer
SERP (1)
Company contribution
Interest up to AFR
Interest above AFR
Total Interest
Balance at year end
Salary Deferred in prior
years (2)
Interest up to AFR
Interest above AFR
Total Interest
Balance at year end
Aggregate Totals (5)
Explanation of Columns:
(a)
(b)
(c)
11,777
$ 6,415
$ 1,585
$ 8,000
$ 171,079
$ 61,714
$ 10,429
$ 72,143
$ 1,451,453
- $ 11,777 $ 80,143 $ — $ 1,622,532
Includes the persons identified in the Summary Compensation Table.
Represents the dollar amount of executive contributions during the last fiscal year. With respect to any deferred salary, includes the actual dollar
amount deferred. The entire amount of the salary earned in 2011 is included in column (c) of the Summary Compensation Table, whether or not
deferred. Only Mary N. Dillon and Kenneth R. Meyers deferred a portion of their salary in 2011. The deferred salary account is paid at the time and
in the form provided in the applicable plan or agreement, which permits certain distribution elections by the officer.
With respect to deferred bonus, includes the actual dollar amount of bonus deferred. The entire amount of the bonus is included in the Summary
Compensation Table, whether or not deferred. LeRoy T. Carlson, Jr., Kenneth R. Meyers and Mary N. Dillon each deferred a portion of their 2010
bonus paid in 2011. The named executive officers employed by TDS receive a distribution of the deferred compensation account at the earlier of the
date elected by the officer and the officers separation from service (or, with respect to amounts subject to section 409A of the Internal Revenue
Code, the seventh calendar month following the calendar month of the officer's separation from service). The named executive officers employed by
U.S. Cellular receive a distribution of the deferred compensation account at the date elected by the officer (either the officer's separation from
service, subject to any six-month delay required by section 409A of the Internal Revenue Code, or a date specified by the officer).
Represents the dollar amount of aggregate contributions by TDS or U.S. Cellular during the last fiscal year. With respect to the SERP, represents
the actual dollar amount contributed with respect to 2011 for the officer. This is the same as the amount included in column (i) of the Summary
Compensation Table. With respect to the company match, the amount in 2011
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represents the value of the shares underlying the phantom stock units awarded to such officer. This is the same as the amount included in
column (e) of the Summary Compensation Table.
(d)
Includes the dollar amount of aggregate interest or other earnings accrued during the last fiscal year. With respect to the SERP, represents the
actual dollar amount earned in 2011 by the officer, of which any amount that is deemed to be above -market or preferential earnings as defined by
SEC rules is included in column (h) of the Summary Compensation Table. With respect to any deferred salary or bonus, includes the amount of
interest credited to the deferral account for 2011, of which any amount that is deemed to be above -market or preferential earnings as defined by
SEC rules is included in column (h) of the Summary Compensation Table. The amount up to the AFR (as previously defined) is not deemed to be
above -market or preferential. The amount above the AFR is deemed to be above -market or preferential and, therefore, is included in the Summary
Compensation Table. With respect to dividends on the bonus deferral and company match, represents the dollar value of the phantom stock units
credited to the account of the identified officer as dividends, based on the closing price of the underlying shares on December 30, 2011, the last
trading day of the year.
Also includes the changes in value of the bonus deferral units and company match units in 2011. This amount is not included in the Summary
Compensation Table.
(e) Represents the aggregate dollar amount of any withdrawals by or distributions to the executive during the last fiscal year. Any such amounts
represent withdrawals or distributions of company and/or employee contributions and/or earnings and are not included in 2011 compensation in the
Summary Compensation Table.
(f) Represents the dollar value of the balance of the executive's account as of the end of the last fiscal year. With respect to the SERP, represents the
actual dollar amount in the executives account as of December 31, 2011. With respect to any deferred salary or any bonus deferred under any
interest -bearing deferral arrangement, represents the actual dollar amount in the executive's account as of December 31, 2011. With respect to
bonus deferral and company match under a phantom stock deferral arrangement, represents the dollar value of the number of phantom stock units
held in the executive's account as of December 31, 2011 based on the closing price of the underlying shares on December 30, 2011, the last
trading day of the year. The stock price used for TDS shares was the closing price of TDS Common Shares of $25.89 and TDS Special Common
Shares of $23.81, on December 30, 2011. The stock price used for U.S. Cellular shares, if any, was the closing price of U.S. Cellular Common
Shares of $43.63 on December 30, 2011. Column (f) includes certain amounts reported as 2011 compensation in the Summary Compensation
Table, as indicated in notes to columns (b) through (d).
Footnotes:
(1)
(2)
(3)
Each of the identified officers participates in the SERP. This plan provides supplemental benefits to the TDS Pension Plan to offset the reduction of
benefits caused by the limitation on annual employee compensation which can be considered for tax qualified pension plans under the Internal
Revenue Code. The SERP is a non -qualified defined contribution plan and is intended to be unfunded. Such officers are credited with earnings on
their balances in this non -qualified defined contribution plan. Under the SERP, the deferred balance is credited with an assumed rate of earnings on
all amounts other than the contributions for the current year equal to the yield on ten year BBB rated industrial bonds for the last trading date of the
prior year as quoted by Standard & Poor's. The interest rate for 2011 was set as of the last trading date of 2010 at 5.3% per annum, based on the
yield on ten year BBB rated industrial bonds at such time. Such rate exceeded the AFR of 4.24% at such time. Accordingly, pursuant to SEC rules,
column (h) of the Summary Compensation Table for 2011 includes the portion of such interest that exceeded the AFR at the time the interest rate
was set.
See "Compensation Discussion and Analysis" for information relating to vesting and distribution of amounts under the SERP.
Represents deferred salary and/or bonus accounts pursuant to deferred compensation agreements with Ms. Dillon, Mr. Meyers and Mr. Wittwer.
The other officers have not deferred any of their salaries or bonus under the interest -bearing deferral arrangements. All of the annual salary is
reported in column (c) of the Summary Compensation Table, whether or not deferred. All of the annual bonus is reported in the Summary
Compensation Table, whether or not deferred. Pursuant to the agreements, the deferred accounts are credited with interest compounded monthly,
computed at a rate equal to one -twelfth of the sum of the average thirty-year Treasury Bond rate for salary or bonus deferred as an employee of
TDS, or the twenty-year Treasury Bond rate for salary or bonus deferred as an employee of U.S. Cellular, plus 1.25 percentage points, until the
deferred compensation amount is paid to such person. As required by SEC rules, column (h) of the Summary Compensation Table includes the
portion of such interest that exceeded interest calculated using the AFR at the time each monthly interest rate was set.
The amounts in column (b) represent deferrals of annual bonus under phantom stock deferral arrangements. All of the annual bonus earned is
reported in the Summary Compensation Table, whether or not deferred. The amounts in column (c) represent the value of company match units
awarded to such officer. One-third of the phantom stock bonus match units vest with respect to a particular year's deferred bonus on each of the
first three anniversaries of the last day of the year for which the applicable bonus is payable, provided that the officer is an employee of TDS or U.S.
Cellular or an affiliate on such date. If the officer continues as an employee during the entire vesting period, he or she will receive a total bonus
match equal to the sum of (i) 25% of amounts deferred up to 50% of such year's bonus and (ii) 33%(331/3%in the case of an officer employed by
U.S. Cellular) of amounts deferred that exceed 50% of such years bonus. The vesting of unvested phantom stock match units may accelerate
under certain circumstances and the effects of such acceleration are disclosed in the "Potential Payments upon Termination or Change in Control"
table below. The aggregate grant date fair value computed in
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accordance with FASB ASC 718 of the match stock units is reported in the Summary Compensation Table in column (e) under "Stock Awards"
A TDS officer will receive in shares an amount equal to his or her vested deferred compensation account balance at the earlier of the date elected
by the officer and the officers separation from service (or, with respect to amounts subject to section 409A of the Internal Revenue Code, the
seventh calendar month following the calendar month of the officers separation from service).
Mary N. Dillon participates and prior to 2007 Kenneth R. Meyers participated in the U.S. Cellular 2005 Long -Term Incentive Plan. This plan permits
participants to defer all or a portion of their annual bonus to a deferred compensation account. Deferred bonus will be deemed invested in phantom
USM Common Shares. The entire amount of the bonus earned is reported in the Summary Compensation Table, whether or not deferred, and
deemed invested in phantom stock. The aggregate grant date fair value computed in accordance with FASB ASC 718 of the match stock units is
reported in the Summary Compensation Table in column (e) under "Stock Awards." For further information relating to U.S. Cellular company match
awards, see U.S. Cellular's proxy statement for its 2012 Annual Meeting. A U.S. Cellular officer will receive in shares an amount equal to his or her
vested deferred compensation account balance at the date elected by the officer (either the officers separation from service, subject to any six-
month delay required by section 409A of the Internal Revenue Code, or a date specified by the officer).
(4)
(5)
Represents a distribution to Mr. Carlson on January 10, 2011, of bonus deferral and related company match for 2007. The distribution represented
4,789 Special Common Shares, having a value at the time of the distribution of $149,470. The distribution represents shares underlying phantom
stock units relating to deferred bonus and the company match reported in prior years in the Summary Compensation Table under Bonus and Stock
Awards, respectively. After deduction of shares for taxes, Mr. Carlson received a net of 3,448 Special Common Shares, plus cash for a fractional
share.
Information relating to deferred compensation amounts included in the above Summary Compensation Table for 2011 is provided in the above
notes. As required by SEC rules, the following is a summary of the amount of the total deferred compensation balances reported as compensation
in the Summary Compensation Table in years prior to 2011, beginning with deferred compensation in 2006, which is the first year in which deferred
compensation was reported pursuant to the above table. The below amounts do not include previously reported deferred compensation that has
been distributed.
LeRoy T. Kenneth R. Mary N. Scott H. David A.
Carlson, Jr. Meyers Dillon Williamson Wittwer
SERP Company
Contribution $ 105,206 $ 144,693
Salary Deferral — 215,485
Excess Interest 17,043 19,719
Bonus Deferral 594,500 324,265
Company Match 151,119 81,052
$ — $ 101,063 $ 23,311
97,596 — —
284 15,890 24,780
Total $ 867,868 $ 785,214 $ 97,880 $ 116,953 $ 48,091
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Potential Payments upon Termination or Change in Control
This section discusses, with respect to the executives identified in the Summary Compensation Table, each contract,
agreement, plan or arrangement, whether written or unwritten, that provides for payments to such executive at, following, or
in connection with any termination, including resignation, severance, retirement or constructive termination, or a Change in
Control of TDS or a change in the executive officer's responsibilities.
TDS does not have any plans or policies that provide for severance or other compensation or benefits to the named
executive officers upon termination or a Change in Control other than the acceleration of vesting of option and stock awards
upon certain events as discussed herein and other than any agreements described in the footnotes to the Table of Potential
Payments upon Termination or Change in Control. However, TDS may enter into agreements or arrangements with officers
that provide for severance or other compensation or benefits under circumstances that are negotiated with an officer in
connection with the employment or termination of employment of such officer, as discussed below.
The acceleration of vesting of awards is considered to be appropriate upon certain qualified termination events or a
Change in Control, but TDS does not consider it appropriate to generally provide for other significant severance or similar
benefits in such events or to permit the acceleration of vesting of awards as a general rule for non -qualified termination
events. TDS considers the fact that, unlike many companies that may be widely held, TDS is controlled by the TDS Voting
Trust. As a result, TDS does not follow the practices of certain other companies that may provide for substantial benefits
upon a termination or a Change in Control as a standard practice. Instead, potential payments upon termination or a Change
in Control are designed primarily so that employees are neither harmed nor given a windfall in such circumstances. The
acceleration of awards under certain circumstances is intended to motivate executive officers to act in the best long-term
interests of TDS.
With respect to agreements with specific officers, TDS may enter into arrangements that provide for severance or other
compensation or benefits under circumstances that are negotiated with such officer in connection with employment or
termination of employment. Any such agreement or arrangement is based on the facts and circumstances at the time relating
to that particular employment relationship. Any such agreements are described in the footnotes to the Table of Potential
Payments upon Termination or Change in Control.
The foregoing limited and customized approach to termination payments is consistent with TDS' overall compensation
objectives, as discussed herein. These objectives assume that officers will be compensated primarily based on performance
during their continued employment with TDS and are designed to motivate executive officers to act in the best long-term
interest of TDS, recognizing that TDS is a controlled company. As a result, these objectives do not contemplate providing
significant benefits upon or providing significant incentives with respect to qualified termination events or a Change in Control
or providing any benefits upon non -qualified termination events. Accordingly, the limited amounts of termination and Change
in Control payments provided as discussed herein are taken into account with all other facts and circumstances, but
otherwise do not significantly affect decisions relating to other elements of compensation, which are provided consistent with
the foregoing compensation objectives assuming continued employment until normal retirement.
Table of Potential Payments upon Termination or Change in Control
The following table summarizes the estimated payments to be made under each contract, agreement, plan or
arrangement which provides for payments to a named executive officer at, following, or in connection with any termination of
employment including by resignation, retirement, disability or a constructive termination of a named executive officer, or a
Change in Control or a change in the named executive officer's responsibilities. However, in accordance with SEC
regulations, the following does not report any amount to be provided to a named executive officer under any arrangement
that does not discriminate in scope, terms, or operation in favor of our executive officers and which is available generally to
all employees. Also, the following table does not repeat information disclosed above under the Nonqualified Deferred
Compensation table or the Outstanding Equity Awards at Fiscal Year -End
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table, except to the extent that the amount payable to the named executive officer would be enhanced or accelerated by the
termination event.
The following table provides quantitative disclosure, assuming that the triggering event took place on December 31,
2011 and, if applicable, that the price per share of the registrant's securities is the closing market price as of December 30,
2011, the last trading day in 2011. Because all of the options granted prior to 2009 were exercisable as of December 31,
2011, no additional amounts would become payable with respect to options granted prior to 2009 upon any termination or
Change in Control. However, additional payments may become due as a result of the acceleration of the vesting of restricted
stock units and/or bonus match units, or options granted during 2009, 2010 or 2011, upon the following triggering events:
(i) a qualified disability (for restricted stock units and bonus match awards but not options), (H) death (for restricted stock units
and bonus match awards but not options), (Hi) a Change in Control (as defined above); (iv) a qualified retirement (for
restricted stock units and options granted by either TDS or U.S. Cellular and bonus match awards granted by U.S. Cellular
but not bonus match awards granted by TDS) and (v) a termination without cause or for good reason (for certain restricted
stock units and options granted by U.S. Cellular to Mary N. Dillon, provided that such termination occurs on or before June 1,
2012) (collectively, "Triggering Events"). No such additional payments would be made in the event of any other termination of
employment or service. In addition, the below table identifies other payments that have been, will be or could be made
pursuant to agreements, if any, to the extent discussed in the footnotes to the below table. In particular, see footnote (2) to
the below table relating to Mary N. Dillon.
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Table of Potential Payments upon Termination or Change in Control
Early Early
Vesting Vesting
Early of of Bonus
Vesting Restricted Stock
of Stock Match
Options Units Units Other Total
Name ($) ($) ($) ($) ($)
(a) (b) (c) (d) (e) (f)
LeRoy T. Carlson, Jr.
Options (exercise price):
2011 Options for 230,000 TDS.S
Shares ($29.94) (1)
2010 Options for 166,667 TDS.S
Shares ($26.66) (1)
2009 Options for 81,334 TDS.S
Shares ($26.95) (1)
Restricted Stock Units:
2011 Award of 36,700 TDS.S Shares
2010 Award of 37,400 TDS.S Shares
Bonus Stock Match Units for unvested
shares as of December 31, 2011:
1,147 TDS.S Shares
Aggregate Totals $ — $ 1,764,321 $ 27,310
$ 873,827 $ 873,827
$ 890,494 $ 890,494
$ 27,310
Kenneth R. Meyers
Options (exercise price):
2011 Options for 121,200 TDS.S
Shares ($29.94) (1)
2010 Options for 88,334 TDS.S
Shares ($26.66) (1)
2009 Options for43,134 TDS.S
Shares ($26.95) (1)
Restricted Stock Units:
2011 Award of 16,700 TDS.S Shares
2010 Award of 17,000 TDS.S Shares
Bonus Stock Match Units for unvested
shares as of December 31, 2011:
774 TDS.S Shares
Aggregate Totals $ — $ 802,397 $ 18,429
$ 397,627
$ 404,770
$ 18,429
Mary N. Dillon (2)
One Year of Current Salary
Awards with Accelerated Vesting upon
Termination without Cause or for
Good Reason (exercise price):
Initial CEO USM Options for 50,000
USM Shares ($40.81) (3)
Initial CEO USM RSUs (20,000 USM
Shares)
Subtotal of amounts that may be paid
upon termination without Cause or for
Good Reason (2)
Awards without Accelerated Vesting
upon Termination without Cause or
for Good Reason (exercise price):
2011 Options for 83,300 USM Shares
($51.99) (3)
Initial CEO USM Options for 75,000
USM Shares ($40.81) (3)
2011 USM RSUs (23,158 USM
Shares)
Initial CEO USM RSUs (25,000 USM
Shares)
Aggregate Totals
$ 141,000
$ 872,600
$ 27,310
- $ 1,791,631
$ 397,627
$ 404,770
$ 18,429
- $ 820,826
$ 752,000 $ 752,000
$ 141,000
$ 872,600
$ 141,000 $ 872,600 - $ 752,000 $ 1,765,600
$ 211,500
$ 1,010,384
$ 1,090,750
$ 352,500 $ 2,973,734
94
$ 211,500
$ 1,010,384
$ 1,090,750
$ 752,000 $ 4,078,234
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Name
(a)
Scott H. Williamson
Options (exercise price):
2011 Options for 80,800 TDS.S
Shares ($29.94) (1)
2010 Options for 60,800 TDS.S
Shares ($26.66) (1)
2009 Options for 30,234 TDS.S
Shares ($26.95) (1)
Restricted Stock Units:
2011 Award of 11,300 TDS.S
Shares
2010 Award of 11,700 TDS.S
Shares
Aggregate Totals
David A. Wittwer
Options (exercise price):
2011 Options for 89,600 TDS.S
Shares ($29.94) (1)
2010 Options for 61,867 TDS.S
Shares ($26.66) (1)
2009 Options for 29,834 TDS.S
Shares ($26.95) (1)
Restricted Stock Units:
2011 Award of 15,900 TDS.S
Shares
2010 Award of 12,200 TDS.S
Shares
Aggregate Totals
Explanation of Columns:
(a)
(b)
(c)
(d)
(e)
(f)
Early
Early Vesting
Early Vesting of Bonus
Vesting of Restricted Stock
of Options Stock Units Match Units Other Total
($) ($) ($) ($) ($)
(b) (c) (d) (e) (f)
269,053
278,577
547,630
378,579
290,482
669,061
Includes the persons identified in the Summary Compensation Table.
269,053
278,577
547,630
378,579
290,482
669,061
Represents the maximum potential value of accelerated options assuming that a Triggering Event took place on December 31, 2011 and that the
price per share of the registrant's securities is the closing market price as of December 30, 2011, the last trading day in 2011. The stock price used
for TDS Special Common Shares was the closing price of TDS Special Common Shares of $23.81 on December 30, 2011. The stock price used for
USM Common Shares was the closing price of USM Common Shares of $43.63 on December 30, 2011.
Represents the maximum potential value of accelerated restricted stock units assuming that a Triggering Event took place on December 31, 2011
and that the price per share of the registrant's securities is the closing market price as of December 30, 2011, the last trading day in 2011. The stock
price used for TDS Special Common Shares was the closing price of TDS Special Common Shares of $23.81 on December 30, 2011. The stock
price used for USM Common Shares was the closing price of USM Common Shares of $43.63 on December 30, 2011.
Represents the maximum potential value of accelerated bonus match units assuming that a Triggering Event took place on December 31, 2011 and
that the price per share of the registrant's securities is the closing market price as of December 30, 2011, the last trading day in 2011. The stock
price used for TDS Special Common Shares was the closing price of TDS Special Common Shares of $23.81 on December 30, 2011. The stock
price used for USM Common Shares was the closing price of USM Common Shares of $43.63 on December 30, 2011.
Except as disclosed for Mary N. Dillon, there were no other potential payments upon a termination or change in control as of December 31, 2011.
Represents the total of columns (b) through (e).
Although TDS has attempted to make a reasonable estimate (or a reasonable estimated range of amounts) applicable to the payment or benefit
based on the disclosed material assumptions, the calculation of the foregoing represents forward -looking statements that involve risks, uncertainties
and other factors that may cause actual results to be significantly different from the amounts expressed or implied by such forward looking
statements. Such risks, uncertainties and other factors include those set forth under "Risk Factors' in TDS' Form 10-K for the year ended
December 31, 2011.
TDS has no current obligations to pay any perquisites or other personal benefits to any of the named executive officers upon termination or change
in control.
No information is provided with respect to contracts, agreements, plans or arrangements to the extent they do not discriminate in scope, terms or
operation in favor of executive officers of the registrant and that are available generally to all employees.
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Footnotes:
(1)
Represents the potential acceleration of unvested options with respect to TDS.S shares. No dollar amount is reflected in the table with respect to
the TDS options because the exercise price of $29.94 per share (in the case of the 2011 options), $26.66 per share (in the case of the 2010
options) and $26.95 per share (in the case of the 2009 options) in each case exceeded the closing price of the TDS.S shares of $23.81 per share
on December 30, 2011, the last trading day of the year.
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(2)
(3)
A letter agreement dated May 3, 2010 between U.S. Cellular and Mary N. Dillon related to her employment with U.S. Cellular effective June 1, 2010
provides for the following: (i) a base salary of $725,000 per year through December 31, 2010, with a performance review following year-end 2010;
(ii) a one-time payment of $450,000 on the three month anniversary of Ms. Dillon's date of employment; (iii) a one-time payment of $250,000 on the
fifteen month anniversary of her date of employment; (iv) a 2010 bonus of at least $580,000; (v) starting in 2011, Ms. Dillon's target bonus
opportunity will be 80% of her base salary for the year; (vi) a grant of 75,000 U.S. Cellular stock options on her first day of employment at a strike
price equal to the closing price of U.S. Cellulars stock on that date, to vest in 3 equal annual installments on the first, second and third anniversaries
of the date of the grant; (vii) a grant of 20,000 U.S. Cellular restricted stock units on her first day of employment, to cliff vest on the third anniversary
of the date of the grant; (viii) in the event that Ms. Dillon terminates without Cause or for Good Reason (as defined in the letter agreement) within
two years of her starting date, she will fully vest in the foregoing stock option and restricted stock unit awards, and will have one year from the date
of such a termination to exercise the options; (ix) in the event that Ms. Dillon terminates without Cause or for Good Reason within two years of her
starting date, subject to Ms. Dillon's execution of a release of all claims against U.S. Cellular and TDS, she will receive an amount equal to one year
of her then current salary (which was $752,000 as of December 31, 2011); (x) a grant of an additional 75,000 U.S. Cellular stock options on her first
day of employment at a strike price equal to the closing price of U.S. Cellular's stock on that date, which will cliff vest on the sixth anniversary of the
date of the grant; (xi) a grant of an additional 25,000 U.S. Cellular restricted stock units on her first day of employment, which will cliff vest on the
sixth anniversary of the date of the grant; (xii) starting in 2011, annual grants of U.S. Cellular stock options and restricted stock units; (xiii) the total
combined value of her stock option award and restricted stock unit award in each of 2011 and 2012 will be no less than $1,800,000; and (xiv) a seat
on the U.S. Cellular board of directors. Reference is made to U.S. Cellular's Form 8-K dated May 6, 2010 for further information.
As a result of the foregoing severance payment and accelerated vesting provisions, with respect to Ms. Dillon, the above table shows a subtotal of
the one year of salary that would be paid and the awards the vesting of which would be accelerated if Ms. Dillon had terminated without Cause or
for Good Reason as of December31, 2011.
Represents the potential acceleration of unvested options with respect to USM Common Shares. No dollar amount is reflected in the table with
respect to the 2011 USM options because the exercise price of $51.99 per share exceeded the closing price of the USM Common Shares of $43.63
per share on December 30, 2011 , the last trading day of the year.
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Compensation of Directors
The following table shows, as to directors who are not executive officers of TDS, certain information regarding director
compensation for the fiscal year ended December 31, 2011.
Director Compensation
Name
(a)
Letitia G.
Carlson,
M.D.
Prudence E.
Carlson
Walter C.D.
Carlson
Clarence A.
Davis
Donald C.
Nebergall
George W. Off
Christopher D.
O'Leary
Mitchell H.
Saran ow
Gary L.
Sugarman
Herbert S.
Wander
Fees
Earned or
Paid in
Cash
($)
(b)
Stock
Awards
($)
(c)
Non -Equity
Option Incentive Plan
Awards Compensation
($) ($)
(d) (e)
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
(f)
All Other
Compensation
($)
(9)
Total
($)
(h)
Explanation of Columns:
$ 86500 $55,000
$ 86500 $55,000
$145,000 $55,000
$118,500 $55,000
$119,375 $55,000
$146,125 $55,000
$101375 $55,000
$127,875 $55,000
$115,375 $55,000
$145,625 $55,000
$ 124 $141,624
$ 124 $141,624
$ 124 $200,124
$ 124 $173,624
$ 124 $174,499
$ 124 $201,249
$ 124 $156,499
$ 124 $182,999
$ 124 $170,499
$ 124 $200,749
(a) Includes each director unless such director is an executive officer whose compensation, including any compensation
for service as a director, is fully reflected in the Summary Compensation Table. Accordingly, this includes only non -
employee directors. Directors who are employees of TDS or its subsidiaries are identified in the Summary
Compensation Table. Such directors do not receive director fees or compensation except for director life insurance, as
disclosed in the Summary Compensation Table.
Includes the aggregate dollar amount of all fees earned or paid in cash for services as a director during 2011,
including annual retainer fees, committee and/or chairmanship fees, and meeting fees.
Represents the aggregate grant date fair value computed in accordance with FASB ASC 718 of stock awards.
Pursuant to the terms of the Compensation Plan for Non -Employee Directors, as amended, represents the 2011
annual stock award of $55,000 (including cash in lieu of fractional shares). Based on the closing price of the TDS
Special Common Shares on February 28, 2011, the last trading day in February 2011, of $29.63, 1,856 shares were
issued. The following table discloses certain additional information with respect to stock awards to non -employee
directors.
Name
Aggregate Number of
awards of TDS Special
Common Shares
outstanding at
December 31, 2011
97
Aggregate Number of
TDS Special Common
Shares underlying
Stock Awards Granted
in 2011
Aggregate
Grant Date
Fair Value of
Stock
Awards in 2011
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Letitia G. Carlson,
M.D.
Prudence E.
Carlson
Walter C.D.
Carlson
Clarence A. Davis
Donald C.
Nebergall
George W. Off
Christopher D.
O'Leary
Mitchell H.
Saran ow
Gary L. Sugarman
Herbert S. Wander
1,856 $ 55,000
1,856 $ 55,000
1,856 $ 55,000
1,856 $ 55,000
1,856 $ 55,000
1,856 $ 55,000
1,856 $ 55,000
1,856 $ 55,000
1,856 $ 55,000
1,856 $ 55,000
(d) This column is not applicable because non -employee directors do not receive options.
(e) This column is not applicable because non -employee directors do not participate in any non -equity incentive plans, as
defined by SEC rules.
(f) This column is not applicable because non -employee directors do not participate in any pension plans or receive any
earnings on deferred compensation.
(g) Represents the dollar value of insurance premiums paid by, or on behalf of, TDS during the fiscal year with respect to
life insurance for the benefit of such director, which is the only category of other compensation.
(h) Represents the sum of all amounts reported in columns (b) through (g).
Narrative Disclosure to Director Compensation Table
The following provides additional information with respect to director compensation. All director compensation is
approved by the full board of directors.
The board of directors approved a Compensation Plan for Non -Employee Directors, as amended (the "Directors Plan"),
which was approved by TDS shareholders at the 2009 Annual Meeting. As described below, the Directors Plan was restated
and reapproved by TDS shareholders on January 13, 2012, and then further amended on March 9, 2012.
The following describes the Directors Plan prior to its restatement and subsequent further amendment.
The Chairperson of the TDS board of directors received an annual director's retainer fee of $100,000 paid in cash, and
non -employee directors other than the Chairperson of the TDS board of directors received an annual director's retainer fee of
$55,000 paid in cash. Non -employee directors also received an annual stock award of $55,000 paid in the form of TDS
Special Common Shares, which was distributed in March on or prior to March 15, for services performed during the 12 month
period that commenced on March 1 of the immediately preceding calendar year and ended on the last day of February of the
calendar year of payment. The number of shares was determined on the basis of the closing price of TDS Special Common
Shares for the last trading day in the month of February of the calendar year of payment.
Each non -employee director who served on the Audit Committee, other than the Chairperson, received an annual
committee retainer fee of $11,000, and the Chairperson received an annual committee retainer fee of $22,000.
Each non -employee director who served on the Compensation Committee, other than the Chairperson, received an
annual committee retainer fee of $7,000, and the Chairperson received an annual committee retainer fee of $14,000.
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Each non -employee director who served on the Corporate Governance and Nominating Committee, other than the
Chairperson, received an annual committee retainer fee of $5,000, and the Chairperson received an annual committee
retainer fee of $10,000.
Non -employee directors also received a meeting fee of $1,750 for each board or committee meeting attended.
Under the Directors Plan, annual retainers were paid in cash on a quarterly basis, as of the last day of each quarter.
Fees for all board and committee meetings were paid in cash on a quarterly basis, as of the last day of each quarter.
The Directors Plan provided that directors had the authority without further shareholder approval to amend the Directors
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 could not exceed
the amount previously approved by shareholders.
The TDS board of directors had reserved 125,000 Special Common Shares of TDS for issuance pursuant to the
Directors Plan, of which 54,524 Special Common Shares had not been issued as of December 31, 2011.
Consistent with the Directors Plan, the non -employee directors received a fee of $1,750 for each meeting or call
attended in connection with the Charter Amendments, except that the fee was $875 if the meeting or call was less than two
hours in duration.
Directors were also reimbursed for travel and expenses incurred in attending board and committee meetings, director
education and other board or company related matters pursuant to TDS' travel and expense reimbursement policy.
On August 7, 2011, the TDS board of directors approved an amendment and restatement of the Directors Plan (the
"Restated Directors Plan"), to become effective in the event and at such time that the Charter Amendments became
effective. The Charter Amendments and the Restated Directors Plan were approved by shareholders on January 13, 2012
and became effective on January 24, 2012.
The terms of the Restated Directors Plan are the same as the Directors Plan except as described below.
In connection with the Charter Amendments, the remaining reserved but unissued Special Common Shares under the
Directors Plan (54,524 as of December 31, 2011) were reclassified as an equal number of Common Shares under the
Restated Directors Plan.
The Restated Directors Plan provides that the number of shares distributed in satisfaction of the annual stock award will
be determined on the basis of the closing price of a TDS Common Share for the first trading day in the month of March of the
calendar year of payment, rather than the last trading day of February as was the case under the Directors Plan.
The Restated Directors Plan expressly provides that the TDS board of directors may also authorize the payment of fees
and reimbursement of reasonable expenses incurred in connection with other meetings (such as meetings of the
independent directors) or activities of the non -employee directors.
On March 9, 2012, the TDS board of directors approved an amendment of the Restated Directors Plan to increase the
amount of the director's annual cash retainer fee from $55,000 to $80,000 and the amount of the director's annual stock
award from $55,000 to $80,000. (No change was made to the amount of the director's annual cash retainer fee paid to the
Chairperson of the TDS board of directors, which remains at $100,000.) This amendment became effective as of March 1,
2012. This increase was based on a review of director compensation paid by other comparable companies and other
relevant considerations and was intended to more closely align the compensation paid to non -employee directors with the
compensation paid by such comparable companies.
In addition to amounts payable under the Restated Directors Plan, TDS pays life insurance premiums to provide life
insurance of $100,000 for each of its directors. Except for life insurance
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coverage, directors who are employees of TDS or any affiliate do not receive fees or compensation for services rendered as
directors. The compensation of directors who are named executive officers is disclosed in the tables under Executive and
Director Compensation above.
None of the non -employee directors had stock awards or option awards outstanding at December 31, 2011.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee has responsibilities relating to the compensation of the executive officers of TDS (other
than executive officers employed by U.S. Cellular or any of its subsidiaries), including the review of salary, bonus, long-term
incentive compensation and all other compensation. The members of the Compensation Committee are Herbert S. Wander
(chairperson), George W. Off, Christopher D. O'Leary and Gary L. Sugarman. Such persons are independent, as discussed
above. None of such persons was, during 2011 or during any of the preceding three years, an officer or employee of TDS (or
its affiliates), or had any relationship requiring disclosure by TDS under any paragraph of Item 404 of SEC Regulation S -K.
Long-term incentive compensation for executive officers who are employees of U.S. Cellular is approved by the long-
term incentive compensation committee of U.S. Cellular. The long-term incentive compensation committee of U.S. Cellular is
composed of directors of such subsidiary who are neither officers nor employees of TDS or any of its subsidiaries nor
directors of TDS or TDS Telecom. The annual compensation of U.S. Cellular's President and CEO, Ms. Dillon, is approved
by LeRoy T. Carlson, Jr., the Chairman of U.S. Cellular. LeRoy T. Carlson, Jr. is also the President and CEO of TDS.
Mr. Carlson is a member of the board of directors of TDS, U.S. Cellular, and TDS Telecom. He is also the Chairman of TDS
Telecom and, as such, approves the executive officer annual compensation decisions for TDS Telecom other than as they
relate to the President and CEO of TDS Telecom, and recommends the annual compensation of the President and CEO of
TDS Telecom to the TDS Compensation Committee. David A. Wittwer, deemed by SEC rules to be an executive officer of
TDS, was the President and CEO of TDS Telecom in 2011. Mr. Carlson is compensated by TDS for his services to TDS and
all of its subsidiaries, including U.S. Cellular. However, U.S. Cellular effectively reimburses TDS for a portion of such
compensation as part of a management fee pursuant to an intercompany agreement between TDS and U.S. Cellular, as
discussed above. Further information about the intercompany agreement is included in the proxy statement of U.S. Cellular
for its 2012 Annual Meeting of shareholders.
Certain Relationships and Related Transactions
In addition to the above -described compensation committee interlocks and insider participation in compensation
decisions, TDS and certain related parties are involved in the following relationships and transactions.
The following persons are partners of Sidley Austin LLP, the principal law firm of TDS, U.S. Cellular and their
subsidiaries: Walter C.D. Carlson, a trustee and beneficiary of the Voting Trust that controls TDS, which controls U.S.
Cellular, the non -executive Chairman of the Board and member of the board of directors of TDS and a director of U.S.
Cellular; William S. DeCarlo, the General Counsel of TDS and an Assistant Secretary of TDS and certain subsidiaries of
TDS; and Stephen P. Fitzell, the General Counsel and/or an Assistant Secretary of U.S. Cellular and certain subsidiaries of
TDS. Mr. Carlson does not provide legal services to TDS, U.S. Cellular or their subsidiaries. TDS, U.S. Cellular and their
subsidiaries incurred legal expenses from Sidley Austin LLP of $13.7 million in 2011, $14.0 million in 2010 and $13.8 million
in 2009.
The Audit Committee of the board of directors is responsible for the review and evaluation of all related party
transactions, as such term is defined by the rules of the NYSE, except as they relate to LeRoy T. Carlson. As described
below, transactions and arrangements as they relate to LeRoy T. Carlson are approved by the TDS Compensation
Committee.
LeRoy T. Carlson, Chairman Emeritus of TDS, is the father of LeRoy T. Carlson, Jr., a director and President and CEO
of TDS, Walter C.D. Carlson, a director and non -executive Chairman of TDS,
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Letitia G. Carlson, M.D., a director of TDS, and Prudence E. Carlson, a director of TDS. Each of such children of LeRoy T.
Carlson is also a trustee of the Voting Trust that controls TDS. Accordingly, even though he is not required to be included in
the Summary Compensation Table as of December 31, 2011, because of such relationships, the following table summarizes
the compensation paid by TDS in 2011 to LeRoy T. Carlson using the same rules as used in the Summary Compensation
Table above. Although the following transactions and arrangements are being reported in this section as related party
transactions under SEC rules, because such transactions and arrangements relate to compensation, they are approved by
the TDS Compensation Committee pursuant to its charter rather than by the Audit Committee.
Amount Earned in 2011
Salary (1)
Bonus (2)
Stock Awards (3)
Option Awards (4)
Excess Earnings on SERP (5)
All Other Compensation (6)
Total (7) (8)
$
480,000
165,800
255,162
301,261
4,638
25,743
$ 1,232,604
(1) Represents the dollar value of base salary (cash and non -cash) earned by Mr. Carlson during 2011, whether or not
paid in such year, none of which was deferred.
(2) Represents the dollar value of bonus (cash and non -cash) earned by Mr. Carlson during 2011, whether or not paid in
such year.
(3) Includes the aggregate grant date fair value computed in accordance with FASB ASC 718 of $207,080 with respect to
restricted stock unit awards relating to 7,200 Special Common Shares awarded in 2011 and the aggregate grant date
fair value computed in accordance with FASB ASC 718 of $48,082 with respect to phantom stock bonus match units
relating to 1,708 Special Common Shares awarded to Mr. Carlson in 2011 in connection with deferred bonus
compensation. Mr. Carlson deferred 100% of his 2010 bonus paid in 2011 and, accordingly, received a stock unit
match in phantom TDS Special Common Shares in 2011.
(4) Represents the aggregate grant date fair value computed in accordance with FASB ASC 718 with respect to stock
options to purchase 31,400 Special Common Shares awarded in 2011.
(5) See explanation under "Executive and Director Compensation" above.
(6) Includes the following: (1) the total of perquisites and personal benefits if they equal or exceed $10,000 (representing
corporate automobile allowance and other personal travel and related expenses and the tax gross up related thereto),
and (2) contributions by TDS for the benefit of Mr. Carlson under the TDS Tax -Deferred Savings Plan, which is
referred to as the TDSP:
Total Perquisites if $10,000 or more $ 16,433
TDSP 9,310
Total $ 25,743
(7) See the above "Executive and Director Compensation" section for a discussion of the terms of stock awards and
options awarded in 2011, and information about other benefits and plans available to executive officers, including
Mr. Carlson.
(8) In addition, TDS has entered into an agreement, as amended, with LeRoy T. Carlson whereby it will employ
Mr. Carlson until he elects to retire from TDS. Mr. Carlson is to be paid at least $60,000 per annum until his retirement.
The agreement also provides that upon his retirement, Mr. Carlson will be retained by TDS as a part-time consultant
(for not more than 60 hours in any month) until his death. Upon his retirement, Mr. Carlson will receive $75,000 per
annum as a consultant, plus increments beginning in 1985 equal to the greater of three percent of his consulting fee or
two-thirds of the
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percentage increase in the consumer price index for the Chicago metropolitan area. If Mr. Carlson becomes disabled
before retiring, TDS can elect to discontinue his employment and retain him in accordance with the consulting
arrangement described above. Upon Mr. Carlson's death (unless his death follows his voluntary termination of the
consulting arrangement), his widow will receive until her death an amount equal to that which Mr. Carlson would have
received as a consultant. TDS may terminate payments under the agreement if Mr. Carlson becomes the owner of
more than 21% of the stock, or becomes an officer, director, employee or paid agent, of any competitor of TDS within
the continental United States. No amounts have ever been paid or become payable under this agreement. Any
amounts that become payable under this agreement may be subject to the six-month payment delay required by
section 409A of the Internal Revenue Code. Mr. Carlson would receive approximately $174,000 in 2012 assuming he
began receiving such payments after December 31, 2011. This amount represents $75,000, plus increments
beginning in 1985 equal to the greater of three percent of his consulting fee or two-thirds of the percentage increase in
the consumer price index for the Chicago metropolitan area through 2011. This amount would increase on an annual
basis at December 31, 2012 and each year thereafter at increments equal to the greater of three percent of his
consulting fee or two-thirds of the percentage increase in the consumer price index for the Chicago metropolitan area
until such payments ceased pursuant to the foregoing agreement. Reference is made to TDS' Registration Statement
on Form S-2 (No. 2-92307) for a copy of this agreement and to TDS' Form 8-K dated December 22, 2009 for an
amendment to this agreement.
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SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table provides information regarding TDS Common Shares and TDS Special Common Shares that could
have been issued under equity compensation plans maintained by TDS based on information as of December 31, 2011, prior
to the Reclassification.
Plan Category
Equity compensation plans
approved by security holders(1):
TDS Common Shares
Tandem TDS Common Shares
and TDS Special Common
Shares
TDS Special Common Shares
Equity compensation plans not
approved by security holders:
Total (2):
TDS Common Shares
Tandem TDS Common Shares
and TDS Special Common
Shares
TDS Special Common Shares
Explanation of Columns:
(a)
Number of
securities to be
issued upon the
exercise
of outstanding
options
and rights
(b)
Weighted -
average
exercise price
of
outstanding
options
and rights
(c)
Number of
securities
remaining
available for
future issuance
under
equity
compensation
plans (excluding
securities
reflected in
column (a))
N/A 1,335,674
619,537 $ 65.64 N/A
6,502,349 $ 34.38 1,931,624
-0- N/A -0-
-0- N/A 1,335,674
619,537 $ 65.64 -0-
6,502,349 $ 34.38 1,931,624
(a) Represents the number of securities to be issued upon the exercise of outstanding options or pursuant to unvested
restricted stock units and vested and unvested phantom stock units.
(b)
(c)
Represents the weighted -average exercise price of all outstanding options, warrants and rights, including tandem
options and TDS Special Common Share options. Restricted stock units and phantom stock units do not have any
exercise price.
Represents the number of securities remaining available for future issuance under the plan, other than securities to be
issued upon the exercise of the outstanding options or pursuant to restricted stock units and phantom stock units
disclosed in column (a).
Footnotes:
(1) This includes the following plans that have been approved by TDS shareholders:
Plan
2004 Long -Term Incentive Plan:
TDS Common Shares
Tandem TDS Common Shares and
TDS Special Common Shares
TDS Special Common Shares
Number of
securities to be
issued upon the
exercise
of outstanding
options
and rights
619,537
6,502,349
Number of
securities
remaining
available for
future issuance
(excluding
securities
reflected in
prior column)
Total
1,335,674 1,335,674
N/A 619,537
1,877,100 8,379,449
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Compensation Plan for Non -Employee
Directors:
TDS Special Common Shares
Total:
TDS Common Shares
Tandem TDS Common Shares and
TDS Special Common Shares
TDS Special Common Shares
-0- 54,524 54,524
-0- 1,335,674 1,335,674
619,537 N/A 619,537
6,502,349 1,931,624 8,433,973
As a result of the TDS Special Common Share dividend in 2005, all options to purchase Common Shares as of
May 13, 2005 under the 2004 Long -Term Incentive Plan, whether vested or unvested,
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were adjusted into tandem options. The tandem options provided that upon exercise, the optionee would acquire the
number of TDS Common Shares originally subject to the option plus an equal number of TDS Special Common
Shares for the original exercise price.
See Note 17 —Stock -Based Compensation, in the notes to the consolidated financial statements included in the 2011
Annual Report to Shareholders for certain information about these plans, which is incorporated by reference herein.
The material terms of the Compensation Plan for Non -Employee Directors, as amended, are set forth above under
"Compensation of Directors" and are incorporated by reference herein.
(2) See discussion above under "Recent Developments" relating to the Reclassification of TDS shares. The following
shows the adjusted information as of the Effective Time on January 24, 2012:
Plan
2011 Long -Term Incentive Plan:
TDS Common Shares
2004 Long -Term Incentive Plan:
TDS Common Shares
Compensation Plan for Non -
Employee Directors:
TDS Common Shares
Total:
TDS Common Shares
Number of
securities to be
issued upon the
exercise
of outstanding
options
and rights
7,795,323*
7,795,323
Number of
securities
remaining available
for
future issuance
(excluding
securities reflected
in
prior column)
6,000,000
100,000
Total
6,000,000
7,895,323"
54,524 54,524
6,154,524 13,949,847
This amount represents the sum of (i) the product of 619,537 awards with respect to Tandem TDS
Common Shares and Special Common Shares and 2.087 and (H) the product of 6,502,349 awards with
respect to Special Common Shares and 1.000. See the discussion relating to the Reclassification above.
Any shares reserved for the TDS 2004 Long -Term Incentive Plan that are not required to satisfy
outstanding rewards under the TDS 2004 Long -Term Incentive Plan are not available for further issuance,
except for 100,000 Common Shares reserved for issuance for annual bonus deferrals and related
employer match awards for calendar years commencing prior to January 1, 2013. On February 27, 2012,
TDS filed a Form S-8 registration statement to register additional Common Shares for issuance under the
TDS 2004 Long -Term Incentive Plan. Immediately after the registration of such additional Common
Shares, TDS had 8,055,211 Common Shares registered for issuance under the TDS 2004 Long -Term
Incentive Plan. Although 8,055,211 Common Shares are registered, only up to 7,895,323 Common
Shares are expected to be issued under the TDS 2004 Long -Term Incentive Plan.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
On February 29, 2012, TDS had outstanding and entitled to vote 101,339,923 Common Shares, par value $.01 per
share (excluding 23,151,389 Common Shares held by TDS and 1,010,133 Common Shares held by a subsidiary of TDS),
and 7,118,667 Series A Common Shares, par value $.01 per share (collectively representing a total of 108,458,590 shares of
common stock); and 8,300 Preferred Shares, par value $.01 per share.
In matters other than the election of directors, each of the Preferred Shares is entitled to one vote, each of the Series A
Common Shares is entitled to ten votes and each of the Common Shares is entitled to a vote per share that floats. The total
voting power of the Series A Common Shares was 71,186,670 votes at February 29, 2012 with respect to matters other than
the election of directors. The total voting power of the Common Shares was 54,328,178 votes at February 29, 2012 with
respect to matters other than the election of directors. The total voting power of all outstanding shares of all classes of capital
stock was 125,523,148 votes at February 29, 2012 with respect to matters other than the election of directors, including
8,300 votes by holders of Preferred Shares.
For purposes of the following tables, percentages are calculated pursuant to SEC Rule 13d -3(d)(1). Under such rule,
shares underlying options that are currently exercisable or exercisable within 60 days after February 29, 2012, restricted
stock units that become vested within 60 days after February 29, 2012 and vested phantom stock units are deemed to be
outstanding for the purpose of calculating the number of shares owned and percentages of shares and voting power with
respect to the person holding such options, restricted stock units or phantom stock units, but are not deemed to be
outstanding for the purpose of calculating the percentages of shares or voting power of other persons.
Security Ownership of Management
The following table sets forth as of February 29, 2012, the latest practicable date, the number of Common Shares and
Series A Common Shares beneficially owned, and the percentage of the outstanding shares of each such class so owned, by
each director of TDS, by each of the executive officers named below and by all directors and executive officers as a group.
As of February 29, 2012, none of the directors or executive officers of TDS beneficially owned Preferred Shares. If a class of
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common stock is not indicated for an individual or group, no shares of such class are beneficially owned by such individual or
group.
Percent
Amount and Percent of
Title of Nature of of Shares of Percent of
Name of Individual or Number of Class or Beneficial Class or Common Voting
Persons in Group Series Ownership(1) Series Stock Power(2)
LeRoy T. Carlson, Jr.,
Walter C.D. Carlson,
Letitia G. Carlson, M.D. and Common
Prudence E. Carlson(3) Shares 6,100,979 6.0% 5.6% 2.6%
Series A
Common
Shares 6,736,420 94.6% 6.2% 53.7%
Common
LeRoy T. Carlson(4)(11) Shares 583,505
Series A
Common
Shares 61,360
Common
LeRoy T. Carlson, Jr.(5)(11) Shares 1,591,386 1.5% 1.4%
Series A
Common
Shares 8,929
Common
Walter C.D. Carlson(6) Shares 21,623
Series A
Common
Shares 1,015
Common
Letitia G. Carlson, M.D.(7) Shares 12,420
Series A
Common
Shares 1,097
Common
Prudence E. Carlson (8) Shares 49,705
Series A
Common
Shares 194,889 2.7% 1.6%
Common
Kenneth R. Meyers(9)(11) Shares 327,909
Common
Donald C. Nebergall(10) Shares 15,583
Series A
Common
Shares 1,216
Common
Herbert S. Wander Shares 13,412
Common
George W. Off Shares 16,053
Common
Christopher D. O'Leary Shares 6,897
Common
Mitchell H. Saranow Shares 10,831
Common
Clarence A. Davis(12) Shares 3,793
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Common
Gary L. Sugarman Shares 3,793
Mary N. Dillon
Common
Scott H. Williamson(11) Shares 374,745
Common
David A. Wittwer(9)(11) Shares 246,844
Other executive officers(9)(11) Common
(13) Shares 595,973
All directors and executive
officers as a group (21 Common
persons)(9)(11) Shares 9,975,451 9.5% 8.9% 4.2%
Series A
Common
Shares 7,004,926 98.4% 6.5% 55.8%
Less than 1%
(1) The nature of beneficial ownership for shares in this column is sole voting and investment power, except as otherwise
set forth in these footnotes. Except with respect to customary brokerage agreement terms pursuant to which shares in
a brokerage account are pledged as collateral security for the repayment of debit balances, none of the above shares
are pledged as security, unless otherwise specified.
(2) Represents the percent of voting power in matters other than the election of directors.
(3) The shares listed are held by the persons named as trustees under the TDS Voting Trust which expires June 30,
2035, created to facilitate long-standing relationships among the trust certificate holders. The trustees share voting
and investment power. The address of the trustees of the TDS Voting Trust in their capacities as such is do LeRoy T.
Carlson, Jr., Telephone and Data Systems, Inc., 30 N. LaSalle St., Suite 4000, Chicago, IL 60602. Under the terms of
the TDS Voting Trust, the trustees hold and vote the Common Shares and Series A Common Shares held in the trust.
If the TDS Voting Trust were terminated, the following individuals, directly or indirectly with their spouses, would each
be deemed to own beneficially more than 5% of the outstanding Series A Common Shares: LeRoy T. Carlson, Jr.,
Walter C.D. Carlson, Prudence E. Carlson and Letitia G. Carlson, M.D. The above numbers of shares and
percentages do not assume conversion of the Series A Common Shares because the trustees have advised TDS that
the TDS Voting Trust has no current intention of converting its Series A Common Shares.
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(4) Includes 9,664 Common Shares and 61,360 Series A Common Shares held by Mr. Carlson's wife. Does not include
29,419 Common Shares and 36,345 Series A Common Shares held for the benefit of LeRoy T. Carlson or 190,655
Common Shares and 208,177 Series A Common Shares held for the benefit of Mr. Carlson's wife (an aggregate of
220,074 Common Shares, or 0.2% of class, and 244,522 Series A Common Shares, or 3.4% of class) in the TDS
Voting Trust described in footnote (3).
(5) Includes 518 Common Shares and 297 Series A Common Shares held by Mr. Carlson's wife outside the TDS Voting
Trust. Also includes 3,768 Common Shares held by Mr. Carlson's children.
Common Shares in TDS Voting Trust. Does not include (i) 1,815,587 Common Shares (1.8% of class) held in the TDS
Voting Trust described in footnote (3) for the benefit of LeRoy T. Carlson, Jr., his spouse and/or their descendants
(individually or through family partnerships, grantor retained annuity trusts, custodial arrangements and otherwise), of
which 693,909 shares are held for the benefit of LeRoy T. Carlson, Jr., or (H) 685,962 Common Shares (0.7% of class)
held by a family partnership in such TDS Voting Trust for the benefit of descendants and family members of LeRoy T.
Carlson and his spouse, of which LeRoy T. Carlson, Jr. is a general partner.
Series A Common Shares in TDS Voting Trust. Does not include (i) 1,977,917 Series A Common Shares (27.8% of
class) held in the TDS Voting Trust described in footnote (3) for the benefit of LeRoy T. Carlson, Jr., his spouse and/or
their descendants (individually or through family partnerships, grantor retained annuity trusts, custodial arrangements
and otherwise), of which 178,978 shares are held for the benefit of LeRoy T. Carlson, Jr., or (H) 747,136 Series A
Common Shares (10.5% of class) held by a family partnership in such TDS Voting Trust for the benefit of descendants
and family members of LeRoy T. Carlson and his spouse, of which LeRoy T. Carlson, Jr. is a general partner.
(6) Common Shares in TDS Voting Trust. Does not include (i) 1,907,276 Common Shares (26.8% of class) held in the
TDS Voting Trust described in footnote (3) for the benefit of Walter C.D. Carlson, his spouse and/or their descendants
(individually or through family partnerships, grantor retained annuity trusts, custodial arrangements and otherwise), of
which 1,098,937 shares are held for the benefit of Walter C.D. Carlson, or (H) 685,962 Common Shares (0.7% of
class) held by a family partnership in such TDS Voting Trust for the benefit of descendants and family members of
LeRoy T. Carlson and his spouse, of which Walter C.D. Carlson is a general partner.
Series A Common Shares in TDS Voting Trust. Does not include (i) 2,139,638 Series A Common Shares (30.1% of
class) held in the TDS Voting Trust described in footnote (3) for the benefit of Walter C.D. Carlson, his spouse and/or
their descendants (individually or through family partnerships, grantor retained annuity trusts, custodial arrangements
and otherwise), of which 1,254,822 shares are held for the benefit of Walter C.D. Carlson, or (H) 747,136 Series A
Common Shares (10.5% of class) held by a family partnership in such TDS Voting Trust for the benefit of descendants
and family members of LeRoy T. Carlson and his spouse, of which Walter C.D. Carlson is a general partner.
(7) Common Shares in TDS Voting Trust. Does not include (i) 1,840,311 Common Shares (25.6% of class) held in the
TDS Voting Trust described in footnote (3) for the benefit of Letitia G. Carlson, M.D., her spouse and/or their
descendants (individually or through family partnerships, grantor retained annuity trusts, custodial arrangements and
otherwise), of which 1,056,660 shares are held for the benefit of Letitia G. Carlson, M.D., or (H) 685,962 Common
Shares (0.7% of class) held by a family partnership in such TDS Voting Trust for the benefit of descendants and family
members of LeRoy T. Carlson and his spouse, of which Letitia G. Carlson, M.D. is a general partner.
Series A Common Shares in TDS Voting Trust. Does not include (i) 2,009,233 Series A Common Shares (28.2% of
class) held in the TDS Voting Trust described in footnote (3) for the benefit of Letitia G. Carlson, M.D., her spouse
and/or their descendants (individually or through family partnerships, grantor retained annuity trusts, custodial
arrangements and otherwise), of which 1,136,568 shares are held for the benefit of Letitia G. Carlson, M.D., or
(H) 747,136 Series A Common Shares (10.5% of class) held by a family partnership in such TDS Voting Trust for the
benefit of descendants and family members of LeRoy T. Carlson and his spouse, of which Letitia G. Carlson, M.D. is a
general partner.
(8) Common Shares in TDS Voting Trust. Does not include (i) 1,719,432 Common Shares (24.2% of class) held in the
TDS Voting Trust described in footnote (3) for the benefit of Prudence E. Carlson, her spouse and/or their
descendants (individually or through family partnerships, grantor retained annuity trusts, custodial arrangements and
otherwise), of which 999,227 shares are held for the benefit of Prudence E. Carlson, or (H) 685,962 Common Shares
(0.7% of class) held by a family partnership in such TDS Voting Trust for the benefit of descendants and family
members of LeRoy T. Carlson and his spouse, of which Prudence E. Carlson is a general partner.
Series A Common Shares in TDS Voting Trust. Does not include (i) 1,123,139 Series A Common Shares (15.8% of
class) held in the TDS Voting Trust described in footnote (3) for the benefit of Prudence E. Carlson, her spouse and/or
their descendants (individually or through family partnerships, grantor retained annuity trusts, custodial arrangements
and otherwise), or (H) 747,136 Series A Common Shares (10.5% of class) held by a
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family partnership in such TDS Voting Trust for the benefit of descendants and family members of LeRoy T. Carlson
and his spouse, of which Prudence E. Carlson is a general partner.
(9) Includes shares as to which voting and/or investment power is shared, and/or shares held by spouse and/or children.
(10) Does not include shares held in the TDS Voting Trust, which are included in the shares described in footnote (3), that
are reported by the TDS Voting Trust: 307 Common Shares and 331 Series A Common Shares held for the benefit of
Donald C. Nebergall; 1,453 Common Shares and 1,568 Series A Common Shares held for the benefit of
Mr. Nebergall's wife; 472,748 Common Shares (0.5% of class) and 510,484 Series A Common Shares (7.2% of class)
held by Mr. Nebergall as trustee under trusts ("Trusts') for the benefit of the heirs of LeRoy T. Carlson (Chairman
Emeritus of TDS) and his wife, Margaret D. Carlson, which heirs include LeRoy T. Carlson, Jr. (director and President
and CEO of TDS), Walter C.D. Carlson (director and non -executive Chairman of the TDS Board), Letitia G. Carlson,
M.D. (director of TDS), Prudence E. Carlson (director of TDS) and/or their heirs. In addition, Mr. Nebergall holds 31
Common Shares for the Trusts outside of the TDS Voting Trust. All shares held under the Trusts are held by
Mr. Nebergall as a trustee in a fiduciary capacity, and he has no beneficial interest in such shares. Since the creation
of the Trusts, Mr. Nebergall has withdrawn $1,000 per year from each trust in compensation for his services as
trustee. These are not arrangements with or compensation from TDS or any other member of the TDS consolidated
group.
(11) Includes the following number of Common Shares that may be acquired pursuant to stock options and/or restricted
stock units which are currently vested or will vest within 60 days after February 29, 2012: LeRoy T. Carlson,
377,983 shares; LeRoy T. Carlson, Jr., 1,517,320 shares; Kenneth R. Meyers, 276374 shares; Scott H. Williamson,
342,603 shares; David A. Wittwer, 237,540 shares; all other executive officers as a group, 476,993 shares; and all
directors and executive officers as a group, 3,228,813 shares. Includes the following number of Common Shares
underlying vested phantom stock units: LeRoy T. Carlson, 110,148 shares; LeRoy T. Carlson, Jr., 49,068 shares;
Kenneth R. Meyers, 10,009 shares; Scott H. Williamson, -0- shares; David A. Wittwer, -0- shares; all other executive
officers as a group, 5,096 shares; and all directors and executive officers as a group, 174,321 shares.
(12) Mr. Davis is a director of the Gabelli SRI Green Fund and the Gabelli GDL Fund. The above does not include TDS
shares owned by such funds, if any. As of the latest available information, neither the Gabelli SRI Green Fund nor the
Gabelli GDL Fund owned any TDS shares.
(13) Includes shares held by the executive officers who are not specifically identified in the above table: Peter L. Sereda,
Douglas D. Shuma, Kurt B. Thaus, C. Theodore Herbert and Joseph R. Hanley.
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Security Ownership by Certain Beneficial Owners
In addition to persons listed in the preceding table and the footnotes thereto, the following table sets forth as of
February 29, 2012 or the latest practicable date, information regarding each person who is known to TDS to own beneficially
more than 5% of any class of voting securities of TDS, based on publicly available information and TDS' stock records as of
such date. Some of the information below is based on reports filed by the below shareholders reporting TDS shares held as
of December 31, 2011 and, in the absence of any SEC filings indicating otherwise, it was assumed that there was no change
to such information between December 31, 2011 and February 29, 2012, except for the Reclassification on January 24, 2012
described above.
Amount and Percent Percent of Percent
Nature of of Shares of of
Shareholder's Name and Title of Class or Beneficial Class or Common Voting
Address Series Ownership(1) Series Stock Power2
Capital Research
Global
Investors 333 South
Hope Street
Los Angeles, CA 90071 Common
(3) Shares 11,222,979 11.1% 10.3% 4.8%
Capital World Investors
333 South Hope Street
Los Angeles, CA 90071 Common
(4) Shares 3,493,100 3.4% 3.2% 1.5%
Total for Capital Research and
Management Company (5) 14,716,079 14.5% 13.6% 6.3%
GAMCO Investors, Inc.
One Corporate Center Common
Rye, NY 10580 (6) Shares 9,246,430 9.1% 8.5% 3.9%
BlackRock, Inc.
40 East 52nd Street
New York, NY 10022 Common
(7) Shares
Less than 1%
6,836,829
6.7% 6.3% 2.9%
(1) The nature of beneficial ownership for shares in this column is sole voting and investment power, except as otherwise
set forth in these footnotes.
(2) Represents voting power in matters other than the election of directors.
(3) Based on the most recent Schedules 13G filed with the SEC, Capital Research Global Investors reports that it had
sole investment authority and sole voting authority with respect to 4,936,315 Special Common Shares, and sole
investment authority and sole voting authority with respect to 5,783,500 Common Shares. After adjusting for the
Reclassification effective January 24, 2012, the 4,936,315 Special Common Shares became 4,936,315 Common
Shares and the 5,783,500 Common Shares became 6,286,664 Common Shares for a total of 11,222,979 Common
Shares.
(4) Based on the most recent Schedule 13G filed with the SEC, Capital World Investors reports that it has sole investment
authority and sole voting authority with respect to 3,493,100 Special Common Shares. After adjusting for the
Reclassification effective January 24, 2012, the 3,493,100 Special Common Shares became 3,493,100 Common
Shares.
(5) Based on a Schedule 13G filed with the SEC, Capital Research Global Investors and Capital World Investors are both
divisions of Capital Research and Management Company, 333 South Hope Street, Los Angeles, CA 90071.
(6) Based on the most recent Schedule 13D (Amendment No. 26) filed with the SEC after the Reclassification, GAMCO
Investors, Inc. and its affiliates report sole voting authority with respect to an aggregate of 8,865,553 Common Shares,
no voting authority with respect to an aggregate of 380,877 Common Shares, and sole investment authority with
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respect to an aggregate of 9,246,430 Common Shares.
(7)
Based on the most recent Schedule 13G filed with the SEC, BlackRock, Inc. and its affiliates report sole investment
and voting authority with respect to an aggregate of 6,289,632 Common Shares. After adjusting for the
Reclassification effective January 24, 2012, the 6,289,632 Common Shares became 6,836,829 Common Shares.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder require TDS'
directors and officers, and persons who are deemed to own more than ten percent of the Common Shares, to file certain
reports with the SEC with respect to their beneficial ownership of Common Shares. The reporting persons are also required
to furnish TDS with copies of all such reports they file.
Based on a review of copies of such reports furnished to TDS by the reporting persons and written representations by
directors and officers of TDS, TDS believes that all filing requirements under Section 16 of the Securities Exchange Act
applicable to the reporting persons during and with respect to 2011 were complied with on a timely basis.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Executive and Director Compensation —Compensation Committee Interlocks and Insider Participation" above.
PROPOSAL 4
SHAREHOLDER PROPOSAL THAT IS OPPOSED BY THE BOARD OF DIRECTORS
A person who purports to be the beneficial holder of no less than 500 TDS Common Shares has advised TDS that he
intends to have his proxy introduce the proposal set forth below at the TDS 2012 Annual Meeting. The name and address of
such shareholder is Kenneth Steiner, 14 Stoner Avenue, 2M, Great Neck, NY 11021. Mr. Steiner has appointed John
Chevedden of 2215 Nelson Avenue, No. 205, Redondo Beach, CA 90278 and/or Mr. Chevedden's designee to act on his
behalf in matters relating to the proposal. The following proposal will be considered at the 2012 Annual Meeting if it is
properly presented at such meeting by either of such persons or an authorized representative thereof in accordance with the
TDS Bylaws, Delaware law, SEC rules and other applicable requirements. The below shareholder proposal and related
supporting statement represent the views of the shareholder who submitted it, and not the views of TDS. TDS is not
responsible for the content of the following shareholder proposal or supporting statement. TDS does not endorse the
shareholder proposal or supporting statement, which are required to be included in this proxy statement pursuant to rules
established by the SEC. The shareholder proposal and supporting statement have been included below verbatim as supplied
by the shareholder and TDS declines to comment on any of the statements therein. For the reasons discussed below the
shareholder proposal, the TDS board of directors unanimously recommends that shareholders vote AGAINST the following
proposal:
"4 —Equal Shareholder Voting
RESOLVED: Shareholders request that our Board take steps to adopt a plan for all of our company's outstanding stock
to have one -vote per share. This would include all practicable steps including encouragement and negotiation with family
shareholders to request that they relinquish, for the common good of all shareholders, any preexisting rights, if necessary.
This proposal is not intended to unnecessarily limit our Board's judgment in crafting the requested change in accordance
with applicable laws and existing contracts. This proposal is important because certain shares not owned by the general
public have super -sized voting power with 10 -votes per share compared to one -vote per share.
This proposal topic was supported by the overwhelming majority of our independent shares at our 2011 annual meeting.
The danger of giving disproportionate power to insiders is illustrated by Adelphia Communications. Adelphia's dual -class
voting stock gave the Rigas family control and contributed to Adelphia's participation in "one of the most extensive financial
frauds ever to take place at a public company." See Securities and Exchange Commission Litigation Release No. 17627
(July 24, 2002).
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The SEC alleged that Adelphia fraudulently excluded more than $2 billion in bank debt from its financial statements and
concealed "rampant self -dealing by the Rigas Family." Meanwhile, the price of Adelphia stock collapsed from $20 to 79¢ in
two -years.
With stock having 10 -times more voting power our company takes our public shareholder money but does not let us
have an equal voice in our company's management. Without a voice, shareholders cannot hold management accountable.
The merit of this proposal should also be considered in the context of the opportunity for additional improvement in our
company's 2011 reported corporate governance in order to make or company more competitive:
The Corporate Library, an independent investment research firm, affirmed its D rating for our company based on board
and executive pay concerns and evaluation of our company's corporate governance practices as a controlled company,
where a single large shareholdering block maintains effective legal control over the affairs of our corporation.
TDS is a controlled company, where the TDS Voting Trust and the Carlson family —including CEO LeRoy Carlson, Jr.,
Chairman Walter Carlson and two other directors —hold 55% of our company's total voting power through a multiple class
stock structure. In addition, our company engaged in a number of related party transactions with the controlling shareholders.
For example, Chairman Carlson was a partner at a law firm where our company spent $14 million in 2010.
Six directors had 14 to 43 years long -tenure. Long -tenured directors chaired and controlled all standing board
committees. CEO Carlson, despite his massive stockholdings, was entitled to an annual bonus that was largely discretionary,
and continued to receive annual pay in stock options and restricted stock that simply vested after time without performance -
contingent criteria.
Please encourage our board to respond positively to this proposal for Equal Shareholder Voting —Yes on 4."
TDS BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO PROPOSAL 4
The TDS board of directors unanimously recommends a vote AGAINST this proposal for the following reasons:
The implementation of the shareholder proposal would require an amendment of the TDS Restated Certificate of
Incorporation. To be approved thereunder and under Delaware law, such an amendment would require, among other things,
approval by a majority of the voting power of all shares of capital stock entitled to vote for matters other than the election of
directors, voting as a group, as well as by a majority of the outstanding TDS Series A Common Shares voting as a class. As
of February 29, 2012, the TDS Voting Trust held 6,736,420 TDS Series A Common Shares, representing 6.2% of all shares
of TDS common stock, and 6,100,979 TDS Common Shares, representing 5.6% of all shares of TDS common stock, for a
total economic interest of 11.8% in TDS. By reason of such holdings, the TDS Voting Trust owns a majority (94.6%) of the
outstanding TDS Series A Common Shares and a majority (56.3%) of the voting power of all shares of capital stock entitled
to vote for matters other than the election of directors.
Dual class capital structures are recognized and valid under applicable federal and corporate law and stock exchange
regulations and are not uncommon among public companies. Various companies have had dual class capital structures for
many years and companies continue to implement dual class capital structures.
The common equity of TDS has included different classes of high and low vote common stock since TDS became a
public company in 1981. TDS has clearly and consistently disclosed in its Risk Factors in its Form 10-K the impact of the
differences in voting rights, particularly with regard to any potential takeover attempt. Purchasers of TDS Common Shares,
including the proponent of the shareholder proposal, therefore bought shares of TDS with full knowledge of the differences in
the voting rights of the shares. Holders of TDS Common Shares also have no basis for anticipating the possibility of any
action that would reduce the voting power of the TDS Series A Common Shares. As stated in the Risk Factors
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set forth in TDS' Form 10-K, the TDS Voting Trust has advised TDS that it intends to maintain the ability to keep or dispose of
voting control of TDS.
The TDS Voting Trust also has advised the TDS board of directors that it (i) opposes and will vote against the
shareholder proposal and (H) will not vote in favor of or support any action to implement the shareholder proposal or any
other action that would dilute its voting control of TDS. Considering all of the foregoing factors, the TDS board of directors
has determined that action in furtherance of the proposal would serve no useful purpose and accordingly opposes the
proposal and recommends that shareholders vote against it.
Finally, it should be noted that under SEC rules, in addition to the above shareholder proposal, TDS is required to
include the shareholder's supporting statement in the TDS proxy statement. This has been included above verbatim as
supplied by the shareholder. TDS is not the author of the shareholder's supporting statement and declines to comment on
any of the statements therein.
THE BOARD OF DIRECTORS UNANIMOUSLY OPPOSES THIS SHAREHOLDER PROPOSAL AND RECOMMENDS
THAT SHAREHOLDERS VOTE "AGAINST" PROPOSAL 4.
SHAREHOLDER PROPOSALS FOR 2013 ANNUAL MEETING
The 2013 Annual Meeting of shareholders is currently scheduled for May 16, 2013, and the proxy statement for such
meeting is expected to be dated on or about April 15, 2013.
Pursuant to SEC Rule 14a-8, proposals by shareholders intended to be included in TDS' proxy statement and form of
proxy relating to the 2013 Annual Meeting of shareholders must be received by TDS at its principal executive offices not later
than December 17, 2012 (120 calendar days before the anniversary date of this proxy statement of April 16, 2012). However,
if the date of the 2013 Annual Meeting changes for any reason by more than 30 days from the anniversary date of the 2012
Annual Meeting, then the deadline will be a reasonable time before TDS begins to print and send its proxy materials. In such
event, TDS would disclose such date in a Form 8-K, 10-Q or 10-K at the appropriate time.
In addition, pursuant to TDS' Bylaws, proposals by shareholders intended to be presented at the 2013 Annual Meeting
of shareholders (other than proposals included in TDS' proxy statement and form of proxy relating to the 2013 Annual
Meeting pursuant to SEC Rule 14a-8), must be received by TDS at its principal executive offices not earlier than January 17,
2013 and not later than February 15, 2013 for consideration at the 2013 Annual Meeting of shareholders (120 calendar days
and 90 days, respectively, before the anniversary date of the 2012 Annual Meeting of May 17, 2012 except that, because the
90th day falls on a Saturday, the deadline pursuant to the TDS Bylaws is the immediately preceding Friday). However, if the
date of the 2013 Annual Meeting is changed by more than 30 calendar days before or after May 17, 2013 (the one year
anniversary date of the 2012 Annual Meeting), different provisions will apply as set forth in the TDS Bylaws.
Pursuant to SEC rules, the proxy solicited by the board of directors for the 2013 Annual Meeting will confer discretionary
authority to vote on any matter that may properly come before such meeting or any adjournment thereof, to the extent
permitted by applicable law and regulation.
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SOLICITATION OF PROXIES
Your proxy is being solicited by the board of directors and its agents, and the cost of solicitation will be paid by TDS.
Officers, directors and regular employees of TDS, acting on its behalf, may also solicit proxies by mail, email, advertisement,
telephone, telecopy, press release, employee communication, postings on TDS' Internet website and Intranet website or in
person. We will not pay such persons additional compensation for their proxy solicitation efforts. TDS has also retained
MacKenzie Partners, Inc. to assist in the solicitation of proxies. The standard fee charged by MacKenzie Partners, Inc. for
proxy solicitation in connection with an Annual Meeting is $10,000 plus reimbursement of out-of-pocket expenses. TDS will,
at its expense, request brokers and other custodians, nominees and fiduciaries to forward proxy soliciting material to the
beneficial owners of shares held of record by such persons.
FINANCIAL AND OTHER INFORMATION
We will furnish you or any shareholder as of the record date without charge a copy of our Annual Report on
Form 10-K for the fiscal year ended December 31, 2011, including the financial statements and the schedules
thereto, upon written or oral request, and will provide copies of the exhibits to any such documents upon payment
of a reasonable fee which shall not exceed our reasonable expenses incurred to do so. Requests for such materials
should be directed to Investor Relations, Telephone and Data Systems, Inc., 30 North LaSalle Street, 40th Floor,
Chicago, Illinois 60602, telephone (312) 630-1900.
In addition, to the extent that, as permitted by SEC rules, TDS delivers only one copy of an annual report to
shareholders, proxy statement or notice of internet availability of proxy materials to an address that is shared by separate
persons who are shareholders (addressed to such shareholders as a group), TDS shall deliver promptly additional copies of
any of such documents to any shareholder located at such shared address upon written or oral request by such shareholder.
Requests should be directed as indicated in the preceding paragraph.
OTHER BUSINESS
It is not anticipated that any action will be asked of the shareholders other than those set forth above, but if other
matters are properly brought before the Annual Meeting, the persons named in the proxy will vote in accordance with their
best judgment.
By order of the Board of Directors
Kevin C. Gallagher
Vice President and Corporate Secretary
All shareholders are urged to sign, date and mail their proxy card(s) promptly or vote on the Internet in
accordance with the instructions set forth on the proxy card(s)
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ms.
IMPORIANTANNOAL MELTING INFORMA nON
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O Vote by Internet
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Annual Meeting Proxy Card - Common (1234 5675 9012 34 5)
♦ IF YOU HAVE NOT VOTED VIA THE INTERNET FOLDALONG THE PERFORATION DETACH AND RETURN THE 80701 PORTION IN THE ENC.OSED ENVELOPE.•
Q Proposals — The Board of Directors unanimously recommends a vote Q its nominees in Proposal 1. Q Proposals 2 and 3
and AGAINST Proposal 4.
For Witnrald
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Q Authonzed Signatures — This section must be completed for your vote to be counted — Date and Sign Below
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The proxy statement and annual report to shareholders are avaliable at v,wrv. teldta.comvproxyvote.
♦ IF YOU HAVE NOT VOTED VIA THE INTERNET FOTO ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENYELOOF •
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Proxy - Telephone and Data Systems, Inc.
Proxy for Common Shares Solicited on Behalf of the Board of Directors for the
Annual Meeting of the Shareholders of TELEPHONE AND DATA SYSTEMS, INC.
To Be Held May 17. 2012
The Board of Directors unar. nicusly recommends a vote FOR' ils nominees rn Proposal 1 FOR Proposal• 2 and land' AGAINST' Proposal 1
This prosy, Men properly executed, A. be voted in the manner d noted on the rime rode her& d no direction .s mace. Pro proxy a be voted FOR 9m nom nets in Proposal 1
FOR proposals 2 and l and'AGAINST' ProposalIM,ch has Men proposed by a nAarenoderl It a nominee rs bnabls to larva or for good cause All no! serve the persons named
In this Posy wall have a-screnonary authority to vole for a substitute rorrumm lone -s dnlgrated br :ho Board s! Dim -ton lun!ess adno.ity to vote to ronsness has been wilhhelar
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IMPORTANT ANNUAL MEETING INFORMATION
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Electronic Voting Instructions
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Available 24 hours a day_ 7 days a week!
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♦ IF YOU HAVE NOT VOTED VIA THE INTERNET, FOLD ALONG THE PERFORATION. DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE•
Q Proposals — The Board of Directors unanimously recommends a vote FQR its nominees in Proposal 1.LQB Proposals 2 and 3
and AGAINST Proposal 4.
For Withhold
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The proxy slatement and arrl.al recorl to snareno'.ders are ava fable al\Yw+r teidla com$roxipote
♦ IF CA HAVE NOT VOTED VIA THE IN1ERAET, FOLD ALOAG THE PERFORATION, DETACH AND RETLRN THE SOTTOY PORTION IN THE ENCLOSED ENVELOPE. •
Proxy • Telephone and Data Systems, Inc.
Proxy for Series A Common Shares Solicited on Behalf of the Board of Directors for the
Annual Meeting of the Shareholders of TELEPHONE AND DATA SYSTEMS. INC.
To Be Held May 17, 2012
The Board of Directors unanimously recommends a vote "AOR" its nominees in Proposal I.'FOR" Proposals 2 and 3 and "AGAINST" Proposal 4.
This prosy. when propedy executed, will be voted in the manner dulled on the reverse side hereof If no direction is made, this prosy will be voted "FOR" the
nominees in Proposal I "=0R" Proposals 2 and 3 and "AGAINST' Proposal 4 [which has been proposed by a shareholder!. If a nominee n unable to serve or for
good cause will not serve, the persons named in this prosy shall have discretionary authority to vote for a substitute nominee if ono is designated by the Board of
Directors !unless authority to vote for nominees has been relined[
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ms.
IMPORIANTANNOAL MEETING INFORMATION
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Vote by Internet
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Annual Meeting Proxy Card - Preferred (1234 5678 9012 345)
♦ IF VCR HAVE NOT VOTED VIA THE INTERNET. FOLD ALONG THE PERFORATION. DETACH AND RETURN THE BOTTGM PORTION IN THE ENC,.OSED ENVELOPE•
0 Proposals — The Board of Directors unanimously recommends a vote EQE its nominees in Proposal 1.N3 Proposals 2 and 3
and AGAINST Proposal 4.
.. ., For Withhold For W hno'd
❑ ❑
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Tie proxy statement an:: annua'. repot to shatholoers a c avadab'e at'rw.vr telcta com+proxyvote
• IF vOL HAVE NOT VOTED VIA THE INIERAET, FOLDALOAG THE PERFORATION, DETACH AND RETLRN THE BOTTOM PORTION IN WE ENCLOSED ENVELOPE. •
Proxy - Telephone and Data Systems, Inc.
Proxy for Preferred Shares Solicited on Behalf of the Board of Directors for the
Annual Meeting of the Shareholders of TELEPHONE AND DATA SYSTEMS. INC.
To Be Held May 17, 2012
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The Board of Directors unanimously recommends a vote "=OR" its nominees in Proposal I. "FOR" Proposals 2 and 3 and "AGAINST" Proposal x"
This proxy. when properly executed, will be voted in the manner directed on the reverse side hereof If no direction is madethis proxy will be voted 'FOR" the
nominees an Proposal 1, "=OR" Proposals 2 and 3 and "AGAINST" Proposal A (which has been proposed by a shareholder) If a nominee is unable to serve or for
good cause MII no: serve, the persons named an this proxy shall have discretionary authority to vole for a substitute nominee designated by :he Board of
Directors )unless authority to vote for nominees has been withheld).
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QuickLinks
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY STATEMENT AND IMPORTANT NOTICE
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REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY
17.2012
RECENT DEVELOPMENTS
SUMMARY
VOTING INFORMATION
PROPOSAL 1 ELECTION OF DIRECTORS
CORPORATE GOVERNANCE
EXECUTIVE OFFICERS
PROPOSAL 2 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FEES PAD TO PRINCIPAL ACCOUNTANTS
AUDIT COMMITTEE REPORT
PROPOSAL 3 ADVISORY VOTE ON EXECUTIVE COMPENSATION
EXECUTIVE AND DIRECTOR COMPENSATION
Compensation Discussion And Analysis
Adjustment of Equity Awards on the Effective Date of the Reclassification on January 24. 2012
Compensation Committee Report
Risks from Compensation Policies and Practices
Compensation Tables
Summary Compensation Table
Grants of Plan -Based Awards
Outstanding Equity Awards at Fiscal Year -End
Director Compensation
Compensation Committee Interlocks and Insider Participation
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PROPOSAL 4 SHAREHOLDER PROPOSAL THAT IS OPPOSED BY THE BOARD OF DIRECTORS
"4 —Equal Shareholder Voting
SHAREHOLDER PROPOSALS FOR 2013 ANNUAL MEETING
SOLICITATION OF PROXIES
FINANCIAL AND OTHER INFORMATION
OTHER BUSINESS
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