US Cellular 2008 Annual Report Download - page 17

CORPORATE GOVERNANCE
Board of Directors
The business and affairs of U.S. Cellular are managed by or under the direction of the board of
directors. The board of directors consists of nine members. Holders of Common Shares elect 25% of the
directors rounded up to the nearest whole number, or three directors based on a board size of nine
directors. TDS, as the sole holder of Series A Common Shares, elects the remaining six directors. As of
the record date, TDS has 100% of the voting power in the election of such six directors, approximately
70.1% of the voting power in the election of the remaining three directors and approximately 95.8% of
the voting power in all other matters.
U.S. Cellular’s Code of Ethics for directors is available on U.S. Cellular’s web site,
www.uscellular.com, under About Us—Investor Relations—Corporate Governance—Code of Business
Conduct and Ethics for Officers and Directors.
Director Independence and New York Stock Exchange Listing Standards
Prior to September 15, 2008, U.S. Cellular Common Shares were listed on the American Stock
Exchange (‘‘AMEX’’). In January 2008, the NYSE Euronext, the parent company of the New York Stock
Exchange (‘‘NYSE’’), entered into an agreement to acquire the AMEX. The NYSE completed such
acquisition in October 2008 and continues to operate the AMEX as a separate stock exchange, primarily
for smaller capitalization companies. As a result of such events, U.S. Cellular voluntarily transferred the
listing of its Common Shares from the AMEX to the NYSE effective September 15, 2008. Accordingly,
U.S. Cellular was subject to the listing standards applicable to companies that have equity securities
listed on the AMEX prior to September 15, 2008, and became subject to the listing standards applicable
to companies which have equity securities listed on the NYSE on and after September 15, 2008. The
listing standards of the NYSE are similar in many respects to the listing standards of the AMEX, except
that the NYSE includes additional requirements with respect to certain matters.
Under the listing standards of the NYSE, U.S. Cellular is a ‘‘controlled company’’ as such term is
defined by the NYSE. U.S. Cellular is a controlled company because over 50% of the voting power of
U.S. Cellular is held by TDS. 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
that qualify as independent under the rules of the NYSE, (ii) have a compensation committee composed
entirely of directors that qualify as independent under the rules of the NYSE, and (iii) have a nominating/
corporate governance committee composed entirely of directors that qualify as independent under the
rules of the NYSE.
As a controlled company, U.S. Cellular is required to have at least three directors who qualify as
independent to serve on the Audit Committee. The U.S. Cellular Audit Committee has three members:
J. Samuel Crowley, Paul-Henri Denuit and Harry J. Harczak, Jr. 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 Section 10A-3 of the Securities
Exchange Act of 1934, as amended (‘‘Section 10A-3’’). Except as required by listing standards or SEC rule,
U.S. Cellular does not have any categorical standards of independence that must be satisfied.
Pursuant to the requirements of the NYSE Listed Company Manual, the U.S. Cellular board of
directors affirmatively determined that each member of the Audit Committee has no material relationship
with U.S. Cellular, either directly or as a partner, shareholder or officer of an organization that has a
relationship with U.S. Cellular, 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.
Such relevant facts and circumstances included the following: None of such persons is an employee
or officer of U.S. Cellular, 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
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