US Cellular 2008 Annual Report Download - page 38

EXECUTIVE AND DIRECTOR COMPENSATION
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 below Summary Compensation Table.
Overview
U.S. Cellular’s 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 financial performance of U.S. Cellular. U.S. Cellular’s policies establish incentive compensation
performance goals for executive officers based on factors over which such officers have substantial
control and which are important to U.S. Cellular’s long-term success. U.S. Cellular believes compensation
should be related to the financial performance of U.S. Cellular and should be sufficient to enable
U.S. Cellular 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 as a
result of the achievement of performance levels. Compensation is not earned until approved and paid or
awarded.
As a controlled corporation, U.S. Cellular is not required to have an independent compensation
committee under listing standards of the New York Stock Exchange or otherwise. Although U.S. Cellular
does not have an independent compensation committee for all executive compensation, long-term equity
compensation elements of executive officers are approved by a fully independent Stock Option
Compensation Committee, as discussed below.
LeRoy T. Carlson, Jr., Chairman of U.S. Cellular, functions as the compensation committee for all
matters not within the authority of the Stock Option Compensation Committee, but does not do so
pursuant to a charter. Mr. Carlson does not approve any compensation to himself as Chairman.
Mr. Carlson receives no compensation directly from U.S. Cellular. Mr. Carlson is compensated by TDS in
connection with his services for TDS and TDS subsidiaries, including U.S. Cellular. A portion of
Mr. Carlson’s salary and bonus paid by TDS is allocated to U.S. Cellular by TDS, along with other
expenses of TDS. This allocation by TDS to U.S. Cellular is done in the form of a single management fee
pursuant to the Intercompany Agreement discussed below under ‘‘Intercompany Agreement.’’
U.S. Cellular directors or officers in such capacities do not receive any compensation paid or awarded by
TDS to TDS officers.
As a controlled company, except with respect to matters within the authority of the Stock Option
Compensation Committee, U.S. Cellular considers it sufficient and appropriate that LeRoy T. Carlson, Jr.
as Chairman of U.S. Cellular, who receives no compensation directly from U.S. Cellular and who is a
director and president of TDS, approves compensation decisions for U.S. Cellular. As a result of
Mr. Carlson’s position with TDS, the majority shareholder of U.S. Cellular, he represents the interests of
all shareholders of U.S. Cellular in his compensation decisions with respect to U.S. Cellular.
As noted above, although it is not required to do so under New York Stock Exchange listing
standards, U.S. Cellular has a Stock Option Compensation Committee comprised solely of directors that
qualify as independent under the rules of the New York Stock Exchange. The Stock Option
Compensation Committee currently consists of J. Samuel Crowley, Ronald E. Daly and Paul-Henri Denuit.
The principal functions of the Stock Option Compensation Committee are to consider and approve
long-term compensation for executive officers and to consider and recommend to the board of directors
new long-term compensation plans or changes in existing plans.
Specifically, the charter of the Stock Option Compensation Committee provides that it shall consider,
review and approve the long-term compensation of officers and key employees of U.S. Cellular, involving
the grant of stock options, stock appreciation rights (‘‘SARs’’) and other long-term compensation or
compensation based on performance under U.S. Cellular’s stock option or other long-term compensation
or incentive plans. The charter also provides that the committee shall consider, approve and recommend
to the board of directors any new stock option or other long-term compensation or incentive plans and
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