US Cellular 2008 Annual Report Download - page 40

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, (ii) why U.S. Cellular chooses to pay each
element of compensation, (iii) how U.S. Cellular determines the amount or formula for each element to
pay and (iv) how each compensation element and U.S. Cellular’s decisions regarding that element fit into
U.S. Cellular’s overall compensation objectives and affect decisions regarding other elements.
Each element of compensation paid to officers is as follows:
• Annual Cash Compensation
Salary
Bonus
• Long-term equity compensation pursuant to Long-Term Incentive Plan
Stock Awards
– Bonus Stock Unit Match Awards
– Restricted Stock Unit Awards, sometimes referred to as ‘‘RSUs’’
Stock Options
• Other Benefits and Plans Available to Identified Officers
Deferred Compensation
SERP
Perquisites
• Other Generally Applicable Benefits and Plans
Employee Stock Purchase Plan
Tax Deferred Savings Plan
Pension Plan
Health and Welfare Plans
U.S. Cellular chooses to pay or provide these elements of compensation, considering common
compensation practices of peers and other companies with similar characteristics, in order to support
U.S. Cellular’s overall business strategy and objectives. U.S. Cellular recognizes that it must compensate
its executive officers in a competitive manner comparable to other similar companies in order to attract
and retain high quality management, attain business objectives and financial performance and increase
shareholder value. Executive compensation is intended to provide an appropriate balance between the
long-term and short-term performance of U.S. Cellular, and also a balance between U.S. Cellular’s
financial performance and shareholder return.
Each element of compensation and total compensation is determined or recommended on the basis
of an analysis of multiple factors rather than specific measures of performance. U.S. Cellular has not
established permanent guidelines or formulae to be used in determining annual executive compensation
or the mix of compensation elements. Instead, each year, based on input from its compensation
consultant, including compensation survey information, U.S. Cellular develops a compensation program
for that year and 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
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