US Cellular 2008 Annual Report Download - page 41

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 process of approving or recommending the elements of compensation begins with an
evaluation of the appropriate compensation elements for each officer, based on the particular duties and
responsibilities of the officer, as well as compensation elements for comparable positions at other
companies in the telecommunications and other industries. See ‘‘Benchmarking’’ below.
The Chairman and Stock Option Compensation Committee also have access to numerous
performance measures and financial statistics prepared by U.S. Cellular. This financial information
includes the audited financial statements of U.S. Cellular, as well as internal financial reports such as
budgets and actual results, operating statistics and other analyses. They also may consider such other
factors that they deem appropriate in making their compensation recommendations or decisions.
Ultimately, it is the informed judgment of the Chairman and/or the Stock Option Compensation
Committee, after reviewing the compensation information provided by the Senior Vice President and
Chief Human Resource Officer of U.S. Cellular and considering the recommendation of the President
and/or Chairman, that determines the elements of compensation for executive officers.
Annually, the President recommends the base salary for the named executive officers other than the
President, and the Chairman approves such base salaries and determines the base salary of the
President. The 2008 rows under column (c), ‘‘Salary,’’ in the below Summary Compensation Table
include the dollar value of base salary (cash and non-cash) earned by the identified officers during 2008,
whether or not paid in such year.
In addition, the President recommends the annual bonus for the named executive officers other than
the President, and the Chairman approves such bonuses and determines the bonus of the President, as
discussed below. The 2008 rows under column (d), ‘‘Bonus,’’ of the below Summary Compensation
Table, represent the dollar value of bonus (cash and non-cash) earned by the identified officers during
2008, whether or not paid in such year. Bonuses for 2007 performance were not earned by the officers
until they were approved and awarded in 2008. As a result, bonuses with respect to 2007 performance
are included in the below Summary Compensation Table in the 2008 rows.
The Stock Option Compensation Committee also annually determines long-term equity
compensation awards to the named executive officers under the U.S. Cellular 2005 Long-Term Incentive
Plan, which awards generally have included stock options, restricted stock units and bonus match units.
The named executive officers received an award of restricted stock units in 2008 based on the
achievement of certain levels of corporate and individual performance in 2007, as discussed below. The
2008 rows under column (e), ‘‘Stock Awards,’’ of the Summary Compensation Table include the dollar
amounts of expense recognized for financial statement reporting purposes with respect to 2008. Officers
may also receive bonus match units, as discussed below.
The named executive officers also received an award of stock options in 2008 based primarily on
the achievement of certain levels of individual performance in 2007, as discussed below. The 2008 rows
under column (f), ‘‘Option Awards,’’ of the Summary Compensation Table include the dollar amounts of
expense recognized for financial statement reporting purposes with respect to 2008.
Grants of equity awards to the President and CEO and the other executive officers are generally
made at the same time each year. U.S. Cellular generally grants equity awards other than bonus match
units on the first business day in April each year. U.S. Cellular grants bonus match units on the date that
annual bonus amounts are paid each year. U.S. Cellular may also make grants of equity awards during
other times of the year as it deems appropriate. U.S. Cellular does not backdate stock options and does
not have any program, plan or practice to time the grant of awards in coordination with the release of
material non-public information. The exercise price of stock options is based on the closing price on the
date of grant.
The Chairman and the Stock Option Compensation Committee do not consider an officer’s
outstanding equity awards or stock ownership levels when determining the value of the long-term
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