US Cellular 2008 Annual Report Download - page 50

which the President contributed to U.S. Cellular’s performance, as discussed above. Based on these
factors, on February 21, 2008, the Chairman approved a bonus to John E. Rooney of $675,000 with
respect to 2007 performance. This was 122% of his target bonus amount reflecting U.S. Cellular’s
performance as discussed above and the Chairman’s subjective views regarding Mr. Rooney’s
contributions to such performance and achievements in 2007.
On June 30, 2008, U.S. Cellular’s Chairman approved an Executive Bonus Plan for 2008. A copy of
this plan was filed with the SEC on a Form 8-K dated June 30, 2008. Performance and bonuses under
this plan will be reflected in next year’s proxy statement.
Beginning with the 2008 performance year relating to bonuses that were paid and earned in 2009,
U.S. Cellular established performance guidelines and procedures for awarding bonuses to the President
and CEO. These guidelines and procedures were filed by U.S. Cellular as Exhibit 10.1 to U.S. Cellular’s
Form 8-K dated November 19, 2008. These guidelines and procedures provide that the Chairman in his
sole discretion determines whether an annual bonus will be payable to the President and CEO for a
performance year and, if so, the amount of such bonus, and describes factors that may be considered
by the Chairman in making such determination, including any factors that the Chairman in the exercise of
his 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 to 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 Chairman has determined whether a bonus will be paid for a performance year, and any
such bonus is not earned or vested until the date the bonus is paid. 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.
For disclosure purposes, the amount of bonus paid on March 13, 2009 with respect to 2008
performance to the President and CEO was $410,000. The amount of the bonus for 2008 paid in 2009 is
only provided for disclosure purposes. This amount was not earned until paid in 2009 and will be
reported in next year’s Summary Compensation Table with respect to 2009.
Long-Term Equity Compensation
The Chairman recommends and the Stock Option Compensation Committee approves 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.
Long-term compensation decisions for the named executive officers are evaluated in a manner
similar to that described for annual base salary and bonus decisions above, except that the stock
options and restricted stock units are generally intended to vest over several years, in order to reflect the
goal of relating long-term compensation of the named executive officers to increases in shareholder
value over the same period.
The Stock Option Compensation Committee may establish performance measures and restriction
periods, 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 Stock Option Compensation Committee has the discretion to grant various awards, it
generally only grants service-based restricted stock units and service-based stock options. The restricted
stock units generally vest in full (cliff vesting) on the third anniversary of the date of grant, subject to
continued employment. Stock options are exercisable until the tenth anniversary of the date of grant,
subject to continued employment. For several years prior to 2008, the stock options granted became
exercisable with respect to 25% of the shares underlying the stock option each year over a four year
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