Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements for Certain Officers
This Form 8-K is being filed to provide information with respect to the Telephone and Data Systems, Inc.(“TDS”) 2017 Officer Bonus Program, and to file as an Exhibit a form of award agreement applicable to officers of TDS, pursuant to paragraph (e) of Item 5.02 of Form 8-K.
The following were approved by the TDS Compensation Committee on May 24, 2017.
- TDS 2017 Officer Bonus Program (the “2017 Plan”):
The 2017 Plan covers all TDS executive officers other than the President and CEO of TDS. The plan provides that the President and CEO of TDS’ subsidiary, TDS Telecommunications Corporation (“TDS Telecom”), has the same company and individual performance weightings as the other TDS executive officers, provided that the company performance will be based on TDS Telecom’s performance rather than TDS’ consolidated performance.
The 2017 Plan provides that 70% of the bonus will be based on quantitative company performance and 30% will be based on individual performance. The TDS consolidated company performance will be based on the following three metrics with the following weights: consolidated operating revenue (50%); consolidated adjusted EBITDA (35%); and consolidated capital spending (15%).
Notwithstanding any provision of the 2017 Plan to the contrary, a participating officer does not have a legally binding right to a bonus unless and until the bonus amount, if any, is paid and no bonus shall be paid unless the officer remains employed through the actual bonus payout date unless otherwise approved at the discretion of the Compensation Committee or President and CEO of TDS, as applicable.
The foregoing description is qualified by reference to the 2017 Plan which is attached hereto as Exhibit 10.1 and incorporated by reference herein.
- Form of 2017 Performance Share Award Agreement under the Telephone and Data Systems, Inc. 2011 Long-Term Incentive Plan, as amended:
The 2017 Performance Share Award Agreement in the form attached hereto as Exhibit 10.2 will be used to grant eligible employees of TDS and applicable subsidiaries, including TDS officers (“Employees”), with a target opportunity of a specified number of TDS Common Shares (“Target Opportunity”), upon and subject to the restrictions, terms and conditions set forth in such agreement.
Depending on the satisfaction of the following performance measures during the three-year period from January 1, 2017 to December 31, 2019 (the “Performance Period”), the Employee may be entitled under the 2017 Performance Share Award Agreement to TDS Common Shares equal to 0% to 200% of the Target Opportunity:
- Return on Capital (“ROC”) (40%)
- Total Revenue (40%)
- Relative Total Shareholder Return (“TSR”) (20%)
ROC will be the average of the three fiscal years in the Performance Period of Adjusted Net Operating Profit After Tax divided by Average Adjusted Assets, as currently defined by TDS.
Total Revenue will be the cumulative Consolidated Operating Revenue as defined by TDS over the three fiscal years in the Performance Period.
TSR will be determined for TDS, as well as for a specified “Peer Group”, from the beginning to the end of the Performance Period. The Peer Group was selected by the TDS Compensation Committee in consultation with its independent compensation consultant, Compensation Strategies. The companies that comprise the Peer Group are listed on Exhibit A to the form of the 2017 Performance Share Award Agreement attached hereto as Exhibit 10.2.
The foregoing description is qualified by reference to the form of the 2017 Performance Share Award Agreement filed herewith as Exhibit 10.2 and incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits:
In accordance with the provisions of Item 601 of Regulation S-K, any Exhibits filed herewith are set forth on the Exhibit Index attached hereto.
