Exhibit 10.1
UNITED STATES CELLULAR CORPORATION
2021 OFFICER ANNUAL INCENTIVE PLAN
Effective January 1, 2021
| I. | PURPOSE | ||||
•To provide incentive for the officers of United States Cellular Corporation (“UScellular” or “Company”) to extend their best efforts towards achieving superior results in relation to key performance targets;
•To reward UScellular officers in relation to their success in meeting and exceeding the performance targets; and
•To attract and retain talented leaders in positions of critical importance to the success of the Company.
| II. | ELIGIBLE PARTICIPANTS | ||||
All UScellular officers, other than officers classified as temporary, are eligible to participate in this 2021 Officer Annual Incentive Plan (“Plan”). Plan eligibility is conditioned on satisfaction of the additional eligibility requirements set forth in Exhibit A, Administrative Guidelines.
| III. | PERFORMANCE MEASURES & WEIGHTINGS | ||||
| Performance Measures | Component Weighting | Overall Plan Weighting | ||||||
| Consolidated Total Service Revenues | 50% | 35% | ||||||
| Consolidated Operating Cash Flow | 40% | 28% | ||||||
| Consolidated Capital Expenditures | 10% | 7% | ||||||
| Company Performance | 70% | |||||||
| Chairman Assessment on Strategic Initiatives | 10% | |||||||
| Individual Performance | 20% | |||||||
| IV. | PERFORMANCE MEASURES DEFINITIONS | ||||
Company Performance - Weighting: 70%: Actual performance will be assessed against the targeted performance for each performance measure. The performance measures are defined below.
Consolidated Total Service Revenues: Total service revenues determined on a consolidated company-wide basis and in a manner consistent with UScellular’s presentation of total service revenues for external reporting purposes.
Consolidated Operating Cash Flow: Operating cash flow determined on a consolidated company-wide basis and in a manner consistent with UScellular’s presentation of Adjusted OIBDA (Operating income before depreciation, amortization, accretion, gains and losses) for external reporting purposes, and further adjusted to remove expenses associated with the annual bonus and performance share unit plans.
Consolidated Capital Expenditures: Capital expenditures determined on a consolidated company-wide basis and in a manner consistent with the Company’s presentation of capital expenditures for external reporting purposes.
Chairman Assessment on Strategic Initiatives – Weighting: 10%: The Chairman in his qualitative and subjective assessment of UScellular’s overall company performance during the year will consider the following key factors and any other information he deems relevant in determining the level of attainment for this measure:
▪Achievement of key goals and objectives provided to the UScellular board of directors.
▪Accomplishing / making commendable progress on major initiatives for the year to the extent not covered under the key goals and objectives provided to the board of directors.
▪Developing and enhancing strategies and plans that strengthen the Company’s ability to successfully compete in the marketplace.
Notes:
▪Results associated with acquisitions and / or divestitures will be evaluated on a case-by-case basis to determine whether adjustments to target or actual results are warranted.
▪The Chairman in his discretion may adjust targets to reflect unanticipated events.
Individual Performance - Weighting: 20%: Each officer’s individual performance for the year will be assessed by the President and CEO1 based on such officer’s effectiveness/success with regard to:
▪Carrying out his/her ongoing responsibilities and key initiatives during the performance year.
▪Officer level leadership and teamwork.
▪Identification and development of key talent for succession planning purposes.
▪Engagement as measured in large part by the Company’s culture survey.
In making these assessments, the President and CEO also will take into consideration:
▪Performance feedback received on the officer.
▪The officer’s report on his/her activities/accomplishments for the performance year.
| V. | MISCELLANEOUS PROVISIONS | ||||
The Plan is subject to the Administrative Guidelines attached hereto as Exhibit A. There are no oral or written agreements or understandings between UScellular and the participants affecting or relating to this Plan not referenced herein. If any participant fails to adhere to the ethical and legal standards as referenced by UScellular policy, UScellular shall have the right to revoke this Plan, reduce or eliminate compensation as it applies to the violator, or any other remedy as provided by corporate policy or law.
Any compensation earned or paid pursuant to this Plan is subject to forfeiture, recovery by UScellular or other action pursuant to any clawback or recoupment policy which UScellular may adopt from time to time, including without limitation any such policy which UScellular may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.
This Plan shall not be construed as an employment contract or as a promise of continuing employment between UScellular and the officer. Employment with UScellular is terminable at will, i.e., either the participant or UScellular may terminate the relationship at any time, with or without cause.
The Officer Annual Incentive Plan, as set forth in this document, represents the general guidelines UScellular intends to utilize to determine the bonuses, if any, that will be paid to the officers. UScellular reserves the right to modify or terminate the Plan at its sole discretion, at any time (including during or following the applicable plan year) and for any reason, with or without written notification and without regard to the effect that any such action may have on any officer’s bonus or potential bonus. UScellular shall have the full power and authority to interpret and administer the Plan and shall be the sole arbiter of all matters of interpretation and application of the Plan.
______________________
1 The Chairman (rather than the President and CEO) shall make any decisions involving the President and CEO’s rights or the computation of his or her bonus under the Plan, and all provisions of this Plan shall be interpreted accordingly.
| VI. | BONUS RANGES AS A PERCENT OF TARGET | ||||
The bonus ranges were set to reinforce the Company’s pay for performance philosophy. The ranges result in substantial reductions in bonuses when targets are not achieved, and greater rewards for above target performance.
Company Performance Measures:
| Performance Measure | Minimum | Maximum | ||||||
| Consolidated Total Service Revenues | 90% | 110% | ||||||
| Consolidated Operating Cash Flow | 85% | 115% | ||||||
| Consolidated Capital Expenditures | 105% | 90% | ||||||
Bonus Payouts as a Percent of Target at Minimum and Maximum Performance Levels:
| Performance Measure | Minimum | Target | Maximum | ||||||||
| Consolidated Total Service Revenues | 50% | 100% | 200% | ||||||||
| Consolidated Operating Cash Flow | 50% | 100% | 200% | ||||||||
| Consolidated Capital Expenditures | 50% | 100% | 150% | ||||||||
Bonus payouts between the minimum and target performance levels and between the target and maximum performance levels will be computed by interpolation.
Any bonus for performance below the minimum level will be determined and approved at the discretion of the Chairman.
Chairman Assessment on Strategic Initiatives:
| Performance Criteria | % Payout Range | ||||
Far exceeds target performance: Performance greatly exceeded that which was planned and expected. | 130% - 160% | ||||
Exceeds target performance: Performance exceeded that which was planned and expected. | 110% - 130% | ||||
Meets target performance: Performance was essentially equivalent to that which was planned and expected. | 90% - 110% | ||||
Partially meets target performance: Given the conditions that prevailed, performance was sufficient to merit a partial bonus. | Up to 90% | ||||
Fails to partially meet target performance: Given the conditions that prevailed, performance was not sufficient to merit any bonus. | 0% | ||||
Individual Performance:
| Performance Criteria | % Payout Range | ||||
| Far Exceeds Expectations (FE) | 140% - 160% | ||||
| Exceeds Expectations (EE) | 115% - 135% | ||||
| Meets Expectations (ME) | 90% - 110% | ||||
| Partially Meets Expectations (PM) | 0% | ||||
| Fails to Meet Expectations (FM) | 0% | ||||
| /s/ Laurent C. Therivel | April 12, 2021 | |||||||||||||
| President and CEO | Date | |||||||||||||
| /s/ LeRoy T. Carlson, Jr. | April 13, 2021 | |||||||||||||
| Chairman | Date | |||||||||||||
Exhibit A
Administrative Guidelines
| PLAN YEAR EFFECTIVE DATES | January 1, 2021 - December 31, 2021 | ||||
| GENERAL ADMINISTRATION | The target annual bonus payout for Plan participants will be based on the officer’s base earnings paid during the plan year. Base earnings are defined as base wages, paid time off, and any differential pay (excludes Short-term disability pay, Long-term disability pay, Paid Parental Leave, Military Service Leave of Absence, any Paid Personal Leave of Absence , bonuses, merit-related lump sum payments, equity, on call pay and any additional compensation not related to base earnings). | ||||
| VESTING | The bonus does not vest and no bonus shall be paid unless the officer remains employed through the actual bonus payout date. In the event of retirement / death prior to the actual bonus payout date, see Separation Prior to Payout Date below. | ||||
| NEW HIRE ELIGIBILITY | In the case of an officer hired during the plan year, eligibility for participation in this Plan will be determined at the discretion of the President and CEO. | ||||
| SEPARATION PRIOR TO PAYOUT DATE | Not eligible for a payout unless separation is due to retirement or death under the circumstances described below (or unless approved by the President and CEO). | ||||
RETIREMENT or DEATH Prior to Payout Date | In the case of separation due to retirement, the officer must be at least age 55 and have a minimum of 10 years of total combined adjusted service within UScellular and any other TDS business units, as applicable, at the time of retirement to be eligible for a payout (unless otherwise approved by the President and CEO). In the event of death or retirement during the plan year (1/1 - 12/31) a prorated bonus for time worked at target (100% Plan attainment) will be paid provided that the officer has been employed through at least January 31st of the plan year. An officer who is not employed through at least January 31st of the plan year will not be eligible to receive a prorated bonus payout for the time worked during the year of the event. The payout will be made as soon as administratively possible following the date of the event (but no later than the Bonus Payout Date, as described below). In the event of death or retirement after the plan year, but before the payout date for the plan year, a participant will be eligible to receive a bonus for the prior year based upon actual Plan attainment for company performance (key performance measures and chairman assessment), and individual performance will be paid out at 100% of target. The payout will be made as soon as administratively possible following the date of the event and after receiving actual Plan attainment (but no later than the Bonus Payout Date, as described below). | ||||
| TRANSFERS/PROMOTIONS WITHIN COMPANY DURING PLAN YEAR | Within/ Between Annual Plans: If an officer is promoted / transferred within or between annual incentive plan(s), no pro-rations will be made in determining the officer’s bonus. The officer’s bonus will be based on the officer’s effective plan as of 12/31/21. Between an Annual Plan and a Quarterly or Monthly Plan: Prorated payouts from both positions/plans will be determined following the end of the plan year. The following factors will be considered in the determination of the payout: both plans’ attainment percentages, individual performance in each job/plan, the eligible base earnings from each position occupied during the plan year (if applicable), target incentive assigned for each associate’s assigned job title, and percentage of time worked in each position/plan during the plan year. | ||||
| TRANSFERS TO/ FROM TDS DURING THE PLAN YEAR | If an officer transfers to/from another TDS business unit, he/she will be eligible to receive a bonus deemed appropriate by the Chairman, considering all applicable factors. | ||||
| BONUS PAYOUT DATE | The bonus will be paid no later than March 15th of the year following the end of the plan year (12/31/2021). Notwithstanding the foregoing, in the event that payment by March 15, 2022 is administratively impracticable and such impracticability was unforeseeable (in each case, such that the payment continues to qualify as a “short-term deferral” within the meaning of section 409A of the Internal Revenue Code), payment will be made as soon as administratively practicable after March 15, 2022, but in no event later than December 31, 2022. Payment will be in the form of a lump sum. | ||||