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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

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Check the appropriate box:

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Preliminary Proxy Statement

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

 

Telephone and Data Systems, Inc.

(Name of Registrant as Specified In Its Charter)

 

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TELEPHONE AND DATA SYSTEMS, INC.
 
30 North LaSalle Street
Suite 4000
Chicago, Illinois 60602
Phone: (312) 630-1900
  GRAPHIC

April 11, 2018

Dear Shareholders

You are cordially invited to attend the 2018 annual meeting of shareholders ("2018 Annual Meeting") of Telephone and Data Systems, Inc. ("TDS") on Thursday, May 24, 2018, at 9:00 a.m., central time, at The Standard Club, 320 S. Plymouth Court, Chicago, Illinois.

The formal Notice of 2018 Annual Meeting of Shareholders and Proxy Statement ("2018 Proxy Statement") of our board of directors is attached. Also enclosed is our 2017 Annual Report to Shareholders ("2017 Annual Report"). At our 2018 Annual Meeting, shareholders are being asked to take the following actions:

1.
elect members of the board of directors;

2.
ratify the selection of independent registered public accountant for the current fiscal year;

3.
approve an amendment and restatement of TDS' Restated Compensation Plan for Non-Employee Directors, which includes approval of 200,000 Common Shares for issuance under the plan;

4.
approve, on an advisory basis, the compensation of our named executive officers as disclosed in the attached 2018 Proxy Statement (commonly known as "Say-on-Pay"); and

5.
Consider a proposal submitted by a shareholder.

Your board of directors recommends a vote "FOR" its nominees for election as directors, "FOR" the proposal to ratify accountants, "FOR" approval of the amendment and restatement of TDS' Restated Compensation Plan for Non-Employee Director and "FOR" approval of the Say-on-Pay proposal.

In addition, as required by the rules of the Securities and Exchange Commission ("SEC"), the 2018 Proxy Statement includes a proposal submitted by a shareholder of TDS calling for the board of directors to take steps to adopt a plan for all of TDS' outstanding stock to have one vote per share. The board of directors unanimously recommends that you vote "AGAINST" this proposal.

We would like to have as many shareholders as possible represented at the 2018 Annual Meeting. Therefore, whether or not you plan to attend the meeting, please sign, date and return the enclosed proxy card(s), or vote on the Internet in accordance with the instructions set forth on the proxy card(s).

We look forward to visiting with you at the 2018 Annual Meeting.

Very truly yours,


GRAPHIC

 

GRAPHIC
LeRoy T. Carlson, Jr.   Walter C. D. Carlson
President and
Chief Executive Officer
  Chairman of the Board

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Your vote is important. No matter how many shares you own, we urge you to please vote FOR the election of the nominees nominated by the board of directors and FOR proposals 2, 3, and 4 and AGAINST proposal 5. In addition to voting by mail, Internet voting is available. Simply follow the instructions on the enclosed proxy card.

If you have questions or need assistance voting your shares please contact

GRAPHIC

1407 Broadway, 27th Floor
New York, New York 10018
TDS@mackenziepartners.com
Call Collect: (212) 929-5500
Or Toll-Free: (800) 322-2885
Fax: (646) 439-9201


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TELEPHONE AND DATA SYSTEMS, INC.
 
30 North LaSalle Street
Suite 4000
Chicago, Illinois 60602
Phone: (312) 630-1900
  GRAPHIC

Dear Shareholders,

TDS' mission is to provide outstanding communication services to our customers and meet the needs of our shareholders, our people, and our communities. In pursuing this mission, we seek to continuously grow our businesses, create opportunities for our associates and employees, and steadily build value over the long term for our shareholders.    
     
   

We embraced a number of opportunities and challenges in 2017. It is an exciting time to be expanding our communications business with leading-edge wireless and broadband technology. Our strong rural and suburban footprint and modest size enable us to be nimble and better understand evolving customer and business needs.

U.S. Cellular Offering high-quality and reliable national wireless service in the Middle of Anywhere™ enables us to achieve our first priority: to attract new customers and retain our loyal customer base. While revenue declined in 2017 due to competitive pricing pressures, our strategic focus on cost reductions helped us to achieve a modest increase in profitability.

TDS Telecom In 2017, TDS Telecom increased its wireline and cable revenues, while hosted and managed service revenues declined. TDS Telecom, in total, significantly increased its profitability. Our wireline and cable businesses share a common strategy. Our goal is to grow high-margin broadband services, bundled with video and voice services to reduce churn.

OneNeck IT Solutions In 2018, OneNeck transitioned to its own business unit within the TDS family of companies, better positioning the company to leverage TDS corporate IT resources. In this hosted and managed services business, we seek to grow recurring revenues in high-margin IT services for mid-market clients.

Creating long-term shareholder value

Our TDS corporate capital allocation strategy calls for investing available cash resources into the business and returning value to shareholders. TDS has increased its dividend every year for the past 43 years and announced another increase for 2018.

2018

We are focused on our strategic imperatives at each business unit. U.S. Cellular is working diligently to attract new customers and protect its customer base, increase revenues, reduce costs, and invest in our future. TDS Telecom is deploying more fiber where economically sound, increasing broadband penetration and evaluating potential cable acquisitions. OneNeck is working to grow recurring service revenues, to add new customers and to improve and standardize its processes.

Sincerely,    

GRAPHIC

 

GRAPHIC
LeRoy T. Carlson, Jr.
President and
Chief Executive Officer
  Walter C. D. Carlson
Chairman of the Board

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Dear Shareholders (continued)

2018 Proxy Statement Summary

Annual Meeting Information
    Time and Date     May 24, 2018, at 9:00 a.m. central time
 
    Place     The Standard Club
320 South Plymouth Court
Chicago, IL 60604
 
    Record Date     March 28, 2018
 
    Webcast     investors.tdsinc.com
                

Strong Corporate Governance Practices

Annual election of all directors

Annual "Say on Pay" vote

Executive sessions with only independent directors present

Policy prohibiting pledging and hedging of company shares

Charter and bylaws can be amended by a simple majority vote

Authority to retain independent advisors by each committee

The positions of (i) Chairman of the Board and (ii) President and Chief Executive Officer are separate

Guidelines recommending that TDS Directors limit to three the number of other public company boards they serve on

Succession planning sessions are held in Executive Session at least annually

Establishment of a Technology Advisory Group to review, monitor and inform the full Board on technology matters

Cyber security oversight by the full Board, the Audit Committee and the Technology Advisory Group

Stock ownership requirements for board members

Annual self-assessment of board

TDS has a Corporate Governance and Nominating Committee (CGNC) even though, as a controlled company, TDS is not required to do so. The CGNC operates under a formal
In order to tie compensation to performance, the Compensation Committee began issuing performance-based shares in 2016.

The TDS Audit Committee, which is comprised entirely of independent directors, operates under a formal charter and continues to earn high scores on Audit Quality from proxy advisory services.

Shareholder Engagement

TDS has an open-door policy for its shareholders to meet with management. Our goal is ongoing engagement and we value the views and opinions of our shareholders.

TDS has a shareholder engagement program to hold conversations with our shareholders to better understand their priorities regarding corporate governance practices and to encourage dialogue regarding ongoing improvements.

Board Refreshment in 2017

TDS believes that new perspectives can be important to a well-run Board. At the same time, it is equally important to benefit from the valuable experience that longer-serving Directors bring to the Boardroom. After assessing the Board's composition, TDS embarked on an initiative to refresh the board and Kimberly D. Dixon joined the TDS board in May 2017.

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Dear Shareholders (continued)

    Voting Matters       Board's Recommendations       Rationale       Page
Reference
  Election of 12 Director nominees     FOR all TDS Board nominees    

Broad, relevant expertise

Progress on strategic initiatives

    9
             
    Ratify independent registered public accountants       FOR      

Independent

      29
  Approve an amendment and restatement of TDS' Restated Compensation Plan for Non-Employee Directors     FOR    

Provide appropriate compensation to qualified Board of Directors

    32
             
    Approve, on an advisory basis, the compensation of named executive officers ("Say on Pay")       FOR      

Strong oversight by Compensation Committee

Aligned with shareholders through a mix of cash and equity

Added performance-based shares to Long-Term Incentive Plan—grants made in 2016 and 2017

      35
  Proposal submitted by a shareholder     AGAINST    

The TDS Voting Trust opposes and intends to vote against this proposal

    87
             

Proposal 1—Director Nominees

Our Board of Directors has nominated 12 directors for election at the 2018 Annual Meeting (Proposal Item No. 1) beginning on page 9.

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Dear Shareholders (continued)

Each of the nominees brings a broad range of experiences and skills to provide effective oversight of the Board. See biographies on pages 11-16. The board of directors unanimously recommends that you vote "FOR" the nominees.

                                            Committee
Memberships

 

 

Director Nominee Name




 

Since




 

Age




 

Primary Occupation




 

Independent




 

AC




 

CC




 

CGNC



                               
    James W. Butman       N/A       60       President and CEO, TDS Telecommunications LLC (TDS Telecom)                                    
    LeRoy T. Carlson, Jr.     1968     71     President and CEO, TDS                 x  
                               
    Letitia G. Carlson, MD       1996       57       Physician and Associate Clinical Professor at George Washington University Medical Faculty Associates                                    
    Prudence E. Carlson     2008     66     Private Investor                  
                               
    Walter C. D. Carlson       1981       64       Partner at Sidley Austin LLP                               C    
    Clarence A. Davis*     2009     76     Former Director and CEO of Nestor, Inc.     x     FE          
                               
    Kimberly D. Dixon*       2017       55       Executive Vice President and Chief Operating Officer at FedEx Office       x               x            
    Kenneth R. Meyers     2007     64     President and CEO, U.S. Cellular                  
                               
    Christopher D. O'Leary       2006       58       Senior Advisor at KKR       x       x       C            
    George W. Off     1997     71     Former Chairman and CEO of Checkpoint Systems, Inc.     x     C     x      
                               
    Mitchell H. Saranow*       2004       72       Chairman of The Saranow Group LLC       x       FE               x    
    Gary L. Sugarman*     2009     65     Managing member-Richfield Capital Partners     x         x      
                               

*To be elected by Common Shares

C - Chairperson

FE - Designated Financial Expert as such term is defined by the SEC

Proposal 2—Independent Public Accountant

As a matter of good corporate governance and consistent with our past practices, we are requesting shareholders to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018. The board of directors unanimously recommends that you vote "FOR" this proposal.

Proposal 3—Amendment and Restatement of Restated Compensation Plan for Non-Employee Directors

To ensure that qualified persons serve as non-employee members of the Board of Directors and that they receive appropriate compensation for their service. The board of directors recommends that you vote "FOR" this proposal.

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Dear Shareholders (continued)

Proposal 4—Approve, on an advisory basis, the compensation of named executive officers ("Say on Pay")

Executive Compensation Programs

Our executive compensation programs are designed to attract and retain high-quality executives. We believe that our compensation practices are transparent and reflect our commitment to align compensation with our business strategy and our short- and long-term performance.

Pay for Performance

Beginning in 2016, Performance Share awards were added to the long-term equity mix for senior executives. Return on Capital, Total Revenue and Relative Total Shareholder Return are measured over a three year performance period with a target opportunity in TDS Common shares equal to 0% to 200% based on performance.

Compensation Beliefs

Compensation should be attractive and fiscally responsible

Compensation is a mix of salary, cash bonuses and equity-based long-term incentive awards

Link individual compensation with attainment of individual performance goals and with attainment of business unit and TDS objectives

Compensation programs designed to motivate executive officers to act in the long-term interests of TDS

Compensation Committee utilizes services of both an independent compensation consultant (Compensation Strategies) and TDS' compensation consultant (Willis Towers Watson)

Few perquisites

The board of directors unanimously recommends that you vote "FOR" this proposal.

Proposal 5—Shareholder Proposal

As required by the rules of the SEC, the 2018 Proxy Statement includes a proposal submitted by a shareholder of TDS calling for the board of directors to take steps to adopt a plan for all of TDS' outstanding stock to have one vote per share. The board of directors unanimously recommends that you vote "AGAINST" this proposal.

    

Communicating with Board of Directors

Any interested party with germane matters can communicate with an individual director or the full Board of Directors by contacting TDS' Corporate Secretary.

Governance Documents

Governance documents, such as the Corporate Governance Guidelines, the Board Committee Charters, and the Officer & Director Code of

Conduct can be found in the Corporate Governance section of investors.tdsinc.com.

These documents are also available at no cost by writing the Corporate Secretary.

Contacting TDS

Corporate Secretary, Telephone and Data Systems, Inc. 30 N. LaSalle Street, Suite 4000, Chicago, IL 60602.

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NOTICE OF 2018 ANNUAL MEETING OF SHAREHOLDERS AND 2018 PROXY STATEMENT

TO THE SHAREHOLDERS OF

TELEPHONE AND DATA SYSTEMS, INC.

        The 2018 Annual Meeting of Telephone and Data Systems, Inc., a Delaware corporation, will be held at The Standard Club, 320 S. Plymouth Court, Chicago, Illinois, on Thursday, May 24, 2018, at 9:00 a.m., central time, for the following purposes:

        We have fixed the close of business on March 28, 2018, as the record date for the determination of shareholders entitled to notice of, and to vote at, the 2018 Annual Meeting or any adjournments thereof.

        We are first sending this Notice of 2018 Proxy Statement, together with 2017 Annual Report, on or about April 11, 2018 to shareholders who are receiving a paper copy of the proxy materials. We made arrangements to commence mailing a Notice of Internet Availability of Proxy Materials on or about April 11, 2018 to other shareholders as discussed below.

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IMPORTANT NOTICE REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDER MEETING TO BE HELD ON MAY 24, 2018

        The following information about the Internet availability of proxy materials is being provided under Rule 14a-16 of the Securities and Exchange Commission ("SEC"):

        Effective as of April 11, 2018, the following documents are available at www.tdsinc.com under Investor Relations—Proxy Vote, or at investors.tdsinc.com/proxyvote:

        Under SEC rules, proxy materials are being furnished to many of our shareholders via the Internet, instead of mailing printed copies of those materials to each shareholder. Beginning April 11, 2018, TDS made arrangements to commence sending certain shareholders a Notice of Internet Availability of Proxy Materials (the "Notice") containing instructions on how to access our proxy materials, including our 2018 Proxy Statement and 2017 Annual Report. The Notice also instructs shareholders on how to vote through the Internet.

        This process is designed to reduce the environmental impact and expense associated with our annual meeting and help conserve resources. However, if a shareholder prefers to receive printed proxy materials at no additional cost, on a one-time or ongoing basis, instructions for doing so are included in the Notice or at investors.tdsinc.com/proxyvote.

        If you have previously elected to receive our proxy materials electronically or in paper format, you will continue to receive these materials in accordance with your election until you elect otherwise.

        We encourage you to formally consent to receive all proxy materials electronically in the future. If you wish to receive these materials electronically next year, please follow the instructions at investors.tdsinc.com/proxyvote.

        If you received a Notice, any control/identification numbers that you need to access the proxy materials and vote are set forth on your Notice.

        If you received printed materials, any control/identification numbers that you need to vote are set forth on your proxy card(s) if you are a record holder, or on your voting instruction card if you hold shares through a broker, dealer or bank.

        In addition, all additional soliciting materials sent to shareholders or made public after this Notice has been sent will be made publicly accessible at the above website address no later than the day on which such materials are first sent to shareholders or made public.

        The location where the 2018 Annual Meeting will be held is The Standard Club in Chicago, Illinois. This is located in the Chicago loop area between Jackson Boulevard and Van Buren Street at 320 South Plymouth Court, which is between State Street and Dearborn Street.

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TELEPHONE AND DATA SYSTEMS, INC.

2018 PROXY STATEMENT

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QUESTIONS AND ANSWERS

  2

PROPOSAL 1: ELECTION OF DIRECTORS

 
9

CORPORATE GOVERNANCE

 
18

EXECUTIVE OFFICERS

 
27

PROPOSAL 2: INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 
29

FEES PAID TO PRINCIPAL ACCOUNTANTS

 
30

AUDIT COMMITTEE REPORT

 
30

PROPOSAL 3: AMENDMENT AND RESTATEMENT OF RESTATED COMPENSATION FOR NON-EMPLOYEE DIRECTORS

 
32

PROPOSAL 4: ADVISORY VOTE ON EXECUTIVE COMPENSATION

 
35

EXECUTIVE AND DIRECTOR COMPENSATION

 
36

Compensation Discussion and Analysis

 
36

Compensation Committee Report

 
57

Risks from Compensation Policies and Practices

 
57

Compensation Tables

 
58

2017 Summary Compensation Table

 
59

2017 Grants of Plan-Based Awards

 
63

2017 Outstanding Equity Awards at Fiscal Year-End

 
65

2017 Option Exercises and Stock Vested

 
69

2017 Nonqualified Deferred Compensation

 
71

2017 Table of Potential Payments upon Termination or Change in Control

 
77

2017 Director Compensation

 
79

Compensation Committee Interlocks and Insider Participation

 
81

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

 
82

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 
83

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 
87

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 
87

CEO PAY RATIO

 
87

PROPOSAL 5: SHAREHOLDER PROPOSAL THAT IS OPPOSED BY THE BOARD OF DIRECTORS

 
87

SHAREHOLDER PROPOSALS FOR 2019 ANNUAL MEETING

 
89

SOLICITATION OF PROXIES

 
90

FINANCIAL AND OTHER INFORMATION

 
90

FORWARD LOOKING STATEMENTS

 
90

OTHER BUSINESS

 
91

AMENDED AND RESTATED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

 
A-1

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QUESTIONS AND ANSWERS

        The following are questions and answers relating to the actions being taken at the 2018 Annual Meeting and do not include all of the information that may be important to you. You should carefully read this entire 2018 Proxy Statement and not rely solely on the following questions and answers.

Proposal 1—Election of Directors

        Under TDS' Restated Certificate of Incorporation, as amended, the terms of all incumbent directors will expire at the 2018 Annual Meeting.

        Holders of Series A Common Shares, voting as a group, will be entitled to elect eight directors. Your board of directors has nominated the following incumbent directors for election by the holders of Series A Common Shares: LeRoy T. Carlson, Jr., Letitia G. Carlson, MD, Prudence E. Carlson, Walter C. D. Carlson, Kenneth R. Meyers, Christopher D. O'Leary, and George W. Off. In addition, the following person has been nominated to be fill the vacancy to be created upon the expiration of David A Wittwer's term as a director: James W. Butman.

        Holders of Common Shares will be entitled to elect four directors. Your board of directors has nominated the following incumbent directors for election by the holders of Common Shares: Clarence A. Davis, Kimberly D. Dixon, Mitchell H. Saranow and Gary L. Sugarman.

        None of the nominees have been nominated because of any agreement or other arrangement. Clarence A. Davis and Gary L. Sugarman were initially nominated as directors in 2009 pursuant to a Settlement Agreement, which we refer to as the "Settlement Agreement," between TDS and GAMCO Asset Management, Inc. which we refer to, together with its affiliates, as "GAMCO," but the obligations expired in 2010. Nevertheless, the TDS board of directors has continued to nominate Clarence A. Davis and Gary L. Sugarman as directors at subsequent annual meetings, including at the 2018 Annual Meeting, as discussed below.

        Your board of directors unanimously recommends that you vote FOR its nominees for election as directors on the enclosed proxy card(s).

Proposal 2—Ratification of Independent Registered Public Accounting Firm for 2018

        As in prior years, shareholders are being asked to ratify PricewaterhouseCoopers LLP ("PwC") for the year ending December 31, 2018

        Your board of directors unanimously recommends that you vote FOR this proposal.

Proposal 3—Amendment and Restatement of Restated Compensation Plan for Non-Employee Directors

        Shareholders are being asked to approve an amendment and restatement of TDS' Restated Compensation Plan for Non-Employee Directors, which includes approval of 200,000 Common Shares for issuance under the plan.

        Your board of directors recommends that you vote FOR this proposal.

Proposal 4—Advisory Vote on Executive Compensation or "Say-on-Pay"

        As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), at the 2018 Annual Meeting shareholders are being asked to approve, on an advisory basis, the compensation of our named executive officers for 2017.

        Your board of directors unanimously recommends that you vote FOR this proposal.

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Proposal 5—Proposal Submitted by a Shareholder

        As required by the rules of the SEC, this 2018 Proxy Statement includes a proposal submitted by a shareholder of TDS calling for the board of directors to take steps to adopt a plan for all of TDS' outstanding stock to have one vote per share.

        Your board of directors unanimously recommends that you vote AGAINST this proposal.

What is the record date for the meeting?

        The close of business on March 28, 2018 is the record date for the determination of shareholders entitled to notice of, and to vote at, the 2018 Annual Meeting or any postponement, adjournment or recess thereof.

        A complete list of shareholders entitled to vote at the 2018 Annual Meeting, arranged in alphabetical order and by voting group, showing the address of and number of shares held by each shareholder, will be made available at the offices of TDS, 30 North LaSalle Street, Suite 4000, Chicago, Illinois 60602, for examination by any shareholder, for any purpose germane to the 2018 Annual Meeting, during normal business hours, for a period of at least ten days prior to the Annual Meeting.

What shares of stock entitle holders to vote at the meeting?

        We have the following classes of stock outstanding, each of which entitles holders to vote at the meeting:

        The Common Shares are listed on the New York Stock Exchange ("NYSE") under the symbol "TDS."

        There is generally no public trading of the Series A Common Shares on the over-the-counter market but the Series A Common Shares are convertible on a share-for-share basis into Common Shares.

What is the voting power of the outstanding shares in the election of directors as the record date?

Class of Stock
  Outstanding
Shares
  Votes per
Share
  Voting Power   Total Number of
Directors
Elected by
Voting Group
and Standing
for Election
 

Series A Common Shares

    7,257,584     10     72,575,840     8  

Common Shares

    104,221,371     1     104,221,371     4  

Total Directors

                      12  

        Accordingly, holders of Series A Common Shares will be entitled to elect eight directors and holders of Common Shares will be entitled to elect four directors.

        Director Voting Sunset Provision    

        As noted above, holders of Series A Common Shares and Common Shares currently vote for separate directors. However, pursuant to the Restated Charter, if the number of Series A Common Shares issued and outstanding at any time falls below 500,000, because of the conversion of Series A Common Shares into Common Shares or otherwise, the holders of Series A Common Shares would lose the right to vote as a separate class and thereafter the holders of Series A Common Shares, with ten votes per share, and the holders of Common Shares, with one vote per share, would vote as a single class in the election of all directors.

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What is the voting power of the outstanding shares in matters other than the election of directors as of the record date?

Class of Stock
  Outstanding
Shares
  Votes per
Share
  Total Voting
Power
  Percent  

Series A Common Shares

    7,257,584     10     72,575,840     56.7 %

Common Shares

    104,221,371     1     55,388,343     43.3 %

                127,964,183     100 %

        Pursuant to the Restated Certificate of Incorporation for TDS (the "Restated Charter"), which effected a reclassification of TDS shares during 2012 (the "Reclassification"), the aggregate voting power of Series A Common Shares and Common Shares in matters other than the election of directors was set at approximately 56.7% and 43.3%, respectively. The initial percentages will be adjusted under certain circumstances, except that the aggregate voting percentage of the Series A Common Shares cannot increase above the initial fixed percentage voting power of approximately 56.7%. The percentage could decrease.

        Based on shares outstanding on March 28, 2018, the per share voting power of the Common Shares for the 2018 Annual Meeting is 0.531449 votes per share, calculated pursuant to Section B.9 of Article IV of the Restated Charter. See the Restated Charter which explains how the relative voting percentages are calculated.

        Voting Power Sunset Provision    

        The aggregate voting power of Series A Common Shares in matters other than the election of directors can be adjusted, but cannot increase above approximately 56.7%. The percentage could decrease because of the conversion of Series A Common Shares into Common Shares or otherwise. The Restated Charter has a sunset provision for voting in matters other than the election of directors because, if a sufficient number of Series A Common Shares are converted into Common Shares, the voting power of Series A Common Shares could decline below 50%.

How may shareholders vote with respect to the election of directors in Proposal 1?

        Shareholders may, with respect to directors to be elected by such shareholders:

        Your board of directors unanimously recommends a vote FOR its nominees for election as directors.

How may shareholders vote with respect to the ratification of our independent registered public accounting firm for 2018 in Proposal 2?

        Shareholders may, with respect to Proposal 2:

        Your board of directors unanimously recommends a vote FOR this proposal.

How may shareholders vote with respect to the amendment and restatement of TDS' Restated Compensation Plan for Non-Employee Directors in Proposal 3?

        Shareholders may, with respect to Proposal 3:

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        Your board of directors recommends a vote FOR this proposal.

How may shareholders vote with respect to Say-on-Pay in Proposal 4?

        Shareholders may, with respect to Proposal 4:

        Your board of directors unanimously recommends a vote FOR this proposal.

How may shareholders vote with respect to the shareholder proposal in Proposal 5?

        Shareholders may, with respect to Proposal 5:

        Your board of directors unanimously recommends a vote AGAINST this proposal.

How does the TDS Voting Trust intend to vote?

        The Voting Trust under Agreement dated June 30, 1989, as amended (the "TDS Voting Trust"), held 6,877,173 Series A Common Shares on the record date, representing approximately 94.8% of the Series A Common Shares. By reason of such holding, the TDS Voting Trust had the voting power to elect all of the directors to be elected by the holders of Series A Common Shares and had approximately 53.7% of the voting power with respect to matters other than the election of directors. The TDS Voting Trust also held 6,186,857 Common Shares on the record date, representing approximately 5.9% of the Common Shares. By reason of such holding, the TDS Voting Trust had approximately 5.9% of the voting power with respect to the election of directors elected by the holders of Common Shares and an additional 2.6% of the voting power in matters other than the election of directors. Accordingly, the TDS Voting Trust had an aggregate of 56.3% of the voting power in matters other than the election of directors.

        The TDS Voting Trust has advised us that it intends to vote:

How do I vote?

        Proxies are being requested from the holders of Common Shares in connection with the election of four directors in Proposal 1 and in connection with Proposals 2, 3, 4 and 5.

        Proxies are being requested from the holders of Series A Common Shares in connection with the election of eight directors in Proposal 1 and in connection with Proposals 2, 3, 4 and 5.

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        Whether or not you plan to attend the meeting, please sign, date and mail your proxy card(s) in the enclosed self-addressed envelope to Proxy Services, c/o Computershare Investor Services, P.O. Box 505008, Louisville, KY 40233-9814, or vote on the Internet using the control/identification number on your proxy card in accordance with the instructions set forth on the proxy card.

How will proxies be voted?

        All properly voted and unrevoked proxies will be voted in the manner directed. If no direction is made, a proxy will be voted FOR the election of the board of directors' nominees to serve as directors in Proposal 1, FOR Proposal 2, FOR Proposal 3, FOR Proposal 4, and AGAINST Proposal 5.

        If a proxy indicates that all or a portion of the votes represented by such proxy are not being voted or abstained with respect to a particular matter, and the shareholder giving such proxy does not attend the 2018 Annual Meeting, such "non-votes" will not be considered present and entitled to vote on such matter. However, the shares represented by such a proxy may be considered present and entitled to vote on other matters and will count for the purpose of determining the presence of a quorum.

        Proxies may be revoked at any time prior to the voting of the shares at the Annual Meeting by written notice to the Secretary of TDS, by submitting a later dated proxy or by attendance and voting in person at the 2018 Annual Meeting.

        The board of directors has no knowledge of any other proposals that may be properly presented at the Annual Meeting and no other proposals were received by TDS by the date specified by the advance notice provision in TDS' Bylaws. The proxy solicited by the board of directors for the 2018 Annual Meeting confers discretionary authority to the proxies named therein to vote on matters that may properly come before such meeting or any postponement, adjournment or recess thereof, in addition to the foregoing proposals, to the extent permitted by Rule 14a-4(c) under the Securities Exchange Act of 1934, as amended. If the meeting is adjourned or postponed, the named proxies can vote such shares at the adjournment or postponement.

How will my shares be voted if I own shares through a broker?

        If you are the beneficial owner of shares held in "street name" by a broker, bank, or other nominee ("broker"), such broker, as the record holder of the shares, is required to vote those shares in accordance with your instructions.

        In the event that there are no contested matters at the meeting, the broker may be entitled to vote the shares with respect to "discretionary" items but will not be permitted to vote the shares with respect to "non-discretionary" items (in which case such shares will be treated as non-votes). In addition, whether the broker can or will vote your shares with respect to discretionary items if you have not given instructions to the broker and how such shares may be voted by the broker (i.e., proportionately with voting instructions received by the broker from other shareholders or pursuant to the recommendation of management, etc.) depend on the particular broker's policies. As a result, we cannot advise you whether your broker will or will not vote your shares or how it may vote the shares if it does not receive or have voting instructions from you and, accordingly, recommend that you contact your broker. In general, the ratification of auditors is a discretionary item. On the other hand, matters such as the election of directors, votes on Say-on-Pay, the approval of an equity compensation plan, and shareholder proposals are non-discretionary items. In such cases, if your broker does not have specific or standing instructions, your shares will be treated as non-votes and may not be voted on such matters.

        Accordingly, we urge you to provide instructions to your broker so that your votes may be counted on all matters. If your shares are held in street name, your broker will include a voting instruction form with this 2018 Proxy Statement. We strongly encourage you to vote your shares by following the instructions provided on the voting instruction form. Please return your voting instruction form to your broker and/or contact your broker to ensure that a proxy card is voted on your behalf.

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What constitutes a quorum for the meeting?

        A quorum is the minimum number of shares required to conduct business at an Annual Meeting. A majority of the voting power of shares of capital stock in matters other than the election of directors and entitled to vote, represented in person or by proxy, will constitute a quorum to permit the 2018 Annual Meeting to proceed. Withheld votes and abstentions and any non-votes will be included in establishing a quorum for the meeting. If the shares beneficially owned by the TDS Voting Trust are present in person or represented by proxy at the 2018 Annual Meeting, such shares will constitute a quorum and permit the meeting to proceed. In addition, where a separate vote by a class or group is required, a quorum is also required with respect to such proposal for the vote to proceed.

        In the election of directors, where a separate vote by a class or voting group is required, the holders of a majority of the votes of the stock of such class or group issued and outstanding and entitled to vote with respect to such director election, present in person or represented by proxy, will constitute a quorum with respect to such election. Withheld votes and non-votes will be treated as present in person or represented by proxy for purposes of establishing a quorum. If Series A Common Shares beneficially owned by the TDS Voting Trust are present in person or represented by proxy at the 2018 Annual Meeting, such shares will constitute a quorum at the 2018 Annual Meeting in connection with the election of directors by the holders of Series A Common Shares. If a quorum of the holders of Common Shares is not present at the time the 2018 Annual Meeting is convened, the chairman of the meeting or holders of a majority of the voting power in matters other than the election of directors may adjourn the Annual Meeting with respect to all proposals or only with respect to the election of directors by the holders of Common Shares.

        With respect to Proposals 2, 3, 4 and 5 the holders of a majority of the votes of the stock issued and outstanding and entitled to vote with respect to such proposals, present in person or represented by proxy, will constitute a quorum at the 2018 Annual Meeting. Abstentions and any non-votes will be treated as present in person or represented by proxy for purposes of establishing a quorum. If TDS shares beneficially owned by the TDS Voting Trust are present in person or represented by proxy at the Annual Meeting, such shares will constitute a quorum.

        Even if a quorum is present, holders of a majority of the voting stock present in person or represented by proxy may adjourn the 2018 Annual Meeting. Because it holds a majority of the voting power of all classes of stock, the TDS Voting Trust has the voting power to approve an adjournment. TDS does not currently have any expectation that the Annual Meeting would be adjourned for any reason.

What vote is required to elect directors in Proposal 1?

        The holders of Common Shares will vote separately for four directors while the holders of Series A Common Shares will vote for eight other directors.

        Directors will be elected by a plurality of the votes cast by the class or group of shareholders entitled to vote in the election of such directors which are present in person or represented by proxy at the meeting.

        Accordingly, if a quorum exists, the persons receiving a plurality of the votes cast will be elected to serve as directors. Withheld votes and any non-votes will not be counted as votes cast for the purpose of determining if a director has received a plurality of the votes.

        In the election of directors by holders of Common Shares, each holder of outstanding Common Shares is entitled to one vote for each Common Share held. In the election of directors by holders of Series A Common Shares, each holder of outstanding Series A Common Shares is entitled to ten votes for each Series A Common Share held.

What vote is required with respect to Proposals 2, 3, 4 and 5?

        The holders of Common Shares and Series A Common Shares will vote together as a single group with respect to Proposals 2, 3, 4 and 5. Based on shares outstanding on March 28, 2018, each holder of

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outstanding Common Shares was entitled to 0.531449 vote for each Common Share and each holder of outstanding Series A Common Shares was entitled to ten votes for each Series A Common Share held in such holder's name.

        If a quorum is present at the 2018 Annual Meeting, the approval of Proposals 2, 3, 4 and 5 will require the affirmative vote of the holders of stock having a majority of the votes which could be cast by the holders of all stock entitled to vote on such question which are present in person or represented by proxy at the meeting. Abstentions by shares entitled to vote on such proposals will be treated as votes which could be cast and, accordingly, will effectively count as a vote against such proposal. Any non-votes will not be included in the total of votes for purposes of determining whether such proposals are approved, even though they may be included for purposes of determining a quorum.

What does it mean if I receive more than one proxy card?

        If you hold multiple series of shares, or hold shares in multiple registrations, you will receive a proxy card for each such account. Please sign, date, and return all proxy cards you receive. If you choose to vote by Internet, please vote each proxy card you receive. Only your latest dated proxy for each account will be voted at the 2018 Annual Meeting.

Can I change my vote or revoke my proxy?

        Yes. You can change your vote or revoke your proxy at any time before it is voted at the 2018 Annual Meeting by written notice to the Secretary of TDS, by voting a later-dated proxy or by voting by ballot at the meeting. Only the latest dated proxy card you vote will be counted for voting purposes.

Who pays the solicitation expenses for this 2018 Proxy Statement and related TDS materials?

        Your proxy is being solicited by the TDS board of directors and its agents, and the cost of solicitation will be paid by TDS. Officers, directors and regular employees of TDS, acting on the behalf of the TDS board of directors, may also solicit proxies by mail, email, advertisement, telephone, press release, employee communication, postings on TDS' Internet website and Intranet website or in person. We will not pay such persons additional compensation for their proxy solicitation efforts. TDS has also retained MacKenzie Partners, Inc. to assist in the solicitation of proxies. TDS will, at its expense, request brokers and other custodians, nominees and fiduciaries to forward proxy soliciting material to the beneficial owners of shares held of record by such persons.

Who should I call if I have any questions?

        If you have any questions, or need assistance voting, please contact our proxy solicitor, MacKenzie Partners, Inc. at (800) 322-2885 (Call Toll Free) or (212) 929-5500 (Call Collect) or by email to TDS@mackenziepartners.com.

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PROPOSAL 1
ELECTION OF DIRECTORS

        The terms of all directors will expire at the 2018 Annual Meeting. The board of directors' nominees are identified in the tables below. Each of the nominees has consented to be named in the 2018 Proxy Statement and consented to serve if elected. The age of the following persons is as of the date of this 2018 Proxy Statement.

To be Elected by Holders of Common Shares

Name
  Age   Position with TDS and Principal Occupation   Served as
Director
since
 

Clarence A. Davis

    76   Director of TDS, Former Director and Chief Executive Officer of Nestor, Inc.; Former Chief Financial Officer and Chief Operating Officer of AICPA     2009  

Kimberly D. Dixon

    55   Director of TDS, Executive Vice President and Chief Operating Officer of FedEx Office, an operating company of FedEx Corp.     2017  

Mitchell H. Saranow

    72   Director of TDS and Chairman of The Saranow Group, L.L.C.     2004  

Gary L. Sugarman

    65   Director of TDS, Managing Member—Richfield Capital Partners and Principal of Richfield Associates, Inc.     2009  

        Your board of directors unanimously recommends a vote "FOR" the election of each of the above nominees for election by the holders of Common Shares.

To be Elected by Holders of Series A Common Shares

Name
  Age   Position with TDS and Principal Occupation   Served as
Director
Since
 

James W. Butman

    60   Nominee for Director of TDS, President and Chief Executive Officer of TDS Telecom (a deemed executive officer of TDS)     N/A  

LeRoy T. Carlson, Jr. 

    71   Director and President and Chief Executive Officer of TDS     1968  

Letitia G. Carlson, MD

    57   Director of TDS and Physician and Associate Clinical Professor at George Washington University Medical Faculty Associates     1996  

Prudence E. Carlson

    66   Director of TDS and Private Investor     2008  

Walter C. D. Carlson

    64   Director and non-executive Chairman of the Board of TDS and Partner, Sidley Austin LLP, Chicago, Illinois     1981  

Kenneth R. Meyers

    64   Director of TDS and President and Chief Executive Officer of U.S. Cellular (a deemed executive officer of TDS)     2007  

Christopher D. O'Leary

    58   Director of TDS and Senior Advisor at KKR     2006  

George W. Off

    71   Director of TDS, Former Chairman and Chief Executive Officer of Checkpoint Systems, Inc.     1997  

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        Your board of directors unanimously recommends a vote "FOR" the election of each of the above nominees for election by the holders of Series A Common Shares.

Background of Board of Directors' Nominees

        The following briefly describes the business experience during at least the past five years of each of the nominees, including each person's principal occupation(s) and employment during at least the past five years; the name and principal business of any corporation or other organization in which such occupation(s) and employment were carried on; and whether such corporation or organization is a parent, subsidiary or other affiliate of TDS. The following also indicates any other directorships held, including any other directorships held during at least the past five years, by each nominee in any SEC registered company or any investment company, and the identity of such company.

        In addition, the following also briefly discusses the specific experience, qualifications, attributes or skills that led to the conclusion that each such person should serve as a director of TDS. Except as discussed below under "Director Nomination Process", TDS does not have any specific, minimum qualifications that the board believes must be met by a nominee for a position on the TDS board of directors, or any specific qualities or skills that the board believes are necessary for one or more of the TDS directors to possess. The TDS board believes that substantial judgment, diligence and care are required to identify and select qualified persons as directors. The TDS board has consistently sought to nominate to the board of directors eminently qualified individuals whom the board believes would provide substantial benefit and guidance to TDS. Also, as discussed below under "Director Nomination Process", TDS believes that it is desirable for directors to have diverse backgrounds, experience, skills and other characteristics. In addition, the conclusion of which persons should serve as directors is based in part on the fact that TDS is a controlled company with a capital structure in which different classes of stock vote for different directorships. In particular, as discussed under "Director Nomination Process", because the TDS Voting Trust has over 90% of the voting power in the election of directors elected by holders of Series A Common Shares, nominations of directors for election by the holders of Series A Common Shares are based on the recommendation of the trustees of the TDS Voting Trust.

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Nominees for Election by Holders of Common Shares

Clarence A. Davis    Independent Director

Current Role: Director   Age 76

Mr. Davis brings to the TDS board of directors substantial experience, expertise and qualifications as a director of TDS for several years, as a former director and chief executive officer of a public technology company, as a chief financial officer and chief operating officer of the American Institute of Certified Public Accountants (AICPA) and as a director or trustee of investment funds. In addition, he has substantial experience, expertise and qualifications in accounting as a result of having been a chief financial officer of the AICPA and a Certified Public Accountant in a public accounting firm for many years, and as a result of being or having been a member of six audit committees, including the TDS Audit Committee since 2010. Mr. Davis is a member of the board of directors of West Broad Street YMCA in Savannah, Georgia, and is named in Who's Who Among African Americans. Mr. Davis has a Bachelor of Science degree in Accounting from Long Island University.

 

Director since 2009, originally nominated by GAMCO

TDS Board Committee

Audit Committee, Designated financial expert

Prior Business and other Experience

Chief Executive Officer,
Nestor, Inc. (2007-2009)*

Chief Financial Officer,
American Institute of Certified Public Accountants, (1998-2000)

Current Public Company Boards

Gabelli Funds: (Gabelli Capital Asset
Fund, since 2015 and Gabelli ESG Fund,
since 2007)

The GDL Fund (NYSE: GDL), since 2007

  Former Public Company Boards

Nestor, Inc. (2006-2009)*

Oneida,  LTD (2005-2006)

Pennichuck Corp. (2009-2012)

Sonesta International Hotels (2009-2012)

 
Chief Operating Officer,
American Institute of Certified Public Accountants (2000-2005)
*
Within the last ten years, Nestor successfully petitioned the Rhode Island Superior Court for a court appointed receiver who assumed all aspects of the company's operations in 2009. The receiver sold the assets of Nestor to American Traffic Solutions in 2009. Mr. Davis ceased to be a director of Nestor at that time.

Kimberly D. Dixon    Independent Director

Current Role: Executive Vice President and Chief Operating Officer of FedEx Office, an operating company of FedEx Corp., since 2010.

Ms. Dixon brings substantial experience, expertise and qualifications from her executive leadership position at FedEx. She has extensive operating and financial management experience. Ms. Dixon has experience in consumer and business marketing, sales and distribution strategies. Ms. Dixon also brings twenty years of experience in the telecommunications industry, and her experience in serving on the board of directors of James Avery Craftsman, Inc., a privately held jewelry designer, manufacturer and retailer. Further, her background and attributes bring diversity to the board. Ms. Dixon has a Bachelor of Science degree from Shippensburg University of Pennsylvania and an MBA from Pennsylvania State University.
  Age 55

TDS Board Committees

Compensation Committee

Technology Advisory Group Committee

Prior Business and other Experience

Sprint Nextel Corporation (1996-2010), including several executive leadership positions most recently as Senior Vice President, Consumer Sales and Distribution


Current Public Company Boards

None


 

Former Public Company Boards

None


 

GTE Wireless, Inc. (1989-1996), roles in marketing, sales and field operations

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Mitchell H. Saranow    Independent Director

Current Role: Director, Chairman of The Saranow Group, L.L.C.   Age 72

Mr. Saranow brings substantial experience and expertise to the TDS board of directors. He has been Chairman of The Saranow Group, L.L.C. for more than thirty years. In addition, Mr. Saranow brings twenty-five years of experience in the cable television industry during its early years of development in the 1970's and as a co-founder of Mid-Atlantic CATV which was sold to Comcast in 2000. He practiced law with Mayer Brown & Platt and then was an investment banker with Warburg, Paribas Becker specializing in financing CATV start-ups. Prior to his founding of The Saranow Group in 1983, he was CFO of two large food companies. Thereafter, Mr. Saranow founded, co-founded or acquired more than a dozen companies as principal, including Mid-Atlantic CATV, was CEO and CFO of two public companies and a director of five public companies, including TDS. He has been a member of the audit committee for all five public companies. Also, he has significant experience as a member of the TDS Corporate Governance and Nominating Committee for many years. Mr. Saranow is a CPA (inactive). He was a Senior Lecturer at the Harvard Business School where he taught in the first-year MBA program during the 2001 academic year, and he is a trustee of the Illinois Institute of Technology and chairman of its Stuart School of Business' "Center for Corporate Performance". He received his JD degree from Harvard Law School and his MBA degree from Harvard Business School.

 

Director since 2004

TDS Board Committees

Audit Committee, Designated financial expert

Corporate Governance and Nominating Committee

Prior Business and other Experience

Chairman, SureTint Technologies (privately-held) (2008-2013)

Chairman and Co-Chief Executive Officer, Navigant Consulting (NYSE: "NCI")

Founder and Managing General Partner, Fluid Management (privately-held) (1987-1996)

Chief Financial Officer, CFS Continental (1979-1983) (formerly OTC: "CFS")

Vice President Finance and Law,

Current Public Company Boards

None

  Former Public Company Boards

Navigant Consulting, Inc. (1996-2000)

Telular Corporation (1996-2001)

Lawson Products, Inc. (1998-2010)

North American Scientific, Inc. (2001-2005)

  Sunmark Companies (private company) (1976-1979)

Investment Banker, Warburg, Paribas Becker (CATV financing) (1973-1976)

Attorney, Mayer Brown & Platt

Within the last ten years, Mr. Saranow served as chief executive officer of two related Dutch companies that were sold under Dutch insolvency laws in 2008.

Gary L. Sugarman    Independent Director

Current Role: Director, Managing Member-Richfield Capital Partners and Principal of Richfield Associates, Inc.

Mr. Sugarman brings to the TDS board of directors substantial experience, expertise and qualifications as a director of TDS for several years, and in the telecommunications industry as a result of his positions at Otelco Inc. and LICT Corporation and his many years of prior experience with other companies in the telecommunications industry. He has been the Managing Member-Richfield Capital Partners and Principal of Richfield Associates, Inc. for twenty five years. He is also currently an advisor and investor in Dezignable, Inc., an online interior design company. Prior to that he was executive chairman of FXecosystem, Inc., a provider of outsourced connectivity services to the foreign currency and bond markets, and executive chairman and investor of Veroxity Technology Partners, a provider of optical data and Internet protocol connectivity solutions to service enterprise customers. He also was chairman and chief executive officer of Mid-Maine Communications, a telecommunications company that he co-founded. In addition, he has experience as a member of the TDS Compensation Committee since 2010. Mr. Sugarman has an MBA from the University at Buffalo-State University of New York.
  Age 65

Director since 2009, originally nominated by GAMCO

TDS Board Committee

Compensation Committee

Prior Business and other Experience

Executive Chairman, FXecosystem (2010-2013)

Executive Chairman/Investor- Veroxity Technology Partners , privately held company (2007-2010)

PrairieWave Communications, privately-held over-builder providing telecommunications (2003-2007)

Current Public Company Boards

OTELCO Inc. (NASDAQ: OTEL), since 2013

 

Former Public Company Boards

LICT Corporation (2006-2018)

 

Chairman and Chief Executive Officer, Mid-Maine Communications (1994-2006)

LICT Corporation (1991-1993)

Multiple operating roles at Rochester Telephone Company, (now known as Frontier Communications) (1984-1991)

Your board of directors unanimously recommends a vote "FOR" each of the above nominees for election by the holders of Common Shares.

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Nominees for Election by Holders of Series A Common Shares

James W. Butman    Nominee for Non-Independent Director

Current Role: President and Chief Executive Officer of TDS Telecom

Mr. Butman brings substantial experience, expertise and qualifications with respect to TDS and its subsidiaries and industries in which they operate as a result of his leadership roles at TDS Telecom. Mr. Butman has extensive sales and marketing experience. Mr. Butman was appointed President and Chief Executive Officer of TDS Telecom on January 1, 2018. Prior to that, he was TDS Telecom's Chief Operating Officer since October 2016 and was its Group President of Marketing, Sales & Customer Operations from 2006 to 2016. As President and Chief Executive Officer of TDS Telecom, the board of directors considers it appropriate and beneficial for Mr. Butman to serve on the TDS board to provide the board with his views on strategy and operations of TDS Telecom and its businesses. Mr. Butman has a Bachelor of Business Administration in Finance from the University of Wisconsin—Eau Claire and a Master of Business Administration in Finance from the University of Wisconsin—Madison.
  Age 60

Director Nominee in 2018

Prior Business and other Experience

Significant leadership and operational experience since joining TDS Telecom in 1985 including several executive leadership roles in management, sales and marketing, and regulatory affairs.


Current Public Company Boards

None


 

Former Public Company Boards

None


 

 

LeRoy T. Carlson, Jr.    President, CEO and Non-Independent Director

Current Role: Director; TDS President, since 1981, and Chief Executive Officer, since 1986

Mr. Carlson brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS and its subsidiaries and the industries in which they operate as a result of his many years as an investor in TDS, a trustee of the TDS Voting Trust, a director and President and Chief Executive Officer of TDS, and a director and Chairman of its two principal business units. As the senior executive officer of TDS and each of its business units, the board of directors considers it essential that Mr. Carlson serve on the TDS board to provide the board with his views on strategy and operations of TDS and its business units. In addition, as a shareholder with a significant economic stake in TDS, Mr. Carlson provides to the TDS board of directors the perspective of shareholders in managing and operating TDS in the long-term interests of shareholders. He also has experience as a member of the TDS Corporate Governance and Nominating Committee since 2004. Mr. Carlson has an MBA from Harvard University.

LeRoy T. Carlson, Jr. is the brother of Walter C. D. Carlson, Letitia G. Carlson, M.D. and Prudence E. Carlson.

  Age 71

Director since 1968

TDS Board Committees

Corporate Governance and Nominating Committee

Technology Advisory Group Committee, Chairperson

Prior Business and other Experience

Trustee of the TDS Voting Trust


Current Public Company Boards

U.S. Cellular, Chairman, since 1989


 

Former Public Company Boards

Aerial Communications (formerly NASDAQ: AERL)

American Paging (formerly AMEX: APP)


 

 

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Letitia G. Carlson, MD, MPH, FACP    Non-Independent Director

Current Role: Director; Physician and Associate Clinical Professor at George Washington University Medical Faculty Associates for more than five years

Dr. Carlson brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS and its subsidiaries and the industries in which they operate as a result of her many years as an investor in TDS, as a trustee of the TDS Voting Trust, and as a director of TDS. Further, her background and attributes bring diversity to the board. In addition, as a shareholder with a significant economic stake in TDS, Dr. Carlson provides to the TDS board of directors the perspective of shareholders in managing and operating TDS in the long-term interests of shareholders. Dr. Carlson has an MD from Harvard Medical School, a Master of Public Health (MPH) from George Washington University and is a Fellow of the American College of Physicians (FACP).

Dr. Carlson is the sister of LeRoy T. Carlson, Jr., Walter C. D. Carlson and Prudence E. Carlson.

  Age 57

Director since 1996

Prior Business and other Experience

Trustee of the TDS Voting Trust


Current Public Company Boards

None


 

Former Public Company Boards

None


 

 

Prudence E. Carlson    Non-Independent Director

Current Role: Director

Ms. Carlson brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS and its subsidiaries and the industries in which they operate as a result of her many years as an investor in TDS, as a trustee of the TDS Voting Trust, and as a director of TDS. Further, her background and attributes bring diversity to the board. In addition, as a shareholder with a significant economic stake in TDS, Ms. Carlson provides to the TDS board of directors the perspective of shareholders in managing and operating TDS in the long-term interests of shareholders. Ms. Carlson has a Bachelor of Arts degree from Harvard University.

  Age 66

Director since 2008

Prior Business and other Experience

Trustee of the TDS Voting Trust


Ms. Carlson is the sister of LeRoy T. Carlson, Jr., Walter C.D. Carlson and Letitia G. Carlson, M.D.

 

 

Current Public Company Boards

 

Former Public Company Boards

 

 

None

 

None

 

 

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Walter C. D. Carlson    Chairman of the Board and Non-Independent Director

Current Role: Director; Partner of the law firm Sidley Austin LLP and a member of its executive committee for more than five years

Mr. Carlson brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS and its subsidiaries and the industries in which they operate as a result of his many years as an investor in TDS, as a trustee of the TDS Voting Trust, as a director of TDS and U.S. Cellular, as Chairman of the Board of TDS, and as a result of having represented many public and private corporate clients. In addition, as a shareholder with a significant economic stake in TDS, Mr. Carlson provides to the TDS board of directors the perspective of shareholders in managing and operating TDS in the long-term interests of shareholders. He also has experience as a member and the chairperson of the TDS Corporate Governance and Nominating Committee since 2004. Mr. Carlson has a J.D. from Harvard University.

Walter C. D. Carlson is the brother of LeRoy T. Carlson, Jr., Letitia G. Carlson, M.D. and Prudence E. Carlson.

  Age 64

Director since 1981, non-executive Chairman of the Board since 2002

TDS Board Committee

Corporate Governance and Nominating Committee, Chairperson

Prior Business and other Experience

Trustee of the TDS Voting Trust


Current Public Company Boards

 

Former Public Company Boards

 

 

U.S. Cellular, since 1989

 

Aerial Communications, Inc.
(formerly NASDAQ: AERL)

 

 

Kenneth R. Meyers    Non-Independent Director

Current Role: Director; President and Chief Executive Officer of U.S. Cellular, since 2013

Mr. Meyers brings to the TDS board of directors substantial experience, expertise and qualifications with respect to TDS and its subsidiaries and the industries in which they operate as a result of his background as a director of TDS and U.S. Cellular for many years, as President and Chief Executive Officer of U.S. Cellular since 2013, as Executive Vice President and Chief Financial Officer of TDS between 2007 and 2013, and as a result of his many years in other positions at U.S. Cellular. He also brings substantial experience, expertise and qualifications in TDS' businesses and in management, finance and accounting as a result of such background. As the President and Chief Executive Officer of U.S. Cellular, TDS' largest business unit, the board of directors considers it appropriate and beneficial for Mr. Meyers to serve on the TDS board to provide the board with his views on strategy and operations of U.S. Cellular. Mr. Meyers has an MBA from Northwestern University's J. L. Kellogg Graduate School of Management.
  Age 64

Director since 2007

Prior Business and other Experience

TDS' executive vice president and chief financial officer (2007-2013)

Former Director, TDS Telecom between 2007 and 2014

Significant leadership and operational experience since joining U.S. Cellular in 1987 including several executive leadership roles providing expertise in management, finance and accounting


Current Public Company Boards

 

Former Public Company Boards

 

 

U.S. Cellular, since 1999

 

None

 

 

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Christopher D. O'Leary    Independent Director

Current Role: Director; Senior Advisor at KKR, since 2017

Mr. O'Leary brings to the TDS board of directors substantial experience, expertise and qualifications as a result of his many years as a director of TDS and as a result of his over 30 years of experience in marketing, management and operations experience. In addition, Mr. O'Leary has over 15 years of significant and high-level experience in management of large multi-national businesses with a large number of employees, including dealing with businesses outside the U.S. Because of the competitive nature of the TDS businesses, the TDS board of directors believes that it is highly desirable to have a director with significant knowledge and experience in marketing and executive leadership. In addition, Mr. O'Leary has experience as a member of the TDS Compensation Committee since 2007 and the TDS Audit Committee since 2016. Mr. O'Leary has an MBA from New York University.
  Age 58

Director since 2006

TDS Board Committees

Audit Committee

Compensation Committee, Chairperson since 2016

Technology Advisory Group Committee

Prior Business and other Experience

Former Chief Operating Officer of General Mills International (2006-2016)

Current Public Company Boards

None

  Former Public Company Boards

Newell Rubbermaid (NYSE: NWL), member of Nominating/Governance Committee and Organizational Development & Compensation Committee

 
Previously president of the General Mills Meals Division, President of the General Mills Betty Crocker Division; and VP of Corporate Strategy and M&A; joined General Mills in 1997

Significant roles with leading consumer packaged goods providers, including PepsiCo (NYSE: PEP) (1981-1997)

George W. Off    Independent Director

Current Role: Director

Mr. Off brings to the TDS board of directors substantial experience, expertise and qualifications as a director of TDS for many years. He also has significant experience in marketing and management as a result of his prior positions as a director and as chief executive officer and chairman of Checkpoint Systems, Inc. and of Catalina Marketing Corporation. Because of the retail nature of the TDS businesses, the TDS board of directors believes that it is highly desirable to have a director with significant knowledge and experience in retail marketing, as well as significant, high-level experience in managing consumer businesses. In addition, Mr. Off has significant experience as a member of the TDS Audit Committee and the TDS Compensation Committee for many years. Mr. Off has a Bachelor of Science degree from the Colorado School of Mines. Mr. Off has also earned the CERT certificate in Cybersecurity Oversight issued by Carnegie Mellon University.
  Age 71

Director since 1997

TDS Board Committees

Audit Committee, Chairperson

Compensation Committee

Technology Advisory Group Committee

Prior Business and other Experience

Infinian Mobile Commerce & Analytic Solutions (2011-2012)

Chief Executive Officer, Checkpoint Systems (2002-2009)

Current Public Company Boards

None

  Former Public Company Boards

Checkpoint Systems (2002-2009)

Catalina Marketing Corporation (1998-2000)

 
President and Chief Executive Officer, Catalina Marketing Corporation (1994-1998)

Your board of directors unanimously recommends a vote "FOR" each of the above nominees for election by the holders of Series A Common Shares.

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Incumbent Director whose term is expiring at 2018 Annual Meeting

        David A. Wittwer.    Mr. Wittwer retired as President and Chief Executive Officer of TDS Telecom at the end of 2017 and will not stand for re-election as a director at the 2018 Annual Meeting. As a result, his term will expire at the 2018 Annual Meeting. As disclosed above, James W. Butman has been nominated to fill Mr. Wittwer's directorship at the 2018 Annual Meeting.

Director Emeritus

        Herbert S. Wander.    Herbert S. Wander is director emeritus following the 2017 annual meeting. Mr. Wander is Of Counsel at Katten Muchin Rosenman LLP.

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CORPORATE GOVERNANCE

Board of Directors

        The business and affairs of TDS are managed by or under the direction of the board of directors. The board of directors consists of twelve members. Holders of Common Shares elect 25% of the directors rounded up plus one director, or a total of four directors based on a board size of twelve directors. Holders of Series A Common Shares elect the remaining eight directors.

Board Leadership Structure

        Under its leadership structure, the same person does not serve as both the Chief Executive Officer and Chairman of the Board. Walter C. D. Carlson, who is not an employee or officer of TDS, serves as the non-executive Chairman of the Board and presides over meetings of the full board of directors. LeRoy T. Carlson, Jr., who is an officer and employee of TDS, serves as President and Chief Executive Officer and is responsible for day-to-day leadership and performance of TDS. LeRoy T. Carlson, Jr. and Walter C. D. Carlson are both trustees of the TDS Voting Trust. TDS has determined that this leadership structure is appropriate given the specific characteristics and circumstances of TDS and it is set forth in TDS' Bylaws. In particular, TDS considers it appropriate that the person who is the President and Chief Executive Officer of TDS also not serve as the Chairman of the Board in order to separate the executive who is primarily responsible for the performance of the company from the person who presides over board meetings at which performance of TDS is evaluated.

Board Role in Risk Oversight

        The following discloses the extent of the board of directors' role in the risk oversight of TDS, including how the board administers its oversight function, and the effect of the board's leadership structure discussed above on risk oversight.

        The TDS board of directors is primarily responsible for oversight of the risk assessment and risk management process of TDS. Although the TDS board of directors can delegate this responsibility to board committees, the TDS board has not done so, and continues to have full responsibility relating to risk oversight. Although the TDS board of directors has oversight responsibilities, the actual risk assessment and risk management is carried out by the President and Chief Executive Officer and other officers of TDS and reported to the board.

        TDS has established an Enterprise Risk Management (ERM) program, which applies to TDS and all of its business units. This program was designed with the assistance of an outside consultant and was integrated into TDS' existing management and strategic planning processes. The ERM program provides a common enterprise-wide language and discipline around risk identification, quantification and mitigation. The TDS board of directors receives periodic updates about the status and progress of this ERM program and takes action to the extent appropriate based on such updates.

        Although the TDS board of directors has ultimate oversight authority over risk and has not delegated such responsibility to any committees, certain TDS committees also have certain responsibilities relating to risk.

        Under NYSE listing standards, and as set forth in its charter, the Audit Committee discusses TDS' major financial and operational risk exposures and the steps management has taken to monitor and control such exposures in connection with its review of financial statements and related matters on a quarterly basis.

        In addition, as part of the ERM program, the Audit Committee discusses guidelines and policies to govern the process by which risk assessment and risk management are handled. The Audit Committee receives updates and discusses policies with respect to risk assessment and risk management on a regular basis.

        In addition, in connection with the functions of the Compensation Committee relating to the compensation of the executive officers of TDS (other than executive officers of U.S. Cellular), the Compensation Committee considers risks relating to the compensation of executive officers of TDS in

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addition to its responsibilities with respect to long-term compensation for all employees, which is discussed below under "Risks from Compensation Policies and Practices."

        Also, the TDS Corporate Governance and Nominating Committee ("CGNC") may consider certain risks in connection with its responsibilities relating to corporate governance and director nominations.

        TDS has established a Technology Advisory Group. The functions of the Technology Advisory Group include reviewing, monitoring and informing the board of directors on technology matters including those related security, threats, risks and internal controls, including safeguards, vulnerabilities, preparedness, disaster recovery plans, cybersecurity-insurance and similar matters.

        TDS believes that its leadership structure facilitates risk oversight because the role of the President and Chief Executive Officer, who has primary operating responsibility to assess and manage TDS' exposure to risk, is separated from the role of the Chairman of the Board, who sets the agenda for and presides over board of directors' meetings at which the TDS board exercises its oversight responsibility with respect to risk.

Board Oversight of Cybersecurity

        TDS believes oversight of cybersecurity risks is the responsibility of the full board of directors and receives annual updates regarding TDS' assessment of threats and mitigation plans. The Audit Committee also exercises oversight over the control-related cybersecurity risks and mitigation plans and receives updates bi-annually. Cybersecurity is also discussed at the Technology Advisory Group as warranted.

        George W. Off, chairperson of the TDS Audit Committee, completed the NACD Cyber-Risk Oversight program and earned the CERT Certificate in Cybersecurity Oversight issued by Software Engineering Institute at Carnegie Mellon University. The program is designed to help directors enhance their cybersecurity literacy and strengthen the board's role in overseeing the organization's cyber preparedness.

Director Independence and New York Stock Exchange Listing Standards

        TDS Common Shares are listed on the NYSE and subject to its listing standards.

        TDS is a "controlled company" as defined by the NYSE because over 50% of the voting power for the election of directors of TDS is held by the trustees of the TDS Voting Trust (i.e., the TDS Voting Trust has over 90% of the voting power in the election of directors elected by the holders of Series A Common Shares and thus has the voting power to elect eight of the twelve directors, or 66.7% of the directors). Accordingly, it is exempt from certain NYSE listing standards that require listed companies that are not controlled companies to (i) have a board composed of a majority of directors who qualify as independent, (ii) have a compensation committee composed entirely of directors who qualify as independent, and (iii) have a nominating/corporate governance committee composed entirely of directors who qualify as independent.

        TDS is required to have at least three directors who qualify as independent to serve on the Audit Committee and the TDS Audit Committee has four members. Such directors must qualify as independent under the NYSE Listed Company Manual, including the independence requirements under Section 10A-3 of the Securities Exchange Act of 1934, as amended (collectively, "Section 10A-3"). TDS' definition for independence is the same as that of the NYSE and TDS does not have any additional independence requirements.

        Pursuant to the requirements of the NYSE, the TDS board of directors affirmatively determined (i) that each member of the TDS Audit Committee has no material relationship with TDS or any other member of the TDS consolidated group ("TDS Consolidated Group"), either directly or as a partner, shareholder or officer of an organization that has a relationship with any member of the TDS Consolidated Group, and (ii) that each of such persons is independent considering all relevant facts and circumstances, including commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, if any. The TDS board of directors considered that none of the independent

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directors had any transactions, relationships or arrangements with any member of the TDS Consolidated Group, except in their capacities as directors and members of board committees of TDS.

        In addition to the four independent directors on the Audit Committee, incumbent directors Gary L. Sugarman and Kimberly D. Dixon qualify as independent directors under the listing standards of the NYSE. As a result, six of the twelve director nominees, or 50% of the directors, qualify as independent under the listing standards of the NYSE.

Meetings of Board of Directors

        The board of directors held six meetings during 2017. Each director attended at least 75% of the total number of board meetings and 75% of their respective committee meetings (at which time such person was a director).

Corporate Governance Guidelines

        Under NYSE listing standards, TDS is required to adopt and disclose corporate governance guidelines that address certain specified matters. TDS has adopted Corporate Governance Guidelines that can be found on TDS' website, www.tdsinc.com, under Corporate Governance—Governance Guidelines.

        Succession Planning:    The corporate governance guidelines provide: In the event of the absence of the President and CEO or in the event of his inability or refusal to act as President and CEO for a continuous period of three months or in the event of his death, resignation, removal or disqualification (a "permanent absence"), the Chairman of the Board will, automatically and without any action on the part of the Board of Directors or otherwise, succeed to and perform the duties of the President and CEO and, when so acting, will have all the powers of and be subject to all the restrictions placed upon the President and CEO set forth in the Company's bylaws. In the event of the permanent absence of both such persons, the vacancy in the position of President and CEO will be filled with a person who is selected by the Board of Directors.

        The board of directors receives an annual presentation regarding succession planning and discusses it regularly.

        Board Self-Assessment:    TDS undertakes an annual Board self-assessment. The assessment is performed by the Senior Vice President—Corporate Relations and Corporate Secretary and discussions have traditionally been open, candid and frank. This self-assessment covered matters relating to board meetings, board composition, committees, board oversight, and other matters. Additionally, director skills, background, characteristics and succession are discussed. Similarly, each committee of the board of directors evaluated its performance and effectiveness in 2017.

Corporate Governance and Nominating Committee

        Under NYSE listing standards, a controlled company is not required to have a Corporate Governance and Nominating Committee ("CGNC"). In addition, if a controlled company voluntarily establishes a CGNC, it is not required to be composed entirely of independent directors. TDS voluntarily established a CGNC and its members are Walter C. D. Carlson (chairperson), LeRoy T. Carlson, Jr. and Mitchell H. Saranow. Mr. Saranow qualifies as an independent director under NYSE listing standards. The primary function of the CGNC is to advise the board on corporate governance matters, including developing and recommending to the board the corporate governance guidelines for TDS. In addition, the charter of the committee provides that the committee will develop selection objectives and oversee the search for qualified individuals to serve on the board of directors and recommend to the board prospective nominees and the re-nomination of incumbent directors as it deems appropriate. For a complete description of the Director Nomination process, please see "Director Nomination Process" below. A copy of the committee charter is available on TDS' website, www.tdsinc.com, under Corporate Governance—Board of Directors—Board Committees & Charters.

        The Corporate Governance and Nominating Committee held three meetings during 2017.

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Audit Committee

        The purpose and primary functions of the Audit Committee are to (a) assist the board of directors of TDS in its oversight of (1) the integrity of TDS' financial statements, (2) TDS' compliance with legal and regulatory requirements, (3) the qualifications and independence of TDS' registered public accounting firm, and (4) the performance of TDS' internal audit function and registered public accounting firm; (b) prepare an audit committee report as required by the rules of the SEC to be included in TDS' annual proxy statement and (c) perform such other functions as set forth in the Audit Committee charter, which shall be deemed to include the duties and responsibilities as set forth in NYSE requirements. A copy of the Audit Committee charter is available on TDS' website, www.tdsinc.com, under Corporate Governance—Board of Directors—Board Committees & Charters.

        In addition, the Audit Committee has certain responsibilities relating to risk management as discussed above under "Board Role in Risk Oversight."

        The Audit Committee members are George W. Off (chairperson), Clarence A. Davis, Christopher D. O'Leary, and Mitchell H. Saranow. Each member qualifies as independent under NYSE listing standards. The board has determined that all members are financially literate and have "accounting or related financial management expertise and that Clarence A. Davis and Mitchell H. Saranow qualify as "audit committee financial experts" as such term is defined by the SEC.

        In accordance with the SEC's safe harbor rule for "audit committee financial experts," no member designated as an audit committee financial expert shall (i) be deemed an "expert" for any other purpose or (ii) have any duty, obligation or liability that is greater than the duties, obligations and liabilities imposed on a member of the board or the audit committee not so designated.

        The Audit Committee held nine meetings during 2017. Certain of these meetings were joint meetings with the U.S. Cellular Audit Committee, which regularly meets with the TDS Audit Committee.

Pre-Approval Procedures

        The Audit Committee has adopted a policy pursuant to which all audit and non-audit services provided by TDS' principal independent registered public accounting firm must be pre-approved by the Audit Committee. The following describes the policy as amended. "Under no circumstances may TDS' principal independent registered public accounting firm provide services that are prohibited by the Sarbanes Oxley Act of 2002 or rules issued thereunder. Non-prohibited audit related services and certain tax and other services may be provided to TDS, subject to such pre-approval process and prohibitions. The Audit Committee has delegated to the chairperson together with one other member of the Audit Committee the authority to pre-approve services by the principal independent registered public accounting firm. In the event the chairperson is unavailable, pre-approval may be given by any two members of the Audit Committee. Specified services have been pre-approved in detail up to specified dollar limits pursuant to the policy. All services are required to be reported to the full Audit Committee at each of its regularly scheduled meetings."

Review, Approval or Ratification of Transactions with Related Persons

        The Audit Committee charter provides that the Audit Committee has responsibilities for related party transactions between officers, directors, principal shareholders and the company. In general, related party transactions would include transactions required to be disclosed in TDS' 2018 Proxy Statement pursuant to Item 404 of Regulation S-K of the SEC, such as any financial transaction, arrangement, or relationship (including any indebtedness or guarantee of indebtedness) or a series of transactions, that has taken place since the beginning of TDS' last fiscal year or any currently proposed transaction in which: (1) TDS was or is to be a participant, (2) the amount involved exceeds $120,000 and (3) any "related person" had or will have a direct or indirect material interest in the transaction during any part of the fiscal year. For this purpose, in general, the term "related person" includes any director or executive officer of TDS, any nominee for director, any beneficial owner of more than five percent of any class of TDS' voting securities and any "immediate family member" of such persons.

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        Other than NYSE requirements, TDS has no related party policies or procedures relating to (i) the types of transactions that are covered by such policies and procedures; (ii) the standards to be applied pursuant to such policies and procedures; or (iii) the persons or groups of persons on the board of directors or otherwise who are responsible for applying such policies and procedures, and TDS does not maintain any written document evidencing such policies and procedures.

        See Executive and Director Compensation—Compensation Committee Interlocks and Insider Participation—Certain Relationships and Related Transactions for discussion of any related party transactions since the beginning of the last fiscal year.

Compensation Committee

        Although not required to do so under NYSE listing standards because it is a controlled company, TDS voluntarily established a Compensation Committee comprised solely of directors who qualify as independent under the rules of the NYSE. None of such members receives any compensation from the TDS Consolidated Group except permitted compensation for services as a TDS director and committee member, and none of such members is affiliated with the TDS Consolidated Group by reason of being an executive officer, or the beneficial owner of more than 10% of any class of voting equity security, of any member of the TDS Consolidated Group.

        Under the Dodd-Frank Act, the SEC directed the NYSE to adopt listing standards prohibiting the listing of any equity security of an issuer that does not comply with specified listing requirements, including with respect to the independence of members of the compensation committee of the board of directors of such issuer, except that this provision of the Dodd-Frank Act expressly provides that it does not apply to an issuer that is a controlled company. In 2013, the NYSE adopted listing standards as required pursuant to such SEC direction.

        The primary functions of the Compensation Committee are to discharge the board of directors' responsibilities relating to the compensation of the executive officers of TDS, other than executive officers of U.S. Cellular or any of its subsidiaries. The responsibilities of the Compensation Committee include the review of salary, bonus, long-term compensation and all other elements of compensation of such executive officers.

        For these purposes, "executive officers" means all officers that are employees who are or will be identified in TDS' annual proxy statement as "executive officers," including the President and Chief Executive Officer of TDS Telecom and the President and Chief Executive Officer of U.S. Cellular, except that the compensation of the President and Chief Executive Officer of U.S. Cellular is established and administered by U.S. Cellular's chairman and Long-Term Incentive Compensation Committee, as described in U.S. Cellular's 2018 proxy statement.

        The Compensation Committee is comprised of at least two non-employee members of TDS' board of directors, each of whom is an "outside director" within the meaning of section 162(m) of the Internal Revenue Code of 1986, as amended, and a "Non-Employee Director" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended. The members of the Compensation Committee are Christopher D. O'Leary (chairperson), Kimberly D. Dixon, George W. Off, and Gary L. Sugarman. These persons do not have any compensation committee interlocks and are not related to any other directors.

        The Compensation Committee charter permits it to delegate some or all of the administration of the long-term incentive plans or programs of TDS to the President and Chief Executive Officer or other executive officers of TDS as the committee deems appropriate, to the extent permitted by law and the applicable long-term incentive plan or program, but not regarding any award to the President and Chief Executive Officer. However, the Compensation Committee has not delegated any of its authority with respect to any of the officers identified in the below Summary Compensation Table.

        The Compensation Committee's charter provides that the Compensation Committee will obtain advice and assistance from the Chief Executive Officer and the Senior Vice President—Human Resources and from any other officer or employee of TDS, as it determines is appropriate. TDS' Human Resources Department also supports the Compensation Committee in its work. As discussed below, the

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Compensation Committee also utilizes the services of an independent compensation consultant. See the Compensation Discussion and Analysis below for information about compensation consultants, which information is incorporated by reference herein.

        The Compensation Committee does not approve director compensation. It is the view of the TDS board of directors that this should be the responsibility of the full board of directors. Only non-employee directors receive compensation in their capacity as directors and, as a result, the view of the TDS board of directors is that all directors should participate in such compensation decisions, rather than only some or all of the non-employee directors.

        A copy of the charter of the Compensation Committee is available on TDS' website, www.tdsinc.com, under Corporate Governance—Board of Directors—Board Committees & Charters.

        The Compensation Committee held five meetings during 2017.

Pricing Committee

        TDS has a Pricing Committee, consisting of LeRoy T. Carlson, Jr., as chairperson, and Kenneth R. Meyers, as a regular member. Walter C. D. Carlson is an alternate member of this committee. The Pricing Committee does not have a charter. Pursuant to resolutions of the TDS board of directors from time to time, the Pricing Committee is authorized to take certain actions with respect to financing and capital transactions of TDS, such as the issuance, redemption or repurchase of debt or the repurchase of shares of capital stock of TDS.

Technology Advisory Group Committee

        In 2015, the board of directors established the Technology Advisory Group ("TAG") Committee of the board of directors. The TAG Committee does not have a charter and its members are LeRoy T. Carlson, Jr. (chairperson), Kimberly D. Dixon, George W. Off and Christopher D. O'Leary. The members of the TAG Committee are also members of the Technology Advisory Group which consists of representatives from the TDS and U.S. Cellular Boards of Directors along with senior technology executives of the two companies. The purpose of which is to review, monitor and inform the board of directors on technology and related matters affecting TDS business units and its customers, along with its competitors and their customers. The TAG does not have authority to take action with respect to any technology matter, but serves solely in an informational and advisory role. The TAG Committee and the Technology Advisory Group report to the board of directors.

        The Technology Advisory Group Committee held four meetings during 2017.

Director Nomination Process

        The CGNC charter provides that the committee will develop selection objectives and oversee the search for qualified individuals to serve on the board of directors and recommend to the board of directors prospective nominees and the re-nomination of incumbent directors. The committee does not nominate directors. It only recommends to the board of directors prospective nominees and the re-nomination of incumbent directors as it deems appropriate. The entire board of directors determines whether to nominate prospective nominees and re-nominate incumbent directors.

        As part of developing selection objectives, the Committee will consider, among other things, whether the Board has the right mix of experience, skills, backgrounds, diversity and other characteristics, and whether the Committee should recommend that candidates with additional desired experience, skills, backgrounds, diversity and characteristics be recruited and nominated for the Board.

        In 2013, the CGNC established a process relating to board refreshment and committee composition. Related to this:

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        Based on the process, the CGNC embarked on board refreshment for the 2017 annual meeting and Kimberly D. Dixon was elected by the holders of the Common Shares and Herbert S. Wander was appointed Director Emeritus.

        TDS does not have a formal policy with regard to the consideration of any director candidates recommended by shareholders. However, because the TDS Voting Trust has over 90% of the voting power in the election of directors elected by the holders of Series A Common Shares, nominations of directors for election by the holders of Series A Common Shares are based on the recommendation of the trustees of the TDS Voting Trust. With respect to candidates for director to be elected by the holders of Common Shares, the CGNC and/or the TDS board may from time to time informally consider candidates recommended by shareholders that hold a significant number of Common Shares. Shareholders that desire to nominate directors must follow the procedures set forth in TDS' Bylaws.

        Considering the importance of Federal Communications Commission ("FCC") licenses to TDS, the TDS Bylaws provide that a person will not be eligible to serve or to continue to serve as a director unless he or she is eligible to serve as a director of a company that controls licenses granted by the FCC, as determined by the TDS CGNC or the board of directors with the advice of counsel. Another qualification requirement provides that a person will not be eligible to serve or to continue to serve as a director if he or she is or becomes affiliated with, employed by or a representative of, or has or acquires a material personal involvement with, or material financial interest in, a Business Competitor (as defined in the TDS Bylaws), as determined by the TDS CGNC or the board of directors. Another qualification requirement provides that a person will not be eligible to serve or to continue to serve as a director if, as determined by the TDS CGNC or the board of directors with the advice of counsel, (i) such person's election as a director would violate federal, state or foreign law or applicable stock exchange requirements (other than those related to independence) or (ii) such person has been convicted, including a plea of guilty or nolo contendere, of any felony, or of any misdemeanor involving moral turpitude.

        Section 1.15 of the TDS Bylaws provides that a person properly nominated by a shareholder for election as a TDS director shall not be eligible for election as a director unless he or she signs and returns to the Secretary of TDS, within fifteen days of a request therefor, written responses to any questions posed by the Secretary, that are intended to (i) determine whether such person may qualify as independent and would qualify to serve as a director of TDS under rules of the FCC, and (ii) obtain information that would be disclosed in a proxy statement with respect to such person as a nominee for election as a director and other material information about such person.

        The TDS CGNC does not have a formal policy with regard to the consideration of diversity in identifying director nominees. However, as reflected in its Code of Business Conduct, TDS values diversity and does not discriminate on the basis of gender, age, race, color, sexual orientation, religion, ancestry, national origin, marital status, disability, military or veteran status or citizenship status. In considering whether to recommend that individuals be nominated as director candidates, the CGNC takes into account all facts and circumstances, including diversity. For this purpose, diversity broadly means a variety of backgrounds, experience, skills, education, attributes, perspectives and other differentiating characteristics. TDS believes that it is desirable for a board to have directors who can bring the benefit of diverse backgrounds, experience, skills and other characteristics to permit the board to have a variety of views and insights. Accordingly, the CGNC considers how director candidates can contribute to board diversity as one of the many factors it considers in identifying nominees for director.

        Whether or not the CGNC will recommend that the TDS board re-nominate, and the TDS board will re-nominate, existing directors for re-election depend on all facts and circumstances, including views on how the director has performed his or her duties. In the event of a vacancy on the board of a director

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elected by the holders of Series A Common Shares, nominations are based on the recommendation of the trustees of the TDS Voting Trust. In the event of a vacancy on the board of a director elected by the holders of Common Shares, TDS may use various sources to identify potential candidates, including an executive search firm. In addition, the CGNC may consider recommendations by shareholders that hold a significant number of Common Shares. Potential candidates are initially screened by the CGNC and by other persons that the committee designates. Following this process, the CGNC will consider whether one or more candidates should be considered by the full board of directors.

        All of the nominees approved by the TDS board for inclusion on TDS' proxy card for election at the 2018 Annual Meeting were recommended for re-nomination by the Corporate Governance and Nominating Committee. In 2017, TDS paid a fixed fee to a search firm for identification of potential board candidates.

Shareholder Engagement

        The TDS board of directors and management value the views of our shareholders and are committed to doing what is in the best interests of all shareholders over the long term.

        TDS has a long record of shareholder engagement. Quarterly, we conduct earnings conference calls both telephonically and by webcast to discuss financial results with shareholders. Also, senior management attends and all directors are encouraged to attend each Annual Meeting of Shareholders, and shareholders have the opportunity to make comments and ask questions at such meeting. We also regularly attend investor conferences and hold one-on-one meetings with shareholders and potential investors throughout the United States as well as overseas. In addition, we have telephonic calls with shareholders and analysts on a regular basis, review correspondence submitted by shareholders to management and/or the board of directors, and have discussions with proxy advisory services.

        TDS also has an open door policy. If shareholders are in the Chicago area and would like to meet members of management, the Investor Relations team will try to accommodate them, calendars permitting.

        Management spends significant time meeting with our shareholders, listening to their concerns and responding to their feedback on company performance, corporate governance, executive compensation and other matters. Our shareholder engagement efforts with respect to corporate governance topics are intended to occur outside of the proxy season. Our engagement team is led by our Senior Vice President of Corporate Relations and Corporate Secretary and, depending on the particular engagement, may include independent directors of TDS, or executive officers of TDS, U.S. Cellular and/or TDS Telecom, including the Chairman, President/CEO and/or CFO of such entities. In addition, such engagement often includes LeRoy T. Carlson, Jr., who is President and CEO of TDS and Chairman of U.S. Cellular and TDS Telecom, as well as a director, a trustee of the Voting Trust that controls TDS and a beneficial owner of a significant equity interest in TDS.

        TDS' shareholder engagement program will at all times be conducted in accordance with applicable law, including Regulation FD, and it does not share material non-public information with any shareholder, investor or analyst. Further, our shareholder engagement program in no way replaces or diminishes other ways in which shareholders can communicate with management or the board of directors.

        Shareholders have multiple avenues to provide input. TDS provides its shareholders with the ability to voice their perspectives to management or the board of directors by mail or email, with an option to direct such communications to any individual director, a specific committee, all independent directors, all non-employee directors or all directors.

        TDS encourages you to share your opinions, interests and concerns and its Investor Relations department is the key point of contact for shareholder interaction. Shareholders may access information about TDS and obtain contact information through the Investor Relations section of our website, www.tdsinc.com. If you would like to communicate directly to our board of directors, please refer to the next section entitled "Shareholder Communication with Directors."

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Shareholder Communication with Directors

        Shareholders or other interested parties may send germane communications to the TDS board of directors, to the Chairman of the Board, to the non-management or independent directors or to specified individual directors of TDS at any time. Shareholders or other interested parties should direct their communication to such persons or group in care of the Secretary of TDS at its corporate headquarters, 30 N. LaSalle St., Suite 4000, Chicago IL 60602. Any shareholder or other communications that are addressed to the board of directors, the Chairman of the Board, the non-management or independent directors or specified individual directors will be delivered by the Secretary of TDS to such persons or group.

        For more information, see the instructions on TDS' website, www.tdsinc.com, under Corporate Governance—Board of Directors—Contact the Board.

Meetings of Non-Management and Independent Directors

        As required by NYSE listing standards, the non-management directors of TDS meet at regularly scheduled executive sessions without management. The TDS Chairman of the Board, Walter C. D. Carlson, a non-management director, presides at all meetings of the non-management directors. In addition, the independent directors of TDS meet at least once per year in an executive session without management or directors who are not independent.

TDS Policy on Attendance of Directors at Annual Meeting of Shareholders

        All directors are invited and encouraged to attend each Annual Meeting of shareholders, which is normally followed by a meeting of the board of directors. In general, all directors attend each Annual Meeting of shareholders unless they are unable to do so due to unavoidable commitments or intervening events. All of the persons serving as directors at the time, other than Prudence E. Carlson and George W. Off attended the 2017 annual meeting.

Stock Ownership Guidelines

        The TDS Corporate Governance Guidelines provide that, within three years after the date on which a director first became a director and thereafter for so long as each director remains a director of TDS, each director shall own Series A Common Shares and/or Common Shares having a combined value of at least three times, or $240,000, the cash retainer which is currently $80,000. The board of directors reviews this minimum ownership requirement periodically. The stock ownership guidelines are included in TDS' Corporate Governance Guidelines, which have been posted to TDS' website, www.tdsinc.com, under Corporate Governance—Governance Guidelines.

        Although TDS does not have executive officer stock ownership guidelines, certain executive officers are directors and subject to the director stock ownership guidelines. In particular, as of February 28, 2018, the following executive officers were directors and each beneficially owned considerably more shares of common stock (Common Shares and Series A Common Shares) than required: excluding stock option awards, restricted stock units and phantom awards, LeRoy T. Carlson, Jr., owned 4,091,993 shares; Kenneth R. Meyers owned 47,470 shares; and David A. Wittwer owned 11,010 shares..

Code of Business Conduct and Ethics Applicable to Directors

        As required by Section 303A.10 of the NYSE Listed Company Manual, TDS has adopted a Code of Business Conduct and Ethics for Officers and Directors. This code has been posted to TDS' website, www.tdsinc.com, under Corporate Governance—Officer & Director Code of Conduct.

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TDS EXECUTIVE OFFICERS

        Although they are TDS executive officers, the below list does not include LeRoy T. Carlson, Jr. and Kenneth R. Meyers who are both TDS Board members, or James W. Butman who is a TDS Board nominee, because they are included above under Election of Directors. Unless indicated, the position held is an office of TDS. The age is as of the date this proxy statement.

Name   Age   Position

Daniel J. Dewitt

    66   Senior Vice President—Human Resources

Joseph R. Hanley

    51   Senior Vice President—Technology, Services and Strategy

Jane W. McCahon

    57   Senior Vice President—Corporate Relations and Corporate Secretary

Peter L. Sereda

    59   Senior Vice President—Finance and Treasurer

Douglas D. Shuma

    57   Senior Vice President—Finance and Chief Accounting Officer

Kurt B. Thaus

    59   Senior Vice President and Chief Information Officer

Scott H. Williamson

    67   Senior Vice President—Acquisitions and Corporate Development

        Daniel J. DeWitt.    Daniel J. DeWitt was appointed Senior Vice President of Human Resources in January 2017. Prior to that, he was an Executive Psychologist at Shields Meneley Partners, since 2006.

        Joseph R. Hanley.    Joseph R. Hanley was appointed Senior Vice President—Technology, Services and Strategy of TDS in 2012. Prior to that, he was Vice President—Technology Planning and Services of TDS for more than five years.

        Jane W. McCahon.    Jane W. McCahon was appointed Senior Vice President—Corporate Relations and Corporate Secretary in 2016. Prior to that, she was Vice President—Corporate Relations and Corporate Secretary since 2013. She joined TDS as Vice President—Corporate Relations in 2009.

        Peter L. Sereda.    Peter L. Sereda was appointed Senior Vice President—Finance and Treasurer of TDS in 2011. Prior to that, Mr. Sereda was Vice President and Treasurer of TDS for more than five years. In 2014, Mr. Sereda was appointed to the board of directors of U.S. Cellular.

        Douglas D. Shuma.    Douglas D. Shuma was appointed Senior Vice President—Finance and Chief Accounting Officer in March 2015. Prior to that, he was the Senior Vice President and Controller for more than five years. Pursuant to the TDS Bylaws, Mr. Shuma has been chief accounting officer of TDS since 2007 and has been the chief financial officer of TDS since 2013. Mr. Shuma was appointed Chief Accounting Officer of U.S. Cellular and TDS Telecom in 2011. Mr. Shuma is a Certified Public Accountant (inactive). In 2014, Mr. Shuma was appointed to the board of directors of U.S. Cellular. He is also a director of TDS Telecom since 2014.

        Mr. Shuma will retire from all of his positions at TDS and U.S. Cellular effective May 18, 2018, except as a director of U.S. Cellular. Except with respect to Mr. Shuma's directorship at U.S. Cellular, Douglas W. Chambers, currently serving as vice president and controller at U.S. Cellular, will succeed Mr. Shuma as Senior Vice President—Finance and Chief Accounting Officer of TDS in all of Mr. Shuma's positions at TDS and U.S. Cellular, including Mr. Shuma's role as chief financial officer and chief accounting officer at TDS and chief accounting officer at U.S. Cellular. Mr. Shuma's term as a director of U.S. Cellular will expire at U.S. Cellular's 2018 Annual Meeting on May 22, 2018, and his directorship will not be replaced.

        Kurt B. Thaus.    Kurt B. Thaus has been the Senior Vice President and Chief Information Officer of TDS for more than five years. In 2014, Mr. Thaus was appointed to the board of directors of U.S. Cellular. Effective January 1, 2018, Mr. Thaus assumed responsibility for TDS' subsidiary OneNeck IT Solutions, with the CEO of OneNeck IT reporting to him.

        Scott H. Williamson.    Scott H. Williamson has been the Senior Vice President—Acquisitions and Corporate Development of TDS for more than five years.

        All of the executive officers devote all of their employment to the affairs of TDS and/or its subsidiaries.

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Codes of Business Conduct and Ethics Applicable to Officers

        As required by Section 303A.10 of the NYSE Listed Company Manual, TDS has adopted a Code of Business Conduct and Ethics for Officers and Directors, that also complies with the definition of a "code of ethics" as set forth in Item 406 of Regulation S-K of the SEC. The foregoing code has been posted to TDS' Internet website, www.tdsinc.com, under Corporate Governance—Officer & Director Code of Conduct.

        In addition, TDS has adopted a broad Code of Business Conduct that is applicable to all officers and employees of TDS and its subsidiaries. The foregoing code has also been posted to TDS' Internet website, www.tdsinc.com, under Corporate Governance—Code of Conduct.

        TDS intends to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any amendment to any of the foregoing codes, by posting such information to TDS' Internet website. Any waivers of any of the foregoing codes for directors or executive officers will be approved by TDS' board of directors or an authorized committee thereof, as applicable, and disclosed in a Form 8-K. There were no such waivers during 2017.

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PROPOSAL 2
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

What am I being asked to vote on in Proposal 2?

        In Proposal 2, we are requesting shareholders to ratify the selection of PricewaterhouseCoopers LLP ("PwC") as our independent registered public accounting firm for the fiscal year ending December 31, 2018. This proposal gives our shareholders the opportunity to express their views on TDS' independent registered public accounting firm for the current fiscal year.

How does the board of directors recommend that I vote on this proposal?

        The board of directors unanimously recommends a vote FOR approval of the ratification of the selection of PwC.

        We anticipate continuing the services of PwC for the current year. Representatives of PWC are expected to be present at the 2018 Annual Meeting and they will have the opportunity to make a statement and respond to appropriate questions raised by shareholders or submitted in writing prior to the meeting.

Is this vote binding on the board of directors?

        This vote is an advisory vote only, and therefore it will not bind TDS, our board of directors or the Audit Committee. We are not required to obtain shareholder ratification of the selection of our independent registered public accounting firm by our Bylaws. However, we have elected to seek such ratification by the affirmative vote of the holders of a majority of the votes which could be cast by shares present or represented by proxy at the 2018 Annual Meeting and entitled to vote with respect to such matter. Should the shareholders fail to ratify the selection of PwC, the Audit Committee will review whether to retain such firm for the fiscal year ending December 31, 2018.

        Your board of directors unanimously recommends a vote "FOR" the approval of Proposal 2.

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FEES PAID TO PRINCIPAL ACCOUNTANTS

        The following sets forth the aggregate fees (including expenses) billed by TDS' principal accountants PwC for 2017 and 2016:

 
  2017   2016  

Audit Fees(1)

  $ 5,085,568   $ 4,561,773  

Audit Related Fees(2)

    327,087     285,000  

Tax Fees(3)

         

All Other Fees(4)

    14,670     16,740  

Total Fees

  $ 5,427,325   $ 4,863,513  

(1)
Represents the aggregate fees billed for professional services rendered for the audit of the annual financial statements for the years 2017 and 2016 included in TDS' and U.S. Cellular's Forms 10-K for those years and the reviews of the financial statements included in TDS' and U.S. Cellular's Forms 10-Q for those years, including the attestation and report relating to internal control over financial reporting. Also includes fees for services that are normally incurred in connection with statutory and regulatory filings or engagements, such as comfort letters, statutory audits, attest services, consents, and review of documents filed with the SEC.

(2)
Represents the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of TDS' and U.S. Cellular's financial statements that are not reported under Audit Fees. In both 2017 and 2016, this amount represents fees billed for audits of subsidiaries.

(3)
Represents the aggregate fees billed for tax compliance, tax advice, and tax planning, if any.

(4)
Represents the aggregate fees billed for services, other than services described in Notes (1), (2) or (3), if any. In both 2017 and 2016, this amount includes the fee for access to a virtual accounting research service.

        See "Corporate Governance—Audit Committee—Pre-Approval Procedures" above for a description of the Audit Committee's pre-approval policies and procedures with respect to TDS' independent registered public accounting firm.


AUDIT COMMITTEE REPORT

        The Audit Committee is composed of four board of directors that are "independent" as defined by the New York Stock Exchange. The Audit Committee has a written charter that has been approved by the TDS board of directors, a copy of which is available on TDS' website, www.tdsinc.com, under Corporate Governance—Board of Directors—Board Committees & Charters.

        Management is responsible for TDS' internal controls and the financial reporting process. TDS has an internal audit staff, which performs testing of internal controls and the financial reporting process. TDS' independent registered public accounting firm is responsible for performing an independent audit of TDS' consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the "PCAOB") and to issue a report thereon. The Audit Committee's responsibility is to monitor and oversee these processes.

        In this context, the Audit Committee reviewed and discussed the audited financial statements with management, the internal audit staff and representatives of PwC, TDS' independent registered public accounting firm for 2017. Management represented to the Audit Committee that TDS' consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. The discussions with PwC also included the matters required to be discussed by PCAOB Auditing Standard No. 1301, Communications with Audit Committees, relating to information regarding the scope and results of the audit. The Audit Committee also received from PwC written disclosures and a letter regarding its independence as required by applicable requirements of the

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PCAOB and discussed this with PwC. The Audit Committee also considered and concluded that the provision of non-audit services by PWC to TDS during 2017 was compatible with their independence.

        Based on and in reliance upon these reviews and discussions, the Audit Committee recommended to the board of directors that the audited financial statements as of and for the year ended December 31, 2017 be included in TDS' Form 10-K for the year ended December 31, 2017.

        In addition to the foregoing report required by SEC rules, the following represents supplemental information voluntarily disclosed by the Audit Committee:

        The Audit Committee holds quarterly regularly scheduled in person meetings along with teleconferences to review and approve the financial results for the immediately preceding period. The Audit Committee reviews TDS' Forms 10-Q and 10-K prior to filing with the SEC. The Audit Committee's agenda for meetings is established by the Audit Committee's chairperson with input from other Committee members and the TDS Vice President—Internal Audit.

        During 2017, at each of its regularly scheduled meetings, the Audit Committee met with the senior members of TDS' financial management team. Additionally, the Audit Committee had separate private sessions with TDS management, TDS' Vice President—Internal Audit, TDS' General Counsel, and representatives of PwC, at which candid discussions regarding financial management, legal, accounting, auditing and internal control issues took place.

        The Audit Committee is updated periodically on management's process to assess the adequacy of TDS' system of internal control over financial reporting, the framework used to make the assessment and management's conclusions on the effectiveness of TDS' internal control over financial reporting. The Audit Committee also discussed with PwC TDS' internal control assessment process, management's assessment and its evaluation of TDS' system of internal control over financial reporting.

        The Audit Committee reviewed with senior members of management, including the Vice President—Internal Audit and General Counsel, TDS' policies and procedures with respect to risk assessment and risk management. The overall adequacy and effectiveness of TDS' legal, regulatory and ethical compliance programs, including TDS' Code of Business Conduct and Whistleblower hotline activity, were also reviewed.

        The Audit Committee evaluates the performance of PwC, including the senior audit engagement team, each year and determines whether to reengage PwC or consider other audit firms. In doing so, the Audit Committee considers the quality and efficiency of the services provided by the auditors, the auditors' capabilities and the auditors' technical expertise and knowledge of TDS' operations and industry. Based on this evaluation, the Audit Committee decided to engage PwC as TDS' independent registered public accountants for the year ending December 31, 2018. Although the Audit Committee has the sole authority to appoint the independent registered public accounting firm, TDS anticipates that it will continue to request shareholders to ratify the selection of the independent registered public accounting firm at annual meetings of shareholders.

        In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management and PwC the audited financial statements of TDS, including the quality of the financial reporting, the reasonableness of significant accounting judgments and estimates, the clarity of disclosures in the financial statements, and the assessment of TDS' internal controls over financial reporting. In performing all of these functions, the Audit Committee acts in an oversight capacity and relies on TDS' management and PwC.

        By the members of the Audit Committee of the board of directors of TDS:

George W. Off, Chair   Clarence A. Davis   Christopher D. O'Leary   Mitchell H. Saranow

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PROPOSAL 3
AMENDMENT AND RESTATEMENT OF RESTATED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

What am I being asked to vote on in Proposal 3?

        In proposal 3, we are requesting shareholders to approve amendments to the 2013 Restated Non-Employee Directors Plan (as amended, the "2017 Restated Plan", to increase the Stock Award (as defined below) from $80,000 to $100,000, effective as of March 1, 2017, and, subject to shareholder approval, to increase the number of the Company's Common Shares that may be issued under such plan. The increase in the Stock Award was based on a review of the 2016-2017 Director Compensation Report by the National Association of Corporate Directors (in partnership with Pearl Meyer & Partners). Based on this review, TDS determined to increase the amount of the Stock Award to align with the average for companies comparable in size to TDS.

        The 2017 Restated Plan provides compensation to each director of TDS who is not an employee of TDS, TDS Telecom, U.S. Cellular or any other subsidiary of TDS ("non-employee directors"). The purpose of the 2017 Restated Plan is to provide appropriate compensation to non-employee directors for their service and to ensure that qualified persons serve as non-employee members of the Board of Directors.

        The TDS Board of Directors and shareholders previously adopted a Restated Compensation Plan for Non-Employee Directors dated as of March 8, 2013 (the "2013 Restated Plan"). As of the date of this proxy, ten of the TDS directors are non-employee directors. A total of 200,000 Common shares were previously reserved for issuance under the 2013 Restated Plan. Such shares had been registered on a Form S-8 Registration Statement (Registration No. 333-190330). As of the date of the proxy, 53,236 shares are available for issuance.

        On December 7, 2017, the Board of Directors of the Company approved amendments to the 2013 Restated Plan. The 2017 Restated Plan reflects the amendments and also increases the number of Common Shares reserved for issuance by 200,000 Common Shares. The additional Common Shares will be registered on a Form S-8 Registration Statement. On March 29, 2018, the closing price of TDS on the NYSE was $28.03.

        The 2017 Restated Plan was approved pursuant to the authority granted in Section 2.22 of Article II of the Company's By-Laws, which provides that the Board of Directors shall have authority to establish reasonable compensation of directors, including reimbursement of expenses incurred in attending meetings of the Board of Directors.

        The 2017 Restated Plan is attached as Exhibit A. The following is a description of the 2017 Restated Plan.


Description of 2017 Restated Plan

        Each non-employee director, other than the Chairman, will receive an annual director's retainer fee of $80,000 paid in cash. The Chairman of the Board will receive an annual retainer fee of $100,000 paid in cash.

        Each non-employee director will receive an annual award of $100,000 paid in the form of Common Shares ("Stock Award"), which shall be distributed in March for services performed during the 12 month period that commences on March 1 of the immediately preceding calendar year and ends on the last day of February of the calendar year. The number of shares shall be determined by the closing price of TDS on the first trading day in the month of March.

        Each non-employee director will receive a director's meeting fee of $1,750 for each board meeting attended and reimbursement of reasonable expenses incurred in connection with attendance at meetings of the Board of Directors, paid in cash.

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General

        Each non-employee director who serves on the Audit Committee, other than the Chairperson, will receive an annual committee retainer fee of $11,000. The Chairperson will receive an annual committee retainer fee of $22,000.

        Each non-employee director who serves on the Compensation Committee, other than the Chairperson, will receive an annual committee retainer fee of $7,000. The Chairperson will receive an annual committee retainer fee of $14,000.

        Each non-employee director who serves on the Corporate Governance and Nominating Committee, other than the Chairperson, will receive an annual committee retainer fee of $5,000. The Chairperson will receive an annual committee retainer of $10,000.

        In addition, each non-employee director will received a meeting fee of $1,750 for each committee meeting attended and reimbursement of reasonable expenses incurred in connection with attendance at meetings of committees of the Board of Directors, including the Technology Advisory Group Committee.

        The Board of Directors may also authorize the payment of fees and reimbursement of reasonable expenses incurred in connection with other meetings or activities of the non-employee directors.

        Upon effectiveness of the 2017 Restated Plan, directors will have the authority without further shareholder approval to further amend the 2017 Restated Plan, including amendments to increase the amount of the compensation payable in TDS shares provided that the number of shares does not exceed the number of shares previously approved by shareholders.

        Under the 2017 Restated Plan, annual Cash retainers along with payment for board and committee meetings will be paid in cash on a quarterly basis.

        Subject to effectiveness of the 2017 Restated Plan, the authorization to issue Common Shares pursuant to the 2017 Restated Plan will expire ten years after the date of shareholder approval, unless reapproved by shareholders. If for any reason Common Shares cannot be issued under the 2017 Restated Plan pursuant to the requirements of the NYSE or otherwise, the value of such Common Shares that cannot be issued shall be paid in the form of cash.

Federal Income Tax Consequences

        The following is a brief summary of certain federal income tax consequences, pursuant to the tax law in effect as of the date of this Proxy Statement, of awards made under the 2017 Restated Plan. Federal income tax laws are complex and subject to different interpretations, and the following summary is not a complete description of the possible federal income tax consequences of awards made under the 2017 Restated Plan. The following also does not address the state, local, foreign or other tax consequences of awards made under the 2017 Restated Plan. The following should not be interpreted as tax advice.

        In general, a non-employee director who is issued Common Shares under the 2017 Restated Plan will recognize taxable compensation in the year of issuance in an amount equal to the fair market value of such Common Shares on the date of issuance, and TDS will be allowed a deduction for federal income tax purposes equal to the amount of such non-employee compensation.

        In addition, a non-employee director will recognize taxable compensation in the year of payment of all cash retainer or meeting or activity fees, and TDS will be allowed a deduction for federal income tax purposes equal to the amount of such non-employee compensation.

Other Information

        Disclosure cannot be made about future payments because the benefit or amount is not determinable until earned and paid. Accordingly, we are providing information concerning the benefits or amounts that were earned in the form of stock awards under the 2017 Restated Plan by the non-executive board of director group in 2017 (nine individuals) and 2018 (ten individuals) year to date.

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No further stock awards are expected to be made under the 2017 Restated Plan for the remainder of 2018.

        In 2017, TDS issued $80,000 in an annual Stock Award to nine non-employee directors, including cash in lieu of fractional shares, for an aggregate total of $720,000 or 26,676 Common Shares. In 2018, TDS issued $100,000 in an annual Stock Award, including cash in lieu of fractional shares, for an aggregate a total of $892,887 or 31,339 Common shares to ten non-employee directors. In 2018, Ms. Dixon and Mr. Wittwer received a fewer number of shares than the other Board members because they were not non-employee directors for the entire period of March 1, 2017 to February 28, 2018.

        Non-employee directors of TDS, including persons who are participants in the solicitation of proxies for the proposals in this Proxy Statement, have an interest in the foregoing proposal because they would receive compensation under the 2017 Restated Plan.

        This description of the 2017 Restated Plan is a summary only and is qualified by the terms of the 2017 Restated Plan attached hereto as Exhibit A.

Your board of directors recommends a vote "FOR" approval of the 2017 Restated Plan.

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PROPOSAL 4
ADVISORY VOTE ON EXECUTIVE COMPENSATION

What am I being asked to vote on in Proposal 4?

        In Proposal 4, we are providing shareholders with a vote to approve, on an advisory basis, the compensation of our Named Executive Officers ("NEO") as disclosed in this 2018 Proxy as required, including Compensation Discussion and Analysis, compensation tables and discussions. This vote is required to be submitted to shareholders pursuant to SEC rules adopted under provisions in the Dodd-Frank Act. The advisory vote on executive compensation described in this proposal is commonly referred to as a "Say-on-Pay" vote.

        TDS is required to request shareholders to vote, on an advisory basis, on the frequency of holding Say-on-Pay votes, commonly referred to as a "Say-on-Frequency" vote, at least once every six years. TDS held a Say-on-Frequency vote at the 2017 Annual Meeting and the shareholders voted by a substantial majority to hold a Say-on-Pay vote every year. Based on the Say-on-Frequency votes in 2017, the TDS board of directors adopted a policy to hold the Say-on-Pay vote every year. Accordingly, TDS is holding a Say-on-Pay vote every year unless and until this policy is changed and it will submit the next Say-on-Frequency proposal to shareholders at the 2023 Annual Meeting.

        This proposal gives our shareholders the opportunity to express their views on the overall compensation of our named executive officers and the compensation philosophy, policies and practices.

How does the board of directors recommend that I vote on this proposal?

        The board of directors unanimously recommends a vote FOR approval of the Say-on-Pay proposal.

        TDS believes that its executive compensation program is reasonable, competitive and strongly focused on pay for performance. TDS' compensation objectives for executive officers are to support the overall business strategy and objectives, attract and retain high-quality management, link compensation to both individual and company performance, and provide compensation that is both competitive and consistent with our financial performance.

        Consistent with these goals, the Compensation Committee has developed and approved an executive compensation philosophy to provide a framework for TDS' executive compensation program featuring the policies and practices described in the Executive Summary of the Compensation Discussion and Analysis below.

Is this vote binding on the board of directors?

        The Say-on-Pay vote is an advisory vote only, and therefore will not bind TDS, our board of directors or the Compensation Committee. However, the board of directors and the Compensation Committee will consider the voting results as appropriate when making future decisions regarding executive compensation.

        The results of the Say-on-Pay vote will be disclosed on a Form 8-K.

Your board of directors unanimously recommends a vote "FOR" the approval of Proposal 4.

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EXECUTIVE AND DIRECTOR COMPENSATION

        The following discussion and analysis of our compensation practices and related compensation information should be read in conjunction with the Summary Compensation Table and other tables included below, as well as our financial statements and management's discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.


Compensation Discussion and Analysis

Compensation Philosophy and Objectives

        TDS and its business units are committed to providing the very best in customer satisfaction, achieving long-term profitable growth, and building the high-quality teams required to make this possible. As such, we focus on operating in a fiscally responsible manner, and on recruiting and retaining talented employees who believe in the Company's values and long-term perspective.

        The objectives of TDS' compensation programs for executive officers are to:

        The primary financial focus of TDS as a consolidated enterprise is the increase of long-term shareholder value measured primarily in such terms as consolidated operating revenue growth, consolidated adjusted earnings before interest, taxes, depreciation, and amortization, and consolidated capital spending. Operating units of TDS may have somewhat different primary financial measures. TDS' compensation policies for executive officers are designed to reward the achievement of such corporate performance goals.

        TDS' compensation programs are designed to reward performance on both a short-term and long-term basis. With respect to the NEOs identified in the Summary Compensation Table, the design of compensation programs and performance rewarded are similar but with some differences for each of the NEOs depending on such officer's position and responsibilities. TDS' policies establish incentive compensation performance goals for executive officers based on factors over which such officers are believed to have some control and which are viewed as important to TDS' long-term success. TDS believes compensation should be related to the performance of TDS.

        The Compensation Committee evaluates the performance of the President and CEO of TDS in light of the annual and ongoing objectives for TDS and its primary business units and the degree of attainment of those objectives, and sets the elements of compensation for him on such performance evaluation and compensation principles.

        With respect to the other executive officers identified in the Summary Compensation Table, the Compensation Committee reviews management's evaluation of the performance of such executive officers, as approved by the President and CEO, and determines and approves the elements of compensation for such executive officers, considering such performance evaluations and compensation principles and the Compensation Committee's own assessment of the performance of these officers, as discussed below.

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Executive Compensation Best Practices

        We annually review all elements of compensation and where appropriate may make changes. The following provides a summary of "what we do" and "what we don't do".

What we do   What we don't do

To align pay and performance, we grant performance-based stock units

We designed our compensation programs to motivate executive officers to act in the long-term interest of TDS

Our executive officer compensation levels are based in part on competitive market compensation data supplied by our Compensation Committee's independent compensation consultant, Compensation Strategies, Inc., and by our compensation consultant, Willis Towers Watson

We have a Compensation Committee, comprised solely of independent directors, that reviews and approves the salaries, bonuses and long-term compensation of executive officers (other than the President and Chief Executive Officer of U.S. Cellular, which compensation is approved by the U.S. Cellular's chairman and Long-Term Incentive Compensation Committee ("LTICC"))

In order to align the executive bonus program with the interests of our shareholders, we have increased the company performance component weighting while decreasing the individual performance component weighting. Bonuses paid in 2018 with respect to 2017 performance were calculated with a 70% company performance weighting and a 30% individual performance weighting. The ratio was 50% (company)—50% (individual) in 2012.

A major compensation goal is to provide compensation and benefit programs that are both attractive and fiscally responsible

The maximum amount of the TDS bonus paid to officers related to company performance is 192.5% of the target opportunity allocated to company performance

TDS may seek to adjust or recover awards or payments if performance measures are restated or otherwise adjusted as described under "Clawback" below

 

Hedging by officers is prohibited

TDS provides few perquisites

Except in limited circumstances, our plans, awards and agreements do not include tax gross-ups

TDS does not backdate options or have any program, plan or practice to time the grant of awards in coordination with the release of material non-public information

Results on Say-on-Pay Vote

        SEC rules require TDS to disclose how the results from the most recent Say-on-Pay vote affected executive compensation policies and decisions. At our 2017 annual meeting, almost 99% of the votes

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cast for the Say-on-Pay vote were in support of the Company's executive compensation program. Considering that substantial support and other factors, the Compensation Committee did not make any changes to TDS' executive compensation policies and decisions in 2017.

        For executive officers, other than the President and CEO, the 2017 officer bonus plan continued to base 70% of bonuses on quantitative company performance and 30% on individual performance. The company performance metrics and weightings also remained the same at consolidated operating revenue (50%), consolidated adjusted EBITDA (35%) and consolidated capital spending (15%).

TDS' Compensation Program

        The elements of executive compensation include both annual cash and long-term equity compensation. Annual compensation decisions are based on both individual and corporate short-term and long-term performance. TDS has chosen to pay and provide these elements of compensation after considering common compensation practices of peers and other companies with similar characteristics, in order to support TDS' overall business strategy and objectives. Executive compensation is intended to provide an appropriate balance between long-term and short-term performance.


Elements of Compensation

Annual Cash
Compensation
  Equity Compensation   Other Benefits Available to
Names Executives
  Other Generally Applicable
Benefits Plans

Salary

 

Performance Share Unit Awards

 

Supplemental Executive Retirement Plan

 

Tax-Deferred Savings Plan (401(k))

Bonus

 

Stock Options

 

Few Perquisites

 

Pension Plan

   

Stock Awards

 

Deferred compensation

 

Welfare Benefits

                (during employment and retirement)

        The Compensation Committee does not consider an officer's outstanding equity awards or stock ownership levels when determining the value of the long-term incentive award component of such officer's compensation. The Compensation Committee makes long-term incentive awards based on performance for a particular year and other considerations.

Risks Relating to Compensation to Executive Officers

        TDS does not believe that incentives related to compensation encourage executive officers to take unnecessary, excessive or inappropriate risks that could threaten the value of TDS, or that risks arising from compensation policies and practices are reasonably likely to have a material adverse effect on the Company. Also, TDS does not believe that risks arising from TDS' compensation policies and practices for its employees, including non-executive officers, are reasonably likely to have a material adverse effect on TDS.

Compensation Consultant

        Willis Towers Watson is TDS management's primary compensation consultant but has from time to time provided materials to the Compensation Committee. Willis Towers Watson also provides compensation consulting and other services to U.S. Cellular, which are described in the U.S. Cellular 2018 proxy statement. The TDS Compensation Committee has no involvement in U.S. Cellular's compensation.

        As required by SEC rules, the following discloses the role of Willis Towers Watson in determining or recommending the amount or form of executive officer compensation, the nature and scope of the assignment, and the material elements of the instructions or directions given to Willis Towers Watson with respect to the performance of its duties under its engagement. Willis Towers Watson provides external market compensation data to TDS from its executive compensation survey database. See "Benchmarking/Market Compensation Data" below. Willis Towers Watson also performs other services for TDS, which may include consulting on TDS compensation plans.

        The Compensation Committee's charter provides that it shall have the authority to engage advisors as it deems necessary to carry out its duties and that TDS shall provide appropriate funding for any advisor retained, as well as ordinary administrative expenses that are necessary or appropriate in

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carrying out its duties. Pursuant to such authority, since 2008, the Compensation Committee has retained and obtained the advice of Compensation Strategies, Inc., a provider of executive compensation consulting services. TDS management has no role in the engagement of Compensation Strategies and Compensation Strategies has not provided any services to TDS nor its affiliates other than its services to the Compensation Committee.

        As required by SEC rules, the following discloses the role of Compensation Strategies in determining or recommending the amount or form of executive officer compensation, the nature and scope of the assignment, and the material elements of the instructions or directions given to Compensation Strategies with respect to the performance of its duties under its engagement: Compensation Strategies reviews TDS' various compensation elements and programs and provides independent analysis and advice to the Compensation Committee for the purpose of evaluating such elements and programs. As discussed below under "Benchmarking/Market Compensation Data", Compensation Strategies conducted a competitive review of compensation levels of TDS executive officers in 2017 as a cross-check to the information provided by Willis Towers Watson. In 2017, Compensation Strategies also provided advice to the Compensation Committee relating to the designs of the bonus program discussed above and the long-term incentive program, as well as advice on other elements of compensation.

Compensation Consultant Conflicts of Interest

        As required by SEC and NYSE rules, with regard to Willis Towers Watson and Compensation Strategies, the Compensation Committee considered if their work raised any conflict of interest.

        Based on its review, the Compensation Committee determined that the work did not raise any conflict of interest considering the factors identified in Rule 10C-1 under the Securities Exchange Act of 1934, as amended.

        Although the independence rules of Section 303.05 of the NYSE Listed Company Manual are not applicable to TDS because it is a controlled company, the Compensation Committee believes that Compensation Strategies would nonetheless satisfy the independence requirements of such rules if they were applicable, considering the factors identified in Rule 10C-1.

        Neither Willis Towers Watson nor Compensation Strategies provides any advice as to director compensation.

Unrealized Components of Compensation

        The compensation reported under "Stock Awards" and "Option Awards" in the Summary Compensation Table represents grant date values as required by SEC rules, and does not represent currently realized or realizable compensation. The NEOs will not realize cash from such awards unless and until any stock awards are vested and the shares received upon vesting are sold for cash, or unless and until any stock options become exercisable, are exercised and the shares received upon exercise are sold for cash. There is no assurance that this will occur. In general, awards are subject to a risk of forfeiture and the options will expire if not exercised during their term, which may occur if the stock price does not appreciate and/or remain above the exercise price during the option's term. The compensation actually realized by a NEO may be more or less than the amount reported in the Summary Compensation Table below depending on the performance of the TDS stock price and other factors. With respect to 2017, the amount of compensation realized by each NEO can be approximated by (i) deducting from the amount in the "Total" column in the Summary Compensation Table the amounts reported in the "Stock Awards" and "Option Awards" columns for such officer, and (ii) adding the values realized by such officer as set forth in the Option Exercises and Stock Vested table below. However, other unrealized components of compensation also may be included in the Summary Compensation Table, such as retirement plan contributions that are subject to a vesting schedule.

Benchmarking/Market Compensation Data

        TDS does not engage in "benchmarking" as defined by the SEC, which would entail using compensation data about other companies as a reference point—either wholly or in part—to base, justify or provide a framework for a compensation decision. TDS does obtain, review and consider a broad-based third-party survey of market compensation data from Willis Towers Watson.

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        In addition, the Compensation Committee obtains peer group information from Compensation Strategies. In particular, with respect to 2017, Compensation Strategies provided market data for a peer group for purposes of a competitive review of compensation levels of TDS' executive officers. This was done as a cross-check against the information provided by Willis Towers Watson in connection with the approval of 2017 compensation.

        Market compensation data is obtained from the Willis Towers Watson Executive Compensation Database. For compensation decisions in 2017, data was obtained from the 2016 database, which contained data for over 1,100 companies that represented a diverse range of companies across all industries, including companies from the telecommunications, retail, financial, electronics, pharmaceutical, manufacturing and consumer products sectors. This database was used to identify the ranges of annual cash compensation considered to be appropriate for the NEOs. This database also was used in evaluating the equity compensation awards of the NEOs. TDS believes this approach provides a reasonably accurate reflection of the competitive market for such elements of compensation necessary to retain current executives and attract future executives to positions at TDS. In addition, TDS believes this methodology is more statistically valid than solely benchmarking these elements of compensation to the limited number of companies in the peer group used for the "Stock Performance Graph" that is included in the TDS Annual Report to shareholders.

        The identities of the individual component companies that are included in the Willis Towers Watson database are not disclosed or considered by TDS or the Compensation Committee. TDS and the Compensation Committee rely upon and consider to be material only the aggregated survey data prepared by Willis Towers Watson. They do not obtain or consider information on the identities of the individual companies included in the survey in connection with any compensation decisions because this information is not considered to be material.

        As a cross-check of 2017 compensation, Compensation Strategies created an industry peer group that consisted of the following 17 publicly-traded companies: CenturyLink Inc., Charter Communications, Inc., Cincinnati Bell Inc., Crown Castle International Corp., DISH Network Corporation, EarthLink Holdings Corp., Equinix, Inc., Fairpoint Communications, Inc., Frontier Communications Corp., Harris Corporation, IDT Corporation, Level 3 Communications, Inc, NII Holdings, Inc., Rackspace Hosting Inc., SBA Communications Corporation, Vonage Holdings Corp. and Windstream Holdings, Inc. These companies were included in this analysis because they are companies somewhat similar in size to TDS in similar industries. Cablevision Systems Corp. was included in this cross-check of compensation with respect to 2016, but removed from the peer group in 2017 due to its acquisition.

        TDS also generally considers compensation arrangements at the companies in the peer group index included in the "Stock Performance Graph" that is included in the TDS Annual Report to shareholders, as discussed below, as well as other companies in the telecommunications industry and other industries, to the extent considered appropriate, based on similar size, function, geography or otherwise. This information is used to generally understand the market for compensation arrangements for executives, but is not used for benchmarking purposes.

        TDS selected the Dow Jones U.S. Telecommunications Index, a published industry index, as its peer group for the Stock Performance Graph in the 2017 Annual Report. As of December 31, 2017, the Dow Jones U.S. Telecommunications Index had been composed of the following companies: AT&T Inc., CenturyLink Inc., Frontier Communications Corp., SBA Communications Corp., Sprint Corp., T-Mobile US Inc., Telephone and Data Systems, Inc. (TDS) and Verizon Communications, Inc.

Company Performance

        U.S. Cellular produced a payout of 117.5% of target for the company performance portion of its 2017 executive bonus plan, as disclosed in the U.S. Cellular 2018 proxy statement. TDS Telecom company performance for purposes of its 2017 bonus plan was determined to be 99.9% of target, as disclosed in TDS' Current Report on Form 8-K dated March 8, 2018. For bonuses relating to 2017 performance paid in 2018, TDS company performance was based on consolidated results of TDS. The TDS consolidated company performance for purposes of its 2017 bonus paid in 2018 was determined to be 103.6% of target.

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        For 2017, the TDS consolidated company performance was based on the following three metrics with the following weights: consolidated operating revenue (50%), consolidated adjusted earnings before interest, taxes, depreciation and amortization (35%), and consolidated capital spending (15%).

        The following shows TDS' calculation of consolidated company performance with respect to 2017. The below amounts are based on the performance metrics established specifically for bonus purposes and may not agree with TDS' financial statements, which are based on accounting principles generally accepted in the United States of America ("GAAP"), or with other publicly disclosed measures. The below bonus results and targets are intended to reflect the regular operating results over which TDS officers have significant influence.

Performance
Measures
  Final Bonus
Results for
2017
  Final Target for 2017   Bonus Results as a % of Target   Minimum Threshold Performance (as a % of Target)   Maximum Performance (as a % of Target)   Interpolated % of Target Bonus Earned (if within Minimum and Maximum Range)   Weight   Weighted Avg % of Target Bonus  

Consolidated Operating Revenue(1)

  $ 5,044M   $ 5,263M     95.8 %   90 %   110 %   79.2 %   50 %   39.6 %

Consolidated Adjusted Earnings before Interest, Taxes, Depreciation and Amortization(2)

  $ 1,153   $ 1,119M     103.0 %   85 %   115 %   120.6 %   35 %   42.0 %

Consolidated Capital Spending(3)

  $ 692   $ 763     90.7 %   105 %   90 %   146.4 %   15 %   22.0 %

Overall Company Performance

                                        100 %   103.6 %

(1)
Consolidated Operating Revenue is based on externally reported consolidated "Operating revenues" as adjusted for the Bonus Metric Amounts.

(2)
Consolidated Adjusted Earnings before Interest, Taxes, Depreciation and Amortization represents consolidated "Adjusted EBITDA" as set forth in the notes to the consolidated financial statements for the year ended December 31, 2017.

(3)
Consolidated Capital Spending represents consolidated cash basis capital expenditures excluding capitalized interest, as adjusted for the Bonus Metric Amounts.

        If a metric does not meet the minimum threshold performance level, the plan provides that it will be at the discretion of the Compensation Committee to determine if a bonus will be paid with respect to such metric. If maximum performance or greater is achieved, 200% of the bonus opportunity for that metric will be funded, except with respect to Consolidated Capital Spending for which the maximum bonus opportunity is 150% of target. As shown above, the minimum threshold was achieved with respect to all of the three metrics, but performance was less than maximum performance for all three metrics. As a result, the payout level was interpolated as indicated above based on the formula included in the TDS bonus plan.

        In accordance with this methodology, the overall percentage deemed to have been achieved by TDS for company performance with respect to 2017 was 103.6%.

Personal Objectives and Performance

        In addition to TDS and/or business unit performance, the Compensation Committee may consider personal objectives and performance. There was no minimum level of achievement of any personal objectives that was required for any cash compensation decision. The assessment of the achievement of personal objectives is not formulaic, objective or quantifiable. Instead, the individual performance considerations are factors, among others, that are taken into account in the course of making subjective judgments in connection with compensation decisions.

        The TDS executive bonus plan considers company performance and individual performance when determining the amount of bonuses.

TDS Corporate Objectives and Accomplishments

        In addition to achieving overall TDS performance for 2017 of 103.6% of target as discussed above, TDS took actions in furtherance of the following objectives:

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        The following shows certain considerations relating to compensation paid by TDS in or with respect to 2017:

 
  LeRoy T. Carlson, Jr.   Kenneth R. Meyers   Douglas D. Shuma   Scott H. Williamson   David A. Wittwer

Position at TDS

  Director and President and CEO   Director and Executive Officer   Senior Vice President—Finance and Chief Accounting Officer (chief financial officer and chief accounting officer)   Senior Vice President—Acquisitions and Corporate Development   Director and Former Executive Officer (Mr. Wittwer retired as Executive Officer on 12/29/17)

Position at U.S. Cellular

 

Director and Chairman

 

Director and President and CEO

 

Director and Chief Accounting Officer

 

N/A

 

N/A

Position at TDS Telecom

 

Director and Chairman

 

N/A

 

Director and Chief Accounting Officer

 

N/A

 

Director and Former President and CEO

Year Appointed to Current Officer Title

 

1981 (President) and 1986 (CEO)

 

2013

 

2015

 

1998

 

2007

Year First Involved with TDS or its Subsidiaries as Director or Employee

 

1968

 

1987

 

2007

 

1995

 

1983

Primary Responsibilities for 2017

 

Primary responsibility for operations and performance of TDS and subsidiaries as TDS CEO

 

Primary responsibility for operations and performance of U.S. Cellular as its CEO

 

Primary responsibility for financial reporting, accounting policy and internal controls, and tax functions at TDS

 

Primary responsibility for acquisitions and corporate development of TDS and subsidiaries

 

Primary responsibility for operations and performance of TDS Telecom as its CEO

Meyers Letter Agreement

        U.S. Cellular and Kenneth R. Meyers are parties to a letter agreement dated July 25, 2013 relating to his appointment as President and CEO effective June 22, 2013 (the "Meyers Letter Agreement"). The Meyers Letter Agreement provided for Mr. Meyers' cash compensation and equity awards for 2013, and includes provisions relating to annual equity awards in subsequent years, cash reimbursements or payments with respect to retiree medical/life insurance benefits and a related tax gross-up, and severance (pursuant to which Mr. Meyers would be entitled to his then current annual base salary in the event that U.S. Cellular terminates Mr. Meyers' employment involuntarily without cause prior to June 22, 2019). See footnote (2) to the Summary Compensation Table below for further details.

Annual Cash Compensation

        Annual cash compensation decisions, consisting of base salary for the current year and bonus based on performance, are generally made concurrently by the Compensation Committee each year for each of the NEOs (other than the President and CEO of U.S. Cellular, whose compensation is not determined by the Compensation Committee but rather by the Chairman and LTICC of U.S. Cellular). Annual compensation decisions are based partly on individual and corporate short-term performance and partly on 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.

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        As part of the process of determining the appropriate elements of annual cash compensation for the NEOs, the Compensation Committee is provided with information about the compensation of similar executive officers at other companies, including chief executive officers of companies, chief executive officers and chief operating officers of principal business units, if available, chief financial officers and other officers with responsibilities comparable to the TDS NEOs, as reported in the survey data discussed above and the proxy statements of other companies. The Compensation Committee also considers recommendations from the President and CEO of TDS regarding compensation for the NEOs other than himself, each of which reports directly to him. TDS' Senior Vice President—Human Resources prepares for the Compensation Committee an analysis of compensation paid to similar executive officers of other comparable companies. See "Benchmarking/Market Compensation Data" above.

        Annually, the nature and extent of each executive officer's personal accomplishments and contributions for the year are determined, based on information submitted by the executive and by others familiar with his or her performance, including the President and CEO of TDS in the case of the NEOs other than himself. The Compensation Committee evaluates the information in terms of the personal objectives established for such executive officer for the performance appraisal period.

        The Compensation Committee also assesses how well TDS did as a whole during the year and the extent to which the President and CEO of TDS believes that the other executive officers contributed to the results. With respect to executive officers having primary responsibility over a certain business unit or division of TDS, the Compensation Committee considers the performance of the business unit or division and the contribution of the executive officer.

        In general, other facts and circumstances that the Compensation Committee and TDS President and CEO consider include TDS' status as a public company and a controlled company; the publicly-available market cash compensation information of TDS' publicly-held peers and other publicly-held companies; the fact that TDS is primarily a regional competitor and that some of its competitors are national or global telecommunications companies that are much larger than TDS and possess greater resources than TDS; the value of TDS' assets; and TDS' primary financial focus of increasing long-term shareholder value. Additional facts and circumstances considered with respect to the NEOs are discussed below in the discussion relating to each such officer.

        The Compensation Committee uses these sources and makes the determination of appropriate elements of compensation and ranges for such elements for such NEOs based on its informed judgment, using the information provided to it by the TDS Human Resources department, including information from Willis Towers Watson, and information from Compensation Strategies. The Compensation Committee also has access to numerous performance measures and financial statistics prepared by TDS. This financial information includes the audited financial statements of TDS, as well as internal financial reports such as budgets and actual results, operating statistics and other analyses. The Compensation Committee may also consider such other factors as it deems appropriate in making its compensation decisions.

        The elements of compensation and ranges for such elements are discretionary. No specific measures of performance or factors are considered determinative in the compensation of executive officers. Instead, various facts and circumstances are taken into consideration by the Compensation Committee. Ultimately, it is the informed judgment of the Compensation Committee, after reviewing all the facts and circumstances, that determines the elements of compensation and total compensation for the executive officers.

Base Salary

        The base salary of each officer is set within the range identified for this element based on an assessment of the responsibilities and the performance of such officer, also taking into account the performance of TDS and/or its business units or divisions, other comparable companies, the industry and the overall economy during the preceding year. Column (c), "Salary," in the Summary Compensation Table includes the dollar value of base salary (cash and non-cash) earned by the NEOs during 2017, 2016 and 2015, whether or not paid in such year.

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        The following shows certain information relating to the rate of base salary in 2017 compared to 2016 for the NEOs.

 
  LeRoy T. Carlson, Jr.   Douglas D. Shuma   Scott H. Williamson   David A. Wittwer  

2016 Base Salary effective 1/1/16

  $ 1,352,700   $ 432,500   $ 663,000   $ 631,000  

2017 Base Salary effective 1/1/17

    1,352,700     446,500     680,000     654,000  

$ Change in 2017

  $   $ 14,000   $ 17,000   $ 23,000  

% Change in 2017

    0%     3%     3%     4%
 

        The TDS Compensation Committee reviews the base salary and bonus of the executive officers on an aggregate basis as described below under "Total Cash Compensation."

Bonus

        TDS established the 2017 Officer Bonus Program for awarding bonuses to certain officers. This bonus program covered all TDS executive officers other than the President and CEO of TDS. This program was filed as Exhibit 10.1 by TDS on a Form 8-K dated May 24, 2017. For bonuses relating to 2017 performance that were paid in 2018, in general, 30% of an officer's target bonus was based on the officer's individual performance and the remaining 70% was based on company performance (utilizing the weightings and metrics described above under "Company Performance"). The maximum amount of the bonus based on company performance could not exceed 192.5% of the target and the maximum bonus based on individual performance cannot exceed 160% of the target bonus.

        The program provided that the TDS Telecom President and CEO would have the same company and individual performance weightings as the other TDS executive officers, provided that the company performance was to be based on TDS Telecom's performance rather than TDS' consolidated performance. However, the amount of the bonus payable to the TDS Telecom President and CEO was not formulaic and was based on TDS Telecom's bonus plan, TDS Telecom metrics and various other performance measures in the discretion of the TDS President and CEO and the TDS Compensation Committee.

        In addition, TDS has established performance guidelines and procedures for awarding bonuses to the President and CEO of TDS. These guidelines and procedures as amended and restated were filed by TDS as Exhibit 10.1 to TDS' Form 8-K dated November 18, 2009. These guidelines and procedures provide that the Compensation Committee in its sole discretion determines whether an annual bonus will be payable to the President and CEO of TDS for a performance year and, if so, the amount of such bonus, and describe factors that may be considered by the Compensation Committee in making such determination, including any factors that the Compensation Committee in the exercise of its 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 of 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 Compensation Committee has determined whether a bonus will be paid for a performance year.

        The TDS 2017 Officer Bonus Program does not cover the President and CEO of U.S. Cellular, who is subject to separate guidelines as described in U.S. Cellular's 2018 proxy statement.

        The following shows information with respect to each NEO that received a bonus for 2017 performance (paid in 2018) from TDS, showing the amount of bonus awarded. The bonus for Mr. Meyers for 2017 performance was paid by U.S. Cellular as described in the U.S. Cellular 2018 proxy statement.

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        As noted above under "Company Performance," the overall percentage achieved by TDS with respect to company performance for 2017 was determined to be 103.6%. Certain amounts below are rounded.

 
   
  Formula   LeRoy T.
Carlson, Jr.
  Douglas D.
Shuma
  Scott H.
Williamson
  David A.
Wittwer
 

a

 

2017 base salary

      $ 1,352,700   $ 446,500   $ 680,000   $ 654,000  


b


 


Target bonus percentage (informal for Mr. Carlson and Mr. Wittwer)


 

 

 

 


90


%

 


55


%

 


50


%

 


75


%


c


 


Target bonus for 2017


 


a × b


 


$


1,217,430

 


$


245,575

 


$


340,000

 


$


490,500

 


d


 


Percentage of 2017 target bonus based on company performance (informal for Mr. Carlson and Mr. Wittwer)


 

 

 

 


70


%

 


70


%

 


70


%

 


70


%


e


 


Target bonus for company performance


 


c × d


 


$


852,201

 


$


171,903

 


$


238,000

 


$


343,350

 


f


 


Calculation of amount reported under "Non-Equity Incentive Plan Compensation" column based on company performance in 2017(1)


 


e × 103.6%


 

 


N/A

 

 


178,091

 

 


246,568

 

 


N/A

 



 


Calculation of amount reported under "Bonus" column:


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


g


 


Amount of discretionary bonus based on individual performance


 

 

 

 


N/A

 

 


96,709

 

 


134,432

 

 


N/A

 


h


 


Discretionary bonus(1)


 

 

 

 


1,030,000

 

 


N/A

 

 


N/A

 

 


490,500

 


i


 


Subtotal of amount reported under "Bonus" column


 


g + h


 


$


1,030,000

 


$


96,709

 


$


134,432

 


$


490,500

 



 


Total bonus for 2017 paid in 2018 (sum of amount reported under "Non-Equity Incentive Plan Compensation" column and amount reported under "Bonus" column)


 


f + i


 


$


1,030,000

 


$


274,800

 


$


381,000

 


$


490,500

 

(1)
Unlike the TDS 2017 Officer Bonus Program, which provides that a specified percentage of an officer's bonus will be determined based on company performance measures (as described above) and that the remaining percentage will be discretionary based on individual performance, the bonus guidelines for the President and CEO of TDS (LeRoy T. Carlson, Jr.), do not provide such specificity and provide that the entire amount of the bonus is discretionary. Accordingly, the entire amount of the bonus for LeRoy T. Carlson, Jr. is reported under the "Bonus" column of the Summary Compensation Table. In addition, although the TDS Officer Bonus Program and TDS Telecom bonus plan are used as guidelines for the bonus for the President and CEO of TDS Telecom, the actual amount of the bonus paid is not formulaic and is based on such bonus arrangements, metrics of TDS Telecom and various other facts and circumstances. Accordingly, the entire amount of the bonus for David A. Wittwer is reported under the "Bonus" column of the Summary Compensation Table.

        As indicated above, the TDS Compensation Committee approved the following bonuses for the above NEOs with respect to 2017:

 
  LeRoy T.
Carlson, Jr.
  Douglas D.
Shuma
  Scott H.
Williamson
  David A.
Wittwer
 

2017 Bonus Paid in 2018

  $ 1,030,000   $ 274,800   $ 381,000   $ 490,500  

Target Bonus

  $ 1,217,430   $ 245,575   $ 340,000   $ 490,500  

Percentage of Target Bonus

    85 %   112 %   112 %   100 %

        Mr. Carlson's informal target bonus with respect to the 2017 bonus paid in 2018 was 90% of his 2017 base salary of $1,352,700 or $1,217,430. In the Compensation Committee's subjective judgment and based on its analysis and consultation with Compensation Strategies, it believed that Mr. Carlson's cash bonus for 2017 should be $1,030,000 or approximately 85% of this target. This reflects the Compensation Committee's subjective judgment of the bonus that Mr. Carlson should receive based on

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company performance, individual performance and other factors, including Mr. Carlson's total cash compensation of base salary and bonus, as discussed below.

        Mr. Shuma's bonus of $274,800 represents a bonus of 103.6% of his target bonus for company performance and approximately 131.3% of his target bonus for individual performance. The individual performance percentage was based on the recommendation of the TDS President and CEO, based on his subjective judgment of Mr. Shuma's personal achievements and performance in 2017.

        Mr. Williamson's bonus of $381,000 represents a bonus of 103.6% of his target bonus for company performance and approximately 131.8% of his target bonus for individual performance. The individual performance percentage was based on the recommendation of the TDS President and CEO, based on his subjective judgment of Mr. Williamson's personal achievements and performance in 2017.

        Mr. Wittwer's informal target bonus with respect to the 2017 bonus paid in 2018 was 75% of his 2017 base salary of $654,000, or $490,500. As described above, TDS Telecom's overall company performance for 2017 was 99.9% of target. Mr. Wittwer retired on December 29, 2017, and was paid a bonus at target or $490,500.

        Kenneth R. Meyers did not receive a bonus from TDS because his bonus was paid by U.S. Cellular, as described in U.S. Cellular's 2018 proxy statement.

        The following shows information relating to total cash compensation in 2017 for the NEOs that received a bonus with respect to 2017 from TDS:

 
  LeRoy T.
Carlson, Jr.
  Douglas D.
Shuma
  Scott H.
Williamson
  David A.
Wittwer
 

Base Salary in 2017

  $ 1,352,700   $ 446,500   $ 680,000   $ 654,000  

2017 Bonus Paid in 2018

  $ 1,030,000   $ 274,800   $ 381,000   $ 490,500  

Total Cash Compensation in 2017

  $ 2,382,700   $ 721,300   $ 1,061,000   $ 1,144,500  

Total Cash Compensation per Willis Towers Watson Survey:

   
 
   
 
   
 
   
 
 

50th percentile

  $ 2,415,000   $ 690,000   $ 800,000   $ 1,115,000  

75th percentile

  $ 3,285,000   $ 830,000   $ 845,000   $ 1,505,000  

        The amount reported above as Base Salary represents the NEO's 2017 base salary. The Compensation Committee, based on its analysis and consultation with Compensation Strategies, believes that total cash compensation paid to TDS executive officers is in line with TDS' peers, but that a greater proportion of the total cash compensation should be paid as bonus and less should be paid as salary compared to peers.

        The basis of the Compensation Committee's decisions for the above levels of compensation is as follows:

        Mr. Carlson's total cash compensation represents the Compensation Committee's subjective view of the appropriate total cash compensation considering the importance of Mr. Carlson's responsibilities, the performance of TDS and its subsidiaries and Mr. Carlson's performance as President and CEO.

        Mr. Shuma's total cash compensation represents the Compensation Committee's subjective view of the appropriate total cash compensation considering his many years of service, the fact that he has served as TDS' chief accounting officer since 2007, and that he has served as TDS' chief financial officer since 2013.

        Mr. Williamson's total cash compensation represents the Compensation Committee's subjective view of the appropriate total cash compensation considering his many years of service with TDS, the importance of Mr. Williamson's responsibilities and his performance over a long period of time.

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        Mr. Wittwer's total cash compensation represents the Compensation Committee's subjective view of the appropriate total cash compensation considering the compensation of officers at comparable companies with similar responsibilities and the performance of TDS Telecom and Mr. Wittwer.

Long-Term Equity Compensation

        The Compensation Committee also determines long-term equity compensation awards to the NEOs (other than the President and CEO of U.S. Cellular whose equity awards are determined by the U.S. Cellular LTICC) under the TDS long-term incentive plans, which awards historically have included options, restricted stock units, performance share units and bonus match units, as discussed below. Long-term equity is usually granted to all equity recipients at the same time each year. In 2017, options, performance share units, and restricted stock units were granted on May 24, 2017. Bonus match units were granted on March 10, 2017 (the date that the related bonus was determined). TDS may also make grants of equity awards during other times of the year as it deems appropriate. All option, restricted stock unit, performance share units and bonus match unit awards are expensed over the applicable vesting periods.

        Although the Compensation Committee has the discretion to grant various awards, in the past it has generally only granted service-based restricted stock units and service-based options. However, beginning in 2016, performance share unit awards were added to the mix of awards granted. In addition, officers may receive employer stock match awards in connection with deferred bonus as described below under "Information Regarding Nonqualified Deferred Compensation." With respect to long-term compensation, the Senior Vice President—Human Resources prepares for the Compensation Committee an analysis of long-term compensation paid to similar officers of comparable companies (see "Benchmarking/Market Compensation Data" above). This information is presented to the Compensation Committee, which approves the long-term compensation of the NEOs in part based on such information. The Compensation Committee also looks at the mix of salary, bonus and long-term incentive compensation, and obtains additional information from its compensation consultant, Compensation Strategies.

        Long-term compensation awards for executive officers are based, in part, on company and individual performance, with the goal of increasing long-term company performance and shareholder value. Stock options, restricted stock units and bonus match units generally vest over several years, and performance share unit awards are based on a three-year performance period, to reflect the goal of relating long-term executive compensation to increases in shareholder value over the same period. The President and CEO of TDS may recommend to the Compensation Committee long-term compensation in the form of stock option, performance share unit and restricted stock unit grants or otherwise for the other executive officers but not for himself.

Performance share units better align compensation with the Company's long-term strategy

        Long-term equity compensation is intended to compensate executives primarily for their contributions to long-term increases in shareholder value. For certain TDS executive officers, during 2016 TDS introduced performance share unit awards and reduced the proportion of long-term equity consisting of stock options and restricted stock units. TDS also issued performance share unit awards to certain executive officers in 2017. The financial-based performance share units are measured over a three year time period using three key performance metrics. The three-year performance period applicable to each of the 2016 and 2017 performance share unit awards results in an overlap of performance periods. The performance goals for the 2016 performance share unit awards relate to the years 2016 - 2018, and the performance goals for the 2017 performance share unit awards relate to the years 2017 - 2019. Performance against the goals established for each award is measured separately for each year's award. Information relating to the 2016 awards was disclosed in TDS' proxy statement. The below describes the performance measures that are applicable to the 2017 awards, describes the current level of performance achievement of the 2017 awards and provides certain additional information regarding such awards.

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        With the pay-for-performance program, each of the designated executives was granted a payout target opportunity in TDS Common Shares. The payout could be increased up to 200% of target or reduced to 0% based on achievement of the key metrics. Performance share units accumulate dividend equivalents (in the form of additional performance share units) which are forfeitable if the performance metrics are not achieved. Dividend equivalents are accrued each quarter that TDS pays a dividend for the period between the grant date and the date the award is settled and will only be issued if and when the shares underlying the performance share units are issued.

Performance metrics and methodology for 2016 and 2017 Awards

 
   
  Methodology during
Performance Period
  Weighting  
Return on Capital ("ROC")  

  Simple average of the three fiscal years in the performance period     40 %
   

  Based on Average Net Operating Profit After Tax divided by Average Adjusted Assets        
Total Revenue  

  Cumulative Consolidated Operating Revenue over the three fiscal years in the performance period     40 %
Relative Total Shareholder Return ("TSR")  

  Comparison of TDS to specified peer group from the beginning to the end of the performance period     20 %
   

  Dividends, if any, are deemed to be reinvested in additional shares of the subject company, based on the then-current closing stock price        

2017 Performance share units peer group at December 31, 2017

American Tower Corp.
AT&T, Inc.
CenturyLink, Inc.
Charter Communications, Inc.
Cincinnati Bell, Inc.
Comcast Corp.
Consolidated Communications Holdings, Inc.
Crown Castle International Corp.
  DISH Network Corp.
Equinix, Inc.
Frontier Communications Corp.
General Communication, Inc.
Harris Corp.
IDT Corp.
NII Holdings, Inc.
SBA Communications Corp.
  Shenandoah Telecommunications Company
Sprint Corp.
T-Mobile U.S. Inc.
Verizon Communications, Inc.
Vonage Holdings Corp.
Windstream Holdings, Inc.
Zayo Group Holdings, Inc.

Performance share unit performance for 2017 Grants

        Below are the three performance share unit performance metrics along with the potential number of shares that would be issued with respect to the performance share units awarded in 2017 based on performance as of December 31, 2017. The final determination of performance will be based on achievement during the three year performance period, which ends on December 31, 2019.

Performance Measure
  Threshold
(10% Payout)
  Target
(100% Payout)
  Maximum
(200% Payout)
  Payout
(as a % of
Target)(1)
 

Total Revenue

    4,590     45,901     91,802     0 %

Return on Capital

    4,590     45,901     91,802     0 %

Relative Total Shareholder Return

    2,295     22,951     45,902     100 %

    11,475     114,753     229,506        

(1)
Represents December 31, 2017 assessed probability of achieving the performance targets. At December 31, 2017, the expectation of final performance at vest date was more than the Threshold but less than the Target for the 2017 grants. Final determination of payout will be based on actual results. Actual payout as a percentage of target could differ significantly from that projected in the table above.

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        The Threshold amount at which shares will be issued assumes that the Total Revenue and Return on Capital measures are not achieved, and that only the Relative Total Shareholder Return measure (with a weight of 20%) equals or exceeds the threshold goal (but is less than target) for such measure (in which case the prorated payout would be 50% of the Target for this measure, which is the minimum payout level). Thus, the Threshold amount is 10% (calculated as 20% × 50%) of the Target amount. If none of the Threshold amounts are achieved, the payout would be zero (0). The Maximum amount represents the maximum number of TDS Common Shares that would be delivered if each company performance measure equals or exceeds 200% of Target.

        The following summarizes the TDS performance share unit awards made by the Compensation Committee during 2017 to the following TDS Corporate named executive officers and other officers. Performance share unit awards were not granted to officers of TDS Telecom.

2017 Grants

Officer
  Threshold
(10% Payout)
  Target
(100% Payout)
  Maximum
(200% Payout)
 

LeRoy T. Carlson, Jr. 

    4,964     49,636     99,272  

Douglas D. Shuma

    794     7,935     15,870  

Scott H. Williamson

    1,659     16,587     33,174  

Other Officers

    4,059     40,595     81,190  

Total

    11,475     114,753     229,506  

        Column (e), "Stock Awards," of the Summary Compensation Table below includes the aggregate grant date fair value of the performance share unit awards computed in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 718. The grant date fair value of the performance share unit awards is calculated based on the probable satisfaction of the performance conditions for such awards.

Options and Restricted Stock Units

        Performance is also a factor in determining the number of shares subject to restricted stock unit and option awards made to the executive officers. A NEO receives an award of restricted stock units in the current year based in part on the achievement of certain levels of corporate performance in the immediately preceding year and an award of options in the current year based in part on the achievement of certain levels of individual performance in the immediately preceding year.

        Executive officers do not become entitled to any options or restricted stock units as a result of the achievement of any corporate or individual performance levels. The award of options and restricted stock units is entirely discretionary and a NEO has no right to any options or restricted stock units unless and until they are awarded. Pursuant to SEC rules, awards with respect to 2016 performance granted in 2017 are included in the Summary Compensation Table below as 2017 compensation.

        The NEOs received an award of restricted stock units in 2017, in part, based on the achievement of certain levels of corporate performance in 2016. Column (e), "Stock Awards," of the Summary Compensation Table includes the aggregate grant date fair value computed in accordance with FASB ASC 718. The grant date fair value of restricted stock units is calculated as the product of the number of shares underlying the award and the closing price of the underlying shares on the grant date, reduced by the estimated value of the discounted cash flows of dividends that would normally be received with respect to the underlying shares (because restricted stock units do not receive credit for dividends prior to vesting).

        The restricted stock units granted in 2017 vest in full (cliff vesting) on May 24, 2020, subject to continued employment.

        The NEOs also received an award of options in 2017 based, in part, on the achievement of certain levels of individual performance in 2016. Column (f), "Option Awards," of the Summary Compensation

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Table includes the aggregate grant date fair value computed in accordance with FASB ASC 718. The grant date fair value of stock options is calculated using the Black-Scholes valuation model.

        Options granted in 2017 vest in full (cliff vesting) on May 24, 2020 and are exercisable until May 24, 2027, in each case subject to continued employment.

        The total target long-term incentive value is determined by multiplying the officer's salary for the immediately preceding year by a multiple. The multiple is determined considering the officer's job responsibilities and the market compensation data from Willis Towers Watson. See "Benchmarking/Market Compensation Data". The target value is also adjusted for performance.

        The following summarizes the TDS option, performance share unit and restricted stock unit grants made by the Compensation Committee on May 24, 2017 to the following NEOs (the amounts below may be rounded).

 
   
  Formula   LeRoy T.
Carlson, Jr.
  Douglas D.
Shuma
  Scott H.
Williamson
  David A.
Wittwer
 

a

 

2016 Salary

      $ 1,352,700   $ 432,500   $ 663,000     $631,000  

b

 

Multiple used

        220 %   110 %   150 %   200 %

c

 

Long-Term Incentive Target Value

  a × b   $ 2,975,940   $ 475,750   $ 994,500     $1,262,000  

d

 

Options Target(1)

  (c × 10%)/$6.74     44,125     7,054     14,746      

 

Options Target(1)

  (c × 50%)/$6.74                 93,620  

e

 

Individual Performance % for 2016

        90 %   119 %   123 %   122 %

f

 

Options Granted

  d × e     39,700     8,394     18,137     114,144  

g

 

Target Performance Share Units(1)

  (c × 45%)/$26.98     49,636     7,935     16,587      

h

 

Performance Share Units Granted

                           

i

 

Target RSUs(1)

  (c × 45%)/$25.36     52,804     8,442     17,646      

 

Target RSUs(1)

  (c × 50%)/$25.36                 24,881  

j

 

Company/Business Unit Performance % for 2016

        114.8 %   114.8 %   114.8 %   120.0 %

k

 

RSUs Granted

  i × j     60,619     9,691     20,258     29,857  

(1)
Messrs. Carlson, Shuma and Williamson received the following target mix of awards: options (10%); performance share units (45%) and restricted stock units (45%). Mr. Wittwer received the following target mix of awards: options (50%) and restricted stock units (50%). The values used for stock options, performance share units and restricted stock units for the above formulas were the estimated values used in determining the May 24, 2017 grants. For financial reporting purposes, the values used were determined using methodology based on FASB ASC 718. The values calculated for 2017 were $6.74 per TDS stock option, $26.98 per TDS performance share unit and $25.36 per TDS restricted stock unit.

        The Company/Business Unit Performance percentage in the above table represents the overall performance of TDS (or in the case of Mr. Wittwer, TDS Telecom). The overall company performance for TDS in 2016 was 114.8%. The business unit performance for TDS Telecom in 2016 was 120.0%.

        The individual performance percentage in the above table is based on each officer's individual performance assessment relating to 2016.

        The individual performance percentage used for the TDS President and CEO was based on the Compensation Committee's subjective judgment of the individual performance of the TDS President and CEO in 2016.

        The individual performance percentage used for each of Douglas D. Shuma, Scott H. Williamson and David A. Wittwer was based on the Compensation Committee's subjective judgment of the individual performance of such officers, considering the TDS President and CEO's evaluation and recommendation to the Compensation Committee for such officers with respect to 2016.

        Mr. Meyers participates in the U.S. Cellular long-term incentive plans.

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Analysis of Compensation

        The following table identifies the percentage of each element of total compensation of each of the NEOs based on the Summary Compensation Table for 2017:

 
  LeRoy T.
Carlson, Jr.
  Kenneth R.
Meyers
  Douglas D.
Shuma
  Scott H.
Williamson
  David A.
Wittwer
 

Salary

    23.7 %   12.8 %   33.9 %   30.0 %   23.1 %

Bonus

    18.1 %   13.6 %   7.3 %   5.9 %   17.3 %

Stock Awards

    52.6 %   72.2 %   35.8 %   43.6 %   27.4 %

Stock Options

    4.9 %       4.5 %   5.7 %   28.5 %

Non-Equity Incentive Plan Compensation

            13.5 %   10.9 %    

Other

    0.7 %   1.4 %   5.0 %   3.9 %   3.7 %

    100.0 %   100.0 %   100.0 %   100.0 %   100.0 %

        As indicated in the Summary Compensation Table, LeRoy T. Carlson, Jr.'s total compensation for 2017 was $5,705,849 and the total compensation for the other NEOs for 2017 ranged from a high of $2,831,129 to a low of $1,318,454 (excluding Mr. Meyers whose compensation is not set by the TDS Compensation Committee). Accordingly in 2017, Mr. Carlson's total compensation was approximately 2.0 times greater than the total compensation of the next highest compensated NEO.

        TDS recognizes that its compensation practices must be competitive in order to attract and retain high quality management. TDS considers the compensation practices of peers and other companies with similar characteristics.

        The Compensation Committee believes that the elements of compensation and total compensation of the above NEOs of TDS were set at an appropriate level considering the foregoing principles.

Other Benefits and Plans Available to NEOs

        The NEOs participate in certain other benefits and plans, as described below.

        To attract and retain high quality management, TDS' compensation packages are designed to compete with other companies for talented employees. The Compensation Committee believes that the NEOs must be offered a competitive compensation package, including benefits and plans. Benefits and plans are an important part of the mix of compensation but do not significantly affect decisions relating to other elements of annual or long-term compensation.

Deferred Salary and Bonus under Deferred Compensation Arrangements

        Deferred Salary and/or Bonus Arrangements.    The NEOs are permitted to defer salary and/or bonus into an interest-bearing arrangement pursuant to deferred compensation agreements or plans. The entire amount of the salary earned is reported in the Summary Compensation Table in column (c) under "Salary," whether or not deferred. The entire amount of the bonus earned is reported in column (d) under "Bonus," or in column (g) under "Non-Equity Incentive Plan Compensation," whether or not deferred. Pursuant to the agreement or plan, the officer's deferred compensation account is credited with interest compounded monthly, computed at a rate equal to one-twelfth of the sum of the average thirty-year Treasury Bond rate for amounts deferred as an employee of TDS or TDS Telecom, or the twenty-year Treasury Bond rate for amounts deferred as an employee of U.S. Cellular, plus 1.25 percentage points, until the deferred compensation amount is paid to such person. As required by SEC rules, column (h) includes any portion of such interest that exceeded that calculated utilizing the rate specified by the Internal Revenue Service that is 120% of the applicable federal long-term rate, with compounding (as prescribed under section 1274(d) of the Internal Revenue Code) (such specified rate, the "AFR"), at the time each monthly interest rate was set. The deferred compensation accounts are paid at the time and in the form provided in the applicable plan or agreement, which permits certain distribution elections by the officer.

        As indicated, certain of the NEOs have deferred a specified portion of their salaries or bonuses. The executive is always 100% vested in all salary or bonus amounts that have been deferred and any interest

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credited with respect thereto. Accordingly, the executive is entitled to 100% of the amount deferred and all earnings upon any termination. Such amounts are reported below in the Nonqualified Deferred Compensation table and, because there would not be any increased benefit or accelerated vesting in the event of any termination or change in control, are not included in the Table of Potential Payments upon Termination or Change in Control.

        Deferred Bonus under Long-Term Incentive Plan ("LTIP").    In addition to being permitted to defer some or all of their bonuses into an interest-bearing arrangement as described immediately above, the NEOs are also permitted to defer some or all of their bonuses pursuant to a LTIP. The entire amount of the bonus earned is reported in column (d) under "Bonus," or in column (g) under "Non-Equity Incentive Plan Compensation," whether or not deferred. Deferred bonus is deemed invested, as applicable, in phantom TDS Common Shares under the applicable TDS LTIP and in phantom U.S. Cellular Common Shares under the applicable U.S. Cellular LTIP. The NEOs receive a distribution of the deferred compensation account generally at the earlier of the date elected by the officer and the officer's separation from service (or, with respect to amounts subject to section 409A of the Internal Revenue Code, the seventh calendar month following the calendar month of the officer's separation from service). The NEOs who defer bonus into phantom shares also receive a company match from TDS, other than the President and CEO of U.S. Cellular, who participates in and may receive a match from U.S. Cellular under the applicable U.S. Cellular LTIP, as described in the U.S. Cellular 2018 proxy statement.

        As indicated in the below tables, certain of the NEOs have deferred a specified portion of their bonuses. The executive is always 100% vested in all bonus amounts that have been deferred and any dividends credited on such bonus amounts. Such amounts are reported below in the Nonqualified Deferred Compensation table and, because there would not be any increased benefit or accelerated vesting in the event of any termination or change in control, are not included in the Table of Potential Payments upon Termination or Change in Control.

TDS 2011 LTIP

        Long-term compensation awards under the TDS 2011 LTIP were discussed above in this Compensation Discussion and Analysis. Under the TDS 2011 LTIP, TDS is authorized to grant incentive stock options, nonqualified stock options, stock appreciation rights ("SARs"), bonus stock awards, restricted stock awards, restricted stock unit awards, performance share awards and employer match awards for deferred bonus. The following provides certain additional information relating to the TDS 2011 LTIP.

        TDS adopted the TDS 2011 LTIP to replace the TDS 2004 LTIP for awards granted after January 24, 2012. A total of six million TDS Common Shares were initially reserved for issuance under the TDS 2011 LTIP and an additional five million TDS Common Shares were reserved following approval by shareholders at the 2014 Annual Meeting.

        Under the TDS 2011 LTIP, executives are permitted to defer receipt of all or a portion of their annual bonuses and receive stock unit matches on the amount deferred. Deferred compensation is deemed invested in phantom TDS Common Shares, and the TDS match amounts depend on the amount of annual bonus that was deferred into stock units. Vested stock units are credited with dividend equivalents.

        If the officer enters into competition with, or misappropriates confidential information of, TDS or any affiliate thereof, or the officer's employment with TDS or any affiliate thereof is terminated on account of the officer's negligence or willful misconduct, then all awards held by the officer under the TDS 2011 LTIP shall terminate and be forfeited. In addition, the TDS 2011 LTIP provides that the Compensation Committee may impose other conditions on an award, and pursuant thereto, certain awards under the plan have been granted subject to forfeiture in the event of the officer's violation of non-solicitation and non-disparagement agreements. Also see "Clawback" below.

        The TDS 2011 LTIP and related award agreements provide various rights upon resignation (with prior consent of the TDS board of directors), retirement, special retirement, disability, death, or other termination or separation from service, and upon a change in control thereunder, as summarized below.

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See the below Table of Potential Payments upon Termination or Change in Control for additional information.

        The TDS 2011 LTIP provides that if an outstanding award expires or terminates unexercised or is canceled or forfeited, then the shares subject to such outstanding award would again be available under the plan. The TDS 2011 LTIP also provides that if a share subject to an award is not delivered by reason of the settlement of such award in cash, then such share shall again be available under the plan. However, the TDS 2011 LTIP expressly provides that such "share recycling" will not occur in the event the option exercise price or tax withholding with respect to an award is satisfied by the delivery or netting of shares, rather than the payment of cash.

        The TDS 2011 LTIP broadly prohibits, without shareholder approval and other than in connection with certain business transactions, "repricings," including the reduction of the exercise price of an outstanding stock option or the base price of an outstanding SAR or the cash buyout of underwater stock options.

        The TDS 2011 LTIP does not have a provision automatically replenishing the shares available under the plan without shareholder approval, known as an "evergreen" provision.

TDS 2011 LTIP Change in Control

        Notwithstanding any other provision in the TDS 2011 LTIP or any agreement, in the event of a Change in Control (as described below), the board of directors may in its discretion, but will not be required to, make such adjustments to outstanding awards as it deems appropriate, including without limitation, (i) accelerating the vesting or exercisability of some or all outstanding awards, and/or to the extent legally permissible, causing any applicable restriction or performance period to lapse in full or part; (ii) causing any applicable performance measures to be deemed satisfied at the target, maximum or any other level determined by the board of directors; (iii) requiring that the shares of stock into which TDS Common Shares are converted be substituted for some or all of the TDS Common Shares subject to outstanding awards, with an appropriate adjustment as determined by the Compensation Committee; and/or (iv) requiring outstanding awards, in whole or part, to be surrendered to TDS in exchange for a payment of cash, shares of capital stock of the company resulting from or succeeding to the business of TDS, or the parent thereof, or a combination of cash and shares.

        Generally, a "Change in Control" is defined in the Plan as: (i) an acquisition by a person or entity of the then outstanding securities of TDS (the "Outstanding Voting Securities") (x) having sufficient voting power of all classes of capital stock of TDS to elect at least 50% or more of the members of the TDS board of directors or (y) having 50% or more of the combined voting power of the Outstanding Voting Securities entitled to vote generally on matters (without regard to the election of directors), subject to certain exceptions; (ii) unapproved changes in the majority of the members of the TDS board of directors; (iii) certain corporate restructurings, including certain reorganizations, mergers, consolidations or sales or other dispositions of all or substantially all of the assets of TDS; or (iv) approval by the shareholders of TDS of a plan of complete liquidation or dissolution of TDS.

        TDS currently only has outstanding under the 2011 LTIP restricted stock units, performance share awards (granted in the form of performance share units), options and phantom stock units related to deferred compensation accounts. Because a 2011 LTIP Change in Control would or may result in the acceleration of vesting of stock options, restricted stock units, performance share units, and bonus match units, the effects of such accelerated vesting in such event are included in the Table of Potential Payments upon Termination or Change in Control.

        A copy of the TDS 2011 LTIP was filed with the SEC as Exhibit B to TDS' Notice of Annual Meeting of Shareholders and Proxy Statement dated April 18, 2014 and a copy of Amendment Number One to the TDS 2011 LTIP was filed with the SEC as Exhibit A to TDS' Notice of Annual Meeting of Shareholders and Proxy Statement dated April 18, 2014.

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TDS 2004 LTIP

        Under the 2004 LTIP, TDS was authorized to grant incentive stock options, nonqualified stock options, SARs, bonus stock awards, restricted stock awards, restricted stock unit awards, performance share awards and employer match awards for deferred bonus. TDS adopted the 2011 LTIP to replace the 2004 LTIP for awards granted after January 24, 2012. No additional awards can be granted under the 2004 LTIP and only options and phantom stock units related to deferred compensation accounts are outstanding. Because awards outstanding under the 2004 LTIP are fully vested, no amounts with respect to awards under the 2004 LTIP are reported in the below Table of Potential Payments upon Termination or Change in Control. A copy of the 2004 LTIP was filed with the SEC as Exhibit 10.1 to TDS' Current Report on Form 8-K dated April 11, 2005, and amendments to the 2004 LTIP were filed with the SEC as Exhibits to TDS' Current Reports on Form 8-K dated December 10, 2007 and December 22, 2008.

U.S. Cellular LTIPs

        The U.S. Cellular President and CEO does not participate in the TDS LTIPs. Instead, he participates in the U.S. Cellular LTIPs. The Meyers Letter Agreement specifies the terms of certain equity awards granted to Mr. Meyers under the U.S. Cellular 2013 LTIP in 2013 and annually prior to June 22, 2019. See footnote (2) to the Summary Compensation Table. Mr. Meyers received grants of equity awards under the U.S. Cellular 2013 LTIP in 2017. The U.S. Cellular LTIPs are described in U.S. Cellular's 2018 proxy statement.

SERP

        Each of the NEOs participates or formerly participated in a supplemental executive retirement plan or SERP, which is a non-qualified defined contribution plan. The SERP is not intended to provide substantial benefits other than to replace the benefits which cannot be provided under the TDS Pension Plan as a result of tax law limitations on the amount and types of annual employee compensation which can be taken into account under a tax qualified pension plan. The SERP is unfunded. The amount of the SERP contribution with respect to the executives identified in the Summary Compensation Table is included in column (i), "All Other Compensation," of the Summary Compensation Table. Participants are credited with interest on balances of the SERP. Pursuant to SEC rules, column (h) includes any portion of interest earned under the SERP calculated utilizing a rate that exceeded the AFR at the time the rate was set.

        A participant is entitled to distribution of his or her entire account balance under the SERP if the participant has a separation from service without cause, after either (a) his or her attainment of age 65; or (b) his or her completion of at least ten years of service. If a participant has a separation from service under circumstances other than those set forth in the preceding sentence, without cause, the participant will be entitled to distribution of 10% of his or her account balance for each year of service up to ten years. Upon a separation from service under circumstances that permit payments under the SERP, the participant will be paid his or her vested account balance in one of the following forms as elected by the participant prior to the first day of the first plan year in which the participant commences participation in the SERP: (a) a single lump sum or (b) annual installments over a period of 5, 10, 15, 20 or 25 years. The SERP does not include any provision that would increase benefits or accelerate amounts upon any termination or change in control and, accordingly, no amount with respect to the SERP is included in the below Table of Potential Payments upon Termination or Change in Control. The balance of the SERP as of December 31, 2017 for each NEO is set forth below in the "Nonqualified Deferred Compensation" Table.

Perquisites

        TDS provides few perquisites to its officers. See note (i) under "Explanation of Columns" under the Summary Compensation Table for information about perquisites provided to the NEOs. In addition, TDS has no formal plan, policy or procedure which entitles executive officers to any perquisites following termination or change in control. However, from time to time, TDS or its affiliates may enter into employment, retirement, severance or similar agreements that may provide for certain limited perquisites.

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See the description of the Meyers Letter Agreement in footnote (2) to the Summary Compensation Table. Perquisites and personal benefits represent a relatively insignificant portion of the NEOs' total compensation. Accordingly, they do not materially influence the Compensation Committee's consideration in setting compensation.

Other Generally Applicable Benefits and Plans

Tax-Deferred Savings Plan

        TDS sponsors the Tax-Deferred Savings Plan (TDSP), a tax-qualified defined contribution plan under Sections 401(a) and 401(k) of the Internal Revenue Code. This plan is available to eligible employees of TDS and participating subsidiaries which have adopted the TDSP, including U.S. Cellular. Employees contribute amounts from their compensation, and TDS and participating employers make matching contributions to the plan in cash equal to 100% of an employee's contributions up to the first 3% of such employee's compensation, and 40% of an employee's contributions up to the next 2% of such employee's compensation. Participating employees have the option of investing their contributions and their employer matching contributions in the TDS Common Share fund, the U.S. Cellular Common Share fund and certain unaffiliated funds. Contributions into the company common stock funds are limited to no more than 20%, combined.

        The amount of the matching contribution with respect to the executives identified in the Summary Compensation Table is included in column (i), "All Other Compensation," of the Summary Compensation Table. SEC rules do not require the Summary Compensation Table to include earnings or other amounts with respect to tax-qualified defined contribution plans.

        Under the TDS TDSP, employees are always fully vested in their employee contributions, but are subject to a two year graduated vesting schedule (34% vesting at one year of service and 100% vesting at two years of service) for employer matching contributions. Vesting in employer matching contributions is not accelerated upon a change in control or termination event, except a termination by reason of death, total and permanent disability, or after an employee attains age 65. The vested portion of an employee's account becomes payable following the employee's termination of employment as (a) a lump sum (full or partial) or (b) a series of annual or more frequent installments. This plan does not discriminate in scope, terms, or operation in favor of executive officers and is available generally to all employees, and benefits are not enhanced upon any termination (other than a termination by reason of death, total and permanent disability or after an employee attains age 65) or change in control. Accordingly, no amounts are reported in the below Table of Potential Payments upon Termination or Change in Control.

Pension Plan

        TDS sponsors a tax-qualified noncontributory defined contribution Pension Plan for the eligible employees of U.S. Cellular, (regardless of employment date), or eligible employees of TDS and its other participating subsidiaries employed on or before December 31, 2014. Under this plan, pension contributions are calculated separately for each participant based on the applicable pension formula, and are funded annually by TDS and its participating subsidiaries. The Pension Plan is designed to provide retirement benefits for eligible employees of TDS and its participating subsidiaries. The amount of the contribution with respect to the executives identified in the Summary Compensation Table is included in column (i), "All Other Compensation," of the Summary Compensation Table. SEC rules do not require the Summary Compensation Table to include earnings or other amounts with respect to tax-qualified defined contribution plans.

        Benefits under the TDS Pension Plan are subject to a five year graduated vesting schedule (20% vesting at two years of service, 40% vesting at three years of service, 60% vesting at four years of service and 100% vesting at five years of service). Vesting is not accelerated upon a change in control or termination event, except a termination of employment due to death, a total and permanent disability or after the employee has attained his or her Early or Normal Retirement Date as defined in the plan. The vested portion of an employee's account becomes payable following the employee's termination of employment as (a) an annuity or (b) a lump sum payment. This plan does not discriminate in scope,

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terms, or operation in favor of executive officers and is available generally to all employees of participating employers (subject to certain restrictions for employees hired after December 31, 2014), and benefits are not enhanced upon any termination (except due to death, a total and permanent disability or after the employee has attained his or her Early or Normal Retirement Date) or change in control. Accordingly, no amounts are reported in the below Table of Potential Payments upon Termination or Change in Control.

Retiree Welfare Benefits

        TDS sponsors retiree medical and life insurance plans for eligible retirees of TDS and subsidiaries of TDS which have adopted the plans. These plans do not discriminate in scope, terms, or operation in favor of executive officers and are available generally to all eligible employees of participating employers, and benefits are not enhanced upon any termination or change in control. Accordingly, no amounts are reported in the below Table of Potential Payments upon Termination or Change in Control.

Welfare Benefits during Employment

        TDS also provides customary health and welfare and similar plans for the benefit of its employees. These group life, health, disability, medical reimbursement and/or similar plans do not discriminate in scope, terms or operation in favor of executive officers and are available generally to all employees, and benefits are not enhanced upon any termination or change in control. Accordingly, no amounts are reported in the below Table of Potential Payments upon Termination or Change in Control.

Impact of Accounting and Tax Treatments of Particular Forms of Compensation

        The Compensation Committee considers the accounting and tax treatments of particular forms of compensation. Accounting treatments do not significantly impact the Committee's determinations of the appropriate compensation for TDS executive officers. The Compensation Committee considers the accounting treatments primarily to be informed and to confirm that company personnel understand and recognize the appropriate accounting that will be required with respect to compensation.

        The Compensation Committee places more significance on the tax treatments of particular forms of compensation, because these may involve an actual cash expense to the company or the executive.

        Section 162(m) of the Internal Revenue Code provides a one million dollar annual limit on the amount that a publicly held corporation is allowed to deduct as compensation paid to each of the corporation's principal executive officer ("PEO") and the corporation's three most highly compensated officers, exclusive of the corporation's PEO and principal financial officer. In 2017, TDS adopted the TDS Incentive Plan and shareholders approved the plan, including the material terms of the performance measures to be used for certain incentive compensation awards under the plan, intending that certain compensation paid under such plan may qualify as performance-based compensation and be deductible under Section 162(m) of the Internal Revenue Code. However, the Tax Cuts and Jobs Act enacted on January 3, 2018 eliminates the performance-based compensation exception to Section 162(m) (with an exception for compensation paid under contracts in effect on November 2, 2017). As a result, unless subject to the exception, compensation paid to TDS' covered executive officers in excess of $1 million will not be deductible, even if it is performance-based. TDS believes that it is important to preserve flexibility in administering compensation programs in a manner designed to promote corporate goals. Accordingly, although TDS considers the deductibility of particular forms of compensation, TDS expects to approve elements of compensation that are consistent with the objectives of our executive compensation program, even though compensation in excess of $1 million per covered executive officer will not be deductible.

        TDS generally does not have any arrangements with its executive officers pursuant to which it has agreed to "gross-up" payments due to taxes or to otherwise reimburse officers for the payment of taxes, except with respect to certain reimbursements related to Mr. Meyers' retiree medical benefits as noted below, and certain perquisites.

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Clawback

        Depending on the facts and circumstances, TDS may seek to adjust or recover awards or payments if the relevant TDS performance measures upon which they are based are restated or otherwise adjusted in a manner that would reduce the size of an award or payment. Under the Dodd-Frank Act, TDS will be required to adopt a formal clawback policy that satisfies SEC and NYSE requirements after the requirements are adopted.

TDS Policy on Stock Ownership

        TDS does not have a formal policy relating to stock ownership by executive officers. However, because the President and CEO of TDS and U.S. Cellular are both directors of TDS, they are subject to the stock ownership guidelines applicable to directors. See "Corporate Governance—Stock Ownership Guidelines" and "Security Ownership of Certain Beneficial Owners and Management".

Prohibition of Derivative Trading, Hedging and Pledging of Shares

        TDS' Policy Regarding Insider Trading and Confidentiality provides that persons subject to such policy may not, under any circumstances, trade options for, pledge, or sell "short," any securities of TDS or U.S. Cellular, and may not enter into any hedging, monetization or margin transactions with respect to any such securities.


Compensation Committee Report

        The TDS Compensation Committee oversees TDS' compensation program on behalf of the board of directors. The committee has reviewed and discussed the Compensation Discussion and Analysis with management and based on the review and discussions, the Compensation Committee recommended to the board of directors that the Compensation Discussion and Analysis be included in TDS's Proxy Statement and the Company's Annual Report on Form 10-K for the year-ended 2017.

        This Compensation Committee Report is submitted by:

    Christopher D. O'Leary, Chair   Kimberly D. Dixon   George W. Off   Gary L. Sugarman    


Risks from Compensation Policies and Practices

        Based on its assessment in 2017, TDS does not believe that its compensation policies and practices risks are reasonably likely to have a material adverse effect on the Company or its financial statements or that any portion of the compensation encourages excessive risk taking. TDS' compensation policies and practices have been developed over time with the assistance of Willis Towers Watson and have been reviewed by Compensation Strategies.

        TDS has a number of processes and controls operating concurrently that assess TDS' compensation and benefits plans to determine if any of them create excessive risks of a material nature. First, as part of its Sarbanes Oxley program, the Company has established internal control processes and procedures to identify, evaluate and remediate deficiencies. The Company also has an annual formal mapping and review process that identifies and evaluates each compensation element along with the characteristics, potential risks, controls and mitigating factors related to each compensation element. The Company also maintains an Enterprise Risk Management control related to compensation. As part of its annual review of risk factors for its Annual Report on Form 10-K, it reviews all risks that may have a material effect on the Company.

        TDS believes that its compensation programs do not encourage excessive risk taking for the following reasons:

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        TDS believes there is less risk related to compensation policies and practices for non-executive officers than executive officers.

        In general, TDS believes that its risks are similar to those at other publicly traded companies. As a company engaged in Wireless, Wireline, Cable and HMS businesses, TDS also faces risks like other companies of comparable size and industry sector. TDS does not have any business units that have significantly different risk profiles (such as a business unit involved in finance, securities, investing, speculation or similar activities), or where compensation expense is a dominant percentage of the business unit's revenues or with a risk and reward structure that varies significantly from the overall risk and reward structure of TDS.

        Also, depending on the facts and circumstances, TDS may seek to adjust or recover awards or payments if the relevant performance measures upon which they are based are restated or otherwise adjusted in a manner that would reduce the size of an award or payment, which is believed to discourage risk taking.


Compensation Tables

Summary of Compensation

        The following table summarizes the compensation earned by the named executive officers ("NEO") in 2017, 2016 and 2015. Compensation reported under "Stock Awards" and "Option Awards" represents grant date values as required by SEC rules, and does not represent currently realized or realizable compensation. The NEOs will not realize cash from such awards unless and until any stock awards, including restricted stock unit and performance share unit awards, are vested and the shares received upon vesting are sold for cash, or unless and until any stock options become exercisable, are exercised and the shares received upon exercise are sold for cash. There is no assurance that this will occur. In general, awards are subject to a risk of forfeiture, and no shares subject to restricted stock unit or performance share unit awards will be issued unless the vesting conditions are satisfied (including, in the case of performance share units awards, the performance threshold is achieved), and the options will expire if not exercised during their term, which may occur if the stock price does not appreciate and/or remain above the exercise price during the option's term. The compensation actually realized by a NEO may be more or less than the amount reported depending on the performance of the TDS stock price and other factors. With respect to 2017, the amount of compensation realized by each NEO can be approximated by (i) deducting from the amount reported in the "Total" column in the 2017 Summary Compensation Table the amounts reported in the "Stock Awards" and "Option Awards" columns for such officer, and (ii) adding the values realized in 2017 by such officer as set forth in the Option Exercises and Stock Vested table below. However, other unrealized components of compensation also may be included, such as retirement plan contributions that are subject to a vesting schedule.

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2017 Summary Compensation Table

Name and Principal Position(a)
  Year
(b)
  Salary
($)(c)
  Bonus
($)(d)
  Stock
Awards
($)(e)
  Option
Awards
($)(f)
  Non-Equity
Incentive
Plan
Compensation
($)(g)
  Change in
Pension Value
and
Non-qualified
Deferred
Compensation
Earnings
($)(h)
  All Other
Compensation
($)(i)
  Total
($)(j)
 

LeRoy T. Carlson, Jr.

                                                     

(1)(6)(7)

  2017   $ 1,352,700   $ 1,030,000   $ 3,000,579   $ 280,365   $   $ 9,860   $ 32,345   $ 5,705,849  

President and CEO of

  2016   $ 1,352,700   $ 1,217,400   $ 3,534,346   $ 389,401   $   $ 8,654   $ 37,880   $ 6,540,381  

TDS

  2015   $ 1,352,700   $ 1,400,000   $ 1,463,182   $ 1,809,161   $   $ 4,278   $ 37,841   $ 6,067,162  

Kenneth R. Meyers

 

 

   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 

(2)(6)(7)

  2017   $ 996,000   $ 1,066,100   $ 5,641,045   $   $   $ 28,490   $ 80,722   $ 7,812,357  

President and CEO

  2016   $ 948,000   $ 1,007,200   $ 2,656,905   $ 2,634,164   $   $ 26,056   $ 79,508   $ 7,351,833  

of U.S. Cellular

  2015   $ 905,300   $ 964,000   $ 1,982,307   $ 1,978,484   $   $ 16,911   $ 82,325   $ 5,929,327  

Douglas D. Shuma

 

 

   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 

(3)(6)(7)

  2017   $ 446,500   $ 96,709   $ 472,391   $ 59,279   $ 178,091   $ 1,860   $ 63,623   $ 1,318,454  

Senior Vice President—

  2016   $ 432,500   $ 92,358   $ 533,990   $ 61,016   $ 191,142   $ 1,305   $ 67,539   $ 1,379,850  

Finance and Chief

  2015   $ 417,000   $ 88,226   $ 193,091   $ 240,271   $ 227,974   $ 519   $ 66,258   $ 1,233,339  

Accounting Officer of TDS

                                                     

Scott H. Williamson

 

 

   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 

(4)(7)

  2017   $ 680,000   $ 134,432   $ 987,476   $ 128,085   $ 246,568   $ 9,845   $ 77,639   $ 2,264,045  

Senior Vice President—

  2016   $ 663,000   $ 133,449   $ 1,126,271   $ 128,698   $ 266,451   $ 8,282   $ 79,146   $ 2,405,297  

Acquisitions and

  2015   $ 645,000   $ 123,735   $ 452,102   $ 562,579   $ 320,565   $ 3,913   $ 81,527   $ 2,189,421  

Corporate Development

                                                     

at TDS

                                                     

David A. Wittwer

 

 

   
 
   
 
   
 
   
 
   
 
   
 
   
 
   
 
 

(5)(7)

  2017   $ 654,000   $ 490,500   $ 776,010   $ 806,096   $   $ 21,429   $ 83,094   $ 2,831,129  

Former President and CEO

  2016   $ 631,000   $ 586,100   $ 648,503   $ 828,636   $   $ 24,181   $ 61,217   $ 2,779,637  

of TDS Telecom

  2015   $ 608,000   $ 507,300   $ 745,908   $ 731,419   $   $ 19,331   $ 59,965   $ 2,671,923  

Explanation of Columns:

(a)
For the years ended 2017, 2016, and 2015, includes LeRoy T. Carlson, Jr., TDS' principal executive officer, Douglas D. Shuma, our principal financial officer, and Messrs. Meyers, Williamson, and Wittwer, our three most highly compensated executive officers other than the principal executive officer and principal financial officer. The determination as to which executive officers are most highly compensated is made by reference to total compensation for the last completed fiscal year as set forth in column (j), reduced by any amount in column (h).

(b)
For additional details relating to 2016 and 2015, see the TDS proxy statements filed with the SEC on Schedule 14A on April 12, 2017 and on April 13, 2016, respectively.

(c)
Represents the dollar value of base salary (cash and non-cash) earned by the NEO during the fiscal year, whether or not paid in such year. Kenneth R. Meyers deferred a portion of his 2017 base salary to an interest-bearing account, all of which salary is included in column (c) whether or not deferred. The total amount of salary deferred was $129,986. See "Information Regarding Nonqualified Deferred Compensation" below for further detail.

(d)
Represents the dollar value of bonus (cash and non-cash) earned by the NEO during the fiscal year, whether or not paid in such year.

LeRoy T. Carlson, Jr. deferred 15% of his 2016 bonus paid in 2017 into TDS phantom stock. Kenneth R. Meyers deferred 25% of his 2016 bonus paid in 2017 into U.S. Cellular phantom stock, and 25% of such bonus into an interest-bearing arrangement. See "Information Regarding Nonqualified Deferred Compensation" below. The entire amount of bonus, including any amount deferred, is included in the Summary Compensation Table above.

The following is a summary of the amount of bonus for 2016 performance paid in 2017 and the amount deferred (shares with respect to Mr. Carlson are TDS Shares and shares with respect to Mr. Meyers are USM Shares):

 
  LeRoy T.
Carlson, Jr.
  Kenneth R.
Meyers
 

Total 2016 Bonus Paid in 2017

  $ 1,217,400   $ 1,007,200  

Percentage Deferred to Interest Account

    0 %   25 %

Amount Deferred to Interest Account

  $   $ 251,800  

Percentage Deferred to Phantom Stock

    15 %   25 %

Amount Deferred to Phantom Stock

  $ 182,610   $ 251,800  

Number of Underlying Shares

    7,002     6,991  

Company Match—see Note (e) below

  $ 45,653   $ 62,950  

Number of Underlying Shares

    1,750     1,748  

The bonus was paid and the related phantom stock awards were granted in March 2017.


The foregoing