The Board of Directors of Telephone and Data Systems, Inc. (the “Company”)
has adopted the following guidelines to promote the effective functioning of the Board
and its committees.
1. Board Structure
1.1 It is the sense of the Board that its current size of 12 is appropriate for
purposes of functioning efficiently. However, the shareholders or the Board may
amend the Company’s bylaws to provide for a smaller or larger size if
circumstances so warranted.
1.2 Directors are encouraged to limit to three the number of other public
company boards on which they serve (excluding double counting of direct or
indirect subsidiaries of a company), taking into account the potential time
commitment of serving on these boards. Directors should also advise the
Chairman of the Board in advance of accepting an invitation to serve on another
for-profit company board.
1.3 The Company’s bylaws provide that all members of the Board are elected
annually, and that voting is not cumulative.
1.4 The Board does not believe it should establish term limits. Term limits
hold the disadvantage of losing the contribution of Directors who have been able
to develop, over a period of time, increasing insight into the Company and its
operations. Each Director will be given a convenient opportunity annually to
confirm his or her desire to continue as a Director.
2. Director Qualification Standards
2.1 Directors who are required to qualify as independent shall satisfy the
applicable independence requirements required by the listing standards of each
stock exchange on which the Company is listed, which are incorporated by
reference herein.
3. Director Responsibilities, Orientation and Continuing Education
3.1 The Board currently holds five regular meetings during the year, including
a December meeting devoted principally to the review of the Company’s
proposed operating and capital budgets for the coming year. The Board also
holds special meetings throughout the year, as necessary.
3.2 Directors are expected to attend Board meetings and meetings of
Committees on which they serve, to spend the time needed and to meet as
frequently as necessary to properly discharge their responsibilities. Written
materials that are important to the Board’s understanding of the business to be
conducted at a meeting should be distributed to the Directors well in advance of
the meeting to allow the Directors time to prepare for discussion at the meeting.
Directors are expected to review these materials in advance of the meeting.
3.3 The Chairman of the Board will set the agenda for the Board meetings
with the understanding that certain items necessary for appropriate Board
oversight will be brought to the Board periodically for review and/or decision.
Any Director may request that the Chairman of the Board include items on any
meeting agenda.
3.4 To supplement the written materials distributed in advance of Board and
Committee meetings, meetings will include presentations by management and,
when appropriate, outside consultants, as well as sufficient time for a full
discussion of the agenda items.
3.5 At least once each year, before or after a regularly scheduled Board
meeting, the independent Directors will meet without non-independent Directors
and management present.
3.6 The non-management Directors of the Company will meet at regularly
scheduled executive sessions without management. "Non-management" Directors
are all those who are not executive officers, and includes such Directors who are
not independent by virtue of a material relationship, former status or family
membership, or for any other reason. The Chairman of the Board will preside at
all meetings of the non-management Directors. The Company’s proxy statement
will disclose that the Chairman of the Board is the presiding Director at such
meetings, and will disclose a method for interested persons to communicate
directly with the presiding Director.
3.7 Directors are expected to adhere to the Code of Ethics adopted by the
Board. The proceedings and work of the Board and its committees are
confidential and each Director is expected to maintain the confidentiality of
information received in connection with performing his or her role as Director.
3.8 New Directors will receive a comprehensive orientation from senior
management of the Company regarding its business. In addition, particular
aspects of the Company’s business will be presented from time to time as part of
regular Board meetings. Individual Directors are strongly urged to participate in
approved director education programs, the cost of which will be paid by the
Company.
4. Director Compensation and Stock Ownership
4.1 Directors’ compensation is reviewed periodically. The Board’s objective
is to provide appropriate compensation, consistent with customary levels for
companies of a similar size. Pursuant thereto, the Board has adopted the
Compensation Plan for Non-Employee Directors, as amended.
4.2 Within three years after (a) March 31, 2007 or (b) the date on which a
Director first became a Director, whichever is later, and thereafter for so long as
each Director remains a Director of the Company, each Director shall own
Series A Common Shares, Common Shares and/or Special Common Shares of the
Company having a combined value of at least $165,000. The Board will review
this minimum ownership requirement periodically.
5. Board Resources and Access to Management and Independent Advisors
5.1 Directors will have full access to management of the Company to obtain
information. Directors will use their judgment to ensure that any contacts are not
disruptive to the operations of the Company, and are encouraged to make their
requests for information through the Secretary.
5.2 Information regarding the Company’s business and affairs will be
provided to the Board on a regular basis by management of the Company.
5.3 The Board and each of its committees have the authority to retain such
outside advisors as it deems appropriate. Prior to the retention of an outside
advisor, the Board or the applicable committee is encouraged to establish a
description of the work, and a budget and time schedule for performance of such
work. The expense of retaining such advisors will be paid by the Company.
6. Annual Performance Evaluation
6.1 At least once each year the Board, under the leadership of the Chairman of
the Board, will evaluate its performance and effectiveness as a Board. Similarly,
each Committee of the Board will evaluate its performance and effectiveness.
7. Committees
7.1 The Board currently has three regular committees - the Audit Committee,
the Compensation Committee and the Corporate Governance and Nominating Committee. The
Board may, from time to time, eliminate or establish additional committees.
7.2 Committee members and chairs will be proposed by the Chairman of the
Board and appointed annually by the Board.
7.3 Each of the regular committees will have a written charter setting forth its
responsibilities. Such charters will be adopted by the Board taking into
consideration, among other factors, the committee’s recommendation.
7.4 The chair of each committee will report periodically to the Board on the
activities of the committee.
8. Management Succession
8.1 In the event of the absence of the President and CEO or in the event of his
or her inability or refusal to act as President and CEO for a continuous period of
three months or in the event of his earlier 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 Section 3.5 of 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.
9. Periodic Review
9.1 These guidelines will be reviewed and may be amended by the Board from
time to time.
* As amended by the Board of Directors on March 9, 2011.
