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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Sprint Corporation
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(Name of Registrant as Specified In Its Charter)
Don A. Jensen, Vice President and Secretary
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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LOGO Post Office Box
11315
Kansas City, Missouri 64112
William T. Esrey
Chairman
March 14, 1995
Dear Stockholder:
On behalf of the Board of Directors and Management, I cordially invite you to
attend the Annual Meeting of the Stockholders of Sprint Corporation. The Annual
Meeting will be held at 10:00 a.m. on Tuesday, April 18, 1995, at Sprint World
Headquarters, 2330 Shawnee Mission Parkway, Westwood, Kansas. The enclosed
notice of the meeting and Proxy Statement contain detailed information about
the business to be transacted at the meeting.
The Board of Directors has nominated two of the three present Directors whose
terms of office expire this year to continue to serve as Directors of Class
III. Paul Henson, Director of our company since 1960 and a present Class III
Director, will retire when his term of office expires at the Annual Meeting. In
order to balance the number of Directors among the three classes, the Board of
Directors has nominated Stewart Turley, a present Class II Director, and
myself, presently a Director of Class I, to serve as Directors of Class III.
The Board of Directors recommends that you vote for the nominees.
You are also being asked to approve a Management Incentive Stock Option Plan.
The plan would permit approximately 13,000 employees who participate in
Sprint's annual incentive compensation plans to elect to receive stock options
at 100% of fair market value in lieu of a portion of their cash incentive plan
opportunity. In addition, you are asked to approve the appointment of Ernst &
Young LLP as independent auditors of Sprint for 1995. The Board of Directors
recommends that you vote for these proposals.
Two Stockholder proposals are also included in the Proxy Statement. The
proposals relate to the retirement plan for outside Directors and establishing
a Stockholder advisory committee. For the reasons set forth in the Proxy
Statement, the Board of Directors recommends a vote against each proposal.
The prompt return of your proxy in the enclosed business return envelope will
save Sprint additional expenses of solicitation and will help ensure that as
many shares as possible are represented.
Sincerely,
LOGO
Chairman
<PAGE>
SPRINT CORPORATION
P.O. BOX 11315
KANSAS CITY, MISSOURI 64112
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 18, 1995
----------------
TO THE STOCKHOLDERS OF SPRINT CORPORATION:
The Annual Meeting of the Stockholders of Sprint Corporation (Sprint) will be
held at the corporate headquarters of Sprint, 2330 Shawnee Mission Parkway,
Westwood, Kansas on Tuesday, April 18, 1995, at 10:00 a.m. (local time) for the
following purposes:
1. To elect four Class III Directors to serve for a term of three years.
2. To consider and vote upon a proposal to approve the Management
Incentive Stock Option Plan.
3. To consider and vote upon a proposal to approve the appointment of
Ernst & Young LLP as independent auditors of Sprint for 1995.
4. To act upon such matters, including two Stockholder proposals (set
forth on pages 19 through 22 of the accompanying Proxy Statement), as may
properly come before the meeting or any adjournments thereof.
The close of business on February 21, 1995, has been designated as the record
date for the determination of Stockholders entitled to notice of and to vote at
the Annual Meeting or any adjournments thereof.
By order of the Board of Directors
Westwood, Kansas Don A. Jensen
March 14, 1995 Vice President and
Secretary
YOUR VOTE IS IMPORTANT
We consider the vote of each Stockholder important, whatever the number
of shares held. If you are unable to attend the meeting in person, please
sign, date and return your proxy in the enclosed envelope at your earliest
convenience. The prompt return of your proxy will save expense to Sprint.
<PAGE>
SPRINT CORPORATION
P.O. BOX 11315
KANSAS CITY, MISSOURI 64112
MARCH 14, 1995
PROXY STATEMENT
PROXIES, SOLICITATION AND VOTING
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of proxies in the accompanying form to be used at the Annual
Meeting of Stockholders on April 18, 1995. Properly executed and dated proxies
received will be voted in accordance with instructions thereon. If the proxy
card is signed and returned and no instructions are given on the proxy with
respect to the matters to be acted upon, the shares represented by the proxy
will be voted for the election of the nominees for Directors designated below,
for approval of the Management Incentive Stock Option Plan, for approval of the
appointment of the auditors of Sprint and against the Stockholder proposals.
A Stockholder giving a proxy may revoke it at any time before it is exercised
by filing with the Secretary of Sprint an instrument of revocation or a duly
executed proxy bearing a later date. A proxy may also be revoked by attending
the Annual Meeting of Stockholders and voting in person. Attendance at the
Annual Meeting of Stockholders will not in and of itself constitute the
revocation of a proxy.
In addition to solicitation by mail, proxies may be solicited by officers of
Sprint in person or by telephone. Sprint has retained D. F. King & Co., Inc. to
assist in the solicitation of proxies for an anticipated fee of $6,000 plus
out-of-pocket expenses. The cost of soliciting proxies will be borne by Sprint.
As of the record date, February 21, 1995, Sprint had outstanding and entitled
to vote 347,567,416 shares of Common Stock, 54,022 shares of Preferred Stock-
First Series, Convertible, 321,238 shares of Preferred Stock-Second Series,
Convertible, and 95 shares of Preferred Stock-Fifth Series. Each share of
Common Stock, Preferred Stock-First Series, Convertible, Preferred Stock-Second
Series, Convertible, and Preferred Stock-Fifth Series is entitled to one vote
on each matter to be voted on at the meeting.
The four nominees for Director receiving the greatest number of votes at the
Annual Meeting of Stockholders will be elected as Directors. For all other
matters to be voted upon at the Annual Meeting, the affirmative vote of a
majority of shares present in person or represented by proxy, and entitled to
vote on the matter, is necessary for approval. For purposes of determining the
outcome of the vote on these matters, an instruction to "abstain" from voting
on a proposal will be treated as shares present and entitled to vote, and will
have the same effect as a vote against a proposal. "Broker non-votes", which
occur when brokers are prohibited from exercising discretionary voting
authority for beneficial owners who have not provided voting instructions, are
not counted for the purpose of determining the number of shares present in
person or represented by proxy on a voting matter and have no effect on the
outcome of the vote.
Sprint's policy is that all Stockholder meeting proxies, ballots and voting
tabulations that identify the vote of a specific Stockholder shall, with
certain specific and limited exceptions, be kept confidential from Sprint's
Directors, officers or employees. One exception to Sprint's confidential voting
policy occurs when a Stockholder writes comments on his or her proxy card. This
exception is designed to accommodate the Stockholders who express their
opinions and views by writing comments on their proxy cards and expect Sprint
to receive these comments.
SECURITY OWNERSHIP OF MANAGEMENT
The following table states the number of shares of Sprint Common Stock
beneficially owned, as of December 31, 1994, by each current Director, each
executive officer named in the "Summary Compensation
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Table" and by all Directors and executive officers as a group. The number of
shares beneficially owned by all Directors and executive officers as a group
represented less than one percent of the outstanding shares. Except as
otherwise indicated, each individual named has sole investment and voting power
with respect to the securities shown.
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
---- ----------------
<S> <C>
DuBose Ausley......................................... 46,792(1)
Warren L. Batts....................................... 11,500(1)
Ruth M. Davis......................................... 12,569(1)
J. Richard Devlin..................................... 86,683(1)
William T. Esrey...................................... 701,963(1)(2)
Donald J. Hall........................................ 30,700(1)
Paul H. Henson........................................ 407,545(1)(2)
Harold S. Hook........................................ 26,500(1)
Robert E. R. Huntley.................................. 27,043(1)
Arthur B. Krause...................................... 173,865(1)(2)
Ronald T. LeMay....................................... 203,865(1)
Linda Koch Lorimer.................................... 41,026(1)
D. Wayne Peterson..................................... 87,343(1)
Charles H. Price II................................... 12,900(1)(2)
Frank E. Reed......................................... 41,275(1)
Charles E. Rice....................................... 13,500(1)
Stewart Turley........................................ 13,900(1)
All Directors and executive officers as a group (26
persons)............................................. 2,347,828(1)(2)
</TABLE>
--------
(1) Includes shares which may be acquired upon the exercise of stock options
exercisable on or within sixty days after December 31, 1994, under Sprint's
stock option plans as follows: 39,519, 10,500, 10,500, 64,992, 427,022,
10,500, 2,000, 10,500, 24,106, 101,046, 145,818, 39,519, 45,403, 10,500,
39,519, 10,500 and 10,500 shares for Mr. Ausley, Mr. Batts, Dr. Davis,
Messrs. Devlin, Esrey, Hall, Henson, Hook, Huntley, Krause, LeMay, Ms.
Lorimer, Messrs. Peterson, Price, Reed, Rice and Turley, respectively, and
1,297,741 for all Directors and executive officers as a group.
(2) Includes shares held by or for the benefit of family members in which
beneficial ownership has been disclaimed: 14,802 shares held in trust for
Mr. Esrey's children, 880 shares owned by Mr. Henson's wife, 13,340 shares
owned by Mr. Krause's wife, 1,000 shares held by Mr. Price's wife and
31,052 shares held by or for the benefit of family members for all
Directors and executive officers as a group.
I. ELECTION OF DIRECTORS
(Item 1 on Proxy Card)
The Board of Directors of Sprint is divided into three classes, with the term
of office of each class ending in successive years. The terms of the Directors
of Class III expire with this Annual Meeting of Stockholders. Each of the four
nominees for Class III, if elected, will serve three years until the 1998
Annual Meeting and until a successor has been elected and qualified. Two of the
nominees are now Directors of Class III, and two of the nominees, Mr. Esrey and
Mr. Turley, are currently members of Class I and Class II, respectively. The
Directors remaining in Classes I and II will continue in office until the 1996
and 1997 Annual Meetings, respectively.
Each share is entitled to one vote for each of four Directors. The persons
named in the accompanying proxy will vote it for the election of the nominees
named below as Directors of Class III unless otherwise directed by the
Stockholder. Each nominee has consented to be named and to continue to serve if
elected. If any of the nominees become unavailable for election for any reason,
the proxies will be voted for the other nominees and for any substitutes.
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NOMINEES FOR DIRECTORS
The following information is given with respect to the nominees for election.
Class III--Nominees to Serve Three Years Until 1998 Annual Meeting
WILLIAM T. ESREY, age 55. Chairman and Chief Executive Offi-
cer of Sprint, Westwood, Kansas; Director of The Equitable
Life Assurance Society of the United States, General Mills,
Inc. and Panhandle Eastern Corporation. Mr. Esrey has been
Chief Executive Officer of Sprint for more than five years.
Director of Sprint since 1985; Chairman of Executive Commit-
tee.
LINDA KOCH LORIMER, age 42. Secretary of the University, Yale
University, New Haven, Connecticut; Director of McGraw-Hill,
Inc. Prior to becoming Secretary of Yale University in 1993,
Ms. Lorimer was President of Randolph-Macon Woman's College
for more than six years. Prior to becoming a Director of
Sprint in 1993, Ms. Lorimer was a Director of Centel Corpora-
tion since 1988; Chairman of Pension and Savings Trusts Com-
mittee, member of Executive Committee and Organization and
Compensation Committee.
CHARLES H. PRICE II, age 63. Chairman of the Board of Mercan-
tile Bank of Kansas City, Kansas City, Missouri; Director of
British Airways PLC, Hanson PLC, Mercantile Bancorporation,
Inc., The New York Times Company and Texaco, Inc. Mr. Price
was elected Chairman of the Board of Mercantile Bank of Kan-
sas City in 1992. He was President and Chief Executive Offi-
cer of Ameribanc, Inc. from 1989 to 1992 and the United
States Ambassador to the United Kingdom of Great Britain and
Northern Ireland from 1983 to 1989. Director of Sprint since
1989; Member of Finance Committee and Nominating and Corpo-
rate Responsibility Committee.
STEWART TURLEY, age 60. Chairman and Chief Executive Officer
of Eckerd Corporation, a diversified retailer, Clearwater,
Florida; Director of Barnett Banks, Inc. and Springs Indus-
tries, Inc. Mr. Turley has been Chairman and Chief Executive
Officer of Eckerd Corporation for more than five years. Di-
rector of Sprint since 1980; Chairman of Organization and
Compensation Committee, member of Executive Committee and
Nominating and Corporate Responsibility Committee.
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MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
The following information is given with respect to the Directors of Classes I
and II, who will continue to serve as Directors of Sprint until the 1996 and
1997 Annual Meetings, respectively.
Class I--Serving Until 1996 Annual Meeting
DUBOSE AUSLEY, age 57. Chairman of Macfarlane, Ausley, Fergu-
son & McMullen, a law firm, Tallahassee, Florida; Director of
Capital City Bank Group, Inc., Tampa Electric Co., Inc. and
TECO Energy, Inc. Prior to becoming Chairman of Macfarlane,
Ausley, Ferguson & McMullen in February of 1994, Mr. Ausley
was President of Ausley, McMullen, McGehee, Carothers & Proc-
tor, P.A. for more than five years. Mr. Ausley has also been
Chairman of the Capital City Bank Group, Inc. for more than
five years. Prior to becoming a Director of Sprint in 1993,
Mr. Ausley was a Director of Centel Corporation since 1982;
Member of Nominating and Corporate Responsibility Committee
and Pension and Savings Trusts Committee.
WARREN L. BATTS, age 62. Chairman and Chief Executive Officer
of Premark International, Inc., a diversified consumer prod-
ucts company, Deerfield, Illinois; Director of The Allstate
Corporation, Cooper Industries, Inc. and Sears, Roebuck &
Company. Mr. Batts has been Chairman and Chief Executive Of-
ficer of Premark International, Inc. for more than five
years. Director of Sprint since 1982; Chairman of Finance
Committee, member of Executive Committee and Organization and
Compensation Committee.
DONALD J. HALL, age 66. Chairman of Hallmark Cards, Inc.,
manufacturer of greeting cards, Kansas City, Missouri. Mr.
Hall has been Chairman of Hallmark Cards, Inc. since 1983.
Director of Sprint since 1986; Member of Audit Committee and
Organization and Compensation Committee.
ROBERT E. R. HUNTLEY, age 65. Counsel to Hunton & Williams, a
law firm, Richmond, Virginia; Director of Philip Morris Com-
panies, Inc. Mr. Huntley has been counsel to Hunton & Wil-
liams for more than five years. Prior to becoming a Director
of Sprint in 1993, Mr. Huntley was a Director of Centel Cor-
poration since 1975; Chairman of Audit Committee, member of
Executive Committee and Organization and Compensation Commit-
tee.
4
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Class II--Serving Until 1997 Annual Meeting
RUTH M. DAVIS, age 66. President and Chief Executive Officer
of The Pymatuning Group, Inc., a technology management serv-
ices company, Alexandria, Virginia; Chairman of the Aerospace
Corporation, Director of Air Products and Chemicals, Inc.,
Consolidated Edison Company of New York, Inc., Ceridian Cor-
poration, Giddings & Lewis, Inc., Premark International,
Inc., SofTech, Inc. and Varian Associates, Inc. Dr. Davis has
been President and Chief Executive Officer of The Pymatuning
Group, Inc. for more than five years. Director of Sprint
since 1981; Member of Audit Committee and Pension and Savings
Trusts Committee.
HAROLD S. HOOK, age 63. Chairman and Chief Executive Officer
of American General Corporation, a financial services holding
corporation, Houston, Texas; Director of Chemical Banking
Corporation, Cooper Industries, Inc. and Panhandle Eastern
Corporation. Mr. Hook has been Chairman and Chief Executive
Officer of American General Corporation for more than five
years. Director of Sprint since 1982; Member of Finance Com-
mittee and Pension and Savings Trusts Committee.
RONALD T. LEMAY, age 49. President and Chief Operating Offi-
cer--Long Distance Division of Sprint, Westwood, Kansas; Di-
rector of Mercantile Bancorporation, Inc. and Yellow Corpora-
tion. Mr. LeMay has been President and Chief Operating Offi-
cer--Long Distance Division of Sprint for more than five
years. Director of Sprint since 1993.
FRANK E. REED, age 59. Former President and Chief Executive
Officer of CoreStates Philadelphia National Bank, Philadel-
phia, Pennsylvania; Director of Harleysville Group, Inc. Mr.
Reed had been President and Chief Executive Officer of
CoreStates Philadelphia National Bank for more than five
years prior to December 31, 1994. Prior to becoming a Direc-
tor of Sprint in 1993, Mr. Reed was a Director of Centel Cor-
poration since 1978; Member of Audit and Finance Committees.
CHARLES E. RICE, age 59. Chairman and Chief Executive Officer
of Barnett Banks, Inc., a bank holding company, Jacksonville,
Florida; Director of CSX Corporation. Mr. Rice has been
Chairman and Chief Executive Officer of Barnett Banks, Inc.
for more than five years. Director of Sprint since 1975;
Chairman of Nominating and Corporate Responsibility Commit-
tee, member of Audit and Executive Committees.
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DIRECTOR MEETINGS AND COMMITTEES
The Board of Directors held six regular meetings and six special meetings in
1994. The Board of Directors has an Audit Committee, a Nominating and Corporate
Responsibility Committee and an Organization and Compensation Committee. The
Board of Directors also has an Executive Committee, a Finance Committee and a
Pension and Savings Trusts Committee. The members of each committee are
identified in the above description of Directors. In 1994 the Organization and
Compensation Committee held six meetings, the Finance Committee held four
meetings and the Nominating and Corporate Responsibility Committee held three
meetings. The Audit Committee, the Executive Committee and the Pension and
Savings Trusts Committee each held two meetings. Each current Director attended
at least 75% of the aggregate of the total number of meetings of the Board of
Directors and the total number of meetings held by all committees of the Board
of Directors on which the Director served during 1994.
The principal responsibilities of the Audit Committee are to ensure: (a) that
proper accounting principles are being followed; (b) that the total audit
coverage of Sprint and its affiliates is satisfactory; and (c) that an adequate
system of internal controls has been implemented by Sprint and is being
effectively followed. The Audit Committee provides an open avenue of
communication between management, the external and internal auditors and the
Board of Directors. The Committee reviews the nature of all services performed
by the external auditors, including the scope and general extent of their audit
examination and the basis for their compensation. The Committee recommends to
the Board of Directors the auditors for formal ratification by the Stockholders
at the Annual Meeting.
The principal responsibilities of the Nominating and Corporate Responsibility
Committee, as they relate to the Director nomination process, are to: (a)
periodically review the size and composition of the Board of Directors and make
recommendations to the Board with respect to such matters; (b) recommend to the
Board of Directors persons proposed as nominees whose election at the next
Annual Meeting of Stockholders will be recommended by the Board of Directors;
and (c) recommend persons proposed to be elected to fill any vacancy on the
Board of Directors between Stockholder meetings. The Committee will consider
qualified nominees recommended by Stockholders. Such recommendations should be
sent to the Nominating and Corporate Responsibility Committee, c/o Corporate
Secretary, at the corporate headquarters of Sprint, Post Office Box 11315,
Kansas City, Missouri 64112.
The principal responsibilities of the Organization and Compensation Committee
are to: (a) assess and appraise the performance of the Chief Executive Officer
and review the performance of executive management; (b) recommend to the Board
of Directors base salaries, incentive compensation and other benefits for the
Chief Executive Officer and other key officers; (c) counsel and advise
management on plans for orderly development and succession of executive
management; (d) take any and all action required or permitted to be taken by
the Board of Directors under the stock option and restricted stock plans, stock
purchase plans, incentive compensation plans and the deferred compensation
plans of Sprint; and (e) review recommendations for major changes in
compensation and benefit and retirement plans which have application to
significant numbers of Sprint's total employees and which require review or
approval of the Board of Directors.
COMPENSATION OF DIRECTORS
Directors who are not officers of Sprint (the Outside Directors) are each
paid $35,000 annually plus $1,250 for each meeting attended and $1,000 for each
committee meeting attended. Mr. Rice, a Director of Sprint, received $8,000 in
1994 as fees for serving as a Director of United Telephone Company of Florida,
a Sprint subsidiary.
The Long-Term Stock Incentive Program, which was approved at the 1989 Annual
Meeting of Stockholders, provides for the grant of stock options to Outside
Directors. Under the program each Outside
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Director receives an annual grant of an option to purchase 2,000 shares at an
option price equal to 100% of the fair market value of the Common Stock on the
date of grant. The options expire ten years from the date of grant; 25% of the
shares subject to each option become exercisable as of December 31 of the year
in which the option is granted and an additional 25% become exercisable on
December 31 of each of the three succeeding years.
In 1982 Sprint adopted a retirement plan for its Outside Directors. Any
Director of Sprint who has served five years as a Director without
simultaneously being employed by Sprint or any of its subsidiaries is eligible
to receive benefits under the plan. An eligible Director retiring after March
30, 1989, will receive monthly benefit payments equal to the monthly fee (not
including meeting fees) being paid to Directors at the time of the Director's
retirement. The monthly retirement benefit would be $2,917 for any Director
retiring while the current $35,000 annual fee remains in effect. The number of
monthly benefit payments to a Director under the plan will equal the number of
months served as a Director without simultaneously being employed by Sprint or
any of its subsidiaries, up to a maximum of 120 payments.
Outside Directors of Sprint and certain of its subsidiaries are also eligible
for a Director's Deferred Fee Plan under which Outside Directors may elect to
defer all or some of their fees.
EXECUTIVE COMPENSATION
ORGANIZATION AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Organization and Compensation Committee of the Board, which is composed
of independent, non-employee Directors and has the principal responsibilities
described on page 6 of this Proxy Statement, has furnished the following report
on executive compensation:
Sprint's compensation philosophy is to link, by using specific objectives,
executives' compensation to the short-term and long-term performance of Sprint
so as to maximize long-term Stockholder value. Sprint's executive compensation
program consists of four elements: (1) base salary, (2) short-term incentive
compensation, (3) long-term incentive compensation and (4) stock options. To
develop a competitive compensation package, both base salary and total
compensation (i.e., the sum of all four elements) are compared to a defined
competitive group. This comparison group is composed of approximately 140
companies similar to Sprint in size as measured by annual sales. The Committee
believes that the comparison group accurately reflects the market in which
Sprint competes for executive talent. Most, but not all, of the companies in
the S&P Telephone Utility Index and the S&P Telecommunications (Long Distance)
Index which are used in the Stock Performance Graph on page 15 of this Proxy
Statement are included in the comparison group. The Committee's policy is to
target base salaries at the 50th percentile for base pay of similar positions
within the comparison group, and total compensation at the 75th percentile
provided certain performance objectives are achieved.
Section 162(m) of the Internal Revenue Code denies a tax deduction to any
publicly held corporation, such as Sprint, for compensation in excess of $1
million paid to any Named Officer. Sprint took all action required under
Section 162(m) for Sprint's incentive compensation plans to be performance-
based so as to preserve Sprint's tax deduction for 1994.
Base Salary. Each year the Committee makes a recommendation to the Board
establishing base pay for all executive officers. Merit increases are based on
individual performance over the previous year and are consistent with the
policy to pay base salaries approximating the median of the comparison group.
As a result of his performance evaluations during his tenure as Chief Executive
Officer, Mr. Esrey's base salary exceeds the median of the comparison group.
Short-Term Incentive Plans. Sprint maintained two short-term incentive plans
covering its executive officers for 1994. Mr. Esrey and Mr. LeMay are covered
under the Executive Management Incentive Plan
7
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(EMIP). The material terms of the performance goals under EMIP were approved by
the Stockholders at the 1994 Annual Meeting. Sprint's other executive officers
are covered under the Corporate Center Management Incentive Plan (CCMIP). Each
plan is a performance-driven short-term, annual incentive plan designed to
promote the near term objectives of the organization.
Target incentive opportunity for each plan is based on job level and
potential impact on organization results. The entire EMIP payout, and 75% of
the CCMIP payout, is based on the achievement of seven financial objectives--
three for the Local Telecommunications Division (LTD), and two for each of the
Long Distance Division (LDD) and the Cellular Division. For each objective,
targets were established and compared to actual 1994 financial results. The
objectives for the LTD related to regulated operating income (50% weighting),
cash generation (35%), and nonregulated operating income (15%). The objectives
for the LDD related to operating income (50%) and net collectible revenue
growth relative to market growth (50%). The objectives for the Cellular
Division related to operating income (40%) and net collectible revenue (60%).
The weights assigned for a particular executive as between the LTD, LDD and
Cellular Division depended on an executive's responsibilities with Sprint.
Twenty-five percent of the CCMIP payout was based on the achievement of
certain personal objectives in 1994. Based on the financial results described
above, and the achievement of their personal objectives, the executive officers
earned CCMIP payouts on average of 126.4% of target. Mr. Esrey's EMIP payout
was based on the financial results described above using relative weights for
objectives by division as follows: 35% for the LTD, 45% for LDD, and 20% for
the Cellular Division. Based on these factors, Mr. Esrey earned a payout of
133.5% of target.
Long-Term Incentive Plan. The company's Long-Term Incentive Plan (LTIP) is a
three-year performance-driven incentive plan designed to promote the long-term
objectives of the organization. Key employees who are in a position to make a
substantial contribution to the accomplishment of the long-term strategic and
financial objectives of the organization are eligible to participate. Target
incentive opportunity is established as a percentage of the three-year average
salary range midpoint and is based on job level and potential impact on
organization results.
LTIP payouts were based entirely on the achievement of financial objectives.
These financial objectives related to the LTD and the LDD. The Cellular
Division was acquired with the merger with Centel Corporation in March of 1993
and was not included in the LTIP criteria for the three year period from
January 1, 1992 to December 31, 1994. Beginning with the performance period
January 1, 1993 to December 31, 1995 the Cellular Division is included in the
LTIP. The objectives for the LTD, which were weighted equally in computing the
payouts, related to return on assets and earnings before interest, income taxes
and depreciation as a percent of revenues. The objectives for the LDD, which
were weighted equally in computing the payouts, related to net collectible
revenue growth relative to market and cumulative operating income. As with the
CCMIP, the relative weights assigned to the LTIP objectives as between the LTD
and LDD depend on an executive's responsibilities with Sprint.
The specific amounts of the LTIP payouts were determined by comparing actual
financial results to the pre-established targets for each objective. The payout
is also adjusted by a stock price factor under which the payout based on
financial objectives as described above is multiplied by a fraction, the
numerator of which is the market price of Sprint Common Stock on December 31,
1994 and the denominator of which is the market price on January 1, 1992. The
three-year increase in the price of Sprint Common Stock resulted in a
multiplier of 118.7%.
Mr. Esrey's LTIP payout was based on the financial results described above
using relative weights for each objective as follows: 40% for the LTD and 60%
for the LDD. Based on the financial results and the methodology described
above, Mr. Esrey received a payout of 143.4% of target. The payout for Mr.
Esrey and the other executive officers was paid in restricted Common Stock of
Sprint.
8
<PAGE>
Stock Options and Restricted Stock Grants. Stock option grants combined with
LTIP comprise long-term incentive compensation awarded to executive officers of
Sprint. Total long-term incentive compensation is targeted at the 75th
percentile of the comparison group. The Committee believes stock options
encourage increased ownership of Sprint Common Stock by executive officers
which, in turn, more closely aligns Stockholder and employee interests by
focusing executives on long-term growth and profitability of Sprint and its
Common Stock.
The option price for shares of Sprint Common Stock issuable under stock
option plans is 100% of the fair market value of the shares on the date of
grant. In making option grants, the Committee does not consider the number of
options already held by an executive. A grant of options was made on July 12,
1994 in recognition of the extraordinary effort made by the Named Officers in
pursuing major strategic initiatives. Grants of restricted stock have recently
been made as consideration for executive officers to enter into noncompetition
agreements with Sprint. The number of restricted shares granted was determined
in the discretion of the Committee.
Stewart Turley, Chairman
Warren L. Batts
Donald J. Hall
Robert E. R. Huntley
Linda Koch Lorimer
SUMMARY COMPENSATION TABLE
The following table reflects the cash and non-cash compensation for services
in all capacities to Sprint by those persons who were, as of December 31, 1994,
the chief executive officer and the other four most highly compensated
executive officers of Sprint (the Named Officers):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- --------------------- --------
OTHER
ANNUAL RESTRICTED SECURITIES ALL OTHER
COMPEN- STOCK UNDERLYING LTIP COMPEN-
NAME AND PRINCIPAL SATION AWARD(S) OPTIONS/ PAYOUTS SATION
POSITION YEAR SALARY ($)(1) BONUS ($)(1) ($) ($)(2) SARS (#) ($)(3) ($)(4)
------------------- ---- ------------- ------------ ------- ---------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William T. Esrey 1994 $863,918 $1,085,569 $76,109(5) $1,113,750 230,000 $424,040 $22,871
Chairman and Chief 1993 802,084 817,825 72,271 0 105,218 357,206 18,627
Executive Officer 1992 762,500 537,713 12,480 0 113,856 82,504 15,379
J. Richard Devlin 1994 286,131 268,447 3,241 371,250 50,000 101,956 6,209
Executive Vice 1993 259,489 215,201 3,661 0 15,000 83,607 5,759
President--Law and 1992 238,935 132,431 1,244 0 2,650 18,869 4,364
External Affairs
Arthur B. Krause 1994 310,570 303,779 9,273 371,250 60,000 111,518 12,751
Executive Vice 1993 278,819 235,602 5,652 0 33,964 91,299 13,168
President--Chief 1992 251,884 147,069 6,124 0 12,761 20,566 10,587
Financial Officer
Ronald T. LeMay 1994 556,494 637,481 20,265 0 157,022 201,588 6,390
President--Long 1993 444,773 435,309 9,446 745,000 54,260 134,379 5,979
Distance Division 1992 399,251 198,844 6,414 0 12,408 20,373 4,364
D. Wayne Peterson(6) 1994 321,010 331,972 8,845 0 94,970 107,633 35,780
President--Local 1993 266,412 191,540 6,811 372,500 11,000 89,783 42,431
Telecommunications
Division
</TABLE>
--------
(1) Includes all amounts earned for the respective years, even if deferred
under Sprint's Executive Deferred Compensation Plan. All bonuses were paid
under Sprint's Management Incentive Plans.
9
<PAGE>
(2) The value of the Restricted Stock Awards shown for 1994 are based on the
closing price of Sprint Common Stock on August 8, 1994, the date of the
grant. As of December 31, 1994, Mr. Esrey held 30,000 shares of restricted
stock valued at $828,750, Messrs. Devlin, Krause and Peterson each held
10,000 shares valued at $276,250, and Mr. LeMay held 20,000 shares valued
at $552,500 (based on the closing price of Sprint Common Stock on December
31, 1994 equal to $27.625). Each of the Named Officers has the right to
vote and receive dividends on the restricted shares. For Messrs. Esrey,
Devlin and Krause, each award vests five years from the date of grant (on
August 8, 1999). The awards to Messrs. LeMay and Peterson vest 25% on July
12, 1996, 25% on July 12, 1997, and 50% on July 12, 1998.
(3) Payments for 1994 were made in restricted shares of Sprint Common Stock.
(4) Consists of the following amounts for 1994: (a) $6,390, $6,209, $6,170,
$6,390 and $6,195 contributed on behalf of Messrs. Esrey, Devlin, Krause,
LeMay and Peterson, respectively as matching contributions under the Sprint
Retirement Savings Plan; (b) $16,481, $6,581 and $650 for Messrs. Esrey,
Krause and Peterson, respectively, representing the portion of interest
credits on deferred compensation accounts under Sprint's Executive Deferred
Compensation Plan that are deemed by Securities and Exchange Commission
(SEC) rules to be at above-market rates; and (c) $28,935 in relocation
expenses for Mr. Peterson.
(5) Includes the cost to Sprint of providing tax and financial services of
$15,145 and automobile allowance of $18,000.
(6) Mr. Peterson became President--Local Telecommunications Division on August
10, 1993. Formerly, he was President and Chief Executive Officer of
Carolina Telephone and Telegraph Company, a Sprint subsidiary.
10
<PAGE>
OPTION GRANTS
The following table summarizes options granted during 1994 under Sprint's
stock option plans to the Named Officers. The amounts shown as potential
realizable values on these options are based on arbitrarily assumed annualized
rates of appreciation in the price of Sprint Common Stock of five percent and
ten percent over the term of the options, as set forth in SEC rules. The Named
Officers will realize no gain on these options without an increase in the price
of Sprint Common Stock which will benefit all shareholders proportionately. No
stock appreciation rights were granted during 1994.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF POTENTIAL REALIZABLE VALUE
SECURITIES % OF TOTAL AT ASSUMED ANNUAL RATES
UNDERLYING OPTIONS EXERCISE OF STOCK PRICE APPRECIATION
OPTIONS GRANTED TO OR BASE FOR OPTION TERM(2)
GRANTED EMPLOYEES IN PRICE EXPIRATION ----------------------------------
NAME (#) (1) FISCAL YEAR ($/SH) DATE 0% 5% 10%
---- ----------- ------------ -------- ---------- -- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
William T. Esrey........ 115,000 4.2% $36.6875 2/11/04 $ 0 $ 2,653,346 $ 6,724,099
115,000 4.2% 35.8125 7/12/04 0 2,590,063 6,563,729
J. Richard Devlin....... 25,000 0.9% 36.6875 2/11/04 0 576,814 1,461,761
25,000 0.9% 35.8125 7/12/04 0 563,057 1,426,898
Arthur B. Krause........ 30,000 1.1% 36.6875 2/11/04 0 692,177 1,754,113
30,000 1.1% 35.8125 7/12/04 0 675,669 1,712,277
Ronald T. LeMay......... 75,000 2.7% 36.6875 2/11/04 0 1,730,443 4,385,282
75,000 2.7% 35.8125 7/12/04 0 1,689,172 4,280,693
7,022 0.3% 37.375 3/9/03 0 141,604 347,247
D. Wayne Peterson....... 30,000 1.1% 36.6875 2/11/04 0 692,177 1,754,113
30,000 1.1% 35.8125 7/12/04 0 675,669 1,712,277
1,892 0.1% 36.5625 4/23/95 0 4,093 8,220
3,525 0.1% 36.5625 4/22/96 0 14,450 29,735
4,041 0.1% 36.5625 4/13/97 0 24,551 51,750
4,895 0.2% 36.5625 2/12/98 0 38,425 82,720
3,512 0.1% 32.1875 2/12/98 0 19,721 41,721
10,444 0.4% 32.1875 2/17/99 0 78,665 170,754
6,661 0.2% 32.1875 2/15/01 0 77,212 176,594
All Stockholders(3)..... 347,567,416 -- 36.4676 7/12/04 0 7,971,207,638 20,200,605,196
Named Officers' gain as
a % of All
Stockholders' gain..... -- -- -- -- .15% .15%
</TABLE>
--------
(1) The options shown for each Named Officer include both option awards and
"reload" option grants. The first two grants shown for each individual are
option awards and the remaining grants, if any, are reload grants.
A reload option is an option granted when an optionee exercises a stock
option and makes payment of the purchase price using shares of previously
owned Sprint Common Stock. A reload option grant is for the number of
shares utilized in payment of the purchase price and tax withholding, if
any. The option price for a reload option is equal to the market price of
Sprint Common Stock on the date of exercise of the original option. A
reload option becomes exercisable one year from the date the original
option was exercised.
Twenty-five percent of the first option shown for each Named Officer
became exercisable on February 11, 1995, and an additional 25% will become
exercisable on February 11 of each of the three successive years. Twenty-
five percent of the second option shown for each Named Officer will become
exercisable on July 12, 1995, and an additional 25% will become exercisable
on July 12 of each of the three successive years. The option awards each
have a reload feature.
(2) The dollar amounts in these columns are the result of calculations at the
five percent and ten percent rates set by the SEC and are not intended to
forecast future appreciation of Sprint Common Stock.
11
<PAGE>
(3) The amounts shown as potential realizable value for all Stockholders, which
are presented for comparison purposes only, represent the aggregate net
gain for all holders of record, as of February 21, 1995, of Sprint Common
Stock assuming a hypothetical option granted at $36.4676 per share (the
weighted average price of the option awards) on July 12, 1994 and expiring
on July 12, 2004, if the price of Sprint Common Stock appreciates at the
rates shown in the table. There can be no assurance that the potential
realizable values shown in the table will be achieved. Sprint will neither
make nor endorse any prediction as to future stock performance.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table summarizes the net value realized on the exercise of
options in 1994, and the value of the outstanding options at December 31, 1994,
for the Named Officers.
AGGREGATED OPTION EXERCISES IN 1994
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT 12/31/94 OPTIONS AT 12/31/94(2)
------------------------- -------------------------
SHARES ACQUIRED VALUE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
ON EXERCISE (#) ($) (#) (#) ($) ($)
--------------- ----------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William T. Esrey........ 5,689 $ 63,290 354,922 337,100 $699,826 $ 0
J. Richard Devlin....... 0 0 46,917 73,075 21,880 0
Arthur B. Krause........ 7,049 175,989 80,946 86,850 128,936 0
Ronald T. LeMay......... 7,750 50,859 104,218 203,122 32,571 0
D. Wayne Peterson....... 45,650 704,188 18,050 111,470 11,419 14,953
</TABLE>
--------
(1) The value realized upon exercise of an option is the difference between the
fair market value of the shares of Sprint Common Stock received upon the
exercise, valued on the exercise date, and the exercise price paid.
(2) The value of unexercised, in-the-money options is the difference between
the exercise price of the options and the fair market value of Sprint
Common Stock at December 31, 1994 ($27.625).
LONG-TERM INCENTIVE PLAN AWARDS
The following table represents potential awards under Sprint's long-term
incentive plan which, subject to Sprint's right to amend the plan at any time
prior to the Organization and Compensation Committee's approval of payouts, can
be earned by the achievement of certain financial objectives over the three
year period ending December 31, 1996. Payouts of awards are tied to achieving
specified levels of performance criteria, based on certain financial
objectives, within the Long Distance Division (LDD), the Local
Telecommunications Division (LTD) and the Cellular Division (CD). The relative
weight given to the performance criteria of the LDD, the LTD and the CD in
computing an executive's payout is based on the executive's responsibilities
with Sprint.
The portion of the payout applicable to the LDD is tied to achieving
specified levels of operating margin and net collectible revenue growth. The
portion of the payout applicable to the LTD is tied to achieving specified
levels of return on assets, nonregulated net collectible revenues and
nonregulated operating income. The portion of the payout applicable to the CD
is tied to achieving specified levels of operating income and net collectible
revenue. The target amount will be earned if 100% of the targeted levels of
such criteria is achieved. An award payout will not be earned for performance
below the threshold.
The calculated payout, based on the achievement of the above financial
criteria, is adjusted (increased or decreased) by the percent change in the
market price of Sprint Common Stock as determined by the change in the average
of the high and low prices on January 1, 1994 and December 31, 1996. If stock
price increases over the three-year performance period, the payout is adjusted
by the percentage increase in stock price. Conversely, if the stock price
decreases over the three-year performance period, the payout is reduced by the
percentage decrease in stock price. Upon approval of the payouts by the
Organization and Compensation
12
<PAGE>
Committee, each payout will be paid as specified by the executive in restricted
or unrestricted shares of Sprint Common Stock, or deferred under the Executive
Deferred Compensation Plan.
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE OR UNDER NON-STOCK PRICE BASED
OTHER PERIOD PLANS(1)
UNTIL ---------------------------
MATURATION OR THRESHOLD TARGET MAXIMUM
NAME PAYOUT ($) ($) ($)
---- --------------- --------- -------- --------
<S> <C> <C> <C> <C>
William T. Esrey.................... 1/1/94-12/31/96 $76,730 $306,920 $572,406
J. Richard Devlin................... 1/1/94-12/31/96 18,756 75,025 139,922
Arthur B. Krause.................... 1/1/94-12/31/96 20,525 82,100 153,117
Ronald T. LeMay..................... 1/1/94-12/31/96 39,270 157,080 303,557
D. Wayne Peterson................... 1/1/94-12/31/96 27,278 109,110 186,305
</TABLE>
--------
(1) Awards are based on a percentage of the Named Officers' average base salary
midpoint over the three-year performance cycle which ends December 31,
1996. In calculating the average base salary midpoint, the table assumes
the base salary midpoint for 1995 and 1996 will equal the 1994 base salary
midpoint. In addition, the estimated future payouts shown assume that the
average of the high and low price of Sprint Common Stock on December 31,
1996 will be the same as it was on January 1, 1994.
PENSION PLANS
The following table reflects the estimated annual pension benefit payable to
an individual retiring in 1995 at age 65. The amounts include all prospective
benefits under Sprint's plans, whether tax-qualified or not.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE(2)
-------------------------------------------
REMUNERATION(1) 15 20 25 30 35
--------------- ------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C>
500,000........................... 115,022 153,362 191,703 230,043 268,384
700,000........................... 161,522 215,362 269,203 323,043 376,884
900,000........................... 208,022 277,362 346,703 416,043 485,384
1,100,000........................... 254,522 339,362 424,203 509,043 593,884
1,300,000........................... 301,022 401,362 501,703 602,043 702,384
1,500,000........................... 347,522 463,362 579,203 695,043 810,884
1,700,000........................... 394,022 525,362 656,703 788,043 919,384
1,900,000........................... 440,522 587,362 734,203 881,043 1,027,884
2,100,000........................... 487,022 649,362 811,703 974,043 1,136,384
2,300,000........................... 533,522 711,362 889,203 1,067,043 1,244,884
2,500,000........................... 580,022 773,362 966,703 1,160,043 1,353,384
</TABLE>
--------
(1) Compensation, for purposes of estimating a pension benefit, includes salary
and bonus as reflected under Annual Compensation in the Summary
Compensation Table on page 9. The calculation of benefits under the pension
plans generally is based upon average compensation for the highest five
consecutive years of the ten years preceding retirement.
(2) These amounts are straight life annuity amounts and would not be subject to
reduction because of Social Security benefits. For purposes of estimating a
pension benefit, the years of service credited are 30, 16, 31, 18 and 37
years for Messrs. Esrey, Devlin, Krause, LeMay and Peterson, respectively.
EMPLOYMENT CONTRACTS
Sprint has contingency employment agreements with Messrs. Esrey, Devlin,
Krause and LeMay which provide for separation pay and benefits if employment is
involuntarily terminated following a change in control. A change of control is
deemed to occur if someone acquires 20% or more of the outstanding voting
13
<PAGE>
stock of Sprint or if there is a change of a majority of the Directors within a
two-year period. Benefits will include monthly salary payments for 35 months
(or until the officer reaches age 65 if this occurs earlier) and three payments
each equal to the highest short-term plus the highest long-term incentive
compensation awards received during the three years preceding termination. In
addition, life, disability, medical and dental insurance coverages will be
provided for 35 months. For purposes of the Key Management Benefit Plan, an
officer will be deemed to have remained a Key Executive (as defined in the
plan) until age 60; interest will be credited under the Executive Deferred
Compensation Plan at the maximum rate allowed under the plan. Retirement
benefits will be determined assuming three years of additional service and no
early retirement pension reduction will be imposed. If any excise tax is
imposed under Section 4999 of the Internal Revenue Code, Sprint will make the
executive whole with respect to any additional taxes due. The agreements are
not intended as an anti-takeover provision but could discourage an attempt to
acquire control of Sprint by increasing its cost.
The Named Officers have each signed non-competition agreements with Sprint
which provide that he will not associate himself with a competitor for an 18-
month period following termination of employment. In addition, the agreements
provide that each executive will receive 18 months of compensation and benefits
following an involuntary termination of employment.
Sprint has a Key Management Benefit Plan providing for a survivor benefit in
the event of the death of a participant or, in the alternative, a supplemental
retirement benefit. Under the plan, if a participant dies prior to retirement,
the participant's beneficiary will receive ten annual payments each equal to
25% of the participant's highest annual salary during the five-year period
immediately prior to the time of death. If a participant dies after retiring or
becoming permanently disabled, the participant's beneficiary will receive a
benefit equal to 300% (or a reduced percentage if the participant retires
before age 60) of the participant's highest annual salary during the five-year
period immediately prior to the time of retirement or disability, payable
either in a lump sum or in installments at the election of the participant.
Prior to reaching age 60 and at least 13 months before retirement, a
participant may elect a supplemental retirement benefit in lieu of all or a
portion of the survivor benefit. Each Named Officer is a participant in the
plan.
14
<PAGE>
PERFORMANCE GRAPH
The graph below compares the yearly percentage change in the cumulative total
Stockholder return for Sprint Common Stock as compared with the S&P(R) 500
Stock Index, the S&P(R) Telephone Utility Index and the S&P(R)
Telecommunications (Long Distance) Index, for the five-year period from
December 29, 1989 to December 30, 1994. The companies which comprise the S&P
Telephone Utility Index are Ameritech, Inc., Bell Atlantic Corp., BellSouth,
GTE, NYNEX, Pacific Telesis Group, Southwestern Bell and U.S. West, Inc. The
companies which comprise the S&P Telecommunications (Long Distance) Index are
AT&T Corp., MCI Communications and Sprint.
LOGO
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Sprint 100.00 63.24 67.19 75.31 105.80 86.53
S&P 500 100.00 96.88 126.42 136.08 149.80 151.78
S&P (Long Distance) 100.00 64.16 85.77 113.33 128.11 116.66
S&P Telephone 100.00 95.46 102.66 112.65 130.10 124.72
</TABLE>
15
<PAGE>
CERTAIN RELATIONSHIPS AND OTHER TRANSACTIONS
Mr. Ausley is Chairman of the law firm of Macfarlane, Ausley, Ferguson &
McMullen, which provided legal services to certain subsidiaries of Sprint in
1994 for which it billed $364,596.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires Sprint's
Directors and executive officers to file with the SEC and the New York Stock
Exchange initial reports of ownership and reports of changes in ownership of
Sprint Common Stock and other equity securities of Sprint. Directors and
executive officers are required by SEC regulations to furnish Sprint with
copies of all Section 16(a) reports they file.
To Sprint's knowledge, based solely on review of the copies of such reports
furnished to Sprint and written representations that no other reports were
required, during 1994 all Section 16(a) filing requirements applicable to its
Directors and executive officers were complied with, except that Mr. Henson
inadvertently failed to report 26 shares of Sprint Common Stock acquired by his
wife through Sprint's automatic dividend reinvestment plan, and Mr. John R.
Hoffman, Sprint's Senior Vice President--External Affairs, inadvertently failed
to timely report 2,000 shares of Sprint Common Stock acquired in June through
Sprint's Employees Stock Purchase Plan. Both Mr. Henson and Mr. Hoffman
promptly reported these amounts as soon as the errors were discovered.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Stockholder proposals for the 1996 Annual Meeting of Stockholders of Sprint
must be received by the Corporate Secretary at Sprint's principal office, 2330
Shawnee Mission Parkway, Westwood, Kansas 66205, no later than November 15,
1995.
II. PROPOSAL TO AUTHORIZE THE
MANAGEMENT INCENTIVE STOCK OPTION PLAN
(Item 2 on Proxy Card)
The Stockholders are asked to consider and vote upon a proposal to adopt the
Management Incentive Stock Option Plan (Plan). The summary of its principal
features which follows is subject to the specific provisions contained in the
official text set forth in Exhibit A to this Proxy Statement.
On February 18, 1995, the Board of Directors adopted the Plan, subject to
approval by the Stockholders. If approved, the Plan will become effective on
February 18, 1995, and will remain in effect for ten years from the date of
Stockholder approval. The Plan is designed to give Sprint employees the
opportunity to receive option grants to purchase Sprint Common Stock (Options)
in lieu of a portion of their annual incentive compensation earned under
Sprint's management incentive plans. If the Plan is not approved, all amounts
earned under the management incentive plans will be paid in cash in accordance
with the terms of the plans.
The intent of the Plan is to increase the proportion of employee compensation
and benefits tied to stock ownership and to reduce the proportion related to
cash compensation. Sprint believes that increased share ownership by employees
more closely aligns Stockholder and employee interests by encouraging greater
focus on long-term growth and profitability of Sprint and the performance of
its Common Stock. The Plan also gives Sprint an immediate benefit of lower cash
payments of incentive compensation. Sprint's Long Term Stock Incentive
Compensation Program, approved by Stockholders on April 18, 1989, will remain
in effect until April 18, 1999, and stock options may continue to be granted
under such plan.
16
<PAGE>
The Plan will be administered by the Organization and Compensation Committee
(Committee) appointed by the Board of Directors and composed of members of the
Board who are ineligible to receive grants under the Plan (see the description
of the Organization and Compensation Committee on page 6 of this Proxy
Statement).
Eligibility for the Plan and Consideration for the Options. Employees of
Sprint and its subsidiaries who participate in Sprint's annual management
incentive compensation plans will be eligible to receive Options under the
Plan. Any salaried employee of Sprint and its subsidiaries shall be eligible to
be selected as a participant in the annual management incentive compensation
plans. Approximately 13,000 employees currently participate in such plans. Non-
employee directors will not be eligible to receive Options under the Plan.
Shares subject to Options granted to any individual employee during any
calendar year shall not exceed a total of 500,000 shares. The Committee will
determine each year whether Options will be granted in such year, whether
participation will be elective or automatic, and the amount of incentive
compensation to be given up for an Option. The exercise price per share of
Sprint Common Stock purchasable under any Option shall be 100% of the fair
market value of the stock on the date of the grant of such Option. In the first
year of the Plan, employees can elect to receive Options for Sprint Common
Stock in lieu of receiving 25% of their target opportunity as cash incentive
compensation. For each $5.00 reduction in an employee's target opportunity
resulting from such an election, the employee will receive an Option to
purchase one share of Sprint Common Stock. In addition, an employee may elect
to receive more than 25% of target opportunity in Options. In that case, the
employee will receive the lesser of 50% of target opportunity or a prorata
portion of the shares available under the Plan for 1995. The number of shares
available for elections by employees to receive more than 25% of target will
depend upon the number of employees who elect to receive cash rather than to
receive Options. If all eligible employees elect to receive Options in lieu of
25% of their cash incentive opportunity, approximately 87% of the shares
available for 1995 would be utilized.
Shares subject to the Plan. Subject to adjustment as described below, nine-
tenths of one percent (0.9%) of the outstanding shares of Sprint Common Stock
as of the first day of each calendar year for which the Plan is in effect shall
be available for grant under the Plan in such year. At January 1, 1995, that
percentage equaled 3,134,605 shares. The closing price of one share as reported
in the New York Stock Exchange Composite Transactions for March 1, 1995 was
$28.75. All shares available in any year which are not subject to an Option
granted under the Plan shall be available for grant in subsequent years. The
shares of stock deliverable under the Plan may consist in whole or in part of
authorized and unissued shares or treasury shares. If any Option is terminated
without issuance of shares, the shares subject to such Options shall again be
available for grant pursuant to the Plan.
Administration. The Committee shall be authorized to interpret the Plan, to
establish, amend, and rescind any rules and regulations relating to the Plan,
and to make all other determinations which may be necessary or advisable for
the administration of the Plan.
The Board may amend, alter or discontinue the Plan or any portion thereof at
any time, provided that no such action shall materially impair the rights of a
participant without the participant's consent and provided that no amendment
shall be made without Stockholder approval which shall increase the total
number of shares reserved for issuance pursuant to the Plan.
Terms and Conditions of the Options. The Options shall have a ten-year term
and vested Options shall be exercisable during such term by active employees.
Vested options of employees whose employment with Sprint has been terminated
other than for cause shall remain exercisable as follows (but in no event may
an Option be exercised after the end of the ten-year term): (i) involuntary
termination by Sprint other than for cause, for ten years from date of grant;
(ii) in the case of death, one year from date of death; (iii) in the event of
retirement or disability, five years from date of termination of employment;
and (iv) voluntary termination, three months from date of termination. Options
shall be exercised by payment of the purchase price, either in cash or in
Sprint Common Stock having a fair market value on the date the Option is
exercised equal to the exercise price.
17
<PAGE>
Adjustments. In the event of any change affecting the shares of Sprint Common
Stock by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, combination or exchange of shares or other corporate
change, or any distribution to Stockholders other than cash dividends, the
Committee shall make such adjustment in the aggregate number of shares which
may be distributed under the Plan and in the number and exercise price of
shares subject to the outstanding Options granted under the Plan as it deems to
be appropriate in order to maintain the purpose of the original grant.
Tax Aspects of the Plan. Under present law, the following are the federal tax
consequences generally arising with respect to awards granted under the Plan.
The grant or vesting of an Option will create no tax consequences for an
optionee or Sprint. Upon exercising an Option and receiving unrestricted
shares, the optionee must recognize ordinary income equal to the difference
between the exercise price and the fair market value of the stock on the date
of exercise. Sprint will be entitled to a deduction for the same amount.
Certain optionees may elect to receive restricted stock from the exercise when
they use previously owned shares to pay the purchase price. These optionees
will not recognize ordinary income until the date the restrictions lapse. The
ordinary income will be equal to the difference between the fair market value
of the stock (i.e., shares received which are in excess of the shares given up
for payment of the purchase price) on the date the restrictions lapse and any
cash paid for the shares. Sprint will be entitled to a deduction for the same
amount. The treatment of a disposition of the shares acquired through the
exercise of an option will result in short-term or long-term capital gain
depending on how long the shares have been held. There will be no tax
consequence to Sprint in connection with a disposition of shares acquired under
an Option. There will be no tax consequences to the optionee or Sprint if an
Option is canceled or expires.
Adoption of this proposal requires the affirmative vote of the majority of
the shares present and entitled to vote at the Stockholders Meeting. THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF THE MANAGEMENT
INCENTIVE STOCK OPTION PLAN.
III. SELECTION OF INDEPENDENT AUDITORS
(Item 3 on Proxy Card)
The Board of Directors of Sprint has voted to appoint Ernst & Young LLP as
independent auditors to examine the consolidated financial statements of Sprint
and its subsidiaries for the fiscal year 1995, subject to approval of the
Stockholders at the Annual Meeting. Such subsidiaries include Centel
Corporation and its subsidiaries (Centel) as a result of the merger between
Sprint and Centel Corporation on March 9, 1993.
Ernst & Young has examined the financial statements of Sprint since 1965.
Representatives of Ernst & Young will be present at the Annual Meeting with the
opportunity to make a statement and to respond to appropriate questions. The
affirmative vote of a majority of the shares present and entitled to vote at
the Annual Meeting is necessary for the approval of the appointment of Ernst &
Young as independent auditors. If the appointment of Ernst & Young is not
approved at the Annual Meeting, the Board of Directors will consider the
selection of another accounting firm.
As a result of the merger with Centel, Arthur Andersen LLP, which had been
Centel's auditors for many years, was dismissed; however, Ernst & Young relied
on the report of Arthur Andersen with respect to the 1992 consolidated
financial statements of Centel in Ernst & Young's report on Sprint's
consolidated financial statements for each of the three years in the period
ended December 31, 1994, as restated in 1993 to reflect the merger. Arthur
Andersen's report on Centel's consolidated financial statements for the 1992
fiscal year did not contain an adverse opinion or a disclaimer of opinion, nor
was the report qualified or modified as to uncertainty, audit scope, or
accounting principles. During 1992 or in any subsequent interim period
preceding the dismissal of Arthur Andersen, there were no disagreements between
Centel and Arthur Andersen on any matters of accounting principles or practice,
financial statement disclosure, or auditing scope or procedure which, if not
resolved to the satisfaction of Arthur Andersen, would have caused Arthur
Andersen to make reference to the matter in their report.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL
OF THE APPOINTMENT.
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IV. STOCKHOLDER PROPOSALS
A. STOCKHOLDER PROPOSAL CONCERNING RETIREMENT PLAN FOR OUTSIDE DIRECTORS
(Item 4 on Proxy Card)
The National Electrical Benefit Fund, 1125 15th Street, N.W., Washington,
D.C. 20005, beneficial owners of more than 70,000 shares of Sprint Common
Stock, has given notice of its intention to introduce the following resolution
at the Annual Meeting:
BE IT RESOLVED: That the shareholders of Sprint ("Company") request that
the Board of Directors in the future refrain from providing pension or
other retirement benefits to non-employee or outside Directors unless such
benefits are specifically submitted to the shareholders for approval.
STOCKHOLDER'S STATEMENT IN SUPPORT OF STOCKHOLDER PROPOSAL A
The Board of Directors should play a vital and independent role in helping to
determine overall corporate policy and strategic direction. They should
actively monitor senior management in faithfully implementing these policies.
In their capacity on the Board, Directors owe their fundamental allegiance to
the shareholders of the corporation--the owners who elect them, and not to
management.
We believe, however, that certain business or financial relationships can
adversely affect the ability of Directors to function in their appropriate
oversight role. This is especially critical for so-called outside or
independent Directors who are not employee/Directors and who should bring a
certain arms-length objectivity to Board deliberations. According to the
Company's most recent proxy statement, in 1982 the Company established a
retirement or pension plan for non-employee Directors with at least five years
of service who will receive a monthly retirement benefit for ten years equal to
the annual Board retainer in effect at the time of the Director's retirement
from the Board. That retainer is now a generous $20,000. Directors are also
entitled to expense reimbursements.
While non-employee or outside Directors should be entitled to reasonable
compensation for their time and expertise, we are of the opinion that
additional layers of compensation in the form of retirement benefits, which are
100 percent of the Director's base compensation, has the pernicious effect of
compromising their independence and impartiality. It is our view that such
generous and unnecessary extra compensation for outside Directors of the
Company is management's way to insure their unquestioning loyalty and
acquiescence to whatever policy management initiates. Accordingly, when viewed
from this perspective, these types of retirement benefits become yet another
device to enhance and entrench management's control over corporate policy while
being accountable only to themselves, and not to the company's owners. We
believe that this additional layer of compensation to Directors may influence
their ability to exercise that degree of independence from management which is
critical to the proper functioning of the Board.
Because of our strong concern for maximizing the ability of Boards of
Directors to act in a shareholder's interest, we feel that the long-term best
interests of the Company are not well-served by such retirement policies. The
vast preponderance of Directors at various corporations are undoubtedly covered
by generous retirement policies at their principal place of employment, and
they need not be "double-dipping" at this Company or any others.
We urge your support for this Proposal.
THE COMPANY'S RESPONSE TO STOCKHOLDER PROPOSAL A
The Board believes that the best interests of Sprint and its Stockholders are
served by continuing to provide a retirement plan for Outside Directors.
Therefore, we are recommending a vote against the proposal.
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To remain competitive, Sprint must attract and retain individuals to serve as
Outside Directors who are recognized for their leadership, knowledge,
experience and ability. To this end, Sprint provides a compensation package
competitive with that offered by other major corporations and which recognizes
the increasing time commitment, diligence, and risks associated with Board
service. The compensation package for outside directors of most large companies
includes retirement benefits. According to a 1994 study of 220 major
corporations by Executive Compensation Reports, an independent research
organization, 82% of companies similar in size to Sprint provide retirement
plans to their non-employee directors. Sprint believes that it would be placed
at a competitive disadvantage if it were to refrain in the future from
providing retirement benefits for Outside Directors as requested under the
proposal.
Sprint, like most other companies, has found retirement plans to be a
reasonable and appropriate part of an overall compensation package for Outside
Directors. Under Sprint's plan, an Outside Director earns retirement benefits
by serving Sprint as a Director for at least five years. In addition, the
retirement benefit under the plan is proportionate to the length of the
Director's service to Sprint. Benefits are paid for the number of years the
Director has served up to a maximum of ten years. These features of the plan
encourage Directors to remain with Sprint for greater continuity and stability
within the Board. At the same time, the plan is reasonable and consistent with
industry standards and cannot fairly be said to compromise the independence and
objectivity of Outside Directors.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
AGAINST THIS PROPOSAL.
B. STOCKHOLDER PROPOSAL TO ESTABLISH A STOCKHOLDER ADVISORY COMMITTEE
(Item 5 on Proxy Card)
Ann Bohlander, 415 West Madison, Decatur, Indiana 46733, owner of 116 shares
of Sprint Common Stock, has given notice of her intention to introduce the
following resolution at the Annual Meeting. In addition, she has indicated her
intention to present an amended proposal at the Annual Meeting. This amended
proposal was not timely submitted to Sprint and is therefore not set forth in
this Proxy Statement. If the amended proposal, as described in correspondence
received on behalf of Ms. Bohlander, is presented at the Annual Meeting, Sprint
intends to use the discretionary authority conferred under the accompanying
proxy to vote against the amended proposal pursuant to Rule 14a-4(c)(4) of the
SEC proxy rules.
Resolved: That the following by-law be adopted:
Article III, Section 10. The Corporation shall have a Stockholder
Advisory Committee consisting of at least three members, who shall agree to
review the management of the business and affairs of the corporation by the
Board of Directors, and advise the Board of their views, and whose first
subject for consideration shall be whether the Corporation has adopted and
effectively administered a compliance program that is adequate to prevent,
detect and respond to violations of law, and of administrative rules or
regulations. Following each annual meeting, each beneficial owner of five
per cent or more of a class of the Corporation's stock, and each collective
bargaining representative of the Corporation's employees, shall have the
right, but not the obligation, to appoint one stockholder to the Committee
to serve until the date of the next annual meeting, provided that each
appointee shall qualify for service by filing a written acceptance with the
Secretary, in which the appointee agrees to serve without expense to the
Corporation, unless the Board decides to authorize payments for expenses
that the Committee may incur.
STOCKHOLDER'S STATEMENT IN SUPPORT OF STOCKHOLDER PROPOSAL B
The proposed by-law would permit stockholders to provide advice and
information to the Board on a broad range of issues. The first subject for
consideration would focus on legal compliance, because Sprint and its
management have recently been made the subject of certain lawsuits and
administrative charges.
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<PAGE>
In 1993, Sprint agreed to a $29 million settlement of a class action against
Sprint and certain of its officers and directors, which had alleged violations
of the federal securities laws.
On September 22, 1994, the National Labor Relations Board (NLRB) filed an
administrative proceeding against Sprint as a result of the Corporation's
closing of its La Conexion Familiar subsidiary in San Francisco, alleging "over
50 separate incidents of employer conduct [that it] deemed violative of . . .
the [National Labor Relations Act], which prohibits interference with employees
in their exercise of their rights to engage in union activity."
In connection with a related federal court action, the NLRB asserted that
Carl Doerr, Sprint Vice President for Employee/Labor Relations, Fair Employment
Practices, had submitted "fabricated evidence" to the NLRB during its
investigation and "was required to resign" by Sprint.
On October 23, 1994, the Rocky Mountain News reported that one employee had
recently filed a lawsuit against Sprint claiming that his dismissal was
racially motivated, that another employee had filed a lawsuit alleging
unsolicited sexual advances, and that two other female employees had filed
complaints alleging racial and gender discrimination.
These cases, and others which space does not allow to be mentioned, have
already resulted in negative publicity for Sprint, as well as substantial
litigation and settlement costs. While the pending charges may prove to be
unfounded, it would be prudent to establish the proposed Committee to determine
whether management has established an effective legal compliance program and,
if not, what remedial action is needed.
THE COMPANY'S RESPONSE TO STOCKHOLDER PROPOSAL B
The Board of Directors believes that the proposed Stockholder Advisory
Committee is unnecessary and will not be truly representative of Sprint's
Stockholders.
The proponent states that the committee would review the actions taken by
management in connection with legal compliance programs. While the Board of
Directors values the advice and opinions of Stockholders, it is the right and
duty of the Directors, as fiduciaries elected to represent the Stockholders, to
manage the company's business and affairs. In fact, the Board of Directors has
recently undertaken the kind of review suggested in this proposal. The Board
established an Ethics Committee, composed of members of the Board. The Ethics
Committee examined Sprint's compliance program and recommended various
measures, all of which have been fully implemented. The efforts of this
Committee and the results of its studies were reported to the Stockholders in
Sprint's Third Quarter Report in 1992. On a continuing basis, one of the
principal duties of the Nominating and Corporate Responsibility Committee of
Sprint's Board of Directors is to review periodically the effectiveness of the
ethical and legal compliance program.
Sprint also has a uniform ethics policy which is printed and distributed to
all employees. Ethics seminars have been held to discuss the policy and respond
to employees' questions. A Chief Ethics Officer oversees compliance company-
wide, and several employees work in the administration of the program. An 800-
number Ethics Hotline (with caller identity protected) is available 24 hours a
day to assist employees who report or seek help with potential ethics issues.
Additionally, Sprint has similar programs specifically designed to address
discrimination and sexual harassment issues. An internal dispute resolution
system affords many employees an opportunity to choose between a peer panel or
an executive panel to hear issues relating to fair treatment.
The proponent has pointed out that the allegations she cites may prove to be
unfounded. Companies as large as Sprint--even with the best of policies and
compliance efforts--are likely to receive some complaints from employees. At
Sprint, ethical and fairness issues raised by employees are given careful
consideration. If Sprint identifies a problem through any of its established
programs or otherwise, it takes prompt remedial action. On the other hand, if
complaints are unfounded, Sprint defends its position. Sprint is seriously
committed to implementing and enforcing its Code of Ethics and to ensuring fair
and consistent treatment of all employees in accordance with the law.
21
<PAGE>
Even if the Shareholder Advisory Committee were necessary, the proposed
procedures for appointing members to the committee will not permit Sprint's
Stockholders to be truly represented. Because there are no beneficial owners of
5% of Sprint's common stock, the proposal would not allow a single holder of
the more than 347 million shares of Sprint's Common Stock, representing more
than 99.5% of the stock of the company, to appoint a member to the committee.
The proposal does specify that organized labor unions, which represent only
approximately 25% of the more than 51,000 employees of Sprint, will have the
right to make appointments to the committee.
For these reasons the Board recommends a vote against the proposal.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
AGAINST THIS PROPOSAL.
V. OTHER MATTERS TO COME BEFORE THE MEETING
No other matters are intended to be brought before the meeting by Sprint nor
does Sprint know of any matters to be brought before the meeting by others. If,
however, any other matters properly come before the meeting, the persons named
in the proxy will vote the shares represented thereby in accordance with the
judgment of management on any such matter.
By order of the Board of Directors
Don A. Jensen
Vice President and
Secretary
March 14, 1995
A COPY OF SPRINT'S ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 1994 WILL BE SENT TO
STOCKHOLDERS UPON REQUEST WITHOUT CHARGE. REQUESTS SHOULD BE SENT TO INVESTOR
RELATIONS DEPARTMENT, P.O. BOX 11315, KANSAS CITY, MISSOURI 64112.
22
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EXHIBIT A
MANAGEMENT INCENTIVE STOCK OPTION PLAN
1. Establishment and Purpose. Sprint Corporation, a Kansas corporation (the
"Company"), hereby establishes a stock option plan to be named the Management
Incentive Stock Option Plan (the "Plan"). The purpose of the Plan is to permit
employees of the Company and its subsidiaries who are eligible to receive
annual incentive compensation to receive nonqualified stock options in lieu of
a portion of the target incentive under the Company's management incentive
plans ("MIPs"), thereby encouraging the employees to focus on the growth and
profitability of the Company and the performance of its common stock. Subject
to approval of the Company's stockholders, the Plan provides for options to be
granted beginning March 15, 1995, and ending April 18, 2005. Stock options
granted prior to or as of April 18, 2005, may extend beyond that date.
2. Administration. The Plan shall be administered by the Organization and
Compensation Committee of the Board of Directors (the "Committee"). The Company
shall grant options under the Plan in accordance with determinations made by
the Committee pursuant to the provisions of the Plan. The Committee from time
to time may adopt (and thereafter amend and rescind) such rules and regulations
for carrying out the Plan and take such action in the administration of the
Plan, not inconsistent with the provisions of the Plan, as it shall deem
proper. The Committee may correct any defect, supply any omission or reconcile
any inconsistency in the Plan, or in any option or restricted shares of common
stock granted or issued pursuant to the Plan, in the manner and to the extent
it shall deem desirable to effect the terms of the Plan. The interpretation and
construction of any provisions of the Plan by the Committee shall, unless
otherwise determined by the Board of Directors of the Company, be final and
conclusive. No member of the Board of Directors or the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any option granted under it. The Corporate Secretary shall act as Plan
Administrator carrying out the day-to-day administration of the Plan unless the
Committee appoints another officer or employee of the Company as Plan
Administrator.
3. Eligibility. The Committee will determine each year whether options will
be granted in such year, whether participation will be elective or automatic
and the amount of incentive compensation to be given up for each stock option.
Any salaried employee of the Company and its subsidiaries shall be eligible to
be selected for participation in the MIPs. The Committee will, in its
discretion, determine the employees who participate in the MIPs and, therefore,
who will be eligible for options, the dates on which options shall be granted,
and any conditions on the exercise of the options.
No option may be granted to any individual who immediately after the option
grant owns directly or indirectly stock possessing more than five percent (5%)
of the total combined voting power or value of all classes of stock of the
Company or any subsidiary.
4. Common Stock Subject to the Plan. The shares of common stock of the
Company, $2.50 par value, to be issued upon the exercise of a nonqualified
option to purchase common stock granted in lieu of MIP payout may be made
available from the authorized but unissued common stock of the Company, shares
of common stock held in the treasury, or common stock purchased on the open
market or otherwise.
Approval of the Plan by the Stockholders of the Company shall constitute
authorization to use such shares for the Plan subject to the discretion of the
Board or as such discretion may be delegated to the Committee.
Subject to the provisions of the following paragraph, the total number of
shares for which options may be granted under the Plan each year shall be 0.9%
of the total outstanding shares of common stock of the Company as of the first
day of such year; provided, however, that such number shall be increased in any
year by the number of shares available in previous years for which options have
not been granted. If and when an option granted under the Plan is terminated
without having been exercised in full, the unpurchased or forfeited shares
shall become available for grant to other employees.
Exhibit A-Page 1
<PAGE>
The number of shares subject to the Plan may be appropriately adjusted by the
Committee in the circumstances outlined in Section 5(k).
5. Stock Options; Terms and Conditions. Each option will represent the right
to purchase a specific number of shares of common stock of the Company and
shall be subject to the following terms and conditions and to such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable:
a. Consideration for and Number of Options. Each option shall be granted
in lieu of a portion of the optionee's cash payout under the MIPs. The
Committee shall determine the number of shares or the manner of calculating
the number of shares available for each option each year, subject to the
total number of shares available under the Plan for such year, and the
amount or the method of determining the amount of annual incentive
compensation to be given up by each participant in return for an option,
taking into consideration appropriate factors in making such
determinations, such as interest rates, volatility of the market price of
common stock of the Company and the term of the option, provided, however
that shares subject to options granted to any individual employee during
any calendar year shall not exceed a total of 500,000 shares.
b. Participation in the Plan. Participation in the Plan may be voluntary
or automatic, as determined by the Committee. The rules and procedures for
voluntary participation, when applicable, shall be established and
implemented by the Plan Administrator.
c. Exercise Price. The price at which each share covered by an option may
be purchased shall be one hundred percent (100%) of the fair market value
of the Company's common stock on the date the option is granted. Fair
market value shall be deemed to be the average of the high and low prices
of the Company's common stock for composite transactions as published by
major newspapers for the date the option is granted or, if no sale of the
Company's common stock shall have been made on that day, the next preceding
day on which there was a sale of such stock.
d. Vesting. Unless the Committee determines otherwise, stock option
grants shall provide that the total number of shares subject to an option
shall become exercisable December 31 in the year of the date of grant.
e. Term of Option. Options shall not be exercisable after the expiration
of ten (10) years from the date of grant.
f. Payment of Exercise Price. Options shall be exercisable only upon
payment to the Company of the full purchase price of the shares with
respect to which options are exercised. Payment for the shares shall be
either in United States dollars, payable in cash or by check, or by
surrender of stock certificates representing like common stock of the
Company having an aggregate fair market value, determined as of the date of
exercise, equal to the number of shares with respect to which such options
are exercised multiplied by the exercise price per share. The fair market
value of common stock on the date of exercise of options shall be
determined in the same manner as the fair market value of common stock on
the date of grant of options is determined. Certain optionees may use
restricted stock as payment for the exercise price in accordance with
Section 6 hereof. In that event, fair market value of the shares of
restricted stock will be determined as if the shares were not restricted.
g. Manner of Exercise. A completed exercise form and the exercise price,
whether in the form of cash or stock, must be delivered to the Plan
Administrator in order to exercise an option. An option shall be deemed
exercised on the date such exercise form and payment are received by the
Plan Administrator.
h. Time for Exercise. Each option expires if it has not been exercised
within its term. Once an option has expired for any reason, it can no
longer be exercised. If employment with the Company or a subsidiary of the
Company is terminated, the optionee may exercise options which are
exercisable on the date of termination of employment until the earlier of
(1) the date on which the option expires and (2) the end of the applicable
time period below:
(i) retirement: five years after retirement date.
Exhibit A-Page 2
<PAGE>
(ii) disability (qualifying for long-term disability benefits under
the Company's Basic Long-Term Disability Plan): five years after
qualification date.
(iii) death: one year after death for the estate or designated
beneficiary to exercise the decedent's options.
(iv) involuntary termination other than for cause: the date on which
the option expires.
(v) voluntary termination: three months from the date of termination
of employment.
If an optionee's employment is terminated for a reason constituting good
cause, any outstanding options granted under the Plan and held by such
optionee at such time will automatically terminate. For this purpose, "good
cause" shall mean conduct by the optionee which reflects adversely on his
or her honesty, trustworthiness or fitness as an employee, or the
optionee's willful engagement in conduct which is demonstrably and
materially injurious to the Company.
If an optionee becomes associated with, becomes employed by, renders
services to, or owns any interest in (other than a nonsubstantial interest,
as determined by the Committee) any business in competition with the
Company, all outstanding options whether vested or unvested shall
automatically terminate and shares of restricted stock received upon the
exercise of an option pursuant to Section 6 hereof which continue to be
restricted shall be forfeited.
i. Restricted Stock. Certain optionees may elect to deliver restricted
shares or receive restricted shares in connection with an exercise of an
option, as provided in Section 6 hereof.
j. Assignment of Benefits; Beneficiary Designations. Options may not be
executed, levied, garnished, attached, pledged, assigned or transferred
other than by will or by the laws of descent and distribution, except that
an optionee may designate a beneficiary or beneficiaries to exercise
unexpired options after the optionee's death. Designations must be made in
writing on a form provided by the Plan Administrator. Designations shall
become effective on the date that the form--properly completed, signed and
notarized--is received by the Plan Administrator.
k. Change in Stock, Adjustments. In the event that the outstanding shares
of common stock of the Company are hereafter increased or decreased or
changed into or exchanged for a different number of shares or kind of
shares or other securities of the Company or of another corporation, by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split up, combination of shares, or a dividend
payable in capital stock, appropriate adjustment shall be made by the
Committee in the number of shares as to which outstanding options, or
portions thereof then unexercised, shall be exercisable, to the end that
the optionee's proportionate interest shall be maintained as before the
occurrence of such event, and such adjustment of outstanding options shall
be made without change of the total price applicable to unexercised options
and with a corresponding adjustment in the exercise price per share.
6. Restricted Stock. Certain optionees, as determined by the Committee, may
elect to receive restricted shares upon payment for the exercise of an option
in the form of unrestricted common stock. The optionee will receive the same
number of unrestricted shares as the number of shares surrendered to pay the
exercise price, while the shares received in excess of the number surrendered
to pay the exercise price may be restricted. Such optionees may also elect to
deliver restricted shares of the Company's common stock in payment of the
exercise price notwithstanding restrictions on transferability to which such
shares are subject. The Company shall be authorized to issue restricted shares
of common stock upon such exercises of stock options, subject to the following
conditions:
a. The optionee shall elect a vesting period for the restricted common
stock to be received upon exercise of the option of between six (6) months
and ten (10) years, subject to rules and procedures established by the Plan
Administrator, but in no event may an optionee elect a vesting period
shorter than the period provided in paragraph (d) of this Section 6.
b. The optionee who receives the restricted stock may not sell, transfer,
assign, pledge, or otherwise encumber or dispose of shares of restricted
stock, except in payment of the exercise price of a stock option issued by
the Company, until such time as all restrictions on such stock have lapsed.
Exhibit A-Page 3
<PAGE>
c. An optionee who elects to receive restricted common stock upon an
exercise shall have the right to satisfy tax withholding obligations in the
manner provided in Section 8 hereof.
d. Restricted common stock received in such an exercise or from an
election to receive a Long-Term Incentive Plan payout in restricted stock,
or any Restricted Stock Award granted pursuant to the Long-Term Stock
Incentive Program, shall be eligible for use in payment of the exercise
price of a stock option, so long as all the shares received as a result of
such an exercise are restricted for a period at least as long as, and with
terms at least as restrictive as the terms of, the restricted common stock
used in payment.
e. The shares of restricted common stock received in an exercise of a
stock option that continue to be restricted shall be forfeited in the event
that vesting conditions are not satisfied, subject to the discretion of the
Committee, except in the case of death, disability, normal retirement, or
involuntary termination for reasons other than cause, in which case all
restrictions lapse; provided, however, that in no event shall restrictions
lapse if the restrictions on shares used to pay for the exercise have not
lapsed under the same conditions. If restricted shares are forfeited, the
optionee or his representative shall sign any document and take any other
action required to assign said restricted shares back to the Company.
f. The optionee will have all the rights of a stockholder with respect to
shares of restricted stock received upon the exercise of an option,
including the right to vote the shares of stock and the right to dividends
on the stock. Unless the Plan Administrator establishes alternative
procedures, the shares of restricted stock will be registered in the name
of the optionee and the certificates evidencing such shares shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to the award and shall be held in escrow by the Company. The
optionee shall execute a stock power or powers assigning the shares of
restricted stock back to the Company, which stock powers shall be held in
escrow by the Company and used only in the event of the forfeiture of any
of the shares of restricted stock. A certificate evidencing unrestricted
shares of common stock shall be issued to the optionee promptly after the
restrictions lapse on any restricted shares.
g. The Plan Administrator shall have the discretion and authority to
establish any rules in connection with the use of restricted stock,
including but not limited to regulating the timing of the lapse of
restrictions within the six-month to ten-year period and prescribing
election forms as the Plan Administrator deems necessary or desirable for
the orderly administration of such exercises.
7. Reload Options. The Committee may provide that optionees have the right to
a reload option, which shall be subject to the following terms and conditions:
a. Grant of the Reload Option; Number of Shares; Price. Subject to
subsections (b) and (c) of this Section 7 and to the availability of shares
to be optioned under the Plan, if an optionee has an option (the "original
option") with reload rights and pays for the exercise of the original
option by surrendering common stock of the Company, the optionee shall
receive a new option ("reload option") for the number of shares so
surrendered (or, if applicable, the number of shares provided for in
paragraph (h) of this Section 7) at an exercise price equal to the fair
market value of the stock on the date of the exercise of the original
option.
b. Minimum Purchase Required. A reload option will be granted only if the
exercise of the original option is an exercise of at least 25% of the total
number of shares granted under the original option (or an exercise of all
the shares remaining under the original option if less than 25% of the
shares remain to be exercised).
c. Other Requirements. A reload option will not be granted: (1) if the
market value of the common stock of the Company on the date of exercise of
the original option is less than the exercise price of the original option;
(2) if the optionee is no longer an employee of the Company or its
subsidiary; or (3) if the original option is exercised less than one year
prior to the expiration of the original option.
d. Term of Option. The reload option shall expire on the same date as the
original option.
e. Type of Option. The reload option shall be a nonqualified option.
f. No Additional Reload Options. The reload options shall not include any
right to a second reload option.
Exhibit A-Page 4
<PAGE>
g. Date of Grant, Vesting. The date of grant of the reload option shall
be the date of the exercise of the original option. The reload options
shall be exercisable in full beginning one year from date of grant;
provided, however, that all shares purchased upon the exercise of the
original option (except for any shares withheld for tax withholding
obligations) shall not be sold, transferred or pledged within six months
from the date of exercise of the original option. In no event shall a
reload option be exercised after the original option expires as provided in
subsection (d) of this Section 7.
h. Stock Withholding; Grants of Reload Options. If the other requirements
of this Section 7 are satisfied, and if shares are withheld or shares
surrendered for tax withholding, a reload option will be granted for the
number of shares surrendered as payment for the exercise of the original
option plus the number of shares surrendered or withheld to satisfy tax
withholding. In connection with reload options for officers who are subject
to Section 16 of the Securities Exchange Act of 1934, the Committee may at
any time impose any limitations which, in the Committee's sole discretion,
are necessary or desirable in order to comply with Section 16(b) of the
Securities Exchange Act of 1934 and the rules and regulations thereunder,
or in order to obtain any exemption therefrom.
i. Other Terms and Conditions. Except as otherwise provided in this
Section 7, all the provisions of the Plan shall apply to reload options.
8. Stock Withholding Election. When taxes are withheld in connection with the
exercise of a stock option by delivering shares of stock in payment of the
exercise price, or upon the lapse of restrictions on restricted stock received
upon the exercise of an option (the date on which income is recognized in
connection with any such exercise or lapse of such restrictions hereinafter
referred to as the "Tax Date"), the optionee may elect to make payment for the
withholding of federal, state and local taxes, excluding Social Security and
Medicare taxes, up to the optionee's marginal tax rates, by one or both of the
following methods:
(i) delivering part or all of the payment in previously-owned shares
(which shall be valued at fair market, as defined herein, on the Tax Date)
held for at least six months, whether or not received through the prior
exercise of a stock option; or
(ii) requesting the Company to withhold from those shares that would
otherwise be received upon exercise of the option, or upon the lapse of
restrictions, a number of shares having a fair market value (as defined
herein) on the Tax Date equal to the amount to be withheld. The amount of
tax withholding to be satisfied by withholding shares from the option
exercise or from the restricted stock received through the exercise of an
option upon the lapse of restrictions is limited to the minimum amount of
taxes, excluding Social Security and Medicare taxes, required to be
withheld under federal, state and local law.
Such election is irrevocable. Any Social Security and Medicare taxes, any
fractional share amount and any additional withholding not paid by the
withholding or surrender of shares must be paid in cash. If no timely election
is made, cash must be delivered to satisfy all tax withholding requirements.
Optionees who are subject to Section 16 of the Securities Exchange Act of
1934 ("Insiders") making an election pursuant to (i) or (ii) of the immediately
preceding paragraph must do so: (a) at least six months after the date of grant
of the option; and (b) within a "window period" as defined in Rule 16b-3(e)(3)
under the Securities Exchange Act of 1934 or at least six months in advance of
the Tax Date. An election by an Insider to deliver stock or have stock retained
to satisfy tax obligations is subject to the approval of the Committee and to
such rules as the Committee may from time to time adopt.
9. Miscellaneous.
a. Amendment. The Company reserves the right to amend the Plan at any
time by action of the Board of Directors provided that no such amendment
may materially and adversely affect any outstanding stock options without
the consent of the respective participants, and provided that, without the
approval of the stockholders, no such amendment may increase the total
number of shares reserved for the purposes of the Plan.
Exhibit A-Page 5
<PAGE>
b. Effectiveness of Plan. This Plan shall be effective as of February 18,
1995, subject to approval of Stockholders of the Company prior to February
18, 1996.
c. Rights in Securities. All certificates for shares delivered under the
Plan shall be subject to such stock-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange
upon which the shares are then listed, and any applicable federal or state
securities law, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such
restrictions. No optionee or optionee's beneficiary, executor or
administrator, legatees or distributees, as the case may be, will be, or
will be deemed to be, a holder of any shares subject to an option unless
and until a stock certificate or certificates for such shares are issued to
such person or persons under the terms of the Plan. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities
or other property) or distributions or other rights for which the record
date is prior to the date such stock certificate is issued, except as
provided in Section 5(k) hereof.
d. Date of Grant. The grant of an option shall be effective no earlier
than the date the Committee decides to grant the option, except that grants
of reload options shall be effective as provided in Section 7(g) hereof.
e. Application of Funds. The proceeds received by the Company from the
sale of stock subject to option are to be added to the general funds of the
Company and used for its corporate purposes.
f. No Obligation to Exercise Option. Granting of an option shall impose
no obligation on the optionee to exercise such option.
Exhibit A-Page 6
<PAGE>
SPRINT RETIREMENT SAVINGS PLAN CENTEL EMPLOYEES' STOCK OWNERSHIP PLAN
SPRINT RETIREMENT SAVINGS PLAN CENTEL RETIREMENT SAVINGS PLAN FOR
FOR BARGAINING UNIT EMPLOYEES BARGAINING UNIT EMPLOYEES
FIDELITY MANAGEMENT TRUST COMPANY
UMB BANK, N.A., and FIRSTIER BANK, N.A., TRUSTEES
P.O. Box 9107, Hingham, Massachusetts 02043-9107
VOTING INSTRUCTIONS FOR ANNUAL MEETING OF STOCKHOLDERS OF SPRINT CORPORATION ON
APRIL 18, 1995
I hereby direct Fidelity Management Trust Company, UMB Bank, n.a., and
FirsTier Bank, n.a., either in person or by proxy, to vote all shares of Common
Stock of Sprint Corporation (Sprint) which have been allocated to my account(s)
under the Sprint Retirement Savings Plan, the Sprint Retirement Savings Plan for
Bargaining Unit Employees, the Centel Retirement Savings Plan for Bargaining
Unit Employees, and the Centel Employees' Stock Ownership Plan at the Annual
Meeting of Stockholders to be held April 18, 1995, and any adjournments thereof,
upon the following matters, AND IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE MEETING INCLUDING ANY STOCKHOLDER PROPOSAL OMITTED
FROM THE ACCOMPANYING PROXY STATEMENT PURSUANT TO RULE 14A-8 OF THE PROXY RULES
OF THE SECURITIES AND EXCHANGE COMMISSION:
------------PLEASE DETACH AT PERFORATION BEFORE MAILING----------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3
AND AGAINST ITEMS 4 AND 5.
1. To elect the nominees listed below, and each of them, as Directors of Class
III; and while Sprint has no reason to believe that any of the nominees will
decline or be unable to serve, if any do, to vote with discretionary
authority.
[_]FOR all nominees listed below [_]WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A LINE
THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
William T. Esrey Charles H. Price II
Linda Koch Lorimer Stewart Turley
2. To approve the Management Incentive
Stock Option Plan. FOR [_] AGAINST [_] ABSTAIN [_]
3. To approve the appointment of Ernst
& Young LLP as independent auditors
of Sprint for 1995. FOR [_] AGAINST [_] ABSTAIN [_]
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 4 AND 5.
4. Stockholder proposal concerning
retirement plan for outside
directors. FOR [_] AGAINST [_] ABSTAIN [_]
5. Stockholder proposal to establish a
Stockholder advisory committee. FOR [_] AGAINST [_] ABSTAIN [_]
(PLEASE SIGN ON REVERSE SIDE.)
<PAGE>
You are entitled to direct the voting of the total number of shares of
Common Stock of Sprint allocated to your accounts through February 21, 1995, the
record date for voting at the April 18, 1995, Stockholders Meeting. Your
accounts include one or more of the following: (a) Company Stock Investment Fund
(your contributions), (b) Company Stock Match account, (c) Centel Profit Sharing
account, (d) TRASOP account (formerly Sprint's ESOP), (e) Centel Employees'
Stock Ownership Plan account (Centel ESOP). The Centel ESOP and the Centel
Retirement Savings Plan for Bargaining Unit Employees provide for the trustees
to vote all shares held in the trusts for these two plans for which they do not
receive voting instructions in the same proportions as instructions received for
shares voted. The trustees will vote all unallocated shares held in the Sprint
Retirement Savings Plan (including the TRASOP) and the Sprint Retirement Savings
Plan for Bargaining Unit Employees in the same proportions as instructions
received for shares voted, and any shares allocated to participant accounts in
these plans for which the trustees do not receive voting instructions will not
be voted.
Statements of your accounts will be provided separately.
----------PLEASE DETACH AT PERFORATION BEFORE MAILING-------
VOTING INSTRUCTIONS, SPRINT CORPORATION ANNUAL MEETING OF STOCKHOLDERS
If you sign and return this card in the enclosed
envelope for receipt by Fidelity Management Trust
Company by April 12, 1995, YOUR SHARES WILL BE VOTED AS
SPECIFIED ON THE REVERSE SIDE, OR IF THIS CARD IS
SIGNED AND RETURNED WITHOUT SPECIFICATIONS, YOUR SHARES
WILL BE VOTED FOR ITEMS 1 , 2 AND 3 AND AGAINST ITEMS
4 AND 5. Your voting instructions to the trustees are
confidential.
___________________________________
Signature
Date __________________________, 1995
<PAGE>
P
R
O
X
Y
SPRINT CORPORATION
P.O. BOX 11315, KANSAS CITY, MISSOURI 64112
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON APRIL 18, 1995
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3 AND AGAINST
ITEMS 4 AND 5.
The undersigned hereby appoints W.T. Esrey, J.R. Devlin and A.B. Krause, and
each of them, with full power of substitution as proxies, to vote all the
shares of Common and Preferred Stock of Sprint Corporation (Sprint) which the
undersigned is entitled to vote at the 1995 Annual Meeting of Stockholders to
be held April 18, 1995, and any adjournment thereof, upon the following
matters, AND IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING INCLUDING ANY STOCKHOLDER PROPOSAL OMITTED FROM THE
ACCOMPANYING PROXY STATEMENT PURSUANT TO RULE 14A-8 OF THE PROXY RULES OF THE
SECURITIES AND EXCHANGE COMMISSION:
1. To elect the nominees listed below, and each of them, as Directors of Class
III; and while Sprint has no reason to believe that any of the nominees will
decline or be unable to serve, if any do, to vote with discretionary
authority.
[_] FOR all nominees listed below
[_] WITHHOLD AUTHORITY
(except as marked to the contrary below)
to vote for all nominees listed below
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A LINE
THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
William T. Esrey
Charles H. Price II
Linda Koch Lorimer
Stewart Turley
2. To approve the Management Incentive Stock Option Plan.
FOR [_] AGAINST [_] ABSTAIN [_]
3. To approve the appointment of Ernst & Young LLP as independent auditors for
1995.
FOR [_] AGAINST [_] ABSTAIN [_]
-------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 4 AND 5.
4. Stockholder proposal concerning retirement plan for outside directors.
FOR [_] AGAINST [_] ABSTAIN [_]
5. Stockholder proposal to establish a Stockholder advisory committee.
FOR [_] AGAINST [_] ABSTAIN [_]
(PLEASE SIGN ON REVERSE SIDE)
<PAGE>
THIS PROXY, IF SIGNED AND RETURNED, WILL BE VOTED AS SPECIFIED ON THE REVERSE
SIDE. IF THIS CARD IS SIGNED AND RETURNED WITHOUT SPECIFICATIONS, YOUR SHARES
WILL BE VOTED FOR ITEMS 1, 2 AND 3 AND AGAINST ITEMS 4 AND 5. A majority of
said proxies, or any substitute or substitutes, who shall be present and act
at the meeting (or if only one shall be present and act, then that one) shall
have all the powers of said proxies hereunder.
Please sign exactly as name appears. If shares are held jointly, any one of
the joint owners may sign. Attorneys-in-fact, executors, administrators,
trustees, guardians or corporation officers should indicate the capacity in
which they are signing. PLEASE SIGN, DATE, AND MAIL THIS PROXY PROMPTLY
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. YOU MAY NEVERTHELESS VOTE IN
PERSON IF YOU DO ATTEND.
DATE ___________________________________________________________________ , 1995
PLEASE ________________________________________________________________________
Signature
IGNS
EREH
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Signature
