<PAGE>
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
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] 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:
<PAGE>
LOGO Post Office Box
11315
Kansas City, Missouri 64112
William T. Esrey
Chairman
March 10, 1998
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 21, 1998, 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 the three present Directors whose terms
of office expire this year to continue to serve as Directors of Class III.
Ruth M. Davis, a Director of Sprint since 1981 and a present Class II
Director, will retire when her term of office expires at the Annual Meeting.
The Board of Directors recommends that you vote for the nominees.
You are also being asked to approve amendments to the 1988 Employees Stock
Purchase Plan and to approve the appointment of Ernst & Young LLP as
independent auditors of Sprint for 1998. The Board of Directors recommends
that you vote for these proposals.
Three Stockholder proposals are also included in the Proxy Statement. The
proposals relate to Sprint's retirement plan for outside Directors, stock
option plans and compensation agreements contingent upon a change in control
of Sprint. 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 21, 1998
----------------
TO THE STOCKHOLDERS OF SPRINT CORPORATION:
The Annual Meeting of the Stockholders of Sprint Corporation (Sprint) will
be held at the World Headquarters of Sprint, 2330 Shawnee Mission Parkway,
Westwood, Kansas on Tuesday, April 21, 1998, at 10:00 a.m. (local time) for
the following purposes:
1. To elect three Class III Directors to serve for a term of three years.
2. To consider and approve amendments to the 1988 Employees Stock
Purchase Plan.
3. To consider and approve the appointment of Ernst & Young LLP as
independent auditors of Sprint for 1998.
4. To act upon such matters, including three Stockholder proposals (set
forth on pages 20 through 24 of the accompanying Proxy Statement), as
may properly come before the meeting or any adjournments thereof.
The close of business on February 23, 1998 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
Don A. Jensen
Vice President and
Secretary
Westwood, Kansas
March 10, 1998
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
----------------
PROXY STATEMENT
MARCH 10, 1998
----------------
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 21, 1998. 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 amendments to the 1988 Employees Stock Purchase 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 $6,500 plus
out-of-pocket expenses. The cost of soliciting proxies will be borne by
Sprint.
As of the record date, February 23, 1998, Sprint had outstanding and
entitled to vote 343,323,103 shares of Common Stock, 42,615 shares of
Preferred Stock-First Series, Convertible, 256,167 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. As of
the record date, Sprint also had outstanding 86,236,036 shares of Class A
Common Stock. Each share of the Class A Common Stock is entitled to one vote
on each matter to be voted on at the meeting other than election of Directors.
The three nominees for Director receiving the greatest number of votes at
the Annual Meeting of Stockholders will be elected as Directors. In addition,
the holders of the Class A Common Stock, France Telecom and Deutsche Telekom
AG, have the right to elect three 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 those comments.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information about the only known beneficial
owners of more than five percent of Sprint's outstanding voting stock, based
solely on Schedules 13G and 13D received by Sprint:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- -------------- ------------------------- -------------------- --------
<S> <C> <C> <C>
Class A Common Stock.... France Telecom 43,118,018 shares 50%
6 place d'Alleray
75505 Paris Cedex 15
France
Class A Common Stock.... Deutsche Telekom AG 43,118,018 shares 50%
Friedrich-Ebert-Allee 140
D-53113 Bonn
Germany
Common Stock............ Putnam Investments, Inc. 21,355,530 shares 6%
One Post Office Square
Boston, Massachusetts
</TABLE>
The following table states the number of shares of Sprint Common Stock
beneficially owned, as of December 31, 1997, by each current Director, each
executive officer named in the "Summary Compensation 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.......................................... 7,652(1)
Warren L. Batts........................................ 5,000(1)
Michel Bon............................................. 0(1)
Ruth M. Davis.......................................... 2,226(1)
William T. Esrey....................................... 380,424(1)(2)
Gary D. Forsee......................................... 39,486(1)
Michael B. Fuller...................................... 27,716(1)
Irvine O. Hockaday, Jr................................. 1,500(1)
Harold S. Hook......................................... 16,000(1)
Arthur B. Krause....................................... 90,376(1)(2)
Ronald T. LeMay........................................ 284,905(1)
Linda Koch Lorimer..................................... 1,465(1)
D. Wayne Peterson...................................... 78,378(1)
Charles E. Rice........................................ 3,000(1)
Ron Sommer............................................. 0(1)
Stewart Turley......................................... 3,400(1)
All Directors and executive officers as a group
(26 persons).......................................... 1,202,277(1)(2)
</TABLE>
- --------
(1) Does not include shares which may be acquired upon the exercise of stock
options exercisable on or within sixty days after December 31, 1997, under
Sprint's stock option plans as follows: 22,500, 18,496, 1,500, 3,928,
981,674, 219,408, 126,735, 0, 18,496, 195,575, 224,828, 36,227, 107,255,
18,496, 1,500 and 18,496 shares for Messrs. Ausley, Batts, Bon, Dr. Davis,
Messrs. Esrey, Forsee, Fuller, Hockaday, Hook, Krause, LeMay, Ms. Lorimer,
Messrs. Peterson, Rice, Sommer and Turley, respectively, and 2,802,519 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: 16,442 shares held in trust for
Mr. Esrey's children, 13,644 shares owned by Mr. Krause's wife and 30,086
shares held by or for the benefit of family members for all Directors and
executive officers as a group.
2
<PAGE>
I. ELECTION OF DIRECTORS
(Item 1 on Proxy Card)
The Board of Directors of Sprint (other than the Directors elected by the
holders of the Class A Common Stock) 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 three nominees for Class III, if elected, will serve three years until
the 2001 Annual Meeting and until a successor has been elected and qualified.
The Directors remaining in Classes I and II will continue in office until the
1999 and 2000 Annual Meetings, respectively.
Except for the Class A Common Stock, each share is entitled to one vote for
each of three 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.
NOMINEES FOR DIRECTORS
The following information is given with respect to the nominees for
election.
Class III--Nominees to Serve Three Years Until 2001 Annual Meeting
WILLIAM T. ESREY, age 58. Chairman and Chief Executive
Officer of Sprint, Westwood, Kansas; Director of Duke
Energy Corporation, The Equitable Life Assurance Society
of the United States, Everen Capital Corporation, and
General Mills, Inc. Mr. Esrey has been Chairman of Sprint
since 1990 and Chief Executive Officer since 1985.
Director of Sprint since 1985; Chairman of the Executive
Committee.
LOGO
LINDA KOCH LORIMER, age 45. Vice President and Secretary
of the University, Yale University, New Haven,
Connecticut; Director of McGraw-Hill, Inc. Prior to
becoming Vice President and Secretary of Yale University
in 1993, Ms. Lorimer was President of Randolph-Macon
Woman's College for more than six years. Director of
Sprint since 1993; Member of the Organization,
Compensation and Nominating Committee.
LOGO
STEWART TURLEY, age 63. Retired Chairman of Eckerd
Corporation, a diversified retailer, Clearwater, Florida;
Director of Barnett Banks, Inc. and Springs Industries,
Inc. Mr. Turley had been Chairman of Eckerd Corporation
for more than five years prior to his retirement in 1997.
Director of Sprint since 1980; Chairman of the
Organization, Compensation and Nominating Committee;
Member of the Executive Committee.
LOGO
3
<PAGE>
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 1999 and
2000 Annual Meetings, respectively.
Class I--Serving Until 1999 Annual Meeting
WARREN L. BATTS, age 65. Retired Chairman and Chief
Executive Officer of Tupperware Corporation, a diversified
consumer products company, Orlando, Florida. Mr. Batts is
also the retired Chairman of Premark International, Inc.,
a diversified consumer products company, Deerfield,
Illinois; Director of The Allstate Corporation, Cooper
Industries, Inc. and Sears, Roebuck & Company. Prior to
his retirement in 1997, Mr. Batts had been Chairman of
Premark International, Inc. since 1986 and Chairman and
Chief Executive Officer of Tupperware Corporation since LOGO
its spin-off from Premark International, Inc. in 1996.
Director of Sprint since 1982; Chairman of the Audit
Committee; Member of the Executive Committee.
IRVINE O. HOCKADAY, JR., age 61. President and Chief
Executive Officer of Hallmark Cards, Inc., manufacturer of
greeting cards, Kansas City, Missouri. Director of Dow
Jones, Inc., Ford Motor Company and UtiliCorp United. Mr.
Hockaday has been President and Chief Executive Officer of
Hallmark Cards, Inc. since 1985. Director of Sprint since
June of 1997; Member of the Audit Committee.
LOGO
RONALD T. LEMAY, age 52. President and Chief Operating
Officer of Sprint, Westwood, Kansas; Director of Ceridian
Corporation, Imation Corporation, and Yellow Corporation.
Mr. LeMay has served as President and Chief Operating
Officer of Sprint since February of 1996 except for the
period from July 1997 to October 1997 when he served as
Chairman and Chief Executive Officer of Waste Management,
Inc., a provider of comprehensive waste management
services. Mr. LeMay was Chief Executive Officer of Sprint
Spectrum L.P. (Sprint PCS) from 1995 to 1996. Mr. LeMay
was President and Chief Operating Officer--Long Distance LOGO
Division of Sprint from 1989 to 1995. Director of Sprint
from 1993 until July 1997 and re-elected in December 1997.
Class II--Serving Until 2000 Annual Meeting
HAROLD S. HOOK, age 66. Retired Chairman and Chief
Executive Officer of American General Corporation, a
financial services holding corporation, Houston, Texas;
Director of Chase Manhattan Bank, Chase Manhattan
Corporation, Cooper Industries, Inc. and Duke Energy
Corporation. Mr. Hook was Chairman of American General
Corporation from 1978 to 1997 and Chief Executive Officer
from 1978 to 1996. Director of Sprint since 1982; Member
of the Organization, Compensation and Nominating
Committee.
LOGO
4
<PAGE>
CHARLES E. RICE, age 62. 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; Member of the Organization,
Compensation and Nominating Committee and the Executive
Committee.
LOGO
Directors Elected by and Serving at the Pleasure of the holders of the Class A
Common Stock
DUBOSE AUSLEY, age 60. Chairman of Ausley & 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 Ausley &
McMullen in 1996, Mr. Ausley was Chairman of Macfarlane,
Ausley, Ferguson & McMullen since 1994 and prior to that
he was President of Ausley, McMullen, McGehee, Carothers &
Proctor, 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. Director of Sprint since 1993.
LOGO
MICHEL BON, age 54. Chairman and Chief Executive Officer
of France Telecom, a telecommunications company, Paris,
France. Mr. Bon became Chairman and Chief Executive
Officer of France Telecom in September of 1995. He served
as head of France's national job-placement agency from
1993 to 1995 and, prior to that as Chairman and Chief
Executive Officer of Carrefour, France's largest retailer,
for more than five years. Director of Sprint since 1996;
Member of the Executive Committee.
LOGO
RON SOMMER, age 48. Chairman of the Board of Management of
Deutsche Telekom AG, a telecommunications company, Bonn,
Germany. Prior to becoming Chairman of Deutsche Telekom AG
in May of 1995, Mr. Sommer was President and Chief
Operating Officer of Sony Corporation of America beginning
in 1990, and in 1993, he took over the management of Sony
Europe in the same function. Director of Sprint since
1996; Member of the Organization, Compensation and
Nominating Committee.
LOGO
BOARD COMMITTEES AND DIRECTOR MEETINGS
The Board of Directors held six regular meetings and one special meeting in
1997. The Board of Directors has an Audit Committee, an Executive Committee
and an Organization, Compensation and Nominating Committee. The members of
each committee are identified in the above description of Directors. In 1997
the Audit Committee held two meetings and the Organization, Compensation and
Nominating Committee held seven meetings. Except for Mr. Hockaday, 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
1997.
5
<PAGE>
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 Organization, Compensation and
Nominating Committee, as they relate to matters of executive compensation, 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.
The principal responsibilities of the Organization, Compensation and
Nominating 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 proposed 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 Organization, Compensation and
Nominating Committee, c/o Corporate Secretary, at the corporate headquarters
of Sprint, Post Office Box 11315, Kansas City, Missouri 64112.
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.
The Long-Term Stock Incentive Program, which was approved at the 1997 Annual
Meeting of Stockholders, provides for the grant of stock options to Outside
Directors. Under the program each Outside Director receives an annual grant of
an option to purchase 2,000 shares of Common Stock 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 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. The retirement plan was amended in December of 1996
to eliminate the retirement benefit for any Director who had not served five
years as of the date of the amendment. 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.
6
<PAGE>
Outside Directors of Sprint and certain of its subsidiaries are also
eligible for a Directors' Deferred Fee Plan under which Outside Directors may
elect to defer all or some of their fees. New Directors, who are not eligible
for benefits under the retirement plan after the December 1996 amendment, will
receive units representing 2,500 shares of Sprint Common Stock credited to
their accounts under the Directors' Deferred Fee Plan upon becoming a
Director. Half of these units will vest upon completion of five years of Board
service and ten percent will vest on each succeeding anniversary. Under the
Long-Term Stock Incentive Program, Outside Directors can elect to use their
fees to purchase Sprint Common Stock. They can also elect to have the
purchased shares deferred and placed in a trust.
In addition, Outside Directors are provided with Sprint residential long
distance service valued in the following amounts for 1997: Mr. Ausley, $4,609;
Mr. Batts, $2,225; Dr. Davis, $1,353; Mr. Hockaday, $352; Mr. Hook, $700; Ms.
Lorimer, $2,585; Mr. Rice, $4,228; and Mr. Turley, $4,961.
EXECUTIVE COMPENSATION
ORGANIZATION, COMPENSATION AND NOMINATING COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Organization, Compensation and Nominating 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 market data
from similarly sized companies in the telecommunications industry as well as
other industries from surveys conducted by independent compensation
consultants and from proxy data. The Committee believes that the comparison
groups accurately reflect the market in which Sprint competes for executive
talent. Eleven of the 12 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 16 of this Proxy Statement, are included in the
comparison groups. 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 unless such compensation is performance-
based under Section 162(m). 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 compensation earned under such plans
for 1997.
Base Salary. Each year the Committee makes a recommendation to the Board
establishing base pay for all Named Officers. In making this recommendation
for 1997, the Committee considered the salaries of other executives within the
comparison group and the executives' performance during 1996. With respect to
the latter, the Committee exercised its judgment in evaluating the executives'
accomplishments during the year. 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 Compensation. Sprint's short-term incentive
compensation (STIC) is a performance-driven annual incentive designed to
promote the near term objectives of the organization. For the Named Officers,
the material terms of the performance goals under STIC were approved by the
Stockholders at the 1997 Annual Meeting.
7
<PAGE>
Target incentive opportunity for STIC is based on job level and potential
impact on organization results. The STIC payout is based on the achievement of
six financial objectives--three for the Local Telecommunications Division
(LTD) and three for the Long Distance Division (LDD). For each objective,
targets were established and compared to actual 1997 financial results.
. The objectives for the LTD related to operating income (55% weighting),
net collectible revenue (25%), and economic value added (EVA) (20%).
Actual results were 70.4% of target on a weighted average basis.
. The objectives for the LDD related to operating income (40% weighting),
net collectible revenue (40%), and EVA (20%). Actual results were 32.7%
of target on a weighted average basis.
The weights assigned for a particular executive among the LTD and LDD depended
on an executive's responsibilities with Sprint.
The entire STIC payout for Messrs. Esrey and LeMay was based on the
achievement of these financial objectives. For the remaining executive
officers except Mr. Peterson, 15% of the STIC payout was based on the
achievement of certain personal objectives in 1997. Fifty percent of Mr.
Peterson's STIC payout was based on personal objectives. These personal
objectives included qualitative factors relating to business unit and
departmental results of a nonfinancial nature, the support the executive
provided in furthering strategic and tactical objectives, contributing to the
progress of the quality improvement process, and individual professional
growth and development.
Based on the financial results described above and the achievement of their
personal objectives, the executive officers earned STIC payouts on average of
56.7% of target. Mr. Esrey's STIC payout was based on the financial results
described above using relative weights for objectives by division as follows:
45% for the LTD and 55% for LDD. Based on these factors, Mr. Esrey earned a
payout of 49.7% of target.
Long-Term Incentive Compensation. Sprint's long-term incentive compensation
(LTIP) is a three-year performance-driven incentive plan designed to promote
the long-term objectives of the organization and to pay out in Sprint common
stock. For the Named Officers, the material terms of the performance goals
under LTIP were approved by the Stockholders at the 1997 Annual Meeting.
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, the LDD, the Cellular Division,
and Sprint consolidated.
. The objectives for the LTD related to return on assets (55% weighting),
nonregulated cumulative net collectible revenue (15%), 1997 nonregulated
operating income (15%) and EVA (15%). For the LTD, actual results were
115.1% of target on a weighted average basis.
. The objectives for the LDD related to net collectible revenue growth
relative to market (50%), cumulative operating margin (40%) and EVA
(10%). For the LDD, actual results were 152.0% of target on a weighted
average basis.
. The objectives for the Cellular Division related to cumulative operating
income (45%), cumulative net collectible revenue (45%) and EVA (10%) from
January 1, 1995 through March 7, 1996. On March 7, 1996, there was a
spin-off of the Cellular Division. For the Cellular Division, actual
results were 107.5% of target on a weighted average basis.
. The objective for Sprint consolidated related to EVA. Actual results were
80.9% of target.
As with the STIC, the relative weights assigned to the LTIP objectives among
the LTD, LDD, Cellular Division, and Sprint consolidated 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
8
<PAGE>
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 the last
day of the performance period and the denominator of which is the market price
on the first day of the performance period. The three-year increase in the
price of Sprint Common Stock resulted in a multiplier of 263.0%.
Mr. Esrey's LTIP payout was based on the financial results described above
using relative weights for each objective as follows: 28% for the LTD, 55% for
the LDD, 6% for the Cellular Division and 11% for Sprint consolidated. Based
on the financial results and the methodology described above, Mr. Esrey
received a payout of 346.4% of target. The LTIP payouts, if not deferred under
the Executive Deferred Compensation Plan, were paid in restricted or
unrestricted shares of Sprint Common Stock.
Stock Options. 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 does not consider any measures of corporate or
individual performance in determining option grants and does not consider the
number of options already held by an executive. The telecommunications
industry is going through tremendous changes and industry leaders are in high
demand, both inside and outside the industry. The Board of Directors believes
that granting options and other stock awards to officers and other key
employees enhances the Company's ability to attract, retain and provide
incentives to individuals of exceptional talent necessary for the continued
success of Sprint. In furtherance of these objectives, a special grant of
options was made to Mr. Esrey and Mr. LeMay in 1997.
During 1997 certain executive officers elected under Sprint's Management
Incentive Stock Option Plan (MISOP) to receive options in lieu of receiving up
to 50% of their target opportunity under Sprint's management incentive plans.
For each $3.95 reduction in an executive's target opportunity resulting from
such election, the executive received an option to purchase one share of
Sprint Common Stock. The MISOP is in keeping with Sprint's philosophy of
increasing the percentage of compensation tied to stock ownership. The
Committee believes stock options more closely align Stockholder and employee
interests by focusing executives on long-term growth and profitability of
Sprint and its Common Stock.
Stewart Turley, Chairman
Harold S. Hook
Linda Koch Lorimer
Charles E. Rice
Ron Sommer
9
<PAGE>
SUMMARY COMPENSATION TABLE
The following table reflects the cash and non-cash compensation for services
in all capacities to Sprint by those persons who were, as of December 31,
1997, the chief executive officer and the other four most highly compensated
executive officers of Sprint, and by Mr. Peterson, who served as an executive
officer until October 14, 1997 (the Named Officers):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------- ----------------------------------
AWARDS PAYOUTS
OTHER ------------------------ --------- ALL
ANNUAL RESTRICTED SECURITIES OTHER
COMPEN- STOCK UNDERLYING LTIP COMPEN-
NAME AND SALARY BONUS SATION AWARD(S) OPTIONS PAYOUTS SATION
PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($) ($)(2) (#) ($) ($)(3)
------------------ ---- --------- --------- ------- ---------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William T. Esrey 1997 1,000,000 0 73,134(4) 0 2,536,183 1,221,064 38,880
Chairman and Chief 1996 987,500 2,280,250 76,480 0 336,468 597,948 33,645
Executive Officer 1995 937,502 541,200 76,989 0 291,360 768,140 31,506
Gary D. Forsee 1997 474,828 0 12,775 0 176,512 459,447 7,513
President--Long 1996 412,746 1,177,866 6,172 577,500 88,688 203,570 5,173
Distance Division 1995 344,237 258,809 6,404 0 50,372 214,524 7,846
Michael B. Fuller(5) 1997 307,864 230,500 1,519 363,750 64,608 204,762 10,511
President--Local 1996 269,485 298,808 1,569 0 28,720 87,851 7,612
Telecommunications
Division
Arthur B. Krause 1997 401,852 192,642 2,840 0 64,608 304,057 23,491
Executive Vice 1996 373,581 670,321 3,787 0 52,200 153,437 16,302
President--Chief 1995 349,172 271,518 8,614 0 36,420 204,099 16,134
Financial Officer
Ronald T. LeMay 1997 602,966 0 9,944 8,896,817(6) 1,603,546 574,008 8,395
President and 1996 700,002 1,684,142 71,975 0 269,531 315,615 9,321
Chief Operating 1995 668,122 287,000 10,979 0 160,268 398,676 12,178
Officer
D. Wayne Peterson(7) 1997 431,770 92,482 4,427 0 177,107 365,238 21,302
Former President-- 1996 389,355 738,212 7,890 0 64,337 193,364 14,567
National Integrated 1995 344,129 382,485 6,198 0 48,935 213,519 14,729
Services
</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.
(2) The value of the Restricted Stock Awards shown for 1997 is based on the
closing prices of Sprint Common Stock on August 12, 1997 and October 30,
1997, the dates of grant for Messrs. Fuller and LeMay, respectively. As of
December 31, 1997, Messrs. Esrey, Forsee, Fuller, Krause, LeMay and
Peterson held 101,820; 19,801; 9,424; 10,000; 174,876 and 6,133 shares,
respectively, of restricted stock. The shares had a market value of
$5,969,198; $1,160,834; $552,482; $586,250; $10,252,106 and $359,547,
respectively, at December 31, 1997, based on a value of $58.625 per share.
Each of the Named Officers has the right to vote and receive dividends on
the restricted shares.
(3) Consists of the following amounts for 1997: (a) $6,365 contributed on
behalf of each of Messrs. Esrey, Forsee, Fuller, Krause, LeMay and
Peterson as matching contributions under the Sprint Retirement Savings
Plan; and (b) $32,515, $1,148, $4,146, $17,126, $2,030 and $14,937 for
Messrs. Esrey, Forsee, Fuller, Krause, LeMay and Peterson, respectively,
representing the portion of interest credits on deferred compensation
accounts under Sprint's Executive Deferred Compensation Plan that are at
above-market rates.
10
<PAGE>
(4) Includes the cost to Sprint of providing tax and financial services of
$15,000, club memberships of $14,717 and automobile allowance of $18,000.
(5) Mr. Fuller became President--Local Telecommunications Division on October
8, 1996.
(6) When Mr. LeMay left Sprint to join Waste Management, Inc. last July, all
of his unvested options to purchase Sprint stock and restricted Sprint
shares were canceled. Upon Mr. LeMay's return to Sprint last October, he
was granted restricted stock in amounts designed to place Mr. LeMay in the
same economic position he was in before his leaving Sprint with respect to
such options and restricted shares. These replacement grants included: (1)
14,876 shares that vest on March 31, 1999 to replace his canceled
restricted stock, and (2) 100,000 shares that vest on April 30, 2000 to
replace the unrealized gain on canceled Sprint stock options.
(7) Mr. Peterson resigned from his position as President--National Integrated
Services on October 14, 1997.
OPTION GRANTS
The following table summarizes options granted during 1997 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 Securities and
Exchange Commission (SEC) rules. The Named Officers will realize no gain on
these options without an increase in the price of Sprint Common Stock that
will benefit all shareholders proportionately.
11
<PAGE>
Each option listed below has a reload feature. Unless otherwise indicated,
vesting is accelerated in the event of a change in control if the change in
control occurs at least one year after the grant date of the option. A change
in control is deemed to occur if someone acquires 20% or more of the
outstanding stock of Sprint or if there is a change of a majority of the
Directors within a two-year period. No stock appreciation rights were granted
during 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
SECURITIES OPTIONS EXERCISE PRICE
UNDERLYING GRANTED TO OR BASE APPRECIATION FOR OPTION TERM(1)
OPTIONS EMPLOYEES PRICE EXPIRATION ----------------------------------
NAME GRANTED (#) IN FISCAL YEAR ($/SH) DTAE 0% 5% 10%
- ---- ------------ -------------- -------- ---------- --- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
William T. Esrey 160,000(2) 1.7% $43.38 2/11/07 $ 0 $ 4,364,529 $ 11,060,573
100,810(3) 1.1% 43.38 2/11/07 0 2,749,926 6,968,852
151,899(4) 1.6% 43.38 2/11/07 0 4,143,547 10,500,562
91,179(5) 1.0% 44.94 3/15/05 0 1,942,564 4,646,788
32,295(5) 0.3% 44.94 2/17/05 0 680,621 1,624,906
1,000,000(6) 10.6% 47.94 6/9/07 0 30,147,636 76,400,029
1,000,000(7) 10.6% 47.94 6/9/07 0 30,147,636 76,400,029
Gary D. Forsee 55,000(2) 0.6% 43.38 2/11/07 0 1,500,307 3,802,072
38,354(3) 0.4% 43.38 2/11/07 0 1,046,232 2,651,358
66,456(4) 0.7% 43.38 2/11/07 0 1,812,807 4,594,009
3,588(5) 0.0% 55.28 2/16/00 0 23,748 49,034
8,217(5) 0.1% 55.28 2/15/01 0 79,746 168,787
4,897(5) 0.1% 55.28 3/9/03 0 81,178 181,152
Michael B. Fuller 40,000(2) 0.4% 43.38 2/11/07 0 1,091,132 2,765,143
24,608(3) 0.3% 43.38 2/11/07 0 671,265 1,701,116
Arthur B. Krause 40,000(2) 0.4% 43.38 2/11/07 0 1,091,132 2,765,143
24,608(3) 0.3% 43.38 2/11/07 0 671,265 1,701,116
Ronald T. LeMay 100,000(2) 1.1% 51.69 2/11/07 0 2,961,927 7,354,406
55,519(3) 0.6% 51.69 2/11/07 0 1,644,432 4,083,092
117,089(4) 1.2% 51.69 2/11/07 0 3,468,091 8,611,200
81,945(8) 0.9% 51.69 2/12/06 0 2,110,729 5,096,086
45,524(9) 0.5% 51.69 2/17/05 0 1,006,959 2,365,970
17,757(10) 0.2% 51.69 2/17/05 0 392,773 922,866
17,109(11) 0.2% 51.69 2/17/05 0 378,439 889,188
91,050(12) 1.0% 51.69 7/12/04 0 1,820,090 4,207,454
14,905(10) 0.2% 51.69 3/9/03 0 230,083 513,180
62,648(11) 0.7% 51.69 2/16/00 0 384,304 793,127
500,000(6) 5.3% 51.69 6/9/07 0 15,455,956 38,731,415
500,000(7) 5.3% 51.69 6/9/07 0 15,455,956 38,731,415
D. Wayne Peterson 40,000(2) 0.4% 43.38 2/11/07 0 1,091,132 2,765,143
32,076(3) 0.3% 43.38 2/11/07 0 874,979 2,217,368
56,329(4) 0.6% 43.38 2/11/07 0 1,536,560 3,893,944
6,850(5) 0.1% 46.63 2/17/05 0 150,037 358,304
5,095(5) 0.1% 46.63 3/9/03 0 79,984 181,205
6,475(5) 0.1% 46.63 2/16/00 0 45,723 95,753
28,247(5) 0.3% 54.47 2/11/04 0 556,324 1,273,134
2,035(5) 0.0% 54.47 2/16/00 0 13,404 27,691
All Stockholders(13) 343,323,103 -- 46.14 2/11/07 0 9,962,473,482 25,246,863,815
Named Officers' gain as
a %
of All Stockholders'
gain -- -- -- -- 0.08% 0.08%
</TABLE>
- --------
(1) 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.
12
<PAGE>
(2) Twenty-five percent of this option became exercisable on February 11,
1998, and an additional 25% will become exercisable on February 11 of
each of the three successive years.
(3) This option was granted in lieu of a potential award under the LTIP for
the three-year period ending on December 31, 1999. The option becomes
exercisable on December 31, 1999 and is not immediately exercisable upon
a change in control.
(4) This option was granted under the Management Incentive Stock Option Plan
(MISOP). Under the MISOP, the optionee elected to receive options in lieu
of receiving a portion of his bonus under the management incentive
compensation plans. The MISOP benefits Sprint by reducing the cash bonus
paid to the executive. It further increases the percentage of
compensation tied to stock ownership, in keeping with Sprint's philosophy
to more closely align Stockholder and employee interests. This option
became exercisable on December 31, 1997.
(5) This option is a reload option. 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
the reload option is granted. A reload option becomes exercisable one
year from the date the original option was exercised.
(6) This option becomes exercisable on June 9, 2002 only if the market value
of Sprint Common Stock equals or exceeds $95.875 per share on any 30
trading days within a consecutive period of 45 trading days, all of which
fall after June 9, 2001 and on or before June 9, 2002. Alternatively, if
the market value of Sprint Common Stock equals or exceeds $95.875 per
share on any 30 trading days within a consecutive period of 45 trading
days, all of which fall after June 9, 2001 and on or before June 9, 2003,
this option becomes exercisable on the last day of the 45-day period. If
no such 45-day period occurs by June 9, 2003, the option will be
forfeited. Upon a change in control, this option becomes exercisable for
a fraction of the number of shares granted, the numerator of which is the
number of months between the grant date and the date of the change in
control and the denominator of which is 60.
(7) This option becomes excisable on July 9, 2002. Upon a change in control,
this option becomes exercisable for a fraction of the number of shares
granted, the numerator of which is the number of months between the grant
date and the date of the change in control and the denominator of which
is 60.
(8) One-third of this option became exercisable on February 12, 1998, and an
additional one-third will become exercisable on February 12, 1999 and on
February 12, 2000.
(9) Fifty percent of this option became exercisable on February 17, 1998 and
an additional 50% will become exercisable on February 17, 1999.
(10) This option became exercisable on November 15, 1997.
(11) This option becomes excisable on May 20, 1998.
(12) This option becomes excisable on July 12, 1999.
(13) 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 23, 1998, of Sprint
Common Stock assuming a hypothetical option granted at $46.14 per share
(the weighted average price of all options granted in 1997) on February
11, 1997 and expiring on February 11, 2007, if the price of Sprint Common
Stock appreciates at the rates shown in the table. There can be no
assurance that the potential realizable values shown in the table will be
achieved. Sprint will neither make nor endorse any prediction as to
future stock performance.
13
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table summarizes the net value realized on the exercise of
options in 1997, and the value of the outstanding options at December 31,
1997, for the Named Officers.
AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT 12/31/97 OPTIONS AT 12/31/97(2)
------------------------- -------------------------
SHARES ACQUIRED VALUE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
ON EXERCISE (#) ($) (#) (#) ($) ($)
--------------- ----------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William T. Esrey........ 330,544 $7,466,939 856,694 2,736,344 $21,732,707 $35,258,353
Gary D. Forsee.......... 23,836 750,953 184,413 184,412 4,075,005 3,319,224
Michael B. Fuller....... 16,996 450,007 109,451 82,818 3,426,780 1,426,311
Arthur B. Krause........ 0 0 165,847 151,105 4,803,963 3,279,384
Ronald T. LeMay......... 368,155 6,112,173 149,751 1,453,795 954,663 9,267,943
D. Wayne Peterson....... 117,683 2,623,292 76,010 211,828 1,248,317 3,805,337
</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, 1997 ($58.0625).
PENSION PLANS
The following table reflects the estimated annual pension benefit payable to
an individual retiring in 1998 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 $114,612 $152,816 $191,020 $229,224 $ 267,428
700,000 161,112 214,816 268,520 322,224 375,928
900,000 207,612 276,816 346,020 415,224 484,428
1,100,000 254,112 338,816 423,520 508,224 592,928
1,300,000 300,612 400,816 501,020 601,224 701,428
1,500,000 347,112 462,816 578,520 694,224 809,928
1,700,000 393,612 524,816 656,020 787,224 918,428
1,900,000 440,112 586,816 733,520 880,224 1,026,928
2,100,000 486,612 648,816 811,020 973,224 1,135,428
</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 10. 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 33, 16,
23, 34, 24 and 40 years for Messrs. Esrey, Forsee, Fuller, Krause, LeMay
and Peterson, respectively.
In addition, Sprint has a Key Management Benefit Plan that permits a
participant to elect a retirement benefit equal to 300% (or a reduced
percentage if the participant retires before age 60) of the participant's
highest annual
14
<PAGE>
salary during the five-year period immediately prior to the time of
retirement. More information on the plan is provided in the following section
under "Employment Contracts."
EMPLOYMENT CONTRACTS
Sprint has contingency employment agreements with Messrs. Esrey, Forsee,
Fuller, 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 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 by 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. In connection
with Mr. Peterson's resignation as President--National Integrated Services
last October, his non-competition agreement was amended to shorten his non-
compete period to end on December 31, 1998. Until that date, Mr. Peterson will
continue to receive his pay and benefits as an employee.
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. 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.
15
<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
500(R) 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 31, 1992 to December 31, 1997. The companies which comprise the S&P
Telephone Utility Index are ALLTEL Corp., Ameritech, Inc., Bell Atlantic
Corp., BellSouth, Frontier Corp, GTE, SBC Communications, Inc. and U.S. West,
Inc. The companies which comprise the S&P Telecommunications (Long Distance)
Index are AT&T Corp., MCI Communications, Sprint and WorldCom, Inc.
LOGO
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Sprint 100.00 140.20 115.49 169.83 212.51 317.77
S&P 500 100.00 109.92 111.34 152.66 187.28 249.28
S&P (Long Distance) 100.00 113.16 103.21 138.74 143.09 201.83
S&P Telephone 100.00 115.35 110.74 165.35 166.64 231.64
</TABLE>
CERTAIN RELATIONSHIPS AND OTHER TRANSACTIONS
Mr. Ausley is Chairman of the law firm of Ausley & McMullen, which provided
legal services to certain affiliates of Sprint in 1997 for which it billed
$288,430.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 1997 all Section 16(a) filing requirements applicable to its
Directors and executive officers were complied with, except that a Form 3,
Initial Statement of Beneficial
16
<PAGE>
Ownership of Securities, for Mr. LeMay (required when he returned to Sprint
after his resignation as Chairman and Chief Executive Officer of Waste
Management, Inc. last October) was filed three days late.
STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Stockholder proposals for the 1999 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 10,
1998.
II. PROPOSAL TO ADOPT AMENDMENTS TO
THE EMPLOYEES STOCK PURCHASE PLAN
(Item 2 on Proxy Card)
In 1988, the Stockholders approved the 1988 Employees Stock Purchase Plan
(the ESPP). In 1994, the Stockholders approved an amendment to the ESPP
increasing the number of shares of Sprint Common Stock reserved for issuance
under the plan and making certain other changes to the plan. At its meeting on
December 9, 1997, the Board of Directors approved amendments making extensive
changes to the plan and recommended that the ESPP, as so amended, be submitted
to the Stockholders at the Annual Meeting for their approval. If approved by
the Stockholders, the ESPP, as amended and restated, will be effective for the
1998 offering and subsequent offerings.
SUMMARY OF AMENDMENTS
The amendments will:
1. Increase the number of shares authorized for issuance under the plan
to a total of 20 million shares, an increase of approximately 2.1 million
shares.
2. Permit participants to elect a percentage of compensation (defined by
the ESPP to include base salary and incentive compensation), up to a
maximum of 75% of compensation, to be used to purchase Sprint Common Stock.
Previously, participants elected the number of shares (between 10 and
2,000) that they could purchase during the purchase period for an offering.
3. Reduce the length of the purchase period for an offering from twenty-
four months to twelve months.
4. Require that Sprint Common Stock be automatically purchased and issued
to participants at quarterly intervals; the number of shares purchased each
quarter will be the number that can be purchased at the offering price with
the cash that has been withheld from the participant's compensation during
the quarter. Previously, a participant could elect to receive his cash back
(with interest) instead of receiving Sprint Common Stock and shares of
Sprint Common Stock were usually not issued until the end of the twenty-
four month purchase period, although a participant could elect to leave the
plan early and either receive his cash back (with interest) or purchase the
number of shares that could be purchased at the offering price with the
cash that had been paid into the plan by the participant at the time of
withdrawal.
5. Require that all purchases be made out of payroll deductions; a
participant may no longer make separate cash payments to the plan.
6. Eliminate the payment of interest on cash paid into the plan.
Previously, the Board of Directors set an interest rate for each offering
and cash paid into the plan earned interest at that rate.
The ESPP, restated to incorporate the amendments adopted by the Board of
Directors, is set forth in Exhibit A attached to this Proxy Statement and
reference is made to such Exhibit for a complete statement of its terms and
provisions.
SUMMARY OF OTHER PLAN PROVISIONS
Under the ESPP, the Board of Directors is authorized to offer to all
eligible employees of Sprint and its subsidiaries the right to elect to
purchase shares of Sprint Common Stock at the prices set forth in the next
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paragraph. No employee may purchase more than 1,000 shares of Sprint Common
Stock during any single offering. In addition, the maximum number of shares
which any employee may purchase in an offering is limited by the fact that the
value of the stock to be purchased may not accrue at a rate which exceeds
$25,000 in any calendar year. If the market price of Sprint Common Stock is
$60 on May 15, 1998, then the maximum number of shares that any employee could
purchase in the 1998 offering would be 416 shares. If the total number of
shares which are to be granted on the date of grant for an offering exceeds
the shares available, the available shares will be allocated among
participating employees. Following termination of the 1996 offering, which
will be concluded at the end of June 1998, approximately 8.5 million shares of
Sprint Common Stock will be available for future offerings under the ESPP if
the plan, as amended, is approved. It is anticipated that this will be
sufficient shares for five to six 12-month offerings. There is no specified
date of termination of the ESPP; however, its duration is limited by the
maximum number of shares that may be sold pursuant to the plan.
The price for shares purchased under each offering will be 85% of the
average market price of Sprint Common Stock (such average market price being
defined by the ESPP to be the average of the high and low price for composite
transactions as published by major newspapers) on the date of grant or the
date of exercise of the option, whichever is lower. On February 23, 1998, the
high and low prices of Sprint Common Stock were $61 9/16 and $59 15/16,
respectively.
The Subscription Period for the 1998 Offering will be from June 1 to June 30
and the twelve month purchase period will begin July 1.
AWARDS UNDER THE PLAN
It is not possible to determine the number of shares that may be purchased
by each participant in the ESPP; however, the maximum number of shares which
any employee may purchase in an offering is limited in the manner described
above.
Set forth below are the number of shares of Sprint Common Stock underlying
options that were elected in the 1996 offering under the plan (which had a
twenty-four month purchase period) by the persons and groups identified.
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING
NAME AND POSITION OPTIONS ELECTED
- ----------------- ----------------
<S> <C>
William T. Esrey............................................. 1,162
Chairman and Chief Executive Officer
Gary D. Forsee............................................... 1,000
President--Long Distance Division
Michael B. Fuller............................................ 700
President--Local Telecommunications Division
Arthur B. Krause............................................. 1,162
Executive Vice President--Chief Financial Officer
Ronald T. LeMay.............................................. 0
President and Chief Operating Officer
D. Wayne Peterson............................................ 1,162
Former President--National Integrated Services
All current executive officers as a group.................... 13,820
All current Directors who are not executive officers as a
group....................................................... 0(1)
All employees who are not executive officers as a group...... 2,741,024
</TABLE>
- --------
(1) Outside Directors cannot participate in the ESPP.
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TAX ASPECTS OF THE PLAN
The ESPP is an "employee stock purchase plan" under Section 423 of the
Internal Revenue Code. Options issued under the plan will qualify for special
tax treatment. No income is recognized at the time the option is granted; the
recognition of gain is deferred until stock is disposed of. If stock is
disposed of after being held for the required period (one year from date of
purchase and two years from the date of the grant of the option), the employee
will recognize ordinary income to the extent of the excess of the fair market
value of the stock on the grant date or the date of disposition, whichever is
less, over the option price. Any further gain is a capital gain. Any loss is
treated as a capital loss. There will be no tax effect on Sprint under these
circumstances.
If the stock is sold before the requisite holding period expires, the
employee must recognize additional ordinary income. This ordinary income is
reported as wages on the employee's Form W-2. The amount to be treated as
ordinary income is the difference between the fair market value on the date of
exercise of the option and the option price. Any further gain is a capital
gain. If the selling price is less than the value of the stock at the time of
exercise, the ordinary income amount remains the same and a capital loss is
recognized. The early disposition of the stock entitles Sprint to a deduction
to the extent that any gain to the employee is treated as ordinary income.
VOTE REQUIRED FOR APPROVAL
Adoption of this proposal requires the affirmative vote of a majority of the
shares present and entitled to vote at the Annual Meeting. If not approved by
the Stockholders, the Board of Directors may continue to make offerings
available to eligible employees under the terms of the plan before the
amendments were adopted at the December 9, 1997 Board meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF THE
EMPLOYEES STOCK PURCHASE PLAN, AS AMENDED.
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 1998, subject to approval of
the Stockholders at the Annual Meeting.
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.
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 International Brotherhood of Electrical Workers' Pension Benefit Fund,
1125 15th Street, N.W., Washington, D.C. 20005, beneficial owners of 40,602
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 Corporation ("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 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 Company (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 particularly critical for so-called outside or
independent Directors who should bring a certain arms-length objectivity to
Board deliberations. According to the Company's most recent proxy statement,
in December 1996, the Company eliminated the old outside director's retirement
plan and replaced it with a "Phantom Share Plan." Under this plan, the outside
directors will receive the cash equivalent of Sprint stock, which is then
placed in the Deferred Directors Fee Plan, just another form of pension.
When this issue was raised at the 1997 stockholders meeting, Mr. Esrey
disputed that the new plan was a "Phantom Share Plan." His staff then informed
him that it was, and the reason they chose this method of providing pay to the
outside directors instead of "Real Stock" was that they would have to seek
stockholder approval for the stock grants. Could stockholder approval be the
real problem? Our resolution received a favorable 27% vote, even though Sprint
claimed to have eliminated their pension plan.
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 Director's base compensation has a
detrimental 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 of assuring 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 at the same time being accountable only to themselves and not to
the Company's owners. We believe that this additional layer of compensation to
the Directors may influence their ability to exercise that degree of
independence from management, which is critical to the proper functioning of
the Board.
Our concern is to maximize the ability of Board of Directors to act in the
shareholder's interest. We feel that the long-term best interest of the
Company is not well served by this type of retirement policy. Most major
corporations have eliminated Outside Director Pension Plans. It is time Sprint
follows their lead. The vast majority 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" this Company or any
other.
We urge you to vote FOR this Proposal.
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THE COMPANY'S RESPONSE TO STOCKHOLDER PROPOSAL A
Providing outside directors with pension benefits has become a subject of
much controversy. Opponents of these arrangements argue that the pensions are
excessive and compromise director independence. While the Board believes
Sprint's Retirement Plan for Outside Directors was neither excessive nor
compromised Director independence, the Board took action in 1996 to eliminate
the controversy. Specifically, Sprint's Retirement Plan for Outside Directors
has been closed to new participants who were not vested in the plan at that
time. For current Directors who are vested in the plan, Sprint will keep its
commitment to provide the benefit.
Sprint provides a compensation package for its Directors that is described
on page 6 of the Proxy Statement. The compensation package for new Directors,
who will not receive a benefit under the Retirement Plan for Outside
Directors, includes a grant of 2,500 share units in the Directors' Deferred
Fee Plan that vest, in part, after five years of Board service. Because the
share units derive their value from Sprint Common Stock (and from an economic
standpoint are no different than owning Sprint common stock), that component
of the new Director's compensation is directly tied to how Sprint stock fares
during the Director's tenure. This is in keeping with the recommendation of
the Report of the National Association of Corporate Directors Blue Ribbon
Commission on Director Compensation to increase the use of equity-based
compensation for non-employee directors.
The Board believes that Sprint's existing compensation package for Outside
Directors, which is designed to attract and retain experienced, able and
knowledgeable Directors, is in the best interests of Sprint and its
Stockholders.
Accordingly, the Board of Directors recommends that the Stockholders vote
AGAINST this Proposal.
B. STOCKHOLDER PROPOSAL CONCERNING
STOCK OPTIONS
(Item 5 on Proxy Card)
The Teamsters Affiliates Pension Plan, 25 Louisiana Avenue, N.W.,
Washington, D.C, 20001, beneficial holders of 16,400 shares of Sprint Common
Stock, has given notice of its intention to introduce the following resolution
at the Annual Meeting:
PROPOSAL: That shareholders urge that no future option plans be adopted, or
existing option plans be amended, to allow options to be issued for exercise
prices below those of any options that were outstanding at any time during the
year immediately preceding the grants of the new options.
STOCKHOLDER'S STATEMENT IN SUPPORT OF STOCKHOLDER PROPOSAL B
Sprint's proxy notes that the Compensation Committee "believes stock options
more closely align stockholder and employee interests by focusing executives
on long-term growth and profitability of Sprint and its common stock."
But, many shareholders believe that this is only the case when there is no
possibility of option repricing.
Repricing is the practice of allowing "under water" options to be traded
back in for better options. Stock options are granted to tie executive
compensation with company performance and align shareholder interests with
those of senior management. However, if there are no consequences for poor
performance, the options do not serve this purpose. If Sprint has a bad year,
will directors untie that connection between performance and pay? Shareholders
deserve a guarantee that they will not.
Sprint executives are already well paid. In April 1997, Business Week
compiled an Executive Compensation Scorecard, comparing compensation of top
executives to both shareholder return and corporate profit with other
21
<PAGE>
industry peers. In both categories Sprint scored a 4 (with 1 as the best
possible score and 5 as the worst.) Sprint's top executives were in the bottom
third of their peers in terms of what they gave shareholders for their money.
Executives need to be held accountable for poor performance, and certainly
not rewarded for it.
For the above reasons we urge you to vote for this proposal.
THE COMPANY'S RESPONSE TO STOCKHOLDER PROPOSAL B
The Board believes the interests of Sprint and its Stockholders are best
served by Sprint's existing stock option plans. Options are designed to align
the interests of employees with the interests of Stockholders. The ability to
grant options at market price is a key component in attracting and retaining
officers and other key employees. The proposal would significantly reduce
Sprint's ability to use this form of compensation.
Options usually have a term of 10 years and often remain outstanding until
near the end of their term. Consequently, if the proposal were adopted, no
option could be granted with an exercise price lower than the highest market
price of Sprint stock on the date any option was granted during the previous
ten-year period. Such a limitation could severely limit Sprint's ability to
attract and retain key employees.
The proponent states incorrectly that there are no consequences to an option
holder for poor performance. Under the 1997 Long-term Stock Incentive Program
approved by the Stockholders last year, options cannot be granted at prices
less than fair market value. Therefore, Sprint employees realize no gain on
options without an increase in the price of Sprint Common Stock that will
benefit all Stockholders.
The proponent's statement in support focuses on a different issue, namely
repricing of existing options. Sprint does not reprice outstanding options.
Also, because repricing is a concern to investors, the Securities and Exchange
Commission requires specific disclosures in a company's proxy statement when a
company reprices outstanding options for a named executive officer. The
disclosures not only require tabular information on repricing over the last
ten years, but also require a discussion of the reasons for repricing the
options. Because Sprint does not reprice options, no such disclosures have
been required in Sprint's Proxy Statements.
With respect to the proponent's comments relating to the performance of
Sprint executives in creating Stockholder value, reference is made to the
performance graph contained on page 16 of this Proxy Statement. The graph
shows the total cumulative return for Sprint Stockholders exceeding that of
both industry and broad market indexes.
Accordingly, the Board of Directors recommends that the Stockholders vote
AGAINST this Proposal.
C. STOCKHOLDER PROPOSAL CONCERNING COMPENSATION
AGREEMENTS CONTINGENT UPON A CHANGE IN CONTROL OF SPRINT
(Item 6 on Proxy Card)
George Speight, 3959 Cordiality Church Road, Nashville, North Carolina
27856, beneficial owner of more than 671 shares of Sprint Common Stock, has
given notice of his intention to introduce the following resolution at the
Annual Meeting:
Resolved, that Sprint Corporation Board of Directors should adopt a
policy against making any future compensation awards to the officers and
directors of this Corporation, which are contingent on a change of control
of the corporation, unless such compensation awards are submitted to a vote
of the shareholders and approved by a majority of the votes cast.
22
<PAGE>
STOCKHOLDER'S STATEMENT IN SUPPORT OF STOCKHOLDER PROPOSAL C
Golden parachutes are lucrative compensation awards, which are provided to
senior executives. Sprint has golden parachutes that are contingent on a
change of control, which by definition occurs if someone acquires 20% or more
of the outstanding stock voting stock, or if there is a change of majority of
the directors within a two-year period.
Golden parachutes have been provided for Messrs. Esrey, Forsee, Krause and
LeMay, but none of these golden parachutes have the approval of the
shareholders. The amounts to be paid out would be calculated by computing an
amount equal to approximately three times the sum of the annual salary, short-
term incentive compensation, and long-term incentive compensation including
the value of stock option awards.
We believe that these golden parachutes are excessive, particularly in view
of the fact that they include a multiplier for stock option awards. For
example, Sprint's 1997 proxy statement reflects that CEO William Esrey
received $987,500 in salary and $597,948 through the long term incentive plan,
which implies a base golden parachute payment of $4.67 million if the payment
were made in 1997, and the potential for larger amounts in later years.
When the multiplier for stock options is included, there is the potential
for truly astronomical payouts. For example, if we consider the options that
Mr. Esrey was awarded during 1996, assume a 10% annual price appreciation over
the term of the option as the Sprint proxy statement does, the additional
payout to Mr. Esrey could amount to as much as three times $19.7 million, or
nearly $60 million more. Total payments to all four executives could amount to
$125 million. The actual payments could be more, or less, depending on the way
the stock options are valued.
In our view, a conflict of interest is created when executives are awarded
special compensation that is to be paid only in the event of a future merger
or acquisition. Such awards provide management with a personal financial
incentive to perform their duties in a way that might be detrimental to
shareholder interests.
Management's first priority should be to maximize shareholder value.
However, actions that might temporarily diminish or restrain the growth of
shareholder value may make the company look more attractive as the potential
target of a merger or acquisition. Management may also be tempted to support a
merger or acquisition proposal without seeking a better deal for shareholders.
In the alternative, excessive golden parachutes may also deter a takeover
attempt. Sprint's 1997 proxy statement notes that "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 COMPANY'S RESPONSE TO STOCKHOLDER PROPOSAL C
The Board of Directors believes that arrangements for executive management
that provide reasonable contingent benefits upon a change in control serve the
best interests of Sprint and its Stockholders.
During a takeover bid for the Company, the Board believes that these
agreements provide financial security against possible job loss, allowing
executive management to assess a takeover bid objectively and to advise the
Board whether the bid is in the best interests of Sprint and its Stockholders.
As a lengthy period may elapse from the time a change in control is proposed
until it is completed, such arrangements also discourage an exodus of talent
and leadership at such a critical period of time, thereby protecting
Stockholder value.
The proponent suggests that these agreements may create a conflict of
interest whereby executives will support a merger or acquisition proposal
presumably to gain severance benefits. However, Sprint's agreements allow an
executive to claim a payment only under limited circumstances. Even though a
change in control may occur, payments will be made only to executives who are
terminated without cause or who resign due to a substantial diminution in
responsibilities, authority or compensation. Because the executives do not
control the
23
<PAGE>
conditions that give rise to a severance payment under the agreements, they
are not encouraged to support a takeover of Sprint solely to obtain severance
benefits.
In the proponent's statement in support of his proposal, the proponent
expresses concern with respect to the valuation of stock option awards upon a
change of control. The proponent's statement incorrectly describes the use of
a "multiplier" in calculating the value of stock options upon a change in
control. The proponent indicates that the use of the multiplier for stock
options results in what the proponent describes as "truly astronomical
payouts". These statements are inaccurate and misleading. In fact, these
agreements do not provide for any benefits based on the value of stock
options. Consequently, the potential payout amounts described in the
proponent's statement are grossly overstated.
Accordingly, the Board of Directors recommends that the Stockholders vote
AGAINST the 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 10, 1998
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, 1997, 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.
24
<PAGE>
EXHIBIT A
EMPLOYEES STOCK PURCHASE PLAN
AMENDED AND RESTATED
FOR 1998 AND SUBSEQUENT OFFERINGS
1. PURPOSE
The purpose of this Employees Stock Purchase Plan is to encourage and enable
eligible employees of Sprint and its Subsidiaries to acquire proprietary
interests in Sprint through the ownership of Common Stock in order to
establish a closer identification of their interests with those of Sprint by
providing them with another and more direct means of participating in its
growth and earnings which, in turn, will provide motivation for participating
employees to remain in the employ of and to give greater effort on behalf of
Sprint. It is the intention of Sprint to have the Plan qualify as an "employee
stock purchase plan" under Section 423 of the Code. The provisions of the Plan
shall, accordingly, be construed so as to extend and limit participation in a
manner consistent with the requirements of that Section of the Code.
2. DEFINITIONS
The following words or terms, when used herein, shall have the following
respective meanings:
(a) "Account" shall mean the funds accumulated with respect to an
individual Employee as a result of deductions from his paycheck for the
purpose of purchasing Common Stock under this Plan. The funds allocated to
an Employee's Account shall remain the property of the respective Employee
at all times but may be commingled with the general funds of Sprint.
(b) "Average Market Price" shall mean the average of the high and low
prices of the Common Stock for composite transactions as published by major
newspapers for the date in question or, if no trade of the Common Stock so
published shall have been made on that date, the next preceding date on
which there was a trade of Common Stock so published.
(c) "Board" shall mean the Board of Directors of Sprint.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Committee" shall mean the Organization, Compensation and Nominating
Committee of the Board unless the Board designates another committee
consisting of three or more members of the Board who are not eligible to
participate in this Plan.
(f) "Compensation" shall mean compensation, as such term is defined from
time to time in the Sprint Retirement Savings Plan for purposes of Pre-Tax
Contributions (as defined in such plan) without regard to any limitations
imposed by such plan under Section 401(a)(17) of the Code.
(g) "Date of Grant" shall mean, with respect to each offering under the
Plan, the 15th day of May (or the business day immediately preceding such
date if May 15 falls on a Saturday, Sunday or a legal holiday) immediately
before the beginning of the Subscription Period for the offering. A
different date may be set by resolution of the Board.
(h) "Date of Exercise" shall mean the date on which Options shall be
deemed exercised, which shall be the last business day of each calendar
quarter in a Purchase Period. Different dates may be set by resolution of
the Board.
(i) "Eligible Employee" or "Employee" shall mean all persons employed by
Sprint or a participating Subsidiary on the Date of Grant; provided,
however, persons whose customary employment is for less than twenty hours
per week or for not more than five months in any calendar year shall not be
an "Employee" or an "Eligible Employee" as those terms are used herein; and
provided further that the Committee may determine, as to any offering under
this Plan, that the offer will not be extended to highly compensated
employees (within the meaning of Section 414(q) of the Code or any
successor Code section). An individual who is on sick leave or other
company approved leave on the Date of Grant and who otherwise is an
Eligible Employee may enroll in an offering under the Plan; provided,
however, if on the Date of Grant such leave has exceeded a period of 90
days and the individual's right to reemployment is not guaranteed either by
statute or by contract, the individual shall not be permitted to enroll.
A-1
<PAGE>
(j) "ESPP Broker" shall have the meaning assigned in Section 14(a).
(k) "Local Plan Administrator" shall mean the person designated by the
employer company to assist that company's Employees in Plan matters.
(l) "Option" or "Options" shall mean the right or rights granted to
Eligible Employees to purchase Common Stock under an offering made under
this Plan.
(m) "Plan" shall mean this Employees Stock Purchase Plan, as amended.
(n) "Plan Administrator" shall mean the individual or individuals
appointed under Section 4 to carry out certain administrative duties with
respect to the Plan.
(o) "Purchase Period" shall mean, with respect to each offering under the
Plan, the period from and including the first business day in July of each
year through the last business day of June of the following year. A
different Purchase Period may be set by resolution of the Board. The
Purchase Period relates to the period during which payroll deductions for
payment for stock purchased under an offering under this Plan are made.
(p) "Shares," "Stock" or "Common Stock" shall mean shares of $2.50 par
value common stock of Sprint.
(q) "Subscription Period" shall mean, with respect to each offering under
the Plan, the period of time from the first business day of June through
the last day of June immediately preceding the Purchase Period for the
offering. A different Subscription Period may be set by resolution of the
Board.
(r) "Sprint" shall mean Sprint Corporation, a Kansas corporation, or its
successor.
(s) "Subsidiary" shall mean a corporation, domestic or foreign, of which
not less than 50% of the voting securities are held by Sprint or by Sprint
together with one or more of its Subsidiaries whether or not such
corporation now exists or is hereafter organized or acquired by Sprint or a
Subsidiary.
3. NUMBER OF SHARES UNDER THE PLAN
A total of 20 million shares of Common Stock may be sold to Eligible
Employees under this Plan. These may be newly issued Shares or may be Shares
purchased for the Plan on the open market or from private sources, at the
option of Sprint. Such Shares may be sold pursuant to one or more offerings
under the Plan. With respect to each offering, the Board of Directors will
specify the Subsidiaries participating in the offering and such other terms
and conditions not inconsistent with this Plan as may be necessary or
appropriate.
In the event of reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, offerings of rights,
or any other change in the structure of Common Stock, the Board may make such
adjustment, if any, as it may deem appropriate in the number, kind, and the
Option price of Shares available for purchase under the Plan, and in the
number of Shares which an Employee is entitled to purchase.
4. ADMINISTRATION OF THE PLAN
This Plan shall be administered by the Committee. The Committee is vested
with full authority to make, administer and interpret such equitable rules and
regulations regarding this Plan as it may deem advisable. Its determinations
as to the interpretation and operation of this Plan shall be final and
conclusive.
To aid in administering the Plan, the Board or the Committee shall appoint a
Plan Administrator and the Committee shall allocate to the Plan Administrator
certain limited responsibilities to carry out the directives of the Committee
in all phases of the administration of the Plan.
Sprint will pay all expenses incident to establishing and administering the
Plan and purchasing or issuing Shares.
A-2
<PAGE>
5. PARTICIPATION; PAYROLL DEDUCTIONS
(a) An Eligible Employee may become a participant by enrolling during the
Subscription Period in the manner prescribed by the Plan Administrator.
(b) Payroll deductions for a participant shall commence with the first
payday in the Purchase Period for an offering and shall end with the last
payday during the Purchase Period for such offering or until the Employee
terminates employment or terminates his participation in the offering as
provided in Section 9.
(c) As part of his enrollment, the participant shall elect to have
deductions made from his pay on each payday during the time he is a
participant in an offering at a percentage (in whole numbers) of his
Compensation, up to a maximum of 75% of Compensation. Payroll withholding in
excess of the percentage designated by a participant is permitted in order to
adjust for delays or mistakes in the processing of enrollments. If a
participant's pay on any payday is insufficient, after all other payroll
deductions, to withhold the percentage of Compensation elected by such
participant, the deduction for this Plan shall be the amount remaining after
such other payroll deductions are taken.
(d) All payroll deductions made for a participant shall be credited to his
Account under the Plan. A participant may not make any separate cash payment
into such Account nor may payment for Shares be made other than by payroll
deduction.
(e) A participant may discontinue his participation in an offering as
provided in Section 9, but may not otherwise alter the rate of his payroll
deductions for that offering.
6. GRANTING OF OPTION
On the Date of Grant for an offering, this Plan shall be deemed to have
granted to each participating Employee an Option for as many full Shares as he
will be able to purchase with the payroll deductions credited to his Account
during the Purchase Period for that offering. Notwithstanding the foregoing,
no Employee may purchase more than 1,000 shares of Common Stock during any
single offering; provided, further, that no Employee shall be granted an
Option to purchase Shares under this Plan if such Employee, immediately after
such Option is granted, owns stock (applying the rules of Section 424(d) of
the Code) or holds Options to purchase stock possessing five percent or more
of the total combined voting power or value of all classes of stock of Sprint
or of any of its Subsidiaries; provided, further, that no Employee may be
granted an Option to purchase Shares which permits his rights to purchase
stock under all employee stock purchase plans of Sprint to accrue at a rate
which exceeds in any one calendar year $25,000 of the fair market value of the
stock determined as of the date the Option to purchase is granted.
If the total number of Shares for which Options are to be granted on any
Date of Grant exceeds the number of Shares then available under the Plan
(after deduction of all Shares for which Options have been exercised or are
then outstanding), Sprint shall make a pro rata allocation of the Shares
remaining available in as nearly a uniform manner as shall be practicable and
as it shall determine to be equitable. In such event, the payroll deductions
to be made pursuant to the authorizations therefor shall be reduced
accordingly and each Employee affected thereby shall be given written notice
of such reduction.
All Shares included in any offering under this Plan in excess of the total
number of Shares purchased in such offering shall be available for inclusion
in any subsequent offering under this Plan.
7. PURCHASE PRICE
The Option price per Share shall be the lower of:
(a) 85% of the Average Market Price for a Share of Common Stock on the
Date of Grant; or
(b) 85% of the Average Market Price for a Share of Common Stock on the
Date of Exercise.
A-3
<PAGE>
8. EXERCISE OF OPTION
Each Employee who has sufficient funds in his Account on a Date of Exercise
to purchase at least one full share of Common Stock shall be deemed to have
exercised his Option on such date and shall be deemed to have purchased from
Sprint such number of full shares of Common Stock reserved for the purpose of
the Plan as the balance in his Account on the Date of Exercise will pay for at
the Option price. Unless the Employee has terminated employment or
participation in the offering, the balance in his Account not used to purchase
Common Stock shall be used for Option exercises on the next Date of Exercise
in the Purchase Period.
9. TERMINATION OF PARTICIPATION
An Employee may terminate participation in an offering, in whole but not in
part, at any time prior to the end of the Purchase Period for such offering.
To terminate participation, an Employee must deliver a notice to his Local
Plan Administrator in the manner prescribed by the Plan Administrator. As soon
as practicable after receipt of such notice, the Local Plan Administrator
shall stop the Employee's payroll deductions provided for in Section 5. The
balance in the Employee's Account shall be used for Option exercises on the
next Date of Exercise. Any funds remaining in the Employee's Account after
such Option exercises will be paid to the Employee as soon as practicable
after the Date of Exercise.
10. TERMINATION OF EMPLOYMENT
Upon termination of employment for any reason whatsoever, including but not
limited to death or retirement, the balance in the Account of a participating
Employee shall be used for Option exercises on the next Date of Exercise. Any
funds remaining in the participant's Account after such Option exercises will
be paid to the Employee as soon as practicable after the Date of Exercise.
11. AUTOMATIC RE-ENROLLMENT
For each offering subsequent to the 1998 offering, each participant in an
offering who is still an Eligible Employee shall automatically be re-enrolled
in the next offering at the same percentage of Compensation in effect at the
last day of the Purchase Period immediately preceding such next offering (if
such an offering is authorized by the Board). If the Employee wants to change
his payroll deductions in the new offering, he must re-enroll in the new
offering during the Subscription Period for the new offering. If an Employee
does not want to participate in the new offering, he must affirmatively elect
not to participate in the new offering during the Subscription Period for the
new offering.
The balance in the Employee's Account at the end of an offering not used to
purchase Common Stock shall be refunded to him. Upon termination of the Plan
the balance in each Employee's Account not used to purchase Common Stock shall
be refunded to him.
12. INTEREST
No interest will be paid or allowed on any money in the Accounts of
participating Employees.
13. RIGHTS TO PURCHASE SHARES NOT TRANSFERABLE
No Employee shall be permitted to sell, assign, transfer, pledge, or
otherwise dispose of or encumber either the payroll deductions credited to his
Account or any rights with regard to the exercise of an Option or to receive
Shares under the Plan other than by will or the laws of descent and
distribution, and such right and interest shall not be liable for, or subject
to, the debts, contracts, or liabilities of the Employee. Any such action
taken by the Employee shall be null and void.
A-4
<PAGE>
14. RIGHTS AS STOCKHOLDER AND EVIDENCE OF STOCK OWNERSHIP
(a) An Employee will not become a stockholder, and will have no rights as a
stockholder, with respect to Shares being purchased under this Plan until
after his Option is exercised and the Shares have been issued by Sprint.
Promptly following each Date of Exercise, the number of shares of Common Stock
purchased by each participant shall be deposited into an account established
in the participant's name at a stock brokerage or other financial services
firm designated by Sprint (the "ESPP Broker").
(b) A participant shall be free to undertake a disposition (as that term is
defined in Section 424 of the Code) of the Shares in his ESPP Broker account
at any time, whether by sale, exchange, gift, or other transfer of legal
title, but in the absence of such a disposition of the Shares, the Shares must
remain in the participant's account at the ESPP Broker until the holding
period set forth in Section 423(a) of the Code has been satisfied. With
respect to Shares for which the Section 423(a) holding period has been
satisfied, the participant may move those Shares to another brokerage account
of participant's choosing or request that a stock certificate be issued and
delivered to him.
(c) A participant who is not subject to payment of U.S. income taxes may
move his Shares to another brokerage account of his choosing or request that a
stock certificate be issued and delivered to him at any time, without regard
to the satisfaction of the Section 423(a) holding period.
15. APPLICATION OF FUNDS
All funds received by Sprint in payment for Shares purchased under this Plan
may be used for any valid corporate purpose.
16. COMMENCEMENT OF PLAN
This Plan commenced on the first day of June, 1988. This Plan as amended and
restated is effective for the 1998 and subsequent offerings.
17. GOVERNMENTAL APPROVALS OR CONSENTS; AMENDMENTS OR TERMINATION
This Plan and any offering and sales to Employees under it are subject to
any governmental approvals or consents that may be or become applicable in
connection therewith.
The Plan shall terminate on the effective date of a merger or consolidation
in which Sprint is not the surviving corporation, if such merger or
consolidation is not between or among corporations related to Sprint. If such
event occurs during a Purchase Period for an offering, the last Date of
Exercise shall be the last such date occurring prior to the date of
termination of the Plan. Any payroll deductions placed in an Employee's
Account after such last Date of Exercise will be refunded to the Employee.
The Board may terminate the Plan or make such changes in the Plan and
include such terms in any offering under this Plan as may be necessary or
desirable, in the opinion of Counsel for Sprint, to comply with the rules or
regulations of any governmental authority, or to be eligible for tax benefits
under the Code or the laws of any state; or for any other reason provided that
no termination or amendment may adversely affect the rights of any participant
in any offering already commenced, nor may any amendment require the sale of
more Shares than are authorized without prior approval of Sprint's
stockholders.
18. NOTICES
All notices or other communications by a participant to Sprint under or in
connection with the Plan shall be deemed to have been duly given when received
in the form specified by Sprint at the location, or by the person, designated
for the receipt thereof.
A-5
<PAGE>
SPRINT CORPORATION
P.O. BOX 11315, KANSAS CITY, MISSOURI 64112
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR ANNUAL MEETING
ON APRIL 21, 1998
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3 AND AGAINST ITEMS
4, 5 AND 6.
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 1998 Annual Meeting of Stockholders to
be held April 21, 1998, and any adjournment thereof, upon the matters set forth
on the reverse side, AND IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
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, 5 AND 6. 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.
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.
WILLIAM T. ESREY, LINDA KOCH LORIMER, STEWART TURLEY
NOTE: If you do not wish your shares voted "FOR" a particular nominee, mark the
"FOR ALL EXCEPT" box and strike a line through the name(s) of the nominee(s).
Your shares will be voted for the remaining nominee(s).
[_] FOR ALL NOMINEES [_] WITHHOLD [_] FOR ALL EXCEPT
2. To approve amendments to the 1988 Employees Stock Purchase Plan.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To approve the appointment of Ernst & Young LLP as independent auditors of
Sprint for 1998.
[_] FOR [_] AGAINST [_] ABSTAIN
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
4. Stockholder proposal concerning retirement plan for outside Directors.
[_] FOR [_] AGAINST [_] ABSTAIN
5. Stockholder proposal concerning stock options.
[_] FOR [_] AGAINST [_] ABSTAIN
6. Stockholder proposal concerning compensation agreements contingent upon a
change in control of Sprint.
[_] FOR [_] AGAINST [_] ABSTAIN
--------------------------
--------------------------
--------------------------
SIGNATURE(S) DATE
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.
<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 23, 1998, the
record date for voting at the April 21, 1998, Stockholders Meeting. Your
accounts are held within one or more of the following plans: (a) the Sprint
Retirement Savings Plan (including TRASOP), (b) the Sprint Retirement Savings
Plan for Bargaining Unit Employees, (c) the Centel Retirement Savings Plan for
Bargaining Unit Employees, (d) the Centel Employees' Stock Ownership Plan, (e)
the 360(degrees) Communications Company Retirement Savings Plan, and (f) the
Global One Retirement Savings Plan. The Centel Employees' Stock Ownership Plan,
the Centel Retirement Savings Plan for Bargaining Unit Employees, and the
360(degrees) Communications Company Retirement Savings Plan each provide for the
trustees to vote all Sprint shares held in the trusts for which they do not
receive voting instructions in the same proportions as they vote the Sprint
stock for which they do receive instructions. The trustee will vote all
unallocated shares held in the Sprint Retirement Savings Plan (including the
TRASOP), the Sprint Retirement Savings Plan for Bargaining Unit Employees and
the Global One Retirement Savings Plan 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 fold and detach card at perforation before mailing--------
Please vote by filling in the appropriate boxes below. If you do not specify,
your shares will be voted FOR items 1, 2 and 3 and AGAINST items 4, 5 and 6.
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 authorize named
individuals as proxies to vote with discretionary authority.
<TABLE>
<CAPTION>
<S> <C>
[_]FOR all nominees listed below [_]WITHHOLD AUTHORITY
(except as marked to the contrary at left) to vote for all nominees listed at left
(To withhold authority to vote for any individual nominee write the nominee's name on the line below.)
William T. Esrey Linda Koch Lorimer Stewart Turley
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
2. To approve amendments to the 1988 Employees Stock Purchase Plan. [_] [_] [_]
3. To approve the appointment of Ernst & Young LLP as independent auditors of Sprint for 1998. [_] [_] [_]
SHAREHOLDER PROPOSALS
4. Stockholder proposal concerning retirement plan for outside Directors. [_] [_] [_]
5. Stockholder proposal concerning stock options. [_] [_] [_]
6. Stockholder proposal concerning compensation agreements contingent upon a change in control [_] [_] [_]
of Sprint.
</TABLE>
(Please sign on reverse side.)
PRESORTED
FIRST CLASS
FIDELITY INSTITUTIONAL RETIREMENT SERVICES CO. U.S. POSTAGE
P.O. BOX 9107 PAID
HINGHAM, MA 02043-9107 PROXY
TABULATOR
<TABLE>
<CAPTION>
<S> <C>
Sprint Retirement Savings Plan Centel Employees' Stock Ownership Plan
Sprint Retirement Savings Plan for Bargaining Unit Employees 360(degrees) Communications Company Retirement Savings Plan
Centel Retirement Savings Plan for Bargaining Unit Employees Global One Retirement Savings Plan
</TABLE>
- ----------Please fold and detach card at perforation before mailing-----------
FIDELITY MANAGEMENT TRUST COMPANY
and THE NORTHERN TRUST COMPANY, TRUSTEES
P.O. Box 9107, Hingham, Massachusetts 02043-9107
Voting Instructions for Annual Meeting of Stockholders of
Sprint Corporation on April 21, 1998
I hereby direct Fidelity Management Trust Company and The Northern Trust
Company, 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, the Centel Employees' Stock Ownership Plan, the 360(degrees)
Communications Company Retirement Savings Plan and the Global One Retirement
Savings Plan at the Annual Meeting of Stockholders to be held April 21, 1998,
and any adjournments thereof, in the manner specified on the reverse side, and
to authorize named individuals as proxies to vote in their discretion upon such
other matters as may properly come before the meeting:
Date__________________________, 1998
If you sign this card and it is received by Fidelity
Management Trust Company by April 15, 1998, your shares
will be voted as directed. In order to direct the trustees,
you must check off a box for each individual proposal on
the reverse side.
______________________________
Signature
