<PAGE>
SCHEDULE 14A
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 (S) 240.14a-11(c) or (S) 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:
-------------------------------------------------------------------------
(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>
Post Office Box
11315
Kansas City,
[SPRINT LOGO] Missouri 64112
William T. Esrey
Chairman
April 26, 2000
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, June 13, 2000, 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
II. The Board of Directors recommends that you vote for the nominees.
You are also being asked to approve the appointment of Ernst & Young LLP as
independent auditors of Sprint for 2000. The Board of Directors recommends
that you vote for this proposal.
One Stockholder proposal is also included in the Proxy Statement. For the
reasons set forth in the Proxy Statement, the Board of Directors recommends a
vote against the proposal.
We encourage you to read this proxy statement and vote promptly. Doing so
will save Sprint additional expenses of solicitation and will help ensure that
as many shares as possible are represented.
Sincerely,
[WTE SIGNATURE]
Chairman
<PAGE>
SPRINT CORPORATION
P.O. Box 11315
Kansas City, Missouri 64112
----------------
Notice of Annual Meeting of Stockholders
----------------
Time:
10:00 a.m. (Central Daylight Time) on Tuesday, June 13, 2000
Place:
Sprint World Headquarters
2330 Shawnee Mission Parkway
Westwood, Kansas
Purpose:
. To elect three Class II Directors to serve for a term of three years
. To approve Ernst & Young LLP as our independent auditors for 2000
. To vote on a Stockholder proposal if presented at the meeting
. To conduct other business properly raised before the meeting and any
adjournment or postponement of the meeting
Record Date:
You can vote if you are a Stockholder of record on April 17, 2000
Proxy Voting:
Your vote is important. You may vote in one of three ways:
. by signing, dating and returning your proxy card in the enclosed
envelope
. by calling the toll-free number on the enclosed proxy card
. via the Internet using instructions on the proxy card
Westwood, Kansas Don A. Jensen
April 26, 2000 Vice President and Secretary
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Proxy Statement............................................................ 1
Stockholders who may vote................................................ 1
How to vote.............................................................. 1
How proxies work......................................................... 2
How to revoke a proxy.................................................... 2
Required vote............................................................ 2
Costs of proxy solicitation.............................................. 2
Confidential voting policy............................................... 2
Attending the meeting.................................................... 3
Stockholder proposals for next year...................................... 3
Security ownership of certain beneficial owners.......................... 3
Security ownership of Directors and executive officers................... 4
Election of Directors (Item 1 on Proxy Card)............................... 4
Nominees for Director.................................................... 5
Directors continuing in office........................................... 6
Board committees and Director Meetings................................... 7
Compensation of Directors................................................ 8
Organization, Compensation and Nominating Committee report on executive
compensation............................................................ 9
Summary Compensation Table............................................... 12
Option grants............................................................ 13
Options exercises and fiscal year-end values............................. 16
Pension plans............................................................ 17
Employment contracts..................................................... 17
Performance graphs....................................................... 17
Compensation committee interlocks and insider participation.............. 19
Selection of Independent Auditors (Item 2 on Proxy Card)................... 20
Stockholder Proposal Concerning Compensation Agreements Contingent upon a
Change in Control of Sprint (Item 3 on Proxy Card)...................... 20
Other Matters to Come Before the Meeting................................... 22
</TABLE>
<PAGE>
SPRINT CORPORATION
P.O. Box 11315
Kansas City, Missouri 64112
PROXY STATEMENT
These proxy materials are delivered in connection with the solicitation by
the Board of Directors of Sprint Corporation of proxies to be voted at our
2000 Annual Meeting of Stockholders to be held June 13, 2000. On about April
26, 2000, we commenced mailing this Proxy Statement and the enclosed form of
proxy to Stockholders entitled to vote at the meeting.
Stockholders who may vote
Stockholders of Sprint at the close of business on April 17, 2000 may vote
at the meeting. As of that date there were outstanding and entitled to vote
the following:
<TABLE>
<CAPTION>
Votes
per
Designation Outstanding share
----------- ----------- -------
<S> <C> <C>
Series 1 FON Stock (FON Stock)........................ 702,665,981 1.0000
Series 3 FON Stock.................................... 88,601,036 1.0000
Series 1 PCS Stock (PCS Stock)........................ 469,129,724 1.0080
Series 2 PCS Stock.................................... 378,110,988 0.1008
Series 3 PCS Stock.................................... 70,254,354 1.0080
Class A Common Stock.................................. 43,118,018 1.5040
Class A Common Stock--series DT....................... 43,118,018 1.5040
Preferred Stock--Fifth Series......................... 95 1.0000
Preferred Stock--Seventh Series
Series 1 PCS underlying.............................. 123,314 65.5680
Preferred Stock--Seventh Series
Series 2 PCS underlying.............................. 123,452 6.5568
</TABLE>
On April 28, 2000, Sprint will hold a special stockholders meeting in
connection with its proposed merger with MCI WorldCom, Inc. At that meeting
the Stockholders will also consider amendments to Sprint's articles of
incorporation. These amendments will eliminate the ability of Deutsche Telekom
AG (DT) and France Telecom (FT), the holders of all of the Series 3 FON Stock,
the Series 3 PCS Stock, and the Class A Common Stock, to designate directors
by a separate class vote. If the amendments are approved by the stockholders,
DT and FT will be entitled to vote on each matter to be voted on at the annual
meeting, including election of directors. If the amendments are not approved,
DT and FT will continue to have the right to designate directors by a separate
class vote, and will be entitled to vote on each matter to be voted on at the
annual meeting other than the election of directors. The holders of all other
classes of stock are entitled to vote on each matter.
The relative voting power of Sprint's different classes of voting stock is
determined under a formula in Sprint's articles of incorporation. That formula
was approved in connection with the 1998 recapitalization of Sprint's common
stock into FON Stock and PCS Stock (the 1998 Recapitalization).
How to vote
You may vote by proxy or in person at the meeting. To vote by proxy, you
may use one of the following methods if you are a registered holder (that is,
you hold your stock in your own name):
. Via the Internet, by going to the web address http://www.umb.com/proxy
and following the instructions on the proxy card,
. Telephone voting, by dialing 1-800-758-6973 and following the
instructions on the proxy card,
. Mail, by completing and returning the proxy card in the enclosed
envelope. The envelope requires no additional postage if mailed in the
United States.
1
<PAGE>
If your shares are held in "street name" by a broker or other nominee, you
should check the voting form used by that firm to determine whether you may
vote by telephone or Internet.
How proxies work
Giving your proxy means that you authorize us to vote your shares at the
meeting in the manner you direct. If you sign, date, and return the enclosed
proxy card but do not specify how to vote, we will vote your shares for the
nominees for Directors designated below, for approval of the appointment of
Sprint's auditors, and against the Stockholder proposal.
How to revoke a proxy
You may revoke your proxy before it is voted at the meeting by:
. voting by telephone or on the Internet--your latest vote will be counted,
. completing a new proxy card with a later date,
. filing an instrument of revocation with the Secretary of Sprint, or
. voting in person at the meeting.
Required vote
In order to carry on the business of the meeting, we must have a quorum. A
quorum requires the presence, in person or by proxy, of the holders of a
majority of the votes entitled to be cast at the meeting. We count abstentions
and broker "non-votes" as present and entitled to vote for purposes of
determining a quorum. A broker "non-vote" occurs when you fail to provide
voting instructions to your broker for shares you hold in "street name." Under
those circumstances, your broker may be authorized to vote for you on some
routine items but is prohibited from voting on other items. Those items for
which your broker cannot vote result in broker "non-votes."
The three nominees for Director receiving the greatest number of votes at
the meeting will be elected as Directors. Abstentions and broker "non-votes"
are not counted for this purpose.
For all other matters to be voted upon at the 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 this purpose,
if you vote to "abstain" from voting on a proposal, your shares will be
treated as present and will have the same effect as if you voted against the
proposal. Broker "non-votes," however, are not counted for this purpose and
have no effect on the outcome of the vote.
Costs of proxy solicitation
We will pay the expenses of soliciting proxies. In addition to solicitation
by mail, our officers may solicit proxies in person or by telephone. We have
hired D. F. King & Co. to assist us in soliciting proxies for an anticipated
fee of $8,500 plus out-of-pocket expenses.
Confidential voting policy
Your individual vote is kept confidential from our Directors, officers, and
employees except for certain specific and limited exceptions. One exception
occurs if you write opinions or comments on your proxy card. In that case, a
copy of your proxy card is sent to us.
2
<PAGE>
Attending the meeting
If you hold your shares in the name of a bank, broker, or other holder, and
you plan to attend the meeting, please bring proof of ownership with you to
the meeting. A bank or brokerage account statement showing that you owned
voting stock of Sprint on April 17, 2000 would be acceptable proof. If you are
a registered holder, no proof is required.
Stockholder Proposals for next year
If an Annual Meeting of Stockholders is held in 2001, it is anticipated
that the meeting would be April 17, 2001. If the proposed merger with MCI
WorldCom, Inc. is completed by that time, no such meeting will be held.
Stockholder proposals for any such meeting must be received by the
Corporate Secretary at Sprint's principal office, 2330 Shawnee Mission
Parkway, Westwood, Kansas 66205, a reasonable time before we begin to print
and mail our proxy materials for the meeting, no later than November 20, 2000.
If you intend to bring a matter before any such meeting, other than by
submitting a proposal to be included in our Proxy Statement, you must give
timely notice according to Sprint's Bylaws. To be timely, your notice must be
received by Sprint's Corporate Secretary at 2330 Shawnee Mission Parkway,
Westwood, Kansas 66205, on or after February 1, 2001 and on or before February
26, 2001. For each matter you intend to bring before the meeting, that notice
must include a brief description of the business you wish to be considered and
the reasons for conducting that business at the meeting. The notice must also
include your name and address, the class and number of shares of Sprint that
you own, and any material interest you have in that business.
Security Ownership of Certain Beneficial Owners
The following table provides information about the only known beneficial
owners of more than five percent of each class of Sprint's outstanding voting
stock:
<TABLE>
<CAPTION>
Percent
Amount and Nature Percent of Sprint
Name and Address of of Beneficial of Voting
Title of Class Beneficial Owner Ownership Series Class Power
-------------- ---------------------------- ------------------ -------- ------- ---------
<S> <C> <C> <C> <C> <C>
FON common stock........ Capital Research and 46,431,200 shares(9) Series 1 5.9%(9) 3.1%
Management Company(1)
DT(2) 44,464,179 shares Series 3 5.6% 2.9%
FT(3) 44,136,857 shares Series 3 5.6% 2.9%
PCS common stock........ FMR Corp(4) 64,477,953 shares Series 1 7.0% 4.3%
Janus Capital Corporation(5) 58,461,490 shares(9) Series 1 6.7%(9) 3.9%
DT(2) 35,813,331 shares Series 3 3.9% 2.4%
FT(3) 34,441,023 shares Series 3 3.8% 2.3%
Comcast(6) 71,796,870 shares Series 2 7.8% 0.5%
Cox(7) 127,186,270 shares Series 2 13.9% 0.8%
Liberty PCS Trust(8) 179,127,848 shares Series 2 19.5% 1.2%
Class A common stock.... DT(2) 43,118,018 shares Class A 50.0% 4.3%
FT(3) 43,118,018 shares Class A 50.0% 4.3%
Preferred stock......... Comcast(6) 61,726 shares Series 7 25.0% 0.0%
Cox(7) 61,726 shares Series 7 25.0% 0.0%
Liberty PCS Trust(8) 123,314 shares Series 7 50.0% 0.5%
</TABLE>
- --------
(1) Capital Research and Management Company, 333 South Hope Street, Los
Angeles, California.
(2) DT, Friedrich-Ebert-Allee 140, D-53113 Bonn, Germany.
(3) FT, 6 place d'Alleray, 75505 Paris Cedex 15, France.
(4) FMR Corp., 82 Devonshire Street, Boston, Massachusetts.
(5) Janus Capital Corporation, 100 Fillmore Street, Denver, Colorado.
3
<PAGE>
(6) Comcast Corporation, 1500 Market Street, Philadelphia, Pennsylvania.
(7) Cox Communications, Inc., 1400 Lake Hearn Drive, Atlanta, Georgia.
(8) Liberty PCS Trust, 1001 Green Oaks Drive, Littleton, Colorado.
(9) These amounts are based solely on Schedules 13G received by Sprint as of
the reporting date of such Schedules.
Security Ownership of Directors and Executive Officers
The following table states the number of shares of Sprint's common stock
beneficially owned, as of February 29, 2000, by each current Director, each
executive officer named in the "Summary Compensation Table" and by all
Directors and executive officers as a group. None of the individuals own more
than 0.5% of the outstanding shares of FON common stock or 0.4% of the
outstanding shares of PCS common stock. As a group all the individuals own
1.3% of the outstanding FON common stock and 1.1% of the outstanding PCS
common stock. Except as otherwise indicated, each individual named has sole
investment and voting power with respect to the securities shown.
<TABLE>
<CAPTION>
FON Stock PCS Stock
-------------------------------- --------------------------------
Shares Covered By Shares Covered By
Exercisable Exercisable
Name Shares Owned Options (1) Shares Owned Options (1)
---- ------------ ----------------- ------------ -----------------
<S> <C> <C> <C> <C>
DuBose Ausley........... 15,550 16,500 7,708 8,250
Warren L. Batts......... 36,080 20,212 17,835 10,106
Michel Bon.............. 0 10,500 0 5,250
Kevin E. Brauer......... 28,741 189,405 15,650 94,702
William T. Esrey........ 2,268,509(2) 1,940,314 1,289,963(3) 1,186,840
Irvine O. Hockaday, Jr.
....................... 6,755 3,500 3,168 1,750
Harold S. Hook.......... 32,000 20,212 16,000 10,106
Arthur B. Krause........ 330,968(2) 412,554 115,647(3) 343,428
Ronald T. LeMay......... 1,003,953 958,374 605,957 534,436
Linda Koch Lorimer...... 27,197 57,500 13,074 28,752
Charles E. Rice......... 32,128 20,212 15,852 10,106
Louis W. Smith.......... 3,345 0 1,158 0
Ron Sommer.............. 777 9,500 724 4,250
Andrew J. Sukawaty...... 182 13,006 223,264 118,465
Stewart Turley.......... 20,000 20,212 10,390 10,106
All Directors and
executive officers as a
group (26 persons)..... 4,826,924(2) 5,826,712 2,987,799(3) 3,527,013
</TABLE>
- --------
(1) These are shares that may be acquired upon the exercise of stock options
exercisable on or within sixty days after February 29, 2000, under
Sprint's stock option plans.
(2) Includes shares held by or for the benefit of family members in which
beneficial ownership has been disclaimed: 33,666 shares held in trust for
Mr. Esrey's children, 53,312 shares held by Mr. Krause's wife, and 87,378
shares held by or for the benefit of family members for all Directors and
executive officers as a group.
(3) Includes shares held by or for the benefit of family members in which
beneficial ownership has been disclaimed: 19,388 shares held in trust for
Mr. Esrey's children, 24,194 shares held by Mr. Krause's wife, and 44,182
shares held by or for the benefit of family members for all Directors and
executive officers as a group.
I. ELECTION OF DIRECTORS
(Item 1 on Proxy Card)
The Board of Directors of Sprint (other than any Directors designated by DT
and FT) is divided into three classes, with the term of office of each class
ending in successive years. The terms of the Directors of Class II expire with
this meeting. Each of the three nominees for Class II, if elected, will serve
three years until the 2003
4
<PAGE>
Annual Meeting and until a successor has been elected and qualified. The
Directors in Class III will continue in office until the 2001 meeting and the
Directors in Class I will continue in office until the 2002 meeting.
Michel Bon and Ron Sommer, who are currently Directors of Sprint, will
resign from the Board at the time of the special Stockholders meeting on April
28, 2000 as part of Sprint's agreement to sell its interests in the Global One
joint venture with DT and FT. In the event the amendments to Sprint's articles
of incorporation are adopted at the special meeting, DT and FT will no longer
have the ability to designate directors by a separate class vote. DuBose
Ausley, who has served as a director designated by DT and FT since 1996, will
also resign at the time of the special Stockholders meeting. However, the Board
has taken action to appoint Mr. Ausley as a Class I Director effective at the
time of that resignation.
The persons named in the accompanying proxy will vote your shares for the
election of the nominees named below as Directors of Class II unless you direct
otherwise. 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 Director
The following information is given with respect to the nominees for
election.
Class II--Nominees to Serve Three Years Until 2003 Meeting
Harold S. Hook, age 68. Retired Chairman and Chief [PHOTO]
Executive Officer of American General Corporation, a
financial services holding corporation, Houston, Texas.
He is a Director of Chase Manhattan Bank, Chase
Manhattan Corporation, and Duke Energy Corporation. Mr.
Hook was Chairman of American General Corporation from
1978 to 1997 and Chief Executive Officer from 1978 to
1996. He has been a Director of Sprint since 1982.
Charles E. Rice, age 64. Vice Chairman, Bank of America [PHOTO]
Corporation, a bank holding company. He is a director of
CSX Corporation. Prior to becoming Vice Chairman, Bank
of America Corporation in 1999, Mr. Rice was Chairman of
NationsBank Corporation and, prior to that, was Chairman
and Chief Executive Officer of Barnett Banks, Inc. from
1984 to 1998. He has been a Director of Sprint since
1975.
Louis W. Smith, age 57. President and Chief Executive [PHOTO]
Officer of the Ewing Marion Kauffman Foundation, Kansas
City, Missouri. He is a director of H & R Block, Inc.
and Western Resources, Inc. Prior to becoming President
and Chief Executive Officer of the Ewing Marion Kauffman
Foundation in 1997, he was President and Chief Operating
Officer of the foundation beginning in 1995. He was
President of Allied Signal Inc., Kansas City Division,
from 1990 to 1995. He has been a Director of Sprint
since June 1999.
5
<PAGE>
Directors continuing in office.
The following information is given with respect to the Directors who are not
nominees for election at the meeting.
Class III -- Serving Until 2001 Annual Meeting
William T. Esrey, age 60. Chairman and Chief Executive [PHOTO]
Officer of Sprint, Westwood, Kansas. He is a director of
Duke Energy Corporation, Exxon-Mobil Corporation, and
General Mills, Inc. Mr. Esrey has been Chairman of
Sprint since 1990 and Chief Executive Officer since
1985. He has been a Director of Sprint since 1985.
Linda Koch Lorimer, age 48. Vice President and Secretary [PHOTO]
of the University, Yale University, New Haven,
Connecticut. She is a 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.
She has been a Director of Sprint since 1993.
Stewart Turley, age 65. Retired Chairman of Eckerd [PHOTO]
Corporation, a diversified retailer, Clearwater,
Florida. He is a director of Marinesmax, Inc. and
Springs Industries, Inc. Prior to his retirement in
1997, Mr. Turley had been Chairman of Eckerd Corporation
for more than five years. He has been a Director of
Sprint since 1980.
Class I--Serving Until 2002 Annual Meeting
DuBose Ausley, age 62. Chairman of Ausley & McMullen, a [PHOTO]
law firm, Tallahassee, Florida. He is a 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. He has
been a Director of Sprint since 1993.
6
<PAGE>
Warren L. Batts, age 67. Retired Chairman and Chief [PHOTO]
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. He is a 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 its spin-off from Premark International,
Inc. in 1996. He has been a Director of Sprint since 1982.
Irvine O. Hockaday, Jr., age 63. President and Chief [PHOTO]
Executive Officer of Hallmark Cards, Inc., a manufacturer
of greeting cards, Kansas City, Missouri. He is a 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. He
has been a Director of Sprint since 1997.
Ronald T. LeMay, age 54. President and Chief Operating [PHOTO]
Officer of Sprint, Westwood, Kansas. He is a director of
The Allstate Corporation, Ceridian Corporation, Imation
Corporation, UtiliCorp United, 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 Division of
Sprint from 1989 to 1995. He was a Director of Sprint from
1993 until July 1997 and re-elected in December 1997.
Board Committees and Director Meetings
During 1999, the Board held six regular meetings and four special meetings.
The Board of Directors has an Audit Committee, a Capital Stock Committee, an
Executive Committee and an Organization, Compensation and Nominating
Committee. All Directors attended at least 75% of the meetings of the Board,
and Board committees on which they served, during 1999.
The Audit Committee. The primary function of the Audit Committee is to
advise and assist the Board in fulfilling its oversight responsibilities to
the investment community. The Audit Committee acts on behalf of the Board and
oversees all material aspects of Sprint's accounting and reporting processes.
The Audit Committee provides an open avenue of communication between
management, the independent auditors, the internal auditing department, legal
counsel and the Board. 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 full Board the independent auditors who are appointed,
subject to your approval at the meeting.
The Chairman of the Audit Committee is Mr. Batts. The other members are Mr.
Hockaday, Mr. Hook, and Mr. Smith. The Audit Committee met three times in
1999.
7
<PAGE>
The Capital Stock Committee. The Capital Stock Committee's role is to
interpret and oversee the implementation of the Policy Statement Regarding
Tracking Stock Matters. This policy provides generally that all material
matters as to which the holders of FON Stock and the holders of PCS Stock may
have potentially divergent interests will be resolved in a manner that the
Board determines to be in the best interests of Sprint and all of its common
Stockholders. In making this determination, the Board will give fair
consideration to the potentially divergent interests and all other relevant
interests of the holders of the separate classes of Sprint's common stock.
The Chairman of the Capital Stock Committee is Mr. Hockaday. The other
members are Mr. Hook, Ms. Lorimer, and Mr. Sommer. The Capital Stock Committee
met once in 1999
The Executive Committee. The principal responsibility of the Executive
Committee is to exercise powers of the Board on matters of an urgent nature
that arise between regularly scheduled Board meetings.
The Chairman of the Executive Committee is Mr. Esrey. The other members are
Mr. Batts, Mr. Bon, Mr. Rice, and Mr. Turley.
The Organization, Compensation, and Nominating Committee. 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 and make
recommendations to the Board with respect to such matters; (b) recommend to
the Board proposed nominees whose election at the next Annual Meeting of
Stockholders will be recommended by the Board; 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.
The Chairman of the Organization, Compensation and Nominating Committee is
Mr. Turley. The other members are Mr. Ausley, Ms. Lorimer, Mr. Rice and Mr.
Sommer. The Organization, Compensation and Nominating Committee met four times
in 1999.
Compensation of Directors
Annual retainer and meeting fees. Directors who are not employees 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. Under the
1997 Long-Term Stock Incentive Program, Outside Directors can elect to use
these fees to purchase FON Stock and PCS Stock. They can also elect to have
the purchased shares deferred and placed in a trust. Sprint also maintains the
Directors' Deferred Fee Plan under which Outside Directors may elect to defer
all or some of their fees.
Stock options. On February 8, 1999, each Outside Director was granted an
option to purchase 3,000 shares of FON Stock and 1,500 shares of PCS Stock at
an option price equal to 100% of the fair market value on that date. The
options expire ten years from the date of grant. Twenty-five percent of the
shares subject to the option became exercisable on February 8, 2000, and an
additional 25% become exercisable on February 8th of each of the three
succeeding years.
8
<PAGE>
Retirement Benefits. 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.
Outside Directors not eligible for benefits under the retirement plan after
the December 1996 amendment received units representing shares of FON Stock
and PCS Stock credited to their accounts under the Director's 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.
Other benefits. Outside Directors are provided with Sprint residential long
distance service. For 1999, these services were valued in the following
amounts: Mr. Ausley, $2,782; Mr. Batts, $947; Mr. Hockaday, $812; Mr. Hook,
$276; Ms. Lorimer, $4,325; Mr. Rice, $2,537; Mr. Smith, $385; and Mr. Turley,
$2,633.
Outside Directors are also provided with Sprint PCS phones and services
valued in the following amounts for 1999: Mr. Ausley, $2,275; Mr. Batts,
$1,449; Mr. Hockaday, $1,829; Mr. Hook, $1,446; Ms. Lorimer, $2,172; Mr. Rice,
$1,838; Mr. Smith, $369; and Mr. Turley, $2,342.
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 8 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. The companies in the S&P Telephone Utility Index and the S&P
Telecommunications (Long Distance) Index, which are used in the Stock
Performance Graph on page 18 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 1999.
Base Salary. Each year the Committee makes a recommendation to the Board
establishing base pay for all Named Officers. In making this recommendation
for 1999, the Committee considered the salaries of other executives within the
comparison group and the executives' performance during 1998. 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.
9
<PAGE>
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.
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
thirteen financial objectives--three for the Local Telecommunications Division
(LTD), three for the Long Distance Division (LDD), four for Sprint PCS, one
for Global One, one for National Integrated Services (NIS) and one Cross-
selling objective. For each objective, targets were established and compared
to actual 1999 results. When the STIC payout exceeds 200% for an individual
financial performance measure, 50% of the excess payout amount will be banked
and paid out in two equal annual installments. The remaining STIC payout will
be made at the same time other STIC payouts occur. The minimum amount required
for banking is $1,000 per performance measure. All banked amounts will accrue
interest at prime rate.
. The objectives for the LTD related to operating income growth (40%
weighting), net collectible revenue growth (30%), and economic value
added (EVA) (30%). Actual results were 71.1% of target on a weighted
average basis.
. The objectives for the LDD related to operating income growth (35%
weighting), net collectible revenue relative to market growth (35%), and
EVA (30%). Actual results were 137.4% of target on a weighted average
basis.
. The objectives for Sprint PCS related to net subscriber additions (30%
weighting), net service revenue (30%), cost to acquire per gross addition
(20% weighting), and cash cost per unit (20% weighting). Actual results
were 274.1% of target on a weighted average basis.
. The objective for Global One related to operating income. The actual
result was 0.0% of target.
. The CEO and COO objective for NIS was expense and capital spending. The
actual result was 163.0% of target. The objectives for NIS for the
remaining executive officers were the completion of key milestones for
the market launch of Sprint ION(SM) (Sprint's Integrated On-demand
Network). The actual results were 152.5% of target on a weighted average
basis.
. The objective for Cross-selling related to net new joint customers. The
actual result was 133.6% of target.
The weights assigned for a particular executive among the LTD, LDD, Sprint
PCS, Global One, NIS and Cross-selling 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.
Based on the financial results described above, and the achievement of
their personal objectives, the executive officers earned STIC payouts on
average of 141.4% of target. Mr. Esrey's STIC payout was based on the
financial results described above using relative weights for objectives--as
follows: 25% for LTD, 30% for LDD, 15% for Sprint PCS, 5% for Global One, 15%
for NIS, and 10% for Cross-selling. Based on these factors, Mr. Esrey earned a
payout of 136.4% of target.
Long-Term Incentive Compensation. Sprint's long-term incentive compensation
(LTIP) is a three-year incentive plan designed to promote the long-term
objectives of the organization. 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. The target incentive
opportunity was converted to stock options under Sprint's Management Incentive
Stock Option Plan (MISOP) using the same conversion ratio applied to Sprint's
management incentive plans.
10
<PAGE>
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 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.
During 1999 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 $4.035 reduction in an executive's target opportunity resulting from
such election, the executive received an option to purchase one share of FON
Common Stock and for each $1.575 reduction in target opportunity, the
executive received an option to purchase one share of PCS Common Stock. The
MISOP is in keeping with Sprint's philosophy of increasing the percentage of
compensation tied to stock ownership. The Committee believes stock options
more closely align Stockholder and employee interests by focusing executives
on long-term growth and profitability of Sprint and its Common Stock.
Stewart Turley, Chairman
DuBose Ausley
Linda Koch Lorimer
Charles E. Rice
Ron Sommer
11
<PAGE>
Summary Compensation Table
The following table reflects the cash and non-cash compensation for
services in all capacities to Sprint by those persons who were, as of December
31, 1999, the chief executive officer and the other four most highly
compensated executive officers of Sprint (the Named Officers):
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------------------
Annual Compensation Awards Payouts
-------------------------------- ------------------------------ ---------
Name Other Restricted
And Annual Stock Securities LTIP All Other
Principal Salary Bonus Compensation Award(s) Underlying Payouts Compensation
Position Year ($)(1) ($)(1) ($) ($)(2) Options (#)(3) ($) ($)(4)
--------- ---- --------- --------- ------------ ---------- ------------------- --------- ------------
FON PCS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
William T. Esrey........ 1999 1,000,000 1,381,698 74,428(5) 0 1,713,260 760,186 0 61,099
Chairman and 1998 1,000,000 851,351 75,986 0 1,444,820 722,412 2,199,644 52,000
Chief Executive 1997 1,000,000 0 73,134 0 5,072,366 2,536,186 1,221,064 38,880
Officer
Kevin Brauer............ 1999 371,854 604,810 10,119 0 149,477 75,486 0 16,633
President--National 1998 339,851 425,845 6,696 0 154,834 77,418 481,312 14,122
Integrated 1997 306,871 172,850 4,857 242,500 79,950 39.976 267,755 6,348
Services and Sprint
Business
Arthur B. Krause........ 1999 426,069 324,712 7,447 0 390,119 134,842 0 50,344
Executive Vice 1998 415,076 371,216 8,866 0 154,834 77,418 532,799 46,053
President--Chief 1997 401,852 192,642 2,840 0 129,216 64,608 304,057 23,491
Financial Officer
Ronald T. LeMay......... 1999 883,400 807,429 10,550 0 870,802 375,548 0 3,532
President and 1998 808,801 562,501 65,566 0 977,736 488,874 1,061,710 3,740
Chief Operating 1997 602,966 0 9,944 8,896,817 3,207,092 1,603,552 574,008 8,395
Officer
Andrew J. Sukawaty (6).. 1999 477,879 720,273 4,623 0 27,242 458,218 4,262,353(7) 9,718
President--Sprint 1998 67,740 30,963 0 0 0 316,862(7) 2,494,520(7) 0
</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 short-term incentive plans.
(2) As of December 31, 1999, the Named Officers held restricted shares of FON
Stock and PCS Stock as set forth in the following table. The market value
of the shares is based on a value of $67.3125 per share for FON Stock and
$51.25 per share for PCS Stock (the closing prices at December 31, 1999).
The closing price and number of shares for PCS Stock are shown after
adjustment for the two-for-one stock split in the first quarter of 2000.
Each of the Named Officers has the right to vote and receive dividends on
the restricted shares.
<TABLE>
<CAPTION>
FON Stock PCS Stock
------------------- ------------------
Number Number
of of
shares Value shares Value
------- ----------- ------- ----------
<S> <C> <C> <C> <C>
Mr. Esrey.......................... 185,296 $12,472,737 92,648 $4,748,210
Mr. Brauer......................... 10,000 673,125 5,000 256,250
Mr. Krause......................... 0 0 0 0
Mr. LeMay.......................... 320,000 21,540,000 160,000 8,200,000
Mr. Sukawaty....................... 0 0 0 0
</TABLE>
(3) Reflects the conversion of options for Sprint's common stock before the
1998 Recapitalization into independently exercisable options for FON Stock
and PCS Stock. Also reflects the two-for-one stock splits of FON Stock in
the second quarter of 1999 and PCS Stock in the first quarter of 2000.
12
<PAGE>
(4) Consists of amounts for 1999 (a) contributed by Sprint under the Sprint
Retirement Savings Plan and (b) representing the portion of interest
credits on deferred compensation accounts under Sprint's Executive
Deferred Compensation Plan that are at above-market rates, as follows:
<TABLE>
<CAPTION>
Above-
Savings Plan Market
Contribution Earnings
------------ --------
<S> <C> <C>
Mr. Esrey........................................... $4,800 $56,299
Mr. Brauer.......................................... 4,800 11,833
Mr. Krause.......................................... 4,800 45,544
Mr. LeMay........................................... 3,532 0
Mr. Sukawaty........................................ 9,600 118
</TABLE>
(5) Includes the cost to Sprint of providing tax and financial services of
$15,000 and automobile allowance of $18,000.
(6) Mr. Sukawaty became President-Sprint PCS in December 1998.
(7) Amounts paid in the form of PCS Stock as replacement of units vesting
under the Sprint Spectrum Long-term Incentive Plan. As part of the 1998
Recapitalization, the Sprint Spectrum Long-term Incentive Plan was
terminated and replaced with a package consisting of options and shares of
PCS Stock.
Option Grants
The following tables summarize options granted to the Named Officers under
Sprint's stock option plans during 1999. The amounts shown as potential
realizable values on these options are based on arbitrarily assumed annualized
rates of appreciation in the price of Sprint Common Stock of five percent and
ten percent over the term of the options, as set forth in SEC rules. The Named
Officers will realize no gain on these options without an increase in the
price of Sprint common stock that will benefit all Stockholders
proportionately.
Unless otherwise indicated, each option listed below has a reload feature.
Vesting is accelerated in the event of an employee's death or permanent
disability. In addition, if an option has been outstanding for at least one
year, vesting is accelerated upon a change in control or an employee's normal
retirement at age 65 or older. A change in control is deemed to occur if (1)
DT and FT acquire additional stock of Sprint that would result in their owning
35% or more of the voting power of Sprint stock, (2) someone acquires 20% or
more of the outstanding stock of Sprint, (3) there is a change of a majority
of the Directors within a two-year period, or (4) Sprint's Stockholders
approve a merger in which Sprint is not the surviving entity, including
Sprint's proposed merger with MCI WorldCom. No stock appreciation rights were
granted during 1999.
Option Grants in Last Fiscal Year
FON Stock Options
<TABLE>
<CAPTION>
Number of % of Total
Securities Options Potential Realizable
Underlying Granted to Exercise Value at Assumed
Options Employees Or Base Annual Rates of Stock
Granted In Price Expiration Price Appreciation for
Name (#) Fiscal Year ($/Sh) Date Option Term(1)
---- ---------- ----------- -------- ---------- ---------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
0% 5% 10%
--- - --
William T. Esrey........ 480,000(3) 2.8% 38.98 2/8/09 $ 0 $11,768,191 $29,822,906
84,580(4) 0.5% 38.98 2/8/09 0 2,073,653 5,255,045
162,578(5) 1.0% 38.98 2/8/09 0 3,985,935 10,101,142
134,330(6) 0.8% 42.97 2/11/04 0 1,581,905 3,492,357
51,786(6) 0.3% 42.97 2/17/05 0 754,383 1,710,691
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Number of % of Total
Securities Options Potential Realizable
Underlying Granted to Exercise Value at Assumed
Options Employees Or Base Annual Rates of Stock
Granted In Price Expiration Price Appreciation for
Name (#) Fiscal Year ($/Sh) Date Option Term(1)
---- ---------- ----------- -------- ---------- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
0% 5% 10%
--- - --
172,790(6) 1.0% 42.97 2/12/06 0 3,005,801 6,998,551
57,112(6) 0.3% 42.97 2/11/07 0 1,165,396 2,788,576
128,154(6) 0.8% 47.31 2/11/07 0 2,663,294 6,285,442
81,402(6) 0.5% 47.31 7/12/04 0 1,035,227 2,280,420
119,948(6) 0.7% 47.31 2/12/06 0 2,104,854 4,834,987
33,746(6) 0.2% 47.31 2/11/07 0 701,309 1,655,107
139,029(6) 0.8% 47.31 2/9/08 0 3,359,997 8,150,786
67,805(6) 0.4% 47.31 2/9/08 0 1,638,684 3,975,171
Kevin E. Brauer......... 120,000(3) 0.7% 38.98 2/8/09 0 2,942,048 7,455,726
20,668(4) 0.1% 38.98 2/8/09 0 506,719 1,284,125
8,809(6) 0.1% 68.97 7/12/04 0 150,533 328,672
Arthur B. Krause........ 120,000(3) 0.7% 38.98 2/8/09 0 2,942,048 7,455,726
20,668(4) 0.1% 38.98 2/8/09 0 506,719 1,284,125
38,916(5) 0.2% 38.98 2/8/09 0 954,106 2,417,892
78,046(6) 0.5% 40.42 2/16/00 0 163,943 328,186
14,382(6) 0.1% 40.42 3/9/03 0 128,598 277,618
37,809(6) 0.2% 49.94 7/12/04 0 499,520 1,098,399
35,612(6) 0.2% 49.94 2/17/05 0 537,301 1,200,124
11,921(6) 0.1% 49.94 2/12/06 0 218,074 500,011
12,023(6) 0.1% 49.94 2/11/07 0 260,842 614,440
20,742(6) 0.1% 49.94 2/9/08 0 523,876 1,268,408
Ronald T. LeMay......... 300,000(3) 1.8% 38.98 2/8/09 0 7,355,119 18,639,316
47,798(4) 0.3% 38.98 2/8/09 0 1,171,867 2,969,740
95,006(5) 0.6% 38.98 2/8/09 0 2,329,268 5,902,823
134,646(6) 0.8% 39.48 2/9/08 0 2,962,015 7,311,402
23,460(6) 0.1% 39.48 3/9/03 0 208,084 449,875
73,964(6) 0.4% 39.48 2/16/00 0 160,401 321,537
52(6) 0.0% 49.42 3/15/05 0 867 1,965
85,580(6) 0.5% 51.03 7/12/04 0 1,205,847 2,664,416
21,394(6) 0.1% 51.03 2/17/05 0 342,835 769,527
25,674(6) 0.2% 51.03 2/12/06 0 496,294 1,143,634
23,497(6) 0.1% 51.03 2/11/07 0 536,644 1,270,590
39,731(6) 0.2% 51.03 2/9/08 0 1,053,332 2,563,635
Andrew J. Sukawaty...... 15,000(3) 0.1% 38.98 2/8/09 0 367,756 931,966
2,986(4) 0.0% 38.98 2/8/09 0 73,208 185,523
9,256(5) 0.1% 38.98 2/8/09 0 226,930 575,085
</TABLE>
14
<PAGE>
PCS Stock Options
<TABLE>
<CAPTION>
Number of % of Total
Securities Options Potential Realizable
Underlying Granted to Value at Assumed
Options Employees Exercise Or Base Annual Rates of Stock
Granted In Price Expiration Price Appreciation for
Name (#) (2) Fiscal Year ($/Sh)(2) Date Option Term(1)
---- ---------- ----------- ---------------- ---------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
0% 5% 10%
- - --
William T. Esrey........ 240,000(3) 1.1% 15.59 2/8/09 $ 0 $2,353,638 $5,964,581
47,566(4) 0.2% 15.59 2/8/09 0 466,471 1,182,130
91,428(5) 0.4% 15.59 2/8/09 0 896,618 2,272,207
24,534(6) 0.1% 16.17 2/11/07 0 188,418 450,849
59,830(6) 0.3% 16.17 2/11/04 0 265,176 585,426
75,518(6) 0.3% 16.17 2/12/06 0 494,424 1,151,192
98,646(6) 0.5% 16.17 2/12/06 0 645,846 1,503,754
24,534(6) 0.1% 16.17 2/11/07 0 188,418 450,849
23,488(6) 0.1% 16.17 2/17/05 0 128,776 292,020
23,030(6) 0.1% 30.64 2/11/07 0 309,822 731,133
15,042(6) 0.1% 30.64 7/12/04 0 123,888 272,902
24,582(6) 0.1% 30.64 2/9/08 0 384,592 932,885
11,988(6) 0.1% 30.64 2/9/08 0 187,630 455,158
Kevin E. Brauer......... 60,000(3) 0.3% 15.59 2/8/09 0 588,410 1,491,145
11,622(4) 0.1% 15.59 2/8/09 0 113,975 288,835
3,864(6) 0.0% 51.97 7/12/04 0 49,755 108,633
Arthur B. Krause........ 60,000(3) 0.3% 15.59 2/8/09 0 588,410 1,491,145
11,622(4) 0.1% 15.59 2/8/09 0 113,975 288,835
21,886(5) 0.1% 15.59 2/8/09 0 214,632 543,920
34,860(6) 0.2% 15.14 2/16/00 0 27,428 54,907
6,474(6) 0.0% 15.14 3/9/03 0 21,683 46,809
Ronald T. LeMay......... 150,000(3) 0.7% 15.59 2/8/09 0 1,471,024 3,727,863
26,880(4) 0.1% 15.59 2/8/09 0 263,607 668,033
53,428(5) 0.2% 15.59 2/8/09 0 523,959 1,327,815
10,164(6) 0.0% 13.09 3/9/03 0 29,896 64,635
32,044(6) 0.1% 13.09 2/16/00 0 23,045 46,195
57,636(6) 0.3% 13.09 2/9/08 0 420,462 1,037,863
26(6) 0.0% 22.38 3/15/05 0 196 445
18,336(6) 0.1% 28.02 7/12/04 0 141,837 313,400
4,582(6) 0.0% 28.02 2/17/05 0 40,310 90,480
5,498(6) 0.0% 28.02 2/12/06 0 58,346 134,451
5,032(6) 0.0% 28.02 2/11/07 0 63,093 149,382
8,440(6) 0.0% 28.02 2/9/08 0 122,841 298,974
3,482(6) 0.0% 28.02 2/16/00 0 2,871 5,687
Andrew J. Sukawaty...... 157,000(3) 0.7% 15.59 2/8/09 0 1,539,672 3,901,830
34,856(4) 0.2% 15.59 2/8/09 0 341,827 866,256
108,032(5) 0.5% 15.59 2/8/09 0 1,059,451 2,684,857
89,060(6) 0.4% 50.41 6/30/07 0 1,982,242 4,682,356
69,270(6) 0.3% 50.41 2/8/09 0 1,953,352 4,825,739
</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's common stock.
(2) Reflects adjustment for the two-for-one stock split of PCS Stock.
(3) Twenty-five percent of this option became exercisable on February 8, 2000,
and an additional 25% will become exercisable on February 8 of each of the
three successive years.
15
<PAGE>
(4) This option becomes exercisable on December 31, 2001.
(5) 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, 1999.
(6) 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 FON Stock or PCS 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 FON Stock or PCS Stock on the date
the reload option is granted. A reload option becomes exercisable one year
from the date the original option was exercised and does not have a reload
feature.
Option Exercises and Fiscal Year-End Values
The following tables summarize the net value realized on the exercise of
options in 1999, and the value of the outstanding options at December 31,
1999, for the Named Officers.
Aggregated Option Exercises in 1999 and Year-end Option Values
FON Stock
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In the Money Options
Options at 12/31/99 At 12/31/99(2)
------------------------- -------------------------
Shares Acquired Value Realized(1) Exercisable Unexercisable Exercisable Unexercisable
on Exercise (#) ($) (#) (#) ($) ($)
--------------- ----------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William T. Esrey........ 1,991,414 $55,480,276 1,186,440 6,299,142 $45,149,109 $251,476,495
Kevin Brauer............ 46,129 2,138,941 107,265 306,451 5,023,741 10,593,918
Arthur Krause........... 362,316 11,605,416 242,927 537,282 11,412,030 16,495,957
Ronald T. LeMay......... 720,576 15,701,165 616,630 3,233,036 23,289,716 125,987,066
Andrew J. Sukawaty...... 0 0 9,256 17,986 260,180 505,575
</TABLE>
PCS Stock (3)
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In the Money Options
Options at 12/31/99 At 12/31/99(2)
------------------------- -------------------------
Shares Acquired Value Realized(1) Exercisable Unexercisable Exercisable Unexercisable
on Exercise (#) ($) (#) (#) ($) ($)
--------------- ----------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William T. Esrey........ 995,710 $19,043,913 603,362 3,042,988 $25,922,926 $130,288,387
Kevin Brauer............ 23,066 763,762 53,632 153,974 2,466,523 6,025,380
Arthur Krause........... 72,720 905,058 232,332 205,996 10,642,044 8,157,461
Ronald T. LeMay......... 360,292 6,021,043 314,244 1,550,740 13,439,444 66,485,056
Andrew J. Sukawaty...... 266,464 10,491,748 0 508,616 0 13,409,786
</TABLE>
- --------
(1) The value realized upon exercise of an option is the difference between
the fair market value of the shares of FON Stock and PCS 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, at December
31, 1999, of FON Stock ($67.09375) and PCS Stock ($50.40625).
(3) Reflects adjustment for the two-for-one stock split of PCS Stock.
16
<PAGE>
Pension Plans
Under the Sprint Retirement Pension Plan, eligible employees generally
accrue for each year of service a retirement benefit equal to 1.5% of career
average compensation, subject to limitations under the Internal Revenue Code.
In addition, the Named Officers participate in a supplemental retirement plan
that provides additional benefits. Assuming each of the Named Officers
continues to work at Sprint until age 65, and that his pensionable
compensation for years after 1999 will be his 1999 pensionable compensation,
the Named Officers would receive an estimated annual pension benefit,
expressed as an annuity for life, as follows: Mr. Esrey--$1,294,700, Mr.
Brauer--$299,800, Mr. Krause--$415,000, Mr. LeMay--$680,700, and Mr.
Sukawaty--$489,300.
In addition, Sprint has a key management benefit plan that permits a
participant to elect a supplemental retirement benefit. More information on
the plan is provided in the following section under "Employment Contracts".
Employment Contracts
Sprint has contingency employment agreements with Messrs. Esrey, Krause,
LeMay, and Sukawaty that 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
coverage 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 Named Officers have each signed non-competition agreements with Sprint
which provide that he will not associate himself with a competitor for an 18-
month period following termination of employment. In addition, the agreements
provide that each executive will receive 18 months of compensation and
benefits following an involuntary termination of employment.
Sprint has a key management benefit plan providing for a survivor benefit
in the event of the death of a participant or, in the alternative, a
supplemental retirement benefit. Under the plan, if a participant dies before
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 before 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 before 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. The supplemental retirement benefit will be the actuarial equivalent
of the survivor benefit. Each Named Officer is a participant in the plan.
Performance Graphs
The graph below compares the yearly percentage change in the cumulative
total Stockholder return for FON Stock as compared with the S&P(R) 500 Stock
Index, the S&P(R) Telephone Utility Index and the S&P(R) Telecommunications
(Long Distance) Index, for the five-year period from December 31, 1994 to
December 31, 1999. The return for FON Stock is based on the historical return
of Sprint common stock before the 1998 Recapitalization as adjusted for the
recapitalization and is based on the return of FON Stock after the the 1998
Recapitalization. The returns for the S&P indexes are compounded annually.
17
<PAGE>
The companies which comprise the S&P Telephone Utility Index are ALLTEL
Corp., Bell Atlantic Corp., BellSouth, CenturyTel, Inc., GTE, SBC
Communications, Inc. and U.S. West, Inc. The companies which comprise the S&P
Telecommunications (Long Distance) Index are AT&T Corp., Global Crossing, MCI
WorldCom, Inc. and Sprint FON Group.
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Sprint FON.......................... 100.00 147.06 184.98 276.63 449.48 724.64
S&P 500............................. 100.00 137.12 168.22 223.90 287.35 347.36
S&P (Long Distance)................. 100.00 134.42 138.64 195.55 316.06 369.20
S&P Telephone....................... 100.00 149.31 150.47 209.17 305.49 322.02
</TABLE>
18
<PAGE>
The graph below compares the yearly percentage change in the cumulative
total Stockholder return for PCS Stock as compared with the S&P 500 Stock
Index and the Barclays Capital Wireless Index for the period from November 23,
1998 to December 31, 1999. The returns for the S&P and Barclays indexes are
compounded annually.
The companies which comprise the Barclays Capital Wireless Index are Aerial
Communications, Inc., Alltel Corp, American Mobile Satellite, Arch
Communications Group, Centennial Cellular, Clearnet Communications, Grupo
IUSA-ADR, Leap Wireless, Metricom, Inc., Metrocall Inc., Millicom
International, Nextel Communications, Omnipoint Corp., Orange PLC, Paging
Network, PowerTel, Inc., Price Communications Corp., Rogers CanTel, Rural
Cellular, Sprint PCS Group, Telesystem International, Teligent, Inc., US
Cellular Corp., Vimpel Communications-ADR, Vodafone Airtouch-ADR, Western
Wireless, and Winstar Communications.
<TABLE>
<CAPTION>
11/23/98 1998 1999
-------- ------ ------
<S> <C> <C> <C>
Sprint PCS............................................. 100.00 124.58 552.19
S&P 500................................................ 100.00 103.61 125.41
Barclays Capital Wireless.............................. 100.00 114.19 280.69
</TABLE>
Compensation Committee Interlocks and Insider Participation
Dubose Ausley is a member of the Organization, Compensation and Nominating
committee of the Sprint Board. He also is chairman of the law firm of Ausley &
McMullen, which provided legal services to certain affiliates of Sprint in
1999 for which it billed $232,787.
19
<PAGE>
II. SELECTION OF INDEPENDENT AUDITORS
(Item 2 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 2000, subject to approval of
the Stockholders at the Annual Meeting.
Ernst & Young have 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 meeting, the Board will consider the selection of another
accounting firm.
The Board of Directors of Sprint, at its June 13, 1999 meeting, determined
that Ernst & Young would serve as the sole independent auditors to examine the
financial statements of Sprint and its subsidiaries. As a consequence,
Deloitte & Touche LLP, which had been the independent auditors for Sprint
Spectrum Holding Company, L.P. and its subsidiaries, were replaced by Ernst &
Young for the year ended December 31, 1999. Ernst & Young relied on the report
of Deloitte & Touche with respect to Sprint Spectrum Holding Company, L.P. and
its subsidiaries in its audit of Sprint's consolidated financial statements
for the years ended December 31, 1998 and 1997. Ernst & Young also relied on
the report of Deloitte & Touche with respect to Sprint Spectrum Holding
Company, L.P. and its subsidiaries in its audit of the financial statements
for Sprint's PCS Group for the years ended December 31, 1998, 1997 and 1996.
Deloitte & Touche's reports on the financial statements of Sprint Spectrum
Holding Company, L.P. for the fiscal years 1998 and 1997 did not contain any
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope, or accounting principles, and Ernst & Young's
reports on the financial statements of Sprint for the same two fiscal years
did not contain any such adverse opinion, disclaimer of opinion, modification
or qualification. During 1997 and 1998 and any subsequent interim period
preceding the replacement of Deloitte & Touche as certifying accountant for
Sprint Spectrum Holding Company, L.P. and its subsidiaries, there were no
disagreements between Sprint and Deloitte & Touche or between Sprint Spectrum
Holding Company, L.P. and Deloitte & Touche on any matters of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures, which, if not resolved to the satisfaction of Deloitte & Touche,
would have caused Deloitte & Touche to make reference to the matter in their
report. None of the "reportable events" described in paragraphs (A) through
(D) of clause (v) of Item 304(a)(1) of Regulation S-K of the SEC occurred
during 1997 or 1998 or any subsequent interim period preceding the replacement
of Deloitte & Touche as certifying accountant for Sprint Spectrum Holding
Company, L.P. and its subsidiaries.
The Board of Directors recommends that the Stockholders vote FOR the
approval of the appointment.
III. STOCKHOLDER PROPOSAL CONCERNING COMPENSATION
AGREEMENTS CONTINGENT UPON A CHANGE IN CONTROL OF SPRINT
(Item 3 on Proxy Card)
George Speight, 3959 Cordiality Church Road, Nashville, North Carolina
27856, beneficial owner of more than 227 shares of FON Stock and 111 shares of
PCS Stock, has given notice of his intention to introduce the following
resolution at the Annual Meeting:
20
<PAGE>
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.
Stockholder's Statement in Support of his Proposal
Golden parachutes are lucrative compensation awards, which are provided to
senior executives and made contingent upon a change of control. In the case of
Sprint, a change in control occurs if someone acquires 20% or more of the
outstanding voting stock, or if there is a change of a 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, which
includes the value of stock option awards.
We believe that these golden parachutes are excessive. In the case of the
planned merger with MCI WorldCom, the Wall Street Journal has reported on
October 6, 1999, that CEO William Esrey "could walk away with a stunning
$690.1 million" if he decides to leave rather than stay on as chairman of the
merged company.
This truly astronomical payout would apparently result from the huge grant
of stock options that have been given to Mr. Esrey in the past. On the basis
of the information presented in past Sprint proxy statements, it appears that
the stock options that were granted to Mr. Esrey in 1997 and 1998 alone are
worth approximately $390 million as this is written. This sum will grow to
approximately $450 million, at the price MCI WorldCom has agreed to pay for
Sprint, if the merger is completed and all the outstanding options vest.
Reflecting on Mr. Esrey's overall compensation package, including his stock
option awards, executive compensation consultant Graef Crystal has concluded
that "he is grossly overpaid." As he was quoted saying in the Kansas City Star
on April 11, 1999, "only 3% of chief executives among the 1,568 public
companies I surveyed were more overpaid than he was."
In our view, the grossly excessive nature of the Esrey golden parachute
demonstrates the importance of adopting a corporate policy, which would
require shareholder approval for any golden parachutes that may be proposed.
Please vote for this proposal.
The Company's Response to the Stockholder Proposal
The proponent's Statement of Support contains numerous inaccuracies about
Sprint's Contingency Employment Agreements (CEAs) with six key executives.
Those inaccuracies greatly distort the nature and financial implications of
these agreements.
In brief, CEAs provide for three years of compensation (salary and short
and long term incentive compensation), but only if there is (1) a change of
control of Sprint and (2) the executive is terminated without cause or resigns
due to a diminution in responsibilities, authority or compensation. The CEAs
do not include annual stock option grants, nor do they affect existing options
in any way.
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.
Indeed, the Board believes the CEAs served Stockholders well relating to
Sprint's pending merger with MCI WorldCom. Also, as a lengthy period may
elapse from the time a change in control is proposed until it is completed,
such arrangements 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, under Sprint's CEAs, payments
will be made only if the executive is terminated without cause or resigns due
to a diminution in responsibilities, authority or compensation. Because the
executives do not control the 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.
21
<PAGE>
The proponent argues that the agreements with executive management of
Sprint are excessive. He concedes, however, that the amount reported in the
Wall Street Journal results from stock options granted in the past. While some
of these options would become immediately exercisable upon a change in
control, there are three important points to be made. First, these options are
valuable only because of the performance of Sprint common stock. This
performance has benefited all Sprint Stockholders. Second, the options that
would become exercisable upon a change in control would otherwise vest within
three years. Third, the vesting of stock options upon a change in control was
specifically authorized by Sprint's Stockholders as part of the 1997 Long-term
Stock Incentive Program.
Accordingly, the Board of Directors recommends that the Stockholders vote
AGAINST the proposal.
IV. 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
April 26, 2000
22
<PAGE>
- --------------------------------------------------------------------------------
SPRINT CORPORATION
P.O. Box 11315, Kansas City, Missouri 64112
This Proxy is Solicited on Behalf of the Board of Directors for the Annual
Meeting on June 13, 2000
The Board of Directors recommends a vote FOR items 1 and 2 and AGAINST item 3.
The undersigned hereby appoints W.T. Esrey, R.T. LeMay, 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")
that the undersigned is entitled to vote at the 2000 Annual Meeting of
Stockholders to be held June 13, 2000, 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 and 2 and AGAINST item 3. A majority of said
proxies, or any substitute or substitutes, who shall be present and act at the
meeting (or if only one shall be present and act, then that one) shall have
all the powers of said proxies hereunder.
- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the reverse side of this
card. 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 VOTE THIS PROXY PROMPTLY whether or not you expect to attend the
meeting. You may nevertheless vote in person if you do attend.
- -------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED?
- -------------------------------
- -------------------------------
- -------------------------------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
If you are voting by telephone or the Internet, do not return your proxy card.
Telephone and Internet voting is provided for under Kansas law.
Two New Ways to Vote Your Proxy
(in addition to voting by mail)
VOTE BY TELEPHONE OR INTERNET
24 Hours a Day--7 Days a Week
Save Your Company Money--It's Fast and Convenient
TELEPHONE INTERNET MAIL
--------- -------- ----
1-800-758-6973 http://www.umb.com/proxy
------------------------
. Use any touch- . Go to the website . Mark, sign and
tone telephone. address indicated date the proxy
. Have this proxy above. card on the
form in hand. . Have this proxy reverse side.
. Enter the Control OR form in hand. OR . Detach the proxy
Number located on . Enter the Control card.
the reverse side Number located on . Return the proxy
of this card. the reverse side card in the
. Follow the simple of this card. postage-prepaid
recorded . Follow the simple envelope
instructions. instructions. provided.
- --------------------------------------------------------------------------------
<PAGE>
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
- -------------------------------------------------------------------------------
SPRINT CORPORATION
- -------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Items 1 and 2.
1. To elect the nominees listed below, and each of them, as Directors of Class
II; and while Sprint has no reason to believe that any of the nominees will
decline or be unable to serve, if any do, to vote with discretionary
authority.
For All With- For All
Nominees hold Except
[_] [_] [_]
1. Harold S. Hook 2. Charles E. Rice 3. Louis W. Smith
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).
2. To approve the appointment of Ernst & Young LLP as independent auditors of
Sprint for 2000.
For Against Abstain
[_] [_] [_]
The Board of Directors recommends a vote AGAINST Item 3.
3. Stockholder proposal concerning compensation agreements contingent upon a
change in control of Sprint.
For Against Abstain
[_] [_] [_]
Mark box at right if an address change has been noted on the reverse side of
this card. [_]
---------------------
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------
- -----Stockholder sign here-----------------------Co-owner sign here-------------
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
