<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
GTE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
GTE CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / 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 registrations statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------
(1)Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE> 2
<TABLE>
<S> <C>
[LOGO]
GTE CORPORATION
One Stamford Forum
Stamford, Connecticut 06904
Telephone: 203-965-2000
CHARLES R. LEE
Chairman and Chief Executive Officer March 4, 1994
</TABLE>
To Our Shareholders:
On behalf of the Board of Directors, I cordially invite you to attend the
1994 Annual Meeting of the Shareholders of GTE Corporation. The Annual Meeting
will be held at 2:00 P.M., Local Time, on Wednesday, April 20, 1994, in the
Wisteria Room of the Italian Center, 1620 Newfield Avenue, Stamford,
Connecticut. The formal notice of the Annual Meeting is set forth on the next
page and directions to the meeting are printed on the back cover.
The matters expected to be acted upon at the meeting are described in the
attached Proxy Statement. During the meeting, shareholders who are present at
the meeting will have the opportunity to ask questions.
It is important that your views be represented whether or not you are able
to be present at the Annual Meeting. Please sign and date the enclosed proxy
card and promptly return it to us in the postpaid envelope.
We are gratified by our shareholders' continued interest in GTE and pleased
that in the past so many of you have voted your shares either in person or by
proxy. We hope that you will continue to do so and urge you to return your proxy
card as soon as possible.
Sincerely,
/s/ Charles R. Lee
<PAGE> 3
[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 20, 1994
Stamford, Connecticut
March 4, 1994
The Annual Meeting of Shareholders of GTE Corporation will be held in the
Wisteria Room of the Italian Center, 1620 Newfield Avenue, Stamford,
Connecticut, on Wednesday, April 20, 1994, at 2:00 P.M., Local Time, for the
following purposes:
1. To elect five Class II directors to the Board of Directors;
2. To ratify the appointment of auditors;
3. To consider and act upon the following seven shareholder proposals
described in the accompanying Proxy Statement:
(a) institute confidential voting;
(b) establish a committee to develop criteria for military
contracts;
(c) eliminate the staggered election of directors;
(d) establish criteria to limit executive officers' compensation so
that it does not exceed 75 times the wages of the average
hourly employees and to more closely link wages and
compensation to company profits;
(e) limit increases in executive officers' total annual cash
compensation to an amount no greater than the average annual
percentage pay increases to employees;
(f) issue a report on the CERES Principles; and
(g) establish a policy of reporting on an equal employment
opportunity/affirmative action program.
4. To act upon any other matters properly coming before the meeting
and any adjournment thereof.
Only shareholders of record at the close of business on March 1, 1994 will
be entitled to vote at the meeting.
By order of the Board of Directors,
MARIANNE DROST
Secretary
PLEASE SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE
ENVELOPE PROVIDED FOR THAT PURPOSE.
<PAGE> 4
[LOGO]
ONE STAMFORD FORUM, STAMFORD, CONNECTICUT 06904
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 20, 1994
This Proxy Statement is furnished to shareholders of GTE Corporation ("GTE"
or the "Corporation") in connection with the Annual Meeting of the Shareholders
of GTE (the "Annual Meeting") to be held at 2:00 P.M., Local Time, on Wednesday,
April 20, 1994, at the Italian Center, 1620 Newfield Avenue, Stamford,
Connecticut, and at any adjournment thereof. The GTE Board of Directors is
soliciting proxies to be voted at the Annual Meeting.
This Proxy Statement and Notice of Meeting, the proxy card and GTE's Annual
Report to shareholders were mailed to shareholders beginning March 4, 1994.
PROXY PROCEDURE
Only shareholders of record at the close of business on March 1, 1994 are
entitled to vote in person or by proxy at the Annual Meeting.
GTE's Board of Directors solicits proxies so that each shareholder has the
opportunity to vote on the proposals to be considered at the Annual Meeting.
When a proxy card is returned properly signed and dated, the shares represented
thereby will be voted in accordance with the instructions on the proxy card. If
a shareholder does not return a signed proxy card or does not attend the Annual
Meeting and vote in person, his or her shares will not be voted. Abstentions are
counted towards determining whether a quorum is present. Shares represented by
broker non-votes are not considered present at the meeting and are not counted
towards quorum. If a shareholder attends the Annual Meeting, he or she may vote
by ballot.
Shareholders are urged to mark the boxes on the proxy card to indicate how
their shares are to be voted. If a shareholder returns a signed proxy card but
does not mark the boxes, the shares represented by that proxy card will be voted
as recommended by the Board of Directors. The proxy card gives the individuals
named as Proxies discretionary authority to vote the shares represented on any
other matter that is properly presented for action at the Annual Meeting. A
shareholder may revoke his or her proxy at any time before it is voted by: (i)
giving notice in writing to the Secretary of GTE; (ii) granting a subsequent
proxy; or (iii) appearing in person and voting at the Annual Meeting.
If a shareholder participates in the GTE Shareholder Systematic Investment
Plan (the "SSIP"), his or her proxy card represents both the number of shares
registered in his or her name and the number of full shares credited to his or
her SSIP account. All such shares will be voted in accordance with the
instructions on the proxy card.
Participants in the GTE Savings Plan, the GTE Corporation Savings,
Investment & Tax-Deferral Plan for Hourly Employees, the GTE Hourly Savings
Plan, the AGCS Savings Plan and the AGCS Hourly Savings Plan (collectively, the
"Savings Plans") and the Consolidated Employee Stock Ownership Plan of GTE
Corporation (the "CESOP") who are also holders of additional shares of Common
Stock will receive one proxy card for all holdings registered in a similar
manner. Accordingly, the executed proxy card also will provide instructions to
the trustees of the Savings Plans as to the voting of shares held in those
Plans. Shareholders will receive a separate proxy card for their individual and
Plan holdings if their accounts are not registered in a similar manner. Unvoted
shares of the CESOP are voted at the discretion of the Trustee. Unvoted shares
of the Savings
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Plans are voted by the Trustee in the same proportion as shares for which voting
instructions have been received.
COST OF SOLICITATION
The cost of soliciting proxies will be borne by GTE. Proxies may be
solicited by directors, officers or regular employees of GTE in person or by
telephone or other means. In addition, GTE has retained D.F. King & Co., Inc.,
New York, New York, to assist in the solicitation of proxies, and it is
estimated their charges and expenses will not exceed $25,000. GTE also will
reimburse brokerage houses and other custodians, nominees and fiduciaries for
their expenses in accordance with the regulations of the Securities and Exchange
Commission and the New York Stock Exchange, Inc. concerning the sending of
proxies and proxy material to the beneficial owners of stock.
VOTING
Shares Outstanding
The outstanding voting stock of GTE as of January 31, 1994 consisted of:
953,466,470 shares of Common Stock; 1,832,480 shares of Preferred Stock; 162,804
shares of $2.00 Convertible No Par Preferred Stock; and 4,000,000 shares of
$2.475 No Par Preferred Stock. Each share of the Common Stock, Preferred Stock
and $2.00 Convertible No Par Preferred Stock is entitled to one vote; the $2.475
No Par Preferred Stock is entitled to .5 vote per share.
Vote Required
The nominees for directors who receive a plurality of the votes cast by the
holders of the outstanding Common, Preferred, $2.00 Convertible No Par Preferred
and $2.475 No Par Preferred Stock entitled to vote at the Annual Meeting will be
elected. An affirmative majority of the votes cast is required to ratify the
appointment of auditors and to approve each of the shareholder proposals.
Abstentions and broker non-votes are not counted in determining the number of
shares voted for or against any nominee for director or any proposal.
PROXY STATEMENT PROPOSALS
At the annual meeting each year, the Board of Directors submits to
shareholders its nominees for election as directors. The shareholders also vote
to ratify or reject the auditors selected by the Audit Committee of the Board of
Directors. In addition, the Board of Directors may submit other matters to the
shareholders for action at the annual meeting.
Shareholders of GTE also may submit proposals for inclusion in the proxy
material. These proposals must meet the shareholder eligibility and other
requirements of the Securities and Exchange Commission. In order to be included
in GTE's 1995 proxy material, a shareholder's proposal must be received not
later than November 4, 1994 at GTE's Corporate Headquarters, One Stamford Forum,
Stamford, Connecticut 06904, Attention: Secretary.
In addition, GTE's By-Laws provide that in order for business to be brought
before the Annual Meeting, a shareholder must deliver written notice to the
Secretary of GTE not less than 30 nor more than 60 days prior to the date of the
meeting. The notice must state the shareholder's name, address and number and
class of shares of GTE stock held, and briefly describe the business to be
brought before the meeting, the reasons for conducting such business at the
Annual Meeting and any material interest of the shareholder in the proposal.
The By-Laws also provide that if a shareholder intends to nominate a
candidate for election as a director, the shareholder must deliver written
notice of his or her intention to the Secretary of GTE. The notice must be
delivered not less than 30 nor more than 60 days before the date of a meeting of
shareholders. The notice must set forth the name and address of and number and
class of shares owned by the shareholder (and that of any other shareholders
known to be supporting said nominee) and the nominee for election as a director,
the age of the nominee, the nominee's
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business address and experience during the past five years, any other
directorships held by the nominee, the nominee's involvement in certain legal
proceedings during the past five years and such other information concerning the
nominee as would be required to be included in a proxy statement soliciting
proxies for the election of the nominee. In addition, the notice must include
the consent of the nominee to serve as a director of GTE if elected.
BOARD OF DIRECTORS
The Board of Directors manages the business of GTE. It establishes the
overall policies and standards for GTE and reviews the performance of
management. The directors are kept informed of GTE's operations at meetings of
the Board and its Committees and through reports and analyses and discussions
with management.
The Board of Directors meets on a regularly scheduled basis and, during
1993, met on twelve occasions. In addition, significant communications between
the directors and the Corporation occur wholly apart from regularly scheduled
Board and Committee meetings. Accordingly, management does not regard attendance
at meetings to be the primary criterion in evaluating the contributions a
director makes to GTE. For the Board of Directors as a whole, average attendance
at Board and Committee meetings (the aggregate of the total number of meetings
of the Board of Directors and the total number of meetings of all Committees of
the Board on which each director served) during 1993 was 95.1%. Several of the
Board and Committee meetings were special meetings that were set up on very
short notice. As a result of unavoidable schedule conflicts, one director, Mr.
Edwin L. Artzt, attended 71.4% of the aggregate of all Board and Committee
meetings.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established six standing Committees and has
assigned certain responsibilities to each of those Committees.
Audit Committee
The Audit Committee met four times in 1993. The Audit Committee recommends
the appointment of independent public accountants for GTE, reviews the scope of
audits proposed by the independent public accountants, reviews internal audit
reports on various aspects of corporate operations and periodically consults
with the independent public accountants on matters relating to internal
financial controls and procedures.
Executive Compensation and Organizational Structure Committee
The Executive Compensation and Organizational Structure Committee had eight
meetings during 1993. The functions of this Committee include the review and
approval of compensation of employees above a certain salary level, the review
of management recommendations relating to incentive compensation plans, the
administration of the GTE Corporation Executive Incentive Plan and 1991
Long-Term Incentive Plan, the review of and recommendations concerning
directors' compensation and consultation on senior executive continuity and
organizational matters.
Nominating Committee
The Nominating Committee had two meetings during 1993. The functions of
this Committee include consideration of the size and composition of the Board,
review and recommendation of individuals for election as directors or officers
of GTE and review of criteria for selecting directors. In carrying out its
responsibilities for recommending candidates to fill vacancies on the Board as
they occur and in recommending a slate of directors for election by the
shareholders at the annual meeting, the Committee will consider candidates
suggested by other directors, employees and shareholders. Suggestions for
candidates, accompanied by biographical material for evaluation, may be sent to
the Secretary of GTE at its Corporate Headquarters. Individuals suggested as
candidates should have attained a position of leadership in the candidate's
field of endeavor and
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have demonstrated the ability to exercise sound business judgment. A candidate
also must indicate a willingness to attend scheduled Board and Committee
meetings.
Pension Trust Coordinating Committee
The Pension Trust Coordinating Committee is responsible for reviewing the
performance of the portfolios of and investment advisors to GTE's various
pension plans, approving overall investment policy relating to the assets of the
pension plans and monitoring the actuarial soundness of those plans. The
Committee had three meetings during 1993.
Public Policy Committee
The Public Policy Committee, which met twice during 1993, reviews the
policies and practices of GTE as to corporate contributions, employee safety and
health and assumes such other duties as the Board may from time to time
delegate.
Strategic Issues, Planning and Technology Committee
The Strategic Issues, Planning and Technology Committee is responsible for
reviewing the long-term strategic objectives and goals of the Corporation and
the external and internal issues related to those goals. This Committee had
three meetings during 1993.
DIRECTORS' COMPENSATION
Retainer and Meeting Fees
Directors who are also employees of GTE are not paid any fees or other
remuneration, as such, for service on the Board or on any Board committee.
Each nonemployee director receives an annual retainer of $30,000 plus 200
shares of GTE Common Stock awarded pursuant to the 1991 Long-Term Incentive
Plan. Nonemployee directors receive a retainer of $1,500 for each Committee on
which they serve. A director who chairs a Committee receives a retainer of
$2,500. In addition, nonemployee directors receive $1,200 for each Board or
Committee meeting they attend. Nonemployee directors are those directors who are
not otherwise employees of GTE or its subsidiaries and are not otherwise
eligible to participate in the GTE employee incentive programs, savings plans,
or stock purchase plans.
Other Compensation
Under the Deferred Compensation Plan for Nonemployee Members of the Board
of Directors of GTE Corporation (the "Deferred Compensation Plan"), any
nonemployee director may elect annually to defer all or any portion of his or
her current cash compensation as a director and receive future payments in one
or more installments. Amounts deferred under the Deferred Compensation Plan are
treated as if held in GTE Common Stock and are accounted for in units with each
unit equal to the value of one share of GTE Common Stock ("Common Stock Units").
Common Stock Units increase or decrease in value based on the fair market value
of an equivalent number of shares of GTE Common Stock. In addition, cash equal
to the dividends on an equivalent number of shares of GTE Common Stock is
credited to a nonemployee director's account each time a dividend is paid. The
cash is then converted into additional Common Stock Units. All payments under
the Deferred Compensation Plan are made in cash. A director may elect a payment
schedule that begins either on fixed dates in the future at least six months
after the close of the year for which the deferral is made, or at any time
commencing at least six months after the director retires from GTE's Board.
Directors may also elect to invest the balance in their Deferred Compensation
Plan account in a variety of other investment options beginning six months after
the director retires from GTE's Board.
Under the Phantom Stock Plan for Nonemployee Members of the Board of
Directors of GTE Corporation (the "PSP"), nonemployee directors are awarded 300
GTE Common Stock Units annually. Common Stock Units increase or decrease in
value based on the fair market value of an equivalent number of shares of GTE
Common Stock. The Common Stock Units are held in an
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account for the director and, each time a dividend is paid, an equivalent amount
is converted to Common Stock Units and credited to the director's PSP account.
Payments under the PSP are made in cash and a director may elect a schedule of
payments beginning no earlier than six months after the director retires from
the GTE Board. Directors may also elect to invest the balance of their PSP
account in a variety of investment options other than Common Stock Units
beginning six months after the director retires from GTE's Board.
Messrs. Johnson, Masin, Palmer, Walter and Wohlstetter, directors of GTE,
also received $17,000, $18,500 $16,000 $16,000 and $17,000, respectively, in
meeting and retainer fees during 1993 for serving as directors of Contel
Cellular Inc. ("Contel Cellular"). GTE indirectly owns approximately 90% of the
capital stock of Contel Cellular and the balance is held by public shareholders.
The fees Mr. Masin received were earned prior to his joining GTE as Vice
Chairman. Mr. Johnson also received $23,205 in meeting and retainer fees for
serving as a director of BC TEL, and $1,268 in meeting fees for serving as a
director of Compania Anonima Nacional Telefonos de Venezuela ("CANTV"). GTE
indirectly owns 50.46% of the voting stock of BC TEL and the balance is held by
public shareholders. GTE indirectly controls 20.40% of CANTV through a 51.0%
interest in a consortium which owns 40% of CANTV's voting stock. The balance is
held by the other consortium partners and other Venezuelan holders.
In 1992, GTE entered into a contract with Mr. Johnson to provide consulting
services in connection with GTE's operations in Venezuela. The contract is
renewable annually and Mr. Johnson received $20,000 for services provided in
1993.
Retirement Plan For Nonemployee Directors
The Retirement Plan for Nonemployee Members of the Board of Directors of
GTE Corporation (the "Directors' Retirement Plan") is designed to provide
competitive compensation arrangements for GTE's nonemployee directors. Directors
who are employees of GTE do not participate in this plan.
Under the terms of the Directors' Retirement Plan, a nonemployee director
who retires is eligible to receive annually payments equal to the value of the
annual cash retainer in effect on the date of his or her retirement, the value
of the Common Stock Units awarded under the PSP and the cash equivalent of the
GTE shares of Common Stock granted annually under the LTIP. Payments are made
for the lesser of the remainder of the director's life or the length of his or
her Board service. If a director retires from the Board before reaching age 65,
the annual payment is reduced by 5% for each year the director's age is below
age 65 up to a maximum of 50%.
If a director dies before retirement, his or her spouse will receive 50% of
the director's benefit, unreduced on account of age, for the lesser of the
remainder of the spouse's life or the length of the director's Board service. If
a director dies after retirement, the spouse will receive 50% of the benefit
being received by the director at the time of his or her death. The spouse will
receive the payment for the lesser of the spouse's life or the remainder of the
length of the director's Board service.
One director, Mr. Sloan, who serves on GTE's Board does not participate in
the Directors' Retirement Plan. He was formerly a director of Contel Corporation
("Contel"), which merged with a subsidiary of GTE in 1991, and continues to
participate in the Retirement Plan for Outside Directors of Contel Corporation
(the "Contel Directors' Plan"). His benefit is based upon the greater of the
annual retainer previously paid by Contel or that paid by GTE at the time of
retirement. The Contel Directors' Plan provides eligible directors who retired
from Contel's Board after attaining age 65 and completion of five years of
service with, among other things, an annual benefit for the remainder of their
life equal to the basic annual retainer for members of the Board in effect
during the last full year of the director's service.
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CHARITABLE AWARDS PROGRAM
Nonemployee directors of GTE and designated senior executives of GTE,
including the individuals named in the Summary Compensation Table on page 11,
participate in a charitable awards program. Under this program, the Corporation
will donate an aggregate of $1 million to up to four tax-exempt educational
institutions or public charities designated by the participant. The donations
will be paid in five annual installments after the participant's death if the
participant dies while a director or designated executive of GTE, if the
participant has retired from GTE after completing five or more years of service
as an employee or director of GTE, or if the participant was a director or
designated senior executive of GTE as of November 5, 1992. The program is
financed through the purchase of life insurance by GTE. Participants derive no
financial benefit from this program since all charitable deductions accrue
solely to GTE.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION COMMITTEE REPORT
As members of the Executive Compensation and Organizational Structure
Committee (the "Committee"), we review and approve annual salary range
adjustments for GTE's upper management levels, covering approximately 550
individuals. The Committee evaluates the performance of senior management,
including the Chief Executive Officer, and reviews and approves increases to the
base compensation of executive management of GTE and its subsidiaries. The
Committee also administers GTE's executive incentive plans including approving
the awards under those plans. The Committee periodically reports to the Board on
its activities.
Compensation Philosophy
The Committee bases its decisions on GTE's executive compensation
philosophy, which relates the level of compensation to GTE's success in meeting
its annual and long-term performance goals, rewards individual achievement and
seeks to attract and retain qualified executives. GTE positions its executive
compensation, which includes salary and incentive awards (both annual and long-
term), at or near the median of the range of compensation levels for other major
companies in the telecommunications industry. These companies include the
regional Bell operating companies ("RBOCs") and AT&T (collectively the
"Telecommunications Group"). The RBOCs, along with GTE, are part of the S&P
Telephone Index shown in the Performance Graph on page 14. GTE's executive
compensation for 1993 was approximately at the median for the Telecommunications
Group.
In addition, when developing policies and practices designed to attract and
retain qualified employees, GTE also considers the compensation-related policies
and practices of corporations not involved in the telecommunications industry.
Typically, these non-telecommunications companies are comparable to GTE in terms
of such quantitative measures as revenues, market value and total shareholder
return and are viewed as direct competitors for executive talent in the overall
labor market (the "Broad Industry Group"). This data is obtained from surveys
conducted by nationally recognized compensation consultants. In reviewing this
data, GTE takes into account how its compensation policies and overall
performance compare to similar indices for the Telecommunications Group and the
Broad Industry Group.
Under GTE's compensation philosophy, approximately 40% of executive
compensation position is represented by base salary. The remaining compensation
is paid under incentive plans. Payments under these incentive plans are based
upon the achievement of annual and long-term goals and, accordingly, are "at
risk".
Executive Compensation
In determining whether the base salary of executives, including the Chief
Executive Officer, should be increased, the Committee takes into account
individual performance, performance of the
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operations directed by that executive and the positioning of compensation in
relation to the established salary range. In determining the overall increase in
an executive's total compensation package, base salary plus incentive
compensation, the Committee also takes into account GTE's philosophy of being at
or near the median range for total compensation for companies in the
Telecommunications Group and the Broad Industry Group.
The Committee reviewed Mr. Lee's performance during 1993 based upon GTE's
financial performance in terms of return on equity ("ROE"), total shareholder
return and earnings per share. The Committee also based its review upon Mr.
Lee's performance with respect to developing a strategic plan for GTE during a
time of unprecedented change in the telecommunications industry, initiating a
plan to revitalize the workforce and develop leaders within the Corporation,
process re-engineering, implementing plans to control costs and streamline
operations and re-enforcement of GTE Values, in particular quality and market
sensitivity, and continued pursuit of service reliability and customer value
enhancement. The Committee also evaluated his overall ability to manage and lead
GTE and determined that Mr. Lee's performance merited an increase. The Committee
reviewed comparative data from the Telecommunications Group and the Broad
Industry Group to determine that Mr. Lee's revised salary was consistent with
GTE's overall compensation philosophy. The Committee also determined that his
base compensation is within the salary range previously approved by the
Committee for the position of Chief Executive Officer. The range was developed
based upon comparison to the Telecommunications Group and the Broad Industry
Group. Mr. Lee's total compensation package was determined after a review of
comparative data for the Telecommunications Group and the Broad Industry Group.
Incentive Compensation
Certain executives are also eligible to receive payments under two
incentive plans in addition to their base salary.
Under the Executive Incentive Plan (the "EIP") awards are made based upon
GTE's performance during the last fiscal year and upon the individual's
achievement of certain goals for his or her business unit and other individual
objectives. At the conclusion of each plan year, the Committee reviews the
overall performance of GTE and its business units and determines the overall
rating of the Corporation and the business units to determine the percentage
payout of bonuses for each unit. The head of the business unit then determines
individual bonuses for participants.
No awards under the EIP are made for any year in which GTE's ROE does not
exceed 8%. However, under the terms of the EIP, the Committee may also take into
consideration extraordinary circumstances affecting GTE's financial performance.
The Committee may take into account items that were extraordinary, nonrecurring
and unrelated to the normal operations of the business. These items may include
the impact of mandated accounting changes, unusual charges related to
acquisitions or divestitures or other unusual events.
Mr. Lee's EIP award for 1993 is based upon the performance of GTE as a
whole and Mr. Lee's performance with respect to critical qualitative and
quantitative objectives approved by the Committee. The Committee reviewed the
Corporation's financial performance in 1993, reflecting a balance of the $1.2
billion after tax restructuring charge, the good operating results in 1993, and
the progress in restructuring and process re-engineering plans and their
implementation to date to enhance GTE's future and Mr. Lee's progress toward
achieving the established objectives. Mr. Lee's 1993 objectives included
quantitative goals related to ROE, earnings per share, net income and total
return to shareholders. Mr. Lee's goals also included significant qualitative
objectives in the areas related to GTE's business plan for 1993, strategic
planning for the Corporation's long-term future in light of unprecedented
changes in the telecommunications industry, positioning GTE to better meet
competition over the long-term, addressing the needs of the Corporation's
constituencies, reinforcing GTE Values (with particular emphasis on quality and
market leadership), process re-engineering restructuring the organization, and
other goals related to employee involvement and communications.
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GTE does not use specific weighting factors with respect to performance
measures. The Committee gave equal consideration to GTE's financial performance
and Mr. Lee's achievement of his qualitative objectives. However, in determining
Mr. Lee's award for 1993, the Committee gave particular emphasis to GTE's
operating results, the streamlining of the organization, cost reductions and
process re-engineering and the development of a strategic plan for GTE.
EIP awards for the five most highly compensated executives of GTE are
included in the "Bonus" column of the Summary Compensation Table on page 11.
Certain GTE executives also have an opportunity to earn incentive payments
under GTE's 1991 Long-Term Incentive Plan ("LTIP"). The primary purpose of the
LTIP is to offer participants an incentive to cause GTE to achieve superior
financial performance, thereby helping assure superior performance for the
shareholders. Two types of awards are currently used under the provisions of the
LTIP -- performance bonuses and stock options which may include tandem stock
appreciation rights.
Senior executives of GTE, including the five executives named in the
Summary Compensation Table, are eligible to receive annual grants of performance
bonuses which are earned during a 36-month performance cycle. The performance
bonuses are paid in cash. Awards for the performance cycle ending in 1993 are
based on GTE's financial performance during the relevant cycle as measured by
GTE's average ROE against pre-established target levels.
The Committee established minimum and maximum targets for each three-year
cycle based upon the Corporation's past financial performance and the strategic
plan. In establishing the targeted levels of ROE, the Committee considered past
performance, the strategic goals of the Corporation and the plans for
implementing those goals. The established targets are designed to facilitate
implementing strategic plans and improving performance.
At the time the performance targets for the current LTIP cycles were
established, a Common Stock Unit account was set up for each participant in
LTIP. An initial dollar amount for each account ("target award") was determined
based on the competitive performance bonus grant practices of the
Telecommunications Group and the Broad Industry Group. That amount was then
divided by the average market price for GTE Common Stock for the calendar week
preceding the day the account was established to determine the number of Common
Stock Units in the account. The value of the account increased or decreased
based on the market price of the GTE Common Stock. An amount equal to the
dividends paid on an equivalent number of shares of GTE Common Stock was added
on each dividend payment date. This amount was then converted into a number of
Common Stock Units obtained by dividing the amount of the dividend by the
average price of the GTE Common Stock on the composite tape of the New York
Stock Exchange on the dividend payment date and added to the Common Stock Unit
Account.
If the minimum level of targeted performance is not attained, no award is
paid. If the minimum performance target is achieved, participants receive a
payment of 20% of the target award. Currently, if the maximum performance target
is attained, participants receive a payment of 100% of the target award.
Superior performance, achieving results in excess of the maximum target level,
results in the payment in excess of 100% of the target award based upon the
following formula:
- For the first and second 0.1% above the maximum performance target,
2% is added to the award;
- For the third and fourth 0.1% above the maximum performance target,
3% is added to the award; and
- For each additional 0.1% after .4% above the maximum performance
target, 4% is added to the award.
Payouts to the named executives for the 1989-1991, 1990-1992 and 1991-1993
award cycles are shown in the Summary Compensation Table on page 11. With
respect to those cycles, the
8
<PAGE> 12
Committee had the discretion to adjust targets or performance results to reflect
unusual items that the Committee determined were extraordinary, nonrecurring and
unrelated to the normal operations of the business and unanticipated or not
contemplated at the time the targets were originally established. In considering
the results of the 1991-1993 LTIP Award Cycle, the Committee excluded the impact
of the 1993 extraordinary charge for the retirement of high coupon debt. Awards
under the plan would not have been made if the minimum performance thresholds
were not met. The actual dollar value of each award also reflected stock price
changes during the period and included the equivalent of dividends paid as if
they had been reinvested in additional shares of GTE Common Stock. Awards for
the 1993-1995 award cycle are shown in the Long-Term Incentive Plan Awards table
on page 13.
Under the LTIP, the Committee normally approves annual grants of stock
options, which may include tandem stock appreciation rights, to a larger group
of executives, including the five executives named in the Summary Compensation
Table.
In approving the number of options awarded under the LTIP, the Committee
compares GTE grant levels to competitive practices with respect to such grants
over a period of time, targeting at or near a median grant posture among the
Telecommunications Group and the Broad Industry Group. The number of options
currently held by any individual participant is not a factor in determining
individual grants since such a factor would create an incentive to exercise
options and sell the shares. In 1993, Mr. Lee and the other four most highly
compensated officers received the awards shown in the Summary Compensation Table
on page 11.
New Internal Revenue Service Rules
In late December 1993, the Internal Revenue Service issued proposed
regulations limiting the deduction a publicly held corporation may take for
compensation paid to its chief executive officer and its four other most highly
compensated employees. The IRS regulations limit the amount that a company may
deduct to one million dollars per person unless the compensation constitutes
"performance based" compensation. Final rules have not yet been issued.
Based on the transitional rules, the Committee intends to take action to
permit the deduction of future amounts received under the EIP and LTIP. However,
amounts paid under the EIP with respect to 1993 performance and amounts paid
under the LTIP for 3 year performance cycles beginning prior to 1994 do not
qualify for the deduction.
Other Compensation Plans
GTE also has various broad-based employee benefit plans. Executives
participate in these plans on the same terms as eligible, non-executive
employees, subject to any legal limits on the amounts that may be contributed or
paid to executives under the plans. GTE offers an Employees' Stock Plan pursuant
to the provision of Section 423 of the Internal Revenue Code of 1986 as amended
(the "Code") under which employees may purchase GTE Common Stock at a discount.
The GTE Savings Plan (the "Savings Plan"), pursuant to the provisions of Section
401(k) of the Code, permits employees to invest in a variety of funds on a pre-
or after-tax basis. Matching contributions under the Savings Plan are made in
GTE Common Stock.
GTE also maintains pension, insurance and other benefit plans for its
employees.
<TABLE>
<S> <C>
James W. Walter, Chairman James L. Ketelsen
James R. Barker Russell E. Palmer
Richard W. Jones
</TABLE>
March 4, 1994
9
<PAGE> 13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The directors whose names appear at the conclusion of the Executive
Compensation Committee Report currently serve as members of the Executive
Compensation and Organizational Structure Committee (the "Executive Compensation
Committee"). Mr. Richard W. Jones serves as a business consultant for
PaineWebber Incorporated. The investment banking firm of PaineWebber
Incorporated received underwriting commissions and fees from GTE and its
subsidiaries on the sale of securities and financial advisory services during
1993. In addition, it is possible that PaineWebber may have received brokerage
commissions from trustees of the various pension, retirement, savings or similar
plans of GTE and its subsidiaries, but any such commissions would not have been
as a result of direction by GTE or its subsidiaries with regard to such orders.
10
<PAGE> 14
EXECUTIVE COMPENSATION TABLES
The following tables provide information about executive compensation.
SUMMARY COMPENSATION TABLE
The following table sets forth information about the compensation of the
Chief Executive Officer and each of the other four most highly compensated
executive officers of GTE for services in all capacities to GTE and its
subsidiaries.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------------
AWARDS
----------------------------- PAYOUTS
ANNUAL COMPENSATION SECURITIES ----------
------------------------------------ RESTRICTED UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY OTHER ANNUAL STOCK OPTIONS/ PAYOUTS COMPENSATION
POSITION YEAR ($)(1) BONUS($) COMPENSATION($) AWARDS(2) SARS(#) ($) ($)(3)
- ----------------------------- ---- -------- --------- --------------- --------------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles R. Lee............... 1993 728,846 1,016,800 0 0 86,000 207,100 7,067
Chairman & Chief 1992 699,808 1,151,300 0 0 0 314,600 6,866
Executive Officer(4)
Kent B. Foster............... 1993 578,846 531,700 0 0 58,800 117,100 31,315
Vice Chairman and 1992 537,500 628,000 0 0 0 195,500 28,810
President - GTE Telephone 1991 454,231 614,000 0 0 133,300 256,200 25,512
Operations Group(5)
John L. Segall............... 1993 603,000 495,300 4,364 0 48,400 130,800 35,319
Vice Chairman - Corporate 1992 626,192 484,900 4,151 0 54,200 134,000 24,120
Planning and Development(6) 1991 484,051 395,400 2,320 0 0 62,800 8,448
Nicholas L. Trivisonno....... 1993 429,308 378,700 0 0 40,700 75,500 7,067
Executive Vice President - 1992 412,269 436,800 0 0 0 133,800 6,866
Strategic Planning and 1991 366,154 414,200 0 0 91,200 186,500 5,611
Group President(7)
Bruce Carswell............... 1993 429,308 360,400 0 0 27,800 74,500 7,067
Senior Vice President - 1992 414,231 414,400 0 0 0 133,800 6,866
Human Resources & 1991 368,846 403,300 0 0 91,200 186,500 5,611
Administration
</TABLE>
- ---------------
(1) GTE executives are paid bi-weekly. As a result of this cycle, executives
received 27 payments of base salary in 1992 rather than the usual 26. The
data in the table includes the extra payment and, accordingly, overstates
the 1992 base salary by 1/26th or 3.8%.
(2) Messrs. Lee, Foster, Segall, Trivisonno and Carswell do not own any shares
of restricted stock of GTE.
(3) All other compensation for 1993 includes above market deferred income of
$28,252 for Mr. Segall, company contributions to defined contribution plans
of $7,067 for Messrs. Lee, Segall, Trivisonno and Carswell and $6,502 for
Mr. Foster, and fees of $21,944 and $2,869 for Mr. Foster for serving as a
director of BC TEL and CANTV, respectively, both indirectly-owned
subsidiaries of GTE.
(4) Mr. Lee became Chairman and Chief Executive Officer in May 1992.
(5) Mr. Foster was President of GTE Telephone Operations Group since 1989. He
became Vice Chairman in October 1993.
(6) Mr. Segall was not employed by GTE prior to March 14, 1991. Effective
December 31, 1993, Mr. Segall resigned as Vice Chairman-Corporate Planning
and Development and became an employee consultant.
(7) Mr. Trivisonno became Executive Vice President - Strategic Planning and
Group President in October 1993. Prior to that time he served as Senior Vice
President - Finance.
11
<PAGE> 15
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table shows all grants of options and tandem stock
appreciation rights ("SARs") to the named executive officers of GTE in 1993. The
options and SARs were granted under the LTIP. Pursuant to Securities and
Exchange Commission (the "SEC") rules, the table also shows the value of the
options granted at the end of the option terms (ten years) if the stock price
were to appreciate annually by 5% and 10%, respectively. There is no assurance
that the stock price will appreciate at the rates shown in the table. The table
also indicates that if the stock price does not appreciate, there will be no
increase in the potential realizable value of the options granted.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1)
---------------------------------------------------
PERCENT POTENTIAL REALIZABLE VALUE AT
NUMBER OF OF TOTAL ASSUMED ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS EXERCISE PRICE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO OR BASE TERM
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION ------------------------------
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE 0% 5% 10%
- -------------------------------- ------------ ------------ -------- ---------- ---- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles R. Lee.................. 86,000 4.31% $35.0625 02/15/03 $0 $1,896,352 $4,805,732
Kent B. Foster.................. 48,400 2.42 35.0625 02/15/03 0 1,067,249 2,704,621
10,400 0.52 37.6250 10/12/03 0 246,087 623,632
John L. Segall.................. 48,400 2.42 35.0625 02/15/03 0 1,067,249 2,704,621
Nicholas L. Trivisonno.......... 27,800 1.39 35.0625 02/15/03 0 613,007 1,533,481
12,900 0.65 37.6250 10/12/03 0 305,242 773,543
Bruce Carswell.................. 27,800 1.39 35.0625 02/15/03 0 613,007 1,533,481
</TABLE>
- ---------------
(1) Under the LTIP, one-third of these grants vest annually commencing one year
after the date of grant.
If the price of the GTE Common Stock appreciates, the value of GTE Common
Stock held by the shareholders will also increase. For example, the market value
of GTE Common Stock on February 15, 1993 was approximately $33.9 billion based
upon the market price on that date. If the share price of GTE's Common Stock
increases by 5% per year, the market value on February 15, 2003 of the same
number of shares would be approximately $55.2 billion. If the price of GTE's
Common Stock increases by 10% per year, the market value on February 15, 2003
would be approximately $87.9 billion.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table provides information as to options and stock
appreciation rights exercised by each of the named executive officers of GTE
during 1993 and the value of options and stock appreciation rights held by such
officers at year end measured in terms of the closing price of GTE Common Stock
on December 31, 1993.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
SHARES OPTIONS/SARS AT FY-END AT FY-END($)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles R. Lee........... 14,700 $ 335,488 325,100 214,800 $2,865,464 $ 410,550
Kent B. Foster........... 70,517 1,447,800 99,450 125,450 341,551 212,447
John L. Segall........... 0 0 35,761 93,382 185,603 172,416
Nicholas L. Trivisonno... 0 0 68,000 86,300 240,550 145,350
Bruce Carswell........... 10,929 294,075 163,500 73,400 1,686,453 145,350
</TABLE>
12
<PAGE> 16
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
The LTIP provides for awards, currently in the form of stock options with
tandem stock appreciation rights and cash bonuses, to participating employees.
The stock options and tandem stock appreciation rights awarded under the LTIP to
the five most highly compensated individuals in 1993 are shown in the table on
page 12. The LTIP is described in more detail on pages 8 and 9.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE-BASED PLAN(1)
----------------------------------------
PERFORMANCE OR
NUMBER OF OTHER PERIOD
SHARES, UNITS UNTIL
OR OTHER MATURATION OR THRESHOLD(2) TARGET(3) (#
NAME RIGHTS PAYOUT (# OF UNITS) OF UNITS) MAXIMUM(4)
- ---------------------------- ------------- -------------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C>
Charles R. Lee.............. 12,000 3 Years 2,809 14,043
Kent B. Foster(5)........... 6,100 3 Years 1,428 7,139
670 2 Years 149 743
326 1 Year 69 343
1,620 26 Months 365 1,827
854 14 Months 183 913
119 2 Months 24 121
John L. Segall.............. 6,100 3 Years 1,428 7,139
Nicholas L. Trivisonno(6)... 3,500 3 Years 819 4,096
1,076 26 Months 243 1,213
565 14 Months 121 604
79 2 Months 16 80
Bruce Carswell(7)........... 3,500 3 Years 819 4,096
493 25 Months 111 556
249 13 Months 53 266
19 1 Month 4 19
</TABLE>
- ---------------
(1) It is not possible to predict future dividends and, accordingly, estimated
Common Stock Unit accruals in this table are calculated for illustrative
purposes only and are based upon the dividend rate and price of GTE Common
Stock at the close of business on December 31, 1993. The target award is
the dollar amount derived by multiplying the Common Stock Unit balance at
the end of the award cycle by the price of GTE Common Stock.
(2) The level of average ROE during the cycle which represents minimum
acceptable performance and which, if attained, results in payment of 20% of
the target award. Below the minimum acceptable performance level, no award
is earned.
(3) The average ROE target during the cycle which represents outstanding GTE
performance and which, if attained, results in payment of 100% of the
target award.
(4) This column has intentionally been left blank because it is not possible to
determine the maximum award until the award cycle has been completed. The
maximum amount of the award is limited by the amount the actual ROE exceeds
the targeted ROE. If GTE's average ROE during the cycle exceeds the
performance target, additional bonuses may be earned according to the
schedule on page 8. For example, if average ROE performance exceeds the ROE
target by 0.5%, the performance bonus will equal 114% of the target award.
(5) The award of 6,100 units to Mr. Foster represents the grant for the 1993-95
performance period made while he was President - GTE Telephone Operations
Group. The other grants shown are incremental, prorated awards made when
his position was reclassified and when he was promoted to Vice Chairman and
President - GTE Telephone Operations Group and apply to the original
targets under the 1993-95, 1992-94 and 1991-93 performance periods.
(6) The award of 3,500 units to Mr. Trivisonno represents the grant for the
1993-95 performance period made while he was Senior Vice
President - Finance. The other grants shown are incremental, prorated
awards made when he was promoted to Executive Vice President - Strategic
Planning and Group President and apply to the original targets under the
1993-95, 1992-94 and 1991-93 performance periods.
13
<PAGE> 17
(7) The award of 3,500 units to Mr. Carswell represents the grant for the
1993-95 period made in his position as Senior Vice President - Human
Resources and Administration. The other grants shown are incremental,
prorated awards made when his position was reclassified and apply to the
original targets under the 1993-95, 1992-94 and 1991-93 performance
periods.
PERFORMANCE GRAPH
The following table shows a comparison of five year cumulative total return
to shareholders for GTE, Standard & Poor's ("S&P") 500 Stock Index, and Standard
& Poor's Telephone Index.
[GRAPH]
<TABLE>
<CAPTION>
Measurement Period S&P TELE-
(Fiscal Year Covered) GTE S&P 500 PHONE INDEX
<S> <C> <C> <C>
1/1/89 $100 $100 $100
12/31/89 $165 $132 $157
12/31/90 $145 $128 $150
12/31/91 $181 $166 $161
12/31/92 $191 $179 $177
12/31/93 $203 $197 $204
</TABLE>
* Assumes $100 invested on January 1, 1989.
* S&P Telephone Index is comprised of the Regional Bell Holding
Companies plus GTE.
EXECUTIVE AGREEMENTS
GTE has entered into agreements (the "Agreements") with Messrs. Lee,
Foster, Trivisonno and Carswell regarding benefits to be paid in the event of a
change in control of GTE (a "Change in Control").
A Change in Control is deemed to have occurred if a majority of the members
of the Board do not consist of members of the Incumbent Board (as defined in the
Agreements) or if, in any 12-month period, three or more directors are elected
without the approval of the Incumbent Board. An individual whose initial
assumption of office occurred pursuant to an agreement to avoid or settle a
proxy or other election contest is not considered a member of the Incumbent
Board. In addition, a director who is elected pursuant to such a settlement
agreement will not be deemed a director who is elected or nominated by the
Incumbent Board for purposes of determining whether a Change in Control has
occurred. A Change in Control will not occur in the following situations: (1)
certain merger transactions in which there is at least 50% GTE shareholder
continuity in the surviving corporation, at least a majority of the members of
the board of directors of the surviving corporation consist of members of the
Board of GTE and no person owns more than 20% (or under certain circumstances, a
lower percentage, not less than 10%) of the voting power of the surviving
corporation following the transaction, and (2) transactions in which GTE's
securities are acquired directly from GTE.
14
<PAGE> 18
The Agreements provide for benefits to be paid in the event these
individuals separate from service and have a "good reason" for leaving or are
terminated without "cause" within two years after a Change in Control of GTE.
Good reason for leaving includes but is not limited to the following
events: demotion, relocation or a reduction in total compensation or benefits,
or the new entity's failure to expressly assume obligations under the
Agreements. Termination for cause includes certain unlawful acts on the part of
the executive or a material violation of his or her responsibilities to the
Corporation resulting in material injury to the Corporation.
An executive who experiences a qualifying separation from service will be
entitled to receive up to two times the sum of (i) base salary and (ii) the
average of his or her other percentage awards under the EIP for the previous
three years. The executive will also continue to receive medical and life
insurance coverage for up to two years and will be provided with financial and
outplacement counseling.
In addition, the Agreements with Messrs. Lee and Trivisonno provide that in
the event of a separation from service, they will receive service credit in the
following amounts: two times years of service otherwise credited if the
executive has five or fewer years of credited service; 10 years if credited
service is more than five and not more than 10 years; and, if the executive's
credited service exceeds 10 years, the actual number of credited years of
service. These additional years of service will apply towards vesting,
retirement eligibility, benefit accrual and all other purposes under the
Supplemental Executive Retirement Plan and the Executive Retired Life Insurance
Plan. In addition, each executive will be considered to have not less than 76
points and 15 years of accredited service for the purpose of determining his or
her eligibility for early retirement benefits. However, there will be no
duplication of benefits.
The Agreements remain in effect until the earlier of July 1 of each
successive year or the date on which the executive reaches age 65, unless the
Agreement is terminated earlier pursuant to its terms. The Agreements will be
automatically renewed on each successive July 1 unless, not later than December
31 of the preceding year, one of the parties notifies the other that he does not
wish to extend the Agreement. If a Change in Control occurs, the Agreements will
remain in effect until the obligations of GTE (or its successor) under the
Agreements have been satisfied.
Effective December 31, 1993, Mr. Segall resigned as Vice
Chairman - Corporate Planning and Development. Under the terms of Mr. Segall's
employment agreement with GTE, as modified, he will continue with GTE as an
employee-consultant until March 13, 1996. During this period he will continue to
participate in certain GTE plans for executives and he will receive a base
salary of $603,000. Certain benefits under the employment agreement shall cease
upon the breach of certain terms of the agreement. On or after March 13, 1996,
(or earlier as specified in the employment agreement), Mr. Segall will be paid a
monthly supplemental pension benefit equal to the lesser of (a) $19,625, or (b)
$250 multiplied by the number of full months of Mr. Segall's service with Contel
and GTE after September 1, 1989, less the actuarial equivalent of any benefits
which Mr. Segall is entitled to receive under any GTE or Contel pension plan in
which he participates or, if greater, the combined GTE Supplemental Executive
Retirement Plan ("SERP") and pension plan benefit.
15
<PAGE> 19
RETIREMENT PROGRAMS
Pension Plans
The estimated annual benefits payable, calculated on a single life annuity
basis, under GTE's defined benefit pension plans at normal retirement at age 65,
based upon final average earnings and years of employment, is illustrated in the
table below:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL AVERAGE ----------------------------------------------------------------
EARNINGS 15 20 25 30 35
- ------------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 300,000 $ 64,229 $ 85,638 $107,048 $ 128,457 $ 149,867
400,000 85,979 114,638 143,298 171,957 200,617
500,000 107,729 143,638 179,548 215,457 251,367
600,000 129,479 172,638 215,798 258,957 302,117
700,000 151,229 201,638 252,048 302,457 352,867
800,000 172,979 230,638 288,298 345,957 403,617
900,000 194,729 259,638 324,548 389,457 454,367
1,000,000 216,479 288,638 360,798 432,957 505,117
1,200,000 259,979 346,638 433,298 519,957 606,617
1,500,000 325,229 433,638 542,048 650,457 758,867
2,000,000 433,978 578,638 723,298 867,957 1,012,617
2,500,000 542,729 723,638 904,548 1,085,454 1,266,366
</TABLE>
All executive officers of GTE are employees of GTE Service Corporation, a
wholly-owned subsidiary, which maintains a noncontributory pension plan for the
benefit of all of its employees based on years of service. Pension benefits to
be paid from this plan and contributions to this plan are related to basic
salary exclusive of overtime, differentials, incentive compensation (except as
otherwise described) and other similar types of payment. Under this plan,
pensions are computed on a two-rate formula basis of 1.15% and 1.45% for each
year of service, with the 1.15% service credit being applied to that portion of
the average annual salary for the five highest consecutive years that does not
exceed the Social Security Integration Level (the portion of salary subject to
the Federal Social Security Act), and the 1.45% service credit being applied to
that portion of the average annual salary that exceeds said level. As of
February 17, 1994, the credited years of service under the plan for Messrs. Lee,
Foster, Segall, Trivisonno and Carswell are 10, 23, 4, 5 and 35, respectively.
Under federal law, an employee's benefits under a qualified pension plan
such as the GTE Service Corporation plan are limited to certain maximum amounts.
GTE maintains a SERP, which supplements the benefits of any participant in the
qualified pension plan by direct payment of a lump sum or by an annuity, on an
unfunded basis, of the amount by which any participant's benefits under the GTE
Service Corporation pension plan are limited by law. In addition, the SERP
includes a provision permitting the payment of additional retirement benefits
determined in a similar manner as under the qualified pension plan on
remuneration accrued under management incentive plans as determined by the
Executive Compensation and Organizational Structure Committee.
Executive Retired Life Insurance Plan
The Executive Retired Life Insurance Plan ("ERLIP") provides Messrs. Lee,
Foster, Trivisonno and Carswell a postretirement life insurance benefit of three
times final base salary. Upon retirement, ERLIP benefits may be paid as life
insurance or, optionally, an equivalent amount may be paid as a lump sum payment
equal to the present value of the life insurance amount (based on actuarial
factors and the interest rate then in effect), as an annuity or as installment
payments. If an
16
<PAGE> 20
optional payment method is selected, the ERLIP benefit will be based on the
actuarial equivalent of the present value of the life insurance amount.
CERTAIN TRANSACTIONS
Mr. Michael T. Masin is Vice Chairman and a director of GTE and was a
managing partner in the law firm of O'Melveny & Myers until October 1993. GTE
and its subsidiaries utilized the services of this firm during 1993.
During 1993, The Boston Consulting Group, Inc. received fees from GTE and
its subsidiaries of approximately $4,110,000 for consulting services. Dr. Sandra
O. Moose is a director of GTE and a Senior Vice President and Director of The
Boston Consulting Group, Inc.
Mr. Charles Wohlstetter is Vice Chairman and a director of GTE. GTE has
assumed and modified Mr. Wohlstetter's agreement with Contel to serve as a
consultant for the remainder of his life. The agreement provides that he will be
compensated at an annual rate of $824,828 plus the payments he receives under
the Contel Senior Executive Supplemental Income Plan and pension plan. In the
event of Mr. Wohlstetter's death, GTE will pay his wife during her lifetime
one-half of the amounts which would have been payable to Mr. Wohlstetter under
the agreement. GTE will pay for certain expenses relating to services performed
by Mr. Wohlstetter under this agreement. During 1993, Mr. Wohlstetter also
received miscellaneous compensation from GTE (including personal automobile
related expenses, club memberships and tax assistance services) valued at
$90,745.
OWNERSHIP OF STOCK BY DIRECTORS, NOMINEES FOR DIRECTORS, EXECUTIVE OFFICERS AND
CERTAIN BENEFICIAL OWNERS
Voting Stock
The following table indicates the shares owned by United States Trust
Company of New York as Trustee for Minnesota Power & Light Company and
Kindercare Learning Centers, Inc., the only person known to GTE to be the owner
of more than 5 percent of any class of its voting stock as of February 17, 1994:
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OF CLASS
------------------- ---------------------------------------------- ------------ --------
<C> <S> <C> <C>
Preferred Stock United States Trust Company of New York as
Trustee for Minnesota Power & Light Company
and Kindercare Learning Centers, Inc. 45 Wall
Street New York, New York 10005 301,000 16.4%
</TABLE>
17
<PAGE> 21
The table below sets forth the shares of GTE's Common Stock beneficially
owned by each director, nominee for director, the Chief Executive Officer and
the other four most highly compensated executive officers and by all directors
and executive officers as a group. No director, nominee for director or
executive officer owns as much as one-tenth of one percent of the total
outstanding shares. Unless otherwise indicated, all persons named in the table
have sole voting and investment power with respect to the shares shown.
<TABLE>
<CAPTION>
PERCENT OF
SHARES TOTAL SHARES
BENEFICIALLY OUTSTANDING
OWNED AS OF AS OF
FEBRUARY 17, FEBRUARY 17,
NAME OF DIRECTOR OR NOMINEE 1994 1994
- ------------------------------------------------------ ------------ -----------------------
<S> <C> <C>
Edwin L. Artzt........................................ 1,870
James R. Barker....................................... 3,800
Edward H. Budd........................................ 3,374
Kent B. Foster(1)(2).................................. 201,476 No director or
James L. Johnson(2)................................... 627,960 nominee or executive
Richard W. Jones...................................... 11,888 officer owns as much
James L. Ketelsen..................................... 1,400 as 1/10th of 1 percent
Charles R. Lee(1)(2).................................. 479,284
Michael T. Masin...................................... 2,600
Sandra O. Moose....................................... 1,400
Russell E. Palmer..................................... 1,800
Howard Sloan(3)....................................... 56,699
Robert D. Storey...................................... 1,100
James W. Walter....................................... 11,800
Charles Wohlstetter................................... 268,118
------------
1,674,569
------------
------------
EXECUTIVE OFFICERS(1)(2)
- ------------------------------------------------------
Charles R. Lee........................................ 479,284
Kent B. Foster........................................ 201,476
John L. Segall........................................ 132,311
Nicholas L. Trivisonno................................ 110,389
Bruce Carswell(4)..................................... 253,286
------------
1,176,746
------------
------------
All directors and executive officers as a
group(1)(2)......................................... 2,729,838 Represents
------------ less
------------ than 1/5th of
1 percent
</TABLE>
- ---------------
(1) Includes shares acquired through participation in GTE's Consolidated
Employee Stock Ownership Plan and/or the GTE Savings Plan.
(2) Included in the number of shares beneficially owned by Messrs. Lee, Foster,
Segall, Trivisonno, Carswell, and Johnson and all directors and executive
officers as a group are 418,166, 148,908, 78,809, 100,066, 195,566, 539,375
and 1,935,729 shares, respectively, which such persons have the right to
acquire within 60 days pursuant to stock options.
(3) Includes 10,797 shares held in trusts on behalf of a member of Mr. Sloan's
family and 2,300 shares owned by a charitable foundation of which Mr. Sloan
is President. Mr. Sloan has voting and investment power with respect to
these shares but disclaims any beneficial interest therein.
(4) Includes 300 shares owned by Mr. Carswell's wife in which he disclaims any
beneficial ownership.
18
<PAGE> 22
Common Stock Units
In addition to the shares of GTE Common Stock shown in the preceding table,
the nonemployee directors held the following number of Common Stock Units, which
are payable in cash, under the Deferred Compensation Plan and the PSP (See
section entitled "Directors' Compensation").
<TABLE>
<CAPTION>
NUMBER OF
COMMON STOCK
UNITS AS OF
NAME OF DIRECTOR FEBRUARY 17, 1994
- ------------------------------------------------------------------------- -----------------
<S> <C>
Edwin L. Artzt........................................................... 4,898
James R. Barker.......................................................... 70,988
Edward H. Budd........................................................... 6,209
James L. Johnson......................................................... 935
Richard W. Jones......................................................... 124,526
James L. Ketelsen........................................................ 935
Michael T. Masin (1)..................................................... 9,087
Sandra O. Moose.......................................................... 935
Russell E. Palmer........................................................ 935
Howard Sloan............................................................. 935
Robert D. Storey......................................................... 935
James W. Walter.......................................................... 111,438
Charles Wohlstetter...................................................... 935
</TABLE>
- ---------------
(1) Mr. Masin participated in the Deferred Compensation Plan and the PSP prior
to joining GTE as Vice Chairman.
Contel Cellular Stock
The following table indicates the number of shares of Class A Common Stock,
$1.00 par value per share, of Contel Cellular beneficially owned by each GTE
director and by all directors and executive officers of GTE as a group as of
February 17, 1994. GTE indirectly owns approximately 90% of Contel Cellular and
the remaining shares are owned by the public. Only directors of GTE who own
shares of Contel Cellular Class A Common Stock are named in the table.
<TABLE>
<CAPTION>
SHARES OF CONTEL
CELLULAR CLASS A
COMMON STOCK
NAME BENEFICIALLY OWNED(1)
- ---------------------------------------------------------------------- ---------------------
<S> <C>
Howard Sloan.......................................................... 11,000
Charles Wohlstetter................................................... 7,000
--------
All GTE directors and executive officers as a group................... 18,000
--------
--------
</TABLE>
- ---------------
(1) Each of these amounts, and all of them in the aggregate, represented less
than 1% of the outstanding shares of Contel Cellular Class A Common Stock as
of February 17, 1994.
DIRECTOR AND EXECUTIVE OFFICER SECURITIES REPORTS
The Federal securities laws require GTE's directors and executive officers,
and persons who own more than 10% of a registered class of GTE's equity
securities, to file with the Securities and Exchange Commission and the New York
Stock Exchange, Inc. initial reports of ownership and reports of changes in
ownership of any equity securities of the Corporation.
To GTE's knowledge, based solely on review of the copies of such reports
furnished to GTE and written representations that no other reports were
required, all persons subject to these reporting requirements filed the required
reports on a timely basis.
19
<PAGE> 23
ITEM 1.
ELECTION OF DIRECTORS
GTE's Board of Directors is divided into three classes. Each class of
directors is elected for a three-year term. Messrs. Barker, Jones, Sloan, Walter
and Wohlstetter are nominated for election by GTE's shareholders as Class II
directors. All nominees are currently directors and were previously elected by
the shareholders. Class II directors elected in 1994 will serve for a term of
three years which expires at the Annual Meeting of Shareholders in 1997 or when
their successors are elected and qualified. However, under GTE's By-laws, Mr.
Walter must retire from the Board at the 1995 Annual Meeting. Each nominee is at
present available for election.
If all the nominees for directors are elected by GTE's shareholders at the
Annual Meeting, GTE's Board of Directors will then consist of 15 directors, 12
directors whose principal occupations are or were outside GTE and 3 directors
who are presently employees of GTE. The following provides information about the
nominees for directors.
THE BOARD RECOMMENDS A VOTE FOR ALL NOMINEES.
BIOGRAPHICAL INFORMATION
<TABLE>
<CAPTION>
NOMINEE, AGE AND
YEAR ELECTED A DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
<S> <C>
- ---------------------------------------------------------------------------------------------
NOMINEES FOR CLASS II DIRECTORS
TERM EXPIRING AT 1997 ANNUAL MEETING
- ---------------------------------------------------------------------------------------------
JAMES R. BARKER Chairman of The Interlake Steamship Co. and Vice Chairman of
58 1976 Mormac Marine Group, Inc. Mr. Barker is also a director and a
principal owner of Meridian Aggregates, Inc., a producer of
[PHOTO] aggregate products for the construction and railroad industries.
Mr. Barker was formerly Chairman of the Board of Moore McCormack
Resources, Inc. and Chairman of that company's operating
subsidiaries since April 1971. He was also Chief Executive
Officer of Moore McCormack Resources, Inc. from 1971 to January
1987. In 1969, Mr. Barker co-founded a management consulting
firm, Temple, Barker & Sloane, Inc., and served in the capacity
of Executive Vice President. He is a Director of The Pittston
Company, a member of the Board of Trustees of Stamford Hospital
and a member of the Business Advisory Committee of the
Transportation Center at Northwestern University and the Board of
Visitors of Columbia University. Mr. Barker is Chairman of the
Pension Trust Coordinating Committee and a member of the Audit
Committee and the Executive Compensation and Organizational
Structure Committee of GTE.
</TABLE>
20
<PAGE> 24
BIOGRAPHICAL INFORMATION
<TABLE>
<CAPTION>
NOMINEE, AGE AND
YEAR ELECTED A DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ---------------------------------------------------------------------------------------------
NOMINEES FOR CLASS II DIRECTORS
TERM EXPIRING AT 1997 ANNUAL MEETING
- ---------------------------------------------------------------------------------------------
<S> <C>
RICHARD W. JONES Business Consultant, PaineWebber Incorporated. From 1977 to 1988
68 1966-1974 he was Managing Director and Executive Vice President of the
JANUARY 1975 investment banking firm of E. F. Hutton & Company, Inc. Prior to
assuming that position, Mr. Jones was associated with Paine,
[PHOTO] Webber, Jackson & Curtis Incorporated, investment bankers, having
served as Senior Vice President and a Director of that firm from
1973 to 1977. Mr. Jones was also associated with Mitchum, Jones &
Templeton Incorporated, investment bankers, having served as
President of that firm from 1961 through 1970 and Chairman of the
Board from 1970 through 1973. He is a member of the Audit
Committee, the Executive Compensation and Organizational
Structure Committee and the Public Policy Committee of GTE.
HOWARD SLOAN Mr. Sloan is a private investor. Prior to joining GTE's Board he
70 1991 was a Director of Contel Corporation. Mr. Sloan is a Trustee and
Chairman of the Board of the New York Blood Center and a Trustee
[PHOTO] of Lincoln Center Theater. He is a member of the Audit Committee,
the Public Policy Committee and the Pension Trust Coordinating
Committee of GTE.
JAMES W. WALTER Founder of Walter Industries, Inc. (formerly Jim Walter
71 1969 Corporation), home construction-building materials manufacturer,
in 1946 and Chairman of its Board since 1962. Mr. Walter also
[PHOTO] serves on the Board of Directors of Anchor Glass Container
Corporation and Contel Cellular Inc. Mr. Walter is Chairman of
the Executive Compensation and Organizational Structure Committee
and a member of the Nominating Committee and the Strategic
Issues, Planning and Technology Committee of GTE.
</TABLE>
21
<PAGE> 25
BIOGRAPHICAL INFORMATION
<TABLE>
<CAPTION>
NOMINEE, AGE AND
YEAR ELECTED A DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ---------------------------------------------------------------------------------------------
NOMINEES FOR CLASS II DIRECTORS
TERM EXPIRING AT 1997 ANNUAL MEETING
- ---------------------------------------------------------------------------------------------
<S> <C>
CHARLES WOHLSTETTER Vice Chairman. Prior to joining GTE's Board, he was Chairman of
83 1991 the Board of Contel Corporation. He was one of the three
co-founders of Contel and had served on its Board since 1960. Mr.
[PHOTO] Wohlstetter was an investment banker and a member of the New York
Stock Exchange, Inc. earlier in his career. He is Chairman of the
Board of Tesoro Petroleum Corporation and a Director of Contel
Cellular Inc., and Fifth Dimension Inc. Mr. Wohlstetter has a
broad range of business, cultural, civic, scientific, educational
and charitable interests and serves on various boards, councils,
commissions, and advisory groups in those areas. He is Chairman
of the Strategic Issues, Planning and Technology Committee and a
member of the Pension Trust Coordinating Committee and the Public
Policy Committee of GTE.
</TABLE>
The following provides information about the members of the Board of
Directors who are continuing in office.
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------
CLASS I DIRECTORS
TERM EXPIRING AT 1996 ANNUAL MEETING
- ---------------------------------------------------------------------------------------------
EDWARD H. BUDD Chairman of The Travelers Insurance Companies and Chairman, Exec-
60 1985 utive Committee, The Travelers, Inc. Mr. Budd was elected
President and Chief Operating Officer in 1976, Chief Executive
Officer in 1981 and Chairman in 1982. He is a Director of The
Travelers, Inc., Delta Air Lines, Inc., the American Insurance
Association, and the Institute for Living, and a member of The
Business Council. He is Chairman of the Public Policy Committee
and a member of the Nominating Committee and the Pension Trust
Coordinating Committee of GTE.
</TABLE>
22
<PAGE> 26
BIOGRAPHICAL INFORMATION
<TABLE>
<CAPTION>
DIRECTOR, AGE
AND YEAR ELECTED PRINCIPAL OCCUPATION AND OTHER INFORMATION
<S> <C>
- ---------------------------------------------------------------------------------------------
CLASS I DIRECTORS
TERM EXPIRING AT 1996 ANNUAL MEETING
- ---------------------------------------------------------------------------------------------
JAMES L. JOHNSON Retired Chairman and Chief Executive Officer. Mr. Johnson, who
66 1985 retired in 1992, has been designated Chairman Emeritus by the
Board. He joined GTE in 1949 and has held a variety of management
positions within the Telephone Operating Group. He was elected
President of the GTE Telephone Operating Group in 1981, Senior
Vice President of GTE and President and Chief Operating Officer
of its Telephone Operating Group in December 1983, President and
Chief Operating Officer of GTE in March 1986 and became Chairman
and Chief Executive Officer in May 1988. Mr. Johnson is a
Director of MONY (The Mutual Life Insurance Company of New York),
Valero Energy Corporation, Greyhound Financial Corp., Contel
Cellular Inc., BC TEL, Compania Anonima Nacional Telefonos de
Venezuela (CANTV) and VenWorld, and a member of The Texas Tech
Board of Regents. He is a Trustee of the Joint Council on
Economic Education and a member of the Strategic Issues, Planning
and Technology Committee of GTE.
JAMES L. KETELSEN Retired Chairman of Tenneco Inc. Mr. Ketelsen retired as Chairman
63 1986 of Tenneco in 1992. He was elected Executive Vice
President - Finance of Tenneco Inc. in 1972 and was appointed
Chairman and Chief Executive Officer in 1978. He is a Director of
J.P. Morgan & Co. Incorporated and its principal subsidiary,
Morgan Guaranty Trust Company of New York, and of Sara Lee
Corporation and a Trustee of Northwestern University. Mr.
Ketelsen is Chairman of the Audit Committee and a member of the
Executive Compensation and Organizational Structure Committee and
the Pension Trust Coordinating Committee of GTE.
CHARLES R. LEE Chairman and Chief Executive Officer. Mr. Lee joined GTE in 1983
54 1989 as Senior Vice President - Finance and in 1986 he was named
Senior Vice President - Finance and Planning. He was elected
President and Chief Operating Officer, effective January 1, 1989,
and became Chairman and Chief Executive Officer in 1992. Prior to
joining GTE, he held various financial and management positions
in the steel, transportation and entertainment industries. Mr.
Lee is a Director of United Technologies Corporation, USX
Corporation and Contel Cellular Inc. He was also elected a
Director of The Procter & Gamble Company, effective March 8,
1994. He is a member of the Business Roundtable, a Trustee of the
Board of Trustees of Cornell University, a Trustee of the
National Planning Association and Chairman of the New American
Realities Committee of the National Planning Association, a
member of The Conference Board, Harvard Business School's Board
of Directors of the Associates, and a director of the Stamford
Hospital Foundation. Mr. Lee is a Personal Trustee of the GTE
Foundation and a member of the Strategic Issues, Planning and
Technology Committee of GTE.
</TABLE>
23
<PAGE> 27
BIOGRAPHICAL INFORMATION
<TABLE>
<CAPTION>
DIRECTOR, AGE
AND YEAR ELECTED PRINCIPAL OCCUPATION AND OTHER INFORMATION
<S> <C>
- ---------------------------------------------------------------------------------------------
CLASS I DIRECTORS
TERM EXPIRING AT 1996 ANNUAL MEETING
- ---------------------------------------------------------------------------------------------
MICHAEL T. MASIN Vice Chairman of the Board. Mr. Masin was elected Vice Chairman
49 1989 on October 20, 1993. Prior to that, he was Managing Partner of
the New York office of the law firm of O'Melveny & Myers. In
addition, Mr. Masin was Co-chair of the firm's International
Practice Group. Mr. Masin joined the firm in 1969 and became a
partner in 1977. He is a Director of the Trust Company of the
West (Los Angeles) and Contel Cellular Inc. Mr. Masin is a
Trustee of The American University and a member of the Council on
Foreign Relations.
- ---------------------------------------------------------------------------------------------
CLASS III DIRECTORS
TERM EXPIRING AT 1995 ANNUAL MEETING
- ---------------------------------------------------------------------------------------------
EDWIN L. ARTZT Chairman of the Board and Chief Executive Officer of The Procter
63 1984 & Gamble Company since January 1990. Mr. Artzt had served as Vice
Chairman of the Board of The Procter & Gamble Company and
President of Procter & Gamble International since 1984. Prior to
that, he was an Executive Vice President since 1980 and had
served as Group Vice President for European operations. Mr. Artzt
is a Director of Teradyne, Inc., Delta Air Lines, Inc. and a
member of the Business Council and Business Roundtable. Mr. Artzt
is a member of the Nominating Committee, the Pension Trust
Coordinating Committee and the Strategic Issues, Planning and
Technology Committee of GTE.
KENT B. FOSTER Vice Chairman of the Board of Directors since October 1993 and
50 1992 President of GTE Telephone Operations Group since January 1989.
Previously, Mr. Foster served as Group Vice President of GTE
Telephone Operations since April 1988. Since joining GTE in 1970,
Mr. Foster served in a number of positions of increasing
responsibility throughout the GTE system. Mr. Foster serves on
the Board of Directors of the United States Telephone
Association, BC TEL, Quebec Telephone, Compania Anonima Nacional
Telefonos de Venezuela (CANTV), NationsBank of Texas, the Dallas
Symphony Orchestra and The Dallas Museum of Art.
</TABLE>
24
<PAGE> 28
BIOGRAPHICAL INFORMATION
<TABLE>
<CAPTION>
DIRECTOR, AGE
AND YEAR ELECTED PRINCIPAL OCCUPATION AND OTHER INFORMATION
<S> <C>
- ---------------------------------------------------------------------------------------------
CLASS III DIRECTORS
TERM EXPIRING AT 1995 ANNUAL MEETING
- ---------------------------------------------------------------------------------------------
SANDRA O. MOOSE Senior Vice President and New York Office Administrator and
52 1978 Director, The Boston Consulting Group, Inc. She is a Director of
Rohm and Haas Company and twenty-seven investment companies
sponsored by The New England Funds, a Corporator of New England
Deaconess Hospital, and a member of the Dana-Farber Cancer
Institute. She is a member of the Audit Committee, the Public
Policy Committee and the Strategic Issues, Planning and
Technology Committee of GTE.
RUSSELL E. PALMER Chairman and Chief Executive Officer, The Palmer Group. Mr.
59 1984 Palmer was formerly Dean, The Wharton School, University of
Pennsylvania from 1983 until June 1990. Prior to that, he was
managing director and Chief Executive Officer of Touche Ross
International, a worldwide accounting firm. Mr. Palmer joined
Touche Ross in 1956 and was elected managing director of Touche
Ross International in 1974. Mr. Palmer is a Director of The
Goodyear Tire & Rubber Company, Bankers Trust New York
Corporation and its subsidiary, Bankers Trust Company, May
Department Stores Company, Allied-Signal, Inc., Safeguard
Scientifics, Inc., Imasco Limited, Federal Home Loan Mortgage
Corporation and Contel Cellular Inc. He has been President of the
Financial Accounting Foundation and a member of the Board of
Directors of the American Institute of Certified Public
Accountants. Mr. Palmer is a former member of the Presidential
Commission on Management Improvement and serves on the boards of
a number of charitable and civic organizations. He is Chairman of
the Nominating Committee and a member of the Strategic Issues,
Planning and Technology Committee and the Executive Compensation
and Organizational Structure Committee of GTE.
ROBERT D. STOREY Partner with the Cleveland law firm of Thompson, Hine & Flory.
57 1985 Mr. Storey previously was a partner with the Cleveland law firm
of McDonald, Hopkins, Burke & Haber Co., L.P.A. Mr. Storey joined
its predecessor firm in 1967 and became a partner in 1971. In
1964 he began his career as an attorney with The East Ohio Gas
Company and in 1966 he became Assistant Director of The Legal Aid
Society of Cleveland. He is a Director of Bank One, Cleveland,
The Procter & Gamble Company, American Education Centers, Inc.
and May Department Stores Company. Mr. Storey is a Trustee of
Case Western Reserve University and the Kresge Foundation and a
former Trustee of Phillips Exeter Academy, Cleveland State
University and Overseer of Harvard University. He is a member of
the Audit Committee, the Nominating Committee and the Public
Policy Committee of GTE.
</TABLE>
25
<PAGE> 29
ITEM 2.
The following resolution will be offered by the Board of Directors at the
meeting:
RESOLVED: That the appointment of Arthur Andersen & Co. by the Board of
Directors of the Corporation to conduct the annual audit of the financial
statements of GTE Corporation and its subsidiary companies for the year
ending December 31, 1994 is ratified, confirmed and approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOREGOING PROPOSAL FOR THE
FOLLOWING REASONS:
The Board of Directors of GTE first appointed Arthur Andersen & Co.
("Arthur Andersen"), independent public accountants, as its auditors in 1935 and
has reappointed the firm as auditors each succeeding year to date. As a result
of Arthur Andersen's knowledge of GTE's operations and reputation in the
auditing field, the Board of Directors is convinced that the firm has the
necessary personnel, professional qualifications and independence to act as
GTE's auditors. The Board has again selected Arthur Andersen as GTE's auditors
for the year 1994 and recommends that the shareholders ratify and approve the
selection. Arthur Andersen's fees for recurring auditing and tax services for
GTE and all of its subsidiaries for the year ended December 31, 1993 are
estimated at $10.5 million.
In the event this resolution does not receive the necessary vote for
adoption, or if for any reason Arthur Andersen ceases to act as auditors for
GTE, the Board of Directors of GTE will appoint other independent public
accountants as auditors.
Representatives of Arthur Andersen will attend the Annual Meeting. They
will have the opportunity to make a statement and also will be available to
respond to appropriate questions from shareholders at the meeting.
ITEM 3.
GTE has been notified by the College Retirement Equities Fund ("CREF"), 730
Third Avenue, New York, New York 10017-3206, representing 8,342,412 shares of
Common Stock, that it intends to propose the following resolution at the Annual
Meeting. The proposed resolution and supporting statement, for which the Board
of Directors and GTE accept no responsibility, are as follows:
"WHEREAS, the Company uses a system of proxy voting that does not
ensure confidentiality;
WHEREAS, in our opinion, such a non-confidential system undermines
corporate democracy by creating the potential for undue pressure on
shareholders;
WHEREAS, we believe that confidential voting is necessary to preserve
the integrity of the proxy system;
RESOLVED, that the shareholders request that the Board of Directors:
Take all necessary steps to implement a system of confidential voting
whereby (a) all proxies, ballots and voting tabulations that identify
shareholders shall be kept secret and (b) independent third parties shall
tabulate such votes."
The following is the statement submitted in support of this proposal:
"I. CONFIDENTIAL VOTING IS ESSENTIAL TO CORPORATE DEMOCRACY AND
PREVENTS ANY APPEARANCE OF IMPROPRIETY IN THE PROXY PROCESS.
Just as the secret ballot is a cornerstone of American political
democracy, we believe that confidential voting is vital to corporate
democracy. In our view, the value of the shareholder's
26
<PAGE> 30
right to exercise a proxy is greatly diminished if management can monitor
how particular shareholders vote.
If proxies are not kept secret, there is the potential for undue
management pressure on shareholders.
II. CONFIDENTIAL VOTING HELPS ENSURE A LEVEL PLAYING FIELD IN PROXY
CONTESTS.
The current non-confidential voting system gives management an unfair
advantage in proxy contests. By allowing management to monitor how
particular shareholders vote, non-confidential voting provides management
with an opportunity to resolicit proxies in support of its position.
Shareholders who submit proposals for inclusion in the Company's proxy
statement are denied this opportunity because they do not have access to
proxies already submitted. Confidential voting will help ensure a level
playing field by eliminating the possibility of management resolicitation.
III. CONFIDENTIAL VOTING PRESERVES SHAREHOLDERS' INVESTMENT VALUE.
We believe that one of the key attributes of stock ownership is the
ability to vote on proxy matters without the potential for coercion or
unfair influence. The ability to vote freely on proxy matters affords
shareholders a voice in shaping the Company's future on issues of
importance to them. Because of the potential for coercion or reprisal,
non-confidential voting undermines this key attribute of stock ownership
and may diminish the value of the stock accordingly.
Our proposal calling for a system of confidential voting is not
intended to inhibit communications between shareholders and management nor
to imply that management has abused the voting process in the past. Our
proposal simply seeks to bring the practices of the Company into line with
a democratic system of voting which eliminates any possibility or
appearance of improper influence and which has already been adopted by a
number of other major corporations."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOREGOING PROPOSAL FOR
THE FOLLOWING REASONS:
GTE fully complies with all requirements regarding the voting and
tabulation of proxies. It has already taken additional steps to ensure that
the voting process does not result in any abuse or coercion of shareholders
and believes these procedures adequately address many of the concerns
raised in the shareholder proposal. In their supporting statement, the
proponents acknowledge that their proposal does not imply that GTE has
abused the voting process in the past. For the reasons discussed below, the
Board of Directors does not believe that a change in GTE's procedures is
necessary.
Shareholders already have the option to keep their votes confidential
by registering their shares in the name of a bank, broker or other nominee.
These nominee holders do not disclose the names of the beneficial holders
without their permission and, accordingly, the shareholder's privacy and
the confidentiality of his or her vote is guaranteed.
GTE has taken a number of actions to ensure confidentiality throughout
the proxy tabulation. For example, GTE recognizes that its employees who
own shares through its various employee benefit plans cannot register these
shares in the nominee names. It has been GTE's practice not to request
information on how any individual votes his or her plan shares. In
addition, GTE has notified its proxy tabulator in writing that it is not
permitted to disclose to GTE or any of its management or employees how any
participant in a GTE plan voted his or her plan shares. GTE believes that
this policy may eliminate any concern by GTE's employees that their votes
are monitored.
The proposal also requests that independent third parties tabulate the
vote. The First National Bank of Boston, Transfer Agent and Registrar for
GTE's stock, tabulates the proxy
27
<PAGE> 31
votes. Stringent confidentiality safeguards are in effect. The votes are
tabulated mechanically and GTE is confident of the efficiency and accuracy
of the process. The tabulation area is isolated and is only accessible to
individuals involved in the proxy tabulation. All personnel involved in the
tabulation process are required to sign an agreement to keep confidential
and not disclose any information obtained in the handling and processing of
the proxies. The only proxy cards viewed by GTE management are those on
which shareholders have written comments. Moreover, GTE appoints two
inspectors of election who are independent third parties to oversee the
voting and tabulation process.
The Board of Directors believes that the current practice protects the
confidentiality of shareholder votes and the use of a third party to
tabulate the votes is not necessary.
ITEM 4.
GTE has been notified by Mercy Consolidated Assets Management Program, 20
Washington Square North, New York, New York 10011, which states that it is the
beneficial owner of 300 shares of Common Stock; Sisters of Saint Joseph of
Peace, St. Joseph Province, Shalom Center, 399 Hudson Terrace, Englewood Cliffs,
New Jersey 07632, which states it is the beneficial owner of 3,600 shares of
Common Stock; Sisters of Mercy of the Americas, 249 Steele Road, West Hartford,
Connecticut 06117, which states it is the beneficial owner of 3,400 shares of
Common Stock; Ursulines of the Roman Union, Eastern Province, 323 East 198th
Street, Bronx, New York 10458, which states it is the beneficial owner of 100
shares of Common Stock; School Sisters of Notre Dame, 345 Belden Hill Road,
Wilton, Connecticut 06897, which states it is the beneficial owner of 3,000
shares of Common Stock; Dominican Sisters, Sparkill, New York 10976, which
states it is the beneficial owner of 1,000 shares of Common Stock; and the
Sisters of Saint Dominic, 1 Ryerson Avenue, Caldwell, New Jersey 07006, which
states it is the beneficial owner of 100 shares of Common Stock; that they
intend to propose the following resolution at the Annual Meeting. The proposed
resolution and supporting statement, for which the Board of Directors and GTE
accept no responsibility, are as follows:
"WHEREAS the proponents of this resolution believe that GTE
Corporation should establish criteria to guide management in bidding for
and executing military contracts, we propose the following for Board and
management study.
RESOLVED the shareholders request the Board of Directors to commission
a subcommittee to develop criteria for acceptance and execution of military
contracts and to report these criteria at the 1995 annual meeting.
Proprietary information may be omitted and cost limited to a reasonable
amount."
The following is the statement submitted in support of this proposal:
"The proponents of this resolution believe that all human beings are
called to establish justice and peace by our responsible stewardship. We
believe corporate social responsibility in a successful free enterprise
society demands that business conduct be ethically correct, socially
supportive and economically useful as well as financially profitable.
Therefore, we recommend the criteria include:
-- Basic canons of ethical business practice
-- Long-term environmental impact and waste management
-- Stability of employment, including descriptions of conversion plans
and funding sources; strategies identifying community needs;
employees' ideas and market opportunities; membership in state
and/or local government economic conversion task forces
-- Lobbying and marketing practices, including costs
-- Limits on military contracts measured by a percentage of sales
28
<PAGE> 32
-- Competitive bidding
-- Sale of weapons, weapons parts and dual-use technology to foreign
governments, other companies and individuals -- Contracts for
nuclear, biological and chemical weapons, parts and technologies.
Global security is not just security of territory, it is security of
people. It is not just security through weapons, it is security through jobs,
human development, environmental sustainability.
We believe decisions to spend huge sums of money to produce weapons
designed to destroy large numbers of people and their environment are morally
wrong. So, too, is the decision to lobby for military contracts to gain markets
in developing countries.
Decisions to devote employee creativity, technology and other human and
financial resources in this manner also have strong implications for U.S.
workers, and indeed, all of U.S. society, during this time of accelerated
down-sizing of our workforce. We believe the end of the Cold War is providing
opportunities to convert to more stable commercial production in environmental
and other socially beneficial technologies with the goal of sustainable
development.
A YES vote recommends these criteria for consideration by the Board."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOREGOING PROPOSAL FOR
THE FOLLOWING REASONS:
The proposal requests that the Board of Directors establish a subcommittee
to develop and report on ethical, environmental, social and other criteria for
entering into military contracts. GTE believes that a committee of this type is
unnecessary because the listed criteria are already an integral part of GTE's
military contracts and acquisition policy.
In order to be eligible for contract awards, contractors such as GTE are
required to certify compliance with many Congressionally-mandated social and
economic policies reflected in statutes such as the Procurement Integrity Act,
the Clean Air and Clean Water Acts, the Truth in Negotiations Act, the
Competition in Contracting Act, and the Equal Employment Opportunity Act. GTE
not only has in place a comprehensive ethics program which requires compliance
with these laws, but further, is continually reviewed by government auditors to
ensure that it complies with these and other mandated policies. GTE has acted
and will continue to act as a socially responsible and ethical corporate citizen
not only in its military contracting but in all its business activities.
GTE also is actively involved in seeking federal funds that have been
designated for defense industry conversion and retraining purposes. The
President of our Government Systems business unit, for example, is currently
serving as Chairman of the Defense Industry Task Force on the Governor's Council
on Economic Growth and Technology for the Commonwealth of Massachusetts.
GTE further believes that the defense needs and foreign policy of the
United States are properly the responsibility of our government and our duly
elected public officials. As a responsible corporate citizen, GTE intends to
continue to support the U.S. Government and to offer its services and products
in the defense of the United States.
ITEM 5.
Mr. John J. Gilbert, trustee under the will of Caston J. Gilbert for 300
shares, and representing an additional family interest of 1,100 shares, and also
representing Corporate Democracy, Inc. (a not-for-profit-corporation), 1165 Park
Avenue, New York, New York 10128-1210, for 300 shares of Common Stock; and John
J. Gilbert for 300 shares of Common Stock, and Margaret R. and/or John J.
Gilbert trustees under the will of Samuel Rosenthal for 1,400 shares of Common
Stock; and Edward and/or Edith Rudy, 1641 Third Avenue, 17G East, New York, New
York 10128, who state that they are the beneficial owners of 491.001 shares of
Common Stock, have informed GTE that they intend to propose the following
resolution at the Annual Meeting. The proposed resolution and
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supporting statement, for which the Board of Directors and GTE accept no
responsibility, are as follows:
"RESOLVED: That the stockholders of GTE Corporation, assembled in
annual meeting in person and by proxy, hereby request that the Board of
Directors take the steps necessary to provide that at future elections of
directors new directors be elected annually and not by classes as is now
provided and that on expiration of present terms of directors their
subsequent election shall also be on an annual basis."
The following is the statement submitted in support of this proposal:
"Continued, very strong support along the lines we suggest were shown
at the last annual meeting when 27.5%, 34,559 owners of 171,880,058 shares,
were cast in favor of this proposal. The vote against included 41,221
unmarked proxies.
LAC Minerals Ltd., Interco, Chemical Banking Corporation and
Commonwealth Edison Company of Chicago are among the latest companies to
end their stagger system of electing directors. In 1992 we withdrew our
resolution on the subject at Westinghouse after they agreed to end their
stagger system of electing directors. Chemical Bank's management, to its
credit, voluntarily ended theirs without a resolution on the subject.
Recently Equitable Life Insurance Company, which is now called
Equitable Companies, converted from a policy owned company to a public
stockholder company. Thanks to AXA, the controlling French insurance
company, not wanting it they will not have a staggered board.
Annual election of directors may insure greater accountability to all
and enables owner to take a fresh look each year at all directors.
If you agree, please mark your proxy for this resolution; otherwise it is
automatically cast against it, unless you have marked to abstain."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOREGOING PROPOSAL FOR
THE FOLLOWING REASONS:
The Board of Directors believes that a staggered board where approximately
one-third of the directors are elected annually, is in the best interests of the
Corporation and its shareholders. This system helps provide continuity and
stability of GTE's management and policies because a majority of the directors
at any one time will have prior experience as directors of GTE and in-depth
knowledge of the Corporation. This system permits directors to effectively
represent the interests of all shareholders in a variety of circumstances,
including those created by a minority shareholder.
This proposal seeks to reverse the action taken by GTE's shareholders at a
special meeting in 1986. Approximately 75.6% of the Corporation's shares voted
at that meeting approved the creation of a staggered board. GTE continues to
believe that this system is in the best interests of the Corporation and its
shareholders and that it is not necessary to reverse the relatively recent
actions of its shareholders.
ITEM 6.
GTE has been notified by the International Brotherhood of Electrical
Workers, 6603 East Chelsea Street, Tampa, Florida 33610, and sponsors Guy A.
Langlais, 131 Stanford Road, Venice, Florida 34293, Gary Nelson, 533 5th Street,
S.E., Largo, Florida 34641, Richard Olone, 1833 Oakdale Lane S., Clearwater,
Florida 34624, Danny Johnson, 12422 Balm Riverview Road, Riverview, Florida
33569, and Rick Lear, 1549 Forxridge Run S.W., Winter Haven, Florida 33880, each
representing at least 100 shares of Common Stock, that they intend to propose
the following resolution at the
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Annual Meeting. The proposed resolution and supporting statement, for which the
Board of Directors and GTE accept no responsibility, are as follows:
"WHEREAS, in 1991 GTE's outside board of directors received an
approximate 44% increase in their retainer which automatically increased
their retirement by approximately 44%;
WHEREAS, Mr. Johnson, former C.E.O. of GTE, did in fact enjoy an
increase in 1990 wages of $489,109 (29.65%) and in 1991 wages of $648,769
(30.53%);
WHEREAS, Mr. Johnson, former C.E.O. of GTE, received a 574% increase
in his stock options in 1991;
WHEREAS, we believe that the top executives are not sharing in cost
cutting measures and in fact are enhancing their pay with business
efficiencies which adversely affect rank and file employees;
WHEREAS, we believe the employees feel that all business efficiencies
are not being shared equally;
RESOLVED, that the shareholders request the board of directors:
Take all necessary steps to establish criteria to guide management
in setting fair executive compensation levels whereby (a) any individual
executive officer's compensation (wages, bonuses, and stock grants,
options and rights) would not exceed 75 times the wages of GTE's average
hourly employee and (b) that executive wages and compensation be more
closely linked to company profits."
The following is the statement submitted in support of this proposal:
"This proposal is submitted by a group of GTE Western Division
shareholder/employees. We are members and/or officers of Local 824,
International Brotherhood of Electrical Workers.
1. The economic health and viability of GTE and its shareholders is
intrinsically linked to the economic health and viability of the United
States economy.
GTE's success is, in large part, dependent on the corporation's
ability to sell its goods and services to an affluent society. Year
after year, GTE's hourly employees have had an adjusted-for-inflation
wage decrease. The effect of this corporate strategy is GTE denying
itself a segment of affluent society necessary for GTE's future success.
The huge disparity in the compensation of the Board of Directors and
GTE's hourly employees is counter-productive in establishing a team
approach to the competitive and technological challenges GTE faces now
and in the future. By establishing a link between the Board of Directors
compensation and the hourly employees compensation, all GTE employees
and shareholders will share equitably in the fruits of GTE's labors and
in the promise of a prosperous future.
2. In order to remain competitive in a world market and limit demands
on the resources of the company, top executives must become 'lean and mean'
in a like manner with their employees.
This proposal will result in a reduction in executive compensation
to approximately 1990 levels. The 1991 10-K report states, 'Although
access lines increased by over 3% in 1991 these lines were serviced by
6% fewer employees.' Employees, as again stated in the 1992 10-K report,
'...access lines increased by approximately 4%, these lines were
serviced by 5% fewer employees,' have increased productivity while the
cost of their services has decreased.
The years 1991, 1992 saw dramatic fluctuation in executive
compensation levels without any appreciable increase in productivity. It
is in the best interests of GTE and its shareholders to establish
criteria to insure all compensation is earned not granted."
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOREGOING PROPOSAL FOR
THE FOLLOWING REASONS:
The Board of Directors strongly believes that GTE has already
established criteria for setting fair compensation levels. As discussed in
the Report of the Executive Compensation and Organizational Structure
Committee of GTE's Board of Directors (the "Executive Compensation
Committee"), the Executive Compensation Committee approves the salary
ranges for executives and reviews the salary and increases in base salary
for all senior executives of GTE's subsidiaries and for all senior
executives of GTE Corporation.
The Executive Compensation Committee has adopted a compensation
philosophy that relates the level of compensation to GTE's success in
meeting annual and long-term goals, rewards individual achievement and is
competitive with other major companies in the telecommunications industry.
GTE believes that this philosophy enables it to attract and retain the most
qualified individuals to lead GTE's business undertakings. In determining
executives' compensation, the Executive Compensation Committee relies on
competitive data and carefully assesses GTE's overall performance and
individual achievement.
Accordingly, the Board of Directors believes that criteria are already
in place to ensure that the compensation of GTE's executives is fair and
closely linked to GTE's performance. It recommends a vote against the
proposal establishing a limit on such compensation based upon a stated
multiple of other employee compensation.
ITEM 7.
GTE has been notified by the International Brotherhood of Electrical
Workers Telephone Coordinating Council No. 2, Neal M. Davis, Schuchat, Cook &
Werner, The Shell Building, Suite 250, 1221 Locust Street, Saint Louis, Missouri
63103-2364, representing 60 shares of Common Stock, that it intends to propose
the following resolution at the Annual Meeting. The proposed resolution and
supporting statement, for which the Board of Directors and GTE accept no
responsibility, are as follows:
"RESOLVED: The shareholders of the GTE Corporation recommend that the
Board of Directors consider the following nonbinding proposal: With respect
to future compensation of active executive officers of GTE, the GTE
shareholders recommend that the Board of Directors voluntarily take
whatever steps it deems necessary and proper to implement a plan which
would limit the total annual cash compensation (salary plus bonuses awarded
under the Executive Incentive Plan) of GTE executive officers so that this
compensation will not be increased by an amount greater than the average
percentage pay increase granted to GTE employees annually."
The following is the statement submitted in support of this proposal:
"In recent years, there has been widespread public debate concerning
executive compensation policies and practices. Often this debate has
focused on what is perceived by many to be excessive salaries, bonuses and
incentives granted to senior executive officers. Many have observed that
senior executives in America are compensated at a much higher rate than
their counterparts in Japan and Germany. The issue of executive
compensation is particularly relevant during the recent recession, which
has resulted in layoffs to many American workers, both managerial and
nonmanagerial alike.
This proposal recommends that the Board of Directors implement a plan
to limit annual executive compensation so that this compensation increases
no more than the average annual pay increase granted to other GTE
employees. The proposal is intended to assure shareholders and employees
that GTE's hard earned profits will be used for research and development,
equipment modernization, and other endeavors which build a stronger, more
profitable, and
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more competitive corporation. Furthermore, this proposal could establish
GTE as a leader in creatively addressing the issue of executive
compensation, thereby enhancing its corporate image.
If you agree, please mark your proxy FOR this proposal."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOREGOING PROPOSAL FOR
THE FOLLOWING REASONS:
The Board believes that arbitrary limits on executive compensation
called for in the proposal would interfere with GTE's ability to attract,
retain and reward key executives in a manner commensurate with their
contributions to GTE and, accordingly, recommends a vote against the
proposal.
GTE's executive compensation structure is designed to attract and
retain talented executives who can lead GTE and direct its business efforts
in an increasingly competitive environment. As discussed in the Report of
the Executive Compensation and Organizational Structure Committee of GTE's
Board of Directors (the "Executive Compensation Committee"), a key element
of executive compensation structure is that approximately 60% of an
executive's compensation is "at risk." This means that there is a
significant upside as well as downside risk in such an individual's
compensation depending on GTE's performance, financial and otherwise.
Accordingly, it is not practical to establish an arbitrary limit on the
total increase in compensation in a given year.
The amount of wage increases for employees represented by unions is
based upon negotiations between the company and the union. The Executive
Compensation Committee sets the executive pay ranges based upon comparative
data from similar companies. The ranges are generally broad and allow for
recognition of individual experience and performance. The Executive
Compensation Committee reviews the salary and increases in base salary for
all senior executives of GTE's subsidiaries and for all senior officers of
GTE Corporation.
The Board of Directors believes that adequate review and controls on
executive salaries are already in place. Moreover, it believes that the
amount of increases granted to executives is consistent with GTE's
performance.
ITEM 8.
GTE has been notified by the Sisters of the Sorrowful Mother, 9056 North
Deerbrook Trail, Brown Deer, Wisconsin 53223, which states that it is the
beneficial owner of 22,800 shares of Common Stock; the Sisters of St. Joseph of
Carondelet, 385 Watervliet-Shaker Road, Latham, New York 12110-4741, which
states that it is the beneficial owner of 17,000 shares of Common Stock; the
Missionary Oblates of Mary Immaculate, 159 Moore Street, Lowell, Massachusetts
01852, which states that it is the beneficial owner of 2,000 shares of Common
Stock; the Sisters of Mercy of the Americas, 1437 Blossom Road, Rochester, New
York 14610-2298, which states that it is the beneficial owner of 100 shares of
Common Stock, that they intend to propose the following resolution at the Annual
Meeting. The proposed resolution and supporting statement, for which the Board
of Directors and GTE accept no responsibility, are as follows:
"WHEREAS WE BELIEVE:
The responsible implementation of sound environmental policy increases
long-term shareholder value by increasing efficiency, decreasing clean-up
costs, reducing litigation, and enhancing public image and product
attractiveness;
Adherence to public standards for environmental performance gives a
company greater public credibility than is achieved by following standards
created by industry alone. In order to
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maximize public credibility and usefulness, such standards also need to
reflect what investors and other stakeholders want to know about the
environmental records of their companies;
Standardized environmental reports will provide shareholders with
useful information which allows comparisons of performance against uniform
standards and comparisons of progress over time. Companies can also attract
new capital from investors seeking investments that are environmentally
responsible, responsive, progressive, and which minimize the risk of
environmental liability.
AND WHEREAS:
The Coalition for Environmentally Responsible Economies
(CERES) -- which comprises large institutional investors with $150 billion
in stockholdings (including shareholders of this Company), public interest
representatives, and environmental experts -- consulted with dozens of
corporations and produced comprehensive public standards for both
environmental performance and reporting. Over 50 companies have endorsed
the CERES Principles -- including the Sun Company, a Fortune-500
company -- to demonstrate their commitment to public environmental
accountability.
In endorsing the CERES Principles, a company commits to work toward:
1. Protection of the biosphere
2. Sustainable use of natural resources
3. Waste reduction & disposal
4. Energy conservation
5. Risk reduction
6. Safe products and services
7. Environmental restoration
8. Informing the public
9. Management commitment
10. Audits and reports
The full text of the CERES Principles and the accompanying CERES
Report Form are available from CERES, 711 Atlantic Avenue, Boston, MA
02110, tel: 617/415-0927.
Concerned investors are asking the Company to be publicly accountable
for its environmental impact, including collaboration with this corporate,
environmental, investor, and community coalition to develop (a) standards
for environmental performance and disclosure; (b) appropriate goals
relative to these standards; (c) evaluation methods and tools for
measurement of progress toward these goals; and (d) a format for public
reporting of this progress.
We believe this request is consistent with regulation adopted by the
European Community for companies' voluntary participation in verified and
publicly-reported eco-management and auditing.
RESOLVED: Shareholders request the Company to endorse the CERES
Principles as a commitment to be publicly accountable for its environmental
impact."
The following is the statement submitted in support of this proposal:
"We invite the Company to endorse the CERES Principles by (1) stating
its endorsement in a letter signed by a senior officer; (2) committing to
implement the Principles; and (3) annually completing the CERES Report.
Endorsing these Principles complements rather than supplants internal
corporate environmental policies and procedures.
We believe that without this public scrutiny, corporate environmental
policies and reports lack the critical component of adherence to standards
set not only by management but also by other stakeholders. Shareholders are
asked to support this resolution, to encourage our
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Company to demonstrate environmental leadership and accountability for its
environmental impact."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOREGOING PROPOSAL FOR
THE FOLLOWING REASONS:
GTE takes environmental issues seriously and is committed to a clean and
safe environment. As a matter of practice, GTE's operating units are expected to
comply with or exceed local, state and federal standards and reporting
requirements established for their industries and types of operations. These
standards have been set through public participation (including GTE's
stakeholders) in the government regulation process. In addition to complying
with governmental laws and regulations, GTE units are striving to improve the
environmental quality of their operations in three specific areas:
-- Reducing the use of environmentally hazardous materials;
-- Minimizing discharges into the environment; and
-- Reducing both hazardous and non-hazardous waste volume.
GTE units are continuing to accomplish those objectives in a number of
ways: by reducing their use of hazardous materials by substituting non-hazardous
materials for hazardous ones as new technologies become available; by promoting
recycling; by upgrading material containment and disposal operations; and by
utilizing environmentally friendly, low-energy, consuming products.
The Board of Directors believes that implementation of the proposal, though
well-intentioned, would serve to burden the Corporation and its shareholders
with additional requirements and costs while not providing any greater
environmental protection than already exists.
GTE finds the CERES Principles to be ambiguous in several respects and also
to cause some concerns to be raised. For example, implementation of the
Principles would require GTE to complete a CERES environmental report. However,
no generally accepted environmental audit standards by which to create such a
report presently exist. Additionally, the CERES report form does not relate to
the majority of GTE's businesses which are of a service nature.
In summary, the Board of Directors believes that the environment is
important and that the Corporation continues to take significant steps to ensure
that it contributes in a meaningful way to the preservation and enhancement of a
safe and healthy environment for the present and future generations.
ITEM 9.
GTE has been notified by the National Council of the Churches of Christ,
475 Riverside Drive, Fifth Floor, New York, New York 10115-0050, which states
that it is the owner of 2,800 shares of Common Stock; the Evangelical Lutheran
Church In America, 800 Marquette Avenue, Suite 1050, Minneapolis, Minnesota
55402-2885, which states that it is the owner of 88,700 shares of Common Stock;
the Medical Mission Sisters, Office for Responsible Investment, 20 Belgrade
Avenue, Room 6, Roslindale, Massachusetts 02131, which states that it is the
owner of 300 shares of Common Stock; the Sisters of Mercy of the Americas,
Regional Community of Detroit, 29000 Eleven Mile Road, Farmington Hills,
Minnesota 48336, which states that it is the owner of 200 shares of Common
Stock; and the Sisters of Charity of Saint Vincent de Paul, Mount St. Vincent
Motherhouse, 150 Bedford Highway, Halifax, Nova Scotia B3M 3J5, which states
that it is the owner of 2,000 shares of Common Stock, that they intend to
propose the following resolution at the Annual
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Meeting. The proposed resolution and supporting statement, for which the Board
of Directors and GTE accept no responsibility, are as follows:
"RESOLVED: The shareholders request the Board to prepare a report at
reasonable cost, available to shareholders and employees, reporting on the
following issues. This report, which may omit confidential information,
shall be available by September 1994.
1. A chart identifying employees according to their sex and race in
each of the nine major Equal Employment Opportunity Commission defined job
categories for 1991, 1992, 1993 listing either numbers or percentages in
each category.
2. A summary description of any Affirmative Action policies and
programs to improve performances, including job categories where women and
minorities are underutilized.
3. A description of any policies and programs oriented specifically
toward increasing the number of managers, who are qualified females and/or
belong to minorities.
4. A general description of how our company publicizes our company's
affirmative action policies and programs to merchandise suppliers and
service providers.
5. A description of any policies and programs utilizing the purchase
of goods and services from minority-and/or female-owned business
enterprises."
The following is the statement submitted in support of this proposal:
"We believe there is a strong need for corporate commitment to equal
employment opportunity. We also believe a clear policy opposing all forms
of discrimination is a sign of a socially responsible corporation. Since a
substandard Equal Employment Opportunity record leaves a company open to
expensive legal action, poor employee morale and even the loss of certain
business, it is in the company's and shareholder's interests to have
information on our company's equal employment record available. By
publicizing our standards, we serve as an example to companies with whom we
do business.
We share the concerns of the 1991 United States Congressional Civil
Rights and Glass Ceiling Acts that '...additional remedies under Federal
law are needed to deter harassment and intentional discrimination in the
workplace...women and minorities remain underrepresented in management and
decision making positions in business.' We support the statement, 'We
continue to find that if the CEO is committed to ensuring diversity, it can
happen.' as published in the U.S. Labor Department's report, 'Pipelines of
Progress.'
We believe issues related to Equal Employment Opportunity and
Affirmative Action are important to shareholder value. Our goal is to
encourage our Board of Directors and Chief Executive Officer to improve our
corporation's Equal Employment record and that of their industry.
As a major employer we are in a position to take the lead in ensuring
that women and minority employees receive fair employment opportunities and
promotions. We believe a report containing the basic information requested
in this resolution keeps the issue high on management's agenda and
reaffirms our public commitment to Equal Employment Opportunity and
programs responsive to the concerns of women and minorities.
The report requested asks for information already gathered for the
purpose of complying with government regulations. The format of the report
requested is not the central question. Different companies use different
styles in telling their story to shareholders. Capital Cities/American
Broadcasting Company, Bristol-Myers and Travellers produced a substantial
magazine style report. Campbell Soup produced a straightforward four page
document."
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOREGOING PROPOSAL FOR
THE FOLLOWING REASONS:
GTE is strongly committed to equal employment opportunity as evidenced
by its policies and programs. GTE has taken a variety of actions in support
of that goal including the adoption of an equal employment policy that is
communicated to employees and reinforced in a variety of communications;
conducting training programs for managers in a variety of areas including
employment law and workforce diversity; establishing relationships with
numerous minority organizations and educational institutions to enhance
GTE's efforts to attract talented candidates for employment; and a variety
of other initiatives. GTE is also a significant contributor to educational
initiatives designed to enhance educational and employment opportunities
for minorities.
More specifically, GTE's Associate Development Program serves as a
prime source of attracting, hiring and retaining qualified females and
minorities. One-third of all Associates hired as potential future
management personnel are minorities, and 50 percent are female. A
conscientious effort is made on an on-going basis to establish a high ratio
of both females and minorities.
To further accelerate our efforts to attract, hire and retain female
and minority employees, GTE maintains active membership in a variety of
organizations and regularly attends career fairs conducted by associations
of minority professionals.
Other initiatives which demonstrate GTE's commitment to the hiring and
advancement of women and minorities can be found throughout the business
units in activities which include: mentor program, career counseling,
cultural awareness, diversity symposiums and workshops, flexible leaves of
absence for dependent care, flexible work schedules and telecommuting and
cross-functional training (job swapping).
The foregoing affirms GTE's commitment and efforts towards equal
opportunity employment and the recruiting, hiring and retaining of women
and minorities for management positions throughout the organization.
Therefore, the Board of Directors does not believe that the additional
reporting requested by the proponent would serve any useful purpose.
OTHER MATTERS
The Board of Directors does not intend to bring any matters before the
Annual Meeting other than those specifically set forth in the notice of the
Annual Meeting and knows of no matters to be brought before the Annual Meeting
by others. If any other matters properly come before the Annual Meeting, it is
the intention of the persons named in the accompanying proxy to vote such proxy
in accordance with the judgment of the Board of Directors.
Financial statements for GTE and its consolidated subsidiaries are included
in GTE's Annual Report to shareholders for the year 1993 which was mailed to the
shareholders beginning March 4, 1994.
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A COPY OF GTE'S 1993 ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION WILL BE AVAILABLE AFTER MARCH 31, 1994 WITHOUT CHARGE TO
THOSE SHAREHOLDERS WHO WOULD LIKE MORE DETAILED INFORMATION CONCERNING GTE. TO
OBTAIN A COPY, PLEASE WRITE TO: MARIANNE DROST, SECRETARY, GTE CORPORATION, ONE
STAMFORD FORUM, STAMFORD, CONNECTICUT 06904.
By order of the Board of Directors,
MARIANNE DROST
Secretary
Dated: March 4, 1994
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(MAP SHOWING ROUTES TO GTE CORPORATION ANNUAL SHAREHOLDERS MEETING)
<PAGE> 43
PLEASE MARK VOTES AS IN THIS EXAMPLE [X]
DIRECTORS RECOMMEND A VOTE "FOR":
1. Election of five Class II directors:
J.R. Barker, R.W. Jones, H. Sloan,
J.W. Walter and C. Wohlstetter
* For all nominees except as noted:
FOR [ ] WITHHELD [ ]
2. Ratification of appointment of auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
DIRECTORS RECOMMEND A VOTE "AGAINST" THE FOLLOWING SHAREHOLDER
PROPOSALS:
3. Institute confidential voting.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Establish a committee to develop
criteria for military contracts.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Eliminate the staggered election of directors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
6. Limit executives' compensation.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
7. Limit executives' pay increases.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
8. Issue a report on the CERES Principles.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
9. Establish a policy of reporting on an equal employment
opportunity/affirmative action program.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE SIGN ON THE OPPOSITE SIDE AND RETURN THE PROXY CARD IN THE
ACCOMPANYING ENVELOPE.
PROXY GTE Logo
GTE Corporation
One Stamford Forum
Stamford, Connecticut 06904
Telephone: 203-965-2000
PROXY SOLICITED BY BOARD OF DIRECTORS FOR GTE'S ANNUAL MEETING OF
SHAREHOLDERS APRIL 20, 1994
The owner of the shares represented by this Proxy hereby
appoints Charles R. Lee and Marianne Drost, or either of them,
Proxies to vote at GTE's Annual Meeting of Shareholders on April
20, 1994 and any adjournments or postponements thereof on matters
which may properly come before the Annual Meeting, in accordance
with and as more fully described in the Notice of Meeting and
Proxy Statement, receipt of which is acknowledged.
Please sign exactly as your name(s) appear. (If more than one
name appears, all must sign.)
(Signature)...........................
(Title)...............................
(Signature)...........................
(Title)...............................
THE PROXIES WILL VOTE YOUR SHARES IN ACCORDANCE WITH YOUR
DIRECTIONS ON THIS CARD. IF YOU DO NOT INDICATE YOUR CHOICES ON
THIS CARD, THE PROXIES WILL VOTE YOUR SHARES IN ACCORDANCE WITH
THE DIRECTORS' RECOMMENDATIONS.
