<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
[GTE LOGO]
GTE CORPORATION
One Stamford Forum
Stamford, Connecticut 06904
Telephone: 203-965-2000
CHARLES R. LEE
Chairman and Chief Executive Officer March 3, 1995
To Our Shareholders:
On behalf of the Board of Directors, I cordially invite you to attend the
1995 Annual Meeting of Shareholders of GTE Corporation. The Annual Meeting will
be held from 2:00 P.M. to 4:00 P.M., Local Time, on Wednesday, April 19, 1995,
in the Wisteria Room of the Italian Center, 1620 Newfield Avenue, Stamford,
Connecticut. The formal notice of the Annual Meeting appears on the next page
and directions to the meeting are printed on the back cover.
The attached Proxy Statement describes matters that we expect will be acted
upon at the meeting. 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
[GTE LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 19, 1995
Stamford, Connecticut
March 3, 1995
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 19, 1995, at 2:00 P.M., Local Time, for the
following purposes:
1. To elect five Class III directors and one Class II director 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) eliminate the staggered election of directors,
(b) 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,
(c) limit increases in executive officers' total annual cash
compensation to an amount no greater than the average annual
percentage pay increases to employees,
(d) endorse the CERES Principles,
(e) establish a policy of reporting on GTE's equal employment
opportunity/affirmative action program,
(f) eliminate non-employee director retirement plan and pensions
previously granted under the plan, and
(g) require shareholder approval of agreements with officers and
directors providing for the payment of benefits upon a change in
control; and
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 February 28, 1995
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
[GTE LOGO]
ONE STAMFORD FORUM, STAMFORD, CONNECTICUT 06904
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 19, 1995
This Proxy Statement is furnished to shareholders of GTE Corporation ("GTE"
or the "Corporation") in connection with the Annual Meeting of Shareholders of
GTE (the "Annual Meeting") to be held from 2:00 P.M. to 4:00 P.M., Local Time,
on Wednesday, April 19, 1995, 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 3, 1995.
PROXY PROCEDURE
Only shareholders of record at the close of business on February 28, 1995
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 attends the Annual Meeting, he or she may vote by ballot.
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.
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 also 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 representing 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 Savings Plan holdings if their accounts are not registered in a
similar manner.
1
<PAGE> 5
Unvoted shares of the CESOP are voted at the discretion of the Trustee. Unvoted
shares of the Savings 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, 1995 consisted of:
967,064,265 shares of Common Stock; 1,596,955 shares of Preferred Stock; and
142,603 shares of $2.00 Convertible 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.
It is the policy of the Corporation that all proxies, ballots and
tabulations that identify the vote of individual shareholders are kept
confidential and not seen by, nor reported to the Corporation, except where
shareholders write comments on their proxy cards, or as necessary to meet legal
requirements or in a contested proxy solicitation.
Vote Required
The nominees for directors who receive a plurality of the votes cast by the
holders of the outstanding Common, Preferred and $2.00 Convertible 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. Shares represented by
broker non-votes are not considered present at the meeting and are not counted
towards quorum.
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 1996 proxy material, a shareholder's proposal must be received not
later than November 4, 1995 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
Annual 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.
2
<PAGE> 6
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 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
1994, met on fourteen occasions. In addition, significant communications between
the directors and the Corporation occur 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 1994 was 95.4%. During 1994, none of
the incumbent directors attended less than 75% of the aggregate of the total
number of Board meetings and the total number of meetings of all Committees of
the Board on which he or she served.
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 1994. 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 seven
meetings during 1994. 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 the GTE
Corporation 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 four meetings during 1994. The functions of
this Committee include the consideration of the size and composition of the
Board, review and recommendation of
3
<PAGE> 7
individuals for election as directors or officers of GTE, review of criteria for
selecting directors and evaluation of directors, as appropriate, and
consideration of policies and practices with respect to the functioning of the
Board. In carrying out its responsibilities for recommending candidates to fill
vacancies on the Board 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 high level management experience in a large, relatively
complex organization or have experience dealing with complex problems. 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 1994.
Public Policy Committee
The Public Policy Committee, which met twice during 1994, 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 five
meetings during 1994.
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 non-employee director receives an annual retainer of $30,000 plus 200
shares of GTE Common Stock awarded pursuant to the GTE Corporation 1991
Long-Term Incentive Plan ("LTIP"). Non-employee 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, non-employee directors receive
$1,200 for each Board or Committee meeting they attend. Non-employee directors
are those directors who are not otherwise employees of GTE or its subsidiaries
and thus 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 Non-Employee Members of the Board
of Directors of GTE Corporation (the "Deferred Compensation Plan"), any
non-employee 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 non-employee 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
4
<PAGE> 8
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.
Under the Phantom Stock Plan for Non-Employee Members of the Board of
Directors of GTE Corporation (the "PSP"), non-employee directors are awarded 300
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 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 Deferred
Compensation Plan account and 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, Palmer, Walter and Wohlstetter, directors of GTE, also
received $16,000, $18,000, $16,000, and $16,000, respectively, in meeting and
retainer fees during 1994 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. GTE is in the
process of acquiring the publicly held shares of Contel Cellular. Mr. Johnson
also received $20,057 in meeting and retainer fees for serving as a director of
BC TEL, and $150 in meeting fees for serving as a director of Compania Anonima
Nacional Telefonos de Venezuela ("CANTV"). GTE indirectly owns 50.47% 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
1994.
Retirement Plan For Non-Employee Directors
The Retirement Plan for Non-Employee Members of the Board of Directors of
GTE Corporation (the "Directors' Retirement Plan") is designed to provide
competitive compensation arrangements for GTE's non-employee directors.
Directors who are employees of GTE do not participate in this plan.
Under the terms of the Directors' Retirement Plan, a non-employee director
who retires is eligible to receive annual payments equal to the value of the
annual cash retainer in effect on the date of his or her retirement, the value
of the most recent award of Common Stock Units under the PSP prior to the
director's retirement and the cash equivalent of the most recent award of GTE
shares of Common Stock under the LTIP prior to the director's retirement.
Payments are made for the lesser of the remainder of the director's life or a
period equal to 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 the
director's benefit, unreduced on account of age, for the lesser of the remainder
of the spouse's life or a period equal to the length of the director's Board
service. If a director dies after retirement, the spouse will continue to
receive the benefit being received by the director at the time of his or her
death for the lesser of the remainder of the spouse's life or a period equal to
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. Under the terms of
the Contel merger agreement, Mr. Sloan continues to
5
<PAGE> 9
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 completing 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.
CHARITABLE AWARDS PROGRAM
Non-employee directors 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 equal annual installments after a participant's death. Generally, the
donations will only be paid if: (1) the participant dies while a director or a
designated senior officer; or (2) the participant was either (a) a director who
separated from service with GTE after completing five or more years of service
as a director or (b) a designated senior officer who separated from service
after attaining age 65 and completing five or more years of service as an
employee of GTE and who was not involuntarily separated from service for cause;
or (3) a change in control occurs while the participant is a director or
designated senior executive of GTE. 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 the
approval of 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. GTE's executive compensation philosophy 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, including salary and
annual and long-term incentive awards, 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"). GTE and the
RBOCs are part of the S&P Telephone Index shown in the Performance Graph on page
15. GTE's executive compensation for 1994 was approximately at the median for
the Telecommunications Group.
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 have a reputation for
excellence, 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. Accordingly, the companies included in the
Broad Industry Group vary. In reviewing the survey data, GTE takes into account
how its
6
<PAGE> 10
compensation policies and overall performance compare to similar indices for the
Telecommunications Group and the Broad Industry Group.
GTE has compared its ratio of base compensation to total executive
compensation to the practices of companies in the Telecommunications Group and
the Broad Industry Group. Under GTE's compensation philosophy, base salary
represents approximately 40% of executive compensation. The remaining
compensation is paid under incentive plans. Payments under these incentive plans
are based upon the achievement of annual and long-term performance goals and,
accordingly, are "at risk".
Executive Compensation
In determining whether to adjust the base salary of an executive, including
the Chief Executive Officer, the Committee takes into account individual
performance, performance of the operations directed by that executive and the
position of compensation in relation to the established salary range. In
evaluating whether an executive's total compensation package (base salary plus
incentive compensation) should be adjusted, the Committee also takes into
account GTE's objective of being at or near the median of the range for total
compensation for companies in the Telecommunications Group and the Broad
Industry Group.
The Committee reviewed Mr. Lee's 1994 performance based upon GTE's
financial performance in terms of return on equity ("ROE"), total shareholder
return and earnings per share and the complexity of managing a multinational
corporation in an industry that is experiencing enormous change and his
performance in leading the Company's internal transformation. The Committee also
based its review upon Mr. Lee's performance with respect to further implementing
plans to control costs and streamline operations, providing leadership in the
development of legislative reform and regulatory strategies that will lead to
increased flexibility, pursuing international telecommunications alliances,
enhancing GTE's position with respect to telecommunications technology, and
continuing the pursuit of quality, reliability and customer value enhancement as
exemplified by the Malcolm Baldridge National Quality Award. In addition, the
Committee also evaluated his overall ability to manage and lead GTE and
determined that Mr. Lee's performance merited an increase. The Committee
determined that his adjusted 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. 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
and that his total compensation package was consistent with the 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 compares GTE's
overall performance and that of its business units to established objectives.
The Committee then arrives at an overall rating of the Corporation and the
business units to determine the percentage payout of incentive awards for each
unit and the individual awards for certain senior executives.
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 unusual or extraordinary items or circumstances affecting GTE's
financial performance, such as the impact of mandated accounting changes or
unusual charges related to acquisitions or divestitures. GTE's 1994 ROE exceeded
8% and awards under the EIP were made.
7
<PAGE> 11
Mr. Lee's EIP award for 1994 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 and operational performance in 1994, and Mr. Lee's
progress toward achieving the established objectives. Specifically, Mr. Lee's
1994 objectives included quantitative goals related to revenues, total return to
shareholders, return on equity, earnings per share, operating and net income and
return on investment. Mr. Lee's goals also included significant qualitative
objectives such as: progress toward attainment of GTE's five strategic thrusts
(voice, video services, data services, wireless business and international
telecommunications, collectively, the "Five Strategic Thrusts"); completing the
restructuring of key segments of the management structure; finalizing and
implementing a plan for the role of the Corporation's satellite business;
implementing plans with respect to certain quality and market leadership
programs; updating and implementing plans relating to GTE's investment in its
human resources; and other goals related to the advancement of technology, the
providing of adequate capital resources, the upgrading of investor,
legislative/regulatory and labor relations.
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 1994, the Committee gave particular emphasis to GTE's
operating results, developing opportunities and priorities with respect to GTE's
Five Strategic Thrusts which are supportive of and consistent with the
Corporation's drive for profitable growth, completing the restructuring of
management and related processes, and finalizing and implementing a plan for the
future role of the Corporation's satellite business.
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 three-year performance cycle ending in
1994 are based on GTE's financial performance during the relevant cycle as
measured by GTE's average ROE against pre-established target levels. In 1994,
the Committee established an additional measure of corporate
performance--operating cash flow margin ("OCFM"). The Committee views OCFM as an
excellent complement to ROE due to its capacity to accurately measure profitable
revenue growth, a key determinant of financial strength, especially for high
growth businesses. To transition from awards based solely on performance against
ROE targets to awards based on a combination of ROE and OCFM performance, the
Committee established two performance periods--a one-year period to run
concurrently with the final year of the three-year ROE performance cycle ending
in 1994 and a two-year period to run concurrently with the final two years of
the three-year ROE performance cycle ending in 1995. The awards for the two
award periods will be based on GTE's performance against ROE and OCFM
performance for the one and two-year periods. Awards for the three-year
performance cycle ending in 1996 will be based on GTE's performance against the
ROE and OCFM targets established for the full three-year cycle. 75% of the award
is determined based on ROE performance and 25% of the award is determined based
on OCFM performance.
The Committee established minimum and maximum targets for each cycle based
upon the practices of the Telecommunications Group and the Broad Industry Group
as well as the Corporation's past and projected financial performance. In
establishing the targeted levels of ROE and OCFM, the Committee considered past
performance, the strategic goals of the Corporation and the
8
<PAGE> 12
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 the
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 for a performance measure,
participants receive a payment of 20% of the target award for that performance
measure. If the maximum performance target for a performance measure is
attained, participants receive a payment of 100% of the target award for that
performance measure. Superior performance, achieving results in excess of the
maximum performance target, results in a payment in excess of 100% of the target
award based upon the following formula which is applied separately for each
performance measure:
- For the first and second 0.1% above the maximum performance target,
2% of the target award for that performance measure is added to the
target award;
- For the third and fourth 0.1% above the maximum performance target,
3% of the target award for that performance measure is added to the
target award; and
- For each additional 0.1% after .4% above the maximum performance
target, 4% of the target award for that performance measure is added
to the target award.
Payouts to the named executives for the 1992-1994 award cycle and 1994
award period are shown in the Summary Compensation Table on page 11. Also shown
are historical awards for the 1990-1992 and 1991-1993 cycles. The awards shown
reflect the following combinations of performance: the 1992-1994 ROE goal was
not met completely, while the goal for the 1994 award period was exceeded. With
respect to these three-year cycles, the 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. 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 1994-1996 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. These options are
granted to a larger group of executives, including the five executives named in
the Summary Compensation Table, than those who are eligible to receive
performance bonuses under the LTIP.
In approving the number of options awarded under the LTIP, the Committee
compares GTE's grant levels to competitive practices with respect to such grants
over a period of time. GTE's
9
<PAGE> 13
philosophy is to be at or near a median grant posture of 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 1994, 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 that apply to the recently-enacted provision 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.
Although amendments to the regulations were issued in December 1994, final rules
have not yet been issued.
In order to comply with the Internal Revenue Service regulations, the
Committee has adopted certain procedures to provide for the deductibility of
future amounts received under the EIP for 1994 and LTIP for cycles commencing in
1994. The provisions include, but are not limited to, establishing the maximum
award payable to any individual participant under the EIP. However, performance
bonuses paid under the LTIP for the 3-year performance cycles beginning prior to
1994 do not qualify for the performance-based exemption to the one million
dollar limit.
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 provisions 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 3, 1995
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
1994. 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(#) ($)(3) ($)(4)
- ----------------------------- ---- -------- --------- --------------- --------------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles R. Lee............... 1994 784,615 1,219,500 0 0 182,300 698,100 7,075
Chairman & Chief 1993 728,846 1,016,800 0 0 86,000 207,100 7,067
Executive Officer(5) 1992 699,808 1,151,300 0 0 0 314,600 6,866
Kent B. Foster............... 1994 687,608 837,900 0 0 138,100 397,800 7,075
Vice Chairman and 1993 603,659 531,700 0 0 58,800 117,100 6,502
President - GTE Telephone 1992 559,444 628,000 0 0 0 195,500 6,866
Operations Group(6)
Michael T. Masin............. 1994 564,577 706,500 0 0 117,800 364,600 5,690
Vice Chairman(7) 1993 95,192 119,100 0 0 100,000 130,800 0
Nicholas L. Trivisonno....... 1994 467,692 594,900 0 0 101,400 272,000 4,500
Executive Vice President - 1993 429,308 378,700 0 0 40,700 75,500 7,067
Strategic Planning and 1992 412,269 436,800 0 0 0 133,800 6,866
Group President(8)
Bruce Carswell............... 1994 459,461 502,200 0 0 83,700 235,000 7,075
Senior Vice President - 1993 429,308 360,400 0 0 27,800 74,500 7,067
Human Resources and 1992 414,231 414,400 0 0 0 133,800 6,866
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%. The data in the table also includes
fees of $22,896, $21,944 and $21,944, respectively, received by Mr. Foster
for serving as a director of BC TEL during 1994, 1993 and 1992, and fees of
$289 and $2,869, respectively, for serving as a director of CANTV during
1994 and 1993. Both BC Tel and CANTV are indirectly-owned subsidiaries of
GTE.
(2) Messrs. Lee, Foster, Masin, Trivisonno and Carswell do not own any
restricted shares of stock of GTE.
(3) 1994 LTIP Payouts include transition awards for the 1994 period, which were
established by the Committee as a special grant to allow for the smooth
transitioning from a single long-term performance measure (return on equity)
to a combined measure (return on equity and operating cash flow margin).
(4) All other compensation for 1994 includes company contributions to the GTE
Savings Plan of $4,500, $4,500, $3,115, $4,500 and $4,500, respectively, for
Messrs. Lee, Foster, Masin, Trivisonno and Carswell, and company
contributions to the GTE Executive Salary Deferral Plan of $2,575 for each
of Messrs. Lee, Foster, Masin and Carswell.
(5) Mr. Lee became Chairman and Chief Executive Officer in May 1992. Prior to
that time he served as President.
(6) Mr. Foster has been President of GTE Telephone Operations Group since 1989.
He was also elected Vice Chairman in October 1993.
(7) Mr. Masin joined GTE as Vice Chairman effective October 1993. Prior to that
time he was a partner with the law firm of O'Melveny & Myers.
(8) Mr. Trivisonno became Executive Vice President - Strategic Planning and
Group President in October 1993. Prior to that time he served as Senior Vice
President - Finance.
11
<PAGE> 15
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table shows all grants of options and tandem stock
appreciation rights ("SARs") to the named executive officers of GTE in 1994. The
options and SARs were granted under the LTIP. Pursuant to Securities and
Exchange Commission (the "SEC") rules, the table also shows the value of the
options granted at the end of the option terms (ten years) if the stock price
were to appreciate annually by 5% and 10%, respectively. There is no assurance
that the stock price will appreciate at the rates shown in the table. The table
also indicates that if the stock price does not appreciate, there will be no
increase in the potential realizable value of the options granted.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION
INDIVIDUAL GRANTS(1) TERM
--------------------------------------------------- -----------------------------
PERCENT
NUMBER OF OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE 0% 5% 10%
- ------------------------- ------------ ------------ -------- ---------- --- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles R. Lee........... 91,150 2.21% $34.44 02/16/04 $0 $1,676,495 $4,527,881
91,150 2.21 32.44 02/16/04 0 1,858,795 4,710,181
Kent B. Foster........... 69,050 1.67 34.44 02/16/04 0 1,270,016 3,430,063
69,050 1.67 32.44 02/16/04 0 1,408,116 3,568,163
Michael T. Masin......... 58,900 1.43 34.44 02/16/04 0 1,083,330 2,925,861
58,900 1.43 32.44 02/16/04 0 1,201,130 3,043,661
Nicholas L. Trivisonno... 50,700 1.23 34.44 02/16/04 0 932,510 2,518,525
50,700 1.23 32.44 02/16/04 0 1,033,910 2,619,925
Bruce Carswell........... 41,850 1.01 34.44 02/16/04 0 769,735 2,078,901
41,850 1.01 32.44 02/16/04 0 853,435 2,162,601
</TABLE>
- ---------------
(1) Each option was granted in tandem with a SAR, which will expire upon
exercise of the option. 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 17, 1994 was approximately $30.8 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 17, 2004 of the same
number of shares would be approximately $50.2 billion. If the price of GTE's
Common Stock increases by 10% per year, the market value on February 17, 2004
would be approximately $79.9 billion.
12
<PAGE> 16
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table provides information as to options and SARs exercised
by each of the named executive officers of GTE during 1994. The table sets forth
the value of options and SARs held by such officers at year end measured in
terms of the closing price of GTE Common Stock on December 30, 1994.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
SHARES OPTIONS/SARS AT FY-END AT FY-END($)
ACQUIRED ON VALUE --------------------------- -----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles R. Lee......... 0 $ 0 418,166 304,034 $ 1,564,288 $ 0
Kent B. Foster......... 0 0 152,374 210,626 0 0
Michael T. Masin....... 0 0 33,333 184,467 0 0
Nicholas L.
Trivisonno........... 0 0 104,366 151,334 0 0
Bruce Carswell......... 6,900 127,794 188,666 125,034 892,388 0
</TABLE>
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
The LTIP provides for awards, currently in the form of stock options with
tandem SARs, other stock-based awards and cash bonuses, to participating
employees. The stock options and tandem SARs awarded under the LTIP to the five
most highly compensated individuals in 1994 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
NUMBER OF PERFORMANCE OR UNDER NON-STOCK PRICE-BASED PLAN(1)
SHARES, UNITS OTHER PERIOD 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.............. 21,600 3 Years 5,191 25,957
8,700 2 Years 1,966 9,832
8,700 1 Year 1,849 9,247
Kent B. Foster.............. 15,400 3 Years 3,701 18,507
5,400 2 Years 1,221 6,103
5,400 1 Year 1,148 5,739
Michael T. Masin............ 13,000 3 Years 3,124 15,622
4,400 2 Years 995 4,973
4,400 1 Year 935 4,676
Nicholas L. Trivisonno...... 10,800 3 Years 2,596 12,979
3,700 2 Years 836 4,182
3,700 1 Year 786 3,932
Bruce Carswell.............. 9,000 3 Years 2,163 10,816
3,000 2 Years 678 3,390
3,000 1 Year 638 3,188
</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 30, 1994. 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 Threshold is the level of the average return on equity ("ROE") and the
average operating cash flow margin ("OCFM") during the relevant cycle which
represents the minimum acceptable performance level for both the ROE and
OCFM performance measures. If the Threshold is attained with respect to both
performance measures, the award will be equal to 20% of the combined target
award for ROE and OCFM. Because ROE and OCFM are separate perform-
13
<PAGE> 17
ance measures, it is possible to receive an award if the Threshold is
achieved with respect to only one of the performance measures. If the actual
results for one, but not both, performance measures is at the Threshold
level, the portion of the award determined by the measure performing at the
Threshold level will be at 20% of the target award for that performance
measure, and no award will be made for the portion of the award determined
by the measure performing at less than the Threshold level. However, if the
actual results for both performance measures are below the minimum
acceptable performance level, no award will be earned.
(3) The Target is the level of the average ROE and the average OCFM during the
cycle which represents outstanding performance for both the ROE and OCFM
performance measures. If the Target is attained with respect to both
performance measures, the award will be equal to 100% of the target award
for ROE and OCFM. If the actual results for one, but not both, performance
measures is at the Target level, the portion of the award determined by the
measure performing at the Target level will be at 100% of the target award
for that performance measure, and the portion of the award determined by the
measure performing at less than 100% will be determined accordingly.
(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 and the
actual OCFM exceed the targeted ROE and the targeted OCFM. If GTE's average
ROE and OCFM during the cycle exceed their respective performance targets,
additional bonuses may be earned according to the schedule on page 9. For
example, if average ROE and OCFM performance each exceed the ROE and OCFM
targets by .5%, respectively, the performance bonus will equal 114% of the
combined target award.
14
<PAGE> 18
PERFORMANCE GRAPH
The following table shows a comparison of five year cumulative total return
to shareholders for GTE, Standard & Poor's ("S&P") 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>
1/1/90 100 100 100
12/31/90 88 97 95
12/31/91 110 126 103
12/31/92 116 136 113
12/31/93 123 150 130
12/31/94 113 152 125
</TABLE>
* Assumes $100 invested on January 1, 1990.
* 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, Masin, 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.
15
<PAGE> 19
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 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. Masin 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 ("SERP") and the Executive Retired Life
Insurance Plan. In addition, each executive covered under an Agreement will be
considered to have not less than 76 points and 15 years of accredited service
for the purpose of determining his eligibility for early retirement benefits.
The Agreements provide that there will be no duplication of benefits.
In order to replace certain pension entitlements that would have been
payable to Mr. Masin had he remained with his former employer, he will also
receive a single life annuity pension of $200,000 per year (the "Special
Pension") with an unreduced surviving spouse benefit when he leaves GTE. He will
only be eligible to receive the Special Pension if he meets certain eligibility
criteria when he separates from GTE. If he is separated involuntarily after age
60 or a Change in Control occurs at any age and Mr. Masin separates for "good
reason" or is terminated without "cause," he will be eligible for postretirement
medical benefits and the early retirement benefit described in the preceding
paragraph.
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.
16
<PAGE> 20
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 (integrated with social security as described
below) and years of service, 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 $ 64,157 $ 85,542 $106,928 $ 128,313 $ 149,699
400,000 85,907 114,542 143,178 171,813 200,449
500,000 107,657 143,542 179,428 215,313 251,199
600,000 129,407 172,542 215,678 258,813 301,949
700,000 151,157 201,542 251,928 302,313 352,699
800,000 172,907 230,542 288,178 345,813 403,449
900,000 194,657 259,542 324,428 389,313 454,199
1,000,000 216,407 288,542 360,678 432,813 504,949
1,200,000 259,907 346,542 433,178 519,813 606,449
1,500,000 325,157 433,542 541,928 650,313 758,699
2,000,000 433,907 578,542 723,178 867,813 1,012,449
2,500,000 542,657 723,542 904,428 1,085,313 1,266,199
</TABLE>
All executive officers of GTE are employees of GTE Service Corporation, a
wholly-owned subsidiary, which maintains the GTE Service Corporation Plan for
Employees' Pensions (the "Service Corporation Plan"), a noncontributory pension
plan for the benefit of all of its employees based on years of service. Pension
benefits to be paid from the Service Corporation Plan and contributions to the
Service Corporation Plan are related to basic salary exclusive of overtime,
differentials, incentive compensation (except as otherwise described) and other
similar types of payment. Under the Service Corporation 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 14, 1995, the credited years of service under the Service Corporation
Plan for Messrs. Lee, Foster, Masin, Trivisonno and Carswell are 11, 24, 1, 6
and 36, respectively.
Under federal law, an employee's benefits under a qualified pension plan,
such as the Service Corporation Plan, are limited to certain maximum amounts.
GTE maintains a SERP, which supplements, on an unfunded basis, the benefits of
any participant in the Service Corporation Plan in an amount by which any
participant's benefits under the Service Corporation 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 Service
Corporation Plan on remuneration accrued under management incentive plans as
determined by the Executive Compensation and Organizational Structure Committee.
SERP benefits are payable in a lump sum or an annuity.
Executive Retired Life Insurance Plan
The GTE Corporation Executive Retired Life Insurance Plan ("ERLIP")
provides Messrs. Lee, Foster, Masin, 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
equal to the present value of the life insurance amount (based on actuarial
17
<PAGE> 21
factors and the interest rate then in effect), as a lump sum payment, as an
annuity or as installment payments.
CERTAIN TRANSACTIONS
During 1994, The Boston Consulting Group, Inc. received fees from GTE's
subsidiaries of approximately $2,651,000 for consulting services. Dr. Sandra O.
Moose is a director of GTE and a Senior Vice President, Chair of the East Coast
and Director of The Boston Consulting Group, Inc.
Mr. Robert D. Storey is a director of GTE and a partner in the law firm of
Thompson, Hine & Flory. GTE's subsidiaries utilized the services of this firm
during 1994.
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 1994, Mr. Wohlstetter also
received miscellaneous compensation from GTE (including personal automobile and
aircraft related expenses, club memberships and tax assistance services) valued
at $109,652.
OWNERSHIP OF STOCK BY DIRECTORS, NOMINEES FOR DIRECTORS, EXECUTIVE OFFICERS AND
CERTAIN BENEFICIAL OWNERS
Voting Stock
The following table indicates the shares owned by FMR Corp., the trustee of
certain of GTE's benefit plans, and United States Trust Company of New York as
Trustee for Minnesota Power & Light Company and Kindercare Learning Centers,
Inc., the only persons known to GTE to own more than 5 percent of any class of
its voting stock as of February 14, 1995:
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
TITLE OF CLASS NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OF CLASS
- ----------------------- --------------------------------------------- ----------- --------
<S> <C> <C> <C>
Common Stock FMR Corp. 66,681,128 6.9%
82 Devonshire Street
Boston, MA 02109-3614
Preferred Stock United States Trust Company of New York as 259,000 16.2%
Trustee for Minnesota Power & Light Company
and Kindercare Learning Centers, Inc.
45 Wall Street
New York, New York 10005-1918
</TABLE>
18
<PAGE> 22
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 14, FEBRUARY 14,
NAME OF DIRECTOR OR NOMINEE 1995 1995
- ------------------------------------------------------ ------------ -----------------------
<S> <C> <C>
Edwin L. Artzt........................................ 2,188
James R. Barker....................................... 4,000
Edward H. Budd........................................ 3,785
Kent B. Foster(1)(2).................................. 301,535 No director or
James L. Johnson(2)................................... 722,085 nominee or executive
Richard W. Jones...................................... 12,088 officer owns as much
James L. Ketelsen..................................... 1,600 as 1/10th of 1 percent
Charles R. Lee(1)(2).................................. 634,148
Michael T. Masin(1)(2)................................ 75,291
Sandra O. Moose....................................... 1,600
Russell E. Palmer..................................... 2,000
Howard Sloan(3)....................................... 55,399
Robert D. Storey...................................... 1,300
Nicholas L. Trivisonno(1)(2).......................... 181,956
James W. Walter....................................... 12,000
Charles Wohlstetter................................... 232,655
------------
2,243,630
============
EXECUTIVE OFFICERS(1)(2)
Charles R. Lee........................................ 634,148
Kent B. Foster........................................ 301,535
Michael T. Masin...................................... 75,291
Nicholas L. Trivisonno................................ 181,956
Bruce Carswell(4)..................................... 314,530
------------
1,507,460
============
All directors and executive officers as a
group(1)(2)......................................... 3,110,588 Represents less
============ than 1/2 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,
Masin, Trivisonno, Carswell, and Johnson and all directors and executive
officers as a group are 553,399, 247,864, 72,599, 170,233, 242,633, 633,300
and 2,373,590 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 800 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.
19
<PAGE> 23
Common Stock Units
In addition to the shares of GTE Common Stock shown in the preceding table,
the non-employee 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(1) FEBRUARY 14, 1995
- ------------------------------------------------------------------------- -----------------
<S> <C>
Edwin L. Artzt........................................................... 5,349
James R. Barker.......................................................... 75,743
Edward H. Budd........................................................... 7,387
James L. Johnson......................................................... 1,294
Richard W. Jones......................................................... 134,787
James L. Ketelsen........................................................ 1,294
Sandra O. Moose.......................................................... 1,294
Russell E. Palmer........................................................ 1,294
Howard Sloan............................................................. 1,294
Robert D. Storey......................................................... 1,294
James W. Walter.......................................................... 121,116
Charles Wohlstetter...................................................... 1,294
</TABLE>
- ---------------
(1) Mr. Masin holds 10,088 Common Stock Units. He participated in the Deferred
Compensation Plan and the PSP while he was a non-employee director of GTE.
In October 1993, Mr. Masin became an employee of GTE. He is no longer
eligible to receive or defer additional compensation under the Deferred
Compensation Plan or to receive new grants under the PSP.
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 representations that no other reports were required, all
persons subject to these reporting requirements filed the required reports on a
timely basis.
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. Artzt, Foster, Palmer and
Storey and Dr. Moose are nominated for election by GTE's shareholders as Class
III directors. All nominees for Class III directors are currently directors and
were previously elected by the shareholders. Class III directors elected in 1995
will serve for a term of three years which expires at the Annual Meeting of
Shareholders in 1998 or when their successors are elected and qualified. Each
nominee is at present available for election.
Mr. James W. Walter, a Class II director, has reached the mandatory age for
retirement and will retire from GTE's Board at the conclusion of the Annual
Meeting. Mr. Nicholas L. Trivisonno is nominated for election as a Class II
director. He is not currently a director. If elected, his term will expire at
the Annual Meeting of Shareholders in 1997 or when his successor is elected and
qualified.
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, 11
directors whose principal occupations
20
<PAGE> 24
are outside GTE and 4 directors who are presently employees of GTE. The
following provides information about the nominees for directors and the
continuing 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 III DIRECTORS
TERM EXPIRING AT 1998 ANNUAL MEETING
- ---------------------------------------------------------------------------------------------
EDWIN L. ARTZT Chairman of the Board and Chief Executive Officer of The Procter
64 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
[PHOTO] served as Group Vice President for European operations. Mr. Artzt
is a Director of Teradyne, Inc., Delta Air Lines, Inc., American
Express Company and a member of the Business Council and Business
Roundtable. Mr. Artzt is a member of the Nominating 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
51 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
[PHOTO] the Board of Directors of BC Telecom Inc., BC TEL, Compania
Anonima Nacional Telefonos de Venezuela (CANTV), NationsBank of
Texas and the Dallas Symphony Orchestra. He is a Trustee of The
Dallas Museum of Art and a member of the Dallas Opera Executive
Board. Mr. Foster is also a Personal Trustee of the GTE
Foundation.
SANDRA O. MOOSE Senior Vice President and Chair of the East Coast as well as New
53 1978 York Office Administrator and 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
[PHOTO] Funds, a Corporator of New England Deaconess Hospital, a member
of the Dana-Farber Cancer Institute and a Director of the Harvard
University Graduate School Alumni Association. She is a member of
the Audit Committee, the Public Policy 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 III DIRECTORS
TERM EXPIRING AT 1998 ANNUAL MEETING
- ---------------------------------------------------------------------------------------------
<S> <C>
RUSSELL E. PALMER Chairman and Chief Executive Officer, The Palmer Group. Mr.
60 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 Bankers
Trust New York Corporation and its subsidiary, Bankers Trust
[PHOTO] 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.
58 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
[PHOTO] Society of Cleveland. He is a Director of Bank One, Cleveland,
The Procter & Gamble Company 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>
22
<PAGE> 26
BIOGRAPHICAL INFORMATION
<TABLE>
<CAPTION>
NOMINEE, AGE AND
YEAR ELECTED A DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ---------------------------------------------------------------------------------------------
NOMINEE FOR CLASS II DIRECTOR
TERM EXPIRING AT 1997 ANNUAL MEETING
- ---------------------------------------------------------------------------------------------
<S> <C>
NICHOLAS L. TRIVISONNO Executive Vice President - Strategic Planning and Group
47 President. Mr. Trivisonno joined GTE in 1988 as Vice President
and Controller. He became Senior Vice President - Finance the
following year and was elected to his current position in 1993.
Prior to joining GTE, he served as managing partner of the
[PHOTO] Stamford, Connecticut office of Arthur Andersen LLP. He is a
Director of Rayonier, Inc., Yankee Energy Systems, Allendale
Insurance, Babson College, Junior Achievement, and St. Joseph's
Medical Center.
</TABLE>
The following provides information about the members of the Board of
Directors who are continuing in office.
<TABLE>
<CAPTION>
DIRECTOR, AGE
AND YEAR ELECTED PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ---------------------------------------------------------------------------------------------
CLASS II DIRECTORS
TERM EXPIRING AT 1997 ANNUAL MEETING
- ---------------------------------------------------------------------------------------------
<S> <C>
JAMES R. BARKER Chairman of The Interlake Steamship Co. and Vice Chairman of
59 1976 Mormac Marine Group, Inc. and the Moran Towing Company. Mr.
Barker is also a Director and a principal owner of Meridian
Aggregates, Inc., a producer of 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 and a member of the Board
of Trustees of Stamford Hospital. 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>
23
<PAGE> 27
BIOGRAPHICAL INFORMATION
<TABLE>
<CAPTION>
DIRECTOR, AGE
AND YEAR ELECTED PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ---------------------------------------------------------------------------------------------
CLASS II DIRECTORS
TERM EXPIRING AT 1997 ANNUAL MEETING
- ---------------------------------------------------------------------------------------------
<S> <C>
RICHARD W. JONES Business Consultant, PaineWebber Incorporated. From 1977 to 1988
69 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,
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
71 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
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
72 1969 Corporation), home construction-building materials manufacturer,
in 1946 and Chairman of its Board since 1962. Mr. Walter also
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.
CHARLES WOHLSTETTER Vice Chairman. Prior to joining GTE's Board, he was Chairman of
84 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.
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>
24
<PAGE> 28
BIOGRAPHICAL INFORMATION
<TABLE>
<CAPTION>
DIRECTOR, AGE
AND YEAR ELECTED PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ---------------------------------------------------------------------------------------------
CLASS I DIRECTORS
TERM EXPIRING AT 1996 ANNUAL MEETING
- ---------------------------------------------------------------------------------------------
<S> <C>
EDWARD H. BUDD Chairman of the Executive Committee and Director of the Travelers
61 1985 Group. From January 1994 to September 1994 Mr. Budd was Chairman
of Travelers Insurance Group, Inc. Mr. Budd was elected Presi-
dent and Chief Operating Officer in 1976, Chief Executive Officer
in 1981 and Chairman in 1982. He is a Director of Delta Air
Lines, Inc. 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.
JAMES L. JOHNSON Retired Chairman and Chief Executive Officer. Mr. Johnson, who
67 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 Operations Group. He was elected
President of the GTE Telephone Operations Group in 1981, Senior
Vice President of GTE and President and Chief Operating Officer
of its Telephone Operations 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, Harte-Hanks Communications, Inc.,
Greyhound Financial Corp., CellStar Corporation, Contel Cellular
Inc., BC TEL, Compania Anonima Nacional Telefonos de Venezuela
(CANTV) and VenWorld, and a member of the Texas Tech University
Board of Regents. He is a Trustee of the Joint Council on
Economic Education and a member of the Audit Committee, the
Pension Trust Coordinating Committee and the Strategic Issues,
Planning and Technology Committee of GTE.
JAMES L. KETELSEN Retired Chairman of Tenneco Inc. Mr. Ketelsen retired as Chairman
64 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.
</TABLE>
25
<PAGE> 29
BIOGRAPHICAL INFORMATION
<TABLE>
<CAPTION>
DIRECTOR, AGE
AND YEAR ELECTED PRINCIPAL OCCUPATION AND OTHER INFORMATION
- ---------------------------------------------------------------------------------------------
CLASS I DIRECTORS
TERM EXPIRING AT 1996 ANNUAL MEETING
- ---------------------------------------------------------------------------------------------
<S> <C>
CHARLES R. LEE Chairman and Chief Executive Officer. Mr. Lee joined GTE in 1983
55 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, The Procter & Gamble Company and Contel Cellular
Inc. 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.
MICHAEL T. MASIN Vice Chairman of the Board. Mr. Masin was elected Vice Chairman
50 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), DynCorp and Contel Cellular Inc. Mr. Masin is
a Trustee of The American University, a Personal Trustee of the
GTE Foundation, a member of the Business Committee of the Board
of Trustees of the Museum of Modern Art and a member of the
Council on Foreign Relations.
</TABLE>
26
<PAGE> 30
ITEM 2.
The following resolution will be offered by the Board of Directors at the
meeting:
RESOLVED: That the appointment of Arthur Andersen LLP 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, 1995 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 LLP ("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 1995 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, 1994 are estimated at $9.2
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.
Mr. John J. Gilbert, representing 300 shares of stock and/or Margaret R.
Gilbert, representing 300 shares of stock, and Margaret R. Gilbert and John J.
Gilbert, co-trustees under the will of Caston J. Gilbert for 300 shares, and
representing an additional family interest of 800 shares, and also representing
Corporate Democracy, Inc. (a not-for-profit-corporation), 29 East 64th Street,
New York, New York 10021-7043, 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 M. Allan Frank, 6882 East Center Avenue, Denver,
Colorado 80224-1503, representing 100 shares; and Edward and/or Edith Rudy, Box
7077, Yorkville Station, New York, New York 10128-7077, who state that they are
the beneficial owners of 519.262 shares of Common Stock, have informed GTE 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:
"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 needed steps 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 29%, an increase over the previous year,
41,746 owners of 181,769,379 shares, were cast in favor of this proposal.
The vote against included 43,701 unmarked proxies.
Last year ARCO, to its credit, voluntarily ended theirs stating that
when a very high percentage, 34.6%, desired it to be changed to an annual
election it was reason enough for
27
<PAGE> 31
them to change it. Several other companies have also followed suit such as
Pacific Enterprises, Katy Industries, Hanover Direct and others.
Because of normal need to find new directors and because of
environmental problems and the recent avalanche of derivative losses and
many groups desiring to have directors who are qualified on the subjects we
think that ending the stagger system of electing directors is the answer.
In addition, some recommendations have been made to carry out the Valdez 10
points. The 11th, in our opinion, should be to end the stagger system of
electing directors and to have cumulative voting.
Recently Equitable Life Insurance Company, which is now called
Equitable Companies, converted from a policy owned company to a public
stockholder meeting. Thanks to AXA, the comptrolling French insurance
company not wanting it they now do not have a staggered board.
The Orange and Rockland Utility Company had a terrible time with the
stagger system and its 80% clause to recall a director. The chairman was
involved in a scandal affecting the company. Not having enough votes the
meeting to get rid of the chairman had to be adjourned. Finally at the
adjourned meeting enough votes were counted to recall him.
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 this action of its
shareholders.
ITEM 4.
GTE has been notified by the International Brotherhood of Electrical
Workers, 6603 East Chelsea Street, Tampa, Florida 33610, and sponsors Guy A.
Langlais, 5158 Lancewood Drive, Sarasota, Florida 34232, 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 Foxridge 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 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;
28
<PAGE> 32
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 1993 10-K report includes the information
that access lines have increased 15% over the last four years, while GTE's
United States employment has decreased 27% since 1988. The remaining GTE
employees have dramatically increased their productivity, while the cost of
their labor has decreased.
The years 1991 through 1993 saw dramatic fluctuation in executive
compensation levels without any appreciable increase in productivity. It is
in the best interest of GTE and its shareholders to establish criteria to
insure all compensation is earned not granted."
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
29
<PAGE> 33
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 5.
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 in America, particularly
when compared to compensation packages of their counterparts in Japan and
Germany. The debate over excessive executive compensation is also a part of
a larger concern over the growing inequity in income distribution in
America. An article in the New York Times on Friday, October 7, 1994
reported on recent figures made public by the U.S. Census Bureau showing
that the typical American household saw its income decline in 1993 by about
$300, even though the economy grew by 3%. From 1989 to 1993, the typical
American household lost $2,344 in annual income, a fall of 7%. While the
Census Bureau reported that average per capita income was up by 1.8% in
1993, most of the benefits flowed to the wealthiest Americans. The Census
Report showed record levels of inequality, with the top fifth of American
households earning 48.2% of the nation's income, while the bottom fifth
earned just 3.6%. This Shareholder Proposal is a modest attempt to address
this unfortunate trend.
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 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."
30
<PAGE> 34
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 6.
GTE has been notified by the Missionary Oblates of Mary Immaculate, 8818
Cameron Street, Silver Spring, Maryland 20910-4113, which states that it is the
beneficial owner of 2,000 shares of Common Stock; and the Sisters of St. Joseph
of LaGrange, 205 West Monroe, 2W, Chicago, Illinois 60606, which states that it
is the beneficial owner of 700 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 a sound, credible environmental
policy increases long-term shareholder value by raising 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 following standards created by
industry alone. For maximum credibility and usefulness, such standards
should reflect what investors and other stakeholders want to know about the
environmental records of their companies;
Companies are increasingly being expected by investors to do
meaningful, regular, comprehensive and impartial environmental reports.
These help investors and the public to understand environmental progress
and problems;
Uniform standards for environmental reports permits comparisons of
performance over time. It also allows companies to attract new capital from
investors seeking investments which are environmentally responsible and
responsive and which minimize risk of environmental liability.
31
<PAGE> 35
WHEREAS:
The Coalition for Environmentally Responsible Economies (CERES) -- which
comprises large institutional investors (including shareholders of this
Company), with $160 billion in stockholdings, public interest representatives,
and environmental experts -- consulted with corporations and produced
comprehensive public standards for both environmental performance and reporting.
Over 80 companies, including Sun (Oil), General Motors, H.B. Fuller, Polaroid,
and Arizona Public Service Company have endorsed the CERES Principles to
demonstrate their commitment to public environmental accountability. Fortune 500
endorsers speak enthusiastically about the benefits that flow from working with
CERES: increasing public credibility; adding 'value' to the company's
environmental initiatives; and advancing the company's own environmental plans
and agenda.
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 and 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
(Full text of the CERES Principles and accompanying CERES Report Form
obtainable from CERES, 711 Atlantic Avenue, Boston, MA 02110, tel.:
617/451-0927.)
RESOLVED: Shareholders request the Company to endorse the CERES
Principles as a part of its commitment to be publicly accountable for its
environmental impact."
The following is the statement submitted in support of this proposal:
"Concerned investors are asking the Company to be publicly accountable
for its environmental impact, including collaborating with this
corporate-environmental-investor-community coalition to develop: standards
for environmental performance and disclosure; methods for measuring
progress toward these goals; and a format for public reporting of progress.
We believe this is comparable to the European Community regulation for
voluntary participation in verified and publicly-reported eco-management
and auditing.
We invite our 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 publishing an environmental
report in the format of the CERES Report. This will complement -- not
supplant -- internal corporate environmental policies and procedures.
Without such public scrutiny, corporate environmental policies and
reports lack the critical component of adherence to standards upheld by
management and stakeholders alike. Shareholders are asked to vote FOR this
resolution to encourage our Company to demonstrate environmental leadership
and accountability."
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
32
<PAGE> 36
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 7.
GTE has been notified by the Sisters of Mercy of the Americas, Regional
Community of Detroit, 29000 Eleven Mile Road, Farmington Hills, Michigan 48336,
which states that it is the owner of 200 shares of Common Stock; and 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 2,000 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:
"RESOLVED: The shareholders request our company 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 1995.
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 1992, 1993, 1994 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 ethnic minorities.
4. A 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 directing the purchase
of goods and services to minority- and/or female-owned business
enterprises."
33
<PAGE> 37
The following is the statement submitted in support of this proposal:
"GTE is the largest U.S. based local telephone company and the
fourth-largest publicly owned telecommunications company in the world. We
believe this position requires a greater responsibility for corporate
commitment to equal employment opportunity and policies opposing all forms
of discrimination. Since a substandard equal employment opportunity record
leaves a company open to expensive legal action, poor employee morale and
even the loss of certain types of business, we believe it is in the
company's and shareholder's interests to have information on our company's
equal employment record available. Last year 14.4% of the GTE shareholders
voted in favor of a Equal Employment Report, a significant vote.
One of the country's largest institutional investors the California
Public Employees' Retirement System includes workplace performance
guidelines as part of their corporate performance criteria. The Department
of Labor's Glass Ceiling Commission has for the last four years conducted
studies with the help of a number of corporations and in 1994 held public
hearings to ascertain the status of equality and diversity in Corporate
America. In 1995 the Commission will report to the President their
recommendations.
We believe a report containing the basic information requested in this
resolution keeps the issue high on top management's and the Board of
Directors' agenda and reaffirms our public commitment to equal employment
opportunity and programs responsive to the concerns of all employees.
Publicizing our standards is helpful to our investors and the companies
with whom we do business.
We are requesting that EEO information already gathered for the
purpose of complying with government regulations be made available to
company shareholders on request. The format of the report requested is not
the central question. Many corporations openly release their EE0-1
information in annual reports or public interest booklets.
Different companies use different styles in telling their story to
shareholders. Capital Cities/American Broadcasting Company,
Bristol-Meyers-Squibb and Travellers produced a substantial magazine style
report. Campbell Soup produced a straightforward four page document. Dozens
of other companies also do these reports. We feel this request is fair and
reasonable."
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; establishing a
corporate-wide Workforce Diversity Forum in 1992; designating a senior member of
management to lead workforce diversity efforts; 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.
34
<PAGE> 38
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 employment
opportunity 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
proponents would serve any useful purpose.
ITEM 8.
GTE has been notified by Mr. William Steiner, 4 Radcliff Drive, Great Neck,
New York 11024, representing 635 shares of stock, that he 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, that the shareholders assembled in person and by proxy
recommend (i) that all future non-employee directors not be granted pension
benefits and (ii) current non-employee directors voluntarily relinquish
their pension benefits."
The following is the statement submitted in support of this
resolution:
"Aside from the usual reasons, presented in the past, regarding
'double dipping', that is outside (non-employee) directors who are in
almost all cases amply rewarded with their pension at their primary place
of employment, and in many instances serving as outside pensioned directors
with other companies, there are other more cogent reasons that render this
policy unacceptable.
Traditionally, pensions have been granted in both the private and
public sectors for long term service. The service component usually
represents a significant number of hours per week. The practice of offering
pensions for consultants is a rarity. Outside directors' service could
logically fit the definition of consultants and pensions for this type of
service is an abuse of the term.
But more importantly, outside directors, although retained by
corporate management, namely the C.E.O., are in reality representatives of
shareholders. Their purpose is to serve as an impartial group to which
management is accountable. Although outside directors are certainly
entitled to compensation for their time and expertise, pensions have the
pernicious effect of compromising their impartiality. In essence, pensions
are management's grants to outside directors to insure their unquestioning
loyalty and acquiescence to whatever policy management initiates, and at
times, serving their own self interests. Thus, pensions become another
device to enhance and entrench management's controls over corporate
policies while being accountable only to themselves. As a founding member
of the Investors Rights Association of America I feel this practice
perpetuates a culture of corporate management 'cronyism' that can easily be
at odds with shareholder and company interest.
A final note in rebuttal to management's contention that many
companies offer their outside directors pensions, so they can attract and
retain persons of the highest quality. Since there are also companies that
do not offer their outside directors pensions, can management demonstrate
that those companies that offer pensions have a better performance record
then their non-pensioned peers? In addition, do we have any evidence of a
significant improvement in corporate profitability with the advent of
pensions for outside directors?
I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION."
35
<PAGE> 39
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOREGOING PROPOSAL FOR
THE FOLLOWING REASONS:
The best interests of GTE and its shareholders are served by having the
most talented, experienced and committed individuals serving as outside
directors. Retirement benefits for outside directors are now a common form of
compensation at large U.S. corporations. According to recent surveys, nearly 80%
of the largest 100 corporations have adopted such plans. In order to attract and
retain highly sought after individuals for Board service, GTE must provide a
competitive total compensation program inclusive of a retirement plan. GTE has
also determined that paying a portion of total compensation in the form of a
retirement benefit is appropriate since it provides not only an incentive to
join the Board but to remain on the Board for a period of time in order to gain
the experience and knowledge of GTE's complex business.
The retirement benefit that is payable under the Retirement Plan for
Non-Employee Members of the Board of Directors of GTE Corporation (the
"Directors Retirement Plan") is based upon the directors' compensation in effect
at the time a director retires. The compensation includes three
components -- the cash retainer, the value of certain shares awarded under the
PSP and the value of certain shares awarded under the LTIP. Two of the three
components of compensation are stock based and, accordingly, the retirement
benefit is closely tied to GTE's stock and re-enforces the mutual interest of
GTE's directors and shareholders. Moreover, the design of this plan ensures that
this commonality of interest is long-term and continues beyond a director's
retirement date. Therefore, the Board of Directors recommends retaining the
Directors Retirement Plan.
ITEM 9.
GTE has been notified by Mr. Kenneth Steiner, 14 Stoner Avenue, Great Neck,
New York 11024, representing 508 shares of stock, that he 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, that the shareholders recommend that the board of directors
adopt a policy against entering into future agreements with officers and
directors of this corporation which provide compensation contingent on a
change of control of the corporation, unless such compensation agreements
are submitted to a vote of the shareholders and approved by a majority of
shares present and voting on the issue."
The following is the statement submitted in support of this
resolution:
"Lucrative severance contracts awarded to senior corporate executives
which provide compensation contingent on a change of control, usually
through a merger or acquisition of the corporation, are known as 'golden
parachutes'. These contracts are awarded without shareholder approval.
The practice of providing these large cash awards to a small group of
senior corporate managers without shareholder approval has been a subject
of public outcry. In 1988, the U.S. Senate in emphasizing the potential
conflict of interest between management and shareholders created by these
agreements voted ninety eight to one to require shareholder approval of
golden parachutes which exceed three times annual compensation.
Although final action was not taken, it is clear to me that the
overwhelming vote in favor of the measure reflects public sentiment against
golden parachutes. A shareholder vote would allow the corporation's owners
to decide for themselves whether golden parachutes are in their best
interests.
As a founding member of the Investors Rights Association of America it
is clear to me that requiring a shareholder vote is necessary to address
the conflicts of interest between management and shareholders that arise in
the awarding of golden parachutes.
I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION."
36
<PAGE> 40
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOREGOING PROPOSAL FOR
THE FOLLOWING REASONS:
The Board of Directors believes that the change in control agreements
provide a reasonable contingent benefit which serves the best interest of
shareholders and are an impartial and entirely appropriate element of sound
corporate governance. The agreements in place (which are described on pages 15
and 16 of this Proxy Statement) are designed to ensure that management assesses
a takeover bid objectively, and advises the Board as to whether the bid is in
the best interest of GTE and its shareholders without undue concern for personal
financial loss or other personal uncertainties. Therefore, the agreements are
intended to minimize rather than create a conflict of interest for executives in
the event of a tender offer or other takeover bid.
It is important to note that under the agreements, no benefit is paid
unless (1) a change in control occurs and, (2) thereafter, the executive is
discharged from employment or is otherwise adversely affected by the change in
control (as described on page 15 of this Proxy Statement). Thus, it is the
potential acquirer -- and not the executive -- who controls whether the
termination benefits will be owed. As a result, the Board strongly believes that
the executives covered by the agreements do not have any financial or other
incentive to act detrimentally to the shareholders' interest.
The agreements have no current cost to GTE or its shareholders. Management
also believes that the agreements do not affect the legal responsibility of
executive officers to the shareholders with respect to discharging their duties
and responsibilities. The GTE agreements are similar to other such agreements
which exist at the majority of companies within our industry and among large
U.S. corporations.
The Board believes that requiring shareholder approval of these agreements
may weaken the Board's flexibility to act promptly, decisively and with a
competitive edge with respect to attracting and retaining seasoned executives,
thereby potentially depriving the Corporation and the shareholders of the
strength and leadership necessary to strive for long term maximization of
shareholder value.
37
<PAGE> 41
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 1994 which was mailed to the
shareholders beginning March 3, 1995.
A COPY OF GTE'S 1994 ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION WILL BE AVAILABLE AFTER MARCH 31, 1995 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 3, 1995
38
<PAGE> 42
(MAP SHOWING ROUTES TO GTE CORPORATION ANNUAL SHAREHOLDERS MEETING)
39
<PAGE> 43
[GTE LOGO]
GTE CORPORATION
One Stamford Forum
Stamford, Connecticut 06904
Telephone: 203-965-2000
March 3, 1995
The Annual Meeting of Shareholders of GTE Corporation will be held at 2:00 P.M.,
Local Time, on Wednesday, April 19, 1995, at the Italian Center, 1620 Newfield
Avenue, Stamford, Connecticut.
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.
Please fill in the boxes on the proxy card to indicate how your shares should be
voted, sign and date your proxy card and return it as soon as possible in the
enclosed postpaid envelope. If you do not sign and return your proxy card, the
Proxies cannot vote your shares at the Annual Meeting.
Marianne Drost
Secretary
PLEASE DETACH AT PERFORATION
/X/ Please mark
votes as in
this example.
DIRECTORS RECOMMEND A VOTE "FOR"
1. Election of five Class III directors:
Edwin L. Artzt, Kent B. Foster, Sandra O.
Moose, Russell E. Palmer, Robert D. Storey,
and election of Nicholas L. Trivisonno as a
class II director.
FOR WITHHELD
/ / / /
/ /
- --------------------------------
For all nominees except as noted
2. Ratification of
appointment FOR AGAINST ABSTAIN
of auditors. / / / / / /
MARK HERE / /
FOR
ADDRESS CHANGE
MARK HERE / /
FOR
COMMENTS
MARK HERE TO / /
DISCONTINUE
DUPLICATE MAILINGS
DIRECTORS RECOMMEND A
VOTE "AGAINST" THE FOLLOWING
SHAREHOLDER PROPOSALS
FOR AGAINST ABSTAIN
3. Eliminate the / / / / / /
staggered
election
of directors.
4. Limit / / / / / /
executives'
compensation.
5. Limit / / / / / /
executives'
pay increases.
6. Endorse / / / / / /
the CERES
principles.
7. Report on EEO/Affirm- / / / / / /
ative Action Program.
8. Eliminate / / / / / /
directors' re-
tirement plan.
9. Require shareholder / / / / / /
vote on contracts
paying compensation
on a change in
control.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE DATE
---------------------------------- -------------- Please sign exactly as your name(s) appear
SIGNATURE DATE (If more than one name appears, all must sign.)
---------------------------------- --------------
</TABLE>
PROXY SOLICITED BY BOARD OF DIRECTORS FOR GTE'S ANNUAL MEETING OF SHAREHOLDERS
ON APRIL 19, 1995.
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 19, 1995 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.
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.
P.O. Box 2201
Boston, MA 02107-9801
--------------
PLEASE SIGN ON THE OPPOSITE SIDE AND RETURN SEE OPPOSITE
THE PROXY CARD IN THE ACCOMPANYING ENVELOPE. SIDE
--------------
