<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
GTE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<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, 1998
To Our Shareholders:
On behalf of the Board of Directors, I cordially invite you to attend the
1998 Annual Meeting of Shareholders of GTE Corporation. The Annual Meeting will
be held on Wednesday, April 15, 1998, in the Wisteria Room of the Italian
Center, 1620 Newfield Avenue, Stamford, Connecticut. The Annual Meeting will
begin at 2:00 P.M. and end no later than 4:00 P.M., Local Time. The formal
Notice of Annual Meeting appears on the next page.
The attached Proxy Statement describes the matters that we expect to act
upon at the Annual Meeting. Those of you who attend the Annual Meeting in person
will also have the opportunity to ask questions of broad interest to GTE's
shareholders. You will need an admission ticket if you plan to attend the Annual
Meeting. More specific information about obtaining your admission ticket can be
found in the Notice of Annual Meeting and on page 29. Directions to the Annual
Meeting are printed on the back cover and on the admission ticket.
It is important that your views be represented whether or not you are able
to be present at the Annual Meeting. The Board of Directors recommends that
shareholders vote FOR Items 1 and 2, and AGAINST Item 3.
We are gratified by your 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 vote your shares as soon as
possible.
Sincerely,
/s/ Charles R. Lee
<PAGE> 3
[GTE LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 15, 1998
Stamford, Connecticut
March 3, 1998
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 15, 1998, at 2:00 P.M., Local Time, for the
following purposes:
1. To elect one Class II director and four Class III directors to the
Board of Directors;
2. To ratify the appointment of auditors;
3. To consider and act upon the shareholder proposal described in the
accompanying Proxy Statement which seeks to establish a policy of
reporting on GTE's foreign military sales; and
4. To act upon any other matters properly coming before the Annual
Meeting and any adjournment thereof.
Only shareholders of record at the close of business on February 24, 1998
will be entitled to vote at the Annual Meeting.
This year GTE is pleased to offer shareholders the choice of voting their
shares either by returning their proxy card by mail, voting their proxy by
telephone or voting their proxy on the internet. Instructions for voting are
printed on the enclosed proxy card.
You will need a ticket if you plan to attend the Annual Meeting. If your
shares are registered in your name and not in the name of a bank, broker or
other third party, an admission ticket is attached to your proxy card. Please
detach and save the ticket. You will need to present it in order to be admitted
to the Annual Meeting. Also, to help us in finalizing arrangements, please
indicate when voting whether you plan to attend the Annual Meeting.
If your shares are not registered in your own name, please advise the
shareholder of record (your bank, broker or other institution holding your
shares) that you wish to attend the Annual Meeting. That firm must provide you
with documentation showing that you owned your GTE shares as of the record date,
February 24, 1998. You must bring that documentation to the Annual Meeting in
order to attend.
By order of the Board of Directors,
MARIANNE DROST
Secretary
PLEASE VOTE YOUR SHARES PROMPTLY. INSTRUCTIONS FOR VOTING ARE PRINTED ON
THE ENCLOSED PROXY CARD.
<PAGE> 4
[GTE LOGO]
ONE STAMFORD FORUM, STAMFORD, CONNECTICUT 06904
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 15, 1998
GTE Corporation ("GTE" or the "Corporation") is sending this Proxy
Statement to its shareholders in connection with GTE's Annual Meeting of
Shareholders (the "Annual Meeting"). The Annual Meeting will start at 2:00 P.M.
and end no later than 4:00 P.M., Local Time, on Wednesday, April 15, 1998. The
Annual Meeting will be held in the Wisteria Room of the Italian Center, 1620
Newfield Avenue, Stamford, Connecticut. The board of directors of GTE (the
"Board of Directors" or the "Board") is soliciting proxies to be voted at the
Annual Meeting and at any adjournment of the Annual Meeting.
GTE began mailing this Proxy Statement and Notice of Annual Meeting, the
proxy card and GTE's Annual Report to shareholders on March 3, 1998.
RECORD DATE
Only shareholders of record at the close of business on February 24, 1998
are entitled to vote in person or by proxy at the Annual Meeting.
PROXY PROCEDURE
The 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 shareholder delivers a valid proxy, the shares represented by that proxy
will be voted in accordance with the shareholder's instructions. To be valid, a
returned proxy card must be signed and dated. Alternatively, if you vote by
telephone or through the internet and follow the instructions, you will also
deliver a valid proxy. If a shareholder attends the Annual Meeting, he or she
may vote by ballot.
If the registered owner of shares does not deliver a valid proxy or does
not attend the Annual Meeting and vote in person, his or her shares will not be
voted.
If a shareholder returns a signed proxy card but does not mark the boxes
indicating how the shares are to be voted, the shares represented by that proxy
card will be voted as recommended by the Board of Directors.
A valid proxy 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 (the "Secretary"); (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 that shareholder's name and the number of full shares credited to
his or her SSIP account.
If an employee shareholder participates in the GTE Savings Plan or the GTE
Hourly Savings Plan (collectively, the "Savings Plans") and also holds
additional shares of the Corporation's common stock ("GTE Common Stock") outside
of the Savings Plans, he or she will receive one proxy card representing all
holdings registered in a similar manner. Accordingly, the proxy also will
provide instructions to the trustee of the Savings Plans for voting the shares
held in those plans. If
1
<PAGE> 5
their accounts are not registered in a similar manner, shareholders will receive
a separate proxy card for their individual and plan holdings. The trustee of the
Savings Plans votes shares of the Savings Plans for which no instructions are
received in the same proportion as shares for which the trustee has received
voting instructions.
COST OF SOLICITATION
GTE is responsible for the cost of soliciting proxies. Proxies may be
solicited by directors, officers or regular employees of GTE in person or by
telephone, or by 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 fee will not exceed $30,000. 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 (the
"SEC") and the New York Stock Exchange, Inc. (the "NYSE") concerning the sending
of proxies and proxy material to the beneficial owners of stock.
VOTING
Shares Outstanding
As of January 31, 1998, the outstanding voting stock of GTE consisted of
958,922,671 shares of GTE Common Stock. Each share of GTE Common Stock is
entitled to one vote.
Confidentiality
It is GTE's policy that all proxies, ballots and tabulations that identify
the vote of individual shareholders are kept confidential. These items are not
seen by nor reported to the Corporation, except as necessary to meet legal
requirements, in a contested proxy solicitation or where shareholders submit
comments with their proxy.
Vote Required
In order to be elected, each nominee for director must receive a plurality
of the votes cast by the holders of the outstanding GTE Common Stock entitled to
vote at the Annual Meeting. The proposal to ratify the appointment of auditors
must receive an affirmative majority of the votes cast. An affirmative majority
of the votes cast is required to approve the shareholder proposal. 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. Abstentions are counted
toward determining whether a quorum has been obtained. However, shares
represented by broker non-votes are not considered present at the meeting and,
accordingly, 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 and approved by
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 SEC. In order to be included in GTE's 1999 proxy material, a
shareholder's proposal must be received no later than November 3, 1998 at GTE's
Corporate Headquarters, One Stamford Forum, Stamford, Connecticut 06904,
Attention: Secretary.
In addition, GTE's By-Laws (the "By-Laws") provide that in order for
business to be brought before the Annual Meeting, a shareholder must deliver
written notice to the Secretary not less than 30 nor more than 60 days prior to
the date of the Annual Meeting. For any annual meeting of shareholders after the
Annual Meeting, this notice must be delivered not less than 90 nor more than 120
days prior to the date of such meeting. The notice must state the shareholder's
name, address and number of shares of GTE Common Stock held, and briefly
describe the business to be brought
2
<PAGE> 6
before the Annual Meeting, the reasons for conducting such business at the
Annual Meeting and any material interest of the shareholder in the proposal.
The By-Laws also provide that if a shareholder intends to nominate a
candidate for election as a director, the shareholder must deliver written
notice of his or her intention to the Secretary. The notice must be delivered
not less than 30 nor more than 60 days before the date of a meeting of
shareholders. For any meeting of shareholders after the Annual Meeting, this
notice must be delivered not less than 90 nor more than 120 days prior to the
date of such meeting. The notice must contain the following information: the
name and address of and number of shares of GTE Common Stock 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 nominee's consent 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 committees of the Board (the "Board Committees") and through
reports and analyses and discussions with management.
The Board of Directors meets on a regularly scheduled basis and, during
1997, met on twelve occasions. In addition, significant communications between
the directors and the Corporation occur apart from regularly scheduled meetings
of the Board and the Board Committees. 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 meetings of the Board and the Board Committees (the
aggregate of the total number of meetings of the Board of Directors and the
total number of meetings of all Board Committees on which each director served)
during 1997 was 96.7%. During 1997, 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 Board Committees on which he or she served.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established six standing Board Committees and
has assigned certain responsibilities to each of those Board Committees.
Audit Committee
The Audit Committee had five meetings in 1997. 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 (the
"Committee") had ten meetings during 1997. The functions of the Committee
include the review and approval of compensation of employees above a certain
salary level, the review of management recommendations relating to executive
incentive compensation plans, the administration of GTE's executive incentive
compensation plans, the review of and recommendations concerning directors'
compensation, and consultation on senior executive continuity and matters of
organizational structure.
3
<PAGE> 7
Nominating Committee
The Nominating Committee had four meetings during 1997. The functions of
this Board Committee include the consideration of the size and composition of
the Board, review and recommendation of individuals for election as directors or
officers of GTE, review of criteria for selecting directors, 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, this
Board 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 at GTE's 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 meetings of the Board and the Board Committees.
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 pension plans,
approving overall investment policy relating to the assets of the pension plans
and monitoring the actuarial soundness of those plans. This Board Committee had
one meeting during 1997.
Public Policy Committee
The Public Policy Committee, which had one meeting during 1997, reviews the
policies and practices of GTE as to corporate contributions, employee safety and
health and other matters 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 and to technology. This
Board Committee had three meetings during 1997.
DIRECTORS' COMPENSATION
Annual Compensation
During 1997, each non-employee director participated in a new compensation
program that has both equity-based and cash-based components. The program is
designed to ensure that a significant portion of a non-employee director's
compensation is equity-based and, therefore, highly dependent on the long-term
performance of GTE Common Stock, aligning the interests of GTE's non-employee
directors and its shareholders. Non-employee directors are those directors who
are not employees of GTE or its related companies. Directors who are also
employees of GTE are not paid any fees or other remuneration, as such, for
service on the Board or any of the Board Committees.
With respect to the equity-based component, during 1997 the Board granted
each non-employee director 1,000 hypothetical shares of GTE Common Stock
("Deferred Stock Units") under the Deferred Stock Unit Plan for Non-Employee
Members of the Board of Directors of GTE Corporation (the "Deferred Stock Unit
Plan"). The Deferred Stock Unit Plan permits participating non-employee
directors to elect to receive distributions in shares of GTE Common Stock, as
well as cash, and to commence payments as soon as the non-employee director
ceases to be an officer or director of GTE. There are no voting rights attached
to Deferred Stock Units.
4
<PAGE> 8
The Deferred Stock Units are held in a hypothetical account for the
non-employee director. Deferred Stock Units increase or decrease in value based
on the market value of an equivalent number of shares of GTE Common Stock. Each
time a dividend is paid on GTE Common Stock, an equivalent amount is converted
to Deferred Stock Units and credited to the non-employee director's individual
account based on the number of Deferred Stock Units held as of the dividend
date. These awards are not payable until the non-employee director terminates
service as a director or officer of GTE.
With respect to the cash-based component, each non-employee director
received an annual retainer in the amount of $60,000, and any non-employee
director who chaired a Board Committee received an additional annual retainer of
$2,500. No other meeting or retainer fees were paid.
Deferred 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 part of the cash
portion of his or her director's compensation and receive future payments, in
one or more installments. Amounts deferred under the Deferred Compensation Plan
are held in Deferred Stock Units or in a hypothetical interest-bearing cash
deferral account (a "Cash Account"), or in a combination thereof, at the
election of the non-employee director. The number of Deferred Stock Units will
be calculated by dividing the amount deferred for a calendar quarter by the
average closing price of GTE Common Stock, as reported on the composite tape of
NYSE issues, for the most recent 20 business-day period ending on or before the
last day of such quarter. Deferred Stock Units increase or decrease in value
based on the value of an equivalent number of shares of GTE Common Stock. Each
time a dividend is paid on GTE Common Stock, an equivalent amount is converted
into Deferred Stock Units and credited to the non-employee director's account
based on the number of Deferred Stock Units held as of the dividend date.
Payments of amounts deferred and held in Deferred Stock Units under the
Deferred Compensation Plan may be made in cash or shares of GTE Common Stock, at
the election of the non-employee director, beginning after the non-employee
director's service as an officer or director of GTE ends. Payments of amounts
deferred under the Deferred Compensation Plan and held in a Cash Account shall
be made in cash and, at the election of the non-employee director, may begin
before or after his or her service as an officer or director ends. After a
non-employee director completes his or her Board service, the non-employee
director may also elect to invest the balance of his or her Deferred
Compensation Plan account in a variety of investment options.
CHARITABLE AWARDS PROGRAM
Non-employee directors and designated senior executives of GTE, including
the individuals named in the Summary Compensation Table on page 12, 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 made in
five equal annual installments after a participant's death. Generally, the
donations will be made only 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.
5
<PAGE> 9
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 executive employee group and administer GTE's executive
short-term and long-term incentive plans, including approving grant and payout
targets and awards under those plans. The Committee also evaluates the
performance of senior management, including the Chief Executive Officer, and
reviews and approves changes to the base salaries of senior management of GTE
and its related companies. The Committee annually reports to the Board on its
activities.
Compensation Philosophy
The Committee is responsible for GTE's executive compensation philosophy
and policies, which form the basis for the Committee's decisions. GTE's
executive compensation philosophy relates the level of compensation to GTE's
success in meeting its annual and long-term performance goals and achieving
long-term returns for shareholders, rewards individual achievement, and seeks to
attract and retain executives of the highest caliber. GTE's philosophy is to pay
average compensation (including base, bonus and long-term incentives) for
average results and above-average compensation for outstanding results. GTE
benchmarks its compensation (including base salary and incentive pay) by
comparing its practices with those of the other companies in its comparator
group. The Corporation's comparator group for benchmarking competitiveness
includes other major companies, both in telecommunications and general industry.
The companies used as comparators have a reputation for excellence and are
comparable to GTE in terms of such quantitative measures as revenues, net
income, assets and market value and are viewed as direct competitors for
executive talent in the overall labor market. Compensation data for the
comparator companies are obtained from benchmarking surveys conducted by
nationally recognized independent compensation consultants. These surveys also
encompass companies not included in the peer group performance comparison shown
in the Performance Graph on page 16. In reviewing the survey data, GTE takes
into account how its compensation policies and overall performance compare to
similar indices for the comparator group.
GTE has compared its ratio of base salary to total executive compensation
to the practices of the comparator companies. Under GTE's compensation
philosophy, base salary is intended to represent less than 40% of top 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".
1997 was the most pivotal year in GTE's history given recent changes in the
telecommunications industry. GTE aggressively moved forward in all existing
markets, acquired BBN Corporation, purchased a fiber-based network from Qwest
Communications Corporation and formed an alliance with Cisco Systems, Inc. The
Corporation demonstrated its commitment to long-term growth and its willingness
to make bold moves to achieve its vision. GTE now holds significant positions in
every key area of the telecommunications market and offers one of the broadest
range of advanced telecommunications products. The Company's growth strategy has
required the Committee to balance the consideration of short- and long-term
results in determining the types and levels of executive compensation associated
with 1997 performance.
Executive Compensation
Based on GTE's stated compensation philosophy, the Committee compares GTE's
compensation to that of its comparator group and, if advisable, approves
adjustments in salary ranges and incentive opportunity values for executives. In
determining whether to adjust an executive's base salary, including the salary
of the Chief Executive Officer, the Committee takes into account the
6
<PAGE> 10
executive's performance, the performance of the operations directed by that
executive, and the position of the executive's compensation in relation to the
established salary range for that position. In evaluating whether an executive's
total compensation package (base salary plus incentive compensation) should be
adjusted, the Committee also takes into account changes in the executive's
responsibilities and GTE's compensation philosophy.
During 1997, the Committee reviewed the current position of GTE's targeted
base salary and the annual and long-term performance-based compensation
components and compared similar factors for the comparator group. Based on this
review, the Committee determined that it was advisable to adjust GTE's targeted
base salary and annual performance-based compensation opportunities for 1998. On
average, total annual compensation opportunities were increased 4.4% in order to
maintain GTE's competitive position. No adjustments were made in 1997 to
long-term performance-based award schedules.
With respect to Mr. Lee's base salary, the Committee determined that his
1996 performance merited an increase of 6.67% in early 1997. This adjustment
follows a year in which no adjustment was made. Mr. Lee's base compensation is
within the salary range previously approved by the Committee for the position of
Chief Executive Officer.
Incentive Compensation
Selected employees are eligible to receive awards under two incentive plans
in addition to their base salary.
During 1997, shareholders approved and the Committee adopted the GTE
Corporation 1997 Executive Incentive Plan (the "EIP"). Under the EIP, awards are
made based on GTE's performance during the prior fiscal year and upon the
individual participant'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 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.
Based on requirements imposed by Section 162(m) of the Internal Revenue
Code of 1986 (the "Code"), the EIP provides that if GTE's Return on Equity
("ROE") exceeds 8%, then an amount equal to 5% of GTE's Consolidated Net Income
("CNI") is available for awards to participants (the "EIP Award Pool"). In
calculating CNI under the terms of the EIP, the Committee shall exclude losses
from unusual or extraordinary items such as the impact of accounting changes or
unusual charges related to business combinations or discontinued operations. In
addition, the Committee established individual award limits with respect to the
EIP awards. Each individual award limit is a percentage of the EIP Award Pool.
The applicable percentage depends on the individual's base salary at the end of
the calendar year and, in all cases, may not exceed 3.5% of the EIP Award Pool.
GTE's 1997 ROE exceeded 8%, and awards under the EIP were made for 1997.
Mr. Lee's EIP award for 1997 is based upon the performance of GTE as a
whole and Mr. Lee's individual performance with respect to critical qualitative
and quantitative objectives approved by the Committee. Although GTE does not
formally weight the factors comprising the performance measures, the Committee
considered the Corporation's financial and operational performance in 1997 and
Mr. Lee's achievement of qualitative objectives. Specifically, Mr. Lee's 1997
objectives included quantitative goals related to: revenues; operating and net
income; earnings per share; earnings before interest, taxes, depreciation, and
amortization ("EBITDA"); ROE; return on investment; operating cash flow; and
total return to shareholders.
In addition to these quantitative goals, Mr. Lee's goals included
significant qualitative objectives such as:
- Establishing GTE as the first to deliver local, long distance, internet
access, and enhanced
7
<PAGE> 11
data services nationwide, adding a targeted number of new customers;
- Seizing opportunities arising from the emerging regulatory environment by
reorganizing its telephone operations;
- Continuing to explore alliances with other major telecommunications
providers, both domestically and internationally;
- Continuing to shape the regulatory landscape at both the Federal and
State levels, ensuring that an equitable environment has been created to
achieve maximum flexibility and business potential;
- Continuing to position GTE as a recognized, high-quality, market leading
telecommunications provider; and
- Ensuring competitive positioning for the twenty-first century by
identifying and pursuing opportunities to transform the corporate
culture, improving effectiveness by developing a labor relations strategy
consistent with the evolving needs of GTE and its employees,
strengthening diversity efforts; and continuing the development of human
resources capabilities and programs in support of aggressive
international expansion.
The Committee reviewed the financial and operational performance of the
Corporation and Mr. Lee's individual performance. In the Committee's assessment,
Mr. Lee's goals were exceeded, and a bonus award was made.
The cash portion of current EIP awards paid to the five most highly
compensated executives of GTE is included in the "Bonus" column of the Summary
Compensation Table on page 12.
Selected GTE employees also have an opportunity to earn incentive payments
under the GTE Corporation 1997 Long-Term Incentive Plan, approved by
shareholders on April 16, 1997 (the "LTIP"). The primary purpose of the LTIP is
to help assure superior long-term financial and operating performance by
offering participants an incentive to achieve those results. Under the
provisions of the LTIP, two types of grants are currently used: performance
bonuses and stock options.
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 performance cycle that is typically three
years in duration (a "Cycle"). Awards for the 3-year performance Cycle ending in
1997 were based on GTE's actual financial performance during the relevant Cycle,
as measured by GTE's average ROE and operating cash flow margin ("OCFM"), in
comparison with pre-established target levels.
Based on requirements imposed by Section 162(m) of the Code, no awards are
made for any Cycle in which GTE's Cumulative Consolidated Net Income ("CCNI")
for the Cycle does not exceed $5 billion. In calculating CCNI under the terms of
the LTIP, the Committee shall exclude losses from unusual or extraordinary items
such as the impact of accounting changes or unusual charges relating to business
combinations or discontinued operations. For the Cycles beginning in 1996 and
later, the Committee established a limitation on the aggregate amount available
for performance bonus awards. If CCNI exceeds $5 billion, then an amount equal
to 3% of CCNI is available for awards to participants (the "LTIP Award Pool").
Amounts of CCNI in excess of $15 billion are not counted in determining the size
of the LTIP Award Pool. In addition, the Committee established individual award
limits with respect to the award of the performance bonus. For cycles beginning
in 1996 and later, the individual award limit is a percentage of the LTIP Award
Pool. The applicable percentage depends on the individual's base salary at the
end of the Cycle and, in all cases, may not exceed 3.5% of the LTIP Award Pool.
For cycles beginning in 1996 and later, the Committee also approved the
adoption of key measures of financial performance ("Guideline Factors"). The
Guideline Factors are: revenue
8
<PAGE> 12
growth, EPS growth, EBITDA growth, relative total shareholder return ("TSR"),
and return on investment ("ROI").
In establishing the targeted performance levels for the five Guideline
Factors, the Committee considered GTE's past performance, the performance of its
principal competitors, its strategic goals, and its plans for implementing those
goals. The targets established by the Committee with respect to the Guideline
Factors are designed to facilitate implementing GTE's strategic plans and to
improve GTE's performance relative to its peers.
At the time the targeted performance bonus levels for each Cycle under the
LTIP were established, a common stock equivalent unit ("Equivalent Unit")
account was set up for each participant. Each Equivalent Unit account represents
an initial dollar amount for each account ("Target Award") based on the
competitive performance bonus grant practices of the market comparator group.
The value of the account was increased or decreased based on the market price of
the GTE Common Stock. Each time a dividend was paid on GTE Common Stock, an
amount equal to the dividend paid on an equivalent number of shares of GTE
Common Stock was added to the account. This amount was then converted into a
number of Equivalent Units, obtained by dividing the amount of the dividend by
the average of the high and low prices of GTE Common Stock on the composite tape
of the NYSE on the dividend payment date. The resulting number of Equivalent
Units was then credited to the account.
The value of the Equivalent Unit account is then adjusted by the Guideline
Performance Percentage (as defined below). Under the performance criteria
approved for the 1996-1998 and 1997-1999 Cycle, the Committee established the
minimum acceptable level of attainment with respect to each of the Guideline
Factors (the "Threshold"). If this Threshold is not attained for a particular
Guideline Factor, no award is paid for that specific factor. If the Threshold
for the Factor is achieved, participants receive a payment of 20% of the Target
Award for that Guideline Factor. However, if GTE attains the Threshold for the
TSR Guideline Factor, a payment of 50% of the award is made due to the
exceptionally demanding goal for TSR. If the target for the Guideline Factor is
attained, participants will receive the full value associated with that
Guideline Factor. If GTE's performance exceeds the target, the award for that
Guideline Factor will exceed the performance target, resulting in a payment in
excess of 100% of the Target Award, based upon the formula explained in footnote
4 under the table entitled Long-Term Incentive Plan -- Awards In Last Fiscal
Year on page 16. The formula is applied separately for each Guideline Factor.
The Committee anticipates that performance bonus awards will be based in equal
proportion on the attainment of the target established for each of the five
Guideline Factors. The cumulative attainment level is called the "Guideline
Performance Percentage".
Payments to the named executives for the 1995-1997 Cycle were based on the
previously applied ROE and OCFM measures and are shown in the Summary
Compensation Table on page 12. The awards for the 1995-1997 Cycle included in
the table reflect the following combinations of performance measures: the ROE
goal was surpassed by a significant margin, and the OCFM goal fell short by
1.4%.
Grants for the 1997-1999 Cycle are shown in the Long-Term Incentive
Plan -- Awards in Last Fiscal Year table on page 15.
Under the LTIP, the Committee normally approves grants of stock options.
These options are granted to the five executives named in the Summary
Compensation Table and to a substantially larger group of executives than those
who are eligible to receive performance bonuses under the LTIP.
In approving the number of executive options awarded under the LTIP, the
Committee compares GTE's grant levels to competitive practices in the comparator
group. In line with the Corporation's objective to relate an increasing amount
of compensation to long-term performance, GTE's philosophy is to be 10-15% above
a median grant posture of the comparator group of
9
<PAGE> 13
companies. The Committee did not take into account the number of options
currently held by any individual participant in determining individual grants
for 1997. Mr. Lee and the other four most highly compensated officers received
the grants shown in the Summary Compensation Table on page 12. Mr. Lee's grant
level was tied to competitive long-term compensation practices for companies in
GTE's comparator group.
During 1996, the Committee approved an introductory grant of stock options
to all of GTE's domestic workforce who otherwise do not participate in the LTIP.
This broadbased grant, referred to as "Partnership Shares", was intended to give
the workforce a stake in the future success of GTE's business and to encourage
all employees to think and act as owners. To further reinforce these objectives,
the Committee approved the second broadbased grant under the Partnership Shares
program in November 1997. This grant significantly increased the number of
options each employee received. In the aggregate, nearly 10 million stock
options were granted to approximately 88,000 domestic employees. This represents
one of the 10 largest broadbased stock option grants made by any company.
Options granted under the program will have an exercise price set at fair market
value on the date of the grant, vest in equal proportions over three years, and
be exercisable for ten years from the grant date. Employees may pay for the
stock in cash, by delivery of previously owned shares, or through a "cashless"
exercise arranged through a broker.
In addition, GTE in 1996 adopted stock ownership guidelines for all
executives who are eligible under the LTIP to receive performance bonuses. Under
the guidelines, the Chief Executive Officer is encouraged to have an ownership
interest in GTE Common Stock with a value at least six times his or her annual
base salary. Other executives identified by the Committee are encouraged to
maintain stock holdings with a value ranging from one to four times their annual
base salaries. Compliance with the stock ownership guidelines are monitored
annually. At the conclusion of the first year after adoption, overall ownership
by the executive populations significantly exceeded these guidelines.
GTE executives also participate in the Equity Participation Program (the
"EPP"). Under the EPP, a portion of certain executives' cash bonuses under the
LTIP and EIP must be deferred and held in restricted stock units ("RSUs") for a
minimum of three years, and then will be payable in GTE Common Stock. EPP
participants may also irrevocably elect to defer an additional percentage of
their LTIP and EIP cash bonuses into RSUs, provided that their mandatory and
voluntary deferrals do not exceed 25% of the LTIP and EIP awards. GTE will
provide a matching contribution in RSUs in the amount of one unit for every four
units deferred by the participant. These matching RSUs were designed as an
inducement to encourage full participation in the EPP and to compensate the
executives for their agreement not to realize the economic value associated with
the RSUs for a minimum of three years.
In recognition of the highly competitive environment in the
telecommunications industry, the Committee believes that, from time to time, it
is appropriate to enter into agreements with key members of management in order
to ensure that GTE continues to retain the services of these individuals. During
1997, the Committee approved and GTE entered into such an agreement with Mr.
William P. Barr, Executive Vice President -- Government and Regulatory Advocacy
and General Counsel. As part of the incentive to continue his employment with
GTE, the agreement provides among other things, for additional grants of options
and restricted stock units. The agreement is more fully described on page 18 and
the additional grants are reflected in the tables in the section entitled
"Executive Compensation Tables."
Internal Revenue Service Rules Relating to Deductibility of Compensation
In late December 1995, the Internal Revenue Service ("IRS") issued final
regulations that apply to the provision in Section 162(m) of the Code limiting
the tax deduction a publicly held corporation may take for compensation paid to
its chief executive officer and its four other most highly compensated employees
("Covered Executives"). The IRS regulations limit the annual amount that a
company may deduct to $1,000,000 per Covered Executive unless the compensation
constitutes "performance-based" compensation. The regulations contained
transition rules that companies
10
<PAGE> 14
generally could rely on until the first shareholder meeting in 1997.
In order to comply with the IRS regulations, management presented proposals
at the 1997 Annual Meeting for the approval of the EIP and the LTIP.
Shareholders approved both plans which include provisions to provide for the
deductibility of future amounts received under these plans. The provisions
include, but are not limited to, limiting positive discretion and establishing
the maximum aggregate awards payable limitations on the number of options that
may be granted to any one individual and limitations on the maximum awards that
may be paid to Covered Executives.
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. The GTE Savings Plan and the GTE Hourly
Savings Plan (the "Savings Plans"), pursuant to the provisions of Section 401(k)
of the Code, permit employees to invest in a variety of funds on a pre-tax or
after-tax basis. Matching contributions under the Savings Plans are made in GTE
Common Stock.
GTE also maintains pension, insurance and other benefit plans for its
employees.
<TABLE>
<S> <C>
Russell E. Palmer, Chairman Edward H. Budd
James R. Barker James L. Ketelsen
</TABLE>
March 3, 1998
11
<PAGE> 15
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
-----------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------------- ---------------------------- ----------
SECURITIES
RESTRICTED UNDERLYING LTIP
NAME AND PRINCIPAL SALARY OTHER ANNUAL STOCK OPTIONS/ PAYOUTS
POSITION(1) YEAR ($)(2) BONUS($)(3) COMPENSATION($)(4) AWARDS($)(5) SARS(#) ($)
------------------ ---- ------ ----------- ------------------ ------------ ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles R. Lee............ 1997 1,039,500 1,508,800 60,095 246,156 248,600 2,429,700
Chairman & Chief 1996 975,000 1,553,100 16 252,210 248,600 2,481,800
Executive Officer 1995 897,500 1,403,600 0 0 247,100 1,347,500
Kent B. Foster............ 1997 843,538 1,011,500 58,084 172,781 182,800 1,753,000
President(7) 1996 784,000 1,041,300 679 176,243 182,800 1,778,800
1995 762,604 953,200 0 0 187,900 848,300
Michael T. Masin.......... 1997 742,391 843,200 61,841 144,956 155,400 1,476,100
Vice Chairman and 1996 679,466 868,000 0 147,952 155,400 1,499,200
President - 1995 633,230 797,400 0 0 163,100 683,200
International(8)
Thomas W. White........... 1997 503,591 533,700 0 84,756 91,700 822,400
Senior Executive 1996 463,115 533,700 0 81,511 183,400 770,000
Vice President - Market 1995 418,884 443,800 0 0 98,800 331,800
Operations, GTE Service
Corporation(9)
William P. Barr........... 1997 445,442 394,500 0 1,936,588 304,000 510,900
Executive Vice 1996 407,500 343,200 0 26,349 101,600 499,800
President - Government 1995 382,500 316,400 0 0 47,600 255,100
and Regulatory Advocacy
and General Counsel(10)
<CAPTION>
ALL OTHER
NAME AND PRINCIPAL COMPENSATION
POSITION(1) ($)(6)
------------------ ------------
<S> <C>
Charles R. Lee............ 11,320
Chairman & Chief 10,613
Executive Officer 10,613
Kent B. Foster............ 11,320
President(7) 10,613
10,613
Michael T. Masin.......... 7,200
Vice Chairman and 6,490
President - 10,613
International(8)
Thomas W. White........... 11,320
Senior Executive 10,613
Vice President - Market 10,613
Operations, GTE Service
Corporation(9)
William P. Barr........... 11,320
Executive Vice 10,613
President - Government 10,613
and Regulatory Advocacy
and General Counsel(10)
</TABLE>
- ---------------
(1) All persons named in the table are officers of GTE except as otherwise
noted.
(2) The data in the salary column of the table include fees received by certain
executives for serving as directors of BC TEL, a Canadian company in which
GTE has a 50.8% ownership interest. Included in Mr. Foster's salary for
1995 are fees of $20,604. Mr. Masin's salary for 1997, 1996 and 1995
includes fees of $17,182, $18,466 and $6,730, respectively. Mr. White's
salary includes fees of $7,280, $15,692 and $16,607 for 1997, 1996 and
1995, respectively. In 1997, Mr. Masin and Mr. White also received BC TEL
deferred stock units valued at $14,593 and $10,695, respectively, which
amounts are included in this column.
(3) The data in this column represent the annual bonus received in 1997 by each
of the named executive officers under the GTE Corporation 1997 Executive
Incentive Plan (the "EIP") and a similar predecessor plan (the Executive
Incentive Plan). In connection with GTE's Equity Participation Program (the
"EPP"), a portion of this amount has been deferred into restricted stock
units payable at maturity (generally, a minimum of three years) in GTE
Common Stock ("Restricted Stock Units"). The number of Restricted Stock
Units received was calculated by dividing the amount of the annual bonus
deferred by the average closing price of GTE Common Stock on the NYSE
composite tape for the 20 consecutive trading days following the release to
the public of GTE's financial results for the fiscal year in which the
bonus was earned (the "Average Closing Price"). Additional Restricted Stock
Units are received on each dividend payment date based upon the amount of
the dividend paid and the closing price of GTE Common Stock on the
composite tape of NYSE issues on the dividend declaration date.
12
<PAGE> 16
(4) The column "Other Annual Compensation" includes $54,379, $29,901 and
$20,624 for personal use of corporate aircraft by Messrs. Lee, Foster and
Masin, respectively, and $27,302 representing club membership fees for Mr.
Masin.
(5) The data in this column represent the dollar value of the matching
Restricted Stock Units based upon the Average Closing Price. Matching
Restricted Stock Units are received on the basis of one additional
Restricted Stock Unit for every four Restricted Stock Units deferred
through annual bonus deferrals described in footnote 3 above. The matching
Restricted Stock Units were designed as an inducement to encourage full
participation in the EPP and to compensate the executives for their
agreement not to realize the economic value associated with the Restricted
Stock Units representing deferred annual bonus for a minimum of three
years. Additional Restricted Stock Units are received on each dividend
payment date based upon the amount of the dividend paid and the closing
price of GTE Common Stock on the composite tape of NYSE issues on the
dividend declaration date. Under Mr. Barr's employment agreement described
on page 18, the dollar amount reported for him in this column also includes
a special grant of Restricted Stock Units valued at $1,880,000. Messrs.
Lee, Foster, Masin, White and Barr each hold a total of 49,792, 34,869,
29,262, 16,568 and 42,604 Restricted Stock Units, respectively, which had a
dollar value of $2,601,632, $1,821,905, $1,528,940, $865,678 and
$2,226,059, respectively, based solely upon the closing price of GTE Common
Stock on December 31, 1997.
(6) The column "All Other Compensation" includes, for 1997, contributions by
GTE and its related companies to the GTE Savings Plan of $7,200 for each of
Messrs. Lee, Foster, Masin, White and Barr, and contributions by GTE and
its related companies to the GTE Executive Salary Deferral Plan of $4,120
for each of Messrs. Lee, Foster, White and Barr.
(7) Mr. Foster was elected President in June 1995. He served as Vice Chairman
and President -- GTE Telephone Operations Group from October 1993 until
June 1995. He had been President -- GTE Telephone Operations Group since
1989.
(8) Mr. Masin joined GTE as Vice Chairman effective October 1993. He was also
elected President -- International in June 1995. Prior to joining GTE he
was a partner with the law firm of O'Melveny & Myers.
(9) Mr. White was elected Senior Executive Vice President -- Market Operations
of GTE Service Corporation in June 1997. He served as President -- GTE
Telephone Operations Group from July 1995 until June 1997, and before that
as an Executive Vice President of GTE Telephone Operations Group from 1991.
(10) Mr. Barr was elected Executive Vice President -- Government and Regulatory
Advocacy and General Counsel in June 1997 and before that served as Senior
Vice President and General Counsel from July 1994. Prior to joining GTE, he
was a partner in the Washington, D.C. office of the law firm of Shaw,
Pittman, Potts & Trowbridge since 1993. He served as Attorney General of
the United States from 1991 to 1993.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table shows all grants of options to the named executive
officers of GTE in 1997. The options were granted under the GTE Corporation 1997
Long-Term Incentive Plan (the "1997 LTIP") and the GTE Corporation 1991
Long-Term Incentive Plan (the "1991 LTIP"), a predecessor plan to the 1997 LTIP.
No stock appreciation rights ("SARs") were granted to the named executive
officers of GTE in 1997. Each option granted may be exercised with respect to
one-third of the aggregate number of shares subject to the grant each year,
commencing one year after the date of grant. Pursuant to 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
13
<PAGE> 17
also indicates that if the stock price does not appreciate, the potential
realizable value of the options granted will be zero.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
INDIVIDUAL GRANTS PRICE APPRECIATION FOR OPTION TERM
--------------------------------------------------- ------------------------------------
PERCENT
NUMBER OF OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SH) DATE 0% 5% 10%
---- ------------ ------------ -------- ---------- ----- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles R. Lee.............. 248,600 1.17% 48.625 2/16/07 $0 $7,602,188 $19,265,438
Kent B. Foster.............. 182,800 .86% 48.625 2/16/07 0 5,590,024 14,166,219
Michael T. Masin............ 155,400 .73% 48.625 2/16/07 0 4,752,132 12,042,836
Thomas W. White............. 91,700 .43% 48.625 2/16/07 0 2,804,186 7,106,358
William P. Barr............. 50,800 .24% 48.625 2/16/07 0 1,553,464 3,936,783
25,200(1) .12% 44.125 6/04/07 0 699,300 1,772,162
228,000(2) 1.07% 49.031 12/04/07 0 7,030,456 17,816,555
</TABLE>
- ---------------
(1) Mr. Barr received an incremental stock option grant during 1997 as a result
of his promotion from Senior Vice President and General Counsel to Executive
Vice President -- Government and Regulatory Advocacy and General Counsel.
(2) Mr. Barr received a special stock option grant during 1997 under the
employment agreement described on page 18.
If the price of GTE Common Stock appreciates, the value of GTE Common Stock
held by the shareholders will also increase. For example, the aggregate market
value of GTE Common Stock on February 26, 1997 was approximately $45.88 billion
based upon the market price on that date. If the share price of GTE Common Stock
increases by 5% per year, the aggregate market value on February 26, 2007 of the
same number of shares would be approximately $74.73 billion. If the price of GTE
Common Stock increases by 10% per year, the aggregate market value on February
26, 2007 would be approximately $118.99 billion.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table provides information as to options and SARs exercised
by each of the named executive officers of GTE during 1997. The table sets forth
the value of options and SARs held by such officers at year end measured in
terms of the closing price of GTE Common Stock on December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
SHARES OPTIONS/SARS AT FY-END AT FY-END($)
ACQUIRED ON VALUE --------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles R. Lee......... 20,600 571,006 911,098 496,702 17,190,936 3,551,484
Kent B. Foster......... 0 0 549,199 367,301 9,608,557 2,699,799
Michael T. Masin....... 0 0 378,332 313,368 5,976,835 2,314,709
Thomas W. White........ 69,300 1,055,056 132,232 277,468 2,094,451 2,158,179
William P. Barr........ 40,000 730,000 58,666 176,534 929,769 1,360,243
</TABLE>
14
<PAGE> 18
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
The 1991 LTIP and 1997 LTIP provide for awards to participating employees,
including stock options, SARs, performance bonuses and other stock-based awards.
The stock options awarded under the 1991 LTIP and 1997 LTIP to the five named
executive officers in 1997 are shown in the table on pages 13 and 14.
<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................. 29,300 3 Years 8,498 32,683
Kent B. Foster................. 21,500 3 Years 6,235 23,982
Michael T. Masin............... 18,300 3 Years 5,307 20,413
Thomas W. White................ 10,900 3 Years 3,161 12,158
William P. Barr(5)............. 6,000 3 Years 1,740 6,693
2,585 30 Months 742 2,854
1,585 18 Months 440 1,692
525 6 Months 108 541
</TABLE>
- ---------------
(1) An individual's award may not exceed the applicable individual award limit,
which is expressed as a percentage of the LTIP Award Pool described on page
8 (the "Award Limit"). The Award Limit depends on the individual's base
salary at the end of the cycle, and may not exceed 3.5% of the LTIP Award
Pool. The amounts described in footnotes 2 through 4 below are subject to
and cannot exceed the Award Limit. An individual is initially granted a
specified number of GTE Common Stock equivalent units ("Equivalent Units")
at the beginning of an award cycle. During the award cycle, additional
Equivalent Units are added based upon the price of GTE Common Stock and the
amount of the per share dividend paid on each dividend payment date. It is
not possible to predict future dividends and, accordingly, estimated
Equivalent Unit accruals in this table are calculated for illustrative
purposes only and are based upon the dividend rate and price of GTE Common
Stock at the close of business on December 31, 1997. The Target future
payout or award is the dollar amount derived by multiplying the Equivalent
Unit balance credited to the participant at the end of the award cycle by
the average closing price of GTE Common Stock, as reported on the composite
tape of NYSE issues, during the last 20 business days of the award cycle.
The Target award measures performance attainment as described in footnote 3.
(2) The Threshold represents attainment of minimum acceptable levels of
performance (the "Threshold Levels") with respect to the five Long-Term
Performance Bonus measures (the "Measures") adopted for the 1997-1999
Performance Bonus award cycle -- revenue growth; earnings per share ("EPS")
growth; earnings before interest, taxes, depreciation and amortization
("EBITDA") growth; average return on investment ("ROI"); and relative total
shareholder return ("TSR"). If the Threshold Level is attained with respect
to each of the Measures, the award will be equal to approximately 25% of the
combined Target award (the TSR Threshold is set at 50%, while the Threshold
for the other four Measures is set at 20%). Because performance is measured
separately for each Measure, it is possible to receive an award if the
Threshold Level is achieved with respect to at least one but not all of the
Measures. If the actual results for all Measures are below the Threshold
Levels, no award will be paid.
(3) The Target represents attainment of levels of three-year revenue growth, EPS
growth, EBITDA growth, ROI and TSR established at the beginning of an award
cycle (the "Target Levels"). If GTE's actual results for each of the
Measures are equivalent to the Target Levels, this would represent
outstanding performance, and the award will be equal to 100% of the combined
Target award. GTE's performance is measured separately for each Measure.
Accordingly, if the actual result for any Measure is at the applicable
Target Level, the portion of the award determined by that Measure will be at
100% of the Target award for that Measure. Similarly, the
15
<PAGE> 19
portion of the award determined by any Measure performing at less than the
applicable Target Level, but above the Threshold, will be less than the
Target award for that Measure.
(4) This column has intentionally been left blank because it is not possible to
determine the maximum number of Equivalent Units until the award cycle has
been completed. Subject to the Award Limit discussed in footnote 1 above,
the maximum amount of the award is limited by the extent to which GTE's
actual results for the five Measures exceed the Target Levels. If GTE's
actual results during the cycle for the five Measures exceed the respective
Target Levels, additional awards may be paid, based on a linear
interpolation. For example, for revenue growth, the schedule is as follows:
<TABLE>
<CAPTION>
PERFORMANCE INCREMENT
ABOVE REVENUE ADDED PERCENTAGE
PERFORMANCE TARGET TO COMBINED AWARDS
--------------------- ------------------
<S> <C>
Each 0.1% improvement in
cumulative revenue growth............... +2%
</TABLE>
Thus, if the revenue growth Measure exceeds its Target Level by .5% while
the remaining four Measures are precisely at their respective Target
Levels, then the performance bonus will equal 110% of the combined Target
award.
(5) The award of 6,000 units to Mr. Barr represents the grant for the 1997-1999
performance period made while he was Senior Vice President and General
Counsel. Pursuant to GTE's compensation policies, the other grants shown are
incremental, prorated awards made when he was promoted to Executive Vice
President -- Government and Regulatory Advocacy and General Counsel. The
incremental units apply to the 1997-1999, 1996-1998, and 1995-1997
performance periods.
PERFORMANCE GRAPH
The following table shows a comparison of five year cumulative total return
to shareholders for GTE Common Stock, Standard & Poor's ("S&P") 500 Index, and
S&P Telephone Index.
<TABLE>
<CAPTION>
Measurement Period GTE Common S&P Telephone
(Fiscal Year Covered) Stock S&P 500 Index Index
<S> <C> <C> <C>
12/31/92 100 100 100
12/31/93 106 110 115
12/30/94 98 111 111
12/29/95 149 153 167
12/31/96 161 189 168
12/31/97 193 251 236
</TABLE>
- Assumes $100 Invested on December 31, 1992.
- S&P Telephone Index is comprised of the Regional Bell Holding
Companies plus GTE, Alltel Corporation and Frontier Corporation.
16
<PAGE> 20
EXECUTIVE AGREEMENTS
GTE has entered into agreements (the "Agreements") with Messrs. Lee,
Foster, Masin, White and Barr 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) any person or group
of persons acquires, other than from GTE or as described below, 20% (or under
certain circumstances, a lower percentage, not less than 10%) of GTE's voting
power, (b) three or more directors are elected in any twelve-month period
without the approval of a majority of the members of GTE's Incumbent Board (as
defined in the Agreements) then serving as members of the Board, (c) the members
of the Incumbent Board no longer constitute a majority of the Board of Directors
or (d) GTE's shareholders approve (i) a merger, consolidation or reorganization
involving GTE, (ii) a complete liquidation or dissolution of GTE or (iii) an
agreement for the sale or other disposition of all or substantially all of the
assets of the Corporation to any person other than a subsidiary of GTE. 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. Notwithstanding the foregoing, 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 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.
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 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, 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. Mr. Masin's
Agreement provides for a service credit in the following amounts: two times
years of service otherwise credited so long as he has five or fewer years of
credited service; 10 years when his credited service is more than five but not
more than 10 years; and, when his 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 GTE Supplemental Executive Retirement Plan (the "SERP"), the
GTE Excess Pension Plan ("Excess Plan") and the Executive Retired Life Insurance
Plan.
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.
17
<PAGE> 21
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.
Each of the Agreements remains in effect until July 1, 1999, unless
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 his respective 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.
In keeping with its philosophy of retaining key executives, effective
December 1, 1997, GTE entered into an employment agreement with Mr. Barr (the
"Employment Agreement") through November 30, 2002 (the "Termination Date"),
which generally provides for the following: an annual base salary of not less
than $465,000 and eligibility for other benefits, including incentive
compensation, provided to comparable senior executives of GTE generally; a
one-time grant of an option to purchase 228,000 shares of GTE Common Stock at a
price equal to fair market value on the date of grant that vests ratably over
three years; a one-time grant of Restricted Stock Units equal to $1,880,000
divided by the Average Closing Price that vest over a period of five years (10%
each year during the first four years and 60% on December 4, 2002); and the
opportunity to borrow up to $300,000 from GTE at a market interest rate for a
term of up to 5 years, provided, however, that any unpaid principal and interest
must be repaid not later than the Termination Date.
If Mr. Barr is employed by GTE until the Termination Date, he receives an
extra year of service credit for each year he actually worked for GTE for
purposes of satisfying GTE's eligibility requirements for pension,
post-retirement medical and executive retirement life insurance benefits.
If Mr. Barr's employment terminates before the Termination Date by reason
of involuntary separation other than for "cause", separation for "good reason",
or a qualifying separation following a Change in Control, he will generally be
entitled to the same pension credit, retirement benefits and compensation and
benefits described above as if his employment continued until the Termination
Date. Except in the case of a qualifying separation following a Change in
Control, any cash compensation to which Mr. Barr would otherwise be entitled
under the Employment Agreement will be reduced by any cash compensation that he
earns for the same period as a result of any subsequent employment.
If, before the Termination Date, Mr. Barr dies or leaves GTE by reason of
disability, entry into service with the federal government or an educational
organization approved by the Board ("Government or Educational Service"), he
will be entitled only to the pension service credit described above. If he
voluntarily leaves for Government or Educational Service, he will also be
entitled to certain other reduced benefits as described in the Employment
Agreement, including immediate vesting of a portion of his unvested equity-based
awards (such as stock options, Restricted Stock Units and performance-bonus
awards) and certain lump sum payments of base salary and incentive compensation
under the 1997 EIP and the 1997 LTIP.
Subject to Board approval, Mr. Barr's Agreement will be amended to provide
for a full gross-up payment to cover any excise taxes he may owe if his
employment is terminated after a Change in Control.
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
18
<PAGE> 22
(integrated with social security as described below) and years of service, is
illustrated in the following table:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL AVERAGE ------------------------------------------------------------
EARNINGS 15 20 25 30 35
- ------------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 500,000 $107,432 $ 143,242 $ 179,053 $ 214,863 $ 250,674
600,000 129,182 172,242 215,303 258,363 301,424
700,000 150,932 201,242 251,553 301,863 352,174
800,000 172,682 230,242 287,803 345,363 402,924
900,000 194,432 259,242 324,053 388,863 453,674
1,000,000 216,182 288,242 360,303 432,363 504,424
1,200,000 259,682 346,242 432,803 519,363 605,924
1,500,000 324,932 433,242 541,553 649,863 758,174
2,000,000 433,682 578,242 722,803 867,363 1,011,924
2,500,000 542,432 723,242 904,053 1,084,863 1,265,674
2,750,000 596,807 795,742 994,678 1,193,613 1,392,549
3,000,000 651,182 868,242 1,085,303 1,302,363 1,519,424
3,500,000 759,932 1,013,242 1,266,553 1,519,863 1,773,174
</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"). The Service Corporation
Plan is a noncontributory pension plan for the benefit of all employees of GTE
Service Corporation and participating affiliates who are not covered by
collective bargaining agreements. It provides a benefit based on a participant's
years of service and earnings. Pension benefits provided by GTE Service
Corporation and contributions to the Service Corporation Plan are related to
basic salary and incentive payments, exclusive of overtime, differentials,
certain incentive compensation and other similar types of payments. 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
for the five highest consecutive years that exceeds said level up to the
statutory limit on compensation. As of February 25, 1998, the credited years of
service under the Service Corporation Plan for Messrs. Lee, Foster, Masin, White
and Barr are 14, 27, 4, 29, and 3, 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 the Excess Plan, which supplements 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
provides additional retirement benefits determined in a similar manner as under
the Service Corporation Plan on remuneration accrued under certain management
incentive plans as determined by the Executive Compensation and Organizational
Structure Committee. SERP and Excess Plan 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, White and Barr a postretirement life
insurance benefit of three times final base salary. Upon retirement, ERLIP
benefits may be paid as life insurance or, alternatively, an equivalent amount
equal to the present value of the life insurance amount (based on actuarial
factors and the
19
<PAGE> 23
interest rate then in effect), may be paid as a lump sum payment, as an annuity
or as installment payments.
CERTAIN TRANSACTIONS
GTE's subsidiaries utilized the services of Thompson, Hine & Flory LLP
during 1997. Mr. Robert D. Storey is a director of GTE and a partner in that law
firm.
The investment banking firm of PaineWebber Incorporated received
underwriting commissions and fees from GTE and its subsidiaries on the sale of
securities during 1997. It is possible that PaineWebber Incorporated may have
received additional brokerage commissions from trustees of the various pension,
retirement, savings or similar plans of GTE and its subsidiaries. However, any
such commissions would not have been as a result of direction by GTE or its
subsidiaries with regard to such orders. Mr. Richard W. Jones is a director of
GTE and a business consultant for PaineWebber Incorporated.
OWNERSHIP OF STOCK BY DIRECTORS, NOMINEES FOR DIRECTORS AND EXECUTIVE OFFICERS
Voting Stock and Stock-Based Holdings
The table below sets forth (a) the shares of GTE Common Stock beneficially
owned by each director, nominee for director, the Chief Executive Officer and
the other four named executive officers, and by all directors and executive
officers as a group; and (b) the total GTE stock-based holdings of the named
individuals and the group. No director, nominee for director or executive
officer owns as much as one-fifth of one percent of the total outstanding shares
of GTE Common Stock, and all directors and executive officers as a group own
less than one-half of one percent of the total outstanding shares of GTE Common
Stock. Unless otherwise indicated, all persons named in the table have sole
voting and investment power with respect to the shares shown in the table.
The last column of the table combines beneficial ownership of shares of GTE
Common Stock (including shares which may be acquired within 60 days pursuant to
the exercise of stock options) with holdings of (i) Deferred Stock Units by
non-employee directors (which are payable in cash or shares of GTE Common Stock,
at the election of the director, and are accrued under the Deferred Stock Unit
Plan and under the Deferred Compensation Plan) and by executive officers (which
are payable in cash pursuant to deferrals under the GTE Executive Salary
Deferral Plan, the EIP and the 1991 LTIP and the 1997 LTIP); and (ii) Restricted
Stock Units by executive officers (which are payable in shares of GTE Common
Stock under the EPP). This column indicates the alignment of the named
individuals and group with the interests of GTE's shareholders because the value
of their total holdings will increase or decrease in line with the price of GTE
Common Stock.
20
<PAGE> 24
<TABLE>
<CAPTION>
SHARES BENEFICIALLY GTE STOCK-BASED
OWNED AS OF HOLDINGS AS OF
NAME OF DIRECTOR OR NOMINEE FEBRUARY 25, 1998 FEBRUARY 25, 1998
- --------------------------- ------------------- -----------------
<S> <C> <C>
Edwin L. Artzt............................................ 2,698 14,046
James R. Barker........................................... 4,200 93,151
Edward H. Budd............................................ 4,829 26,509
Robert F. Daniell......................................... 2,877 8,298
Kent B. Foster(1)(2)...................................... 781,627 876,473
James L. Johnson.......................................... 76,643 85,167
Richard W. Jones.......................................... 12,288 173,456
James L. Ketelsen......................................... 1,800 12,235
Charles R. Lee(1)(2)...................................... 1,272,032 1,384,201
Michael T. Masin(1)(2)(3)................................. 532,799 593,061
Sandra O. Moose........................................... 1,800 9,103
Russell E. Palmer......................................... 2,200 9,003
Robert D. Storey.......................................... 700 9,550
--------- ---------
2,696,493 3,294,253
========= =========
</TABLE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS(1)(2)
- ------------------------
<S> <C> <C>
Charles R. Lee............................................ 1,272,032 1,384,201
Kent B. Foster............................................ 781,627 876,473
Michael T. Masin(3)....................................... 532,799 593,061
Thomas W. White........................................... 227,441 253,247
William P. Barr........................................... 101,575 147,327
--------- ---------
2,915,474 3,254,309
========= =========
All directors and executive officers as a group(1)(2)..... 3,657,875 4,684,526
========= =========
</TABLE>
- ---------------
(1) Includes shares acquired through participation in the GTE Savings Plan.
(2) Included in the number of shares beneficially owned by Messrs. Lee, Foster,
Masin, White and Barr and all directors and executive officers as a group
are 1,117,665, 725,432, 528,266, 214,532, 98,399, and 3,267,062,
respectively, which such persons have the right to acquire within 60 days
pursuant to the exercise of stock options.
(3) Mr. Masin participated in the Deferred Compensation Plan while he was a
non-employee director of GTE. In October 1993, Mr. Masin became an employee
of GTE and since that date he has not been eligible to receive or defer
additional compensation under the Deferred Compensation Plan or to receive
new grants under any plans for non-employee directors of GTE.
CANTV Stock
The following table indicates the number of shares of Class D Common Shares
of Compania Anonima Nacional Telefonos de Venezuela ("CANTV") beneficially owned
by each GTE director or nominee, the Chief Executive Officer and each of the
other four most highly compensated executive officers who beneficially own such
shares, and by all directors and executive officers of GTE as a group as of
February 25, 1998. A subsidiary of GTE owns approximately 15% of the Class D
shares of CANTV and the remaining shares are owned by the public. GTE also
indirectly owns 51% of the Class A Common Shares of CANTV through a consortium,
and the other consortium partners indirectly own the remaining Class A Common
Shares. Only directors of GTE who own shares of CANTV Class D Common Shares are
named in the table.
21
<PAGE> 25
<TABLE>
<CAPTION>
SHARES OF CANTV
CLASS D COMMON SHARES
NAME BENEFICIALLY OWNED(1)(2)
- ---- ------------------------
<S> <C>
James R. Barker............................................. 50,960
Kent B. Foster.............................................. 7,000
Charles R. Lee.............................................. 77,000
Michael T. Masin............................................ 30,450
Russell E. Palmer........................................... 7,000
-------
172,410
=======
All GTE directors and executive officers as a group......... 182,910
=======
</TABLE>
- ---------------
(1) Each of these amounts, and all of them in the aggregate, represented less
than 1% of the outstanding shares of CANTV Class D Common Shares as of
February 25, 1998.
(2) All of the above Class D Common Shares of CANTV are owned in the form of
American Depositary Shares, each representing seven Class D Common Shares.
ITEM 1.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. Each class of
directors is elected for a three-year term. In order to better balance the
number of directors in each class, however, Mr. Storey, who is presently serving
as a Class III director, is nominated for election by GTE's shareholders as a
Class II director and if elected will serve for a term of only two years
expiring at the Annual Meeting of Shareholders in 2000 or when his successor is
elected and qualified. Messrs. Artzt, Foster and Palmer and Dr. Moose are
nominated for election by GTE's shareholders as Class III directors. The Class
III directors elected in 1998 will serve for a term of three years which expires
at the Annual Meeting of Shareholders in 2001 or when their successors are
elected and qualified. All nominees for Class II and Class III directors are
currently directors and were previously elected by the shareholders. Each
nominee is at present available for election.
Mr. Richard W. Jones, a Class II director, has reached the mandatory
retirement age. Accordingly, he will retire from the Board at the conclusion of
the Annual Meeting.
If all the nominees for directors are elected by GTE's shareholders at the
Annual Meeting, the Board of Directors will consist of 12 directors, 9 directors
whose principal occupations are outside GTE and 3 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.
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 2000 ANNUAL MEETING
- -----------------------------------------------------------------------------------------------
<S> <C>
ROBERT D. STOREY
61 1985
Partner with the Cleveland law firm of Thompson, Hine &
Robert D. Storey Flory LLP. Mr. Storey previously was a partner with the
Cleveland law firm of McDonald, Hopkins, Burke & Haber Co.,
L.P.A. Mr. Storey joined its predecessor firm in 1967 and
became a partner in 1971. In 1964 he began his career as an
attorney with The East Ohio Gas Company and in 1966 he
became Assistant Director of The Legal Aid Society of
Cleveland. He is a Director of The Procter & Gamble Company
and May Department Stores Company. Mr. Storey is a Trustee
of Case Western Reserve University, the Kresge Foundation
and the George Gund 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>
<TABLE>
<CAPTION>
NOMINEE, AGE AND
YEAR ELECTED A DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
- -----------------------------------------------------------------------------------------------
NOMINEES FOR CLASS III DIRECTORS
TERM EXPIRING AT 2001 ANNUAL MEETING
- -----------------------------------------------------------------------------------------------
<S> <C>
EDWIN L. ARTZT
67 1984
Chairman of the Executive Committee and Director of The
Edwin L. Artzt Procter & Gamble Company. Mr. Artzt was Chairman of the
Board and Chief Executive Officer from January 1990 until
July 1995. 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 Executive Vice President since 1980 and had served as
Group Vice President for European operations. Mr. Artzt is a
Director of Delta Air Lines, Inc., American Express Company,
Barilla S.p.A., Evenflo & Spalding Holdings Corporation and
a member of the Business Council. Mr. Artzt is Chairman of
the Strategic Issues, Planning and Technology Committee and
a member of the Nominating Committee and the Pension Trust
Coordinating Committee of GTE.
KENT B. FOSTER
54 1992
President. Mr. Foster served as Vice Chairman of the Board
Kent B. Foster of Directors from October 1993 until June 1995 and President
of GTE Telephone Operations Group from January 1989 until
June 1995. Since joining GTE in 1970, Mr. Foster served in a
number of positions of increasing responsibility throughout
the GTE system. Mr. Foster serves on the Board of Directors
of Campbell Soup Company and New York Life Insurance
Company. He is a former Trustee of The Dallas Museum of Art,
a member of the Board of Governors of the Dallas Symphony
Association and a member of The Dallas Opera Executive
Board. Mr. Foster is also a Personal Trustee of the GTE
Foundation.
</TABLE>
23
<PAGE> 27
BIOGRAPHICAL INFORMATION
<TABLE>
<CAPTION>
NOMINEE, AGE AND
YEAR ELECTED A DIRECTOR PRINCIPAL OCCUPATION AND OTHER INFORMATION
- -----------------------------------------------------------------------------------------------
NOMINEES FOR CLASS III DIRECTORS
TERM EXPIRING AT 2001 ANNUAL MEETING
- -----------------------------------------------------------------------------------------------
<S> <C>
SANDRA O. MOOSE
56 1978
Senior Vice President, Director and Chair of the East Coast
Sandra O. Moose Practice, The Boston Consulting Group, Inc. She is a
Director of Rohm and Haas Company and twenty-seven
investment companies sponsored by The New England Funds, an
Overseer of the Beth Israel Deaconess Medical Center, a
Trustee of the Boston Public Library, an Overseer of the
Museum of Fine Arts, member of Visiting Committee of the
Harvard School of Public Health and a Director of the
Harvard University Graduate School Alumni Association. She
is Chairperson of the Public Policy Committee and a member
of the Audit Committee and the Strategic Issues, Planning
and Technology Committee of GTE.
RUSSELL E. PALMER
63 1984
Chairman and Chief Executive Officer, The Palmer Group. Mr.
Russell E. Palmer 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 (now Deloitte and Touche), 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 Company, May
Department Stores Company, Allied-Signal, Inc., Safeguard
Scientifics, Inc. and Federal Home Loan Mortgage
Corporation. 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 Executive Compensation and Organizational Structure
Committee and a member of the Nominating Committee and the
Strategic Issues, Planning and Technology Committee of GTE.
</TABLE>
24
<PAGE> 28
BIOGRAPHICAL INFORMATION
The following provides information about the members of the Board of
Directors who are continuing in office, as well as Mr. Jones, who will retire
from the Board at the conclusion of the Annual Meeting.
<TABLE>
<CAPTION>
DIRECTOR, AGE
AND YEAR ELECTED PRINCIPAL OCCUPATION AND OTHER INFORMATION
- -----------------------------------------------------------------------------------------------
CLASS I DIRECTORS
TERM EXPIRING AT 1999 ANNUAL MEETING
- -----------------------------------------------------------------------------------------------
<S> <C>
EDWARD H. BUDD Retired Chairman of the Board of The Travelers Corporation.
64 1985 From January 1994 to September 1994, Mr. Budd was Chairman
of Travelers Insurance Group, Inc. Mr. Budd was elected
President and Chief
Operating Officer of The Travelers Corporation in 1976, Chief Executive Officer in 1981 and
Chairman in 1982. He is a Director of the Travelers Group Inc., Delta Air Lines, Inc. and a
member of The Business Council. He is Chairman of the Audit Committee and a member of the
Nominating Committee and the Executive Compensation and Organizational Structure Committee of
GTE.
JAMES L. JOHNSON Retired Chairman and Chief Executive Officer. Mr. Johnson,
70 1985 who retired in 1992, has been designated Chairman Emeritus
by the Board. He joined GTE in 1949 and 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., The Finover Group, Walter Industries, Inc. and CellStar
Corporation. He is also a Trustee of the Joint Council on Economic Education. Mr. Johnson is 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
67 1986 Chairman 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 Pension Trust Coordinating
Committee and a member of the Executive Compensation and Organizational Structure Committee and
the Public Policy Committee of GTE.
CHARLES R. LEE Chairman and Chief Executive Officer. Mr. Lee joined GTE in
58 1989 1983 as Senior Vice President -- Finance and in 1986 he was
named Senior Vice President -- Finance and Planning. He was
elected President and
Chief Operating Officer, effective January 1, 1989, and became Chairman and Chief Executive
Officer in 1992. Prior to joining GTE, he held various financial and management positions in
the steel, transportation and entertainment industries. Mr. Lee is a Director of United
Technologies Corporation, USX Corporation and The Procter & Gamble Company. 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, a member of the New American Realities Committee of the
National Planning Association, a member of The Conference Board, Harvard Business School's
Board of Directors of the Associates, and a Director of the Stamford Hospital Foundation. Mr.
Lee is a Personal Trustee of the GTE Foundation and a member of the Strategic Issues, Planning
and Technology Committee of GTE.
</TABLE>
25
<PAGE> 29
BIOGRAPHICAL INFORMATION
<TABLE>
<CAPTION>
DIRECTOR, AGE
AND YEAR ELECTED PRINCIPAL OCCUPATION AND OTHER INFORMATION
- -----------------------------------------------------------------------------------------------
CLASS II DIRECTORS
TERM EXPIRING AT 2000 ANNUAL MEETING
- -----------------------------------------------------------------------------------------------
<S> <C>
JAMES R. BARKER Chairman of The Interlake Steamship Co. and Vice Chairman of
62 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 Non-Executive Chairman and a Director of The Pittston Company,
a Director of Eastern Enterprises, Chairman of the Board of Trustees of Stamford Hospital, and
President of the Committee of SKULD (an Oslo, Norway based marine insurance company). Mr.
Barker is Chairman of the Nominating Committee and a member of the Executive Compensation and
Organizational Structure Committee and the Strategic Issues, Planning and Technology Committee
of GTE.
ROBERT F. DANIELL Retired Chairman, United Technologies Corporation. Mr.
64 1996 Daniell was elected Chairman, United Technologies
Corporation, effective January 1, 1987 and retired in April
1997. He relinquished the offices of
President and Chief Operating Officer in February 1992 and the office of Chief Executive
Officer in April 1994. Mr. Daniell was elected President and Chief Operating Officer in 1984
and named to the additional post of Chief Executive Officer, effective January 1, 1986. He was
elected Senior Vice President -- Defense Systems in 1983 and had served as Vice President of
United Technologies from 1982 to 1983 and President of Sikorsky Aircraft from 1981 to 1983. He
is a Director of Shell Oil Co. Mr. Daniell is a member of the Audit Committee, the Pension
Trust Coordinating Committee and the Public Policy Committee of GTE.
RICHARD W. JONES Business Consultant, PaineWebber Incorporated. From 1977 to
72 1966-1974 1988 he was Managing Director and Executive Vice President
JANUARY 1975 of the 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 Pension Trust Coordinating Committee and the Public Policy Committee of GTE.
MICHAEL T. MASIN Vice Chairman of the Board and President -- International.
53 1989 Mr. Masin was elected Vice Chairman in October 1993 and
President -- International in June 1995. Prior to that, he
was Managing Partner of
the New York office of the law firm of O'Melveny & Myers and 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 Travelers Group, BC Telecom Inc., BC TEL, Compania Anonima Nacional
Telefonos de Venezuela (CANTV) and VenWorld. Mr. Masin is a member of the Board of Trustees and
Executive Committee of Carnegie Hall, the Board of Directors of the W. M. Keck Foundation, the
Board of Directors of the China America Society, the Dean's Advisory Council of Dartmouth
College, the Business Committee of the Board of Trustees of the Museum of Modern Art, the
Council on Foreign Relations, and a Personal Trustee of the GTE Foundation.
</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, 1998 is ratified, confirmed and approved.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOREGOING PROPOSAL FOR THE
FOLLOWING REASONS:
The Board of Directors first appointed Arthur Andersen LLP ("Arthur
Andersen"), independent public accountants, as its auditors in 1935. After a
diligent review, the Board has reappointed the firm as auditors each succeeding
year to date. As a result of Arthur Andersen's reputation in the auditing field
and its knowledge of GTE's operations, the Board of Directors is convinced that
the firm has the necessary personnel, professional qualifications and
independence to act as GTE's auditors. Accordingly, the Board has again selected
Arthur Andersen as GTE's auditors for the year 1998 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, 1997 are estimated at $9.4 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 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 Annual Meeting.
ITEM 3.
GTE has been notified by the Sisters of Charity of New York, Mount St.
Vincent-on-Hudson, 6301 Riverdale Avenue, Bronx, New York 10471-9930, which
states that it is the owner of 7,600 shares of GTE Common Stock; the Sisters of
Charity, 150 Bedford Highway, Halifax, Nova Scotia, Canada, which states that it
is the owner of 6,000 shares of GTE Common Stock; the Congregation of the
Sisters of Charity of the Incarnate Word, 6510 Lawndale, Houston, Texas
77223-0969, which states that it is the owner of 1,400 shares of GTE Common
Stock; the Sisters of Charity of Saint Elizabeth, P.O. Box 476, Convent Station,
New Jersey 07961-0476, which states that it is the owner of 4,944 shares of GTE
Common Stock; Catholic Healthcare West, 1700 Montgomery Street, Suite 300, San
Francisco, California 94111-1024, which states that it is the owner of 35,000
shares of GTE Common Stock; The Redemptorists/Denver Province, 2310 East 14th
Avenue, Denver, Colorado 80206, which state that it is the owner of 20,000
shares of GTE Common Stock; The Passionists Eastern Province, 80 David Street,
South River, New Jersey 08882, which states that it is the owner of 4,000 shares
of GTE Common Stock; the School Sisters of St. Francis, US Province, 4127 N.
Central Park, Chicago, Illinois 60618, which states that it is the owner of
5,500 shares of GTE Common Stock; Miller/Howard Investments, Inc., 141 Upper
Byrdcliffe Road, Woodstock, New York 12498, which states that it is the owner of
5,000 shares of GTE Common Stock; Delcy L. Steffy, 54 Plochman Lane, Woodstock,
New York 12498, who states that she is the owner of 25 shares of GTE Common
Stock; the Sisters of St. Francis of Assisi, 3221 South Lake Drive, St. Francis,
Wisconsin 53235-3799, which states that it is the owner of 5,000 shares of GTE
Common Stock; and the Sisters of Charity of the Incarnate Word Retirement Trust,
2600 North Loop West, Houston Texas 77092, which states that it is the owner of
34,400 shares of GTE Common Stock; that they intend to propose the following
resolution at the Annual Meeting. The proposed resolution and
27
<PAGE> 31
supporting statement, for which the Board of Directors and GTE accept no
responsibility, are as follows:
"WHEREAS in fiscal year 1996 the United States supplied $13.8 billion worth
of weapons in actual deliveries of arms sales abroad.
WHEREAS the last three times the U.S. sent troops into combat in
significant numbers (Panama, Iraq, and Somalia), they faced adversaries that
received U.S. weapons or military technology in the period leading to the
conflict.
WHEREAS U.S. weapons supplied to anti-Communist rebels in Angola and
Afghanistan under the Reagan Doctrine have been used in devastating civil wars;
in the Afghan case, U.S.-supplied Stinger missiles turned up on the
international black market as prized items sought by all manner of rebel groups
and terrorist organizations ('Sale of the Century', Commonweal, William D.
Hartung, 5/20/94). 'U.S. Weapons at War: United States Arms Deliveries to
Regions in Conflict' (World Policy Institute, 1995) shows that the U.S. was a
major arms supplier in one-third of the 50 ethnic and territorial conflicts
currently raging. The study says that some 45 parties involved in the conflicts
purchased over $42 billion in U.S. arms sales in the last ten years.
WHEREAS our company ranked twenty-second among Department of
Defense-leading corporations with contracts in excess of $609 million.
WHEREAS this resolution received nearly 17% of the vote last year.
RESOLVED that shareholders request the Board of Directors to provide a
comprehensive report on GTE's foreign military sales. The report, prepared at
reasonable cost, should be available to all shareholders by December 1998, and
may omit classified and proprietary information."
The following is the statement submitted in support of this proposal:
"Global security is security of people. The cold-war notion of using arms
sales to maintain balances of power or to support allies has been discredited by
1990's experience, when alliances, governments and boundaries in large parts of
the world are in flux.
We are disturbed by the industry's claims and lobbying efforts asserting
that the only way to keep jobs is to promote foreign military sales. We believe
such statements are inconsistent with co-production agreements and transfers of
technology to foreign companies. Offset arrangements on major sales often give
business to overseas suppliers. Such contracts with foreign
companies/governments have harsh repercussions on U.S. workers during this time
of accelerated down-sizing of our workforce.
Therefore, it is reasonable for shareholders to ask:
1. Criteria used to promote foreign military sales.
2. Procedures used to negotiate sales directly with foreign governments or
through the U.S. government. For example, what determines which weapons are
direct commercial arms sales and what must be negotiated through the Pentagon?
What percentage is commercial military sales and what is foreign military sales?
3. Categories of military equipment exported for the past three years, with
as much statistical information as is permissible, contracts for
servicing/maintaining equipment; offset agreements; and licensing and/or
co-production with foreign governments.
4. Analysis of legislation establishing a code of conduct for U.S. arms
transfers (e.g., no sales to governments that violate human rights of their own
citizens, engage in aggression against neighbors, come to power through
undemocratic means or ignore international arms-control negotiations)."
28
<PAGE> 32
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE FOREGOING PROPOSAL FOR
THE FOLLOWING REASONS:
GTE is a telecommunications company that offers a wide variety of products
and services including local and long distance telephone service, wireless
communications service, air to ground communications and telecommunications
systems and design services. GTE does not manufacture or sell weapons to any
government in the United States or abroad. As of December 31, 1997, GTE's total
assets were approximately $42.1 billion, its total revenues and sales were
approximately $23.3 billion and its net income was approximately $2.8 billion.
For the year 1997, GTE's sales of products and services that GTE believes could
possibly be characterized as foreign military sales within the scope of the
foregoing proposal amounted to considerably less than one-half of one percent of
each of GTE's total assets and total revenues and sales, and approximately 3% of
its net income. Again, none of those sales involved weapons.
GTE has acted and will continue to act as a socially responsible and
ethical corporate citizen not only in its military contracting but in all its
business activities. GTE has in place a comprehensive ethics program which
requires compliance with applicable laws. These laws include stringent federal
regulations governing contracts with foreign governmental and military entities,
as well as laws of any foreign country with which it does or proposes to do
business. GTE also conducts ongoing training programs to ensure that its
employees understand and are aware of the requirements under this program.
GTE believes that the defense needs and foreign policy of the United States
are properly the responsibility of our government and our duly elected public
officials. As a responsible corporate citizen, however, GTE is proud to be able
to supply communications and electronic systems which help to protect the United
States, its military forces and our allies and expects to continue to support
the U.S. Government and to offer its products and services in defense of the
United States, the American people and their interests. For the reasons cited
above, GTE does not believe that the kind of reporting proposed is warranted, or
that it would provide significant, relevant information to shareholders in any
case. Accordingly, GTE recommends a vote against this proposal.
INFORMATION ABOUT ATTENDING THE MEETING
The Annual Meeting of Shareholders will be held in the Wisteria Room of the
Italian Center, 1620 Newfield Avenue, Stamford, Connecticut. Only shareholders
of GTE may attend the Annual Meeting. A map showing the location of the Annual
Meeting and directions to the Annual Meeting are printed on the back cover of
this Proxy Statement. Directions to the Annual Meeting are also printed on the
admission ticket.
Each shareholder will need an admission ticket to attend the Annual
Meeting. If a shareholder's stock is registered in his or her name and not in
the name of a bank, broker or other third party, the shareholder will receive an
admission ticket attached to his or her proxy card. This ticket must be
presented in order to be admitted to the Annual Meeting.
However, if a shareholder's stock is not registered in his or her name, the
shareholder must advise the firm that is the holder of record of those shares
(bank, broker or other institution holding such shares) that he or she wishes to
attend the Annual Meeting. That firm must provide the shareholder with
documentation showing his or her ownership of shares of GTE Common Stock as of
the record date, February 24, 1998. The shareholder must bring that
documentation to the Annual Meeting in order to gain admittance to the Annual
Meeting.
GTE will establish reasonable rules and procedures for the conduct of the
Annual Meeting to ensure that there is sufficient time to address all of the
items on the agenda and to facilitate an orderly meeting. These rules will be
distributed at the Annual Meeting and will include an agenda for the Annual
Meeting, procedures for maintaining order and the safety of those present and
limitations on the time allotted to questions or comments by shareholders.
29
<PAGE> 33
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 does not know of any other matters to be brought before the
Annual Meeting by others. If any other matters properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote any proxies GTE
receives in accordance with the recommendation of the Board of Directors.
GTE's Annual Report to shareholders for 1997 was mailed to shareholders
beginning March 3, 1998. It contains financial statements for GTE and its
consolidated subsidiaries.
IF A SHAREHOLDER WOULD LIKE MORE DETAILED INFORMATION CONCERNING GTE, HE OR
SHE MAY OBTAIN A COPY OF GTE'S ANNUAL REPORT ON FORM 10-K FOR 1997 AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION BY WRITING TO MARIANNE DROST, SECRETARY,
GTE CORPORATION, ONE STAMFORD FORUM, STAMFORD, CONNECTICUT 06904. THE 1997 FORM
10-K WILL BE AVAILABLE AFTER MARCH 31, 1998.
By order of the Board of Directors,
MARIANNE DROST
Secretary
Dated: March 3, 1998
30
<PAGE> 34
map to meeting
<PAGE> 35
ADMISSION TICKET
[GTE LOGO]
GTE CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, APRIL 15, 1998
2:00 - 4:00 P.M.
DIRECTIONS TO GTE'S ANNUAL MEETING
LOCATION OF MEETING
The Italian Center
1620 Newfield Avenue
Stamford, Connecticut
(203) 322-6941
PARKING FOR THE MEETING
Adequate parking will be provided at the Italian Center for shareholders
attending the Annual Meeting.
SHUTTLE SERVICE
Round trip shuttle service will be provided from the Stamford train station to
the Annual Meeting. Shuttle service will be available from 12:00 noon to 5:00
p.m. The trip to the Annual Meeting from the train station will take
approximately 15 minutes.
CONNECTICUT TURNPIKE (I-95)
FROM NEW YORK -
- - Take I-95 North to Exit 8 "Atlantic Street".
- - Go left at light and follow Atlantic Street for three traffic lights.
- - At third light go right onto Tresser Blvd.
- - Take Tresser Blvd. for three lights.
- - At third light go left onto Main Street.
- - Continue on Main Street (becomes Grove Street, Strawberry Hill, and then
Newfield Avenue) for approximately 4-1/2 miles.
- - Italian Center will be on left.
FROM NEW HAVEN -
- - Take I-95 South to Exit 8 "Elm Street" and stay to right.
- - Go right on Elm Street (becomes Main Street, Grove Street, Strawberry Hill,
and Newfield Ave.) for approximately 4-1/2 miles.
- - Italian Center will be on left.
MERRITT PARKWAY
FROM NEW YORK -
- - Take Merritt Parkway North to Exit 35 "High Ridge Road".
- - After exiting go right onto High Ridge Road.
- - Follow High Ridge Road for four traffic lights.
- - Go left onto Vine Road and take to end (approximately one mile).
- - Go left onto Newfield Avenue.
- - Take Newfield Avenue for approximately 1-1/2 miles.
- - The Italian Center will be on your left.
FROM NEW HAVEN -
- - Take Merritt Parkway South to Exit 35 "High Ridge Road".
- - Follow High Ridge Road for five traffic lights. Then follow directions "From
New York" above to the Italian Center.
V PLEASE DETACH PROXY CARD HERE V
- -------------------------------------------------------------------------------
PROXY
[GTE LOGO]
GTE CORPORATION
PROXY SOLICITED BY BOARD OF DIRECTORS FOR GTE CORPORATION'S
ANNUAL MEETING OF SHAREHOLDERS ON APRIL 15, 1998.
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 Corporation's
Annual Meeting of Shareholders on April 15, 1998 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 SIGN THE CARD BUT DO NOT INDICATE YOUR CHOICES ON THIS CARD, THE
PROXIES WILL VOTE YOUR SHARES IN ACCORDANCE WITH THE DIRECTORS' RECOMMENDATIONS.
IF YOU ARE VOTING BY TELEPHONE OR THE INTERNET, PLEASE DO NOT MAIL YOUR
PROXY CARD. IF YOU ARE VOTING BY MAIL, PLEASE SIGN ON THE OPPOSITE SIDE AND
RETURN THE PROXY CARD IN THE ACCOMPANYING ENVELOPE.
SEE OPPOSITE
SIDE
<PAGE> 36
[GTE LOGO]
GTE Corporation
c/o BankBoston, N.A.
P.O. Box 1840
Boston, MA 02102-1840
1-800-225-5160
INSTRUCTIONS FOR VOTING YOUR PROXY
GTE IS NOW OFFERING SHAREHOLDERS THREE ALTERNATIVE WAYS TO VOTE THEIR PROXIES
- BY MAIL (traditional method) - TELEPHONICALLY (using a touch-tone
telephone) - THROUGH THE INTERNET (using your web browser)
VOTE BY MAIL: Simply mark, sign and date your proxy card, and return it
in the envelope provided.
If you elect to use your touch-tone telephone or the internet, you may now vote
your proxy 24 hours a day, seven days a week. To vote your proxy have your
proxy card ready and then either:
VOTE BY PHONE: Dial the TOLL-FREE NUMBER...1-888-807-7699 and follow the
spoken instructions. You will be
asked to provide the control
number located in the lower left
corner of this page.
OR
VOTE BY INTERNET: Point your web browser to...http://www.equiserve.com/proxy/gte
and follow the printed
instructions. You will be asked to
enter the control number located
in the lower left corner of this
page.
Your telephone or internet vote authorizes the named Proxies to vote your
shares in the same manner as if you named, signed and returned your proxy card
by mail.
IF YOU ARE VOTING BY TELEPHONE OR THE INTERNET, PLEASE DO NOT MAIL YOUR PROXY
CARD.
Please note: If you plan to attend this year's Annual Meeting, you will need to
present the admission ticket on the reverse side of this form. When voting,
please indicate whether you plan to attend the Annual Meeting. Please bring the
admission ticket which is on the reverse side of this form with you to the
Annual Meeting.
PLEASE RETAIN THIS FORM FOR ADMISSION TO THE MEETING
V PLEASE DETACH PROXY CARD HERE V
- -------------------------------------------------------------------------------
Please mark
[X] votes as in
this example.
- --------------------------------------------------------------------------------
GTE's Directors recommend a vote "FOR" proposals 1 and 2
- --------------------------------------------------------------------------------
1. Election of Directors:
FOR WITHHELD FOR AGAINST ABSTAIN
Edwin L. Artzt, [ ] [ ] [ ] [ ] [ ]
Kent B. Foster, 2. Ratification of
Sandra O. Moose, appointment
Russell E. Palmer, of auditors.
Robert D. Storey.
----------------------------------------
For all nominees except as noted above:
- --------------------------------------------------------------------------------
- --------------------------------------------------
GTE's Directors recommend a vote "AGAINST"
proposal 3.
- --------------------------------------------------
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Report on foreign
military sales.
- --------------------------------------------------
CONTROL NUMBER
------------------
[NAME]
[ADDRESS]
- -----------------------------------------------------------------------
FOR THOSE VOTING BY MAIL,
PLEASE CHECK ANY OF THE FOLLOWING THAT APPLY.
- -----------------------------------------------------------------------
I plan to attend the [ ] Please change my [ ]
Annual Meeting. address.
Please discontinue [ ] I have commented on [ ]
duplicate mailings. reverse side.
- -----------------------------------------------------------------------
Signature: Date
--------------------------------------- --------------------------
Signature: Date
--------------------------------------- --------------------------
Please Sign This Proxy as Name(s) Appear Above, and Mail In The Enclosed
Envelope.
<PAGE> 37
[GTE LOGO]
GTE Corporation
PROXY SOLICITED BY BOARD OF DIRECTORS FOR GTE CORPORATION'S
ANNUAL MEETING OF SHAREHOLDERS ON APRIL 15, 1998.
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 Corporation's
Annual Meeting of Shareholders on April 15, 1998 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 SIGN THE CARD BUT DO NOT INDICATE YOUR CHOICES ON THIS CARD, THE
PROXIES WILL VOTE YOUR SHARES IN ACCORDANCE WITH THE DIRECTORS' RECOMMENDATIONS.
PLEASE SIGN ON THE OPPOSITE SIDE AND RETURN THE PROXY CARD IN THE ACCOMPANYING
ENVELOPE.
SEE OPPOSITE SIDE
<PAGE> 38
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
- -------------------------------------------------------------------------------
GTE'S DIRECTORS RECOMMEND A VOTE "FOR" PROPOSALS 1 AND 2
- -------------------------------------------------------------------------------
1. Election of Directors:
Edwin L. Artzt,
Kent B. Foster,
Sandra O. Moose,
Russell E. Palmer,
Robert D. Storey.
FOR [ ] WITHHELD [ ]
--------------------------------------
For all nominees except as noted above
2. Ratification of
appointment
of auditors
FOR [ ] AGAINST [ ] ABSTAIN [ ]
- --------------------------------------------------------------------------------
GTE'S DIRECTORS RECOMMEND A VOTE "AGAINST" PROPOSAL 3
- --------------------------------------------------------------------------------
3. Report on foreign military sales
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Signature Date Signature Date
------------------ ------- -------------------- -------
Please Sign This Proxy as Name(s) Appear Above, and
Mail in the Enclosed Envelope.
<PAGE> 39
[INTERNET PROXY SCRIPT]
[GTE LOGO] PROXY
PEOPLE MOVING IDEAS(TM) SERVICES
[A GRAPHIC APPEARS HERE DEPICTING,
FROM THE TOP MOVING CLOCKWISE, A HAND TYPING ON A
COMPUTER KEYBOARD, A HIGH VOLTAGE LINE TOWER, A
PRINTING PRESS AND A MAN TALKING ON A TELEPHONE.]
GTE uses Boston EquiServe's Web-based proxy system to allow you to securely vote
your proxy card over the Web using Boston EquiServe's advanced Web technology.
ALL VOTES ARE KEPT IN THE STRICTEST CONFIDENCE.
To vote your GTE proxy using Boston EquiServe's secure Internet services, have
your proxy ready and click on the button below...
Vote Proxy
===============================================================================
Copyright Direct Report Corporation.
All Rights Reserved.
Internet services provided by Shareholder Direct
<PAGE> 40
[BOSTON EQUISERVE LOGO]
Web Proxy Voting
- --------------------------------------------------------------------------------
PLEASE ENTER THE 13 DIGIT CONTROL NUMBER LOCATED IN THE LOWER LEFT
CORNER OF YOUR GTE PROXY CARD AND CLICK "SUBMIT."
CONTROL NUMBER: / /
/ Submit /
------------------------------------------------------------------
Copyright (C) 1998 by Boston EquiServe, L.P. and Direct Report Corporation.
All rights reserved.
Internet services provided by Shareholder Direct
<PAGE> 41
[BOSTON EQUISERVE LOGO]
Web Proxy Voting
- --------------------------------------------------------------------------------
GTE Corporation
People Moving Ideas(SM)
You may now cast your proxy vote for the GTE CORPORATION Annual
Meeting to be held on APRIL 15, 1998.
- -------------------------------------------------------------------------------
PROXY VOTING INSTRUCTIONS
Confidentiality
It is GTE's policy that all proxies, ballots and tabulations that identify the
vote of individual shareholders are kept confidential. These items are not seen
by nor reported to the Corporation, except as necessary to meet legal
requirements, in a contested proxy solicitation or where shareholders submit
comments with their proxy.
PROXY SOLICITED BY BOARD OF DIRECTORS FOR GTE'S ANNUAL MEETING OF SHAREHOLDERS
ON APRIL 15, 1998. 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 15, 1998 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.
IF YOU ARE VOTING BY TELEPHONE OR THE INTERNET, PLEASE DO NOT MAIL YOUR PROXY
CARD.
PLEASE SELECT ONE OF THE FOLLOWING OPTIONS:
/ / Vote all proposals in accordance with the Board of Directors'
recommendations as indicated on your proxy card and in the proxy statement
/ / Vote each proposal selectively
/ Submit /
- --------------------------------------------------------------------------------
Copyright (C) 1998 by Boston EquiServe, L.P. and Direct Report Corporation.
All rights reserved.
Internet services provided by Shareholder Direct
<PAGE> 42
[BOSTON EQUISERVE LOGO]
Web Proxy Voting
- --------------------------------------------------------------------------------
GTE Corporation
People Moving Ideas(SM)
PROXY CONFIRMATION
PLEASE REVIEW YOUR VOTING INSTRUCTIONS INDICATED BELOW.
YOU MAY THEN EITHER SUBMIT YOUR VOTE OR REVISE WHAT YOU HAVE
ENTERED.
Vote all proposals in accordance with the Board of Directors'
recommendations.
/ Submit / / Revise /
-----------------------------------------------------------------------------
Copyright (C) 1998 by Boston EquiServe, L.P. and Direct Report Corporation.
All rights reserved.
Internet services provided by Shareholder Direct
<PAGE> 43
[BOSTON EQUISERVE LOGO]
Web Proxy Voting
- --------------------------------------------------------------------------------
GTE Corporation
People Moving Ideas(SM)
VOTE EACH PROPOSAL SELECTIVELY
Please vote proposals 1 through 3 below by clicking on the box that indicates
how you would like your shares voted on each proposal. When you have finished,
click on the Submit button at the bottom of the page.
GTE's Directors recommend a vote "FOR" proposals 1 and 2.
1. Election of Directors:
NOMINEES:
Edwin L. Artzt
Kent B. Foster
Sandra O. Moose
Russell E. Palmer
Robert D. Storey
/ / Vote For All Nominees
/ / Vote Withheld from all Nominees
/ / Withhold Selectively
---------------------------------------------------------------------------
Place a check mark next to each nominee from whom you would like to
WITHHOLD your vote.
/ / Edwin L. Artzt
/ / Kent B. Foster
/ / Sandra O. Moose
/ / Russell E. Palmer
/ / Robert D. Storey
---------------------------------------------------------------------------
2. Ratification of appointment of auditors
/ / For
/ / Against
/ / Abstain
---------------------------------------------------------------------------
GTE's Directors recommend a vote "AGAINST" proposal 3.
3. Report on foreign military sales
/ / For
/ / Against
/ / Abstain
---------------------------------------------------------------------------
/ Submit / / Revise Ballot /
- -----------------------------------------------------------------------------
Copyright (C) 1998 by Boston EquiServe, L.P. and Direct Report Corporation.
All rights reserved.
Internet services provided by Shareholder Direct
<PAGE> 44
[BOSTON EQUISERVE LOGO]
Web Proxy Voting
- --------------------------------------------------------------------------------
GTE Corporation
People Moving Ideas(SM)
PROXY CONFIRMATION
PLEASE REVIEW YOUR VOTING INSTRUCTIONS INDICATED BELOW. YOU MAY
THEN EITHER SUBMIT YOUR VOTING INSTRUCTIONS OR REVISE WHAT YOU
HAVE ENTERED.
PROPOSAL 1. Election of Directors:
Vote FOR all Nominees
--------------------------------------------------
PROPOSAL 2. Ratification of appointment of auditors
FOR
--------------------------------------------------
PROPOSAL 3. Report on foreign military sales
AGAINST
--------------------------------------------------
/ Sumit / / Revise /
- -----------------------------------------------------------------------------
Copyright (C) 1998 by Boston EquiServe, L.P. and Direct Report Corporation.
All rights reserved.
Internet services provided by Shareholder Direct
<PAGE> 45
[BOSTON EQUISERVE LOGO]
Web Proxy Voting
- --------------------------------------------------------------------------------
GTE Corporation
People Moving Ideas(SM)
THANK YOU FOR VOTING YOUR PROXY.
Please check any of the following that apply:
1. I plan to attend the Annual Meeting. / /
2. Please discontinue duplicate mailings. / /
3. Please change my address.
My new address is...
/ /
4. I have the following comments:
My comments are...
/ /
5. If you would like to receive an email confirmation of your
vote, please enter your email address:
/ /
/ Submit /
- -----------------------------------------------------------------------------
Copyright (C) 1998 by Boston EquiServe, L.P. and Direct Report Corporation.
All rights reserved.
Internet services provided by Shareholder Direct
<PAGE> 46
[BOSTON EQUISERVE LOGO]
Web Proxy Voting
- --------------------------------------------------------------------------------
GTE Corporation
People Moving Ideas(SM)
[EXCLAMATION POINT GRAPHIC]
THANK YOU FOR YOUR PARTICIPATION.
IF YOU WISH TO CHANGE YOUR VOTING INSTRUCTIONS, PLEASE VOTE AGAIN. OUR
SYSTEM WILL AUTOMATICALLY COUNT ONLY YOUR LAST VOTE.
Return to Boston EquiServe's Proxy Page.
-----------
- -----------------------------------------------------------------------------
Copyright (C) 1998 by Boston EquiServe, L.P. and Direct Report Corporation.
All rights reserved.
Internet services provided by Shareholder Direct
<PAGE> 47
GTE CORPORATION TELEPHONIC PROXY SCRIPT
TOPIC CODE: 1030
DESCRIPTION: Control Number Entry
VOICE ARTIST: Male
MESSAGE: Welcome to Shareholder Direct Telephone Proxy. Please be assured
that your telephone-based vote is strictly confidential. (PAUSE)
Please use your telephone key pad to enter your thirteen-digit
control number found in the lower left portion of your proxy
card.
TOPIC CODE: 9999
MESSAGE: GTE Corporation
TOPIC CODE: 9997
DESCRIPTION: Initial Instructions
VOICE ARTIST: Female
MESSAGE: This telephonic proxy is solicited by GTE's Board for the Annual
Meeting of Shareholders on April 15, 1998. You, as owner of the
shares represented by this proxy, hereby appoint Charles R. Lee
and Marianne Drost, or either of them, Proxies to vote at the
Annual Meeting, 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. By voting your proxy by phone you
acknowledge receipt of the notice of meeting and Proxy
Statement. The Proxies will vote your shares as you direct on
this call. (Pause)
You are now ready to vote your shares. GTE's Board of Directors
recommends a vote for proposal 1, the election of Directors and
proposal 2, the ratification of Auditors, and against proposal 3
as listed on your proxy card.
TOPIC CODE: 2000
DESCRIPTION: Vote All
VOICE ARTIST: Male
MESSAGE: To vote your proxy in accordance with the Board of Directors'
recommendations, please press 1. To vote on each issue
separately, press 2.
TOPIC CODE: 2010
DESCRIPTION: Confirm Vote - All In Favor of Management
VOICE ARTIST: Female
MESSAGE: You have chosen to vote your proxy in accordance with the Board
of Directors' recommendations.
TOPIC CODE: 2020
DESCRIPTION: Confirm Vote - Vote Proxy Selectively
VOICE ARTIST: Female
MESSAGE: You have chosen to vote on each proposal separately.
TOPIC CODE: 3001
DESCRIPTION: Director Election [Withhold Selectively]
VOICE ARTIST: Male
MESSAGE: You will now vote for the Directors: To accept all of the
Nominees, press 1. To withhold your vote from all of these
Nominees, press 2. To withhold your vote from only some of the
nominees, press 3.
TOPIC CODE: 3010
DESCRIPTION: Confirm Vote - Accept All
VOICE ARTIST: Female
MESSAGE: You have chosen to elect all of the Nominees.
<PAGE> 48
TOPIC CODE: 3020
DESCRIPTION: Confirm Vote - Withhold All
VOICE ARTIST: Female
MESSAGE: You have chosen to withhold your vote from all of the Nominees.
TOPIC CODE: 3030
DESCRIPTION: Confirm Vote - Withhold Selectively
VOICE ARTIST: Female
MESSAGE: You have chosen to vote on a per Nominee basis.
TOPIC CODE: 3100
DESCRIPTION: Individual Director Election - Instructions
VOICE ARTIST: Female
MESSAGE: Proposal 1. Election of Directors. Please vote for the following
individuals on a per Nominee basis. After hearing the name, you
may choose to accept, or you may choose to withhold your vote
from the Nominee.
TOPIC CODE: 3160
DESCRIPTION: Please consider
VOICE ARTIST: Female
MESSAGE: Please consider nominee . . . .
TOPIC CODE: 3101
MESSAGE: Edwin L. Artst
TOPIC CODE: 3102
MESSAGE: Kent B. Foster
TOPIC CODE: 3103
MESSAGE: Sandra O. Moose
TOPIC CODE: 3104
MESSAGE: Russell E. Palmer
TOPIC CODE: 3105
MESSAGE: Robert D. Storey
TOPIC CODE: 3170
DESCRIPTION: Accept or Withhold Menu
VOICE ARTIST: Male
MESSAGE: To vote for this Nominee as a director, press 1. To withhold
your vote from this Nominee, press 2.
TOPIC CODE: 3171
DESCRIPTION: Confirm Vote - Accept
VOICE ARTIST: Female
MESSAGE: You have chosen to vote for ...
TOPIC CODE: 3172
DESCRIPTION: Confirm Vote - Withhold
VOICE ARTIST: Female
MESSAGE: You have chosen to withhold your vote from ...
<PAGE> 49
TOPIC CODE: 4003
DESCRIPTION: Appointment of Auditors
VOICE ARTIST: Male
MESSAGE: Proposal 2. Ratification of appointment of auditors.
TOPIC CODE: 4004
DESCRIPTION: Foreign Military Sales
VOICE ARTIST: Male
MESSAGE: Proposal 3. Report on foreign military sales.
TOPIC CODE: 4043
DESCRIPTION: Voting Issues Menu (Without the Terminate Option)
VOICE ARTIST: Male
MESSAGE: To vote for, press 1. To vote against, press 2. To abstain,
press 3.
TOPIC CODE: 4051
DESCRIPTION: Confirm Vote - For
VOICE ARTIST: Female
MESSAGE: You have chosen to vote for this proposal.
TOPIC CODE: 4052
DESCRIPTION: Confirm Vote -
VOICE ARTIST: Female
MESSAGE: You have chosen to vote against this proposal.
TOPIC CODE: 4053
DESCRIPTION: Confirm Vote -
VOICE ARTIST: Female
MESSAGE: You have chosen to abstain from voting on this proposal.
TOPIC CODE: 1590
DESCRIPTION: If this is correct . . . .
VOICE ARTIST: Male
MESSAGE: If this is correct, press 1. If this is not correct press 2.
TOPIC CODE: 9998
DESCRIPTION: Closing Comments
VOICE ARTIST: Female
MESSAGE: If you plan to attend the Annual Meeting, change your mailing
address, discontinue duplicate mailings, or make comments please
call 1-800-225-5160. (Pause)
Thank you for your interest in GTE and for voting your shares.
Remember since you have voted your proxy telephonically, there
is no need to return your Proxy Card. If you would like to
change your vote, please call back and follow the instructions
provided. Our system will count only your last vote.
TOPIC CODE: 1600
DESCRIPTION: Thank You And Good-bye
VOICE ARTIST: Female
MESSAGE: Thank-you for participating. Good Bye.
