<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
GTE CALIFORNIA INCORPORATED
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(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
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(4) Proposed maximum aggregate value of transaction:
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/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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- ---------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE> 2
GTE CALIFORNIA INCORPORATED
ONE GTE PLACE
THOUSAND OAKS, CALIFORNIA 91362-3811
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 10, 1996
Irving, Texas
March 29, 1996
To the Holders of the Cumulative Preferred Stock, $20 Par Value, 4 1/2%
Series, and the Common Stock:
Notice is hereby given that, in accordance with the Bylaws of GTE California
Incorporated (the Company), the Annual Meeting of Shareholders of the Company
will be held at the office of GTE Telephone Operations World Headquarters,
600 Hidden Ridge, Irving, Texas 75038, at 10:00 a.m., on Wednesday, the 10th
day of April, 1996, for the purpose of (1) electing a Board of Directors to
serve for the ensuing year and until their successors have been elected and
qualified, (2) voting upon the appointment of Arthur Andersen LLP as the
independent public accountant for the Company, and (3) transacting such other
business as may properly come before the meeting and any adjournment thereof.
The nominees for election as directors are named in the attached Proxy
Statement, which is a part of this notice. The Board does not presently know of
any other business to be considered.
Only shareholders of record at the close of business on Wednesday, March 6,
1996, will be entitled to vote at the meeting.
Please mark, sign and return the enclosed proxy as promptly as possible. If you
are present at the meeting, you may withdraw your proxy and vote your shares
personally.
By order of the Board of Directors,
CHARLES J. SOMES
Secretary
<PAGE> 3
GTE CALIFORNIA INCORPORATED
ONE GTE PLACE
THOUSAND OAKS, CALIFORNIA 91362-3811
PROXY STATEMENT
This Proxy Statement is being mailed on approximately March 29, 1996 to
shareholders of GTE California Incorporated (the Company) in connection with
the Annual Meeting of Shareholders of the Company (the Annual Meeting) to be
held on Wednesday, April 10, 1996, at the office of GTE Telephone Operations
World Headquarters, 600 Hidden Ridge, Irving, Texas 75038, at 10:00 a.m. and at
any and all adjournments thereof. The Company's Board of Directors is
soliciting proxies to be voted at the Annual Meeting.
RECORD DATE
Only shareholders of record at the close of business on March 6, 1996 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 proxy card is returned properly signed and dated, the shares represented
thereby will be voted in accordance with the instructions on the proxy card. If
a shareholder attends the Annual Meeting, he or she may vote by ballot.
If a shareholder does not return a signed proxy card or does not attend
the Annual Meeting and vote in person, his or her shares will not be voted.
Abstentions are counted towards determining whether a quorum is present.
If a shareholder returns a signed proxy card but does not mark the boxes,
the shares represented by that proxy card will be voted as recommended by the
Board of Directors. Otherwise, the signed proxy card will be voted as
indicated on the card. The proxy card also gives the individuals named as
Proxies discretionary authority to vote the shares represented on any other
matter that is properly presented for action at the Annual Meeting. A
shareholder may revoke his or her proxy at any time before it is voted by: (i)
giving notice in writing to the Secretary of the Company (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. All such shares will be voted in accordance with the
instructions on the proxy card.
COST OF SOLICITATION
The Company is responsible for the cost of soliciting proxies. Proxies
may be solicited by directors, officers or regular employees of the Company in
person or by telephone, or by other means. The Company will also request
brokers or nominees who hold shares of Cumulative Preferred Stock, $20 Par
Value, 4 1/2% Series, in their names to forward proxy material at the Company's
expense to the beneficial owners of such stock.
-1-
<PAGE> 4
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Shareholders of record at the close of business on March 6, 1996, of the
280,312 outstanding shares of Cumulative Preferred Stock, $20 Par Value, 4 1/2%
Series, and the 69,438,190 outstanding shares of Common Stock are entitled to
notice of and to vote at the Annual Meeting. Shareholders have cumulative
voting rights, as described below, in electing directors. No shareholders shall
be entitled to cumulative votes (i.e., cast for any one or more candidates a
number of votes greater than the number of the shareholder's shares) unless
such candidate or candidates' names have been placed in nomination prior to the
voting and the shareholder has given notice at the meeting, prior to the
voting, of the shareholder's intention to cumulate the shareholder's votes. If
any one shareholder has given such notice, all shareholders may cumulate their
votes for candidates who have been nominated. If voting for directors is
conducted by cumulative voting, each share will be entitled to a number of
votes equal to the number of directors to be elected, which votes may be cast
for a single candidate or may be distributed among two or more candidates in
such proportions as the shareholder may determine. If voting is not conducted
by cumulative voting, each share will be entitled to one vote, and the holders
of a majority of the shares voting at the meeting will be able to elect all of
the directors if they choose to do so. In such event, the other shareholders
will be unable to elect any director or directors. The candidates receiving the
highest number of votes, up to the number of directors to be elected, shall be
elected. On all other matters, each share is entitled to one vote.
All of the 69,438,190 outstanding shares of Common Stock are owned of
record and beneficially by GTE Corporation (GTE or the Corporation),
representing 99.6 percent of the outstanding voting securities of the Company.
VOTING OF PROXIES
The persons named in the enclosed proxy have advised they intend to vote
for the election of the nominees listed below as directors of the Company. If,
in the event of an unexpected occurrence, any nominee should not be available
for election, the proxies will be voted for the election of such substitute
nominee, if any, as the Board of Directors may propose. Each nominee is at
present available for election. The individuals listed below currently serve
as directors of the Company.
If voting for directors is conducted by cumulative voting, the persons
named on the enclosed form of proxy will have discretionary authority to
cumulate votes among the nominees with respect to which authority was not
withheld or, if the form of proxy either was not marked or was marked for all
nominees, among all nominees. In any case, the proxies may be voted for less
than the entire number of nominees if any situation arises which, in the
opinion of the proxy holders, makes such an action necessary or desirable.
-2-
<PAGE> 5
BOARD OF DIRECTORS
The directors of the Company are elected annually. During 1995 all
actions of the Board of Directors (the Board) was by unanimous consent
resolutions.
The Board of Directors currently consists of five directors with two seats
vacant. The Company proposes to elect five members at the Annual Meeting
thereby leaving two seats on the Board vacant. The Company has concluded that
it can operate efficiently with only five directors on the Board in light of
the decision to have only GTE employees serve as directors of the Company. The
five nominees for election to hold office until the next annual election of
directors and until their successors shall be elected and qualified are listed
in the following table. The proxies submitted in response to this Proxy
Statement cannot be voted for a greater number of directors than the number of
nominees named. All of the nominees were elected as directors of the Company
at the last Annual Meeting, except John C. Appel, who was elected effective
March 1, 1996. Also shown on the table are the nominees' ages and principal
occupations or employment during the last five years. All of the nominees are
executives of GTE Telephone Operations.
<TABLE>
<CAPTION>
Name Age Director Since Business Experience
- ------------------------ ------ ---------------- -------------------------------------------------------
<S> <C> <C> <C>
John C. Appel 47 1996 Executive Vice President - Network Operations, GTE
Telephone Operations, 1996; Executive Vice President -
Network Operations, all GTE domestic telephone
subsidiaries of which he is not the President, 1996;
Director, all GTE domestic telephone subsidiaries,
1996; President - GTE South Incorporated and GTE North
Incorporated, 1995; Senior Vice President - Regulatory
Operations, GTE Telephone Operations, 1994; President -
GTE Southwest Incorporated, 1994; State President -
Texas / New Mexico, 1993; Vice President and General
Manager - California, GTE Telephone Operations West
Area, 1992; Assistant Vice President - Business
Services, GTE Telephone Operations, 1991.
Richard M. Cahill 57 1993 Vice President - General Counsel, GTE Telephone
Operations, 1988; Director, all GTE domestic telephone
subsidiaries, 1993 and / or 1994; Director, GTE Vantage
Incorporated, 1991; Vice President - General Counsel,
all GTE domestic telephone subsidiaries, 1995.
Gerald K. Dinsmore 46 1993 Senior Vice President - Finance and Planning, GTE
Telephone Operations, 1994; Senior Vice President -
Finance and Planning, all GTE domestic telephone
subsidiaries, 1994; Vice President - Finance, GTE
Telephone Operations, 1993; Vice President -
Intermediary Customer Markets, GTE Telephone
Operations, 1988; President of all South Area
Companies, GTE Telephone Operations, 1992; Director,
GTE Florida Incorporated and GTE South Incorporated,
1992; Director, all GTE domestic telephone
subsidiaries, 1993 and / or 1994.
</TABLE>
-3-
<PAGE> 6
<TABLE>
<CAPTION>
Name Age Director Since Business Experience
- ------------------------ ------ ---------------- -------------------------------------------------------
<S> <C> <C> <C>
Michael B. Esstman 49 1993 Executive Vice President - Customer Segments, GTE
Telephone Operations, 1994; Executive Vice President -
Operations, GTE Telephone Operations, 1993; President
of all Central Area Companies, GTE Telephone
Operations, 1991; President, Contel Eastern Region,
Telephone Operations Sector, 1983; Director, AG
Communications Systems; Director of all Central Area
Companies, 1991; Director of all other GTE domestic
telephone subsidiaries, 1993 and / or 1994.
Thomas W. White 49 1993 President, GTE Telephone Operations, 1995; Executive
Vice President - Network Operations, GTE Telephone
Operations, 1994; Executive Vice President - GTE
Telephone Operations, 1993; Senior Vice President -
General Office Staff, GTE Telephone Operations, 1989;
Director, all GTE domestic telephone subsidiaries, 1993
and / or 1994; Director, Quebec-Telephone.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Company does not have any standing audit, nominating or compensation
committees of the Board of Directors. In light of the decision to have only
GTE employees serve on the Board, the Board of Directors concluded that such
committees are not necessary.
DIRECTORS' COMPENSATION
The current directors, all of whom are employees of GTE, are not paid any
fees or remuneration, as such, for service on the Board.
EXECUTIVE COMPENSATION
Report on Executive Compensation
The Board of Directors of the Company has reviewed and approved the annual
compensation paid to the Company's President, M.L. Keith, Jr., and C. Michael
Crawford and Larry J. Sparrow, each a former President and Chief Executive
Officer of the Company during 1995, and each of the other four highest paid
executive officers of the Company. Mr. Sparrow resigned as President and as a
director of the Company effective at the close of business on February 14,
1995, to accept another position within GTE. Messrs. Crawford and Sparrow and
several of the other executive officers are also executive officers of
affiliates of the Company. The Company's pro rata share of salaries, bonuses
and other cash compensation for such executive officers is discussed in Note 1
to the table on page 9.
The compensation of Mr. Keith and the other four highest paid executive
officers (the named executive officers) are recommended to and approved by the
Executive Compensation and Organizational Structure Committee of the Board of
Directors of GTE Corporation (the Committee). The Committee also administers
GTE's executive incentive plans including the approval of awards under those
plans. In the opinion of the Board of the Company, the compensation paid to
the named executive officers of the Company is reasonable.
-4-
<PAGE> 7
Compensation Philosophy
The compensation philosophy of GTE, in which the Company's Board of
Directors concurs, is that the compensation for the executive officers of the
Company as a group should be set at a level so that it attracts superior
individuals, rewards sustained performance and maximizes shareholder value.
The Board also believes that because the Company is a majority-owned subsidiary
of GTE, and because most of the named executive officers are also executive
officers of other GTE affiliates, their compensation should closely resemble
the compensation paid to other similarly situated employees of other GTE
subsidiaries. The Board further believes that the Company benefits from the
policy of compensating its employees on a similar basis to other employees with
similar responsibilities within GTE because it facilitates the ability of GTE
to transfer employees between companies, thereby providing the Company with a
large group of skilled and knowledgeable individuals from which to draw to fill
key vacancies. This policy also serves to attract talented people to the
Company because they will have an opportunity for additional experience and
promotion throughout all of GTE.
Executive Compensation
The base salary of the named executive officers is determined by reviewing
the individual's performance as well as the duties and responsibilities of the
respective executive management position. Each management position is given a
grade level with an attendant salary range. The grade levels are determined
using the Hay Job Evaluation System, an orderly and widely recognized system to
establish job levels. The Hay system emphasizes employee relations,
staffing/retention and equal opportunity considerations. The individual's
performance, years of experience and prior salary increase history, determine
where within the salary range the individual's base salary falls. The grade
levels of the executive officers are generally comparable to other similar
management positions within GTE.
The base compensation, whether or not specifically allocated to the
Company, of the named executive officers increased during 1995, based on their
performance and the date of their last increase. The percentage increases
ranged from 0.5% to 18.5% and were based, in the case of Messrs. Keith,
Crawford and Sparrow, upon the performance of GTE Telephone Operations and the
Company and each individual's performance. The percentage increases for Messrs.
Foster, White, Esstman and Dinsmore were based on the total performance of GTE
Telephone Operations and each individual's performance. The base salaries paid
by the Company to the named executive officers of the Company as of December
31, 1995, are included under the "salary" column of the Summary Compensation
Table on page 9.
Incentive Compensation
Certain executives are also eligible to receive payments under two
incentive plans in addition to their base salary. Under the Executive
Incentive Plan (the EIP), awards are made, in the case of Messrs. Keith,
Crawford and Sparrow, based upon the performance of GTE, GTE Telephone
Operations and the Company during the last fiscal year and upon the individual
participant's achievement of certain goals for his business unit and other
individual objectives. In the case of Messrs. Foster, White, Esstman and
Dinsmore, awards are made based on the total performance of GTE and GTE
Telephone Operations and each individual's performance.
No awards under the EIP are made for any year in which GTE's return on
equity (ROE) does not exceed 8%. However, under the terms of the EIP, the
Committee shall also take into consideration unusual or extraordinary items or
circumstances affecting GTE's financial performance, such as the impact of
mandated accounting changes or unusual charges related to acquisitions or
divestitures. GTE's 1995 ROE exceeded 8%, excluding the adjustment for
Financial Accounting Standards No. 71, and awards under the EIP were made.
-5-
<PAGE> 8
The award to Mr. Keith under the GTE EIP for 1995 allocated to the Company
was $78,000. This award represents approximately 34% of Mr. Keith's total cash
compensation for the year allocated to the Company. The award was based on the
performance of GTE as a whole as well as Mr. Keith's performance with respect
to critical pre-established qualitative and quantitative objectives related to
the Company established and approved by the Chief Executive Officer of GTE
Telephone Operations and the Committee. The quantitative objectives included
targets for net income, return on equity, net cash flow, customer value of
service and affirmative action. Other objectives included new product
revenues, product price and positioning, employee satisfaction and process
re-engineering. In determining Mr. Keith's award for 1995, particular emphasis
was given to the financial performance of the Company and the quality of
service provided to customers of the Company.
EIP awards for the named executive officers paid by the Company are
included in the "Bonus" column of the Summary Compensation Table on page 9 .
Certain executives also have an opportunity to earn incentive payments
under GTE's 1991 Long-Term Incentive Plan (LTIP). The primary purpose of the
LTIP is to offer participants an incentive to cause GTE to achieve superior
financial performance, thereby helping to assure superior performance for the
shareholders. Two types of grants are currently used under the provisions of
the LTIP - performance bonuses and stock options, which may include tandem
stock appreciation rights (SARs).
The named executive officers are eligible to receive annual grants of
performance bonuses which are earned during a 36-month performance cycle.
Awards for the three-year performance cycle ending in 1995 were based on GTE's
financial performance during the relevant cycle as measured by GTE's average
ROE against pre-established target levels. In 1994, the Committee established
an additional measure of corporate performance - operating cash flow margin
(OCFM). To transition from awards based solely on performance against ROE
targets to awards based on a combination of ROE and OCFM performance and to
bring opportunities to company levels, the Committee established a special
performance period of two-year duration to run concurrently with the final two
years of the three-year ROE performance cycle ending in 1995. The awards for
the additional period were based on GTE's performance against ROE and OCFM
goals for the two-year period. The Committee authorized grants for the
three-year performance cycle ending in 1997. The payments under this cycle
will be based on GTE's performance against the ROE and OCFM targets established
for the full three-year cycle. 75% of the award is determined based on ROE
performance and 25% of the award will be determined based on OCFM performance.
The Committee established minimum and target award opportunities for each
cycle based upon competitive practices. In establishing the targeted
performance objectives for ROE and OCFM, the Committee considered past
performance, the strategic goals of GTE and the plans for implementing those
goals. The established targets are designed to facilitate implementing
strategic plans and improving performance.
At the time performance targets for the current LTIP cycles were
established, a Common Stock Unit account was set up for each participant in the
LTIP. An initial dollar amount for each account (Target Award) was determined
based on the competitive performance bonus grant practices of the market
comparator group. That amount was then divided by the average market price for
GTE Common Stock for the calendar week preceding the day the account was
established to determine the number of Common Stock Units in the account. The
value of the account increased or decreased based on the market price of the
GTE Common Stock. An amount equal to the dividends paid on an equivalent
number of shares of GTE Common Stock was added on each dividend payment date.
This amount was then converted into a number of Common Stock Units obtained by
dividing the amount of the dividend by the average price of the GTE Common
Stock on the composite tape of the New York Stock Exchange on the dividend
payment date and added to the Common Stock Unit account.
-6-
<PAGE> 9
If the minimum level of the targeted performance range is not attained, no
award is paid. If the minimum of the performance target range is achieved,
participants receive a payment of 20% of the Target Award for that performance
measure. If the target value of the performance range is attained,
participants receive a payment of 100% of the Target Award for that performance
measure. Superior performance, achieving results in excess of the target
value, results in a payment in excess of 100% of the Target Award based upon
the following formula which is applied separately for each performance measure:
- For the first and second 0.1% above the maximum performance target, 2%
of the target award for that performance measure is added to the target
award;
- For the third and fourth 0.1% above the maximum performance target, 3%
of the target award for that performance measure is added to the target
award; and
- For each additional 0.1% after .4% above the maximum performance
target, 4% of the target award for that performance measure is added to the
target award.
Payouts to the named executives for the 1993-1995 award cycle and
1994-1995 award period are shown in the Summary Compensation Table on page 9.
Also shown are historical awards for the 1991-1993 and 1992-1994 cycles and
1994 supplement. The awards shown reflect the following combinations of
performance: the 1993-1995 ROE goal was not met completely, while the goal for
the 1994-1995 award period was exceeded. With respect to these three-year
cycles, the Committee had the discretion to adjust targets or performance
results to reflect unusual items that the Committee determined were
extraordinary, nonrecurring and unrelated to the normal operations of the
business and unanticipated or not contemplated at the time the targets were
originally established. Grants for the 1995-1997 award cycle are shown in the
Long-Term Incentive Plan Awards Table on page 12.
Under the LTIP, the Committee normally approves grants of stock options,
which may include SARs. These options are granted to a substantially larger
group of executives, including the named executive officers, than those who
are eligible to receive performance bonuses under the LTIP.
In approving the number of options and SARs awarded under the LTIP, the
Committee compares GTE's grant levels to competitive practices with respect to
such grants over a period of time. GTE's philosophy is to be at or near a
median grant posture of the comparator group of companies. The number of
options currently held by any individual participant is not a factor in
determining individual grants for 1995. In 1995, the named executive officers
received the awards shown in the Summary Compensation Table on page 9.
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 the Internal Revenue 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. The IRS regulations limit the amount that a company may deduct to
one million dollars per person unless the compensation constitutes "performance
based" compensation. The regulations contain transition rules which companies
generally may rely on until the first shareholder meeting in 1997.
In order to comply with the IRS regulations, the Committee has adopted
certain procedures to provide for the deductibility of future amounts received
under the EIP for 1995 and LTIP for cycles commencing in 1994. The provisions
include, but are not limited to, limiting positive discretion and establishing
the maximum award payable to any individual participant under the EIP.
However, performance bonuses paid under the LTIP for the 3-year performance
cycles beginning prior to 1994, do not qualify for the performance-based
exemption to the one million dollar limit.
-7-
<PAGE> 10
Other Compensation Plans
The Company also participates in various broad-based GTE employee benefit
plans. Executives participate in these plans on the same terms as eligible,
non-executive employees, subject to any legal limits on the amounts that may be
contributed or paid to executives under the plans. GTE offers an Employees'
Stock Plan pursuant to the provision of Section 423 of the Internal Revenue
Code of 1986, as amended (the Code), under which employees may purchase GTE
Common Stock at a discount. The GTE Savings Plan (the Savings Plan), pursuant
to the provisions of Section 401(k) of the Code, permits employees to invest
in a variety of funds on a pre- or after-tax basis. Matching contributions
under the Savings Plan are made in GTE Common Stock.
The Company also maintains pension, insurance and other benefit plans for its
employees.
John C. Appel
Richard M. Cahill
Gerald K. Dinsmore
Michael B. Esstman
Thomas W. White
March 29, 1996
-8-
<PAGE> 11
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 1995
Principal Executive Officers of the Company and each of the other four most
highly compensated executive officers (the named executive officers) of GTE
Telephone Operations in 1995. The information in this table under the caption
"Annual Compensation" sets forth all compensation paid to the named executive
officers by GTE Telephone Operations. The caption "Long-Term Compensation"
sets forth all long-term compensation paid to the named executive officers
under employee benefit plans administered by GTE Corporation or GTE Service
Corporation. Footnote 1 to this table sets forth the actual 1995 annual
compensation for each of the named executive officers that was allocated to the
Company.
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------------------------------------
Annual Compensation (1) Awards Payouts
-------------------------------- ------------------------ --------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Securities
Other Annual Restricted Underlying LTIP All Other
Name and Principal Salary Bonus Compensation Stock Options/ Payouts Compensation
Position in Group Year ($) (2) ($) ($) Awards (#) SARs (#) ($) (3) ($) (4)
- ------------------------- ---- -------- --------- ------------- ----------- ----------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
M. L. Keith, Jr. (5) 1995 $204,308 $104,000 $ -- -- 12,500 $ -- $9,111
President
C. Michael Crawford (6) 1995 197,077 139,100 -- -- 16,900 73,700 8,805
President 1994 170,804 96,300 -- -- 7,800 14,600 5,302
1993 155,500 61,900 -- -- 4,900 -- 4,665
Larry J. Sparrow (7) 1995 261,866 255,600 -- -- 36,400 211,300 10,613
President 1994 260,662 233,800 -- -- 30,900 117,200 7,075
1993 245,846 173,600 -- -- 14,500 38,300 7,368
Kent B. Foster (8) 1995 381,302 476,600 -- -- 187,900 848,300 10,613
President - 1994 687,608 837,900 -- -- 138,100 397,800 7,075
GTE Telephone 1993 603,659 531,700 -- -- 58,800 117,100 6,502
Operations
Thomas W. White 1995 418,884 443,800 -- -- 98,800 331,800 10,613
President - 1994 353,508 368,200 -- -- 53,700 164,100 7,075
GTE Telephone 1993 328,696 282,600 -- -- 22,600 52,700 7,067
Operations
Michael B. Esstman 1995 350,731 349,400 -- -- 63,500 305,900 7,238
Executive Vice President -1994 327,546 358,200 -- -- 53,700 158,300 4,998
Customer Segments 1993 287,830 268,400 -- -- 22,600 46,200 7,056
GTE Telephone
Operations
Gerald K. Dinsmore 1995 265,125 255,600 -- -- 36,400 211,300 10,613
Senior Vice President - 1994 248,438 233,800 -- -- 30,900 97,800 7,075
Finance and Planning 1993 213,061 206,900 -- -- 14,500 14,800 6,207
GTE Telephone
Operations
</TABLE>
(1) Annual Compensation represents the total annual cash compensation of
salaries, bonuses and other compensation. The Company's allocated share
for Messrs. Keith, Crawford, Sparrow, Foster, White, Esstman and Dinsmore
for whom total annual amounts are shown above, is $231,231; $107,619;
$165,654; $189,015; $188,675; $156,129 and $116,122, respectively.
(2) The data in the table includes fees of $20,604, $22,896 and $21,944,
respectively, received by Mr. Foster when he served as a director of BC
TEL during 1995, 1994 and 1993, and fees of $289 and $2,869, respectively,
for serving as a director of CANTV during 1994 and 1993. Mr. White
received fees of $16,607 for serving as director of BC TEL during 1995.
Both BC TEL and CANTV are indirectly-owned subsidiaries of GTE
Corporation.
-9-
<PAGE> 12
(3) 1995 Long-Term Incentive Plan (LTIP) Payouts include transition awards for
the 1994-1995 performance period, which were established by the Committee
as a special grant to allow for the smooth transitioning from a single
measure of long-term performance (return on equity) to a combined measure
(return on equity and operating cash flow margin).
(4) All other compensation for 1995 includes company contributions to the GTE
Savings Plan of $6,750 for each of Messrs. Keith, Crawford, Sparrow,
Foster, White and Dinsmore and $3,375 for Mr. Esstman. Also included are
company contributions to the GTE Executive Salary Deferral Plan of $2,361
for Mr. Keith, $2,055 for Mr. Crawford, and $3,863 for each of Messrs.
Sparrow, Foster, White, Esstman and Dinsmore.
(5) Mr. Keith was elected President of the Company in April 1995, replacing
Mr. Crawford, who served as President from February 15, 1995 to April 1,
1995.
(6) Mr. Crawford was replaced as President by Mr. Keith on April 1, 1995, when
he was elected Vice President - Network Operations Support for GTE
Telephone Operations which he served until February 1996 when he was
elected Vice President - Information Technology for GTE Telephone
Operations.
(7) Mr. Sparrow was replaced as President by Mr. Crawford on February 15,
1995, when he was elected Vice President - Carrier Markets for GTE
Telephone Operations.
(8) Mr. Foster served as President of GTE Telephone Operations through June
1995 at which time he was elected President of GTE Corporation. Mr. White
replaced Mr. Foster as President of GTE Telephone Operations.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table shows all grants of options and tandem stock appreciation
rights (SARs) to the named executive officers of the Company in 1995, whether
or not specifically allocated to the Company. The options and SARs were
granted under the LTIP. Pursuant to Securities and Exchange Commission (the
SEC) rules, the table also shows the value of the options granted at the end
of the option terms (ten years) if the stock price were to appreciate annually
by 5% and 10%, respectively. There is no assurance that the stock price will
appreciate at the rates shown in the table. The table also indicates that
if the stock price does not appreciate, there will be no increase in the
potential realizable value of the options granted.
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rate of Stock
Price Appreciation For
Individual Grants (1) Option Term
------------------------------------------------------ ------------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
Percent of
Number of Total Options/
Securities SARs Granted Exercise
Underlying to All GTE Or Base
Options / SARs Employees in Price Expiration
Name Granted (1) Fiscal Year ($/SH) Date 0% 5% 10%
- -------------------- -------------- --------------- --------- ----------- ------ --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
M. L. Keith, Jr. 6,500 0.11% $ 33.38 02/13/05 $ -- $ 136,431 $ 345,743
6,000 0.11% 34.06 03/26/05 -- 128,486 325,583
C. Michael Crawford 12,500 0.22% 33.38 02/14/05 -- 262,367 664,889
4,400 0.08% 34.06 03/26/05 -- 94,223 238,761
Larry J. Sparrow 36,400 0.64% 33.38 02/14/05 -- 764,013 1,936,158
Kent B. Foster 163,100 2.89% 33.38 02/13/05 -- 3,423,364 8,675,477
24,800 0.44% 34.44 07/02/05 -- 536,922 1,360,557
Thomas W. White 63,500 1.12% 33.38 02/13/05 -- 1,332,824 3,377,638
35,300 0.62% 35.75 07/30/05 -- 793,375 2,010,409
Michael B. Esstman 63,500 1.11% 33.38 02/14/05 -- 1,332,824 3,377,638
Gerald K. Dinsmore 36,400 0.64% 33.38 02/14/05 -- 764,013 1,936,158
</TABLE>
(1) Each option was granted in tandem with a SAR, which will expire upon
exercise of the option. Under the LTIP, one-third of these grants vest
annually commencing one year after the date of grant.
-10-
<PAGE> 13
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 the Company during 1995. 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 29,
1995.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Shares Options/SARs at FY-End at FY-End ($)
Acquired Value ---------------------------- -----------------------------
Name On Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ---------------- ------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
M. L. Keith, Jr. -- $ -- 13,199 17,501 $ 148,303 $ 180,822
C. Michael Crawford -- -- 14,566 23,734 162,363 248,300
Larry J. Sparrow -- -- 58,766 61,834 668,538 660,412
Kent B. Foster -- -- 251,331 299,569 2,836,272 3,071,409
Thomas W. White 19,800 227,700 105,566 142,134 1,227,717 1,428,689
Michael B. Esstman -- -- 49,166 106,834 526,500 1,141,425
Gerald K. Dinsmore 29,833 142,354 12,833 61,834 117,248 660,412
</TABLE>
-11-
<PAGE> 14
LONG-TERM INCENTIVE PLAN - AWARDS IN LAST FISCAL YEAR
The LTIP provides for awards, currently in the form of stock options with
tandem SARs, other stock-based awards and dollar denominated awards, to
participating employees. The stock options and tandem SARs awarded under the
LTIP to the named executive officers are shown in the table on page 10. The
LTIP is described in more detail on pages 6 and 7.
<TABLE>
<CAPTION>
Estimated Future Payouts
Under Non-Stock Price Based Plans (1)
-----------------------------------------------
(a) (b) (c) (d) (e) (f)
Performance
Or Other Period
Number of Until
Shares, Units Maturation
Name Or Other Rights Or Payout Threshold (2) Target (3) Maximum (4)
- ------------------------ ---------------- --------------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
M. L. Keith, Jr. 875 21 Months 184 920
1,375 21 Months 289 1,446
C. Michael Crawford 808 8 Months 168 838
1,293 20 Months 268 1,341
1,521 32 Months 315 1,577
Larry J. Sparrow 3,800 3 Years 799 3,996
Kent B. Foster 15,400 3 Years 3,527 17,633
2,415 30 Months 538 2,690
1,450 18 Months 310 1,548
610 6 Months 125 624
Thomas W. White 5,900 3 Years 1,351 6,755
2,495 29 Months 556 2,779
1,465 17 Months 313 1,564
370 5 Months 76 378
Michael B. Esstman 5,900 3 Years 1,241 6,204
Gerald K. Dinsmore 3,800 3 Years 799 3,996
</TABLE>
(1) It is not possible to predict future dividends and, accordingly, estimated
Common Stock Unit accruals in this table are calculated for illustrative
purposes only and are based upon the dividend rate and price of GTE Common
Stock at the close of business on December 29, 1995. The target award is
the dollar amount derived by multiplying the Common Stock Unit balance at
the end of the award cycle by the price of GTE Common Stock.
(2) The Threshold is the level of the average return on equity (ROE) and the
average operating cash flow margin (OCFM) during the relevant cycle which
represents the minimum acceptable performance level for both the ROE and
OCFM performance measures. If the Threshold is attained with respect to
both performance measures, the award will be equal to 20% of the combined
target award for ROE and OCFM. Because ROE and OCFM are separate
performance measures, it is possible to receive an award if the Threshold
is achieved with respect to only one of the performance measures. If the
actual results for one, but not both, performance measures is at the
Threshold level, the portion of the award determined by the measure
performing at the Threshold level will be at 20% of the target award for
that performance measure, and no award will be made for the portion of the
award determined by the measure performing at less than the Threshold
level. However, if the actual results for both performance measures are
below the minimum acceptable performance level, no award will be earned.
(3) The Target is the level of the average ROE and the average OCFM during the
cycle which represents outstanding performance for both the ROE and OCFM
performance measures. If the Target is attained with respect to both
performance measures, the award will be equal to 100% of the target award
for ROE and OCFM. If the actual results for one, but not both,
performance measures is at the Target level, the portion of the
-12-
<PAGE> 15
award determined by the measure performing at the Target level will be at
100% of the target award for that performance measure, and the portion of
the award determined by the measure performing at less than 100% will be
determined accordingly.
(4) This column has intentionally been left blank because it is not possible
to determine the maximum award until the award cycle has been completed.
The maximum amount of the award is limited by the amount the actual ROE
and the actual OCFM exceed the targeted ROE and the targeted OCFM. If
GTE's average ROE and OCFM during the cycle exceed their respective
performance targets, additional bonuses may be earned according to the
schedule on page 7. For example, if average ROE and OCFM performance each
exceed the ROE and OCFM targets by .5%, respectively, the performance
bonus will equal 114% of the combined target award.
-13-
<PAGE> 16
EXECUTIVE AGREEMENTS
GTE has entered into agreements (the Agreements) with Messrs. Sparrow,
Foster, White, Esstman and Dinsmore regarding benefits to be paid in the event
of a change in control of GTE (a Change in Control).
A Change in Control is deemed to have occurred if a majority of the
members of the Board do not consist of members of the incumbent Board (as
defined in the Agreements) or if, in any 12-month period, three or more
directors are elected without the approval of the incumbent Board. An
individual whose initial assumption of office occurred pursuant to an agreement
to avoid or settle a proxy or other election contest is not considered a member
of the incumbent Board. In addition, a director who is elected pursuant to
such a settlement agreement will not be deemed a director who is elected or
nominated by the incumbent Board for purposes of determining whether a Change
in Control has occurred. A Change in Control will not occur in the following
situations: (1) certain merger transactions in which there is at least 50% GTE
shareholder continuity in the surviving corporation, at least a majority of the
members of the board of directors of the surviving corporation consists of
members of the Board of GTE and no person owns more than 20% (or under certain
circumstances, a lower percentage, not less than 10%) of the voting power of
the surviving corporation following the transaction, and (2) transactions in
which GTE's securities are acquired directly from GTE.
The Agreements provide for benefits to be paid in the event these
individuals separate from service and have a "good reason" for leaving or are
terminated without "cause" within two years after a Change in Control of GTE.
Good reason for leaving includes, but is not limited to, the following
events: demotion, relocation or a reduction in total compensation or benefits,
or the new entity's failure to expressly assume obligations under the
Agreements. Termination for cause includes certain unlawful acts on the part
of the executive or a material violation of his or her responsibilities to the
Corporation resulting in material injury to the Corporation.
An executive who experiences a qualifying separation from service will be
entitled to receive up to two times the sum of (i) base salary and (ii) the
average of his or her other percentage awards under the EIP for the previous
three years. The executive will also continue to receive medical and life
insurance coverage for up to two years and will be provided with financial and
outplacement counseling.
In addition, the Agreements with Messrs. Sparrow, Foster, White, Esstman
and Dinsmore provide that in the event of a separation from service, they will
receive service credit in the following amounts: two times years of service
otherwise credited if the executive has five or fewer years of credited
service; 10 years if credited service is more than five and not more than 10
years; and, if the executive's credited service exceeds 10 years, the actual
number of credited years of service. These additional years of service will
apply towards vesting, retirement eligibility, benefit accrual and all other
purposes under the Supplemental Executive Retirement Plan (SERP) and the
Executive Retired Life Insurance Plan. In addition, each executive covered
under an Agreement will be considered to have not less than 76 points and 15
years of accredited service for the purpose of determining his or her
eligibility for early retirement benefits. The Agreements provide that there
will be no duplication of benefits.
Each of the agreements remain 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.
-14-
<PAGE> 17
RETIREMENT PROGRAMS
Pension Plans
The estimated annual benefits payable, calculated on a single life annuity
basis, under GTE's defined benefit pension plans at normal retirement at age
65, based upon final average earnings (integrated with social security as
described below) and years of service, is illustrated in the following table:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
Final Average --------------------------------------------------------------------------------
Earnings 15 20 25 30 35
- -------------------- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 150,000 $ 31,460 $ 41,946 $ 52,433 $ 62,919 $ 73,406
200,000 42,335 56,446 70,558 84,669 98,781
300,000 64,085 85,446 106,808 128,169 149,531
400,000 85,835 114,446 143,058 171,669 200,281
500,000 107,585 143,446 179,308 215,169 251,031
600,000 129,335 172,446 215,558 258,669 301,781
700,000 151,085 201,446 251,808 302,169 352,531
800,000 172,835 230,446 288,058 345,669 403,281
900,000 194,585 259,446 324,308 389,169 454,031
1,000,000 216,335 288,446 360,558 432,669 504,781
1,200,000 259,835 346,446 433,058 519,669 606,281
1,500,000 325,085 433,446 541,808 650,169 758,531
2,000,000 433,835 578,446 723,058 867,669 1,012,281
</TABLE>
GTE Service Corporation, a wholly-owned subsidiary of GTE, maintains the
GTE Service Corporation Plan for Employees' Pensions (the Service Corporation
Plan), a noncontributory pension plan for the benefit of all GTE employees
based on years of service. Pension benefits to be paid from the Service
Corporation Plan and contributions to the Service Corporation Plan are related
to basic salary exclusive of overtime, differentials, incentive compensation
(except as otherwise described) and other similar types of payment. Under the
Service Corporation Plan, pensions are computed on a two-rate formula basis of
1.15% and 1.45% for each year of service, with the 1.15% service credit being
applied to that portion of the average annual salary for the five highest
consecutive years that does not exceed the Social Security Integration Level
(the portion of salary subject to the Federal Social Security Act), and the
1.45% service credit being applied to that portion of the average annual salary
that exceeds said level. As of December 31, 1995, the credited years of service
under the plan for Messrs. Keith, Crawford, Sparrow, Foster, White, Esstman and
Dinsmore are 30, 27, 28, 25, 28, 26 and 20, respectively.
Under Federal law, an employee's benefits under a qualified pension plan,
such as the Service Corporation Plan, are limited to certain maximum amounts.
GTE maintains a SERP, which supplements the benefits of any participant in the
Service Corporation Plan in an amount by which any participant's benefits under
the Service Corporation Plan are limited by law. In addition, the SERP
includes a provision permitting the payment of additional retirement
benefits determined in a similar manner as under the Service Corporation Plan
on remuneration accrued under management incentive plans as determined by the
Executive Compensation and Organizational Structure Committee. SERP benefits
are payable in a lump sum or an annuity.
-15-
<PAGE> 18
Executive Retired Life Insurance Plan
The GTE Corporation Executive Retired Life Insurance Plan (ERLIP) provides
Messrs. Crawford, Sparrow, Foster, White, Esstman and Dinsmore a
postretirement life insurance benefit of three times final base salary and
provides Mr. Keith a postretirement life insurance benefit of two and one-half
times final base salary. Upon retirement, ERLIP benefits may be paid as life
insurance, or optionally, an equivalent amount equal to the present value of
the life insurance amount (based on actuarial factors and the interest rate
then in effect), as a lump sum payment, as an annuity or as installment
payments.
OWNERSHIP OF STOCK BY DIRECTORS, NOMINEES FOR DIRECTORS, EXECUTIVE OFFICERS AND
CERTAIN BENEFICIAL OWNERS
The table below sets forth the shares of GTE's Common Stock beneficially
owned by each director, nominee for director, the Chief Executive Officer and
the other four most highly compensated executive officers and by all directors
and executive officers as a group. No director, nominee for director or
executive officer owns as much as one-tenth of one percent of the total
outstanding shares 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.
<TABLE>
<CAPTION>
Shares Beneficially
Owned as of
Title of Class Name of Director or Nominee (1) (2) (3) December 31, 1995
- ----------------------------- ---------------------------------------- --------------------
<S> <C> <C>
Common Stock of GTE Richard M. Cahill 54,481
Corporation Gerald K. Dinsmore 29,667
Michael B. Esstman 107,586
Thomas W. White 119,761
--------------------
311,495
====================
Executive Officers (1) (2) (3)
---------------------------------------- --------------------
M. L. Keith, Jr. 24,383
C. Michael Crawford 28,751
Larry J. Sparrow 51,093
Kent B. Foster 432,173
Thomas W. White 119,761
Michael B. Esstman 107,586
Gerald K. Dinsmore 29,667
--------------------
793,414
====================
All directors and executive
officers as a group (1) (2) (3) 1,455,050
====================
</TABLE>
(1) Includes shares acquired through participation in GTE's Consolidated
Employee Stock Ownership Plan and/or the GTE Savings Plan.
(2) Included in the number of shares beneficially owned by Messrs. Cahill,
Dinsmore, Esstman, White, Keith, Crawford, Sparrow and Foster and all
directors and executive officers as a group are 49,733; 27,267; 93,066;
106,699; 20,532; 24,432; 37,567; 367,865; and 1,206,451 shares,
respectively, which such persons have the right to acquire within 60 days
pursuant to stock options.
(3) No director, nominee for director or executive officer owns as much as
one-tenth 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-fifth of one percent of the total outstanding shares of GTE Common
Stock.
-16-
<PAGE> 19
DIRECTOR AND EXECUTIVE OFFICER SECURITIES REPORTS
The Federal securities laws require the Company's directors and executive
officers, and persons who own more than 10% of a registered class of the
Company's equity securities, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
any equity securities of the Company.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and representations that no other reports
were required, all persons subject to these reporting requirements filed the
required reports on a timely basis. All of the Company's common stock is
owned by GTE and, to the Company's knowledge, none of such directors or
executive officers currently owns, or has ever owned, any shares of the
Company's registered preferred stock (which is the only registered class of the
Company's equity securities).
INDEPENDENT PUBLIC ACCOUNTANTS
A proposal will be presented at the meeting that the selection by the
Board of Directors of Arthur Andersen LLP as the independent public accountants
of the Company be approved by the shareholders of the Company. An affirmative
vote of the holders of a majority of the shares represented at the meeting will
be required for such approval. In the event such approval is not obtained,
selection of the accountant will be reconsidered by the Board of Directors.
Proxies solicited by the Board of Directors will be voted for the proposal
unless marked to the contrary.
A representative of Arthur Andersen LLP will not attend the shareholders'
meeting.
CERTAIN TRANSACTIONS
Certain affiliated companies, which are not subsidiaries of the Company,
supply construction and maintenance equipment, supplies and electronic repair
services to the Company. These purchases and services amounted to $94.8
million in 1995. Such purchases and services are recorded in the accounts of
the Company, at cost, which includes a normal return realized by the
affiliates.
The Company is billed for certain printing and other costs associated with
telephone directories, data processing services and equipment rentals, and
receives management, consulting, research and development and pension
management services from other affiliated companies. These charges amounted
$212.1 million in 1995. The amounts charged for these affiliated transactions
are based on a proportional cost allocation method.
The Company's consolidated financial statements include allocated expenses
based on the sharing of certain executive, administrative, financial,
accounting, marketing, personnel, engineering, and other support services being
performed at consolidated work centers among the domestic GTE Telephone
Operating Companies. The amounts charged for these affiliated transactions are
based on a proportional cost allocation method as filed with the Federal
Communications Commission.
The Company has an agreement with GTE Directories Corporation (Directories)
(100% owned by GTE), whereby the Company provides its subscriber lists, billing
and collection and other services to Directories. Revenues from these
activities amounted to $122.6 million in 1995.
OTHER MATTERS
The Board of Directors does not know of any other matters to be presented
at the meeting. If any other business should properly be brought before the
meeting, it is the intention of the person named in the proxy to vote the
proxy in accordance with their best judgment on such matters.
-17-
<PAGE> 20
PROPOSALS FOR NEXT ANNUAL MEETING
Any proposal which a shareholder intends to present at the next Annual Meeting
of Shareholders, to be held in April 1997, must be received at the office of
the Company by November 29, 1996, if such proposal is to be considered for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting.
A copy of the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission is available free of charge by written
request to:
GTE Telephone Operations
Financial Reporting
1420 East Rochelle Blvd.
Suite 300, Building 6
MC: HQC03F29
Irving, TX 75039
By order of the Board of Directors,
Charles J. Somes
Secretary
Dated: March 29, 1996
-18-
<PAGE> 21
DETACH HERE
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
P GTE CALIFORNIA INCORPORATED
R THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
O
X
Y The undersigned appoints RICHARD M. CAHILL, PETER K. PLAUT and CHARLES
J. SOMES, and each of them, proxies, with power of substitution, to vote,
as designated on the reverse side, all shares of the undersigned at the
annual meeting of shareholders of GTE California Incorporated to be held
at 600 Hidden Ridge, Irving, Texas 75038, on Wednesday, April 10, 1996, at
10 a.m., and all adjournments.
PROXIES CANNOT BE VOTED FOR A GREATER NUMBER OF DIRECTORS THAN THE
NOMINEES NAMED.
*************
*SEE REVERSE*
CONTINUED AND TO BE SIGNED ON REVERSE SIDE * SIDE *
*************
DETACH HERE
[X] Please mark
votes as in
this example.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made this proxy
will be voted FOR Proposals 1 and 2.
1. ELECTION OF DIRECTORS
Nominees: Thomas W. White, John C. Appel, Michael B. Esstman, Gerald K.
Dinsmore and Richard M. Cahill
FOR WITHHELD
[ ] [ ]
[ ]
--------------------------------------
For all nominees except as noted above
2. Proposal to approve the appointment of Arthur Andersen LLP as the
independent public accountant for the Company
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
MARK HERE [ ]
FOR ADDRESS
CHANGE AND
NOTE AT LEFT
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
(Please sign your name(s) as printed hereon. If co-owner, both parties
should sign.)
Signature____________________ Date _____ Signature _________________ Date ______
