[AT&T LOGO]
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1996
Notice of
Annual Meeting
and
Proxy Statement
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Wednesday, April 17, 1996
at 9:30 A.M. local time
James L. Knight International Center
Miami Convention Center
400 Southeast 2nd Avenue
Miami, Florida
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[AT&T LOGO]
32 Avenue of the Americas
New York, NY 10013-2412
Robert E. Allen
Chairman of the Board
February 27, 1996
Dear Shareholder:
It is a pleasure to invite you to your Company's 1996 Annual Meeting in
Miami, Florida, on Wednesday, April 17, beginning at 9:30 A.M. local time, at
the James L. Knight International Center. This will be AT&T's 111th Annual
Meeting of Shareholders and it marks a time of important transitions for the
Company and its investors. I hope that those who find the time and place
convenient will attend the meeting. An admission ticket, which will be
required, is attached to the proxy card.
The Center is fully accessible to disabled persons, and we will provide
hearing amplification and sign interpretation for our hearing- impaired
shareholders.
Whether you own a few or many shares of stock and whether or not you plan
to attend in person, it is important that your shares be voted on matters
that come before the meeting. I urge you to specify your choices by marking
the enclosed proxy card and returning it promptly. If you sign and return
your proxy card without specifying your choices, it will be understood that
you wish to have your shares voted in accordance with the directors'
recommendations.
Thank you for your interest.
Sincerely,
[SIGNATURE OF ROBERT E. ALLEN]
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NOTICE OF MEETING
The 111th Annual Meeting of Shareholders of AT&T Corp. (the "Company")
will be held at the James L. Knight International Center, Miami Convention
Center, 400 Southeast 2nd Avenue, Miami, Florida, on Wednesday, April 17,
1996, at 9:30 A.M. local time, for the following purposes:
(bullet) To elect directors for the ensuing year (page );
(bullet) To ratify the appointment of auditors to examine the Company's
accounts for the year 1996 (page );
(bullet) To approve the AT&T 1996 Employee Stock Purchase Plan (page );
(bullet) To act upon such other matters, including shareholder proposals
(beginning on page ), as may properly come before the meeting.
Holders of common shares of record at the close of business on February
27, 1996, will be entitled to vote with respect to this solicitation.
Marilyn J. Wasser
Vice President - Law and Secretary
February 27, 1996
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AT&T Corp.
Executive Offices
32 Avenue of the Americas
New York, NY 10013-2412
PROXY STATEMENT
This proxy statement and the accompanying proxy/voting instruction card
(proxy card) are being mailed beginning February 27, 1996, to holders of
common shares in connection with the solicitation of proxies by the board of
directors for the 1996 Annual Meeting of Shareholders in Miami, Florida.
Proxies are solicited to give all shareholders of record at the close of
business on February 27, 1996, an opportunity to vote on matters that come
before the meeting. This procedure is necessary because shareholders live in
all states and abroad and most will not be able to attend. Shares can be
voted only if the shareholder is present in person or is represented by
proxy.
When your proxy card is returned properly signed, the shares represented
will be voted in accordance with your directions. You can specify your
choices by marking the appropriate boxes on the enclosed proxy card. If your
proxy card is signed and returned without specifying choices, the shares will
be voted as recommended by the directors. Abstentions marked on the proxy
card are voted neither "for" nor "against," but are counted in the
determination of a quorum.
If you wish to give your proxy to someone other than the Proxy Committee,
all three names appearing on the enclosed proxy card must be crossed out and
the name of another person or persons (not more than three) inserted. The
signed card must be presented at the meeting by the person or persons
representing you. You may revoke your proxy at any time before it is voted at
the meeting by executing a later-dated proxy, by voting by ballot at the
meeting, or by filing an instrument of revocation with the inspectors of
election in care of the Vice President-Law and Secretary of the Company at
the above address.
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Your vote is important. Accordingly, you are urged to sign and return the
accompanying proxy card whether or not you plan to attend the meeting. If you
do attend, you may vote by ballot at the meeting, thereby cancelling any
proxy previously given.
As a matter of policy, proxies, ballots, and voting tabulations that
identify individual shareholders are kept private by the Company. Such
documents are available for examination only by the inspectors of election
and certain personnel associated with processing proxy cards and tabulating
the vote. The vote of any shareholder is not disclosed except as may be
necessary to meet legal requirements.
Voting Shares Held in Dividend Reinvestment
and Savings Plans
If a shareholder is a participant in the AT&T Shareowner Dividend
Reinvestment and Stock Purchase Plan ("DRISPP"), the proxy card will
represent the number of full shares in the DRISPP account on the record date,
as well as shares registered in the participant's name. If a shareholder is a
participant in the AT&T Employee Stock Ownership Plan, AT&T Long Term Savings
Plan for Management Employees, AT&T Long Term Savings and Security Plan, AT&T
Retirement Savings and Profit Sharing Plan, AT&T Long Term Savings and
Security Employee Stock Ownership Trust, AT&T of Puerto Rico, Inc. Long Term
Savings Plan for Management Employees, AT&T of Puerto Rico, Inc. Long Term
Savings and Security Plan, AT&T Capital Corporation Retirement and Savings
Plan, AT&T Capital Corporation Excess Benefit Plan, AGCS Savings Plan, or
AGCS Hourly Savings Plan, the proxy card will also serve as a voting
instruction for the trustees of those plans where all accounts are registered
in the same name. If cards representing the shares in the above-named plans
are not returned, those shares will not be voted with the exception of the
AT&T Long Term Savings and Security Plan and the AT&T Long Term Savings and
Security Employee Stock Ownership Trust where if cards are not returned,
those shares will be voted by the trustees of those plans.
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Shares allocated to the accounts of participants in plans of AT&T Global
Information Solutions Company, a wholly owned subsidiary of AT&T, such as the
Corporation Payroll Employee Stock Ownership Plan, the Savings Plan, and the
Employees' Profit Sharing Plan (referred to collectively as the "Future
Income Plans") may be voted through separate participant direction cards that
will be mailed to participants in these plans. If a participant also owns
shares outside these plans, the participant must return both the proxy card
and the participant direction card. The trustees of these plans will vote the
number of shares allocated to a participant's account or accounts under such
plans in accordance with the directions on the participant direction card if
the card is duly signed and received by April , 1996. For participants in
the Future Income Plans, allocated shares for which the trustee receives no
instructions and all unallocated shares will be voted by the trustee.
Annual Meeting Admission
If you are a registered owner and plan to attend the meeting in person,
please detach and retain the admission ticket which is attached to your proxy
card and mark the appropriate box on the proxy card. Beneficial owners who
plan to attend the meeting in person may obtain admission tickets in advance
by sending written requests, along with proof of ownership, such as a bank or
brokerage firm account statement, to: Manager - Shareowner Relations, AT&T
Corp., 32 Avenue of the Americas, Room 2420E, New York, NY 10013-2412.
Shareholders who do not present admission tickets at the meeting will be
admitted upon verification of ownership at the admissions counter.
Highlights of the meeting will be included in the next quarterly report.
Information on obtaining a full transcript of the meeting will also be found
in that quarterly report.
Securities and Exchange Commission ("SEC") rules require that an annual
report precede or be included with proxy materials. Shareholders with
multiple accounts may be receiving more than one
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annual report, which is costly to AT&T and may be inconvenient to these
shareholders. Such shareholders may authorize AT&T to discontinue mailing
extra reports by marking the appropriate box on the proxy card for selected
accounts. At least one account must continue to receive an annual report.
Eliminating these duplicate mailings will not affect receipt of future proxy
statements and proxy cards. To resume the mailing of an annual report to an
account, please call the AT&T shareholder services number, 1-800-348-8288.
On January 1, 1996, there were common shares outstanding.
Each common share is entitled to one vote on each matter properly brought
before the meeting.
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BOARD OF DIRECTORS
The board of directors has the responsibility for establishing broad
corporate policies and for overseeing the overall performance of the Company.
However, in accordance with corporate legal principles, it is not involved in
day-to-day operating details. Members of the board are kept informed of the
Company's business through discussions with the Chairman and other officers,
by reviewing analyses and reports sent to them each month, and by
participating in board and committee meetings.
The board held 12 meetings in 1995; the committees held 23 meetings. The
average attendance at the aggregate of the total number of meetings of the
board and the total number of committee meetings was 97%.
COMMITTEES OF THE BOARD
The board has established a number of committees, including the Audit
Committee, the Compensation Committee, and the Committee on Directors, each
of which is briefly described below. Other committees of the board are: the
Corporate Public Policy Committee, the Employee Benefits Committee, the
Executive Committee, the Finance Committee, and the Proxy Committee (which
votes the shares represented by proxies at the annual meeting of
shareholders).
The Audit Committee meets with management to consider the adequacy of the
internal controls and the objectivity of financial reporting; the committee
also meets with the independent auditors and with appropriate Company
financial personnel and internal auditors about these matters. The committee
recommends to the board the appointment of the independent auditors, subject
to ratification by the shareholders at the annual meeting. Both the internal
auditors and the independent auditors periodically meet alone with the
committee and always have unrestricted access to the committee. The
committee, which consists of six non-employee directors, met five times in
1995.
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The Compensation Committee administers management incentive compensation
plans, including stock option plans. The committee makes recommendations to
the board with respect to compensation of directors and of the officers as
listed on page . The committee, which consists of five non-employee
directors, met six times in 1995.
The Committee on Directors advises and makes recommendations to the board
on all matters concerning directorship and corporate governance practices and
the selection of candidates as nominees for election as directors. The
committee, which consists of seven non-employee directors, met three times in
1995. The committee recommended this year's candidates at the January 1996
board meeting.
In recommending board candidates, this committee seeks individuals of
proven judgment and competence who are outstanding in their respective
fields; it considers such factors as anticipated participation in board
activities, education, geographic location, and special talents or personal
attributes. Shareholders who wish to suggest qualified candidates should
write to: Vice President-Law and Secretary, AT&T Corp., 32 Avenue of the
Americas, Room 2420E, New York, NY 10013-2412, stating in detail the
qualifications of such persons for consideration by the committee.
COMPENSATION OF DIRECTORS
Directors who are not employees receive an annual retainer of $30,000 and
a fee of $1,500 for each board, committee, and shareholder meeting attended.
The chairpersons of the Audit Committee, Compensation Committee, and Finance
Committee each receive an additional annual retainer of $7,500. Other non-
employee directors who chair committees receive additional annual retainers
of $5,000. Pursuant to the Company's Deferred Compensation Plan for
Non-Employee Directors, 15% of the annual retainer for each non-employee
director is deferred and credited to a portion of a deferred compensation
account, the value of which is measured from time to time by the value of
Company common
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shares (the "AT&T shares portion"). Directors may elect to defer the receipt
of all or part of the remainder of their compensation into the AT&T shares
portion or the cash portion of the deferred compensation account (the "cash
portion"). The AT&T shares portion is credited on each dividend payment date
for AT&T common shares with a number of deferred shares of common stock
equivalent in market value to the amount of the quarterly dividend on the
shares then credited in the accounts. The cash portion of the deferred
compensation account earns interest, compounded quarterly, at an annual rate
equal to the average interest rate for ten-year United States Treasury notes
for the previous quarter, plus 5%. Non- employee directors with at least five
years' service are eligible for an annual retirement benefit equal to their
annual retainer at retirement. The benefit begins at age 70 and is payable
for life. The Company also provides non-employee directors with travel
accident insurance when on Company business. A non-employee director may
purchase life insurance sponsored by the Company. The Company will share the
premium expense with the director; however, all the Company contributions
will be returned to the Company at the earlier of (a) the director's death or
(b) the later of age 70 or 10 years from the policy's inception. This benefit
will continue after the non- employee director's retirement from the board.
Directors who are also employees of the Company or a subsidiary of the
Company receive no compensation for serving as directors.
ELECTION OF DIRECTORS (Item A on Proxy Card)
The Proxy Committee intends to vote for the election of the nominees
listed on the following pages unless otherwise instructed on the proxy card.
These nominees have been selected by the board on the recommendation of the
Committee on Directors. If you do not wish your shares to be voted for
particular nominees, please identify the exceptions in the designated space
provided on the proxy card. Directors will be elected by a plurality of the
votes cast. Any shares not voted (whether by abstention, broker non-vote, or
otherwise) have no impact on the vote.
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If at the time of the meeting one or more of the nominees have become
unavailable to serve, shares represented by proxies will be voted for the
remaining nominees and for any substitute nominee or nominees designated by
the Committee on Directors or, if none, the size of the board will be
reduced. The Committee on Directors knows of no reason why any of the
nominees will be unavailable or unable to serve.
Directors elected at the meeting will hold office until the next annual
meeting or until their successors have been elected and qualified. For each
nominee there follows a brief listing of principal occupation for at least
the past five years, other major affiliations, and age as of January 1, 1996.
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NOMINEES FOR ELECTION AS DIRECTORS
Robert E. Allen, Chairman and Chief Executive Officer of AT&T since 1988.
Director of Bristol-Myers Squibb Co.; Chrysler Corporation; and PepsiCo, Inc.
Director of AT&T since 1984; Chairman of the Executive and Proxy Committees.
Age 60.
[PHOTO OF ROBERT E. ALLEN]
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STOCK OWNERSHIP OF MANAGEMENT AND DIRECTORS
The following table sets forth information concerning the beneficial
ownership of the Company's common stock as of January 1, 1996, for (a) each
director and nominee for director; (b) each of the named officers (the "named
officers" as defined in the Compensation Report, herein) not listed as a
director; and (c) directors and executive officers as a group. Except as
otherwise noted, the nominee or family members had sole voting and investment
power with respect to such securities.
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Number of Shares
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Beneficially Deferral
Name Owned (1) Plans(2) Total
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<S> <C> <C> <C>
(a)
Robert E. Allen ............
(b)
(c)
Directors and Executive ....
Officers as a Group
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Footnotes
1. No individual director and nominee for director or named officer
beneficially owns 1% or more of the Company's outstanding common shares
or the common shares of AT&T Capital Corporation, a majority- owned
subsidiary of the Company, nor do the directors and executive officers as
a group.
2. Share units held in deferred compensation accounts.
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RATIFICATION OF APPOINTMENT OF AUDITORS
(Item B on Proxy Card)
Subject to shareholder ratification, the board of directors, upon
recommendation of the Audit Committee, has reappointed the firm of Coopers &
Lybrand L.L.P. ("Coopers & Lybrand") as the independent auditors to examine
the Company's financial statements for the year 1996. Coopers & Lybrand has
audited the Company's books for many years. Your directors recommend that
shareholders vote FOR such ratification. Ratification of the appointment of
auditors requires a majority of the votes cast thereon. Any shares not voted
(whether by abstention, broker non-vote, or otherwise) have no impact on the
vote. If the shareholders do not ratify this appointment, other independent
auditors will be considered by the board upon recommendation of the Audit
Committee.
Representatives of Coopers & Lybrand are expected to attend the annual
meeting and will have the opportunity to make a statement if they desire and
to respond to appropriate questions.
For the year 1995, Coopers & Lybrand also examined the financial
statements of the Company's subsidiaries and provided other audit services to
the Company and subsidiaries in connection with SEC filings, review of
financial statements, and audits of pension plans.
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DIRECTORS' PROPOSAL TO APPROVE THE AT&T 1996
EMPLOYEE STOCK PURCHASE PLAN
(Item C on Proxy Card)
In December 1995, the board adopted, subject to shareholder approval, the
AT&T 1996 Employee Stock Purchase Plan (the "Plan"). If approved by
shareholders, the Plan provides eligible employees (defined below) with an
opportunity to purchase AT&T common stock (the "Common Stock") through
payroll deductions. The Plan is intended to assist eligible employees in
acquiring a stock ownership interest in the Company pursuant to a plan that
is intended to qualify as an "employee stock purchase plan" under section 423
of the Internal Revenue Code of 1986, as amended (the "Code") to help
eligible
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employees provide for their future security and to encourage them to remain
in the employment of the Company and participating subsidiaries.
Shares Reserved for the Plan
The aggregate number of shares of Common Stock which may be purchased
under the Plan shall not exceed 50 million, subject to adjustment in the
event of stock dividends, stock splits, combination of shares,
recapitalizations, or other changes in the outstanding Common Stock. Any such
adjustment will be made by the board. Shares issued under the Plan may
consist, in whole or in part, of authorized and unissued shares or treasury
shares.
Eligible Participants
Full-time employees of the Company (or a subsidiary designated by the
Company) are eligible if they meet certain conditions. To be eligible the
employee must have completed six months of employment and the employee's
customary employment must be greater than 20 hours per week.
Approximately 200,000 employees would have been eligible to participate as
of December 31, 1995.
Material Features of the Plan
The Company may make offerings on January 1 and/or July 1 of each Plan
year or on such other date as the Administrator shall designate. Each
offering shall be for a limited period ending on such exercise dates as the
Administrator determines.
Each eligible employee on an exercise date shall be entitled to purchase
shares of Common Stock at the purchase price equal to 85% of the average of
the reported highest and lowest sale prices of shares of Common Stock on the
New York Stock Exchange on the applicable exercise date.
Payment for shares of Common Stock purchased under the Plan will be made
by authorized payroll deductions from an eligible employee's Eligible
Compensation or, when authorized by the Administrator, an eligible employee
may pay an equivalent amount for shares of Common Stock. "Eligible
Compensation" means an eligible employee's total regular compensation payable
from the
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Company or a subsidiary of the Company (a "Subsidiary") during an option
period.
Eligible employees who elect to participate in the Plan will designate a
stated whole percentage equaling at least 1%, but no more than 10% of
eligible compensation, to be deposited into a periodic deposit account. On
the date of exercise, the entire periodic deposit account of each participant
in the Plan is used to purchase whole and/or fractional shares of Common
Stock. The Company shall maintain a stock purchase account for each
participant to reflect the shares of Common Stock purchased under the Plan by
each participant. No participant in the Plan is permitted to purchase Common
Stock under the Plan at a rate that exceeds $25,000 in fair market value of
Common Stock for each calendar year.
All funds received by the Company from the sale of Common Stock under the
Plan may be used for any corporate purpose.
New Plan Benefits
It is not possible to determine how many eligible employees will
participate in the Plan in the future. Therefore, it is not possible to
determine the dollar value or number of shares of Common Stock that will be
distributed under the Plan.
Tax Treatment
The Plan is intended to qualify as an employee stock purchase plan within
the meaning of Section 423 of the Code. Under the Code, an employee who
elects to participate in an offering under the Plan will not realize income
at the time the offering commences or when the shares purchased under the
Plan are transferred to him or her. If an employee disposes of such shares
after two years from the date the offering of such shares commences and after
one year from the date of the transfer of such shares to him or her, the
employee will be required to include in income, as compensation for the year
in which such disposition occurs, an amount equal to the lesser of (i) the
excess of the fair market value of such shares at the time of disposition
over the purchase price, or (ii) 15% of the fair market value of such shares
at the time the offering commenced. The employee's basis in the shares
disposed of will be increased by an amount equal to the amount so includable
in his or her income as
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compensation, and any gain or loss computed with reference to such adjusted
basis which is recognized at the time of the disposition will be a capital
gain or loss, either short-term or long-term, depending on the holding period
for such shares. In such event, the Company (or the subsidiary by which the
employee is employed) will not be entitled to any deduction from income.
If any employee disposes of the shares purchased under the Plan within
such two-year or one-year period, the employee will be required to include in
income, as compensation for the year in which such disposition occurs, an
amount equal to the excess of the fair market value of such shares on the
date of purchase over the purchase price. The employee's basis in such shares
disposed of will be increased by an amount equal to the amount includable in
his or her income as compensation, and any gain or loss computed with
reference to such adjusted basis which is recognized at the time of
disposition will be a capital gain or loss, either short-term or long- term,
depending on the holding period for such shares. In the event of a
disposition within such two-year or one-year period, the Company (or the
subsidiary by which the employee is employed) will be entitled to a deduction
from income equal to the amount the employee is required to include in income
as a result of such disposition.
An employee who is a nonresident of the United States will generally not
be subject to the U.S. federal income tax described above with respect to the
shares of Common Stock purchased under the Plan.
Plan Administration and Termination
The board of directors of the Company, or its delegate, shall appoint a
committee (the "Administrator"), which shall be composed of one or more
members, to administer the Plan on behalf of the Company. The Administrator
may delegate any or all of the administrative functions under the Plan to
such individuals, committees, or entities as the Administrator considers
appropriate. The Administrator may adopt rules and procedures not
inconsistent with the provisions of the Plan for its administration. The
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Administrator's interpretation and construction of the Plan is final and
conclusive.
The board may at any time, or from time to time, alter or amend the Plan
in any respect, except that, without approval of the shareholders of AT&T, no
amendment may increase the number of shares reserved for purchase, or reduce
the purchase price per share under the Plan, other than as described above.
The board shall have the right to terminate the Plan or any offering at
any time for any reason. Unless terminated earlier, the Plan shall continue
in effect through June 30, 2001, except that if at the end of any purchase
period the aggregate funds available for purchase of Common Stock would
purchase a greater number of shares than is available for purchase, the
number of shares that would otherwise be purchased by each participant at the
end of the purchase period will be proportionately reduced in order to
eliminate the excess. The Plan would then automatically terminate after such
purchase period. Upon expiration or termination of the Plan, any amount not
applied toward the purchase of Common Stock will be refunded.
Adoption of this proposal requires an affirmative vote by the holders of a
majority of the outstanding Common Stock. Any shares not voted (whether by
abstention, broker non-vote or otherwise) have the effect of a negative vote.
The directors recommend that shareholders vote FOR the approval of the AT&T
1996 Employee Stock Purchase Plan.
SUBMISSION OF SHAREHOLDER PROPOSALS
Proposals intended for inclusion in next year's proxy statement should be
sent to: Vice President-Law and Secretary, AT&T Corp., 32 Avenue of the
Americas, New York, NY 10013-2412, and must be received by ,1996.
OTHER MATTERS TO COME BEFORE THE MEETING
In addition to the matters described above, there will be an address by
the Chairman of the Board and a general discussion period during which
shareholders will have an opportunity to ask questions about the business.
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If any matter not described herein should come before the meeting, the
Proxy Committee will vote the shares represented by it in accordance with its
best judgment. At the time this proxy statement went to press, the Company
knew of no other matters which might be presented for shareholder action at
the meeting.
BOARD COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee is composed of five independent non-employee
directors. The committee is responsible for setting and administering
executive officer salaries and the annual bonus and long-term incentive plans
that govern the compensation paid to all senior managers of the Company,
except that the board consisting of "outside directors" within the meaning of
Section 162(m) of the Code (other than directors who are employees) is
responsible for setting and administering salaries and the annual bonus for
the officers listed on page (the "named officers") based upon
recommendations of the committee.
On September 20, 1995, the AT&T CEO announced a strategic restructuring of
AT&T designed to make AT&T more valuable to its shareowners, better able to
focus on its markets and more responsive to its customers. This restructuring
will separate AT&T into three stand-alone companies each focused on a major
segment of the global information industry: communications services
(including wireless); communications systems and technology (from
infrastructure to end-user); and transaction-intensive computing. To protect
the AT&T talent base and ensure a smooth transition to this new environment
the Compensation Committee recommended and approved certain special equity
incentive/retention grants to key managers. The committee also recommended
some changes in the 1995 and 1996 compensation plans that will govern
management actions throughout the transition. We will describe these awards
and changes in the appropriate sections of this report. The following report
represents the actions of the committee and the board regarding compensation
paid to the named officers during 1995.
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Compensation Philosophy
The Company's compensation programs are designed to link executives'
compensation to the performance of the Company. For example, the Chairman's
annual bonus and long-term awards are performance-driven incentives and
account for % of his total compensation structure. The other named officers
have approximately % of their total compensation at risk in
performance-driven incentive plans. AT&T targets executive competitive
compensation levels at the mean of a select group of large, market-focused,
progressive companies with whom it competes for senior executive talent. The
Company's competitors for executive talent are not necessarily the same
companies that would be included in a peer group established to compare
shareholder returns because the Company requires skills and perspectives from
a broader range of backgrounds. Thus, the comparable companies for purposes
of executive compensation are not the same as the peer group index used in
the Five-Year Performance Comparison graph included in this proxy statement.
The target executive compensation levels determined with reference to the
comparable market survey sample described above require that the compensation
to each of the Company's top five officers exceeds the annual limit for
deductibility under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). The Company, however, has taken steps to mitigate the
negative impact of this tax provision on the shareholders. For example,
elements of compensation under our annual bonus and long-term incentive plans
qualify for exemption from the limit on tax deductibility as
shareholder-approved performance-driven plans. In addition, we have a salary
and incentive deferral plan which permits compensation deferred under the
plan to be exempt from the limit on tax deductibility.
The committee has developed executive compensation governing principles
that provide guidance in the design and operation of the senior management
compensation plans. These principles address key areas of AT&T senior
executive compensation policy such as the identification of the markets to be
surveyed, and the degree of flexibility of the compensation programs to
facilitate strategic executive hires in global markets.
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The committee also has utilized these governing principles for review of
officer performance. Among other things, these principles ensure that
executive officer compensation is linked to corporate performance levels.
The Company's executive compensation program consists of two key elements:
(1) an annual component, i.e., base salary and annual bonus, and (2) a
long-term component, i.e., performance shares, stock options, and restricted
stock. The policies with respect to each of these elements, as well as the
basis for determining the compensation of the Chairman of the Board and CEO,
Mr. Allen, are described below.
(1) Annual Component: Base Salary and Annual Bonus
Base Salary: Base salaries for executive officers are determined with
reference to a position rate for each officer. These position rates are
determined annually by evaluating the responsibilities of the position and
comparing it with other executive officer positions in the marketplace.
Annual salary adjustments are determined by the Company's performance and the
individual's contribution to that performance. For those executive officers
responsible for particular business units, the financial and non- financial
results (e.g., recognition within respective industries) of their business
units are also considered.
The committee presents the salary recommendations to the board for the
named officers. While there are no individual performance matrices or
pre-established weightings given to each factor, these salary recommendations
are based on performance criteria such as:
(bullet) financial performance with a balance between long- and short-term
earnings and revenue growth,
(bullet) long-term strategic decisions,
(bullet) initiatives to globalize the Company,
(bullet) development of the leadership team,
(bullet) response to a rapidly changing competitive environment, and
(bullet) relative position to salary structure.
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Annual Bonus: The annual bonus for the Chairman and for the rest of the
named officers is (i) % of the Company's "Net Cash Provided by Operating
Activities", for the annual performance period as adjusted, divided by the
total number of named officers with respect to such period, or (ii) a lesser
amount based on factors including the Company's performance relative to
pre-set financial, employee, customer, and individual performance targets.
The pre-set financial target is based on Economic Value Added ("EVA"),
which measures the return on investment that enhances shareholder value.
Employee attitude measures are determined by an index called People Value
Added ("PVA"). There are two components of the measurement: leadership of
people and diversity. Components of this measurement are derived from an
annual employee survey that measures employee perceptions of executive
behavior such as: sharing roles and responsibilities, leadership,
empowerment, and respect for individuals. The customer measure is Customer
Value Added ("CVA") and it measures the relative value that customers
perceive when our products are compared with those of our competitors.
Targets for these measures were reviewed and approved by the committee.
For the first three quarters of 1995 the executive officers had
approximately 90% of their annual bonus tied to a level of achievement of
annual EVA, CVA and PVA targets. In connection with the restructuring
transition effort described above, for the fourth quarter of 1995, the senior
executive incentive plan for annual bonuses was adjusted to provide 50% of
the incentive on the EVA level of achievement and 50% based on successful
accomplishment of the restructuring transition work. The Compensation
Committee approved senior executive performance criteria for the
restructuring transition work to assure accountability for meeting
shareowner, financial, customer, and employee objectives through the
transition.
22
<PAGE>
(2) Long-Term Component: Performance Shares, Stock Options, and Restricted
Stock
To align shareholder and executive officer interests, the long- term
component of the Company's executive compensation program uses grants whose
value is related to the value of Company common shares. Grants of performance
shares, stock options, and restricted stock are made under the AT&T 1987 Long
Term Incentive Program which was approved by the shareholders. Historically,
performance shares and stock options have been granted annually based on
position rate, while restricted stock awards are granted on a selective
basis. The size of annual performance share and stock option award levels are
related to survey results of award levels of comparable companies in the
marketplace. The size of previous grants and the number of shares held by an
executive are not considered in determining annual award levels. Our target
is to deliver approximately half of this long-term incentive value via
performance shares and half via stock options. The awards provide rewards to
executives upon creation of incremental shareholder value and the attainment
of long-term goals.
Performance Shares: Performance shares, which are awards of units
equivalent in value to AT&T common shares, are awarded annually in numbers
based on an executive's position rate. Payout of 0% to 150% of such
performance shares is made in the form of cash and/or AT&T common shares at
the end of a three-year performance period based on the Company's
return-to-equity ("RTE") performance compared with a target. However, if an
executive's annual compensation is subject to the limit on tax deductibility,
under Section 162(m) of the Code, in the last year of a performance period,
then the executive shall receive an Other Stock Unit Award payout, in lieu of
the performance share payout, and the value of the payout to each such
executive for the performance period shall be (i) 0.13% of the Company's "Net
Cash Provided by Operating Activities," as adjusted, for each year in the
performance period, divided by the total number of executives receiving such
payouts, or (ii) a lesser amount, based on factors, including targets for the
Company's RTE established for performance shares for such performance period.
The committee
23
<PAGE>
recognizes that the Company's impending restructure will render obsolete the
performance criteria established for the long-term cycles 1994-1996 and
1995-1997. To address this transition period, and the difficulty of setting
long-term financial targets while the restructure is in process, the
committee has recommended and approved that the criteria for performance
periods 1994-1996 and 1995-1997 are deemed to have been met at the target
level. The opportunity to earn a payout above 100% is eliminated, and all
other terms and conditions of the award continue to apply.
Stock Options and Restricted Stock: Stock options are granted annually to
executive officers also in numbers based on their position rate. Like
performance shares, the magnitude of such awards is determined annually by
the committee. Stock options are granted with an exercise price equal to or
greater than the fair market value of AT&T common shares on the day of grant.
Stock options are exercisable between one and ten years from the date
granted. Such stock options provide incentive for the creation of shareholder
value over the long term since the full benefit of the compensation package
cannot be realized unless an appreciation in the price of Company common
shares occurs over a specified number of years.
Restricted stock awards are granted occasionally to executive officers
under the AT&T 1987 Long Term Incentive Program. Restricted stock is subject
to forfeiture and may not be disposed of by the recipient until certain
restrictions established by the committee lapse. Recipients of restricted
stock are not required to provide consideration other than the rendering of
services or the payment of any minimum amount required by law.
Following the September 20, 1995, restructuring announcement the
Compensation Committee awarded special equity incentive/ retention grants of
stock options and restricted stock units to key employees. These special
grants are a program targeted to retain selected people during a three to
four year transition period of organizational realignment . The size of the
grants ranges from 1.5 to 4.5 times total compensation and the options are
governed by price performance terms. The grants vest after four years
provided that applicable price performance criteria have been satisfied.
These
24
<PAGE>
special grants will replace the normal annual stock option grants these
employees would have received for 1996. Details of these grants for named
officers are on page .
CEO Compensation
During 1995, the Company's most highly compensated officer was Robert E.
Allen, Chairman of the Board and CEO. Mr. Allen's 1995 performance was
reviewed by the committee and discussed with the non-employee directors and
Mr. Allen. The committee also made recommendations to the board concerning
the annual component (base salary and annual bonus) and approved the long-
term component (performance shares, stock options, and restricted stock) of
his compensation. These actions were predicated on the considerations
discussed below.
A substantial portion of Mr. Allen's annual bonus is based on measurements
of success with our three key stakeholders: shareholders, customers, and
employees.
The shareholder element was measured by success relative to an EVA target
for the year of $ billion. Final results for 1995 indicate .
An AT&T performance share payout was made in 1995 based on an aggressive
average RTE target for the performance period from 1992-1994. The actual
average return achieved was % of the RTE target and these results yielded
a payout of % of the performance shares awarded to Mr. Allen at the
beginning of 1992.
During 1995, Mr. Allen also led AT&T in bold strategic actions, including:
(bullet) Initiation of a massive restructuring of the Company into three
stand-alone, global, strategically focused companies;
(bullet) Strengthening of the Company's presence in the wireless arena by
transitioning McCaw Cellular into AT&T Wireless Services, developing
combined packages of wireless and other services, and acquiring
licenses for new wireless services known as personal communication
services, thereby extending AT&T's reach to 80 percent of the U.S.
population;
25
<PAGE>
(bullet) Launching a new business, AT&T Solutions, to offer consulting,
systems integration and outsourcing services to large global
enterprises;
(bullet) Reaching agreement on a new three-year labor contract, a process
considered a model for building on common goals and shared
commitment.
The Compensation Committee
Philip M. Hawley, Chairman
Walter Y. Elisha
Michael I. Sovern
Joseph D. Williams
Thomas H. Wyman
26
<PAGE>
FIVE-YEAR PERFORMANCE COMPARISON
The graph below provides an indicator of cumulative total shareholder returns
for the Company as compared with the S&P 500 Stock Index and a Peer Group(1)
[LINE CHART]
DOLLARS
----------------------------------------------------
AT&T CORP S&P 500 PEER GROUP
1990
1991
1992
1993
1994
1995
Assumes $100 invested on December 31, 1990 in AT&T Common Stock, the S&P 500
Index and Peer Group Common Stock
Total Shareholder Returns Assume Reinvestment of Dividends
Footnote
1. The peer group comprises the largest companies worldwide which compete
against the Company in its two industry segments of information movement and
management, and financial services and leasing. None of the companies
competing with AT&T in information movement and management offers a fully
comparable range of products and services, although each is widely recognized
as a competitor of AT&T. The returns of each company have been weighted
according to their respective stock market capitalization for purposes of
arriving at a peer group average. The members of the peer group are as
follows: American Express Company; Ameritech Corporation; Apple Computer,
Inc.; Bell Atlantic Corporation; BellSouth Corporation; Cable & Wireless
p.l.c.; Digital Equipment Corp.; GTE Corporation; Hewlett-Packard Co.; Intel
Corp.; International Business Machines Corporation; ITT Corporation; L. M.
Ericsson Telefonaktiebolaget; MCI Communications Corp.; Motorola, Inc.; NEC
Corp.; Northern Telecom Limited; NYNEX Corporation; Pacific Telesis Group;
SBC Communications Inc.; Sprint Corporation; Texas Instruments Incorporated;
U S WEST, Inc.; and Xerox Corporation.
27
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation (2) Long-Term Compensation (2)
---------------------------------- -----------------------------------
Awards Payouts
---------------------- ----------
Other
Annual Restricted All Other
Compen- Stock LTIP Compen-
Name and sation(3) Award(s)(4) Options/ Payouts(5) sation(6)
Principal Position (1) Year Salary ($) Bonus ($) ($) ($) SARs (#) ($) ($)
- ------------------------ ---- ---------- --------- --------- ----------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert E. Allen
Chairman of the Board
and CEO
</TABLE>
28
<PAGE>
Footnotes
1. Includes Chairman of the Board and Chief Executive Officer and the four
other most highly compensated executive officers as measured by salary and
bonus.
2. Compensation deferred at the election of named officers is included in the
category (e.g., bonus, LTIP payouts) and year it would have otherwise been
reported had it not been deferred.
3. Includes (a) payments of above-market interest on deferred compensation,
(b) dividend equivalents paid with respect to long-term performance shares
prior to end of three-year performance period, and other earnings on long-
term incentive compensation paid during the year, (c) tax payment
reimbursements, and (d) the value of personal benefits and perquisites.
4. On December 31, 1995 Mr. Allen held an outstanding grant of restricted
stock, and Messrs. , , , and held outstanding grants of restricted
stock units. Mr. Allen held shares with a value of $ . On
September 25, 1995, an award of restricted stock units was granted to
Messrs. , , , and as part of the Company's special equity
incentive/retention program in the amounts of units, units,
units, and units, respectively, with a value at December 31,
1995 of $0,000,000, $000,000, $000,000, and $0,000,000, respectively.
These grants vest four years after the date of grant and carry stringent
penalties for competition and other adverse activities against the
Company. The value at grant of these units is reflected in the table
above.
5. Includes distribution in 1995 to Messrs. Allen, , , , and of
performance shares whose three-year performance period ended December 31,
1994. The value of ,000 AT&T Restricted Shares which vested in 1995 is
also reflected in the payout for that year for Mr. Allen.
6. In 1995, includes (a) Company contributions to savings plans (Mr. Allen
$0,000; Mr. $ ; Mr. $ ; Mr. $ ; and Mr. $ ),
(b) dollar value of the benefit of premiums paid for split-dollar life
insurance policies (unrelated to term life insurance coverage) projected
on an actuarial basis (Mr. Allen $0,000, Mr. $ ; Mr. $ ; Mr.
$ ; and Mr. $ ), and (c) payments equal to lost Company
savings match caused by IRS limitations (Mr. Allen $ ; Mr. $ ; Mr.
$ ; Mr. $ , and Mr. $ ).
29
<PAGE>
AGGREGATED OPTION/STOCK APPRECIATION RIGHTS
("SAR") EXERCISES IN 1995 AND YEAR-END VALUES
<TABLE>
<CAPTION>
Unexercised Value of
Options/SARs In-the-Money
at Year End Options/SARs
(#) at Year End ($)
------------- ---------------
Shares Acquired Value Realized Exercisable/ Exercisable/
Name (1) on Exercise (#) ($) Unexercisable Unexercisable
- ------------------- --------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C>
Robert E. Allen ......
</TABLE>
LONG-TERM INCENTIVE PLANS--AWARDS IN 1995
<TABLE>
<CAPTION>
Estimated Future Payouts
of Performance Shares
Under Non-Stock Price
Performance Based Plan (2)
Number of Period Until ------------------------
Performance Maturation Target
Name (1) Shares or Payout (#)
- ------------------- ----------- ------------ -----
<S> <C> <C> <C>
Robert E. Allen ......
</TABLE>
30
<PAGE>
Footnotes
1. Includes Chairman of the Board and Chief Executive Officer and the four
other most highly compensated executive officers as measured by salary and
bonus.
2. In January 1995, the Performance Shares listed in the table were awarded.
Normally, the payout of awards is tied to achieving specified levels of
return-to-equity ("RTE"). The target amount will be earned if 100% of the
targeted RTE rate is achieved. At its December 1995 meeting, the
Compensation Committee recommended and approved that the performance
criteria for the 1995-1997 performance cycle be deemed to have been met at
the target level. This action was taken in acknowledgment that the
Company's restructuring had rendered the original performance criteria
inapplicable and of the difficulty of establishing revised criteria while
the restructuring was in progress. Awards will be distributed as common
stock of the Company, or as cash in an amount equal to the value of those
shares, or partly in common stock and partly in cash. However, if an
executive's annual compensation is subject to the limit on tax
deductibility, under Section 162(m) of the Code, in the last year of a
performance period, then the executive shall receive an Other Stock Unit
Award payout, in lieu of the performance share payout, and the value of
the payout to each such executive for the performance period shall be (i)
0.13% of the Company's "Net Cash Provided by Operating Activities," as
adjusted, for each year in the performance period, divided by the total
number of executives receiving such payouts, or (ii) a lesser amount,
based on factors, including targets for the Company's RTE established for
performance shares for such performance period.
31
<PAGE>
OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------------
Number of
Shares Grant
Underlying % of Total Date
Options Options Exercise Present
Granted (2) Granted to Price Expiration Value (3)
Name (1) # Employees ($/Sh) Date ($)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert E. Allen ......
</TABLE>
Footnotes
1. Includes Chairman of the Board and Chief Executive Officer and the four
other most highly compensated executive officers as measured by salary and
bonus.
2. Includes the regular annual grant of options as well as a special equity
incentive/ retention grant following the announcement of the Company's
intended restructuring. Options granted 1/3/95 become exercisable to the
extent of one-third of the grant on 1/3/96, 1/3/97, and 1/3/98
respectively. Options granted 9/25/95 become exercisable four years after
the date of grant.
32
<PAGE>
3. In accordance with Securities and Exchange Commission rules, the
Black-Scholes option pricing model was chosen to estimate the grant date
present value of the options set forth in this table. The Company's use of
this model should not be construed as an endorsement of its accuracy at
valuing options. All stock option valuation models, including the
Black-Scholes model, require a prediction about the future movement of the
stock price. The following assumptions were made for purposes of
calculating the Grant Date Present Value: for the January grant, an option
term of 7 years, volatility at .1769, dividend yield at 2.77%, interest
rate at 7.83%, and a 3% per year discount for each year in the vesting
period for risk of forfeiture over the 3-year vesting schedule, and for
the September grant, an option term of 7 years, volatility at .1572,
dividend yield at 2.66%, interest rate at 6.40%, and a 3% per year
discount for each year in the vesting period for risk of forfeiture over
the 4-year vesting schedule. The real value of the options in this table
depends upon the actual performance of the Company's stock during the
applicable period.
33
<PAGE>
PENSION PLANS
The Company maintains the AT&T Management Pension Plan, a non-contributory
pension plan which covers all management employees, including Messrs. Allen,
, , , and . The normal retirement age under this plan is 65; however,
retirement before age 65 can be elected under certain conditions.
Under the AT&T Management Pension Plan, annual pensions are computed on an
adjusted career average pay basis. The adjusted career average pay formula is
the sum of (a) 1.6% of the average annual pay for the six years ending
December 31, 1992, times the number of years of service prior to January 1,
1993, plus (b) 1.6% of pay subsequent to December 31, 1992. Only the basic
salary is taken into account in the formula used to compute pension amounts.
Federal laws place limitations on pensions that may be paid from the
pension trust related to the AT&T Management Pension Plan. Pension amounts
based on the AT&T Management Pension Plan formula which exceed the applicable
limitations will be paid as an operating expense.
The Company also maintains the AT&T Non-Qualified Pension Plan. Under the
plan, annual pensions for Messrs. Allen, , , , and , and other senior
managers are computed based primarily on actual annual bonus awards under the
Company's Short Term Incentive Plan. Pension benefits under this plan will
generally commence at the same time as benefits under the AT&T Management
Pension Plan. The annual pension amounts payable under this plan are equal to
the greater of the amounts computed under the Basic or Alternate Formula
described below.
Basic Formula:
The sum of (a) 1.5% of the average of the actual annual bonus awards for
the three-year period ending December 31, 1989, times the number of years
of service prior to January 1, 1990, plus (b) 1.6% of the actual annual
bonus awards subsequent to December 31, 1989.
Alternate Formula:
The excess of (a) 1.7% of the adjusted career average pay, over (b)
34
<PAGE>
0.8% of the covered compensation base, times years of service to
retirement, minus the benefit calculated under the AT&T Management Pension
Plan formula (without regard to limitations imposed by the Internal
Revenue Code). For purposes of this formula, adjusted career average pay
is determined by dividing the sum of the employee's total adjusted career
income by the employee's actual term of employment at retirement. Total
adjusted career income is the sum of (A) and (B), where (A) is the sum of
(i) the employee's years of service prior to January 1, 1993, multiplied
by the employee's average annual compensation (within the meaning of the
AT&T Management Pension Plan) for the three-year period ending December
31, 1992, without regard to the limitations imposed by the Internal
Revenue Code, plus (ii) the employee's years of service prior to January
1, 1990, multiplied by the average of the employee's actual annual bonus
awards for the three-year period ending December 31, 1989, and (B) is the
sum of the employee's actual compensation (within the meaning of the AT&T
Management Pension Plan) after December 31, 1992, without regard to the
limitations imposed by the Internal Revenue Code, and actual annual bonus
awards subsequent to December 31, 1989. The covered compensation base used
in this formula is the average of the maximum wage amount on which an
employee was liable for social security tax for each year beginning with
1961 and ending with 1995. In 1995, the covered compensation base was
$25,800.
In 1993, an Alternative Minimum Formula ("AMF"), applicable to active
senior managers with five years of service who are participants in the AT&T
Non-Qualified Pension Plan as of December 31, 1993, was established. The
annual pension amount payable under the AMF is equal to the greater of the
amounts computed under formulas A and B plus an additional percent increase
factor as described below:
35
<PAGE>
Formula A:
The sum of (a) 1.5% of the average of the total compensation for the
three-year period ending December 31, 1992, times the number of years of
service prior to January 1, 1993, plus (b) 1.6% of the total compensation
from January 1, 1993, to December 31, 1993. For purposes of this Formula
A, total compensation shall be basic salary plus actual annual bonus
awards. The pension amounts resulting from this Formula A will be reduced
to reflect retirements prior to age 55.
Formula B:
The excess of (a) 1.7% of the adjusted career average pay, over (b) 0.8%
of the covered compensation base, times years of service to December 31,
1993. For purposes of this Formula B, adjusted career average pay is
determined by dividing the sum of the employee's total adjusted career
income used for purposes of Formula A, by the employee's actual term of
employment to December 31, 1993. The covered compensation base used in
this Formula B is the average of the maximum wage amounts on which an
employee was liable for social security tax for each year beginning with
1959 and ending with 1993. In 1993, the covered compensation base was
$22,800. The pension amounts resulting from this Formula B will be reduced
to reflect retirements prior to age 60.
An additional percent increase factor based on age and service is applied
to the pension amount resulting from the higher of Formula A or B. The total
AMF pension results in a fixed benefit and such amount is reduced by the
amount payable under the AT&T Management Pension Plan. It is anticipated that
after 1997, a senior manager's normal pension increases resulting from
additional age and service as well as possible future pension plan amendments
could cause the regular accrued pension benefit to exceed the fixed AMF
benefit. Pensions resulting from the AMF will be payable under the AT&T
Non-Qualified Pension Plan.
As part of their employment agreements, the Company entered into a
supplemental pension arrangement with Messrs. and
36
<PAGE>
. Pursuant to his arrangement, if Mr. employment is terminated on or
after age 55 for any reason other than Company-initiated termination for
"cause," as defined, he will be entitled to immediate pension benefits based
on the higher of (1) a pension determined by his actual net credited service
and calculated under the then-existing Company qualified and non-qualified
pension formulas, but without reference to age and service eligibility
requirements, or (2) a fixed minimum monthly pension schedule which ranges
from $ at age 55 to $ at age 65. Pursuant to Mr. arrangement,
if employment is terminated for any reason other than Company-initiated
termination for "cause," as defined, after completion of eight years of
Company service, he will be entitled to immediate pension benefits based on
his actual net credited service and calculated under the then- existing
Company qualified and non-qualified pension formulas, but without reference
to age and service eligibility requirements. Pension benefits payable under
these arrangements will be paid out of the Company's operating income, and
will be offset by all amounts actually received by Messrs. and under
any other Company qualified or non-qualified retirement plan or arrangement.
In addition, Messrs. and will be entitled to certain other
post-retirement benefits that are generally made available to retired
executive officers and service pension-eligible senior managers from time to
time.
In the event Mr. employment is terminated by the Company for any reason
other than for "cause," as defined, prior to age 55, he will be eligible for a
severance benefit equal to 200% of his then base salary under the provisions
of his employment agreement. The year 1996 is the final year of a three-year
severance agreement with Mr. . In the event Mr. employment is terminated
by the Company for any reason other than for "cause," as defined, anytime
prior to August 9, 1996, he will be eligible for a severance benefit which
ranges from 200% to 100% of base salary.
Senior managers (including Messrs. and ) and certain other management
employees who are hired at age 35 or over are covered by a supplemental AT&T
Mid-Career Pension Plan. For specified managers retiring with at least five
years in level, the plan provides additional pension credits equal to the
difference between age
37
<PAGE>
35 and their maximum possible years of service attainable at age 65, but not
to exceed actual net credited service, at approximately one-half the rate in
the AT&T Management Pension Plan.
Pension amounts under either the AT&T Management Pension Plan formula, the
AT&T Non-Qualified Pension Plan, or the AT&T Mid-Career Pension Plan are not
subject to reductions for social security benefits or other offset amounts.
If Messrs. Allen and continue in the positions given above and retire at
the normal retirement age of 65, the estimated annual pension amounts payable
under the AT&T Management Pension Plan formula and the AT&T Non-Qualified
Pension Plan would be $ , and $ , respectively. Mr. Pelson
announced his retirement effective the second quarter of 1996 and his pension
at such retirement would approximate $000.000. For Messrs. and , the
estimated annual pension amounts payable under the AT&T Management Pension
Plan formula, the AT&T Non-Qualified Pension Plan, and the AT&T Mid-Career
Pension Plan would be $ and $ , respectively. Amounts shown are
straight- life annuity amounts not reduced by a joint and survivorship
provision which is available to these officers named.
The Company has reserved the right to purchase annuity contracts to
satisfy its unfunded obligations to any of these officers under the AT&T
Non-Qualified Pension Plan. In the event the Company purchases an annuity
contract for any officer, the pension payments for such officer will vary
from that set forth above. Then there would be a tax gross-up payment to the
officer and annuity benefits paid by the annuity provider will be reduced to
offset the tax gross-up payment. The after-tax pension benefit will be the
same as the after-tax benefit the participant would otherwise have received
under the AT&T Non-Qualified Pension Plan.
OTHER INFORMATION
A Directors' and Officers' Liability Policy was renewed effective July 1,
1995, with Lloyds of London and other carriers. The policy insures AT&T for
certain obligations incurred in the indemnification of its directors and
officers under New York law or under contract and
38
<PAGE>
insures directors and officers when such indemnification is not provided by
AT&T. The one-year policy's cost is $1,416,000.
The cost of soliciting proxies in the accompanying form will be borne by
the Company. In addition to solicitations by mail, a number of regular
employees of the Company and of its subsidiaries may solicit proxies in
person or by telephone. The Company also has retained Morrow & Co. to aid in
the solicitation of proxies, at an estimated cost of $18,000 plus
reimbursement of reasonable out-of- pocket expenses.
The above notice and proxy statement are sent by order of the board of
directors.
Marilyn J. Wasser
Vice President-Law and
Secretary
Dated: February 27, 1996
39
<PAGE>
(AT&T LOGO)
PROXY
AT&T Corp.
32 Avenue of the Americas, New York, NY 10013
This proxy is solicited on behalf of
the Board of Directors for the Annual Meeting on April 17, 1996.
The undersigned hereby appoints R.E. Allen, B.K. Johnson and each of them,
proxies, with powers the undersigned would possess if personally present,
and with full power of substitution, to vote all common shares of the
undersigned in AT&T Corp. at the annual meeting of shareholders to be held
at James L. Knight International Center in Miami, Florida, at 9:30 a.m. on
April 17, 1996, and at any adjournment thereof, upon all subjects that may
properly come before the meeting, including the matters described in the
proxy statement furnished herewith, subject to any directions indicated on
the other side of this card. If no directions are given, the proxies will
vote for the election of all listed nominees, in accord with the Directors'
recommendations on the other subjects listed on the other side of this card
and, at their discretion, on any other matter that may properly come before
the meeting. (If you have indicated any changes or voting limitations on
this side of the card, please mark the "comment" box on the other side.)
This card also provides voting instructions for shares held in the dividend
reinvestment plan and, if registrations are identical, shares held in the
various employee stock purchase and savings plans as described in the proxy
statement. Your vote for the election of Directors may be indicated on the
other side. Nominees are-- .
Please sign on the other side and return promptly to P.O. Box 8872,
Edison, NJ 08818-9241. If you do not sign and return a proxy, or attend the
meeting and vote by ballet, your shares cannot be voted.
Comments:
(If you have written in the above space, please mark the "comment" box on the
other side of this card.)
<PAGE>
Please mark your vote with an X.
Directors recommend a vote "FOR"
FOR ALL WITHHELD
nominees FROM ALL
nominees
A. Election of
Directors
(page 0) ( ) ( )
FOR ALL EXCEPT the following nominees
FOR AGAINST ABSTAIN
B. Ratification
of Auditors
(page 00) ( ) ( ) ( )
FOR AGAINST ABSTAIN
C. AT&T 1996 Employee ( ) ( ) ( )
Stock Purchase
Plan (page 00)
Directors recommend a vote "AGAINST"
the shareholder proposals regarding
FOR AGAINST ABSTAIN
SIGNATURE(S) DATE , 1996
Please sign this proxy as name(s) appears above and return it promptly
whether or not you plan to attend the meeting. If signing for a corporation
or partnership or as agent, attorney or fiduciary, indicate the capacity
in which you are signing. If you do attend the meeting and decide to vote by
ballot, such vote will supersede this proxy.
