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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
BELL ATLANTIC CORPORATION
(Name of Registrant as Specified in Its Charter)
BELL ATLANTIC CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(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 registrations statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(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.
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PROXY STATEMENT
<TABLE>
<CAPTION>
CONTENTS PAGE
<S> <C>
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Voting Procedures 1
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Election of Directors 1
- -Item A on Proxy Card
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Ratification of Independent Accountants 5
- -Item B on Proxy Card
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Amendments to the Bell Atlantic Stock Incentive Plan 5
- -Item C on Proxy Card
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Proposals of Shareowners 7
- -Items D, E, and F on Proxy Card
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Other Business 9
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Executive Compensation 9
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Submission of Shareowner Proposals and Director 17
Nominations for 1995 Annual Meeting
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Proxy Solicitation 17
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</TABLE>
- -Items to be voted on at the Annual Meeting.
BELL ATLANTIC CORPORATION
1717 ARCH STREET, PHILADELPHIA, PA 19103
<PAGE> 3
VOTING PROCEDURES-------------------------------------------------------------
This proxy statement and the accompanying proxy card or proxy/voting
instruction card (either, the "proxy card") are being mailed beginning on or
about March 8, 1994, to holders of record of common stock, par value $1.00 per
share, of Bell Atlantic Corporation (the "Company" or "Bell Atlantic") in
connection with the solicitation of proxies by the Board of Directors for the
Company's 1994 Annual Meeting of Shareowners. The record date for the Annual
Meeting is the close of business on March 1, 1994. On that date, approximately
436,210,000 shares of common stock were outstanding, each of which is entitled
to one vote at the Annual Meeting.
When a proxy card is returned properly signed, the shares represented will be
voted in accordance with the shareowner's directions. If the proxy card is
signed and returned without directions, the shares will be voted as recommended
by the Directors. A shareowner giving a proxy may revoke it at any time before
it is voted at the Annual Meeting, by written notice to the Secretary, by
submission of a proxy bearing a later date, or by casting a ballot at the Annual
Meeting.
The holders of one-third of the shares issued and outstanding and entitled to
vote, present in person or represented by proxy, will constitute a quorum for
the transaction of business. Assuming a quorum is present, the twelve nominees
for Director receiving the highest number of votes will be elected. For Items B,
D, E and F, the affirmative vote of a majority of shares present in person or by
proxy and voting on a matter is necessary for approval. For Item C, the proposal
to amend the Stock Incentive Plan, Securities and Exchange Commission rules
specify that a majority of shares present in person or by proxy and entitled to
vote is necessary for approval. Shares represented by proxies which are marked
"abstain" for Items B, D, E, and F on the proxy card and proxies which are
marked to deny discretionary authority on other matters will not be included in
the vote totals for those items and, therefore, will have no effect on the vote.
Shares represented by proxies which are marked "abstain" for Item C will have
the same effect as a vote "against" Item C. Where brokers are prohibited from
exercising discretionary authority for beneficial owners who have not provided
voting instructions (commonly referred to as "broker non-votes"), those shares
will not be included in the vote totals.
If a shareowner is a participant in the Company's Dividend Reinvestment and
Stock Purchase Plan ("DRSPP"), the proxy card covers the number of full shares
registered in the name of the Company in the participant's plan account and will
serve as voting instructions for such shares. If a shareowner is a participant
in the Company's 1976 Employee Stock Ownership Plan ("1976 ESOP"), Savings Plan
for Salaried Employees, or Savings and Security Plan (Non-Salaried Employees),
the proxy card will similarly serve as voting instructions for the trustees of
those Plans, if accounts are registered in the same name. Shares in DRSPP and
the 1976 ESOP cannot be voted unless the proxy card is signed and returned. If
proxy cards representing shares in the two Savings Plans are not returned, those
shares will be voted in the same proportion as the shares for which signed proxy
cards are returned by other participants in those Plans.
ELECTION OF DIRECTORS----------------------------------------------------------
ITEM A ON PROXY CARD
Each of the twelve nominees named on the following pages has been nominated
for election as a Director of the Company to serve until the 1995 Annual Meeting
of Shareowners, or until his or her successor has been duly elected and
qualified. Each nominee is currently a Director. If so authorized, the persons
named in the accompanying proxy card intend to vote for the reelection of each
nominee. Shareowners who do not wish their shares to be voted for a particular
nominee may so indicate in the space provided on the proxy card.
If one or more of the nominees should become unavailable to serve at the time
of the Annual Meeting, the shares represented by proxy will be voted for the
remaining nominees and for any substitute nominee or nominees designated by the
Board of Directors. If no substitute is designated, the size of the Board may be
reduced. The Board knows of no reason why any of the nominees will be
unavailable to serve.
There follows a brief description of each nominee's principal occupation and
business experience, age, and directorships held in other corporations.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES
IDENTIFIED ON THE FOLLOWING PAGES.
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NOMINEES
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WILLIAM W. ADAMS, Chairman of the Board, Armstrong World
Industries, Inc., since 1993; President and Chairman of the
Board (1988-1993); Executive Vice President (1982-1988).
Director of Bell Atlantic since 1993. Director of Bell
Atlantic - Pennsylvania, Inc. (1986-1993). Age 59.
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THOMAS E. BOLGER, Chairman of the Executive Committee of the
Board of Directors, Bell Atlantic Corporation, since 1983;
Chairman of the Board (January-June 1989); Chairman of the
Board and Chief Executive Officer (1983-1988). Director of
Ashland Oil, Inc. Age 66.
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FRANK C. CARLUCCI, Chairman, The Carlyle Group (merchant
banking), since 1993; Vice Chairman (1989-1993). Secretary of
Defense, United States of America (1987-1989). Director of
Ashland Oil, Inc.; BDM International, Inc.; CB Commercial Real
Estate Group, Inc.; Connecticut Mutual Life Insurance Co.; East
New York Savings Bank; General Dynamics Corporation; Kaman
Corporation; Neurogen Corporation; Northern Telecom Ltd.; The
Quaker Oats Co.; SunResorts Ltd.; The Upjohn Co.; Westinghouse
Electric Corporation. Director of Bell Atlantic since 1989. Age
63.
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WILLIAM G. COPELAND, Chairman of the Board, Providentmutual
Holding Company (insurance), since 1993; Chairman of the Board,
Continental American Life Insurance Company of Delaware
(1991-1993); Chairman of the Board and Chairman of the
Executive Committee (1988-1990); Chairman of the Board,
President and Chief Executive Officer (1984-1988). Director of
Bank of Delaware Corporation; PNC Bank Corp. Director of Bell
Atlantic since 1983. Age 68.
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JAMES H. GILLIAM, JR., Executive Vice President and General
Counsel, Beneficial Corporation (financial services), since
1992; Executive Vice President, General Counsel and Secretary,
and Member of the Executive Committee (1989-1991); Senior Vice
President, General Counsel and Secretary (1987-1989). Director
of Beneficial Corporation; Beneficial National Bank; Delmarva
Power & Light. Trustee of Howard Hughes Medical Institute.
Director of Bell Atlantic since 1989. Age 48.
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THOMAS H. KEAN, President, Drew University, since 1990.
Governor, State of New Jersey (1982-1990). Director of Amerada
Hess Corporation; Beneficial Corporation; Fiduciary Trust
Company International; United Healthcare Corporation. Director
of Bell Atlantic since 1990. Age 58.
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JOHN C. MAROUS, JR., Retired Chairman, Westinghouse Electric
Corporation, since 1990; Chairman and Chief Executive Officer,
Westinghouse Electric Corporation (1988-1990). Director of
Connecticut Mutual Life Insurance Company; Consolidated Rail
Corporation; Mellon Bank Corporation. Director of Bell Atlantic
since 1983. Age 68.
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JOHN F. MAYPOLE, Managing Partner, Peach State Real Estate
Holding Company, and Consultant, since 1984. Director of
Avondale Incorporated; Blodgett Corporation; Briggs Industries,
Inc.; Dan River, Inc.; Davies, Turner & Co.; Igloo Corporation.
Director of Bell Atlantic since 1983. Age 54.
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THOMAS H. O'BRIEN, Chairman and Chief Executive Officer, PNC
Bank Corp., since 1992; Chairman, President and Chief Executive
Officer (1988-1991); President and Chief Executive Officer
(1985-1988). Director of PNC Bank Corp.; Hilb, Rogal and
Hamilton Company. Director of Bell Atlantic since 1987. Age 57.
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ROZANNE L. RIDGWAY, Co-Chair, The Atlantic Council of The
United States (a private foreign policy institute), since 1993;
President (1989-1992). Assistant Secretary of State for Europe
and Canada (1985-1989). Director of The Boeing Company;
Citicorp and Citibank; RJR Nabisco; 3M Company; Sara Lee
Corporation; Union Carbide Corp. Director of Bell Atlantic
since 1990. Age 58.
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RAYMOND W. SMITH, Chairman of the Board of Directors and Chief
Executive Officer, Bell Atlantic Corporation, since 1989;
President and Chief Executive Officer (January-June, 1989);
President and Chief Operating Officer (1988). Director of
CoreStates Financial Corporation; USAir Group, Inc. Director of
Bell Atlantic since 1985. Age 56.
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SHIRLEY YOUNG, Vice President, Consumer Market Development,
General Motors Corporation, since 1988. Chairman, Grey
Strategic Marketing, Inc. (1988-1990); President (1983-1988).
Director of Promus Companies; Consultant Director of Dayton
Hudson Corporation. Director of Bell Atlantic since 1986. Age
58.
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MEETINGS OF BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors (the "Board") held eleven meetings in 1993. The Board
has established an Executive Committee, an Audit Committee, a Human Resources
Committee, a Finance Committee, and a Nominating Committee.
The Executive Committee, which met two times in 1993, has the authority during
the intervals between meetings of the Board to exercise the powers of the Board,
except for certain powers reserved exclusively to the Board. Messrs. Bolger
(Chair), Copeland, Kean, Marous, Maypole, and Smith are the current members of
the Committee.
The Audit Committee, which met five times in 1993, is responsible for
periodically reviewing the objectivity and results of audit programs of the
Company, recommending to the Board each year the firm of independent accountants
for appointment as auditors for the Company, meeting with the auditors to
consider the scope of their activities and findings, meeting with appropriate
officers of the Company to consider the Company's internal audit program and
findings, overseeing the Company's Integrity and Ethics Compliance Program, and
considering such other matters relating to the effectiveness of the internal and
external audits of the accounts of the Company as the Committee may determine to
be warranted. Messrs. Copeland (Chair), Adams, and Gilliam, and Ms. Ridgway are
the current members of the Committee.
The Human Resources Committee, which met five times in 1993, is responsible
for overseeing the management of human resources activities of the Company,
including the determination of compensation for senior management and the design
of pension, savings and certain other employee benefit plans. Messrs. Marous
(Chair), Kean, and Maypole, and Ms. Young are the current members of the
Committee.
The Finance Committee, which met five times in 1993, is responsible for making
recommendations to the Board concerning investment policy and methods of
financing the operations of the Company and its subsidiaries, overseeing
investments of the Company's employee benefit plans, and assisting the Company
in the development and evaluation of new business ventures. Messrs. Maypole
(Chair), Bolger, Carlucci, Copeland, Kean, and O'Brien are the current members
of the Committee.
The Nominating Committee, which met two times in 1993, is responsible for
recommending candidates for nomination to the Board and reviewing and making
recommendations regarding compensation of Directors who are not employees of the
Company ("Outside Directors"). The Committee is authorized to consider nominees
recommended by shareowners. Shareowners who wish to propose director candidates
for consideration by the Committee may do so by writing to the Secretary, giving
the candidate's name, biographical data and qualifications. Messrs. Kean
(Chair), Copeland, Gilliam, and Maypole, and Ms. Young are the current members
of the Committee.
The current Directors attended 93% of the Board and Committee meetings in the
aggregate in 1993.
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COMPENSATION OF OUTSIDE DIRECTORS
All Outside Directors receive an annual retainer of $27,000 and a fee of
$1,250 for each Board and Committee meeting attended. Committee chairpersons are
paid an additional annual retainer of $5,000. Directors who are employees
receive no remuneration for serving as members of the Board or as members of
Committees of the Board.
Pursuant to the Bell Atlantic Stock Compensation Plan for Outside Directors,
each individual who is in active service as an Outside Director of the Company
on the first business day of each July receives a grant of a number of shares of
Company stock having a value equal to $5,000.
Directors may elect to defer the receipt of all or a part of their fees and
retainers under the Bell Atlantic Deferred Compensation Plan for Outside
Directors ("Outside Directors' Deferral Plan"). Amounts so deferred may be
allocated to a cash deferral account, which earns interest, compounded monthly,
at a rate determined by reference to 10-year United States Treasury notes, or to
a stock deferral account, which is credited with share equivalents of Company
stock having a value equal to the amount deferred, and which accrues additional
shares of Company stock based on dividends paid, or divided between the two
accounts. Outside Directors also are furnished life insurance coverage and
business-related travel accident insurance. The aggregate premiums paid by the
Company for such insurance coverage in 1993 were approximately $5,200.
The Bell Atlantic Retirement Plan for Outside Directors provides retirement
benefits for Outside Directors. To be eligible for a benefit, a Director must
have served for an aggregate of five years as an Outside Director on the Board
of the Company or on the board of directors of a subsidiary telephone company.
The normal benefit is an annual amount equal to 10% of the annual Board retainer
payable to a Director at the date of retirement, multiplied by the Director's
aggregate years of service as an Outside Director up to a maximum of 10 years. A
Director is eligible to receive a retirement benefit at the later of age 65 or
the date of retirement. Benefits beginning before age 65, or deferred to age 70,
are actuarially adjusted.
In 1989, the Board adopted the Bell Atlantic Corporation Directors' Charitable
Giving Program, pursuant to which the Company is obligated to contribute an
aggregate of $500,000 to one or more charitable organizations or educational
institutions designated by directors who meet certain eligibility requirements,
upon the director's death, either while serving on the Board or after retirement
from the Board. Designated donees are subject to Company review. The Program was
discontinued, effective for Directors elected after 1992.
RATIFICATION OF INDEPENDENT ACCOUNTANTS-----------------------------------------
ITEM B ON PROXY CARD
The Board of Directors, upon recommendation of the Audit Committee, has
reappointed the firm of Coopers & Lybrand, Certified Public Accountants, as
independent accountants to conduct an audit of the accounts of the Company for
the year 1994. If the appointment is not ratified by shareowners, the Audit
Committee may reconsider its recommendation. A representative of Coopers &
Lybrand is expected to be present at the Annual Meeting, will have an
opportunity to make a statement, and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF COOPERS &
LYBRAND AS INDEPENDENT ACCOUNTANTS FOR THE YEAR 1994.
AMENDMENTS TO THE BELL ATLANTIC STOCK INCENTIVE PLAN--------------------------
ITEM C ON PROXY CARD
At Bell Atlantic's 1985 Annual Meeting, shareowners of the Company voted to
approve the Bell Atlantic Stock Incentive Plan (the "Stock Incentive Plan" or
the "Plan"), which consists of a stock option plan and a performance share plan.
Shareowners are being asked to approve amendments to the Plan which would: (a)
eliminate a provision from the stock option plan which prohibited the grant of
options after January 21, 1995; (b) provide a limit on the number of options
that may be granted to any individual under the stock option plan; and (c)
increase the number of shares that are authorized to be issued under the Plan.
STOCK OPTION PLAN ADMINISTRATION AND PARTICIPATION
Under the stock option plan, approximately 45 senior managers, 150 executive
managers and 700 middle managers were granted options to purchase Company stock
in 1993. The grant of stock options is administered by the Human Resources
Committee of the Board of Directors (the "HRC"). The HRC selects those employees
of the Company to whom options are granted, the times at which options are
granted and expire, and the number of shares which may be purchased upon the
exercise of options. The purchase price of stock subject to options is equal to
the market value of the stock on the date the option is granted.
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Options may be granted as incentive stock options ("ISOs"), which are intended
to qualify for favorable federal tax treatment, or as nonqualified options.
Options may have a term of up to ten years as determined by the HRC. The HRC, in
its discretion, may permit the purchase price to be paid in cash, in Company
stock, or in a combination of cash and stock. The stock option plan provides for
"reload" options to be granted at the discretion of the HRC. In the event that
an eligible optionee tenders previously owned Company shares to exercise options
which include the "reload" feature, such individual will automatically be
granted a number of nonqualified "reload" options equal to the number of shares
tendered. "Reload" options have an exercise price equal to the fair market value
on the date of such exercise, and will expire on the date on which the options
then exercised would have expired.
TAX CONSEQUENCES
There are no tax consequences to the optionee or the Company upon the grant of
a nonqualified stock option or an ISO under the Plan. On exercising a
nonqualified stock option, the optionee realizes ordinary income to the extent
the market value of the stock exceeds the exercise price, and the Company may
claim a tax deduction of like amount. On exercising an ISO, the optionee
realizes no ordinary income for tax purposes, and the Company receives no tax
deduction. Upon sale of ISO shares more than one year after the date of
exercise, the difference between the proceeds of sale and the exercise price is
a long-term capital gain (or loss) for the optionee. Such a sale within one year
of exercising an ISO, however, is a "disqualifying disposition" resulting in
ordinary income for the optionee on the spread between the exercise price and
the lesser of the market value on exercise date or the proceeds of the sale, and
the Company may claim a deduction of like amount. If the proceeds of sale from
the disqualifying disposition exceed the market value on the date of exercise,
the optionee realizes a short-term capital gain on that excess, but the excess
is not deductible by the Company. In the absence of a disqualifying disposition,
the spread between the exercise price of an ISO and the market value of the
stock on the date of exercise is a tax preference which, under certain
circumstances, is subject to alternative minimum tax.
AMENDMENTS
The Plan may not be amended, without shareowner approval, to: (a) increase the
aggregate number of shares available for distribution under the Plan (except for
adjustments to reflect stock dividends, stock splits or other
recapitalizations); (b) decrease the purchase price of option stock; (c) extend
the period during which options or performance shares may be granted; (d) extend
the period during which options may be exercised; or (e) materially increase the
benefits available under the Plan.
The original terms of the Plan provided that no options would be granted after
January 21, 1995. In January 1994, the HRC amended the Plan, subject to approval
by the Company's shareowners, to eliminate this provision. The HRC did not
remove a similar restriction contained in the performance share plan. Therefore,
authority to make grants under the performance share plan will expire in
December 1994. Outstanding grants under the performance share plan will continue
to be distributed to participants at the end of applicable performance periods
in accordance with the terms of the Plan.
The HRC amended the stock option plan, subject to shareowner approval, to
provide that no individual may be granted, in any calendar year, a number of
options on shares of a class of the Company's common stock that is more than
one-half of one percent of the shares of that class outstanding on the first day
of that year. The purpose of this amendment is to allow the Company to qualify
for certain tax deductions for compensation paid to its executive officers.
Finally, the HRC amended the Plan, subject to shareowner approval, to increase
the number of shares authorized to be issued under the Plan from 14 million to
25 million.
1993 GRANTS AND STOCK PRICE INFORMATION
The number of options granted in 1993 to the five most highly compensated
individuals is set forth in Column (e) of the Summary Compensation Table on page
12. The following table sets forth the number of options granted in 1993 to the
following groups:
<TABLE>
<S> <C>
All Executive Officers 131,880
All Other Employees 767,984
</TABLE>
The closing price per share of the Company's common stock on February 15, 1994
as reported on the New York Stock Exchange Composite Tape was 54 7/8.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
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PROPOSALS OF SHAREOWNERS------------------------------------------------------
ITEM D ON PROXY CARD
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue, N.W.,
Suite 215, Washington, D.C. 20037, who owns 120 shares of the Company's common
stock, has stated that she intends to submit the following proposal at the
Annual Meeting:
"RESOLVED: That the shareholders recommend that the Board take the necessary
steps that Bell Atlantic specifically identify by name and corporate title in
all future proxy statements those executive officers, not otherwise so
identified, who are contractually entitled to receive in excess of $100,000
annually as a base salary, together with whatever other additional compensation
bonuses and other cash payments were due them.
REASONS: In support of such proposed Resolution, it is clear that the
shareholders have a right to comprehensively evaluate the management in the
manner in which the Corporation is being operated and its resources utilized. At
present only a few of the most senior executive officers are so identified, and
not the many other senior executive officers who should contribute to the
ultimate success of the Corporation. Through such additional identification the
shareholders will then be provided an opportunity to better evaluate the
soundness and efficacy of the overall management. Last year the owners of
44,035,774 shares, representing approximately 14.4% of shares voting, voted FOR
this proposal."
BOARD OF DIRECTORS' POSITION
The Board does not believe that adoption of the proposal would impart any
meaningful additional information to shareowners. The Board believes that the
disclosure requirements of the Securities and Exchange Commission ("SEC")
currently provide shareowners with sufficient information with respect to
compensation matters. In accordance with SEC rules, the Company provides
detailed information in its proxy statement regarding the compensation of its
most highly compensated executive officers, including the terms and conditions
of any contractual arrangements.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
ITEM E ON PROXY CARD
Msgr. Leo J. Conti, P.O. Box 2566, Evansville, IN 47728, who owns 76 shares of
the Company's common stock, has stated that he intends to submit the following
proposal at the Annual Meeting:
"RESOLVED: that in keeping with the Judeo-Christian principles of justice and
equity, that the shareowners recommend that the Board of Directors adopt the
compensation policy successfully used in major foreign countries (i.e. Japan and
Germany), that top executives of Bell Atlantic be paid no more aggregate
compensation than twenty times that received by the average workers on the
line."
BOARD OF DIRECTORS' POSITION
As described in the Report of the Human Resources Committee ("HRC") on
Executive Compensation on page 9 of this proxy statement, the HRC sets executive
compensation at levels which are intended to be sufficiently competitive with
companies of similar size and complexity to permit the Company to attract and
retain the best possible individuals to manage the Company. Executive
compensation is structured to provide incentives for executive officer
performance that results in continuing improvements in the Company's financial
results and total return to shareowners over both the short term and the long
term. The HRC regularly reviews these compensation plans and reports its
determinations to the Board. The Board believes that this system has and will
continue to be most effective in aligning the interests of the Company's
executive officers and its shareowners.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
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<PAGE> 10
ITEM F ON PROXY CARD
Mr. Robert P. and Mrs. Edith L. Shelor, 3049 B Trevor House Road, Oakton, VA
22124, who jointly own 713 shares of the Company's common stock, have stated
that they intend to submit the following proposal at the Annual Meeting:
"WHEREAS the crisis in U.S. health care costs has led to a national public
policy debate, and to legislative proposals, including the American Health Care
Security Act (S. 491 and H.R. 1200) and the proposal of the Clinton
Administration, which may significantly alter the regulatory environment with
which the Company must deal; and
WHEREAS it appears that health care reforms, if implemented, could result in
significant cost savings which could assist the Company in improving profits,
maintaining competitiveness, improving labor-management relations, and enhancing
shareholder value;
THEREFORE BE IT RESOLVED: That the shareholders of Bell Atlantic Corporation
("Company") request that the Board of Directors establish a Committee composed
of four members of the Board, in order to evaluate the impact of various health
care proposals on the Company, including the American Health Care Security Act
and the proposal of the Clinton Administration and to prepare a report of its
findings, for the purposes of: (1) providing advice and information to the Board
concerning strategic decisions, or other major policy decisions, that may be
necessary to achieve significant cost savings in a reformed regulatory
environment; and (2) providing information to shareholders, who may request
copies of the report, so that they may evaluate the potential impact of health
care reform on the Company in making decisions to buy, sell or hold the
Company's securities.
STATEMENT OF SUPPORT
The Company faces a unique opportunity to accrue significant costs savings,
maintain competitiveness, improve labor-management relations, and enhance
shareholder value.
For example, in the Clinton Administration's materials concerning the economic
effects of health care reform, which were reprinted by BNA's Health Care Policy
Report on October 11, 1993, it is declared:
"the rising cost of health care is a hidden tax on employers -- hurting
business, depressing wages, limiting job creation and threatening our
competitiveness. The bottom line is this: health care reform will lower
business costs, raise wages, and increase opportunities for workers."
According to the Administration materials reprinted by BNA, "Businesses that
currently provide insurance pay more than true cost since providers overcharge
them to make up for care to the uninsured." In addition the materials state that
savings would be achieved by eliminating the cost of an estimated 20 million
"free riders" who "are insured through a spouse's policy." In addition the
Washington Post has reported (September 25, 1993) that companies could save an
estimated $4.5 to $5 billion a year under the Clinton health plan, because it
calls for government, rather than corporations, to pay the health care costs of
those who retire before the age of 65.
Under those circumstances, the Company will benefit from a thorough review of
the health care reform options in order to ensure that it avails itself of every
opportunity to achieve costs savings that could improve the Company's profits,
maintain competitiveness, improve labor-management relations, and enhance
shareholder value. For the reasons stated above, we urge you to vote YES on this
proposal."
BOARD OF DIRECTORS' POSITION
The Company devotes significant administrative resources, including
approximately 12 employees, to the planning and management of its health care
benefits in an ongoing effort to reduce costs to the Company and its employees
while continuing to provide adequate coverage for employees. Health care reform
is one of the most significant challenges facing Congress in 1994. The Company
intends to work with all parties having a vital interest in this issue to reach
an acceptable solution. While reaching agreement on the goals and structure of
health care reform will be a difficult task, management and the Board are
confident that the Company will make its voice heard to help shape a health care
system that promotes the interests of our employees and shareowners. The Board
of Directors does not believe that a formal committee of the Board to address
the topic of health care reform is necessary at this time. In addition, the
evolving nature of currently pending health care reform proposals, and the
uncertainty as to which, if any, of the proposals are likely to be adopted, make
it extremely difficult for a Board committee to issue a timely and meaningful
report to shareowners.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
8
<PAGE> 11
OTHER BUSINESS-----------------------------------------------------------------
In addition to the business described above, there will be remarks by the
Chairman of the Board and Chief Executive Officer and a general discussion
period during which shareowners will have an opportunity to ask questions about
the Company.
The Board knows of no other matters to be presented for shareowner action at
the meeting. If other matters are properly brought before the meeting, the
persons named in the accompanying proxy intend to vote the shares represented by
them in accordance with their best judgment.
EXECUTIVE COMPENSATION---------------------------------------------------------
REPORT OF THE HUMAN RESOURCES COMMITTEE ON EXECUTIVE COMPENSATION
This report is made by the Human Resources Committee of the Board of Directors
of Bell Atlantic Corporation (the "HRC"), the committee charged with
establishing and administering the policies and plans which govern compensation
for executive officers, including those individuals listed in the compensation
tables in this proxy statement. In the case of those executive officers who are
also members of the Board of Directors, the HRC makes recommendations which are
subject to approval by the Board.
PHILOSOPHY
Compensation of executive officers of the Company is set at levels which are
intended to be sufficiently competitive with companies of similar size and
complexity to permit the Company to attract and retain the best possible
individuals. The companies that are included in the comparative analysis of
compensation include not only the six companies characterized as the "peer
group" on page 16 of this proxy statement, but approximately 40 to 60 other
companies considered by independent consultants to be appropriate for
comparison, based on such factors as revenues and number of employees.
The compensation plans are structured to provide incentives for executive
officer performance that results in continuing improvements in the Company's
financial results, over both the short term and the long term. The plans are
also designed to align the interests of the Company's executives and its
shareowners by providing for payment of a significant portion of incentive
compensation in the form of Company stock. Each executive officer's compensation
is based upon both individual and Company performance.
COMPENSATION STRUCTURE
As may be seen from the Summary Compensation Table (the "Summary Table")
included on page 12, the compensation of executive officers consists of four
principal parts, each of which is reviewed regularly by the HRC. As more fully
described below, three of the four components are at risk, meaning that the
ultimate value of the compensation depends on such factors as company financial
performance, individual performance, and stock price.
The HRC annually reviews the stated salary midpoint for each of the salary
grades applicable to executive officers. The HRC furthermore determines for each
salary grade, from time to time, an appropriate target short term incentive
bonus under the Company's Short Term Incentive Plan (the "STIP"), derived as a
percentage of the salary grade midpoint. The applicable percentage is larger at
higher salary grades.
Moreover, for each salary grade, the HRC established in 1990 an appropriate
aggregate dollar value for long term incentive compensation, consisting of
target grants of performance shares and stock options under the Company's
Performance Share Plan and the Stock Option Plan. This aggregate amount was
stated as a percentage of short term cash compensation, consisting of the salary
grade midpoint and the target short term award, and was based on comparative
market surveys of long term incentive compensation. Once again, the applicable
percentage increases at higher salary grades.
To determine the number of options to grant by salary grade in 1990, the HRC
relied upon an independent survey of long term incentive compensation at 35
major U.S. industrial companies with revenues comparable to the Company's, and a
valuation model for stock options recommended by an independent compensation
consultant. In 1991, the HRC approved a 1991-1995 target grant of performance
shares, the dollar value of which was likewise based on the previously described
market survey of long term incentive compensation.
As a result of this approach, a substantial portion of the total compensation
structure for executive officers is tied to stock performance pursuant to long
term incentive plans, and an even greater portion of total compensation is at
risk.
9
<PAGE> 12
COMPONENTS OF COMPENSATION
SALARY
Salaries shown in Column (c) of the Summary Table represent the fixed portion
of compensation for executive officers for 1993. Changes in salary depend upon
such factors as individual performance, the period of time since the last change
in the individual's salary or salary grade, whether the individual's current
salary is in the lower, middle or upper third of the range for that grade, and
the economic and business conditions affecting the Company at the time.
BONUS
The amounts shown under "Bonus" in Column (d) of the Summary Table are awarded
to executive officers, 80% in cash and 20% in deferred stock, pursuant to the
STIP. Under the STIP, annual bonuses for executive officers depend upon growth
in Earnings Per Share ("EPS") over the prior year; for certain executive
officers employed by subsidiaries of the Company, bonuses also depend in part on
financial and strategic accomplishments of the subsidiaries. Each executive
officer's bonus may range from zero to a maximum amount determined by reference
to the individual's salary grade.
At the beginning of each performance year, the HRC establishes a set of
"gateway" requirements involving service quality indicators ("SQIs"), and a
schedule showing the extent to which bonuses will be reduced or eliminated based
on achievement levels under approximately 20 SQIs. The SQIs measure customer
satisfaction in specified customer groups for certain categories of service and
reliability at periodic intervals throughout the year.
The HRC also establishes a scale that permits a particular level of EPS growth
to be converted into bonus amounts for executive officers at each salary grade.
During the year, the HRC may exclude from the determination of the applicable
EPS growth rate the effects of such factors as changes in accounting methods or
tax laws or items considered extraordinary, unusual, or infrequently occurring.
The HRC reviews the applicable EPS growth and potential adjustments at each
meeting and reports regularly to the Board on the impact of any adjustments
affecting the STIP EPS scale. The final outcome for the year on the EPS scale
which is used to determine the STIP for the Chief Executive Officer is also one
factor, and in most cases the exclusive performance factor, in determining the
annual profit sharing and cash incentive awards for the vast majority of
employees of the Company and its subsidiaries.
In determining final STIP awards, the HRC may adjust the award for each
executive officer up or down based upon individual performance, including
significant strategic accomplishments, and success in implementing the Company's
quality improvement program, best cost principles, and other changes in the
Company's corporate culture.
PERFORMANCE SHARES
The amounts shown in Column (f) of the Summary Table as "Long Term Incentive
Plan (LTIP) Payouts" represent the value of shares awarded under the Performance
Share Plan. Awards may range from zero to a maximum number of shares linked to
the executive officer's salary grade. Pursuant to the Performance Share Plan,
the shares reflected in the Summary Table were awarded in January 1994 based
upon a comparison of the total shareowner return on Company stock, compared to
the average (weighted by market capitalization at the beginning of the
performance period) of the returns for the six other Bell regional holding
companies (listed under "Stock Performance" on page 16), for the three-year
interim performance period from 1991 through 1993. The shares awarded under the
Performance Share Plan in January 1994 were the first of three annual
installments that executive officers may receive for a performance period that
will ultimately take account of cumulative performance over a five-year period
from 1991 through 1995. Averaging procedures are used at the beginning and end
of the performance period to ensure that awards are not distorted by temporary
factors affecting the stock on a particular starting or ending date; as a
result, the performance outcome under the Performance Share Plan may differ
slightly from the comparative stock performance shown on the first graph on page
16. Included in each installment under this plan are shares reflecting the
quarterly dividends actually paid on Company stock during the performance
period, treating such cash dividend amounts as though they were reinvested in
shares of Company stock.
10
<PAGE> 13
STOCK OPTIONS
The last principal component of compensation arises from the Company's grant
of stock options to executive officers (the Company's Stock Option Plan actually
covers several levels of management numbering approximately 900 employees). The
HRC sets the number of options to be granted based on the recipient's salary
grade. The number of options granted in 1991, 1992 and 1993 for a particular
salary grade was equal to the number granted in 1990. All options under the Plan
are granted at fair market value, and therefore any value which ultimately
accrues to executive officers is based entirely on the Company's stock
performance.
1993 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
The plans described above were the basis for the 1993 compensation of Raymond
W. Smith, the Company's Chairman and Chief Executive Officer. Mr. Smith's 1993
compensation from salary, STIP and the Performance Share Plan was $2,451,022, a
decrease of 4.2% from the $2,559,771 received in 1992.
The annual salary shown for Mr. Smith for 1993 in Column (c) of the Summary
Table took effect in January 1993, and reflects a salary increase in the amount
of $65,700 (8.8%), the first salary increase for Mr. Smith since July 1991. In
setting the new salary level, the HRC took into account its evaluation of Mr.
Smith's performance, the budgeted 4.7% merit increase for the Company as a
whole, his salary level relative to the range, and his years of service at the
same top salary grade.
Mr. Smith's STIP award for 1993 was $880,700, out of a possible range of $0 to
$970,625 established for him. This award was determined by comparing (a) the
Company's EPS growth in 1993, after eliminating the financial consequences of
certain extraordinary, unusual or infrequent events and changes in accounting
methods, the most significant of which were the adoption of FAS 112 and FAS 109
and extraordinary charges for debt refinancings, to (b) benchmarks established
by the HRC in January 1993. Furthermore, the award reflects an upward adjustment
of $80,000 for individual performance. This STIP award represented a 28.1%
increase from the $687,300 amount received for 1992.
Mr. Smith was awarded 13,612 Bell Atlantic shares under the Performance Share
Plan for the 1991-1993 interim performance period, out of a potential range of
zero to 28,934 shares, after taking account of dividends reinvested during the
performance period. This award, worth $761,422 at the date of award, was based
on a 35.81% cumulative total shareowner return on the Company's stock for the
first three years of a five-year performance period, compared to the 37.69%
cumulative average of the returns of the other six Bell regional holding
companies for the same period. The dollar value of the performance share award
for 1991-1993 was 32.6% lower than the $1,129,272 value of the Performance Share
Plan award for the 1990-1992 performance period. Unlike the award for 1991-1993,
the Performance Share Plan award for the 1990-1992 performance period and prior
awards under this plan had been based on growth in earnings per share for the
performance period.
As noted in Column (e) of the Summary Table, Mr. Smith was granted 32,240
stock options in 1993.
RECENT TAX LEGISLATION
The HRC has reviewed the potential consequences for the Company of a newly
enacted federal income tax rule under Section 162(m) of the Internal Revenue
Code that first applies to employing companies in 1994 and which imposes a limit
on tax deductions for annual compensation in excess of one million dollars paid
to any of the five most highly compensated executive officers. Although certain
forms of "performance based compensation" are eligible to be excluded from the
compensation taken into account for purposes of that limit, the HRC has
determined that neither salary nor STIP awards will be eligible for that
exclusion. Nevertheless, based on its review of the facts and circumstances, the
HRC believes that the limitation will have no effect on the Company in 1994.
Respectfully submitted,
Human Resources Committee
John C. Marous, Jr., Chairman
Thomas H. Kean
John F. Maypole
Shirley Young
11
<PAGE> 14
COMPENSATION TABLES
The following tables contain compensation data for the Chief Executive Officer
and the four other most highly compensated executive officers.
SUMMARY COMPENSATION TABLE
($000)
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
(a) (e) (f) (g)
Name and (b) (c) (d) Options/ LTIP All Other
Position in 1993 Year Salary Bonus SARs (#) Payouts Compensation1
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Raymond W. Smith 1993 $808.9 $880.7 32,240 $ 761.4 $ 11.8
Chairman and CEO 1992 $743.2 $687.3 32,240 $1,129.3 $ 35.8
1991 $706.1 $748.8 32,240 $1,261.8 $ 59.8
Robert M. Valentini 1993 $307.3 $413.8 10,040 $ 155.1 $ 211.8
President and CEO, 1992 $292.9 $270.0 10,040 $ 225.9 $ 11.4
Bell Atlantic -
Pennsylvania, Inc.
James G. Cullen 1993 $353.1 $338.4 15,680 $ 169.1 $ 5.7
President 1992 $298.0 $295.0 10,040 $ 225.9 $ 18.0
Lawrence T. Babbio, Jr. 1993 $253.6 $260.3 10,040 $ 153.6 $ 30.0
Chairman, President 1992 $239.4 $232.5 10,040 $ 115.8 $ 35.8
and CEO, Bell Atlantic 1991 $229.9 $217.1 10,040 $ 123.9 $ 38.4
Enterprises
International, Inc.
William O. Albertini 1993 $253.0 $259.9 10,040 $ 132.2 $ 11.0
Vice President and 1992 $223.6 $186.5 10,040 $ 156.0 $ 11.1
Chief Financial Officer 1991 $207.5 $151.0 5,860 $ 157.8 $ 9.9
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Company matching contributions to the Savings Plan for Salaried Employees for
the year 1993 were $11,785 for Mr. Smith, $11,791 for Mr. Valentini, $5,745
for Mr. Cullen, $11,628 for Mr. Babbio and $11,038 for Mr. Albertini. Mr.
Babbio received a payment of $18,376 under the Senior Management Transfer
Program. Mr. Valentini was paid a $200,000 special award in October 1993.
12
<PAGE> 15
1993 OPTION/SAR GRANTS
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Individual Grants
- ------------------------------------------------------------------------------ Potential Realizable Value
Number of at Assumed Annual Rates
Securities % of Total of Stock Price Appreciation
Underlying Options/ Exercise For Option Term ($000)2
Options/SARs SARs or Base
Granted Granted to Price Expiration ---------------------------------------
Name (#)1 Employees ($/Share) Date 0% 5% 10%
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Raymond W. Smith 32,240 3.58% $53.0625 Jan. 2003 $0 $1,075.9 $2,726.5
Robert M. Valentini 10,040 1.12% $53.0625 Jan. 2003 $0 $ 335.0 $ 849.1
James G. Cullen 13,280 1.48% $53.0625 Jan. 2003 $0 $ 443.2 $1,123.1
2,400 0.27% $62.0625 Oct. 2003 $0 93.7 237.4
------- ------- -------- --------
Total 15,680 1.75% $ 536.9 $1,360.5
Lawrence T. Babbio,Jr. 10,040 1.12% $53.0625 Jan. 2003 $0 $ 335.0 $ 849.1
William O. Albertini 10,040 1.12% $53.0625 Jan. 2003 $0 $ 335.0 $ 849.1
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
All Shareowners3 N/A N/A N/A N/A $0 $14,498,798.9 $36,742,930.8
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 The options reported above are exercisable one year from the date of grant. In
the event an executive officer tenders previously owned Company shares in
payment of the exercise price of options, such individual will automatically
be granted a number of replacement, or "reload," options equal to the number
of shares tendered. Reload options have an exercise price equal to fair market
value on the date of such exercise, and expire on the date on which the
options then exercised would have expired. No SARs were granted in 1993.
2 The dollar amounts in this table are the result of calculations at stock price
appreciation rates specified by the SEC and are not intended to forecast
actual future appreciation rates of the Company's stock price.
3 The hypothetical stock appreciation for shareowners over the option term would
be $33.37 per share at an assumed annual rate of 5% and $84.57 per share at an
assumed annual rate of 10%.
1993 AGGREGATED OPTION/SAR EXERCISES
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Number of Unexercised Value of Unexercised
Options/SARs at Year- In-the-Money Options/
Shares Value End (# of Shares) SARs at Year-End ($000)
Acquired on Realized ----------------------------- ------------------------------
Name Exercise(#) ($000) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Raymond W. Smith 0 $ 0 119,230 32,240 $1,195.0 $221.7
Robert M. Valentini 0 $ 0 39,967 10,040 $ 531.5 $ 69.0
James G. Cullen 0 $ 0 52,908 15,680 $ 855.2 $ 91.3
Lawrence T. Babbio, Jr. 0 $ 0 34,760 10,040 $ 488.8 $ 69.0
William O. Albertini 1,081 $63.7 23,078 10,040 $ 253.0 $ 69.0
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 16
BELL ATLANTIC PENSION PLANS
The Company and several of its subsidiaries maintain a noncontributory,
nonqualified pension plan known as the Bell Atlantic Senior Management
Retirement Income Plan (the "Senior Management Retirement Plan") under which
retirement benefits are payable to senior managers.
The following table sets out the estimated annual target pension payable as a
single life annuity under the Senior Management Retirement Plan for a senior
manager age 60 or older, for various levels of final average pay and years of
service:
<TABLE>
<CAPTION>
- ----------------- --------------------------------------------------------------------------
FINAL AVERAGE CREDITED YEARS OF SERVICE
PAY 15 20 25 30 35
- ----------------- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 250,000 $ 75,000 $100,000 $118,750 $ 137,500 $ 150,000
500,000 150,000 200,000 237,500 275,000 300,000
750,000 225,000 300,000 356,250 412,500 450,000
1,000,000 300,000 400,000 475,000 550,000 600,000
1,250,000 375,000 500,000 593,750 687,500 750,000
1,500,000 450,000 600,000 712,500 825,000 900,000
1,750,000 525,000 700,000 831,250 962,500 1,050,000
2,000,000 600,000 800,000 950,000 1,100,000 1,200,000
- ----------------- --------------------------------------------------------------------------
</TABLE>
Under the Senior Management Retirement Plan, a senior manager accrues a target
pension in an amount equal to a percentage of "final average pay." This
percentage factor increases with service, up to a maximum of 60 percentage
points for a senior manager with 35 or more years of service. For purposes of
calculating the target pension, "final average pay" means the average of a
senior manager's base salary plus the Short Term Incentive Plan award (Columns
(c) and (d) of the Summary Table) for the highest five years of the final ten
years of employment prior to retirement. The pension benefit payable under the
Senior Management Retirement Plan is not subject to reduction for Social
Security benefits, but is reduced dollar-for-dollar by the amount of the benefit
paid from the trust of the qualified defined benefit pension plan in which the
executive officer participates (either the Bell Atlantic Management Pension Plan
or the Bell Atlantic Enterprises Retirement Plan, as described below;
collectively, the "Qualified Pension Plans").
The years of credited service under the Senior Management Retirement Plan, as
of December 31, 1993, were: Mr. Smith, 34 years; Mr. Cullen, 29 years; Mr.
Valentini, 28 years; Mr. Babbio, 27 years; and Mr. Albertini, 26 years.
The Qualified Pension Plans are each noncontributory, qualified pension plans
for salaried employees, including executive officers of the Company who are
eligible to receive retirement benefits under the Senior Management Retirement
Plan. Under the Qualified Pension Plans, retirement is mandatory at age 65 for
certain executives, and retirement before age 65 can be elected if certain
conditions are met. Annual pensions under the plan are computed on an adjusted
career average pay basis. The applicable adjusted career average pay formula for
senior managers is the sum of (i) 1.6% of average pay for the five years ended
September 30, 1987, times the number of years of Bell System and participating
company service prior to September 30, 1987, plus (ii) 1.6% of pay subsequent to
September 30, 1987. Pension amounts under the Qualified Pension Plans are not
subject to reduction for Social Security benefits or other offset amounts. The
Internal Revenue Code of 1986 places certain limitations on pensions which may
be paid from the trusts of federal income tax qualified plans, including the
Qualified Pension Plans. Pension amounts which exceed such limitations will be
paid from Company assets under the Senior Management Retirement Plan.
Assuming that the officers listed in the Summary Table continue in their
present positions at their current salaries until retirement at age 65, their
estimated annual pensions under the applicable Qualified Pension Plans
attributable to such salaries would be: Mr. Smith, $127,341; Mr. Cullen,
$108,541; Mr. Valentini, $99,652; Mr. Babbio, $97,771; and Mr. Albertini,
$91,986. These annual pension amounts are included within the target pension
benefit under the Senior Management Retirement Plan (as described above) and are
not in addition to that target pension.
14
<PAGE> 17
OWNERSHIP OF BELL ATLANTIC COMMON STOCK
On January 31, 1994, the Directors and executive officers of the Company
beneficially owned, in the aggregate, 813,402 shares of Bell Atlantic common
stock (or less than one percent of the shares outstanding), including 524,021
shares under options currently exercisable by executive officers. In addition,
certain executive officers have deferred receipt of 66,817 shares under the Bell
Atlantic Deferred Compensation Plan, and certain Outside Directors have deferred
receipt of 52,707 shares under the Outside Directors' Deferral Plan. Shares
deferred under those plans may not be voted or transferred. The following table
sets forth information regarding ownership of Bell Atlantic common stock by the
named executive officers and Directors as of January 31, 1994. Except as
otherwise noted, these individuals or his or her family members have sole or
shared voting and/or investment power with respect to such securities.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
SHARES SHARES HELD UNDER
NAME BENEFICIALLY OWNED(1) DEFERRAL PLANS(2) TOTAL
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
NAMED EXECUTIVE OFFICERS:
Raymond W. Smith 247,299 22,398 269,697
James G. Cullen 72,021 6,467 78,488
Robert M. Valentini 56,447 6,348 62,795
Lawrence T. Babbio, Jr. 54,874 2,727 57,601
William O. Albertini 55,073 2,250 57,323
DIRECTORS:
William W. Adams 128 4,473 4,601
Thomas E. Bolger 79,092(3) 1,101 80,193
Frank C. Carlucci 1,015 4,907 5,922
William G. Copeland 2,304 -- 2,304
James H. Gilliam, Jr. 330 5,046 5,376
Thomas H. Kean 1,304 1,074 2,378
John C. Marous, Jr. 2,904 11,358 14,262
John F. Maypole 2,304 6,594 8,898
Thomas H. O'Brien 504 6,407 6,911
Rozanne L. Ridgway 446 2,479 2,925
Shirley Young 399 9,268 9,667
- ------------------------------------------------------------------------------------
</TABLE>
1 Includes shares subject to exercisable options as follows: 151,470 for
Mr. Smith, 66,188 for Mr. Cullen, 50,007 for Mr. Valentini, 44,800 for
Mr. Babbio, and 33,118 for Mr. Albertini.
2 These shares may not be voted or transferred.
3 Includes 14,806 shares held by Mr. Bolger's spouse as to which Mr. Bolger
disclaims beneficial ownership.
15
<PAGE> 18
STOCK PERFORMANCE
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG BELL ATLANTIC, OTHER RHCS, AND S&P 500
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) BELL ATLANTIC OTHER RHCS S&P 500
<S> <C> <C> <C>
1988 100 100 100
1989 162.0 155.2 131.6
1990 163.7 148.7 127.5
1991 155.0 159.2 166.2
1992 174.0 176.0 178.8
1993 210.8 206.0 196.7
</TABLE>
* Assumes $100 invested on December 31, 1988.
The Company's peer group is comprised of the six other regional holding
companies ("RHCs") which commenced operations on January 1, 1984, following a
court-approved divestiture of certain assets of the Bell System: Ameritech
Corporation, BellSouth Corporation, NYNEX Corporation, Pacific Telesis Group,
Southwestern Bell Corporation, and U S West, Inc.
The following supplemental tables present comparisons of the Company's stock
performance with that of its peer group and the S&P 500 since the Company
commenced operations, and in 1993. None of the elements of executive
compensation reported above was directly related to stock performance for these
specific periods.
COMPARISON OF CUMULATIVE
TOTAL RETURN
AMONG BELL ATLANTIC, OTHER RHCS, AND
S&P 500 FOR PERIOD SINCE
FORMATION OF RHCS AT DIVESTITURE
Percent
BELL ATLANTIC 538
OTHER RHCS 511
S&P 500 300
COMPARISON OF TOTAL RETURN
AMONG BELL ATLANTIC,
OTHER RHCS, AND
S&P 500 FOR 1993
Percent
BELL ATLANTIC 21.2
OTHER RHCS 17.0
S&P 500 10.0
16
<PAGE> 19
EMPLOYMENT AGREEMENTS
The Company has entered into Employment Agreements (collectively, the "1994
Agreements") with each of Messrs. Albertini, Babbio, and Cullen, as well as
certain other executive officers who are not listed in the Summary Table on page
12. The 1994 Agreements prohibit each executive from disclosing proprietary
information of the Company at any time, and furthermore prohibit each executive
from engaging in certain competitive activities during the period of employment
with the Company and for a period of two years following termination of
employment. In the event of involuntary termination of employment without cause,
the executive would be entitled to a separation benefit equal to three times the
sum of the executive's base salary and an amount equal to the greater of i) the
most recent award under the Short Term Incentive Plan or ii) that most recent
award but without taking account of any individual performance modification to
the award. The separation benefit would be payable subject to the executive's
compliance with the terms of the 1994 Agreement. In the event of the executive's
voluntary termination of employment under certain circumstances, the Company may
elect to (i) provide for the same separation arrangement as described above for
involuntary termination of employment or (ii) waive the prohibitions contained
in the 1994 Agreement on the executive's ability to engage in certain
competitive activities, in which case the executive would not be entitled to any
separation benefit under the 1994 Agreement.
The 1994 Agreements will expire on the second anniversary of the closing of
the Company's proposed merger with Tele-Communications, Inc. and Liberty Media
Corporation or, if no such closing has then occurred, on December 31, 1995. Upon
the expiration of his 1994 Agreement, Mr. Cullen would be subject to the terms
of the Employment Agreement entered into with the Company in 1993 (the "1993
Agreement"). The 1993 Agreement is substantially equivalent to the 1994
Agreement, except that the separation benefit under the 1993 Agreement is equal
to two times the executive's base salary and most recent award under the Short
Term Incentive Plan, and except that the 1993 Agreement has no expiration date.
SUBMISSION OF SHAREOWNER PROPOSALS AND DIRECTOR
NOMINATIONS FOR 1995 ANNUAL MEETING
- --------------------------------------------------------------------------------
Shareowners who wish to submit a proposal for inclusion in the Board of
Directors' 1995 proxy statement are advised that such proposals must be received
by the Secretary no later than November 15, 1994. SEC rules set forth standards
as to what shareowner proposals are required to be included in a proxy
statement. In addition, the Company's by-laws provide that any shareowner
wishing to make a nomination for the office of director, or wishing to initiate
a proposal or other business, at the 1995 Annual Meeting must give the Company
at least 60 days advance notice, and that notice must meet certain other
requirements set forth in the by-laws. Shareowners may request a copy of the
by-laws from the Secretary, Bell Atlantic Corporation, 1717 Arch Street,
Philadelphia, PA 19103.
PROXY SOLICITATION
- --------------------------------------------------------------------------------
The Company will pay the entire cost of solicitation of proxies. Georgeson &
Co. Inc., New York, NY, has been retained by the Company to solicit proxies by
personal interview, mail, telephone and telegraph, and will request brokers,
banks and other custodians, nominees and fiduciaries to forward soliciting
material to beneficial owners of stock held of record by such persons. The
Company will pay Georgeson & Co. Inc. a fee of $15,000, and will reimburse
expenses incurred in connection with its services. Proxies also may be solicited
by the Company's directors, officers and employees, and by The Bank of New York,
the Company's transfer agent.
By Order of the Board of Directors
/s/ P. ALAN BULLINER
P. Alan Bulliner
Vice President - Corporate Secretary and Counsel
March 1, 1994
17
<PAGE> 20
BELL ATLANTIC CORPORATION
(LOGO)
PRINTED ON RECYCLED PAPER.
This document is printed on recycled paper which contains at least 10%
post-consumer waste.
<PAGE> 21
PROXY/VOTING INSTRUCTION CARD [BELL ATLANTIC LOGO]
- -------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF SHAREOWNERS
The Playhouse Theatre, Friday, April 29, 1994, 10 a.m. Local Time, 10th &
Market Streets, Wilmington, Delaware
The undersigned hereby appoints W.O. Albertini, J.G. Cullen and R.W. Smith, and
each of them, proxies, with the powers the undersigned would possess if
personally present, and with full power of substitution, to vote all common
shares held of record by the undersigned in Bell Atlantic Corporation, 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 reverse side of this card. IF NO DIRECTIONS ARE GIVEN, THE
PROXIES WILL VOTE FOR THE ELECTION OF ALL LISTED NOMINEES FOR DIRECTOR (W.W.
ADAMS, T.E. BOLGER, F.C. CARLUCCI, W.G. COPELAND, J.H. GILLIAM, JR., T.H. KEAN,
J.C. MAROUS, JR., J.F. MAYPOLE, T.H. O'BRIEN, R.L. RIDGWAY, R.W. SMITH AND S.
YOUNG), IN ACCORD WITH THE DIRECTORS' RECOMMENDATIONS ON THE OTHER SUBJECTS
LISTED ON THE REVERSE SIDE OF THIS CARD AND AT THEIR DISCRETION ON ANY OTHER
MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
This card also constitutes your voting instructions for shares held of record
by Bell Atlantic Corporation for your account in the Dividend Reinvestment and
Stock Purchase Plan (DRSPP) and, if shares are held in the same name, shares
held in the 1976 Bell Atlantic Employee Stock Ownership Plan, Savings Plan for
Salaried Employees, or Savings and Security Plan (Non-Salaried Employees).
PLEASE SIGN ON THE REVERSE SIDE AND RETURN TO P.O. BOX 1019, NEWARK, NJ
07101-9757. IF YOU DO NOT SIGN AND RETURN A PROXY, OR ATTEND THE MEETING AND
VOTE BY BALLOT, YOUR SHARES CANNOT BE VOTED, NOR YOUR INSTRUCTIONS FOLLOWED,
EXCEPT THAT SHARES IN THE SAVINGS PLAN WILL BE VOTED AS DESCRIBED ON PAGE 1 OF
THE PROXY STATEMENT.
NOTATIONS:
-------------------------------------------------------------------
<PAGE> 22
DIRECTORS RECOMMENDED A VOTE "FOR":
<TABLE>
<CAPTION>
A. ELECTION OF ALL DIRECTORS B. RATIFICATION OF INDEPENDENT ACCOUNTANTS
<S> <C> <C> <C> <C> <C>
FOR WITHHOLD EXCEPTION* FOR AGAINST ABSTAIN
/X/ /X/ /X/ /X/ /X/ /X/
</TABLE>
<TABLE>
<CAPTION>
*EXCEPTION(S) C. AMENDMENTS TO STOCK INCENTIVE PLAN
---------------------
<S> <C> <C> <C>
To vote your shares for all Director FOR AGAINST ABSTAIN
nominees, mark the "FOR" box above. To /X/ /X/ /X/
withhold voting for all nominees, mark the
"Withhold" box. If you do not wish your
shares voted "For" a particular nominee,
mark the "Exception" box and enter the name(s)
of the exception(s) in the space provided.
</TABLE>
CHECK HERE TO:
1. INDICATE NOTATIONS 2. ELIMINATE DUPLICATE
ON REVERSE SIDE ANNUAL REPORTS
/X/ /X/
DIRECTORS RECOMMEND A VOTE "AGAINST":
D. SHAREOWNER PROPOSAL REGARDING ADDITIONAL
COMPENSATION INFORMATION
FOR AGAINST ABSTAIN
/X/ /X/ /X/
E. SHAREOWNER PROPOSAL REGARDING EXECUTIVE
OFFICER COMPENSATION
FOR AGAINST ABSTAIN
/X/ /X/ /X/
F. SHAREOWNER PROPOSAL REGARDING CREATION OF
HEALTH CARE REFORM COMMITTEE OF BOARD
FOR AGAINST ABSTAIN
/X/ /X/ /X/
Please sign exactly as name or names appear on this proxy. If stock is held
jointly, each holder should sign. If signing as attorney, trustee, executor,
administrator, custodian, guardian or corporate officer, please give full title.
DATE , 1994
-------------------------------
SIGNATURE
--------------------------------
SIGNATURE
--------------------------------
VOTES MUST BE INDICATED (X) IN BLACK
OR BLUE INK AS IN THIS EXAMPLE. /X/
<PAGE> 23
Attachment 1
BELL ATLANTIC
1985 INCENTIVE STOCK OPTION PLAN
(Restated as of January 24, 1994,
to incorporate amendments adopted
through that date, subject, in certain instances,
to shareowner approval)
SECTION 1. PURPOSE. The Bell Atlantic 1985 Incentive Stock
Option Plan (the "Plan") is intended to provide key employees of Bell Atlantic
Corporation (the "Company") and its subsidiaries an opportunity to acquire
common stock of the Company. The Plan is expected to help the Company and its
subsidiaries attract, retain, and motivate key employees to work for the
success of the Company and its subsidiaries. With the exception of options
granted under section 6 of the Plan, options granted under the Plan are
intended to be incentive stock options as defined in section 422A(b) of the
Internal Revenue of 1986 (the "Code"). Options granted under section 6 of the
Plan are intended to be nonqualified stock options.
SECTION 2. ADMINISTRATION.
(a) HUMAN RESOURCES COMMITTEE. The Plan shall be administered by
the Human Resources Committee of the Company's Board of Directors (the
"Committee"). The Committee may delegate some or all of its administrative
responsibility under the Plan to one or more persons.
(b) ADMINISTRATION. The Assistant Vice President - Executive
Compensation and Benefits of the Company shall have the authority and
responsibility to act as "Plan Administrator" (as that term is used in this
Plan), including, without limitation, the authority and responsibility, with
the advice of counsel, to distribute summary descriptions of the Plan, to enter
into stock option agreements with optionees on behalf of the Company, to
maintain records of options granted and outstanding, and to administer
transactions in connection with the exercise of options by optionees. The Plan
Administrator, with the advice of counsel, shall have the right to respond to
and decide any claims or disputes under the Plan and to interpret the Plan,
subject to the ultimate authority of the Committee to review any appeal from
any such claim or interpretation. In the event of any such appeal, the action
of the Committee shall be final and binding.
(c) GRANT OF OPTIONS. The Committee shall determine the key
employees of the Company and its subsidiaries to whom options may be granted
under this Plan. The Committee shall also determine the time at which options
shall be granted under the Plan, the number of shares for which these options
shall be granted, the time at which these options may be exercised, and the
conditions
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<PAGE> 24
under which these options may be exercised. The Committee, in its sole
discretion, shall prescribe the terms and conditions of each option granted
under the Plan.
(d) LIABILITY. No member of the Committee may be held accountable
for any action taken under this Plan in good faith.
SECTION 3. ELIGIBILITY.
(a) IN GENERAL. Options may be granted to key employees of the
Company or any of its subsidiaries as defined in section 425(f) of the Code
("Subsidiaries").
(b) DIRECTORS. Options may not be granted to any director of the
Company or its Subsidiaries unless the director is also a key employee of the
Company or any of its Subsidiaries.
(c) TEN-PERCENT SHAREHOLDERS. Incentive stock options may not be
granted under this Plan to shareholders of the Company or any of its
Subsidiaries who own more than ten percent of the total combined voting power
of all classes of stock of the Company or any of its Subsidiaries, unless the
special requirements of sections 5(a) and 5(c) relating to ten-percent
shareholders are met.
(d) NO OPTIONS FOR COMMITTEE. Options may not be granted under
this Plan to members of the Committee.
SECTION 4. STOCK.
(a) COMMON STOCK. Options may be granted under this Plan for
shares of the $1.00 par value common stock of the Company (the "Stock"). In
the discretion of the Treasurer of the Company, Stock distributed under this
Plan may be authorized but unissued shares or treasury shares; it may also be
outstanding shares acquired by the Company in the open market or elsewhere.
(b) AGGREGATE SHARE LIMITATION. The aggregate number of shares of
Stock (restated to take into account the stock splits of record on March 31,
1986 and April 10, 1990) which may be distributed upon the exercise of options
under this Plan may not exceed 25 million shares, less the number of shares
(restated to take account of such splits) distributed under the Bell Atlantic
1985 Performance Share Plan. The expiration or termination of an option will
not reduce the number of shares which may be distributed under this Plan; but
the exercise of a stock appreciation right and the cancellation of the related
option shall reduce the number of shares which may be distributed under this
Plan by the number of shares for which the canceled option was granted. For
purposes of determining
- 2 -
<PAGE> 25
whether the aggregate share limitation of this paragraph has been exceeded, the
total number of shares distributed under this Plan shall be reduced by the
number of shares tendered by key employees in stock-for-stock option exercise
transactions under this Plan which occur after January 1, 1991.
(c) INDIVIDUAL OPTION GRANT LIMITATION. In the absence of a Plan
amendment approved by the shareowners of the Company, the aggregate number of
options to purchase a class of stock of the Company which may be granted under
this Plan to any individual in any single calendar year shall be a number not
greater than one-half of one percent of the number of shares of that class of
stock which are issued and outstanding as of the first day of that calendar
year.
(d) REORGANIZATION OF THE COMPANY. The limitation on the
aggregate number of shares that may be distributed or granted under this Plan
may be adjusted in accordance with section 8 of the Plan (relating to
recapitalizations, etc., of the Company).
SECTION 5. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS.
Each incentive stock option granted under the Plan will be evidenced by a stock
option agreement ("Agreement") between the Company and the individual to whom
the option is granted ("Optionee"). Each incentive stock option granted under
the Plan will comply with the following conditions:
(a) OPTION PRICE. The option price of an incentive stock
option will not be less than the fair market value of the Stock at the
time an option is granted. However, in the case of an Optionee who
owns more than ten percent of the total combined voting power of all
classes of stock of the Company or any of its Subsidiaries, the option
price will not be less than one-hundred-ten percent of the fair market
value of the Stock at the time the option is granted. The fair market
value of the Stock shall be the mean between the highest and lowest
selling prices of the Stock on the day an option is granted, as
reported on the New York Stock Exchange Composite Tape. However, if
there are no sales on the day an option is granted, the fair market
value of the Stock shall be a weighted average of the means between
the highest and lowest selling prices of the Stock on the nearest day
before and the nearest day after the day the option is granted, as
reported on the New York Stock Exchange Composite Tape; the average is
to be weighted inversely by the respective number of trading days
between the selling days and the day the option is granted.
(b) DOLLAR LIMITATION. With respect to any incentive
stock options granted on or after January 1, 1987, the aggregate fair
market value (determined at the time the option is granted) of the
Stock with respect to which any such incentive stock options are
exercisable for the first time by
- 3 -
<PAGE> 26
the Optionee during any calendar year shall not exceed $100,000. For
purposes of the dollar limitation under this Section 5(b), all
incentive stock options which are granted on or after January 1, 1987
by the Company or any of its Subsidiaries, and which first become
exercisable in the applicable year, shall be treated as granted under
this Plan and shall be subject to the aggregate fair market value
limit under this Section 5(b) for such year.
(c) TEN-YEAR LIMITATION. No incentive stock option may
be exercised more than ten years after it is granted. However, in the
case of an Optionee who owns more than ten percent of the combined
voting power of all classes of stock of the Company or any of its
Subsidiaries, no incentive stock option may be exercised more than
five years after it is granted. Each Agreement must contain this
ten-year (or five-year) limitation. However, the Committee may grant
options which may only be exercised during a period of less than ten
(or five) years. In the case of any options which may only be
exercised during a period of less than ten (or five) years, each
Agreement must contain this shorter limitation.
(d) EXERCISE OF OPTIONS. The Committee will determine
the time at which incentive stock options may be exercised and the
conditions under which incentive stock options may be exercised. Any
restrictions upon exercise of an option will be contained in the
Agreement. Subject to these limitations, if any, options may be
exercised in whole or in part. They may be exercised on any business
day until they expire. However, no option may be exercised for fewer
than ten shares (or such other minimum number as may be established by
the Plan Administrator) unless fewer than ten shares (or such other
number established by the Plan Administrator) are outstanding, and the
option is exhausted upon its exercise. When an option is exercised,
and before shares are transferred to an Optionee upon his exercise of
the option, the option price must be paid in full. In the discretion
of the Committee, the option price may be paid in cash, with Stock, or
in any combination of cash and Stock. If the option price may be paid
other than in cash, then the Agreement will specify the acceptable
methods of payment. If the option price may be paid in Stock, the
Optionee may not tender on or after January 1, 1991 any share of Stock
which was acquired by the Optionee through exercise of an option less
than six months prior to the date of exercise for which the Stock is
being tendered. An Optionee will not have any of the rights of a
shareholder by reason of an option until it is exercised. The
Committee in its sole discretion may accelerate the time at which
options may be exercised when it is in the best interests of the
Company and its Subsidiaries to do so.
(e) SERIATIM EXERCISE. An incentive stock option granted
prior to December 31, 1986 (a "Pre-1987 ISO") may not be exercised by
an
- 4 -
<PAGE> 27
Optionee if there is an unexercised and unexpired incentive stock
option granted to the Optionee at an earlier time under this Plan (or
under another plan of the Company or any other company that was a
Subsidiary when the incentive stock option was granted). Each
Agreement with respect to a Pre-1987 ISO grant shall contain this
restriction. This Section 5(e) shall not apply to any stock option
granted on or after January 1, 1987.
(f) TERMINATION OF EMPLOYMENT.
(i) In the case of any stock options for which
the one-year waiting period has not expired, the remaining
waiting period shall be waived, and a 90-day exercise period
shall commence, on options granted to Optionees at Salary
Grade C or below (or equivalent salary grades), effective as
of the date of termination of any such Optionee who is not
then eligible to retire (within the meaning of paragraph (g)
below) and who terminates employment under a
company-initiated, voluntary or involuntary, force management
or force reduction program or initiative; provided, however,
that this paragraph will not apply to an Optionee who
terminates employment for poor performance, misconduct, or
refusal to accept a reassignment that involves no relocation
or downgrade.
(ii) Except as provided in paragraph 5(j) and in
paragraphs 5(f)(i) (relating to force reductions), 5(g)
(relating to retirement of an Optionee), 5(h) (relating to
death of an Optionee), and 5(i) (relating to disability of an
Optionee), no incentive stock option may be exercised by an
Optionee after termination of the employment relationship
between the Optionee and the Company, or between the Optionee
and a Subsidiary, as the case may be. In the case of an
Optionee who is transferred to the Company, to a Subsidiary,
or to Bell Communications Research, Inc. ("Bellcore"), or who
commences an approved Bellcore rotational assignment, the
termination of the employment relationship shall not be deemed
to occur until the first date on which the Optionee is
employed neither by the Company, a Subsidiary, nor Bellcore.
(g) RETIREMENT. Except as provided in paragraph 5(j) or
this paragraph 5(g), in the case of an Optionee who either:
(i) retires and is eligible for a service pension
under section 4.1(a) of the Bell Atlantic Management Pension
Plan (or would be eligible for a service pension if the
Subsidiary from which the Optionee retires participated in
that plan), or
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<PAGE> 28
(ii) at the time of termination of employment
satisfies such age and service criteria for retirement as the
Committee may have established, in its discretion, on a
case-by-case basis at the time of granting options to said
Optionee, incentive stock options which are exercisable on the
day of retirement may be exercised during the remaining option
term, but not more than five years after the day of
retirement, and options which are not exercisable on the day
of retirement may never be exercised. The Committee may, in
its discretion, at the time of granting options to some or all
key employees, establish a permissible exercise period
following retirement which is shorter than the five-year
period stated in the previous sentence.
(h) DEATH. Except as provided in paragraph 5(j) or this
paragraph 5(h), in the case of the death of an Optionee while employed
by the Company or a Subsidiary, an incentive stock option may be
exercised during the remaining option term, but not more than one year
after the day of death, by the person entitled to exercise the option
under the Optionee's will or under the laws of descent and
distribution. The Committee may, in its discretion, at the time of
granting options to some or all key employees, establish a permissible
exercise period following death which is shorter than the one-year
period stated in the previous sentence.
(i) DISABILITY. Except as provided in paragraph 5(j) or
this paragraph 5(i), in the case of an Optionee who becomes disabled
within the meaning of section 37(e)(3) of the Code while employed by
the Company or a Subsidiary, incentive stock options which are
exercisable on the day the disability occurs may be exercised during
the remaining option term, but not more than five years after the day
the disability occurs, and options which are not exercisable on the
day the disability occurs may never be exercised. The Committee may,
in its discretion, at the time of granting options to some or all key
employees, establish a permissible exercise period following
termination for disability which is shorter than the five-year period
stated in the previous sentence.
(j) WAIVER OF LIMITATIONS; ACCELERATION OF OPTIONS. Upon
an Optionee's termination of employment, retirement, death, or
disability, the Committee in its sole discretion may waive the
limitations on exercise of an incentive stock option contained in
paragraphs 5(f) through 5(i) when it is in the best interests of the
Company and its Subsidiaries to do so. Upon an Optionee's termination
of employment, retirement, death, or disability, the Committee may
also waive any requirements of paragraphs 5(d) and 5(l) that an
incentive stock option may not be exercised within a certain time of
its grant when it is in the best interests of the Company and its
Subsidiaries to
- 6 -
<PAGE> 29
do so. However, the Committee may not extend the period during which
an incentive stock option could otherwise be exercised.
(k) TRANSFERABILITY OF OPTION. Except as provided in
this paragraph 5(k), no incentive stock option will be transferable.
Upon the death of an Optionee, an incentive stock option may be
transferred as provided in paragraph 5(h) (relating to death of an
Optionee). Moreover, an Optionee may designate the person or persons
who may exercise and benefit from the option after the Optionee's
death. During an Optionee's lifetime, an incentive stock option may
only be exercised by the Optionee. Each Agreement will contain these
restrictions on transferability.
(l) NO EXERCISE WITHIN ONE YEAR OF GRANT. Except as
provided in this section 5(l) or in section 8(b) or 6(b) of this Plan,
no option granted under the Plan may be exercised within one year of
its grant. The Committee may, in its discretion, waive this
limitation in the case of any or all options granted to any or all
Optionees when it is in the best interests of the Company and its
Subsidiaries to do so.
SECTION 6. TERMS AND CONDITIONS OF NONQUALIFIED OPTIONS.
(a) GENERAL PROVISIONS. Each nonqualified stock option
granted under the Plan will be evidenced by an Agreement between the
Company and the Optionee. No Agreement evidencing a nonqualified
stock option shall also evidence an incentive stock option. Each
nonqualified option shall be subject to all the terms and conditions
of this Plan with the exception of section 5(c) (relating to the
ten-year limitation). No nonqualified stock option may be exercised
more than ten years after it is granted, except in the case of an
Optionee who becomes disabled within the meaning of section 37(e)(3)
of the Code while employed by the Company or a Subsidiary, in which
case the nonqualified stock option may be exercised not more than five
years (or such shorter time limit as the Committee may, in its
discretion, prescribe) after the day the disability occurs, without
regard to the ten-year limitation. Each Agreement will contain this
restriction.
(b) RELOAD OPTIONS. Notwithstanding any other provision
of this Plan, the Committee may provide for the automatic granting of
nonqualified stock options ("reload options") to all or one or more
classifications of key employees, as designated by the Committee, upon
the exercise by any such designated key employees of options in
transactions in which Stock is tendered to pay the option price. In
such a case, the number of reload options which shall automatically be
granted by the Company to a designated key employee shall be equal to
the number of shares of Stock tendered by the designated key employee.
The option price of each such
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<PAGE> 30
reload option shall be equal to the fair market value of the Stock on
the date on which the reload option is automatically granted, and such
reload options shall expire on the same date as the options then being
exercised would have expired in the absence of being exercised.
Reload options shall be immediately exercisable by the Optionee on and
after the date on which they are granted. Except as provided in this
section 6(b) to the contrary, the terms and conditions applicable to
reload options shall be the same as those that apply to other
nonqualified options as described in section 6(a).
SECTION 7. STOCK APPRECIATION RIGHTS. Incentive stock options
and nonqualified stock options granted under the Plan may, in the discretion of
the Committee, be coupled with stock appreciation rights in the same number of
shares of Stock for which the options are granted. Stock appreciation rights
may be exercised at the same time, and under the same conditions, as the
incentive stock options or nonqualified stock options to which they relate.
Upon an Optionee's exercise of a stock appreciation right, the Optionee shall
be entitled to a cash payment from the Company in an amount equal to the
difference between the fair market value of one share of Stock on the day the
stock appreciation right is exercised, as determined under section 5(a), and
the option price of the related incentive stock option or nonqualified stock
option, and the related incentive stock option or nonqualified stock option
shall be canceled.
SECTION 8. RECAPITALIZATION OF COMPANY.
(a) ADJUSTMENTS IN STOCK. In a transaction to which section
425(a) of the Code applies, the share and option limitations of sections 4(b)
and 4(c) may be adjusted and the Stock subject to option under section 4(a) may
be changed. The Committee will determine the adjustments to be made in the
case of reorganization, recapitalization, stock split, stock dividend,
combination of shares, or any other change affecting the Stock. Adjustments in
the shares subject to option under the Plan may be in the aggregate number of
shares subject to option under the Plan; the number of shares for which any
Optionee has options; the option price of any options; and the type of stock
subject to option under the Plan.
(b) ACCELERATION OF OPTIONS. In connection with a transaction to
which section 425(a) of the Code applies, the Committee may waive any
requirements of sections 5(d) and 5(l) that an incentive stock option may not
be exercised within a certain time of its grant. The Committee may waive these
requirements in the case of any or all Optionees. It may waive these
requirements with respect to any or all options granted to an Optionee. The
Committee may take this action either before or after the transaction to which
section 425(a) of the Code applies. If this action is taken by the Committee
before the transaction occurs, the action must be contingent upon the
transaction occurring.
- 8 -
<PAGE> 31
SECTION 9. AMENDMENT AND TERMINATION. To the extent permitted
by law, the Committee or the Company's Board of Directors ("Board") may amend
or suspend, and the Board may terminate, this Plan. The Plan Administrator may
make administrative modifications to the Plan to comply with changes in
applicable law or to ensure effective and consistent administration of the
Plan; provided, however, that the Plan Administrator shall not amend the Plan
in any manner which alters the amount of the benefit provided under the Plan.
Unless an Optionee consents to an amendment, suspension, or termination of the
Plan which is adopted by the Board, the Committee or the Plan Administrator, no
amendment, suspension, or termination of the Plan will adversely affect the
rights of an Optionee with respect to any option granted to the Optionee.
Moreover, without approval of the owners of a majority of the shares of the
Stock voting either in person or by proxy at a duly convened meeting of the
Company's shareowners, no amendment to the Plan may:
(a) except as provided in section 8(a), increase the
aggregate number of shares subject to option under section 4(b) of the
Plan or the number of options which may be granted to an individual in
a single calendar year under section 4(c) of the Plan;
(b) except as provided in section 8(a), decrease the
option price at which options may be granted under section 5(a) of the
Plan;
(c) extend the period during which any option may be
exercised; or
(d) extend the period during which options may be granted
under section 10(b) of the Plan.
The Vice President - Human Resources of the Company, with the advice
of counsel, has the authority to amend the Plan or modify the administration of
the Plan to the extent required to ensure that transactions under the Plan are
exempt to the maximum extent possible from the short-swing profit provisions of
Section 16(b) of the Securities Exchange Act of 1934.
SECTION 10. EFFECTIVE DATE. This Plan will be effective on the
date it is adopted by the Board. However, this adoption will be conditioned
upon approval of the Plan, within one year of its adoption, by owners of a
majority of the shares of the Stock voting either in person or by proxy at a
duly convened meeting of the Company's shareowners. All grants of incentive
stock options, nonqualified stock options, and stock appreciation rights
granted before shareowner approval of the Plan shall be conditioned on
shareowner approval of the Plan.
- 9 -
<PAGE> 32
SECTION 11. MISCELLANEOUS PROVISIONS.
(a) NO RIGHT TO EMPLOYMENT. No grant of an incentive stock
option, nonqualified stock option, or stock appreciation right under this plan
shall give an Optionee a right to continued employment by the Company or any
Subsidiary or otherwise interfere with the Company's or any Subsidiary's right
to discharge an Optionee, whether or not for cause.
(b) TAX WITHHOLDING. When the Company has an obligation to
withhold any federal, state, or local tax upon the exercise of an incentive
stock option or a nonqualified stock option under the Plan, the Optionee may
pay the Company the amount of the required withholding, in cash, at the time of
exercising the option, in lieu of the Company withholding the amount through
the sale of shares.
(c) GOVERNING LAW. This Plan shall be construed and enforced in
accordance with the laws of the State of Delaware (without regard to the
legislative or judicial conflict of laws rules of any state), except to the
extent superseded by federal law.
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