<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
BELLSOUTH CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
Preliminary Copy
Notice of
1998
Annual Meeting
Proxy Statement
Annual Financial Statements and
Review of Operations
BELLSOUTH
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Notice of Annual Meeting................................................................................. 2
Proxy Statement:
Voting of Shares....................................................................................... 3
Election of Directors.................................................................................. 5
Governance of the Company.............................................................................. 8
Directors' Compensation................................................................................ 10
Stock Ownership of Directors and Executive Officers.................................................... 12
Directors' Proposals................................................................................... 13
Shareholder Proposals.................................................................................. 15
Nominating and Compensation Committee Report on Executive Compensation................................. 23
Compensation Committee Interlocks and Insider Participation............................................ 27
Executive Compensation................................................................................. 28
Five Year Performance Comparison....................................................................... 33
General Information:
Other Matters To Come Before The Meeting............................................................. 34
Shareholder Proposals for the 1999 Proxy Statement................................................... 34
Director Nominees or Other Business for Presentation at the Annual Meeting........................... 34
Section 16(a) Beneficial Ownership Reporting Compliance.............................................. 34
Other Information.................................................................................... 34
Solicitation of Proxies.............................................................................. 35
Exhibit A.............................................................................................. 36
Appendix:
</TABLE>
<PAGE>
[LOGO]
MARCH 10, 1998
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 27, 1998
To Our Shareholders:
The Annual Meeting of Shareholders of BellSouth Corporation will be held at the
Cobb Galleria Centre Ballroom, 2 Galleria Parkway, Atlanta, Georgia, on Monday,
April 27, 1998 at 9:00 a.m., Eastern Daylight Time. The following items of
business will be discussed and voted upon during the meeting:
1. The election of three directors for a term of three years and one director
for a term of two years.
2. The approval of Coopers & Lybrand L.L.P., certified public accountants, as
BellSouth's independent auditors for the year 1998.
3. Amendments to BellSouth's [Restated] Articles of Incorporation.
4. Such other matters, including shareholder proposals, that may properly come
before the meeting.
The Board of Directors has fixed March 9, 1998 as the record date for the
determination of the shareholders entitled to notice of, and to vote at, this
meeting or any adjournment.
I look forward to seeing you at the meeting. On behalf of the management and
directors of BellSouth Corporation, I want to thank you for your continued
support and confidence in 1998.
[LOGO]
Arlen G. Yokley
Senior Vice President--Corporate Compliance and Corporate Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE FILL IN, SIGN, DATE AND
PROMPTLY MAIL THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE.
2
<PAGE>
PROXY STATEMENT
VOTING OF SHARES
PURPOSE
This Proxy Statement and the accompanying proxy card are being mailed to
BellSouth shareholders beginning March 10, 1998. The BellSouth Board of
Directors is soliciting proxies to be used at the 1998 Annual Meeting of
BellSouth Shareholders which will be held on April 27, 1998. Proxies are
solicited to give all shareholders of record an opportunity to vote on matters
to be presented at the Annual Meeting. In the following pages of this Proxy
Statement, you will find information on matters to be voted upon at the Annual
Meeting of Shareholders or any adjournment of that meeting.
WHO CAN VOTE
All shareholders of record of BellSouth Common Stock as of the close of business
on March 9, 1998 are entitled to one vote for each share owned by them on all
matters properly brought before the meeting. Shares can be voted at the meeting
only if the shareholder is present or represented by a valid proxy.
SHARES OUTSTANDING
Forty percent of the outstanding shares of BellSouth Common Stock must be
present, either in person or represented by proxy, in order to conduct the
Annual Meeting of BellSouth Shareholders. On January 31, 1998, 1,008,826,041
shares of BellSouth Common Stock were outstanding, including shares issued to
certain grantor trusts, which are not considered outstanding for financial
reporting purposes. We do not know of any shareholder who beneficially owned
more than five percent of BellSouth's stock as of January 31, 1998.
PROXY CARD
If you sign the proxy card but do not specify how you want your shares to be
voted, your shares will be voted by the Directors' Proxy Committee in favor of
the election of all listed nominees and in accordance with the directors'
recommendations on the other subjects listed on the proxy card. The Committee
will vote at its discretion on any other matter that may properly come before
the meeting and is not listed on the proxy card.
If you wish to assign your proxy to someone other than the Directors' Proxy
Committee, you should cross out all three names appearing on the proxy card and
insert the name(s) of up to three other people. The person or persons
representing you must present your signed proxy card and a ballot at the meeting
in order to vote your shares.
VOTING OF SHARES
Each share of BellSouth Common Stock represented at the Annual Meeting is
entitled to one vote on each matter properly brought before the meeting. All
shares entitled to vote and represented by properly executed proxies received
before the Annual Meeting, and not revoked or superceded, will be voted at the
Annual Meeting in accordance with the instructions indicated on those proxies.
BELLSOUTH DIRECT STOCK PURCHASE AND DIVIDEND REINVESTMENT PLAN: If you
participate in this Plan, your Plan shares are included on the proxy card, as
well as shares you hold directly in certificate form registered in the same
name.
FOR BELLSOUTH EMPLOYEES: If you are a participant in one or more of the
following employee payroll-based plans, and the accounts are registered in the
same name, your proxy card will also serve as voting instructions for the
trustees of those plans:
BellSouth Employee Stock Ownership Plan (PAYSOP)
BellSouth Employee Stock Investment Plan (ESIP)
BellSouth Stock Purchase Plan (ESPP)
BellSouth Savings and Security Plan (SSP)
BellSouth Retirement Savings Plan (BRSP)
3
<PAGE>
The ESIP, ESPP, SSP, and BRSP each provide that the trustee will vote plan
shares represented by proxy cards which are not signed and returned in the same
proportion as shares for which signed cards are returned. Shares in the PAYSOP
are not voted unless the card is signed and returned.
REQUIRED VOTES--ELECTION OF DIRECTOR NOMINEES
Directors are elected by a plurality of the votes, which means the nominees for
the four director positions who receive the largest number of properly executed
votes will be elected as directors. Each share of Common Stock is entitled to
one vote for each of four director nominees. Shares that are represented by
proxies which are marked "withhold authority" for the election of one or more
director nominees will not be counted in determining the number of votes cast
for those persons.
REQUIRED VOTES--OTHER MATTERS
The outcome of the directors' proposal to amend the [Restated] Articles of
Incorporation will be determined by the vote of a majority of the outstanding
shares of Common Stock. All other matters properly considered at the meeting
will be determined by a majority of the votes cast.
TABULATION OF VOTES
Under certain circumstances, brokers are prohibited from exercising
discretionary authority for beneficial owners who have not returned proxies to
the brokers (so-called "broker non-votes"). In such cases, and in cases where
the shareholder abstains from voting on a matter, those shares will be counted
for the purpose of determining if a quorum is present but will not be included
in the vote totals with respect to those matters and, therefore, will have no
effect on the vote. In addition, proxies which are marked to deny discretionary
authority on other matters will not be counted in determining the number of
votes cast with respect to those matters.
HOW YOU CAN VOTE
Vote your choices by marking the appropriate boxes on the enclosed proxy card.
Sign and return the proxy card promptly in the enclosed self-addressed envelope.
YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR MARKED PROXY CARD PROMPTLY SO YOUR
SHARES CAN BE REPRESENTED, EVEN IF YOU PLAN TO ATTEND THE MEETING IN PERSON. IF
YOU WOULD LIKE TO VOTE IN ACCORDANCE WITH THE DIRECTORS' RECOMMENDATIONS ON THE
MATTERS DISCUSSED IN THIS PROXY STATEMENT, ALL YOU NEED TO DO IS SIGN, DATE AND
RETURN YOUR PROXY CARD.
REVOCATION OF PROXY
If you vote by proxy, you may revoke that proxy at any time before it is voted
at the meeting. You can revoke your proxy by delivering to the Company a proxy
card bearing a later date or by attending the meeting in person and casting a
ballot.
OTHER INFORMATION
ATTENDANCE AT ANNUAL MEETING: If you plan to attend the meeting, please retain
the admission ticket and map attached to the proxy card. Shareholders who do not
have admission tickets, including beneficial owners whose shares are held by
brokers or other institutions, will be admitted upon presentation of proper
identification at the door.
DUPLICATE SUMMARY ANNUAL REPORTS: If you hold BellSouth stock in more than one
shareholder account, you may be receiving multiple copies of the Summary Annual
Report. You can direct us to discontinue mailing multiple reports by marking the
appropriate box on the proxy card for those accounts. Leave at least one account
unmarked so that you continue to receive a Summary Annual Report. Eliminating
redundant mailings will not affect your receipt of future proxy statements and
proxy cards. To resume the mailing of a Summary Annual Report to a particular
account, call BellSouth Shareholder Services at 1-800-631-6001.
4
<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
At the date of this Proxy Statement, the Board of Directors of BellSouth
consists of 12 members, 11 of whom are non-employee directors. The Board is
divided into three classes whose terms are staggered so that the term of one
class expires at each Annual Meeting of Shareholders. Four director nominees
have been nominated for election at this meeting.
NOMINEES
The following nominees have been selected by the Nominating and Compensation
Committee and approved by the Board for submission to the shareholders: James H.
Blanchard, Armando M. Codina, and J. Tylee Wilson, each to serve a three year
term expiring at the Annual Meeting in the year 2001; and William S.
Stavropoulos, to serve a two year term expiring at the Annual Meeting in the
year 2000.
The Board believes that each director nominee will be able to stand for
election. If any nominee becomes unable to stand for election, proxies in favor
of that nominee will be voted in favor of the remaining nominees and in favor of
any substitute nominee named by the Board upon recommendation of the Nominating
and Compensation Committee. If you do not wish your shares voted for one or more
of the nominees, you may so indicate on the proxy card.
FOLLOWING IS THE PRINCIPAL OCCUPATION, AGE AND CERTAIN OTHER INFORMATION FOR
EACH DIRECTOR NOMINEE AND OTHER DIRECTORS SERVING UNEXPIRED TERMS.
NOMINEES FOR ELECTION AT THIS MEETING TO TERMS EXPIRING IN 2001: _______________
[PHOTO] JAMES H. BLANCHARD, 56, CHAIRMAN OF THE
BOARD AND CHIEF EXECUTIVE OFFICER,
SYNOVUS FINANCIAL CORP., A BANK HOLDING
COMPANY. DIRECTOR SINCE 1994. Director
of BellSouth Telecommunications, Inc.,
November 1988-February 1994. Director of
Columbus Bank and Trust Co.; Synovus
Data Corp.; Total System Services, Inc.;
and W. C. Bradley Co.
[PHOTO] ARMANDO M. CODINA, 51, CHAIRMAN OF THE
BOARD AND CHIEF EXECUTIVE OFFICER,
CODINA GROUP INC., A REAL ESTATE
DEVELOPMENT COMPANY. DIRECTOR SINCE
1992. Director of BellSouth
Telecommunications, Inc., March
1989-February 1992. Director of American
Bankers Insurance Group, Inc.; AMR
Corporation; CSR America, Inc.; FPL
Group, Inc.; and Winn-Dixie Stores.
[PHOTO] J. TYLEE WILSON, 66, RETIRED CHAIRMAN OF
THE BOARD AND CHIEF EXECUTIVE OFFICER,
RJR NABISCO, INC. DIRECTOR SINCE 1985.
Director of Southern Bell, October
1983-February 1985. Director of Carolina
Power & Light Company. Trustee, Wake
Forest University.
5
<PAGE>
NOMINEE FOR ELECTION AT THIS MEETING TO A TERM EXPIRING IN 2000: _______________
[PHOTO] WILLIAM S. STAVROPOULOS, 58, PRESIDENT
AND CHIEF EXECUTIVE OFFICER OF THE DOW
CHEMICAL COMPANY, A CHEMICAL MANUFACTUR-
ING COMPANY. DIRECTOR SINCE 1997.
Director of The Chemical Financial
Corp.; Dow Chemical Company; Dow
AgroSciences; Dow Corning Corporation;
and NCR Corporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ABOVE NOMINEES
------------------------
DIRECTORS WHOSE TERMS CONTINUE UNTIL 1999: _____________________________________
[PHOTO] F. DUANE ACKERMAN, 55, CHAIRMAN OF THE
BOARD, PRESIDENT AND CHIEF EXECUTIVE
OFFICER OF BELLSOUTH. DIRECTOR SINCE
1993 AND FROM APRIL 1989-APRIL 1991.
Vice Chairman of the Board, President
and Chief Executive Officer, December
1996-December 1997; Vice Chairman of the
Board and Chief Operating Officer,
January 1995-December 1996; President
and Chief Executive Officer, BellSouth
Telecommunications, Inc., November
1992-December 1994. President and Chief
Operating Officer, and Vice Chairman of
the Board, BellSouth Telecommunications,
Inc., December 1991- October 1992; Vice
Chairman and Group President, March
1991-November 1991. Vice
Chairman--Finance and Administration,
BellSouth Corporation, April
1989-February 1991. Director of South
Central Bell, January 1984-April 1985.
Director of American Business Products,
Inc.; and American Heritage Life
Insurance Company. Trustee, Rollins
College.
[PHOTO] REUBEN V. ANDERSON, 55, PARTNER, PHELPS
DUNBAR, A LAW FIRM. DIRECTOR SINCE 1994.
Mississippi Supreme Court Justice,
1985-1990. Director of The Kroger
Company; and Trustmark National Bank.
Trustee, Tougaloo College.
[PHOTO] JOHN G. MEDLIN, JR., 64, CHAIRMAN OF THE
BOARD, WACHOVIA CORPORATION. DIRECTOR
SINCE 1988. Director of Burlington
Industries, Inc.; Media General, Inc.;
Nabisco Holdings Corp.; National Service
Industries, Inc.; RJR Nabisco Holdings
Corp.; and US Airways Group, Inc.
[PHOTO] C. DIXON SPANGLER, JR., 65, CHAIRMAN OF
THE BOARD, C.D. SPANGLER CONSTRUCTION
CO. DIRECTOR SINCE 1987. President,
University of North Carolina, 1986-1997.
Director of C. D. Spangler Construction
Co.; Golden Eagle Industries, Inc.; and
National Gypsum Co.
6
<PAGE>
<TABLE>
<S> <C>
[PHOTO] RONALD A. TERRY, 67, RETIRED CHAIRMAN OF
THE BOARD, FIRST TENNESSEE NATIONAL
CORP. DIRECTOR SINCE 1987. Director of
South Central Bell, January
1984-February 1987. Director of
AutoZone, Inc.; Blue Eagle Golf Centers,
Inc.; Delta Life Corp.; Delta Life and
Annuity; Home Account Network, Inc.; The
Promus Hotel Corporation; and St. Jude
Children's Research Hospital.
</TABLE>
DIRECTORS WHOSE TERMS CONTINUE UNTIL 2000: _____________________________________
[PHOTO] J. HYATT BROWN, 60, CHAIRMAN, PRESIDENT
AND CHIEF EXECUTIVE OFFICER, POE &
BROWN, INC., AN INSURANCE SERVICES
COMPANY. DIRECTOR SINCE 1994. Director
of BellSouth Telecommunications Inc.,
March 1984-February 1994. Director of
FPL Group, Inc.; First Floridian
Insurance Co.; International Speedway
Corporation; Rock- Tenn Company; Sun
Banks of Volusia County; and SunTrust
Banks Inc.; Trustee, Stetson University.
[PHOTO] PHYLLIS BURKE DAVIS, 66, RETIRED SENIOR
VICE PRESIDENT, AVON PRODUCTS, INC.
DIRECTOR SINCE 1985. Director of Eaton
Corporation; The TJX Companies, Inc.;
and Trustee of Fidelity Mutual Funds.
[PHOTO] ROBIN B. SMITH, 58, CHAIRMAN AND CHIEF
EXECUTIVE OFFICER, PUBLISHERS CLEARING
HOUSE, A MAGAZINE SUBSCRIPTION COMPANY.
DIRECTOR SINCE 1994. Director of Kmart
Corp.; Springs Industries, Inc.; Texaco
Inc.; and two fund clusters administered
by Prudential Investment Management.
------------------------
7
<PAGE>
GOVERNANCE OF THE COMPANY
BOARD OF DIRECTORS
The business affairs of BellSouth are managed under the direction of the Board
of Directors in accordance with the Georgia Business Corporation Code, as
implemented by the Company's Articles of Incorporation and By-laws. Members of
the Board are kept informed through reports routinely presented at Board and
committee meetings by the Chief Executive Officer and other officers, and
through other means.
All of the directors are independent, non-employee directors except Mr.
Ackerman, the Chairman of the Board, President and Chief Executive Officer of
BellSouth. Mr. John L. Clendenin, the former Chief Executive Officer of the
Company, retired as Chairman of the Board on December 30, 1997. Directors who
are officers of BellSouth do not participate in any action of the Board relating
to any executive compensation plan described in this Proxy Statement. Mr. Reuben
V. Anderson is a partner in the law firm of Phelps Dunbar, located in Jackson,
Mississippi. During 1997, BellSouth Telecommunications, Inc. retained Phelps
Dunbar with regard to a variety of legal issues. The amount of fees paid to
Phelps Dunbar for such services was less than 5% of the firm's gross revenue for
the last fiscal year.
Shareholders who wish to suggest qualified candidates for consideration as
directors of BellSouth by the Nominating and Compensation Committee should write
to: Secretary, BellSouth Corporation, 1155 Peachtree Street, NE, Room 14B06,
Atlanta, Georgia 30309-3610, stating in detail the qualifications of such
persons.
BOARD AND COMMITTEE MEETINGS
The Board of Directors held 11 meetings in 1997. All directors attended at least
91% of Board and committee meetings during 1997 except Mr. Codina, who attended
71% of the meetings. During 1997, the standing committees listed below assisted
the Board in carrying out its duties.
COMMITTEES OF THE BOARD
<TABLE>
<CAPTION>
AUDIT EXECUTIVE FINANCE/STRATEGIC PLANNING NOMINATING AND COMPENSATION
- ----------------- ---------------------- --------------------------- ------------------------------
<S> <C> <C> <C>
R. A. Terry, F.D. Ackerman, Chair P.B. Davis, Chair C.D. Spangler, Jr., Chair
Chair P.B. Davis F.D. Ackerman J.H. Blanchard
R.V. Anderson C.D. Spangler, Jr. J.H. Brown A.M. Codina
J.G. Medlin, Jr. R.A. Terry R.B. Smith J. T. Wilson
W.S. Stavropoulos
</TABLE>
AUDIT COMMITTEE
The Audit Committee met six times in 1997. Its duties and responsibilities
include the following:
- Provides oversight of the financial reporting process and management's
responsibility for the integrity, accuracy and objectivity of financial
reports and accounting and financial reporting practices.
- Recommends to the Board the appointment of the Company's independent
public accountants.
- Provides oversight of management's responsibility for the integrity of its
accounting and financial reporting practices.
- Provides oversight of management practices relating to ethical
considerations and business conduct.
8
<PAGE>
EXECUTIVE COMMITTEE
The Executive Committee did not meet in 1997. The Committee meets on call by the
Chairman of the Board during the intervals between Board meetings and has all
the authority of the Board, subject to the limitations imposed by law, the
By-laws or the Board of Directors.
FINANCE/STRATEGIC PLANNING COMMITTEE
The Finance/Strategic Planning Committee met six times in 1997. Its duties and
responsibilities include the following:
- Reviews the long-term business goals and strategies of the Company,
including strategic considerations in the allocation of corporate
resources.
- Oversees the financial objectives, policies, procedures and activities of
the Company.
NOMINATING AND COMPENSATION COMMITTEE
The Nominating and Compensation Committee met ten times in 1997. Its Report on
Executive Compensation begins on page 24. Its duties and responsibilities
include the following:
- Nominates qualified persons as directors and executive officers.
- Establishes an overall strategy with respect to compensation for
directors, officers and management.
- Oversees the Company's executive succession plan.
- Oversees corporate governance matters.
DIRECTORS' PROXY COMMITTEE
The Board also has designated a Directors' Proxy Committee, which votes the
shares represented by proxies at the Annual Meeting of Shareholders. Its members
are Messrs. Ackerman, Spangler and Terry.
9
<PAGE>
DIRECTORS' COMPENSATION
During 1996, the Nominating and Compensation Committee of the Board undertook an
extensive review of the compensation paid to non-employee directors. Working
with an outside consultant, the Committee concluded that the compensation
package should be restructured to place more emphasis on equity in the Company
and less on retirement benefits. The new compensation program, which became
effective May 1, 1997, was designed to more closely align the directors'
interests with those of the Company's shareholders. This goal was accomplished
through the following:
- 50% of the directors' annual retainer is paid in shares of BellSouth
Common Stock and 50% is paid in cash;
- The accrual of retirement benefits under the directors' retirement plan
was discontinued effective April 30, 1997 and current directors were given
the option of receiving their accrued benefits under the current
retirement plan or converting the actuarial present value of the accrued
retirement benefits into deferred BellSouth phantom stock units;
- An annual grant of 200 shares of BellSouth Common Stock will be made to
each director; and
- The BellSouth Corporation Directors' Compensation Deferral Plan, which
became effective May 1, 1997, allows directors to defer receipt of all or
part of their cash or stock compensation into BellSouth phantom stock
units.
FEES AND OTHER COMPENSATION
During 1997, directors who were not employees of BellSouth received the
following :
<TABLE>
<S> <C>
$30,000 (50% paid in BellSouth
Annual retainer stock)
Attendance fee for each Board meeting $1,800
Attendance fee for each Committee meeting $1,500
Annual retainer for each Committee chaired $5,000
</TABLE>
Non-employee directors are also provided certain telecommunications services and
death benefits and, while on BellSouth business, travel accident insurance. In
1997, the cost of such benefits was approximately $1,250 per director.
The Company has historically maintained a retirement plan for non-employee
directors who have served on the Board or a subsidiary board for at least five
years and have reached the age of 55. Eligible directors receive an annual
retirement benefit of up to a maximum of 100 percent of the retainer with ten
years or more service. Payments are made for a maximum of 12 years following
retirement. Effective April 30, 1997, as discussed above, benefits no longer
accrue under this plan.
NON-EMPLOYEE DIRECTOR STOCK PLAN
Under the Director Stock Plan, each non-employee director receives an annual
grant of non-qualified stock options to purchase 2,000 shares of BellSouth
Common Stock, together with tandem stock appreciation rights, at an exercise
price per share equal to the fair market value of the stock on the grant date.
The options become exercisable one year after the grant date. In 1997, each of
the 11 eligible non-employee directors were granted options to purchase 2,000
shares of common stock at a per share exercise price of $43.31.
STOCK OWNERSHIP INCENTIVES
To further link director and shareholder interests, the Director Stock Plan also
provides that if the value of BellSouth Common Stock owned by a non-employee
director exceeds five times the amount of the annual retainer for Board members,
that director will receive additional stock options. The director receives one
additional option for every two shares he or she owns in excess of five times
the retainer
10
<PAGE>
amount. The maximum number of additional options that may be granted annually to
any director is 2,000 options. Directors only receive additional stock options
for each excess share one time; thereafter, they must acquire additional shares
in order to continue to receive additional stock options. The following
directors received grants of additional options at a per share grant price of
$43.31 in 1997: Blanchard (310 additional options); Brown (2,000 additional
options); Clendenin (2,000 additional options); Codina (777 additional options);
Davis (304 additional options); Medlin (776 additional options); and Terry (247
additional options).
The director realizes value from the stock options only to the extent that the
price of BellSouth Common Stock on the exercise date exceeds the price of the
stock on the grant date.
NON-EMPLOYEE DIRECTORS CHARITABLE CONTRIBUTION PROGRAM
The non-employee Directors Charitable Contribution Program has been terminated
with respect to new members of the Board; however, contributions will continue
to be made on behalf of directors who were members of the Board prior to January
1997. This program was designed to acknowledge the service of Company directors
and to recognize the mutual interests of directors and the Company in supporting
worthy institutions. The program provided that BellSouth would make a
contribution to an educational or cultural organization(s) designated by the
director. Directors had to have five years of service on the Board or on the
board of a subsidiary to qualify for this program. The amount contributed by
BellSouth increased with each year served by the director, up to a maximum
contribution of one million dollars payable after ten years of service. All
charitable deductions for tax purposes accrue solely to the Company and the
individual directors derive no direct financial benefit from the program.
11
<PAGE>
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth ownership of shares of BellSouth Common Stock by
each director, by each executive officer named in the Summary Compensation Table
on page 29, and by all directors and executive officers as a group, as of
February 2, 1998. These shares represent in the aggregate less than one percent
of the outstanding shares.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP AS OF
FEBRUARY 2, 1998
CURRENT SHARES
BENEFICIAL SHARES SUBJECT TO HELD UNDER
NAME HOLDINGS OPTIONS(A) DEFERRAL PLANS(B) TOTAL
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
F. Duane Ackerman (C)................... 19,799 56,146 47,715 123,660
Walter H. Alford........................ 26,445 17,219 5,011 48,675
Reuben V. Anderson (C).................. 1,000 4,666 5,666
James H. Blanchard (C).................. 7,369 6,869 14,238
J. Hyatt Brown (C)...................... 20,444 8,666 29,110
Armando M. Codina (C)................... 5,230 5,998 11,228
Phyllis Burke Davis (C)................. 3,175 6,664 9,839
Jere A. Drummond........................ 37,028 49,404 15,347 101,779
R. M. Dykes (C)......................... 5,935 19,945 5,885 31,765
Earle Mauldin (C)....................... 27,744 48,035 14,627 90,406
John G. Medlin, Jr. (C)................. 5,000 6,114 11,114
Robin B. Smith (C)...................... 2,000 4,000 6,000
C. Dixon Spangler, Jr. (C).............. 2,000 6,664 8,664
William S. Stavropoulos (C)............. 2,200 2,200
Ronald A. Terry (C)..................... 800 6,664 7,464
J. Tylee Wilson (C)..................... 10,000 9,946 19,946
Directors and Executive Officers as a
group................................... 257,419 412,078 176,017 845,514
</TABLE>
- ------------------
(A) Shares, included in total, which may be acquired within 60 days after
February 2, 1998 through the exercise of stock options. Options are
exercisable at the market price on the date of grant and are not discounted.
Directors and officers realize value from options when exercised and only to
the extent that the price of BellSouth stock on the exercise date exceeds
only the price of the stock on the grant date.
(B) Represents shares of BellSouth stock, included in total, earned in various
years under BellSouth's long term incentive plans, and accrued dividends on
those shares, receipt of which has been deferred pursuant to various
deferral plans. These shares may not be voted or transferred.
(C) In addition to the shares of BellSouth Common Stock shown on the table, the
following directors and executive officers held the indicated number of
phantom stock units, which are payable in cash, but track the performance of
BellSouth stock under various deferral plans: Mr. Ackerman-2,854; Mr.
Anderson-1,703; Mr. Blanchard-5,996; Mr. Brown-5,862; Mr. Codina-4,421; Ms.
Davis-2,394; Mr. Dykes-5,800; Mr. Mauldin-9,284; Mr. Medlin-7,963; Ms.
Smith-765; Mr. Spangler-7,240; Mr. Stavropoulos-173; Mr. Terry-10,827; Mr.
Wilson-1,182. These stock units may not be voted or transferred.
12
<PAGE>
DIRECTORS' PROPOSALS
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, acting upon the recommendation of the Audit Committee,
has appointed the firm of Coopers & Lybrand L.L.P., certified public
accountants, as independent auditors to make an examination of the accounts of
BellSouth and its subsidiaries for the year 1998. Coopers & Lybrand L.L.P. has
audited the accounts and records of BellSouth and its subsidiaries since 1984.
Representatives of Coopers & Lybrand L.L.P. will attend the Annual Meeting and
have the opportunity to make a statement if they desire and will also be
available to answer questions.
------------------------
PROPOSAL 3: AMENDMENTS TO THE [RESTATED] ARTICLES OF INCORPORATION
The Board of Directors has unanimously approved and recommends to the
shareholders the adoption of amendments to two Articles of the Company's
[Restated] Articles of Incorporation. The purpose of the changes to both
Articles is to reflect changes that have been made to the Georgia Business
Corporation Code since the Articles were adopted.
ARTICLE 10:
In 1986, the Company's shareholders adopted what is now Article 10 of the
Company's [Restated] Articles of Incorporation, which added statutory provisions
which had recently been adopted by the Georgia legislature. The statutory
provisions were designed to ensure that any multi-step attempt to take over a
Georgia company is made on terms which offer similar treatment to all holders of
each class of the company's voting stock. In addition, the Board of Directors
also adopted a By-law provision, Article V, Section 2, which states that all of
the requirements of the statutory provisions shall be applicable to business
combinations of the Company.
Since 1986, the Georgia legislature has enacted several changes to the statutory
provisions. Although none of these changes would have a substantive effect on
the application of the provisions, the Board feels that it is desirable to amend
the provisions of Article 10 so that it consistently tracks the language of the
statute. This will avoid any question in the future regarding the applicability
of the Georgia Code provisions. If the language in Article 10 differs, even in a
non-substantive way, from the language in the statute, disputes as to meaning
and applicability could arise, resulting in increased litigation expense to the
Company. Moreover, since the Company's By-laws provide that the requirements of
these provisions shall be applicable to business combinations of the Company, it
is important to maintain consistency between the statutory provisions and the
provisions of the [Restated] Articles of Incorporation.
The Board of Directors has unanimously approved and recommends that the
shareholders vote FOR the following amendments to Section I of Article 10 of the
Articles of Incorporation:
(1) Paragraph (5) of Section I of Article 10 shall be amended as follows:
(a) Subparagraph (5)(A) shall be amended by deleting the phrase "or
consolidation" following the word "merger" in two places; and
(b) A new subparagraph (5)(B) shall be added which shall read as follows:
"(B) Any share exchange with (i) any interested shareholder or (ii)
any other corporation, whether or not itself an interested
shareholder, which is, or after the share exchange would be, an
affiliate of an interested shareholder that was an interested
shareholder prior to the consummation of the transaction;"
and the remaining subparagraphs of Paragraph (5) of Section I shall be
renumbered accordingly;
13
<PAGE>
(c) Subparagraph (5)(E), which shall become subparagraph (5)(F) if the
proposed amendments are adopted by the shareholders, shall be amended by
deleting the phrase "or consolidation" following the word "merger" and by
adding the phrase "or any share exchange with any of its subsidiaries"
following the phrase "or any merger of the corporation with any of its
subsidiaries";
(2) Paragraph (8) shall be amended by adding the phrase "in addition to the
definition contained in Georgia Business Corporation Code Section 14-2-140,"
following the word "Corporation"; and
(3) A new Paragraph (12) shall be added which shall read as follows:
"(12) "Net assets" means the amount by which the total assets
of the Company exceed the total debts of the Company;"
and the remaining paragraph of Section I shall be renumbered accordingly.
A copy of Section I of Article 10 as it will read if the amendments are approved
by the shareholders at the Annual Meeting is attached to this Proxy Statement as
Exhibit A.
ARTICLE 11:
In 1988, the shareholders approved an amendment to BellSouth's Articles of
Incorporation that added a new Article then designated as Article 14 (now
Article 11), which provided:
No director of the Corporation shall be personally liable to the Corporation
or its shareholders for monetary damages for breach of his or her duty of
care or any other duty as a director, except for liability (i) for any
appropriation, in violation of his or her duties, of any business
opportunity of the Corporation, (ii) for acts or omissions not in good faith
or constituting intentional misconduct or a knowing violation of law, (iii)
for the types of liability set forth in Section 14-2-154 of the Georgia
Business Corporation Code, or (iv) for any transaction from which the
director derived an improper personal benefit.
The section of the Georgia Business Corporation Code authorizing such
exculpatory provisions has been amended by the Georgia legislature to remove the
reference to "not in good faith," to change "monetary damages for breach of his
or her duty of care or any other duty as a director" to "monetary damages for
any action taken or any failure to take any action, as a director" and to make
several other technical revisions.
The Board of Directors believes that it is appropriate and advisable to amend
Article 11 of BellSouth's [Restated] Articles of Incorporation to conform to the
current language of the Code. To the extent that the exculpatory charter
language varies from the language of the enabling statute, disputes as to
meaning and applicability could arise, resulting in greater litigation expense
to the Company and less certainty to the directors who are the beneficiaries of
this provision. The Board has unanimously approved and recommends that the
shareholders vote FOR the amendment to Article 11 of the [Restated] Articles of
Incorporation to read as follows:
No director of the Corporation shall be personally liable to the Corporation
or its shareholders for monetary damage for ANY ACTION TAKEN, OR ANY FAILURE
TO TAKE ANY ACTION, as a director, except for liability (i) for any
appropriation, in violation of his or her duties, of any business
opportunity of the Corporation, (ii) for acts or omissions which involve
intentional misconduct or a knowing violation of law, (iii) for the types of
liability set forth in Section 14-2-832 of the Georgia Business Corporation
Code, or (iv) for any transaction from which the director received an
improper personal benefit. (New language is italicized.)
BellSouth has not received notice of any suit or proceedings as to which these
provisions would apply.
14
<PAGE>
Approval of Proposal 3 requires the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 2 AND 3
------------------------
SHAREHOLDER PROPOSALS
The following shareholder proposals may be presented for a vote at the Annual
Meeting. We expect the proposals to be presented either by the proponent or a
designated representative. The proposals are printed exactly as they were
submitted by the shareholder, except for changes permitted by the Securities and
Exchange Commission. Spaces are provided on the accompanying proxy card to vote
FOR, AGAINST, or ABSTAIN with respect to each of the proposals.
PROPOSAL 4: EXECUTIVE OFFICERS' INCENTIVE AWARDS
Robert S. Kopach, 4309 San Carlos Drive, Fairfax, Virginia 22030-5371, record
owner of 318 shares of BellSouth Common Stock, has informed the Company that he
intends to present the following proposal at the Annual Meeting:
RESOLVED:
I recommend that the current Short Term and Long Term Incentive awards for
executive officers be abolished. The new Short Term Incentive award I propose
would be tied proportionately to the price of the stock at end of the year.
Example: if stock price is up 20% at end of the year, then the incentive award
would be 20% of salary.
1. Under the existing incentive plans, as illustrated in the Summary
Compensation table, executive officers are getting rich at the expense of
customers, employees and shareholders. Example: Short Term award range of
our 95% to over 200%. These excessive incentive plans have gotten out of
control. When and where will it end?
2. There is no need for any Long Term Incentive award. Since the annual salary
is more than adequate and the executive officers receive an annual award.
3. Under my proposed Short Term Incentive Plan the executive officers award
would be aligned with the shareholders return by tying their award to the
stock price appreciation. This is clear and fair.
4. We need to bring some justice and equity back into the workplace. There is
too big a gap between what the executive officers make and the pay of the
average worker. The pay an executive officer makes in a few years far
exceeds the average workers total lifetime or career earnings.
5. The only reason management gets away with this abuse of power is that most
of the shareholders do not take the time to read the proxy materials.
Unfortunately, they are too trusting and vote according to the board's
recommendations. Please note that the Board of Directors are mostly
executive officers or retired executive officers from other companies.
Members of the board all hold seats for several other companies. Imagine
that Huh!
6. The media needs to inform and educate the shareholders and public before
proxy materials coming out in order to win a battle such as this. It is
their responsibility to report the news and not worry about the reprisals
such as the loss of advertising dollars.
7. My point has been made the current incentive plans are just wrong. The
Company has the nerve to talk about shareholder value.
8. Management needs to be held accountable. A vote for this proposal will send
a clear message and remind them they work for us the shareholders. Lets make
it right. Make management walk the talk.
15
<PAGE>
BOARD OF DIRECTORS' RECOMMENDATION:
THIS PROPOSAL WAS SUBMITTED AT THE 1993, 1995, 1996 AND 1997 ANNUAL MEETINGS AND
WAS DEFEATED BY A MAJORITY OF THE VOTES CAST. Your directors have again
considered the proposal and continue to believe it would make the executive
officers of the Company less accountable for performance than under the
compensation program now in place.
Short term awards are not extra compensation. Total annual compensation,
including both standard short term awards and base salary, is set at levels
comparable to that at companies similar to BellSouth. A significant part of this
total amount must be earned, under the short term plan, based on how effectively
the executives manage the business during the year. In addition, the BellSouth
Corporation Officer Short Term Incentive Award Plan grants awards intended to
qualify as performance-based under Section 162(m) of the Internal Revenue Code.
If short term awards based on performance were eliminated, there would be no
direct correlation between annual cash compensation and operational performance.
Executives would be less accountable for important goals, such as customer
satisfaction, which they must now achieve to earn a short term award. Setting
measurable standards and paying executives based on their achievement of these
standards is a much more effective way to achieve important goals set by the
Board of Directors.
Stock performance is important and is already a part of the Company's
compensation programs. In fact, stock performance, including total return to
shareholders as well as stock price appreciation, is the only measurement under
the Company's long term incentive program. The Nominating and Compensation
Committee Report on Executive Compensation (beginning at page 24 of this Proxy
Statement) explains the compensation programs in detail. Shareholders should
find this Report helpful in evaluating this proposal.
FOR THE REASONS SET FORTH ABOVE, YOUR BOARD OF DIRECTORS
STRONGLY RECOMMENDS THAT SHAREHOLDERS VOTE "AGAINST" PROPOSAL 4.
------------------------
PROPOSAL 5: SALARY AND COMPENSATION CEILING
Raymond M. Baechle, Jr. and Carla D. Baechle, 6420 W. Falcon's Lea Dr., Davie,
Fl 33331, record owners of 273 shares of BellSouth Common Stock, have informed
the Company that they intend to present the following proposal at the Annual
Meeting:
"Resolved:
The shareholders of BellSouth recommend that the Board of Directors institute a
salary and compensation ceiling such that as to present and future contracts, no
senior executive or director of the Company receive combined salary and other
compensation which is more than nine and one half times the annual wage of a
wage scale 32 non-management employee. Currently this amount would be ($42,952 x
9.5) $408,044.00 annually. As wages increase for non-management employees, so
will this compensation ceiling."
"Reasons:
Officers and directors of public corporations are the employees and not the
owners, except as they may be shareholders in common with other stockholders.
Yet they give the appearance that they run the corporations primarily for their
benefit and incidentally for the shareholders. The Board of Directors, a closed
group which perpetuates itself determines who is to be selected to the Board and
who is to be an officer of the company, as well as the compensation to be
received. Directors and officers can run the corporation as if it were their
property. Thus, officers may drain away millions of dollars in salary stock
options and other compensation. When the recommended ceiling on salary and
compensation is exeeded [sic], it demonstrates an expression of greed and abuse
of power. A prime example of this is the
16
<PAGE>
variable compensation program now in place which was applied to Mr. Ackerman for
the one day of 1996 in which he served as Chief Executive Officer and to Mr.
Clendenin who retired on December 30, 1996."
"The Company argues that a significant part of the executive officer's
compensation is at risk and is earned only if specific performance goals are
met. With the current downsizing trend, executive officers are in a win-win
situation. As more employees are cut, expenses drop, profits increase and their
bonuses increase."
"High compensation need not serve as an incentive for a better run or more
profitable corporation. There is no shortage of qualified people who could do as
good a job as the incumbent officers of the corporation and who have no
hesitation on serving within the aforementioned pay ceiling."
"The officers and directors of the Company seem to forget that it is the average
worker within this company who makes it profitable. We need to bring some
justice and equity into the workplace. There is a large gap between what the
executive officers make and the pay of the average worker."
"The Company has chosen to outsource areas which are closer to the core
business, shifting the cost structure from fixed to variable. It claims this
will increase capabilities and innovation and reduce costs. In reality,
outsourcing has led to promotions of management people, an increase in the
number of people (contractors) to do the same work as those outsoured [sic], and
increased costs. Increased innovation within the Company is not necessarily the
product of outsourcing, it can be achieved if the employees are given the
flexibilty [sic] and empowerment to do so."
"If you AGREE please mark your proxy FOR this resolution."
BOARD OF DIRECTORS' RECOMMENDATION:
The Board of Directors of the Company reviews the compensation of the Company's
directors and executive officers in light of market conditions, the Company's
financial performance and other factors. As discussed in the Nominating &
Compensation Committee's Report on Executive Compensation at page 24, the Board
believes that competitive compensation levels are necessary to attract and
retain qualified directors and management and to provide appropriate performance
incentives to the Company's executive officers.
The Board of Directors believes that the Company's executive officer
compensation program has allowed the Company to attract and retain talented,
experienced management. Furthermore, compensation policies which attract and
retain qualified directors and management are in the best interests of the
shareholders because qualified management and a qualified board of directors are
integral to enabling the Company to achieve its performance goals.
The Board of Directors therefore believes that inflexible requirements regarding
compensation, such as that contemplated by this proposal, will hinder its
ability to manage the Company for the best interests of the shareholders and
that the Board of Directors should retain discretion with respect to the
compensation of the Company's management.
FOR THE REASONS SET FORTH ABOVE, YOUR BOARD OF DIRECTORS
STRONGLY RECOMMENDS THAT SHAREHOLDERS VOTE "AGAINST" PROPOSAL 5.
------------------------
17
<PAGE>
PROPOSAL 6: EXECUTIVE BONUS RESTRICTION
B. Wayne Carmichael, RR 2 Box 133 KM, Dieterich, IL 62424, Trustee for M.
Katherine Carmichael Trust and record holder of 2,466 shares of BellSouth Common
Stock, has informed the Company that he intends to present the following
proposal at the Annual Meeting:
Executive compensation in excess of one million dollars comes directly from
company earnings and is a dilution of shareholders value, not tax deductible.
The board shall consider shareholders value and interests above self interest of
executives. This proposal does not inhibit the Board from its legal and
fiduciary obligations.
Resolved that the company shall restrict any one executive bonus to no more than
one million dollars per year, including stock options.
SUPPORTING STATEMENT:
It may be argued that procedures are in place to provide limited compensation.
Facts do not support the argument. Shareholders confidence is low with regard to
Board action.
Chairman of the Board, Mr. Clendenin received 2.7 million dollars in pay plus
options and an additional 3 million dollars to retire early. At the same time
stock value fell 7%. It is also noted, first quarter profit fell 29% from the
same 1996 quarter. Earnings per share fell from 98 cents to 70 cents in the same
period.
This performance should not be rewarded with a big bonus, thus diluting
shareholders value.
We need to bring equity back into the work place. The pay an executive officer
makes in a few years far exceeds the average workers lifetime earnings. It seems
the board of directors have forgotten that they work for the shareholders.
I could go on about the injustices of excess executive compensation. My point
has been made--It is just wrong!
Vote yes for this proposal.
BOARD OF DIRECTORS' RECOMMENDATION:
This proposal, like the proposal presented in four of the last five years by Mr.
Robert Kopach (Proposal 4 at page 15 above) deals with the annual bonuses
awarded to the executive officers of the Company. This proposal seeks to limit
executive bonuses to $1 million per year, including stock options.
Once again, the Board of Directors believes that it would not be in the best
interests of the Company or its shareholders to adopt this proposal. Short term
awards are not simply "extra" compensation. As explained in its Report on
Executive Compensation on page 24, the Nominating & Compensation Committee
carefully targets the executive officers' total annual compensation, including
both standard short term awards and base salary, at levels comparable to those
at companies similar to BellSouth. A significant part of this total amount must
be earned, based on how effectively the executives manage the business during
the year. In addition, the BellSouth Corporation Officer Short Term Incentive
Award Plan grants awards intended to qualify as performance-based under Section
162(m) of the Internal Revenue Code. Placing an arbitrary limit on the amount of
the short term award limits the incentive for the officers to improve the
performance of the business. Setting measurable standards and paying executives
18
<PAGE>
based on their achievement of those standards is a much more effective way to
achieve important goals set by the Board of Directors.
The Board of Directors believes that the proposal's Supporting Statement is
based on erroneous and misleading factual statements and does not support the
proponent's position. The Board is confident that the methods it uses to
determine the incentive awards for the executive officers are in fact in the
best interests of the shareholders of the Company. It therefore believes that
this proposal should be rejected.
<TABLE>
<S> <C>
FOR THE REASONS SET FORTH ABOVE, YOUR BOARD OF DIRECTORS
STRONGLY RECOMMENDS THAT SHAREHOLDERS VOTE "AGAINST" PROPOSAL 6.
</TABLE>
------------------------
PROPOSAL 7: POLITICAL CONTRIBUTIONS
John P. Sloan and Bernardine J. Sloan, 2741 S. Fourth St., Apt D, Springfield,
IL 62703, record owners of 200 shares of BellSouth Common Stock, have informed
the Company that they intend to present the following proposal at the Annual
Meeting:
SHAREHOLDER PROPOSAL
Resolved:
BellSouth hereafter referred to as the corporation shall obtain shareholder
consent/approval for political contributions in excess of $10,000.00 annually to
a political party. Be it further resolved that the corporation shall publish in
its annual report to shareholders a list of political contributions for the
previous 12 month period.
Supporting statement of shareholder:
The Corporation, through its Board of Directors, contributes many thousands of
dollars to the political process in an effort to influence political decisions
dealing with a variety of items ranging from socio-economic issues to
environmental factors.
Oftentimes, an individual shareholder many [sic] differ with the corporate view
toward the above issues. But, by virtue of ownership of shares, the shareholder
is giving tacit approval to the Directors to contribute to a political party
which is in opposition to the shareholder's individual views.
At the very least, a shareholder of a public-traded corporation is entitled to
know where and when his/her views differ from the corporate view regarding the
political process and its bearing on socio-economic and environmental factors.
This proposal would reveal any differences between the shareholder's individual
views and corporate activity in the political process. Consequently, the
shareholder would have an opportunity to defend his/ her views by taking
appropriate action.
Without this proposal, a corporate decision to support a political party could
be tantamount to coercive cooptation [sic.] of shareholders in accepting or
supporting a political party contrary to a shareholder's individual view.
The publication of political contributions should be in tandem with a limit on
political contributions of $10,000.00. The $10,000.00 limit will help abate
"influence peddling". Huge corporate contributions to a political party
(referred to as "soft money") are ultimately and indirectly used to buy
influence on a
19
<PAGE>
particular issue from a candidate (referred to as "hard money"). Until such a
time that effective campaign finance laws are enacted (which appears remote at
this junction) shareholders must initiate action at the grass roots level in
order to curb the abuse of corporate contributions to the political process.
A past statesman cautioned us on this subject: All that remains to insure
corrupt government is for all good (wo)men to do nothing. The words may not be
the exact quotation, but the message is clear: sit on your rights too long and
you may lose the privilege to exercise them.
If shareholders fail to act on this proposal, its failure could seriously
undermine the principle of "One (wo)man--one vote!"
If shareholders wish to contribute or participate in the political process, most
of us are mature enough to do so on an individual basis. We should not be
subjected to coercive cooptation [sic.] in supporting a political party which
stands in opposition to our individual beliefs.
BOARD OF DIRECTORS' RECOMMENDATION:
The Board believes that approval of this shareholder resolution would require
the unnecessary expenditure of funds by the Company and would not provide the
shareholders with any appreciable benefit in return.
It is BellSouth's policy to comply fully with all federal, state and local laws
governing corporate contributions to political candidates. Employees may make
contributions to a Political Action Committee ("PAC") or directly to a state
candidate's campaign. A PAC's funds come solely from voluntary contributions by
the Company's employees, except in some states in which the Company may make
contributions to a PAC. Under federal and state election laws, PACs must
publicly disclose information about their contributions. Many states also
require candidates to disclose contributions above a specified limit. Therefore,
most of the information sought by this proposal is already publicly available.
The Board thus believes that the expenditure of the Company funds and the
employee time that would be required in order to create a report to shareholders
on the Company's political contributions is unnecessary.
The total amount of the Company's corporate political contributions, including
contributions to political parties is quite small and is insignificant in
relation to the Company's business. The Company's corporate expenditures in
support of federal and state government affairs activities on legislative and
regulatory matters are a legitimate business expense. Because the Company's
business operations are subject to numerous laws and regulations, it is critical
that we maintain our access and visibility to the legislators who in effect
control our future. The Board therefore believes that it would not be in the
best interests of the Company to ask shareholders to approve of or consent to
the Company's political contributions. This is an issue related to the business
of the Company that should be left to the judgment of management and the Board
of Directors.
In addition, the inference by the proponents that the Company's political
contributions are somehow abusive or used for improper purposes is false and
misleading. As stated above, the Company complies with all federal, state and
local laws relating to contributions and does not in any way abuse the political
contribution process.
<TABLE>
<S> <C>
FOR THE REASONS SET FORTH ABOVE, YOUR BOARD OF DIRECTORS
STRONGLY RECOMMENDS THAT SHAREHOLDERS VOTE "AGAINST" PROPOSAL 7.
</TABLE>
------------------------
20
<PAGE>
PROPOSAL 8: CHINA LABOR POLICY
Tracy Gore, 7260 Hillside Avenue, #205, Los Angeles, California 90046,
beneficial owner of 180 shares of BellSouth Common Stock, has informed the
Company that she intends to present the following proposal at the Annual
Meeting:
RESOLUTION FOR AN ANTI-SLAVE LABOR POLICY FOR BELLSOUTH
The stockowners hereby recommend that the Board of Directors adopt the following
policies for all dealings with China:
1. Goods or services produced in whole or part by slave or forced labor shall
not be acceptable for delivery to the corporation, its subsidiaries,
affiliates, or joint ventures. A suitable certificate of origin shall be
required.
2. Goods provided by the corporation, its subsidiaries, affiliates, or joint
ventures shall not be sold to or otherwise provided to any facility
utilizing slave or forced labor. A suitable certificate of use shall be
required.
3. The right of on-site inspection to determine the existence of slave or
forced labor shall be vigorously pursued.
4. The corporation shall cooperate promptly, energetically, and fully with the
United States government and any international organization in their laws or
policies to discourage the use of slave or forced labor.
Supporting Statement:
The outrageous arrest, incarceration, trial, and expulsion of American Harry Wu
in the summer of 1995 by the Chinese Communist regime put the spotlight on the
immense Chinese laogai forced labor system. Mr. Wu has been exposing this
hideous system for years.
Slave and forced labor are widespread in China. China's laogai camps and
factories include about 20,000,000 slave and forced laborers. They produce a
wide range of products, including sophisticated machinery and electronics and
much of it is intended for export.
BellSouth has multi-million dollar deals with China, but has no comprehensive
anti-slave labor policies, as proposed by this resolution. Here's what
BellSouth's current policy lacks:
- - No by-law or corporate article includes it.
- - No board resolution includes it.
- - No agreement with joint ventures or affiliates includes it.
- -No specific written guideline for buyers, sales personnel, or other employees
or agents covers all sales or purchases.
- -No standard clause on it is in all purchase or sales contracts.
- -No specific penalty for violations by customers, suppliers, employees, or
agents exists.
21
<PAGE>
- -No relevant certificates of origin (for all purchases) or use (for all sales)
are utilized.
Much of BellSouth's business is conducted overseas and is beyond the reach of
U.S. Law, but not beyond managerial control.
Please vote for my proposed resolution so that BellSouth will retain the respect
and ethical standards we have come to expect from this company.
BOARD OF DIRECTORS' RECOMMENDATION:
BellSouth does not in any way support or condone the use of slave or forced
labor in China or anywhere else in the world. BellSouth does not knowingly
purchase products produced by slave or forced labor at any of its operating
sites throughout the world. The Board of Directors respects and supports the
principles behind this proposal, but strongly believes that it is not applicable
to BellSouth and that to adopt the policy as proposed would be cumbersome,
expensive and non-productive.
The Company's operations in China are financially insignificant to the Company,
with revenues representing less than .1% of consolidated revenues. All of the
goods purchased by Company representatives in China are standard office or
computer equipment and supplies or telecommunications equipment purchased from
major international companies with worldwide operations, and not directly from
Chinese manufacturers. The issue of slave or forced labor is therefore
tangential to the business of the Company and the Board of Directors therefore
does not believe it is necessary or appropriate for the Company to adopt the
policy required by this proposal.
<TABLE>
<S> <C>
FOR THE REASONS SET FORTH ABOVE, YOUR BOARD OF DIRECTORS
STRONGLY RECOMMENDS THAT SHAREHOLDERS VOTE "AGAINST" PROPOSAL 8.
</TABLE>
------------------------
22
<PAGE>
NOMINATING AND COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
POLICY
The Nominating and Compensation Committee of the BellSouth Board of Directors
(the "Committee") is responsible for the oversight and administration of the
Company's executive compensation program. The Committee is composed entirely of
independent, non-employee directors.
The Company's executive compensation program is based on a philosophy that the
total compensation package must be competitive with similar companies in order
to attract and maintain executive talent. The program also seeks to emphasize
variable compensation. The 1997 executive compensation program was based on the
following principles:
- Base salaries are targeted to the median level of salaries paid to
officers in comparable companies with comparable responsibilities.
- Annual incentive awards are dependent upon the Company's performance
against established target levels and its financial performance relative
to its peers.
- Long-term incentive awards include stock options and cash incentives based
on Total Shareholder Return ("TSR"), which is measured by adding the
amount of appreciation in the Company's stock price to the amount of
dividends paid to shareholders. The amounts of the awards are determined
by comparing BellSouth's TSR to the TSR of peer companies. As a result,
officers' rewards are directly linked to the return realized by BellSouth
shareholders.
The 1997 compensation program and a specific discussion as to the compensation
of the Chief Executive Officer are set out in detail below.
STOCK OWNERSHIP GUIDELINES
In keeping with its belief that tying the interests of BellSouth executives to
those of the shareholders will result in enhanced shareholder value, the Board
has established executive stock ownership guidelines. Under these guidelines,
the officers are expected to own BellSouth stock valued at between one and four
times their individual base salary amounts, depending upon their position in the
Company. In order to incent officers to exceed the targets, awards of Incentive
Stock Options are made to those who do exceed the targets. In 1997, the Company
awarded 69,796 Incentive Stock Options to 34 officers who exceeded their stock
ownership targets.
BASE SALARY
BellSouth establishes a market-competitive target salary for each officer based
upon his or her job responsibilities. The target salary is established by
utilizing information from general industry surveys, surveys of the
telecommunications industry specifically, and proxy materials of the companies
included in the performance graph on page 34. After reviewing the market
competitiveness of each individual salary and the CEO's recommendations
regarding individual pay treatment, the Committee approved individual salary
levels for the named executive officers as shown on the Summary Compensation
Table on page 29.
ANNUAL INCENTIVE AWARDS
In April 1996, the Company's shareholders approved the BellSouth Corporation
Officer Short Term Incentive Award Plan (the "Incentive Award Plan"). The
purpose of the Incentive Award Plan is to provide annual incentive awards that
qualify as performance-based compensation under Section 162(m) of the Internal
Revenue Code (see discussion below), thus allowing the Company to fully deduct
these
23
<PAGE>
payments. The Incentive Award Plan establishes an overriding performance goal
prohibiting the payment of any short term award to eligible officers unless the
Company has positive Consolidated Earnings, as defined in the plan. Furthermore,
the Incentive Award Plan establishes maximum levels of awards payable to any one
individual. The Committee works within these limitations and then exercises
discretion in determining the actual amount of individual awards. A target
incentive award amount, determined as a percentage of base salary, is
established for each officer.
The Incentive Award Plan is intended to place a significant part of each
executive's annual compensation at risk. Annual incentive awards for a
particular year are based on that year's performance (measured by revenue
growth, net income, and customer satisfaction) and individual achievement of
commitments linked to corporate strategic objectives. Performance objectives are
approved by the Committee at the beginning of each year based on a projection of
the results BellSouth will be required to achieve in order to be a
top-performing company in its peer group. The weight given to each of these
performance components varies, depending upon the officer's particular job
assignment. The measurements and target performance levels for each officer are
tied to the business entity with which he/she is most closely associated. For
1997, the typical executive officer's award, excluding the Chief Executive
Officer's, was weighted as follows: 62.5% financial results; 12.5% customer
satisfaction results; and 25% individual strategic results. In addition, the
officer's award can be adjusted by the Committee based upon a comparison of the
Company's financial performance with the financial performance of the peer group
of companies. Awards of officers who manage a business unit are based on a
comparison of that business unit's financial performance with the financial
performance of companies in a related industry group. If the Company's financial
performance is above the median performance of a selected group of its peers,
officers' awards will be above the median incentive award level. Similarly, if
the Company's performance is below the median performance of its peers,
officers' awards will be below the median incentive award level.
Application of the methodology described above resulted in the payment of the
amounts reported in the Summary Compensation Table on page 29 to the named
executive officers for 1997. The method used to determine the Chief Executive
Officer's annual incentive award is discussed below in the section entitled
"1997 Compensation for the Chief Executive Officer."
LONG TERM INCENTIVE PROGRAM
BellSouth's long term incentive program is intended to focus the officer group
on the achievement of corporate goals over time. Officers must carefully weigh
the short and long term benefits or consequences of their decisions and manage
the business to effectively grow and compete in a rapidly changing
communications marketplace. They also must balance long term business
development with the need for a reasonable current return. The Committee wants
to incent the Company's officers to take the risks necessary to secure a strong
foothold for BellSouth in the competitive marketplace, which is continually
changing to admit new competitors such as alternative local exchange service
providers, cable companies, wireless service providers, and long distance
carriers.
This philosophy is put into effect by basing the Company's long term incentive
plans on the performance of BellSouth stock. First, under the BellSouth
Corporation Stock Plan, each officer receives an annual grant of nonqualified
stock options. The options are issued at market price on the date of grant. The
Company does not issue options at less than fair market value at the date of
grant and the officer receives value from the options only if the stock price
appreciates.
In 1997, in addition to the stock option grants, the Committee also awarded
dividend equivalent rights to each officer for the 1997-1999 performance period,
as described in the section entitled "Long Term
24
<PAGE>
Incentive Plan Awards in Fiscal Year 1997" on page 31. The only performance
factor used to determine payouts under this program is relative Total
Shareholder Return (TSR), which is defined on page 24. The Committee believes
that the grant of dividend equivalent rights emphasizes pay for performance and
provides an additional incentive for officers to maximize TSR.
The amount of stock options and dividend equivalent rights granted to each
officer for 1997 was determined by applying an annual grant level percentage
against each individual executive's base salary. This percentage was comparable
to the grant practices of the high-performing companies, as determined by
examining external surveys and data from proxy statements. The actual number of
stock options granted was determined by using the Black-Scholes option pricing
model. The number of dividend equivalent units awarded was determined by using
the calculated present value of the dividend payment stream on a share of
BellSouth stock, assuming constant dividend amounts. The Committee does not
adjust each annual grant to reflect options or units outstanding or previously
granted to a particular executive officer.
In 1993, 1994 and 1995, the Company's executives received grants of units under
the Shareholder Return Cash Plan ("SRCP"). Each grant provided for five annual
cash payments. The maximum payment under the SRCP is 100% of the value of the
annual dividends paid by the Company on a share of common stock multiplied by
the number of units granted. The actual amount of the payments is determined by
comparing the Company's TSR with the median TSR of a peer group of companies.
BellSouth's TSR exceeded the median TSR of the peer group for all performance
periods. As a result, each officer received the amount reported on the Summary
Compensation Table on page 29.
1997 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
1997 BASE SALARY: F. Duane Ackerman became Chief Executive Officer of the
Company on December 30, 1996, following the retirement of John L. Clendenin. In
determining Mr. Ackerman's 1997 base salary, the Committee reviewed reported
base salary information for the chief executive officers of the other companies
in the peer group as well as the salaries of chief executive officers of other
companies of comparable size. Due to the fact that Mr. Ackerman was newly
promoted to his position, Mr. Ackerman's 1997 salary was not set at the
market-competitive level. However, assuming satisfactory performance, the
Committee intends to increase Mr. Ackerman's salary to a market-competitive
level over the next few years.
1997 SHORT TERM INCENTIVE AWARD: In determining the Chief Executive Officer's
short term incentive award for 1997 performance, the Committee reviewed
BellSouth's 1997 financial performance with respect to the standard plan
measurements of revenue growth, net income, and customer satisfaction. In
addition to taking into account BellSouth's financial performance and customer
satisfaction levels, the Committee considered BellSouth's continuing efforts to
achieve and maintain a competitive position within the communications industry.
Under Mr. Ackerman's leadership in 1997, BellSouth continued to operate in
accordance with the three major components of its corporate strategy: to
strengthen its leadership position as the premier telecommunications company in
the South; to grow its domestic wireless business profitably; and to grow,
evolve and expand its international operations with an emphasis on Latin
America. The following accomplishments are evidence of the success of these
strategies:
- Growth in earnings per share, adjusted for special items, of 12.3%, the
best in the Company's peer group;
- Growth of access lines in service by 4.8%, setting a record for the number
of new access lines in a calendar year;
25
<PAGE>
- Continued growth in revenues from value-added telephone services such as
Caller ID, Call Waiting and MemoryCall-Registered Trademark- voice
messaging service, which generated $1.3 billion in revenues, a 24%
increase over 1996;
- Continued aggressive efforts to ensure that the provisions of the Federal
Telecommunications Act of 1996 are properly applied and that the
marketplace is opened to full and fair competition. The Act gives
BellSouth the ability to compete in the long distance market, clarifies
the rules for entry into the video market and enables BellSouth to jointly
market all of its services, including cellular services;
- Continued improvement in productivity of telephone operations, which now
leads the industry in employee productivity, as measured by the number of
employees per 10,000 access lines;
- Continued growth in domestic and international wireless customers,
bringing total worldwide wireless customers to 6.1 million;
- Continued growth in international operations, particularly in Latin
America, with such significant accomplishments as (a) winning the cellular
license for Sao Paulo, Brazil, the world's third largest city with a
population of 18 million; (b) winning the cellular license for the
northeastern region of Brazil, with a population of 26 million; (c)
acquiring a majority stake in Tele 2000, a telecommunications company in
Peru; (d) acquiring a majority stake in OTECEL, one of two nationwide
wireless telephone companies in Ecuador; and (e) acquiring a 49% stake in
Nicacel, a company that provides cellular service in the Pacific region of
Nicaragua; and
- Continued to take major steps toward providing cable service through the
launch of digital video service in New Orleans and the acquisition of
digital video rights in Atlanta, Miami and other areas of Florida.
Based on these factors, the Committee felt that Mr. Ackerman had provided strong
strategic leadership for the Company. Since there was no pre-established formula
for determining the annual incentive award for the Chief Executive Officer, the
Committee reviewed the factors described above and, exercising its judgment,
awarded the Chief Executive Officer the overall short term incentive award shown
in the Summary Compensation Table on page 29.
1997 LONG TERM INCENTIVE AWARD: The Committee also approved payment to the
Chief Executive Officer of the amount shown in the Summary Compensation Table
for units granted under the Shareholder Return Cash Plan for performance periods
beginning in 1993, 1994 and 1995. This payment represents 100% of the target
value and was based on a comparison of BellSouth's TSR to the median shareholder
return of the peer group shown in the performance graph. Using the same
procedure as is described in "Long Term Incentive Program", above, the Committee
also approved grants of stock options and dividend equivalent rights as shown in
"Option Grants in 1997" on page 30 and "Long Term Incentive Plan Awards in 1997"
on page 31. Finally, the Committee approved the grant of 2,308 Incentive Stock
Options to the Chief Executive Officer in recognition of the fact that his level
of stock ownership for 1996 exceeded the established executive stock ownership
target.
INTERNAL REVENUE CODE SECTION 162(M) IMPLICATIONS FOR EXECUTIVE COMPENSATION
The Committee is responsible for addressing the issues raised by Internal
Revenue Code Section 162(m) ("Section 162(m)"). This Section limits to $1
million per executive officer the Company's deduction for compensation paid to
certain executive officers of the Company which does not qualify as
"performance-based". To qualify as performance-based under Section 162(m),
compensation payments must be made pursuant to a plan that is administered by a
committee of outside directors and must be based on achieving objective
performance goals. In addition, the material terms of the plan
26
<PAGE>
must be disclosed to and approved by shareholders, and the Committee must
certify that the performance goals were achieved before payments can be awarded.
The Committee continues to carefully consider the impact of this tax code
provision and has taken several steps which are designed to comply with its
provisions and to minimize compensation payments for which the Company does not
receive a tax deduction. First, it adopted the BellSouth Corporation Stock Plan
which was approved by the Company's shareholders in 1995. This plan establishes
performance criteria which are intended to qualify awards made under the plan to
the named executive officers as performance-based awards approved by the
shareholders; thus, these awards should not be counted toward the $1,000,000
limitation. Second, it adopted the BellSouth Corporation Officer Short Term
Incentive Award Plan approved by the Company's shareholders in 1996. Awards made
pursuant to this plan are intended to qualify as performance-based awards
approved by the shareholders and thus also should not count toward the
$1,000,000 limitation. Due to these actions and to voluntary deferrals of
compensation, the Company believes that there will be only a minimal loss of tax
deductions related to the named executive officers' 1997 compensation. The
Committee will continue to examine the effects of this tax provision and will
monitor the level of compensation paid to the executive officers in order to
take any steps which may be appropriate in response to the provisions of Section
162(m).
C. Dixon Spangler, Jr., Chairman
James H. Blanchard
Armando M. Codina
J. Tylee Wilson
------------------------
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Nominating and Compensation Committee consists of Messrs. Spangler (Chair),
Blanchard, Codina, and Wilson. None of the members of the Nominating and
Compensation Committee are former or current officers or employees of the
Company or any of its subsidiaries.
27
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The table below shows, for the last three years, the compensation paid or
accrued by BellSouth and its subsidiaries to each of the five named executive
officers.
SUMMARY COMPENSATION TABLE
($000)
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
AWARDS PAYOUTS
<S> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
OTHER
ANNUAL
COMPEN- SECURITIES LTIP ALL OTHER
NAME AND BONUS SATION UNDERLYING PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) ($)(A) ($)(B) OPTIONS/SAR (#) ($)(C) ($)(D)
<S> <C> <C> <C> <C> <C> <C> <C>
F. D. ACKERMAN 1997 $ 825.0 $ $ 11.0 208,608 $ $ 107.4
Chairman of the Board, 1996 $ 610.0 $ 793.0 $ 11.2 115,700 $ 148.0 $ 108.0
President and Chief Executive 1995 $ 498.0 $ 516.3 $ 15.3 138,400 $ 1,186.6 $ 110.6
Officer
J. A. DRUMMOND 1997 $ 500.0 $ $ 11.2 89,808 $ $ 80.8
President and Chief Executive 1996 $ 438.0 $ 547.5 $ 15.1 72,700 $ 83.2 $ 81.2
Officer-- BellSouth 1995 $ 354.0 $ 350.9 $ 9.4 88,040 $ 672.0 $ 76.5
Communications Group
E. MAULDIN 1997 $ 465.0 $ $ 12.9 83,708 $ $ 107.4
President and Chief Executive 1996 $ 400.0 $ 417.5 $ 13.2 68,911 $ 77.5 $ 108.6
Officer-- BellSouth 1995 $ 323.0 $ 321.0 $ 12.1 80,840 $ 640.7 $ 92.4
Enterprises, Inc.
W. H. ALFORD (E) 1997 $ 388.0 $ $ 12.0 60,508 $ $ 127.0
Executive Vice President and 1996 $ 370.0 $ 370.5 $ 13.0 55,211 $ 77.5 $ 126.8
General Counsel 1995 $ 346.0 $ 273.3 $ 11.9 69,640 $ 587.4 $ 147.2
R. M. DYKES 1997 $ 360.0 $ $ 16.9 56,296 $ $ 63.7
Executive Vice President and 1996 $ 271.3 $ 307.5 $ 11.8 38,175 $ 35.1 $ 62.3
Chief Financial Officer 1995 $ 222.0 $ 159.1 $ 9.9 34,200 $ 263.0 $ 57.6
</TABLE>
- --------------
Notes
(A) The amounts reported for 1997 and 1996 were amounts earned under the
BellSouth Corporation Officer Short Term Incentive Award Plan. The 1995
amounts also include amounts earned under the Shareholder Return Cash Plan
("SRCP") for the first year of the 1995-1999 performance period.
(B) Tax "gross up" for financial counseling and use of motor vehicle.
(C) The amounts reported for 1997 and 1996 were earned under the SRCP for the
second and subsequent years of five year performance periods beginning in
1993, 1994, and 1995. Amounts reported for 1995 also include the value of
shares that were earned under the BellSouth Corporation Executive Long Term
Incentive Plan, the final payment under this plan.
(D) Included in this category for 1997 are amounts for the five named executive
officers for: (a) above-market interest on voluntary salary deferrals under
nonqualified deferred compensation plans, $60.5, $45.4, $79.1, $98.9, and
$43.0, respectively; (b) Company matching contributions to certain employee
savings plans, $7.7, $7.9, $7.8, $7.9, and $8.4, respectively; (c) benefits
substantially equal to Company matching contributions that could not be
provided under employee savings plans because of limitations under the
Internal Revenue Code or on amounts deferred from compensation, $29.7,
$18.4, $13.3, $11.3, and $9.9, respectively; and (d) value of benefits from
premiums paid by the Company under the BellSouth Life Insurance Program,
$9.5, $9.1, $7.2, $8.9, and $2.4, respectively. BellSouth uses the Present
Value Ratio Method to determine the portion of each
28
<PAGE>
premium dollar attributable to the executive officer. The Company will
recover the cost of premium payments from the cash value of the policies.
(E) Mr. Alford has announced his intention to retire from the Company effective
April 1, 1998.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The following table contains information concerning the grant of stock options
to the five named executive officers during 1997. The Company utilized the
Black-Scholes option pricing model to develop the theoretical values set forth
under the "Grant Date Value" column. The officer realizes value from the stock
options only to the extent that the price of BellSouth Common Stock on the
exercise date exceeds the price of the stock on the grant date. Consequently,
there is no assurance the value realized by an officer will be at or near the
value estimated below. These amounts should not be used to predict stock
performance.
OPTION / SAR GRANTS IN 1997
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
NUMBER OF % OF TOTAL GRANT
SECURITIES OPTIONS/ SARS DATE
UNDERLYING GRANTED TO EXERCISE OR PRESENT
OPTIONS/SARS EMPLOYEES BASE PRICE EXPIRATION VALUE
NAME GRANTED (#) IN FISCAL YEAR ($/SH) DATE ($000)
<S> <C> <C> <C> <C> <C>
F. D. ACKERMAN 206,300(A) 3.30% $ 44.38 2/3/07 1,795.0(C)
2,308(B) .04% $ 43.31 4/28/07 20.5(D)
J. A. DRUMMOND 87,500(A) 1.40% $ 44.38 2/3/07 761.3(C)
2,308(B) .04% $ 43.31 4/28/07 20.5(D)
E. MAULDIN 81,400(A) 1.30% $ 44.38 2/3/07 708.2(C)
2,308(B) .04% $ 43.31 4/28/07 20.5(D)
W. H. ALFORD 58,200(A) .93% $ 44.38 2/3/07 506.4(C)
2,308(B) .04% $ 43.31 4/28/07 20.5(D)
R. M. DYKES 54,000(A) .86% $ 44.38 2/3/07 469.8(C)
2,296(B) .04% $ 43.31 4/28/07 20.4(D)
</TABLE>
- --------------
Notes
(A) Under provisions of the BellSouth Corporation Stock Plan (the "Stock Plan"),
the Board of Directors granted stock options to key employees to purchase
shares of BellSouth Common Stock within prescribed periods at prices equal
to the fair market value of the stock on the date of the grant. Options
granted in 1997 generally become exercisable at the end of three years,
determined from the date of the grant. No stock appreciation rights were
granted in 1997. All options vest immediately in the event of a change in
control.
(B) Incentive Stock Options were awarded to certain officers based on their
achievement of ownership of specified levels of Company stock as established
by the Board of Directors. These options, which have exercise prices equal
to the fair market value of the stock on the date of the grant, are
exercisable six months from the date of the grant. See "Nominating and
Compensation Committee Report on Executive Compensation" at page 24.
(C) This value was determined using the standard application of the
Black-Scholes option pricing methodology using the following assumptions:
volatility-19%, dividend yield-3.24%, and a risk-free rate of return of
6.19% based on options being outstanding for a five year term.
(D) This value was determined using the standard application of the
Black-Scholes option pricing methodology using the following assumptions:
volatility-19%, dividend yield-3.32%, and a risk-free rate of return of
6.79% based on options being outstanding for a five year term.
29
<PAGE>
OPTION / SAR EXERCISES AND HOLDINGS
The following table sets forth information with respect to the five named
executive officers concerning the exercise of options/SARs during 1997 and
unexercised options /SARs held on December 31, 1997.
AGGREGATED OPTION / SAR EXERCISES IN 1997
AND FISCAL YEAR-END OPTION / SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS / SARS AT OPTIONS / SARS AT
EXERCISE REALIZED FISCAL YEAR-END (#) FISCAL YEAR-END ($000)
NAME (#) ($000) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
F. D. Ackerman 0 0 33,546 566,200 $ 1,021.6 $ 9,656.1
J. A. Drummond 17,170 $ 496.7 37,004 300,000 $ 1,085.1 $ 5,237.9
E. Mauldin 4,300 $ 113.7 35,635 276,600 $ 1,013.1 $ 4,836.1
W. H. Alford 0 0 4,819 236,300 $ 74.9 $ 4,256.7
R. M. Dykes 2,218 $ 58.6 15,145 150,800 $ 412.1 $ 2,523.3
</TABLE>
LONG TERM INCENTIVE PLAN AWARDS IN FISCAL YEAR 1997
The following table provides information concerning awards of dividend
equivalent rights made to the named executive officers during 1997 under the
BellSouth Stock Plan. Each dividend equivalent right is represented as a unit
under the Shareholder Return Cash Program. Each unit awarded provides the
contingent right to receive an amount of cash equal to the total dividends paid
on a share of common stock over a three year performance period. Under the
provisions of the program, payments are made following the performance period
and are adjusted based on a comparison of BellSouth's Total Shareholder Return
("TSR") with the TSR of five other telecommunications companies. If BellSouth's
TSR ranks first, 200% of the award will be paid. If BellSouth's TSR ranks sixth,
no award will be paid. Awards are paid solely in cash and may not be deferred.
Plan participants may not sell, assign or otherwise transfer the awards.
LONG-TERM INCENTIVE PLAN AWARDS IN 1997
<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE OR ESTIMATED FUTURE PAYOUTS
SHARES, UNITS OTHER UNDER NON-STOCK
OR PERIOD UNTIL PRICE-BASED PLANS ($000)
OTHER RIGHTS MATURATION OR THRESHOLD TARGET MAXIMUM
NAME (#) PAYOUT ($) ($) ($)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
F. D. Ackerman 134,400 1997-1999 $ 290.3 $ 580.6 $ 1,161.2
J. A. Drummond 57,100 1997-1999 $ 123.3 $ 246.7 $ 493.3
E. Mauldin 53,100 1997-1999 $ 114.7 $ 229.4 $ 458.8
W. H. Alford 38,000 1997-1999 $ 82.1 $ 164.2 $ 328.3
R. M. Dykes 35,200 1997-1999 $ 76.0 $ 152.1 $ 304.1
</TABLE>
30
<PAGE>
PENSION AND OTHER RETIREMENT BENEFITS
The following table shows the estimated single life annual pension annuity
benefit provided to eligible participants under the BellSouth Personal
Retirement Account Pension Plan and the BellSouth Supplemental Executive
Retirement Plan ("SERP") combined, based on the specified remuneration levels
and years of credited service. The SERP provides benefits that would otherwise
be denied participants by reason of certain Internal Revenue Code limitations on
qualified benefit plans. The amounts set forth as payable in the table below
assume an undiscounted retirement age and are reduced, in accordance with the
Plan, by an average Social Security Primary Insurance benefit determined
annually to be payable at age 65.
PENSION PLAN TABLE
($000'S)
<TABLE>
<CAPTION>
YEARS OF SERVICE
REMUNERATION 15 20 25 30 35 40 45
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200 $ 43.5 $ 63.5 $ 78.5 $ 93.5 $ 103.5 $ 113.5 $ 123.5
400 103.5 143.5 173.5 203.5 223.5 243.5 263.5
600 163.5 223.5 268.5 313.5 343.5 373.5 403.5
800 223.5 303.5 363.5 423.5 463.5 503.5 543.5
1,000 283.5 383.5 458.5 533.5 583.5 633.5 683.5
1,500 433.5 583.5 696.0 808.5 883.5 958.5 1,033.5
1,600 463.5 623.5 743.5 863.5 943.5 1,023.5 1,103.5
</TABLE>
Pension benefits are based on the average compensation (salary and bonus) over
the five-year period preceding retirement. Therefore, the covered compensation
presented in the table below for the five named executive officers is based upon
the last five-year average of pension eligible compensation actually paid and,
as such, will differ from the salary and bonus amounts set forth in the Summary
Compensation Table on page 29. In addition, the number of whole years of
credited service obtained in 1997 is presented.
<TABLE>
<CAPTION>
COVERED
COMPENSATION YEARS OF SERVICE
NAME ($000'S) (#)
- ---------------------------------------------------------------------
<S> <C> <C>
F. D. Ackerman 999,800 33
J. A. Drummond 659,900 35
E. Mauldin 605,800 33
W. H. Alford 587,200 33
R. M. Dykes 391,600 26
</TABLE>
TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Board of Directors has authorized the Company, through December 1999, to
enter into long range succession planning arrangements with certain officers
below the Chief Executive Officer level. The agreements require that the officer
retire during the calendar year of his 60th birthday. In order to compensate the
officers for retiring prior to the normal retirement age of 65, the agreements
would entitle them to severance and other benefits. The Company has entered into
agreements of this type with Messrs. Drummond and Mauldin. The agreements call
for benefits that would include payment of an amount equal to two times annual
base pay plus the amount of standard bonus for the year of retirement. In
addition, each of these officers would also receive an enhanced nonqualified
pension
31
<PAGE>
benefit, an additional grant of stock options and dividend equivalent rights
under the BellSouth Corporation Stock Plan equal to the number of options and
dividend equivalent rights, respectively, most recently granted, and financial
counseling through age sixty-seven.
The Company also has an agreement with Mr. Ackerman that was entered into prior
to his becoming Chief Executive Officer. The agreement is presently being
reconsidered by the Board in light of Mr. Ackerman's current position. Mr
Ackerman's current agreement provides for the payment of an amount equal to two
times his annual base pay plus two times his standard bonus for the year of
retirement. In addition, Mr. Ackerman would also receive an enhanced
nonqualified pension benefit, an additional grant of stock options and dividend
equivalent rights under the BellSouth Corporation Stock Plan equal to twice the
number of options and dividend equivalent rights, respectively, most recently
granted, and financial counseling through age sixty-seven.
The Company has also entered into severance agreements (which are presently
effective until January 1, 2000) with the named executive officers that provide
specified payments and enhanced benefits in the event of involuntary termination
of employment incident to a change in control of the Company. In such event, in
their current positions, each of Messrs. Ackerman, Drummond, Mauldin, Alford,
and Dykes would receive payment of an amount equal to three times his annual
base pay plus three times his standard annual bonus. In addition, under these
agreements, each of these officers would receive (i) an immediate cash-out of
his bonus for the year of termination equal to the greater of the full standard
bonus for such year or such bonus based on actual performance results through
the date of termination; and (ii) an immediate cash-out of his dividend
equivalent rights multiplied by the greater of 100% or actual performance
results through the date of termination. All benefits of each such executive
officer under nonqualified deferred compensation plans, supplemental retirement
plans, and similar arrangements would in such event be immediately vested and
nonforfeitable. These agreements also provide for certain gross-up payments to
compensate these executive officers for any excise taxes incurred in connection
with these benefits, and reimbursement for certain outplacement services.
A covered executive officer will be entitled to the benefits under these change
in control severance agreements if, within two years after the occurrence of a
change in control, his employment is terminated by the Company (other than for
cause) or by the executive for good reason. For these purposes, "cause" means
the executive officer's willfully engaging in conduct materially injurious to
the Company, and "good reason" includes the assignment to the executive officer
of duties inconsistent with his prior status and position, certain reductions in
compensation or benefits, and relocation or increased travel obligations.
A "change in control" is defined for purposes of these agreements as: (i) the
acquisition by a party or certain related parties of 20% or more of the
Company's voting securities; (ii) a turnover in a majority of the Board of
Directors in any period of two consecutive years; (iii) a merger or similar
transaction after which the Company's shareholders hold 70% or less of the
voting securities of the surviving entity; (iv) the sale or disposition of a
subsidiary or assets which produced for the most recent fiscal year more than
30% of the Company's total operating revenues or net income; or (v) the
liquidation of the Company or sale of substantially all of its assets.
Should any of Messrs. Ackerman, Drummond, or Mauldin become entitled to both the
benefits described in his long range succession planning agreement discussed
above and his change in control severance agreement, such executive officer may
choose which such agreement shall apply but will in no event be entitled to
benefits under both.
-------------------
32
<PAGE>
FIVE YEAR PERFORMANCE COMPARISON
The following graph compares the cumulative total returns of BellSouth, the
Standard & Poor's 500 Index, and a peer group of other large United States
telecommunications companies (Ameritech Corporation, Bell Atlantic Corporation,
GTE Corporation, SBC Communications, Inc. and U S West, Inc.) over a five year
period.
For the years 1993-1996, NYNEX Corporation and Pacific Telesis Group were part
of the peer group. During the second quarter of 1997, Pacific Telesis merged
with SBC and NYNEX merged with Bell Atlantic in the third quarter. The peer
group returns were adjusted to reflect both mergers.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500 PEER GROUP BELLSOUTH
<S> <C> <C> <C>
1/1/93 $100.00 $100.00 $100.00
12/31/93 111.13 115.98 119.59
12/31/94 112.64 110.26 117.08
12/31/95 154.82 163.72 195.86
12/31/96 190.27 166.78 189.18
12/31/97 253.66 234.08 271.15
</TABLE>
The above performance chart assumes that $100 was invested on January 1, 1993,
with dividends reinvested. Returns are based on end of period prices. Peer
returns are weighted by market capitalization.
33
<PAGE>
GENERAL INFORMATION
OTHER MATTERS TO COME BEFORE THE MEETING
If any matter not described in this Proxy Statement should properly come before
the meeting, the Directors' Proxy Committee will vote the shares represented by
it in accordance with its best judgment. The Directors' Proxy Committee will not
use its discretionary voting authority with respect to any validly conducted
solicitation in opposition. At the time this Proxy Statement went to press, the
Company did not know of any other matters which might be presented for
shareholder action at the annual meeting, except that a shareholder has advised
the Company that he may nominate Mr. Hubert C. Blankenship as a director of the
Company. In addition, Mr. Blankenship has advised the Company that he intends to
present a proposal to amend the By-laws of the Company to provide that any
person nominated as a director by a shareholder "shall be included in the
company proxy statement and included on the company proxy ballot, even if the
Board of Directors recommends a vote against such person". If either of these
proposals are properly presented at the meeting, the Directors' Proxy Committee
would not vote for Mr. Blankenship as a director and would exercise its
discretionary authority to vote against Mr. Blankenship's By-law amendment
proposal.
SHAREHOLDER PROPOSALS FOR THE 1999 PROXY STATEMENT
Any shareholder satisfying the Securities and Exchange Commission requirements
and wishing to submit a proposal to be included in the Proxy Statement for the
1999 Annual Meeting of Shareholders should submit the proposal in writing to the
Secretary, BellSouth Corporation, 1155 Peachtree Street, N.E., Room 14B06,
Atlanta, Georgia 30309-3610. BellSouth must receive a proposal by November 10,
1998 in order to consider it for inclusion in the Proxy Statement for the 1999
Annual Meeting of Shareholders.
DIRECTOR NOMINEES OR OTHER BUSINESS FOR PRESENTATION AT THE ANNUAL MEETING
Shareholders who wish to present director nominations or other business at the
annual meeting are required to notify the Secretary of their intent at least 75
days but not more than 120 days before the meeting and the notice must provide
information as required in the By-laws. A copy of these By-laws requirements
will be provided upon request in writing to the Secretary, BellSouth
Corporation, 1155 Peachtree Street, N.E., Room 14B06, Atlanta, Georgia
30309-3610. This requirement does not apply to the deadline for submitting
shareholder proposals for inclusion in the Proxy Statement (see "Shareholder
Proposals for the 1999 Proxy Statement" above), nor does it apply to questions a
shareholder may wish to ask at the meeting.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and any persons who own more than 10% of the
Company's Common Stock, to file with the Securities and Exchange Commission
(SEC) initial reports of ownership and reports of changes in ownership of common
stock. Such persons are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during the year ended December 31, 1997, all such Section 16(a) filing
requirements were met.
OTHER INFORMATION
Consolidated financial statements for BellSouth Corporation are attached as an
appendix to this Proxy Statement and are included in the Annual Report on Form
10-K filed with the Securities and Exchange Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and the New York, Boston, Chicago, Pacific and
Philadelphia stock exchanges in the United States and the London, Frankfurt,
Amsterdam
34
<PAGE>
and Swiss exchanges. A copy of the 1997 Form 10-K (excluding exhibits) will be
furnished, without charge, by writing to the Secretary, BellSouth Corporation,
1155 Peachtree Street, N.E., Room 14B06, Atlanta, Georgia, 30309-3610. The Form
10-K is also available on BellSouth's home page on the Internet's World Wide Web
at http://www.bellsouth.com.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be paid by BellSouth. BellSouth has retained
Morrow & Co., Inc. to solicit proxies, by mail, in person, or by telephone, at
an estimated cost of $18,500 plus reimbursement of reasonable out-of-pocket
expenses. In addition, employees of BellSouth may likewise solicit proxies on
behalf of the Company.
The above Notice of Annual Meeting and Proxy Statement are sent by order of the
BellSouth Board of Directors.
[LOGO]
Arlen G. Yokley
Senior Vice President--Corporate Compliance & Corporate Secretary
Dated: March 10, 1998
35
<PAGE>
EXHIBIT A
Amendments to Section I of Article 13 of the [Restated] Articles of
Incorporation
As described in "Directors' Proposals -- Amendments to the [Restated]
Articles of Incorporation", the Board of Directors recommends that Section I
of Article 10 of the Company's [Restated] Articles of Incorporation be
amended to read as follows:
1. As used in this Article 10, the term:
(1) "Affiliate" means a person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, a specified person.
(2) "Announcement date" means the date of the first general public
announcement of the proposal of the business combination.
(3) "Associate," when used to indicate a relationship with any person,
means:
(A) Any corporation or organization, other than the corporation or a
subsidiary of the corporation, of which such person is an officer,
director, or partner or is the beneficial owner of 10 percent or more of
any class of equity securities;
(B) Any trust or other estate in which such person has a beneficial
interest of 10 percent or more, or as to which such person serves as
trustee or in a similar fiduciary capacity; and
(C) Any relative or spouse of such person, or any relative of such
spouse, who has the same home as such person.
(4) "Beneficial owner"-- a person shall be considered to be the
beneficial owner of any equity securities:
(A) Which such person or any of such person's affiliates or
associates owns, directly or indirectly;
(B) Which such person or any of such person's affiliates or
associates, directly or indirectly, has:
(i) The right to acquire, whether such right is exercisable
immediately or only after the passage of time, pursuant to any
agreement, arrangement, or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or
otherwise; or
(ii) The right to vote pursuant to any agreement, arrangement,
or understanding; or
(C) Which are owned, directly or indirectly, by any other person
with which such person or any of such person's affiliates or associates
has any agreement, arrangement, or understanding for the purpose of
acquiring, holding, voting, or disposing of equity securities.
(5) "Business combination" means:
(A) Any merger of the corporation or any subsidiary with (i) any
interested shareholder or (ii) any other corporation, whether or not
itself an interested shareholder, which is, or after the merger would
be, an affiliate of an interested shareholder that was an interested
shareholder prior to the consummation of the transaction;
(B) ANY SHARE EXCHANGE WITH (I) ANY INTERESTED SHAREHOLDER OR (II)
ANY OTHER CORPORATION, WHETHER OR NOT ITSELF AN INTERESTED SHAREHOLDER,
WHICH IS, OR AFTER THE SHARE EXCHANGE WOULD BE, AN AFFILIATE OF AN
INTERESTED SHAREHOLDER THAT WAS AN INTERESTED SHAREHOLDER PRIOR TO THE
CONSUMMATION OF THE TRANSACTION;
(C) Any sale, lease, transfer, or other disposition, other than in
the ordinary course of business, in one transaction or in a series of
transactions in any 12 month period, to any
36
<PAGE>
interested shareholder or any affiliate of any interested shareholder,
other than the corporation or any of its subsidiaries, of any assets of
the corporation or any subsidiary having, measured at the time the
transaction or transactions are approved by the board of directors of
the corporation, an aggregate book value as of the end of the
corporation's most recently ended fiscal quarter of 10 percent or more
of the net assets of the corporation as of the end of such fiscal
quarter;
(D) The issuance or transfer by the corporation, or any subsidiary,
in one transaction or a series of transactions in any 12 month period,
of any equity securities of the corporation or any subsidiary which have
an aggregate market value of 5 percent or more of the total market value
of the outstanding common and preferred shares of the corporation whose
shares are being issued, to any interested shareholder or any affiliate
of any interested shareholder, other than the corporation or any of its
subsidiaries, except pursuant to the exercise of warrants or rights to
purchase securities offered pro rata to all holders of the corporation's
voting shares or any other method affording substantially proportionate
treatment to the holders of voting shares;
(E) The adoption of any plan or proposal for the liquidation or
dissolution of the corporation in which anything other than cash will be
received by an interested shareholder or an affiliate of any interested
shareholder; or
(F) Any reclassification of securities, including any reverse stock
split, or recapitalization of the corporation, or any merger of the
corporation WITH ANY OF ITS SUBSIDIARIES, OR ANY SHARE EXCHANGE with any
of its subsidiaries, which has the effect, directly or indirectly, in
one transaction or a series of transactions in any 12 month period, of
increasing by 5 percent or more the proportionate amount of the
outstanding shares of any class or series of equity securities of the
corporation or any subsidiary which is directly or indirectly
beneficially owned by any interested shareholder or any affiliate of any
interested shareholder.
(6) "Continuing director" means any member of the board of directors who
is not an affiliate or associate of an interested shareholder or any of its
affiliates, other than the corporation or any of its subsidiaries, and who
was a director of the corporation prior to the determination date, and any
successor to such continuing director who is not an affiliate or an
associate of an interested shareholder or any of its affiliates, other than
the corporation or its subsidiaries, and is recommended or elected by a
majority of all of the continuing directors.
(7) "Control," including the terms "controlling," "controlled by," and
"under common control with," means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies
of a person, whether through the ownership of voting securities, by
contract, or otherwise, and the beneficial ownership of shares representing
10 percent or more of the votes entitled to be cast by a corporation's
voting shares shall create an irrebuttable presumption of control.
(8) "Corporation," IN ADDITION TO THE DEFINITION CONTAINED IN GEORGIA
BUSINESS CORPORATION CODE SECTION 14-2-140, shall include any trust merging
with a domestic corporation pursuant to Georgia Business Corporation Code
Section 53-12-59.
(9) "Determination date" means the date on which an interested
shareholder first became an interested shareholder.
(10) "Fair market value" means:
(A) In the case of securities, the highest closing sale price,
during the period beginning with and including the determination date and
for 29 days prior to such date, of such a security on the principal United
States securities exchange registered under the Securities Exchange Act of
1934 on which such securities are listed, or, if such securities are not
listed on any such exchange,
37
<PAGE>
the highest closing sales price or, if none is available, the average of the
highest bid and asked prices reported with respect to such a security, in
each case during the 30 day period referred to above, on the National
Association of Securities Dealers, Inc., Automatic Quotation System, or any
system then in use, or, if no such quotations are available, the fair market
value on the date in question of such a security as determined in good faith
at a duly called meeting of the board of directors by a majority of all of
the continuing directors, or, if there are no continuing directors, by the
entire board of directors; and
(B) In the case of property other than securities, the fair market
value of such property on the date in question as determined in good
faith at a duly called meeting of the board of directors by a majority
of all of the continuing directors, or, if there are no continuing
directors, by the entire board of directors of the corporation.
(11) "Interested shareholder" means any person, other than the
corporation or its subsidiaries, that:
(A) Is the beneficial owner of 10 percent or more of the voting
power of the outstanding voting shares of the corporation; or
(B) Is an affiliate of the corporation and, at any time within the
two-year period immediately prior to the date in question, was the
beneficial owner of 10 percent or more of the voting power of the then
outstanding voting shares of the corporation.
For the purpose of determining whether a person is an interested
shareholder, the number of voting shares deemed to be outstanding shall
not include any unissued voting shares which may be issuable pursuant to
any agreement, arrangement, or understanding, or upon exercise of
conversion rights, warrants or options, or otherwise.
(12) "NET ASSETS" MEANS THE AMOUNT BY WHICH THE TOTAL ASSETS OF THE
CORPORATION EXCEED THE TOTAL DEBTS OF THE CORPORATION.
(13) "Voting shares" means shares entitled to vote generally in the
election of directors.
(New language is italicized.)
38
<PAGE>
BELLSOUTH CORPORATION
1155 PEACHTREE STREET, N.E.
ATLANTA, GA 30309-3610
LOGO
PRINTED ON RECYCLED PAPER
[LOGO]
<PAGE>
Preliminary Copy
DIRECTORS' PROPOSALS -- DIRECTORS RECOMMEND A VOTE "FOR"
Withhold for All
For Authority Except*
---- --------- -------
1. Elect all Director Nominees (p.__) / / / / / /
For Against Abstain
---- --------- -------
2. Ratification of Auditors (p.__) / / / / / /
3. Amend Articles of Incorporation (p.__) / / / / / /
*Exceptions:
To vote for all nominees, mark the "For" box. To withhold voting for all
nominees, mark the "Withhold Authority" box. To withhold voting for a
particular nominee, mark the "For All Except" box and enter name(s) of the
exception(s) in the space provided.
- ------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS -- DIRECTORS RECOMMEND A VOTE "AGAINST"
For Against Abstain
---- --------- -------
4. Kopach: Executive Compensation (p.__) / / / / / /
5. Baechle: Executive Compensation (p.__) / / / / / /
6. Carmichael: Executive
Compensation (p.__) / / / / / /
7. Sloan: Political Contributions (p.__) / / / / / /
8. Gore: China Labor Policy (p.___) / / / / / /
- ------------------------------------------------------------------------------
Discontinue mailing of duplicate Annual Report
Signature(s) Date
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
DETACH HERE FROM PROXY VOTING CARD
BELLSOUTH
ADMISSION TICKET
- ----------------
This ticket entitles you, the
shareholder, and one guest to
attend the 1998 Annual Meeting.
- ------------------------------------------------------------------------------
ANNUAL MEETING OF BELLSOUTH SHAREHOLDERS
MONDAY, APRIL 27, 1998
8:00 A.M.-DOORS OPEN
9:00 A.M.-MEETING BEGINS
The Cobb Galleria Centre Ballroom - Two Galleria Parkway - Atlanta, Georgia
See reverse side for map of area and directions
- ------------------------------------------------------------------------------
For wheelchair and hearing impaired seating, please see a host/hostess for
assistance.
<PAGE>
PROXY/VOTING INSTRUCTION CARD BELLSOUTH
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS ON APRIL 27, 1998.
The undersigned hereby appoints F. Duane Ackerman, C. Dixon Spangler, Jr.,
and Ronald A. Terry, and each of them, proxies with full power of
substitution, to vote all shares of Common Stock of the undersigned at the
Annual Meeting of Shareholders to be held at 9:00 a.m. EDT, April 27, 1998 at
the Cobb Galleria Centre Ballroom, Two Galleria Parkway, Atlanta, Georgia,
and at any adjournment thereof, upon all subjects that may properly come
before the meeting, including the matters described in the proxy statement
furnished herewith, subject to any directions indicated on the reverse side
of this card. IF NO DIRECTIONS ARE GIVEN, THE PROXIES WILL VOTE FOR THE
ELECTION OF ALL LISTED NOMINEES, IN ACCORD WITH THE DIRECTORS'
RECOMMENDATIONS ON THE OTHER MATTERS LISTED ON THE REVERSE SIDE OF THIS CARD,
AND AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE
MEETING.
Your vote for the election of Directors for the terms set forth in the proxy
statement may be indicated on the reverse side of this card. Nominees are
James H. Blanchard, Armando M. Codina, William S. Stavropoulos and J. Tylee
Wilson.
This card also provides voting instructions for shares held in the BellSouth
Direct Stock Purchase and Dividend Reinvestment Plan and, if registrations
are identical, shares held in the various employee stock purchase and benefit
plans.
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE ON THE REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE OR OTHERWISE TO BELLSOUTH CORPORATION,
CHURCH STREET STATION, P.O. BOX 1456, NEW YORK, NEW YORK 10277-1456, SO THAT
YOUR SHARES CAN BE REPRESENTED AT THE MEETING.
Comments:
______________________________________________________________________
______________________________________________________________________
- ------------------------------------------------------------------------------
Detach here.
ANNUAL MEETING
OF BELLSOUTH
SHAREHOLDERS
[MAP] [MAP]
MONDAY
APRIL 27, 1998
9:00 a.m. EDT
DIRECTIONS TO THE COBB GALLERIA CENTRE, TWO GALLERIA PARKWAY, ATLANTA, GEORGIA
NORTHBOUND ON I-75: Take exit 109B (I-285 Westbound); continue west on I-285
and take exit 14 (Cobb Pkwy./U.S. Hwy. 41) and turn left at traffic light,
southbound onto Cobb Pkwy.; continue under overpass and make a left turn at
second traffic light onto Galleria Drive.
SOUTHBOUND ON I-75: Take exit 109 (I-285 Westbound); continue west on I-285
and take the Cobb Pkwy./U.S. Hwy. 41 exit and turn left at traffic light,
southbound onto Cobb Pkwy.; continue under overpass and make a left turn at
second traffic light onto Galleria Drive.
WESTBOUND ON I-285: Take exit 14 (Cobb Pkwy./U.S. Hwy. 41) and turn left at
traffic light, southbound onto Cobb Pkwy.; continue under overpass and make a
left turn at second traffic light onto Galleria Drive.
EASTBOUND ON I-285: Take exit 13 (Cobb Pkwy./U.S. Hwy. 41) and turn right
onto Cobb Pkwy. headed south; turn left at next traffic light onto Galleria
Drive.
