<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
AMERITECH CORPORATION
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(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
AMERITECH LOGO 30 South Wacker Drive
Chicago, Illinois 60606
NOTICE OF 1997 ANNUAL MEETING AND PROXY STATEMENT
February 27, 1997
Dear Shareowner:
The directors and officers of your company cordially invite you to attend
the annual meeting of Ameritech's shareowners, which will be held in the
Arthur Rubloff Auditorium of The Art Institute of Chicago, on Wednesday, April
16, 1997, at 9:30 a.m.
At the meeting we will elect five directors and vote on ratification of the
appointment of independent public accountants, approval of a new Ameritech
Long-Term Stock Incentive Plan and one shareowner proposal, as described in
the formal notice of the meeting and proxy statement appearing on the
following pages.
We also will report on the progress of Ameritech and comment on matters of
current interest. There will be a period of informal discussion in which
shareowners will have an opportunity to comment or ask questions. After the
meeting, you are invited to be our guest and tour the magnificent exhibits of
The Art Institute of Chicago.
If you plan to attend the meeting, please keep the admission ticket and map
that are attached to the form of proxy accompanying this notice and proxy
statement and check the appropriate box on the form of proxy. If your shares
are held by a broker, bank or other nominee and you do not receive an
admission ticket, please bring proof of your ownership of Ameritech shares to
be admitted to the meeting.
Whether or not you plan to attend in person, we ask that you carefully
review the material on the following pages and vote your shares on the matters
that will come before the meeting. This year, record holders of Ameritech
shares can vote their shares by using a toll-free telephone number or the
Internet. Instructions for using these convenient new services are set forth
on the enclosed proxy card. Of course, you also may vote your shares by
marking your votes on the enclosed proxy card, signing and dating it and
mailing it in the postage-paid envelope.
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THIS MEETING, WHETHER OR
NOT YOU ATTEND THE MEETING IN PERSON AND REGARDLESS OF THE NUMBER OF SHARES
YOU OWN. TO MAKE SURE YOUR SHARES ARE REPRESENTED, WE URGE YOU TO VOTE AS SOON
AS POSSIBLE BY TELEPHONE, ON THE INTERNET OR BY MAILING YOUR PROXY CARD.
Sincerely,
/s/ Richard C. Notebaert
Richard C. Notebaert
Chairman and Chief Executive Officer
<PAGE>
AMERITECH CORPORATION
30 SOUTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
PROXY STATEMENT
The Board of Directors of Ameritech Corporation (hereinafter called
"Ameritech" or the "Company") solicits your proxy for use at the 1997 Annual
Meeting of Shareowners to be held on April 16, 1997. This year, shareowners of
record can give proxies by calling a toll-free telephone number, by using the
Internet or by mailing their signed proxy cards. The telephone and Internet
voting procedures are designed to authenticate shareowners' identities, to
allow shareowners to give their voting instructions and to confirm that
shareowners' instructions have been recorded properly. Ameritech has been
advised by counsel that the procedures that have been put in place are
consistent with the requirements of applicable law. Specific instructions for
shareowners of record who wish to use the telephone or Internet voting
procedures are set forth on the enclosed proxy card. A proxy may be revoked at
any time prior to the voting at the meeting by submitting a later dated proxy
(including a proxy via telephone or the Internet) or by giving written notice
of such revocation to the Secretary of the Company.
Holders of Ameritech Common Stock of record at the close of business on
February 18, 1997 are entitled to vote at the Annual Meeting. On that date,
550,849,416 shares of Ameritech Common Stock were issued and outstanding. Each
share entitles the holder to one vote. The persons appointed by the enclosed
proxy card have advised the Board of Directors that it is their intention to
vote at the meeting in compliance with the instructions on the proxies
received from shareowners and, if no contrary instruction is indicated, for
the election of the persons nominated to serve as Directors and in accordance
with the recommendations of the Board of Directors on the other matters
brought before the meeting, as described herein.
If a shareowner is a participant in the Ameritech Direct Services Investment
Plan, the proxy card represents the number of full and fractional shares in
the dividend reinvestment plan account, as well as other shares registered in
the participant's name. If a shareowner is a participant in the Ameritech
Savings Plan for Salaried Employees ("SPSE"), the Ameritech Savings and
Security Plan for Non-Salaried Employees ("SSP") or certain employee savings
plans of affiliated companies, the proxy card will also serve as a voting
instruction for the trustees of those plans where all accounts are registered
in the same name. If voting instructions are not received for shares in SPSE
or SSP, those shares will be voted in the same proportion as the shares in
those plans for which voting instructions are received.
The five Directors to be elected at the Annual Meeting will be elected by a
plurality of the votes cast by the shareowners present in person or by proxy
and entitled to vote. With regard to the election of Directors, votes may be
cast for or withheld from each nominee. Votes that are withheld will have no
effect on the outcome of the election because Directors will be elected by a
plurality of votes cast.
Abstentions may be specified on all proposals submitted to a shareowner vote
other than the election of Directors. Abstentions will be counted as present
for purposes of determining the existence of a quorum regarding the proposal
on which the abstention is noted. Thus, abstentions on any of the Company's
proposals to ratify the appointment of the independent public accountants and
to approve the Ameritech Long-Term Stock Incentive Plan or on the shareowner
proposal will have the effect of a vote against such proposal.
Under the rules of the New York Stock Exchange, brokers who hold shares in
street name have the authority to vote on certain routine matters on which
they have not received instructions from beneficial owners. Brokers holding
shares of Ameritech Common Stock in street name who do not receive
instructions are entitled to vote on the election of Directors and the
ratification of the appointment of the independent public accountants.
However, brokers may not vote shares held for customers on approval of the
Ameritech Long-Term Stock Incentive Plan or the shareowner proposal without
specific instructions from such customers. Under applicable Delaware law,
"broker non-votes" on any such proposal (where a broker submits a proxy but
does not have authority to vote a customer's shares on such proposal) will not
be included in the vote totals on that proposal.
This proxy statement and the enclosed proxy card are being first mailed to
shareowners on or about February 27, 1997.
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors is currently composed of twelve members. In 1996,
shareowners approved an amendment to the Certificate of Incorporation of
Ameritech that eliminated the division of the Board of Directors into three
classes, with one class of Directors elected each year for a three-year term,
and provided instead for the annual election of all Directors as their current
terms expire. The terms of four Directors expire in 1997 and all of those
Directors have been nominated for re-election, and a fifth person who is not
now a Director has been nominated for election, to terms expiring in 1998.
Beginning in 1999 all Directors will be elected annually. If for any reason
any of the nominees for election at this meeting becomes unable or is
unwilling to serve at the time of the meeting, the persons named in the
enclosed proxy card will have discretionary authority to vote for a substitute
nominee or nominees. It is not anticipated that any nominee will be
unavailable for election.
The following sets forth information as to each nominee for election at this
meeting and each Director continuing in office, including his or her age,
present principal occupation, other business experience during the last five
years, directorships in other publicly held companies, membership on
committees of the Board of Directors and period of service as a Director of
Ameritech.
NOMINEES FOR ELECTION AT THIS MEETING TO TERMS EXPIRING IN 1998:
DONALD C. CLARK, 65, Retired Chairman of the Board of
Household International, Inc., Prospect Heights, Illinois
(financial services), since 1996. Mr. Clark served as
Chairman and Chief Executive Officer of Household
International, Inc. from 1984 to 1994 and as Chairman of the
DONALD C. CLARK Board from 1994 to 1996. He is a Director of Warner-Lambert
PHOTO Co., Scotsman Industries, Inc., Armstrong World Industries,
Inc., The PMI Group Inc. and Ripplewood Holdings L.L.C. Mr.
Clark is a member of the Executive Committee, the
Compensation Committee and the Finance Committee.
Director since 1989.
MELVIN R. GOODES, 61, Chairman and Chief Executive Officer
of Warner-Lambert Company, Morris Plains, New Jersey
(pharmaceuticals and consumer products), since 1991. Mr.
MELVIN R. GOODES Goodes served as President and Chief Operating Officer of
PHOTO Warner-Lambert from 1985 to 1991. He is a Director of
Warner-Lambert Company, Chase Manhattan Corporation and
Unisys Corporation. Mr. Goodes is Chairman of the Nominating
Committee and a member of the Finance Committee.
Director since 1994.
JAMES A. HENDERSON, 62, Chairman and Chief Executive Officer
of Cummins Engine Company, Inc., Columbus, Indiana (heavy-
duty diesel engines, parts and related products), since
1995. Mr. Henderson became Chief Executive Officer in 1994
and served as President and Chief Operating Officer of
JAMES A. HENDERSON Cummins Engine Company, Inc. from 1977 to 1994. He is a
PHOTO Director of Cummins Engine Company, Inc., Inland Steel
Industries, Inc., Ryerson Tull, Inc., Rohm and Haas Co. and
Landmark Communications, Inc. Mr. Henderson is Chairman of
the Audit Committee and a member of the Compensation
Committee and the Executive Committee. He also is a Director
of the Ameritech Foundation.
Director since 1983.
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<PAGE>
JOHN B. MCCOY, 53, Chairman and Chief Executive Officer of
BANC ONE CORPORATION, Columbus, Ohio (bank holding company),
since 1987. Mr. McCoy served as President and Chief
JOHN B. MCCOY, Executive Officer of BANC ONE CORPORATION from 1984 to 1987.
PHOTO He is a Director of BANC ONE CORPORATION, Cardinal Health,
Inc., Tenneco Inc. and the Federal Home Loan Mortgage
Corporation. Mr. McCoy is Chairman of the Compensation
Committee and a member of the Executive Committee and the
Audit Committee.
Director since 1991.
LAURA D'ANDREA TYSON, 49, Professor and holder of the Chair
endowed by the Class of 1939 in the Economics Department and
the Haas School of Business Administration at the University
of California at Berkeley, since 1996. Dr. Tyson served as
National Economic Adviser to the President of the United
LAURA D'ANDREA States from March 1995 to December 1996 and as Chair of the
TYSON White House Council of Economic Advisers from 1993 to 1995.
PHOTO She also served as a member of the President's National
Security Council and Domestic Policy Council. Dr. Tyson was
Director of the Institute of International Studies from 1990
to 1992, and Research Director of The Berkeley Roundtable on
the International Economy from 1986 to 1992, at the
University of California, Berkeley, where she was also a
professor of economics and business administration.
Not currently a Director.
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 1998:
HANNA HOLBORN GRAY, PH.D., 66, President Emeritus and Harry
Pratt Judson Distinguished Service Professor of History,
University of Chicago, Chicago, Illinois, since 1993. Dr.
Gray served as President of the University of Chicago from
HANNA HOLBORN GRAY 1978 to 1993. She is a Director of Atlantic Richfield
PHOTO Company, Cummins Engine Company, Inc. and J. P. Morgan & Co.
Incorporated (and its subsidiary, Morgan Guaranty Trust
Company of New York). Dr. Gray is a member of the Nominating
Committee. She also is a Director of the Ameritech
Foundation.
Director since 1983.
ARTHUR C. MARTINEZ, 57, Chairman and Chief Executive Officer
of Sears, Roebuck and Co., Hoffman Estates, Illinois
(merchandising), since 1995. Mr. Martinez served as Chairman
and Chief Executive Officer of the Sears Merchandise Group
from 1992 to 1995, as Vice Chairman of Saks Fifth Avenue
ARTHUR C. MARTINEZ from 1990 to 1992 and as Senior Vice President and Group
PHOTO Chief Executive of the BATUS, Inc. Retail Division from 1987
to 1990. He is a Director of Sears, Roebuck and Co. and
Amoco Corporation. Mr. Martinez is Chairman of the Finance
Committee and a member of the Audit Committee.
Director since 1995.
3
<PAGE>
[JOHN D. ONG JOHN D. ONG, 63, Chairman of the Board of The BFGoodrich
PHOTO] Company, Akron, Ohio (chemical and aerospace products),
since 1979 and Chief Executive Officer from 1979 to 1996.
Mr. Ong is a Director of The BFGoodrich Company, Asarco
Incorporated, Cooper Industries, Inc., The Geon Company, The
Kroger Company and TRW Inc. He is a member of the Executive
Committee, the Compensation Committee and the Nominating
Committee.
Director since 1983.
[A. BARRY RAND A. BARRY RAND, 52, Executive Vice President, Operations of
PHOTO] Xerox Corporation, Stamford, Connecticut (document
processing and financial services), since 1992. Mr. Rand
served as President of the Xerox United States Marketing
Group from 1987 to 1992. He has been a corporate officer of
Xerox since 1985. Mr. Rand is a Director of Honeywell Inc.
and Abbott Laboratories. He is a member of the Audit
Committee and the Nominating Committee.
Director since 1993.
[JAMES A. UNRUH JAMES A. UNRUH, 55, Chairman of the Board and Chief
PHOTO] Executive Officer of Unisys Corporation, Blue Bell,
Pennsylvania (information services, technology and
software), since 1990. Mr. Unruh served as President and
Chief Executive Officer of Unisys in 1990 and as President
and Chief Operating Officer from 1989 to 1990. He is a
Director of Unisys Corporation and The Prudential Insurance
Company of America. Mr. Unruh is a member of the Audit
Committee and the Finance Committee.
Director since 1995.
DIRECTORS WHOSE PRESENT TERMS CONTINUE UNTIL 1999:
[SHELDON B. SHELDON B. LUBAR, 67, Founder and Chairman of Lubar & Co.,
LUBAR PHOTO] Milwaukee, Wisconsin (private investment and venture capital
firm), since 1977 and Chairman and Chief Executive Officer
of Christiana Companies, Inc., Milwaukee, Wisconsin
(operating and investment company with businesses in
refrigerated warehousing and logistics), since 1987. Mr.
Lubar is a Director of Massachusetts Mutual Life Insurance
Company, Firstar Corporation, Christiana Companies, Inc.,
Energy Ventures, Inc. and MGIC Investment Corp. He is a
member of the Compensation Committee and the Finance
Committee. Mr. Lubar also is a Director of the Ameritech
Foundation.
Director since 1993.
[LYNN M. MARTIN LYNN M. MARTIN, 57, Chair of the Council for the Advancement
PHOTO] of Women and Advisor to the firm of Deloitte & Touche since
1993. Ms. Martin assumed the Davee Chair at the J.L. Kellogg
Graduate School of Management, Northwestern University, in
1993. She also served as a fellow at the Kennedy School of
Government, Harvard University, in 1993. Ms. Martin served
as United States Secretary of Labor from February 1991 to
January 1993. She served as a member of the U.S. House of
Representatives from Illinois for five terms from 1981 to
1990. She also served in the Illinois House of
Representatives from 1977 to 1979 and the Illinois Senate
from 1979 to 1981. She is a Director of Harcourt General,
Inc., Ryder System, Inc., The Procter & Gamble Corporation
and TRW, Inc. Ms. Martin is a member of the Finance
Committee and the Nominating Committee.
Director since 1993.
4
<PAGE>
RICHARD C. RICHARD C. NOTEBAERT, 49, Chairman of the Board, President
NOTEBAERT and Chief Executive Officer of Ameritech since April 1994.
PHOTO] Mr. Notebaert served as President and Chief Executive
Officer of Ameritech from January 1994 to April 1994, as
President and Chief Operating Officer from June 1993 to
January 1994 and as Vice Chairman from January 1993 to June
1993. He served as President of Ameritech Services, Inc. (a
wholly-owned subsidiary of Ameritech's five state telephone
companies) from June 1992 to January 1993, and as President
of Ameritech's Indiana Bell subsidiary from 1989 to 1992.
Mr. Notebaert is a Director of Sears, Roebuck and Co. He is
Chairman of the Executive Committee.
Director since 1993.
THE BOARD OF DIRECTORS
The business and affairs of Ameritech are managed under the direction of the
Board of Directors. The Board has responsibility for establishing broad
corporate policies and for the overall performance of Ameritech rather than
day-to-day operating details. Members of the Board of Directors are kept
informed of the Company's business by various reports and documents sent to
them each month, as well as by reports presented at meetings of the Board and
its committees by officers and employees of Ameritech and its business units.
The Board of Directors met seven times in 1996. The average attendance at
the aggregate number of Board and committee meetings was 95% in 1996 and no
Director attended fewer than 75% of the aggregate number of meetings of the
Board of Directors and the committees on which he or she served, except Mr.
Ong who attended 69% of such meetings.
COMMITTEES OF THE BOARD
The Audit Committee, which is composed entirely of Directors who are not
officers or employees of Ameritech, reviews the Company's accounting
functions, operations and management and the adequacy and effectiveness of the
internal controls and internal auditing methods and procedures of the Company.
The Audit Committee recommends to the Board the appointment of the independent
public accountants for the Company, subject to ratification by the shareowners
at the Annual Meeting. In connection with its duties, the Audit Committee
periodically meets privately with the independent public accountants and with
the Company's internal auditors. The Audit Committee met two times in 1996.
The Compensation Committee, which is composed entirely of Directors who are
not officers or employees of Ameritech, reviews and acts with respect to
pension, compensation and other employee benefit plans, approves the salary
and compensation of officers of Ameritech other than the five most highly
compensated officers and makes recommendations to the Board of Directors
concerning the salary and compensation of the Chairman of the Board, President
and Chief Executive Officer and any other officer who is or would be among the
five most highly compensated officers of Ameritech. This committee met four
times in 1996.
The Executive Committee is authorized to exercise, during intervals between
meetings of the Board of Directors, the powers of the Board of Directors in
the management and direction of the business and affairs of the Company,
subject to the provisions of the corporation law of the State of Delaware. The
Executive Committee did not meet in 1996.
The Finance Committee reviews and makes recommendations to the Board with
respect to the financial policies, plans and procedures of the Company, the
financial implications of proposed corporate actions and matters concerning
dividend reinvestment and stock purchase plans. This committee also reviews
and authorizes investments in and advances to subsidiaries and is responsible
for reviewing the policies, plans and procedures of the Company with respect
to the investment and management of the assets of the Company's pension,
savings and other employee benefit plans. The Finance Committee met two times
in 1996.
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<PAGE>
The Nominating Committee advises and makes recommendations to the Board of
Directors on all matters concerning Board procedures and directorship
practices. The Nominating Committee reviews and makes recommendations to the
full Board concerning the qualifications and selection of candidates as
nominees for election as Directors. In recommending candidates, this committee
seeks individuals who possess broad training and experience in business,
finance, law, government, technology, education or administration and
considers factors such as personal attributes, geographic location and special
expertise complementary to the background and experience of the Board as a
whole. Shareowners who wish to suggest qualified candidates should write to
the Corporate Secretary of Ameritech at 30 South Wacker Drive, Chicago,
Illinois 60606, stating in detail the qualifications of such persons for
consideration by the Committee. The Nominating Committee met two times in
1996.
The committee memberships of each nominee and continuing Director are set
forth in his or her biographical information above.
OFFICER AND DIRECTOR STOCK OWNERSHIP
The following table sets forth beneficial ownership of Ameritech Common
Stock, as of February 18, 1997, by each Director and nominee, the chief
executive officer, the four other most highly compensated executive officers
in 1996 and all Directors and executive officers as a group. Such beneficial
ownership includes shares held by certain family members, trusts and private
foundations. The persons shown in the following table are deemed to have sole
power to vote and dispose of such shares. None of the persons nor the group
shown below has beneficial ownership of more than 1% of the outstanding shares
of Ameritech Common Stock. Shares shown as beneficially owned by Mr. Allen,
Mr. Campbell, Mr. Hester, Mr. Notebaert and Mr. Shaffer and by all Ameritech
officers as a group below include shares held for their accounts in the
Ameritech Savings Plan for Salaried Employees as of December 31, 1996.
<TABLE>
<CAPTION>
TOTAL
NAME OWNERSHIP(*)
---- ------------
<S> <C>
Barry K. Allen.................................................... 22,219
W. Patrick Campbell............................................... 95,247
Donald C. Clark................................................... 14,188
Melvin R. Goodes.................................................. 5,000
Hanna Holborn Gray................................................ 9,604
James A. Henderson................................................ 12,400
Thomas P. Hester.................................................. 160,115
Sheldon B. Lubar.................................................. 15,714
Lynn M. Martin.................................................... 6,588
Arthur C. Martinez................................................ 4,000
John B. McCoy..................................................... 10,500
Richard C. Notebaert.............................................. 374,933
John D. Ong....................................................... 9,164
A. Barry Rand..................................................... 5,710
Oren G. Shaffer................................................... 53,665
Laura D'Andrea Tyson.............................................. 0
James A. Unruh.................................................... 4,000
All of the above and other executive officers as a group (30 per-
sons)............................................................ 1,263,741
</TABLE>
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* Includes shares of Ameritech Common Stock which may be acquired within 60
days after February 20, 1997 through the exercise of stock options. The
persons who have such options and the number of shares which may be so
acquired are as follows: Mr. Allen, 12,203; Mr. Campbell, 93,715; Mr.
Hester, 129,262; Mr. Notebaert, 340,463; Mr. Shaffer, 53,479; and all
executive officers as a group, 1,004,398.
6
<PAGE>
COMPENSATION OF DIRECTORS
Directors who are not employees of Ameritech or its subsidiaries receive an
annual retainer of $41,000. Non-employee Directors also receive additional
annual retainers of $5,000 ($6,000 for chairmen) for each active committee
(other than the Executive Committee) on which they serve. Directors may elect
to defer receipt of all or part of their retainers in either cash units,
Common Stock units or a combination of both. Deferred cash units earn
interest, compounded quarterly, at the rate established by the Compensation
Committee from time to time or, if no such rate is established, at a rate
equal to the average interest rate for ten-year United States Treasury notes
for the previous quarter. Deferred Common Stock units are based on the number
of Ameritech common shares which deferred retainers would purchase at the fair
market value of Ameritech common shares on the date the retainers would
otherwise be paid. Deferred Common Stock accounts are credited on each
dividend payment date for Ameritech common shares with additional Common Stock
units by dividing the aggregate cash dividend which would have been paid if
existing Common Stock units were actual common shares by the fair market value
of the Company's common shares as of the dividend payment date. Deferred
amounts are paid in cash, with the value of Common Stock units based on the
fair market value of Ameritech common shares at the time of payment, in one
payment or in up to ten equal annual installments beginning on the first day
of the calendar year following the year in which the Director ceases to be a
Director, or in a lump sum in the event of certain specified changes in the
beneficial ownership of Ameritech voting stock or in the composition of the
Board of Directors and certain mergers or consolidations involving Ameritech.
At the 1987 Annual Meeting, Ameritech's shareowners approved the Ameritech
Stock Retirement Plan for Non-Employee Directors, under which each Director
who is not an officer or employee of Ameritech or any of its subsidiaries or
affiliates is granted 1,500 shares of Ameritech Common Stock after each Annual
Meeting at which Directors are elected. Each grant of stock is accompanied by
a payment to offset the increase in the Directors' Federal, state and local
tax liabilities resulting from such grant and payment. The maximum number of
grants to a Director is six. The plan also provides for grants up to the
maximum number of shares in the event of certain specified changes in the
beneficial ownership of Ameritech voting stock or in the composition of the
Board of Directors and certain mergers or consolidations involving Ameritech.
The Company also provides non-employee Directors travel accident insurance
when on Company business.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed Arthur Andersen LLP, as independent public accountants, to audit the
consolidated financial statements of the Company for the current year ending
December 31, 1997. Arthur Andersen LLP has served as independent public
accountants for the Company since its organization.
A proposal will be presented at the meeting to ratify the appointment of
Arthur Andersen LLP as Ameritech's independent public accountants. One or more
members of that firm are expected to be present at the Annual Meeting to
respond to questions and to make a statement if they desire to do so. If the
shareowners do not ratify this appointment by the affirmative vote of a
majority of the shares present in person or represented by proxy at the
meeting, other independent public accountants will be considered by the Board
upon recommendation of the Audit Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF THE INDEPENDENT PUBLIC ACCOUNTANTS.
APPROVAL OF THE AMERITECH LONG-TERM STOCK INCENTIVE PLAN
On December 18, 1996, the Board of Directors adopted, subject to shareowner
approval, the Ameritech Long-Term Stock Incentive Plan (the "Plan"). The Board
of Directors recommends that shareowners approve the Plan.
7
<PAGE>
The purpose of the Plan is to promote the longer-term financial success of
Ameritech by providing a means to attract, retain and reward individuals who
can and do contribute to such success. By using stock-based compensation, the
recipients of awards under the Plan will further identify their interests with
those of Ameritech's shareowners.
The Plan will be administered by a Committee of the Board of Directors
consisting of no less than three Directors, all of whom shall not be employees
of the Company (the "Committee"). Subject to approval of the Plan by
shareowners, the Board has designated its Compensation Committee (which
currently consists of five non-employee Directors) to be the Committee called
for by the Plan.
The Plan will replace the Ameritech 1989 Long Term Incentive Plan (the "1989
Plan"), which was approved by shareowners in April 1989 and which will, by its
terms, expire on April 19, 1999. Awards previously made under the 1989 Plan
have been exempt from Section 162(m) of the Internal Revenue Code, which was
adopted in 1993 and which limits a corporation's tax deduction for
compensation paid to certain officers, under the transition provisions of
Section 162(m). These transition provisions, however, will expire in 1997. The
Board of Directors has determined that it is preferable to adopt the new Plan,
which the Company believes complies with Section 162(m) such that awards under
the Plan will be deductible by the Company, rather than try to amend the 1989
Plan just two years prior to its expiration.
Under the terms of the Plan, the maximum number of shares of Ameritech
Common Stock that may be delivered to participants and their beneficiaries
under the Plan is 20,000,000, plus any shares that remain available for future
awards under the 1989 Plan at the effective date of the Plan (9,545,055 shares
as of February 1, 1997), plus any shares subject to awards made under the 1989
Plan that expire, are cancelled or are forfeited back to the Company after the
effective date of the Plan. The terms of the Plan further limit awards so that
no more than 20,000,000 shares in any event may be granted in the form of
incentive stock options (as described below), no more than 7,000,000 shares
may be issued in connection with stock awards (including restricted stock) and
awards covering no more than 2,500,000 shares may be made to any one
individual over any consecutive five-year period. The persons eligible to
receive awards under the Plan will be selected by the Committee from among
management employees of the Company and any subsidiary of the Company or other
entity in which the Company has a significant equity or other interest, as
determined by the Committee, and from among the members of the Board of
Directors from time to time. No awards have been made or will be made under
the Plan unless and until it is approved by shareowners. Future awards are
subject to the complete discretion of the Committee and the amounts of such
awards are not presently determinable.
Awards under the Plan may be made in the form of stock options, stock
appreciation rights or stock awards. A stock option represents a right to
purchase a specified number of shares at a price per share determined at the
time of the award as provided in the Plan. Stock options may be in the form of
Incentive Stock Options ("ISOs") or in a form that does not qualify for the
federal income tax treatment of ISOs described below. A stock appreciation
right is a right to receive a payment in cash or shares or a combination of
both equal to the excess of the aggregate market price, at the time of
exercise, of the number of shares as to which the stock appreciation right is
exercised over the aggregate exercise price of such shares. A stock award is a
grant of shares or a right to receive shares (or their cash equivalent or a
combination of both) in the future. The Plan provides that each stock award
shall be subject to such conditions, restrictions and contingencies as the
Committee shall determine, which may include continuous service and/or the
achievement of performance goals. An award under the Plan may, at the
discretion of the Committee, contain the right to receive dividends or
dividend equivalents, which may be either paid currently or credited to a
participant's account and which may be subject to conditions, restrictions and
contingencies established by the Committee, including the achievement of
performance goals.
All stock options and stock appreciation rights must have an exercise price
that reflects the average traded price of a share of the Company's Common
Stock on the date on which the award is made (or the next preceding trading
day if there was no trading on such date), except that the date used to
determine such average traded price may be the date on which an award
recipient was hired or promoted or on which a similar singular event
8
<PAGE>
occurred so long as the actual award is made within 90 days following such
date, and except further that in the case of a stock option or stock
appreciation right granted retroactively in tandem with or in substitution for
another previously granted stock option or stock appreciation right the
applicable date may be the date of the prior award.
The Plan provides that the Committee may include in any or all awards
provisions which contemplate a "Change in Control" due to either a change in
beneficial ownership of the Company's voting stock or in the composition of
the Company's Board of Directors. Such provisions could include, for example,
immediate exercisability of stock options and stock appreciation rights and
termination of conditions, restrictions and contingencies on stock awards. For
purposes of the Plan, a Change in Control is deemed to occur if (i) any person
(other than an employee benefit plan of the Company) becomes the beneficial
owner of 20% or more of the Company's outstanding voting stock, (ii) a tender
offer not approved by the Company's Board of Directors is made and the offeror
owns or accepts for payment 20% or more of the Company's outstanding voting
stock, (iii) during any period of twenty-four consecutive months members of
the Board of Directors at the beginning of such period, together with new
Directors nominated or appointed during that period by a vote of at least two-
thirds of such existing Directors, cease to comprise a majority of the Board
of Directors, or (iv) the shareowners of the Company approve a merger or
consolidation of the Company with another company, other than a merger or
consolidation which would result in the Company's outstanding voting stock
continuing to represent more than 70% of the combined voting power of the
Company's or such surviving entity's outstanding voting stock immediately
after such merger or consolidation or a merger or consolidation which would
result in the Directors of the Company who were Directors of the Company
immediately prior thereto continuing to constitute at least 50% of the
Directors of the Company or the surviving entity immediately after such merger
or consolidation.
The Company believes that the following generally summarizes the federal
income tax consequences of awards under the Plan for participants and the
Company. A participant will not be deemed to have received any income subject
to tax at the time a stock option (including an ISO), a stock appreciation or
a stock award that is subject to conditions, restrictions or contingencies is
awarded, nor will the Company be entitled to a tax deduction at that time.
When a stock option (other than an ISO) is exercised, the participant will be
deemed to have received an amount of ordinary income equal to the excess of
the fair market value of the shares purchased over the exercise price. Upon
exercise of a stock appreciation right, a participant will be in receipt of
ordinary income in an amount equal to any cash payment and the fair market
value of any shares distributed. The income tax consequences of stock awards
will depend on how the awards are structured, but generally a participant will
be deemed to have ordinary income at the time a stock award is distributed to
him or her free of all conditions, restrictions and contingencies. In each
case, the Company will be allowed a tax deduction in the year and in an amount
equal to the amount of ordinary income the participant is deemed to have
received. If an ISO is exercised by a participant who satisfies certain
employment requirements at the time of exercise, the participant will not be
deemed to have received any income subject to tax at such time, although the
excess of the fair market value of the Common Stock so acquired on the date of
exercise over the exercise price will be an item of tax preference for
purposes of the alternative minimum tax. Section 422 of the Code provides that
if the Common Stock is held at least one year after the exercise date and two
years after the date of grant, the participant will realize a long term
capital gain or loss upon a subsequent sale, measured as the difference
between the exercise price and the sales price. If Common Stock acquired upon
the exercise of an ISO is not held for one year, a "disqualifying disposition"
results, at which time the participant is deemed to have received an amount of
ordinary income equal to the lesser of (a) the excess of the fair market value
of the Common Stock on the date of exercise over the exercise price or (b) the
excess of the amount realized on the disposition of the shares over the
exercise price. If the amount realized on the "disqualifying disposition" of
the Common Stock exceeds the fair market value on the date of exercise, the
gain on the excess of the ordinary income portion will be treated as capital
gain. Any loss on the disposition of Common Stock acquired through the
exercise of an ISO is a capital loss. No income tax deduction will be allowed
to the Company with respect to shares of Common Stock purchased by a
participant through the exercise of an ISO, provided there is no
"disqualifying disposition" as described above. In the event of a
"disqualifying disposition," the Company is entitled to a tax deduction equal
to the amount of ordinary income recognized by the participant.
9
<PAGE>
The Plan may be amended from time to time by the Company's Board of
Directors, provided that the provisions of the Plan limiting the number of
shares that may be used for various types of awards and requiring that the
exercise price for stock options and stock appreciation rights be the average
traded price on the applicable date may not be amended unless such a change is
properly approved by the Company's shareowners.
THIS SUMMARY OF THE PLAN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
FULL TEXT OF THE PLAN AS SET FORTH IN EXHIBIT A.
The affirmative vote of a majority of the shares present in person or
represented by proxy at the meeting is required to approve the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PLAN.
SHAREOWNER PROPOSAL REGARDING CUMULATIVE VOTING
Mrs. Evelyn Y. Davis, 2600 Virginia Avenue, N.W., Suite 215, Washington,
D.C. 20037, record owner of 180 shares of the Common Stock of the Company, has
given notice that she plans to introduce the following resolution at the
meeting and has asked that the following statement of reasons for its
introduction be printed in this proxy statement:
"RESOLVED: That the stockholders of Ameritech, assembled in Annual Meeting
in person and by proxy, hereby request the Board of Directors to take the
necessary steps to provide for cumulative voting in the election of
directors, which means each stockholder shall be entitled to as many votes
as shall equal the number of shares he or she owns multiplied by the number
of directors to be elected, and he or she may cast all of such votes for a
single candidate, or any two or more of them as he or she may see fit."
"REASONS: Many states have mandatory cumulative voting, so do National
Banks."
"In addition, many corporations have adopted cumulative voting."
"Last year the owners of 82,252,593 shares, representing approximately
22.3% of shares voting, voted for my similar resolution."
"If you AGREE, please mark your proxy FOR this resolution."
THE BOARD OF DIRECTORS DOES NOT SUPPORT THIS PROPOSAL.
The proponent submitted the same proposal for the 1991, 1992, 1993, 1994,
1995 and 1996 Annual Meetings and it was opposed by the owners of 83.1%,
81.1%, 78.2%, 79.7%, 72.8% and 77.7% respectively, of the shares voted.
Each Director of the Company currently is elected by the holders of a
majority of the Company's outstanding shares, thereby permitting the Directors
to administer the affairs of the corporation for the benefit of all
shareowners. The Board of Directors continues to believe that cumulative
voting is undesirable because it is directed toward the election of one or
more directors by a special group of shareowners. The shareowner or special
group electing a director by cumulative voting may seek to have that director
represent the shareowner's or group's special interest rather than the
interests of the shareowners as a whole. This partisanship among directors and
voting on behalf of special interests could interfere with the effectiveness
of the Board and could be contrary to the interests of the Company and its
shareowners as a whole.
The majority of state legislatures, including the State of Delaware, the
state in which Ameritech is incorporated, do not require cumulative voting.
The majority of companies listed on the New York Stock Exchange do not elect
directors by cumulative voting. The Company's present method of electing
Directors is employed by most companies listed on the New York Stock Exchange
and the Board of Directors believes that this method is appropriate to ensure
that Directors will represent all the shareowners and not a particular group.
10
<PAGE>
Under the corporation law of the State of Delaware, the action recommended
in this proposal could be taken only if the Board of Directors recommended an
amendment to the Company's Certificate of Incorporation establishing
cumulative voting and directed that the amendment be submitted to a vote of
the Company's shareowners. The Company's Board of Directors has not
recommended, and does not recommend, such an amendment. Therefore, a vote in
favor of this proposal would be only an advisory recommendation to the Board
of Directors that it take steps to initiate such an amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS PROPOSAL.
OTHER BUSINESS
The Board of Directors does not know of any further business to be presented
at the meeting. However, should any other matter requiring a vote of the
shareowners arise, the persons appointed by the enclosed proxy card intend to
vote thereon in accordance with their judgment as to the best interests of the
Company.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors has oversight
responsibility for the Company's executive compensation programs. More
specifically, the Committee approves all pay plans and changes therein. It
also approves performance goals for incentive awards, certifies the attainment
of goals and approves the actual awards to the chief executive officer and the
other four most highly compensated executive officers. The Committee
recommends the base salary of the chief executive officer and the other four
most highly compensated executive officers to the full Board of Directors. The
full Board of Directors is responsible for acting on the recommendations of
the Committee.
REPORT OF THE COMPENSATION COMMITTEE
Since its inception, the Company has designed and administered executive
compensation programs so that pay is linked to Company performance and so that
the interests of executives are aligned with the interests of shareowners.
This philosophy is articulated in the following guiding principles of the
Company's compensation programs:
. A significant percentage of pay will be determined by the Company's
annual and long term financial performance, including the creation of
shareowner value.
. Compensation programs will be designed to encourage and balance the
attainment of short term operational goals and long term strategic
initiatives.
. Total compensation will be targeted at competitive levels to allow the
Company to attract, retain and motivate high caliber employees; however,
a greater percentage of compensation will be performance-based and
variable (versus fixed compensation) than competitive practices might
suggest.
. Compensation programs will be designed to encourage stock ownership by
executives.
There are three elements to the Company's compensation program, each
consistent with the compensation philosophy: annual base salary, annual cash
bonus incentives and long term incentives. Annual incentives are directed
toward specific financial measures, including earnings growth and revenue
growth, with each of the targets calling for progressively excellent results.
Long term incentives focus on total return to shareowners (stock price
appreciation plus dividends).
An important consideration in the design of the Company's compensation
programs is the use of stock to encourage ownership by management. The
Ameritech long term incentive plans may utilize performance-based
11
<PAGE>
restricted stock, performance units and stock options in making grants. Since
1991, all long term grants have been in the form of the Company's stock. To
support the Company's belief in stock ownership by executives, there are in
effect ownership guidelines for key managers which require stock holdings that
are proportionate to an individual's compensation and position in the Company.
Newly hired and promoted executives are given a reasonable period of time to
achieve these guidelines. As of December 31, 1996, the stock ownership of each
of the executive officers named in the Summary Compensation Table that follows
either exceeded or was on track to meet these guidelines.
Annual cash compensation (as reported in the "Salary" and "Bonus" columns of
the Summary Compensation Table that follows) is somewhat influenced by the pay
practices of comparable large corporations so that Ameritech remains
reasonably competitive with what others are doing. The Compensation
Committee's current view is that Ameritech's salaries should be at about the
median of all companies in the comparator group and that target annual cash
compensation (salary plus target bonus) and long term compensation should be
somewhat higher to focus on variable compensation tied to Company performance.
The comparator group used in establishing the base salary, annual cash
compensation guidelines and long term grants is composed of a broad cross
section of approximately 65 major corporations in multiple industries as
opposed to the smaller peer group comprised of the six Regional Holding
Companies ("RHCs") shown in the Shareowner Return Performance Graph following
this report. The Committee believes that this is appropriate considering that
the Company competes for executives in many industries, not solely with the
RHCs. Although competitive practices are viewed importantly, the Company and
the Compensation Committee concur in the view that the most important
considerations in setting annual compensation are individual merit and the
Company's financial performance.
In 1996, annual cash compensation targets for executives were increased by
approximately 4.5% to maintain target total compensation levels based on
analysis of survey data of the comparator group companies described above. Mr.
Notebaert's base salary increased 8% in 1996 over 1995 to bring his salary
more in line with the competitive market rate for his position. His total
salary and bonus increased because of this salary increase and the Company's
improved performance versus return on assets and revenue targets, which
produced a cash bonus for 1996 above the targeted level. A special grant of a
stock option to purchase 250,000 shares was made to Mr. Notebaert in December
of 1996. To further strengthen the linkage between his compensation and
Ameritech's long term performance, this stock option has a waiting period
before it can be exercised that is substantially longer than normal, with the
option becoming exercisable in equal installments of one-third each on the
sixth, seventh and eighth anniversaries of the date of grant.
Actual incentive bonus awards are made pursuant to the Company's Management
Committee Short Term Incentive Plan and are shown in the "Bonus" column in the
Summary Compensation Table that follows. These awards are either equal to,
more than, or less than targeted amounts depending on actual results compared
with the performance measures being used. Thus, the Company's incentive plans
forge a direct link between pay and performance, strengthened by the fact that
the greater portion of total compensation (annual salary plus annual bonus
plus long term awards) is determined by the incentive elements of an
individual's aggregate compensation rather than by salary. In 1996 for
example, about 59% of the Company's chief executive officer's total
compensation was dependent on incentive factors and thus was variable with
performance. Because of increases in revenues and return on assets in 1996,
the actual incentive bonus awards for 1996 were above the targeted amounts.
Performance targets established for the annual incentive awards are based on
internal financial goals. The number of shares granted under the Company's
long term incentive plans ("LTIP") is based on periodic analysis of the
competitive total compensation and the long term incentive component of a
comparator group of approximately 25 high profile U.S. industrial companies
that has been followed by a recognized industry consultant for a number of
years and is a subset of the broad cross section of major corporations
referenced above. Factors that are considered by the Compensation Committee in
determining the number of option shares granted annually to each executive
include individual merit, the competitive market for his or her position and
the potential value of an option share and the dividend equivalents
attributable to such shares using the expected grant price.
12
<PAGE>
The Compensation Committee believes strongly in the continued focus of the
LTIP on total return to shareowners. Beginning in 1994, the Compensation
Committee has approved new annual grants under the LTIP that continue this
focus by providing participating executives grants of stock options with
dividend equivalents. The first grant under this program was made in January
1994. The options are granted at fair market value on the date of grant.
Dividend equivalents are converted to share units and credited quarterly to a
book account for each participant. The share units will be paid in shares of
stock five years after the grant date or following the exercise of the
options, whichever is sooner, but only if the stock price at the time of
distribution exceeds the exercise price of the option.
The LTIP payouts shown in the Summary Compensation Table for the years 1994
and 1995 are from a prior long term incentive award of performance-based
restricted stock. The payouts were based on Ameritech's five-year average
percentile ranking on total return to shareowners as compared to the total
returns of approximately 100 companies the size and risk characteristics of
which most nearly compared with those of Ameritech. The LTIP payouts shown in
the Summary Compensation Table for 1996 for Mr. Notebaert and Mr. Hester are
from a prior grant of restricted stock that was not performance based.
As often as seems appropriate, but at least annually, the Compensation
Committee studies Ameritech's executive compensation programs to judge their
consistency with the Company's compensation philosophy, their support of the
Company's strategic and financial objectives and their market competitiveness.
The Company's performance targets will be changed from time to time so as to
maintain the most effective relationship between performance and compensation.
Section 162(m) of the Internal Revenue Code generally limits the corporate
tax deduction for compensation paid to executive officers named in the Summary
Compensation Table in the proxy statement to $1 million, unless certain
requirements are met. In 1996, Mr. Notebaert's compensation exceeded the
threshold for deductibility under Section 162(m) because of a distribution of
performance-based restricted stock awarded in 1991, before Section 162(m) went
into effect. The Management Committee Short Term Incentive Plan approved by
shareowners in 1995 complies with Section 162(m) of the Internal Revenue Code
and, therefore, awards under this plan to members of the Company's Management
Committee (currently the top eight senior officers) for 1996 and subsequent
years will qualify for the corporate tax deduction. The Long-Term Stock
Incentive Plan to be presented for shareowner approval at the 1997 annual
meeting also complies with Section 162(m) of the Internal Revenue Code. It is
the Committee's intent to request shareowner approval of future compensation
plans for the executive officers subject to the deduction limit as required by
Section 162(m) so the corporate tax deduction is maximized without limiting
the Committee's flexibility to attract and retain qualified executives to
manage the Company.
The Compensation Committee, which is composed entirely of Directors who are
not officers or employees of the Company, uses a professional compensation
consultant who is separate from consultants employed by the Company. This
consultant provides guidance in our deliberations and helps ensure equity and
fairness in the Company's practices.
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
John B. McCoy, Chairman
Donald C. Clark James A. Henderson
John D. Ong
Sheldon B. Lubar
13
<PAGE>
SHAREOWNER RETURN PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total returns (assuming
reinvestment of dividends) of Ameritech, the average of the other six Regional
Holding Companies ("RHCs") formed along with Ameritech in the AT&T divestiture
effective January 1, 1984, Bell Atlantic Corporation, BellSouth Corporation,
NYNEX Corporation, Pacific Telesis Group, SBC Communications Inc. and US West
Communications Group ("Peer Group Index"), and the Standard & Poor's 500
Composite Stock Index ("S&P 500") from December 31, 1991 through December 31,
1996.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
[INSERT GRAPH HERE]
<TABLE>
<CAPTION>
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ameritech............. $100 $119 $134 $148 $225 $240
Peer Group Index...... $100 $110 $130 $123 $187 $184
S&P 500............... $100 $108 $118 $120 $165 $203
</TABLE>
From November 21, 1983, the date on which Ameritech and the other RHCs began
trading on a "when issued" basis on the New York Stock Exchange, through
December 31, 1996, Ameritech has provided its shareowners with a cumulative
total return of 1,039%. This performance compares to a 588% total return for
the S&P 500 and a 733% return for the Peer Group Index over the same thirteen-
year period.
14
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth information as to the compensation of the
Chief Executive Officer and each of the other four most highly compensated
executive officers of Ameritech as of December 31, 1996 for services in all
capacities to the Company and its subsidiaries in 1994, 1995 and 1996.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------- ------------------- --------
NAME OTHER ALL
AND ANNUAL RESTRICTED OPTIONS/ OTHER
PRINCIPAL COMPEN- STOCK SARS LTIP COMPEN-
POSITION(1) YEAR SALARY BONUS(2) SATION(3) AWARDS(4) (SHARES) PAYOUTS SATION(5)
----------- ---- -------- ---------- --------- ---------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard C. Notebaert 1996 $950,000 $1,006,288 $ 47,413 $ 0 370,000 $384,660 $373,664
Chairman, President 1995 $880,000 $1,029,750 $ 58,319 $ 0 135,000 $348,898 $280,654
& CEO 1994 $709,583 $ 754,200 $ 79,725 $ 0 126,000 $244,456 $264,214
W. Patrick Campbell 1996 $475,000 $ 323,350 $ 9,683 $ 0 35,000 $ 0 $342,178
Executive VP- 1995 $475,000 $ 245,424 $ 18,028 $ 0 44,300 $ 0 $393,640
Corp. Strategy 1994 $423,492 $ 298,600 $ 13,379 $ 0 44,300 $ 0 $958,707
Oren G. Shaffer 1996 $450,000 $ 340,633 $ 412 $ 0 40,000 $ 0 $261,702
Executive VP & 1995 $440,000 $ 391,305 $ 6,885 $ 0 44,300 $ 0 $282,917
Ch. Financial Off. 1994 $ 92,540 $ 77,400 $ 7,720 $ 0 11,100 $ 0 $ 0
Thomas P. Hester 1996 $380,000 $ 285,440 $ 16,554 $ 0 30,700 $126,913 $213,192
Executive VP & 1995 $365,000 $ 343,250 $ 33,929 $ 0 35,800 $302,418 $179,576
General Counsel 1994 $350,000 $ 312,700 $ 37,403 $ 0 35,800 $212,023 $169,454
Barry K. Allen 1996 $346,500 $ 289,789 $ 4,860 $ 0 35,600 $ 0 $101,144
Executive VP-Comm. 1995 $131,882 $ 117,278 $ 20,254 $ 0 0 $ 0 $286,683
& Info Products 1994
</TABLE>
- - --------
(1)Mr. Campbell joined the Company in January 1994. Mr. Shaffer joined the
Company in October 1994. Mr. Allen rejoined the Company in July 1995 after a
two-year absence. Mr. Hester resigned as General Counsel effective December 1,
1996, in anticipation of his retirement on January 31, 1997.
(2) Awards under the Management Committee Short Term Incentive Plan for 1995
and 1996 and the Senior Management Short Term Incentive Plan for 1994, based
on corporate performance for the year. Payments are made in January of the
next year.
(3)Consists of earnings on long term awards and payments to offset Federal,
state and local tax liabilities attributable to non-cash services for
transportation, parking, club memberships and financial counseling. The value
of such non-cash services did not exceed $50,000 for any individual in any
year.
(4)At December 31, 1996, the persons named in the table above held the
following shares of restricted stock with the following values (based on the
closing market price of Ameritech Common Stock on December 31, 1996): Mr.
Notebaert, 13,332 shares, $808,253; Mr. Campbell, no shares, $0; Mr. Shaffer,
no shares, $0; Mr. Hester, 4,400 shares, $266,750; and Mr. Allen, no shares,
$0. Dividends are paid on restricted stock when and as paid on the Company's
Common Stock.
(5)Detail of amounts reported in the "All Other Compensation" column for 1996
is provided in the table below. Split dollar insurance represents the present
value of the interest projected to accrue for the employee's benefit on the
current year's insurance premium paid by the Company. The employee contributes
an amount equal to the value of the death benefit under the policy. Cumulative
net life insurance premiums paid are recovered by the Company at the later of
retirement or 15 (or in some cases 10) years.
<TABLE>
<CAPTION>
ITEM MR. NOTEBAERT MR. CAMPBELL MR. SHAFFER MR. HESTER MR. ALLEN
---- ------------- ------------ ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
. Earnings on Deferred
Compensation $ 95,528 $ 25,996 $ 16,266 $110,411 $ 5,328
. Company Contributions
to Defined
Contribution Savings
Plans $ 35,362 $ 20,188 $ 20,081 $ 17,044 $ 16,449
. Split Dollar Insurance
Premium Value $242,774 $295,994 $225,355 $ 85,737 $ 79,367
-------- -------- -------- -------- --------
Total All Other
Compensation $373,664 $342,178 $261,702 $213,192 $101,144
======== ======== ======== ======== ========
</TABLE>
15
<PAGE>
LONG TERM INCENTIVE PLANS
The Company's shareowners approved Long Term Incentive Plans ("LTIP") in
1985 and 1989. These plans provide incentive compensation opportunities for
officers and other key employees in the form of stock options, stock
appreciation rights, restricted stock, restricted stock units and other forms
consistent with the objectives of the plans. The 1985 LTIP expired on April
18, 1994 and no new grants may be made thereunder, but grants made prior to
such expiration remain outstanding for their respective terms. The following
two tables provide information as to exercises and grants of stock options
under the LTIP. No grants other than stock options were made under the LTIP to
the officers named in the Summary Compensation Table above in 1996.
OPTION GRANTS IN 1996
The following table shows all grants of stock options to the officers named
in the Summary Compensation Table above in 1996. The exercise price of all
such options was the fair market value on the date of grant. Stock options
generally become exercisable as to one-third of the option shares on each of
the first three anniversaries of the date of grant; however, the option for
250,000 shares granted to Mr. Notebaert and shown in the table below does not
become exercisable until the sixth, seventh and eighth anniversaries of the
date of grant. In the event of a change in control of the Company, options
previously granted would become exercisable in full. Upon exercise of an
option, an officer purchases all or a portion of the shares covered by the
option by paying the exercise price multiplied by the number of shares as to
which the option is exercised, either in cash or by surrendering common shares
already owned by the officer.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
- - ------------------------------------------------------------------------- ------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO PER SHARE
OPTIONS/SARS EMPLOYEES EXERCISE OR EXPIRATION
NAME GRANTED(1) IN FISCAL YEAR BASE PRICE DATE 0% 5% 10%
---- ------------ -------------- ------------ ---------- --- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard C. Notebaert 120,000 1.74% $58.56 1/17/06 $0 $ 4,419,600 $ 11,199,600
250,000 3.63% $55.63 12/19/06 $0 $ 8,747,500 $ 22,165,000
W. Patrick Campbell 35,000 0.51% $58.56 1/17/06 $0 $ 1,289,050 $ 3,266,550
Oren G. Shaffer 40,000 0.58% $58.56 1/17/06 $0 $ 1,473,200 $ 3,733,200
Thomas P. Hester 30,700 0.45% $58.56 1/17/06 $0 $ 1,130,681 $ 2,865,231
Barry K. Allen 35,600 0.52% $58.56 1/17/06 $0 $ 1,311,148 $ 3,322,548
All Shareowners n/a n/a n/a n/a $0 $20,159,416,690 $51,087,919,950
All Optionees 6,880,416 100.00% $58.29 (avg) 2006 $0 $ 252,224,132 $ 639,185,472
Optionees Gain
as % of All
Shareowners Gain n/a n/a n/a n/a n/a 1.25% 1.25%
</TABLE>
- - --------
(1) Under the terms of the options granted to Messrs. Notebaert, Campbell,
Shaffer, Hester and Allen, dividend equivalents are credited quarterly on
the shares subject to the options by dividing the aggregate cash dividend
that would have been paid on such shares had they been outstanding by the
current market price of the Company's Common Stock. The dividend
equivalents will be distributed in the form of shares of stock after the
earlier of exercise of the option or five years from the date of grant,
but only if the then current market price exceeds the exercise price.
Dividend equivalents credited in 1996 on options held by the persons named
in the Summary Compensation Table above were: Mr. Notebaert, 13,932
shares; Mr. Campbell, 4,566 shares; Mr. Shaffer, 3,316 shares; Mr. Hester,
3,758 shares; and Mr. Allen, 1,004 shares.
The dollar amounts under the 5% and 10% columns in the table above are the
result of calculations required by the Securities and Exchange Commission's
rules and therefore are not intended to forecast possible future
16
<PAGE>
appreciation in the stock price of the Company. As shown in the 0% column
above, no gain to the named officers or all optionees is possible without
appreciation in the price of the Company's Common Stock, which will benefit
all shareowners. For example, in order for Mr. Notebaert to realize the
potential values for the option grant of 120,000 shares set forth in the 5%
and 10% columns in the table above, the price per share of the Company's
Common Stock would be approximately $95.39 and $151.89, respectively, as of
the expiration date of his option.
No stock appreciation rights ("SARs") were granted in 1996. An SAR entitles
a participant to receive, upon exercise of the SAR, an amount equal to the
difference, if any, between the exercise price per share and the fair market
value of a common share on the date of exercise, multiplied by the number of
shares as to which the SAR is exercised. The Company has in the past granted
SARs only in tandem with stock options, such that exercise of the option
reduces the number of shares as to which the SAR may be exercised and exercise
of the SAR cancels the option as to such number of shares.
OPTION/SAR EXERCISES IN 1996 AND OPTION/SAR VALUES AT DECEMBER 31, 1996
The following table provides information as to options exercised in 1996 by
the officers named in the Summary Compensation Table above, the value realized
upon such exercises and the value of options held by such officers at year end
based on the closing price of the Company's Common Stock on December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
ACQUIRED AT YEAR END AT YEAR END (1)
ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard
C.
Notebaert 8,632 $ 308,493 189,466 502,000 $4,402,039 $4,148,310
W. Pat-
rick
Campbell 0 n/a 44,301 79,299 $ 936,745 $ 964,234
Oren G.
Shaffer 0 n/a 22,167 73,233 $ 439,188 $ 725,803
Thomas P.
Hester 47,600 $1,562,294 88,501 66,499 $2,282,078 $ 784,208
Barry K.
Allen 0 n/a 0 35,600 $ 0 $ 73,514
</TABLE>
- - --------
(1) Valued at $60.625 per share.
PENSION PLANS
The Company's management pension plans were amended effective May 1, 1995.
Under the plans as amended, employees earn pension credits for each year of
service and the pension benefit is calculated by multiplying the earned
pension credits by the employee's highest three-year average pay out of the
last five years of employment. Under the pension plan formula prior to May 1,
1995, the benefit was calculated on the basis of fixed percentages of final
average pay above and below a Social Security "breakpoint" over the highest
five years out of the last 10 years of employment, multiplied by years of
service. To qualify for a service pension, employees had to meet specified age
and service requirements. The amended plans include a transition under which
employees who were service pension eligible or within five years thereof at
the effective date, including Mr. Notebaert and Mr. Hester, will receive the
greater of the benefit under the new formula or the old formula.
17
<PAGE>
The following table illustrates the maximum annual benefits payable for
management employees for specified final average annual compensation and
specified years of service, assuming retirement at age 65 and payment as a
single-life annuity, under the formula in existence prior to May 1, 1995.
<TABLE>
<CAPTION>
FINAL
AVERAGE YEARS OF SERVICE
ANNUAL --------------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40 45
------------ -------- -------- -------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 600,000 $134,107 $178,810 $223,512 $268,214 $ 312,917 $ 357,619 $ 402,322
800,000 179,107 238,810 298,512 358,214 417,917 477,619 537,322
1,000,000 224,107 298,810 373,512 448,214 522,917 597,619 672,322
1,200,000 269,107 358,810 448,512 538,214 627,917 717,619 807,322
1,400,000 314,107 418,810 523,512 628,214 732,917 837,619 942,322
1,600,000 359,107 478,810 598,512 718,214 837,917 957,619 1,077,322
1,800,000 404,107 538,810 673,512 808,214 942,917 1,077,619 1,212,322
2,000,000 449,107 598,810 748,512 898,214 1,047,917 1,197,619 1,347,322
</TABLE>
The following table illustrates the maximum annual benefits payable for
specified final average annual compensation and specified years of service,
assuming retirement at age 65 and payment as a single-life annuity, under the
formula that became effective May 1, 1995.
<TABLE>
<CAPTION>
FINAL
AVERAGE YEARS OF SERVICE
ANNUAL --------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40 45
------------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 600,000 $152,540 $185,822 $213,557 $235,744 $255,159 $271,799 $288,440
800,000 203,387 247,763 284,742 314,326 340,212 362,399 384,587
1,000,000 254,234 309,703 355,928 392,907 425,264 452,999 480,734
1,200,000 305,081 371,644 427,113 471,489 510,317 543,599 576,880
1,400,000 355,928 433,585 498,299 550,070 595,370 634,199 673,027
1,600,000 406,775 495,525 569,485 628,652 680,423 724,798 769,174
1,800,000 457,621 557,466 640,670 707,233 765,476 815,398 865,321
2,000,000 508,468 619,407 711,856 785,815 850,529 905,998 961,467
</TABLE>
Under the management pension plans (including a supplemental plan which is
not a "qualified" plan under the Internal Revenue Code) before and after the
May 1, 1995 amendments, compensation included in the pension plan base
consists of salaries and actual short term incentive plan awards (shown in the
"Bonus" column of the Summary Compensation Table above).
As of December 31, 1996, Mr. Notebaert, Mr. Campbell, Mr. Shaffer, Mr.
Hester and Mr. Allen had 27, 2, 2, 30 and 1 years of service, respectively,
for purposes of the management pension plans. Prior to his two-year absence
from 1993 to 1995, Mr. Allen had 19 years of service with the Company.
Pension amounts are not subject to reductions for Social Security benefits
or other offset amounts. The Employee Retirement Income Security Act of 1974
("ERISA") places certain limitations on pensions which may be paid under
Federal income tax qualified plans. Pension amounts which exceed such
limitations, as well as pension amounts attributable to awards under the short
term incentive plans, are paid under a separate non-qualified plan as an
operating expense.
Under the pension plans as amended, benefits are payable in a lump sum but
employees may elect to receive them in the form of an annuity. Under the old
plan, management employees could elect to receive pension benefits under the
qualified plan and/or the non-qualified plan in a lump sum upon retirement
based on the present value of such pension benefits. The non-qualified pension
plan was amended in 1992 to provide for a lump sum payment as of December 31,
1992 to those participants in the non-qualified plan (including Mr. Hester)
who were as of December 31, 1994 eligible by reason of age and length of
service to receive a service pension, unless the participant waived such
payment of the accrued benefit.
18
<PAGE>
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company entered into an employment agreement with Mr. Campbell when he
joined the Company in January 1994. The agreement provides for a base salary
of $460,000 subject to adjustment in accordance with the Company's customary
practice. Under the agreement, if the Company terminates Mr. Campbell's
employment without cause prior to the fifth anniversary of the commencement of
his employment, the Company will pay Mr. Campbell a lump sum equal to eighteen
months of his base salary.
In 1995, the Board of Directors approved a supplemental pension arrangement
for Mr. Shaffer, who joined Ameritech as Chief Financial Officer at age 52 in
October 1994. Under this arrangement, Mr. Shaffer will receive supplemental
pension credits at the rate of 7% per year that will vest and be included in
his pension if Mr. Shaffer remains employed by the Company for at least five
years and becomes vested under the Ameritech Management Pension Plan.
The Company entered into an employment agreement with Mr. Allen when he
rejoined the Company in July 1995. The agreement provides for a base salary of
$275,000 subject to adjustment in accordance with the Company's customary
practice. The agreement also provided for a special one-time bonus of $200,000
upon hire which is shown in the "All Other Compensation" column for 1995 in
the Summary Compensation Table above. Under the agreement, if Mr. Allen
voluntarily terminates his employment with the Company or if the Company
terminates Mr. Allen's employment for cause or unsatisfactory performance
prior to the fifth anniversary of the commencement of his employment, Mr.
Allen will repay this special bonus to the Company. The Company also agreed to
assume its obligations under the split-dollar and collateral assignment
agreements for life insurance policies originally purchased under the Key
Management Life Insurance and Estate Preservation Plans before he left the
Company in 1993. Additionally, the agreement provides a supplemental pension
arrangement for Mr. Allen if he retires at a time when he would have been
eligible for a service pension under the pension plan formula in effect prior
to May 1, 1995. Under this arrangement, Mr. Allen will receive a supplemental
non-qualified pension benefit equal to the difference between (A) the pension
benefit to which he would have been entitled at retirement, calculated using
the pre-May 1, 1995 formula and adjusted for amounts previously paid to Mr.
Allen under the Company's pension plans and (B) the amount actually payable to
Mr. Allen under the Company's pension plans upon retirement. If the Company
terminates Mr. Allen's employment without cause prior to the date when he
would have been eligible for a service pension under the pre-May 1, 1995
formula, the Company will pay Mr. Allen a severance benefit equal to the
difference between (A) the pension benefit he would have received had he
remained employed by the Company until his service pension eligible date
calculated using the pre-May 1, 1995 formula and adjusted for amounts
previously paid to Mr. Allen under the Company's pension plans and (B) the
amount actually payable to Mr. Allen under the Company's pension plans upon
termination of employment.
In October 1996, the Company entered into a consulting agreement with Mr.
Hester that became effective upon his retirement on January 31, 1997 and
continues to December 31, 1997. Under this agreement Mr. Hester will provide
legal services to the Company on a mutually convenient part-time basis and
will receive fees at the rate of $150,000 per year payable in monthly
installments.
The Company has entered into agreements regarding change in control with
Messrs. Notebaert, Campbell, Shaffer, Hester and Allen and the other four
members of the Management Committee. Under these agreements, a "change in
control" occurs if (a) any person (other than an employee benefit plan of the
Company or the executive or persons acting in concert with the executive)
becomes the beneficial owner of 20% or more of the Company's voting stock, (b)
a tender offer is made and the offeror owns or has accepted for payment 20% or
more of the Company's voting stock (unless the tender offer is approved by the
Company's Board of Directors before the offeror becomes the beneficial owner
of 5% or more of the Company's voting stock), (c) during any period of twenty-
four consecutive months members of the Board at the beginning of such period,
together with new Directors nominated or appointed during that period by a
vote of at least two-thirds of such existing
19
<PAGE>
Directors, cease to comprise a majority of the Board of Directors, or (d) the
shareowners of the Company approve a merger or consolidation of the Company
with any other company (unless the voting stock outstanding immediately prior
thereto continues to represent at least 70% of the combined voting power of
the Company or the surviving entity thereafter or at least 50% of the
Directors of the Company or the surviving entity after the merger or
consolidation were Directors of the Company prior thereto). The agreements
provide that the executive's compensation and employee benefits will not be
reduced following a change in control. The agreements also provide that if the
executive's employment with the Company is terminated under certain
circumstances the executive will continue to receive certain medical,
insurance and other employee benefits for a period of twenty-four months and
will receive a lump sum payment up to, but limited by the amount deductible
for income tax purposes under the Internal Revenue Code, the sum of (i) 2.99
times the executive's annual salary rate in effect immediately prior to the
change in control and the executive's short term incentive award for the
preceding year plus (ii) the actuarial equivalent of the additional pension
benefits the executive would have accrued under the Company's qualified and
non-qualified pension plans if, on the date of termination, the executive had
been credited with two additional years of age, service and compensation under
such plans. These benefits will be provided to the executives other than Mr.
Notebaert if the executive's employment is terminated involuntarily for any
reason other than death, disability or just cause during the twenty-four month
period following the change in control or voluntarily by the executive during
the thirty-day period beginning on the first anniversary of the change in
control and to Mr. Notebaert if his employment is voluntarily or involuntarily
terminated (other than for death, disability or just cause) during the twenty-
four month period following the change in control. The Company estimates that,
if a change in control occurred as of January 31, 1997, the aggregate amount
payable under these agreements if the employment of Messrs. Notebaert,
Campbell, Shaffer, Hester and Allen was terminated would be approximately
$25,242,000. The initial terms of these agreements are one year. On each
December 31 thereafter they are automatically extended for an additional one-
year term unless the Company has given notice by the preceding November 1 that
the term will not be extended, provided that the term continues for twenty-
four months after a change in control occurs. The agreement with Mr. Hester
terminated upon his retirement effective January 31, 1997.
Under the Ameritech Corporate Resource Severance Pay Plan, which became
effective January 1, 1989, key executives of the Company and its subsidiaries
(approximately 222 persons as of January 1, 1997, including Messrs. Notebaert,
Campbell, Shaffer and Allen if the agreements described above are not in
effect) will, so long as they are employed during the twenty-four month period
following a change in control (as defined above), continue to receive a base
salary at a rate not less than the rate in effect prior to the change in
control and be entitled to participate in short and long term incentive plans
and other employee benefit plans which are not materially less favorable than
those applicable immediately prior to the change in control. The Plan also
provides for a severance benefit to such executives, in an amount up to, but
limited by the amount deductible for income tax purposes under the Internal
Revenue Code, two times base salary as of the change in control, two times the
target short term incentive award for the year preceding the change in control
and the actuarial equivalent of the additional pension benefits the executive
would have accrued if he or she had two additional years of age, service and
compensation, in the event that the executive's employment is terminated by
the employer other than for cause or disability or by the executive for good
reason during the twenty-four months following a change in control or at the
executive's discretion during the thirty-day period following the first
anniversary of the change in control.
In the event of a change in control (as defined above), the Company's
benefit plans provide that the annual incentive award for the year in which
the event occurs will be not less than the target award, all stock options
previously granted will become fully exercisable, the restrictions on
Restricted Stock previously granted will terminate, compensation previously
deferred will be paid in a lump sum unless waived by the executive, and
pension amounts under the non-qualified pension plan will be held in a trust
for the benefit of the employees entitled to such pension amounts.
20
<PAGE>
SUBMISSION OF 1998 SHAREOWNER PROPOSALS
Proposals of shareowners intended to be presented at the annual meeting in
1998 must be received by the Secretary of Ameritech, 30 South Wacker Drive,
Chicago, Illinois 60606, not later than November 1, 1997 to be considered for
inclusion in the Company's 1998 proxy material.
ADDITIONAL INFORMATION
In addition to soliciting proxies through the mail, certain employees of
Ameritech and its transfer agent, First Chicago Trust Company of New York, may
solicit proxies in person and by telephone. Ameritech has retained Kissel-
Blake Inc., 110 Wall Street, New York, New York 10005, to assist in the
solicitation of proxies, primarily from brokers, banks and other nominees, for
an estimated fee of $21,000. The cost of soliciting proxies will be borne by
Ameritech. As is customary, Ameritech will, upon request, reimburse brokers,
banks, nominees, custodians and other record holders for their out-of-pocket
expenses of forwarding proxy materials to the beneficial owners of the shares.
If you plan to attend the Annual Meeting in person, please retain the
admission ticket attached to the form of proxy accompanying this notice and
proxy statement. Shareowners who do not have admission tickets will be
admitted upon presentation of proof of ownership of Ameritech shares at the
door.
The rules of the Securities and Exchange Commission require that an annual
report accompany or precede the proxy materials. However, no more than one
annual report need be sent to the same address. If more than one annual report
is being sent to your address and you wish to reduce the number of annual
reports you receive, please mark the Discontinue Annual Report Mailing box in
the Special Action area on the proxy card.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE THE ENCLOSED PROXY CARD AND MAIL IT
IN THE ENCLOSED POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE OR, IF YOU WISH,
GIVE YOUR PROXY BY TELEPHONE OR THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON
THE PROXY CARD MAILED TO RECORD HOLDERS OF AMERITECH SHARES.
BY ORDER OF THE BOARD OF DIRECTORS,
/S/ Bruce B. Howat
------------------
Bruce B. Howat
Secretary
February 27, 1997
21
<PAGE>
EXHIBIT A
AMERITECH LONG-TERM STOCK INCENTIVE PLAN
1. THE PLAN
a) Purpose. The purpose of this Long-Term Stock Incentive Plan (the "Plan")
is to promote the longer-term financial success of Ameritech Corporation (the
"Company") by providing a means to attract, retain and reward individuals who
can and do contribute to such success. By using stock-based compensation, the
recipients of awards under the Plan will further identify their interests with
those of the Company's shareowners.
b) Effective Date. To serve this purpose, the Plan will become effective
upon its approval by the affirmative vote of a majority of the shares present
or represented by proxy at the Company's 1997 Annual Meeting of Shareowners.
2. ADMINISTRATION
a) Committee. The Plan shall be administered by a Committee, appointed by
the Board of Directors of the Company, which shall consist of no less than
three of its members, all of whom shall not be employees of the Company (the
"Committee"); provided, however, that the Board of Directors of the Company
may assume, at its sole discretion, administration of the Plan.
b) Powers and Authority. The Committee's powers and authority include, but
are not limited to, selecting individuals from among employees of the Company
and any subsidiary of the Company or other entity in which the Company has a
significant equity or other interest as determined by the Committee, and from
among the members of the Board of Directors of the Company, to receive awards
under the Plan; determining the types and terms and conditions of all awards
granted, including performance and other earnout and/or vesting contingencies;
permitting transferability of awards to third parties; interpreting the Plan's
provisions; and administering the Plan in a manner that is consistent with its
purpose.
c) Award Prices. For Plan purposes, all stock options and stock appreciation
rights shall have an exercise price which shall reflect the average traded
price of a share of the common stock of the Company, par value $1.00
("Share"), on the applicable date as determined by the Committee, or if Shares
are not traded on such date, the average price on the next preceding day on
which such stock is traded. The applicable date shall be the date on which the
award is granted, except that the Committee may provide that the applicable
date may be: (i) the day on which an award recipient was hired, promoted or
such similar singular event occurred, provided that the grant of such award
occurs within 90 days following such applicable date; or (ii) in the case of a
stock option or stock appreciation right granted retroactively in tandem with
or as a substitution for another previously granted stock option or stock
appreciation right, the applicable date for such prior award. The above
notwithstanding, the per Share exercise price of any stock option or stock
appreciation right may not be decreased after the grant of the award, and a
stock option or stock appreciation right may not be surrendered as
consideration in exchange for the grant of a new award with a lower per Share
exercise price.
d) Change in Control. The Committee may provide that any or all awards
contain provisions which contemplate a "Change in Control" due to either a
change in the beneficial ownership of the Company's voting stock or in the
composition of the Company's Board of Directors. For all Plan purposes, a
Change of Control shall be deemed to occur, unless the Board of Directors
determines otherwise prior to such change of control occurring, when:
(i) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934) other than:
(A) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company; or
(B) the Participant or any other person acting in concert with the
Participant;
is or becomes a beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of stock of the
Company representing 20% or more of the total voting power of the
A-1
<PAGE>
Company's then outstanding stock; provided, however, that this paragraph
(i) shall not apply to any tender offer made pursuant to an agreement with
the Company approved by the Company's Board of Directors and entered into
before the offeror has become a beneficial owner of stock of the Company
representing 5% or more of the combined voting power of the Company's then
outstanding stock;
(ii) a tender offer is made for the stock of the Company, and the person
making the offer owns or has accepted for payment stock of the Company
representing 20% or more of the total voting power of the Company's then
outstanding stock; provided, however, that this paragraph (ii) shall not
apply to any tender offer made pursuant to an agreement with the Company
approved by the Company's Board of Directors and entered into before the
offeror has become a beneficial owner of stock of the Company representing
5% or more of the combined voting power of the Company's then outstanding
stock;
(iii) during any period of 24 consecutive months there shall cease to be
a majority of the Board of Directors comprised as follows: individuals who
at the beginning of such period constitute the Board of Directors and any
new director(s) whose election by the Board of Directors or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds ( 2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved; or
(iv) the stockholders of the Company approve a merger or consolidation of
the Company with any other company other than:
(A) a merger or consolidation which would result in the Company's
voting stock outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting stock of the surviving entity) more than 70% of the combined
voting power of the Company's or such surviving entity's outstanding
voting stock immediately after such merger or consolidation; or
(B) a merger or consolidation which would result in the directors of
the Company who were directors of the Company who were directors
immediately prior thereto continuing to constitute at least 50% of the
directors of the surviving entity immediately after such merger or
consolidation.
For purposes of paragraph (iv) above, the phrase "surviving entity" shall
mean only an entity in which all of the Company's stockholders who are
stockholders immediately before the merger or consolidation (other than
stockholders exercising dissenter rights) become stockholders by the terms of
the merger or consolidation, and the phrase "directors of the Company who were
directors immediately prior thereto" shall not include (1) any director of the
Company who was designated by a person who has entered into an agreement with
the Company to effect a transaction described in paragraph (i) or paragraph
(iv) above, or (2) any director who was not a director at the beginning of the
24-consecutive-month period preceding the date of such merger or
consolidation, unless his election by the Company's stockholders was approved
by a vote of at least two-thirds ( 2/3) of the directors who were directors
before the beginning of such period.
3. SHARES SUBJECT TO THE PLAN
a) Maximum Shares Available for Delivery. Subject to Section 3(c), the
maximum number of Shares that may be delivered to participants and their
beneficiaries under the plan shall be equal to the sum of:
(i) 20,000,000;
(ii) any Shares available for future awards under the Company's 1989
Long-Term Incentive Plan as of the effective date of this Plan; and
(iii) any Shares that represent awards granted under any prior plan of
the Company which are forfeited, expire or are canceled without the
delivery of Shares or which result in the forfeiture of Shares back to the
Company.
In addition, any Shares granted under the Plan which are forfeited back to
the Company because of the failure to meet an award contingency or condition
shall again be available for delivery pursuant to new awards granted under the
Plan. Any Shares covered by an award (or portion of an award) granted under
the Plan, which is forfeited or canceled, expires or is settled in cash, shall
be deemed not to have been delivered for purposes of determining the maximum
number of Shares available for delivery under the Plan.
A-2
<PAGE>
Likewise, if any stock option is exercised by tendering Shares, either
actually or by attestation, to the Company as full or partial payment in
connection with the exercise of a stock option under this Plan or any stock
plan of the Company, only the number of Shares issued net of the Shares
tendered shall be deemed delivered for purposes of determining the maximum
number of Shares available for delivery under the Plan. Further, any Shares
delivered under the Plan through the settlement, assumption or substitution of
outstanding awards or obligations to grant future awards as a condition of the
Company acquiring another entity shall not reduce the maximum number of Shares
available pursuant to this Section 3(a).
b) Other Share Limits. Subject to Section 3(c), the following additional
Share maximums are imposed under the Plan. The maximum number of Shares that
may be covered by stock options intended to comply with Section 422 of the
Internal Revenue Code ("incentive stock options") shall be 20,000,000. The
maximum number of Shares that may be issued in conjunction with awards granted
pursuant to Section 4(d) shall be 7,000,000. The maximum number of Shares that
may be covered by awards granted to any one individual shall be 2,500,000 over
any consecutive five-year period.
c) Adjustments for Corporate Transactions. The Committee may determine that
a corporate transaction has affected the price per Share such that an
adjustment or adjustments to outstanding awards are required to preserve (or
prevent enlargement of) the benefits or potential benefits intended at the
time of grant. For this purpose a corporate transaction will include, but is
not limited to, any stock split, stock dividend, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination or exchange of shares, or other similar occurrence. In the event
of such a corporate transaction, the Committee may, in such manner as the
Committee deems equitable, adjust (i) the number and kind of shares which may
be awarded under the Plan pursuant to Sections 3(a) and 3(b); (ii) the number
and kind of share subject to outstanding awards; and (iii) the exercise price
of outstanding stock options and stock appreciation rights.
4. TYPES OF AWARDS
a) General. An award may be granted singularly, in combination with another
award(s) or in tandem whereby exercise or vesting of one award held by a
participant cancels another award held by the participant. Subject to Section
2(c), an award may be granted as an alternative to or replacement of an
existing award or as the form of payment for grants or rights earned or due
under other compensation plans or arrangements of the Company, including the
plan of any entity acquired by the Company. The types of awards that may be
granted under the plan include:
b) Stock Options. A stock option represents a right to purchase a specified
number of Shares during a specified period at a price per share which is no
less than that required by Section 2(c). A stock option may be in the form of
an incentive stock option or in a form which does not qualify for federal tax
treatment as an incentive stock option. The Shares covered by a stock option
may be purchased by means of a cash payment or such other means as the
Committee may from time-to-time permit, including (i) tendering (either
actually or by attestation) Shares valued using the market price at the time
of exercise, (ii) authorizing a third party to sell Shares (or a sufficient
portion thereof) acquired upon exercise of a stock option and to remit to the
Company a sufficient portion of the sale proceeds to pay for all the Shares
acquired through such exercise and any tax withholding obligations resulting
from such exercise; or (iii) any combination of the above.
c) Stock Appreciation Rights. A stock appreciation right is a right to
receive a payment in cash, Shares or a combination, equal to the excess of the
aggregate market price at time of exercise of a specified number of Shares
over the aggregate exercise price of the stock appreciation rights being
exercised.
d) Stock Awards. A stock award is a grant of Shares or of a right to receive
Shares (or their cash equivalent or a combination of both) in the future. Each
stock award shall be subject to such conditions, restrictions and
contingencies as the Committee shall determine. These may include continuous
service and/or the achievement of performance goals. The performance goals
that may be used by the Committee for such awards shall consist of cash
generation targets, profit and revenue targets, profitability targets as
measured by return ratios, and/or shareholder returns. The Committee may
designate a single criterion or multiple criteria for performance measurement
purposes with the measurement based on absolute Company or business unit
performance and/or on performance as compared with that of other publicly-
traded companies.
A-3
<PAGE>
e) Dividends and Dividend Equivalents. An award may contain the right to
receive dividends or dividend equivalent payments which may be either paid
currently or credited to a participant's account. Any such crediting of
dividends or dividend equivalents or reinvestment in Shares may be subject to
such conditions, restrictions and contingencies as the Committee shall
establish, including the reinvestment of such credited amounts in Share
equivalents. The performance goals that may be used by the Committee for such
dividends or dividend equivalent award payments shall consist of cash
generation targets, profit and revenue targets, profitability targets as
measured by return ratios, shareholder returns and/or an increase in the
Company stock value after the date of the related grant.
5. AWARD SETTLEMENTS AND PAYMENTS
Awards may be settled through cash payments, the delivery of Shares, the
granting of awards or any combination thereof as the Committee shall
determine. Any award settlement, including payment deferrals, may be subject
to such conditions, restrictions and contingencies as the Committee shall
determine. The Committee may permit or require the deferral of any award
payment, subject to such rules and procedures as it may establish, which may
include provisions for the payment or crediting of interest or dividend
equivalents, including converting such credits into deferred Share
equivalents.
6. PLAN AMENDMENT AND TERMINATION
a) Amendments. The Company's Board of Directors may amend this Plan as it
deems necessary and appropriate to better achieve the Plan's purpose;
provided, however, that (i) the Share limitations set forth in Sections 3(a)
and 3(b) cannot be increased and (ii) the minimum stock option and stock
appreciation right exercise prices set forth in Section 2(c) cannot be
changed, unless such a change is properly approved by the Company's
shareowners.
b) Plan Suspensions and Termination. The Board of Directors of the Company
may suspend or terminate this Plan at any time. Any such suspension or
termination shall not of itself impair any outstanding award granted under the
Plan or the applicable participant's rights regarding such award.
7. MISCELLANEOUS
a) No Individual Right. No person shall have any claim or right to be
granted an award under the Plan. Neither the Plan nor any action taken
hereunder shall be construed as giving any employee or other person any right
to continue to be employed by or to perform services for the Company, any
subsidiary or related entity. The right to terminate the employment of or
performance of services by any Plan participant at any time and for any reason
is specifically reserved to the employing entity.
b) Binding Arbitration. Any dispute or disagreement regarding participation
and/or an award recipient's right under the Plan shall be settled solely by
binding arbitration in accordance with the applicable rules of the American
Arbitration Association.
c) Unfunded Plan. The Plan shall be unfunded and shall not create (or be
construed to create) a trust or a separate fund or funds. The Plan shall not
establish any fiduciary relationship between the Company and any participant
or beneficiary of a participant. To the extent any person holds any obligation
of the Company by virtue of an award granted under the Plan, such obligation
shall merely constitute a general unsecured liability of the Company and
accordingly shall not confer upon such person any right, title or interest in
any assets of the Company.
d) Other Benefit and Compensation Programs. Unless otherwise specifically
determined by the Committee, settlements of awards received by participants
under the Plan shall not be deemed a part of a participant's regular,
recurring compensation for purposes of calculating payments or benefits from
any Company benefit plan or severance program. Further, the Company may adopt
other compensation programs, plans or arrangements as it deems appropriate.
e) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any award, and the Committee shall determine whether
cash shall be paid or transferred in lieu of any fractional Shares, or whether
such fractional Shares or any rights thereto shall be canceled.
A-4
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[AMERITECH LOGO]
LOGO
<PAGE>
PROXY
AMERITECH CORPORATION
30 South Wacker Drive, Chicago, Illinois 60606 [LOGO OF AMERITECH]
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This proxy is solicited on behalf of the Board of Directors for the Annual
Meeting on April 16, 1997.
The undersigned hereby appoints Richard C. Notebaert, Melvin R. Goodes, Hanna
Holborn Gray, Lynn M. Martin, John D. Ong and A. Barry Rand, and each of them,
as proxies, with the powers the undersigned would possess if personally present,
and with full power of substitution, to vote all common shares of the
undersigned in Ameritech Corporation at the Annual Meeting of Shareowners to be
held in the Arthur Rubloff Auditorium at The Art Institute of Chicago, Chicago,
Illinois, on April 16, 1997, beginning at 9:30 a.m., and at any adjournment
thereof, upon all subjects that may properly come before the meeting, 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 the five nominees listed on
the reverse side of this card; in accord with the Directors' recommendations on
the matters listed on the reverse side of this card; and at their discretion on
any other matter that may properly come before the meeting. If you have
indicated any changes or voting limitations in this paragraph, please mark the
"Vote Limitations" box on the reverse side of this card.
This card also provides voting instructions for shares held in the dividend
reinvestment plan and, if registrations are identical, shares held in various
employee savings plans as described in the proxy statement.
To vote by telephone or Internet, please see the reverse side of this card. To
vote by mail, please sign and date on the reverse side and mail promptly in the
enclosed postage-paid envelope.
Comments: _____________________________________________________________________
_______________________________________________________________________________
If you have written in the above space, please mark the "Comments" box on the
reverse side of this card.
Detach Proxy Card Here If You Are Voting by Mail
and Return in Enclosed Envelope
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<PAGE>
Please mark your
[X] votes with an "X" 6688
using blue or black ink. ----
This proxy, when properly executed, will be voted in the manner directed herein.
If no directions are given, this proxy will be voted FOR the election of
directors, FOR Proposals 2 and 3 and AGAINST Proposal 4.
- - --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR
- - --------------------------------------------------------------------------------
1. Election of Directors (see reverse)
FOR WITHHELD
[_] [_]
FOR, except vote withheld from the following nominee(s):
- - --------------------------------------------------------
01 D. Clark
02 M. Goodes
03 J. Henderson
04 J. McCoy
05 L. D'Andrea Tyson
2. Appointment of Independent Public Accountants
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Approval of the Ameritech Long-Term Stock Incentive Plan
FOR AGAINST ABSTAIN
[_] [_] [_]
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The Board of Directors recommends a vote AGAINST
- - --------------------------------------------------------------------------------
4. Shareowner Proposal on Cumulative Voting in Elections of Directors
FOR AGAINST ABSTAIN
[_] [_] [_]
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Special Note
- - --------------------------------------------------------------------------------
Items on Other Side of Card
Comments [_]
Vote Limitations [_]
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(For Multiple-Account Holders Only)
Discontinue Annual Report Mailing for This Account [_]
Will Attend Annual Meeting [_]
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SIGNATURES(S) __________________________________________ DATE ____________, 1997
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee, guardian or
corporate officer, please give full title as such.
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- - --------------------------------------------------------------------------------
IF YOU WISH TO VOTE BY TELEPHONE OR INTERNET,
*** PLEASE READ THE INSTRUCTIONS BELOW ***
- - --------------------------------------------------------------------------------
Ameritech encourages you to take advantage of new and convenient ways to vote
your shares for matters to be covered at the 1997 ANNUAL MEETING OF AMERITECH
SHAREOWNERS. Please take the opportunity to use one of the three voting methods
outlined below to cast your ballot. We've made it easier than ever.
1 VOTE BY PHONE. Use any touch-tone telephone to vote your proxy 24 hours a
day, 7 days a week, TOLL-FREE, at 1-888-457-2961. Have your proxy card
(above) in hand when you call. Please enter the 12-digit control number
which is located in the red box on top of your proxy card (above).
Option 1 To vote as the Board of Directors recommends on ALL proposals,
press 1. Your vote will be confirmed and cast as directed and
the call will end. If you wish to vote on each proposal
separately, press 0.
Option 2 If you selected 0 to vote on each proposal separately, you will
hear these instructions:
Proposal 1 -- To vote FOR all nominees, press 1; to WITHHOLD for
all nominees, press 9; to WITHHOLD for AN INDIVIDUAL nominee,
press 0 and enter the two digit number that appears on the proxy
card (above) next to the name of the nominee you DO NOT wish to
vote for. Once you have completed voting for Directors, press 0.
Proposals 2, 3 and 4 -- To vote FOR, press 1; to vote AGAINST,
press 9; to ABSTAIN, press 0. Your vote selection will be
repeated and you will have an opportunity to confirm it.
2 VOTE ON THE INTERNET 24 hours a day, 7 days a week. This address is:
http://www.vote-by-net.com Have your proxy card (above) in hand when you
access the web site.
3 VOTE BY MAIL. Mark, sign and date your card (above) and return it in the
postage-paid envelope we've provided or, otherwise, return it to Ameritech,
P.O. Box 8678, Edison, New Jersey 08818-9166.
IF YOU VOTE BY PHONE OR VOTE USING THE INTERNET, PLEASE DO MAIL YOUR PROXY.
THANK YOU FOR VOTING
AMERITECH LOGO
