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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
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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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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(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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(4) Date Filed:
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Notes:
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{LOGO] 30 South Wacker Drive
Chicago, Illinois 60606
NOTICE OF 1999 ANNUAL MEETING AND PROXY STATEMENT
March 3, 1999
Dear Shareowner:
We cordially invite you to attend the annual meeting of Ameritech's
shareowners, which will be held on Wednesday, April 21, 1999, at 9:30 a.m,
local time, at McCormick Place South, Grand Ballroom, Level 1, 2301 South
Martin Luther King, Jr. Drive, Chicago, Illinois 60616.
At the meeting we will elect thirteen Directors and vote on the appointment
of independent public accountants and one shareowner proposal. Each of these
matters is described in 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 a chance to comment or ask questions.
If you are a shareowner of record and you plan to attend the meeting, please
keep the admission ticket that is attached to the enclosed form of proxy, as
you must present this ticket to be admitted to the meeting. If your shares are
held by a broker or a bank and you do not receive an admission ticket, you
will be admitted to the meeting only if you bring proof of your ownership of
Ameritech shares.
Whether or not you plan to attend the meeting, we ask that you read the
material on the following pages and submit your proxy with voting instructions
as soon as possible. Record holders of Ameritech shares may submit their
proxies with voting instructions by using a toll-free telephone number or the
Internet. Instructions for using these convenient services are set forth on
the enclosed proxy card and accompanying information sheet. Of course, you
also may submit a proxy containing your voting instructions by completing,
signing, dating and returning the enclosed proxy card in the postage-paid
envelope provided.
It is important that your shares are represented at this meeting, whether or
not you plan to 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
submit a proxy containing your voting instructions as soon as possible by
telephone, through the Internet or by signing, dating and mailing your proxy
card.
Sincerely,
/s/ Richard C. Notebaert
Richard C. Notebaert
Chairman of the Board, President and Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
The Annual Meeting of Shareowners of Ameritech Corporation will be held on
Wednesday, April 21, 1999, at 9:30 a.m., local time, at McCormick Place South,
Grand Ballroom, Level 1, 2301 South Martin Luther King, Jr. Drive, Chicago,
Illinois 60616, to consider and take action with respect to the following
matters:
1. Election of thirteen Directors to serve for a term of one year;
2. Ratification of the appointment of Arthur Andersen LLP as
independent public accountants for the Company for the year ending
December 31, 1999;
3. A shareowner proposal regarding cumulative voting in the election of
Directors; and
4. Such other business as may properly come before the meeting or any
adjournment thereof.
The record date for the Annual Meeting is the close of business on February
22, 1999. Only shareowners of record as of that time and date will be entitled
to notice of, and to vote at, the meeting. A complete list of the shareowners
of record entitled to vote at the meeting will be open to examination by any
Ameritech shareowner, for any purpose germane to the meeting, at the offices
of Ameritech Corporation, 30 South Wacker Drive, Chicago, Illinois, during
Ameritech's ordinary business hours for a period of ten days prior to the
meeting.
March 3, 1999 By Order of the Board of Directors,
/s/ Deidra D. Gold
Deidra D. Gold, Secretary
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
PROXY AND VOTING INFORMATION............................................... 1
PROPOSED MERGER WITH SBC COMMUNICATIONS INC................................ 2
ELECTION OF DIRECTORS...................................................... 2
Nominees for Election at the Annual Meeting.............................. 3
Meetings of the Board.................................................... 6
Committees of the Board.................................................. 6
Compensation of Directors................................................ 7
Officer and Director Stock Ownership..................................... 8
Section 16(a) Beneficial Ownership Reporting Compliance.................. 8
Beneficial Owners of More than Five Percent.............................. 9
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS.............. 9
SHAREOWNER PROPOSAL REGARDING CUMULATIVE VOTING............................ 9
OTHER BUSINESS............................................................. 10
EXECUTIVE COMPENSATION..................................................... 10
Compensation Committee................................................... 10
Report of the Compensation Committee..................................... 11
Shareowner Return Performance Graph...................................... 14
Summary Compensation Table............................................... 15
Option Grants in 1998.................................................... 16
Option Exercises in 1998 and Option Values at December 31, 1998.......... 17
Pension Plans............................................................ 17
Employment Contracts..................................................... 19
Certain Compensatory Arrangements Upon a Change in Control............... 19
SUBMISSION OF SHAREOWNER PROPOSALS FOR NEXT YEAR........................... 22
ADDITIONAL INFORMATION..................................................... 22
</TABLE>
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Ameritech Corporation PROXY STATEMENT
30 South Wacker Drive
Chicago, Illinois 60606
PROXY AND VOTING INFORMATION
The Board of Directors of Ameritech Corporation (referred to as "Ameritech"
or the "Company" or "we" in this proxy statement) is soliciting your proxy for
use at the 1999 Annual Meeting of Shareowners of Ameritech and any
adjournments thereof (the "Annual Meeting"). This proxy statement and the
enclosed proxy card are being mailed to shareowners beginning on or about
March 3, 1999.
Who is Entitled to Vote. Holders of record of shares of Common Stock of
Ameritech, $1.00 par value per share ("Ameritech Common Stock"), at the close
of business on February 22, 1999 (the "Record Date") may vote at the Annual
Meeting. On that date, 1,099,191,878 shares of Ameritech Common Stock were
issued and outstanding and entitled to be voted at the meeting. Each share
entitles the holder to one vote.
How You May Vote. You may submit a proxy with your voting instructions by
completing, signing and mailing the enclosed proxy card, or by submitting your
proxy with voting instructions by toll-free telephone or through the Internet.
How to Submit a Written Proxy by Mail. To submit a written proxy by mail,
you should complete, sign and mail the enclosed proxy card in accordance with
its instructions. If you sign and return a proxy card without indicating your
voting instructions, the named proxies will vote your shares FOR the election
of all nominees for Director shown under "Election of Directors" on the
following pages, FOR ratification of the appointment of Arthur Andersen LLP as
our independent public accountants and AGAINST the one shareowner proposal
described in this proxy statement.
How to Submit Your Proxy by Telephone or through the Internet.
Alternatively, you may submit your proxy with voting instructions, by
telephone or through the Internet, by following the instructions that are set
forth on the enclosed proxy card and the accompanying information sheet. If
you are a shareowner of record on the Record Date, you may call 1-800-652-8683
(1-201-324-0377, outside the U.S. and Canada) or visit the Web site listed on
the enclosed proxy card and accompanying information sheet. If you hold your
shares through a broker, nominee, fiduciary or other custodian, you should use
the different toll-free telephone number and Web site address provided on the
accompanying information sheet for such beneficial owners.
If you choose to submit your proxy with voting instructions by telephone or
through the Internet, you will be required to provide your assigned control
number noted on the enclosed proxy card before your proxy will be accepted. In
addition to the instructions that appear on the enclosed proxy card and
information sheet, step-by-step instructions will be provided by recorded
telephone message or at the designated Web site on the Internet. Once you have
indicated how you want to vote, in accordance with those instructions, you
will receive confirmation that your proxy has been successfully submitted by
telephone or through the Internet.
Voting by Plan Participants. If you are a participant in the Ameritech
Direct Services Investment Plan, the proxy card, telephone proxy or Internet
proxy will serve as voting instructions for the number of shares in your plan
account, as well as other shares registered in your name. If you are a
participant in the Ameritech Savings Plan for Salaried Employees (the
"Salaried Savings Plan"), the Ameritech Savings and Security Plan for Non-
Salaried Employees (the "Non-Salaried Savings Plan") or certain employee
savings plans of affiliated companies, the proxy card, telephone proxy or
Internet proxy similarly will serve as voting instructions for the trustees of
those plans, if all accounts are registered in the same name. Shares in the
Salaried Savings Plan or Non-Salaried Savings Plan for which voting
instructions are not received, as well as shares which have not been allocated
to participants' accounts in such plans, generally will be voted in the same
proportion as the shares for which voting instructions are given by other
participants in the same plan.
Revocation of Proxies. You can revoke your proxy at any time before the
voting at the Annual Meeting by sending a properly signed written notice of
your revocation to the Secretary of the Company, by submitting
<PAGE>
another proxy that is properly signed and bears a later date or by voting in
person at the Annual Meeting. Attendance at the Annual Meeting will not itself
revoke an earlier submitted proxy. To revoke a proxy previously submitted by
telephone or through the Internet, you may simply vote again at a later date,
using the same procedures, in which case your later submitted vote will be
recorded and your earlier vote revoked. You should direct any written notices
of revocation and related correspondence to: Ameritech Corporation, 30 South
Wacker Drive, Chicago, Illinois 60606, Attention: Corporate Secretary.
Your Vote is Confidential. Under a confidential voting policy adopted by the
Company's Board of Directors, no proxies, voting instructions or ballots
submitted by Ameritech shareowners will be made available for examination by,
nor will the particular vote of any shareowner be disclosed to, the Company,
its Directors, officers or employees or any third party, except (i) as
necessary to tabulate and certify voting results, (ii) as necessary to meet
applicable legal requirements and to assert or defend claims of or against the
Company, (iii) if there is a proxy solicitation by someone else in opposition
to a solicitation by the Board, (iv) if the shareowner has made a written
comment on his or her proxy, voting instruction or ballot or (v) if the
shareowner expressly requests or consents to such disclosure in writing. The
policy also provides that votes will be tabulated by our transfer agent or
another independent party we select, and that we will engage an independent
inspector of elections to inspect the tabulation of votes and certify the
voting results.
Quorum. A quorum will exist if a majority of the shares of Ameritech Common
Stock outstanding on the Record Date are present in person or represented by
proxy at the meeting. Proxies that are submitted by brokers as holders of
record and that do not indicate a vote for some of the proposals, because the
brokers have not received instructions from their customers or other
beneficial owners on how to vote on those proposals and do not have
discretionary voting authority, are called "broker non-votes." Abstentions,
votes withheld with respect to the election of one or more nominees as
Directors and broker non-votes will be counted as present at the Annual
Meeting for the purpose of determining whether a quorum is present.
Required Votes. There are differing voting requirements for the various
proposals. Directors will be elected by a plurality of the votes cast at the
Annual Meeting. This means that only votes cast for a nominee will be counted,
and the thirteen nominees for Director who receive the most votes will be
elected as Directors. Broker non-votes and instructions to withhold authority
to vote for one or more of the nominees will result in those nominees
receiving fewer votes, but will not reduce the number of votes otherwise
received by the nominees.
Each of the other proposals, including ratification of appointment of the
auditors and the shareowner proposal, requires the approval of a majority of
the shares of Ameritech Common Stock present or represented by proxy at the
Annual Meeting and entitled to vote on the proposal. Abstentions therefore
will have the same effect as votes against such proposals and broker non-votes
will have no effect on the vote.
PROPOSED MERGER WITH SBC COMMUNICATIONS INC.
On May 11, 1998, Ameritech and SBC Communications Inc. ("SBC") jointly
announced that they had signed a definitive merger agreement (the "Merger
Agreement"), pursuant to which a wholly owned subsidiary of SBC will be merged
with and into Ameritech (the "Merger") and Ameritech will become a wholly
owned subsidiary of SBC. Upon consummation of the Merger, each outstanding
share of Ameritech Common Stock (other than shares owned by Ameritech, SBC or
their respective subsidiaries) will be converted into and exchanged for 1.316
shares of SBC Common Stock. More detailed information relating to the terms
and conditions of the Merger Agreement was provided to shareowners in the
Joint Proxy Statement/Prospectus of Ameritech and SBC dated October 15, 1998.
The Merger Agreement has been approved and adopted by the Boards of Directors
and shareowners of Ameritech and SBC and remains subject to various federal
and state regulatory approvals.
ELECTION OF DIRECTORS
The business and affairs of Ameritech are managed under the direction of its
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
2
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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 is currently composed of thirteen members. Since
1996, when shareowners approved an amendment to the Company's Certificate of
Incorporation that eliminated the division of the Board of Directors into
three classes, Directors have been elected for one-year terms as their
previous terms expired. The terms of all thirteen Directors expire in 1999 and
all of those Directors have been nominated for re-election for terms expiring
in 2000. If for any reason any nominee for election at this meeting becomes
unable or is unwilling to serve at the time of the meeting, the persons named
as proxies in the enclosed proxy card will have discretionary authority to
vote for a substitute nominee. It is not anticipated that any nominee will be
unavailable for election.
The following sets forth information as to each nominee for election as a
Director at the Annual Meeting, including his or her age, present principal
occupation, other business experience (including that 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 the Annual Meeting (for one-year terms expiring in
2000):
[PHOTO] Donald C. Clark, 67, Chairman Emeritus of Household
International, Inc., Prospect Heights, Illinois (financial
services), since 1996. Mr. Clark served as Chairman of the
Board of Household International, Inc. from 1984 to 1996 and
as its Chief Executive Officer from 1982 to 1994. He is a
Director of Armstrong World Industries, Inc., Scotsman
Industries, Inc., The PMI Group, Inc. and Warner-Lambert
Company. Mr. Clark is a member of the Compensation Committee
and the Finance Committee.
Director since 1989.
[PHOTO] Melvin R. Goodes, 63, Chairman of the Board and Chief
Executive Officer of Warner-Lambert Company, Morris Plains,
New Jersey (pharmaceuticals and consumer products), since
1991. Mr. Goodes served as President and Chief Operating
Officer of Warner-Lambert Company from 1985 to 1991. He is a
Director of Warner-Lambert Company, The Chase Manhattan
Corporation and Unisys Corporation. Mr. Goodes is Chairman
of the Nominating Committee and a member of the Executive
Committee and the Finance Committee.
Director since 1994.
[PHOTO] Hanna Holborn Gray, Ph.D., 68, 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 and a
professor of history from 1978 to 1993. She is a Director of
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.
Director since 1983.
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[PHOTO] James A. Henderson, 64, Chairman of the Board since 1995 and
Chief Executive Officer since 1994 of Cummins Engine
Company, Inc., Columbus, Indiana (heavy-duty diesel engines,
power generators and related products). Mr. Henderson served
as President and Chief Operating Officer of Cummins Engine
Company, Inc. from 1977 to 1994. He is a Director of Cummins
Engine Company, Inc., International Paper Company, Ryerson
Tull, Inc. and Rohm and Haas Company. Mr. Henderson is
Chairman of the Audit Committee and a member of the
Compensation Committee and the Executive Committee.
Director since 1983.
[PHOTO] Sheldon B. Lubar, 69, Founder and Chairman of Lubar & Co.,
Milwaukee, Wisconsin (private investment and venture capital
firm), since 1977. Mr. Lubar served as Chairman and Chief
Executive Officer of Christiana Companies, Inc., Milwaukee,
Wisconsin (operating and investment company with businesses
in refrigerated warehousing and logistics), from 1987 to
February 1999. Mr. Lubar is a Director of Firstar
Corporation, Jefferies Group, Inc., Massachusetts Mutual
Life Insurance Company, MGIC Investment Corporation and
Weatherford International, Inc. He is a member of the
Compensation Committee and the Finance Committee.
Director since 1993.
[PHOTO] Lynn M. Martin, 59, Chair of the Council for the Advancement
of Women and Advisor to the firm of Deloitte & Touche LLP,
Chicago, Illinois (accounting and consulting services),
since 1993. Ms. Martin has held the Davee Chair at the
Kellogg Graduate School of Management, Northwestern
University, since 1993. She also was a fellow at the Kennedy
School of Government, Harvard University, in 1993. Ms.
Martin served as U.S. Secretary of Labor from 1991 to 1993,
and as a member of the U.S. House of Representatives from
Illinois for five terms from 1981 to 1990. She is a Director
of certain Dreyfus Funds, Harcourt General, Inc., Ryder
System, Inc., The Procter & Gamble Company and TRW Inc. Ms.
Martin is a member of the Finance Committee and the
Nominating Committee.
Director since 1993.
[PHOTO] Arthur C. Martinez, 59, 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 and as Vice Chairman of Saks Fifth Avenue
from 1990 to 1992. He is a Director of Sears, Roebuck and
Co. and the Federal Reserve Bank of Chicago. Mr. Martinez is
Chairman of the Finance Committee and a member of the Audit
Committee and the Executive Committee.
Director since 1995.
[PHOTO] John B. McCoy, 55, President and Chief Executive Officer of
BANK ONE CORPORATION, Chicago, Illinois (bank holding
company), since October 1998. Mr. McCoy served as Chairman
and Chief Executive Officer of BANC ONE CORPORATION,
Columbus, Ohio (bank holding company) from 1987 to October
1998, and as its President and Chief Executive Officer from
1984 to 1987. He is a Director of BANK ONE CORPORATION,
Cardinal Health, Inc., Federal Home Loan Mortgage
Corporation and Paymentech, Inc. Mr. McCoy is Chairman of
the Compensation Committee and a member of the Audit
Committee and the Executive Committee.
Director since 1991.
4
<PAGE>
[PHOTO] Richard C. Notebaert, 51, Chairman of the Board, President
and Chief Executive Officer of Ameritech since 1994. Mr.
Notebaert served as President and Chief Executive Officer of
Ameritech during a portion of 1994, as President and Chief
Operating Officer from 1993 to 1994 and as Vice Chairman in
1993. He served as President of Ameritech Services, Inc. (a
wholly owned subsidiary of Ameritech's five state landline
communications companies) from 1992 to 1993, and as
President of Ameritech's subsidiary, Indiana Bell Telephone
Company, Incorporated, from 1989 to 1992. Mr. Notebaert is a
Director of Aon Corporation and Sears, Roebuck and Co. He is
Chairman of the Executive Committee.
Director since 1993.
[PHOTO] John D. Ong, 65, Chairman Emeritus of The BFGoodrich
Company, Akron, Ohio (aerospace products and services and
specialty chemicals), since 1997. Mr. Ong served as Chairman
of the Board of The BFGoodrich Company from 1979 to 1997 and
as its Chief Executive Officer from 1979 to 1996. Mr. Ong is
a Director of ASARCO Incorporated, Cooper Industries, Inc.,
Marsh & McLennan Companies, Inc., The Geon Company and TRW
Inc. He is a member of the Compensation Committee and the
Nominating Committee.
Director since 1983.
[PHOTO] A. Barry Rand, 54, Executive Vice President, Operations of
Xerox Corporation, Stamford, Connecticut (document
processing products and services), from 1992 through 1998.
Mr. Rand served as President of the Xerox United States
Marketing Group from 1987 to 1992. Mr. Rand is a Director of
Abbott Laboratories and Honeywell Inc. He is a member of the
Audit Committee and the Nominating Committee.
Director since 1993.
[PHOTO] Laura D'Andrea Tyson, Ph.D., 51, Dean of the Walter A. Haas
School of Business at the University of California at
Berkeley, since July 1998 and Principal, Law & Economics
Consulting Group, Emeryville, California (consulting
services), since 1997. Dr. Tyson served as professor and
holder of the Chair endowed by the Class of 1939 in the
Economics Department and the Haas School of Business at the
University of California at Berkeley from 1996 to 1998. She
served as National Economic Adviser to the President of the
United States from 1995 to 1996 and as Chair of the White
House Council of Economic Advisers from 1993 to 1995. Dr.
Tyson was Visiting Scholar of the Institute for
International Economics at the University of California at
Berkeley from 1990 to 1992. She is a Director of Eastman
Kodak Company, Human Genome Sciences, Inc. and Morgan
Stanley Dean Witter & Co. Dr. Tyson is a member of the Audit
Committee and the Finance Committee.
Director since 1997.
5
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[PHOTO] James A. Unruh, 57, Founding Principal of Alerion Capital
Group, L.L.C., Phoenix, Arizona (private equity merchant
bank), since 1998. Mr. Unruh served as Chairman of the Board
and Chief Executive Officer of Unisys Corporation, Blue
Bell, Pennsylvania (information technology services,
hardware and software), from 1990 to 1997. He is a Director
of The Prudential Insurance Company of America. Mr. Unruh is
a member of the Audit Committee and the Finance Committee.
Director since 1995.
Meetings of the Board
The Board of Directors met ten times in 1998. The average attendance at the
aggregate number of Board and committee meetings was approximately 95% in
1998. During 1998, 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.
Committees of the Board
The Board of Directors has established five standing committees, described
below, to assist it in the discharge of its responsibilities. The committee
memberships of each Director nominee during 1998 are listed above as part of
his or her biographical information.
The Audit Committee, which is composed entirely of Directors who are not
officers or employees of Ameritech or its subsidiaries, reviews the Company's
accounting functions, operations and management, its financial reporting
process and the adequacy and effectiveness of its internal controls and
internal auditing methods and procedures. The Audit Committee recommends to
the Board the appointment of the independent public accountants for the
Company, subject to ratification by the shareowners at their annual meeting.
In connection with its duties, the Audit Committee periodically meets
privately with the Company's independent public accountants and its internal
auditors. The Audit Committee met two times in 1998.
The Compensation Committee, which also is composed entirely of non-employee
Directors, reviews and acts with respect to pension, incentive 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 highest paid
officers of Ameritech. The Compensation Committee met five times in 1998.
The Executive Committee is authorized to exercise, during intervals between
Board meetings, 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 1998.
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 1998.
The Nominating Committee advises and makes recommendations to the Board of
Directors on all matters concerning Director compensation and Board policies,
procedures and practices. This committee reviews and makes recommendations to
the full Board concerning the qualifications and selection of Director nominee
candidates, including any candidates proposed by shareowners. In recommending
candidates, the Nominating
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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. The
Nominating Committee met two times in 1998.
Compensation of Directors
Directors who are not employees of Ameritech or its subsidiaries receive an
annual retainer of $41,000. Non-employee Directors receive additional annual
retainers of $5,000 ($6,000 for chairmen) for each standing committee (other
than the Executive Committee) on which they serve.
Under the Company's Deferred Compensation Plan for Non-Employee Directors,
Directors who are not employees of the Company or its subsidiaries may elect
to defer receipt of all or part of the payments they receive for service on
the Company's Board of Directors (or its committees) in the form of cash
units, stock units or a combination of both. Deferred cash units earn
interest, compounded quarterly, at the rate established from time to time
pursuant to the Ameritech Corporate Resource Deferral Plan or, if no such rate
is established, the average interest rate for ten-year U.S. Treasury Notes for
the previous quarter. Deferred stock units are based on the number of shares
of Ameritech Common Stock that deferred retainers would purchase at the fair
market value of such shares on the date the retainers otherwise would be paid.
On each Ameritech Common Stock dividend payment date, deferred stock unit
accounts are credited with additional stock units, determined by dividing the
aggregate cash dividend which would have been paid if existing stock units
were actual shares of Ameritech Common Stock by the fair market value of
shares of Ameritech Common Stock as of the dividend payment date.
All amounts deferred under the Deferred Compensation Plan for Non-Employee
Directors are paid in cash, regardless of the form in which the deferral
account is maintained. In general, Directors can receive deferred amounts in
one payment or in up to ten equal annual installments. Distributions of
deferred amounts begin on the first day of the calendar year following the
year in which the Director's service on the Company's Board ends, with stock
units valued for purposes of such distributions based on their fair market
value at the time of payment. Under the terms of the plan, however, Directors
receive lump sum payments of the entire balance in their deferral accounts
following certain change in control events (including specified changes in the
beneficial ownership of the Company's voting stock or in the composition of
the Board and certain mergers involving the Company). Consummation of the
Company's proposed Merger with SBC would constitute a change in control for
purposes of the plan. Accordingly, deferred amounts would be paid out in a
lump sum as soon as practical after completion of the Merger. Stock units
would be valued for this purpose at the highest sales price of Ameritech
Common Stock as reported on the New York Stock Exchange Composite Transactions
Tape during the thirty days prior to the Merger. The Directors who have
deferral accounts under the plan, and the current approximate values of their
deferred balances, based on a price per share of Ameritech Common Stock of
$60.9375, the closing price on February 12, 1999, are: Mr. Clark, $1,461,114;
Mr. Henderson, $948,840; Mr. Lubar, $634,143; Mr. Martinez, $305,625; Mr.
McCoy, $491,582; and Mr. Unruh, $247,621.
Under the Ameritech Stock Retirement Plan for Non-Employee Directors,
approved by shareowners in 1987, Directors who are not employees of the
Company or its subsidiaries or affiliates are granted 3,000 shares of
Ameritech Common Stock after each annual meeting of the Company's shareowners
at which Directors are elected, up to a maximum number of six grants. 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 Company also provides non-employee Directors with travel accident
insurance when on Company business and reimburses their travel-related
expenses incurred in attending meetings of the Board of Directors and its
committees.
7
<PAGE>
Officer and Director Stock Ownership
The following table sets forth beneficial ownership of Ameritech Common
Stock, as of February 22, 1999 (including shares acquired under the Salaried
Savings Plan through December 31, 1998 and the Ameritech Direct Services
Investment Plan as of February 5, 1999), by each Director, each executive
officer named in the Summary Compensation Table on page 15 and all Directors
and executive officers as a group. Neither any of the individuals nor the
group shown below has beneficial ownership of more than 1% of the outstanding
shares of Ameritech Common Stock.
<TABLE>
<CAPTION>
Total
Name Ownership(1)(2)
---- ---------------
<S> <C>
Barry K. Allen.................................................. 129,481
W. Patrick Campbell............................................. 268,547
Donald C. Clark................................................. 30,492
Melvin R. Goodes................................................ 16,000
Hanna Holborn Gray.............................................. 19,208
James A. Henderson.............................................. 24,800
Sheldon B. Lubar................................................ 36,784
Lynn M. Martin.................................................. 19,985
Arthur C. Martinez.............................................. 14,000
John B. McCoy................................................... 24,000
Richard C. Notebaert............................................ 1,248,659
John D. Ong..................................................... 18,353
A. Barry Rand................................................... 18,343
Thomas E. Richards.............................................. 82,579
Oren G. Shaffer................................................. 318,360
Laura D'Andrea Tyson............................................ 6,100
James A. Unruh.................................................. 14,000
All Directors and executive officers as a group (25 persons).... 2,893,392
</TABLE>
- --------
(1) Includes shares of Ameritech Common Stock which may be acquired within 60
days after February 22, 1999 through the exercise of stock options and, to
the extent determinable as of February 22, 1999, related dividend
equivalents under our long term incentive plans, as follows: Mr. Allen,
90,257 shares; Mr. Campbell, 204,579 shares; Mr. Notebaert, 1,201,171
shares; Mr. Richards, 61,542 shares; Mr. Shaffer, 257,642 shares; and all
executive officers as a group, 2,341,022 shares. Also includes shares
credited as of December 31, 1998 under the Company's Salaried Savings Plan
to the accounts of the following persons, who have sole voting power as to
such shares, but may not have investment power with respect to some of
such shares: Mr. Allen, 1,060 shares; Mr. Campbell, 1,554 shares; Mr.
Notebaert, 2,920 shares; Mr. Richards, 1,066 shares; Mr. Shaffer, 643
shares; and all executive officers as a group, 28,600 shares.
(2) Except as otherwise indicated in these notes, the individuals and group
listed in the table above have sole voting and investment power with
respect to the shares shown as beneficially owned. The following
individuals are deemed to share voting and investment power with their
spouses with respect to the following shares: Mr. Campbell, 62,414 shares;
Mr. Clark, 30,492 shares; Mr. Notebaert, 18,807 shares; Mr. Ong, 351
shares; and Mr. Shaffer, 60,075 shares. Mr. Lubar is deemed to have shared
voting and investment power with respect to 12,984 shares held for the
benefit of various family members by a partnership of which he is a
partner; he disclaims beneficial ownership of such shares. Excluding the
shares held in the Company's Salaried Savings Plan as reported in note
(1), all Directors and executive officers as a group are deemed to have
shared voting and investment power as to 188,151 shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and executive officers, as well as any persons who beneficially own
more than ten percent of Ameritech Common Stock, to file with the Securities
and Exchange Commission ("SEC") initial reports and reports of changes in
beneficial ownership of such stock.
8
<PAGE>
Based on its review of copies of such reports and written representations
that no other reports were required, the Company believes that all such
required Section 16(a) reports have been filed on a timely basis, except that
an acquisition of 26 shares of Ameritech Common Stock by Mr. Lubar's savings
plan account was inadvertently reported late by the Company on his behalf. In
addition, the quarterly accruals of dividend equivalents on stock options held
by the Company's executive officers, which should have been included in year-
end reports for 1994 through 1997, were inadvertently reported late by the
Company on their behalf, and the quarterly acquisitions of stock units under
the Deferred Compensation Plan for Non-Employee Directors by the six Directors
with deferral accounts thereunder, which should have been included in year-end
reports for 1996 through 1998, were inadvertently reported late by the Company
on their behalf.
Beneficial Owners of More than Five Percent
As reported in a Schedule 13G filed with the SEC on February 9, 1999, as of
December 31, 1998, State Street Bank and Trust Company ("State Street"), 225
Franklin Street, Boston, Massachusetts 02110, held an aggregate of 101,825,438
shares of Ameritech Common Stock (approximately 9.22% of the then outstanding
shares), acting in various fiduciary capacities, including as Trustee of the
Ameritech Savings Trusts. State Street further reported that, as of December
31, 1998, it had sole voting power with respect to 13,984,196 shares, shared
voting power with respect to 86,752,385 shares, sole dispositive power with
respect to 14,994,284 shares and shared dispositive power with respect to
86,831,154 shares of Ameritech Common Stock. In its Schedule 13G, State Street
expressly disclaimed beneficial ownership of all shares of Ameritech Common
Stock it reported in such filing.
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, 1999. Arthur Andersen LLP has served as independent public
accountants for the Company since the Company's organization.
A proposal will be presented at the Annual 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
Company's shareowners do not ratify this appointment at the Annual 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.
SHAREOWNER PROPOSAL REGARDING CUMULATIVE VOTING
Mrs. Evelyn Y. Davis, 2600 Virginia Avenue, N.W., Suite 215, Washington,
D.C. 20037, record owner of 360 shares of Ameritech Common Stock, has given
notice that she plans to introduce the following resolution at the Annual
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."
9
<PAGE>
"Last year the owners of 170,778,913 shares, representing approximately
22.3% of shares voting, voted FOR this proposal."
"If you AGREE, please mark your proxy FOR this resolution."
The Board of Directors does not support this proposal and recommends a vote
AGAINST it for the following reasons:
The proponent submitted substantially the same proposal for the Company's
1991, 1992, 1993, 1994, 1995, 1996, 1997 and 1998 Annual Meetings, and it was
opposed by the owners of approximately 83.1%, 81.1%, 78.2%, 79.7%, 72.8%,
77.7%, 75.5% and 77.7%, respectively, of the shares voted (not counting
abstentions and broker non-votes).
The Board of Directors continues to believe that cumulative voting is
undesirable. With cumulative voting, a narrow constituency of minority
shareowners who have pooled their voting power may elect one or more Directors
and then seek to have such Directors advance their special interests, rather
than the best interests of the Company's shareowners as a whole. The Board
believes that cumulative voting introduces the possibility of partisanship and
factionalism among Directors who owe their positions to special shareowner
constituencies, and so could interfere with the effective functioning of the
Board. The majority of state corporation laws, including those in effect in
Delaware, the state in which Ameritech is incorporated, do not require
cumulative voting.
The Board of Directors regards its proper constituency to be all of the
Company's shareowners. It believes that the present method of electing
Directors has served the Company and its shareowners well in the past and will
continue to do so in the future and will best assure that the Directors
represent the interests of all shareowners, not just those of a particular
group.
Under the General Corporation Law of the State of Delaware, cumulative
voting could be established for the Company only if the Board of Directors
recommends an amendment to the Company's Certificate of Incorporation
providing for the same and directs 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, approval of
this proposal would serve only as 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 Annual Meeting. However, should any other matters requiring a vote of
the shareowners arise, the persons named as proxies in the enclosed proxy card
intend to vote on those matters 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 is responsible for
overseeing the Company's executive compensation programs. The Committee
approves all pay plans and changes in those plans. 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.
10
<PAGE>
Report of the Compensation Committee
Since the Company began, we have designed and administered executive
compensation programs to link pay to Company performance and to make sure that
the interests of executives are the same as your interests as shareowners.
These goals are expressed in the following guiding principles of the Company's
compensation programs:
. A significant portion of pay will be determined by the Company's annual
and long term financial performance, including the creation of value for
shareowners.
. Compensation programs will be designed to encourage and balance short
term operational goals with long term strategic plans.
. Total compensation will be competitive with the telecommunications
industry and with other major U.S. companies to allow us to attract,
retain and motivate high caliber employees. A greater percentage of
compensation will be performance-based and variable (as opposed to fixed
compensation) than competitive practice might suggest.
. Compensation programs will be designed to encourage stock ownership by
executives.
There are three elements to the Company's compensation program: annual base
salary, annual cash bonus incentives and long term incentives. Each of these
elements is consistent with the goals of our compensation programs. Annual
incentives are based on specific financial measures, including earnings growth
and revenue growth, with each of the targets calling for improved results
year-over-year. 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 incentives to encourage stock ownership by management.
Under the Ameritech long term incentive plans, we can make grants in the form
of performance-based restricted stock, restricted stock, performance units and
stock options. Since 1991, all long term grants have been in the form of
interests in the Company's stock. To support the Company's belief in stock
ownership by executives, we have established stock ownership guidelines for
key managers, which require them to maintain interests in the Company's stock
that are proportionate to their respective compensation and positions in the
Company. Newly hired and promoted executives are given a reasonable period of
time to achieve these guidelines. As of December 31, 1998, the stock ownership
of each of the Company's executive officers 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 in the group of companies with which we compare our compensation and
that target annual cash compensation (salary plus target bonus) and long term
incentives should be somewhat higher than the median for such group, since
incentive payments are tied to Company performance. The group of companies we
use for comparison purposes 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 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 other communications companies. Although competitive practices are
viewed as important, the Company and the Compensation Committee believe that
the most important considerations in setting annual compensation are
individual merit and the Company's financial performance.
In 1998, annual cash compensation targets for executives were increased by
approximately 4.4% which, based on survey data, is consistent with other
companies with which we compare our compensation. Mr. Notebaert's base salary
increased 5.1% in 1998 over 1997. His total salary and bonus increased because
of this salary increase and the Company's performance, which produced a cash
bonus for 1998 above the targeted level. In addition, the Compensation
Committee recommended, and the Company's Board of Directors approved,
11
<PAGE>
special bonus awards in 1998 for Mr. Notebaert and two of the other executive
officers named in the Summary Compensation Table to recognize their
outstanding contributions in 1998.
Prior to the announcement of the Merger between Ameritech and SBC, the
Compensation Committee also recommended, and the Board of Directors also
approved, the grant to Mr. Notebaert of a retention and performance bonus of
$2.5 million, to retain Mr. Notebaert's services through the completion of the
Merger and to compensate him for the increased demands and responsibilities
placed upon him during this period. This retention bonus is payable on the
earlier of the completion of the Merger with SBC or September 1, 1999.
Actual incentive bonus awards paid to the executive officers named in the
Summary Compensation Table 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 equal to, more than
or less than targeted amounts, depending on how actual results compare with
the performance measures being used. Thus, the Company's incentive plans
create 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 components rather
than by salary. In 1998, for example, about 83% of the total compensation of
the Company's chief executive officer was dependent on incentive factors and
thus was variable with performance. Because of the Company's financial
performance in 1998, the actual incentive bonus awards for 1998 were above the
targeted amounts.
Performance targets established for the annual incentive awards are based on
internal financial goals. Awards granted under the Company's long term
incentive plans ("LTIPs") are 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. This group
of companies is a part of the broad cross-section of 65 major corporations
referred to 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.
The Compensation Committee believes strongly in the continued focus of the
LTIPs on total return to shareowners. Since 1994, the Compensation Committee
has approved annual grants under the LTIPs that reinforce this focus by
providing to participating executives grants of stock options with dividend
equivalents. 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 related options, whichever is sooner, but only if the stock price at
the time of distribution exceeds the exercise price of the option.
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 to $1 million, unless certain requirements are met. To
maximize the corporate tax deduction, the Management Committee Short Term
Incentive Plan and the Long-Term Stock Incentive Plan were approved by
shareowners in 1995 and 1997, respectively, and comply with Section 162(m) of
the Internal Revenue Code. Performance-based awards made pursuant to these
Plans are intended to qualify for the tax deduction. Although the Committee
intends to maximize the corporate tax deduction for performance-based
compensation, it believes that Ameritech must attract and retain qualified
executives to manage the Company and that, in some instances, the loss of a
tax deduction may be a necessary
12
<PAGE>
and appropriate trade-off. The Committee believes it is appropriate to pay Mr.
Notebaert a base salary in excess of $1 million to maintain competitiveness
with the comparator group of companies described above. In 1998, due to the
combination of salary and the payment of certain previously earned and
reported, vested deferred compensation and non-qualified pension benefits, the
compensation of each of the executive officers named in the Summary
Compensation Table, other than Mr. Richards, exceeded the limit for
deductibility under Section 162(m).
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
Sheldon B. Lubar John D. Ong
13
<PAGE>
Shareowner Return Performance Graph
Set forth below is a graph comparing the cumulative total returns (assuming
an investment of $100 on December 31, 1993 and reinvestment of dividends) of
Ameritech, a peer group of other large U.S. communications companies and the
Standard & Poor's 500 Composite Stock Index ("S&P 500") from December 31, 1993
through December 31, 1998.
Comparison of Five-Year Cumulative Total Return
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ameritech............. $100 $111 $168 $179 $246 $397
Peer Group Index*..... 100 94 144 144 200 296
S&P 500............... 100 101 139 171 229 294
</TABLE>
- --------
* Peer Group Index consists of Bell Atlantic Corporation, BellSouth
Corporation, GTE Corporation, SBC Communications Inc. and U S WEST, Inc.
(not including MediaOne Group, Inc. after its separation from the U S WEST
Communications Group).
From November 21, 1983, the date on which Ameritech began trading on a "when
issued" basis on the New York Stock Exchange, through December 31, 1998,
Ameritech has provided its shareowners with a cumulative total return of
2,421%. This performance compares with a cumulative total return of 1,565% for
the Peer Group Index and 1,080% for the S&P 500 over the same fifteen-year
period.
14
<PAGE>
Summary Compensation Table
The Summary Compensation Table below shows the compensation for the last
three years of the Chief Executive Officer and the four next highest paid
executive officers of Ameritech as of December 31, 1998 (the "Named Executive
Officers") for services in all capacities to the Company and its subsidiaries.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------------------- ------------
Name Other Awards All
and Annual ------------ Other
Principal Compen- Options Compen-
Position Year Salary Bonus(1) sation(2) (shares) sation(3)
--------- ---- ---------- ---------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Notebaert 1998 $1,100,000 $1,918,854 $11,140 221,137 $331,608
Chairman, President & 1997 1,047,000 1,570,500 24,755 306,600 341,172
Chief Executive 1996 950,000 1,006,288 47,413 740,000 373,664
Officer
Oren G. Shaffer 1998 523,500 600,028 3,843 71,205 275,329
Executive VP & Chief 1997 500,000 509,250 4,262 370,000 254,384
Financial Officer 1996 450,000 340,633 412 80,000 261,702
W. Patrick Campbell 1998 500,200 456,189 3,447 43,798 338,724
Executive VP--Corp. 1997 491,800 450,000 7,512 217,000 331,462
Strategy & Bus. Dev. 1996 475,000 323,350 9,683 70,000 342,178
Barry K. Allen 1998 446,500 500,746 4,584 58,851 106,927
Executive VP--Reg. & 1997 417,900 470,250 1,531 280,000 100,702
Wholesale Operations 1996 346,500 289,789 4,860 71,200 101,144
Thomas E. Richards 1998 375,000 457,983 4,262 42,248 153,724
Executive VP--Comm. & 1997 300,000 337,500 2,975 270,000 147,311
Info. Products 1996 225,600 143,244 6,730 101,400 154,782
</TABLE>
- --------
(1) Consists of (a) awards paid under the Management Committee Short Term
Incentive Plan, based on corporate performance for the year, and (b) for Mr.
Notebaert, Mr. Shaffer and Mr. Richards, an additional special 1998 bonus in
the amount of $109,649, $52,183 and $37,380, respectively.
(2) Consists of earnings on long term awards and payments to offset federal
and state tax liabilities attributable to non-cash services for
transportation, parking, club memberships and financial counseling. The value
of such non-cash services is excluded from the table, as it did not exceed
$50,000 for any individual in any year.
(3) Detail of amounts reported in the "All Other Compensation" column for 1998
is provided in the table below. Preferential earnings on deferred compensation
represents interest that is above market rates, as provided under applicable
SEC rules. 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. Shaffer Mr. Campbell Mr. Allen Mr. Richards
---- ------------- ----------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C>
Preferential Earnings on
Deferred Compensation $113,110 $ 53,167 $ 62,690 $ 33,313 $ 8,705
Company Contributions to
Qualified and Non-Qual-
ified Defined Contribu-
tion Savings Plans 49,301 23,469 22,478 19,985 16,594
Split Dollar Insurance
Premium Value 169,197 198,693 253,556 53,629 128,425
-------- -------- -------- -------- --------
Total All Other
Compensation $331,608 $275,329 $338,724 $106,927 $153,724
======== ======== ======== ======== ========
</TABLE>
15
<PAGE>
Option Grants in 1998
The following table shows all grants of stock options to the Named Executive
Officers in 1998. The exercise price of all such options was the fair market
value on the date of grant.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term(2)
- ---------------------------------------------------------------------- ------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Per Share
Options 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 221,137 2.28% $45.13 4/22/08 $0 $ 6,276,314 $ 15,905,411
Oren G. Shaffer 71,205 0.73% 45.13 4/22/08 0 2,020,941 5,121,462
W. Patrick Campbell 43,798 0.45% 45.13 4/22/08 0 1,243,075 3,150,197
Barry K. Allen 58,851 0.61% 45.13 4/22/08 0 1,670,310 4,232,893
Thomas E. Richards 42,248 0.44% 45.13 4/22/08 0 1,199,083 3,038,713
All Shareowners n/a n/a n/a n/a 0 31,237,158,468 79,161,092,595
All Optionees 9,697,193 100.00% 45.09 2008 0 274,981,932 696,858,205
(avg)
Optionees' Gain
as % of All
Shareowners' Gain n/a n/a n/a n/a n/a 0.88% 0.88%
</TABLE>
- --------
(1) Under the terms of the options granted to the Named Executive Officers,
dividend equivalent shares are credited quarterly, for up to five years,
on the shares subject to the options (and on previously credited dividend
equivalent shares), by dividing the aggregate cash dividend that would
have been paid on such shares had they been outstanding by an amount based
on the average market price per share of Ameritech Common Stock on the
first and last trading days within the quarter. Dividend equivalents so
credited will be distributed in the form of shares of Ameritech Common
Stock (i) on a prescribed distribution date following either the exercise
of the option (in proportion to the option shares exercised) or five years
from the date of grant (as to remaining dividend equivalents), if in
either case the then current market price exceeds the option exercise
price, or (ii) on the first subsequent distribution date on which the then
current market price exceeds the option exercise price. Dividend
equivalents credited in 1998 on options held by the Named Executive
Officers were: Mr. Notebaert, 34,031 shares; Mr. Shaffer, 9,244 shares;
Mr. Campbell, 8,502 shares; Mr. Allen, 4,816 shares; and Mr. Richards,
5,093 shares.
(2) The dollar amounts under the 5% and 10% columns in the table above are
the result of calculations required by the SEC's rules and are not
intended to forecast any future appreciation in the stock price of the
Company. As shown in the 0% column above, no gain to the Named Executive
Officers or all optionees is possible without appreciation in the price
of Ameritech Common Stock, which will benefit all shareowners. For
example, in order for Mr. Notebaert to realize the potential values for
the option grant of 221,137 shares set forth in the 5% and 10% columns in
the table above, the price per share of Ameritech Common Stock must be
approximately $73.51 and $117.06, respectively, as of the expiration date
of his option.
Stock options generally (and all of the options granted to the Named
Executive Officers in 1998) become exercisable as to one-third of the option
shares on each of the first three anniversaries of the date of grant. Upon
exercise of an option, an officer purchases all or a portion of the shares
covered by the option by paying the exercise price either in cash or by
surrendering shares of Ameritech Common Stock already owned by the officer.
Substantially all of the options granted prior to May 11, 1998 become fully
vested upon a change in control. Further, if the option holder's employment is
involuntarily terminated for reasons other than cause after the change in
control and on or before the last day of the second full calendar year
following the change in control,
16
<PAGE>
such options remain exercisable for up to five years after the employment
termination date. The Company's Board of Directors has concluded that the
consummation of the Merger of the Company with a wholly owned subsidiary of
SBC would constitute a change in control under the applicable LTIPs and
associated option agreements.
Option Exercises in 1998 and Option Values at December 31, 1998
The following table provides information as to options exercised in 1998 by
the Named Executive Officers, the value realized upon such exercises and the
value of options held by such officers at year end.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options In-the-Money Options
Shares at Year End at Year End(2)
Acquired on Value ------------------------- -------------------------
Name Exercise(1) Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard C.
Notebaert 92,000 $2,578,732 813,132 1,005,537 $32,864,048 $31,472,427
Oren G.
Shaffer 52,200 1,890,650 148,601 431,204 5,559,442 11,999,368
W. Patrick
Campbell 132,900 4,467,992 119,967 255,131 4,462,644 7,213,473
Barry K.
Allen 59,115 1,477,234 15,019 335,917 509,219 9,310,168
Thomas E.
Richards 67,268 1,642,558 0 349,380 0 10,086,014
</TABLE>
- --------
(1) In addition to the shares acquired on option exercises and the associated
values realized, shown in the table above, during 1998, dividend
equivalents were distributed in the form of shares of Ameritech Common
Stock to the Named Executive Officers, with associated values realized
(based on per share market prices on the respective distribution dates),
as follows: Mr. Shaffer, 7,875 shares, $445,184; Mr. Campbell, 24,397
shares, $1,301,804; and Mr. Richards, 319 shares, $17,101.
(2) Valued at $63.375 per share, the closing price per share of Ameritech
Common Stock on December 31, 1998.
Pension Plans
The Company's qualified and non-qualified management pension plans were
amended effective May 1, 1995. Under the plans as amended, employees earn
pension credits for each month 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 ten 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 transition provisions under which employees who were service
pension eligible or within five years thereof on May 1, 1995, including Mr.
Notebaert, will receive the greater of the benefit under the new formula or
the benefit under 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 Years of Service
Average --------------------------------------------------------------------
Compensation 15 20 25 30 35 40 45
------------ -------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 600,000 $134,045 $ 178,727 $ 223,409 $ 268,090 $ 312,772 $ 357,454 $ 402,135
800,000 179,045 238,727 298,409 358,090 417,772 477,454 537,135
1,000,000 224,045 298,727 373,409 448,090 522,772 597,454 672,135
1,200,000 269,045 358,727 448,409 538,090 627,772 717,454 807,135
1,400,000 314,045 418,727 523,409 628,090 732,772 837,454 942,135
1,600,000 359,045 478,727 598,409 718,090 837,772 957,454 1,077,135
1,800,000 404,045 538,727 673,409 808,090 942,772 1,077,454 1,212,135
2,000,000 449,045 598,727 748,409 898,090 1,047,772 1,197,454 1,347,135
2,200,000 494,045 658,727 823,409 988,090 1,152,772 1,317,454 1,482,135
2,400,000 539,045 718,727 898,409 1,078,090 1,257,772 1,437,454 1,617,135
2,600,000 584,045 778,727 973,409 1,168,090 1,362,772 1,557,454 1,752,135
2,800,000 629,045 838,727 1,048,409 1,258,090 1,467,772 1,677,454 1,887,135
3,000,000 674,045 898,727 1,123,409 1,348,090 1,572,772 1,797,454 2,022,135
3,200,000 719,045 958,727 1,198,409 1,438,090 1,677,772 1,917,454 2,157,135
3,400,000 764,045 1,018,727 1,273,409 1,528,090 1,782,772 2,037,454 2,292,135
</TABLE>
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 (determined using the current interest rate specified in
the plan), under the formula that became effective May 1, 1995.
<TABLE>
<CAPTION>
Final Years of Service
Average --------------------------------------------------------------------
Compensation 15 20 25 30 35 40 45
------------ -------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 600,000 $146,591 $ 178,575 $ 205,228 $ 226,550 $ 245,207 $ 261,199 $ 277,190
800,000 195,455 238,099 273,637 302,066 326,943 348,265 369,587
1,000,000 244,318 297,624 342,046 377,583 408,678 435,331 461,984
1,200,000 293,182 357,149 410,455 453,100 490,414 522,397 554,381
1,400,000 342,046 416,674 478,864 528,616 572,149 609,464 646,778
1,600,000 390,910 476,199 547,273 604,133 653,885 696,530 739,174
1,800,000 439,773 535,724 615,683 679,650 735,621 783,596 831,571
2,000,000 488,637 595,249 684,092 755,166 817,356 870,662 923,968
2,200,000 537,501 654,774 752,501 830,683 899,092 957,728 1,016,365
2,400,000 586,364 714,298 820,910 906,199 980,828 1,044,795 1,108,762
2,600,000 635,228 773,823 889,319 981,716 1,062,563 1,131,861 1,201,159
2,800,000 684,092 833,348 957,728 1,057,233 1,144,299 1,218,927 1,293,555
3,000,000 732,955 892,873 1,026,138 1,132,749 1,226,035 1,305,993 1,385,952
3,200,000 781,819 952,398 1,094,547 1,208,266 1,307,770 1,393,060 1,478,349
3,400,000 830,683 1,011,923 1,162,956 1,283,783 1,389,506 1,480,126 1,570,746
</TABLE>
Under the qualified and non-qualified management pension plans 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 "Salary" and "Bonus" columns of the Summary Compensation Table).
Pension amounts are not subject to reductions for Social Security benefits or
other offset amounts. Benefits are payable in the form of a lump sum or an
annuity. The Employee Retirement Income Security Act of 1974 ("ERISA") places
certain limitations on pensions which may be paid under federal tax qualified
plans. Pension amounts which exceed such limitations, as well as pension
amounts attributable to awards under the short term incentive plans and to
salary deferred under a deferred compensation plan, are paid under a separate
non-qualified plan as an operating expense.
18
<PAGE>
As of December 31, 1998, Mr. Notebaert, Mr. Shaffer, Mr. Campbell, Mr. Allen
and Mr. Richards had 29, 4, 4, 3 and 3 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. Under Mr.
Allen's employment agreement with the Company, if he retires on or after
December 9, 2000, he will receive a supplemental non-qualified pension. This
supplemental pension combined with the pension benefits to which he otherwise
then would be entitled will equal the total pension he would have received
under the pre-May 1, 1995 management pension plan formula, on the basis of his
total years of service (including his 19 years of prior service). In addition,
if Mr. Allen's employment is involuntarily terminated for reasons other than
cause or unsatisfactory performance, he will be treated as if he had fulfilled
the requirement for this supplemental pension.
In 1995, the Board of Directors approved a supplemental non-qualified
pension arrangement for Mr. Shaffer, who had joined Ameritech in 1994 at age
52 to serve as its Chief Financial Officer. 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 non-qualified pension if Mr. Shaffer
remains employed by the Company and becomes vested under the Ameritech
Management Pension Plan.
The Ameritech Corporate Resource Supplemental Pension Plan was amended in
1998 to provide for a lump sum payment of accrued vested benefits on or before
December 31, 1998 to certain participants in the non-qualified plan (including
Mr. Notebaert, Mr. Campbell and Mr. Allen), determined based on compensation
and position in the Company, unless the participant waived receipt of such
payment.
Employment Contracts
The Company entered into an employment agreement with Mr. Campbell when he
joined the Company in 1994. Although the agreement remains in effect with
respect to Mr. Campbell's general employment duties and benefit eligibility,
substantially all of its terms, including those providing for initial
compensatory and severance arrangements, have expired or been satisfied.
Under a July 1995 employment agreement between the Company and Mr. Allen, if
Mr. Allen retires from the Company on or after December 9, 2000, or if his
employment is involuntarily terminated for reasons other than cause or
unsatisfactory performance, the Company will pay Mr. Allen a supplemental
pension benefit described above. The employment agreement also provides that,
if Mr. Allen voluntarily terminates his employment with the Company, or if the
Company terminates his employment for cause or unsatisfactory performance,
prior to August 1, 2000, Mr. Allen will repay the $200,000 special hire bonus
he received from the Company.
In 1997, the Company made special grants of stock options to Mr. Shaffer,
Mr. Campbell, Mr. Allen and Mr. Richards, who agreed, among other things, that
they would not compete with the Company or its subsidiaries, either directly
or as an employee of another firm, for a period of two years after termination
of their employment with the Company. These non-compete agreements terminate
upon a change in control of the Company.
Certain Compensatory Arrangements Upon a Change in Control
Change in Control Agreements
The Company has entered into Agreements Regarding Change in Control ("Change
in Control Agreements") with the Named Executive Officers. The Change in
Control Agreements provide that, if the executive officer's employment with
the Company is terminated under specified circumstances, the executive officer
will continue to receive certain medical, insurance and other employee benefit
coverage and perquisites for a period of 24 months following such termination,
and will receive a lump sum payment up to the sum of (i) 2.99 times the
executive officer's annual base salary and the executive officer's short term
incentive award and other bonuses for the preceding year, plus (ii) the
actuarial equivalent of the additional pension benefits the
19
<PAGE>
executive officer would have accrued under the Company's qualified and non-
qualified pension arrangements if, on the date of termination, the executive
had been credited with two additional years of age, service and compensation
(base salary and target short term incentive award). Under the Change in
Control Agreements, these benefits will be provided to the Named Executive
Officers other than Mr. Notebaert if the executive's employment is terminated
involuntarily for any reason other than death, disability or just cause during
the 24-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 24-month period following the change in control. Payments under the
Change in Control Agreements may be reduced to the extent they, together with
certain other payments, may result in the loss of a tax deduction to the
Company under certain provisions of the Internal Revenue Code.
The Company's Board of Directors has concluded that the consummation of the
Merger would constitute a change in control under the Change in Control
Agreements. The aggregate amount payable by Ameritech pursuant to the Change
in Control Agreements cannot be determined definitively as of the date of this
proxy statement. However, the maximum aggregate amount of such payments to the
Named Executive Officers, assuming that the Merger is completed on May 1, 1999
and the employment of all such persons is terminated under circumstances
entitling them to severance benefits, is estimated to be: up to $15.2 million
for Mr. Notebaert; up to $4.0 million for Mr. Shaffer; up to $5.4 million for
Mr. Allen (which includes approximately $1.9 million payable to Mr. Allen as
an additional non-qualified pension benefit pursuant to his July 1995
employment agreement); up to $3.3 million for Mr. Campbell; and up to $3.2
million for Mr. Richards.
Stock Options
Substantially all of the options granted prior to May 11, 1998 pursuant to
the Company's LTIPs become fully vested upon a change in control and, if the
option holder's employment is involuntarily terminated for reasons other than
cause after the change in control and on or before the last day of the second
full calendar year following the change in control, such options remain
exercisable for up to five years after the employment termination date. In
addition, the agreements not to compete with Ameritech entered into by certain
of the Named Executive Officers in connection with 1997 stock option grants
terminate upon a change in control in accordance with the terms of such
agreements. The Company's Board of Directors has concluded that the
consummation of the Merger would constitute a change in control under the
LTIPs and associated option agreements.
The following table sets forth, with respect to the Named Executive
Officers, (i) the number of shares of Ameritech Common Stock subject to
options presently held by such persons that are not presently exercisable but
will become exercisable at the effective time of the Merger, (ii) the
approximate weighted average exercise price for such Ameritech options
presently held by such persons, and (iii) the aggregate value of such
Ameritech options held by such persons, based on the closing price per share
of Ameritech Common Stock of $60.9375 on February 12, 1999, and an assumed
Merger effective time of May 1, 1999:
<TABLE>
<CAPTION>
Options Which Approximate
Become Exercisable Weighted Average
at Merger Exercise Price Aggregate Value
Effective Time per Share of Options
------------------ ---------------- ---------------
<S> <C> <C> <C>
Mr. Notebaert............... 749,624 $31.4459 $22,107,633
Mr. Shaffer................. 344,136 36.0197 8,575,119
Mr. Campbell................ 188,198 35.9129 4,709,580
Mr. Allen................... 265,900 36.1507 6,590,804
Mr. Richards................ 291,498 34.7636 7,629,649
</TABLE>
Under the terms of certain of these options, dividend equivalent shares are
credited quarterly, for up to five years, on the shares subject to the options
(and on previously credited dividend equivalent shares), by dividing the
aggregate cash dividend that would have been paid on such shares had they been
outstanding by an amount based on the average market price per share of
Ameritech Common Stock on the first and last trading days within the quarter.
The dividend equivalents so credited are distributed in the form of shares of
Ameritech Common Stock (i) on a prescribed distribution date following either
the exercise of the option (in proportion to the option
20
<PAGE>
shares exercised) or five years from the date of grant (as to remaining
dividend equivalents), if in either case the then current market price exceeds
the option exercise price, or (ii) on the first subsequent distribution date
on which the then current market price exceeds the option exercise price. The
dividend equivalent shares credited to date on options held by the Named
Executive Officers that will first become exercisable upon consummation of the
Merger, and the values of such dividend equivalent shares based on the closing
price per share of Ameritech Common Stock of $60.9375 on February 12, 1999,
were: 9,019 shares ($549,595) for Mr. Notebaert; 3,136 shares ($191,100) for
Mr. Shaffer; 2,323 shares ($141,558) for Mr. Campbell; 2,347 shares ($143,020)
for Mr. Allen; and 5,593 shares ($340,823) for Mr. Richards.
Other Compensation and Benefit Plans
The Ameritech Management Committee Short Term Incentive Plan and the
Ameritech Senior Management Short Term Incentive Plan (the "Short Term
Incentive Plans") provide that, upon a change in control, each participant
will receive as soon as practicable following the earlier of such employee's
termination of employment or at the end of the calendar year in which the
change in control occurs, a payment equal to not less than 100% of the target
or standard award for such participant for that year established by the
Compensation Committee of the Company's Board of Directors. In addition, upon
a change in control, benefits of all participants under certain non-qualified
pension plans will become fully vested and compensation previously deferred at
the election of the employee will be paid in a lump sum unless such
distribution was previously waived by the employee. The Company's Board of
Directors has concluded that the consummation of the Merger would constitute a
change in control under the Short Term Incentive Plans and the non-qualified
pension plans. The Short Term Incentive Plans cover approximately 35
employees, including the Named Executive Officers. The Company accelerated
into 1998 payment of the 1998 awards under the Short Term Incentive Plans and
to certain participants, including the Named Executive Officers, previously
vested deferred compensation and non-qualified pension benefits, unless the
participant waived receipt of such benefits.
Services and Non-Compete Agreements with SBC
On May 10, 1998, SBC entered into Services and Non-Compete Agreements with
the Named Executive Officers. The Services and Non-Compete Agreements provide
that each such executive officer of Ameritech will be employed by SBC or a
subsidiary of SBC for a period of up to 30 months commencing upon consummation
of the Merger and will provide services to the combined company as a member of
senior management as required by SBC during the transition and integration
period. The Services and Non-Compete Agreements also provide that each such
executive officer may cease to be a full-time employee of SBC or a subsidiary
of SBC and become a consultant to SBC, at the election of either the officer
or SBC, any time after six months from the Merger completion date (except that
SBC cannot make such an election for Mr. Allen until after July 31, 2000). The
Services and Non-Compete Agreements acknowledge that termination of the
executive officer's status as a full-time employee thereunder would constitute
an involuntary termination without cause for purposes of the Change in Control
Agreements and the Company's other benefit arrangements. The annual
compensation as an employee or a consultant of the Named Executive Officers
pursuant to the Services and Non-Compete Agreements is as follows: Mr.
Notebaert, $7.0 million; Mr. Shaffer, $2.3 million; Mr. Allen, $2.0 million;
Mr. Campbell, $1.8 million; and Mr. Richards, $1.6 million. Under the Services
and Non-Compete Agreements, in addition to this compensation, Mr. Notebaert
will receive a bonus for the year in which the Merger is consummated in an
amount equal to $1,331,000 multiplied by the percentage by which the bonus
paid to the Chief Executive Officer of SBC for such year exceeds his base
salary, and Mr. Shaffer will be treated as having fully earned his pension
supplements pursuant to his 1995 supplemental pension arrangement with
Ameritech and will qualify for certain post-retirement benefits. All payments
under the Services and Non-Compete Agreements cease if SBC terminates the
employment or consulting relationship in the event the Named Executive Officer
becomes an employee or director of, or performs services for, a substantial
competitor of SBC during the term. In addition, the Services and Non-Compete
Agreements prohibit each Named Executive Officer, for 36 months after
consummation of the Merger, from soliciting customers of SBC or attempting to
induce any employee or agent to cease his or her relationship with SBC. Upon
termination of employment, unless the non-competition clause is violated, the
Services and Non-Compete Agreements provide that each Named Executive Officer
will receive financial consulting assistance for a period of five years under
SBC's standard policies for retiring executives and, in addition, Mr.
Notebaert will receive office space and secretarial support.
21
<PAGE>
SUBMISSION OF SHAREOWNER PROPOSALS FOR NEXT YEAR
Proposals of shareowners intended to be included in the Company's proxy
statement in connection with any annual meeting of the Company held in 2000
(if the proposed Merger with SBC is not completed by such time) must be
received by the Secretary of Ameritech, 30 South Wacker Drive, Chicago,
Illinois 60606, not later than November 3, 1999 and must otherwise comply with
applicable SEC requirements. Any other shareowner proposal will be considered
untimely for purposes of the Company's discretionary voting authority unless
received prior to January 17, 2000.
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 D.F. King &
Co., Inc., 77 Water 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 $17,500. 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 are a shareowner of record and you plan to attend the Annual Meeting
in person, please retain the admission ticket attached to the enclosed form of
proxy, as you must present this ticket to be admitted to the meeting. If your
shares are held by a broker or other nominee and you do not receive an
admission ticket, you will be admitted to the Annual Meeting only if you bring
proof of your ownership of Ameritech shares.
SEC rules 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 with your
voting instructions and mail it in the enclosed postage-paid envelope as soon
as possible or, if you wish, submit your proxy with voting instructions by
telephone or through the Internet by following the instructions on the proxy
card and accompanying information sheet.
March 3, 1999 By Order of the Board of Directors,
/s/ Deidra D. Gold
Deidra D. Gold, Secretary
22
<PAGE>
[LOGO]
Printed on Recycled paper
<PAGE>
[X] Please mark your votes as in this example in blue or black ink. 6688
Receipt hereby acknowledged of the Ameritech Notice of Annual Meeting and Proxy
Statement.
The undersigned directs that this proxy be voted as follows:
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR
- --------------------------------------------------------------------------------
1. Election of Directors
FOR WITHHELD
[_] [_]
FOR, except vote withheld from the following nominee(s): ___________
-----------------------------------------------------------------------------
01 D. Clark 04 J. Henderson 07 A. Martinez 10 J. Ong 12 L. Tyson
02 M. Goodes 05 S. Lubar 08 J. McCoy 11 A. Rand 13 J. Unruh
03 H. Gray 06 L. Martin 09 R. Notebaert
2. Approval of Independent Public Accountants
FOR AGAINST ABSTAIN
[_] [_] [_]
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote AGAINST
- --------------------------------------------------------------------------------
3. Shareowner Proposal on Cumulative Voting in Elections of Directors
FOR AGAINST ABSTAIN
[_] [_] [_]
Special Note:
Item On Other Side of Card
Vote Limitations [_]
(For Multiple-Account Holders Only)
Discontinue Annual Report [_]
Mailing for This Account
SIGNATURE(S)__________________________________________ DATE_______________, 1999
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as an attorney, executor, administrator, trustee or guardian,
please give full title. If signed by a corporation, a duly authorized corporate
representative should sign on its behalf and state the corporation's name and
the title of such representative.
[LOGO]
Ameritech Offers Phone or Internet Voting
24 hours a day, 7 days a week
On a touch-tone phone call toll-free 1-800-652-8683 (outside the US and
Canada call 201-324-0377) and you will hear these instructions:
. You will be asked to enter the last four digits of your social security number
and the control number from the box just below the perforation on this proxy
card.
. You will then have two options:
OPTION 1: to submit your voting instructions as the Board of Directors
recommends on all proposals; or
OPTION 2: to submit your voting instructions on each proposal separately.
. Your voting instructions will be repeated to you and you will be asked to
confirm them.
Log onto the Internet and type: http://www.vote-by-net.com
. Have your proxy card ready and follow the simple instructions.
. You will be prompted to enter the control number from the box just below the
perforation on this proxy card and the last four digits of your social
security number.
. You will then be asked to provide your voting instructions and confirm your
submission.
Your electronic proxy authorizes the named proxies to vote your shares to the
same extent as if you marked, signed, dated and returned the proxy card.
If you submit your proxy by phone or through the Internet, please do not mail
your proxy card. ---
THANK YOU FOR YOUR PROXY SUBMISSION!
<PAGE>
PROXY
AMERITECH CORPORATION
30 South Wacker Drive, Chicago, Illinois 60606 [LOGO]
- -------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors of Ameritech
Corporation.
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 the undersigned's proxies, with full power of substitution, for and in the
name, place and stead of the undersigned to vote upon and act with respect to
all shares of Common Stock of Ameritech Corporation ("Ameritech") in the name of
the undersigned or with respect to which the undersigned is entitled to vote and
act at the Annual Meeting of Shareowners (including any adjournments or
postponements thereof, the "Annual Meeting") of Ameritech to be held on April
21, 1999 at 9:30 a.m., local time, at McCormick Place South, Grand Ballroom,
Level 1, 2301 South Martin Luther King, Jr. Drive, Chicago, Illinois, upon all
subjects that may properly come before the Annual Meeting.
This proxy, when properly executed, will be voted as specified on the reverse
side. If no specification is given, this proxy will be voted: for the election
of the thirteen Director nominees listed on the reverse side of this card; in
accord with the Directors' recommendations on the other matters listed on the
reverse side of this card; and, at the discretion of the proxies, on any other
matter that may properly come before the Annual Meeting. If you have indicated
any changes or voting limitations in these paragraphs, please mark the "Vote
Limitations" box on the reverse side of this card. This card also provides
voting instructions for shares held in the Ameritech Direct Services Investment
Plan and in various Ameritech employee savings plans, as described in the proxy
statement, if registrations are identical.
To submit your proxy by telephone or Internet, please see the reverse side of
this card. To submit your proxy by mail, please mark, sign, date, detach and
return this card in the enclosed envelope.
[LOGO]
Admission Ticket
This entitles you, the shareowner, to attend the Annual Meeting.
Present this to the Ameritech representative at the entrance of the Ballroom.
Annual Meeting of Shareowners
April 21, 1999, 9:30 a.m.
McCormick Place South
Grand Ballroom, Level 1
2301 South Martin Luther King, Jr. Drive
Chicago, Illinois
[MAP SHOWING MCCORMICK PLACE SOUTH AND SURROUNDING AREA]
Directions to McCormick Place South:
- ------------------------------------
North: Take Rt. 41 South to 31st Street. Exit 31st St. At stoplight, turn
right (West). Go to 2 blocks to Martin Luther King, Jr. Drive. At stoplight,
turn right (North) and go less than a mile to McCormick Place South.
Northwest: Take I-90 or I-94 South, keep to the right and exit North onto
I-55 to Martin Luther King, Jr. Drive. At stoplight, turn left and follow the
parking lot signs.
South: Take I-90 to the Chicago Skyway to the local traffic lanes of I-94.
North to I-55 to Martin Luther King, Jr. Drive. At stoplight, turn left and
follow the parking lot signs.
Indiana or South via I-80/94: Take I-80/94 to the Bishop Ford Expressway to
I-94. North to I-55 to Martin Luther King, Jr. Drive. At stoplight, turn left
and follow the parking lot signs.
West: Take I-290 East to I-94 South. Keep to the right and follow signs to
I-55 North to Martin Luther King, Jr. Drive. At stoplight, turn left and
follow the parking lot signs.
Parking:
. Outdoor parking is available at 23rd and Prairie or 31st and Lake Shore Drive
for $10.00.
. The Hyatt Regency McCormick Place is connected to the McCormick Place South
Building and offers indoor parking at an hourly rate.
Alternative Transportation:
CTA, METRA or PACE call: 836-7000, within Chicago and its suburbs.
<PAGE>
Wait! There's an easier way to submit your proxy.
24 Hours a Day--7 Days a Week [LOGO]
Submit Your Proxy by Telephone
It's fast and convenient. Your submission
is immediately confirmed and posted.
Call Toll-Free on a Touch-Tone Phone
1-800-652-8683
Just follow these four easy steps:
================================================================================
1. Read the accompanying Proxy Statement and proxy card.
2. Call the toll-free number 1-800-652-8683.
3. Enter the last four digits of your social security number and the control
number from the box just below the perforation on the proxy card.
4. Follow the simple recorded instructions.
================================================================================
Submit Your Proxy by Internet
It's fast and convenient. Your submission
is immediately confirmed and posted.
You also can register to receive
all future materials by Internet.
Go to Web site:
www.vote-by-net.com
Just follow these four easy steps:
================================================================================
1. Read the accompanying Proxy Statement and proxy card.
2. Go to the Web site, www.vote-by-net.com
3. Enter the control number from the box just below the perforation on the
proxy card and the last four digits of your social security number.
4. Follow the simple instructions.
================================================================================
Your telephone or Internet proxy submission authorizes the named proxies to
vote your shares to the same extent as if you marked, signed, dated and
returned the proxy card.
If you submit your proxy by telephone or Internet,
do not return your proxy card.
---
Thank you for your proxy submission.
<PAGE>
Wait! There's an easier way to submit your proxy.
24 Hours a Day--7 Days a Week [LOGO]
Submit Your Proxy by Telephone
It's fast and convenient. Your submission
is immediately confirmed and posted.
Call on a Touch-Tone Phone
201-324-0377
Just follow these four easy steps:
================================================================================
1. Read the accompanying Proxy Statement and proxy card.
2. Call 201-324-0377.
3. Enter the last four digits of your social security number and the control
number from the box just below the perforation on the proxy card.
4. Follow the simple recorded instructions.
================================================================================
Submit Your Proxy by Internet
It's fast and convenient. Your submission
is immediately confirmed and posted.
You also can register to receive
all future materials by Internet.
Go to Web site:
www.vote-by-net.com
Just follow these four easy steps:
================================================================================
1. Read the accompanying Proxy Statement and proxy card.
2. Go to the Web site, www.vote-by-net.com
3. Enter the control number from the box just below the perforation on the
proxy card and the last four digits of your social security number.
4. Follow the simple instructions.
================================================================================
Your telephone or Internet proxy submission authorizes the named proxies to
vote your shares to the same extent as if you marked, signed, dated and
returned the proxy card.
If you submit your proxy by telephone or Internet,
do not return your proxy card.
---
Thank you for your proxy submission.
<PAGE>
Wait! There's an easier way to submit your vote.
24 Hours a Day--7 Days a Week [LOGO]
Vote by Telephone
It's fast and convenient. Your vote is immediately
confirmed and posted.
Using a touch-tone phone,
call the toll-free phone number
which appears on the top left corner
on your voting form.
Just follow these four easy steps:
================================================================================
1. Read the accompanying Proxy Statement and voting instruction form.
2. Call the toll-free number on the top left corner of the voting instruction
form.
3. Enter your 12-digit control number located on your voting instruction form.
4. Follow the simple recorded instructions.
================================================================================
Your vote is important!
Call 24 hours a day
Vote by Internet
It's fast and convenient. Your vote is immediately
confirmed and posted. You can get all future
materials by Internet.
Go to Web site:
WWW.PROXYVOTE.COM
Just follow these four easy steps:
================================================================================
1. Read the accompanying Proxy Statement and voting instruction form.
2. Go to the Web site, www.proxyvote.com
3. Enter your 12-digit control number located on your voting instruction form.
4. Follow the simple instructions.
================================================================================
Your vote is important!
Go to WWW.PROXYVOTE.COM
If you submit your proxy by telephone or Internet,
do not return your voting instruction form.
---
Thank you for your voting instructions.
