SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11 or
Section 240.14a-12
Southwestern Bell 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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-
6(j)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
(1)Title of each class of securities to which transaction applies:
(2)Aggregate number of securities to which transaction applies:
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computed pursuant to Exchange Act Rule 0-11:
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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
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Notice of 1995
Annual Meeting
and Proxy Statement
(SBC LOGO)
Southwestern Bell Corporation
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
TO BE HELD ON APRIL 28, 1995
TO THE HOLDERS OF COMMON STOCK OF SOUTHWESTERN BELL CORPORATION:
The 1995 Annual Meeting of Shareowners of Southwestern Bell
Corporation ("SBC"), a Delaware Corporation, will be held at 9:00 a.m.
on Friday, April 28, 1995, in the George R. Brown Convention Center,
1001 Avenida de las Americas, Houston, Texas. The purposes of the
meeting are:
1.To elect five Directors to serve three-year terms;
2.To ratify the appointment of Ernst & Young LLP as independent
auditors of SBC for 1995;
3.To approve a management proposal to amend the Certificate of
Incorporation to change the name of the company to SBC
Communications Inc.;
4.To act on shareowner proposals; and
5.To act upon such other matters as may properly come before the
meeting.
Holders of Common Stock of record at the close of business on
February 28, 1995, are entitled to vote at the meeting and any
adjournment of the meeting. A list of the shareowners of SBC as of
the close of business on February 28, 1995, will be available for
inspection during business hours from April 13 through April 27, 1995,
at 9051 Parkwest, Room 1200, Houston, Texas, and will also be
available at the Annual Meeting.
By Order of the Board of Directors
/s/ Judith M. Sahm
Judith M. Sahm
Secretary
March _____ , 1995
IMPORTANT NOTICE
IF YOU DO NOT PLAN TO ATTEND THE ANNUAL MEETING TO VOTE YOUR SHARES,
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY CARD
IN THE RETURN ENVELOPE PROVIDED. NO POSTAGE IS NECESSARY IF IT IS
MAILED IN THE UNITED STATES. ANY PERSON GIVING A PROXY HAS THE POWER
TO REVOKE IT AT ANY TIME, AND SHAREOWNERS WHO ARE PRESENT AT THE
MEETING MAY WITHDRAW THEIR PROXIES AND VOTE IN PERSON.
PROXY STATEMENT
SOUTHWESTERN BELL CORPORATION
175 E. HOUSTON
SAN ANTONIO, TEXAS 78205
Annual Meeting of Shareowners
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Southwestern Bell Corporation
("SBC") for use at the 1995 Annual Meeting of Shareowners of SBC. The
meeting will be held at 9:00 a.m. on Friday, April 28, 1995, in the
George R. Brown Convention Center, 1001 Avenida de las Americas,
Houston, Texas. The purposes of the meeting are set forth in the
Notice of Annual Meeting of Shareowners. This Proxy Statement and the
accompanying proxy card are being mailed beginning March 14, 1995, to
shareowners of record of SBC's common stock ("Common Stock") at the
close of business on February 28, 1995. Each share entitles the
registered holder to one vote. As of January 31, 1995, there were
606,751,567 shares of Common Stock outstanding.
All shares represented by proxies will be voted by the individuals
designated on the enclosed proxy card, all of whom are members of the
Directors' Proxy Committee, in accordance with the shareowners'
directions. If the proxy card is signed and returned without specific
directions with respect to the matters to be acted upon, the shares
will be voted in accordance with the recommendations of the Board of
Directors described below, except for shares held under certain
employee benefit plans as described in more detail later. Any
shareowner giving a proxy may revoke it at any time before such proxy
is voted at the meeting by giving written notice of revocation to
SBC's Secretary, by submitting a later-dated proxy, or by attending
the meeting and voting in person. The Chairman of the Board and Chief
Executive Officer will announce the closing of the polls during the
Annual Meeting. All proxies must be received prior to the closing of
the polls in order to be counted.
A shareowner may designate a person or persons to act as the
shareowner's proxy other than those persons designated on the proxy
card. The shareowner may do so by striking out the names appearing on
the enclosed proxy card, inserting the name or names of another person
or persons, and delivering the signed card to such person or persons.
The person(s) designated by the shareowner must present the signed
proxy card at the meeting in order for the shares to be voted.
If a shareowner is a participant in SBC's Dividend Reinvestment Plan,
the proxy card will represent the number of full shares held in the
Dividend Reinvestment account together with any shares registered in
the participant's name. If a shareowner is a participant in SBC's
PAYSOP, Savings Plan ("SP"), or the Savings and Security Plan ("SSP"),
the proxy will also serve as a voting instruction for the trustees of
those plans for all accounts registered in the same name. If proxy
cards representing shares in the SP and SSP are not received, those
shares will be voted in the same proportion as the shares for which
signed cards are returned by other participants. Shares in the
PAYSOP, however, cannot be voted unless the card is signed and
returned.
The cost of soliciting proxies will be borne by SBC. Officers, agents
and employees of SBC and its subsidiaries and other solicitors
retained by SBC may, by letter, by telephone or in person, make
additional requests for the return of proxies and may receive proxies
on behalf of SBC. Brokers, nominees, fiduciaries and other custodians
will be requested to forward soliciting material to the beneficial
owners of shares and will be reimbursed for their expenses. SBC has
retained Georgeson & Company, Inc., to aid in the solicitation of
proxies, at a fee of $19,000, plus expenses.
Shareowners representing 40 percent of the Common Stock outstanding
and entitled to vote must be present or represented by proxy in order
to constitute a quorum to conduct business at the meeting. A list of
eligible voters will be available at the Annual Meeting. The
following proposals are expected to be submitted to the shareowners at
the 1995 Annual Meeting: the election of Directors; the ratification
of the appointment of Ernst & Young LLP as independent auditors of
SBC; the approval of a management proposal to amend the Certificate of
Incorporation to change the name of the company; and three shareowner
proposals.
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD
PROMPTLY SO THAT A QUORUM MAY BE REPRESENTED AT THE MEETING.
HIGHLIGHTS OF THE MEETING WILL BE INCLUDED IN THE SECOND QUARTER
REPORT TO SHAREOWNERS, WHICH WILL BE MAILED IN AUGUST 1995.
If you plan to attend the meeting in person, please mark the
appropriate box on the proxy voting card and bring the admission
ticket (which is attached to the proxy voting card) to the Annual
Meeting. Shareowners who do not have admission tickets will be
admitted upon presentation of identification at the door. Anyone
requiring special services for the hearing impaired or physically
disabled should contact the Corporate Manager-Financial Communications
at 210-351-2136 in advance of the meeting to arrange for these
services.
Board of Directors
The Board of Directors is responsible for the management and direction
of SBC and for establishing broad corporate policies. Regular
meetings of the Board of Directors are held each month except
February, May, August and October. The Board held nine meetings in
1994, including a special meeting held in February. In addition,
members of the Board of Directors are kept informed of SBC's business
by various reports and documents given to them regularly, as well as
by operating and financial reports presented by the Chairman of the
Board and other Officers at meetings of the Board of Directors and
committees of the Board.
Board Committees
From time to time, the Board establishes permanent standing committees
and temporary special committees to assist the Board in carrying out
its responsibilities. The Board has established six standing
committees of Directors, the principal responsibilities of which are
described below. The biographical information included later in this
Proxy Statement identifies committee memberships held by each
Director.
THE AUDIT COMMITTEE met three times in 1994. It consists of seven non-
employee Directors. The Audit Committee recommends to the Board the
appointment of a firm to serve as independent auditors, subject to
ratification by the shareowners at the Annual Meeting. The
independent auditing firm examines the accounting records of SBC and
its subsidiaries for the coming year. The Audit Committee
periodically reviews the adequacy and effectiveness of SBC's internal
system of accounting controls and financial reporting procedures with
representatives of the independent auditors and with the corporate
internal auditors. The Audit Committee also examines the results of
the annual audit of the financial statements and the recommendations
of the independent auditors pertaining to accounting practices,
policies and procedures followed by SBC.
THE CORPORATE DEVELOPMENT COMMITTEE met four times in 1994. It
consists of five non-employee Directors and one employee Director.
The purpose of the Corporate Development Committee is to examine
proposed acquisitions and similar new ventures and to advise
management with regard to the expansion or disposition of SBC's
businesses through mergers, acquisitions, sales and similar
transactions.
THE CORPORATE PUBLIC POLICY AND ENVIRONMENTAL AFFAIRS COMMITTEE met
three times in 1994. It consists of six non-employee Directors. The
Corporate Public Policy and Environmental Affairs Committee examines
corporate policy and provides guidance and perspective to SBC
management on major public issues, including corporate governance,
legislative and environmental matters, and SBC's compliance program.
THE EXECUTIVE COMMITTEE did not meet in 1994. It consists of four
non-employee Directors and one employee Director. The Executive
Committee's primary function is to assist the Board of Directors by
acting upon matters when the Board is not in session. The Committee
has the full power and authority of the Board to the extent permitted
by law, including the power and authority to declare a dividend or to
authorize the issuance of Common Stock.
THE FINANCE/PENSION COMMITTEE met six times in 1994. It consists of
five non-employee Directors and one employee Director. This Committee
is responsible for recommending investment policy, making
recommendations to the Board of Directors as to methods of financing
the operations of SBC and its subsidiaries, and overseeing the
investments of SBC's employee benefit plans.
THE HUMAN RESOURCES COMMITTEE met seven times in 1994. It consists of
four non-employee Directors. The Human Resources Committee oversees
the management of human resources activities of SBC, including
compensation for senior management and the design of employee pension
and savings plans. The Committee reviews and makes recommendations to
the Board with respect to compensation of Directors. The Committee
also advises the Board with respect to the nomination of members to
the Board of Directors to be elected at the Annual Meeting or to be
appointed by the Board to fill vacancies that may occur during the
period between Annual Meetings.
In recommending Board candidates, this Committee seeks individuals of
proven judgment and competence who are outstanding in their chosen
fields, and it considers factors such as anticipated participation in
Board activities, education, geographic location, and special talents
or personal attributes. Shareowners who wish to suggest qualified
candidates should write to the Secretary, Southwestern Bell
Corporation, 175 E. Houston Street, Room 1140, San Antonio,
Texas 78205, stating in detail the qualifications of such persons for
consideration by the Committee.
Members of the Board of Directors
Under SBC's Bylaws, the Board of Directors has the authority to
determine the size of the Board, not to exceed 21 Directors, and to
fill vacancies. The Board of Directors of SBC presently consists of
15 members, one of whom is an SBC executive officer.
SBC's Bylaws provide for a classified Board of Directors under which
there are three classes of Directors, all of which are as equal in
number as possible. The class to which each Director has been
assigned is designated as Group A, Group B or Group C. The term of
office of Group B Directors will expire at the 1995 Annual Meeting,
Group C at the 1996 Annual Meeting, and Group A at the 1997 Annual
Meeting. The SBC Board intends to nominate at the 1995 Annual Meeting
the five persons listed as nominees for Group B, all of whom are
incumbent Directors, for election to three-year terms of office
expiring at the 1998 Annual Meeting.
Mr. Robert G. Pope retired as a Director and as an officer of SBC,
effective March 31, 1994. SBC's Bylaws provide that the classes of
Directors shall be as equal in number as possible; however, the
retirement of Mr. Pope created a vacancy in Group B and an imbalance
between the classes. In order to make the classes equal in size, the
Board, at its June 24, 1994, meeting, elected Mr. Jack S. Blanton to
the vacancy created by Mr. Pope's retirement, and Mr. Blanton
simultaneously withdrew as a Group A Director, resulting in each class
having five Directors. Immediately thereafter, the Board voted to
reduce its size to 15 members. There are no vacancies on the Board.
Biographical information about the Directors is provided on pages 6 -
8. Except as otherwise noted, Directors who are shown as officers or
partners of other corporations, institutions or firms have held the
positions indicated, or have been officers of the organizations
indicated, for more than the last five years.
Directors' ownership of Common Stock is shown on the table on page 10.
DIRECTORS TO BE ELECTED AT THE 1995 ANNUAL MEETING
(GROUP B)
JACK S. BLANTON, age 67, is Chairman, Houston Endowment, Inc., and has
served in this capacity since December 1990, and is President and
Chief Executive Officer of Eddy Refining Company, Houston, Texas.
Mr. Blanton was Chairman of the Board and Chief Executive Officer of
Scurlock Oil Company, a wholly owned subsidiary of Ashland Oil, Inc.,
from 1983 to 1988. Mr. Blanton has been a Director of SBC since
October 1983. He served as a Director of Southwestern Bell Telephone
Company from 1977 to 1983. Mr. Blanton is a Director of Ashland Oil,
Inc.; Baker Hughes Incorporated; Burlington Northern Inc.; and Pogo
Producing Company. He is the Chairman of the Human Resources
Committee and a member of the Executive Committee.
AUGUST A. BUSCH III, age 57, is Chairman of the Board and President of
Anheuser-Busch Companies, Inc., St. Louis, Missouri. Mr. Busch has
been a Director of SBC since October 1983. He served as a Director of
Southwestern Bell Telephone Company from 1980 to 1983. Mr. Busch is a
Director of Anheuser-Busch Companies, Inc.; Emerson Electric Co.; and
General American Life Insurance Company; and an Advisory Member of the
Boards of Directors of Grupo Modelo, S.A. de C.V., and Diblo, S.A. de
C.V. He is a member of the Corporate Development Committee, the
Executive Committee and the Human Resources Committee.
TOM C. FROST, age 67, is Chairman of the Board and Chief Executive
Officer of Cullen/Frost Bankers, Inc., San Antonio, Texas. Mr. Frost
has been a Director of SBC since October 1983. He served as a
Director of Southwestern Bell Telephone Company from 1974 to 1983.
Mr. Frost is a Director of Cullen/Frost Bankers, Inc. He is the
Chairman of the Finance/Pension Committee and a member of the
Corporate Development Committee and the Executive Committee.
JESS T. HAY, age 64, is Chairman of The Texas Foundation for Higher
Education, Dallas, Texas, and has served in this capacity since
February 1987. Mr. Hay was Chairman and Chief Executive Officer of
Lomas Financial Corporation from 1969 until his retirement in December
1994. Mr. Hay has been a Director of SBC since April 1986. He is a
Director of The Dial Corp; Exxon Corporation; Lomas Financial
Corporation; Lomas Mortgage USA, Inc.; and Trinity Industries, Inc.
He is a member of the Audit Committee and the Human Resources
Committee.
BOBBY R. INMAN, age 63, Admiral, United States Navy, Retired. Admiral
Inman was Chairman and Chief Executive Officer of Westmark Systems,
Inc., Austin, Texas, from January 1987 through December 1989. Admiral
Inman served as Vice Admiral, United States Navy, and Director,
National Security Agency, from 1977 to 1981, and as Admiral, United
States Navy, and Deputy Director, Central Intelligence Agency, from
1981 to 1982. He has been a Director of SBC since March 1985.
Admiral Inman is a Director of Fluor Corporation; Science Applications
International Corporation; Temple-Inland Inc.; and Xerox Corporation.
He is a member of the Finance/Pension Committee and the Human
Resources Committee.
DIRECTORS SERVING UNTIL THE 1996 ANNUAL MEETING
(GROUP C)
JAMES E. BARNES, age 61, is Chairman of the Board and Chief Executive
Officer, MAPCO Inc., Tulsa, Oklahoma, and has served in this capacity
since January 1992. Mr. Barnes was Chairman of the Board, Chief
Executive Officer and President of MAPCO Inc. from May 1986 through
December 1991. Mr. Barnes has been a Director of SBC since
November 1990. Mr. Barnes is a Director of BOK Financial Corp.;
Kansas City Southern Industries, Inc.; and MAPCO Inc. He is a member
of the Audit Committee and the Corporate Development Committee.
SYBIL C. MOBLEY, age 69, is Dean of The School of Business and
Industry at Florida A&M University, Tallahassee, Florida. Dr. Mobley
has been a Director of SBC since May 1989. She is a Director of
Anheuser-Busch Companies, Inc.; Champion International Corporation;
Dean Witter, Discover & Co.; Hershey Foods Corporation; and Sears,
Roebuck & Co. She is a member of the Audit Committee and the
Corporate Public Policy and Environmental Affairs Committee.
HASKELL M. MONROE, JR., age 63, is Professor of History at The
University of Missouri-Columbia, Columbia, Missouri, and has served in
this capacity since July 1987. Dr. Monroe was also Chancellor at the
University of Missouri-Columbia, Columbia, Missouri, from July 1987
through December 1991. He has been a Director of SBC since October
1983. Dr. Monroe served as a Director of Southwestern Bell Telephone
Company from 1982 to 1983. He is the Chairman of the Corporate Public
Policy and Environmental Affairs Committee and a member of the
Finance/Pension Committee.
PATRICIA P. UPTON, age 56, is President and Chief Executive Officer of
Aromatique, Inc., Heber Springs, Arkansas. Mrs. Upton has been a
Director of SBC since June 1993. She is a member of the Audit
Committee and the Corporate Public Policy and Environmental Affairs
Committee.
EDWARD E. WHITACRE, JR., age 53, is Chairman of the Board and Chief
Executive Officer of SBC and has served in this capacity since
January 1990. Mr. Whitacre has been a Director of SBC since October
1986. He is a Director of Anheuser-Busch Companies, Inc.; Burlington
Northern Inc.; Emerson Electric Co.; and May Department Stores
Company. He is the Chairman of the Executive Committee and a member
of the Corporate Development Committee and the Finance/Pension
Committee.
DIRECTORS SERVING UNTIL THE 1997 ANNUAL MEETING
(GROUP A)
CLARENCE C. BARKSDALE, age 62, is Vice Chairman, Board of Trustees,
Washington University, St. Louis, Missouri, and has served in this
capacity since July 1989. Mr. Barksdale was Chairman of the Board and
Chief Executive Officer of Centerre Bancorporation from 1978 to 1988
and Chairman of the Board of Centerre Bank N.A. from February 1985
through December 1988. Mr. Barksdale was Vice Chairman of Boatmen's
Bancshares, Inc., from January through June 1989. He has been a
Director of SBC since October 1983. Mr. Barksdale served as a
Director of Southwestern Bell Telephone Company from 1982 to 1983. He
is a member of the Audit Committee and the Corporate Public Policy and
Environmental Affairs Committee.
RUBEN R. CARDENAS, age 64, is an attorney whose Professional Limited
Liability Company is a Partner in the law firm of Cardenas, Whitis &
Stephen, L.L.P., McAllen, Texas. Mr. Cardenas has been a Director of
SBC since October 1983. He served as a Director of Southwestern Bell
Telephone Company from 1975 to 1983. He is the Chairman of the Audit
Committee and a member of the Corporate Public Policy and
Environmental Affairs Committee.
MARTIN K. EBY, JR., age 60, is Chairman of the Board and Chief
Executive Officer and President of The Eby Corporation, Wichita,
Kansas. Mr. Eby has been a Director of SBC since June 1992. He is a
Director of Intrust Financial Corporation and Intrust Bank, N.A. He
is a member of the Audit Committee and the Corporate Development
Committee.
CHARLES F. KNIGHT, age 59, is Chairman and Chief Executive Officer of
Emerson Electric Co., St. Louis, Missouri. Mr. Knight has been a
Director of SBC since October 1983. He served as a Director of
Southwestern Bell Telephone Company from 1974 to 1983. Mr. Knight is
a Director of Anheuser-Busch Companies, Inc.; The British Petroleum
Company p.l.c., London, England; Emerson Electric Co.; and
International Business Machines Corporation. He is the Chairman of
the Corporate Development Committee and a member of the Executive
Committee and the Finance/Pension Committee.
CARLOS SLIM HELU, age 55, is Chairman of the Board of Grupo Carso,
S.A. de C.V., Mexico, and since January 1991 has been Chairman of the
Board of Telefonos de Mexico, S.A. de C.V., Mexico. Ing. Slim has
been a Director of SBC since September 1993. He is a Director of
Telefonos de Mexico, S.A. de C.V. He is a member of the Corporate
Public Policy and Environmental Affairs Committee and the
Finance/Pension Committee.
Compensation of Directors
Directors who are also employees of SBC or its subsidiaries receive no
cash compensation for serving as Directors or as members of Board
committees. Directors who are not employees of SBC or its
subsidiaries receive a $35,000 annual retainer, $1,500 for each Board
meeting attended, and $1,200 for each Committee meeting attended.
Excluding employee Directors, the Chairman of each Committee receives
an additional annual retainer of $5,000. Directors may elect to defer
the receipt of all or part of these fees and retainers and earn a
variable rate of interest, adjusted quarterly, equal to the average
rate paid on commercial paper issued by SBC and its subsidiaries.
Non-employee Directors may receive pension payments for life following
their retirement from the Board. A non-employee Director must have
served on the Board for five years prior to retirement to be eligible
to receive payment. Eligible non-employee Directors will receive, in
quarterly installments, annual amounts equal to 10 percent of the
annual retainer (exclusive of Board and Committee meeting fees) in
effect at the time of termination of Board service, multiplied by the
number of years of service, not to exceed ten years. If a participant
dies prior to the expiration of 10 years from his or her date of
retirement, his or her beneficiary will be entitled to receive the
payments for the remainder of the 10-year period. If an eligible
non-employee Director dies while still serving on the Board, a pre-
retirement death benefit will be paid as though the individual had
retired on the date of death.
SBC provides each non-employee Director with travel accident insurance
while the Director is on SBC business, along with $100,000 of group
life insurance. The total premiums during 1994 for these policies
were $750 for the travel accident insurance and $7,020 for the group
life insurance. Directors also received certain telecommunications
services and equipment from subsidiaries of SBC or were reimbursed for
such services and equipment provided by other companies. The value of
telecommunications services and equipment received, or for which
reimbursement was provided, together with amounts necessary to offset
the Directors' federal tax liabilities, computed at maximum marginal
rates, including tax surcharges, resulting from such services and
benefits, averaged $8,640 per non-employee Director in 1994. Employee
Directors receive similar services and equipment in connection with
their service as officers of SBC.
Each non-employee Director who joins the Board after August 1, 1994,
will receive one thousand shares of restricted stock of SBC upon
joining the Board, together with amounts necessary to offset the
Director's federal tax liabilities resulting from the grant, computed
at maximum marginal rates, including tax surcharges. All shares of
stock will be restricted from sale for a period of five years from
grant or until the recipient ceases being a Director, whichever occurs
first. Each incumbent non-employee Director who held office on
August 1, 1994, also received the same benefit.
COMMON STOCK OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth the beneficial ownership of Common
Stock as of December 31, 1994, by each Director and each officer named
in the Compensation Charts on pages 26-31. As of that date, the
Directors and officers listed both individually and as a group owned
less than one percent of the outstanding Common Stock.
Shares of Common Stock Total
Voting and Options Beneficial
Investment to Ownership
Power Sole Purchase (including
Name of Voting Common options)
Beneficial Owner Sole Shared Power Stock
(1)
Edward E. 200,173 15,834 577 317,068 533,652
Whitacre, Jr.
James R. Adams 93,191 19,815 745 82,182 195,933
Clarence C. 3,000 0 0 0 3,000
Barksdale
James E. Barnes 3,000 0 0 0 3,000
Jack S. Blanton 16,000 35,000 0 0 51,000
(2)
August A. Busch 4,126 144 0 0 4,270
III
Royce S. Caldwell 15,928 8,122 194 50,444 74,688
Ruben R. Cardenas 8,264 0 0 0 8,264
William E. Dreyer 26,906 6,514 54 51,764 85,238
Martin K. Eby, 10,000 0 0 0 10,000
Jr.
Charles E. Foster 19,194 7,526 672 71,852 99,244
Tom C. Frost 3,556 1,558 0 0 5,114
Jess T. Hay 10,000 0 0 0 10,000
Bobby R. Inman 1,600 0 0 0 1,600
Charles F. Knight 7,000 0 0 0 7,000
Sybil C. Mobley 1,679 0 0 0 1,679
Haskell M. 1,009 4,338 0 0 5,347
Monroe, Jr.
Carlos Slim Helu 1,000 0 0 0 1,000
Patricia P. Upton 1,215 0 0 0 1,215
All executive
officers and
Directors as a
group (consisting
of 24 persons, 478,270 131,268 3,748 751,134 1,364,420
including those
named above).
Shares held by officers in the Savings Plan are included in the table
as of November 30, 1994. Additional shares may have been accumulated
under this plan since that date.
(1) Represents presently exercisable employee stock options and those
which will become exercisable within 60 days of the date of this
table.
(2) Of the reported shares, Mr. Blanton disclaims beneficial
ownership of 15,000 shares which are held by Mr. Blanton as Trustee
for the benefit of family members.
VOTING
Each share of Common Stock represented at the Annual Meeting is
entitled to one vote on each matter properly brought before the
meeting. Except as otherwise noted below, all matters submitted at
the Annual Meeting shall be determined by a majority of the votes
cast. Shares represented by proxies that are marked "withhold
authority" with respect to the election of one or more nominees for
election as Directors, proxies that are marked "abstain" on other
proposals, and proxies that are marked to deny discretionary authority
on other matters will not be counted in determining whether a majority
vote was obtained in such matters. If no directions are given and the
signed card is returned, the members of the Director's Proxy Committee
will vote the shares for the election of all listed nominees and in
accordance with the Directors' recommendations on the other subjects
listed on the proxy card, and at their discretion on any other matter
that may properly come before the meeting. In instances where brokers
are prohibited from exercising discretionary authority for beneficial
owners who have not returned proxies to the brokers (so-called "broker
non-votes"), those shares will not be included in the vote totals and,
therefore, will have no effect on the vote.
As described more fully later in this Proxy Statement, the Board of
Directors will submit to the Shareowners at the 1995 Annual Meeting a
proposal to amend SBC's Certificate of Incorporation to change the
company name to SBC Communications Inc. Under Delaware law, in order
for a proposal to amend the Certificate of Incorporation to pass, a
majority of the outstanding shares of Common Stock entitled to vote on
the proposal must approve the amendment. In this instance,
abstentions and broker non-votes will have the same effect as a vote
against the proposal.
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
The following Group B Directors have been nominated by the Board of
Directors on the recommendation of the Human Resources Committee for
election to three-year terms of office that will expire at the 1998
Annual Meeting:
Jack S. Blanton Jess T. Hay
August A. Busch III Bobby R. Inman
Tom C. Frost
Shares represented by the accompanying form of proxy will be voted for
the election of the nominees, unless other instructions are shown on
the proxy card. If one or more of the nominees should at the time of
the meeting be unavailable or unable to serve as a Director, the
shares represented by the proxies will be voted to elect the remaining
nominees and any substitute nominee or nominees designated by the
Board. The Board knows of no reason why any of the nominees would be
unavailable or unable to serve.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED IN
GROUP B ABOVE.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 2 ON PROXY CARD)
Subject to shareowner ratification, the Board of Directors, upon
recommendation of the Audit Committee, has appointed the firm of Ernst
& Young LLP to serve as independent auditors of SBC for the fiscal
year ending December 31, 1995. This firm has audited the accounts of
SBC since 1983 and the accounts of Southwestern Bell Telephone Company
for many years. If shareowners do not ratify this appointment, the
Board will consider other independent auditors. One or more members
of Ernst & Young LLP are expected to be present at the Annual Meeting
and will be available to respond to questions.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
DIRECTORS' PROPOSAL TO APPROVE THE CHANGE IN THE COMPANY'S NAME
(ITEM 3 ON PROXY CARD)
Your Board of Directors proposes and recommends to the Shareowners for
their approval an amendment to SBC's Certificate of Incorporation to
change the name of the corporation by amending Article One to read:
"The name of the corporation is SBC Communications Inc."
Southwestern Bell Corporation has been a prominent name in
communications since its divestiture in 1984 from the American
Telephone and Telegraph Company (now AT&T). This name was an
appropriate choice for your company at that time since almost all of
its revenues were derived from its telephone subsidiary, Southwestern
Bell Telephone Company. However, because of the diversification of
your company beyond its geographical and local telephone exchange
origins, your Board believes it is time to adopt a new name for the
parent company and acknowledge its place as a international provider
of a wide variety of communications goods and services.
Your Board does not intend to change the name of your company's
telephone subsidiary, Southwestern Bell Telephone Company, which
provides local exchange, network access and intra-LATA toll services
within the five-state region of Arkansas, Kansas, Missouri, Oklahoma
and Texas. This name, in use since 1917, is a valuable asset, widely
recognized and associated with reliability, quality, strength and
responsive customer service.
However, the original rationale for using the Southwestern Bell name
as part of the parent company's name no longer holds. The parent
company has aggressively expanded beyond the provision of local
telephone service, with the result that its non-telephone company
businesses now provide approximately 35 percent of the parent
company's net income, and that figure is expected to continue to grow.
Your company's wireless communications subsidiary now operates in
Chicago, Washington, D.C., Boston, Baltimore, upper New York state
(including Rochester, Syracuse, Buffalo and Albany), Dallas/Ft. Worth,
and St. Louis, as well as numerous other communities. Other
subsidiaries have interests in telecommunications, cable television,
publishing or other communications operations in Mexico, England,
France, Australia, and Israel. Another subsidiary provides telephone
equipment across the United States and in several foreign countries.
Your company has expanded far beyond its southwestern origins.
To recognize the proud history of the company and yet acknowledge the
company's move beyond its geographical and business origins, your
Board recommends the adoption of SBC Communications Inc. as the
company's new name. The new name already enjoys some recognition in
the marketplace. SBC has been our stock exchange ticker symbol since
1984 and has been used in a variety of applications. For example,
several of our subsidiaries, including our international subsidiary,
SBC International, Inc., use SBC in their name. In addition, since
October 1994, your company has been doing business under the proposed
new name.
The company has also adopted a new logo incorporating the initials
SBC, which appears on the cover of this proxy statement. The new logo
replaces the old Bell symbol, which will continue to be used by our
telephone company and certain other subsidiaries. Your Board believes
the new name and logo reflect the fact that our company has grown from
a regional telephone service provider to multi-faceted global
communications business.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE
PROPOSAL TO AMEND ARTICLE ONE OF SBC'S CERTIFICATE OF INCORPORATION
TO READ: "THE NAME OF THE CORPORATION IS SBC COMMUNICATIONS INC."
SHAREOWNER PROPOSAL A
(ITEM 4 ON PROXY CARD)
Bertram H. Behrens of 17300 Bismark Road, White Lake, Wisconsin 54491,
the owner of 60 shares of Common Stock, has indicated he intends to
propose the following resolution for action at the Annual Meeting:
My stockholders proposal is a very simple - but important - one. It
is this:
That beginning with the election (by the stockholders) of any new
non-employee directors to the Board of Directors no "retirement pay"
or "pension" be paid to them. This is not to apply to those presently
on the board or presently receiving "retirement pay" or "pension", but
it is to apply to any new non-employee director.
Shareowner's Supporting Statement
According to the 1994 proxy statement "Directors who are not employees
of the Corporation or its subsidiaries receive a $35,000 annual
retainer". A non-employee director must be on the Board for five
years before being eligible for "retirement pay" or "pension", but
then upon leaving the firm he receives for life 10% of the $35,000 for
each year on the Board! For being on the Board for five years he
receives 50% of $35,000; for six years he receives 60% of $35,000,
etc. Boy! Does he ever have it made! Most of us work a lifetime for
that kind of "retirement pay" or "pension"!
And usually a director is not only a director on one board; he's a
director on several boards. For example, in the 1994 Southwestern Bell
Corporation election of directors the six non-employee directors were
all on the boards of other firms in addition to Southwestern Bell.
One of them was on four other boards. Think of the kind of money some
of the former directors are making just with retirement pay! We
stockholders must put our foot down and put a stop to this ridiculous
retirement pay. The Board of Directors met eight times in 1993. In
my opinion all they do anyway is to rubber-stamp what the full-time
employees ask them to. We stockholders must protect our own interests
and vote "yes" to this proposal.
YOUR DIRECTORS' POSITION
Your Board of Directors believes that the best interests of your
company are served by having talented and experienced individuals
serving as outside directors. To attract and retain these highly
sought-after individuals, SBC must provide a competitive total
compensation package. Retirement benefits are a common element of
Director compensation at large corporations. A 1993 survey by a
nationally recognized compensation and benefits consulting firm found
that over 70 percent of the Fortune 150 industrial companies provide
retirement plans to their outside Directors. In addition, each of the
other major telecommunications carriers, including Ameritech, Bell
Atlantic, BellSouth, NYNEX, Pacific Telesis, U S West, AT&T, GTE, and
MCI, offer similar retirement packages.
SBC believes that including retirement benefits in the total package
of compensation for Directors is appropriate. The retirement plan
provides each Director who has served at least five years, a pension
equal to 10 percent of their annual retainer for each year of service,
not to exceed their retainer at retirement, which is presently
$35,000. This is a modest benefit in light of the responsibility,
commitment and challenge of the position. Each Director brings to the
company proven experience and judgment that is so critical to guide
SBC in an ever more increasingly complex business environment. The
company makes retirement plans available to substantially all of its
employees, and it is appropriate to make retirement benefits available
to the Directors as well.
ACCORDINGLY, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE
SHAREOWNER PROPOSAL.
SHAREOWNER PROPOSAL B
(ITEM 5 ON PROXY CARD)
Theodore F. Vick of 5245 E. Enrose St., Mesa, Arizona 85205, the
holder of 252 shares of Common Stock, has indicated he intends to
propose the following resolution for action at the Annual Meeting:
Be It Resolved:
That, in the future, we recommend the Board of Directors should:
1) Limit total compensation paid annually to any one employee to a
maximum of one million dollars; and
2) Limit stock options to a number whose potential realizable
gain, considering an annual 10 percent appreciation over ten years, not
exceed one million dollars; and
3) Base pensions solely on annual base salary, excluding any other
compensation; and
4) Take all legal steps available to bring existing agreements and
contracts within the scope of this proposal
Shareowner's Supporting Statement
I, as a shareholder, in approving previous incentive and pension
proposals neither contemplated nor envisioned annual multimillion dollar
bonuses; stock option awards having potential gain of multimillion
dollars; annual pensions totaling more than a million dollars would be
the outcome.
How Employees Have Fared
Employees have been reduced by 13,500.
The nation's poor and homeless are growing in number and the middle
class is shrinking, but corporate executive compensation is reaching new
highs.
Historically the number of employees on the payroll has been a measure
of the corporation's success and future growth. Today they herald its
reduction as a measure of management's accomplishments and results in
greater compensation.
How Shareholders Have Fared
Book Value/Share increased $.97 cents from 1984 to 1993, 8.28% in ten
years; an average of less than 1% a year.
Debt Ratio increased 8.5% from 1984 to 1993; $524,000,000 or
$.87/share.
Dividend grew $.58, from $.93 to $1.51; however, in the last three years
the annual increase has fallen to average of 3% from 6.8% in the prior
six years, a reduction in growth of 44%.
Operating Income vs. Operating Revenue:
Decreased 4.7% from 1984 to 1993; $492,000,000; $.82/share this has
taken place though:
1) Network access lines increased 24% since 1984
2) Access minutes use increased 64% since 1985
3) Cellular customers increased 2 hundred fold
4) Long distance messages increased 46%
5) Employees have decreased (18.7%)
Assuming average wage of $25,317/employee, a potential
operating revenue increase of $341,779,500; $.57/share.
How Executives Have Fared
CEO 1993 compensation (business week) was 149 times average factory
workers' earnings ($25,317).
Southwestern Bell Compensation Packages Include:
1) Base salary
2) Annual cash bonus
3) Stock options
4) Long term incentive plans
5) Other annual compensation
6) All other compensation
7) Pension plans
8) Senior management supplemental retirement income plan
9) Control severance agreements.
How Top 5 Executives Have Fared
Potential
% Inc. Realizable Value
Compensation Over Projected Of Stock
1993 1991 Annual Options/SARS
Pension Granted In 1993
Benefits at SEC Assumed
Appreciation Of
10%
Whitacre $ 4,436,687 93 $ 1,651,400 $ 18,660,679
Pope 2,415,733 54 731,700 6,509,655
Adams 1,965,792 46 530,200 3,623,050
Dreyer 1,213,397 87 351,400 2,990,728
Foster 1,149,705 76 390,100 3,771,834
Conclusion
The number of incentive plans is too many and too lenient in their
interpretation when measuring meeting of goals. Overly generous
compensation awards result.
It is time for us to voice our opinion on compensation limits used for
senior management. Seeking guide lines would be a prudent board policy
since the guide lines would reflect the views of the real owners, the
shareholders.
YOUR DIRECTORS' POSITION
Your Board of Directors strongly disagrees with the proponent's view
of your company and of how our shareowners have fared. SBC has
delivered excellent results for its shareowners, producing a total
return of 741 percent (stock price appreciation plus reinvested
dividends) since its divestiture from AT&T in 1984 -- the best of any
of the regional Bell companies and significantly better than the 405
percent total return for the S&P 500 stock index during the same
period. Total return is one of the best means by which a shareowner
can measure his or her success, yet it is conspicuously absent from
the proponent's analysis.
The proponent also ignores other financial results that typically play
key roles in evaluating the company's performance, including, for
example, the company's dramatic increases in earnings. Through its
earnings strategies, your company has registered double digit
percentage earnings increases in each of the past three years, 14.9
percent in 1994 alone, a record unmatched by any other former Bell
company. Your company has achieved this performance by anticipating
and responding to changes in a difficult operating environment, which
in recent years has included technological advances, regulatory
changes and an expansion of competition and markets. Your company has
met these challenges by controlling costs, focusing on improved
service, and diversifying into high-growth areas such as wireless
services and international communications.
While avoiding any reference to these significant results, the
proponent relies on misleading data that bears little relevance to the
proposal. An examination of book values or debt ratios, taken out of
the context of the overall financial results, has little value.
Moreover, the proponent's discussion of book values and debt ratios
ignores the impact of changes in the accounting standards relating to
postretirement benefits, postemployment benefits and income taxes,
which were mandated for all U.S. corporations. These accounting
changes affected the financial results beginning in 1993, limiting the
value of direct comparisons between 1984 and 1993 financial results.
For example, without the change in the accounting rules, the book
value of the company for 1993 would have been $16.15 per share, an
increase of $4.44 per share or 37.9 percent over 1983 (not the 8.28
percent increase put forth by the proponent), and the debt ratio would
have decreased to 41.38 percent (not increased by 8.5 percent as
indicated by the proponent).
The proponent also asserts that the dividend increases in the last
three years have "fallen to average of 3 percent from 6.8 percent in
the prior six years." The proponent fails to recognize that a
reduction in the rate of dividend growth allows the company to invest
more funds in its business, including diversification and expansion
efforts -- growth that we believe will increase our earnings and our
long term returns to our shareowners. Similarly, as we have expanded
into new operating areas and faced new competition and tough
regulatory bodies, our operating margins have narrowed; however, as
shown by our earnings and stock growth, your company's responses to
these challenges has allowed it to continue to add significant value
for our shareowners.
Your Board of Directors believes that the company could not have
achieved this success without the highly talented group of employees
who serve the company. Your Board of Directors believes it is in the
best interests of the company and its shareowners that the company be
served by experienced and proven officers and employees. To attract
and retain these highly sought-after individuals, the company provides
a competitive compensation package (described beginning on page 9)
developed in consultation with a nationally recognized compensation
and benefits consulting firm.
Moreover, in recent years your Board has placed significantly more
emphasis on incentive based compensation. This is compensation which
is only paid if specific performance objectives are achieved,
rewarding our management and employees only when our shareowners
benefit. When the company's performance objectives are not met, this
compensation is reduced or eliminated. Similarly, when shareowners
reap rewards through the exceptional performance of our employees,
your Board believes these employees should be appropriately rewarded.
Your Board believes that it is crucial that it retain the flexibility
to develop compensation programs which are designed to encourage the
building of value for our shareowners. It is only in this way that
your company may attract and retain those persons who are most likely
to develop and execute the strategies necessary to enhance the
investment each of us has in SBC.
ACCORDINGLY, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE
SHAREOWNER PROPOSAL.
SHAREOWNER PROPOSAL C
(ITEM 6 ON PROXY CARD)
Rabbi Benno M. Wallach of 19803 White Dove Trail, P.O. Box 246,
Crosby, Texas 77532, the owner of 1,000 shares of Common Stock, has
indicated he intends to propose the following resolution for action at
the Annual Meeting:
WHEREAS it is the corporation's current practice to report
stockholders' votes on proposals submitted at the annual meeting as
either affirmative or negative, and
WHEREAS such reportage may present a distorted perspective of the true
desires of the stockholders, therefore be it hereby
RESOLVED, that is the sense of the shareholders that their interest
will best be served if the outcome of the voting at the corporation's
annual meeting, and all future annual meetings, will be reported in
the following manner:
A. The number of votes cast affirmatively by voting stockholders for
a specific proposal, and the percentage of the total vote this
constitutes; and
B. The number of votes cast by voting stockholders against a specific
proposal, and the percentage of the total vote this constitutes; and
C. The number of votes cast as abstentions on a specific proposal by
voting stockholders; and the percentage of the total vote this
constitutes; and
D. The number of votes cast by management, either affirmatively or
negatively, on behalf of stockholders who did not avail themselves of
the right to vote, and the percentage of the total vote this
constitutes,
AND BE IT FURTHER RESOLVED that to effectuate such reporting the
shareowners request the appropriate corporate decision makers to
institute above outlined procedures beginning with the reporting of
the voting results of the 1995 annual meeting.
Shareowner's Supporting Statement
Under the current system of voting it is entirely possible that
management can impose its will on a proposal even though the majority
of the voting stockholders are opposed to it. While it may be
necessary to retain the current voting system in order to carry on the
orderly administration of the corporation's work, the proposed system
of reportage will indicate whether and in what fashion management is
actually carrying out the desires of the stockholders. This method of
reporting may also persuade stockholders who usually do not vote,
fearing that their votes are unimportant, to avail themselves of the
franchise in the future.
If you agree, please mark your proxy FOR this proposal.
YOUR DIRECTORS' POSITION
Your Board of Directors believes this proposal would require an
unjustified expense of your company.
Under present practices, the company publicly reports shares voted for
and against all matters acted upon at the meeting, as well as
abstentions. This shareowner proposal would require the company to
also break down and separately count the different methods used by
shareowners to indicate their votes. Specifically, the proxy card
allows shareowners to instruct the Proxy Committee as to how their
shares are to be voted by checking individual boxes for, against, or
abstain with respect to each proposal, or the shareowners may vote by
signing the card without checking the boxes. If the proxy card is
signed without boxes being checked, the proxy card expressly provides
that the shares will be voted in accordance with the recommendations
of your Board, also described on the proxy card. If a shareowner
chooses for any reason not to vote or submit his or her proxy, the
shareowner's shares will not be voted by management nor may any other
person vote the shares. This proposal would require the company to
count and report the number of shares voted by shareowners who check
the boxes separately from shareowners who voted solely by signature on
the proxy cards.
The proposal would require the expenditure of over $100,000 in
additional tabulation and programming expenses to be able to
separately identify the methods by which shares were voted. Your
Board believes this would be an inappropriate use of the company's
assets. This method of voting is universally used and accepted by
publicly held companies and brokerage houses in the United States. It
serves no purpose to examine the personal methods by which each of our
1 million shareowners provide their voting directions.
ACCORDINGLY, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE
SHAREOWNER PROPOSAL.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Human Resources Committee, composed entirely of independent,
outside Directors, is responsible for establishing and administering
SBC's policies involving the compensation of officers. No employee of
SBC serves on the Committee. During the 1994 fiscal year the members
of the Committee were (and are currently): Jack S. Blanton (Chairman),
August A. Busch III, Jess T. Hay and Admiral Bobby R. Inman.
Mr. Busch is Chairman of the Board and President of Anheuser-Busch
Companies, Inc., where Mr. Whitacre also serves as a member of the
Board of Directors.
EXECUTIVE COMPENSATION
Report of the Human Resources Committee on Executive Compensation
The Human Resources Committee of the Board of Directors has furnished
the following report with respect to executive compensation for 1994:
The Human Resources Committee's responsibilities include establishing
SBC's policies governing the compensation of officers and other key
executives of SBC. The Committee is composed of four non-employee
Directors.
The Committee's principal objective in establishing compensation
policies is to develop and administer a comprehensive program designed
to attract and retain outstanding managers who are most likely to
enhance the profitability of SBC and create value for our shareowners.
The policies are designed to attract and retain high-quality
executives, to encourage them to make career commitments to SBC and to
accomplish SBC's short and long term objectives. To achieve these
results, the Committee, in consultation with a nationally recognized
compensation and benefits consulting firm, has developed a
compensation program that combines annual base salaries with annual
and long term incentives principally tied to the performance of SBC
and SBC's Common Stock. The principles used by the Committee in
developing the program include the following:
In order to align the financial interests of SBC's executives
with those of SBC and its shareowners, a significant portion of
executive compensation should be "at risk" and tied to the achievement
of certain short and long term performance objectives of SBC.
Ownership of SBC's Common Stock by executives should be
encouraged through SBC's compensation program.
Sustained superior performance by individual officers should be
recognized. Superior performance is defined as enhancing the
profitability of SBC and creating value for shareowners. This may be
demonstrated by actions such as increasing revenues, reducing
expenses, efficiently deploying capital, and improving service and
product quality, while always complying with the high ethical
standards established by SBC for the conduct of its officers and
employees.
The Committee is responsible for the establishment of salaries
and bonuses for officers of SBC, including Named Officers employed by
SBC. Similar compensation for officers of subsidiaries, including any
subsidiary officers who may be deemed to exercise key policy making
activities on behalf of SBC, are determined by the Boards of Directors
of the subsidiaries using recommendations and policies set out by the
Committee. The Committee is also responsible for determining long
term awards for the senior managers of SBC and its subsidiaries.
ANNUAL BASE SALARY The Committee has established a policy, which
it continued in 1994, that annual base salaries for officers will be
market-based; that is, the salaries will, generally, be based upon a
review of salaries for similar positions in the 50th percentile of a
group of companies with similar revenues (the "Comparator Group"),
developed in consultation with the Committee's outside compensation
consultant. The majority of the companies selected for salary
comparison purposes are companies having telecommunications or related
operations for which compensation data is available. Accordingly, the
Comparator Group includes the companies in the Stock Performance Graph
on page 34, except for one company with respect to which information
was not available. Where an officer's salary significantly differs
from the market based salary, the Committee's objective is to move the
officer's salary gradually to the market based salary for his or her
position, unless the officer has been assigned to a lower rated
position because of a particular need of the business. The Committee
may, in its discretion, choose to pay above the 50th percentile of the
market because of sustained superior performance.
INCENTIVES In order to create incentives for superior efforts on
behalf of SBC and to allow employees to share in the success of SBC
for which they are responsible, the Committee has decided to make a
significant portion of an officer's total compensation dependent upon
the annual and long term performance of SBC.
Annual Incentives During 1994, officers and other key
executives, other than Mr. Whitacre, participated in an annual
incentive plan administered by the Committee. Under the plan, each
officer may receive an annual bonus contingent upon the yearly
performance of the SBC business to which the officer is assigned.
A target award for each officer and the specific performance
objectives applicable to the officer, composed of earnings goals and
service goals, are established prior to the beginning of the year.
The earnings goals are given approximately three times as much weight
as the service goals. Service goals are based upon the quality of
service provided by the company or its subsidiaries as measured
through surveys. The targets are set with a view toward making an
officer's combined target award and base salary fall between the 50th
and 75th percentile of the Comparator Group, as determined by the
Committee's outside compensation consultant. Officers receive their
full target awards only if the respective earnings and service
objectives for each officer are met or exceeded. If less than the
combined earnings and service objectives are achieved, the target
award will be reduced in progressively increasing proportions. During
1994, the combined earnings and service objectives established for
each of the Named Officers were exceeded.
As part of the annual incentive plan, the Committee has discretion
to award individual officers an additional amount based upon the
performance of SBC and its subsidiaries, an overall evaluation of each
officer's performance, and/or the contribution of the officer to
increasing shareowner value. For the 1994 calendar year, the
Committee made discretionary awards to reflect the outstanding results
achieved by SBC and its subsidiaries and to recognize individual
achievement.
Long Term Incentives SBC, since its inception, has provided stock-
based long term incentives to officers of SBC and major subsidiaries
through the Long Term Incentive Plan. This element of the total
executive compensation program is intended to tie the executive's
financial interests to those of our shareowners through the
establishment of long term performance awards and the payment of
awards in Common Stock or in cash based upon the price of Common
Stock. This plan rewards the achievement of SBC's earnings goals as
well as increases in the price of SBC's Common Stock. The plan
operates by granting each officer, including all of the Named
Officers, a specific number of units, each equivalent in value to a
share of Common Stock, based on the total of all long term type awards
granted to approximately the 50th percentile of the Comparator Group,
as determined by the Committee's outside compensation consultant. In
addition, the Committee, in its discretion, may grant units beyond the
median to persons who have exhibited superior performance during the
prior year (these additional units are for two year performance
periods). At the end of the performance period, a percentage of the
units, not to exceed 100 percent of the units granted, is paid out
(i.e., converted into Common Stock and/or cash), equivalent to the
average percentage achievement of SBC's yearly earnings goals. No
awards are paid out if SBC fails to achieve 80 percent of its average
earnings goals. Various officers, including all of the Named
Officers, received grants of 1994-1996 performance period units. In
addition, based upon the Committee's evaluation of their 1993
performances, including Mr. Whitacre's, as excellent, the Committee
made discretionary grants of units for the 1994-1995 performance
period. (The performance objectives to the 1994-1996 and 1994-1995
units are described below the table titled, "Long Term Incentive Plans
- - Awards in Last Fiscal Year.")
In 1994, SBC's officers received the payout of the Long Term
Incentive Award for the 1991-1993 performance period. The Committee
determined that during this performance period SBC exceeded the
earnings goals set by the Committee. In accordance with a
predetermined formula, 100 percent of the target numbers of units
granted to the officers were distributed in the form of cash and/or
Common Stock, as elected by each officer. Each of the Named Officers
elected to receive his award half in Common Stock and half in cash.
The Committee also recognizes the importance of stock options as a
means to further tie the executive's financial interests directly to
those of our shareowners. As a result, the Board asked the
shareowners to approve the 1992 Stock Option Plan, which they did at
the 1992 Annual Meeting. This program is intended to link the
executives' and shareowners' interests by basing a portion of the
executive's compensation on the performance of SBC's Common Stock. To
strengthen the linkage between executives and shareowners, the
Committee granted additional options to the officers, including all of
the Named Officers, as well as mid-level executives, during the year.
The Committee decided to grant the options by level of responsibility,
rather than individualizing the grants. The Committee granted each
executive in a responsibility level the same number of options as all
other executives in the same level, without regard to other
compensation or the number of options or shares then held by the
executive.
The company also provides several alternatives for its managers to
invest a portion of their salaries and annual incentive awards in SBC
Common Stock, thereby giving these managers an even greater stake in
the performance of SBC. One such opportunity is the Stock Savings
Program, under which mid-level and upper-level managers may receive
stock options based upon the number of shares purchased through the
program with payroll deductions.
COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER The foregoing criteria
were applied by the Committee to determine the compensation for the
Chairman of the Board and Chief Executive Officer, Mr. Whitacre, for
the last fiscal year.
The Committee established Mr. Whitacre's annual base salary for
1994, targeted to the median base salary paid by companies in the
Comparator Group.
Mr. Whitacre's annual incentive bonus is determined under the Key
Executive Officer Short Term Incentive Plan, which was approved by
shareholders at the 1994 Annual Meeting. Under this plan, Mr.
Whitacre may receive an annual bonus contingent upon the yearly
performance of SBC. Annually, performance objectives, composed of
earnings goals and service goals, are established for Mr. Whitacre in
the same manner as the annual incentive awards for other officers.
Mr. Whitacre's target award, which may never exceed two times his
salary, is set with the view of having the combination of his base
salary and 50 percent of his target award fall between the 50th and
75th percentile of the Comparator Group. The Committee has determined
that if the company achieves its objectives, Mr. Whitacre will receive
50 percent of his target award; if less than the stated objectives are
achieved, the award is proportionately reduced. In addition, based on
his performance during the year, the Committee may adjust the award,
but in no event may it exceed the target amount.
During 1994, the earnings and service objectives established for Mr.
Whitacre were exceeded. In addition, the Committee determined that
Mr. Whitacre's performance during 1994 was of exceptional benefit to
the company. As a result, Mr. Whitacre received 100 percent of his
target amount.
With respect to the Committee's determination that Mr. Whitacre
performed exceptionally, it notes that during his tenure as Chairman
and Chief Executive Officer, Mr. Whitacre has led the transformation
of the company from a regional telephone company to that of a
diversified, international telecommunications provider. By the end of
1994, approximately 35 percent of the company's earnings came from
operations outside of its telephone subsidiary, the highest percentage
of any former Bell holding company. In addition, under Mr. Whitacre's
leadership, the company extended its record of consecutive annual
earnings increases to 11 years in 1994, a record unmatched by any
other former Bell holding company. During this same period, SBC's
total return (stock price appreciation plus reinvested dividends)
exceeded that of the Standard & Poor's Index and every other former
Bell holding company.
The Committee believes that Mr. Whitacre's leadership was crucial to
SBC's success in 1994 in an industry characterized by technological,
regulatory and competitive changes. SBC's net income (before
extraordinary charges and the cumulative effects of changes in
accounting principles) increased 14.9 percent over 1993, SBC's third
consecutive year of double digit percentage earnings growth; SBC's
cellular subsidiary continued to acquire significant cellular
properties and achieved a market penetration of 7.4 percent at year
end, the best of any major U.S. cellular company and more than double
the industry average; and the number of SBC's telephone subsidiary's
access lines increased by 467,000 during 1994, the largest annual
increase in the company's history. Also during 1994, SBC increased
its international activity, acquiring an indirect 10 percent interest
in one of France's two cellular companies and was selected as a
partner in a major cellular venture in the Republic of Korea.
Mr. Whitacre, along with the other Named Officers, received stock
options and participated in the Long Term Incentive Plan. These
matters are discussed under Long Term Incentives, above.
LIMIT ON DEDUCTIBILITY OF CERTAIN COMPENSATION In 1993 Congress
adopted legislation that prohibited publicly held companies, such as
SBC, from deducting certain compensation paid to a Named Officer that
exceeds $1,000,000 during the tax year. However, if a portion of the
compensation is based upon the attainment of performance goals set by
the Committee pursuant to plans approved by the shareowners, then the
corresponding deduction will not be limited by the legislation. In
compliance with this legislation, the Board of Directors adopted the
Key Executive Officer Short Term Incentive Plan (which was approved by
shareowners at the 1994 Annual Meeting), that will allow SBC to
continue to deduct compensation paid under the plan which might
otherwise be non-deductible. In addition, the Committee has modified
applicable plans to comply with the legislation and retain the
deductibility of executive compensation.
The Human Resources Committee:
Jack S. Blanton, Chairman Jess T. Hay
August A. Busch III Admiral Bobby R. Inman
<TABLE>
Summary Compensation Table
The Summary Compensation Table below contains information concerning annual and
long term compensation provided to the Chief Executive Officer and the other
four most highly compensated executive officers of SBC (the "Named Officers")
for services in all capacities to SBC, including service as an officer of
Southwestern Bell Telephone Company ("SWBT"), for the fiscal years ending
December 31, 1994, 1993, and 1992.
<CAPTION>
-------LONG TERM COMPENSATION----
---------ANNUAL COMPENSATION---------- ---AWARDS---------- -PAYOUTS-
Name and Other Rest- Number LTIP All
Principal Position Year Salary Bonus ($) Annual ricted of Secu- Payouts Other
($) Compensa- Stock rities (2)($) Compensa-
tion($) Award(s) Underlying tion (3)
($) Options(1) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward E. Whitacre, Jr. 1994 $ 762,000 $ 1,190,000 $ 260,705 $ 0 161,739 $ 1,948,146 $ 41,318
Chairman of the Board 1993 $ 762,000 $ 1,124,000 $ 263,515 $ 0 290,197 $ 2,246,215 $ 40,957
and Chief
Executive Officer 1992 $ 642,000 $ 886,050 $ 208,132 $ 0 243,296 $ 1,363,562 $ 32,644
James R. Adams 1994 $ 428,000 $ 325,000 $ 144,629 $ 0 40,125 $ 842,897 $ 22,831
Group President 1993 $ 428,000 $ 399,000 $ 133,283 $ 0 56,691 $ 982,839 $ 22,670
1992 $ 416,000 $ 399,000 $ 127,708 $ 0 56,714 $ 737,383 $ 21,353
Royce S. Caldwell 1994 $ 325,000 $ 370,100 $ 88,281 $ 0 49,580 $ 366,544 $ 16,787
President and Chief 1993 $ 271,000 $ 234,000 $ 136,383 $ 0 45,455 $ 407,244 $ 14,423
Executive
Officer-SWBT 1992 $ 263,000 $ 187,500 $ 67,096 $ 0 45,130 $ 290,522 $ 13,583
William E. Dreyer 1994 $ 325,500 $ 303,000 $ 87,556 $ 0 31,568 $ 478,469 $ 15,624
Senior Executive Vice 1993 $ 325,500 $ 283,500 $ 104,410 $ 0 46,504 $ 484,797 $ 15,190
President-
External Affairs 1992 $ 301,000 $ 261,000 $ 58,926 $ 0 46,662 $ 349,343 $ 14,596
Charles E. Foster 1994 $ 306,000 $ 301,600 $ 67,658 $ 0 46,559 $ 406,837 $ 16,567
Group President 1993 $ 306,000 $ 258,400 $ 74,556 $ 0 58,757 $ 494,217 $ 16,532
1992 $ 266,000 $ 192,000 $ 59,425 $ 0 46,754 $ 356,242 $ 13,872
<FN>
(1) The number of Options granted in 1992 has been restated to reflect a
two-for-one stock split in May 1993, effected in the form of a stock
dividend. SBC has not issued any stock appreciation rights to the
Named Officers.
(2) The Long Term Incentive Plan ("LTIP") payout is for the 1991 to 1993
performance period. All the Named Officers elected to receive 50
percent of their awards in SBC Common Stock and 50 percent in cash.
During this same time, the market price of SBC Common Stock rose from
$27.88 on January 2, 1991, to $41.50 on December 31, 1993 (adjusted for
the subsequent stock split), resulting in an increase in the value of
Common Stock held by our shareowners of approximately $8.2 billion.
(3) All Other Compensation for 1994 includes the benefits imputed to the
Named Officers with respect to premiums on SBC owned life insurance, as
determined in accordance with IRS guidelines. For Messrs. Whitacre,
Adams, Caldwell and Foster these amounts were $4,742, $2,287, $1,835
and $1,879, respectively. All other amounts reported under this
heading represent employer matching contributions made to the Stock
Savings Plan.
</TABLE>
<TABLE>
Option Grants in Last Fiscal Year
The table below contains estimated present value of the stock options as of
their issue date.
<CAPTION>
Number of
Securities % of Total
Underlying Options Exercise
Options Granted to or Base Expiration Grant Date
Name Granted Employees in Price Date Present
Fiscal ($/Share) Value
Year(2)
<S> <C> <C> <C> <C> <C>
Edward E. Whitacre, 6,244 0.12% $ 40.375 02/01/04 $ 51,138
Jr.
150,000(1) 2.91% $ 41.875 08/01/04 $1,485,000
5,495 0.11% $ 41.875 08/01/04 $ 56,708
James R. Adams 8,030 0.16% $ 40.375 02/01/04 $ 65,766
29,000(1) 0.56% $ 41.875 08/01/04 $ 287,100
3,095 0.06% $ 41.875 08/01/04 $ 31,940
Royce S. Caldwell 3,384 0.07% $ 40.375 02/01/04 $ 27,715
44,000(1) 0.85% $ 41.875 08/01/04 $ 435,600
2,196 0.04% $ 41.875 08/01/04 $ 22,663
William E. Dreyer 1,205 0.02% $ 40.375 02/01/04 $ 9,869
29,000(1) 0.56% $ 41.875 08/01/04 $ 287,100
1,363 0.03% $ 41.875 08/01/04 $ 14,066
Charles E. Foster 9,758 0.19% $ 40.375 02/01/04 $ 79,918
29,000(1) 0.56% $ 41.875 08/01/04 $ 287,100
7,801 0.15% $ 41.875 08/01/04 $ 80,506
<FN>
Reference to grants A, B and C in the following discussion correspond to first,
second and third grants of options, respectively, listed opposite the name of
each of the Named Officers.
The option values in the table represent the estimated present value of the
options as of their issue date. These values were determined by a nationally
recognized compensation and benefits consulting firm in accordance with the
Black-Scholes option valuation model. The material adjustments and assumptions
incorporated in the Black-Scholes model in estimating the value of the options
includes the following:
Options were issued with an exercise price equal to the fair market value
of stock on the date of issuance. The term of each option is ten years
(unless shortened or forfeited due to termination of employment), but no
option may be exercised during the 12-month period following the date of
issuance.
The model assumed an interest rate of 5.97 percent in calculating the value
of the options in grant A and 7.24 percent for grants B and C. These
interest rates represent the interest rates on Treasury securities with
maturity dates corresponding to that of the option terms. Volatility was
calculated using daily stock prices for the one-year period prior to the
issuance date, resulting in 23 percent volatility for grant A, and
26 percent volatility for grants B and C. The model reflected annual per
share dividends at the date of issuance of $1.51 per share for grant A, and
$1.58 per share for grants B and C.
The present value of each option was reduced approximately 4 percent for
grants A and C, and 8 percent for grant B, to reflect the probability of
forfeiture due to termination prior to vesting; and approximately
16 percent for grant A, 14 percent for grant B, and 15 percent for grant C,
to reflect the probability of a shortened option term due to termination of
employment prior to the option expiration date.
The ultimate value of the options will depend on the future market price of
SBC's stock which cannot be forecast with reasonable accuracy. The actual
value, if any, an optionee will realize upon exercise of an option will depend
on the excess of the market value of SBC's common stock over the exercise price
on the date the option is exercised.
(1)One-third of these options vest on each anniversary of the grant date. As
of December 31, 1994, none of these options have vested.
(2) Based on a total of 5,155,660 options granted to employees in 1994.
</TABLE>
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The purpose of the following table is to report exercises of stock options and SARS by
the Named Officers during 1994 and the value of their unexercised stock options and
SARS as of December 31, 1994. None of the Named Officers exercised stock options
during 1994. SBC has not issued any SARS to the Named Officers.
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Shares Value Year-End (#) at Fiscal Year-End
Acquired Realized (1) ($)
Name on ($) Exercisable Unexercisable Exercisa- Unexercis-
Exercise ble able
(#)
<S> <C> <C> <C> <C> <C> <C>
Edward E. Whitacre, Jr. 0 $0 310,824 391,738 $ 1,395,333 $ 570,203
James R. Adams 0 $0 74,152 84,124 $ 411,768 $ 109,078
Royce S. Caldwell 0 $0 47,060 93,579 $ 237,839 $ 109,078
William E. Dreyer 0 $0 50,559 75,567 $ 267,341 $ 109,078
Charles E. Foster 0 $0 62,094 90,558 $ 260,100 $ 109,078
<FN>
(1) Value of Unexercised Options based on the year end, December 30, 1994,
stock price of $40.375.
</TABLE>
<TABLE>
Long Term Incentive Plans-Awards in Last Fiscal Year
The table below reports Long Term units granted under the Long Term Incentive
Plan during 1994.
<CAPTION>
Number of Performance or Estimated Future Payouts
Shares, Units Other Period under Non-Stock Price-Based Plans
or Until
Name Other Rights Maturation or Threshold Target Maximum (#)
(#) Payout (#) (#)
<S> <C> <C> <C> <C> <C>
Edward E. Whitacre, 20,677 1994-1996 16,542 20,677 20,677
Jr.
24,109 1994-1995 19,287 24,109 24,109
James R. Adams 9,195 1994-1996 7,356 9,195 9,195
3,477 1994-1995 2,782 3,477 3,477
Royce S. Caldwell 8,961 1994-1996 7,169 8,961 8,961
3,628 1994-1995 2,902 3,628 3,628
William E. Dreyer 6,950 1994-1996 5,560 6,950 6,950
3,602 1994-1995 2,882 3,602 3,602
Charles E. Foster 5,181 1994-1996 4,145 5,181 5,181
2,685 1994-1995 2,148 2,685 2,685
<FN>
This table reports units granted to the Named Officers during the last fiscal
year, applicable to the performance periods indicated. Each unit is equal in
value to one share of Common Stock. At the end of a performance period, a
percentage of the units are converted into cash and/or Common Stock, based
upon the achievement of performance levels. Each year's performance
achievements are expessed as a percentage and then averaged over the
performance period. The resulting percentage is applied to the target
number of units to determine the number which are actually converted. If
SBC does not achieve at least an 80 percent performance level average
(which is equivalent to the threshold award), the units become worthless
and none are converted. The maximum number of units that may be converted
may not exceed 100 percent of the target number of units.
For 1994, the performance level percentage was equal to the percentage of
the earnings objective achieved. For 1995 and subsequent years, the
performance objective will be based on a target Value Added. Value Added
is defined as earnings before interest and amortization of intangibles,
minus a computed charge for the capital invested in the company by holders
of debt and equity. For consistency, yearly Value Added achievement levels
are converted to percentages which are comparable to earnings achievement
percentages.
</TABLE>
PENSION PLANS
SBC has a noncontributory pension plan for management employees known as
the Pension Benefit Plan. Under the plan, retirement for officers and
other executives is mandatory at age 65. Retirement before age 65 can
be elected when specified age and net credited service requirements are
met. Annual pensions are computed using the greater result of two
separate formulas (Formula A and Formula B). Under Formula A, the
pension is the sum of 1.6 percent of the average pay for the five years
ended December 31, 1993, multiplied by the number of years of service
prior to January 1, 1994, plus 1.6 percent of pay subsequent to
December 31, 1993. Under Formula B, the pension is the sum of
1.6 percent of the average pay for the five years ended December 31,
1990, multiplied by the number of years of service prior to January 1,
1991 (with five years of additional age and service), plus 1.6 percent
of pay from January 1, 1991, through December 30, 1991. Formula B was
adopted as part of an early retirement incentive in 1991. Continued
service or additional compensation or age after December 30, 1991, will
not result in any additional benefits under Formula B. Pension amounts
are not subject to reduction for Social Security benefits or any other
offset amounts. The Internal Revenue Code places certain limitations on
pensions that may be paid under federal income tax qualified plans.
Benefits that are so limited are restored from the general funds of SBC.
Under the Pension Benefit Plan, the pay used to determine pension
amounts is computed without regard to compensation that has been
deferred under nonqualified deferral plans; however, the deferral plans
contain provisions that compensate the participants for any loss of
income from the pension plan. If they continue in their current
positions at their current levels of compensation and retire at the
mandatory retirement age of 65, the total estimated annual pension
amounts from the Pension Benefit Plan, together with compensating
payments under the nonqualified deferral plans, and the net credited
years service at retirement under the plan for Messrs. Whitacre, Adams,
Caldwell, Dreyer, and Foster would be $131,100 (44 years), $127,500 (42
years), $114,100 (41 years), $50,700 (18 years) and $121,300 (40 years),
respectively.
The Senior Management Supplemental Retirement Income Plan establishes a
target annual minimum retirement benefit for all officers and certain
senior managers (employees at the fifth level of management and above)
stated as a percentage of average annual salaries and Short Term
Incentive Awards averaged over a specified averaging period described
below ("Average Annual Compensation"). The percentage is increased by
.71 percent, for each year of actual service in excess of, or decreased
by 1.43 percent for each year of actual service below, 30 years of
service for executive officers and other officers and 35 years of
service for other senior managers. Average Annual Compensation is
determined by averaging salaries and Short Term Incentive Awards earned
during the 36 consecutive month period out of the last 120 months
preceding retirement that generates the highest average earnings. The
target percentages of Average Annual Compensation are: Chairman of the
Board and Chief Executive Officer, 75 percent; certain executive
officers, 70 percent; other executive officers and other officers,
60 percent; and other senior managers, 50 percent. The Supplemental
Retirement Income Plan pays the difference, if any, between the target
amount and what would be payable under the Pension Benefit Plan if the
pension plan's payments were computed without regard to deferrals. (The
Pension Benefit Plan calculation will generally exclude additional
benefit amounts provided under Formula B above.) If they continue in
their current positions at their current levels of salary and short term
incentive targets and retire at the mandatory retirement age of 65, the
estimated annual amounts that will be paid in accordance with the Senior
Management Supplemental Retirement Income Plan for Messrs. Whitacre,
Adams, Caldwell, Dreyer and Foster would be $1,683,600, $402,700,
$414,200, $313,900 and $282,100, respectively. To avert a loss of
credit because of a break in service, the company, in calculating Mr.
Dreyer's benefits under the plan, will recognize Mr. Dreyer's prior
service with the company and also recognize his prior service with a
former affiliate of the company (estimated to give him a total of 44
years of actual service at retirement).
CONTRACTS WITH MANAGEMENT
On January 27, 1989, the Board of Directors approved change of Control
Severance Agreements (the "Agreements") with each of the officers named
in the summary compensation table as well as certain other officers.
The purpose of the Agreements is to reinforce and encourage the officers
to maintain objectivity and a high level of attention to their duties
without distraction from the possibility of a change in control of SBC.
These Agreements provide that in the event of a change in control of
SBC, as that term is defined in the Agreements and summarized below,
each officer is entitled to certain benefits (the "Severance Benefits")
upon the subsequent termination or constructive termination of his or
her employment, unless such termination is due to death, disability, or
voluntary retirement; or unless the termination is by SBC for cause (as
defined in the Agreements) or is by the officer for other than good
reason (as defined in the Agreements).
The Severance Benefits include the payment of the officer's full base
salary through the date of termination plus all other amounts to which
the officer is entitled under any compensation plan of SBC in effect
immediately prior to the change in control. Also, each officer is
entitled to a lump sum payment equal to three (in the case of Messrs.
Whitacre, Adams, Caldwell, and Foster) or two (in the case of Mr.
Dreyer) times the sum of (a) the officer's annual base salary in effect
immediately prior to termination, (b) the most recently paid amount
under the Short Term Incentive Plan, and (c) the cash value of the Long
Term Incentive Plan target award applicable to each officer's salary
grade for the most current performance period. If any officer should
reach his normal retirement age prior to three years (for Messrs.
Whitacre, Adams, Caldwell, and Foster) or two years (Mr. Dreyer)
following the change in control, the lump sum payment would be reduced
pro rata. Additionally, each officer will be provided with life and
health benefits, including supplemental medical, vision and dental
benefits, for three years from the date of termination, if not otherwise
entitled to the same.
In the event any payment or benefit received or to be received by an
officer in connection with a change in control or the termination of his
or her employment, whether pursuant to his or her Agreement or otherwise
(the "Total Payments"), would be claimed to be an excess parachute
payment as defined in the Internal Revenue Code and thus subject to the
20 percent federal excise tax, the amount of the benefits payable under
his or her Agreement will be reduced until the Total Payments are no
longer subject to such excise tax or until the payments under his or her
Agreement are zero, if such reduction results in the officer's receipt
of a greater net after-tax benefit than if such officer had received the
full severance benefits under the Agreement.
Under the Agreements, in general, change in control is deemed to occur
if (A) anyone (other than an employee benefit plan of SBC) acquires more
than 20 percent of SBC's stock, or (B) if within a two year period, the
individuals who were Board members at the beginning of such period cease
to constitute a majority of the Board, or (C) SBC's shareowners approve
a merger or consolidation which results in someone other than the
shareowners immediately prior thereto holding more than 20 percent of
the voting power of the surviving entity, or the shareowners approve the
complete liquidation of SBC or the disposition of substantially all of
SBC's assets.
STOCK PERFORMANCE GRAPH
Comparison of Five Year Cumulative Total Return*
SBC, S&P 500 and Peer Group
(Stock Performance Graph appears here.)
Data
Points 1989 1990 1991 1992 1993 1994
in
Dollars
SBC $100.00 $92.12 $111.64 $133.67 $155.54 $157.08
S&P 500 $100.00 $96.89 $126.28 $135.88 $149.52 $151.55
Peer $100.00 $97.24 $99.77 $109.11 $128.49 $122.41
Group
Assumes $100 invested on January 1, 1990, in SBC Common Stock, S&P 500
Index, and a Peer Group of other large U.S. telecommunications companies
(Ameritech Corporation, Bell Atlantic Corporation, BellSouth
Corporation, NYNEX, Pacific Telesis Group and US West, Inc.).
The index of Telecommunications Companies ("Peer Group") is weighted
according to the market capitalization of its component companies at the
beginning of each period. Total return equals price appreciation plus
reinvestment of dividends on a quarterly basis.
SHAREOWNER PROPOSALS
Proposals of shareowners intended for presentation at the 1996 Annual
Meeting must be received by SBC for inclusion in its Proxy Statement and
form of Proxy relating to that meeting by November 14, 1995. Such
proposals should be sent to the Secretary of SBC at 175 E. Houston,
Room 1140, San Antonio, Texas 78205.
Shareowners whose proposals are not included in the Proxy Statement but
who still intend to submit a proposal at the 1996 Annual Meeting, and
shareowners who intend to submit nominations for Directors at the
meeting, are required to notify the Secretary of SBC of their proposal
or nominations and to provide certain other information not less than 60
days, nor more than 90 days, prior to the meeting, in accordance with
SBC's Bylaws. Additional information may be obtained from the
Secretary's Office at the above address.
OTHER BUSINESS
The Board of Directors are not aware of any matters which will be
presented at the meeting for action on the part of shareowners other
than those described herein.
A COPY OF SBC'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
ON FORM 10-K FOR THE YEAR 1994 MAY BE OBTAINED WITHOUT CHARGE UPON
WRITTEN REQUEST TO THE ASSISTANT DIRECTOR-EXTERNAL REPORTING, 175 E.
HOUSTON, 9th FLOOR, SAN ANTONIO, TEXAS 78205.
By Order of the Board of Directors
/s/ Judith M. Sahm
Judith M. Sahm
Secretary
March _____, 1995
APPENDIX
(SBC LOGO) Southwestern Bell Corporation
Edward E. Whitacre, Jr.
Chairman and Chief Executive Officer
Dear Shareowner:
It is my pleasure to invite you to the 1995 Annual Meeting of
Shareowners of Southwestern Bell Corporation. The meeting will
be held at 9:00 a.m. on Friday, April 28, 1995, at the George R.
Brown Convention Center, 1001 Avenida de las Americas, Houston,
Texas. Admission to the meeting will begin at 8:00 a.m. If you
plan to attend, please mark the appropriate box on the attached
proxy card. A map showing directions to the meeting site is
shown on the reverse side of this admission ticket. If you plan
to attend, please present this ticket for your admission to the
meeting.
The enclosed Notice of Annual Meeting of Shareowners and the
Proxy Statement cover the formal business of the meeting, which
includes six proposals: the election of Directors, the
ratification of the appointment of the independent auditors, the
approval of the change in the company's name, and three
shareowner proposals. Also during the meeting, management will
address other corporate matters which may be of interest to you
as a shareowner.
It is important that your shares are represented at this meeting,
whether or not you attend the meeting in person, and regardless
of the number of shares you own. To be sure your shares are
represented, we urge you to complete and mail the attached proxy
card as soon as possible. If you attend the meeting and wish to
vote in person, the ballot that you submit at the meeting will
supersede your proxy.
Sincerely,
/s/ Edward E. Whitacre, Jr.
Edward E. Whitacre, Jr.
March , 1995
Admission Ticket
Southwestern Bell Corporation
Annual Meeting of Shareowners
April 28, 1995
George R. Brown Convention Center
1001 Avenida de las Americas
Houston, Texas 77010
Detach Proxy Card Here
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - -
(FACE OF PROXY CARD)
Directors recommend a vote "FOR" the Director proposals 1, 2, and 3.
1.Election of Directors
For _____ Withhold Authority _____ Exception_____
*Exception(s):__________________________________________
2. Ratification of Independent Auditors
For _____ Withhold Authority _____ Exception_____
3. Change of Company's Name
For _____ Withhold Authority _____ Exception_____
To have your shares voted for all Director nominees mark the "For" box on
item 1. To withhold authority to vote your shares for all nominees,
mark the "Withhold Authority" box. If you do not wish your shares
voted for a Authority" box. If you do not wish your shares voted
for a particular nominee, mark the "Exception" box and enter the
name(s) of the exception(s) in the space provided
If you plan to attend the annual meeting please mark here ______.
Directors recommend a vote "AGAINST" the shareowner proposals A, B and C
4. Shareowner Proposal A
For _____ Withhold Authority _____ Exception_____
5. Shareowner Proposal B
For _____ Withhold Authority _____ Exception_____
5. Shareowner Proposal C
For _____ Withhold Authority _____ Exception_____
If you have noted either an Address Change or Comments on the other side
of this card, please mark here. ____
Please sign exactly as name or names appear on this proxy If stock is
held jointly, each holder should sign. If signing as attorney,
trustee, executor, administrator, custodian guardian or corporate
officer, please give full title.
DATE_________________________________
SIGNATURE_____________________________
Votes MUST be indicated (X) in Black or Blue ink
Please Sign, Date and Return the Proxy Card Promptly Using the Enclosed
Envelope
(Reverse of Letter to Shareowners)
A map detailing the location of the Annual Meeting will appear on the
reverse side of Mr. Whitacre's letter to shareowners:
(REVERSE OF PROXY CARD)
(Logo) Southwestern Bell Corporation PROXY/VOTING
INSTRUCTION CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING ON APRIL 28, 1995.
The undersigned hereby appoints Edward E. Whitacre, Jr., Ruben R.
Cardenas, Tom C. Frost and each of them, proxies, with full power
of substitution, to vote all common shares of the undersigned in
Southwestern Bell Corporation at the Annual Meeting of
Shareowners to be held on April 28, 1995, and at any adjournment
thereof, upon all subjects that may properly come before the
meeting including the matters described in the proxy statement
furnished herewith, subject to the directions indicated on the
reverse side of this card. IF SPECIFIC DIRECTIONS ARE NOT GIVEN
WITH RESPECT TO THE MATTERS TO BE ACTED UPON AND THE SIGNED CARD
IS RETURNED, THE PROXIES WILL VOTE FOR THE ELECTION OF ALL LISTED
NOMINEES AND IN ACCORDANCE WITH THE DIRECTORS' RECOMMENDATIONS ON
THE OTHER SUBJECTS LISTED ON THE REVERSE SIDE OF THIS CARD, AND
AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE MEETING. (If you have indicated any changes or voting
exceptions in this paragraph, please mark the box for
"Exceptions" on the reverse side of this card in order to
expedite processing.)
The Board of Directors recommends a vote "FOR" each of the three
Director proposals and "AGAINST" each of the three Shareowner
proposals listed on the reverse side of this card.
The nominees for the Board of Directors are Jack S. Blanton,
August A. Bush III, Tom C. Frost, Jess T. Hay, and
Bobby R. Inman.
PLEASE SIGN ON THE REVERSE SIDE OF THIS CARD AND RETURN PROMPTLY
TO P.O. BOX 1138, NEWARK, N.J. 07101-9758. IF YOU DO NOT SIGN
AND RETURN A PROXY, OR ATTEND THE MEETING AND VOTE BY BALLOT,
YOUR SHARES CANNOT BE VOTED.
This proxy card also provides voting instructions for shares held
in the Dividend Reinvestment Plan and, if registrations are
identical, for shares held in the Savings Plan, Savings and
Security Plan, and PAYSOP.
Southwestern Bell
Corporation
P.O. Box 1138
Newark, N.J. 07101-9758
General comments:
(If you have written in the above space, please mark the box for
"Address Change/Comments" on the reverse side of this card so
that your comments can be directed to the appropriate group for
review.)
(Continued, and please sign on reverse side.)
(Logo) Southwestern Bell Corporation
ANNUAL MEETING OF SHAREOWNERS TO BE HELD APRIL 28, 1995.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Edward E. Whitacre, Jr., Ruben R.
Cardenas, Tom C. Frost and each of them, proxies, with full power of
substitution, to vote all common shares of the undersigned in
Southwestern Bell Corporation at the Annual Meeting of Shareowners to
be held on April 28, 1995, and at any adjournment thereof, upon all
subjects that may properly come before the meeting including the
matters described in the proxy statement furnished herewith, subject
to the directions indicated on the reverse side of this card. IF
DIRECTIONS ARE NOT GIVEN AND THE SIGNED CARD IS RETURNED, THE PROXIES
WILL VOTE FOR THE ELECTION OF ALL LISTED NOMINEES AND IN ACCORDANCE
WITH THE DIRECTORS' RECOMMENDATIONS ON THE OTHER SUBJECTS LISTED ON
THE REVERSE SIDE OF THIS CARD, AND AT THEIR DISCRETION ON ANY OTHER
MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
The Board of Directors recommends a vote "FOR" each of the three
Director proposals and "AGAINST" each of the three Shareowner
proposals listed on the reverse side of this card.
The nominees for the Board of Directors are Jack S. Blanton,
August A. Bush III, Tom C. Frost, Jess T. Hay, and Bobby R. Inman.
(REVERSE SIDE OF CARD)
Directors recommend a vote "FOR" the Director proposals 1, 2, and 3.
1. Election of Directors
For _____ Withhold Authority _____ Exception_____
*Exception(s):__________________________________________
2. Ratification of Independent Auditors
For _____ Withhold Authority _____ Exception_____
3. Change of Company's Name
For _____ Withhold Authority _____ Exception_____
To have your shares voted for all Director nominees mark the "For" box on item
1. To withhold authority to vote your shares for all nominees, mark the
"Withhold Authority" box. If you do not wish your shares voted for a
Authority" box. If you do not wish your shares voted for a particular
nominee, mark the "Exception" box and enter the name(s) of the exception(s) in
the space provided
If you plan to attend the annual meeting please mark here ______.
Directors recommend a vote "AGAINST" the shareowner proposals A, B and C
4. Shareowner Proposal A
For _____ Withhold Authority _____ Exception_____
5. Shareowner Proposal B
For _____ Withhold Authority _____ Exception_____
5. Shareowner Proposal C
For _____ Withhold Authority _____ Exception_____
If you have noted either an Address Change or Comments on the other side of
this card, please mark here. ____
Please sign exactly as name or names appear on this proxy If stock is held
jointly, each holder should sign. If signing as attorney, trustee, executor,
administrator, custodian guardian or corporate officer, please give full
title.
DATE_________________________________
SIGNATURE_____________________________
SIGNATURE_____________________________
IMPORTANT: Please sign your name(s) exactly as shown
hereon.
Votes MUST be indicated (X) in Black or Blue ink
PLEASE SIGN, DATE AND RETURN YOUR PROXY TODAY
