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(c)
or Section 240.14a-12
SBC Communications Inc.
(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(i)(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:
(3)Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it was
determined.):
(4)Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1)Amount Previously Paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:
(SBC LOGO) Notice of 1996
Annual Meeting
and Proxy Statement
SBC Communications Inc.
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
TO BE HELD ON APRIL 26, 1996
TO THE HOLDERS OF COMMON STOCK OF SBC COMMUNICATIONS INC.:
The 1996 Annual Meeting of Shareowners of SBC Communications Inc.
("SBC" or the "Company"), a Delaware Corporation, will be held at
9:00 a.m. on Friday, April 26, 1996, at the Alzafar Shrine
Temple, 901 North Loop 1604 West, San Antonio, Texas. The
purposes of the meeting are to:
1.Elect four Directors to serve three-year terms;
2.Ratify the appointment of Ernst & Young LLP as independent
auditors of SBC for 1996;
3.Approve an amendment to the Restated Certificate of
Incorporation to increase the authorized number of shares of
Common Stock;
4.Approve the SBC Communications Inc. 1996 Stock and Incentive
Plan; and
5.Act upon such other matters as may properly come before the
meeting.
Holders of SBC Common Stock of record at the close of business on
February 27, 1996, are entitled to vote at the meeting and any
adjournment of the meeting. A list of these shareowners will be
available for inspection during business hours from April 11
through April 25, 1996, at 175 E. Houston, San Antonio, Texas,
and will also be available at the Annual Meeting.
By Order of the Board of Directors
/s/ Judith M. Sahm
Judith M. Sahm
Vice President and Secretary
March , 1996
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
SBC COMMUNICATIONS INC.
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 SBC
Communications Inc. for use at the 1996 Annual Meeting of
Shareowners of SBC. The meeting will be held at 9:00 a.m. on
Friday, April 26, 1996, at the Alzafar Shrine Temple, 901 North
Loop 1604 West, San Antonio, 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 12, 1996, to shareowners of record of
SBC's common stock ("Common Stock") at the close of business on
February 27, 1996. Each share entitles the registered holder to
one vote. As of January 31, 1996, there were 609,087,310 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 below. 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 Vice President and
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 name or
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 any of the following SBC employee benefit plans:
the PAYSOP, the Savings Plan ("SP"), or the Savings and Security
Plan ("SSP"); then 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 1996 Annual Meeting: the
election of Directors; the ratification of the appointment of
Ernst & Young LLP as independent auditors of SBC; the approval of
an amendment to the Restated Certificate of Incorporation to
increase the authorized number of shares of Common Stock; and the
approval of the SBC Communications Inc. 1996 Stock and Incentive
Plan.
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 1996.
If you plan to attend the meeting in person, please 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 Financial
Communications at 210-351-2163 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 eight
meetings in 1995. 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. All of the Directors of the Company
attended at least 75 percent of the aggregate number of meetings
of the Board and committees on which each served, except for
Mr. Barnes who, because of a scheduling conflict, missed
satisfying 75 percent attendance by one meeting.
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 1995. 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 two times in 1995. 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 four times in 1995. 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 1995. 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 four times in 1995. It
consists of five non-employee Directors and one employee
Director. This Committee is responsible for making
recommendations to the Board of Directors with respect to
investment policy, dividends, 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 five times in 1995. It
consists of four non-employee Directors. The Human Resources
Committee oversees the management of human resources activities
of SBC, including senior management compensation and the design
of employee benefit 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 Vice President and Secretary, SBC Communications Inc.,
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.
There are no vacancies on the Board.
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 C Directors will expire at the 1996
Annual Meeting, Group A at the 1997 Annual Meeting, and Group B
at the 1998 Annual Meeting. The SBC Board intends to nominate at
the 1996 Annual Meeting the four persons listed as nominees for
Group C, all of whom are incumbent Directors, for election to
three-year terms of office expiring at the 1999 Annual Meeting.
Dr. Sybil C. Mobley, a Group C Director and a member of the Audit
Committee and the Corporate Public Policy and Environmental
Affairs Committee, will retire with the expiration of her term on
April 26, 1996. To take into account the retirement of
Dr. Mobley from the Board, the Board voted to reduce its size to
14 Directors, effective immediately preceding the 1996 Annual
Meeting. Accordingly, only four Directors will be elected at the
Annual Meeting.
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.
(Black and white photographs of each individual director are
placed to the left of the biographical information in the printed
document.)
DIRECTORS TO BE ELECTED AT THE 1996 ANNUAL MEETING
(GROUP C)
JAMES E. BARNES, age 62, is Chairman of the Board, President and
Chief Executive Officer of MAPCO Inc., Tulsa, Oklahoma, and has
served in this capacity since September 1995. He was Chairman of
the Board and Chief Executive Officer since December 1991 and
Chairman of the Board, President and Chief Executive Officer from
May 1986 to 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.
HASKELL M. MONROE, JR., age 64, is Professor of History at The
University of Missouri-Columbia, Columbia, Missouri, and began
service as a senior University Administrator and Faculty Member
in July 1980 as President of The University of Texas at El Paso.
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 57, 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 54, 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 Santa Fe Corporation;
Emerson Electric Co.; and The 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 63, 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 65, 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. Mr. Cardenas is a Director of Cullen/Frost Bankers, Inc.
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 61, 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 Bank, N.A. and Intrust Financial
Corporation. He is a member of the Audit Committee and the
Corporate Development Committee.
CHARLES F. KNIGHT, age 60, is Chairman, President 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 56, 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.
DIRECTORS SERVING UNTIL THE 1998 ANNUAL MEETING
(GROUP B)
JACK S. BLANTON, age 68, 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, 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, Inc.; Baker Hughes
Incorporated; Burlington Northern Santa Fe Corporation; 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 58, 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 68, is Senior 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 65, 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 Group 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; and
Trinity Industries, Inc. He is a member of the Audit Committee
and the Human Resources Committee.
BOBBY R. INMAN, age 64, 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.
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.
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 1995
for these policies were $800 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 $8,154 per non-employee
Director in 1995. Employee Directors receive similar services
and equipment in connection with their service as officers of
SBC.
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 10 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.
Each non-employee Director receives 1,000 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.
COMMON STOCK OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth the beneficial ownership of Common
Stock as of December 31, 1995, held by each Director and each
officer named in the Compensation Charts on pages 24-29. 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.
Total
Options Beneficial
to
Purchase Ownership
Name of Beneficial Common (including
Owner Stock(1) options)(2)
Clarence C. Barksdale 0 3,000
James E. Barnes 0 3,000
Jack S. Blanton (3) 0 51,000
August A. Busch III 0 9,170
Ruben R. Cardenas 0 8,553
Martin K. Eby, Jr. 0 10,000
Tom C. Frost 0 5,164
Jess T. Hay 0 10,000
Bobby R. Inman 0 1,600
Charles F. Knight 0 7,000
Sybil C. Mobley 0 1,738
Haskell M. Monroe, Jr. 0 5,535
Carlos Slim Helu 0 1,000
Patricia P. Upton 0 1,658
Edward E. Whitacre, Jr. 531,444 795,630
Royce S. Caldwell 99,060 129,566
William E. Dreyer 93,503 126,779
James D. Ellis 97,388 144,693
Charles E. Foster 121,038 153,985
All executive officers
and Directors as a
group (consisting of 1,176,014 1,771,103
23 persons, including
those named above)
(1) Represents presently exercisable employee stock options and
those which will become exercisable within 60 days of the date of
this table.
(2) Includes restricted shares held by non-employee Directors,
each of whom has sole voting power but no investment power until
the lapse of the restrictions. Also includes shares held in an
employee benefit plan for Messrs. Whitacre, Caldwell, Dreyer,
Ellis and Foster, who have sole voting power but no investment
power with respect to 577, 195, 54, 605 and 672 shares,
respectively. In addition, Messrs. Barnes, Blanton, Busch,
Frost, Monroe, Whitacre, Caldwell, Dreyer, Ellis and Foster share
voting and investment power with other persons with respect to
2,000, 35,000, 5,044, 88, 4,490, 15,834, 8,122, 6,514, 5,870 and
16,610 shares, respectively.
(3) 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 1996 Annual
Meeting a proposal to amend SBC's Restated Certificate of
Incorporation to increase the authorized number of shares of
Common Stock. Under Delaware law, in order for a proposal to
amend the Restated 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 C 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 1999 Annual Meeting:
James E. Barnes Patricia P. Upton
Haskell M. Monroe, Jr. Edward E. Whitacre, Jr.
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 C 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, 1996. 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.
AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK
(Item 3 on Proxy Card)
Your Board of Directors proposes and recommends the adoption of
an amendment to SBC's Restated Certificate of Incorporation to
increase the number of authorized shares of Common Stock from 1.1
billion shares to 2.2 billion shares. No increase is proposed in
the currently authorized number of preferred shares.
The first paragraph of Article Five of the Restated Certificate
of Incorporation would be amended to read as follows:
ARTICLE FIVE
The aggregate number of shares which the
corporation is authorized to issue is
2,210,000,000 shares, consisting of 2,200,000,000
common shares having a par value of $1 per share
and 10,000,000 preferred shares having a par value
of $1 per share.
At the time of your Company's divestiture from AT&T Corp. in
1984, your Company had approximately 97 million shares of Common
Stock outstanding, out of an authorized 350 million shares. In
1987, SBC declared a 3-for-1 stock split (all SBC stock splits
have been effected in the form of a stock dividend). Following
that stock split, shareowners approved raising the number of
authorized common shares from 350 million to 1,100 million shares
in 1988. Subsequently, in 1993, the Company declared a 2-for-1
stock split. Since that time the number of shares of SBC's
outstanding Common Stock has risen to approximately 609 million
shares, out of the 1,100 million shares authorized, as of the
date of this proxy statement.
In order to have a sufficient additional number of shares of
Common Stock available for issuance in connection with subsequent
stock splits, acquisitions, financings, employee benefit plans,
and other proper corporate purposes, your Directors recommend
increasing the number of authorized shares. Although the Company
has no specific plans at this time for the use of the additional
Common Stock, having such additional authorized shares available
for issuance in the future will give the Company greater
flexibility and would allow such shares to be issued without the
expense and delay of a special shareowners meeting. The
additional Common Stock would be identical to the Common Stock
the Company now has authorized. Holders of these shares do not
have preemptive rights to subscribe to additional securities
which may be issued by the Company.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT OF
ARTICLE FIVE OF SBC'S RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK.
APPROVAL OF THE 1996 STOCK AND INCENTIVE PLAN
(Item 4 on Proxy Card)
Your Board of Directors has unanimously adopted the SBC
Communications Inc. 1996 Stock and Incentive Plan (the "Incentive
Plan") and recommends approval of the plan to our shareowners at
the Annual Meeting.
This Incentive Plan is designed to replace three forms of
incentive compensation previously approved by our shareowners
with the following:
performance shares - previously issued under the Long Term
Incentive Plan, which is now expiring;
performance units - previously issued as annual bonuses
through the Key Executive Officer Short Term Incentive Plan
(your Directors intend to terminate this plan upon approval
of the Incentive Plan); and
stock options - which have been and are issued through the
1992 Stock Option Plan, which has insufficient shares
available to meet the needs of the Company beyond 1996.
In addition to replacing these three forms of incentive
compensation, the new Incentive Plan provides a restricted stock
feature.
As with the programs it replaces, this plan reflects the
principles that underlie SBC's compensation policies:
Incentive compensation should be "at risk," and tied to the
achievement of performance objectives.
Compensation policies should encourage ownership of SBC's
Common Stock by executives.
The terms of the Incentive Plan are summarized below. In
addition, the full text of the Incentive Plan is set forth in the
Appendix to this Proxy Statement. The following summary is
qualified in its entirety by reference to the text of the
Incentive Plan.
Summary of the Incentive Plan
Performance Awards
These types of incentives were previously authorized by the Long
Term Incentive Plan and the Key Executive Officer Short Term
Incentive Plan, and retain most of their key features. The
Incentive Plan will allow a committee of your Directors (the
"Committee") to continue to issue "performance shares" and
"performance units." These are contingent incentive awards which
are converted into stock and/or cash and paid out to the
participant only if specific performance goals are achieved over
performance periods of not less than one year. If the
performance goals are not achieved, the awards are forfeited or
reduced. Performance shares are each equivalent in value to a
share of Common Stock (payable in cash and/or stock), while
performance units are a fixed cash award. In any calendar year,
no participant may receive performance shares having a potential
target payout in shares exceeding two-thirds of 1 percent of the
shares approved for issuance under the plan. Similarly no
participant may receive performance units having a potential
target payout in cash exceeding an amount equivalent to two-
thirds of 1 percent of the approved shares. Unless limited by
the Committee, participants may receive dividend equivalents on
performance shares.
Performance Goals
The performance goals set by the Committee shall include payout
tables, formulas or other standards to be used in determining the
extent to which the performance goals are met, and, if met, the
number of performance shares and/or performance units which would
be converted into stock and/or cash (or the rate of such
conversion) and distributed to participants. The performance
goals may include any of the following criteria or any
combination thereof:
(1) Financial performance of the Company (on a consolidated
basis), of one or more of its subsidiaries, and/or a
division of any of the foregoing. Such financial
performance may be based on net income and/or value added
(after-tax cash operating profit less depreciation and less
a capital charge).
(2) Service performance of the Company (on a consolidated
basis), of one or more of its subsidiaries, and/or of a
division of any of the foregoing. Such service performance
may be based upon measured customer perceptions of service
quality.
(3) The Company's stock price; return on shareowners'
equity; total shareowner return (stock price appreciation
plus dividends, assuming the reinvestment of dividends);
and/or earnings per share.
(4) With respect to the Company (on a consolidated basis),
to one or more of its subsidiaries, and/or to a division of
any of the foregoing: sales; costs; market share of a
product or service; return on net assets; return on assets;
return on capital; profit margin; and/or operating revenues,
expenses or earnings.
The Incentive Plan also contains adjustments for unusual events,
including for example, natural disasters, extraordinary items and
changes in accounting rules, that could affect performance
results.
Stock Options
Your Directors intend to continue to issue options with respect
to shares available for issuance under the 1992 Stock Option Plan
and do not expect to begin issuing options under the Incentive
Plan until after 1996. As with the 1992 Stock Option Plan,
options may be either incentive stock options, within the meaning
of Section 422 of the Internal Revenue Code of 1986 (the "Code"),
or non-qualified options. The Committee shall determine the
number of shares subject to options and all other terms and
conditions of the options. In no event, however, may the
exercise price of a stock option be less than 100 percent of the
fair market value of the Company's Common Stock on the date of
the stock option's grant, nor may any option have a term of more
than ten years. Unless the Committee provides for a later
vesting period, option grants shall vest in equal yearly
increments over a three year period, subject to acceleration in
certain circumstances. During any calendar year, no single
employee may receive options on shares representing more than two
percent of the shares authorized for issuance under the plan.
If the Committee determines that an option recipient is engaging
in competitive activity with the Company or its subsidiaries, the
Committee may cancel any option granted to the recipient.
Restricted Stock
The Incentive Plan adds restricted stock to the incentives
available to the Committee. Each share of restricted stock shall
be subject to such terms, conditions, restrictions, and/or
limitations, if any, as the Committee deems appropriate
including, but not by way of limitation, restrictions on
transferability and continued employment. In order to qualify a
restricted stock grant under Section 162(m) of the Code, the
Committee may condition vesting of the award on the attainment of
performance goals using the same performance criteria as that
used for performance shares and units. No restriction may be for
a period of less than 3 years; provided, however, the Committee
may accelerate the vesting of any such award. No more than
10 percent of the shares authorized for issuance under the
Incentive Plan may be used for restrictive stock grants, and no
manager may receive in any calendar year more than one-third of
1 percent of the shares authorized to be issued under the
Incentive Plan.
Deferrals
Participants may elect to defer receipt of their performance
share or unit payouts under the Incentive Plan. Deferred cash
amounts earn interest at a rate determined by the Company from
time to time, which for 1996 would be 7.6 percent. Deferred
stock distributions have dividend equivalents reinvested in
additional amounts of deferred stock.
Eligibility for Participation
All management employees of the Company or its majority owned
subsidiaries, representing approximately 16,000 managers, are
eligible to be selected to participate in the Incentive Plan.
Actual selection of any eligible manager to participate in the
Incentive Plan is within the sole discretion of the Committee.
Available Shares
The Incentive Plan authorizes the Committee to issue, over a
fifteen year period, awards providing for the issuance of up to
thirty million shares of Common Stock to participants under the
plan. During the first year of the Incentive Plan, incentive
awards may be issued only with respect to no more than 10 percent
of the shares of Common Stock authorized to be issued under the
plan. No more than 40 percent of the shares authorized for
issuance under the Incentive Plan may be issued to participants
as a result of performance share awards or restricted stock
awards.
After December 31, 2010, no awards may be issued, other than
options which replace the remaining terms of existing options.
New Incentive Plan Benefits
To date, the Committee has only issued performance shares and
units under the Incentive Plan, subject to shareowner approval.
These performance awards will be paid to the recipients only upon
the achievement of performance goals established for performance
periods within each of the performance cycles. If the
performance goals are not met, the award will be reduced or
eliminated. These awards are noted below. The dollar value of
these awards is not determinable until the end of the performance
period. The Committee may, in its discretion, reduce any award
prior to payment.
1996- 1996-
1997 1998
Name Cycle Cycle
Edward E. Whitacre, Jr. 19,698 21,453
Royce S. Caldwell 9,586 3,729
William E. Dreyer 5,294 4,326
James D. Ellis 5,049 2,751
Charles E. Foster 5,675 1,622
All other executive 13,504 7,487
officers
All Directors who are not None None
executive officers
All employees, excluding 102,823 36,115
executive officers
In addition, under the Incentive Plan, Mr. Whitacre was assigned
a target performance unit of three million dollars. The
Committee has determined that if the Company achieves its
performance objectives, Mr. Whitacre will receive approximately
one-third of his target performance unit; if less than the stated
objectives are achieved, the award will be forfeited or, at a
minimum, reduced in progressively increasing proportions. In
addition, based on his performance during the year, the Committee
may increase or decrease the award, but in no event may it exceed
the target amount. Other officers are expected to continue to
receive their bonuses under the Short Term Incentive Plan instead
of the Incentive Plan.
Federal Income Tax Matters Relating to Stock Options
The Company believes that, under present law, the following is a
summary of the principal United States Federal income tax
consequences of the issuance and exercise of stock options
granted under the Incentive Plan. This summary is not intended
to be exhaustive and, among other things, does not describe state
or local tax consequences.
A participant will not be deemed to have received any income
subject to tax at the time a non-qualified stock option or an
incentive stock option (within the meaning of Section 422 of the
Code) is granted, nor will the Company be entitled to a tax
deduction at that time.
When a non-qualified stock option is exercised, the participant
will be deemed to have received an amount of ordinary income
equal to the excess of the fair market value of the shares of
Common Stock purchased over the exercise price. The Company will
be allowed a tax deduction in the year the shares are valued, in
an amount equal to the ordinary income which the participant is
deemed to have received.
If an incentive stock option is exercised by a participant who
satisfies certain employment requirements at the time of
exercise, the participant will not be deemed to have received any
income subject to tax at such time, although the excess of the
fair market value of the Common Stock so acquired on the date of
exercise over the exercise price will be an item of tax
preference for purposes of the alternative minimum tax. Section
422 of the Code provides that if the Common Stock is held at
least one year after the exercise date and two years after the
date of grant, the participant will realize a long term capital
gain or loss upon the subsequent sale, measured as the difference
between the exercise price and the sales price.
If Common Stock acquired upon the exercise of an incentive stock
option is not held for one year, a "disqualifying disposition"
results, at which time the participant is deemed to have received
an amount of ordinary income equal to the lesser of (a) the
excess of the fair market value of the Common Stock on the date
of exercise over the exercise price, or (b) the excess of the
amount realized on the disposition of the shares over the
exercise price. If the amount realized on the "disqualifying
disposition" of the Common Stock exceeds the fair market value on
the date of exercise, the gain on the excess of the ordinary
income portion will be treated as capital gain. Any loss on the
disposition of Common Stock acquired through the exercise of
incentive stock options is a capital loss.
No income tax deduction will be allowed to the Company with
respect to shares of Common Stock purchased by a participant
through the exercise of an incentive stock option, provided there
is no "disqualifying disposition" as described above. In the
event of a "disqualifying disposition," the Company is entitled
to a tax deduction equal to the amount of ordinary income
recognized by the participant.
Other Information
The Plan may be amended in whole or in part only by the Board of
Directors or a Committee made up of disinterested directors. In
the event of a Change In Control (as defined in the Incentive
Plan), all options and restricted stock granted under the plan
will become vested and all options will become exercisable, and
all performance shares or units relating to incomplete
performance periods shall be deemed to have achieved their
performance goals.
The closing price of the Company's Common Stock reported on the
New York Stock Exchange for February 1, 1996, was $57.375 per
share.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE
SBC COMMUNICATIONS INC. 1996 STOCK AND INCENTIVE PLAN.
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 1995 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 (the "Committee") of the Board of
Directors has furnished the following report with respect to
executive compensation for 1995:
The Committee's responsibilities include establishing policies
governing the compensation of officers and other key executives
of SBC and its subsidiaries. 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 establishing salaries and
bonuses for officers of SBC, including Named Officers (defined
below) employed by SBC. Similar compensation for officers of
subsidiaries 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 1995, 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 information is available. Accordingly, the
Comparator Group includes, among others, the companies in the
Stock Performance Graph on page 32. 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, at 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 1995, officers and other key executives, other than
Mr. Whitacre, participated in SBC's Senior Management Short Term
Incentive Plan, 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 "value added"
objectives, are established prior to the beginning of the year.
The term "value added" refers to after-tax cash operating profit
less depreciation and less a capital charge, which is designed to
encourage employees to focus on exceeding a specified level of
return. 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 their respective value
added objectives are met or exceeded. If less than the value
added objectives are achieved, the target awards are forfeited
or, at a minimum, reduced in progressively increasing
proportions. During 1995, the value added targets were
substantially met by each of the Named Officers.
As part of the annual incentive plan, the Committee has
discretion to award individual officers additional amounts 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 1995
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 and other key executives of SBC and
certain subsidiaries through the Senior Management Long Term
Incentive Plan. (Its successor, the 1996 Stock and Incentive
Plan is being submitted to shareowners at the 1996 Annual
Meeting). The Long Term Incentive Plan 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 and/or in cash based upon the
price of Common Stock. This plan rewards the achievement of
SBC's earnings goals (value added goals for 1995 and subsequent
years) 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 forms
of 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, at its discretion, may grant units beyond the median
to persons who have exhibited superior performance during the
prior year (these additional units are generally 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), based on the achievement of SBC's value added and/or
earnings goals over a three (or two) year period. No awards are
paid out if SBC fails to achieve certain minimum value added
and/or earnings requirements. Various officers, including all of
the Named Officers, received grants of 1995-1997 performance
units. In addition, based upon the Committee's evaluation of
their 1994 performances, including Mr. Whitacre's, as excellent,
the Committee made discretionary grants of 1995-1996 performance
units. (The performance objectives for the 1995-1997 and 1995-
1996 units are described below the table titled, "Long Term
Incentive Plans - Awards in Last Fiscal Year.")
In 1995, SBC's officers received the payout of the Long Term
Incentive Award for the 1992-1994 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. 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 the responsibility
level of the officer's position.
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 above
managers may receive stock options based upon the number of
shares purchased under the program through 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 1995, targeted
to the median base salary paid by companies in the Comparator
Group.
Mr. Whitacre's annual incentive bonus for 1995 was determined
under the Key Executive Officer Short Term Incentive Plan (the
"KEO Plan"), which was approved by shareowners at the 1994 Annual
Meeting. Under this plan, Mr. Whitacre may receive an annual
bonus dependent upon SBC meeting objectives set by the Committee.
Annually, a performance objective, which for 1995 was a value
added goal, is established for Mr. Whitacre in the same manner as
the annual incentive awards for other officers. Mr. Whitacre's
target award, which may not exceed two times his salary, is set
with the view of having the combined total 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 will be
forfeited or, at a minimum, the target award will be reduced in
progressively increasing proportions. In addition, based on his
performance during the year, the Committee may increase or
decrease the award, but in no event may it exceed the target
award.
During 1995, the value added performance objective established
for Mr. Whitacre was exceeded. In making this determination, the
Committee noted that under Mr. Whitacre's leadership the company
has achieved outstanding financial results while positioning
itself for continued success in a dynamic and rapidly changing
marketplace. In 1995 SBC extended its record of consecutive
annual earnings increases to 12 years (before extraordinary
charges and cumulative effect of accounting changes). During
this same period, SBC's total return (stock price appreciation
plus reinvested dividends) exceeded that of the Standard & Poor's
500 Index and every other former Bell holding company. The
Committee believes Mr. Whitacre's leadership was a significant
factor in the success enjoyed by the Company and its
shareholders.
In 1995, Mr. Whitacre led the Company to its fourth consecutive
year of double-digit earnings growth, reporting an 11.5 percent
increase (before extraordinary charges and cumulative effect of
accounting changes). SBC in 1995 had the highest percentage gain
in revenues of any of the former Bell companies, and leads the
group in revenue growth over the last five years. Southwestern
Bell Telephone Company had its best-ever annual access line
growth, while Southwestern Bell Mobile Systems reached a
9.0 percent end-of-year cellular market penetration, by far the
best among major U.S. cellular companies. To a large extent,
these accomplishments reflect the Company's success in developing
the marketing skills essential to success in an increasingly
competitive and customer-driven marketplace.
The Committee also specially recognized Mr. Whitacre's leadership
in preparing the company to anticipate and respond to the
technological, regulatory and competitive changes it will face in
the future. One important change was the reorganization of the
Company into a single management structure within each of its two
principal markets: the region encompassing SBC's traditional
five-state area (Arkansas, Kansas, Missouri, Oklahoma and Texas)
and a second region encompassing other areas of the U.S. and
international operations. This new structure is designed to
provide a platform for long-term growth by allowing the Company
to respond to customer desires to do business with a
single-source provider of telecommunications services and to
react more quickly to competitive challenges.
The Committee believes Mr. Whitacre is personally responsible for
much of the Company's success, and it wishes to commend Mr.
Whitacre for his leadership. Accordingly, the Committee decided
to award Mr. Whitacre $1,320,000 under the KEO Plan. In
addition to the KEO Plan award, because of Mr. Whitacre's
outstanding performance, the Committee decided to grant Mr.
Whitacre a special cash bonus of $180,000 for 1995.
Mr. Whitacre, along with 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 one million dollars during the tax year. To
the extent compensation is based upon the attainment of
performance goals set by the Committee pursuant to plans approved
by the shareowners, the compensation is not included in the
computation of the limit. The committee intends, to the extent
feasible and where it believes it is in the best interests of SBC
and its shareowners, to attempt to qualify such compensation as tax
deductible. In this regard, the Board of Directors is submitting
the 1996 Stock and Incentive Plan for shareowner approval at the
1996 Annual Meeting, in order to allow certain of the
compensation payable under this plan to be eligible for the
deduction.
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 Chairman of the Board and Chief Executive
Officer and the other four most highly compensated executive officers of SBC
(the "Named Officers") for services in all capacities to SBC, for the fiscal
years ending December 31, 1995, 1994, and 1993.
<CAPTION>
------- Long Term Compensation--
------ Annual Compensation----- ---- Awards---- -Payouts-
Other Restri- Number of
Annual cted Securities
Name and Compensa- Stock Underlying LTIP All Other
Principal Position Year Salary Bonus tion Award(s) Options(1) Payouts(2) Compensation(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward E. Whitacre, 1995 $ 825,000 $ 1,500,000 $ 285,338 $ 0 219,490 $ 2,200,090 $ 45,195
Jr.
Chairman of the 1994 $ 762,000 $ 1,190,000 $ 260,705 $ 0 161,739 $ 1,948,146 $ 41,318
Board and Chief
Executive Officer 1993 $ 762,000 $ 1,124,000 $ 263,515 $ 0 290,197 $ 2,246,215 $ 40,957
Royce S. Caldwell 1995 $ 380,000 $ 450,000 $ 91,970 $ 0 53,954 $ 436,989 $ 20,555
President - 1994 $ 325,000 $ 370,100 $ 88,281 $ 0 49,580 $ 366,544 $ 16,787
Southwestern Bell
Operations 1993 $ 271,000 $ 234,000 $ 136,383 $ 0 45,455 $ 407,244 $ 14,423
William E. Dreyer 1995 $ 330,000 $ 423,000 $ 73,938 $ 0 31,676 $ 591,530 $ 15,840
Senior Executive 1994 $ 325,500 $ 303,000 $ 87,556 $ 0 31,568 $ 478,469 $ 15,624
Vice President- 1993 $ 325,500 $ 283,500 $ 104,410 $ 0 46,504 $ 484,797 $ 15,190
External Affairs
James D. Ellis 1995 $ 315,000 $ 350,400 $ 85,055 $ 0 33,390 $ 523,876 $ 16,537
Senior Executive 1994 $ 295,000 $ 277,500 $ 96,916 $ 0 32,795 $ 499,552 $ 15,382
Vice President
and General 1993 $ 295,000 $ 259,500 $ 92,792 $ 0 50,376 $ 593,301 $ 15,298
Counsel
Charles E. Foster 1995 $ 321,000 $ 260,040 $ 59,914 $ 0 59,367 $ 441,073 $ 17,467
President - SBC 1994 $ 306,000 $ 301,600 $ 67,658 $ 0 46,559 $ 406,837 $ 16,567
Operations 1993 $ 306,000 $ 258,400 $ 74,556 $ 0 58,757 $ 494,217 $ 16,532
<FN>
(1) SBC has not issued any stock appreciation rights to the Named
Officers.
(2) The Long Term Incentive Plan ("LTIP") payout is for the 1992-1994
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 $32.313 on December 31, 1991, to $40.375 on December 30, 1994
(adjusted for the subsequent stock split), resulting in an increase
in the value of Common Stock held by our shareowners of
approximately $4.9 billion.
(3) All Other Compensation for 1995 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, Caldwell, Ellis and Foster, these amounts were $5,595,
$2,315, $1,417 and $2,059, respectively. All other amounts reported
under this heading represent employer matching contributions made to
employee benefit plans.
</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 stock
appreciation rights ("SARs") by the Named Officers during 1995
and the value of their unexercised stock options and SARs as of December 31, 1995.
None of the Named Officers exercised stock options during
1995. 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 ----- Year End---- -at Fiscal Year End(1)-
Acquired
Name on Exercise Value Exercis- Unexercis- Exercis- Unexercis-
Realized able able able able
<S> <C> <C> <C> <C> <C> <C>
Edward E. Whitacre, 0 $0 525,896 396,156 $ 10,737,622 $ 5,016,166
Jr.
Royce S. Caldwell 0 $0 96,640 97,953 $ 1,948,756 $ 1,241,244
William E. Dreyer 0 $0 92,127 65,675 $ 1,910,850 $ 862,409
James D. Ellis 0 $0 95,188 67,389 $ 1,942,425 $ 883,352
Charles E. Foster 0 $0 118,653 93,366 $ 2,341,579 $ 1,140,776
<FN>
(1) Value of Unexercised Options based on the year end, December 29, 1995,
stock price of $57.250.
</TABLE>
<TABLE>
Option Grants in Last Fiscal Year
The table below contains the estimated present value of the stock options as
of their issue date.
<CAPTION>
Number of Percent of
Securities Total Options Exercise
Underlying Granted to or Base Expiration Grant Date
Name Options Employees in Price Date Present Value
Granted Fiscal Year(2) ($/Share)
<S> <C> <C> <C> <C> <C>
Edward E. 5,548 0.07% $ 42.500 02/01/05 $ 53,760
Whitacre, Jr. 150,000(1) 1.85% $ 47.375 08/01/05 $ 1,504,500
63,942 0.79% $ 47.375 08/01/05 $ 668,194
Royce S. Caldwell 2,420 0.03% $ 42.500 02/01/05 $ 23,450
44,000(1) 0.54% $ 47.375 08/01/05 $ 441,320
7,534 0.09% $ 47.375 08/01/05 $ 78,730
William E. Dreyer 1,376 0.02% $ 42.500 02/01/05 $ 13,333
29,000(1) 0.36% $ 47.375 08/01/05 $ 290,870
1,300 0.02% $ 47.375 08/01/05 $ 13,585
James D. Ellis 2,200 0.03% $ 42.500 02/01/05 $ 21,318
29,000(1) 0.36% $ 47.375 08/01/05 $ 290,870
2,190 0.03% $ 47.375 08/01/05 $ 22,886
Charles E. Foster 2,385 0.03% $ 42.500 02/01/05 $ 23,111
40,000(1) 0.49% $ 47.375 08/01/05 $ 401,200
16,982 0.21% $ 47.375 08/01/05 $ 177,462
<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 include 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 10 years
(unless otherwise 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 7.47 percent in calculating the value
of the options in grant A and 6.49 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 21 percent volatility for grant A, and
22 percent volatility for grants B and C. The model reflected annual per
share dividends at the date of issuance of $1.58 per share for grant A, and
$1.65 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, 15 percent for grant B, and 16 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, 1995, none of these options have vested.
(2) Based on a total of 8,101,794 options granted to employees in 1995.
</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 1995.
<CAPTION>
Number of Performance or Estimated Future Payouts
Shares, Other Period Under Non-Stock Price-Based Plans
Units or Until
Name Other Rights Maturation or Threshold Target Maximum
Payout
<S> <C> <C> <C> <C> <C>
Edward E. Whitacre, 21,453 1995-1997 18,235 21,453 21,453
Jr.
20,677 1995-1996 17,575 20,677 20,677
Royce S. Caldwell 9,298 1995-1997 7,903 9,298 9,298
3,584 1995-1996 3,046 3,584 3,584
William E. Dreyer 7,211 1995-1997 6,129 7,211 7,211
2,433 1995-1996 2,068 2,433 2,433
James D. Ellis 6,877 1995-1997 5,845 6,877 6,877
1,988 1995-1996 1,690 1,988 1,988
Charles E. Foster 5,375 1995-1997 4,569 5,375 5,375
1,554 1995-1996 1,321 1,554 1,554
<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 certain value added performance levels. Each year's
performance achievement is assigned a percentage of the target award, and then
the percentages are averaged over the performance period to determine the
percentage of the units to be paid out. If certain minimum average performance
levels are not achieved, the awards are canceled and nothing is paid out. The
maximum number of units that may be converted may not exceed 100 percent of the
target number of units. Value added is defined as after-tax cash operating
profit less depreciation and less a capital charge.
</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). Subject to Internal Revenue Code
limitations on pay used to calculate pensions, under Formula A,
the pension is the sum of 1.6 percent of the average pay for the
five years ended December 31, 1993 (or any prior averaging period
if it would result in a higher benefit), multiplied by the number
of years of service through the end of the averaging period, plus
1.6 percent of pay subsequent to the averaging period. 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, Caldwell, Dreyer, Ellis and Foster would be
$131,069 (44 years), $114,121 (41 years), $50,704 (18 years),
$101,657 (36 years) and $121,301 (40 years), respectively.
The Senior Management Supplemental Retirement Income Plan (which
is not funded by, nor is it a part of, the Pension Benefit 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 their
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. In addition, with respect to
certain executive officers and other officers and senior
managers, in the event the participant retires before reaching
his or her 60th birthday and has less than thirty years of
service, the percentage will be reduced an additional .5 percent
for each month remaining until the participant's 60th birthday.
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, 55 to
60 percent; and certain 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 Formula
A (or if the individual is not eligible for an immediate pension
under Formula A, then the higher of Formula A or Formula B) of
the Pension Benefit Plan if the pension plan's payments were
computed without regard to deferrals. If they continue in their
current positions at their current levels of salary, and based on
their most recent bonuses and they 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, Caldwell, Dreyer,
Ellis and Foster would be $1,899,331, $560,077, $451,887,
$403,260 and $370,123, 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, Caldwell, Ellis 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, Caldwell, Ellis 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) either 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
in Dollars 1990 1991 1992 1993 1994 1995
SBC $100.00 $121.19 $145.10 $168.84 $170.51 $249.79
Standard &
Poor's 500 $100.00 $130.34 $140.25 $154.32 $156.42 $214.99
Index
Peer Group $100.00 $102.60 $112.20 $132.13 $125.94 $191.67
Assumes $100 invested on January 1, 1991, in SBC Common Stock,
Standard & Poor's 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 U S West Communications Group).
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
stock price appreciation plus reinvestment of dividends on a
quarterly basis.
SHAREOWNER PROPOSALS
Proposals of shareowners intended for presentation at the 1997
Annual Meeting must be received by SBC for inclusion in its Proxy
Statement and form of Proxy relating to that meeting by
November 12, 1996. Such proposals should be sent to the Vice
President and 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 1997
Annual Meeting, and shareowners who intend to submit nominations
for Directors at the meeting, are required to notify the Vice
President and 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
Vice President and Secretary's Office at the above address.
OTHER BUSINESS
The Board of Directors is 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 1995 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
Vice President and Secretary
March , 1996
APPENDIX: SBC Communications Inc. 1996 Stock and Incentive Plan
Article 1. Establishment and Purpose
1.1 Establishment of the Plan. SBC Communications Inc., a
Delaware corporation (the "Company" or "SBC"), hereby establishes
an incentive compensation plan (the "Plan"), as set forth in this
document.
1.2 Purpose of the Plan. The purpose of the Plan is to
promote the success and enhance the value of the Company by
linking the personal interests of Participants to those of the
Company's shareowners, and by providing Participants with an
incentive for outstanding performance.
The Plan is further intended to attract and retain the
services of Participants upon whose judgment, interest, and
special efforts the successful operation of SBC and its
subsidiaries is dependent.
1.3 Effective Date of the Plan. The Plan shall become
effective on January 1, 1996; however, grants may be made before
that time subject to becoming effective on or after that date.
During the first year this Plan is effective, Awards shall be
issued only to the extent the potential payout of Shares shall
not exceed 10% of the Shares approved for issuance under this
Plan.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have
the meanings set forth below and, when the meaning is intended,
the initial letter of the word is capitalized:
(a) "Award" means, individually or collectively, a grant
under this Plan of Nonqualified Stock Options, Incentive
Stock Options, Restricted Stock, Performance Units, or
Performance Shares.
(b) "Award Agreement" means an agreement which may be
entered into by each Participant and the Company, setting
forth the terms and provisions applicable to Awards granted
to Participants under this Plan.
(c) "Board" or "Board of Directors" means the SBC Board of
Directors.
(d) "Cause" shall mean willful and gross misconduct on the
part of an Employee that is materially and demonstrably
detrimental to the Company or any Subsidiary as determined
by the Committee in its sole discretion.
(e) "Change in Control" shall be deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than a trustee or other
fiduciary holding securities under an employee benefit plan
of the Company or a corporation owned directly or indirectly
by the shareowners of the Company in substantially the same
proportions as their ownership of stock of the Company, is
or becomes the "beneficial owner" (as defined in Rule 13d-3
under said Act), directly or indirectly, of securities of
the Company representing twenty percent (20%) or more of the
total voting power represented by the Company's then
outstanding voting securities, or (ii) during any period of
two (2) consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the
Company and any new Director whose election by the Board of
Directors or nomination for election by the Company's
shareowners was approved by a vote of at least two-thirds
(2/3) of the Directors then still in office who either were
Directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease
for any reason to constitute a majority thereof, or (iii)
the shareowners of the Company approve a merger or
consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) at least eighty percent (80%) of the
total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately
after such merger or consolidation, or the shareowners of
the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.
(f) "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
(g) "Committee" means the committee or committees, as
specified in Article 3, appointed by the Board to administer
the Plan with respect to grants of Awards.
(h) "Director" means any individual who is a member of the
SBC Board of Directors.
(i) "Disability" shall mean the Participant's inability to
perform the Participant's normal Employment functions due to
any medically determinable physical or mental disability,
which can last or has lasted 12 months or is expected to
result in death.
(j) "Employee" means any management employee of the Company
or of one of the Company's Subsidiaries. "Employment" means
the employment of an Employee by the Company or one of its
Subsidiaries. Directors who are not otherwise employed by
the Company shall not be considered Employees under this
Plan.
(k) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, or any successor Act
thereto.
(l) "Exercise Price" means the price at which a Share may
be purchased by a Participant pursuant to an Option, as
determined by the Committee.
(m) "Fair Market Value" shall mean the closing price of
Shares on the relevant date, or (if there were no sales on
such date) the next preceding trading date, all as reported
in the New York Stock Exchange Composite Trading listings,
or in a similar report selected by the Committee. A trading
day is any day that the Stock is traded on the New York
Stock Exchange.
(n) "Incentive Stock Option" or "ISO" means an option to
purchase Shares from SBC, granted under this Plan, which is
designated as an Incentive Stock Option and is intended to
meet the requirements of Section 422 of the Code.
(o) "Insider" shall mean an Employee who is, on the
relevant date, an officer, director, or ten percent (10%)
beneficial owner of the Company, as those terms are defined
under Section 16 of the Exchange Act.
(p) "Key Executive Officer Short Term Award" means a
Performance Unit expressed in dollars.
(q) "Nonqualified Stock Option" or "NQSO" means the option
to purchase Shares from SBC, granted under this Plan, which
is not intended to be an Incentive Stock Option.
(r) "Option" or "Stock Option" shall mean an Incentive
Stock Option or a Nonqualified Stock Option, and shall
include a Restoration Option.
(s) "Participant" means a person who holds an outstanding
Award granted under the Plan.
(t) "Performance Unit" and "Performance Share" shall each
mean an Award granted to an Employee pursuant to Article 8
herein.
(u) "Plan" means this 1996 Stock and Incentive Plan. The
Plan may also be referred to as the "SBC 1996 Stock and
Incentive Plan" or as the "SBC Communications Inc. 1996
Stock and Incentive Plan."
(v) "Restricted Stock" means an Award of Stock granted to
an Employee pursuant to Article 7 herein.
(w) "Restriction Period" means the period during which
Shares of Restricted Stock are subject to restrictions or
conditions under Article 7.
(x) "Retirement" or to "Retire" shall mean the termination
of a Participant's Employment with the Company or one of its
Subsidiaries, for any reason other than death, Disability or
for Cause, on or after the date the Participant would be
eligible to retire with an immediate pension either under
the rules of the SBC Pension Benefit Plan or the SBC Senior
Management Supplemental Retirement Income Plan, whether or
not actually a participant in either such plan, or as
otherwise provided by the Committee.
(y) "Rotational Work Assignment Company ("RWAC") shall mean
any entity with which SBC Communications Inc. or any of its
Subsidiaries may enter into an agreement to provide an
employee for a rotational work assignment.
(z) "Shares" or "Stock" means the shares of common stock of
the Company.
(aa) "Subsidiary" shall mean any corporation in which the
Company owns directly, or indirectly through subsidiaries,
more than fifty percent (50%) of the total combined voting
power of all classes of Stock, or any other entity
(including, but not limited to, partnerships and joint
ventures) in which the Company owns more than fifty percent
(50%) of the combined equity thereof.
(bb) "Window Period" means the period beginning on the
third business day following the date of public release of
the Company's quarterly sales and earnings information, and
ending on the twelfth business day following such date.
Article 3. Administration
3.1 The Committee. Administration of the Plan shall be
bifurcated as follows:
(a) With respect to Insiders, the Plan and all Awards
hereunder shall be administered only by the Human Resources
Committee of the Board or such other Committee as may be
appointed by the Board for this purpose (the "Disinterested
Committee"), where each Director on such Disinterested
Committee is a "Disinterested Person" (or any successor
designation for determining who may administer plans,
transactions or awards exempt under Section 16(b) of the
Exchange Act), as that term is used in Rule 16b-3 under the
Exchange Act, as that rule may be modified from time to
time.
(b) The Disinterested Committee and such other Committee as
the Board may create, if any, specifically to administer the
Plan with respect to non-Insiders (the "Non-Insider
Committee") shall each have full authority to administer the
Plan and all Awards hereunder with respect to all persons
who are not Insiders, except as otherwise provided herein or
by the Board. Either Committee may be replaced by the Board
at any time.
3.2 Authority of the Committee. The Committee shall have
full power except as limited by law and subject to the provisions
herein, to select the recipients of Awards, to determine the size
and types of Awards; to determine the terms and conditions of
such Awards in a manner consistent with the Plan; to construe and
interpret the Plan and any agreement or instrument entered into
under the Plan; to establish, amend, or waive rules and
regulations for the Plan's administration; and (subject to the
provisions of Article 13 herein) to amend the terms and
conditions of any outstanding Award to the extent such terms and
conditions are within the discretion of the Committee as provided
in the Plan. Further, the Committee shall make all other
determinations which may be necessary or advisable for the
administration of the Plan.
No Award other than Restoration Options may be made under
the Plan after December 31, 2010.
All determinations and decisions made by the Committee
pursuant to the provisions of the Plan and all related orders or
resolutions of the Board shall be final, conclusive, and binding
on all persons, including the Company, its stockholders,
Employees, Participants, and their estates and beneficiaries.
Subject to the terms of this Plan, the Committee is
authorized, and shall not be limited in its discretion, to use
any of the Performance Criteria specified herein in its
determination of Awards under this Plan.
Article 4. Shares Subject to the Plan
4.1 Number of Shares. Subject to adjustment as provided in
Section 4.3 herein, the number of Shares available for grant
under the Plan shall not exceed 30 million Shares of Stock. No
more than 10% of the Shares approved for issuance under this Plan
may be Shares of Restricted Stock. No more than 40% of the
Shares approved for issuance under this Plan may be issued to
Participants as a result of Performance Share or Restricted Stock
Awards. The Shares granted under this Plan may be either
authorized but unissued or reacquired Shares. The Disinterested
Committee shall have full discretion to determine the manner in
which Shares available for grant are counted in this Plan.
Without limiting the discretion of the Committee under this
section, unless otherwise provided by the Committee, the
following rules will apply for purposes of the determination of
the number of Shares available for grant under the Plan or
compliance with the foregoing limits:
(a) The grant of a Stock Option or a Restricted Stock Award
shall reduce the Shares available for grant under the Plan
by the number of Shares subject to such Award. However, to
the extent the Participant uses previously owned Shares to
pay the Exercise Price or any taxes, or Shares are withheld
to pay taxes, these Shares shall be available for regrant
under the Plan.
(b) With respect to Performance Shares, the number of
Performance Shares granted under the Plan shall be deducted
from the number of Shares available for grant under the
Plan. The number of Performance Shares which cannot be, or
are not, converted into Shares and distributed (including
deferrals) to the Participant (after any applicable tax
withholding) following the end of the Performance Period
shall increase the number of Shares available for regrant
under the Plan by an equal amount.
(c) With respect to Performance Units representing a fixed
dollar amount that may only be settled in cash, the
Performance Units Award shall not affect the number of
Shares available under the Plan.
4.2 Lapsed Awards. If any Award granted under this Plan is
canceled, terminates, expires, or lapses for any reason, Shares
subject to such Award shall be again available for the grant of
an Award under the Plan.
4.3 Adjustments in Authorized Plan Shares. In the event of
any merger, reorganization, consolidation, recapitalization,
separation, liquidation, Stock dividend, split-up, Share
combination, or other change in the corporate structure of the
Company affecting the Shares, an adjustment shall be made in the
number and class of Shares which may be delivered under the Plan
(including individual limits), and in the number and class of
and/or price of Shares subject to outstanding Awards granted
under the Plan, and/or the number of outstanding Options, Shares
of Restricted Stock, and Performance Shares constituting
outstanding Awards, as may be determined to be appropriate and
equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights.
Article 5. Eligibility and Participation
5.1 Eligibility. All management Employees are eligible to
participate in this Plan.
5.2 Actual Participation. Subject to the provisions of the
Plan, the Committee may, from time to time, select from all
eligible Employees, those to whom Awards shall be granted and
shall determine the nature and amount of each Award. No Employee
is entitled to receive an Award unless selected by the Committee.
Article 6. Stock Options
6.1 Grant of Options. Subject to the terms and provisions
of the Plan, Options may be granted to Employees at any time and
from time to time, and under such terms and conditions, as shall
be determined by the Committee. The Committee shall have
discretion in determining the number of Shares subject to Options
granted to each Employee; provided, however, that the maximum
number of Shares subject to Options which may be granted to any
single Employee during any calendar year shall not exceed 2% of
the Shares approved for issuance under this Plan. The Committee
may grant ISOs, NQSOs, or a combination thereof; provided
however, that no ISO may be issued after January 1, 2006. The
Committee may authorize the automatic grant of additional Options
("Restoration Options") when a Participant exercises already
outstanding Options, or options granted under a prior option plan
of the Company, on such terms and conditions as it shall
determine. Unless otherwise provided by the Committee, the
number of Restoration Options granted to a Participant with
respect to the exercise of an option (including an Option under
this Plan) shall not exceed the number of Shares delivered by the
Participant in payment of the Exercise Price of such option,
and/or in payment of any tax withholding resulting from such
exercise, and any Shares which are withheld to satisfy
withholding tax liability arising out of such exercise. A
Restoration Option shall have an Exercise Price of not less than
100% of the per Share Fair Market Value on the date of grant of
such Restoration Option, and shall be subject to all the terms
and conditions of the original grant, including the expiration
date, and such other terms and conditions as the Committee in its
sole discretion shall determine.
6.2 Form of Issuance. Each Option grant may be issued in
the form of an Award Agreement and/or may be recorded on the
books and records of the Company for the account of the
Participant. If an Option is not issued in the form of an Award
Agreement, then the Option shall be deemed granted as determined
by the Committee. The terms and conditions of an Option shall be
set forth in the Award Agreement, in the notice of the issuance
of the grant, or in such other documents as the Committee shall
determine. Such terms and conditions shall include the Exercise
Price, the duration of the Option, the number of Shares to which
an Option pertains (unless otherwise provided by the Committee,
each Option may be exercised to purchase one Share), and such
other provisions as the Committee shall determine, including, but
not limited to whether the Option is intended to be an ISO or a
NQSO.
6.3 Exercise Price. Unless a greater Exercise Price is
determined by the Committee, the Exercise Price for each Option
Awarded under this Plan shall be equal to one hundred percent
(100%) of the Fair Market Value of a Share on the date the Option
is granted.
6.4 Duration of Options. Each Option shall expire at such
time as the Committee shall determine at the time of grant (which
duration may be extended by the Committee); provided, however,
that no Option shall be exercisable later than the tenth (10th)
anniversary date of its grant.
6.5 Vesting of Options. Options shall vest at such times
and under such terms and conditions as determined by the
Committee; provided, however, unless a later vesting period is
provided by the Committee at or before the grant of an Option,
one-third of the Options will vest on each of the first three
anniversaries of the grant; if one Option remains after equally
dividing the grant by three, it will vest on the first
anniversary of the grant, if two Options remain, then one will
vest on each of the first two anniversaries. The Committee shall
have the right to accelerate the vesting of any Option; however,
the Chairman of the Board or the Senior Vice President-Human
Resources, or their respective successors, or such other persons
designated by the Committee, shall have the authority to
accelerate the vesting of Options for any Participant who is not
an Insider.
6.6 Exercise of Options. Options granted under the Plan
shall be exercisable at such times and be subject to such
restrictions and conditions as the Committee shall in each
instance approve, which need not be the same for each grant or
for each Participant.
Options shall be exercised by delivery of a written notice
(including telecopies) to the Company (or, if so provided by the
Company, to its designated agent), which notice shall be
irrevocable, setting forth the exact number of Shares with
respect to which the Option is being exercised and including with
such notice payment of the Exercise Price. When Options have
been transferred, the Company or its designated agent may require
appropriate documentation that the person or persons exercising
the Option, if other than the Participant, has the right to
exercise the Option. No Option may be exercised with respect to
a fraction of a Share.
6.7 Payment. The Exercise Price shall be paid in full at
the time of exercise. However, unless otherwise provided by the
Committee at any time, the Exercise Price may be paid in cash the
business day after the exercise by a stockbroker which is acting
on behalf of the Participant and is acceptable to the Company, if
the stockbroker notifies the Company in writing at the time of
exercise that it will make such payment the next day. No Shares
shall be issued or transferred until full payment has been
received therefor.
Payment may be made:
(a) in cash, or
(b) unless otherwise provided by the Committee at any time,
and subject to such additional terms and conditions and/or
modifications as the Committee may impose from time to time,
and further subject to suspension or termination of this
provision by the Committee or Company at any time, by:
(i) delivery of Shares of Stock owned by the
Participant in partial (if in partial payment, then
together with cash) or full payment (if a fractional
Share remains after payment of the Exercise Price in
full by previously owned Shares, then the fractional
Share shall be withheld for taxes); provided, however,
as a condition to paying any part of the Exercise Price
in Stock, at the time of exercise of the Option: (A)
the Stock tendered to the Company must not have been
acquired from the Company or its Subsidiaries within
the past six (6) months, and (B) the total number of
Shares held by the Participant at the time of exercise
must equal or exceed the number of Shares which the
Participant has received from the Company during the
preceding six (6) months plus the number of Shares
tendered; or
(ii) if the Company has designated a stockbroker
to act as the Company's agent to process Option
exercises, then delivery of a properly executed
exercise notice together with instructions to such
stockbroker irrevocably instructing the stockbroker:
(A) to immediately sell a sufficient portion of the
Shares to pay the Exercise Price of the Options being
exercised and the required tax withholding, and (B) to
deliver on the settlement date the portion of the
proceeds of the sale equal to the Exercise Price and
tax withholding to the Company. In the event the
stockbroker sells any Shares on behalf of a
Participant, the stockbroker shall be acting solely as
the agent of the Participant, and the Company disclaims
any responsibility for the actions of the stockbroker
in making any such sales.
If payment is made by the delivery of Shares of Stock,
the value of the Shares delivered shall be equal to the Fair
Market Value of the Shares on the day preceding the date of
exercise of the Option.
6.8 Termination of Employment.
Unless otherwise provided by the Committee, the following
limitations on exercise of Options shall apply upon termination
of Employment:
(a) Termination by Death or Disability. In the event the
Employment of a Participant shall terminate by reason of
death or Disability, all outstanding Options granted to that
Participant shall immediately vest as of the date of
termination of Employment and may be exercised, if at all,
no more than three (3) years from the date of the
termination of Employment, unless the Options, by their
terms, expire earlier. However, in the event the
Participant was eligible to Retire at the time of
termination of Employment, notwithstanding the foregoing,
the Options may be exercised, if at all, no more than five
(5) years from the date of the termination of Employment,
unless the Options, by their terms, expire earlier.
(b) Termination for Cause. If the Employment of a
Participant shall be terminated by the Company for Cause,
all outstanding Options held by the Participant shall
immediately be forfeited to the Company and no additional
exercise period shall be allowed, regardless of the vested
status of the Options.
(c) Retirement or Other Termination of Employment. If the
Employment of a Participant shall terminate for any reason
other than the reasons set forth in (a) or (b), above, all
outstanding Options which are vested as of the effective
date of termination of Employment may be exercised, if at
all, no more than five (5) years from the date of
termination of Employment if the Participant is eligible to
Retire, or one (1) year from the date of the termination of
Employment if the Participant is not eligible to Retire, as
the case may be, unless in either case the Options, by their
terms, expire earlier. In the event of the death of the
Participant after termination of Employment, this paragraph
(c) shall still apply and not paragraph (a), above.
(d) Options not Vested at Termination. Except as provided
in paragraph (a), above, all Options held by the Participant
which are not vested on or before the effective date of
termination of Employment shall immediately be forfeited to
the Company (and shall once again become available for grant
under the Plan).
(e) Notwithstanding the foregoing, the Committee may, in its
sole discretion, establish different terms and conditions
pertaining to the effect of termination of Employment, but
no such modification shall shorten the terms of Options
issued prior to such modification.
6.9 Employee Transfers. For purposes of the Plan, transfer
of employment of a Participant between the Company and any one of
its Subsidiaries (or between Subsidiaries) or between the Company
or a Subsidiary and a RWAC, to the extent the period of
employment at a RWAC is equal to or less than five (5) years,
shall not be deemed a termination of Employment. Provided,
however, for purposes of this Article 6, termination of
employment with a RWAC without a concurrent transfer to the
Company or any of its Subsidiaries shall be deemed a termination
of Employment as that term is used herein. Similarly,
termination of an entity's status as a Subsidiary or as a RWAC
shall be deemed a termination of Employment of any Participants
employed by such Subsidiary or RWAC.
6.10 Restrictions on Exercise and Transfer of Options.
Unless otherwise provided by the Committee:
(a) During the Participant's lifetime, the Participant's
Options shall be exercisable only by the Participant or by
the Participant's guardian or legal representative. After
the death of the Participant, except as otherwise provided
by SBC's Rules for Employee Beneficiary Designations, an
Option shall only be exercised by the holder thereof
(including, but not limited to, an executor or administrator
of a decedent's estate) or his or her guardian or legal
representative.
(b) No Option shall be transferable except: (i) in the case
of the Participant, only upon the Participant's death and in
accordance with the SBC Rules for Employee Beneficiary
Designations; and (ii) in the case of any holder after the
Participant's death, only by will or by the laws of descent
and distribution.
6.11 Competition. Notwithstanding anything in this Article
6 to the contrary, prior to a Change in Control, in the event the
Committee determines, in its sole discretion, that a Participant
is engaging in competitive activity with the Company, any
Subsidiary, or any business in which any of the foregoing have a
substantial interest (the "SBC Businesses"), the Committee may
cancel any Option granted to such Participant, whether or not
vested, in whole or in part. Such cancellation shall be
effective as of the date specified by the Committee. Competitive
activity shall mean any business or activity in the same
geographical market where a substantially similar business
activity is being carried on by an SBC Business, including, but
not limited to, representing or providing consulting services to
any person or entity that is engaged in competition with an SBC
Business or that takes a position adverse to an SBC Business.
However, competitive activity shall not include, among other
things, owning a nonsubstantial interest as a shareholder in a
competing business.
The determination of whether a Participant has engaged in
competitive activity with the Company shall be determined by the
Committee in good faith and in its sole discretion.
Article 7. Restricted Stock
7.1 Grant of Restricted Stock. Subject to the terms and
provisions of the Plan, the Committee, at any time and from time
to time, may grant Shares of Restricted Stock to eligible
Employees in such amounts and upon such terms and conditions as
the Committee shall determine. In addition to any other terms
and conditions imposed by the Committee, vesting of Restricted
Stock may be conditioned upon the attainment of Performance Goals
based on Performance Criteria in the same manner as provided in
Section 8.4, herein, with respect to Performance Shares. No
Employee may receive, in any calendar year, in the form of
Restricted Stock more than one-third of 1% of the Shares approved
for issuance under this Plan.
7.2 Restricted Stock Agreement. The Committee may require,
as a condition to an Award, that a recipient of a Restricted
Stock Award enter into a Restricted Stock Award Agreement,
setting forth the terms and conditions of the Award. In lieu of
a Restricted Stock Award Agreement, the Committee may provide the
terms and conditions of an Award in a notice to the Participant
of the Award, on the Stock certificate representing the
Restricted Stock, in the resolution approving the Award, or in
such other manner as it deems appropriate.
7.3 Transferability. Except as otherwise provided in this
Article 7, the Shares of Restricted Stock granted herein may not
be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated until the end of the applicable Restriction
Period established by the Committee, which shall not be less than
a period of three years.
7.4 Other Restrictions. The Committee shall impose such
other conditions and/or restrictions on any Shares of Restricted
Stock granted pursuant to the Plan as it may deem advisable
including, without limitation, a requirement that Participants
pay a stipulated purchase price for each Share of Restricted
Stock and/or restrictions under applicable Federal or state
securities laws; and may legend the certificates representing
Restricted Stock to give appropriate notice of such restrictions.
The Company shall also have the right to retain the
certificates representing Shares of Restricted Stock in the
Company's possession until such time as all conditions and/or
restrictions applicable to such Shares have been satisfied.
7.5 Removal of Restrictions. Except as otherwise provided
in this Article 7, Shares of Restricted Stock covered by each
Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the
Restriction Period and completion of all conditions to vesting,
if any. However, unless otherwise provided by the Committee, the
Committee, in its sole discretion, shall have the right to
immediately waive all or part of the restrictions and conditions
with regard to all or part of the Shares held by any Participant
at any time.
7.6 Voting Rights, Dividends and Other Distributions.
During the Restriction Period, Participants holding Shares of
Restricted Stock granted hereunder may exercise full voting
rights and shall receive all regular cash dividends paid with
respect to such Shares. Except as provided in the following
sentence, in the sole discretion of the Committee, other cash
dividends and other distributions paid to Participants with
respect to Shares of Restricted Stock may be subject to the same
restrictions and conditions as the Shares of Restricted Stock
with respect to which they were paid. If any such dividends or
distributions are paid in Shares, the Shares shall be subject to
the same restrictions and conditions as the Shares of Restricted
Stock with respect to which they were paid.
7.7 Termination of Employment Due to Death or Disability.
In the event the Employment of a Participant shall terminate by
reason of death or Disability, all Restriction Periods and all
restrictions imposed on outstanding Shares of Restricted Stock
held by the Participant shall immediately lapse and the
Restricted Stock shall immediately become fully vested as of the
date of termination of Employment.
7.8 Termination of Employment for Other Reasons. If the
Employment of a Participant shall terminate for any reason other
than those specifically set forth in Section 7.7 herein, all
Shares of Restricted Stock held by the Participant which are not
vested as of the effective date of termination of Employment
immediately shall be forfeited and returned to the Company.
7.9 Employee Transfers. For purposes of the Plan, transfer
of employment of a Participant between the Company and any one of
its Subsidiaries (or between Subsidiaries) or between the Company
or a Subsidiary and a RWAC, to the extent the period of
employment at a RWAC is equal to or less than five (5) years,
shall not be deemed a termination of Employment. Provided,
however, for purposes of this Article, termination of employment
with a RWAC without a concurrent transfer to the Company or any
of its Subsidiaries shall be deemed a termination of Employment
as that term is used herein. Similarly, termination of an
entity's status as a Subsidiary or as a RWAC shall be deemed a
termination of Employment of any Participants employed by such
Subsidiary or RWAC.
Article 8. Performance Units and Performance Shares
8.1 Grants of Performance Units and Performance Shares.
Subject to the terms of the Plan, Performance Shares and
Performance Units may be granted to eligible Employees at any
time and from time to time, as determined by the Committee. The
Committee shall have complete discretion in determining the
number of Performance Units and/or Performance Shares Awarded to
each Participant.
8.2 Value of Performance Shares and Units.
(a) A Performance Share is equivalent in value to a Share
of Stock. In any calendar year, no individual may be
Awarded Performance Shares having a potential payout of
Shares of Stock exceeding two-thirds of 1% of the Shares
approved for issuance under this Plan.
(b) A Performance Unit shall be equal in value to a fixed
dollar amount determined by the Committee. In any calendar
year, no individual may be Awarded Performance Units having
a potential payout equivalent exceeding the Fair Market
Value of two-thirds of 1% of the Shares approved for
issuance under this Plan. The number of Shares equivalent
to the potential payout of a Performance Unit shall be
determined by dividing the maximum cash payout of the Award
by the Fair Market Value per Share on the effective date of
the grant. In the event the Committee denominates a
Performance Unit Award in dollars instead of Performance
Units, the Award may be referred to as a Key Executive
Officer Short Term Award. In all other respects, the Key
Executive Officer Short Term Award will be treated in the
same manner as Performance Units under this Plan.
8.3 Performance Period. The Performance Period for
Performance Shares and Performance Units is the period over which
the Performance Goals are measured. The Performance Period is
set by the Committee for each Award; however, in no event shall
an Award have a Performance Period of less than one year.
8.4 Performance Goals. For each Award of Performance Shares
or Performance Units, the Committee shall establish performance
objectives ("Performance Goals") for the Company, its
Subsidiaries, and/or divisions of any of foregoing, based on the
Performance Criteria and other factors set forth in (a) through
(d), below. Performance Goals shall include payout tables,
formulas or other standards to be used in determining the extent
to which the Performance Goals are met, and, if met, the number
of Performance Shares and/or Performance Units which would be
converted into Stock and/or cash (or the rate of such conversion)
and distributed to Participants in accordance with Section 8.6.
All Performance Shares and Performance Units which may not be
converted under the Performance Goals or which are reduced by the
Committee under Section 8.6 or which may not be converted for any
other reason after the end of the Performance Period shall be
canceled at the time they would otherwise be distributable. When
the Committee desires an Award to qualify under Section 162(m) of
the Code, as amended, the Committee shall establish the
Performance Goals for the respective Performance Shares and
Performance Units prior to or within 90 days of the beginning of
the service relating to such Performance Goal, and not later than
after 25% of such period of service has elapsed. For all other
Awards, the Performance Goals must be established before the end
of the respective Performance Period.
(a) The Performance Criteria which the Committee is
authorized to use, in its sole discretion, are any of the
following criteria or any combination thereof:
(1) Financial performance of the Company (on a
consolidated basis), of one or more of its
Subsidiaries, and/or a division of any of the
foregoing. Such financial performance may be based on
net income and/or Value Added (after-tax cash operating
profit less depreciation and less a capital recovery
charge).
(2) Service performance of the Company (on a
consolidated basis), of one or more of its
Subsidiaries, and/or of a division of any of the
foregoing. Such service performance may be based upon
measured customer perceptions of service quality.
(3) The Company's Stock price; return on
shareholders' equity; total shareholder return (Stock
price appreciation plus dividends, assuming the
reinvestment of dividends); and/or earnings per share.
(4) With respect to the Company (on a consolidated
basis), to one or more of its Subsidiaries, and/or to a
division of any of the foregoing: sales; costs; market
share of a product or service; return on net assets;
return on assets; return on capital; profit margin;
and/or operating revenues, expenses or earnings.
(b) If the performance of more than one Subsidiary is being
measured to determine the attainment of performance goals,
then a weighted average of the Subsidiaries' results shall
be used, as determined by the Committee, including, but not
limited to, basing such weighting upon the revenues, assets
or net income for each Subsidiary for any year prior to the
Performance Period or by using budgets to weight such
Subsidiaries.
(c) Except to the extent otherwise provided by the
Committee in full or in part, if any of the following events
occur during a Performance Period and would directly affect
the determination of whether or the extent to which
Performance Goals are met, they shall be disregarded in any
such computation: changes in accounting principles;
extraordinary items; changes in tax laws affecting net
income and/or Value Added; natural disasters, including
floods, hurricanes, and earthquakes; and intentionally
inflicted damage to property which directly or indirectly
damages the property of the Company or its Subsidiaries. No
such adjustment shall be made to the extent such adjustment
would cause the Performance Shares or Performance Units to
fail to satisfy the performance based exemption of Section
162(m) of the Code.
8.5 Dividend Equivalents on Performance Shares. Unless
reduced or eliminated by the Committee, a cash payment in an
amount equal to the dividend payable on one Share will be made to
each Participant for each Performance Share which on the record
date for the dividend had been awarded to the Participant and not
converted, distributed (or deferred) or canceled.
8.6 Form and Timing of Payment of Performance Units and
Performance Shares. As soon as practicable after the applicable
Performance Period has ended and all other conditions (other than
Committee actions) to conversion and distribution of a
Performance Share and/or Performance Unit Award have been
satisfied (or, if applicable, at such other time determined by
the Committee at or before the establishment of the Performance
Goals for such Performance Period), the Committee shall determine
whether and the extent to which the Performance Goals were met
for the applicable Performance Units and Performance Shares. If
Performance Goals have been met, then the number of Performance
Units and Performance Shares to be converted into Stock and/or
cash and distributed to the Participants shall be determined in
accordance with the Performance Goals for such Awards, subject to
any limits imposed by the Committee. Unless the Participant has
elected to defer all or part of his Performance Units or
Performance Shares as provided in Article 10, herein, payment of
Performance Units and Performance Shares shall be made in a
single lump sum, as soon as reasonably administratively possible
following the determination of the number of Shares or amount of
cash to which the Participant is entitled. Performance Units
will be distributed to Participants in the form of cash.
Performance Shares will be distributed to Participants in the
form of 50% Stock and 50% Cash, or at the Participant's election,
100% Stock or 100% Cash. In the event the Participant is no
longer an Employee at the time of the distribution, then the
distribution shall be 100% in cash, provided the Participant may
elect to take 50% or 100% in Stock. At any time prior to the
distribution of the Performance Shares and/or Performance Units
(or if distribution has been deferred, then prior to the time the
Awards would have been distributed), unless otherwise provided by
the Committee, the Committee shall have the authority to reduce
or eliminate the number of Performance Units or Performance
Shares to be converted and distributed or to mandate the form in
which the Award shall be paid (i.e., in cash, in Stock or both,
in any proportions determined by the Committee).
Unless otherwise provided by the Committee, any election to
take a greater amount of cash or Stock with respect to
Performance Shares must be made in the calendar year prior to the
calendar year in which the Performance Shares are distributed (or
if distribution has been deferred, then in the year prior to the
year the Performance Shares would have been distributed absent
such deferral). In addition, if required in order to exempt the
transaction from the provisions of Section 16(b) of the Exchange
Act, any election by an Insider to take a greater amount in cash
must be made during a Window Period and shall be subject to
Committee approval.
For the purpose of converting Performance Shares into cash
and distributing the same to the holders thereof (or for
determining the amount of cash to be deferred), the value of a
Performance Share shall be the average of the Fair Market Values
of Shares for the period of five (5) trading days ending on the
valuation date. The valuation date shall be the first business
day of the second month in the year of distribution (or the year
it would have been distributed were it not deferred), except that
in the case of distributions due to death or Disability, the
valuation date shall be the first business day of the month in
which the Committee determines the distribution. Performance
Shares to be distributed in the form of Stock will be converted
at the rate of one (1) Share of Stock per Performance Share.
8.7 Termination of Employment Due to Death, Disability, or
Retirement. If the Employment of a Participant shall terminate
by reason of death or Disability, the Participant shall receive a
lump sum payout of all outstanding Performance Units and
Performance Shares calculated as if all unfinished Performance
Periods had ended with 100% of the Performance Goals achieved,
payable in the year following the date of termination of
Employment. In the event of Retirement, the full Performance
Units and Performance Shares shall be converted and distributed
based on and subject to the achievement of the Performance Goals
and in accordance with all other terms of the Award and this
Plan.
8.8 Termination of Employment for Other Reasons. If the
Employment of a Participant shall terminate for other than a
reason set forth in Section 8.7 (and other than for Cause), the
number of Performance Units and Performance Shares to be
converted and distributed shall be converted and distributed
based upon the achievement of the Performance Goals and in
accordance with all other terms of the Award and the Plan;
however, the Participant may receive no more than a prorated
payout of all Performance Units and Performance Shares, based on
the portions of the respective Performance Periods that have been
completed.
8.9 Termination of Employment for Cause. In the event that
a Participant's Employment shall be terminated by the Company for
Cause, all Performance Units and Performance Shares shall be
forfeited by the Participant to the Company.
8.10 Nontransferability. Performance Units and Performance
Shares may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than in accordance
with the SBC Rules for Employee Beneficiary Designations.
Article 9. Beneficiary Designation
In the event of the death of a Participant, distributions or
Awards under this Plan, other than Restricted Stock, shall pass
in accordance with the SBC Rules for Employee Beneficiary
Designations.
Article 10. Deferrals
10.1 Deferrals. Unless otherwise provided by the Committee,
a Participant may defer all or part of the Stock or cash to be
received upon conversion and distribution of Performance Units or
Performance Shares. In the event of the termination of
Employment of a Participant prior to becoming eligible for
Retirement, no deferrals under this Article shall be permitted
and any previously deferred Performance Shares or Performance
Units, and earnings thereon, shall be distributed as soon as
administratively possible.
10.2 Deferral of Performance Unit and Performance Share
Distributions. Prior to the calendar year in which Performance
Units or Performance Shares are to be distributed (or if
deferred, prior to the calendar year the Awards would have been
distributed), Participants may elect to defer the receipt of a
Performance Unit or Performance Share distribution upon such
terms as the Committee deems appropriate. Unless otherwise
provided by the Committee, Participants may elect to defer
receipt of all or part of a Performance Unit or Performance Share
for distribution in a lump sum in February of any calendar year
following the year in which the Awards would otherwise be
distributed, or to be distributed in up to 15 annual installments
(each installment shall be equal to the total Shares or cash in
the Award divided by the number of remaining installments),
payable each calendar year in the month determined by the
Participant, beginning as soon as administratively possible after
Retirement or in a later month in the calendar year of
Retirement, or in the calendar year immediately thereafter.
(a) Deferred amounts which would otherwise have been
distributed in cash shall be credited to the Participant's
account and shall bear interest from the date the Awards
would otherwise have been paid. The interest will be
credited quarterly to the account at the declared rate
determined by the Company from time to time, which shall not
be less than one-fourth of the annual Moody's Corporate Bond
Yield Average-Monthly Average Corporates, as published by
Moody's Investor Service, Inc., (or successor thereto) for
the month of September before the calendar year in question.
(b) Deferred amounts which would otherwise have been
distributed in Shares by the Company shall be credited to
the Participant's account as deferred Shares. The
Participant's account shall also be credited on each
dividend payment date for Shares with an amount equivalent
to the dividend payable on the number of Shares equal to the
number of deferred Shares in the Participant's account on
the record date for such dividend. Such amount shall then be
converted to a number of additional deferred Shares
determined by dividing such amount by the price of Shares,
as determined in the following sentence. The price of Shares
related to any dividend payment date shall be the average of
the Fair Market Values of Shares for the period of five (5)
trading days ending on such dividend payment date, or the
period of five (5) trading days immediately preceding such
dividend payment date if the New York Stock Exchange is
closed on the dividend payment date.
(c) At any time during the calendar year prior to the
calendar year during which an Award deferred under the
provisions of this Article 10 is scheduled for distribution,
a Participant may further defer the commencement of the
distribution of such Award to a subsequent calendar year and
upon such further deferral, change the number of
installments applicable to the distribution of the Award.
Amounts that are further deferred pursuant to this Article
10 shall continue to be subject to all provisions of this
Plan including further distribution modifications as
provided herein.
Article 11. Employee Matters
11.1 Employment Not Guaranteed. Nothing in the Plan shall
interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant's Employment at any
time, nor confer upon any Participant any right to continue in
the employ of the Company or one of its Subsidiaries.
11.2 Participation. No Employee shall have the right to be
selected to receive an Award under this Plan, or, having been so
selected, to be selected to receive a future Award.
11.3 Claims and Appeals. Any claim under the Plan by a
Participant or anyone claiming through a Participant shall be
presented to the Committee. Any person whose claim under the Plan
has been denied may, within sixty (60) days after receipt of
notice of denial, submit to the Committee, a written request for
review of the decision denying the claim. The Committee shall
determine conclusively for all parties all questions arising in
the administration of the Plan.
Article 12. Change in Control
Upon the occurrence of a Change in Control:
(a) Any and all Options granted hereunder immediately shall
become vested and exercisable;
(b) Any Restriction Periods and all restrictions imposed on
Restricted Shares shall lapse and they shall immediately
become fully vested;
(c) The 100% Performance Goal for all Performance Units and
Performance Shares relating to incomplete Performance
Periods shall be deemed to have been fully achieved and
shall be converted and distributed in accordance with all
other terms of the Award and this Plan; provided, however,
notwithstanding anything to the contrary in this Plan, no
outstanding Performance Unit or Performance Share may be
reduced.
Article 13. Amendment, Modification, and Termination
13.1 Amendment, Modification, and Termination. The Board
may at any time suspend or terminate the Plan in whole or in
part; the Disinterested Committee may at any time and from time
to time, alter or amend the Plan in whole or in part.
13.2 Awards Previously Granted. No termination, amendment,
or modification of the Plan shall adversely affect in any
material way any Award previously granted under the Plan, without
the written consent of the Participant holding such Award.
Article 14. Withholding
14.1 Tax Withholding. The Company shall deduct or withhold
an amount sufficient to satisfy Federal, state, and local taxes
(including the Participant's employment tax obligations) required
by law to be withheld with respect to any taxable event arising
or as a result of this Plan ("Withholding Taxes").
14.2 Share Withholding. With respect to withholding
required upon the exercise of Options, upon the lapse of
restrictions on Restricted Stock, upon the distribution of
Performance Shares in the form of Stock, or upon any other
taxable event hereunder involving the transfer of Stock to a
Participant, the Company shall withhold Stock having a Fair
Market Value on the date the tax is to be determined in an amount
equal to the Withholding Taxes on such Stock. Any fractional
Share remaining after the withholding shall be withheld as
additional Federal withholding.
Unless otherwise determined by the Committee, when the
method of payment for the Exercise Price is from the sale by a
stockbroker pursuant to Section 6.7(b)(ii), herein, of the Stock
acquired through the Option exercise, then the tax withholding
shall be satisfied out of the proceeds. For administrative
purposes in determining the amount of taxes due, the sale price
of such Stock shall be deemed to be the Fair Market Value of the
Stock.
Prior to the end of any Performance Period a Participant may
elect to have a greater amount of Stock withheld from the
distribution of Performance Shares to pay withholding taxes;
provided, however, the Committee may prohibit or limit any
individual election or all such elections at any time. In
addition, if required in order to exempt the transaction from the
provisions of Section 16(b) of the Exchange Act, any such
election by an Insider must be made during a Window Period and
shall be subject to Committee approval.
Article 15. Successors
All obligations of the Company under the Plan, with respect
to Awards granted hereunder, shall be binding on any successor to
the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or
assets of the Company.
Article 16. Legal Construction
16.1 Gender and Number. Except where otherwise indicated by
the context, any masculine term used herein also shall include
the feminine; the plural shall include the singular and the
singular shall include the plural.
16.2 Severability. In the event any provision of the Plan
shall be held illegal or invalid for any reason, the illegality
or invalidity shall not affect the remaining parts of the Plan,
and the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.
16.3 Requirements of Law. The granting of Awards and the
issuance of Shares under the Plan shall be subject to all
applicable laws, rules, and regulations, and to such approvals by
any governmental agencies or national securities exchanges as may
be required.
16.4 Securities Law Compliance. With respect to Insiders,
transactions under this Plan are intended to comply with all
applicable conditions or Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the plan or action
by the Committee fails to comply with a condition of Rule 16b-3
or its successors, it shall not apply to the Insiders or
transactions thereby.
16.5 Governing Law. To the extent not preempted by Federal
law, the Plan, and all agreements hereunder, shall be construed
in accordance with and governed by the laws of the State of
Texas.
APPENDIX - Proxy Materials
(SBC LOGO) SBC Communications Inc.
Edward E. Whitacre, Jr.
Chairman and Chief Executive Officer
Dear Shareowner:
It is my pleasure to invite you to the 1996 Annual Meeting of
Shareowners of SBC Communications Inc. The meeting will be held
at 9:00 a.m. on Friday, April 26, 1996, at the Alzafar Shrine
Temple, 901 North Loop 1604 West, San Antonio, Texas. Admission
to the meeting will begin at 8:00 a.m. 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 four proposals: the election of Directors, the
ratification of the appointment of the independent auditors, the
approval of a proposal to increase the number of authorized
Shares, and approval of the 1996 Stock and Incentive Plan. 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 , 1996
Admission Ticket
SBC Communications Inc.
Annual Meeting of Shareowners
April 26, 1996
Alzafar Shrine Temple
901 North Loop 1604 West
San Antonio, Texas 78216
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - -
(FACE OF PROXY CARD)
Your Directors recommend a vote "FOR" the Director proposals 1, 2, 3
and 4.
1.Election of Directors
For _____ Withhold Authority _____ Exception_____
*Exception(s):__________________________________________
2. Ratification of Independent Auditors
For _____ Against _____ Abstain_____
3. Increase Authorized Shares
For _____ Against _____ Abstain_____
4. Approve the 1996 Stock and Incentive Plan
For _____ Against _____ Abstain_____
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 particular nominee, mark the "Exception" box and enter
the name(s) of the exception(s) in the space provided.
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(S):_____________________________
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)
Two maps 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) SBC Communications Inc. PROXY/VOTING INSTRUCTION
CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING ON APRIL 26, 1996.
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
SBC Communications Inc. at the Annual Meeting of Shareowners to
be held on April 26, 1996, 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 four
Director proposals listed on the reverse side of this card.
The nominees for the Board of Directors are James E. Barnes,
Haskell M. Monroe, Jr., Patricia P. Upton and
Edward E. Whitacre, Jr.
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, as described in the Proxy Statement.
SBC COMMUNICATIONS INC.
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) SBC Communications Inc.
ANNUAL MEETING OF SHAREOWNERS TO BE HELD APRIL 26, 1996.
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
SBC Communications Inc. at the Annual Meeting of Shareowners to be
held on April 26, 1996, 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 VOTING 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 to expedite
processing.)
The Board of Directors recommends a vote "FOR" each of the four
Director proposals listed on the reverse side of this card.
The nominees for the Board of Directors are James E. Barnes, Haskell
M. Monroe, Jr., Patricia P. Upton and Edward E. Whitacre, Jr.
(REVERSE SIDE OF CARD)
Directors recommend a vote "FOR" the Director proposals 1, 2, 3 and 4.
1. Election of Nominees
For _____ Withhold _____ Exception_____
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
__________________________________________
2. Ratification of Independent Auditors
For _____ Against _____ Abstain_____
3. Increase authorized Shares
For _____ Against _____ Abstain_____
4. Approve the 1996 Stock and Incentive Plan
For _____ Against _____ Abstain_____
DATE_________________________________
SIGNATURE_____________________________
SIGNATURE_____________________________
IMPORTANT: Please sign your name(s) exactly as shown
hereon.
PLEASE SIGN, DATE AND RETURN YOUR PROXY TODAY.
