<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[SBC COMMUNICATIONS INC. LOGO]
Notice of 1997
Annual Meeting and
Proxy Statement
SBC Communications Inc.
<PAGE> 3
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
TO BE HELD ON APRIL 25, 1997
TO THE HOLDERS OF COMMON STOCK OF SBC COMMUNICATIONS INC.:
The 1997 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
25, 1997, at the Alzafar Shrine Temple, 901 North Loop 1604 West, San Antonio,
Texas. The purposes of the meeting are to:
1. Elect five SBC Directors to serve three-year terms;
2. Ratify the appointment of Ernst & Young LLP as independent auditors of SBC
for 1997; and
3. 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 24,
1997, 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 10 through April 24, 1997, 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 11, 1997
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.
1
<PAGE> 4
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
1997 Annual Meeting of Shareowners of SBC. The meeting will be held at 9:00
a.m. on Friday, April 25, 1997, 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 11, 1997, to
shareowners of record of SBC's common stock, $1.00 par value per share, at the
close of business on February 24, 1997. Each share entitles the registered
holder to one vote. As of January 31, 1997, there were 598,562,452 shares of
SBC 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. 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. 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.
The proxy card will also serve as voting instructions to the plan administrator
or trustee for shares held on behalf of participants in SBC's Dividend
Reinvestment Plan or in any of the following SBC employee benefit plans: the
PAYSOP, the Savings Plan, or the Savings and Security Plan. If proxy cards
representing shares in the PAYSOP, the Savings Plan, or the Savings and
Security Plan are not received, those shares will be voted in the same
proportion as the shares for which signed cards are returned by other
participants.
If a shareowner participates in any of these plans or maintains other accounts
under different names (e.g., with or without a middle initial), the shareowner
may receive
2
<PAGE> 5
more than one set of proxy materials. To ensure that all shares are voted,
please sign and return every proxy card received.
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 1997 Annual Meeting: the election of
Directors and the ratification of the appointment of Ernst & Young LLP as
independent auditors of SBC.
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 1997.
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. 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 Chief Executive Officer and other
officers at meetings of the Board of Directors and committees of the Board.
Regular meetings of the Board of Directors are held each month except February,
May, August and October. The Board held nine meetings in 1996.
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 14 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 A Directors will expire at the
1997 Annual Meeting,
3
<PAGE> 6
Group B at the 1998 Annual Meeting and Group C at the 1999 Annual Meeting. The
SBC Board intends to nominate at the 1997 Annual Meeting the five persons
listed as nominees for Group A, all of whom are incumbent Directors, for
election to three-year terms of office expiring at the 2000 Annual Meeting.
SBC has entered into an Agreement and Plan of Merger with Pacific Telesis Group
("PAC"), dated April 1, 1996, whereby PAC would become a subsidiary of SBC and
PAC shareowners would receive SBC common stock in exchange for their PAC common
stock (the "Merger Agreement"). The Merger Agreement was approved by the
shareholders of SBC and PAC on July 31, 1996. Consummation of the Merger
Agreement is subject to obtaining applicable regulatory approvals, among other
conditions. (For more information on the merger, please see page 26 of the 1996
Annual Report to Shareowners.)
SBC has agreed that, at the closing of the Merger Agreement, SBC will cause
approximately one third of the SBC Board to be made up of PAC Directors,
including Philip J. Quigley, Chairman of the Board, President and Chief
Executive Officer of PAC. Other than Mr. Quigley, it has not been determined
which PAC Directors will be asked to join the SBC Board.
It is expected that of the PAC Directors appointed to the SBC Board, one or
more of the PAC Directors will be appointed into Group A. As noted above, the
Group A Directors are being presented to the shareowners for election at the
1997 Annual Meeting. If the Merger Agreement closes and the PAC Directors are
appointed to the SBC Board before the April 25, 1997, Annual Meeting, then the
SBC Board presently intends to nominate at the Annual Meeting all the then
Group A Directors for reelection, in addition to and/or in lieu of the nominees
listed below. This would include any former PAC Directors then serving as SBC
Group A Directors. Alternatively, the SBC Board may re-elect any former PAC
Director to the SBC Board following the Annual Meeting.
Biographical information about the Directors, including the PAC Directors, is
provided on pages 6-11. 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.
Holdings of SBC common stock by SBC Directors are shown on the table on page
13. The PAC holdings of the PAC Directors are shown on the table on page 14.
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 1996. It consists of six 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
4
<PAGE> 7
Annual Meeting. The independent auditing firm examines the accounting records
of SBC and its subsidiaries for the coming year. The Audit Committee
periodically reviews the adequacy and effectiveness of SBC's internal system of
accounting controls and financial reporting procedures with representatives of
the independent auditors and with the corporate internal auditors. The Audit
Committee also examines the results of the annual audit of the financial
statements and the recommendations of the independent auditors pertaining to
accounting practices, policies and procedures followed by SBC.
THE CORPORATE DEVELOPMENT COMMITTEE met four times in 1996. It consists of four
non-employee Directors and one employee Director. The purpose of the Corporate
Development Committee is to examine proposed acquisitions and similar new
ventures and to advise management with regard to the expansion or disposition
of SBC's businesses through mergers, acquisitions, sales and similar
transactions.
THE CORPORATE PUBLIC POLICY AND ENVIRONMENTAL AFFAIRS COMMITTEE met three times
in 1996. It consists of five 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 1996. 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 1996. It consists of six
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 four times in 1996. 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.
5
<PAGE> 8
SBC DIRECTORS TO BE ELECTED AT
THE 1997 ANNUAL MEETING (GROUP A)
[Photo of Clarence C. Barksdale]
CLARENCE C. BARKSDALE, age 64, is Vice Chairman, Board of Trustees,
Washington University, St. Louis, Missouri. 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.
[Photo of Ruben R. Cardenas]
RUBEN R. CARDENAS, age 66, 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.
[Photo of Martin K. Eby, Jr.]
MARTIN K. EBY, JR., age 62, 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 Finance/Pension
Committee.
6
<PAGE> 9
[Photo of Charles F. Knight]
CHARLES F. KNIGHT, age 61, 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.
[Photo of Carlos Slim Helu]
CARLOS SLIM HELU, age 57, 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 Empresas ICA Sociedad Controladora S.A. de C.V. and 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.
SBC DIRECTORS SERVING UNTIL
THE 1998 ANNUAL MEETING (GROUP B)
[Photo of Jack S. Blanton]
JACK S. BLANTON, age 69, is Chairman, Houston Endowment, Inc., and
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.
7
<PAGE> 10
[Photo of August A. Busch III]
AUGUST A. BUSCH III, age 59, 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.
[Photo of Tom C. Frost]
TOM C. FROST, age 69, 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.
[Photo of Jess T. Hay]
JESS T. HAY, age 66, is Chairman of the Texas Foundation for Higher
Education and Chairman of HCB Enterprises Inc (a private investment
firm), Dallas, Texas. 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 Exxon Corporation; Trinity Industries, Inc.;
and Viad Corp. He is a member of the Audit Committee and the Human
Resources Committee.
[Photo of Bobby R. Inman]
BOBBY R. INMAN, age 65, Admiral, United States Navy, Retired.
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.
8
<PAGE> 11
SBC DIRECTORS SERVING UNTIL
THE 1999 ANNUAL MEETING (GROUP C)
[Photo of James E. Barnes]
JAMES E. BARNES, age 63, 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
Corporation; Kansas City Southern Industries, Inc.; and MAPCO Inc.
He is a member of the Audit Committee and the Corporate Development
Committee.
[Photo of Haskell M. Monroe, Jr.]
HASKELL M. MONROE, JR., age 65, 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.
[Photo of Patricia P. Upton]
PATRICIA P. UPTON, age 58, 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.
[Photo of Edward E. Whitacre, Jr.]
EDWARD E. WHITACRE, JR., age 55, 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.
9
<PAGE> 12
PACIFIC TELESIS GROUP DIRECTORS
GILBERT F. AMELIO, age 54, is Chairman of the Board and Chief Executive Officer
of Apple Computer, Inc., Cupertino, California, and has served in this capacity
since February 1996. Dr. Amelio was Chairman of the Board, Chief Executive
Officer and President of National Semiconductor Corporation from 1991 to 1996.
He has been a Director of PAC since September 1995. He is a Director of Apple
Computer, Inc.
WILLIAM P. CLARK, age 65, is Chief Executive Officer of Clark Companies, Paso
Robles, California. Mr. Clark is a lawyer, rancher, retired California Supreme
Court Justice and former Secretary of the United States Department of the
Interior. Mr. Clark has been a Director of PAC since May 1985. He is a
Director of The Irish Investment Fund and Lawter International Inc.
HERMAN E. GALLEGOS, age 66, is an Independent Management Consultant. Mr.
Gallegos was a Director of Gallegos Institutional Investors Corporation from
May 1990 to August 1994. He served as an alternate U.S. Public Delegate to the
49th United Nations General Assembly from 1994 to 1995. He has been a Director
of PAC since December 1983. He is a Director of Union Bank.
FRANK C. HERRINGER, age 54, is Chairman of the Board, President and Chief
Executive Officer of Transamerica Corporation, San Francisco, California. He
has served as Chairman of the Board of Transamerica Corporation since January
1996, and as President and Chief Executive Officer since April 1991. He has
been a Director of PAC since January 1994. Mr. Herringer is a Director of
Charles Schwab Corporation; Transamerica Corporation; and Unocal Corporation.
MARY S. METZ, age 59, is Dean of University Extension of the University of
California, Berkeley, and is President Emerita of Mills College. Dr. Metz has
been a Director of PAC since July 1986. She is a Director of Longs Drug Stores
Corporation; Pacific Gas and Electric Company; and Union Bank.
10
<PAGE> 13
LEWIS E. PLATT, age 55, is Chairman of the Board, President and Chief Executive
Officer of Hewlett-Packard Company, Palo Alto, California. He has served as
Chairman since September 1993 and as President and Chief Executive Officer of
Hewlett-Packard Company since November 1992. Mr. Platt was an Executive Vice
President of Hewlett-Packard Company from May 1987 through November 1992. He
has been a Director of PAC since February 1994. He is a Director of
Hewlett-Packard Company.
PHILIP J. QUIGLEY, age 54, is Chairman of the Board, President and Chief
Executive Officer of PAC, San Francisco, California, and has served in this
capacity since April 1994. Mr. Quigley served as Group President of PAC from
1988 through March 1994 and President and Chief Executive Officer of Pacific
Bell from 1987 through March 1994. Mr. Quigley has been a Director of PAC since
January 1988. He is a Director of Wells Fargo & Co. and Wells Fargo Bank, N.A.
TONI REMBE, age 60, is a Partner in the law firm of Pillsbury Madison & Sutro
LLP, San Francisco, California. Ms. Rembe has been a Director of PAC since
April 1991. She is a Director of APL Limited; Potlatch Corporation; and
Transamerica Corporation.
S. DONLEY RITCHEY, age 63, is Managing Partner of Alpine Partners, Danville,
California. Mr. Ritchey was Chief Executive Officer and Chairman of the Board
of Lucky Stores, Inc. from 1980 to 1986. He has been a Director of PAC since
January 1984. He is a Director of McClatchy Newspapers, Inc.
RICHARD M. ROSENBERG, age 66, retired. Mr. Rosenberg was Chairman of the Board
of BankAmerica Corporation from January 1996 to May 1996. He was Chairman of
the Board and Chief Executive Officer from May 1990 to December 1995. Mr.
Rosenberg has been a Director of PAC since May 1994. He is a Director of
Airborne Freight Corporation; BankAmerica Corporation; K 2 Inc.; Northrop
Grumman Corporation; and Potlatch Corporation.
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
interest, adjusted quarterly, equal to the average rate paid on commercial
paper issued by SBC and its subsidiaries (beginning in 1997, the yearly
11
<PAGE> 14
interest rate shall be the Moody's Corporate Bond Yield Average-Monthly Average
Corporates for September of the preceding year).
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 1996 for these policies were $800 for the travel
accident insurance and $6,660 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 resulting from such services and
benefits, computed at maximum marginal rates, including tax surcharges,
averaged $9,284 per non-employee Director in 1996. 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.
Prior to November 22, 1996, each non-employee Director elected to the Board was
entitled to receive 1,000 shares of SBC common stock, together with amounts
necessary to offset the Director's federal tax liabilities resulting from the
grant, computed at maximum marginal rates, including tax surcharges. This
program was terminated November 22, 1996. All shares of SBC common stock
previously issued under the plan are restricted from sale for a period of five
years from grant or until the recipient ceases being a Director, whichever
occurs first.
Two members of Mr. Gallegos' and one member of Mr. Quigley's immediate families
were employed by subsidiaries of PAC, and were paid a total of $210,000 in
1996. Amounts paid to these employees are comparable to compensation paid to
other employees performing similar job functions.
In 1996, PAC and its subsidiaries obtained legal services from the law firm of
Pillsbury Madison & Sutro LLP, of which Ms. Rembe is a Partner, on terms which
SBC believes were as favorable as would have been obtained from unaffiliated
parties.
12
<PAGE> 15
COMMON STOCK OWNERSHIP OF
DIRECTORS AND OFFICERS
SBC Directors and Named Officers
The following table sets forth the beneficial ownership of SBC common stock as
of February 21, 1997 (including shares acquired under the SBC Savings Plan as
of December 31, 1996), held by each Director and each officer named in the
Compensation Charts on pages 21-23. As of that date, each Director and officer
listed below, and all Directors and executive officers as a group, owned less
than one percent of the outstanding SBC common stock. Except as noted below,
the persons listed in the table have sole voting and investment power with
respect to the securities indicated.
<TABLE>
<CAPTION>
Total SBC Total SBC
Name of Beneficial Ownership Name of Beneficial Ownership
Beneficial Owner (including options)(1)(2) Beneficial Owner (including options)(1)(2)
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Clarence C. Barksdale(3) 3,000 Haskell M. Monroe, Jr. 5,721
James E. Barnes 3,000 Carlos Slim Helu 1,000
Jack S. Blanton(4) 51,000 Patricia P. Upton 2,500
August A. Busch III 9,026 Edward E. Whitacre, Jr. 1,050,990
Ruben R. Cardenas 13,841 Royce S. Caldwell 183,301
Martin K. Eby, Jr. 10,000 Charles E. Foster 207,790
Tom C. Frost 5,217 William E. Dreyer 170,384
Jess T. Hay 10,000 James D. Ellis 182,708
Bobby R. Inman 1,600 All executive officers and
Charles F. Knight 7,000 Directors as a group
(consisting of 22 persons,
including those named above) 2,362,370
</TABLE>
(1) Includes presently exercisable stock options and stock options which
will become exercisable within 60 days of the date of this table.
Messrs. Whitacre, Caldwell, Foster, Dreyer, Ellis and all executive
officers and Directors as a group hold 776,832; 152,796; 177,547;
129,887; 135,403; and 1,731,348 of such options, respectively.
(2) Included in "Total SBC Beneficial Ownership" are 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 included
are shares held in an employee benefit plan for Messrs. Whitacre,
Caldwell, Foster, Dreyer and Ellis who have sole voting power but no
investment power with respect to 576; 194; 671; 54; and 605 shares,
respectively. In addition, Messrs. Barnes, Blanton, Busch, Frost,
Monroe, Whitacre, Caldwell, Foster, Dreyer and Ellis share voting and
investment power with other persons with respect to 2,000; 35,000;
4,900; 94; 4,641; 15,834; 8,122; 13,610; 6,514; and 5,870 shares,
respectively.
(3) Mr. Barksdale also owns 1,000 shares of PAC.
(4) 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.
13
<PAGE> 16
PAC Directors
The following table sets forth the beneficial ownership of PAC common stock as
of December 31, 1996, by PAC Directors. Under the Merger Agreement, each share
of PAC will be converted into .733 of a share of SBC, subject to adjustment as
provided in the Merger Agreement.
<TABLE>
<CAPTION>
Total PAC Beneficial Total PAC Beneficial
Name of Ownership Name of Ownership
Beneficial Owner (including options)(1)(2) Beneficial Owner (including options)(1)(2)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gilbert F. Amelio 3,833 Lewis E. Platt 7,222
William P. Clark 12,054 Philip J. Quigley(4) 274,847
Herman E. Gallegos 12,677 Toni Rembe 11,344
Frank C. Herringer(3) 9,204 S. Donley Ritchey 13,711
Mary S. Metz 12,574 Richard M. Rosenberg 6,200
</TABLE>
(1) Includes PAC stock options that are presently exercisable or will
become exercisable within 60 days of the date of this table as
follows: Dr. Amelio - 2,000 options; Mr. Clark - 10,000 options; Mr.
Gallegos - 10,000 options; Mr. Herringer - 6,000 options; Dr. Metz -
10,000 options; Mr. Platt - 6,000 options; Mr. Quigley - 267,000
options; Ms. Rembe - 9,000 options; Mr. Ritchey - 10,000 options; and
Mr. Rosenberg - 4,000 options.
(2) Mr. Clark, Mr. Herringer, Dr. Metz, Mr. Quigley, Mr. Ritchey, and Mr.
Rosenberg share voting and investment power with other persons with
respect to 600; 3,200; 348; 3,520; 3,711; and 400 PAC shares,
respectively.
(3) Includes four PAC shares beneficially owned by a spouse, for which
beneficial ownership is disclaimed.
(4) Includes 65 PAC shares held in an employee benefit plan for Mr.
Quigley, who has sole voting power but no investment power with
respect to the shares.
VOTING
Each share of SBC common stock represented at the Annual Meeting is entitled to
one vote on each matter properly brought before the meeting. All matters
submitted at the Annual Meeting, other than the election of Directors, are
determined by a majority of the votes cast. Directors are elected by a
plurality of the votes cast. Shares represented by proxies that are marked
"withhold authority" with respect to the election of one or more nominees as
Directors, by proxies that are marked "abstain" on other proposals, and by
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, 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.
14
<PAGE> 17
ELECTION OF DIRECTORS
(Item 1 on Proxy Card)
The following Group A 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 2000 Annual Meeting:
Clarence C. Barksdale Charles F. Knight
Ruben R. Cardenas Carlos Slim Helu
Martin K. Eby, 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. If the composition of Group A is changed prior to the
1997 Annual Meeting because of the Merger Agreement to include one or more of
the PAC Directors, then SBC presently intends that shares represented by the
accompanying form of proxy will be voted for reelection of the Directors then
serving in Group A unless a contrary instruction is given. The PAC Directors
are described above on pages 10 and 11. 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" ITS NOMINEES LISTED AS GROUP A
DIRECTORS.
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, 1997. 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.
15
<PAGE> 18
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 this
committee. During the 1996 fiscal year, the members of the Human Resources
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 1996:
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.
16
<PAGE> 19
The Committee is responsible for establishing salaries and bonuses for officers
of SBC, including the Named Officers (defined below). 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 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
27. 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 each
officer's total compensation dependent upon the annual and long term
performance of SBC.
Annual Incentives During 1996, 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 this 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 at the beginning of the year. The term "value added" refers to
after-tax cash operating profit less depreciation and less a capital charge.
The value added objectives are 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 1996, the
value added targets were exceeded 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,
17
<PAGE> 20
an overall evaluation of each officer's performance and/or the contribution of
the officer to increasing shareowner value. For the 1996 calendar year, the
Committee made discretionary awards to reflect the significant results achieved
by SBC and its subsidiaries and to recognize individual achievement.
Long Term Incentives Since its inception, SBC has provided stock-based long
term incentives to officers and other key executives of SBC and certain
subsidiaries in the form of performance shares and stock options.
Performance shares are designed 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. Performance shares are granted under the 1996 Stock and
Incentive Plan (prior to 1996, they were granted under the Senior Management
Long Term Incentive Plan). Performance shares are designed to provide rewards
for 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. Each
officer, including each of the Named Officers, is granted a specific number of
performance shares, each equivalent in value to a share of common stock. The
target number of performance shares is based on the value of all long term type
awards granted to the 50th percentile of employees holding similar positions
with companies in the Comparator Group, as determined by the Committee's
outside compensation consultant. In addition, the Committee, at its discretion,
may grant performance shares beyond the median to persons who have exhibited
superior performance during the prior year (these additional performance shares
are generally for two-year performance periods). At the end of the performance
period, a percentage of the performance shares, not to exceed 100 percent of
the performance shares granted, is paid out (i.e., converted into common stock
and/or cash), based on the achievement of SBC's earnings and/or value added
goals over a three- (or two-) year period. No awards are paid out if SBC fails
to achieve certain minimum earnings and/or value added requirements. Various
officers, including all of the Named Officers, received grants of 1996-1998
performance shares. In addition, the Committee evaluated the Named Officers'
1995 performances, including Mr. Whitacre's, as excellent and made
discretionary grants of 1996-1997 performance shares. (The performance
objectives for the 1996-1998 and 1996-1997 shares are described below in the
table titled "Long Term Incentive Plans - Awards in Last Fiscal Year.")
In 1996, SBC's officers received the payout of their performance share awards
for the 1993-1995 and 1994-1995 performance periods. The Committee determined
that during this performance period SBC exceeded the earnings and value added
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. The Board uses stock options to link the executives' and
shareowners' interests by basing a portion of the executives' compensation on
the performance of SBC's common stock.
18
<PAGE> 21
To strengthen the linkage between executives and shareowners, the Committee
granted stock options to all managers, including all of the Named Officers
during the year. The Committee decided to grant the options by the
responsibility level of the manager'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 middle 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 policies 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 1996, targeted to
the median base salary paid by companies in the Comparator Group.
Mr. Whitacre's annual incentive bonus for 1996 was determined under the 1996
Stock and Incentive Plan. 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 1996 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 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
intends that if the Company achieves its objectives, Mr. Whitacre will receive
at least 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 amount.
The Committee determined that during 1996, the value added performance
objective established for Mr. Whitacre was exceeded and is pleased to report
that Mr. Whitacre's personal performance was excellent. The Committee notes
that under Mr. Whitacre's leadership SBC has continued to achieve exceptional
financial results while positioning itself for future growth opportunities. In
1996, SBC reported a 11.2 percent increase over 1995 earnings (before
extraordinary charges and cumulative effect of accounting changes), extending
its record of consecutive earnings increases to 13 years. Nineteen-ninety-six
was also SBC's fifth consecutive year of double-digit earnings growth, the best
record among major telecommunications companies. Southwestern Bell Telephone
Company operations achieved an 8.9 percent increase in revenues in 1996, its
largest increase ever, and a 5.1 percent increase in access lines, also the
best in its history. Domestic wireless operations reached a 10.8 percent
wireless market penetration, again leading the major U.S. wireless companies.
The Committee commends Mr. Whitacre for his leadership and for positioning SBC
for future growth opportunities, as evidenced by expanding international
ventures as well
19
<PAGE> 22
as the proposed merger with Pacific Telesis, which will allow SBC to expand its
local market presence and extensive wireless and wireline networks. Mr.
Whitacre was also instrumental in preparing SBC to take advantage of new
opportunities made available under the Telecommunications Act of 1996. For
example, during 1996 SBC began offering wireless long-distance service to its
cellular customers, and by the end of the year the company had signed up 1.9
million subscribers, or 43 percent of its wireless customer base. In addition,
the Committee believes that Mr. Whitacre's leadership was among the major
reasons SBC, for the second year in a row, was voted the "most admired"
telecommunications company in America by Fortune Magazine. Because of the
crucial role Mr. Whitacre has played in the continuing success of SBC, the
Committee decided Mr. Whitacre's annual incentive award should be $2.5 million
for 1996.
Mr. Whitacre, along with other Named Officers, received stock options and
performance shares. These matters are discussed above under "Long Term
Incentives."
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
submitted and received shareowner approval at the 1996 Annual Meeting for the
1996 Stock and Incentive Plan, 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
20
<PAGE> 23
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, 1996, 1995 and 1994.
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
---------------------------------------------- ---------------------- ---------
Number of
Other Restricted Securities All Other
Name and Annual Stock Underlying LTIP Compen-
Principal Position Year Salary Bonus Compensation Award(s) Options(1) Payouts(2) sation(3)
<S> <C> <C> <C> <C> <C> <C> <C>
Edward E. Whitacre, Jr. 1996 $900,000 $2,500,000 $259,355 $0 160,040 $2,876,953 $49,773
Chairman of the Board and Chief 1995 $825,000 $1,500,000 $285,338 $0 219,490 $2,200,090 $45,195
Executive Officer 1994 $762,000 $1,190,000 $260,705 $0 161,739 $1,948,146 $41,318
Royce S. Caldwell 1996 $434,980 $ 854,000 $ 92,508 $0 48,645 $ 615,218 $22,669
President-Southwestern Bell 1995 $380,000 $ 450,000 $ 91,970 $0 53,954 $ 436,989 $20,555
Operations 1994 $325,000 $ 370,100 $ 88,281 $0 49,580 $ 366,544 $16,787
Charles E. Foster 1996 $388,980 $ 512,000 $ 65,133 $0 51,378 $ 531,165 $17,856
President-SBC Operations 1995 $321,000 $ 260,040 $ 59,914 $0 59,367 $ 441,073 $17,467
1994 $306,000 $ 301,600 $ 67,658 $0 46,559 $ 406,837 $16,567
William E. Dreyer 1996 $356,980 $ 532,500 $ 76,413 $0 31,210 $ 712,554 $16,320
Senior Executive Vice President- 1995 $330,000 $ 423,000 $ 73,938 $0 31,676 $ 591,530 $15,840
External Affairs 1994 $325,500 $ 303,000 $ 87,556 $0 31,568 $ 478,469 $15,624
James D. Ellis 1996 $347,980 $ 492,800 $102,139 $0 40,882 $ 630,932 $17,513
Senior Executive Vice President 1995 $315,000 $ 350,400 $ 85,055 $0 33,390 $ 523,876 $16,537
and General Counsel 1994 $295,000 $ 277,500 $ 96,916 $0 32,795 $ 499,552 $15,382
</TABLE>
(1) SBC has not issued any stock appreciation rights to the Named Officers.
(2) The Senior Management Long Term Incentive Plan ("LTIP") payout is for the
1993-1995 and 1994-1995 performance periods. 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 $37.00 on December 31, 1992 (adjusted for the May 1993
stock split), to $57.25 on December 29, 1995, resulting in an increase in
the value of common stock held by our shareowners of approximately $12
billion.
(3) "All Other Compensation" for 1996 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 and Ellis, these amounts were $6,573, $2,605 and $1,625,
respectively. All other amounts reported under this heading represent
employer matching contributions made to employee benefit plans.
21
<PAGE> 24
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 1996 and the
value of their unexercised stock options and SARs as of December 31, 1996. None
of the Named Officers exercised stock options during 1996. SBC has not issued
any SARs to the Named Officers.
<TABLE>
<CAPTION> Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options at
Year End Fiscal Year End (1)
Shares Acquired Value -------------------------- --------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Edward E. Whitacre, Jr. 0 $0 772,052 310,040 $9,847,758 $1,260,520
Royce S. Caldwell 0 $0 150,594 92,644 $1,865,404 $ 371,545
Charles E. Foster 0 $0 175,687 87,710 $2,126,097 $ 315,693
William E. Dreyer 0 $0 128,803 60,209 $1,741,415 $ 243,911
James D. Ellis 0 $0 133,578 69,881 $1,768,266 $ 261,773
</TABLE>
(1) "Value of Unexercised Options" figures are based on the year end, December
31, 1996, SBC common stock price of $51.875.
Long Term Incentive Plans--Awards in Last Fiscal Year
The table below reports performance shares granted under the 1996 Stock and
Incentive Plan.
<TABLE>
<CAPTION> Estimated Future Payouts
Number of Performance or Other Under Non-Stock Price-Based Plans
Shares, Units or Period Until ------------------------------------
Name Other Rights Maturation or Payout Threshold Target Maximum
<S> <C> <C> <C> <C> <C>
Edward E. Whitacre, Jr. 19,698 1996-1998 16,743 19,698 19,698
21,453 1996-1997 18,235 21,453 21,453
Royce S. Caldwell 9,586 1996-1998 8,148 9,586 9,586
3,729 1996-1997 3,170 3,729 3,729
Charles E. Foster 5,675 1996-1998 4,824 5,675 5,675
1,622 1996-1997 1,379 1,622 1,622
William E. Dreyer 5,294 1996-1998 4,500 5,294 5,294
4,326 1996-1997 3,677 4,326 4,326
James D. Ellis 5,049 1996-1998 4,292 5,049 5,049
2,751 1996-1997 2,338 2,751 2,751
</TABLE>
This table reports performance shares granted to the Named Officers during the
last fiscal year, applicable to the performance periods indicated. Each
performance share is equivalent in value to one share of SBC common stock. At
the end of a performance period, a percentage of the performance shares is
converted into cash and/or SBC common stock, based upon the achievement of
certain value added performance levels.
The performance levels are set on a yearly basis, and the extent to which a
performance level is met or exceeded is expressed as a percentage. The annual
percentages are then averaged over the term of each performance period to
determine the percentage of performance shares which may be converted and paid
out. The maximum number of performance shares that may be converted at the end
of a performance period may not exceed 100% of the target number of performance
shares.
22
<PAGE> 25
Option Grants in Last Fiscal Year
The table below contains the estimated present value of the stock options as of
their issue date. The first and third options set forth opposite each name were
issued under a plan where middle level and above managers receive options based
on the number of shares purchased.
<TABLE>
<CAPTION>
Number of
Securities Percent of Total
Underlying Options Granted Exercise or Base
Options to Employees in Price Expiration Grant Date
Name Granted Fiscal Year ($/Share) Date Present Value
<S> <C> <C> <C> <C> <C>
Edward E. Whitacre, Jr. 4,780 0.06% $57.375 02/01/06 $ 66,346
150,000(1) 1.81% $49.875 08/01/06 $1,518,000
5,260 0.06% $49.875 08/01/06 $ 58,491
Royce S. Caldwell 2,202 0.03% $57.375 02/01/06 $ 30,564
44,000(1) 0.53% $49.875 08/01/06 $ 445,280
2,443 0.03% $49.875 08/01/06 $ 27,166
Charles E. Foster 1,860 0.02% $57.375 02/01/06 $ 25,817
40,000(1) 0.48% $49.875 08/01/06 $ 404,800
9,518 0.11% $49.875 08/01/06 $ 105,840
William E. Dreyer 1,084 0.01% $57.375 02/01/06 $ 15,046
29,000(1) 0.35% $49.875 08/01/06 $ 293,480
1,126 0.01% $49.875 08/01/06 $ 12,521
James D. Ellis 1,825 0.02% $57.375 02/01/06 $ 25,331
29,000(1) 0.35% $49.875 08/01/06 $ 293,480
10,057 0.12% $49.875 08/01/06 $ 111,834
</TABLE>
References 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 5.81 percent in calculating the
value of the options in grant A and 6.64 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 22.4 percent
volatility for grant A and 19.9 percent volatility for grants B and
C. The model reflected annual per share dividends at the date of
issuance of $1.652 per share for grant A and $1.72 per share for
grants B and C.
The present value of each option was reduced approximately 8 percent
for grant B, to reflect the probability of forfeiture due to
termination prior to vesting, and approximately 17 percent for Grant
A and 16 percent for grants B and 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 common 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. As of
December 31, 1996, none of these options have vested.
23
<PAGE> 26
PENSION PLANS
SBC has a noncontributory pension plan for employees known as the Pension
Benefit Plan. Retirement for officers and certain 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 of service at
retirement under the plan for Messrs. Whitacre, Caldwell, Foster, Dreyer and
Ellis would be $132,656 (44 years), $115,254 (41 years), $122,035 (40 years),
$51,704 (18 years) and $103,471 (36 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, stated
as a percentage of their annual salaries and annual incentive bonus 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 the event the
participant retires before reaching his or her 60th birthday, the amount
payable under this plan would be reduced by .5 percent for each month remaining
until the participant's 60th birthday, except for officers who have 30 years or
more of service at the time of retirement. Average Annual Compensation is
determined by averaging salaries and annual incentive bonus earned during the
36-consecutive-
24
<PAGE> 27
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. This 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 most recent bonuses, and if 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, Foster, Dreyer and Ellis would be $2,805,432,
$772,490, $529,973, $420,452 and $436,570, respectively. In calculating Mr.
Dreyer's benefits under the plan, the Company recognizes Mr. Dreyer's prior
service with the Company as well as his prior service with a former affiliate
of the Company (estimated to give him a total of 44 years of actual service at
retirement); however, these benefits are reduced by payments to be received by
Mr. Dreyer pursuant to such former affiliate's defined pension benefit plan.
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; 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, Foster and Ellis) 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 Senior Management Short Term Incentive Plan and (c) the cash
value of the Senior Management Long Term Incentive Plan target award applicable
to each officer for the most current performance period. If any officer should
reach his normal retirement age prior to three years (for
25
<PAGE> 28
Messrs. Whitacre, Caldwell, Foster and Ellis) 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"), is determined 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 (a) if
anyone (other than an employee benefit plan of SBC) acquires more than 20
percent of SBC's common stock; ( 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) if SBC's shareowners either 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 approve the complete liquidation of SBC or the
disposition of substantially all of SBC's assets.
26
<PAGE> 29
STOCK PERFORMANCE GRAPH
Comparison of Five Year Cumulative Total Return
SBC, S&P 500 and Peer Group
<TABLE>
<CAPTION>
Measurement Period SBC S&P 500 Peer Group
(Fiscal Year Covered)
<S> <C> <C> <C>
1991 100 100 100
1992 120 108 109
1993 139 118 129
1994 141 120 123
1995 206 165 187
1996 193 203 188
</TABLE>
Assumes $100 invested on December 31, 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.
27
<PAGE> 30
SHAREOWNER PROPOSALS
Proposals of shareowners intended for presentation at the 1998 Annual Meeting
must be received by SBC for inclusion in its Proxy Statement and form of Proxy
relating to that meeting by November 11, 1997. 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 1998 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.
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 1996 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 11, 1997
28
<PAGE> 31
[RECYCLE LOGO]
Printed entirely on recycled paper
meeting or exceeding the Environmental
Protection Agency minimum requirements
for recycled paper stock.
<PAGE> 32
APPENDIX
(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 1997 Annual Meeting of Shareowners of
SBC Communications Inc. The meeting will be held at 9:00 a.m. on Friday, April
25, 1997, at Alzafar Shrine Temple, 901 North Loop 1604 West, in 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 1997 Annual Meeting and Proxy Statement covers the
formal business of the meeting, which includes two proposals: the election of
fifteen Directors and the ratification of the appointment of the independent
auditors. 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 11, 1997
<PAGE> 33
- ------------------------------------------------------------
(FACE OF PROXY CARD)
Your Directors recommend a vote "FOR" the Director proposals 1 and 2.
1. Election of Directors
For _____ Withhold Authority _____ Exception*_____
*Exception(s):__________________________________________
To have your shares voted for all Director Nominees, including the Alternate
Nominees described on the reverse side, mark the "For" box. To withhold
authority to vote your shares for all Nominees and Alternate Nominees, mark the
"Withhold Authority" box. If you do not wish your shares voted for a
particular Nominee or Alternate 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_____
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.
<PAGE> 34
(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:
Admission Ticket
SBC Communications Inc.
Annual Meeting of Shareowners
April 25, 1997
Alzafar Shrine Temple
901 North Loop 1604 West
San Antonio, Texas 78216
<PAGE> 35
(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 25, 1997.
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 25, 1997, 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 MATTERS 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 two Director
proposals listed on the reverse side of this card.
The nominees for the Board of Directors are Clarence C. Barksdale, Ruben R.
Cardenas, Martin K. Eby, Jr., Charles F. Knight, and Carlos Slim Helu. In the
event of the merger of Pacific Telesis Group ("PAC") with a subsidiary of SBC,
one or more of the following directors of PAC may be nominees for election to
Group A in addition to and/or in lieu of the foregoing: Gilbert F. Amelio,
William P. Clark, Herman E. Gallegos, Frank C. Herringer, Mary S. Metz, Lewis
E. Platt, Phillip J. Quigley, Toni Rembe, S. Donley Ritchey, and Richard M.
Rosenberg.
PLEASE SIGN ON THE REVERSE SIDE OF THIS CARD AND RETURN PROMPTLY TO P.O. BOX
1138, NEWARK, N.J. 07101-9758.
This proxy card also provides voting instructions for shares held in the
Dividend Reinvestment Plan, 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:
================================================================================
<PAGE> 36
(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.)
<PAGE> 37
(LOGO) SBC COMMUNICATIONS INC.
ANNUAL MEETING OF SHAREOWNERS TO BE HELD APRIL 25, 1997.
- -------------------------------------------------------------
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 25, 1997, 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, IN ACCORDANCE WITH THE DIRECTORS' RECOMMENDATIONS ON THE OTHER
SUBJECTS LISTED ON THE REVERSE SIDE OF THIS CARD, AND AT THEIR DISCRETION ON
ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
The Board of Directors recommends a vote "FOR" each of the two Director
proposals listed on the reverse side of this card.
The nominees for the Board of Directors are: Clarence C. Barksdale, Ruben R.
Cardenas, Martin K. Eby, Jr., Charles F. Knight, and Carlos Slim Helu. In the
event of the merger of Pacific Telesis Group ("PAC") with a subsidiary of SBC,
one or more of the following directors of PAC may be nominees for election to
Group A in addition to and/or in lieu of the foregoing: Gilbert F. Amelio,
William P. Clark, Herman E. Gallegos, Frank C. Herringer, Mary S. Metz, Lewis
E. Platt, Philip J. Quigley, Toni Rembe, S. Donley Ritchey, and Richard M.
Rosenberg.
<PAGE> 38
(REVERSE SIDE OF CARD)
Directors recommend a vote "FOR" the Director proposals 1 and 2.
1. Election of All 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 line below.
2. Ratification of Independent Auditors
For _____ Against _____ Abstain_____
Date
--------------------------------------------------------
Signature
---------------------------------------------------
Signature
---------------------------------------------------
IMPORTANT: Please sign your name(s) exactly as shown
hereon.
PLEASE SIGN, DATE AND RETURN YOUR PROXY TODAY.
