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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:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SBC Communications Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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[Logo of SBC Appears Here]
Notice of 1999
Annual Meeting
and
Proxy Statement
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SBC Communications Inc.
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NOTICE OF ANNUAL MEETING OF SHAREOWNERS
To be held on April 30, 1999
To the holders of Common Stock of SBC Communications Inc.:
The 1999 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 30, 1999, at the Alzafar Shrine Temple, 901 North Loop 1604
West, San Antonio, Texas. The purposes of the meeting are to:
1. Elect six Directors to serve three-year terms;
2. Ratify the appointment of Ernst & Young LLP as independent auditor
of SBC for 1999; and
3. Act upon a shareowner proposal;
and to 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 March
2, 1999, 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 15 through April 29, 1999, 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 12, 1999
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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. Shareowners of record may also give their proxy by telephone or
through the Internet in accordance with the instructions accompanying the
proxy card. 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.
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PROXY STATEMENT
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
1999 Annual Meeting of Shareowners of SBC. The meeting will be held at 9:00
a.m. on Friday, April 30, 1999, 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, 1999, to
shareowners of record of SBC's common stock, $1.00 par value per share, at the
close of business on March 2, 1999. Each share entitles the registered holder
to one vote. As of January 31, 1999, there were 1,959,315,331 shares of SBC
common stock outstanding.
All shares represented by proxies will be voted by the individuals
designated on the enclosed proxy card, each of whom is a member 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 the Vice President and Secretary of SBC, 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.
Instead of submitting a signed proxy card, shareowners may submit their
proxies by telephone or through the Internet using the control number and
instructions accompanying the proxy card. Telephone and Internet proxies must
be used in conjunction with, and will be subject to, the information and terms
contained on the proxy card. These procedures may not be available to
shareowners who hold their shares through a broker, nominee, fiduciary or
other custodian.
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The proxy card or the telephone or Internet proxy will also serve as
voting instructions to the plan administrator or trustee for shares held on
behalf of a participant in SBC's Direct Stock Purchase and Reinvestment Plan
or in any of the following benefit plans: the SBC Savings Plan, the SBC
Savings and Security Plan, the SNET Management Retirement Savings Plan, the
SNET Bargaining Unit Retirement Savings Plan (the four immediately preceding
plans are referred to as the "Savings Plans"), the SBC PAYSOP, the Pacific
Telesis Group Employee Stock Ownership Plan, and the Southern New England
Telecommunications Corporation Tax Reduction Act Stock Ownership Plan (the
"TRASOP"). Shares in each of the foregoing employee benefit plans (except the
TRASOP) for which voting instructions are not received, as well as shares
which have not yet been allocated to participants' accounts in each of the
Savings Plans, will be voted in the same proportion as the shares for which
voting instructions are received from other participants in each such plan.
If a shareowner participates in these plans and/or maintains shareowner
accounts under more than one name (for example, with or without a middle
initial), the shareowner may receive more than one set of proxy materials. To
ensure that all shares are voted, please sign and return every proxy card
received or submit a proxy by telephone or through the Internet for each proxy
card you receive (the control numbers will differ on each card).
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 use the proxy card to give another person authority 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 shares are held through a broker, nominee, fiduciary or other
custodian, the shareowner must provide voting instructions to the record
holder of the shares in accordance with the record holder's requirements in
order to ensure his or her shares are properly voted.
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 $25,000, plus expenses.
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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.
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.
SBC's executive offices are located at 175 E. Houston, San Antonio, Texas
78205.
Your vote is important. Please sign, date and return your proxy card
or submit your proxy by telephone or through the Internet promptly so that
a quorum may be represented at the meeting.
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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.
The Board held 11 meetings in 1998.
Under SBC's Bylaws, the Board of Directors has the authority to determine
the size of the Board, not to exceed 25 Directors, and to fill vacancies.
Pursuant to the terms of the Agreement and Plan of Merger with Southern New
England Telecommunications Corporation ("SNET"), the Board of Directors
appointed Joyce M. Roche, a former SNET Director, to be a Group B Director,
effective October 26, 1998. The Board of Directors of SBC presently consists
of 20 members, two of whom are SBC executive officers. In addition, the Board
has appointed one non-voting Advisory Director, whose function is to provide
advice and counsel to the Board. 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 1999 Annual Meeting, Group A at the 2000 Annual Meeting, and
Group B at the 2001 Annual Meeting.
The SBC Board intends to nominate at the 1999 Annual Meeting the six
persons listed as nominees for Group C, all of whom are incumbent Directors
for election to three-year terms of office expiring at the 2002 Annual
Meeting. Dr. Haskell M. Monroe, Jr., a Group C Director, will retire from
service on the Board of Directors at the 1999 Annual Meeting and will not
stand for reelection. As a result of Dr. Monroe's retirement, an imbalance
between the classes will be created. In order to make the classes as equal in
size as possible, the Board of Directors has nominated August A. Busch III, a
Group B Director, for election to Group C at the 1999 Annual Meeting, along
with the other five persons listed as nominees for election as Group C
Directors. Mr. Busch will resign as a Group B Director effective with his
election as a Group C Director.
Biographical information about the Directors is provided on pages 7-12.
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 five
years.
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Holdings of SBC common stock by SBC Directors are shown on the table on
page 15.
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 1998. It consists of nine non-employee
Directors. The Audit Committee recommends to the Board the appointment of
a firm to serve as independent auditor, 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 SBC's internal system of
accounting controls and financial reporting procedures with
representatives of the independent auditor and with SBC's internal
auditors. The Audit Committee also examines the results of the annual
audit of the financial statements and the recommendations of the
independent auditor pertaining to accounting practices, policies and
procedures followed by SBC.
The Corporate Development Committee met one time in 1998. It consists of five
non-employee Directors and one employee Director. The Corporate
Development Committee examines proposed acquisitions and similar new
ventures and advises 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 1998. It consists of nine 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.
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The Executive Committee did not meet in 1998. It consists of two non-employee
Directors and two employee Directors. The Executive Committee assists 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 five times in 1998. It consists of seven
non-employee Directors and two employee Directors. The Finance/Pension
Committee makes recommendations to the Board of Directors with respect to
investment policy, dividends, methods of financing the operations of SBC
and its subsidiaries and oversees the investments of SBC's employee
benefit plans.
The Human Resources Committee met ten times in 1998. 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, Room 1140, San Antonio, Texas 78205, stating in detail the
qualifications of such persons for consideration by the Committee.
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SBC Directors To Be Elected at the 1999 Annual Meeting (GROUP C)
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[Photo James E. Barnes, age 65, retired. Mr. Barnes was Chairman of
Appears the Board, President and Chief Executive Officer of MAPCO
Here] Inc., Tulsa, Oklahoma from 1986 until 1998. 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 Parker Drilling Company. He is a member
of the Audit Committee and the Corporate Development
Committee.
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[Photo August A. Busch III, age 61, is Chairman of the Board and
Appears President of Anheuser-Busch Companies, Inc., St. Louis,
Here] 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.
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[Photo William P. Clark, age 67, is Chief Executive Officer of Clark
Appears Company, Paso Robles, California, and since December 1996 has
Here] been Senior Counsel to the law firm of Clark, Cali and
Negranti. He is a retired California Supreme Court Justice and
former Secretary of the United States Department of the
Interior. Judge Clark has been a Director of SBC since April
1997. He served as a Director of Pacific Telesis Group from
1985 to 1997. He is a Director of The Irish Investment Fund
and Lawter International Inc. He is a member of the Corporate
Development Committee and the Corporate Public Policy and
Environmental Affairs Committee.
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[Photo Mary S. Metz, age 61, is President of S. H. Cowell Foundation,
Appears San Francisco, California, and has served in this capacity
Here] since January 1999. Dr. Metz was Dean of University Extension
of the University of California, Berkeley, from July 1991
until August 1998, and is President Emerita of Mills College.
Dr. Metz has been a Director of SBC since April 1997. She
served as a Director of Pacific Telesis Group from 1986 to
1997. She is a Director of Longs Drug Stores Corporation;
Pacific Gas and Electric Company; and UnionBanCal Corporation.
She is a member of the Audit Committee.
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[Photo Patricia P. Upton, age 60, is President and Chief Executive
Appears Officer of Aromatique, Inc., Heber Springs, Arkansas. Mrs.
Here] 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.
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[Photo Edward E. Whitacre, Jr., age 57, is Chairman of the Board and
Appears Chief Executive Officer of SBC and has served in this capacity
Here] 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.
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SBC Directors Serving Until the 2000 Annual Meeting (GROUP A)
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[Photo Clarence C. Barksdale, age 66, is Vice Chairman, Board of
Appears Trustees, Washington University, St. Louis, Missouri.
Here] 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.
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[Photo Ruben R. Cardenas, age 68, is a partner in the law firm of
Appears Cardenas, Whitis & Stephen, L.L.P., McAllen, Texas.
Here] 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.
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[Photo Martin K. Eby, Jr., age 64, is Chairman of the Board and Chief
Appears Executive Officer of The Eby Corporation, Wichita, Kansas. Mr.
Here] 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.
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[Photo Charles F. Knight, age 63, is Chairman and Chief Executive
Appears Officer of Emerson Electric Co., St. Louis, Missouri. Mr.
Here] 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.; BP Amoco p.l.c., London, England; Emerson
Electric Co.; International Business Machines Corporation; and
Morgan Stanley Dean Witter & Co. He is the Chairman of the
Corporate Development Committee and a member of the Executive
Committee and the Finance/Pension Committee.
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[Photo Toni Rembe, age 62, is a partner in the law firm of Pillsbury
Appears Madison & Sutro LLP, San Francisco, California. Ms. Rembe was
Here] elected a Director of SBC in January 1998 and had served as an
Advisory Director of SBC from April 1997 to January 1998. She
served as a Director of Pacific Telesis Group from 1991 to
1997. She is a Director of Potlatch Corporation and
Transamerica Corporation. She is a member of the Corporate
Public Policy and Environmental Affairs Committee.
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[Photo Richard M. Rosenberg, age 68, retired. Mr. Rosenberg was
Appears Chairman of the Board of BankAmerica Corporation from January
Here] 1996 to May 1996 and was Chairman of the Board and Chief
Executive Officer from May 1990 to December 1995. Mr.
Rosenberg has been a Director of SBC since April 1997. He
served as a Director of Pacific Telesis Group from 1994 to
1997. He is a Director of Airborne Freight Corporation;
BankAmerica Corporation; Northrop Grumman Corporation; and
Potlatch Corporation. He is a member of the Corporate
Development Committee and the Finance/Pension Committee.
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[Photo Carlos Slim Helu, age 59, is Chairman of the Board of
Appears Telefonos de Mexico, S.A. de C.V. and Chairman of the Board of
Here] Carso Global Telecom, S.A. de C.V., Mexico. He is also
Chairman Emeritus of Grupo Carso, S.A. de C.V., having served
as Chairman of the Board from October 1980 to October 1998.
Ing. Slim has been a Director of SBC since September 1993. He
is a Director of Carso Global Telecom, S.A. de C.V.; Grupo
Financiero Inbursa, S.A. de C.V.; Philip Morris Companies
Inc.; 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.
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SBC Directors Serving Until the 2001 Annual Meeting (GROUP B)
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[Photo Royce S. Caldwell, age 60, is President-SBC Operations, SBC
Appears Communications Inc., and has served in this capacity since
Here] July 1995. Mr. Caldwell was President and Chief Executive
Officer of Southwestern Bell Telephone Company from April 1994
to June 1995. He was President-Customer Services, Southwestern
Bell Telephone Company, from July 1992 to March 1994. Mr.
Caldwell has been a Director of SBC since April 1997. He is a
Director of Cullen/Frost Bankers, Inc.; Pacific Bell; and
Southwestern Bell Telephone Company. Mr. Caldwell is also a
member of the Telecommunications Board of Advisors of Compaq
Computer Corporation. He is a member of the Executive
Committee and the Finance/Pension Committee.
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Herman E. Gallegos, age 68, 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. Mr.
Gallegos has been a Director of SBC since April 1997. He
served as a Director of Pacific Telesis Group from 1983 to
1997. He is a Director of UnionBanCal Corporation. He is a
member of the Audit Committee and the Corporate Public Policy
and Environmental Affairs Committee.
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Jess T. Hay, age 68, 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 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 Chairman of the Human Resources Committee.
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[Photo Bobby R. Inman, age 67, Admiral, United States Navy, Retired.
Appears Admiral Inman served as Vice Admiral, United States Navy, and
Here] 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 the Chairman
of the Finance/Pension Committee and a member of the Human
Resources Committee.
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[Photo S. Donley Ritchey, age 65, is Managing Partner of Alpine
Appears Partners, Danville, California. Mr. Ritchey was Chief
Here] Executive Officer and Chairman of the Board of Lucky Stores,
Inc. from 1980 to 1986. Mr. Ritchey has been a Director of SBC
since April 1997. He served as a Director of Pacific Telesis
Group from 1984 to 1997. He is a Director of The McClatchy
Company. He is a member of the Finance/Pension Committee and
the Human Resources Committee.
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[Photo Joyce M. Roche, age 51, is an independent consultant.
Appears Ms. Roche was President and Chief Operating Officer of Carson,
Here] Inc. from 1996 to 1998. Ms. Roche was Executive Vice President
of Global Marketing of Carson, Inc. from 1995 to 1996 and Vice
President-Global Marketing of Avon Products, Inc. from 1993 to
1994. Ms. Roche has been a Director of SBC since October 1998.
She served as a Director of Southern New England
Telecommunications Corporation from May 1997 to October 1998.
She is a Director of Anheuser-Busch Companies, Inc. and
Tupperware Corporation. She is a member of the Audit Committee
and the Corporate Public Policy and Environmental Affairs
Committee.
Advisory Director
The Board of Directors has appointed the following Advisory Director:
Gilbert F. Amelio, age 56, Partner and Director, The Parkside Group,
LLC, and Principal, Aircraft Ventures, LLC. Dr. Amelio has been an
Advisory Director of SBC since April 1997. He served as a Director of
Pacific Telesis Group from 1995 to 1997. He is a Director of Phase
Metrics, Inc.
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Compensation of Directors
Directors who are also employees of SBC or its subsidiaries receive no
separate 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, $2,000 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.
Advisory Directors receive the same retainers, fees and benefits as regular
Directors. Directors may elect to take their retainer and fees in the form of
SBC common stock or cash.
Directors may elect to defer the receipt of all or part of these
retainers and fees into either Stock Units or into a Cash Deferral Account.
Each Stock Unit is equivalent to a share of common stock and earns dividend
equivalents in the form of additional Stock Units. Stock Units are converted
to common stock and paid out as elected by the Director in up to 15
installments after the Director ceases service with the Board. In addition to
any deferrals into Stock Units, on the date of each Annual Meeting of
shareowners, each continuing Director also receives an award of Stock Units
equal in value to one-half of the annual retainer. Deferrals into a Cash
Deferral Account earn interest during the calendar year at a rate equal to the
Moody's Corporate Bond Yield Averages-Monthly Average Corporates for September
of the preceding year ("Moody's"). In addition, on the day of each Annual
Meeting, each continuing non-employee Director who joined the Board after
November 21, 1997, will receive a grant of Stock Units equal to $13,000,
limited to 10 annual grants.
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 1998 for these policies were $1,020 for
the travel accident insurance and $540 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 (as well as state tax liabilities for former
Pacific Telesis Group Directors), computed at maximum marginal rates,
including tax surcharges, averaged $7,900 per non-employee Director in 1998.
Employee Directors receive similar services and equipment in connection with
their service as officers of SBC.
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Non-employee Directors who joined the Board prior to 1997 may receive
pension payments for life following their retirement from the Board. Eligible
non-employee Directors who serve for at least five years will receive, in
quarterly installments, annual amounts equal to 10 percent of the annual
retainer in effect at the time of termination of Board service, multiplied by
the number of years of service, not to exceed 10 years. If the Director 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. (Of the Directors eligible to
receive a pension, only four continue to accrue service credits.)
Directors who formerly served on the Board of Pacific Telesis Group
("PTG") (which was acquired by SBC on April 1, 1997) do not receive pension
benefits from SBC. As part of their service with PTG, these Directors
previously received PTG Deferred Stock Units, each unit now representing the
cash value of a share of SBC common stock. The PTG Deferred Stock Units were
issued in exchange for the waiver by the Directors of certain retirement
benefits. PTG Deferred Stock Units earn dividend equivalents and are paid out
in the form of cash after the retirement of the Director. The units will vest
pro rata each year until the Director has completed seven years of service.
For purposes of vesting and payout of the PTG Deferred Stock Units and the
period during which certain options granted by PTG (initially to purchase
stock of PTG) may be exercised, service on the SBC Board of Directors will be
deemed to constitute service on the PTG Board. In addition, PTG Directors were
allowed to elect during 1997 to have their prior deferrals of PTG retainers
and fees continued until they leave the SBC Board. These deferrals earn a rate
of interest equal to Moody's plus 4 percent for deferrals from 1985 through
1992; Moody's plus 2 percent for deferrals from 1993 through 1995; and for
deferrals after 1995, the 10-year Treasury Note average for the month of
September for the prior year plus 2 percent.
Two members of Mr. Gallegos' immediate family were employed by
subsidiaries of PTG, and were paid a total of approximately $259,219 in 1998.
Amounts paid to these employees are comparable to compensation paid to other
employees performing similar job functions.
In 1998, PTG 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.
14
<PAGE>
Common Stock Ownership of Directors and Officers
The following table sets forth the beneficial ownership of SBC common
stock as of December 31, 1998, held by each Director (other than the Advisory
Director) and each officer named in the Compensation Charts on pages 25-27. 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
Name of Beneficial Ownership
Beneficial Owner (including options)(1)
- ---------------- ------------------------
<S> <C>
Clarence C.
Barksdale 10,797
James E. Barnes 6,002
August A. Busch
III(2) 49,554
Ruben R.
Cardenas 28,640
William P. Clark 18,594
Martin K. Eby,
Jr. 26,856
Herman E.
Gallegos 18,750
Jess T. Hay 20,002
Bobby R. Inman 3,690
Charles F.
Knight 14,978
Mary S. Metz 18,467
Haskell M.
Monroe, Jr. 12,062
Toni Rembe 18,525
S. Donley
Ritchey 20,345
</TABLE>
<TABLE>
<CAPTION>
Total SBC
Name of Beneficial Ownership
Beneficial Owner (including options)(1)
- ---------------- ----------------------
<S> <C>
Joyce M. Roche 1,629
Richard M. Rosenberg 9,110
Carlos Slim Helu 2,002
Patricia P. Upton 6,913
Edward E. Whitacre, Jr. 2,743,236
Royce S. Caldwell 539,852
Charles E. Foster 594,509
James D. Ellis 530,077
Donald E. Kiernan 450,539
All executive officers and Directors
as a group (consisting of 28 persons,
including those named above): 6,264,870
</TABLE>
- -------------------------------------------------------------------------------
(1) This table includes presently exercisable stock options and stock options
which will become exercisable within 60 days of the date of this table.
The following Directors and officers hold the number of options set forth
following their respective names: Judge Clark--14,620; Mr. Gallegos--
14,620; Dr. Metz--14,620; Ms. Rembe--13,158; Mr. Ritchey--14,620;
Mr. Rosenberg--5,848; Mr. Whitacre--2,196,842; Mr. Caldwell--518,335;
Mr. Foster--560,304; Mr. Ellis--435,465; Mr. Kiernan--418,207; and all
executive officers and Directors as a group--5,265,271.
This table also includes 2,000 restricted shares held by each non-employee
Director (other than Judge Clark, Mr. Gallegos, Dr. Metz, Ms. Rembe, Mr.
Ritchey, Ms. Roche and Mr. Rosenberg), 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 the following persons, who have
sole voting power but no investment power with respect to the number of
shares set forth following their respective names: Mr. Whitacre--1,154; Mr.
Caldwell--389; Mr. Foster--1,344; and Mr. Ellis--1,210. In addition, of the
shares shown in the above table, the following persons share voting and
investment power with other persons with respect to the number of shares
set forth following their respective names: Mr. Barnes--4,000; Mr. Busch--
9,800; Judge Clark--3,118; Dr. Monroe--9,784; Mr. Ritchey--5,723; Mr.
Rosenberg--1,798; Ms. Upton--715; Mr. Whitacre--31,668; Mr. Caldwell--
11,406; Mr. Foster--3,500; and Mr. Ellis--11,740.
(2) Mr. Busch disclaims beneficial ownership of 1,600 shares held by adult
son.
15
<PAGE>
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.
Directors are elected by a plurality of the votes cast. All other matters will
be determined by a majority of the votes cast. Shares represented by proxies
marked "withhold authority" with respect to the election of one or more
nominees as Directors, by proxies marked "abstain" on other proposals, and by
proxies marked to deny discretionary authority on other matters will not be
counted in determining the vote obtained on such matters. If no directions are
given and the signed card is returned, the members of the Directors' Proxy
Committee will vote the shares for the election of the Board of Directors'
nominees and in accordance with the recommendations of the Board of Directors
on the other subjects listed on the proxy card, and at their discretion on any
other matter that may properly come before the meeting. Under the rules of the
New York Stock Exchange, on certain routine matters, brokers may, at their
discretion, vote shares they hold in "street name" on behalf of beneficial
owners who have not returned voting instructions to the brokers. Routine
matters include the election of directors and the ratification of the
appointment of the independent auditor, but not shareowner proposals. In
instances where brokers are prohibited from exercising discretionary authority
(so-called "broker non-votes"), the shares they hold are not included in the
vote totals and, therefore, have no effect on the vote.
Matters To Be Voted Upon
Item 1 on Proxy Card -- Election of Directors
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 2002 Annual Meeting:
<TABLE>
<S> <C>
James E. Barnes Mary S. Metz
August A. Busch III Patricia P. Upton
William P. Clark Edward E. Whitacre, Jr.
</TABLE>
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 or provided through the telephone or Internet proxy. 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"
its Nominees Listed as Group C Directors.
16
<PAGE>
Item 2 on Proxy Card -- Ratification of Appointment
of Independent Auditor
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 auditor of SBC for the fiscal year ending December
31, 1999. 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 Auditor.
Shareowner Proposal
A shareowner has advised the Company that the shareowner intends to
introduce at the 1999 Annual Meeting the proposal set forth below. The name
and address of, and the number of shares owned by, such shareowner will be
provided upon request to the Secretary of the Company.
Item 3 on Proxy Card -- Shareowner Proposal
RESOLVED: We the stockholders assembled in person and by proxy, do hereby
request that the Board of Directors take the necessary steps so that (i) the
pensions currently granted to "outside" directors, and not currently
"grandfathered", be reviewed with an eye towards discontinuance, and (ii) no
such pensions be granted in future, nor increased if granted, without the
direct and specific vote of such stockholders assembled in Annual Meeting.
Shareowner's Supporting Statement
REASONS: Although it was commonplace some years ago to grant pensions to
"outside" directors, and to do so without stockholder approval, this practice
has been largely dropped by other large companies, including the others of the
"Baby Bells." Currently, SBC accrues pension benefits for four (4) such
directors. To continue the practice under these circumstances is ridiculous.
The ladies and gentlemen on our Board are employees not of the Company,
but of the stockholders, yet we were not called upon to make this decision.
They are currently being handsomely rewarded for their services in the form of
retainers, per diems, and expenses for their work for us. Most of these
directors are otherwise employed, or are retired with pensions, by their place
of primary employment. For us, the owners of the Company, to further pension
them is not in our best interests.
17
<PAGE>
While we surely require top talent as our directors, there are many
corporations today, despite what management may say to the contrary, where
this practice is not permitted, and numerous others where it has been
voluntarily withdrawn.
A similarly worded proposal last year drew 200,193,750 votes representing
30 percent of the votes cast. Your vote in favor is requested again.
Your Directors' Position
Your Board does not believe any action is necessary to further eliminate
pensions for Directors. In 1997, your Board changed the program so that
Directors who joined the Board after 1996 would not be entitled to a pension.
Directors who already were vested in their pensions were not affected. In
addition, four (4) Directors who joined the Board prior to 1997 who were not
fully vested at the time of the modifications were permitted to continue to
earn vesting credits. It is these four (4) individuals that the proponent
seeks to deny further vesting in their pensions.
Your Board believes it is important to keep its commitment to provide
pension benefits to those outside Directors who joined the Board before 1997.
When the four (4) Directors who are still accruing pension credits joined the
Board, they were informed that their compensation package would include a
pension benefit, and your Board believes it is wrong to take away these
benefits from this small group.
Your Directors believe the Company's shareowners are best served by
having talented, experienced and committed individuals serving as Directors.
To attract and retain such individuals, the Company must provide a
compensation package that is comparable with compensation packages provided by
other major U.S. companies. While this plan met those needs at one time, your
Directors believe it is no longer needed as part of the Company's compensation
package. Accordingly, your Board ceased participation by future Directors in a
way that did not unfairly prejudice the directors who joined the Board while
the retirement plan was still a part of the Board compensation package.
Your Board of Directors Recommends a
Vote "AGAINST" this Proposal.
18
<PAGE>
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 1998 fiscal year, the members of the Human Resources
Committee were (and are currently): Jess T. Hay (Chairman), August A. Busch
III, Admiral Bobby R. Inman and S. Donley Ritchey. 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. In addition, Mr. Whitacre
serves as a director and is on the Compensation and Human Resources Committee
of Emerson Electric Company, where Charles F. Knight, an SBC Director, is
Chairman of the Board and Chief Executive Officer.
Executive Compensation
Report of the Human Resources Committee on Executive Compensation
Responsibilities of the Human Resources Committee (the "Committee") of
the Board of Directors include establishing policies governing the
compensation of officers of SBC and certain key executives of 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.
19
<PAGE>
. Sustained superior performance by individual officers that enhances
the profitability of SBC should be recognized and appropriately
rewarded. As measured by the Committee, such performance may include
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 approving the compensation of officers
of SBC, including the Named Officers (defined below), and certain officers of
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 relate
reasonably to salaries for similar positions in the 50th percentile of a group
of companies with large 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
telecommunications or technology companies for which compensation information
is available. Accordingly, the Comparator Group includes, among others, the
companies in the Stock Performance Graph on page 32. The Committee may, at its
discretion, choose to pay above the 50th percentile of the market because of
sustained superior performance or to meet significant needs of the Company.
Incentives -- In order to create incentives for superior efforts on behalf of
SBC and to allow employees to share in the very success for which they are
responsible, the Committee has determined that a significant portion of each
officer's total compensation shall be dependent upon the annual and long term
performance of SBC.
Annual Incentives. During 1998, officers and other key executives of SBC
and certain subsidiaries received annual incentives under either the Short
Term Incentive Plan ("STIP") or the 1996 Stock and Incentive Plan ("SIP"). The
latter plan allows certain compensation paid to Named Officers to be
deductible under Section 162(m) of the Internal Revenue Code (discussed
below). Under each plan, the Committee awards an annual bonus contingent upon
the yearly performance of the SBC business to which the officer is assigned.
Under each plan, 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 target
20
<PAGE>
awards 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 if their respective value added
objectives are met; however, the formula driven portion of the award is capped
at 100 percent of the target amount. If less than the value added objectives
are achieved, the target awards are forfeited or, at a minimum, reduced in
progressively increasing proportions. The Committee has discretion to award
individual officers additional awards 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. The Committee
may also make annual discretionary awards in addition to any awards under the
plan.
The Committee has determined that the performance objectives were met or
exceeded by all of the Company's executive officers. The Committee is also
pleased to report that the Company's results exceeded the Board's expectations
and reflected exceptional performances by all the executive officers.
Accordingly, the Committee made additional discretionary awards beyond the
target award based upon individual performance.
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 value added goals 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. At the end of the performance
period, a percentage of the performance shares, not to exceed 100 per cent of
the performance shares granted, is paid out (i.e., converted into common stock
and/or cash), based on the achievement of SBC's value added goals over a
three- (or two-) year period. No awards are paid out if SBC fails to achieve
certain minimum value added requirements. 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. During 1998, the
Committee granted stock options
21
<PAGE>
to all managers, including all of the Named Officers. The target value of the
regular long term grants (combined value of performance shares and stock
options) made in 1998 was designed to relate reasonably to the value of all
long term type awards made to the 50th - 62nd percentile of employees holding
similar positions with companies in the Comparator Group, as determined by the
Committee's outside compensation consultant. In addition to the foregoing
awards, the Committee, at its discretion, may grant additional performance
shares to persons who have exhibited superior performance during the prior
year (these additional performance shares generally have two-year performance
periods). During 1998, Mr. Whitacre received such an award.
In 1998, SBC's officers received the payout of their performance share
awards for the 1995-1997 and 1996-1997 performance periods. The Committee
determined that during these performance periods SBC exceeded the 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.
The telecommunications industry continues to undergo unprecedented
changes, with the competitive landscape being redefined by numerous new
entrants into the industry. Moreover, new businesses in related industries,
such as the Internet, are proliferating. Foreign telecommunications firms are
now seeking entry into U.S. markets. These industries are constantly seeking
out qualified managers to fill their ranks, including SBC's officers, who are
widely recognized as being among the most qualified and talented leaders in
the telecommunications industry. From time to time SBC's officers receive
inquiries and offers from competitors, sometimes successfully, who seek to
hire them away from SBC. Your Committee believes it is crucial to SBC and its
shareowners that compensation programs be designed to adequately reward
officers for their past and current achievements and be given incentives to
remain with SBC. As a result, your Committee made special retention awards of
Amdocs stock units ("Amdocs Units") to certain key officers, including the
Named Officers. SBC holds more than 20% of Amdocs Limited, a provider of
software products and services to telecommunications companies. In recent
years, the value of SBC's investment in Amdocs has grown dramatically, and the
Committee feels it is appropriate to tie the awards to this successful
investment. Under the grants, one-third of the Amdocs Units will vest and be
issued to the officers each year beginning on the first anniversary of the
grant. Each officer was given a one-time election to convert his or her Amdocs
Units into a fixed cash amount, which would then earn interest and be subject
to the same vesting schedule as the Amdocs Units.
22
<PAGE>
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 Plan, 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 principles and
policies were applied by the Committee in determining 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
1998, targeted to the median base salary paid by companies in the Comparator
Group.
Mr. Whitacre's annual incentive bonus for 1998 was determined under the
1996 Stock and Incentive Plan, as described above. The Committee determined
that in 1998, Mr. Whitacre's personal performance was again excellent,
exceeding his value-added performance objective. Under Mr. Whitacre's
leadership, SBC achieved outstanding financial results from its core business
operations, while continuing to position itself for future growth
opportunities. Mr. Whitacre's success in transforming SBC from a regional
carrier to a national and global competitor was demonstrated by industry-
shaping acquisitions, including the still-pending merger with Ameritech; the
merger with Southern New England Telecommunications, providing a critical
foothold in the Northeast; and the rapid integration of Pacific Telesis, which
is accelerating the realization of targeted synergies. In response to
Mr. Whitacre's strategic vision, and his critical role in the leadership and
success of SBC, the Committee determined to grant Mr. Whitacre an annual
incentive award of $5 million for 1998.
Mr. Whitacre, along with other Named Officers, received stock options,
performance shares and Amdocs Units. 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. Although 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, it
does not intend to permit this arbitrary tax provision to distort the
23
<PAGE>
Committee's development and execution of effective compensation plans. Thus,
the Committee will continue to exercise discretion in those instances where
the mechanistic approaches necessary under tax law considerations could
compromise the interests of shareholders.
The Human Resources Committee:
<TABLE>
<S> <C>
Jess T. Hay, Chairman August A. Busch III
Admiral Bobby R. Inman S. Donley Ritchey
</TABLE>
24
<PAGE>
Summary
The table below contains information concerning annual and long term
compensation provided to the Chairman of the Board and Chief Executive
Officer and the other most highly compensated executive officers of SBC
(the "Named Officers").
Compensation
Table
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
---------------------------------- ------------------------ ----------
Number of
Restricted Securities All Other
Name and Principal Other Annual Stock Underlying LTIP Compen-
Position Year Salary Bonus Compensation Award(s) Options Payouts(1) sation(2)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward E. Whitacre, Jr. 1998 $1,162,500 $5,000,000 $541,932 $ 0 426,792 $3,341,841 $12,565,876
Chairman of the Board and 1997 $ 975,000 $3,300,000 $407,455 $8,737,500(3) 344,920 $2,232,082 $ 54,429
Chief Executive Officer 1996 $ 900,000 $2,500,000 $259,355 $ 0 160,040 $2,876,953 $ 49,773
Royce S. Caldwell 1998 $ 591,572 $1,200,000 $190,283 $ 0 205,509 $1,014,640 $ 2,031,622
President-SBC Operations 1997 $ 476,980 $1,054,000 $169,297 $2,912,500(3) 165,848 $ 677,116 $ 25,077
1996 $ 434,980 $ 854,000 $ 92,508 $ 0 48,645 $ 615,218 $ 22,669
Charles E. Foster 1998 $ 458,072 $ 700,000 $144,207 $ 0 61,409 $ 544,979 $ 2,024,735
Group President-SBC 1997 $ 425,980 $ 550,000 $107,577 $2,912,500(3) 100,127 $ 363,522 $ 22,580
1996 $ 388,980 $ 512,000 $ 65,133 $ 0 51,378 $ 531,165 $ 17,856
James D. Ellis 1998 $ 449,238 $ 700,000 $174,524 $ 0 77,756 $ 749,901 $ 2,023,257
Senior Executive Vice 1997 $ 372,980 $ 600,000 $124,434 $2,912,500(3) 87,663 $ 465,049 $ 18,975
President and General Counsel 1996 $ 347,980 $ 492,800 $102,139 $ 0 40,882 $ 630,932 $ 17,513
Donald E. Kiernan 1998 $ 401,905 $ 625,000 $138,932 $ 0 78,679 $ 633,693 $ 2,019,447
Senior Vice President, Treasurer 1997 $ 338,980 $ 525,000 $ 94,223 $2,912,500(3) 188,980 $ 392,992 $ 15,429
and Chief Financial Officer 1996 $ 308,980 $ 445,000 $ 53,426 $ 0 76,766 $ 492,163 $ 15,075
</TABLE>
----
(1) The long term incentive award payouts are for the 1995-1997 and
1996-1997 performance periods. All the Named Officers elected to
receive 50% of their awards in stock and 50% in cash with the
exception of Mr. Foster, who elected to receive his award in 100%
stock. During the same time, the market price of SBC common stock
rose from $20.19 on December 30, 1994 to $36.63 on December 31,
1997, (prices are adjusted for the March 1998 stock split),
resulting in an increase in the value of common stock held by our
shareowners of approximately $31 billion.
(2) All Other Compensation for 1998 reflects the grant date value of
Amdocs Units. The number of units granted and their values as of the
date of grant, are as follows: Mr. Whitacre received 892,857 units
valued at $12,500,000, Messrs. Caldwell, Foster, Ellis and Kiernan
each received 142,857 units valued at $2,000,000. Dividend
equivalents will be paid on the units equal to dividends paid, if
any, on an equal number of shares. All Other Compensation also
includes 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, Foster, Ellis
and Kiernan these amounts were $10,076, $3,942, $3,463, $2,409 and
$871, respectively. All other amounts reported under this heading
represent employer matching contributions made to employee benefit
plans.
(3) This represents the grant date value of SBC restricted stock and
phantom stock units awarded to the Named Officers. These awards will
vest and be issued and paid out over a three year period beginning
June 3, 2000. The number of shares of units granted, and their
values as of December 31, 1998, are as follows: Mr. Whitacre has
200,000 restricted shares valued at $10,725,000, and 100,000 phantom
stock units valued at $5,362,500; Messrs. Caldwell, Foster, Ellis
and Kiernan each have 100,000 restricted shares valued at
$5,362,500. Dividends or dividend equivalents are paid on all
restricted stock and phantom stock units.
25
<PAGE>
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 1998 and
the value of their unexercised stock options and SARs as of December 31, 1998.
None of the Named Officers exercised stock options during 1998. SBC has not
issued any SARS to the Named Officers.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options at Fiscal In-the-Money Options at
Acquired Year End Fiscal Year End(1)
on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edward E. Whitacre, Jr. 0 $ 0 2,187,384 1,093,432 $71,338,540 $22,237,542
Royce S. Caldwell 0 $ 0 513,873 509,808 $16,328,031 $10,174,925
Charles E. Foster 0 $ 0 556,336 232,121 $17,679,910 $ 5,172,238
James D. Ellis 0 $ 0 432,011 227,989 $13,859,610 $ 4,811,904
Donald E. Kiernan 0 $ 0 416,125 241,112 $13,200,056 $ 5,136,831
</TABLE>
(1) "Value of Unexercised In-the-Money Options" figures are based on the year
end, December 31, 1998, SBC common stock price of $53.625.
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>
Performance
or Other Estimated Future Payouts
Number of Period Under Non-Stock Price-
Shares, Until Based Plans
Units or Maturation ------------------------
Name Other Rights or Payout Threshold Target Maximum
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Edward E. Whitacre, Jr. 50,000 1998-2000 42,500 50,000 50,000
41,132 1998-1999 34,962 41,132 41,132
Royce S. Caldwell 24,628 1998-2000 20,934 24,628 24,628
Charles E. Foster 8,734 1998-2000 7,424 8,734 8,734
James D. Ellis 7,772 1998-2000 6,606 7,772 7,772
Donald E. Kiernan 7,388 1998-2000 6,280 7,388 7,388
</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. Value added is defined as after-tax
cash operating profit less depreciation and less a capital charge.
26
<PAGE>
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.
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 stock purchase plan where middle level and above
managers received options based on the number of shares purchased.
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options Exercise
Underlying Granted to or Base Grant Date
Options Employees in Price Expiration Present
Name Granted Fiscal Year(1) ($/Share) Date Value
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Edward E. Whitacre, Jr. 9,458 0.05% $39.313 2/2/08 $ 104,889
350,000(2) 1.75% $43.000 4/1/08 $4,389,000
67,334 0.34% $41.375 8/3/08 $ 834,942
Royce S. Caldwell 4,462 0.02% $39.313 2/2/08 $ 49,484
196,875(2) 0.99% $43.000 4/1/08 $2,468,813
4,172 0.02% $41.375 8/3/08 $ 51,733
Charles E. Foster 3,968 0.02% $39.313 2/2/08 $ 44,005
54,143(2) 0.27% $43.000 4/1/08 $ 678,953
3,298 0.02% $41.375 8/3/08 $ 40,895
James D. Ellis 3,454 0.02% $39.313 2/2/08 $ 38,305
57,663(2) 0.29% $43.000 4/1/08 $ 723,094
16,639 0.08% $41.375 8/3/08 $ 206,324
Donald E. Kiernan 2,082 0.01% $39.313 2/2/08 $ 23,089
59,063(2) 0.30% $43.000 4/1/08 $ 740,650
17,534 0.09% $41.375 8/3/08 $ 217,422
</TABLE>
(1) Percentages are based on 19,945,962 options granted to employees in 1998.
(2) One-third of these options vest on each anniversary of the grant. As of
December 31, 1998, none of these options have vested.
References to grants A, B, and C in the following discussion correspond
to first, second, and third grants of options, respectively, listed opposite
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 significant assumptions incorporated in the Black-Scholes model in
estimating the value of the options include the following:
27
<PAGE>
. 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 5.57 percent in calculating the
value of the options in grant A, 5.64 percent for grant B and 5.34
percent for grant C. These interest rates represent the interest rates
on U.S. Treasury securities on the date of grant with a maturity date
corresponding to that of the option term. Volatility was calculated
using daily stock prices for the one-year period prior to the grant
date, resulting in volatility of 26.68 percent for grant A, 26.29
percent for grant B, and 28.15 percent for grant C. The model
reflected annual per share dividends at the date of issuance of $.90
per share for grant A, and $.94 per share for grants B and C.
. The present values of the options were reduced approximately 4 percent
for grant A and 7.79 percent for grant B to reflect the probability of
forfeiture due to termination prior to vesting, and 15.64 percent for
grant A, 10.46 percent for grant B, and 15.94 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 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.
Pension Plans
SBC has a noncontributory pension plan for employees known as the SBC
Pension Benefit Plan. Beginning June 1, 1997, management participants,
including executive officers, are entitled to receive the greater of two
pension benefits, the Cash Balance Benefit or the Grandfathered Benefit, each
of which is subject to Internal Revenue Code limitations on pay used to
calculate pensions. A participant's Cash Balance Benefit is equal to the
balance in the participant's cash balance account, which is made up of (i) an
opening account balance as of June 1, 1997, which reflects the lump sum
present value of the participant's approximate "age 65" accrued benefit under
the old plan design, (ii) subsequent monthly basic benefit credits equal to 5
percent of the participant's compensation (generally, base pay, commissions,
and other nondiscretionary bonuses such as group incentive awards), and (iii)
monthly interest credits on the participant's cash balance account. The
interest rate is equal to the published average annual yield for
28
<PAGE>
the 30-year Treasury Bond, reset quarterly as of the middle of the preceding
quarter. In addition, over the period June 30, 1997, through May 31, 2002, the
participant's account receives a monthly pro rata share of the participant's
transition benefit, which is based on an estimate of what the participant's
account balance would have been if the cash balance design had been applied
throughout the participant's employment with SBC, plus additional credits if
the total of the participant's age plus service exceeds 25. The Grandfathered
Benefit is equal to the sum of 1.6 percent of a participant's average
compensation (generally, base pay, commissions, and other nondiscretionary
bonuses such as group incentive awards) for the five years ended December 31,
1997 (or any prior 5 year averaging period if it would result in a higher
benefit), multiplied by the number of years of service through the end of the
participant's averaging period, plus 1.6 percent of the participant's pension
compensation subsequent to the averaging period. (The participant may also be
eligible for an alternative Grandfathered Benefit under an early retirement
program. Under the alternative benefit, the pension is equal to the number of
years of service (plus an additional 5 years of age and service credits)
multiplied by the participant's average compensation for the 5 year period
ending December 31, 1990, plus 1.6% of pay in 1991, and no credit for service
after 1991.)
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 for officers and certain
senior managers from the general funds of SBC either under the Supplemental
Retirement Income Plan (see paragraph below) or another SBC nonqualified 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, and the
estimated credited years of service at retirement under the Plan for Messrs.
Whitacre, Caldwell, Foster, Ellis, and Kiernan would be $132,656 (44 years),
$115,254 (41 years), $122,034 (40 years), $103,470 (36 years), and $43,775 (18
years), respectively.
The Supplemental Retirement Income Plan (which is not funded by, nor is
it a part of, the Pension Benefit Plan) establishes a target annual 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. Average Annual Compensation is determined
by averaging salaries and annual incentive bonus earned during the 36-
consecutive-month period out of the last 120 months preceding
29
<PAGE>
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 the Pension Benefit Plan if the
benefits under the Pension Benefit Plan were paid in the form of an immediate
annuity for life. In the event the participant retires before reaching his or
her 60th birthday, a discount of .5 percent for each month remaining until the
participant's 60th birthday is applied reducing the amount payable under this
plan, except for officers who have 30 years or more of service at the time of
retirement. 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 Supplemental Retirement Income Plan for Messrs. Whitacre,
Caldwell, Foster, Ellis, and Kiernan would be $4,604,944, $1,297,066,
$787,821, $767,205 and $491,574, respectively.
Contracts with Management
On November 21, 1997, the Board of Directors approved revised Change of
Control Severance Agreements (the "Agreements") for 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 or disability, or 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, Foster and
Ellis) or two (in the case of Mr. Kiernan) 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 or as a Key Executive
Officer Short Term Award under the 1996 Stock and Incentive Plan and (c) the
cash value of the target award of performance shares granted under the 1996
Stock and Incentive Plan applicable to each officer for the
30
<PAGE>
most current performance cycle. 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 the officer
is 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 and/or under the 1996
Stock and Incentive Plan (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, SBC will pay the officer an amount equal to
the excise tax and all Federal and applicable state taxes resulting from the
payment of the excise tax or from payment of such Federal and state taxes.
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
Directors at the beginning of such period (together with any new Directors
elected or nominated for election by a 2/3 majority of Directors then in
office who were Directors at the beginning of such period or whose election or
nomination for election was previously so approved) 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 35 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.
Section 16(a) Beneficial Ownership Reporting Compliance
SBC's executive officers and Directors are required under the Securities
Exchange Act of 1934 to file reports of transactions and holdings in SBC
common stock with the Securities and Exchange Commission and the New York
Stock Exchange and to file a copy of such reports with SBC. Based solely on a
review of the filed reports and written representations that no other reports
are required, SBC believes that during the preceding year all executive
officers and Directors were in compliance with all filing requirements
applicable to such executive officers and Directors, except for one
transaction of less than 1,000 shares by an investment manager who had
discretionary authority over an account in which Ms. Upton had an indirect
beneficial interest that was filed after the due date.
31
<PAGE>
Stock Performance Graph
Comparison of Five Year Cumulative Total Return
SBC, S&P 500 and Peer Group
[Graph Appears Here]
<TABLE>
<CAPTION>
Data Points in Dollars
at Year End SBC S&P 500 Index Peer Group
- ---------------------- ---------- ------------- ----------
<S> <C> <C> <C>
1993 $100 $100 $100
1994 $101 $101 $ 95
1995 $149 $139 $150
1996 $139 $171 $151
1997 $203 $229 $214
1998 $304 $294 $325
</TABLE>
Assumes $100 invested on December 31, 1993, 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, 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.
32
<PAGE>
Other Business
The Board of Directors is not aware of any matters that 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 1998 may be obtained without charge upon written request
to the Assistant Director-External Reporting, 175 E. Houston, 9th Floor, San
Antonio, Texas 78205.
Shareowner Proposals
Proposals of shareowners intended for presentation at the 2000 Annual
Meeting must be received by SBC for inclusion in its Proxy Statement and form
of Proxy relating to that meeting by November 12, 1999. Such proposals should
be sent in writing by certified mail to the Vice President and Secretary of SBC
at 175 E. Houston, Room 1140, San Antonio, Texas 78205. Faxed proposals will
not be accepted.
Shareowners whose proposals are not included in the Proxy Statement but
who still intend to submit a proposal at an Annual Meeting and shareowners who
intend to submit nominations for Directors at an Annual 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.
By Order of the Board of Directors.
/s/ Judith M. Sahm
------------------------------------
Judith M. Sahm
Vice President and Secretary
March 12, 1999
33
<PAGE>
[Recycling Logo
Appears Here]
Printed entirely on recycled paper
meeting or exceeding the Environmental
Protection Agency minimum requirements
for recycled paper stock.
<PAGE>
Voting Side - Top Portion
- -------------------------
SBC logo
Proxy Services
P.O. Box 9142
Farmingdale, NY 11735
If you submit your vote by telephone or Internet there is no need for you to
mail back the proxy card.
THANK YOU FOR VOTING!
Your Vote Is Important!
This year you can submit your vote by mail, telephone, or the Internet. Please
refer to the enclosed instruction sheet if you would like to submit your vote
by telephone or the Internet.
The shares represented by this proxy card will be voted in accordance with your
directions. In the absence of directions, the shares will be voted FOR
Items 1 and 2, and AGAINST Item 3.
TO SUBMIT YOUR VOTE BY MAIL
Mark, sign and date your proxy card and return it in the enclosed envelope.
TO SUBMIT YOUR VOTE BY TELEPHONE
Call 1-800-690-6903 on any touch-tone telephone to authorize each of the members
of the Proxy Committee to vote your shares as if you marked and returned your
proxy card. You may vote 24 hours a day, 7 days a week. You will be prompted to
enter the control number below; then just follow the simple recorded
instructions.
TO SUBMIT YOUR VOTE BY INTERNET
The website address is www.proxyvote.com to authorize each of the members of the
Proxy Committee to vote your shares as if you marked and returned your proxy
card. You may vote 24 hours a day, 7 days a week. You will be prompted to enter
the control number below; then just follow the simple instructions.
CONTROL NUMBER
ACCOUNT NUMBER
TO VOTE, MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS: X
<PAGE>
Voting Side - Bottom Portion
- ----------------------------
DETACH PROXY CARD HERE IF YOU ARE NOT SUBMITTING YOUR VOTE BY TELEPHONE OR
INTERNET
SBC COMMUNICATIONS INC.
Your Directors recommend a vote FOR Items 1 and 2.
Item 1. Election of Directors
For All [ ] Withhold All [ ] For All Except [ ]
To have your shares voted FOR all Director nominees, mark the FOR ALL box
on Item 1. To withhold authority to vote your shares for all nominees, mark
WITHHOLD ALL. If you do not wish your shares voted for a particular nominee,
mark FOR ALL EXCEPT and write the name(s) of the exception(s) below.
Exception(s): ____________________________________
Item 2. Ratification of Independent Auditor
For [ ] Against [ ] Abstain [ ]
Your Directors recommend a vote AGAINST Item 3.
Item 3. Shareowner Proposal
For [ ] Against [ ] Abstain [ ]
<PAGE>
Voting Side
- -----------
Comments: If you have noted either an Address Change or Comments on the other
side of this card, mark here. [ ]
Discontinue Mailing Annual Report For This Account (only where you receive
multiple copies at the same address). [ ]
Please sign exactly as name or names appear on this account. 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.
- ------------------------------------------------------------------------------
Signature
Date
-----------------------------
- ------------------------------------------------------------------------------
Signature (Joint Owner)
Date
-----------------------------
Instruction Side - Top Portion
- ------------------------------
The Alzafar Shrine Temple is
located at 901 North Loop 1604
West in San Antonio, on the
west-bound frontage road
between the Stone Oak Parkway
and Blanco Road exits.
(Insert maps)
ADMISSION TICKET
SBC COMMUNICATIONS INC.
Annual Meeting of Shareowners
Friday, April 30, 1999
Alzafar Shrine Temple
901 North Loop 1604 West
San Antonio, Texas 78216
Doors open at 8:00 a.m.
Meeting begins at 9:00 a.m.
<PAGE>
Instruction Side - Bottom Portion
- ---------------------------------
SBC logo PROXY CARD/VOTING INSTRUCTION CARD
- -------- ----------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON APRIL 30, 1999.
The undersigned hereby appoints Edward E. Whitacre, Jr., Ruben R. Cardenas,
Royce S. Caldwell, 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 30, 1999, 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, in accordance with the directions indicated on the reverse side of
this card or provided through the telephone or Internet proxy procedures, and at
the discretion of the proxies on any other matters that may properly come before
the meeting. 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 MATTERS THAT MAY PROPERLY COME BEFORE THE
MEETING.
The Board of Directors recommends a vote FOR each of the two Director proposals
(Items 1 and 2) and AGAINST the Shareowner proposal (Item 3) listed on the
reverse side of this card. The Board of Directors knows of no other matters that
are to be presented at the meeting.
The nominees for the Board of Directors are:
01 - James E. Barnes 03 - William P. Clark 05 - Patricia P. Upton
02 - August A. Busch III 04 - Mary S. Metz 06 - Edward E. Whitacre, Jr.
PLEASE SIGN ON THE REVERSE SIDE OF THIS CARD AND RETURN PROMPTLY TO P.O. BOX
9142, FARMINGDALE, NY 11735; OR, IF YOU CHOOSE, YOU CAN SUBMIT YOUR VOTE BY
TELEPHONE OR INTERNET. IF YOU DO NOT SIGN AND RETURN A PROXY, SUBMIT YOUR VOTE
BY TELEPHONE OR INTERNET, OR ATTEND THE MEETING AND VOTE BY BALLOT, SHARES YOU
HOLD DIRECTLY CANNOT BE VOTED.
This proxy card, when signed and returned, or your telephone or Internet proxy,
will also constitute voting instructions to the Plan Administrator or trustee
for shares held in SBC's Direct Stock Purchase and Reinvestment Plan or in any
of the following benefit plans: the SBC Savings Plan, the SBC Savings and
Security Plan, the SNET Management Retirement Savings Plan, the SNET Bargaining
Unit Retirement Savings Plan (the four immediately preceding plans are referred
to as the "Savings Plans"), the SBC PAYSOP, the Pacific Telesis Group Employee
Stock Ownership Plan, and the Southern New England Telecommunications
Corporation Tax Reduction Act Stock Ownership Plan (the "TRASOP"). Shares in
each of the foregoing employee benefit
<PAGE>
plans (except the TRASOP) for which voting instructions are not received, as
well as shares which have not yet been allocated to participants' accounts in
each of the Savings Plans, will be voted in the same proportion as the shares
for which voting instructions are received from other participants in each such
plan.
General Comments: _____________________________________________________________
_________________________________ Daytime Phone #: ____________________________
(If you have written in the above space, please mark the box for "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 the reverse side.)
<PAGE>
Separate Handout For Telephone and Internet Voting Instructions (left column)
- ----------------------------------------------------------------------------
Wait! There's an easier way to submit your proxy.
24 Hours A Day --- 7 Days A Week SBC logo
Submit Your Proxy By Telephone
It's fast, convenient, and your submission is immediately confirmed and posted.
Call Toll-Free On A Touch Tone Phone
1-800-690-6903
Just follow these four easy steps:
Read the accompanying Proxy Statement and proxy card.
Call the toll-free number 1-800-690-6903.
Enter your 12-digit Control Number located on your proxy card.
Follow the simple recorded instructions.
Your vote is important!
- -----------------------
Call 1-800-690-6903
24 hours a day
Separate Handout For Telephone and Internet Voting Instructions (right column)
- -----------------------------------------------------------------------------
Submit your Proxy by Internet
It's fast, convenient, and your submission is immediately confirmed and posted.
Go to website:
WWW.PROXYVOTE.COM
Just follow these four easy steps:
Read the accompanying Proxy Statement and proxy card.
Go to the website, www.proxyvote.com.
Enter your 12-digit Control Number located on your proxy card.
Follow the simple instructions.
Your vote is important!
- -----------------------
Go to WWW.PROXYVOTE.COM
24 hours a day
If you submit your proxy by telephone or Internet, do not return your proxy
card.
Thank you for your proxy submission.
<PAGE>
(Broker Card)
SBC logo SBC Communications Inc.
ANNUAL MEETING OF SHAREOWNERS TO BE HELD APRIL 30, 1999
- -------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints the following members of the Directors' Proxy
Committee: Edward E. Whitacre, Jr., Ruben R. Cardenas, Royce S. Caldwell 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 30, 1999, 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, in accordance with the
directions indicated on the reverse side of this card, and at the discretion of
the proxies on any other matters that may properly come before the meeting. 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.
The Board of Directors recommends a vote "FOR" each of the two Director
proposals and "AGAINST" the Shareowner proposal listed on the reverse side of
this card.
The nominees for the Board of Directors are: James E. Barnes, August A. Busch
III, William P. Clark, Mary S. Metz, Patricia P. Upton, and Edward E. Whitacre,
Jr.
VOTING SIDE
Directors recommend a vote "FOR" the Director proposals and "AGAINST" the
Shareowner proposal.
1. Election of all Directors FOR [ ] WITHHOLD [ ] EXCEPTION [ ]
2. Ratification of Independent Auditor FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Shareowner Proposal FOR [ ] AGAINST [ ] ABSTAIN [ ]
Date: _____________________________________
Signature: _____________________________________
Signature: _____________________________________
IMPORTANT: Please sign your name(s) exactly as shown hereon.
PLEASE DATE, SIGN, AND RETURN YOUR PROXY TODAY
