<PAGE>
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)
- --------------------------------------------------------------------------------
(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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SBC Communications Inc.
[SBC COMMUNICATIONS INC. LOGO]
Notice of
2000 Annual Meeting
and Proxy Statement
[SBC GLOBAL NETWORK LOGO]
Southwestern Bell . Ameritech . Pacific Bell . SNET . Nevada Bell . Cellular
One . SBC Telecom
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
To be held on April 28, 2000
To the holders of Common Stock of SBC Communications Inc.:
The 2000 Annual Meeting of Shareowners of SBC Communications Inc.
("SBC"), a Delaware corporation, will be held at 9:00 a.m. on Friday, April
28, 2000, at the Alzafar Shrine Temple, 901 North Loop 1604 West, San Antonio,
Texas. The purposes of the meeting are to:
1. Elect seven Directors to serve three-year terms;
2. Ratify the appointment of Ernst & Young LLP as independent auditors
of SBC for 2000;
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
February 29, 2000, 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 13 through April 27, 2000, 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 10, 2000
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. ("SBC") for use
at the 2000 Annual Meeting of Shareowners of SBC. The meeting will be held at
9:00 a.m. on Friday, April 28, 2000, 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 10, 2000, to
shareowners of record of SBC's common stock, $1.00 par value per share, at the
close of business on February 29, 2000. Each share entitles the registered
holder to one vote. As of January 31, 2000, there were 3,396,087,189 shares of
SBC common stock outstanding.
All shares represented by proxies will be voted by one or more of the
persons 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.
The proxy card, or a proxy submitted by telephone or through the
Internet, will also serve as voting instructions to the plan administrator or
trustee for any shares held on behalf of a participant under any of the
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following employee benefit plans: the SBC Savings Plan, the SBC Savings and
Security Plan, the Ameritech Savings Plan for Salaried Employees, the
Ameritech Savings and Security Plan for Non-Salaried Employees (the preceding
plans are referred to as the "Savings Plans"), the DonTech Profit
Participation Plan, the Old Heritage Advertising & Publishers, Inc. Profit
Sharing Plan, the SBC PAYSOP, the Pacific Telesis Group Employee Stock
Ownership Plan, and the Tax Reduction Act Stock Ownership Plan sponsored by
The Southern New England Telephone Company (the "TRASOP"). Shares in each of
the foregoing employee benefit plans (except the TRASOP and the Old Heritage
plan) 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, subject to the trustees' fiduciary obligations, will be voted by the
trustees in the same proportion as the shares for which voting instructions
are received from other participants in each such plan. Similarly, the proxy
card or a proxy submitted by telephone or through the Internet will constitute
voting instructions to the plan administrator pursuant to the DirectSERVICE
Investment Program, offered by First Chicago Trust Company of New York (SBC's
transfer agent), for fractional shares held on behalf of plan participants.
If a shareowner participates in these plans and/or maintains shareowner
accounts under more than one name (including minor differences in
registration, such as 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 (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
names appearing on the enclosed proxy card, inserting the name(s) of another
person(s) and delivering the signed card to such person(s). The person(s)
designated by the shareowner must present the signed proxy card at the meeting
in order for the shares to be voted.
Where the shareowner is not the record holder, such as where the 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.
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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.
Shareowners representing 40% 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. If
you do not have an admission ticket you will be admitted upon presentation of
identification at the door. If you are hearing impaired or physically disabled
and require special service, you 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
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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 seven meetings in 1999.
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. The
Board of Directors of SBC presently consists of 23 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.
Pursuant to the terms of the Agreement and Plan of Merger with Ameritech
Corporation ("Ameritech"), the Board of Directors appointed James A.
Henderson, Lynn M. Martin, John B. McCoy, Richard C. Notebaert, and Laura
D'Andrea Tyson, each a former Ameritech Director, to be SBC Directors,
effective with the completion of the transaction on October 8, 1999. On
December 30, 1999, Mr. Notebaert resigned as a Director of SBC.
SBC's Bylaws provide for a classified Board of Directors under which
there are three classes of Directors, all of which are as equal in number as
possible. The class to which each Director has been assigned is designated as
Group A, Group B or Group C. The term of office of Group A Directors will
expire at the 2000 Annual Meeting, Group B at the 2001 Annual Meeting, and
Group C at the 2002 Annual Meeting.
The SBC Board intends to nominate at the 2000 Annual Meeting the seven
persons listed as nominees for Group A, all of whom are incumbent Directors,
for election to three-year terms of office expiring at the 2003 Annual
Meeting. Current Group A Directors Ruben R. Cardenas and Richard M. Rosenberg
will retire from service on the Board of Directors at the 2000 Annual Meeting
and will not stand for re-election. As a result of their retirements, the
Board has voted to reduce the size of the Board to 21 Directors, effective
immediately before the 2000 Annual Meeting. In order to make the classes equal
in size, as required by SBC's Bylaws, the Board of Directors has nominated
Royce S. Caldwell, a Group B Director, and Patricia P. Upton, a Group C
Director, for election to Group A at the 2000 Annual Meeting, along with the
other persons
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listed as nominees for election as Group A Directors. Mr. Caldwell and Mrs.
Upton will resign as Group B and Group C Directors, respectively, effective
with their election as Group A Directors.
Biographical information about the Directors is provided on pages 8-13.
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.
During 1999, each Director attended at least 87% of all Board and Committee
meetings, except for Mr. Notebaert who attended one out of two scheduled
meetings.
Holdings of SBC common stock by SBC Directors are shown on the table on
page 16.
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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.
Audit Committee--The Committee met four times in 1999. It consists of 11 non-
employee Directors. The Audit Committee recommends to the Board the
appointment of a firm to serve as independent auditors, subject to
ratification by the shareowners at the Annual Meeting. The independent
auditing firm examines the accounting records of SBC and its subsidiaries
for the coming year. The Audit Committee periodically reviews SBC's
internal system of accounting controls and financial reporting procedures
with representatives of the independent auditors 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 auditors pertaining to accounting practices, policies and
procedures followed by SBC.
Corporate Development Committee--The Committee met five times in 1999. It
consists of seven non-employee Directors and one employee Director. The
Corporate Development Committee reviews proposed mergers, acquisitions,
dispositions and similar transactions.
Corporate Public Policy And Environmental Affairs Committee--The Committee met
three times in 1999. It consists of ten 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.
Executive Committee--The Committee did not meet in 1999. 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.
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Finance/Pension Committee--The Committee met four times in 1999. It consists
of nine 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.
Human Resources Committee--The Committee met seven times in 1999. It consists
of five non-employee Directors. The Human Resources Committee oversees the
management of human resources activities of SBC, including officer
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, the 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, San Antonio, Texas 78205, stating in detail the qualifications of
such persons for consideration by the Committee.
7
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SBC Directors to be Elected at the 2000 Annual Meeting
(GROUP A)
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Clarence C. Barksdale, age 67, served as Vice Chairman, Board of
Trustees, Washington University, St. Louis, Missouri, from July
1989 to July 1999. He is taking a one-year absence and is
expected to return in May 2000. 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
1985 to 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 Chairman
of the Corporate Public Policy and Environmental Affairs Committee.
[Photo of Clarence C. Barksdale]
Royce S. Caldwell, age 61, is Vice Chairman of the Board of
Directors and President-SBC Operations of SBC Communications Inc.
and has served as Vice Chairman since November 1999 and as
President-SBC Operations since July 1995. Mr. Caldwell was
President and Chief Executive Officer of Southwestern Bell
Telephone Company from April 1994 to June 1995. Mr. Caldwell has
been a Director of SBC since April 1997. He is a Director of Cullen/Frost
Bankers, Inc.; Pacific Bell Telephone Company; Pacific Telesis Group; 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.
[Photo of Royce S. Caldwell]
Martin K. Eby, Jr., age 65, is Chairman of the Board and Chief
Executive Officer of The Eby Corporation, Wichita, Kansas. Mr.
Eby has been a Director of SBC since June 1992. He is a Director
of Intrust Bank, N.A. and Intrust Financial Corporation. He is a
member of the Audit Committee and the Finance/Pension Committee.
[Photo of Martin K. Eby, Jr.]
Charles F. Knight, age 64, is Chairman and Chief Executive
Officer of Emerson Electric Co., St. Louis, Missouri. Mr. Knight
has been a Director of SBC since October 1983. He served as a
Director of Southwestern Bell Telephone Company from 1974 to
1983. Mr. Knight is a Director of Anheuser-Busch Companies, Inc.;
BP Amoco p.l.c.; 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.
[Photo of Charles F. Knight]
8
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(GROUP A--continued)
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Toni Rembe, age 63, is a partner in the law firm of Pillsbury
Madison & Sutro LLP, San Francisco, California. Ms. Rembe was
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. She is a member of the
Corporate Development Committee and the Corporate Public Policy and
Environmental Affairs Committee.
[Photo of Toni Rembe]
Carlos Slim Helu, age 60, is Chairman of the Board of Carso
Global Telecom, S.A. de C.V., Mexico City, Mexico, and has held
this position since 1996. He is also Chairman of the Board of
Telefonos de Mexico, S.A. de C.V. and Chairman Emeritus of Grupo
Carso, S.A. de C.V., having served as Chairman of the Board of
Grupo Carso from 1980 to 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.
[Photo of Carlos Slim Helu]
Patricia P. Upton, age 61, is President and Chief Executive
Officer of Aromatique, Inc., Heber Springs, Arkansas. Mrs. Upton
has been a Director of SBC since June 1993. She is a member of
the Audit Committee and the Corporate Public Policy and
Environmental Affairs Committee.
[Photo of Patricia P. Upton]
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SBC Directors Serving Until the 2001 Annual Meeting
(GROUP B)
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Herman E. Gallegos, age 69, is an independent management
consultant. Mr. Gallegos was a Director of Gallegos
Institutional Investors Corporation from 1990 to 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.
[Photo of Herman E. Gallegos]
Jess T. Hay, age 69, is Chairman of HCB Enterprises Inc, a
private investment firm, Dallas, Texas, and has served in this
capacity since 1995. He is also Chairman of the Texas
Foundation for Higher Education, Dallas, Texas. Mr. Hay was
Chairman and Chief Executive Officer of Lomas Financial Group
from 1969 until his retirement in 1994. Mr. Hay has been a
Director of SBC since April 1986. He is a Director of Exxon Mobil Corporation;
Trinity Industries, Inc.; and Viad Corp. He is a member of the Audit Committee
and Chairman of the Human Resources Committee.
[Photo of Jess T. Hay]
James A. Henderson, age 65, retired. Mr. Henderson was
Chairman of the Board from 1995 and Chief Executive Officer
from 1994 of Cummins Engine Company, Inc., Columbus, Indiana,
until his retirement in December 1999. Mr. Henderson has been
a Director of SBC since October 1999. He served as a Director
of Ameritech Corporation from 1983 to 1999. He is a Director
of International Paper Company; Rohm and Haas Company; and Ryerson Tull, Inc.
He is a member of the Audit Committee and the Finance/Pension Committee.
[Photo of James A. Henderson]
Bobby R. Inman, age 68, Admiral, United States Navy, Retired.
Admiral Inman served as Vice Admiral, United States Navy, and
Director, National Security Agency, from 1977 to 1981, and as
Admiral, United States Navy, and Deputy Director, Central
Intelligence Agency, from 1981 to 1982. He has been a Director
of SBC since March 1985. Admiral Inman is a Director of Fluor
Corporation; Science Applications International Corporation; Temple-Inland
Inc.; and Xerox Corporation. He is the Chairman of the Finance/Pension
Committee and a member of the Human Resources Committee.
[Photo of Bobby R. Inman]
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(GROUP B--continued)
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John B. McCoy, age 56, retired. Mr. McCoy was Chairman from
November 1999 and Chief Executive Officer from October 1998 of
BANK ONE CORPORATION, Chicago, Illinois, until his retirement
in December 1999. Mr. McCoy served as Chairman and Chief
Executive Officer of BANC ONE CORPORATION from 1987 to 1998.
Mr. McCoy has been a Director of SBC since October 1999. He
served as a Director of Ameritech Corporation from 1991 to 1999. He is a
Director of Cardinal Health, Inc. and Federal Home Loan Mortgage Corporation.
He is a member of the Corporate Development Committee and the Human Resources
Committee.
[Photo of John B. McCoy]
S. Donley Ritchey, age 66, is Managing Partner of Alpine
Partners, Danville, California. Mr. Ritchey was Chief
Executive Officer and Chairman of the Board of Lucky Stores,
Inc. from 1980 to 1986. 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.
[Photo of S. Donley Ritchey]
Joyce M. Roche, age 52, is an independent marketing
consultant. Ms. Roche was President and Chief Operating
Officer of Carson, 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.
[Photo of Joyce M. Roche]
11
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SBC Directors Serving Until the 2002 Annual Meeting
(GROUP C)
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James E. Barnes, age 66, retired. Mr. Barnes was Chairman of
the Board, President and Chief Executive Officer of MAPCO
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.
[Photo of James E. Barnes]
August A. Busch III, age 62, is Chairman of the Board and
President of Anheuser-Busch Companies, Inc., St. Louis,
Missouri. Mr. Busch has been a Director of SBC since October
1983. He served as a Director of Southwestern Bell Telephone
Company from 1980 to 1983. Mr. Busch is a Director of
Anheuser-Busch Companies, Inc.; Emerson Electric Co.; and
General American Life Insurance Company; and an Advisory
Member of the Boards of Directors of Grupo Modelo, S.A. de C.V., and Diblo,
S.A. de C.V. He is a member of the Corporate Development Committee, the
Executive Committee and the Human Resources Committee.
[Photo of August A. Busch III]
William P. Clark, age 68, is Senior Counsel to Clark, Cali and
Negranti, Attorneys at Law, San Luis Obispo, California, and
has served in this capacity since 1996. He is also Chief
Executive Officer of Clark Company, Paso Robles, California.
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. He is a member of the Corporate
Development Committee and the Corporate Public Policy and Environmental
Affairs Committee.
[Photo of William P. Clark]
Lynn M. Martin, age 60, is Chair of the Council for the
Advancement of Women and Advisor to the firm of Deloitte &
Touche LLP, Chicago, Illinois, and is a professor at the J.L.
Kellogg Graduate School of Management, Northwestern
University. Ms. Martin served as U.S. Secretary of Labor from
1991 to 1993, and as a member of the U.S. House of
Representatives from Illinois from 1981 to 1991. Ms. Martin
has been a Director of SBC since October 1999. She served as a Director of
Ameritech Corporation from 1993 to 1999. She is a Director of certain Dreyfus
Funds; Harcourt General, Inc.; The Procter & Gamble Company; Ryder System,
Inc.; and TRW Inc. She is a member of the Corporate Public Policy and
Environmental Affairs Committee and the Finance/Pension Committee.
[Photo of Lynn M. Martin]
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(GROUP C--continued)
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Mary S. Metz, age 62, is President of S. H. Cowell Foundation,
San Francisco, California, and has served in this capacity
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 and the Corporate Public Policy and Environmental Affairs Committee.
[Photo of Mary S. Metz]
Laura D'Andrea Tyson, age 52, is Dean of the Walter A. Haas
School of Business at the University of California at
Berkeley, and has served in this capacity since 1998.
Dr. Tyson has also served as Director of LECG-Navigant
Consulting, Inc., Emeryville, California, since 1997.
Dr. Tyson served as Professor of Economics at the University
of California at Berkeley from 1997 to 1998. She served as
National Economic Adviser to the President of the United States from 1995 to
1996 and as Chair of the White House Council of Economic Advisers from 1993 to
1995. Dr. Tyson has been a Director of SBC since October 1999. She served as a
Director of Ameritech Corporation from 1997 to 1999. She is a Director of
Eastman Kodak Company; Fox Entertainment Group, Inc.; Human Genome Sciences,
Inc.; and Morgan Stanley Dean Witter & Co. She is a member of the Audit
Committee and the Finance/Pension Committee.
[Photo of Laura D'Andrea Tyson]
Edward E. Whitacre, Jr., age 58, is Chairman of the Board and
Chief Executive Officer of SBC and has served in this capacity
since January 1990. Mr. Whitacre has been a Director of SBC
since October 1986. He is a Director of Anheuser-Busch
Companies, Inc.; Burlington Northern Santa Fe Corporation;
Emerson Electric Co.; and The May Department Stores Company.
He is the Chairman of the Executive Committee and a member of
the Corporate Development Committee and the Finance/Pension Committee.
[Photo of Edward E. Whitacre, Jr.]
Advisory Director
The Board of Directors has appointed the following Advisory Director to
serve until January 31, 2001: Gilbert F. Amelio, age 57, is Chairman and Chief
Executive Officer of each of AmTech, LLC and AmTech Capital, LP, San
Francisco, California, and has served as such since 1999. Dr. Amelio was
Principal of Aircraft Ventures, LLC from 1997 to 1999 and Partner and Director
of The Parkside Group, LLC from 1998 to 1999. Dr. Amelio was Chairman of the
Board and Chief Executive Officer of Apple Computer, Inc. from 1996 to 1997.
He was Chairman of the Board, Chief Executive Officer and President of
National Semiconductor Corporation from 1991 to 1996. 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.
13
<PAGE>
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 $60,000 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 in the form of SBC common
stock or cash. Directors may also elect to defer the receipt of all or part of
their retainers as well as 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 1999 for these policies were $770 for
travel accident insurance and $9,585 for group life insurance. Directors also
receive certain telecommunications services and equipment from subsidiaries of
SBC and are 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' applicable tax liabilities resulting from such services
and benefits, computed at maximum marginal rates, including tax surcharges,
averaged $8,859 per non-employee Director in 1999. Employee Directors receive
similar services and equipment in connection with their service as officers of
SBC.
14
<PAGE>
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% 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% for deferrals from 1985 through 1992;
Moody's plus 2% 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%.
Two members of Mr. Gallegos' immediate family were employed by
subsidiaries of PTG in 1999 and were paid a total of approximately $158,023.
The amounts paid to these employees are comparable to compensation paid to
other employees performing similar job functions.
In 1999, SBC and/or 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.
15
<PAGE>
Common Stock Ownership
of Directors and Officers
- -------------------------------------------------------------------------------
The following table sets forth the beneficial ownership of SBC common
stock as of December 31, 1999, held by each Director (other than the Advisory
Director) and each officer named in the Compensation Tables 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
Beneficial
Ownership
Name of (including
Beneficial Owner options)(1)
- ---------------- -----------
<S> <C>
Clarence C.
Barksdale 10,977
James E. Barnes 6,602
August A. Busch
III(/2/) 49,554
Ruben R.
Cardenas 33,973
William P. Clark 18,634
Martin K. Eby,
Jr. 26,856
Herman E.
Gallegos 18,824
Jess T. Hay 20,002
James A.
Henderson 26,636
Bobby R. Inman 4,069
Charles F.
Knight 14,978
Lynn M. Martin 25,310
John B. McCoy 31,584
Mary S. Metz 18,495
Toni Rembe 19,201
S. Donley
Ritchey 20,447
</TABLE>
<TABLE>
<CAPTION>
Total SBC
Beneficial
Ownership
Name of (including
Beneficial Owner options)(1)
- -------------------------------------------------------------------------------------------------------- -----------
<S> <C>
Joyce M. Roche 2,041
Richard M. Rosenberg 9,121
Carlos Slim Helu 2,002
Laura D'Andrea Tyson 11,768
Patricia P. Upton 7,294
Edward E. Whitacre, Jr. 2,636,320
Royce S. Caldwell 559,429
Charles E. Foster 615,760
James D. Ellis 537,071
Donald E. Kiernan 536,066
All executive officers and Directors as a group (consisting of 32 persons, including those named above): 6,964,725
</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--2,089,843; Mr. Caldwell--537,916; Mr.
Foster--573,656; Mr. Ellis--513,859; Mr. Kiernan--503,734; and all
executive officers and Directors as a group--5,820,044.
This table 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--4,600; Mr. Busch--9,800; Judge Clark--3,158; Mr. Hay--2,000; Mr.
Ritchey--5,825; Mr. Rosenberg--1,809; Dr. Tyson--11,768; Ms. Upton--715;
Mr. Whitacre--31,668; Mr. Caldwell--11,406; Mr. Foster--1,934; and Mr.
Ellis--12,090.
(2) Mr. Busch disclaims beneficial ownership of 1,600 shares held by adult
son.
16
<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 to withhold authority to vote 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 auditors, 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 A Directors have been nominated by the Board of
Directors on the recommendation of the Human Resources Committee for election
to three-year terms of office that will expire at the 2003 Annual Meeting:
Clarence C. Barksdale Royce S. Caldwell
Martin K. Eby, Jr. Charles F. Knight
Toni Rembe Carlos Slim Helu
Patricia P. Upton
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 A Directors.
17
<PAGE>
Item 2 on Proxy Card--Ratification of Appointment of
Independent Auditors
- -------------------------------------------------------------------------------
Subject to shareowner ratification, the Board of Directors, upon
recommendation of the Audit Committee, has appointed the firm of Ernst & Young
LLP to serve as independent auditors of SBC for the fiscal year ending
December 31, 2000. This firm has audited the accounts of SBC since 1983. If
shareowners do not ratify this appointment, the Board will consider other
independent auditors. One or more members of Ernst & Young LLP are expected to
be present at the Annual Meeting and will be available to respond to
questions.
Your Board of Directors Recommends a Vote "FOR" Ratification
of the Appointment of Ernst & Young LLP as Independent Auditors.
Item 3 on Proxy Card--Shareowner Proposal
- -------------------------------------------------------------------------------
A shareowner has advised SBC that the shareowner intends to introduce at
the 2000 Annual Meeting the following proposal. This proposal has been
overwhelmingly rejected by shareowners on two prior occasions; in each case,
of the votes cast, over two-thirds voted against the proposal. The name and
address of, and the number of shares owned by the proponent will be provided
upon request to the Secretary of SBC.
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
18
<PAGE>
place of primary employment. For us, the owners of the Company, to further
pension them is not in our best interests.
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 406,936,269 votes representing
31.8% 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 the
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 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 individuals that the proponent seeks to
deny further vesting in their pensions.
Your Board believes it is important to keep its commitments, including
its commitment to provide pension benefits to those outside Directors who
joined the Board before 1997. When these Directors 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 this benefit from this small
group. Moreover, one of the four Directors will be fully vested in the benefit
this year, while the others will be fully vested by 2003.
Your Directors believe SBC's shareowners are best served by having
talented, experienced and committed individuals serving as Directors. To
attract and retain such individuals, SBC 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 SBC'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. Under these
circumstances, your Directors believe it would be wrong to abandon its
commitment to these four individuals.
Your Board of Directors Recommends a
Vote "AGAINST" this Proposal.
19
<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 executive officers. No employee of SBC serves on
this committee. During the 1999 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, John B. McCoy (joined the Committee in
November 1999) 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 Co. 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 five 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:
. 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.
20
<PAGE>
. Ownership of SBC's common stock by executives should be encouraged
through SBC's compensation program.
. 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. Mr. Notebaert's employment and consulting agreement was
determined through negotiations with SBC, while his annual compensation and
target incentive compensation was determined by Ameritech. The following is a
summary of the policies underlying compensation reported for 1999.
Annual Base Salary--The Committee has established a policy that annual base
salaries for officers will be market-based. Given the greater responsibilities
and obligations resulting from the company's recent acquisitions, the
Committee determined in 1999 that salaries should relate reasonably to
salaries for similar positions in the 50th to 75th percentile of a group of
companies similar in size and complexity (the "Comparator Group"), developed
in consultation with the Committee's outside compensation consultant.
Incentives--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 1999, 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 net income
21
<PAGE>
objectives, are established at the beginning of the year. If performance and
net income objectives are achieved, the resulting awards typically would place
the respective officers' aggregate compensation between the 50th and 75th
percentile of the Comparator Group. Although the formula driven portion of
each award is capped at 100% of the target amount, if less than the net income
objectives are achieved, the target awards are forfeited or, at a minimum,
reduced in progressively increasing proportions. The Committee reviewed the
performance objectives and corresponding results, noting that the Company met
its overall net income targets and that the individual performance objectives
were generally met by the Company's executive officers. The Committee may also
make (and in 1999 did make) annual discretionary awards in addition to those
under the plan.
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. 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. 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. 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% of the performance shares
granted, is paid out (i.e., converted into common stock and/or cash), based on
the annual achievement of SBC's value added goals averaged over a three- (or
two-) year period. (The Committee began using net income goals in 1999.) 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 1999, the Committee granted stock options to
managers at all levels, including all of the Named Officers. The target value
of the regular long term grants (combined value of performance
22
<PAGE>
shares and stock options) made in 1999 was designed to relate reasonably to
the value of all long term type awards made to the 50th to 62nd percentile of
employees holding similar positions with companies in the Comparator Group.
The Chief Executive Officer was targeted to the 75th percentile. In addition
to the foregoing awards, the Committee, at its discretion, may grant
additional performance shares to persons (these additional performance shares
generally have two-year performance periods). During 1999, Mr. Whitacre
received such an award.
In 1999, SBC's officers received the payout of their performance share
awards for the 1996-1998 and 1997-1998 performance periods. The Committee
determined that during these performance periods SBC exceeded the performance
goals set by the Committee. In accordance with a predetermined formula, 100%
of the target numbers of units granted to the officers were distributed.
Since April 1996, SBC has been transforming itself into a new,
significantly larger, worldwide communications leader. During this period, SBC
completed the acquisitions of Ameritech, PTG and SNET, successfully integrated
PTG and SNET into SBC, and is well on its way to the successful integration of
Ameritech. SBC has made significant advances in creating a strategic plan for
implementing a multibillion dollar broadband infrastructure for the provision
of high-speed data and Internet services, obtaining the authority to enter the
long-distance business inside its traditional states, expanding its wireless
footprint to major markets, increasing the size and strategic value of its
international portfolio and expanding into out-of-region markets (the
national/local strategy). These efforts have required, and continue to
require, SBC's management to adopt completely new paradigms in the operation
of the company, requiring extraordinary commitment and leadership.
Management's efforts since 1996 have been critical to crafting the new SBC and
increasing shareowner value. The years 2000 and 2001 will be important as SBC
transforms itself from a regionally-based business into a global
communications leader, implements key strategies such as the integration of
major acquisitions, expands into out-of-region markets, and deploys a new
high-speed broadband network. To achieve these critical objectives it is
essential to maintain a continuity of the key executives who have the skills,
knowledge, and dedication required to successfully complete these
undertakings, and to avoid losing these key executives to competitors. As a
result of these significant accomplishments since 1996, your Committee made
discretionary Special Performance and Retention Awards to certain key
officers, including the Named Officers, shown on the Summary Compensation
Table. Three additional awards, in the same respective amounts as the initial
awards, will vest and be payable semiannually, beginning October 1, 2000, upon
the continued employment of each recipient (or upon retirement after April 1,
2001).
23
<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 a middle level or
above manager may receive stock options based upon the number of shares
purchased by the manager 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. In recognition of Mr. Whitacre's outstanding performance as SBC's
Chief Executive Officer, the Committee targeted his 1999 annual salary and
target bonus to the 75th percentile paid by companies in the Comparator Group.
In doing so, the Committee commended Mr. Whitacre for his performance in 1999
and noted that under his leadership, SBC achieved outstanding financial
results for the year and again positioned itself strategically for continuing
growth in the future.
Mr. Whitacre, along with other Named Officers, received a discretionary
incentive award, stock options, performance shares and a Special Performance
and Retention Award, as described 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
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:
Jess T. Hay, Chairman John B. McCoy
August A. Busch III S. Donley Ritchey
Admiral Bobby R. Inman
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") and Mr. Notebaert, former Chief Executive Officer
of Ameritech.
Compensation
Table
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
---------------------------------- ------------------------ ----------
Number of
Restricted Securities
Name and Principal Other Annual Stock Underlying LTIP All Other
Position Year Salary Bonus Compensation Award(s) Options Payouts(1) Compensation(2)
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward E. Whitacre, Jr. 1999 $1,429,167 $6,000,000 $601,334 $ 0 412,983 $3,547,529 $ 5,296,586
Chairman of the Board
and 1998 $1,162,500 $5,000,000 $541,932 $ 0 426,792 $3,341,841 $12,565,876
Chief Executive Officer 1997 $ 975,000 $3,300,000 $407,455 $8,737,500(3) 344,920 $2,232,082 $ 54,429
Royce S. Caldwell 1999 $ 695,333 $ 950,000 $191,340 $ 0 139,712 $1,029,536 $ 996,055
President-SBC
Operations 1998 $ 591,572 $1,200,000 $190,283 $ 0 205,509 $1,014,640 $ 2,031,622
1997 $ 476,980 $1,054,000 $169,297 $2,912,500(3) 165,848 $ 677,116 $ 25,077
Charles E. Foster 1999 $ 529,708 $ 675,000 $138,656 $ 0 66,713 $ 609,495 $ 848,442
Group President-SBC 1998 $ 458,072 $ 700,000 $144,207 $ 0 61,409 $ 544,979 $ 2,024,735
1997 $ 425,980 $ 550,000 $107,577 $2,912,500(3) 100,127 $ 363,522 $ 22,580
James D. Ellis 1999 $ 519,292 $ 625,000 $160,646 $ 0 76,742 $ 542,263 $ 1,202,466
Senior Executive Vice 1998 $ 449,238 $ 700,000 $174,524 $ 0 77,756 $ 749,901 $ 2,023,257
President and General
Counsel 1997 $ 372,980 $ 600,000 $124,434 $2,912,500(3) 87,663 $ 465,049 $ 18,975
Donald E. Kiernan 1999 $ 490,125 $ 600,000 $130,486 $ 0 64,221 $ 487,274 $ 688,102
Senior Executive
Vice President, 1998 $ 401,905 $ 625,000 $138,932 $ 0 78,679 $ 633,693 $ 2,019,447
Treasurer and Chief
Financial Officer 1997 $ 338,980 $ 525,000 $ 94,223 $2,912,500(3) 188,980 $ 392,992 $ 15,429
Richard C. Notebaert 1999 $1,018,024 $6,395,270 $ 0 $ 0 277,111 $ 0 $17,248,156(4)
Former CEO -
Ameritech Corporation
</TABLE>
--------------------------------------------
(1) The long term incentive award payouts
are for the 1996-1998 and 1997-1998
performance periods.
(2) All Other Compensation for 1999
reflects the following Special
Performance and Retention Awards (in
thousands): Mr. Whitacre $5,250, Mr.
Caldwell $975, Mr. Foster $831.25, Mr.
Ellis $1,187.5, and Mr. Kiernan $675.
These awards are for achievements from
1996 through 1999. (See Executive
Compensation report above for
additional information on awards.) 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
$14,586, $5,855, $5,992, $3,766, and
$2,702, 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, 1999, are as
follows: Mr. Whitacre has 200,000
restricted shares valued at $9,750,000,
and 100,000 phantom stock units valued
at $4,750,000; Messrs. Caldwell,
Foster, Ellis and Kiernan each have
100,000 restricted shares valued at
$4,750,000. Dividends or dividend
equivalents are paid on all restricted
stock and phantom stock units.
(4) Includes $1,000,000 earned in 1999 by
Mr. Notebaert under an employment and
consulting agreement with SBC. (Under
that agreement, SBC agreed to pay Mr.
Notebaert, beginning October 8, 1999,
$7 million per year, in lieu of salary,
bonuses, long term awards or other
compensation, to serve as Chief
Executive Officer of Ameritech
Corporation and, thereafter, as a
consultant, for a total of up to 30
months after the closing of the
Ameritech acquisition. Under that
agreement, Mr. Notebaert also received
a bonus of $4,256,870 for 1999,
included under the heading "Bonus".)
Also includes a "retention and
performance bonus" of $2,500,000 paid
by Ameritech for his additional
services in 1998 and 1999 in connection
with the sale of Ameritech and a
payment of $13,248,156 under his 1994
change-in-control agreement with
Ameritech. Mr. Notebaert also received
preferential earnings on deferred
compensation of $191,251, company
contributions to savings plans of
$48,251, and split dollar life
insurance premiums of $54,925. Mr.
Notebaert received a lump sum
distribution of $700,120 under the
Ameritech Pension Plan and will receive
$4,581,380 under a supplemental pension
plan.
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 and Mr. Notebaert
during 1999 and the value of their unexercised stock options and SARs as of
December 31, 1999. SBC has not issued any SARS to the Named Officers or
Mr. Notebaert.
<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. 501,252 $19,455,900 2,081,091 1,111,456 $50,224,066 $9,874,109
Royce S. Caldwell 130,220 $ 4,985,996 533,818 499,355 $11,896,803 $5,367,005
Charles E. Foster 64,308 $ 2,286,922 570,581 220,281 $14,255,061 $2,445,219
James D. Ellis 0 $ 0 510,658 226,084 $12,904,754 $2,315,617
Donald E. Kiernan 0 $ 0 500,862 220,596 $12,448,607 $2,477,978
Richard C. Notebaert 0 $ 0 2,670,478 0 $66,651,445 $ 0
</TABLE>
(1) "Value of Unexercised In-the-Money Options" figures are based on the year
end, December 31, 1999, SBC common stock price of $48.75.
Long Term Incentive Plans--Awards in Last Fiscal Year
- -------------------------------------------------------------------------------
The table below reports performance shares granted to the Named Officers
during the last fiscal year, applicable to the performance periods indicated,
under the 1996 Stock and Incentive Plan.
<TABLE>
<CAPTION>
Performance
or Other Estimated Future Payouts
Number of Period Under Non-Stock Price-
Shares, Units Until Based Plans
or Maturation ------------------------
Name Other Rights(1) or Payout Threshold Target Maximum
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Edward E. Whitacre, Jr. 50,000 1999-2001 42,500 50,000 50,000
37,037 1999-2000 31,481 37,037 37,037
Royce S. Caldwell 18,529 1999-2001 15,750 18,529 18,529
Charles E. Foster 7,266 1999-2001 6,176 7,266 7,266
James D. Ellis 7,266 1999-2001 6,176 7,266 7,266
Donald E. Kiernan 7,266 1999-2001 6,176 7,266 7,266
</TABLE>
(1) 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 net income objectives. 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.
26
<PAGE>
Option Grants in Last Fiscal Year
- -------------------------------------------------------------------------------
The table below contains the estimated present value of stock options
granted in 1999, as of their issue date. Option grants A and C were issued
under a stock purchase plan where middle level and above managers received
options based on the number of SBC shares they purchased.
<TABLE>
<CAPTION>
Number of Percent of Grant
Securities Total Options Exercise Date
Underlying Granted to or Base Present
Options Employees in Price Expiration Value
Name Grant Granted Fiscal Year(1) ($/Share) Date ($000s)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Edward E. Whitacre, Jr. A 8,752 0.05% $52.5625 2/1/09 $ 153
B 316,500(2) 1.93%(2) $49.75 4/1/09 $4,431
C 87,731 0.53% $58.875 8/2/09 $1,943
Royce S. Caldwell A 4,098 0.02% $52.5625 2/1/09 $ 72
B 132,000(2) 0.80%(2) $49.75 4/1/09 $1,848
C 3,614 0.02% $58.875 8/2/09 $ 80
Charles E. Foster A 3,075 0.02% $52.5625 2/1/09 $ 54
B 46,667(2) 0.28%(2) $49.75 4/1/09 $ 653
C 16,971 0.10% $58.875 8/2/09 $ 376
James D. Ellis A 3,201 0.02% $52.5625 2/1/09 $ 56
B 57,333(2) 0.35%(2) $49.75 4/1/09 $ 803
C 16,208 0.10% $58.875 8/2/09 $ 359
Donald E. Kiernan A 2,872 0.02% $52.5625 2/1/09 $ 50
B 46,667(2) 0.28%(2) $49.75 4/1/09 $ 653
C 14,682 0.09% $58.875 8/2/09 $ 325
Richard C. Notebaert n/a 277,111(3) n/a $45.48 4/2/09 $ (3)
- ---------------------------------------------------------------------------------------
</TABLE>
(1) Percentages are based on 16,435,899 options granted to employees in 1999.
(2) One-third of these options vest on each anniversary of the grant. As of
December 31, 1999, none of these options have vested.
(3) This represents the equivalent number of SBC options that were converted
from Ameritech options upon the acquisition of Ameritech Corporation on
October 8, 1999. The Ameritech options had been granted by the Ameritech
Board of Directors.
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:
. 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.
27
<PAGE>
. The model assumed an interest rate of 5.00% in calculating the value
of the options in grant A, 5.18% for grant B and 5.94% 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 27.93% for grant A, 28.68% for grant B, and 29.96% for
grant C. The model reflected annual per share dividends at the date of
issuance of $.94 per share for grant A, and $.97 per share for grants
B and C.
. The present values of the grant B options were reduced approximately
15.58% to reflect the probability of forfeiture due to termination
prior to vesting, and 11.61% for grant A, 9.51% for grant B, and
11.72% 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 (a) 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, (b) subsequent monthly basic benefit credits equal to 5%
of the participant's compensation (generally, base pay, commissions, and other
nondiscretionary bonuses such as group incentive awards), and (c) monthly
interest credits on the participant's cash balance account. The interest rate
is equal to the published average annual yield for 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
28
<PAGE>
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% 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, 1998 (or any
prior five 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% 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 five years of age and service credits)
multiplied by the participant's average compensation for the five-year period
ending December 31, 1990, plus 1.6% of pay in 1991, and no credit for pay or
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 $138,073 (43 years),
$130,314 (40 years), $134,609 (40 years), $110,906 (35 years), and $48,479 (15
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% for each year of actual service in excess of,
or decreased by 1.43% 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
29
<PAGE>
bonus earned during the 36-consecutive-month period out of the last 120 months
preceding retirement that generates the highest average earnings. The target
percentages of Average Annual Compensation are: Chairman of the Board and
Chief Executive Officer, 75%; certain executive officers, 70%; other executive
officers and other officers, 55% to 60%; and certain other senior managers,
50%. 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% 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 $5,360,277, $1,301,037, $880,547, $860,328 and
$593,296, 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 Named Officers
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
30
<PAGE>
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 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% 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
if: (a) anyone (other than an employee benefit plan of SBC) acquires more than
20% of SBC's common stock, (b) 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 two-thirds 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) SBC's shareowners either approve a merger or consolidation which
results in someone other than the shareowners immediately prior thereto
holding more than 35% 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.
Two members of the immediate family of Mr. Edward Mueller, President-SBC
International Operations, an executive officer of SBC, were employed by
subsidiaries of SBC and were paid a total of approximately $172,309 in 1999.
Amounts paid to these employees are comparable to compensation paid to other
employees performing similar job functions.
31
<PAGE>
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 two
transactions, totaling less than 1,000 shares, which were reported after the
due date by an investment manager who had discretionary authority over
accounts in which Mr. Barnes had an indirect beneficial interest.
32
<PAGE>
Stock Performance Graph
- -------------------------------------------------------------------------------
Comparison of Five Year Cumulative Total Return
SBC, S&P 500 and Peer Group
[Graph Appears Here]
12/94 12/95 12/96 12/97 12/98 12/99
----- ----- ----- ----- ----- -----
SBC............. 100 147 138 201 300 278
S&P 500......... 100 138 169 226 290 350
Peer Group...... 100 154 156 226 344 373
Assumes $100 invested on December 31, 1994, in SBC common stock, Standard
& Poor's 500 Index ("S&P 500") and a Peer Group of other large U.S.
telecommunications companies (Bell Atlantic Corporation, BellSouth
Corporation, and U S WEST, Inc.). The index of telecommunications companies
("Peer Group") is weighted according to the market capitalization of its
component companies at the beginning of each period. Total return equals stock
price appreciation plus reinvestment of dividends on a quarterly basis.
33
<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 1999 may be obtained without charge upon written request
to the Director-External Reporting, 175 E. Houston, 9th Floor, San Antonio,
Texas 78205.
Shareowner Proposals
Proposals of shareowners intended for presentation at the 2001 Annual
Meeting must be received by SBC for inclusion in its Proxy Statement and form
of Proxy relating to that meeting by November 10, 2000. Such proposals should
be sent in writing by certified mail to the Vice President and Secretary of SBC
at 175 E. Houston, San Antonio, Texas 78205. Faxed proposals are not 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 10, 2000
34
<PAGE>
[RECYCLED LOGO]
Printed entirely on recycled paper
meeting or exceeding the Environmental
Protection Agency minimum requirements
for recycled paper stock.
<PAGE>
[FRONT OF CARD -- TOP ]
[SBC logo] SBC Communications Inc.
PROXY CARD/VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON APRIL 28, 2000.
The undersigned hereby appoints Edward E. Whitacre, Jr. and 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 28, 2000, 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 SUCH SHARES IN ACCORDANCE WITH
THE DIRECTORS' RECOMMENDATIONS ON THE MATTERS LISTED BELOW AND AT THE DISCRETION
OF THE PROXIES 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 -- Clarence C. Barksdale 04 -- Charles F. Knight 06 -- Carlos Slim Helu
02 -- Royce S. Caldwell 05 -- Toni Rembe 07 -- Patricia P. Upton
03 -- Martin K. Eby, Jr.
PLEASE SIGN ON THE REVERSE SIDE OF THIS CARD AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE OR, IF YOU CHOOSE, YOU CAN SUBMIT YOUR PROXY THROUGH THE INTERNET OR BY
TELEPHONE.
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 on behalf of a participant under any of the following employee
benefit plans: the SBC Savings Plan, the SBC Savings and Security Plan, the
Ameritech Savings Plan for Salaried Employees, the Ameritech Savings and
Security Plan for Non-Salaried Employees (the preceding plans are referred to as
the "Savings Plans"), the DonTech Profit Participation Plan, the Old Heritage
Advertising & Publishers, Inc. Profit Sharing Plan, the SBC PAYSOP, the Pacific
Telesis Group Employee Stock Ownership Plan, and the Tax Reduction Act Stock
Ownership Plan sponsored by the Southern New England Telephone Company (the
"TRASOP"). Shares in each of the foregoing employee benefit plans (except the
TRASOP and the Old Heritage plan) 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, subject to the trustees' fiduciary
obligations, will be voted by the trustees in the same proportion as the shares
for which voting instructions are received from
<PAGE>
other participants in each such plan. Similarly, the proxy card or telephone or
Internet proxy will constitute voting instructions to the plan administrator
pursuant to the DirectSERVICE Investment Program.
(PLEASE MARK YOUR PROXY AND SIGN ON THE REVERSE SIDE.)
- -----------------------------------------------------------------------------
FOLD AND DETACH HERE
[FRONT OF CARD -- BOTTOM]
ADMISSION TICKET
(Insert maps)
The Alzafar Shrine Temple is located in San Antonio on the west-bound frontage
road of North Loop 1604 between the Stone Oak Parkway and Blanco Road Exits.
SBC COMMUNICATIONS INC.
Annual Meeting of Shareowners
Friday, April 28, 2000
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.
[BACK OF CARD --TOP]
[X]Please mark your votes as in this example.
SBC COMMUNICATIONS INC.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
YOUR DIRECTORS RECOMMEND A VOTE FOR ITEMS 1 AND 2.
1. Election of Directors (see reverse)
For All [ ] Withhold All [ ]
For all, except withhold vote from the following nominee(s):
2. Appointment of Independent Auditors.
For [ ] Against [ ] Abstain [ ]
YOUR DIRECTORS RECOMMEND A VOTE AGAINST ITEM 3.
3. Shareowner Proposal.
For [ ] Against [ ] Abstain[ ]
Discontinue mailing Annual Report for this account because I already receive
multiple copies at this address. [ ]
Comments:
Daytime Phone Number:
<PAGE>
Signature
Signature (joint owner)
Date
Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, corporate officer, trustee,
guardian, or custodian, please give full title.
- -----------------------------------------------------------------------------
FOLD AND DETACH HERE
[BACK OF CARD -- BOTTOM]
SBC logo
Your Vote Is Important!
You can submit your proxy by mail, by telephone, or through the Internet (see
instructions below).
IF YOU SUBMIT YOUR PROXY BY TELEPHONE OR THROUGH THE INTERNET, THERE IS NO NEED
FOR YOU TO MAIL BACK YOUR PROXY CARD.
BY MAIL
Mark, sign and date your proxy card and return it in the enclosed envelope.
BY TELEPHONE
Call Toll Free 1-877-779-8683 on any touch-tone telephone to authorize the
voting of your shares as if you marked and returned your proxy card. You may
call 24 hours a day, 7 days a week. You will be prompted to enter the control
number in the box above; then just follow the simple instructions.
THROUGH THE INTERNET
Access the website at www.eproxyvote.com/sbc to authorize the voting of your
shares as if you marked and returned your proxy card. You may access the site 24
hours a day, 7 days a week. You will be prompted to enter the control number,
above; then just follow the simple instructions.
THANK YOU FOR VOTING
<PAGE>
(Broker Card)
[SBC logo] SBC Communications Inc.
PROXY CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON APRIL 28, 2000.
The undersigned hereby appoints Edward E. Whitacre, Jr. and 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 28, 2000, 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 SUCH SHARES IN ACCORDANCE WITH
THE DIRECTORS' RECOMMENDATIONS ON THE MATTERS LISTED BELOW AND AT THE DISCRETION
OF THE PROXIES 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 -- Clarence C. Barksdale 04 -- Charles F. Knight 06 -- Carlos Slim Helu
02 -- Royce S. Caldwell 05 -- Toni Rembe 07 -- Patricia P. Upton
03 -- Martin K. Eby, Jr.
(PLEASE MARK YOUR PROXY AND SIGN ON THE REVERSE SIDE OF THIS CARD AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.)
- -------------------------------------------------------------------------------
SBC COMMUNICATIONS INC. [X] Please mark your vote as in this example.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
YOUR DIRECTORS RECOMMEND A VOTE FOR ITEMS 1 AND 2.
1. Election of Directors (see reverse)
For All [ ] Withhold All [ ]
For all, except withhold vote from the following nominee(s):
2. Appointment of Independent Auditors.
For [ ] Against [ ] Abstain [ ]
YOUR DIRECTORS RECOMMEND A VOTE AGAINST ITEM 3.
3. Shareowner Proposal.
For [ ] Against [ ] Abstain[ ]
Signature
Date
