October 1, 1998
Dear ____________:
America Online's fiscal 1998 Annual Report to Shareholders has just arrived from
the printers, and I wanted you to be among the first to receive a copy along
with this year's proxy statement. It's also important to me that you have the
benefit of our thinking on the request for a tripling in the Company's
authorized share count, from 600 million to 1.8 billion.
In mentioning this proposal on our conference call earlier this week, Steve Case
noted we're seeking the increase to allow for a number of possible corporate
actions, including stock splits. As a matter of policy, our Board would not
announce a split unless there were sufficient shares authorized to accommodate
one. And, since it was only a few months ago that you last approved a share
increase, only to see it followed by a split, we hoped this time to give our
Board plenty of flexibility to act -- including to declare a couple of splits
should they consider it appropriate -- before coming back to you for further
authorization.
You'll appreciate that the current 600 million authorized share count does not
allow for even one 2-for-1 split. This authorized/outstanding share ratio puts
us firmly at the low end of such notable - and similarly split-conscious -
companies as Microsoft, Time Warner and Intel, which Georgeson & Co. tells us
presently average a 3.3/1.0 ratio.
It's my hope that you will consider these facts and what's contained in our
proxy in reaching a decision to give us your affirmative vote. By doing so, you
allow us to continue a tradition of splits that reflect not just management's
confidence in our future but, also, our conviction that more affordably priced
shares encourage broader ownership and thus serve the interests of all
stockholders.
Please also know that Mike Kelly and I are available at any time to discuss this
matter with you, and I hope that you or your proxy agent will call with any
questions or concerns.
Best personal regards,
/s/Richard E. Hanlon
Richard E. Hanlon
Vice President
Investor Relations
