<PAGE> 1
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 Rule 14a-11(c) or Rule 14a-12
AirTouch Communications, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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 was calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
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[ ] 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
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<PAGE> 2
LOGO
AIRTOUCH COMMUNICATIONS, INC.
ONE CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94111
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1997 Annual Meeting of Stockholders of AirTouch Communications, Inc.
(the "Company") will be held at INFOMART, 1950 Stemmons Freeway, Dallas, Texas,
75207 on Monday, May 19, 1997 at 8:30 a.m., local time (the "Meeting"), for the
following purposes:
1. To elect four directors, constituting Class III of the Company's Board
of Directors, to serve a three-year term.
2. To ratify the appointment of Price Waterhouse LLP as the Company's
independent accountants for 1997.
3. To approve the Company's amended and restated 1993 Long-Term Stock
Incentive Plan.
4. To approve the Company's amended and restated Short-Term Incentive Plan.
5. To transact such other business properly brought before the Meeting, or
any adjournment or postponement thereof.
Stockholders of record at the close of business on March 20, 1997 will be
entitled to vote at the Meeting or any adjournment or postponement thereof.
A list of stockholders entitled to vote at the Meeting will be available
for inspection ten days prior to the Meeting at the offices of AirTouch Paging,
12221 Merit Drive, Suite 800, Dallas, Texas 75251.
Your vote is important. Please sign and return the enclosed proxy card in
the envelope provided to ensure your representation at the Meeting.
By Order of the Board of Directors,
/s/ Margaret G. Gill
Margaret G. Gill
Senior Vice President Legal,
External Affairs and Secretary
San Francisco, California
April 4, 1997
<PAGE> 3
PROXY STATEMENT
This proxy statement, notice of meeting and accompanying proxy card are
being mailed beginning on April 4, 1997 to stockholders of AirTouch
Communications, Inc. (the "Company"), in connection with the solicitation by the
Board of Directors of proxies for the Annual Meeting of Stockholders (the
"Meeting") to be held on May 19, 1997.
Proxies are solicited to provide all stockholders of record on March 20,
1997 an opportunity to vote on matters scheduled for the Meeting and described
in the proxy materials. Shares can only be voted if the stockholder is present
in person or by proxy. Any person giving a proxy may revoke it at any time
before the Meeting by sending in a written revocation or a proxy bearing a later
date. Stockholders may also revoke their proxies by attending the Meeting in
person and casting a ballot. If proxy cards are signed and returned without
specifying choices, the shares represented by the proxy card will be voted as
recommended by the Board of Directors.
Stockholders of record at the close of business on March 20, 1997 will be
entitled to vote at the Meeting or any adjournment or postponement. Each share
of Common Stock, $.01 par value ("Common Stock"), is entitled to one vote and
each share of Class B Mandatorily Convertible Preferred Stock, Series 1996
("Preferred Stock") is entitled to vote on the basis of four-fifths of a vote
for each share of Preferred Stock held. On February 28, 1997, 502,888,433 shares
of Common Stock were outstanding and 17,238,593 shares of Preferred Stock were
outstanding (representing approximately 13,790,874 votes).
VOTING OF SHARES
The director nominees who receive the highest number of votes for the
number of positions to be filled will be elected. An affirmative vote of the
holders of the majority of the shares present or represented by proxy at the
Meeting is required for the approval of each of the other matters to be voted
upon. Abstentions will be treated as votes cast on a particular matter as well
as shares present and represented for purposes of establishing a quorum. Where
nominee record holders do not vote on specific issues because they did not
receive specific instructions on such issues from the beneficial owners, such
broker nonvotes will not be treated as votes cast on a particular matter but
will be treated as shares present or represented for purposes of establishing a
quorum.
It is the policy of the Company that the proxy, ballot or voting
instruction of any stockholder be kept confidential, if requested, except as
required by law or in the event of a contested proxy solicitation. The policy
also provides for the tabulation of the vote by the Company's transfer agent or
some other independent third party and for the certification of the vote by an
independent inspector of election. The Company may, however, be informed whether
or not a particular stockholder has voted and may receive periodic status
reports on the aggregate vote. Your written comments on proxies or ballots may
be made available to the Company, but your name and address will not be
disclosed if you request confidentiality.
1
<PAGE> 4
PROPOSAL 1
ELECTION OF DIRECTORS
There are ten members of the Board of Directors of the Company. The
Company's Certificate of Incorporation divides the Board into three
approximately equal classes of directors serving staggered three-year terms,
with one class of directors to be elected at each annual meeting. Directors hold
office until the end of their terms and until their successors have been elected
and qualified.
The proxy holders named on the proxy card will vote for the election of the
four Class III nominees listed below unless otherwise instructed. These nominees
have been selected by the Board of Directors and are all currently members of
the Board. If you do not wish your shares to be voted for particular nominees,
please identify the exceptions on the proxy card.
If one or more of the nominees should become unavailable to serve at the
time of the Meeting, the shares represented by the proxies will be voted for the
remaining nominees and for any substitute nominees designated by the Board of
Directors or the size of the Board will be reduced. The Nominating & Director
Affairs Committee knows of no reason why any of the nominees will be unavailable
or unable to serve.
Director James Harvey died in June 1996. The Company wishes to acknowledge
the enormous contribution he made to the Company and its stockholders during his
tenure as a member of the Board. Mr. Harvey was an outstanding director and was
Chairman of the Compensation & Personnel Committee. Dr. Michael Boskin was
appointed to the Board in August 1996.
The following is a brief description of the principal occupation for at
least the past five years, age and major affiliations of each director.
CLASS III -- NOMINEES FOR ELECTION:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES BELOW.
<TABLE>
<C> <S>
BOSKIN PHOTO MICHAEL J. BOSKIN, 50, has been a Director of the Company since
August 1996 and is a member of the Executive, Audit & Investment and
Nominating & Director Affairs Committees. Dr. Boskin has been a
professor of economics at Stanford University since 1971 and
principal of Boskin & Co., a consulting firm, since 1980. He was
Chairman of the President's Council of Economic Advisers from
February 1989 until January 1993. Dr. Boskin is also a director of
Exxon Corporation, HealthCare COMPARE Corp. and Oracle Corporation.
ROCK PHOTO ARTHUR ROCK, 70, became a director of the Company in January 1994.
He is a member of the Audit & Investment Committee. He has been a
principal in Arthur Rock & Co., a venture capital firm, since 1969.
Mr. Rock is a director of Intel Corporation and Argonaut Group, Inc.
</TABLE>
2
<PAGE> 5
<TABLE>
<C> <S>
SCHULTZ PHOTO GEORGE P. SHULTZ, 76, became a director of the Company in January
1994. He is a member of the Compensation & Personnel and Executive
Committees and is Chairman of the Nominating & Director Affairs
Committee. He has been a Professor at the Stanford University
Graduate School of Business for more than five years. He served as
United States Secretary of State from 1982 to 1989. Mr. Shultz is a
Distinguished Fellow at the Hoover Institution, a director of the
Bechtel Group, Inc., Chairman of J.P. Morgan's International Council
and Chairman of the Governor's California Economic Policy Advisory
Council.
SARIN PHOTO ARUN SARIN, 42, was named President and Chief Operating Officer of
the Company in February 1997. He is a member of the Executive
Committee. He was Vice Chairman of the Board from August 1995 until
January 1997 and was President and Chief Executive Officer of
AirTouch International from May 1995 until January 1997. Mr. Sarin
was Senior Vice President, Corporate Strategy/Development and
International Operations for the Company until August 1995, and was
also responsible for Human Resources through 1994. Mr. Sarin was
Vice President, Organization Design of Pacific Telesis Group from
March 1993 to April 1994. He joined Pacific Telesis Group in 1984
and held a variety of positions there until April 1994.
</TABLE>
CLASS I -- DIRECTORS CONTINUING IN OFFICE UNTIL THE 1998 ANNUAL MEETING OF
STOCKHOLDERS:
<TABLE>
<C> <S>
GINN PHOTO SAM GINN, 60, has been Chairman of the Board and Chief Executive
Officer of the Company since December 1993. He is Chairman of the
Executive Committee and a member of the Nominating & Director
Affairs Committee. He was Chairman of the Board, President and Chief
Executive Officer of Pacific Telesis Group from 1988 to 1994 and a
director of Pacific Telesis Group from 1983 to 1994. He was Chairman
of the Board of Pacific Bell from 1988 to 1994. Mr. Ginn is also a
director of Chevron Corporation, Safeway Inc., Transamerica
Corporation and Hewlett-Packard Company.
FISHER PHOTO DONALD G. FISHER, 68, became a director of the Company in January
1994. He is the Chairman of the Compensation & Personnel Committee.
He is the founder and Chairman of the Board of The Gap, Inc. and was
Chief Executive Officer of The Gap, Inc. until November 1995. He is
a director of The Charles Schwab Corporation, San Francisco Bay Area
Council, the National Retail Federation and KQED, Inc.
SCHWAB PHOTO CHARLES R. SCHWAB, 59, became a director of the Company in January
1994. He is a member of the Compensation & Personnel and Nominating
& Director Affairs Committees. He is the founder, Chairman of the
Board and Chief Executive Officer of The Charles Schwab Corporation
and Chairman of Charles Schwab & Co. Inc. Mr. Schwab is a director
of The Gap, Inc., Transamerica Corporation and Siebel Systems, Inc.
</TABLE>
3
<PAGE> 6
CLASS II -- DIRECTORS CONTINUING IN OFFICE UNTIL THE 1999 ANNUAL MEETING OF
STOCKHOLDERS:
<TABLE>
<C> <S>
BARTZ PHOTO CAROL A. BARTZ, 48, became a director of the Company in February
1994. She is a member of the Compensation & Personnel Committee. She
has been Chairman of the Board, President and Chief Executive
Officer of Autodesk, Inc. since April 1992. From 1983 to April 1992,
Ms. Bartz served in various positions with Sun Microsystems, Inc.,
most recently as Vice President of Worldwide Field Operations. Ms.
Bartz is also a director of Cadence Design Systems, Network
Appliance and Cisco Systems, Inc.
COX PHOTO C. LEE COX, 56, was named Vice Chairman of the Board in November
1994. On April 4, 1997 Mr. Cox retired after 33 years of service
with the Company and its predecessor. He remains a director and a
member of the Executive Committee. Mr. Cox was President and Chief
Executive Officer of AirTouch Cellular from November 1990 until
February 1997. He was President and Chief Operating Officer of the
Company from December 1993 to November 1994. He was President and
Chief Executive Officer of the Company from 1987 to December 1993,
was a director of the Company from 1987 to April 1993 and became a
director again in January 1994. He was a director and a Group
President of Pacific Telesis Group from 1988 to April 1994. Mr. Cox
is a director of Pacific Gas & Electric Co.
HAZEN PHOTO PAUL HAZEN, 55, became a director of the Company in April 1993. He
is Chairman of the Audit & Investment Committee and a member of the
Executive Committee. He became Chairman and Chief Executive Officer
of Wells Fargo & Company and its principal subsidiary, Wells Fargo
Bank, N.A., in January 1995. He was President and Chief Operating
Officer of Wells Fargo & Company and Wells Fargo Bank, N.A. from
1984 to January 1995. He served as a director of Pacific Telesis
Group from 1989 to April 1994. Mr. Hazen is a director of Wells
Fargo & Company, Wells Fargo Bank, N.A., Phelps Dodge Corporation
and Safeway Inc.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
Regular meetings of the Board of Directors are held six times a year and
special meetings are scheduled as appropriate. The Board held seven meetings in
1996. No director attended fewer than 75 percent of the aggregate number of
meetings of the Board and of all committees on which he or she served, with the
exception of Mr. Shultz, who attended four of the seven Board meetings and eight
of the 11 meetings of the committees of which he is a member. Directors meet
their responsibilities not only by attending Board and committee meetings, but
also through communication with the Chairman and other members of management on
matters affecting the Company.
The Board of Directors has established a number of standing committees: the
Audit & Investment Committee, the Compensation & Personnel Committee (the "C&P
Committee"), the Executive Committee and the Nominating & Director Affairs
Committee.
The Audit & Investment Committee, which consists of Mr. Hazen, Chairman,
Dr. Boskin and Mr. Rock, met four times and acted once by written consent in
1996. The Committee has responsibility for recommending the annual appointment
of independent public accountants and recommending action as appropriate
regarding the adequacy, effectiveness and legality of the Company's accounts,
internal procedures and controls. The Committee also oversees the investment of
trust assets related to benefit plans and pension funding policy.
4
<PAGE> 7
The C&P Committee, which consists of Mr. Fisher, Chairman, Ms. Bartz and
Messrs. Schwab and Shultz, met eight times and acted once by written consent in
1996. The C&P Committee has responsibility for reviewing and approving salary
and compensation of all officers, reviewing candidates for promotion to or
within officer levels, establishing or modifying the terms and conditions of the
employment of officers, advising the Board regarding director compensation,
keeping informed of and recommending material changes to employee benefit plans
and administering incentive plans.
The Executive Committee, which consists of Mr. Ginn, Chairman, Dr. Boskin
and Messrs. Cox, Hazen, Sarin and Shultz, met once and acted twice by written
consent in 1996. This Committee has the full authority of the Board to the
extent permitted by Delaware law. Its function is to deal with issues requiring
action between scheduled Board meetings.
The Nominating & Director Affairs Committee, which consists of Mr. Shultz,
Chairman, Dr. Boskin and Messrs. Ginn and Schwab, was established in late 1996.
Prior to establishing this Committee, the full Board acted as the Nominating
Committee and met once in that capacity during 1996. The Nominating & Director
Affairs Committee is responsible for recommending Board candidates and for
evaluating the effectiveness of the Board and individual contributions to the
Board. In evaluating candidates for the Board, the Committee seeks individuals
of proven judgment and competence who are outstanding in their chosen fields. It
also considers factors such as education, geographic location, anticipated
participation in Board activities and special talents or personal attributes.
Stockholders who wish to suggest qualified candidates to the Nominating &
Director Affairs Committee should write to Margaret G. Gill, Secretary of the
Company, at One California Street, San Francisco, California 94111, stating in
detail the candidate's qualifications for consideration by the Committee. A
stockholder who wishes to nominate a director must comply with certain
procedures set out in the Company's By-Laws (see "Other Matters").
DIRECTOR COMPENSATION
Nonemployee directors of the Company receive an annual retainer of $45,000,
and committee chairs receive an additional annual retainer of $5,000. Quarterly
payments of the annual retainer are reduced by 20 percent if a director is
absent from one or more of the previous quarter's meetings. In addition,
nonemployee directors are entitled to reimbursement for out-of-pocket expenses
in connection with attendance at Board and committee meetings. Nonemployee
directors may elect to defer the receipt of all or part of their retainers.
Amounts deferred in 1996 earned interest at an annual rate of 8.04%.
Directors may elect to receive all or a portion of their retainers in the
form of stock options and/or stock units under the Company's 1993 Long-Term
Stock Incentive Plan (the "Plan"). In the case of directors who elect to receive
retainers in the form of stock units, the number of stock units is determined by
dividing the amount that would otherwise be paid in cash by the arithmetic mean
of the closing prices of the Company's Common Stock on the ten consecutive
trading days ending with the date when the amount is payable. The stock units
are immediately vested and have a maximum term of ten years, subject to earlier
termination if the director's service terminates. The stock units are settled in
shares of the Company's Common Stock. In the case of directors who elect to
receive retainers in the form of stock options, the number of options is
determined by using the Black-Scholes option valuation model. These options are
immediately exercisable and have a term of seven years, subject to earlier
termination if the director's service terminates. The exercise price is equal to
the fair market value of the Company's Common Stock on the date of grant, which
is the date the retainers would otherwise be payable. A majority of the
Company's nonemployee directors have elected to receive their retainers in the
form of stock options and/or stock units.
Each nonemployee director of the Company is granted a stock option for
10,000 shares under the Plan upon election as a director. Additionally, each
nonemployee director is granted a stock option for 1,000 shares at the time of
each Annual Meeting. These options generally become exercisable one year after
the date of grant and have a term of ten years, subject to earlier termination
if the director's service terminates. The options become exercisable in full in
the event of the director's death or disability or in the event that the Company
is subject to a change in control. The exercise price is equal to the fair
market value of the Company's Common Stock on the date of grant. As a condition
of the initial 10,000-share option grant, each
5
<PAGE> 8
director is required to demonstrate to the Company that he or she owns shares of
the Company's Common Stock with a value of $100,000 or more on any date within
30 days after election to the Board. The Company has a policy of making loans
available to its nonemployee directors with respect to the equity ownership
requirement. Such loans have a maximum maturity of ten years and bear interest
at the mid-term Applicable Federal Rate. See "Certain Transactions."
Directors who are also employees of the Company receive no remuneration for
serving as directors or as members of committees of the Board.
Nonemployee directors are reimbursed for the costs of cellular services and
equipment. Employee directors receive similar reimbursements for services and
equipment as part of their compensation as officers.
The Company has entered into indemnity agreements with each of its
directors that provide for indemnification against any judgments or costs
assessed against them in the course of their service as directors. Such
agreements do not permit indemnification for acts or omissions for which
indemnification is not permitted under Delaware law.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of December 31, 1996, information
regarding ownership of the Company's outstanding Common Stock by any entity or
person known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
-------------------------------------------------- ----------------------- ----------------
<S> <C> <C>
The Equitable Companies Incorporated; AXA; and the 31,734,493(2) 6.3%
Mutuelles AXA, as a group(1)....................
FMR Corp.; Edward C. Johnson III; Abigail P. 28,898,970(4) 5.7%
Johnson; and Fidelity Management & Research
Company(3)......................................
</TABLE>
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(1) This information is based on a Schedule 13G filed with the Securities and
Exchange Commission (the "SEC") by: The Equitable Companies Incorporated,
787 Seventh Avenue, New York, New York 10019; AXA, 23, avenue Matignon,
75008 Paris France; and the Mutuelles AXA, as a group, as follows: Alpha
Assurances I.A.R.D. Mutuelle and Alpha Assurances Vie Mutuelle, 100-101
Terrasse Boieldieu, 92042 Paris La Defense France; AXA Assurances I.A.R.D.
Mutuelle and AXA Assurances Vie Mutuelle, 21, rue de Chateaudun, 75009 Paris
France; and AXA Courtage Assurance Mutuelle (formerly, Uni Europe Assurance
Mutuelle), 26 rue Louis le Grand, 75002 Paris France.
(2) The above described beneficial owners report voting and dispositive power as
follows: The Equitable Companies Incorporated reports sole voting power with
respect to 21,912,588 shares; shared voting power with respect to 1,140,701
shares; sole dispositive power with respect to 31,706,182 shares; and shared
dispositive power with respect to 7,560 shares; AXA and the Mutuelles AXA,
as a group reports sole voting power with respect to 21,912,589 shares;
shared voting power with respect to 1,140,701 shares; sole dispositive power
with respect to 31,706,182 shares; and shared dispositive power with respect
to 7,560 shares.
(3) This information is based on a Schedule 13G filed with the SEC by: FMR
Corp., Edward C. Johnson III, Abigail P. Johnson and Fidelity Management and
Research Company. The address for each of the filing persons is 82
Devonshire Street, Boston, Massachusetts 02109.
(4) The above-described beneficial owners report voting and dispositive power as
follows: FMR Corp. reports sole voting power with respect to 4,222,124
shares; shared voting power with respect to 6,200 shares; sole dispositive
power with respect to 28,892,170 shares; and shared dispositive power with
respect to 6,200 shares. Edward C. Johnson III reports sole voting power
with respect to 7,550 shares; shared voting power with respect to 6,200
shares; sole dispositive power with respect to 28,892,170 shares; and shared
dispositive power with respect to 6,200 shares. Abigail P. Johnson reports
no sole or shared voting power; sole dispositive power with respect to
28,892,170 shares; and no shared dispositive power. Fidelity Management and
Research Company reports sole voting power with respect to 4,222,124 shares;
shared voting power with respect 6,200 shares; sole dispositive power with
respect to 28,892,170 shares; and shared dispositive power with respect to
6,200 shares.
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<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of February 28, 1997, information
regarding ownership of the Company's outstanding Common Stock by (i) each Named
Executive Officer, (ii) each director and (iii) all executive officers and
directors as a group. The table also includes the number of shares subject to
outstanding options to purchase Common Stock of the Company which are currently
exercisable or become exercisable within 60 days of February 28, 1997. The total
number of shares of Common Stock beneficially owned by each such person and by
the group as a whole is less than one percent of the class outstanding.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP
---------------------------------------------------------------- --------------------
<S> <C>
Sam Ginn........................................................ 965,900(1)
C. Lee Cox...................................................... 367,680(2)
Arun Sarin...................................................... 335,793(3)
Margaret G. Gill................................................ 104,878(4)
Mohan S. Gyani.................................................. 159,768(5)
Carol A. Bartz.................................................. 22,662(6)
Michael J. Boskin............................................... 3,500
Donald G. Fisher................................................ 55,000(7)
Paul Hazen...................................................... 25,064(8)
Arthur Rock..................................................... 199,755(9)
Charles R. Schwab............................................... 23,119(10)
George P. Shultz................................................ 28,295(11)
All directors and executive officers as a group (16 persons).... 2,563,957(12)
</TABLE>
- ---------------
(1) Includes 46,066 shares held by Mr. Ginn's Family Trust, of which Mr. Ginn
is the Trustee, an aggregate of 3,652 shares held in trust for Mr. Ginn's
children, of which Mr. Ginn is the Trustee, and 13,930 shares held in
retirement plans. Also includes 30,000 shares of restricted stock and
872,252 shares subject to options that are currently exercisable or will
become exercisable within 60 days of February 28, 1997.
(2) Includes 1,036 shares held in retirement plans. Also includes 20,000 shares
of restricted stock and 332,612 shares subject to options that are
currently exercisable or will become exercisable within 60 days of February
28, 1997.
(3) Includes 6,591 shares held in retirement plans. Also includes 130,000
shares of restricted stock and 197,101 shares subject to options that are
currently exercisable or will become exercisable within 60 days of February
28, 1997.
(4) Includes 617 shares held in retirement plans. Also includes 20,000 shares
of restricted stock and 82,692 shares subject to options that are currently
exercisable or will become exercisable within 60 days of February 28, 1997.
(5) Includes 4,052 shares held in retirement plans. Also includes 31,000 shares
of restricted stock and 103,898 shares subject to options that are
currently exercisable or will become exercisable within 60 days of February
28, 1997.
(6) All shares held by Ms. Bartz's Family Trust, of which Ms. Bartz is the
Trustee. Includes 18,162 shares subject to options that are currently
exercisable or will become exercisable within 60 days of February 28, 1997.
(7) Includes 40,000 shares held by Mr. Fisher's Charitable Trust, of which Mr.
Fisher is the Trustee. Also includes 11,000 shares subject to options that
are currently exercisable or will become exercisable within 60 days of
February 28, 1997.
(8) Includes 20,844 shares subject to options that are currently exercisable or
will become exercisable with 60 days of February 28, 1997.
(9) Includes 2,572 shares held by Mr. Rock's spouse. Also includes 17,183
shares subject to options that are currently exercisable or will become
exercisable within 60 days of February 28, 1997.
(10) Includes 300 shares held by Mr. Schwab's Family Trust, of which Mr. Schwab
is the Trustee. Also includes 18,819 shares subject to options that are
currently exercisable or will become exercisable within 60 days of February
28, 1997.
(11) All shares held by Mr. Shultz's Family Trust, of which Mr. Shultz is the
Trustee. Also includes 18,295 shares subject to options that are currently
exercisable or will become exercisable within 60 days of February 28, 1997.
(12) Includes an aggregate of 118,015 shares held in Trust for certain officers
and directors and their children, 27,332 shares held in retirement plans
and 2,572 shares held by the spouse of a director. Also includes an
aggregate of 294,000 shares of restricted stock and 1,879,976 shares
subject to options that are currently exercisable or will become
exercisable within 60 days of February 28, 1997.
7
<PAGE> 10
REPORT OF THE COMPENSATION AND PERSONNEL COMMITTEE ON EXECUTIVE COMPENSATION
The compensation of the Company's executive officers is determined by the
C&P Committee, which consists exclusively of nonemployee directors. The C&P
Committee engages independent executive compensation consultants to assess
competitive levels of executive compensation.
ELEMENTS OF THE EXECUTIVE COMPENSATION PROGRAM
The three key elements of the Company's executive compensation program are
base salary, an annual cash bonus and long-term incentives. The base salaries of
executive officers are set at approximately the 50th-percentile level relative
to executives employed by similar companies. (This means that base salaries at
approximately 50 percent of the similar companies are higher.) If performance
targets are met but not exceeded, cash bonuses are also intended to be at
approximately the 50th-percentile level. If performance warrants, executive
officers have the opportunity to receive total compensation, including base
salary, annual bonus and long-term incentives, which is projected to be at
approximately the 75th percentile. The emphasis on long-term incentives is
intended to encourage executives to focus on the growth of the Company and the
value of its stock. In 1996, the C&P Committee granted long-term incentives in
the form of premium-priced options.
In assessing competitive levels of executive compensation for 1996, the C&P
Committee retained an independent executive compensation consultant. The
consultant provided the Committee with competitive compensation data for
executive officers in similar positions at comparable companies. The competitive
data reflected an average of the compensation practices of telecommunications
companies and high technology companies. The Committee believes that this blend
of compensation practices is appropriate because the Company needs to attract
and retain executives with the ability to handle the complexity inherent in
telecommunications companies along with the growth focus inherent in high
technology companies.
ANNUAL CASH BONUS
Executive officers and all employees participate in an annual incentive
plan under which the cash bonus component of their compensation is determined.
Under the plan, the C&P Committee determines a target award amount (as a
percentage of base pay) for each executive officer. The plan provides for annual
payment of cash bonuses in amounts equal to a percentage of the target award,
based on the level of achievement of selected corporate performance objectives
in the preceding year. The performance objectives vary by business entity and
are determined by the C&P Committee in conjunction with the Board's approval of
the Company's business plans at the start of the fiscal year. Bonuses for 1996
were based on the achievement of financial and operating performance objectives
for net gains, net income, free cash flow, operating cash flow margin and cash
costs per unit, as well as the achievement of strategic milestones.
LONG-TERM INCENTIVES
The independent executive compensation consultant retained by the C&P
Committee also performed a study of the Company's entire executive compensation
programs. As a result of that study and the C&P Committee's desire to even
further align the compensation of executive officers with the interests of
stockholders, for 1996 the C&P Committee decided to grant executive officers
long-term incentives in the form of premium-priced options rather than fair
market value options. Prior to late 1995, all stock options, other than options
replacing awards made by Pacific Telesis Group prior to the Company's spin-off
in April 1994, had been granted with an exercise price equal to the fair market
value of the stock at the time of grant.
Premium-priced options are granted with an exercise price at a premium
above the fair market value of the stock at the time of grant and are subject to
stricter forfeiture provisions. The primary purpose of these options is to
strongly motivate executive officers to achieve outstanding returns for
stockholders. Unlike fair market value options (under which an executive
receives compensation for any increase in stock value after the date of grant),
premium-priced options are designed so that an executive receives no
compensation until the value of the stock exceeds the above-market exercise
price. Thus, stockholders will receive significant
8
<PAGE> 11
appreciation in their investment in the Company before executives can realize
any gains on their premium-priced options.
Implementing its philosophy of targeting total compensation at the
75th-percentile of comparable companies if performance warrants it, the C&P
Committee approved a two-year grant of premium-priced options for executive
officers. In November of 1995, the Committee granted options at a 10 percent
premium above fair market value. Executive officers will forfeit all of these
options if the Company's common stock does not reach the exercise price of
$33.275 per share on any 10 days within three years of the date of grant. Early
in 1996, the Committee granted options at 50, 70 and 90 percent premiums above
fair market value, also subject to forfeiture provisions. These options will be
forfeited if the Company's common stock does not reach the exercise prices of
$41.625 per share, $47.175 per share and $52.725 per share on any ten days
within four, five and six years, respectively, of the date of grant.
POLICY ON DEDUCTIBILITY OF COMPENSATION
The C&P Committee has reviewed the impact of Section 162(m) of the Internal
Revenue Code on the Company. This provision limits the amount of compensation
that the Company may deduct from its taxable income for any year to $1 million
for any of its five most highly compensated executive officers. Mr. Ginn was the
only executive officer with compensation in excess of the $1 million limit in
1996. Mr. Ginn elected to defer his annual bonus to be earned in 1996. As a
result of this deferral, his 1996 compensation will not materially exceed the $1
million limit and the Company's tax deduction will be preserved.
The Company's 1993 Long-Term Stock Incentive Plan includes provisions
intended to ensure that the Company may deduct compensation arising from the
exercise of stock options without regard to the limitation. The Company also has
amended both its 1993 Long-Term Stock Incentive Plan and its Short-Term
Incentive Plan so that awards under both plans will be "performance-based" and
thus exempt from the deduction limitation imposed by Section 162(m) as described
below in management's proposals to amend both plans (see Proposals 3 and 4 on
pages 17 and 20).
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Ginn's salary for 1996 was based on the C&P Committee's assessment of
his individual performance, his experience in the Company's business and the C&P
Committee's comparative analysis described above.
Like other executive officers and employees, Mr. Ginn participates in the
Company's annual incentive plan under which the cash bonus component of his
compensation is determined. As described above, Mr. Ginn's cash bonus for 1996
was based on the level of achievement of predetermined performance objectives,
including a weighted average of financial, strategic and operational objectives
of each of the Company's business units, Company-consolidated earnings
objectives and corporate headquarters expense targets. The relative weight of
each performance objective was 70 percent, 20 percent and 10 percent,
respectively. The performance objectives were exceeded by 34 percent in the
aggregate, resulting in a bonus equal to 134 percent of the target award set by
the C&P Committee.
The number of premium-priced options granted to Mr. Ginn in 1995 and early
1996 was based on the C&P Committee's policy of providing long-term incentives
that will result in total compensation at the 75th-percentile level, relative to
comparable companies. This policy reflects the C&P Committee's emphasis on
long-term incentives related to growth in the value of the stockholders'
investment in the Company.
March 31, 1997
COMPENSATION AND PERSONNEL COMMITTEE
Donald G. Fisher, Chairman
Carol A. Bartz
Charles R. Schwab
George P. Shultz
9
<PAGE> 12
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
Common Stock with the NatWest Cellular Index, the S&P 500 Index (the "S&P 500")
and a group of cellular companies selected for presentation in prior proxy
statements of the Company (the "Cellular Group"). In the Company's view, the
NatWest Cellular Index, which includes the performance of 18 cellular companies,
including the members of the Cellular Group (Vodafone Group PLC, Rogers Cantel
Mobile Communications, Inc., United States Cellular Corporation, Vanguard
Cellular Systems and Cellular Communications, Inc., which was acquired by the
Company on August 16, 1996), provides some perspective of the growth in the
cellular industry over the past few years and a broader representation of the
performance of cellular companies over the required period than the more limited
Cellular Group.
The graph assumes that $100 was invested at the time of the Company's
initial public offering on December 2, 1993 in each of the Company's Common
Stock, the NatWest Cellular Index, the Cellular Group and the S&P 500.
COMPARISON OF AIRTOUCH COMMUNICATIONS, INC., THE NATWEST CELLULAR INDEX,
THE CELLULAR GROUP AND THE S&P 500
<TABLE>
<CAPTION>
'AIRTOUCH
MEASUREMENT PERIOD COMMUNICATIONS, NATWEST
(FISCAL YEAR COVERED) INC.' CELLULAR INDEX CELLULAR GROUP S&P 500
<S> <C> <C> <C> <C>
12/3/93 100 100 100 100
12/31/93 108 105 105 101
12/30/94 126 123 118 102
12/29/95 122 123 119 141
12/31/96 110 113 129 172
</TABLE>
10
<PAGE> 13
EXECUTIVE COMPENSATION
The following table discloses compensation earned by the Chief Executive
Officer and the four other most highly paid executive officers (the "Named
Executive Officers") for the three fiscal years ended December 31, 1996. Prior
to April 1, 1994, the Company was an 86.1% owned subsidiary of Pacific Telesis
Group ("Telesis") from which it was spun off effective April 1, 1994 (the
"Spin-off"). Prior to the Spin-off, all payments to the Named Executive
Officers, except for Mrs. Gill, were made by Telesis. Unless otherwise
indicated, positions listed are with the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------ ------------------------- ----------
(A) (B) (C) (D) (E) (F) (G) (H) (I) (C+D+H)
SECURITIES
OTHER RESTRICTED UNDERLYING ALL TOTAL
NAME AND ANNUAL STOCK OPTIONS/ LTIP OTHER CASH
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMP($) AWARDS($)(1) SARS(#) PAYOUTS($) COMP($)(2) COMP($)(3)
- ----------------------- ---- --------- -------- ------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sam Ginn............... 1996 760,000 865,640 -- 0 500,000 0 185,307 1,625,640
Chairman of the Board 1995 650,000 571,000 -- 0 435,750 0 115,000 1,221,000
and Chief Executive 1994 618,000 493,000 93,000 2,119,098 398,000 0 179,000 1,111,000
Officer
C. Lee Cox............. 1996 518,000 485,884 -- 0 318,980 0 109,916 1,003,884
Vice Chairman of the 1995 440,000 298,000 -- 0 219,330 0 76,000 738,000
Board(4) 1994 419,000 330,000 -- 1,001,827 195,900 0 129,000 749,000
Arun Sarin............. 1996 426,666 479,519 -- 2,873,750 318,980 0 50,349 906,185
President and Chief 1995 276,000 171,000 -- 0 249,330 0 43,000 447,000
Operating Officer(5) 1994 227,000 168,000 -- 639,863 72,800 0 38,000 395,000
Margaret G. Gill....... 1996 325,000 261,300 -- 517,500 168,810 0 50,981 586,300
Senior Vice President 1995 275,000 140,000 -- 0 98,070 0 44,000 415,000
Legal, External 1994 255,000 160,000 -- 0 60,000 0 9,000 415,000
Affairs
and Secretary
Mohan S. Gyani......... 1996 300,000 241,200 -- 646,875 168,810 0 45,686 541,200
Executive Vice 1995 229,000 116,000 -- 110,000 128,070 0 33,000 345,000
President
and Chief Financial 1994 173,000 101,000 -- 180,575 35,600 1,000 20,000 275,000
Officer
</TABLE>
- ---------------
(1) Aggregate number of shares of restricted stock and their value at fiscal
year end ($25.25 per share) are as follows: Mr. Ginn -- 30,000 shares,
$757,500; which vest with respect to 10,000 shares on 11/18/97, 10,000
shares on 11/18/98 and 10,000 shares on 11/18/99. Mr. Cox -- 20,000 shares,
$505,000; Mr. Sarin -- 130,000 shares, $3,282,500; Mrs. Gill -- 20,000
shares, $505,000; and Mr. Gyani -- 31,000 shares, $782,750. Includes Phantom
Stock Units ("Units") which were converted in connection with the Spin-off
from awards originally granted under the Telesis Long Term Incentive Plan
for the completed portion of the three-year performance cycle ending
December 31, 1995. Units convert on a one-for-one basis into Common Stock of
the Company. Awards for the three-year performance cycle ending December 31,
1995 settled on January 26, 1996 as follows: Mr. Ginn -- 17,092 Units; Mr.
Cox -- 7,938 Units; Mr. Sarin -- 2,231 Units; and Mr. Gyani -- 1,507 Units,
all of which were deferred under the Company's Deferred Compensation Plan,
with the exception of Mr. Gyani's.
(2) Includes "above-market" interest on deferred compensation under the
Company's Deferred Compensation Plan for 1996 for each of the Named
Executive Officers: $1,005, $521, $127, $122, and $74, respectively. Also
includes Company contributions under the Company's Retirement Plan for Mr.
Ginn -- $16,500; Mr. Cox -- $16,558; Mr. Sarin -- $14,742; Mrs.
Gill -- $16,500; and Mr. Gyani -- $16,500. Also includes Company
contributions under the Company's Deferred Compensation Plan for each of the
Named Executive Officers of: $167,802, $92,837, $35,485, $34,354, and
$29,112, respectively.
(3) Includes Salary, Bonus and LTIP Payouts.
(4) Mr. Cox retired from the Company effective April 4, 1997.
(5) Mr. Sarin was appointed President and Chief Operating Officer of the Company
effective February 1, 1997.
11
<PAGE> 14
The following table provides information on stock option grants during
fiscal year 1996 to the Named Executive Officers.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL POTENTIAL REALIZED VALUE AT
OPTIONS/ OPTIONS/SARS ASSUMED ANNUAL RATES OF STOCK PRICE
SARS GRANTED TO EXERCISE OR APPRECIATION FOR 10-YEAR OPTION TERM(2)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ------------------------------------------
NAME (#)(1) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($) 12% ($)
- ------------------ ------------- ------------- ----------- ---------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sam Ginn.......... 189,080 3.32 41.625 01/04/06 0 0 8,426,350
200,870 3.53 47.175 01/04/06 0 0 7,836,943
110,050 1.93 52.725 01/04/06 0 0 3,682,823
C. Lee Cox........ 100,410 1.76 41.625 01/04/06 0 0 4,474,772
106,670 1.87 47.175 01/04/06 0 0 4,161,730
111,900 1.97 52.725 01/04/06 0 0 3,744,734
Arun Sarin........ 100,410 1.76 41.625 01/04/06 0 0 4,474,772
106,670 1.87 47.175 01/04/06 0 0 4,161,730
111,900 1.97 52.725 01/04/06 0 0 3,744,734
Margaret G.
Gill............ 53,140 0.93 41.625 01/04/06 0 0 2,368,184
56,450 0.99 47.175 01/04/06 0 0 2,202,397
59,220 1.04 52.725 01/04/06 0 0 1,981,797
Mohan S. Gyani.... 53,140 0.93 41.625 01/04/06 0 0 2,368,184
56,450 0.99 47.175 01/04/06 0 0 2,202,397
59,220 1.04 52.725 01/04/06 0 0 1,981,797
Stock Price Per Share(3)........ $45.20 $71.98 $86.19
Added Value to All
Stockholders(4)............... $8.8 billion $22.2 billion $29.4 billion
Named Executive Officers 0.08%
as % of Added Value 0.07%
to all Stockholders........... 0.05%
</TABLE>
- ---------------
(1) Premium-priced options granted in January of 1996 with an exercise price
50%, 70% and 90% above the fair market value of the Company's common stock
on the date of grant ($27.75), respectively. Each of these options has a
ten-year term and will be forfeited unless the Company's common stock
reaches the exercise price on any ten days prior to the fourth anniversary
of the grant date in the case of the 50% premium-priced options, the fifth
anniversary of the grant date in the case of the 70% premium-priced options
and the sixth anniversary of the grant date in the case of the 90%
premium-priced options.
(2) The Potential Realized Value shown for these options assumes that all
options are exercised at the end of their 10-year term, and that the stock
price will grow at an assumed annual rate of 5% and 10%, as required by the
SEC, and 12%. The Company's Common Stock price must actually appreciate over
the four, five and six year periods at a minimum annual rate of
approximately 12% to achieve the exercise prices within the required time
periods and to avoid forfeiture. See the Report of the Compensation &
Personnel Committee beginning on page 8 for further discussion of
premium-priced options.
(3) The projected fair market value of a share of AirTouch Common Stock at the
end of the option term (10 years) after applying the stated assumed annual
rates to the fair market value on the date of grant.
(4) Represents aggregate increases in market capitalization of AirTouch
Communications, Inc. based upon the outstanding shares (502,652,959) of the
Company's Common Stock as of December 31, 1996 if the price of the Company's
Common Stock were to increase annually by 5%, 10% and 12% over the terms of
the options.
12
<PAGE> 15
The following table provides information on the value of each of the Named
Executive Officer's options/SARs at December 31, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END (#) FY-END ($)*
SHARES --------------- --------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- ----------- --------------- --------------------
<S> <C> <C> <C> <C>
Sam Ginn...................... -- -- 772,242/940,499 4,236,748/731,245
C. Lee Cox.................... 70,276 1,040,358 282,607/540,199 1,214,934/365,620
Arun Sarin.................... -- -- 177,099/515,200 591,581/146,250
Margaret G. Gill.............. -- -- 62,690/264,190 146,250/146,250
Mohan S. Gyani................ 9,352 147,596 94,878/267,879 347,273/65,808
</TABLE>
- ---------------
* Based on the closing price on the New York Stock Exchange-Composite
Transactions of the Company's Common Stock on December 31, 1996 of $25.25 per
share.
PENSION PLAN
The Company maintains a defined benefit pension plan ("Pension Plan") under
which individuals who were employees at December 31, 1986 and certain
transferred employees receive pension benefits based on a percentage of their
final five-year average pay and years of service. New employees of the Company
are not eligible to participate in the Pension Plan. The accrual of service
credit was discontinued in 1986 for almost all Pension Plan participants. Thus,
pension benefits only increase as a participant's compensation increases. Of the
Named Executive Officers, Messrs. Ginn, Cox, Sarin and Gyani participate in the
Pension Plan.
In addition, the Company maintains a "nonqualified pension plan" that
supplements the Pension Plan benefits of a closed group of executives who
participated in a similar plan prior to the Spin-off. Of the Named Executive
Officers, Messrs. Cox, Sarin and Gyani participate in the Company's nonqualified
pension plan.
The following table shows the total annual pension benefits (stated as a
single-life annuity) that would be received by an executive officer of the
Company retiring today at age 65 under the Company's qualified and nonqualified
pension plans. It assumes various specified levels of total years of service and
average annual compensation (which includes base salary and the target award
under the Short-Term Incentive Plan) during the final five years of service. The
benefits shown in the table generally are not subject to offsets for Social
Security benefits or other payments.
13
<PAGE> 16
<TABLE>
<CAPTION>
AVERAGE ANNUAL YEARS OF SERVICE PRIOR TO RETIREMENT
COMPENSATION
DURING FINAL
FIVE YEARS
OF SERVICE
- --------------------------------------------------------------------------------
15 20 25 30 35
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 300,000 65,250 87,000 108,750 130,500 152,250
- --------------------------------------------------------------------------------
350,000 76,125 101,500 126,875 152,250 177,625
- --------------------------------------------------------------------------------
400,000 87,000 116,000 145,000 174,000 203,000
- --------------------------------------------------------------------------------
450,000 97,875 130,500 163,125 195,750 228,375
- --------------------------------------------------------------------------------
500,000 108,750 145,000 181,250 217,500 253,750
- --------------------------------------------------------------------------------
550,000 119,625 159,500 199,375 239,250 279,125
- --------------------------------------------------------------------------------
650,000 141,375 188,500 235,625 282,750 329,875
- --------------------------------------------------------------------------------
700,000 152,250 203,000 253,750 304,500 355,250
- --------------------------------------------------------------------------------
800,000 174,000 232,000 290,000 348,000 406,000
- --------------------------------------------------------------------------------
900,000 195,750 261,000 326,250 391,500 456,750
- --------------------------------------------------------------------------------
1,000,000 217,500 290,000 362,500 435,000 507,500
- --------------------------------------------------------------------------------
1,200,000 261,000 348,000 435,000 522,000 609,000
</TABLE>
The 1996 compensation of Messrs. Ginn, Cox, Sarin and Gyani covered by the
pension plans was $150,000, $726,120, $431,094, and $304,272, respectively. As
of December 31, 1996, the years of service of Messrs. Ginn, Cox, Sarin and
Gyani, for purposes of calculating a pension benefit, were 34, 30, 9 and 16,
respectively.
Under one of the Company's nonqualified pension plans, eligible officers
who terminate after attaining age 55 and completing 10 years of service as an
officer are entitled to a minimum pension of 45% of average annual compensation.
This minimum pension is increased by an additional 1% per year, up to a maximum
of 50% at 15 or more years of service as an officer. As of December 31, 1996,
the completed years of service of Messrs. Cox and Sarin that are credited under
the minimum pension provisions were 12 and 7, respectively.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT OR CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has entered into employment agreements with each of the Named
Executive Officers that provide for specified payments in case of termination of
employment. The agreements were approved by the C&P Committee. The employment
agreements have no fixed term and may be terminated by either party upon one
year's notice.
The amount payable upon termination of employment depends upon the type of
termination and whether it occurs after a "change in control." If a Named
Executive Officer's employment is involuntarily terminated for any reason other
than cause, death or disability, and the termination does not occur within three
years of a "change in control," the Company will make a cash payment equal to
one and one-half times base compensation (two times base compensation in the
case of the Chief Executive Officer), plus 150% of the target award under the
Short-Term Incentive Plan for that calendar year (200% of the target award under
the Short-Term Incentive Plan for that calendar year for the Chief Executive
Officer). Also, the Named Executive Officer's health care and life insurance
benefits are continued for 18 months (two years for the Chief Executive Officer)
and, in the case of all of the Named Executive Officers, the one-year period
following termination counts as service for purposes of vesting and exercise
grace periods under all of the Company's option, restricted stock and incentive
plans.
14
<PAGE> 17
If a Named Executive Officer's employment ends in a "qualifying
termination" within three years after a "change in control," the Company will
make a cash payment equal to three times base compensation, plus 300% of the
target award under the Short-Term Incentive Plan for that calendar year.
A "qualifying termination" is an involuntary termination by the Company for
any reason, or a "constructive termination," which means a material reduction in
salary or benefits, a material change in responsibilities, or a requirement to
relocate that would increase the officer's one-way commute distance by more than
40 miles. For the Named Executive Officers, a "qualifying termination" also
includes a voluntary termination during the 13th month after the "change in
control."
A "change in control" is defined generally as (1) the acquisition of 50% or
more of the securities of the Company; (2) a change in the composition of the
Company's Board of Directors so that fewer than two-thirds of the directors are
"continuing directors"; (3) the direct or indirect acquisition of 20% or more of
the securities of the Company without the approval of a majority of the
continuing directors; or (4) certain mergers, consolidations, sales or
liquidations of substantially all of the assets of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1993, the Company provided a $100,000 loan to Mr. Hazen, a
Director of the Company, under the Company's equity purchase program, to finance
the purchase of $100,000 worth of the Company's Common Stock. The term of the
loan is five years, with an option to extend for an additional five years. Final
maturity is ten years or, if earlier, 30 days following the borrower's
resignation from the Board. No interim payments are otherwise due. The interest
rate for such loan is 6%, which was established at the time the loan was made
and will be reset if the loan is renewed for an additional five years. The
interest rate was determined using the greater of the mid-term, adjusted
Applicable Federal Rate, as published by the Internal Revenue Service, or the
Company's cost of funds, currently equivalent to the five-year Treasury rate
plus 85 basis points, but in no event higher than permitted under the California
usury laws (10%). Interest will compound annually and be paid at the end of each
five-year term. The principal and interest balance at December 31, 1996 was
$119,512.76.
In April 1996, the Company provided a $300,000 loan to Mr. Miron, the
Company's Vice President, Corporate Strategy and Development, in connection with
his relocation to California. The term of the loan is five years. The loan
accrues 3% simple interest annually and is payable in equal annual installments.
Interest and principal payments are deducted from Mr. Miron's annual awards
under the Short-Term Incentive Plan. If any such award is insufficient to cover
a loan payment, Mr. Miron will repay the difference directly to the Company. An
aggregate of $30,000 of the principal will be forgiven annually for up to five
years provided that Mr. Miron remains an employee on the date of payment of his
annual award under the Short-Term Incentive Plan. In the event that Mr. Miron's
employment terminates prior to full repayment of the loan, the entire
outstanding principal and accrued and unpaid interest will be immediately due
and payable. The principal and interest balance as of December 31, 1996 was
$305,100.00.
In August 1996, the Company provided a $100,000 loan to Dr. Boskin, a
Director of the Company, under the Company's equity purchase program, to finance
the purchase of $100,000 worth of the Company's Common Stock. The term of the
loan is five years, with an option to extend for an additional five years. Final
maturity is ten years or, if earlier, 30 days following the borrower's
resignation from the Board. No interim payments are otherwise due. The interest
rate for such loan is 6.9%, which was established at the time the loan was made
and will be reset if the loan is renewed for an additional five years. The
interest rate was determined using the greater of the mid-term, adjusted
Applicable Federal Rate, as published by the Internal Revenue Service, or the
Company's cost of funds, currently equivalent to the five-year Treasury rate
plus 85 basis points, but in no event higher than permitted under the California
usury laws (10%). Interest will compound annually and be paid at the end of each
five-year term. The principal and interest balance at December 31, 1996 was
$102,445.16.
Mrs. Gill's sister-in-law is Vice President and General Counsel of U.S.
Computer Services. AirTouch Paging, a subsidiary of the Company, entered into an
agreement with U.S. Computer Services d/b/a International Billing Services on
January 23, 1995 (the "Agreement"). The Agreement provides for printing
15
<PAGE> 18
and mailing services of monthly billing statements to customers of AirTouch
Paging. The Agreement is for a five-year term with approximately $1.2 million in
minimum annual fees.
Mr. Rock's wife is a partner in the law firm of Pillsbury Madison & Sutro
LLP, which provides legal services to the Company and certain of its
subsidiaries.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF PRICE
WATERHOUSE LLP.
The Board of Directors, upon recommendation of the Audit & Investment
Committee, has appointed the firm of Price Waterhouse LLP, independent
accountants to audit the financial statements of the Company for 1997. The Board
of Directors recommends that the stockholders vote "FOR" such ratification. If
the stockholders do not ratify this appointment, other certified public
accountants will be considered by the Board of Directors upon recommendation of
the Audit & Investment Committee.
For the year 1996, Price Waterhouse LLP audited the financial statements of
the Company and some of its subsidiaries, and provided other audit services to
the Company in connection with SEC filings, the review of interim financial
statements and audits of pension and other employee benefit plans.
One or more members of the firm are expected to be present at the Meeting
and will have the opportunity to make a statement if they desire to do so and to
respond to appropriate questions.
The Company chose not to extend the engagement of Coopers & Lybrand LLP
effective July 1, 1995, as the Company's independent auditors. To effect an
orderly transition Coopers & Lybrand LLP provided services to the Company in
connection with the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995.
The reports of Coopers & Lybrand LLP on the Company's consolidated
financial statements for each of the two fiscal years ended December 31, 1993
and December 31, 1994, contained no adverse opinion or disclaimer of opinion,
and were not qualified or modified as to uncertainty, audit scope, or accounting
principles.
The decision to change independent auditors was recommended by the
Company's Audit Committee and approved by the Board of Directors.
During the Company's two fiscal years ended December 31, 1993 and 1994 and
through June 30, 1995, the Company had no disagreements with Coopers & Lybrand
LLP on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreement(s), if not
resolved to the satisfaction of Coopers & Lybrand LLP, would have caused them to
make reference thereto in their report on the consolidated financial statement
of the Company for such years.
During the Company's two fiscal years ended December 31, 1993 and 1994 and
through June 30, 1995, the Company had no reportable events as defined in Item
304 (a)(1)(v) of Regulation S-K.
The Company requested that Coopers & Lybrand LLP furnish it with a letter
addressed to the SEC stating whether it agreed with the above statements. A copy
of that letter dated July 6, 1995 was filed as Exhibit 16 to a Form 8-K filed
with the SEC on July 7, 1995.
The Company engaged Price Waterhouse LLP as its new independent accountant
effective July 1, 1995.
During the Company's two fiscal years ended December 31, 1993 and December
31, 1994 and through the date of engagement of Price Waterhouse LLP, the Company
had not consulted with Price Waterhouse LLP regarding any of the matters
specified in Item 304(a)(2) of Regulation S-K.
16
<PAGE> 19
PROPOSAL 3
APPROVAL OF THE COMPANY'S AMENDED AND RESTATED 1993 LONG-TERM STOCK INCENTIVE
PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDED AND RESTATED
1993 LONG-TERM STOCK INCENTIVE PLAN.
A proposal to approve the amended and restated 1993 Long-Term Stock
Incentive Plan (the "Plan") will be presented to stockholders at the Annual
Meeting. On December 12, 1996 the Board of Directors approved the amended and
restated Plan, as approved and recommended by the C&P Committee.
The Board of Directors believes that the Plan provides a means of
attracting and retaining directors, employees, consultants and advisors. The
Plan is being submitted for stockholder approval to meet the requirements of
Section 162(m) of the Internal Revenue Code (the "Code"). If the Plan, as
amended and restated, is not approved by the stockholders, the Plan will remain
in effect as amended and restated except as to amendments specifically relating
to Section 162(m) of the Code.
A summary of the essential features of the amended and restated Plan is
provided below, but is qualified in its entirety by reference to the full text
of the amended and restated Plan which is included as Appendix A hereto.
Adoption and Amendments. The Plan was initially adopted by the Company's
Board of Directors in June 1993 and approved by the majority stockholder of the
Company's predecessor in February 1994. The Plan was amended and restated
effective in December 1994 and has been amended from time to time thereafter.
The Board of Directors may amend any aspect of the Plan at any time in the
future. Amendments are subject to the approval of the Company's stockholders
only to the extent required by applicable laws or regulations. The Plan shall
remain in effect until it is terminated by the Board of Directors, except that
no incentive stock options ("ISOs") shall be granted under the Plan after
February 15, 2004.
Shares Available for Issuance. The Plan provides for awards in the form of
restricted shares, stock units, options or stock appreciation rights ("SARs"),
or any combination thereof. The total number of shares of Common Stock reserved
for issuance under the Plan is 49,000,000, subject to anti-dilution provisions.
If any stock units, options or SARs granted under the Plan are forfeited, or if
options or SARs terminate for any other reason prior to exercise, then the
underlying shares of Common Stock again become available for awards under the
Plan. If SARs are exercised, then only the number of shares of Common Stock (if
any) actually issued in settlement of such SARs shall reduce the number of
shares available and the balance shall again become available for awards under
the Plan. If restricted shares are forfeited prior to the payment of any
dividends, then such shares shall again become available for awards under the
Plan. As of February 28, 1997, 22,503,390 shares remained available for issuance
under the Plan.
Administration. The Plan is administered by the C&P Committee. The C&P
Committee consists entirely of directors of the Company who are not officers or
employees of the Company or any subsidiary. The C&P Committee selects the
employees of the Company or any subsidiary who will receive awards, determines
the size of the award (subject to certain limitations described under
"Provisions Relating to Section 162(m) of the Code" on page 19) and establishes
the vesting or other conditions of the award. The Company's Board of Directors
has appointed an additional committee, which consists of directors who may be
officers of the Company. This committee administers the Plan with respect to
participants other than directors and officers.
Eligibility. Employees, directors, consultants and advisors of the
Company, its subsidiaries, or affiliates of which the Company owns not less than
50% are eligible to participate in the Plan, although ISOs may be granted only
to employees of the Company or a subsidiary. The participation of nonemployee
directors of the Company is limited to certain automatic grants of nonstatutory
stock options ("NSOs") and the ability for nonemployee directors to convert
their annual retainer payments and meeting fees to stock options or stock units.
See "Director Compensation."
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<PAGE> 20
Payment. In general, no payment will be required upon receipt of an award.
The Plan, however, permits the grant of awards in consideration of a cash
payment or a voluntary reduction in cash compensation.
Restricted Stock. Restricted shares are shares of Common Stock that are
subject to forfeiture in the event that the applicable vesting conditions are
not satisfied. Restricted shares have the same voting and dividend rights as
other shares of Common Stock.
Stock Units. A stock unit is an unfunded bookkeeping entry representing
the equivalent of one share of Common Stock. A holder of stock units has no
voting rights or other privileges as a stockholder but may be entitled to
receive dividend equivalents equal to the amount of any dividends paid on the
same number of shares of Common Stock. Dividend equivalents may be converted
into additional stock units or settled in the form of cash, Common Stock or a
combination of both.
Stock units, when vested, may be settled by distributing shares of Common
Stock or by a cash payment corresponding to the fair market value of the
appropriate number of shares of Common Stock, or a combination of both. The
number of shares of Common Stock (or the corresponding amount of cash)
distributed in settlement of stock units may be greater or smaller than the
number of stock units, depending upon the attainment of performance objectives.
The recipient of restricted shares or stock units may pay all withholding taxes
relating to the award with Common Stock rather than cash.
Stock Options. Options may include NSOs as well as ISOs intended to
qualify for special tax treatment. The term of an ISO cannot exceed 10 years,
and the exercise price of an ISO must be equal to or greater than the fair
market value of the Common Stock on the grant date. The same rule applies to
NSOs intended to be exempt from the deduction limitation of Section 162(m) of
the Code. (On February 28, 1997, the closing price of the Company's Common Stock
on the New York Stock Exchange was $27.25.) The Plan permits the grant of NSOs
with an exercise price that varies according to a predetermined formula.
The exercise price of an option may be paid in any lawful form permitted by
the C&P Committee, including (without limitation) the surrender of shares of
Common Stock or restricted shares already owned by the optionee. The C&P
Committee may also permit optionees to satisfy their withholding tax obligation
upon exercise of an NSO by surrendering a portion of their option shares to the
Company.
Stock Appreciation Rights. SARs permit the participant to elect to receive
any appreciation in the value of the underlying stock from the Company, either
in shares of Common Stock or in cash or a combination of the two, with the C&P
Committee having the discretion to determine the form in which such payment will
be made. The amount payable on exercise of an SAR is measured by the difference
between the market value of the underlying Common Stock at exercise and the
exercise price. The exercise price of an SAR intended to be exempt from the
deduction limitation of Section 162(m) of the Code must not be less than the
fair market value of the Company's Common Stock on the grant date. The Plan
permits the grant of SARs with an exercise price that varies according to a
predetermined formula. SARs may, but need not, be granted in combination with
options, restricted shares or stock units, and such an award may provide that
the SARs will not be exercisable unless the related options, restricted shares
or stock units are forfeited. In addition, an SAR granted under the Plan may
provide that it will be exercisable only in the event of a change in control.
Vesting Conditions. As noted above, the C&P Committee determines the
number of restricted shares, stock units, options or SARs to be included in the
award as well as the vesting and other conditions. The vesting conditions may be
based on the employee's service, his or her individual performance, the
Company's performance or other criteria. Vesting may be accelerated in the event
of the employee's death, disability or retirement, in the event of a change in
control with respect to the Company, or upon other events. Moreover, the C&P
Committee may determine that outstanding options and SARs will become fully
vested if it has concluded that there is a reasonable possibility that a change
in control will occur within six months thereafter.
For purposes of the Plan, the term "change in control" is defined as (1)
the acquisition, directly or indirectly, of at least 20 percent of the total
voting power represented by the Company's then outstanding voting securities (if
such acquisition was not approved by a majority of the existing directors), (2)
a greater than one-third change in the composition of the Board of Directors
over a period of 24 months (if such change was not approved by a majority of the
existing directors), (3) certain mergers and consolidations involving the
18
<PAGE> 21
Company, (4) a liquidation of the Company or (5) a sale of all or substantially
all of the Company's assets. The term "change in control" does not include a
reincorporation of the Company in a different state and certain other
transactions.
Transferability of Awards. Recipients of awards under the Plan may sell,
donate, pledge or otherwise transfer their awards only to the extent provided in
the applicable agreement. In addition, awards, other than ISOs, may only be
transferred to the recipient's spouse, children or grandchildren; a trust
established for the recipient's benefit and/or the benefit of the recipient's
spouse, children or grandchildren; or certain family partnerships. ISOs are not
transferable during the optionee's lifetime.
Modifications. The C&P Committee is authorized, within the provisions of
the Plan, to amend the terms of outstanding restricted shares or stock units, or
to modify, extend or assume outstanding options or SARs or may accept the
cancellation of outstanding options or SARs in return for the grant of new
options for the same or a different number of shares and at the same or a
different exercise price.
Tax Consequences of Options. There are no federal income tax consequences
to the optionee or the Company upon the grant of an option. Generally, there are
no federal income tax consequences to the optionee or the Company upon the
exercise of an ISO (except that the alternative minimum tax may apply). Upon
exercise of an NSO, the optionee normally will recognize taxable ordinary income
equal to the excess of the fair market value of the stock on the date of
exercise over the option exercise price. Generally, with respect to employees,
the Company is required to withhold from regular wages or supplemental wage
payments an amount based on the ordinary income recognized. Subject to the
requirement of reasonableness and the provisions of Section 162(m) of the Code,
the Company will generally be entitled to a business expense deduction equal to
the taxable ordinary income realized by the optionee. Optionees who are
employees generally may elect to satisfy the withholding tax obligation by
having shares of Common Stock withheld from those purchased under the NSO.
If an optionee holds the stock acquired upon exercise of an ISO for at
least two years from the date on which the option is granted and at least one
year from the date of exercise of the option, any gain or loss on a disposition
of such stock will be long-term capital gain or loss. Generally, if the optionee
disposes of the stock before the expiration of either of these holding periods
(a "disqualifying disposition"), at the time of disposition, the optionee will
realize taxable ordinary income equal to the lesser of (i) the excess of the
stock's fair market value on the date of exercise over the exercise price, or
(ii) the optionee's actual gain, if any, on the purchase and sale. The
optionee's additional gain, or any loss, upon the disqualifying disposition will
be a capital gain or loss, which will be long-term or short-term depending on
whether the stock was held for more than one year. To the extent the optionee
recognizes ordinary income by reason of a disqualifying disposition, the Company
will generally be entitled (subject to the requirement of reasonableness and the
provisions of Section 162(m) of the Code) to a corresponding business expense
deduction in the tax year in which the disqualifying disposition occurs.
Upon disposition of the stock acquired upon exercise of an NSO, the
optionee will recognize a capital gain or loss equal to the difference between
the selling price and the sum of the amount paid for such stock plus any amount
recognized as ordinary income upon exercise of the option. Such gain or loss
will be long-term or short-term, depending on whether the stock was held for
more than one year.
Provisions Relating to Section 162(m) of the Code. As part of the Omnibus
Budget Reconciliation Act of 1993, the U.S. Congress amended the Code to add
Section 162(m) which denies a deduction to any publicly held corporation for
compensation paid to certain employees in a taxable year to the extent that
compensation exceeds $1 million for a covered employee. It is possible that
compensation attributable to awards under the Plan, when combined with all other
types of compensation received by a covered employee from the Company, may cause
this limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation" are disregarded for purposes of the deduction limitation. The 1996
amendment and restatement of the Plan includes certain provisions that are
applicable solely to the Named Executive Officers to ensure that compensation
attributable
19
<PAGE> 22
to awards under the Plan is "performance-based" in accordance with applicable
Treasury regulations issued under Section 162(m) of the Code. Compensation
attributable to stock options and SARs with an exercise price not less than the
fair market value of the Company's Common Stock on the grant date currently
qualifies as performance-based compensation and will continue to qualify as
performance-based compensation if the stockholders approve the Plan's new
per-employee limitation on the number of shares for which stock options and SARs
may be granted during a calendar year. The new per-employee limitation is .75%
of the Company's Common Stock outstanding on December 12, 1996. The amended and
restated Plan also contains new provisions to qualify grants of restricted stock
and stock units as "performance-based" compensation, subject to stockholder
approval. Under the amended and restated Plan, grants of restricted stock and
stock units will be "performance-based" if the vesting of such grants is
contingent upon the attainment of specified objective goals relating to
financial, operational and marketing measures. (Each measure is described in the
Plan.) The number of shares included in such grants to any person in any
calendar year shall not exceed .75% of the Company's Common Stock outstanding on
December 12, 1996.
New Plan Benefits. The Committee has full discretion to determine the
number and amount of awards to be granted to participants under the Plan,
subject to any annual limitation on the total number of awards that may be
granted to any employee in any calendar year. Accordingly, the actual number of
awards to be granted to any individual is not determinable. Notwithstanding the
foregoing, the Committee has no discretion as to grants to nonemployee
directors. See "Director Compensation."
PROPOSAL 4
APPROVAL OF THE COMPANY'S AMENDED AND RESTATED SHORT-TERM INCENTIVE PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDED AND RESTATED SHORT-TERM
INCENTIVE PLAN.
A proposal to approve the Company's amended and restated Short-Term Stock
Incentive Plan (the "STIP") will be presented to stockholders at the Annual
Meeting. On December 12, 1996, and effective January 1, 1997, the Board of
Directors approved the amended and restated STIP, as recommended and approved by
the C&P Committee.
The Board of Directors believes that the STIP provides a means of
attracting, retaining and motivating employees. The STIP is being submitted for
stockholder approval to meet the requirements of Section 162(m) of the Code. If
the STIP, as amended and restated, is not approved by the stockholders, the STIP
will remain in effect except as to the amendments specifically relating to
Section 162(m) of the Code.
A summary of the essential features of the STIP is provided below, but is
qualified in its entirety by reference to the full text of the STIP which is
included as Appendix B hereto.
Administration. The STIP is administered by the C&P Committee. Employees
of the Company or any of its affiliates in active service for at least 90 days
during a performance year (the year in which a STIP award is earned) are
eligible to participate in the STIP. As of January 1, 1997, approximately 6,327
employees of the Company and its affiliates were eligible to participate in the
STIP. The C&P Committee determines the target award amount for each employee
position or level and the performance objectives applicable to awards for the
award year. Such performance objectives are generally financial, operational and
strategic in nature and are determined for each business entity by the C&P
Committee in conjunction with the Board's approval of the Company's business
plans at the start of the fiscal year.
Annual Awards. Awards are made each calendar year with respect to the
immediately preceding award year, based upon the level of achievement of the
pre-established performance criteria. Awards shall be prorated for a particular
award year for employees who have less than a full year of active service with
respect to a particular award year, receipt of disability benefits for more than
30 days during the award year, or certain terminations of service during the
award year. Target awards serve as a guideline in making awards. Awards normally
may vary from the target award based upon the degree to which pre-established
performance objectives are met, up to a maximum of 200 percent of the target
award.
20
<PAGE> 23
Provisions Relating to Section 162(m) of the Code. As part of the Omnibus
Budget Reconciliation Act of 1993, the U.S. Congress amended the Code to add
Section 162(m) which denies a deduction to any publicly held corporation for
compensation paid to certain employees in a taxable year to the extent that
compensation exceeds $1 million for a covered employee. It is possible that
compensation attributable to awards under the STIP, when combined with all other
types of compensation received by a covered employee from the Company, may cause
this limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation" are disregarded for purposes of the deduction limitation. The 1996
amendment and restatement of the STIP includes certain provisions that are
applicable solely to the Named Executive Officers to ensure that compensation
attributable to awards under the STIP is "performance-based" in accordance with
applicable Treasury regulations issued under Section 162(m) of the Code.
For the Named Executive Officers, the annual award is determined by
allocating among all such executives, pro rata based upon each such executive's
base salary at the beginning of the award year, a portion of an aggregate award
for all such executives equal to 0.6 percent of the Company's proportionate
operating cash flow for the award year. In addition, the C&P Committee has
discretion to reduce the award payable to any Named Executive Officer based on
financial performance criteria or any other criteria the Committee deems
appropriate.
New Plan Benefits. The C&P Committee determines the target award amount
for each employee position or level and the performance objectives applicable to
awards under the STIP for each plan year. However, because the performance
objectives are generally financial, operational and strategic in nature, such
target award amounts serve as a guideline in making awards. Awards may vary from
the target award based upon the degree to which pre-established performance
objectives are met, up to a maximum of 200 percent of the target award.
Accordingly, the amount of awards payable to any individual is not determinable.
OTHER MATTERS
In addition to voting choices specifically marked, and unless otherwise
indicated by the stockholder, the proxy card confers discretionary authority on
the named proxy holders to vote on any matter that properly comes before the
Meeting which is not described in these proxy materials. At the time this proxy
statement went to press, the Company knew of no other matters which might be
presented for stockholder action at the Meeting.
To be eligible for inclusion in the Company's 1998 proxy statement,
stockholder proposals must be received at the Company's principal executive
offices no later than December 5, 1997.
If a stockholder desires to bring business before the Meeting which is not
the subject of a proposal timely submitted for inclusion in the proxy statement,
the stockholder must follow procedures outlined in the Company's By-Laws. One of
the procedural requirements in the By-Laws is timely notice to the Company in
writing of the business the stockholder proposes to bring before the Meeting. A
copy of these procedures is available upon request from the Secretary of the
Company, One California Street, San Francisco, California 94111. It should be
noted that these By-Law procedures govern proper submission of business to be
put before a stockholder vote and do not preclude discussion by any stockholder
of any business properly brought before the Meeting.
If a stockholder wants to nominate a person for election to the Board of
Directors other than a director nominated by the Nominating & Director Affairs
Committee, the Stockholder must follow procedures outlined in the Company's
By-Laws. One of the procedural requirements in the By-Laws is timely notice to
the Company in writing of the proposed nomination to be made at the Meeting. A
copy of the By-Law provision governing the requirements for the notice is
available upon request from the Secretary of the Company.
21
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires certain
persons, including the Company's directors and officers, to file reports of
ownership and changes in ownership of the Company's securities with the SEC.
Based upon the Company's review of the reporting forms received by it and
written representations from certain persons that no Form 5 reports were
required to be filed by those persons, the Company believes that all filing
requirements applicable to its directors, officers and 10% stockholders were
complied with for fiscal year 1996.
SOLICITATION OF PROXIES
The Company will pay all costs of distribution and solicitation of proxies.
Brokers, nominees, fiduciaries and other custodians will be reimbursed their
reasonable fees and expenses incurred in forwarding proxy materials to
beneficial owners. Georgeson & Co., New York, has been retained at an estimated
cost of $15,000, plus reasonable out-of-pocket expenses, to assist in the
solicitation of proxies. This solicitation will be by mail, telephone, and other
means.
By Order of the Board of Directors,
/s/ Margaret G. Gill
Margaret G. Gill
Senior Vice President
Legal, External Affairs and Secretary
22
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LOGO
<PAGE> 26
APPENDIX A
AIRTOUCH COMMUNICATIONS, INC.
1993 LONG-TERM STOCK INCENTIVE PLAN
(AMENDMENT AND RESTATEMENT EFFECTIVE AS OF DECEMBER 12, 1996)
<PAGE> 27
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1. INTRODUCTION................................................................ 1
ARTICLE 2. ADMINISTRATION.............................................................. 1
2.1 Committee Composition............................................................. 1
2.2 Committee Responsibilities........................................................ 1
ARTICLE 3. SHARES AVAILABLE FOR GRANTS................................................. 1
3.1 Basic Limitation.................................................................. 1
3.2 Additional Shares................................................................. 1
3.3 Dividend Equivalents.............................................................. 2
ARTICLE 4. ELIGIBILITY................................................................. 2
4.1 General Rules..................................................................... 2
4.2 Outside Directors................................................................. 2
4.3 Incentive Stock Options........................................................... 2
ARTICLE 5. OPTIONS..................................................................... 3
5.1 Stock Option Agreement............................................................ 3
5.2 Number of Shares.................................................................. 3
5.3 Exercise Price.................................................................... 3
5.4 Exercisability and Term........................................................... 3
5.5 Effect of Change in Control....................................................... 3
5.6 Modification or Assumption of Options............................................. 3
ARTICLE 6. PAYMENT FOR OPTION SHARES................................................... 4
6.1 General Rule...................................................................... 4
6.2 Surrender of Stock................................................................ 4
6.3 Exercise/Sale..................................................................... 4
6.4 Exercise/Pledge................................................................... 4
6.5 Promissory Note................................................................... 4
6.6 Other Forms of Payment............................................................ 4
ARTICLE 7. STOCK APPRECIATION RIGHTS................................................... 4
7.1 SAR Agreement..................................................................... 4
7.2 Number of Shares.................................................................. 4
7.3 Exercise Price.................................................................... 4
7.4 Exercisability and Term........................................................... 4
7.5 Effect of Change in Control....................................................... 5
7.6 Exercise of SARs.................................................................. 5
7.7 Modification or Assumption of SARs................................................ 5
ARTICLE 8. RESTRICTED SHARES AND STOCK UNITS........................................... 5
8.1 Time, Amount and Form of Awards................................................... 5
8.2 Payment for Awards................................................................ 5
8.3 Vesting Conditions................................................................ 5
8.4 Form and Time of Settlement of Stock Units........................................ 6
8.5 Death of Recipient................................................................ 6
8.6 Creditors' Rights................................................................. 6
</TABLE>
i
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<TABLE>
<S> <C>
ARTICLE 9. VOTING AND DIVIDEND RIGHTS.................................................. 6
9.1 Restricted Shares................................................................. 6
9.2 Stock Units....................................................................... 6
ARTICLE 10. PROTECTION AGAINST DILUTION................................................ 6
10.1 Adjustments...................................................................... 6
10.2 Reorganizations.................................................................. 7
ARTICLE 11. AWARDS UNDER OTHER PLANS................................................... 7
ARTICLE 12. PAYMENT OF DIRECTOR'S FEES IN SECURITIES................................... 7
12.1 Effective Date................................................................... 7
12.2 Elections to Receive NSOs or Stock Units......................................... 7
12.3 Number and Terms of NSOs......................................................... 7
12.4 Number and Terms of Stock Units.................................................. 7
ARTICLE 13. LIMITATION ON RIGHTS....................................................... 7
13.1 Retention Rights................................................................. 7
13.2 Stockholders' Rights............................................................. 8
13.3 Regulatory Requirements.......................................................... 8
ARTICLE 14. LIMITATION ON PAYMENTS..................................................... 8
14.1 Basic Rule....................................................................... 8
14.2 Reduction of Payments............................................................ 8
14.3 Overpayments and Underpayments................................................... 8
14.4 Related Corporations............................................................. 9
ARTICLE 15. WITHHOLDING TAXES.......................................................... 9
15.1 General.......................................................................... 9
15.2 Share Withholding................................................................ 9
ARTICLE 16. ASSIGNMENT OR TRANSFER OF AWARDS........................................... 9
ARTICLE 17. FUTURE OF THE PLAN......................................................... 9
17.1 Term of the Plan................................................................. 9
17.2 Amendment or Termination......................................................... 9
ARTICLE 18. DEFINITIONS................................................................ 10
ARTICLE 19. EXECUTION.................................................................. 12
</TABLE>
ii
<PAGE> 29
AIRTOUCH COMMUNICATIONS, INC.
1993 LONG-TERM STOCK INCENTIVE PLAN
(AMENDMENT AND RESTATEMENT EFFECTIVE AS OF DECEMBER 12, 1996)
ARTICLE 1
INTRODUCTION
The Plan was adopted by the board of directors of the Company's predecessor
on June 25, 1993, and approved by the majority stockholder of the Company's
predecessor on February 16, 1994. The Plan was most recently amended and
restated on December 12, 1996, effective as of the same date.
The purpose of the Plan is to promote the long-term success of the Company
and the creation of stockholder value by (a) encouraging Key Employees to focus
on critical long-range objectives, (b) encouraging the attraction and retention
of Key Employees with exceptional qualifications and (c) linking Key Employees
directly to stockholder interests through increased stock ownership. The Plan
seeks to achieve this purpose by providing for Awards in the form of Restricted
Shares, Stock Units, Options (which may constitute incentive stock options or
nonstatutory stock options) or stock appreciation rights. The Plan shall be
governed by, and construed in accordance with, the laws of the State of Delaware
(except their choice-of-law provisions).
ARTICLE 2
ADMINISTRATION
2.1 Committee Composition. The Plan shall be administered by the
Committee. The Committee shall consist of two or more disinterested directors of
the Company, who shall be appointed by the Board. A member of the Board shall be
deemed to be "disinterested" only if he or she satisfies (a) such requirements
as the Securities and Exchange Commission may establish for non-employee
directors administering plans intended to qualify for exemption under Rule 16b-3
(or its successor) under the Exchange Act and (b) such requirements as the
Internal Revenue Service may establish for outside directors acting under plans
intended to qualify for exemption under section 162(m)(4)(C) of the Code. The
Board may also appoint one or more separate committees of the Board, each
composed of one or more directors of the Company who need not be disinterested,
who may administer the Plan with respect to Key Employees who are not considered
officers or directors of the Company under Section 16 of the Exchange Act, may
grant Awards under the Plan to such Key Employees and may determine all terms of
such Awards.
2.2 Committee Responsibilities. The Committee shall (a) select the Key
Employees who are to receive Awards under the Plan, (b) determine the type,
number, vesting requirements and other features and conditions of such Awards,
(c) interpret the Plan and (d) make all other decisions relating to the
operation of the Plan. The Committee may adopt such rules or guidelines as it
deems appropriate to implement the Plan. The Committee's determinations under
the Plan shall be final and binding on all persons.
ARTICLE 3
SHARES AVAILABLE FOR GRANTS
3.1 Basic Limitation. Common Shares issued pursuant to the Plan may be
authorized but unissued shares or treasury shares. The aggregate number of
Restricted Shares, Stock Units, Options and SARs awarded under the Plan shall
not exceed 49,000,000. The limitation of this Section 3.1 shall be subject to
adjustment pursuant to Article 10.
3.2 Additional Shares. If Restricted Shares, Stock Units, Options or SARs
are forfeited or if Options or SARs terminate for any other reason before being
exercised, then the corresponding Common Shares shall again become available for
Awards under the Plan. If Stock Units are settled, then only the number of
Common Shares (if any) actually issued in settlement of such Stock Units shall
reduce the number available
<PAGE> 30
under Section 3.1 and the balance shall again become available for Awards under
the Plan. If SARs are exercised, then only the number of Common Shares (if any)
actually issued in settlement of such SARs shall reduce the number available
under Section 3.1 and the balance shall again become available for Awards under
the Plan. The foregoing notwithstanding, the aggregate number of Common Shares
that may be issued under the Plan upon the exercise of ISOs shall not be
increased when Restricted Shares are forfeited.
3.3 Dividend Equivalents. Any dividend equivalents distributed under the
Plan shall not be applied against the number of Restricted Shares, Stock Units,
Options or SARs available for Awards, whether or not such dividend equivalents
are converted into Stock Units.
ARTICLE 4
ELIGIBILITY
4.1 General Rules. Only Key Employees (including, without limitation,
independent contractors who are not members of the Board) shall be eligible for
designation as Participants by the Committee. Key Employees who are Outside
Directors shall only be eligible for the grant of the NSOs described in Section
4.2 and for making an election described in Article 12.
4.2 Outside Directors. Any other provision of the Plan notwithstanding,
the participation of Outside Directors in the Plan shall be subject to the
following restrictions:
(a) Outside Directors shall receive no Awards except as described in
this Section 4.2 and Article 12.
(b) Each Outside Director who first becomes a member of the Board on
or after February 25, 1994, shall receive a one-time grant of an NSO
covering 10,000 Common Shares (subject to adjustment under Article 10).
Such NSO shall be granted on the date when such Outside Director first
joins the Board.
(c) Upon the conclusion of each regular annual meeting of the
Company's stockholders in 1995 and subsequent years, each Outside Director
who will continue serving as a member of the Board after such meeting shall
receive an NSO covering 1,000 Common Shares (subject to adjustment under
Article 10). The foregoing notwithstanding, an Outside Director shall not
receive a grant under this Subsection (c) if he or she has received a grant
under Subsection (b) above earlier in the same calendar year.
(d) All NSOs granted to an Outside Director under this Section 4.2
shall become exercisable in full on the first anniversary of the date of
grant. Such NSOs shall also become exercisable in full in the event of (i)
the termination of such Outside Director's service because of death or
total and permanent disability or (ii) a Change in Control with respect to
the Company.
(e) The Exercise Price under all NSOs granted to an Outside Director
under this Section 4.2 shall be equal to 100% of the Fair Market Value of a
Common Share on the date of grant, payable in one of the forms described in
Sections 6.1, 6.2, 6.3 and 6.4.
(f) All NSOs granted to an Outside Director under this Section 4.2
shall terminate on the earliest of (i) the 10th anniversary of the date of
grant, (ii) the date three months after the termination of such Outside
Director's service for any reason other than death, total and permanent
disability or Retirement, (iii) the date 12 months after the termination of
such Outside Director's service because of death or (iv) the date 36 months
after the termination of such Outside Director's service because of total
and permanent disability or Retirement.
(g) NSOs granted under Subsection (b) above shall also terminate 30
days after the date of grant unless the Outside Director demonstrates to
the Company's satisfaction that he or she beneficially owned Common Shares
with a Fair Market Value of $100,000 or more on any date within 30 days
after the date of grant.
4.3 Incentive Stock Options. Only Key Employees who are common-law
employees of the Company, a Parent or a Subsidiary shall be eligible for the
grant of ISOs. In addition, a Key Employee who owns more
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than 10% of the total combined voting power of all classes of outstanding stock
of the Company or any of its Parents or Subsidiaries shall not be eligible for
the grant of an ISO unless the requirements set forth in section 422(c)(6) of
the Code are satisfied.
ARTICLE 5
OPTIONS
5.1 Stock Option Agreement. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms of the Plan and may be
subject to any other terms that are not inconsistent with the Plan. The Stock
Option Agreement shall specify whether the Option is an ISO or an NSO. The
provisions of the various Stock Option Agreements entered into under the Plan
need not be identical. Options may be granted in consideration of a cash payment
or in consideration of a reduction in the Optionee's other compensation. A Stock
Option Agreement may provide that new Options will be granted automatically to
the Optionee when he or she exercises the prior Options.
5.2 Number of Shares. Each Stock Option Agreement shall specify the
number of Common Shares subject to the Option and shall provide for the
adjustment of such number in accordance with Article 10. In no event shall the
number of Common Shares subject to the Options granted to any Optionee in a
single calendar year exceed 0.75% of the Common Shares outstanding on December
12, 1996, subject to adjustment in accordance with Article 10 and subject to the
approval of the Company's stockholders at the 1997 regular annual meeting of
stockholders.
5.3 Exercise Price. Each Stock Option Agreement shall specify the
Exercise Price; provided that the Exercise Price under an ISO shall in no event
be less than 100% of the Fair Market Value of a Common Share on the date of
grant and the Exercise Price under an NSO shall in no event be less than the par
value of the Common Shares subject to such NSO. In the case of an NSO, a Stock
Option Agreement may specify an Exercise Price that varies in accordance with a
predetermined formula while the NSO is outstanding.
5.4 Exercisability and Term. Each Stock Option Agreement shall specify
the date when all or any installment of the Option is to become exercisable. The
Stock Option Agreement shall also specify the term of the Option; provided that
the term of an ISO shall in no event exceed 10 years from the date of grant. A
Stock Option Agreement may provide for accelerated exercisability in the event
of the Optionee's death, disability or retirement or other events and may
provide for expiration prior to the end of its term in the event of the
termination of the Optionee's service. Options may be awarded in combination
with SARs, and such an Award may provide that the Options will not be
exercisable unless the related SARs are forfeited. NSOs may also be awarded in
combination with Restricted Shares or Stock Units, and such an Award may provide
that the NSOs will not be exercisable unless the related Restricted Shares or
Stock Units are forfeited.
5.5 Effect of Change in Control. The Committee may determine, at the time
of granting an Option or thereafter, that such Option shall become fully
exercisable as to all Common Shares subject to such Option in the event that a
Change in Control occurs with respect to the Company. If the Committee finds
that there is a reasonable possibility that, within the succeeding six months, a
Change in Control will occur with respect to the Company, then the Committee at
its sole discretion may determine that any or all outstanding Options shall
become fully exercisable as to all Common Shares subject to such Options.
5.6 Modification or Assumption of Options. Within the limitations of the
Plan, the Committee may modify, extend or assume outstanding options or may
accept the cancellation of outstanding options (whether granted by the Company
or by another issuer) in return for the grant of new options for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of an Option shall, without the
consent of the Optionee, alter or impair his or her rights or obligations under
such Option.
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ARTICLE 6
PAYMENT FOR OPTION SHARES.
6.1 General Rule. The entire Exercise Price of Common Shares issued upon
exercise of Options shall be payable in cash at the time when such Common Shares
are purchased, except as follows:
(a) In the case of an ISO granted under the Plan, payment shall be
made only pursuant to the express provisions of the applicable Stock Option
Agreement. The Stock Option Agreement may specify that payment may be made
in any form(s) described in this Article 6.
(b) In the case of an NSO, the Committee may at any time accept
payment in any form(s) described in this Article 6.
6.2 Surrender of Stock. To the extent that this Section 6.2 is
applicable, payment for all or any part of the Exercise Price may be made with
Common Shares which have already been owned by the Optionee for more than six
months. Such Common Shares shall be valued at their Fair Market Value on the
date when the new Common Shares are purchased under the Plan.
6.3 Exercise/Sale. To the extent that this Section 6.3 is applicable,
payment may be made by the delivery (on a form prescribed by the Company) of an
irrevocable direction to a securities broker approved by the Company to sell
Common Shares and to deliver all or part of the sales proceeds to the Company in
payment of all or part of the Exercise Price and any withholding taxes.
6.4 Exercise/Pledge. To the extent that this Section 6.4 is applicable,
payment may be made by the delivery (on a form prescribed by the Company) of an
irrevocable direction to pledge Common Shares to a securities broker or lender
approved by the Company, as security for a loan, and to deliver all or part of
the loan proceeds to the Company in payment of all or part of the Exercise Price
and any withholding taxes.
6.5 Promissory Note. To the extent that this Section 6.5 is applicable,
payment may be made with a full-recourse promissory note; provided that the par
value of the Common Shares shall be paid in cash.
6.6 Other Forms of Payment. To the extent that this Section 6.6 is
applicable, payment may be made in any other form that is consistent with
applicable laws, regulations and rules.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 SAR Agreement. Each grant of an SAR under the Plan shall be evidenced
by an SAR Agreement between the Optionee and the Company. Such SAR shall be
subject to all applicable terms of the Plan and may be subject to any other
terms that are not inconsistent with the Plan. The provisions of the various SAR
Agreements entered into under the Plan need not be identical. SARs may be
granted in consideration of a reduction in the Optionee's other compensation.
7.2 Number of Shares. Each SAR Agreement shall specify the number of
Common Shares to which the SAR pertains and shall provide for the adjustment of
such number in accordance with Article 10. In no event shall the number of
Common Shares subject to the SARs granted to any Optionee in a single calendar
year exceed 0.75% of the Common Shares outstanding on December 12, 1996, subject
to adjustment in accordance with Article 10 and subject to the approval of the
Company's stockholders at the 1997 regular annual meeting of stockholders.
7.3 Exercise Price. Each SAR Agreement shall specify the Exercise Price.
An SAR Agreement may specify an Exercise Price that varies in accordance with a
predetermined formula while the SAR is outstanding.
7.4 Exercisability and Term. Each SAR Agreement shall specify the date
when all or any installment of the SAR is to become exercisable. The SAR
Agreement shall also specify the term of the SAR. An SAR Agreement may provide
for accelerated exercisability in the event of the Optionee's death, disability
or
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retirement or other events and may provide for expiration prior to the end of
its term in the event of the termination of the Optionee's service. SARs may
also be awarded in combination with Options, Restricted Shares or Stock Units,
and such an Award may provide that the SARs will not be exercisable unless the
related Options, Restricted Shares or Stock Units are forfeited. An SAR may be
included in an ISO only at the time of grant but may be included in an NSO at
the time of grant or at any subsequent time. An SAR granted under the Plan may
provide that it will be exercisable only in the event of a Change in Control.
7.5 Effect of Change in Control. The Committee may determine, at the time
of granting an SAR or thereafter, that such SAR shall become fully exercisable
as to all Common Shares subject to such SAR in the event that a Change in
Control occurs with respect to the Company. If the Committee finds that there is
a reasonable possibility that, within the succeeding six months, a Change in
Control will occur with respect to the Company, then the Committee at its sole
discretion may determine that any or all outstanding SARs shall become fully
exercisable as to all Common Shares subject to such SARs.
7.6 Exercise of SARs. If, on the date when an SAR expires, the Exercise
Price under such SAR is less than the Fair Market Value on such date but any
portion of such SAR has not been exercised or surrendered, then such SAR shall
automatically be deemed to be exercised as of such date with respect to such
portion. Upon exercise of an SAR, the Optionee (or any person having the right
to exercise the SAR after his or her death) shall receive from the Company (a)
Common Shares, (b) cash or (c) a combination of Common Shares and cash, as the
Committee shall determine. The amount of cash and/or the Fair Market Value of
Common Shares received upon exercise of SARs shall, in the aggregate, be equal
to the amount by which the Fair Market Value (on the date of surrender) of the
Common Shares subject to the SARs exceeds the Exercise Price.
7.7 Modification or Assumption of SARs. Within the limitations of the
Plan, the Committee may modify, extend or assume outstanding SARs or may accept
the cancellation of outstanding SARs (whether granted by the Company or by
another issuer) in return for the grant of new SARs for the same or a different
number of shares and at the same or a different exercise price. The foregoing
notwithstanding, no modification of an SAR shall, without the consent of the
Optionee, alter or impair his or her rights or obligations under such SAR.
ARTICLE 8
RESTRICTED SHARES AND STOCK UNITS
8.1 Time, Amount and Form of Awards. Awards under the Plan may be granted
in the form of Restricted Shares, in the form of Stock Units, or in any
combination of both. Restricted Shares or Stock Units may also be awarded in
combination with NSOs or SARs, and such an Award may provide that the Restricted
Shares or Stock Units will be forfeited in the event that the related NSOs or
SARs are exercised.
8.2 Payment for Awards. To the extent that an Award is granted in the
form of newly issued Restricted Shares, the Award recipient, as a condition to
the grant of such Award, shall be required to provide consideration to the
Company in the form of cash or services rendered in an amount equal to the par
value of such Restricted Shares. To the extent that an Award is granted in the
form of Restricted Shares from the Company's treasury or in the form of Stock
Units, no consideration shall be required of the Award recipients.
8.3 Vesting Conditions. Each Award of Restricted Shares or Stock Units
shall become vested, in full or in installments, upon satisfaction of the
conditions specified in the Stock Award Agreement. Subject to the approval of
the Company's stockholders at the 1997 regular annual meeting of stockholders,
the Committee may include among such conditions the requirement that the
performance of the Company or a business unit of the Company (as determined by
the Company's independent auditors) for a specified period of one or more years
equal or exceed a target determined in advance by the Committee. Such target
shall be based on one or more of the financial, operational and marketing
criteria set forth in Schedule A. The Committee shall determine such target not
later than the 90th day of such period. In no event shall the number of
Restricted Shares or Stock Units which are subject to performance-based vesting
conditions and which are granted to any Participant in a single calendar year
exceed 0.75% of the Common Shares outstanding on December 12, 1996,
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subject to adjustment in accordance with Article 10. A Stock Award Agreement may
provide for accelerated vesting in the event of the Participant's death,
disability or retirement or other events. The Committee may determine, at the
time of making an Award or thereafter, that such Award shall become fully vested
in the event that a Change in Control occurs with respect to the Company.
8.4 Form and Time of Settlement of Stock Units. Settlement of vested
Stock Units may be made in the form of (a) cash, (b) Common Shares or (c) any
combination of both. The actual number of Stock Units eligible for settlement
may be larger or smaller than the number included in the original Award, based
on predetermined performance factors. Methods of converting Stock Units into
cash may include (without limitation) a method based on the average Fair Market
Value of Common Shares over a series of trading days. Vested Stock Units may be
settled in a lump sum or in installments. The distribution may occur or commence
when all vesting conditions applicable to the Stock Units have been satisfied or
have lapsed, or it may be deferred to any later date. The amount of a deferred
distribution may be increased by an interest factor or by dividend equivalents.
Until an Award of Stock Units is settled, the number of such Stock Units shall
be subject to adjustment pursuant to Article 10.
8.5 Death of Recipient. Any Stock Units Award that becomes payable after
the recipient's death shall be distributed to the recipient's beneficiary or
beneficiaries. Each recipient of a Stock Units Award under the Plan shall
designate one or more beneficiaries for this purpose by filing the prescribed
form with the Company. A beneficiary designation may be changed by filing the
prescribed form with the Company at any time before the Award recipient's death.
If no beneficiary was designated or if no designated beneficiary survives the
Award recipient, then any Stock Units Award that becomes payable after the
recipient's death shall be distributed to the recipient's estate.
8.6 Creditors' Rights. A holder of Stock Units shall have no rights other
than those of a general creditor of the Company. Stock Units represent an
unfunded and unsecured obligation of the Company, subject to the terms and
conditions of the applicable Stock Award Agreement.
ARTICLE 9
VOTING AND DIVIDEND RIGHTS
9.1 Restricted Shares. The holders of Restricted Shares awarded under the
Plan shall have the same voting, dividend and other rights as the Company's
other stockholders. A Stock Award Agreement, however, may require that the
holders of Restricted Shares invest any cash dividends received in additional
Restricted Shares. Such additional Restricted Shares shall be subject to the
same conditions and restrictions as the Award with respect to which the
dividends were paid. Such additional Restricted Shares shall not reduce the
number of Common Shares available under Article 3.
9.2 Stock Units. The holders of Stock Units shall have no voting rights.
Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at
the Committee's discretion, carry with it a right to dividend equivalents. Such
right entitles the holder to be credited with an amount equal to all cash
dividends paid on one Common Share while the Stock Unit is outstanding. Dividend
equivalents may be converted into additional Stock Units. Settlement of dividend
equivalents may be made in the form of cash, in the form of Common Shares, or in
a combination of both. Prior to distribution, any dividend equivalents which are
not paid shall be subject to the same conditions and restrictions as the Stock
Units to which they attach.
ARTICLE 10
PROTECTION AGAINST DILUTION
10.1 Adjustments. In the event of a subdivision of the outstanding Common
Shares, a declaration of a dividend payable in Common Shares, a declaration of a
dividend payable in a form other than Common Shares in an amount that has a
material effect on the price of Common Shares, a combination or consolidation of
the outstanding Common Shares (by reclassification or otherwise) into a lesser
number of Common Shares, a recapitalization, a spin-off or a similar occurrence,
the Committee shall make such adjustments as it,
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in its sole discretion, deems appropriate in one or more of (a) the number of
Options, SARs, Restricted Shares and Stock Units available for future Awards
under Article 3, (b) the limitations set forth in Sections 5.2, 7.2 and 8.3, (c)
the number of NSOs to be granted to Outside Directors under Section 4.2, (d) the
number of Stock Units included in any prior Award which has not yet been
settled, (e) the number of Common Shares covered by each outstanding Option and
SAR or (f) the Exercise Price under each outstanding Option and SAR. Except as
provided in this Article 10, a Participant shall have no rights by reason of any
issue by the Company of stock of any class or securities convertible into stock
of any class, any subdivision or consolidation of shares of stock of any class,
the payment of any stock dividend or any other increase or decrease in the
number of shares of stock of any class.
10.2 Reorganizations. In the event that the Company is a party to a
merger or other reorganization, outstanding Options, SARs, Restricted Shares and
Stock Units shall be subject to the agreement of merger or reorganization. Such
agreement may provide, without limitation, for the assumption of outstanding
Awards by the surviving corporation or its parent, for their continuation by the
Company (if the Company is a surviving corporation), for accelerated vesting and
accelerated expiration, or for settlement in cash.
ARTICLE 11
AWARDS UNDER OTHER PLANS
The Company may grant awards under other plans or programs. Such awards may
be settled in the form of Common Shares issued under this Plan. Such Common
Shares shall be treated for all purposes under the Plan like Common Shares
issued in settlement of Stock Units and shall, when issued, reduce the number of
Common Shares available under Article 3.
ARTICLE 12
PAYMENT OF DIRECTOR'S FEES IN SECURITIES
12.1 Effective Date. No provision of this Article 12 shall be effective
unless and until the Board has determined to implement such provision.
12.2 Elections to Receive NSOs or Stock Units. An Outside Director may
elect to receive his or her annual retainer payments and meeting fees from the
Company in the form of cash, NSOs, Stock Units, or a combination thereof. Such
NSOs and Stock Units shall be issued under the Plan. An election under this
Article 12 shall be filed with the Company on the prescribed form. The election
may be amended or canceled by filing a new form with the Company.
12.3 Number and Terms of NSOs. The number of NSOs to be granted to
Outside Directors in lieu of annual retainers and meeting fees that would
otherwise be paid in cash shall be calculated in a manner determined by the
Board. The terms of such NSOs shall also be determined by the Board.
12.4 Number and Terms of Stock Units. The number of Stock Units to be
granted to Outside Directors shall be calculated by dividing the amount of the
annual retainer or the meeting fee that would otherwise be paid in cash by the
arithmetic mean of the Fair Market Values of a Common Share on the 10
consecutive trading days ending with the date when such retainer or fee is
payable. The terms of such Stock Units shall be determined by the Board.
ARTICLE 13
LIMITATION ON RIGHTS
13.1 Retention Rights. Neither the Plan nor any Award granted under the
Plan shall be deemed to give any individual a right to remain an employee,
consultant or director of the Company, a Parent, a Subsidiary or an Affiliate.
The Company and its Parents and Subsidiaries reserve the right to terminate the
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service of any employee, consultant or director at any time, with or without
cause, subject to applicable laws, the Company's certificate of incorporation
and by-laws and a written employment agreement (if any).
13.2 Stockholders' Rights. A Participant shall have no dividend rights,
voting rights or other rights as a stockholder with respect to any Common Shares
covered by his or her Award prior to the issuance of a stock certificate for
such Common Shares. No adjustment shall be made for cash dividends or other
rights for which the record date is prior to the date when such certificate is
issued, except as expressly provided in Articles 8, 9 and 10.
13.3 Regulatory Requirements. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Common Shares under the
Plan shall be subject to all applicable laws, rules and regulations and such
approval by any regulatory body as may be required. The Company reserves the
right to restrict, in whole or in part, the delivery of Common Shares pursuant
to any Award prior to the satisfaction of all legal requirements relating to the
issuance of such Common Shares, to their registration, qualification or listing
or to an exemption from registration, qualification or listing.
ARTICLE 14
LIMITATION ON PAYMENTS
14.1 Basic Rule. This Article 14 shall not apply to a Participant's Award
if (a) the Committee, at the time of making such Award or at any time
thereafter, specifies in writing that such Award shall not be subject to this
Article 14 or (b) a written employment agreement between the Company and such
Participant expressly provides that his or her Awards shall not be subject to
the limitation described in this Article 14. If this Article 14 applies to an
Award, it shall supersede any other provision of the Plan. In the event that the
independent auditors most recently selected by the Board (the "Auditors")
determine that any payment or transfer by the Company to or for the benefit of a
Participant, whether paid or payable (or transferred or transferable) pursuant
to the terms of this Plan or otherwise (a "Payment"), would be nondeductible by
the Company for federal income tax purposes because of the provisions concerning
"excess parachute payments" in section 280G of the Code, then the aggregate
present value of all Payments shall be reduced (but not below zero) to the
Reduced Amount. For purposes of this Article 14, the "Reduced Amount" shall be
the amount, expressed as a present value, which maximizes the aggregate present
value of the Payments without causing any Payment to be nondeductible by the
Company because of section 280G of the Code.
14.2 Reduction of Payments. If the Auditors determine that any Payment
would be nondeductible by the Company because of section 280G of the Code, then
the Company shall promptly give the Participant notice to that effect and a copy
of the detailed calculation thereof and of the Reduced Amount, and the
Participant may then elect, in his or her sole discretion, which and how much of
the Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount) and shall
advise the Company in writing of his or her election within 10 days of receipt
of notice. If no such election is made by the Participant within such 10-day
period, then the Company may elect which and how much of the Payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the Payments equals the Reduced Amount) and shall notify the
Participant promptly of such election. For purposes of this Article 14, present
value shall be determined in accordance with section 280G(d)(4) of the Code. All
determinations made by the Auditors under this Article 14 shall be binding upon
the Company and the Participant and shall be made within 60 days of the date
when a payment becomes payable or transferable. As promptly as practicable
following such determination and the elections hereunder, the Company shall pay
or transfer to or for the benefit of the Participant such amounts as are then
due to him or her under the Plan and shall promptly pay or transfer to or for
the benefit of the Participant in the future such amounts as become due to him
or her under the Plan.
14.3 Overpayments and Underpayments. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Company which should not have been made (an "Overpayment") or that
additional Payments which will not have been made by the Company could have been
made (an "Underpayment"),
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consistent in each case with the calculation of the Reduced Amount hereunder. In
the event that the Auditors, based upon the assertion of a deficiency by the
Internal Revenue Service against the Company or the Participant which the
Auditors believe has a high probability of success, determine that an
Overpayment has been made, such Overpayment shall be treated for all purposes as
a loan to the Participant which he or she shall repay to the Company, together
with interest at the applicable federal rate provided in section 7872(f)(2) of
the Code; provided, however, that no amount shall be payable by the Participant
to the Company if and to the extent that such payment would not reduce the
amount which is subject to taxation under section 4999 of the Code. In the event
that the Auditors determine that an Underpayment has occurred, such Underpayment
shall promptly be paid or transferred by the Company to or for the benefit of
the Participant, together with interest at the applicable federal rate provided
in section 7872(f)(2) of the Code.
14.4 Related Corporations. For purposes of this Article 14, the term
"Company" shall include affiliated corporations to the extent determined by the
Auditors in accordance with section 280G(d)(5) of the Code.
ARTICLE 15
WITHHOLDING TAXES
15.1 General. To the extent required by applicable federal, state, local
or foreign law, a Participant or his or her successor shall make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise in connection with the Plan. The Company shall not be
required to issue any Common Shares or make any cash payment under the Plan
until such obligations are satisfied.
15.2 Share Withholding. The Committee may permit a Participant to satisfy
all or part of his or her withholding or income tax obligations by having the
Company withhold all or a portion of any Common Shares that otherwise would be
issued to him or her or by surrendering all or a portion of any Common Shares
that he or she previously acquired. Such Common Shares shall be valued at their
Fair Market Value on the date when taxes otherwise would be withheld in cash.
ARTICLE 16
ASSIGNMENT OR TRANSFER OF AWARDS
An Award shall be transferable only as provided in the applicable Stock
Option Agreement, SAR Agreement or Stock Award Agreement. Such Agreement may
permit a transfer of the Award by beneficiary designation, will or intestate
succession. In the case of an Award other than an ISO, such Agreement may also
permit a transfer of the Award to (a) the Participant's spouse, children or
grandchildren, (b) to a trust established by the Participant for the benefit of
the Participant or the Participant's spouse, children or grandchildren or (c) to
a family partnership whose partners are the Participant, the Participant's
spouse, children or grandchildren, or such trust. The transferee of an Award
shall agree in writing on a form prescribed by the Company to be bound by all
provisions of the applicable Stock Option Agreement, SAR Agreement or Stock
Award Agreement.
ARTICLE 17
FUTURE OF THE PLAN
17.1 Term of the Plan. The Plan, as set forth herein, shall become
effective on December 12, 1996. The Plan shall remain in effect until it is
terminated under Section 17.2, except that no ISOs shall be granted after
December 11, 2006.
17.2 Amendment or Termination. The Board may, at any time and for any
reason, amend or terminate the Plan. The Company's Vice President -- Human
Resources, with the approval of the Senior Vice President -- Legal and External
Affairs and Secretary, is authorized to make minor or administrative changes to
the Plan. An amendment of the Plan shall be subject to the approval of the
Company's
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stockholders only to the extent required by applicable laws, regulations or
rules. No Awards shall be granted under the Plan after the termination thereof.
The termination of the Plan, or any amendment thereof, shall not affect any
Award previously granted under the Plan.
ARTICLE 18
DEFINITIONS
18.1 "Affiliate" means any entity other than a Subsidiary, if the Company
and/or one or more Subsidiaries own not less than 50% of such entity.
18.2 "Award" means any award of an Option, an SAR, a Restricted Share or a
Stock Unit under the Plan.
18.3 "Board" means the Company's Board of Directors, as constituted from
time to time.
18.4 "Change in Control" means the occurrence of any of the following
events:
(a) Both:
(i) Any "person" (as defined below) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing at least 20% of
the total voting power represented by the Company's then outstanding
voting securities; and
(ii) The beneficial ownership by such person of securities
representing such percentage has not been approved by a majority of the
"continuing directors" (as defined below); or
(b) Any "person" (as defined below) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing at least 50% of the
total voting power represented by the Company's then outstanding voting
securities; or
(c) A change in the composition of the Board occurs, as a result of
which fewer than two-thirds of the incumbent directors are directors who
either:
(i) Had been directors of the Company on the "look-back date" (as
defined below) (the "original directors"); or
(ii) Were elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the aggregate of the
original directors who were still in office at the time of the election
or nomination and the directors whose election or nomination was
previously so approved (the "continuing directors"); or
(d) The stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, if such merger or consolidation
would result in the voting securities of the Company outstanding
immediately prior thereto representing (either by remaining outstanding or
by being converted into voting securities of the surviving entity) 50% or
less of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such merger
or consolidation; or
(e) The stockholders of the Company approve (i) a plan of complete
liquidation of the Company or (ii) an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
For purposes of Subsections (a) and (b) above, the term "person" shall have
the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act
but shall exclude (i) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or of a Parent or Subsidiary and (ii) a
corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of the common stock of the
Company.
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For purposes of Subsection (c) above, the term "look-back date" shall mean
the later of (i) April 1, 1994, or (ii) the date 24 months prior to the date of
the event that may constitute a Change in Control.
Any other provision of this Section 18.4 notwithstanding, the term "Change
in Control" shall not include either of the following events, if undertaken at
the election of the Company:
(i) A transaction, the sole purpose of which is to change the state of
the Company's incorporation; or
(ii) A transaction, the result of which is to sell all or
substantially all of the assets of the Company to another corporation (the
"surviving corporation"); provided that the surviving corporation is owned
directly or indirectly by the stockholders of the Company immediately
following such transaction in substantially the same proportions as their
ownership of the Company's common stock immediately preceding such
transaction; and provided, further, that the surviving corporation
expressly assumes this Plan and all outstanding Awards.
18.5 "Code" means the Internal Revenue Code of 1986, as amended.
18.6 "Committee" means a committee of the Board, as described in Article
2.
18.7 "Common Share" means one share of the common stock of the Company.
18.8 "Company" means AirTouch Communications, Inc., a Delaware
corporation.
18.9 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
18.10 "Exercise Price," in the case of an Option, means the amount for
which one Common Share may be purchased upon exercise of such Option, as
specified in the applicable Stock Option Agreement. "Exercise Price," in the
case of an SAR, means an amount, as specified in the applicable SAR Agreement,
which is subtracted from the Fair Market Value of one Common Share in
determining the amount payable upon exercise of such SAR.
18.11 "Fair Market Value" means the market price of Common Shares,
determined by the Committee as follows:
(a) If the Common Shares were traded over-the-counter on the date in
question and were traded on the Nasdaq system or The Nasdaq National
Market, then the Fair Market Value shall be equal to the lasttransaction
price quoted for such date by the Nasdaq system or The Nasdaq National
Market;
(b) If the Common Shares were traded on a stock exchange on the date
in question, then the Fair Market Value shall be equal to the closing price
reported by the applicable composite transactions report for such date; and
(c) If neither of the foregoing provisions is applicable, then the
Fair Market Value shall be determined by the Committee in good faith on
such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee
shall be based on the prices reported in the Western Edition of The Wall Street
Journal. Such determination shall be conclusive and binding on all persons.
18.12 "IPO" means the initial public offering of the Company's common
stock pursuant to a Registration Statement on Form S-1 that has been declared
effective by the Securities and Exchange Commission.
18.13 "ISO" means an incentive stock option described in section 422(b) of
the Code.
18.14 "Key Employee" means (a) a common-law employee of the Company, a
Parent, a Subsidiary or an Affiliate, (b) an Outside Director and (c) a
consultant or adviser who provides services to the Company, a Parent, a
Subsidiary or an Affiliate as an independent contractor. Service as an Outside
Director or as an independent contractor shall be considered employment for all
purposes of the Plan, except as provided in Sections 4.2 and 4.3.
11
<PAGE> 40
18.15 "NSO" means an employee stock option not described in sections 422
or 423 of the Code.
18.16 "Option" means an ISO or NSO granted under the Plan and entitling
the holder to purchase one Common Share.
18.17 "Optionee" means an individual or estate who holds an Option or SAR.
18.18 "Outside Director" shall mean a member of the Board who is not a
common-law employee of the Company, a Parent, a Subsidiary or an Affiliate.
18.19 "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a Parent on
a date after the adoption of the Plan shall be considered a Parent commencing as
of such date.
18.20 "Participant" means an individual or estate who holds an Award.
18.21 "Plan" means this AirTouch Communications, Inc. 1993 Long-Term Stock
Incentive Plan, as amended from time to time.
18.22 "Restricted Share" means a Common Share awarded under the Plan.
18.23 "Retirement" means that an Outside Director's service terminates
after he or she has served for three or more years as a member of the Board
and/or as a member of the board of directors of Pacific Telesis Group.
18.24 "SAR" means a stock appreciation right granted under the Plan.
18.25 "SAR Agreement" means the agreement between the Company and an
Optionee which contains the terms, conditions and restrictions pertaining to his
or her SAR.
18.26 "Stock Award Agreement" means the agreement between the Company and
the recipient of a Restricted Share or Stock Unit which contains the terms,
conditions and restrictions pertaining to such Restricted Share or Stock Unit.
18.27 "Stock Option Agreement" means the agreement between the Company and
an Optionee which contains the terms, conditions and restrictions pertaining to
his or her Option.
18.28 "Stock Unit" means a bookkeeping entry representing the equivalent
of one Common Share, as awarded under the Plan.
18.29 "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.
ARTICLE 19
EXECUTION
To record the. amendment and restatement of the Plan by the Board, the
Company has caused its duly authorized officers to affix the corporate name and
seal hereto.
AIRTOUCH COMMUNICATIONS, INC.
By: /s/ JOHN RIDING
--------------------------------------
12
<PAGE> 41
SCHEDULE A
PERFORMANCE CRITERIA
<TABLE>
<S> <C> <C>
FINANCIAL Operating Cash Flow Net Income
Earnings per Share Free Cash Flow From
Operations
Free Cash Flow Return on Assets
Return on Equity Economic Value Added
Revenue Growth
OPERATIONAL Costs per MOU Network Coverage
Network Efficiency New Licenses
MARKETING Net Adds Net to Gross Adds
Acquisition Cost per Gross Churn
Add
Average Revenue per Unit Margins
Market Share Customer Satisfaction
</TABLE>
13
<PAGE> 42
APPENDIX B
AIRTOUCH COMMUNICATIONS
SHORT-TERM INCENTIVE PLAN
(AMENDED AND RESTATED EFFECTIVE AS OF JANUARY 1, 1997)
Section 1. Establishment and Purpose of the Plan
This Plan, amended and restated effective as of January 1, 1997, was
originally established by the Corporation effective January 1, 1994 and, as
amended and restated, supersedes any previous short-term incentive plans for the
payment of awards based on the satisfaction of annual performance criteria. The
purpose of the Plan is to provide for the payment of annual awards to Eligible
Employees based on the achievement of performance criteria established by the
Corporation.
Section 2. Eligibility and Participation
Awards under the Plan are earned with respect to performance during the
Award Year. An Employee is an Eligible Employee entitled to receive an Award
with respect to an Award Year only if he or she is in Active Service and on the
payroll of a Participating Entity on December 31 of such Award Year or
terminated employment during such Award Year on account of death or Retirement.
An individual's status as an Eligible Employee shall be determined by the
Corporation, and such determination shall be conclusive and binding on all
persons.
Section 3. Amount of Award
(a) Performance Criteria. With respect to each Award Year, the C&P
Committee shall adopt performance criteria for each Participating Entity. The
C&P Committee may also adopt difference performance criteria for different job
classifications. In order to assure the incentive features of the Plan and to
avoid distortion in its operation, the C&P Committee may, in its sole
discretion, revise any performance criteria to the extent the C&P Committee
deems appropriate to compensate for or reflect any extraordinary changes
occurring during the Award Year that significantly alter the basis upon which
the performance criteria were established. Any such revisions may be made
before, during or after the Award Year and, once adopted by the C&P Committee,
shall be conclusive and binding on all persons.
(b) Award Target. Award targets for each Award Year are determined by the
C&P Committee and may be expressed as a percentage of Base Pay, a dollar amount
or any other form specified by the C&P Committee. The C&P Committee may
designate different Award targets for different job classifications and
Participating Entities.
(c) Performance Levels. The C&P Committee shall annually designate levels
of minimum, maximum and target achievement of performance criteria and shall
establish percentages of Award targets to be given for achievement of each such
performance level. Different performance levels and associated percentages of
Award targets may be established for different Participating Entities. The C&P
Committee also has the discretion to increase or decrease Awards. In no event
shall the percentage of the Award target actually paid exceed 200%. No Award
shall be paid for performance below the minimum level of achievement of
performance criteria designated by the C&P Committee.
(d) Accrued Awards. As of the end of the Award Year, the C&P Committee
shall determine Award amounts based on the Award targets and performance
criteria for each Participating Entity and job classification as described in
Subsections (a), (b) and (c). Award amounts so determined (and adjusted, if
applicable) are referred to as Accrued Awards.
(e) Proration of Accrued Awards. Accrued Awards shall be prorated as
follows:
(i) The Accrued Award of an Eligible Employee who has less than a full
year of Active Service with respect to an Award Year shall be prorated by
multiplying his or her Accrued Award by a fraction, the denominator of
which is 365 and the numerator of which is equal to the number of days of
such Eligible Employee's Active Service for such Award Year. The foregoing
notwithstanding, for purposes of
<PAGE> 43
this Paragraph (i) only, up to 30 days of a period of approved leave of
absence or sickness disability absence may be counted as Active Service if
such period does not begin within 13 weeks of the end of a previous period
of leave of absence or sickness disability absence occurring in the current
or preceding Award Year.
(ii) The Accrued Award of an Eligible Employee who has Active Service
at more than one rate of Base Pay with respect to an Award Year (because of
job transfer, performance increase or similar reason) shall be determined
as follows. First, for each such rate of Base Pay, an Accrued Award shall
be determined as if the Eligible Employee had an entire year of Active
Service at that Base Pay. Next, each such Accrued Award amount shall be
prorated by multiplying it by a fraction, the denominator of which is 365
and the numerator of which is the number of days of such Eligible
Employee's Active Service at such rate of Base Pay for that Award Year.
Finally, the prorated Accrued Awards shall be added together to determine
the Eligible Employee's total Accrued Award.
(iii) The Accrued Award of an Eligible Employee who has Active Service
at more than one Award target level with respect to an Award Year (because
of job transfer, temporary or permanent promotion or similar reason) shall
be determined as follows. First, for each such Award, target level, an
Accrued Award shall be determined as if the Eligible Employee had an entire
year of Active Service at that Award target level. Next, each such Accrued
Award amount shall be prorated by multiplying it by a fraction, the
denominator of which is 365 and the numerator of which is the number of
days of such Eligible Employee's Active Service at such Award target level
for that Award Year. Finally, the prorated Accrued Awards shall be added
together to determine the Eligible Employee's total Accrued Award.
Section 4. Awards for Certain Employees
Notwithstanding any other provision of the Plan to the contrary and subject
to the approval of the Company's stockholders at the 1997 regular Annual Meeting
of Stockholders, the Accrued Awards of any Eligible Employee who, as of the end
of an Award Year, is a Covered Employee shall be determined as follows:
(a) The aggregate Award payable to all Covered Employees shall be
equal to 0.6 percent of the Corporation's proportionate operating cash flow
for the Award Year;
(b) The aggregate amount determined pursuant to paragraph (a) above
shall be allocated among all Covered Employees pro-rata based on each
Covered Employee's Base Pay at the beginning of the Award Year; and
(c) The C&P Committee shall have the discretion to reduce the Award
for any Covered Employee based on financial performance criteria,
individual performance criteria or any other criteria the C&P Committee
deems appropriate.
Section 5. Payment of Awards
As described in subsection 3(b), Awards may be expressed in dollars or any
other medium specified by the C&P Committee including, without limitation,
shares of stock of the Corporation. The C&P Committee shall also specify a
medium of payment (such as dollars, shares of stock of the Corporation or other
medium) of Accrued Awards, which medium may be different from the medium in
which the Award was expressed under Section 3(b). Accrued Awards paid in the
form of dollars shall be rounded to the nearest whole dollar (rounding up at
$0.50) and Accrued Awards paid in the form of shares of stock shall be rounded
to the nearest whole share (rounding up at 1/2). Accrued Awards shall be paid as
soon as administratively practicable following the Award Year with respect to
which the Accrued Awards are earned. In the event of any Eligible Employee's
death before payment of an Accrued Award, payment shall be made (a) to the
Eligible Employee's spouse or (b) if there is no spouse living at the time of
such payment to the Eligible Employee's then living children in equal shares or
(c) if there are no such children living at the time of such payment to the
Eligible Employee's estate. Accrued Award payments shall be subject to income
tax and employment tax withholding as required by applicable law, but shall not
be subject to Eligible Employees' payroll deduction
2
<PAGE> 44
elections for personal obligations, such as U.S. Savings Bonds, charitable
giving, political action committee contributions and credit union or bank
payments.
Section 6. Administration
The Plan shall be administered by the C&P Committee. The C&P Committee in
its sole discretion shall make such rules, interpretations and computations as
it may deem appropriate. Any decision of the C&P Committee with respect to the
Plan, including (without limitation) any determination of eligibility to receive
an Award and any calculation of the amount of an Award shall be conclusive and
binding on all persons.
Section 7. Amendment and Termination
The C&P Committee may amend or terminate the Plan at any time, to be
effective at such date as the C&P Committee designates. Any amendment or
termination may affect present and future Eligible Employees. The Corporation's
Vice President -- Human Resources & corporate Services, with the approval of the
Senior Vice President -- Legal and External Affairs and Secretary, shall be
authorized to make minor or administrative changes to the Plan.
Section 8. General Provisions
(a) Stock Splits, Etc. In the event of any change in the outstanding
shares of capital stock of the Corporation by reason of any stock dividend or
split, recapitalization, merger, spinoff, consolidation, combination or exchange
of shares or other similar corporate change, the Board shall make such
adjustments as it deems appropriate to the performance criteria for any Award
Year not yet completed. Any such adjustments, once adopted by the Board, shall
be conclusive and binding on all persons.
(b) Incompetence. If, in the opinion of the C&P Committee, an individual
becomes unable to handle properly any amounts payable to such individual under
the Plan, then the C&P Committee may make such arrangements for payment on such
individual's behalf as it determines will be beneficial to such individual,
including (without limitation) payment to such individual's guardian,
conservator, spouse, parent or dependent.
(c) No Employment Rights. Nothing in the Plan shall be deemed to give any
individual any right to remain in the employ of the Corporation or any
Participating Entity. The Corporation and Participating Entities reserve the
right to terminate any individual's employment at any time, with or without
cause.
(d) Choice of Law. The validity, interpretation, construction and
performance of the Plan shall be governed under the laws of the State of
California.
Section 9. Definitions
(a) "Accrued Award" means the amount of an Award that has been determined
and is payable.
(b) "Active Service" means each day on which an individual is actively at
work as a common-law employee of the Corporation, a Participating Entity or any
member of the Corporation's Controlled Group and each day on which such
individual is absent from such active work but is entitled to payment on account
of vacation, holiday or jury duty.
(c) "Award" means an award under the Plan.
(d) "Award Year" means the calendar year or, if different, the
Corporation's fiscal year.
(e) "Base Pay" means an Eligible Employee's base rate of annual salary or
wages, without reduction for deferrals made under any plans or programs of the
Controlled Group.
(f) "Board" means the Board of Directors of the Corporation.
(g) "C&P Committee" means the Compensation and Personnel Committee of the
Board.
(h) "Code" means the Internal Revenue Code of 1986, as amended.
3
<PAGE> 45
(i) "Controlled Group" means the group of corporations and unincorporated
trades or businesses each member of which is at least 80% owned, directly or
indirectly, by AirTouch Communications, Inc.
(j) "Corporation" means AirTouch Communications, Inc., a Delaware
corporation.
(k) "Covered Employee" means any individual who, on the last day of the
taxable year, is the Chief Executive Officer of the Corporation or is acting in
such capacity; or who is among the four highest compensated officers (other than
the Chief Executive Officer) as defined in Treasury Regulation Section
1.162-27(c)(2).
(l) "Eligible Employee" is defined in Section 2.
(m) "Employee" means an individual who is classified by a Participating
Entity as a regular full-time or part-time employee of the Participating Entity
and who is not:
(i) A commissioned salesperson employed by AirTouch Paging;
(ii) Included in a unit of employees covered by a collective
bargaining agreement under which the Employee is not eligible to
participate in the Plan; or
(iii) A nonresident alien with respect to the United States; provided
that this Paragraph (iii) shall not apply to an Employee whom the C&P
Committee has designated in writing as an Eligible Employee.
An individual's status as an Employee shall be determined by the C&P
Committee, and such determination shall be conclusive and binding on all
persons.
(n) "Participating Entity" means the Corporation and each of its
subsidiaries and affiliates that has been designated as a Participating Entity
by the C&P Committee. In addition, a particular division or separate operating
unit of the Corporation or any of its subsidiaries or affiliates may be
designated as a separate Participating Entity.
(o) "Plan" means this AirTouch Communications, Inc. Short-Term Incentive
Plan.
(p) "Retirement" means a termination of employment (i) from a Participating
Entity at an age and with employment service that would entitle the individual
to a Service Pension under the AirTouch Communications Employees' Pension Plan
if the individual were a participant in such Pension Plan or (ii) under
circumstances designated as a Retirement by the C&P Committee.
Section 10. Execution
To record the amendment and restatement of the Plan, effective as of
January 1, 1997, the Corporation has caused its duly authorized officer to affix
the corporate name hereto.
AIRTOUCH COMMUNICATIONS, INC.
By: /s/ JOHN RIDING
--------------------------------------
4
<PAGE> 46
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE> 47
(LOGO)
<PAGE> 48
[AIRTOUCH LOGO]
Sam Ginn
Chairman and Chief Executive Officer
April 1997
Dear Stockholder:
Enclosed is AirTouch Communications, Inc.'s 1996 Annual Report and Proxy
Statement relating to our 1997 Annual Stockholders' Meeting. This has been
another eventful year for AirTouch and our Annual Report reviews our
accomplishments and shares our vision for the future.
The 1997 Annual Meeting will be in Dallas, Texas on Monday, May 19, 1997 at
8:30 a.m., local time. The location is INFOMART, 1950 Stemmons Freeway, Dallas,
Texas 75207. If you plan to attend, please be sure to bring the admission
ticket (on reverse) to the meeting. Your vote is important to us, so whether
or not you plan to attend the meeting, please take time to complete and return
the attached proxy card.
Sincerely,
/s/ SAM GINN
- ------------
Sam Ginn
DETACH PROXY CARD HERE
===============================================================================
[AIRTOUCH LOGO]
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 19, 1997
The undersigned hereby authorize(s) Sam Ginn or Margaret G. Gill, or one of
them, and each with the power to appoint his or her substitute, to vote as
Proxy for the undersigned at the Annual Meeting of Stockholders to be held at
INFOMART, 1950 Stemmons Freeway, Dallas, Texas 75207 on May 19, 1997 at 8:30
A.M., local time, or any adjournment or postponement thereof, the number of
shares which the undersigned would be entitled to vote if personally present.
The proxies shall vote subject to the directions indicated on the reverse side
of this card and proxies are authorized to vote in their discretion upon such
other business as may properly come before the meeting and any adjournments or
postponements thereof. The proxies will vote as the Board of Directors
recommends where the undersigned does not specify a choice.
THIS CARD ALSO CONSTITUTES YOUR VOTING INSTRUCTIONS FOR SHARES HELD OF RECORD
IN THE AIRTOUCH RETIREMENT PLAN, THE PACIFIC TELESIS GROUP SUPPLEMENTAL
RETIREMENT AND SAVINGS PLAN FOR SALARIED EMPLOYEES AND THE PACIFIC TELESIS
GROUP SUPPLEMENTAL RETIREMENT AND SAVINGS PLAN FOR NON-SALARIED EMPLOYEES (THE
"PLANS") AND THE UNDERSIGNED HEREBY AUTHORIZES THE RESPECTIVE TRUSTEES OF THE
PLANS TO VOTE THE UNDERSIGNED'S SHARES HELD IN ITS ACCOUNTS.
(Continued and to be signed on reverse side)
<PAGE> 49
[AIRTOUCH LOGO]
ANNUAL MEETING OF STOCKHOLDERS
MAY 19, 1997
INFOMART
1950 STEMMONS FREEWAY
DALLAS, TEXAS 75207
============================================================================
1. Election of Directors. The Board of Directors recommends a vote "FOR"
management's nominees: Michael J. Boskin, Arthur Rock, George Shultz and
Arun Sarin.
FOR WITHHELD ABSTAIN
INSTRUCTION: To withhold authority for any individual nominee, write that
nominee's name on the space provided:
---------------------------------------------------------------------------
2. Ratification of the appointment of Price Waterhouse LLP as the Company's
Independent Accountants for 1997. The Board of Directors recommends a vote
"FOR" ratification of the appointment of Price Waterhouse LLP.
FOR WITHHELD ABSTAIN
3. Approval of the amended and restated 1993 Long-Term Stock Incentive Plan
(the "1993 Plan"). The Board of Directors recommends a vote "FOR" the 1993
Plan.
FOR WITHHELD ABSTAIN
4. Approval of the amended and restated Short-Term Incentive Plan. The Board
of Directors recommends a vote "FOR" the Short-Term Incentive Plan.
FOR WITHHELD ABSTAIN
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment or
postponement thereof.
Please sign name exactly as it appears on this card. Joint owners should each
sign. Attorneys, trustees, executors, administrators, custodians, guardians or
corporate officers should give full title.
DATE: _________________________________________________________________________
SIGNATURE: ____________________________________________________________________
SIGNATURE: ____________________________________________________________________
Votes MUST be indicated (x) in black or blue ink.
Check here if you: o plan to attend the Annual Meeting
o have a change of address on this card (indicate change
below)
o want your vote kept confidential
o are interested in receiving materials via electronic
delivery in the future
