<PAGE> 1
SCHEDULE 14A INFORMATION
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Rule 14a-6(e)(2))
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Airtouch Communications
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<PAGE> 2
AIRTOUCH LOGO
AIRTOUCH COMMUNICATIONS, INC.
ONE CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94111
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1998 Annual Meeting of Stockholders of AirTouch Communications, Inc.
(the "Company") will be held at The Museum of History and Industry, 2700 24th
Avenue East, Seattle, Washington 98112, on Friday, May 29, 1998 at 8:00 a.m.,
local time (the "Meeting"), for the following purposes:
1. To elect four directors.
2. To ratify the appointment of Price Waterhouse LLP as the Company's
independent accountants.
3. To approve an amendment to the Company's Employee Stock Purchase Plan.
4. To transact any other business properly brought before the Meeting.
Stockholders of record at the close of business on March 31, 1998 will be
entitled to vote at the Meeting.
A list of stockholders entitled to vote at the Meeting will be available
for inspection ten days prior to the Meeting at the The Museum of History and
Industry, 2700 24th Avenue East, Seattle, Washington 98112.
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 10, 1998
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
---- ----
<S> <C>
Proposals to be Voted Upon.................................. 1
Election of Directors..................................... 1
Ratification of Appointment of Independent Accountants.... 3
Approval of Amendment to the Employee Stock Purchase 4
Plan...................................................
Security Ownership of Management............................ 5
Executive Compensation...................................... 6
Employment Contracts and Termination of Employment or 9
Change-In-Control Arrangements............................
Report of the Compensation and Personnel Committee on 10
Executive Compensation....................................
Committees of the Board of Directors........................ 13
Director Compensation....................................... 13
Certain Relationships and Related Transactions.............. 14
Performance Graph........................................... 16
Security Ownership of Certain Beneficial Owners............. 16
Proxies and Voting at the Meeting........................... 16
Other Matters............................................... 17
Section 16(a) Beneficial Ownership Reporting Compliance..... 18
Solicitation of Proxies..................................... 18
</TABLE>
i
<PAGE> 4
PROPOSALS TO BE VOTED UPON
1. ELECTION OF DIRECTORS
There are eleven members of the Board of Directors of the Company. The
Board is divided into three classes for purposes of election. One class is
elected at each annual meeting of stockholders to serve for a three-year term.
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 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 proxy holders will vote 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.
The following is a brief description of the principal occupation for at
least the past five years, age and major affiliations of each director.
NOMINEES FOR ELECTION:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES.
<TABLE>
<C> <S>
GINN PHOTO SAM GINN, 61, 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, 69, 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, 60, 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>
1
<PAGE> 5
<TABLE>
<S> <C>
CHANG-LIN PHOTO CHANG-LIN TIEN, 62, became a director of the Company
in June 1997. He is a member of the Executive and
Nominating & Director Affairs Committees. Dr. Tien
served as Chancellor of the University of California,
Berkeley, from 1990 to June 1997. He is the NEC
Distinguished Professor of Engineering at the
University of California, Berkeley. He is a director
of Chevron Corporation, Raychem Corporation and Wells
Fargo & Company, and also serves on the board of
trustees of the Asia Foundation. He is a Fellow of the
American Academy of Arts and Sciences and a member of
the National Academy of Engineering.
</TABLE>
DIRECTORS UP FOR ELECTION IN 1999:
<TABLE>
<S> <C>
BARTZ PHOTO CAROL A. BARTZ, 49, 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 and Chief Executive Officer of Autodesk, Inc.
since April 1992. Ms. Bartz is also a Director of
Cadence Design Systems, Network Appliance, Cisco
Systems, Inc. and BEA Systems Inc.
COX PHOTO C. LEE COX, 57, is a member of the Executive Committee
of the Board and was Vice Chairman from November 1994
until his retirement from the Company in April 1997.
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. and NETCOM On-Line Communication
Services, Inc.
HAZEN PHOTO PAUL HAZEN, 56, 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.
Mr. Hazen is a director of Wells Fargo & Company,
Wells Fargo Bank, N.A., Phelps Dodge Corporation and
Safeway Inc.
</TABLE>
2
<PAGE> 6
DIRECTORS UP FOR ELECTION IN 2000:
<TABLE>
<S> <C>
BOSKIN PHOTO MICHAEL J. BOSKIN, 51, became a director of the
Company in 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 a 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, First Health Group Corp. and Oracle
Corporation.
ROCK PHOTO ARTHUR ROCK, 71, 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
the lead director of Intel Corporation and a director
of Argonaut Group, Inc.
SCHULTZ PHOTO GEORGE P. SHULTZ, 77, 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 is a Distinguished Fellow at the Hoover
Institution and a Professor at the Stanford University
Graduate School of Business. He served as United
States Secretary of State from 1982 to 1989. Mr.
Shultz is a director of the Bechtel Group, Inc., The
Charles Schwab Corporation, Gulfstream Aerospace
Corporation, Gilead Sciences, Inc., Chairman of J.P.
Morgan's International Council and Chairman of the
Governor's California Economic Policy Advisory
Council.
SARIN PHOTO ARUN SARIN, 43, was named President and Chief
Operating Officer of the Company in February 1997. Mr.
Sarin became a director of the Company in July 1995
and is a member of the Executive Committee. He was
Vice Chairman of the Board from July 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.
</TABLE>
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 Price Waterhouse LLP, independent accountants, to audit
the financial statements of the Company for 1998. The Board of Directors
recommends a 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 the Committee's recommendation.
For the year 1997, 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.
3
<PAGE> 7
One or more members of Price Waterhouse LLP are expected to be present at
the Meeting and will have the opportunity to make a statement if they wish to do
so and to respond to appropriate questions.
3. APPROVAL OF AN AMENDMENT TO THE EMPLOYEE STOCK PURCHASE PLAN.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE EMPLOYEE STOCK
PURCHASE PLAN.
The Company maintains an Employee Stock Purchase Plan (the "Plan") to
provide its employees, including officers, with an opportunity to purchase
AirTouch Common Stock on favorable terms through payroll deductions. In February
1998, the Board of Directors of the Company adopted an amendment to the Plan,
subject to stockholder approval, to increase the number of shares of Common
Stock authorized for issuance under the Plan from 2.4 million to 7.4 million. As
of February 28, 1998, 892,577 shares of Common Stock were available for issuance
under the Plan.
The Plan became effective on July 1, 1994, and will remain in effect until
it is terminated by the Board of Directors. The Plan may be amended by the Board
at any time. An increase in the number of shares reserved for issuance under the
Plan must be approved by the stockholders, while other amendments are subject to
stockholder approval only to the extent required by applicable law or
regulation. The Plan is administered by the Compensation & Personnel Committee
of the Board.
An employee is eligible to participate in the Plan if he or she is
customarily employed for more than five months per calendar year and for more
than 20 hours per week and has continuously been employed by the Company or a
participating subsidiary for three months or more. Eligible employees may elect
to contribute from two percent to 25 percent of their compensation (including
bonuses and commissions) during each three-month offering period.
At the end of each offering period, the Company will apply the amount
contributed by the participant during the period to purchase shares of Common
Stock, but not more than 2,000 shares per offering period or $25,000 in market
value in a calendar year. Shares of Common Stock are purchased for 85 percent of
the lower of (a) the market price of the Company's Common Stock immediately
before the beginning of the offering period or (b) the market price of such
Common Stock on the last business day in the offering period.
As of February 28, 1998, 8,042 employees were eligible to participate in
the Plan and 2,231 employees had elected to participate.
Any stockholder may obtain a copy of the current Plan by writing to
AirTouch Communications, Inc., One California Street, San Francisco, California
94111, Attention: Corporate Secretary.
4
<PAGE> 8
SECURITY OWNERSHIP OF MANAGEMENT
>The following table sets forth, as of February 28, 1998, 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, 1998. 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.................................................... 1,552,517(1)
Arun Sarin.................................................. 501,530(2)
Margaret G. Gill............................................ 185,823(3)
Mohan S. Gyani.............................................. 258,051(4)
Brian R. Jones.............................................. 176,947(5)
Carol A. Bartz.............................................. 27,673(6)
Michael J. Boskin........................................... 13,500(7)
C. Lee Cox.................................................. 284,356(8)
Donald G. Fisher............................................ 56,000(9)
Paul Hazen.................................................. 25,064(10)
Arthur Rock................................................. 204,766(11)
Charles R. Schwab........................................... 28,130(12)
George P. Shultz............................................ 33,695(13)
Chang-Lin Tien.............................................. 6,757(14)
All directors and executive officers as a group (18 3,719,263(15)
persons)..................................................
</TABLE>
- ---------------
(1) Includes 51,006 shares held by Mr. Ginn's Family Trust, of which Mr. Ginn
is the Trustee, an aggregate of 5,167 shares held in trust for Mr. Ginn's
children and grandchild, of which Mr. Ginn is the Trustee, and 117 shares
held in retirement plans. Also includes 434,500 shares of restricted stock
and 1,061,727 shares subject to options that are currently exercisable or
will become exercisable within 60 days of February 28, 1998.
(2) Includes 6,937 shares held in retirement plans. Also includes 125,000
shares of restricted stock and 363,213 shares subject to options that are
currently exercisable or will become exercisable within 60 days of February
28, 1998.
(3) Includes 999 shares held in retirement plans. Also includes 20,000 shares
of restricted stock and 164,380 shares subject to options that are
currently exercisable or will become exercisable within 60 days of February
28, 1998.
(4) Includes 4,425 shares held in retirement plans. Also includes 20,000 shares
of restricted stock and 203,298 shares subject to options that are
currently exercisable or will become exercisable within 60 days of February
28, 1998.
(5) Includes 651 shares held in retirement plans and an aggregate of 400 shares
held by Mr. Jones' spouse as custodian for their minor children. Also
includes 15,000 shares of restricted stock and 153,668 shares subject to
options that are currently exercisable or will become exercisable within 60
days of February 28, 1998.
(6) All shares held by Ms. Bartz's Family Trust, of which Ms. Bartz is the
Trustee. Includes 23,173 shares subject to options that are currently
exercisable or will become exercisable within 60 days of February 28, 1998.
(7) Includes 10,000 shares subject to options that are currently exercisable or
will become exercisable within 60 days of February 28, 1998.
(8) Includes 1,314 shares held in retirement plans. Also includes 269,010
shares subject to options that are currently exercisable or will become
exercisable within 60 days of February 28, 1998.
(9) Includes 40,000 shares held by Mr. Fisher's Charitable Trust, of which Mr.
Fisher is the Trustee. Also includes 12,000 shares subject to options that
are currently exercisable or will become exercisable within 60 days of
February 28, 1998.
(10) Includes 21,844 shares subject to options that are currently exercisable or
will become exercisable with 60 days of February 28, 1998.
(11) Includes 2,572 shares held by Mr. Rock's spouse. Also includes 22,194
shares subject to options that are currently exercisable or will become
exercisable within 60 days of February 28, 1998.
(12) Includes 300 shares held by Mr. Schwab's Family Trust, of which Mr. Schwab
is the Trustee. Also includes 23,830 shares subject to options that are
currently exercisable or will become exercisable within 60 days of February
28, 1998.
(13) All shares held by Mr. Shultz's Family Trust, of which Mr. Shultz is the
Trustee. Also includes 23,695 shares subject to options that are currently
exercisable or will become exercisable within 60 days of February 28, 1998.
(14) Includes 2,757 shares subject to options that are currently exercisable or
will become exercisable within 60 days of February 28, 1998.
(15) Includes an aggregate of 128,300 shares held in trust or in custody for
certain officers and directors and their children and grandchildren, 16,043
shares held in retirement plans and 2,572 shares held by the spouse of a
director. Also includes an aggregate of 648,500 shares of restricted stock
and 2,659,417 shares subject to options that are currently exercisable or
will become exercisable within 60 days of February 28, 1998.
5
<PAGE> 9
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, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------
ANNUAL COMPENSATION AWARDS
--------------------- -------------------------
(A) (B) (C) (D) (F)
(E) SECURITIES (G) (C+D)
RESTRICTED UNDERLYING ALL TOTAL
NAME AND STOCK OPTIONS/ OTHER CASH
PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($)(1) SARS(#) COMP($)(2) COMP($)
------------------ ---- --------- --------- ------------ ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Sam Ginn..................... 1997 816,250 1,135,600 9,999,813 1,055,000 203,149 1,951,850
Chairman of the Board and 1996 760,000 865,640 185,307 1,625,640
Chief Executive Officer 1995 650,000 571,000 115,000 1,221,000
Arun Sarin................... 1997 546,667 660,000 -- 375,000 123,342 1,206,667
President and 1996 426,666 479,519 50,349 906,185
Chief Operating Officer 1995 276,000 171,000 43,000 447,000
Margaret G. Gill............. 1997 347,500 340,800 -- 135,000 73,175 688,300
Senior Vice President,
Legal, 1996 325,000 261,300 50,981 586,300
External Affairs and
Secretary 1995 275,000 140,000 44,000 415,000
Mohan Gyani.................. 1997 326,250 336,600 -- 215,000 68,219 662,850
Executive Vice President
and 1996 300,000 241,200 45,686 541,200
Chief Financial Officer 1995 229,000 116,000 33,000 345,000
Brian R. Jones............... 1997 319,583 326,521 -- -- 56,340 646,104
Senior Vice President(3)
</TABLE>
- ---------------
(1) Restricted shares held by the Named Executive Officers and their value at
fiscal year end ($41.5625 per share) are as follows: Mr. Ginn -- 20,000
shares, $831,250, which vest with respect to 10,000 shares on 11/18/98 and
10,000 shares on 11/18/99. Mr. Sarin -- 125,000 shares, $5,403,125; Mrs.
Gill -- 20,000 shares, $831,250; Mr. Gyani -- 20,000 shares, $831,250; and
Mr. Jones -- 15,000 shares, $623,438. In addition, in 1997 Mr. Ginn was
awarded 414,500 phantom stock units with a fiscal year end value of
$17,227,656, which vest as to 80,000 units on each of 1/1/1999 and 1/1/2000,
160,000 units on 1/1/2001 and 40,000 units on each of 1/1/2002 and 1/1/2003,
assuming that Mr. Ginn meets certain retention milestones. Vested units may
not be settled until the earlier of (a) 1/1/2003, (b) the date on which Mr.
Ginn is no longer a Named Executive Officer, or (c) an earlier date approved
by the Compensation & Personnel Committee. Units convert on a one-for-one
basis into shares of the Company's Common Stock.
(2) Includes "above-market" interest on deferred compensation under the
Company's Deferred Compensation Plan for 1997 for each of the Named
Executive Officers: $1,322, $199, $119, $124, and $107, respectively. Also
includes Company contributions under the Company's Retirement Plan for Mr.
Ginn -- $19,200; Mr. Sarin -- $19,200; Mrs. Gill -- $19,200; Mr.
Gyani -- $19,200; and Mr. Jones -- $19,100. Also includes Company
contributions under the Company's Deferred Compensation Plan for each of the
Named Executive Officers of: $182,627, $103,943, $53,856, $48,895 and
$37,133, respectively.
(3) Mr. Jones became an executive officer of the Company effective February 1,
1997.
6
<PAGE> 10
The following table provides information on stock option grants during
fiscal year 1997 to the Named Executive Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM(1)
-------------------------------------------------------- -----------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ------------ ------------ ----------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Sam Ginn............. 500,000(2) 18.5 $24.125 01/06/04 $ 4,910,649 $ 11,443,900
555,000(3) 20.6 $24.125 01/28/07 $ 8,420,506 $ 21,339,215
Arun Sarin........... 375,000(4) 13.9 $24.125 01/06/04 $ 3,682,987 $ 8,582,925
Margaret G. Gill..... 135,000(4) 5.0 $24.125 01/06/04 $ 1,325,875 $ 3,089,853
Mohan S. Gyani....... 165,000(4) 6.1 $24.125 01/06/04 $ 1,620,514 $ 3,776,487
50,000(5) 1.9 $36.500 10/28/04 $ 742,958 $ 1,731,409
Stock Price Per Share(6)........... $ 33.95 $ 47.01
$ 39.30 $ 62.57
$ 51.36 $ 71.13
Added Value to All
Stockholders(7).................. $5.0 billion $11.6 billion
$7.7 billion $19.4 billion
$7.5 billion $17.5 billion
Named Executive Officers as % of
Added Value to All
Stockholders..................... 0.23%
0.11%
0.01%
</TABLE>
- ---------------
(1) The Potential Realized Value shown for these options assumes that all
options are exercised at the end of their term, and that the stock price
will grow at an assumed annual rate of five percent and ten percent.
(2) Option granted in January 1997 with an exercise price of $24.125, the fair
market value of the Company's Common Stock on the date of grant. This option
has a seven-year term and vests as to 151,739 shares on each of the first,
second and third anniversaries of the date of grant and the remaining 44,783
shares on January 4, 1999.
(3) Option granted in January 1997 with an exercise price of $24.125 per share,
the fair market value of the Company's Common Stock on the date of grant.
This option has a ten-year term and vests as to 111,000 shares on each of
January 1, 1999, 2000, 2001, 2002 and 2003, assuming that Mr. Ginn meets
certain retention milestones. Vested options may not be exercised until the
earlier of (i) January 1, 2003, or (ii) the date on which Mr. Ginn is no
longer a Named Executive Officer.
(4) Option granted in January 1997 with an exercise price of $24.125, the fair
market value of the Company's Common Stock on the date of grant. The option
has a seven-year term and vests as to one-third of the shares subject to the
option on each of the first, second and third anniversaries of the date of
grant.
(5) Option granted in October 1997 with an exercise price of $36.50 per share,
the fair market value of the Company's Common Stock on the date of grant.
This option has a seven-year term and vests in full on the first anniversary
of the date of grant.
(6) The projected fair market value of a share of AirTouch Common Stock at the
end of the seven-year term of the options granted on January 6, 1997 and
October 28, 1997, and the ten-year term of the option granted on January 28,
1997 after applying the stated assumed annual rates to the fair market value
on the date of grant.
(7) Represents aggregate increases in market capitalization of the Company based
on the outstanding shares (505,542,960) of the Company's Common Stock on
December 31, 1997, if the price of the Company's Common Stock were to
increase annually by five percent and ten percent over the seven-year term
of the options granted on January 6, 1997 and October 28, 1997, and the
ten-year term of the option granted on January 28, 1997, respectively.
7
<PAGE> 11
The following table provides information on the value of each of the Named
Executive Officer's options/SARs at December 31, 1997.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END(#) FY-END($)*
SHARES ----------------- ---------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ----------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
Sam Ginn................. 157,503 3,204,847 859,999/1,750,239 15,067,581/20,659,464
Arun Sarin............... 19,196 366,068 261,015/787,088 3,507,967/7,457,419
Margaret G. Gill......... -- -- 115,382/346,498 1,601,254/2,836,814
Mohan S. Gyani........... 2,769 77,974 143,799/430,999 2,050,755/3,597,178
Brian R. Jones........... 4,504 104,469 152,479/137,831 2,310,099/2,036,931
</TABLE>
- ---------------
* Based on the closing price on the New York Stock Exchange-Composite
Transactions of the Company's Common Stock on December 31, 1997 of $41.5625
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 fiveyear 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, Sarin, Gyani and Jones 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 Company's spin-off from Pacific
Telesis Group in April 1994. Of the Named Executive Officers, Messrs. Sarin and
Gyani participate in the Company's nonqualified pension plan.
8
<PAGE> 12
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.
<TABLE>
<CAPTION>
AVERAGE ANNUAL
COMPENSATION
DURING FINAL
FIVE YEARS
OF SERVICE YEARS OF SERVICE PRIOR TO RETIREMENT
- -------------------------------------------------------------------------------------
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 1997 compensation of Messrs. Ginn, Sarin, Gyani and Jones covered by
the pension plans was $152,000, $654,441, $398,620 and $397,961, respectively.
As of December 31, 1997, the years of service of Messrs. Ginn, Sarin, Gyani and
Jones, for purposes of calculating a pension benefit, were 34, 9, 16 and 5,
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 percent of average annual
compensation. This minimum pension is increased by an additional one percent per
year, up to a maximum of 50 percent at 15 or more years of service as an
officer. As of December 31, 1997, Mr. Sarin had seven completed years of service
credited under the minimum pension provisions.
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 Compensation & Personnel
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," defined below. 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 percent of the target
award under the Short-Term Incentive Plan for that calendar year (200 percent 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
9
<PAGE> 13
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.
If a Named Executive Officer's employment ends in a "qualifying
termination" under certain circumstances following the public announcement of a
definitive agreement to effectuate a change in control, or within three years
after a change in control, the Company will make a cash payment equal to three
times base compensation, plus 300 percent of the target award under the
Short-Term Incentive Plan for that calendar year. Mr. Ginn has elected to apply
up to $3 million of the compensation payable in the event of a qualifying
termination to satisfy the Company's premium obligations under a life insurance
arrangement for the benefit of Mr. Ginn's family.
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.
In addition, some of the Company's benefit plans contain provisions that
are triggered only in the event of a change in control. For example, vesting of
stock grants is accelerated or options are converted to limited stock
appreciation rights in the event of a change in control. Some benefit plans
contain provisions that prohibit a successor from reducing current benefit
levels for certain periods of time following a change in control. Some benefit
plans have rabbi trusts that require the Company to fund outstanding benefit
obligations in the event of a change in control.
A "change in control" is defined generally as (1) the acquisition of 50
percent 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 percent 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.
REPORT OF THE COMPENSATION AND PERSONNEL COMMITTEE ON
EXECUTIVE COMPENSATION
The compensation of the Company's executive officers is determined by the
Compensation & Personnel Committee, which consists exclusively of nonemployee
directors. The Compensation & Personnel Committee relies on independent
executive compensation consultants and survey data to determine competitive
levels of executive compensation.
TYPES OF COMPENSATION
There are two main types of executive compensation:
1. Annual Compensation. This includes base salary and an annual cash
bonus.
2. Long-term Compensation. This includes stock options and other
long-term incentive awards based on Common Stock. The value of these awards
depends on Company performance and future stock value.
In assessing competitive levels of executive compensation for 1997, the
Compensation & Personnel Committee relied on independent survey data for
executive officers in similar positions at comparable companies. The survey data
reflected an average of the executive 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.
10
<PAGE> 14
ANNUAL COMPENSATION
Annual compensation includes base salary and an annual cash bonus. The base
salaries of executive officers are set at approximately the 50th-percentile
level relative to executives in similar positions at comparable companies. (This
means that base salaries at approximately 50 percent of the comparable companies
are higher.) If performance targets are met but not exceeded, cash bonuses are
also intended to be at approximately the 50th-percentile level.
Executive officers participate in an annual incentive plan under which the
cash bonus component of their compensation is determined. Last year, the
stockholders approved a new method for determining each executive officer's
annual cash bonus. This method preserves the deductibility of the annual cash
bonus under Section 162(m) of the Internal Revenue Code. The annual cash bonus
of each executive officer is determined by allocating a fund equal to 0.6
percent of proportionate operating cash flow among the executive officers in
proportion to their salaries. The Compensation & Personnel Committee has
discretion to reduce annual cash bonuses based on the achievement of financial
performance objectives and any other criteria the Compensation & Personnel
Committee deems appropriate. The bonus pool for 1997 was $10,413,846 and the
Compensation & Personnel Committee reduced each bonus based on each executive
officer's target award amount (set as a percentage of base pay) and the
Company's financial and operating performance in 1997.
LONG-TERM COMPENSATION
Long-term incentives are granted at levels to bring total compensation,
including base salary, annual bonus and long-term incentives, up to the 60th
percentile level relative to executives in similar positions at comparable
companies, and up to the 75th percentile if exceptional performance is achieved.
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.
Long-term compensation is linked to growth in the value of the Company's
stock and consists of stock options and other long-term incentive awards based
on Common Stock. In 1997, the Committee granted long-term incentives in the form
of options with an exercise price equal to the fair market value of stock at the
time of grant. These options provide no compensation to the executive unless the
value of the stock increases. Where appropriate and for specific retention
purposes, the Committee grants restricted stock or similar retention awards
based on Common Stock, in addition to providing competitive long-term
compensation.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Annual Compensation
Mr. Ginn's salary for 1997 was based on the Compensation & Personnel
Committee's assessment of his individual performance, the Company's performance
in 1997 and the Compensation & Personnel Committee's analysis of independent
survey data.
Under Mr. Ginn's leadership, the Company had a stellar year in 1997,
reflecting tremendous growth both in the United States and internationally, and
resulting in stock price appreciation of 65 percent. The Company added 2.3
million cellular and PCS customers, a 44 percent increase over 1996. The Company
achieved over $1.7 billion proportionate operating cash flow, 54 percent greater
than 1996. The Company generated positive free cash flow of $157 million and
increased earnings per share by 117 percent to $0.78.
Like other executive officers, Mr. Ginn participates in the Company's
annual incentive plan under which the cash bonus component of his compensation
is determined. Mr. Ginn's allocated cash bonus for 1997 was $3,672,632. The
Compensation & Personnel Committee reduced the bonus to $1,135,600, based on the
target award set by the Committee as a percentage of base pay and the Company's
stellar achievement of financial and operating performance objectives.
11
<PAGE> 15
Long-Term Compensation
The number of options granted to Mr. Ginn in 1997 was based on the
Compensation & Personnel Committee's policy of providing long-term incentives
that will result in total compensation at the 60th-percentile level, relative to
chief executive officers at comparable companies. This policy reflects the
Compensation & Personnel Committee's emphasis on long-term incentives related to
growth in the value of the stockholders' investment in the Company.
Retention Grant
In 1997, the Compensation & Personnel Committee approved a retention grant
of nonqualified stock options and phantom stock units for Mr. Ginn. The total
dollar value of the grant was $15 million when approved. The purpose of the
grant is to incent Mr. Ginn to remain with the Company so that he can continue
to focus on the successful implementation of the Company's strategic objectives
as established by the Board of Directors. The Compensation & Personnel Committee
designed the grant to vest over a five-year period, beginning on January 1,
1999, provided Mr. Ginn satisfies certain service conditions each year.
STOCK OWNERSHIP GUIDELINES
In 1997, the Compensation & Personnel Committee established stock ownership
guidelines for officers. The purpose of the guidelines is to further align the
interests of officers with those of the Company's stockholders. The guidelines
require a significant commitment by each officer to own AirTouch Common Stock
worth a multiple of his or her annual base salary. Shares of Common Stock
counted towards satisfaction of the guidelines include open market purchases,
shares received upon option exercise or upon the receipt of restricted stock, a
portion of vested option shares, vested retirement plan shares and shares
purchased through the Company's Employee Stock Purchase Plan. The guidelines
should be met by the later of January 1, 2002 or five years after becoming an
officer. The guidelines for stock ownership are as follows:
<TABLE>
<CAPTION>
MULTIPLE OF
POSITION ANNUAL BASE SALARY
-------- ------------------
<S> <C>
Chief Executive Officer..................................... 6x
Chief Operating Officer..................................... 4x
Executive/Senior Vice President............................. 2x
Vice President.............................................. 1x
</TABLE>
POLICY ON DEDUCTIBILITY OF COMPENSATION
The Compensation & Personnel Committee considers the tax deductibility of
compensation paid to executive officers and 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.
In 1997, stockholders approved changes to the Company's incentive plans so
that annual cash bonuses and long-term compensation awarded under both plans can
be "performance-based" and deductible by the Company. The Company believes that
1997 annual cash bonuses paid to executive officers are fully deductible as well
as compensation arising from the exercise of stock options in 1997. The
Committee also designed Mr. Ginn's 1997 retention grant to maximize its
deductibility by the Company under Section 162(m).
March 27, 1998
COMPENSATION AND PERSONNEL COMMITTEE
Donald G. Fisher, Chairman
Carol A. Bartz
Charles R. Schwab
George P. Shultz
12
<PAGE> 16
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
1997. No director attended fewer than 81 percent of the aggregate number of
meetings of the Board and of all committees on which he or she served. 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
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
1997. 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.
The Compensation & Personnel Committee, which consists of Mr. Fisher,
Chairman, Ms. Bartz and Messrs. Schwab and Shultz, met five times and acted once
by written consent in 1997. The 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, Drs. Boskin
and Tien and Messrs. Cox, Hazen, Sarin and Shultz, met four times and acted once
by written consent in 1997. 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, Drs. Boskin and Tien and Messrs. Ginn and Schwab, met four times
during 1997. This 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 $55,000,
and committee chairs receive an additional annual retainer of $5,000. The annual
retainer is reduced by $3,000 for each absence by a director from a Board
meeting except there is no reduction for the first missed meeting in each year.
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 1997 earned interest at an annual rate of
8.53 percent.
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 amended and
restated 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 on the date when the
13
<PAGE> 17
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 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 Relationships and Related Transactions."
Directors who are employees of the Company receive no remuneration for
serving as directors or as members of committees of the Board.
Nonemployee directors are reimbursed up to $1,000 per quarter 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.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has a policy of making loans available to its nonemployee
directors with respect to its equity ownership requirements. Such loans have a
five-year term, 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 loans is determined using the greater of the mid-term 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 percent). Interest compounds annually and is paid at the end of each
five-year term. The Company has provided a loan on these terms to each of Mr.
Hazen and Drs. Boskin and Tien in December 1993, August 1996 and June 1997,
respectively. The respective interest rates are 6.0 percent, 6.9 percent and 6.9
percent, and the principal and interest balances at December 31, 1997 were
$126,878.96, $109,973.40 and 104,030.81, respectively.
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 three percent 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 amount 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
14
<PAGE> 18
the loan, the entire outstanding principal and accrued and unpaid interest will
be immediately due and payable. However, if Mr. Miron's employment terminates as
a result of a change in control, his repayment obligations will not include
amounts that would have been forgiven by the Company in future periods had he
remained employed. The principal and interest balance as of December 31, 1997
was $246,357.10.
Following his retirement as Vice Chairman of the Company in April 1997, the
Company entered into a five year consulting agreement with C. Lee Cox to provide
advice and counsel to the Company. Mr. Cox will receive $518,000 each year for
his services, and in 1997 received $366,916 pursuant to the agreement.
Additionally, premium-priced stock options with respect to 73,110 shares granted
to Mr. Cox on November 16, 1995 continue in effect for the term of the
Agreement. In the event of a change in control, any remaining payments under the
agreement become due.
Mrs. Gill's sister-in-law was Vice President and General Counsel of U.S.
Computer Services until January 1998, when she retired from the Company.
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 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. Riding's son is the Director, Customer Operations for AirTouch Paging
and received $144,140 in salary and bonus during 1997. Mr. Riding is the Vice
President, Human Resources and Corporate Services of the Company and will retire
from the Company effective June 1, 1998.
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.
15
<PAGE> 19
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
Common Stock with the BT Alex. Brown Cellular Index (formerly the NatWest
Cellular Index) and the S&P 500 Index (the "S&P 500"). The graph assumes that
$100 was invested on December 31, 1993 in each of the Company's Common Stock,
the BT Alex. Brown Cellular Index and the S&P 500.
COMPARISON OF AIRTOUCH COMMUNICATIONS, INC.,
THE BT ALEX. BROWN CELLULAR INDEX AND THE S&P 500
<TABLE>
<CAPTION>
MEASUREMENT PERIOD AIRTOUCH BT ALEX. BROWN
(FISCAL YEAR COVERED) COMMUNICATIONS CELLULAR INDEX S&P 500
<S> <C> <C> <C>
12/3/93 100 100 100
12/31/93 108 105 101
12/30/94 126 123 102
12/29/95 122 121 141
12/31/96 110 112 172
12/31/97 181 143 230
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of December 31, 1997, information
regarding ownership of the Company's outstanding Common Stock on December 31,
1997, by any entity or person known by the Company to be the beneficial owner of
more than five percent 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 Capital Group Companies, Inc.(1) 28,216,480(2) 5.6%
</TABLE>
- ---------------
(1) This information is based on a Schedule 13G filed with the SEC by: The
Capital Group Companies, Inc., 333 South Hope Street, Los Angeles, CA 90071.
(2) The above-described beneficial owner reports sole voting power with respect
to 9,247,830 shares and sole dispositive power with respect to 28,216,480
shares.
PROXIES AND VOTING AT THE MEETING
Stockholders Eligible to Vote
This proxy statement, notice of meeting and accompanying proxy card are
being mailed beginning on April 10, 1998 to stockholders of the Company in
connection with the solicitation by the Board of Directors of proxies for the
Annual Meeting of Stockholders to be held on May 29, 1998.
16
<PAGE> 20
Proxies are solicited to provide all stockholders of record on March 31,
1998 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.
Stockholders of record can give proxies by calling a toll free telephone
number, by using the Internet or by mailing their signed proxy cards. The
telephone and Internet voting procedures are designed to authenticate
stockholders' identities, to allow stockholders to give their voting
instructions and to confirm that stockholders' instructions have been recorded
properly. Specific instructions for stockholders of record who wish to use the
telephone or Internet voting procedures are set forth on the enclosed proxy
card.
Stockholders of record at the close of business on March 31, 1998 will be
entitled to vote at the Meeting or any adjournment or postponement. Each share
of Common Stock, $.01 par value, is entitled to one vote and each share of Class
B Mandatorily Convertible Preferred Stock, Series 1996 is entitled to vote on
the basis of four-fifths of a vote for each share of Preferred Stock held. On
February 28, 1998, 511,394,464 shares of Common Stock were outstanding and
17,254,192 shares of Preferred Stock were outstanding (representing
approximately 13,803,354 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.
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 1999 proxy statement,
stockholder proposals must be received at the Company's principal executive
offices no later than December 11, 1998.
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
17
<PAGE> 21
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 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.
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 percent stockholders
were complied with for fiscal year 1997 except that Mr. Jones inadvertently
failed to reflect the indirect beneficial ownership of 400 shares of the
Company's Common Stock held by his spouse as custodian for his minor children on
his Form 3. Mr. Jones has filed an amended Form 3.
SOLICITATION OF PROXIES
The Company will pay all costs of distribution and solicitation of proxies.
Brokers, nominees, fiduciaries and other custodians will be reimbursed for 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
18
<PAGE> 22
(LOGO)
Printed on Recycled Paper
<PAGE> 23
[AIRTOUCH LOGO]
Sam Ginn
Chairman and Chief Executive Officer
April 1998
Dear Stockholder:
Enclosed is AirTouch Communications, Inc.'s 1997 Annual Report and Proxy
Statement relating to our 1998 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.
For those of you who prefer to receive information electronically, we are
pleased to announce that now you can access the Annual Report and Proxy
Statement on our web site located at http://www.airtouch.com/stockholders. We
are also offering two new ways to vote your shares. In addition to completing
and mailing your proxy card, you can now vote by telephone or Internet.
Instructions on voting by telephone or by Internet are located on the reverse
side of this card.
The 1998 Annual Meeting will be in Seattle, Washington on Friday, May 29, 1998
at 8:00 a.m., local time. The location is The Museum of History & Industry,
McEachern Auditorium, 2700 24th Avenue East, Seattle, Washington. If you plan
to attend, please be sure to bring this card as your admission ticket. Your
vote is important to us, so whether or not you plan to attend the meeting,
please take the time to vote.
Sincerely,
/s/ SAM GINN
Sam Ginn
This Card Is Your Admission Ticket To The Annual Meeting
o Detach Proxy Card Here o
- --------------------------------------------------------------------------------
[AIRTOUCH LOGO]
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 29, 1998
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
The Museum of History & Industry, McEachern Auditorium, 2700 24th Avenue East,
Seattle, Washington on May 29, 1998, at 8:00 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.
AIRTOUCH COMMUNICATIONS, INC.
P.O. BOX 1093
NEWARK, N.J. 07101-9663
(Continued and to be signed on reverse side)
<PAGE> 24
[AIRTOUCH LOGO]
[Graphic of Telephone] VOTE BY TELEPHONE OR INTERNET [Graphic of Computer]
24 HOURS A DAY, 7 DAYS A WEEK
AirTouch Communications is pleased to offer you two new ways to vote. In
addition to mailing your proxy you can now also vote by telephone (from the
U.S.) or by Internet.
VOTE BY PHONE: Just follow these easy steps:
1. Call the toll-free number 1-888-698-8077
2. Enter your control number (located in the lower right
portion of this card)
3. Follow the recorded instructions
VOTE BY INTERNET: Just follow these easy steps:
1. Go to web site http://airtouch.proxyvoting.com
2. Enter your control number (located in the lower right
portion of this card)
3. Follow the instructions given
- -----------------------------
no type here -- label area
- -----------------------------
--------------------------
DO NOT MAIL
YOUR PROXY CARD
IF YOU ARE VOTING BY
TELEPHONE OR INTERNET
THANK YOU FOR VOTING
---------------------------
---------------------------
YOUR VOTE IS IMPORTANT!!! XXX XXX X
CALL OR GO TO THE WEB SITE 24 HOURS A DAY CONTROL NUMBER
1-888-698-8077 ---------------------------
http://airtouch.proxyvoting.com
o Detach Proxy Card Here o
- -------------------------------------------------------------------------------
/ /
<TABLE>
<S> <C> <C> <C> <C>
1. Election of Directors FOR AGAINST ABSTAIN
The Board of Directors recommends a vote "FOR" 2. Ratification of the appointment of
management's nominees. Price Waterhouse LLP as the Company's / / / / / /
Independent Accountants for 1998.
Nominees: 01 - Sam Ginn 02 - Donald G. Fisher
03 - Charles R. Schwab 04 - Chang-Lin Tien The Board of Directors recommends a
vote "FOR" ratification of the
FOR all WITHHOLD AUTHORITY *EXCEPTIONS appointment of Price Waterhouse LLP.
nominees listed. to vote for all
nominees listed. 3. Approval of the amendment to the
Employee Stock Purchase Plan (the / / / / / /
/ / / / / / "Plan").
(INSTRUCTION: To withhold authority for any individual The Board of Directors recommends a
nominee, mark the "Exceptions" box and write that vote "FOR" the Plan.
nominee's name in the space provided below.)
*Exceptions __________________________________________
</TABLE>
<TABLE>
<S> <C>
CHECK HERE IF YOU:
Plan to attend the -----
Annual Meeting. -----
Have a change of -----
address on the card -----
(indicate change below).
Want your vote kept -----
confidential. -----
Want to discontinue -----
duplicate Annual -----
Reports.
Are interested in -----
receiving the Annual -----
Report and Proxy
Statement electronically
in the future.
</TABLE>
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.
SIGNATURE: __________________________________________________________________
SIGNATURE: __________________________________________________________________
