EXHIBIT (10)(iii)(A)19
AT&T Form 10-K
LOGO
Harold W. Burlingame Room 444511
Senior Vice President 295 North Maple Avenue
Basking Ridge, NJ 07920
908 221-6033
Mr. Jerre Stead
71 Skyline Drive
Bernardsville, New Jersey 07924
Dear Jerre:
This will supplement my July 31, 1991 and October 18, 1991 letters to
you detailing the terms and conditions of your employment with AT&T. In line
with our previous discussions, the incentive arrangements described in the
"Special Incentive Program" section of Attachment A to my July 31, 1991
letter are null and void in their entirety. As a substitute for this
"Special Incentive Program", you have been awarded a total of 70,000 AT&T
Restricted Shares as reflected in the attached agreement.
Within 10 business days, you will receive a dividend equivalent check in
the amount of $115,500 this amount, in effect, assumes you were awarded the
70,000 Restricted Shares effective back to January 1, 1992, the start of the
performance period incorporated in the attached Restricted Share agreement.
Accordingly, it reflects four quarterly dividends through the December 31,
1992 dividend record date and related February 1, 1993 dividend payment date.
For the next dividend record date and related dividend payment date, (i.e.
March 31, 1993 and May 3, 1993) you will receive actual dividends rather than
dividend equivalents.
Your signature below will indicate your acceptance of this proposal.
Sincerely,
H. W. Burlingame
Attachment
Jerre L Stead 3/29/93
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Jerre L. Stead Date
LOGO
Harold W. Burlingame Room 29-3500
Senior Vice President 550 Madison Avenue
New York, NY 10022-3297
212-644-1000
October 18, 1991
M. Jerre L. Stead
71 Skyline Drive
Bernardsville, NJ 07924
Dear Jerre:
This will supplement my July 31, 1991 letter to you
detailing the terms and conditions of your employment with AT&T.
Subsequent to my July 31, 1991 letter, we advised you that
our Legal organization felt it was inappropriate for you to serve
on the board of directors of Household International as they
considered this organization a competitor of AT&T's Universal
Card business. We understand this means forgoing annual
compensation in the order of $31,000 per year plus 350 Household
International common shares.
In view of this situation, each year on the anniversary of
your employment with AT&T, you will receive a lump sum payment of
$51,000. These payments will not be included in the base for
calculating benefits under any AT&T employee or Senior Management
benefit plan and will cease the earlier of (1) such time as you
secure a position on the board of a company not in competition
with AT&T or (2) termination of your employment with AT&T. A
final prorated payment will be made on the number of completed
business days for a partially completed 12-month period.
Your signature below will indicate your acceptance of this
addition to the terms of your employment.
Sincerely,
Harold W. Burlingame
Jerre L. Stead October 27, 1991
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Jerre L. Stead Date
LOGO
Harold W. Burlingame Room 29-3314
Senior Vice President 55 Madison Avenue
New York, NY 10022-3297
July 31, 1991
Mr. Jerre L. Stead
110 Rolling Green Drive
Barrington IL 60010
Dear Jerre:
It gives me great pleasure to offer you a Senior
Management position as President of AT&T's Business
Communications Systems.
In addition to confirming my offer, this letter will
further detail the terms and conditions of your employment and
outline the major features of AT&T's compensation and benefit
plans and practices as well as the arrangements we developed
especially for you.
SALARY AND INCENTIVES: Attachment A outlines the salary and
incentive arrangements we are offering to you. As
discussed, your current employer may not be granting you a
prorated annual incentive for 1991. If such is the case,
your 1991 AT&T annual incentives (APA and MA) will not be
prorated to reflect a partial years' service here.
HIRING BONUS: You will receive a hiring bonus of $380,000
payable within 30 days of your employment date. This
payment is to compensate you for certain forfeitures when
you leave your current employer. This payment will not be
includable in the calculation of any benefits under the
benefit plans of AT&T. In addition, at their next meeting,
the AT&T Board's Compensation Committee will be requested to
award you a special grant of 15,700 AT&T Shares.
EMPLOYEE AND SPECIAL MID-CAREER BENEFITS: You will be
eligible to be relocated from Barrington, Illinois to the
Basking Ridge, New Jersey area under the AT&T Management
Relocation Program. This Program includes a Miscellaneous
Allowance equal to 10% of your starting base salary.
(Attachment B is an outline of AT&T's Management Relocation
Plan.) If you decide to join us, we will make arrangements
to have a counselor immediately available to assist you with
your relocation and we will assist you in securing a
mortgage.
-2-
You will, of course be eligible for the employee benefit
programs available to all management employees. In
addition, under the terms of the AT&T Mid-Career Hire
Program, you would be entitled to a one-time payment
(grossed up to reflect taxes) equivalent to six months'
premiums for the Company Medical and Dental Plans. Although
you will have to make your own arrangement for dental
coverage during your first six months, you may immediately
enroll (and pay for coverage) under the Company's Medical
Expense Plan. After this initial six month period, you will
be eligible for the Company paid medical, dental, and vision
care coverage provided to all management employees.
Attachment C summarizes how the Mid-Career Program's
medical, death and disability benefits combine with our
general employee benefit plans to protect you and your
family in these important areas. In addition, this
attachment outlines the features of the AT&T Savings Plans
as well as our Senior Management financial counseling and
telephone concession programs, which are also available to
you.
AT&T MID-CAREER PENSION PLAN: Under the Plan's current
terms and conditions, a participant hired at age 48 and
retiring at age 65 would receive extra pension credit for 16
years at approximately one half the rate under the AT&T
Management Pension Plan. See also Special Pension
Arrangement.
SPECIAL PENSION ARRANGEMENT: This arrangement would provide
you with special Ancillary Post-Termination Benefits and a
Special Pension Arrangement in the event of (1) an employee
initiated termination or (2) a Company initiated termination
(other than for cause), on or after age 55 (but prior to age
65, the age you would normally become eligible for immediate
pension benefits).
-- Ancillary Post-Termination Benefits:
- COBRA entitlements
- 1 times salary Senior Management "Basic" life
insurance
- 1-1 1/2 times salary Senior Management "Split Dollar"
(contributory) life insurance
- Same ad-hoc inflation adjustments accorded to AT&T
Non-Qualified "Service Pensioners"
- Continuation of outstanding Stock Options and
Performance Shares if such treatment continues to be
available to Service Pension eligible Senior
Managers.
- Senior Management telephone concession service
-3-
-- Special Pension Arrangement:
- Provided you remain employed with AT&T until at least
age 55, you will receive an accrued pension benefit
payable immediately upon retirement. Such accrued
pension benefit will be calculated under then existing
AT&T qualified and non-qualified pension formulas
(including the AT&T Mid Career Pension Plan) using
actual AT&T service at termination but ignoring age and
service requirements. (However, the age and service
requirements for the Minimum Retirement Benefit and
Surviving Spouse Benefit payable under the AT&T Senior
Management Long Term Disability and Survivor Protection
Plan will not be waived.) In the event such accrued
pension amounts are lower than a minimum annual pension
schedule reflected in Attachment D, you will receive
the higher pension amount called for in this Minimum
Pension Schedule. Of course, such minimum annual
pension will be reduced by any actual AT&T qualified
and non-qualified pensions payable to you as well as
the other offsets indicated in Attachment D.
Since I will be abroad for two weeks, if you have any
questions concerning this offer, please call Rich Evans on 908-
221-2112.
This letter completely replaces my July 29, 1991 offer
letter to you. Your signature below will indicate your
acceptance of this offer.
Sincerely,
Rich Evens for HWB
Attachments
Jerre L. Stead 8/9/91
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Jerre L. Stead Date
Attachment A
JERRE L. STEAD
Current Proposed
Target Max Target Per-to-Date
------ --- ------ -----------
Annual Base Salary: $ 600 $ 600 $ 550 $ 550
1991 AT&T Performance
Award (APA): 258 334
191 Merit Award (MA): 450 600 93 120
----- ----- ------ -----
Total Cash Compensation: $1050 $1200 $ 901 $1004
Long Term Incentives-
Standard 1991 Grants: 540 780
- - 1991-1993 Performance
Shares (PV of 10640
Shares) 396 534
- - Annual Dividend
Equivalents 14
- - 1991 Stock Options
(PV of 25,970 Options) 395 395
Total Compensation: $1590 $1980 $1692 $1933
Seasoned Performance Shares
- - 1990-1992 (7888 Shares) 360 289
- - 1989-1991 (10,104 Shares) 350 364
SPECIAL INCENTIVE PROGRAM:
3- year program ties to performance of Mr. Stead's business.
- - Incremental earnings opportunity during the period:
For achievements of each $100MM* in position MOI (i.e., MOI improvements
break even):
$200K cash payment
150K 5-yr restricted stock
For each achievement of specified improvements in key non-MOI measures such as
net operating cash flow (NOCF), R&D expenditures as a percent of sales,
customer satisfaction index, etc.:
$200K cash payment
150K 5-yr restricted
Residual earnings opportunity:
- -Achievement of target MOI by end of period: $700K cash
- -Achievement of target non-MOI measures by
end of period: $700K cash
- -Payable when achieved
*Example target; actual targets to be jointly agreed to by Mr. Stead and AT&T.
Plan design will produce a target earnings potential of $3.5MM over the period
($70OK/year incremental bonuses + $1.4MM residual bonus). Additional earnings
potential for above-target performance will be available and, if earned, would
be delivered in restricted stock at the end of the performance period.
NOTES: Performance share and stock option present values assume 12%/year
stock price growth for 5 years and an 8.5% discount rate.
Performance-to-date figures for performance shares based on $38.00
share price and results through 2Q.
Does not account for any accrued forfeitures which may be
incurred.
Attachment B
OUTLINE OF MANAGEMENT RELOCATION PLAN
Lump Sum Payment Paid in advance based on an individual formula which
includes home search trips, interim living costs,
meals, transportation, lodging, etc., for employee and
family.
Miscellaneous
Household Allowance 10% of new salary*
Home Sale Assistance I Sale to Company at fair market value as
determined by the average of two professional
appraisals
II If employee finds buyer, 3% of the sale price is
paid to the employee as an incentive
Loss On Sale of Home Limited to the lower of the actual loss or 10% of the
sum of the original purchase price and one-half of
eligible capital improvements to the home
Loan for Down Payment
(Equity Advance) Interest free loan up to 95% of equity in prior home
Closing Cost Most fees paid, e.g., attorneys, recording, mortgage
origination, etc.
Moving/Storage Packing, moving household goods and unpacking
Differentials If applicable, the greater of a Mortgage Interest
Differential or High Housing Cost Differential, prior
house to new house, for 36 months. Maximum aggregate
payment equal to 30% and 10.8% of salary, respectively
Difference in real estate taxes, prior house to new
house, for 36 months, no maximum
Tax Gross-up For non-deductible moving expense reimbursements
(Misc. Allowance, Home Sale Incentive and
Differentials not included)
*6% of new salary if renting at the new location
The above is only a brief outline of such benefits. Any benefits or rights
will be determined by the specific plan provisions as they apply in each case.
Attachment C
BENEFIT SUMMARY#
MEDICAL Coverage and tax gross-up during first six months ...
thereafter, eligible to Medical@, Dental@, Vision Care
Plans for employees generally
DEATH BENEFITS Minimum 15% of Pay* for spouse's life-time until
pension plan for employees generally exceeds such
percentage
- 1 x Salary Company Paid Basic Life Insurance
- 1 x Pay* Company Paid Pension Death Benefit to
mandatory beneficiary
- Up to 3 x Salary Employee Paid Group Term
- Up to 1 and 1/2 x Salary Company/Employee Paid
"Split Dollar" Insurance
SICKNESS DISABILITY 52 weeks at full Salary
LONG TERM DISABILITY 60% of Salary LTD benefit to age 65 provided by the
Company or option to elect 70% with employee
contribution for the additional 10%
VACATIONS 5 weeks
SAVINGS PLAN After one year's service, Company matches 2/3 of
employee contribution up to 6% of Salary (Plan
includes pretax 401k feature)
DEFERRAL PLAN Option to defer Short and Long Term Incentives.
Current interest rate is 10 year U.S. Treasury notes
plus 5% interest**
FINANCIAL COUNSELING Tax, estate planning and investment advice Preparation
of will and trusts Income tax preparation
TELEPHONE CONCESSION 100% of inter-LATA long distance charges
AUTOMOBILE Company provided leased automobile or chauffeur
service for business and commutation
PENSION See AT&T MID-CAREER PENSION
# Includes Mid-Career, Senior Management and Employee Benefits
@ Under the Company Flex Plan, there are different levels of coverage from
which to elect
* Base salary plus Short Term Awards
**Interest rate established by AT&T Board and subject to change from
time to time.
Terms and Conditions of Employee Benefit, Mid-Career Benefit and
Executive Benefit Plans subject to change by the Company. The above
is only a very brief outline of such benefits. Any benefits or rights
will be determined by the specific plan provisions as they apply in
each case.
7/19/91
Attachment D
MINIMUM PENSION SCHEDULE#
(Amounts Assume 50% Joint and Survivor Pension is declined)*
Retirement Age** Total Annual Pension***
55 $384,639
56 422,228
57 462,330
58 505,060
59 550,526
60 598,839
61 650,107
62 704,429
63 761,909
64 822,640
65 886,716
* If survivor annuity is elected, employee's minimum pension
amount will be reduced to reflect practices in effect upon
employee's termination and such reduction will assume that the
proportion of accrued qualified and non-qualified pensions
applies to amounts paid under this Minimum Pension Schedule.
** Pension amounts will be prorated to the nearest whole month.
*** Amounts paid under this Minimum Pension Schedule will be reduced
by the following offsets: (1) All AT&T's or subsidiary or
associated company's qualified and non-qualified pension plans
(e.g., AT&T Management Pension Plan, AT&T Non-Qualified Pension
Plan, AT&T Mid-Career Pension Plan, AT&T Senior Management Long-
Term Disability and Survivor Protection Plan), (2) any pensions
payable from former employers (e.g., Honeywell), and (3) 50% of
the Primary Social Security Maximum Benefit. If such offsets
exceed the Minimum Pension amount, no benefit under this
schedule is payable. Qualified and non qualified savings plans
are not offsets to the Minimum Pension Schedule, e.g., AT&T
Long-Term Savings Plan and AT&T Senior Management Incentive
Award Deferral Plan.
The Minimum Pension, all other AT&T non-qualified pensions and
benefits, as well as all short and long term incentives, are
subject to the AT&T Non-Competition Guideline (attached).
7/31/91