1 Exhibit (10)(iii)(A)1
AT&T Form 10-K
AT&T SHORT TERM INCENTIVE PLAN
(As Amended March, 1994)
1. PURPOSE. The purpose of the AT&T Short Term Incentive Plan (the
"Plan") is to provide Senior Managers of American Telephone and Telegraph
Company (the "Company") and its Affiliates with incentive compensation based
upon the level of achievement of financial and other performance criteria.
The Plan will enhance the ability of the Company and its Affiliates to attract
individuals of exceptional managerial talent upon whom, in large measure, the
sustained progress, growth and profitability of the Company depends.
2. DEFINITIONS. As used in the Plan, the following terms shall have
the meanings set forth below:
(a) "Affiliate" shall mean (i) any Person that directly, or through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the Company or (ii) any entity in which the Company has a
significant equity interest, as determined by the Committee.
(b) "Award" shall mean a cash payment.
(c) "Board" shall mean the Company Board of Directors.
(d) "Calendar Year" shall mean the year, following the Performance Year,
in which the Award is made.
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(e) "Change in Control" shall be deemed to have occurred if (a) there
shall have been a change in the composition of the Board such that at any time
a majority of the Board shall have been members of the Board for less than
twenty-four months, unless the election of each new director who was not a
director at the beginning of the period was approved by at least two-thirds of
the directors then still in office who were directors at the beginning of such
period (but in no event by fewer than three such directors); or (b) any Person
acquiring 30% or more of the outstanding common shares of the Company.
(f) "Committee" shall mean the Compensation Committee of
the Board.
(g) "Covered Employees" shall mean a Participant who is a "covered
employee" within the meaning of Section 162(m) of the Internal Revenue Code
with respect to any Performance Year.
(h) "Outside Directors" shall mean those members of the Committee who
are "outside directors" within the meaning of Section 162(m) of the Internal
Revenue Code.
(i) "Participant" shall mean each and every Senior Manager of the
Company and its Affiliates other than those Senior Managers who are determined
by the Committee, or such person or committee empowered by the Committee, to
be ineligible to participate in the Plan.
(j) "Performance Year" shall mean the year in which the award was
earned.
(k) "Person" shall mean any individual, corporation, partner- ship,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision thereof.
(l) "Senior Manager" shall mean any manager of the Company or any
Affiliate holding a position above "E" level or any future salary grade level
that is the equivalent thereof.
(m) "Target Award" shall mean an Award level that will be
paid if certain performance criteria are achieved in the Performance Year.
3. AWARDS-GENERAL. Awards will be made in each Calendar Year with
respect to a Performance Year. Awards shall be paid as soon as practicable
after the Performance Year, except to the extent that a Participant has made
an election to defer the receipt of such Award pursuant to the AT&T Senior
Management Incentive Award Deferral Plan.
The Committee shall approve a Target Award for each structure rate of
management eligible for Awards under the Plan prior to each Performance Year
for which it intends to make Awards. For each Performance Year the Committee
shall also establish performance criteria as described in A and B below to be
applicable to Awards for such Performance Year (and future Performance Years,
as the case may be).
Performance criteria are:
A. Financial performance criteria of the Company and its Affiliates (in
each case, prepared on the same basis as the financial statements published
for financial reporting purposes except as adjusted pursuant to Section 5
hereof); and
B. Other performance criteria of the Company and its Affiliates.
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Except as provided in Section 4 (relating to Award to "covered
employees"), Awards for any Performance Year will be determined by the
Committee, or such person or committee empowered by the Committee, based upon
the level of achievement during such Performance Year of the criteria referred
to in A or B above and on individual merit of each Participant. The Target
Awards shall serve only as a guideline in making Awards under the Plan.
Depending upon individual performance, in the case of each Participant, an
Award may be more or less (including no Award) than such Target Award.
4. AWARD TO "COVERED EMPLOYEES". Notwithstanding any other provision
of the Plan to the contrary, the following provisions shall apply to any
Participant who is a "covered employee" within the meaning of Section 162(m)
of the Code (i.e., the CEO and four most highly compensated officers of the
Company, other than the CEO, as of the end of a Performance Year):
(a) The total of all Awards payable to all such Participants who are
"covered employees" shall be 0.4% of the "Net Cash Provided by Operating
Activities," as publicly disclosed in the Company's consolidated financial
statements for such Performance Year, and the Award to each Participant with
respect to such Performance Year shall be such amount divided by the number of
Participants who are "covered employees" with respect to such Performance
Year, subject to adjustment as described in (b) below. Prior to the payment
of any award to a "covered employee" with respect to a Performance Year, those
Compensation Committee members who are "outside directors" under Section
162(m) of the Code shall certify the amounts under this Section 4(a) with
respect to such Performance Year.
(b) Those Compensation Committee members who are "outside directors"
(within the meaning of Section 162(m) of the Code), in their sole discretion,
shall have the authority to set the actual Award to any Participant under this
Section 4 at any amount lower than the amount described in (a) above, based on
factors, including but not limited to, individual merit and financial and
other performance criteria of the Company established by the Compensation
Committee along with any adjustments (as described herein under "Plan
Administration and Termination"). The award to any Participant may be less
than (including no award), but never more than, the amount determined under
(a) above.
5. ELIGIBILITY. (a) Persons employed by the Company or any of its
Affiliates during a Performance Year in active service at a Senior Manager
level are eligible to be Participants under the Plan for such Performance Year
(whether or not so employed or living at the date an Award is made); provided
that, except in the case of a manager promoted to Senior Manager, the manager
has at least three months of active service at such level during the
Performance Year with the Company or any Affiliate (excluding any time the
manager was absent on account of disability and receiving any Sickness or
Accident Disability Benefits ("Disability Benefits") under the Company or any
employing Affiliate's Sickness or Accident Disability Benefit Plan). A Senior
Manager is not rendered ineligible to be a Participant by reason of being a
member of the Board.
(b) The Target Award applicable to a Participant under the Plan for a
Performance Year shall be prorated over the Performance Year or the
Participant shall be ineligible for an Award, as follows:
(1) entrance to or exit from - prorate from date of
a level of Senior Manager entrance or exit to
after the beginning of the the nearest half
Performance Year, including month
exit due to death, retirement,
resignation, or leave of absence
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(2) changes in designated - prorate according
structure rate to time of active
service at each
structure rate to the
nearest half month
(3) receipt of Disability - prorate to the day
Benefits for more than based on time of
three months in a service while not
Performance Year under the receiving Disability
plan of the Company or any Benefits
Affiliate
(4) receipt of Disability - no reduction in
Benefits for three months applicable Target
or less in a Performance Award
Year under the plan of the
Company or any Affiliate
(5) dismissal during or after - no award
a Performance Year by the
Company or any Affiliate
6. ADJUSTMENTS. (a) In order to assure the incentive features of the
Plan and to avoid distortion in the operation of the Plan, the Committee may
make adjustments in the performance criteria established by it for any
Performance Year under Section 3 whether before or after the end of the
Performance Year to the extent it deems appropriate in its sole discretion,
which shall be conclusive and binding upon all parties concerned, to
compensate for or reflect any extraordinary changes which may have occurred
during the Performance Year which significantly alter the basis upon which
such performance criteria were determined. Such changes may include without
limitation changes in accounting practices, tax, regulatory or other laws or
regulations, or economic changes not in the ordinary course of business
cycles. The Company also reserves the right to adjust Target Awards to
insulate them from the effects of unanticipated, extraordinary, major business
developments, e.g., unusual events such as a special asset writedown, sale of
a division, etc. The determination of financial performance achieved for any
Performance Year may, but need not be, adjusted by the Committee to reflect
such extraordinary, major business developments. Any such determination shall
not be affected by subsequent adjustments or restatements.
(b) In the event of any change in outstanding shares of the Company by
reason of any stock dividend or split, recapitalization, merger,
consolidation, combination or exchange of shares or other similar corporate
change, the Committee shall make such adjustments, if any, that it deems
appropriate in the performance criteria established by it under Section 3 for
any Performance Year not then completed; any and all such adjustments to be
conclusive and binding upon all parties concerned.
(C) In order to maintain the Participants' rights in the event of any
Change in Control of the Company the Committee as constituted before such
Change in Control may, in its sole discretion, as to any Award, either at the
time a Target Award is determined hereunder or any time thereafter, take any
one of the following actions: (i) provide for the acceleration of any time
periods relating to the realization of any Award so that such Award may be
realized in full on or before a date fixed by the Committee; (ii) make such
adjustment to any Target Award then outstanding as the Committee deems
appropriate to reflect such Change in Control; (iii) cause the Company's
obligation with respect to such Target Award and any other obligations
hereunder to be assumed, or new obligations substituted therefor, by the
acquiring or surviving corporation after such Change in Control.
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7. OTHER CONDITIONS. (a) No person shall have any claim to an Award
under the Plan and there is no obligation for uniformity of treatment of
Participants under the Plan. Awards under the Plan may not be assigned or
alienated.
(b) Neither the Plan nor any action taken hereunder shall be construed
as giving to any Participant the right to be retained in the employ of the
Company or any Affiliate.
(c) The Company or any Affiliate shall have the right to deduct from
any Award to be paid under the Plan any federal, state or local taxes required
by law to be withheld with respect to such payment.
(d) Awards under the Plan will be included in the base for determining
pensions, retirement and death related benefits under the following plans:
- AT&T Non-Qualified Pension Plan
- AT&T Mid-Career Pension Plan
- AT&T Senior Management Long Term Disability
and Survivor Protection Plan
(e) In the event an Award under the Plan is deferred under the AT&T
Senior Management Incentive Award Deferral Plan, it will be reflected in the
calculations of the above benefit plans as if it had been paid as scheduled
and not deferred.
8. DESIGNATION OF BENEFICIARIES. A Participant may designate a
beneficiary or beneficiaries to receive all or part of the Award which may be
made to the Participant, or may be payable, after such Participant's death. A
designation of beneficiary may be replaced by a new designation or may be
revoked by the Participant at any time. A designation or revocation shall be
on a form to be provided for this purpose and shall be signed by the
Participant and delivered to the Company or Affiliate employing the
Participant prior to the Participant's death. In case of the Participant's
death, an Award with respect to which a designation of beneficiary has been
made (to the extent it is valid and enforceable under applicable law) shall be
paid to the designated beneficiary or beneficiaries. Any Award granted or
payable to a Participant who is deceased and not subject to such a designation
shall be distributed to the Participant's estate. If there shall be any
question as to the legal right of any beneficiary to receive an Award under
the Plan, the amount in question may be paid to the estate of the Participant,
in which event the Company or it's employing Affiliate shall have no further
liability to anyone with respect to such amount.
9. PLAN ADMINISTRATION. (a) The Committee shall have full power to
administer and interpret the Plan and to establish rules for its
administration subject to such resolutions, not inconsistent with the Plan, as
may be adopted by the Board, except that the "outside directors" shall have
such power with respect to Awards to "covered employees" under the provisions
of Section 4. In making any determinations under or referred to in the Plan
the Committee, or the outside directors, as applicable, shall be entitled to
rely on opinions, reports or statements of officers or employees of the
Company and its Affiliates and of counsel, public accountants and other
professional or expert persons.
(b) The Plan shall be governed by the laws of the State of New York and
applicable Federal law.
10. MODIFICATION OR TERMINATION OF PLAN. The Board may modify or
terminate the Plan at any time, effective at such date as the Board may
determine. The Senior Vice President - Human Resources of the Company (or any
successor to that officer's responsibilities) with the concurrence of the
General Counsel, or the Vice President-Law for Corporate Matters, of the
Company (or any successor to either of such officer's responsibilities), shall
be authorized to make minor or administrative changes in the Plan or changes
required by or made desirable by government regulation. A modification may
affect present and future Participants.