SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Sprint Corporation
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(Name of Registrant as Specified In Its Charter)
Don A. Jensen, Vice President and Secretary
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notes:
[SPRINT LOGO] Post Office Box
11315
Kansas City, Missouri 64112
William T. Esrey
Chairman
March 7, 1996
Dear Stockholder:
On behalf of the Board of Directors and Management, I cordially invite you
to attend the Annual Meeting of the Stockholders of Sprint Corporation. The
Annual Meeting will be held at 10:00 a.m. on Tuesday, April 16, 1996, at
Sprint World Headquarters, 2330 Shawnee Mission Parkway, Westwood, Kansas. The
enclosed notice of the meeting and Proxy Statement contain detailed
information about the business to be transacted at the meeting.
The Board of Directors has nominated three of the four present Directors
whose terms of office expire this year to continue to serve as Directors of
Class I. The Board of Directors recommends that you vote for the nominees. The
Board composition is changing as a result of the completion of two
transactions strategically important to the company. Two new members, Michel
Bon and Ron Sommer, have joined the Board with the investment in Sprint by
France Telecom and Deutsche Telekom AG on January 31, 1996. Three Directors
are leaving the Board to join the board of 360(degrees) Communications Company
following the spin-off of our cellular division.
You are also being asked to approve the appointment of Ernst & Young LLP as
independent auditors of Sprint for 1996. The Board of Directors recommends
that you vote for this proposal.
Two Stockholder proposals are also included in the Proxy Statement. The
proposals relate to the retirement plan for outside Directors and establishing
a Stockholder advisory committee. For the reasons set forth in the Proxy
Statement, the Board of Directors recommends a vote against each proposal.
The prompt return of your proxy in the enclosed business return envelope
will save Sprint additional expenses of solicitation and will help ensure that
as many shares as possible are represented.
Sincerely,
[SIGNATURE LOGO OF WILLIAM T. ESREY]
Chairman
SPRINT CORPORATION
P.O. BOX 11315
KANSAS CITY, MISSOURI 64112
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 16, 1996
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TO THE STOCKHOLDERS OF SPRINT CORPORATION:
The Annual Meeting of the Stockholders of Sprint Corporation (Sprint) will
be held at the corporate headquarters of Sprint, 2330 Shawnee Mission Parkway,
Westwood, Kansas on Tuesday, April 16, 1996, at 10:00 a.m. (local time) for
the following purposes:
1. To elect three Class I Directors to serve for a term of three years.
2. To consider and vote upon a proposal to approve the appointment of
Ernst & Young LLP as independent auditors of Sprint for 1996.
3. To act upon such matters, including two Stockholder proposals (set
forth on pages 16 through 19 of the accompanying Proxy Statement), as may
properly come before the meeting or any adjournments thereof.
The close of business on February 20, 1996, has been designated as the
record date for the determination of Stockholders entitled to notice of and to
vote at the Annual Meeting or any adjournments thereof.
By order of the Board of Directors
Westwood, Kansas Don A. Jensen
March 7, 1996 Vice President and
Secretary
YOUR VOTE IS IMPORTANT
We consider the vote of each Stockholder important, whatever the number
of shares held. If you are unable to attend the meeting in person, please
sign, date and return your proxy in the enclosed envelope at your earliest
convenience. The prompt return of your proxy will save expense to Sprint.
SPRINT CORPORATION
P.O. BOX 11315
KANSAS CITY, MISSOURI 64112
MARCH 7, 1996
PROXY STATEMENT
PROXIES, SOLICITATION AND VOTING
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of proxies in the accompanying form to be used at the
Annual Meeting of Stockholders on April 16, 1996. Properly executed and dated
proxies received will be voted in accordance with instructions thereon. If the
proxy card is signed and returned and no instructions are given on the proxy
with respect to the matters to be acted upon, the shares represented by the
proxy will be voted for the election of the nominees for Directors designated
below, for approval of the appointment of the auditors of Sprint and against
the Stockholder proposals.
A Stockholder giving a proxy may revoke it at any time before it is
exercised by filing with the Secretary of Sprint an instrument of revocation
or a duly executed proxy bearing a later date. A proxy may also be revoked by
attending the Annual Meeting of Stockholders and voting in person. Attendance
at the Annual Meeting of Stockholders will not in and of itself constitute the
revocation of a proxy.
In addition to solicitation by mail, proxies may be solicited by officers of
Sprint in person or by telephone. Sprint has retained D. F. King & Co., Inc.
to assist in the solicitation of proxies for an anticipated fee of $6,500 plus
out-of-pocket expenses. The cost of soliciting proxies will be borne by
Sprint.
As of the record date, February 20, 1996, Sprint had outstanding and
entitled to vote 349,289,865 shares of Common Stock, 49,852 shares of
Preferred Stock-First Series, Convertible, 300,079 shares of Preferred Stock-
Second Series, Convertible, and 95 shares of Preferred Stock-Fifth Series.
Each share of Common Stock, Preferred Stock-First Series, Convertible,
Preferred Stock-Second Series, Convertible, and Preferred Stock-Fifth Series
is entitled to one vote on each matter to be voted on at the meeting. As of
the record date, Sprint also had outstanding 63,525,675 shares of Class A
Preference Stock that are entitled to an aggregate of 61,596,583 votes on each
matter to be voted on at the meeting other than election of Directors.
The three nominees for Director receiving the greatest number of votes at
the Annual Meeting of Stockholders will be elected as Directors. In addition,
the holders of the Class A Preference Stock, France Telecom and Deutsche
Telekom AG, have the right to elect two Directors. For all other matters to be
voted upon at the Annual Meeting, the affirmative vote of a majority of shares
present in person or represented by proxy, and entitled to vote on the matter,
is necessary for approval. For purposes of determining the outcome of the vote
on these matters, an instruction to "abstain" from voting on a proposal will
be treated as shares present and entitled to vote, and will have the same
effect as a vote against a proposal. "Broker non-votes", which occur when
brokers are prohibited from exercising discretionary voting authority for
beneficial owners who have not provided voting instructions, are not counted
for the purpose of determining the number of shares present in person or
represented by proxy on a voting matter and have no effect on the outcome of
the vote.
Sprint's policy is that all Stockholder meeting proxies, ballots and voting
tabulations that identify the vote of a specific Stockholder shall, with
certain specific and limited exceptions, be kept confidential from Sprint's
Directors, officers or employees. One exception to Sprint's confidential
voting policy occurs when a Stockholder writes comments on his or her proxy
card. This exception is designed to accommodate the Stockholders who express
their opinions and views by writing comments on their proxy cards and expect
Sprint to receive those comments.
1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information about the only known beneficial
owners of more than five percent of Sprint's outstanding voting stock, based
solely on Schedules 13G and 13D received by Sprint:
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
-------------- ------------------- -------------------- --------
Class A Preference France Telecom 31,762,837.48 shares 50%
Stock 6 place d'Alleray
75505 Paris Cedex 15
France
Class A Preference Deutsche Telekom AG 31,762,837.48 shares 50%
Stock Friedrich-Ebert-Allee 140
D-53113 Bonn
Germany
The following table states the number of shares of Sprint Common Stock
beneficially owned, as of December 31, 1995, by each current Director, each
executive officer named in the "Summary Compensation Table" and by all
Directors and executive officers as a group. The number of shares beneficially
owned by all Directors and executive officers as a group represented less than
one percent of the outstanding shares. Except as otherwise indicated, each
individual named has sole investment and voting power with respect to the
securities shown.
NUMBER
OF
NAME SHARES
---- -------
DuBose Ausley.............................................. 7,410(1)
Warren L. Batts............................................ 1,000(1)
Michel Bon................................................. 0
Ruth M. Davis.............................................. 2,129(1)
William T. Esrey........................................... 299,126(1)(2)
Gary D. Forsee............................................. 9,874(1)
Donald J. Hall............................................. 20,200(1)
Harold S. Hook............................................. 16,000(1)
Arthur B. Krause........................................... 81,932(1)(2)
Ronald T. LeMay............................................ 65,902(1)
Linda Koch Lorimer......................................... 1,507(1)(2)
D. Wayne Peterson.......................................... 48,276(1)
Charles E. Rice............................................ 3,000(1)
Ron Sommer................................................. 0
Stewart Turley............................................. 3,400(1)
All Directors and executive officers as a group
(25 persons).............................................. 712,452(1)(2)
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(1) Does not include shares which may be acquired upon the exercise of stock
options exercisable on or within sixty days after December 31, 1995, under
Sprint's stock option plans as follows: 41,019, 11,500, 11,500, 583,351,
47,250, 11,500, 11,500, 116,296, 240,340, 41,019, 72,828, 11,500 and
11,500 shares for Mr. Ausley, Mr. Batts, Dr. Davis, Messrs. Esrey, Forsee,
Hall, Hook, Krause, LeMay, Ms. Lorimer, Messrs. Peterson, Rice and Turley,
respectively, and 1,742,916 for all Directors and executive officers as a
group.
(2) Includes shares held by or for the benefit of family members in which
beneficial ownership has been disclaimed: 14,802 shares held in trust for
Mr. Esrey's children, 13,340 shares owned by Mr. Krause's wife, 753 shares
held by Ms. Lorimer's husband and 29,955 shares held by or for the benefit
of family members for all Directors and executive officers as a group.
2
I. ELECTION OF DIRECTORS
Item 1 on Proxy Card
The Board of Directors of Sprint (other than the Directors elected by the
holders of the Class A Preference Stock) is divided into three classes, with
the term of office of each class ending in successive years. The terms of the
Directors of Class I expire with this Annual Meeting of Stockholders. Each of
the three nominees for Class I, if elected, will serve three years until the
1999 Annual Meeting and until a successor has been elected and qualified. The
Directors remaining in Classes II and III will continue in office until the
1997 and 1998 Annual Meetings, respectively.
Except for the Class A Preference Stock, each share is entitled to one vote
for each of three Directors. The persons named in the accompanying proxy will
vote it for the election of the nominees named below as Directors of Class I
unless otherwise directed by the Stockholder. Each nominee has consented to be
named and to continue to serve if elected. If any of the nominees become
unavailable for election for any reason, the proxies will be voted for the
other nominees and for any substitutes.
NOMINEES FOR DIRECTORS
The following information is given with respect to the nominees for
election.
Class I--Nominees to Serve Three Years Until 1999 Annual Meeting
DUBOSE AUSLEY, age 58. Chairman of Macfarlane, Ausley, Fergu-
son & McMullen, a law firm, Tallahassee, Florida; Director of
Capital City Bank Group, Inc., Tampa Electric Co., Inc. and [PHOTO]
TECO Energy, Inc. Prior to becoming Chairman of Macfarlane,
Ausley, Ferguson & McMullen in 1994, Mr. Ausley was President
of Ausley, McMullen, McGehee, Carothers & Proctor, P.A. for
more than five years. Prior to becoming a Director of Sprint
in 1993, Mr. Ausley was a Director of Centel Corporation
since 1982; Member of the Audit Committee.
WARREN L. BATTS, age 63. Chairman and Chief Executive Officer
of Premark International, Inc., a diversified consumer prod-
ucts company, Deerfield, Illinois; Director of The Allstate [PHOTO]
Corporation, Cooper Industries, Inc. and Sears, Roebuck &
Company. Mr. Batts has been Chairman and Chief Executive Of-
ficer of Premark International, Inc. since 1986. Director of
Sprint since 1982; Chairman of the Audit Committee, member of
the Executive Committee.
DONALD J. HALL, age 67. Chairman of Hallmark Cards, Inc.,
manufacturer of greeting cards, Kansas City, Missouri. Mr.
Hall has been Chairman of Hallmark Cards, Inc. since 1983. [PHOTO]
Director of Sprint since 1986; Member of the Audit Committee.
3
MEMBERS OF BOARD OF DIRECTORS CONTINUING IN OFFICE
The following information is given with respect to the Directors of Classes
II and III, who will continue to serve as Directors of Sprint until the 1997
and 1998 Annual Meetings, respectively.
Class II--Serving Until 1997 Annual Meeting
RUTH M. DAVIS, age 67. President and Chief Executive Officer
of The Pymatuning Group, Inc., a technology management serv-
ices company, Alexandria, Virginia; Director of Air Products [PHOTO]
and Chemicals, Inc., BTG, Inc., Consolidated Edison Company
of New York, Inc., Ceridian Corporation, Giddings & Lewis,
Inc., Premark International, Inc. and Varian Associates, Inc.
Dr. Davis has been President and Chief Executive Officer of
The Pymatuning Group, Inc. for more than five years. Director
of Sprint since 1981; Member of the Audit Committee.
HAROLD S. HOOK, age 64. Chairman and Chief Executive Officer
of American General Corporation, a financial services holding
corporation, Houston, Texas; Director of Chemical Banking [PHOTO]
Corporation, Cooper Industries, Inc. and PanEnergy Corpora-
tion. Mr. Hook has been Chairman and Chief Executive Officer
of American General Corporation since 1978. Director of
Sprint since 1982; Member of the Organization, Compensation
and Nominating Committee.
RONALD T. LEMAY, age 50. President and Chief Operating Offi-
cer of Sprint, Westwood, Kansas; Director of Mercantile Ban-
corporation, Inc. and Yellow Corporation. Prior to becoming [PHOTO]
President and Chief Operating Officer of Sprint in February
of this year, Mr. LeMay was Chief Executive Officer of Sprint
Spectrum beginning in March of 1995. Mr. LeMay was President
and Chief Operating Officer--Long Distance Division of Sprint
from 1989 until March of 1995. Director of Sprint since 1993.
CHARLES E. RICE, age 60. Chairman and Chief Executive Officer
of Barnett Banks, Inc., a bank holding company, Jacksonville,
Florida; Director of CSX Corporation. Mr. Rice has been [PHOTO]
Chairman and Chief Executive Officer of Barnett Banks, Inc.
for more than five years. Director of Sprint since 1975; Mem-
ber of the Organization, Compensation and Nominating Commit-
tee and the Executive Committee.
4
Class III--Serving Until 1998 Annual Meeting
WILLIAM T. ESREY, age 56. Chairman and Chief Executive Offi-
cer of Sprint, Westwood, Kansas; Director of The Equitable
Life Assurance Society of the United States, Everen Capital [PHOTO]
Corporation, General Mills, Inc. and PanEnergy Corporation.
Mr. Esrey has been Chairman of Sprint since 1990 and Chief
Executive Officer since 1985. Director of Sprint since 1985;
Chairman of the Executive Committee.
LINDA KOCH LORIMER, age 43. Vice President and Secretary of
the University, Yale University, New Haven, Connecticut; Di-
rector of McGraw-Hill, Inc. Prior to becoming Secretary of [PHOTO]
Yale University in 1993, Ms. Lorimer was President of Ran-
dolph-Macon Woman's College for more than six years. Prior to
becoming a Director of Sprint in 1993, Ms. Lorimer was a Di-
rector of Centel Corporation since 1988; Member of the Organ-
ization, Compensation and Nominating Committee.
STEWART TURLEY, age 61. Chairman of Eckerd Corporation, a di-
versified retailer, Clearwater, Florida; Director of Barnett
Banks, Inc. and Springs Industries, Inc. Mr. Turley has been [PHOTO]
Chairman of Eckerd Corporation for more than five years. Di-
rector of Sprint since 1980; Chairman of the Organization,
Compensation and Nominating Committee, member of the Execu-
tive Committee.
Directors Elected by and Serving at the Pleasure of the holders of the Class A
Preference Stock
MICHEL BON, age 52. Chairman and Chief Executive Officer of
France Telecom, a telecommunications company, Paris, France.
Mr. Bon became Chairman and Chief Executive Officer of France [PHOTO]
Telecom in September of 1995. He served as head of France's
national job-placement agency from 1993 to 1995, and prior to
that, as Chairman and Chief Executive Officer of Carrefour,
France's largest retailer, for more than five years. Mr. Bon
became a Director of Sprint on January 31, 1996.
RON SOMMER, age 46. Chairman of the Board of Management of
Deutsche Telekom AG, a telecommunications company, Bonn, Ger-
many. Prior to becoming Chairman of Deutsche Telekom AG in [PHOTO]
May of 1995, Mr. Sommer was President and Chief Operating Of-
ficer of Sony Corporation of America beginning in 1990, and
in 1993, he took over the management of Sony Europe in the
same function. Mr. Sommer became a Director of Sprint on Jan-
uary 31, 1996.
5
BOARD COMMITTEES AND DIRECTOR MEETINGS
There are currently three standing committees of the Board of Directors.
They are the Audit Committee, the Executive Committee and the Organization,
Compensation and Nominating Committee. The members of each committee are
identified in the above description of Directors.
During 1995 there were six standing committees. In addition to the Audit and
Executive Committees, there was a Finance Committee, a Nominating and
Corporate Responsibility Committee, an Organization and Compensation Committee
and a Pension and Savings Trusts Committee. In February of this year, the
Board committees were restructured, resulting in the elimination of certain
committees with the functions of those committees reassigned to the remaining
committees, to Sprint management, or to the full Board.
The Board of Directors held six regular meetings and two special meetings in
1995. In 1995 the Audit Committee and the Pension and Savings Trusts Committee
each held two meetings, the Finance Committee, the Nominating and Corporate
Responsibility Committee and the Organization and Compensation Committee each
held three meetings and the Executive Committee met once. Except for Dr.
Davis, each current Director attended at least 75% of the aggregate of the
total number of meetings of the Board of Directors and the total number of
meetings held by all committees of the Board of Directors on which the
Director served during 1995.
The principal responsibilities of the Audit Committee are to ensure: (a)
that proper accounting principles are being followed; (b) that the total audit
coverage of Sprint and its affiliates is satisfactory; and (c) that an
adequate system of internal controls has been implemented by Sprint and is
being effectively followed. The Audit Committee provides an open avenue of
communication between management, the external and internal auditors and the
Board of Directors. The Committee reviews the nature of all services performed
by the external auditors, including the scope and general extent of their
audit examination and the basis for their compensation. The Committee
recommends to the Board of Directors the auditors for formal ratification by
the Stockholders at the Annual Meeting.
The principal responsibilities of the Organization, Compensation and
Nominating Committee, as they relate to matters of executive compensation, are
to: (a) assess and appraise the performance of the Chief Executive Officer and
review the performance of executive management; (b) recommend to the Board of
Directors base salaries, incentive compensation and other benefits for the
Chief Executive Officer and other key officers; (c) counsel and advise
management on plans for orderly development and succession of executive
management; (d) take any and all action required or permitted to be taken by
the Board of Directors under the stock option and restricted stock plans,
stock purchase plans, incentive compensation plans and the deferred
compensation plans of Sprint; and (e) review recommendations for major changes
in compensation and benefit and retirement plans which have application to
significant numbers of Sprint's total employees and which require review or
approval of the Board of Directors.
The principal responsibilities of the Organization, Compensation and
Nominating Committee, as they relate to the Director nomination process, are
to: (a) periodically review the size and composition of the Board of Directors
and make recommendations to the Board with respect to such matters; (b)
recommend to the Board of Directors persons proposed as nominees whose
election at the next Annual Meeting of Stockholders will be recommended by the
Board of Directors; and (c) recommend persons proposed to be elected to fill
any vacancy on the Board of Directors between Stockholder meetings. The
Committee will consider qualified nominees recommended by Stockholders. Such
recommendations should be sent to the Organization, Compensation and
Nominating Committee, c/o Corporate Secretary, at the corporate headquarters
of Sprint, Post Office Box 11315, Kansas City, Missouri 64112.
COMPENSATION OF DIRECTORS
Directors who are not officers of Sprint (the Outside Directors) are each
paid $35,000 annually plus $1,250 for each meeting attended and $1,000 for
each committee meeting attended. Mr. Rice, a Director of Sprint, received
$5,900 in 1995 as fees for serving as a Director of United Telephone Company
of Florida, a Sprint subsidiary.
6
The Long-Term Stock Incentive Program, which was approved at the 1989 Annual
Meeting of Stockholders, provides for the grant of stock options to Outside
Directors. Under the program each Outside Director receives an annual grant of
an option to purchase 2,000 shares at an option price equal to 100% of the
fair market value of the Common Stock on the date of grant. The options expire
ten years from the date of grant; 25% of the shares subject to each option
become exercisable as of December 31 of the year in which the option is
granted and an additional 25% become exercisable on December 31 of each of the
three succeeding years.
In 1982 Sprint adopted a retirement plan for its Outside Directors. Any
Director of Sprint who has served five years as a Director without
simultaneously being employed by Sprint or any of its subsidiaries is eligible
to receive benefits under the plan. An eligible Director retiring after March
30, 1989, will receive monthly benefit payments equal to the monthly fee (not
including meeting fees) being paid to Directors at the time of the Director's
retirement. The monthly retirement benefit would be $2,917 for any Director
retiring while the current $35,000 annual fee remains in effect. The number of
monthly benefit payments to a Director under the plan will equal the number of
months served as a Director without simultaneously being employed by Sprint or
any of its subsidiaries, up to a maximum of 120 payments.
Outside Directors of Sprint and certain of its subsidiaries are also
eligible for a Director's Deferred Fee Plan under which Outside Directors may
elect to defer all or some of their fees. In addition, Outside Directors are
provided with Sprint residential long distance service valued in the following
amounts for 1995: Mr. Ausley, $2,383; Mr. Batts, $699; Dr. Davis, $1,430; Mr.
Hall, $2,680; Mr. Hook, $515; Ms. Lorimer, $2,374; Mr. Rice, $2,635; and Mr.
Turley, $4,365.
EXECUTIVE COMPENSATION
ORGANIZATION, COMPENSATION AND NOMINATING COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Organization, Compensation and Nominating Committee of the Board, which
is composed of independent, non-employee Directors and has the principal
responsibilities described on page 6 of this Proxy Statement, has furnished
the following report on executive compensation:
Sprint's compensation philosophy is to link, by using specific objectives,
executives' compensation to the short-term and long-term performance of Sprint
so as to maximize long-term Stockholder value. Sprint's executive compensation
program consists of four elements: (1) base salary, (2) short-term incentive
compensation, (3) long-term incentive compensation and (4) stock options. To
develop a competitive compensation package, both base salary and total
compensation (i.e., the sum of all four elements) are compared to a defined
competitive group. This comparison group is composed of approximately 140
companies similar to Sprint in size as measured by annual sales. The Committee
believes that the comparison group accurately reflects the market in which
Sprint competes for executive talent. Most, but not all, of the companies in
the S&P Telephone Utility Index and the S&P Telecommunications (Long Distance)
Index which are used in the Stock Performance Graph on page 15 of this Proxy
Statement are included in the comparison group. The Committee's policy is to
target base salaries at the 50th percentile for base pay of similar positions
within the comparison group, and total compensation at the 75th percentile
provided certain performance objectives are achieved.
Section 162(m) of the Internal Revenue Code denies a tax deduction to any
publicly held corporation, such as Sprint, for compensation in excess of $1
million paid to any Named Officer unless such compensation is performance-
based under Section 162(m). Sprint took all action required under Section
162(m) for Sprint's incentive compensation plans to be performance-based so as
to preserve Sprint's tax deduction for compensation earned under such plans
for 1995.
Base Salary. Each year the Committee makes a recommendation to the Board
establishing base pay for all executive officers. In making this
recommendation for 1995, the Committee considered the salaries of other
executives within the comparison group and the executives' performance during
1994. With respect to the latter, the Committee exercised its judgment in
evaluating the executives' accomplishments during the year. As a result of his
performance evaluations during his tenure as Chief Executive Officer, Mr.
Esrey's base salary exceeds the median of the comparison group.
7
Short-Term Incentive Plans. Sprint maintained two short-term incentive plans
covering its executive officers for 1995. Mr. Esrey, Mr. Forsee and Mr. LeMay
are covered under the Executive Management Incentive Plan (EMIP). The material
terms of the performance goals under EMIP were approved by the Stockholders at
the 1994 Annual Meeting. Sprint's other executive officers are covered under
the Corporate Center Management Incentive Plan (CCMIP). Each plan is a
performance-driven short-term, annual incentive plan designed to promote the
near term objectives of the organization.
Target incentive opportunity for each plan is based on job level and
potential impact on organization results. The entire EMIP payout, and a
portion of the CCMIP payout, is based on the achievement of seven financial
objectives--three for the Local Telecommunications Division (LTD), and two for
each of the Long Distance Division (LDD) and the Cellular Division. For each
objective, targets were established and compared to actual 1995 financial
results.
. The objectives for the LTD related to regulated operating income (50%
weighting), cash generation (35%), and nonregulated operating income
(15%). For the LTD, actual results were 108.6% of target on a weighted
average basis.
. The objectives for the LDD related to operating income (50%) and net
collectible revenue growth relative to market growth (50%). For the LDD,
actual results were 90.2% of target on a weighted average basis.
. The objectives for the Cellular Division related to operating income
(40%) and net collectible revenue (60%). For the Cellular Division,
actual results were 87.3% of target on a weighted average basis.
The weights assigned for a particular executive among the LTD, LDD and
Cellular Division depended on an executive's responsibilities with Sprint.
In addition to these seven financial objectives, the CCMIP payout was based
on three additional financial objectives. These objectives were tied to
economic value added (EVA) for each of the LTD, the LDD and the Cellular
Division. EVA measures the return on investment that enhances Stockholder
value. Actual EVA results exceed target for the LTD but were below target for
the LDD and the Cellular Division.
Twenty-five percent of the CCMIP payout was based on the achievement of
certain personal objectives in 1995. These personal objectives included
qualitative factors relating to business unit and departmental results of a
nonfinancial nature, the support the executive provided in furthering
strategic and tactical objectives, contributing to the progress of the quality
improvement process, and individual professional growth and development.
Based on the financial results described above, and the achievement of their
personal objectives, the executive officers earned CCMIP payouts on average of
104.5% of target. Mr. Esrey's EMIP payout was based on the financial results
described above using relative weights for objectives by division as follows:
35% for the LTD, 45% for LDD, and 20% for the Cellular Division. Based on
these factors, Mr. Esrey earned a payout of 104.1% of target.
Long-Term Incentive Plan. The company's Long-Term Incentive Plan (LTIP) is a
three-year performance-driven incentive plan designed to promote the long-term
objectives of the organization. Key employees who are in a position to make a
substantial contribution to the accomplishment of the long-term strategic and
financial objectives of the organization are eligible to participate. Target
incentive opportunity is established as a percentage of the three-year average
salary range midpoint and is based on job level and potential impact on
organization results.
LTIP payouts were based entirely on the achievement of financial objectives.
These financial objectives related to the LTD, the LDD and the Cellular
Division.
. The objectives for the LTD, which were weighted equally in computing the
payouts, related to return on assets and earnings before interest, income
taxes and depreciation as a percent of revenues. For the LTD, actual
results were 105.8% of target on a weighted average basis.
8
. The objectives for the LDD, which were weighted equally in computing the
payouts, related to net collectible revenue growth relative to market and
three-year operating margin. For the LDD, actual results were 124.4% of
target on a weighted average basis.
. The objectives for the Cellular Division related to cumulative operating
income (40% weighting) and cumulative net collectible revenue (60%). For
the Cellular Division, actual results were 127.5% of target on a weighted
average basis.
As with the CCMIP, the relative weights assigned to the LTIP objectives among
the LTD, LDD and Cellular Division depend on an executive's responsibilities
with Sprint.
The specific amounts of the LTIP payouts were determined by comparing actual
financial results to the pre-established targets for each objective. The
payout is also adjusted by a stock price factor under which the payout based
on financial objectives as described above is multiplied by a fraction, the
numerator of which is the market price of Sprint Common Stock on the last day
of the performance period and the denominator of which is the market price on
the first day of the performance period. The three-year increase in the price
of Sprint Common Stock resulted in a multiplier of 155.9%.
Mr. Esrey's LTIP payout was based on the financial results described above
using relative weights for each objective as follows: 30% for the LTD, 50% for
the LDD and 20% for the Cellular Division. Based on the financial results and
the methodology described above, Mr. Esrey received a payout of 160.8% of
target. The LTIP payouts, if not deferred under the Executive Deferred
Compensation Plan, were paid in restricted or unrestricted shares of Sprint
Common Stock.
Stock Options. Stock option grants combined with LTIP comprise long-term
incentive compensation awarded to executive officers of Sprint. Total long-
term incentive compensation is targeted at the 75th percentile of the
comparison group. The Committee does not consider any measures of corporate or
individual performance in determining option grants and does not consider the
number of options already held by an executive. During 1995 certain executive
officers elected under Sprint's Management Incentive Stock Option Plan (MISOP)
to receive options in lieu of receiving up to 50% of their target opportunity
under Sprint's management incentive plans. For each $5.00 reduction in an
executive's target opportunity resulting from such election, the executive
received an option to purchase one share of Sprint Common Stock. The MISOP is
in keeping with Sprint's philosophy of increasing the percentage of
compensation tied to stock ownership. The Committee believes stock options
encourage increased ownership of Sprint Common Stock by executive officers
which, in turn, more closely aligns Stockholder and employee interests by
focusing executives on long-term growth and profitability of Sprint and its
Common Stock.
Stewart Turley, Chairman
Harold S. Hook
Linda Koch Lorimer
Charles E. Rice
9
SUMMARY COMPENSATION TABLE
The following table reflects the cash and non-cash compensation for services
in all capacities to Sprint by those persons who were, as of December 31,
1995, the chief executive officer and the other four most highly compensated
executive officers of Sprint (the Named Officers):
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
-----------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- --------------------- -------
OTHER
ANNUAL RESTRICTED SECURITIES ALL OTHER
COMPEN- STOCK UNDERLYING LTIP COMPEN-
NAME AND PRINCIPAL SATION AWARD(S) OPTIONS/ PAYOUTS SATION
POSITION YEAR SALARY ($)(1) BONUS ($)(1) ($) ($)(2) SARS (#) ($) ($)(3)
------------------- ---- ------------- ------------ ------- ---------- ---------- ------- ---------
William T. Esrey 1995 937,502 541,200 76,989(4) 0 240,000 768,140 31,506
Chairman and Chief 1994 863,918 1,085,569 76,109 1,113,750 230,000 424,040 22,871
Executive Officer 1993 802,084 817,825 72,271 0 105,218 357,206 18,627
Gary D. Forsee(5) 1995 344,237 258,809 6,404 0 41,493 214,524 7,846
President--Long
Distance Division
Arthur B. Krause 1995 349,172 271,518 8,614 0 30,000 204,099 16,134
Executive Vice 1994 310,570 303,779 9,273 371,250 60,000 111,518 12,751
President--Chief 1993 278,819 235,602 5,652 0 33,964 91,299 13,168
Financial Officer
Ronald T. LeMay 1995 668,122 287,000 10,979 0 132,017 398,676 12,178
President and Chief 1994 556,494 637,481 20,265 0 157,022 201,588 6,390
Operating Officer 1993 444,773 435,309 9,446 745,000 54,260 134,379 5,979
D. Wayne Peterson 1995 344,129 382,485 6,198 0 40,309 213,519 14,729
President--Local 1994 321,010 331,972 8,845 0 94,970 107,633 35,780
Telecommunications 1993 266,412 191,540 6,811 372,500 11,000 89,783 42,431
Division
- --------
(1) Includes all amounts earned for the respective years, even if deferred
under Sprint's Executive Deferred Compensation Plan. All bonuses were paid
under Sprint's Management Incentive Plans.
(2) As of December 31, 1995, Messrs. Esrey, Forsee, Krause, LeMay and Peterson
held 53,542; 2,000; 13,764; 26,805 and 13,633 shares, respectively, of
restricted stock. The shares had a market value of $2,121,602; $79,250;
$545,399; $1,062,148 and $540,208, respectively, at December 31, 1995,
based on a value of $39.625 per share. Each of the Named Officers has the
right to vote and receive dividends on the restricted shares. The awards
during 1994 to Messrs. Esrey and Krause each vests five years from the
date of grant (on August 8, 1999). The awards during 1993 to Messrs. LeMay
and Peterson vest 50% on July 12, 1996, 25% on July 12, 1997, and 25% on
July 12, 1998.
(3) Consists of the following amounts for 1995: (a) $6,750, $7,110, $6,930,
$6,930 and $6,750 contributed on behalf of Messrs. Esrey, Forsee, Krause,
LeMay and Peterson, respectively, as matching contributions under the
Sprint Retirement Savings Plan; and (b) $24,756, $736, $9,204, $5,248 and
$7,979 for Messrs. Esrey, Forsee, Krause, LeMay and Peterson,
respectively, representing the portion of interest credits on deferred
compensation accounts under Sprint's Executive Deferred Compensation Plan
that are at above-market rates.
(4) Includes the cost to Sprint of club memberships of $15,937 and automobile
allowance of $18,000.
(5) Mr. Forsee became President--Long Distance Division on March 29, 1995.
10
OPTION GRANTS
The following table summarizes options granted during 1995 under Sprint's
stock option plans to the Named Officers. The amounts shown as potential
realizable values on these options are based on arbitrarily assumed annualized
rates of appreciation in the price of Sprint Common Stock of five percent and
ten percent over the term of the options, as set forth in Securities and
Exchange Commission (SEC) rules. The Named Officers will realize no gain on
these options without an increase in the price of Sprint Common Stock which
will benefit all shareholders proportionately. No stock appreciation rights
were granted during 1995.
OPTION GRANTS IN LAST FISCAL YEAR
% OF TOTAL POTENTIAL REALIZABLE VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF STOCK
SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION FOR OPTION
UNDERLYING EMPLOYEES OR BASE TERM(1)
OPTIONS IN FISCAL PRICE EXPIRATION ----------------------------------
NAME GRANTED (#) YEAR ($/SH) DATE 0% 5% 10%
---- ----------- ---------- -------- ---------- -- -------------- ---------------
William T. Esrey........ 140,000(2) 4.4% $29.6250 2/17/05 $ 0 $ 2,608,340 $ 6,610,047
100,000(3) 3.2% 28.6875 3/15/05 0 1,804,141 4,572,049
Gary D. Forsee.......... 25,000(2) 0.8% 29.6250 2/17/05 0 465,775 1,180,366
11,500(3) 0.4% 28.6875 3/15/05 0 207,476 525,786
4,993(4) 0.2% 37.4375 2/15/01 0 55,210 122,973
Arthur B. Krause........ 30,000(2) 0.9% 29.6250 2/17/05 0 558,930 1,416,439
Ronald T. LeMay......... 75,000(2) 2.4% 29.6250 2/17/05 0 1,397,325 3,541,097
50,000(3) 1.6% 28.6875 3/15/05 0 902,071 2,286,024
7,017(4) 0.2% 37.4375 3/9/03 0 113,575 267,318
D. Wayne Peterson....... 30,000(2) 0.9% 29.6250 2/17/05 0 558,930 1,416,439
10,309(4) 0.3% 33.8125 2/15/01 0 108,114 242,287
All Stockholders(5)..... 349,289,865 -- 29.4119 2/17/05 0 6,460,809,701 16,372,960,277
Named Officers' gain as
a % of All
Stockholders' gain..... -- -- -- -- 0.08% 0.08%
- --------
(1) The dollar amounts in these columns are the result of calculations at the
five percent and ten percent rates set by the SEC and are not intended to
forecast future appreciation of Sprint Common Stock.
(2) Twenty-five percent of this option became exercisable on February 17,
1996, and an additional 25% will become exercisable on February 17 of each
of the three successive years. Each option has a reload feature.
(3) Options granted under the Management Incentive Stock Option Plan (MISOP).
Under the MISOP, the optionee elected to receive options in lieu of
receiving a portion of his bonus under the management incentive
compensation plans. The MISOP benefits Sprint by reducing the cash bonus
paid to the executive. It further increases the percentage of compensation
tied to stock ownership, in keeping with Sprint's philosophy to more
closely align stockholder and employee interests. This option became
exercisable on December 31, 1995.
(4) Reload options. A reload option is an option granted when an optionee
exercises a stock option and makes payment of the purchase price using
shares of previously owned Sprint Common Stock. A reload option grant is
for the number of shares utilized in payment of the purchase price and tax
withholding, if any. The option price for a reload option is equal to the
market price of Sprint Common Stock on the date the reload option is
granted. A reload option becomes exercisable one year from the date the
original option was exercised.
(5) The amounts shown as potential realizable value for all Stockholders,
which are presented for comparison purposes only, represent the aggregate
net gain for all holders of record, as of February 20, 1996, of Sprint
Common Stock assuming a hypothetical option granted at $29.4119 per share
(the weighted average price of all options granted in 1995) on February
17, 1995 and expiring on February 17, 2005, if the price of Sprint Common
Stock appreciates at the rates shown in the table. There can be no
assurance that the potential realizable values shown in the table will be
achieved. Sprint will neither make nor endorse any prediction as to future
stock performance.
11
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table summarizes the net value realized on the exercise of
options in 1995, and the value of the outstanding options at December 31,
1995, for the Named Officers.
AGGREGATED OPTION EXERCISES IN 1995
AND YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT 12/31/95 OPTIONS AT 12/31/95(2)
------------------------- -------------------------
SHARES ACQUIRED VALUE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
ON EXERCISE (#) ($) (#) (#) ($) ($)
--------------- ----------------- ----------- ------------- ----------- -------------
William T. Esrey........ 28,671 $289,493 519,601 383,750 $5,124,276 $2,466,328
Gary D. Forsee.......... 6,000 69,750 34,000 82,493 322,938 495,453
Arthur B. Krause........ 4,500 85,828 101,296 92,000 747,773 564,188
Ronald T. LeMay......... 7,750 51,344 202,840 228,767 1,517,563 1,353,115
D. Wayne Peterson....... 11,800 94,400 55,078 101,059 314,876 626,843
- --------
(1) The value realized upon exercise of an option is the difference between
the fair market value of the shares of Sprint Common Stock received upon
the exercise, valued on the exercise date, and the exercise price paid.
(2) The value of unexercised, in-the-money options is the difference between
the exercise price of the options and the fair market value of Sprint
Common Stock at December 31, 1995 ($39.625).
LONG-TERM INCENTIVE PLAN AWARDS
The following table represents potential awards under Sprint's long-term
incentive plan which, subject to Sprint's right to amend the plan at any time
prior to the Organization, Compensation and Nominating Committee's approval of
payouts, can be earned by the achievement of certain financial objectives over
the three year period ending December 31, 1997. Payouts of awards are tied to
achieving specified levels of performance criteria, based on certain financial
objectives, within the Long Distance Division (LDD), the Local
Telecommunications Division (LTD), the Cellular Division (CD) and Sprint
consolidated economic value added (EVA). The relative weight given to the
performance criteria of the LDD, the LTD, the CD and EVA in computing an
executive's payout is based on the executive's responsibilities with Sprint.
The portion of the payout applicable to the LDD is tied to achieving
specified levels of operating margin and net collectible revenue growth. The
portion of the payout applicable to the LTD is tied to achieving specified
levels of return on assets, nonregulated net collectible revenues and
nonregulated operating income. The portion of the payout applicable to the CD
is tied to achieving specified levels of operating income and net collectible
revenue. The portion of the payout applicable to EVA is tied to Sprint's
consolidated economic value added which measures the return on investment that
enhances shareholder value. The target amount will be earned if 100% of the
targeted levels of such criteria is achieved. An award payout will not be
earned for performance below the threshold.
The calculated payout, based on the achievement of the above financial
criteria, is adjusted (increased or decreased) by the percent change in the
market price of Sprint Common Stock as determined by the change in the average
of the high and low prices on January 1, 1995 and December 31, 1997. If the
stock price increases over the three-year performance period, the payout is
adjusted by the percentage increase in stock price. Conversely, if the stock
price decreases over the three-year performance period, the payout is reduced
by the percentage decrease in stock price. Upon approval of the payouts by the
Organization, Compensation and Nominating Committee, each payout will be paid
as specified by the executive in restricted or unrestricted shares of Sprint
Common Stock, or deferred under the Executive Deferred Compensation Plan.
12
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE PAYOUTS
PERFORMANCE OR UNDER NON-STOCK PRICE BASED
NUMBER OF OTHER PERIOD PLANS(1)
SHARES, UNITS UNTIL ---------------------------
OR OTHER MATURATION OR THRESHOLD TARGET MAXIMUM
NAME RIGHTS PAYOUT ($) ($) ($)
- ---- ------------- --------------- --------- -------- --------
William T. Esrey..... -- 1/1/95-12/31/97 $80,000 $320,000 $607,000
Gary D. Forsee....... -- 1/1/95-12/31/97 33,473 133,890 262,257
Arthur B. Krause..... -- 1/1/95-12/31/97 21,225 84,900 161,045
Ronald T. LeMay...... -- 1/1/95-12/31/97 40,403 161,610 316,554
D. Wayne Peterson.... -- 1/1/95-12/31/97 27,863 111,450 193,017
- --------
(1) Awards are based on a percentage of the Named Officers' average base
salary midpoint over the three-year performance cycle which ends December
31, 1997. In calculating the average base salary midpoint, the table
assumes the base salary midpoint for 1996 and 1997 will equal the 1995
base salary midpoint. In addition, the estimated future payouts shown
assume that the average of the high and low price of Sprint Common Stock
on December 31, 1997 will be the same as it was on January 1, 1995.
PENSION PLANS
The following table reflects the estimated annual pension benefit payable to
an individual retiring in 1996 at age 65. The amounts include all prospective
benefits under Sprint's plans, whether tax-qualified or not.
PENSION PLAN TABLE
YEARS OF SERVICE(2)
------------------------------------------------
REMUNERATION(1) 15 20 25 30 35
- --------------- -------- -------- -------- ---------- ----------
$ 500,000..................... $114,959 $153,278 $191,596 $ 229,917 $ 268,237
700,000..................... 161,459 215,278 269,098 322,917 376,737
900,000..................... 207,959 277,278 346,598 415,917 485,237
1,100,000..................... 254,459 339,278 424,098 508,917 593,737
1,300,000..................... 300,959 401,278 501,598 601,917 702,237
1,500,000..................... 347,459 463,278 579,098 694,917 810,737
1,700,000..................... 393,959 525,278 656,598 787,917 919,237
1,900,000..................... 440,459 587,278 734,098 880,917 1,027,737
2,100,000..................... 486,959 649,278 811,598 973,917 1,136,237
2,300,000..................... 533,459 711,278 889,098 1,066,917 1,244,737
2,500,000..................... 579,959 773,278 966,598 1,159,917 1,353,237
- --------
(1) Compensation, for purposes of estimating a pension benefit, includes
salary and bonus as reflected under Annual Compensation in the Summary
Compensation Table on page 10. The calculation of benefits under the
pension plans generally is based upon average compensation for the highest
five consecutive years of the ten years preceding retirement.
(2) These amounts are straight life annuity amounts and would not be subject
to reduction because of Social Security benefits. For purposes of
estimating a pension benefit, the years of service credited are 31, 12,
32, 20 and 38 years for Messrs. Esrey, Forsee, Krause, LeMay and Peterson,
respectively.
In addition, Sprint has a Key Management Benefit Plan that permits a
participant to elect a retirement benefit equal to 300% (or a reduced
percentage if the participant retires before age 60) of the participant's
highest annual salary during the five-year period immediately prior to the
time of retirement. More information on the plan is provided in the following
section under "Employment Contracts".
13
EMPLOYMENT CONTRACTS
Sprint has contingency employment agreements with Messrs. Esrey, Krause and
LeMay which provide for separation pay and benefits if employment is
involuntarily terminated following a change in control. A change of control is
deemed to occur if someone acquires 20% or more of the outstanding voting
stock of Sprint or if there is a change of a majority of the Directors within
a two-year period. Benefits will include monthly salary payments for 35 months
(or until the officer reaches age 65 if this occurs earlier) and three
payments each equal to the highest short-term plus the highest long-term
incentive compensation awards received during the three years preceding
termination. In addition, life, disability, medical and dental insurance
coverages will be provided for 35 months. For purposes of the Key Management
Benefit Plan, an officer will be deemed to have remained a Key Executive (as
defined in the plan) until age 60; interest will be credited under the
Executive Deferred Compensation Plan at the maximum rate allowed under the
plan. Retirement benefits will be determined assuming three years of
additional service and no early retirement pension reduction will be imposed.
If any excise tax is imposed by Section 4999 of the Internal Revenue Code,
Sprint will make the executive whole with respect to any additional taxes due.
The agreements are not intended as an anti-takeover provision but could
discourage an attempt to acquire control of Sprint by increasing its cost.
The Named Officers have each signed non-competition agreements with Sprint
which provide that he will not associate himself with a competitor for an 18-
month period following termination of employment. In addition, the agreements
provide that each executive will receive 18 months of compensation and
benefits following an involuntary termination of employment.
Sprint has a Key Management Benefit Plan providing for a survivor benefit in
the event of the death of a participant or, in the alternative, a supplemental
retirement benefit. Under the plan, if a participant dies prior to retirement,
the participant's beneficiary will receive ten annual payments each equal to
25% of the participant's highest annual salary during the five-year period
immediately prior to the time of death. If a participant dies after retiring
or becoming permanently disabled, the participant's beneficiary will receive a
benefit equal to 300% (or a reduced percentage if the participant retires
before age 60) of the participant's highest annual salary during the five-year
period immediately prior to the time of retirement or disability, payable
either in a lump sum or in installments at the election of the participant.
Prior to reaching age 60 and at least 13 months before retirement, a
participant may elect a supplemental retirement benefit in lieu of all or a
portion of the survivor benefit. Each Named Officer is a participant in the
plan.
14
PERFORMANCE GRAPH
The graph below compares the yearly percentage change in the cumulative
total Stockholder return for Sprint Common Stock as compared with the S&P(R)
500 Stock Index, the S&P(R) Telephone Utility Index and the S&P(R)
Telecommunications (Long Distance) Index, for the five-year period from
December 31, 1990 to December 29, 1995. The companies which comprise the S&P
Telephone Utility Index are Ameritech, Inc., Bell Atlantic Corp., BellSouth,
GTE, NYNEX, Pacific Telesis Group, SBC Communications, Inc. and U.S. West,
Inc. The companies which comprise the S&P Telecommunications (Long Distance)
Index are AT&T Corp., MCI Communications and Sprint.
[GRAPH APPEARS HERE]
1990 1991 1992 1993 1994 1995
Sprint 100.00 106.25 119.09 167.31 136.83 202.13
S&P 500 100.00 130.48 140.46 154.62 156.66 215.54
S&P (Long Distance) 100.00 133.67 176.64 199.68 181.83 245.25
S&P Telephone 100.00 107.54 118.01 136.29 130.66 196.82
CERTAIN RELATIONSHIPS AND OTHER TRANSACTIONS
Mr. Ausley is Chairman of the law firm of Macfarlane, Ausley, Ferguson &
McMullen, which provided legal services to certain subsidiaries of Sprint in
1995 for which it billed $415,661.
15
STOCKHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Stockholder proposals for the 1997 Annual Meeting of Stockholders of Sprint
must be received by the Corporate Secretary at Sprint's principal office, 2330
Shawnee Mission Parkway, Westwood, Kansas 66205, no later than November 7,
1996.
II. SELECTION OF INDEPENDENT AUDITORS
(Item 2 on Proxy)
The Board of Directors of Sprint has voted to appoint Ernst & Young LLP as
independent auditors to examine the consolidated financial statements of
Sprint and its subsidiaries for the fiscal year 1996, subject to approval of
the Stockholders at the Annual Meeting.
Ernst & Young has examined the financial statements of Sprint since 1965.
Representatives of Ernst & Young will be present at the Annual Meeting with
the opportunity to make a statement and to respond to appropriate questions.
The affirmative vote of a majority of the shares present and entitled to vote
at the Annual Meeting is necessary for the approval of the appointment of
Ernst & Young as independent auditors. If the appointment of Ernst & Young is
not approved at the Annual Meeting, the Board of Directors will consider the
selection of another accounting firm.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE APPOINTMENT.
III. STOCKHOLDER PROPOSALS
A. STOCKHOLDER PROPOSAL CONCERNING RETIREMENT PLAN
FOR OUTSIDE DIRECTORS
(Item 3 on Proxy Card)
The National Electrical Benefit Fund, 1125 15th Street, N.W., Washington,
D.C. 20005, beneficial owners of 80,000 shares of Sprint Common Stock, has
given notice of its intention to introduce the following resolution at the
Annual Meeting:
BE IT RESOLVED: That the shareholders of Sprint Corporation ("Company")
request that the Board of Directors, in the future, refrain from providing
pension or other retirement benefits to non-employee or outside Directors,
unless such benefits are specifically submitted to the shareholders for
approval.
STOCKHOLDER'S STATEMENT IN SUPPORT OF STOCKHOLDER PROPOSAL A
The Board of Directors should play a vital and independent role in helping
to determine overall corporate policy and strategic direction. They should
actively monitor senior management in faithfully implementing these policies.
In their capacity on the Board, Directors owe their fundamental allegiance to
the shareholders of the Company--the owners who elect them, and not to
management.
We believe, however, that certain business or financial relationships can
adversely affect the ability of Directors to function in the appropriate
oversight role. This is especially critical for so-called outside or
independent Directors, who are not employee/Directors, and who should bring a
certain arms-length objectivity to Board deliberations. According to the
Company's most recent proxy statement, in 1982, the Company established a
retirement or pension plan for non-employee Directors with at least five years
of service, who will receive a monthly retirement benefit for ten years, equal
to the annual Board retainer in effect at the time of the Director's
retirement from the Board. That retainer is now a generous $35,000. We note
that this is a 75% increase over the previous year's retainer. Directors are
also entitled to expense reimbursements.
16
While non-employee or outside Directors should be entitled to reasonable
compensation for their time and expertise, we are of the opinion that
additional layers of compensation in the Director's base compensation has the
pernicious effect of compromising their independence and impartiality. It is
our view that such generous and unnecessary extra compensation for outside
Directors of the Company is management's way to insure their unquestioning
loyalty and acquiescence to whatever policy management initiates. Accordingly,
when viewed from this perspective, these types of retirement benefits become
yet another device to enhance and entrench management's control over corporate
policy, while being accountable only to themselves and not to the Company's
owners. We believe that this additional layer of compensation to Directors may
influence their ability to exercise that degree of independence from
management, which is critical to the proper functioning of the Board.
Because of our strong concern for maximizing the ability of Boards of
Directors to act in a shareholder's interest, we feel that the long-term best
interests of the Company are not well-served by such retirement policies. The
vast preponderance of Directors at various corporations are undoubtedly
covered by generous retirement policies at their principal place of
employment, and they need not be "double-dipping" at this Company or any
other.
We urge you to vote for this Proposal.
THE COMPANY'S RESPONSE TO STOCKHOLDER PROPOSAL A
The Board believes that the best interests of Sprint and its Stockholders
are served by providing a compensation package that attracts and retains non-
employee Directors who are experienced, able and knowledgeable leaders. To
that end, the compensation package should be competitive with that offered by
other major corporations and should recognize the increasing time commitment,
diligence and risks associated with Board service.
The proponent objects to Sprint's Director Retirement Plan, claiming that it
is excessive and compromises Director independence. We believe both assertions
are unfounded.
When compared to the director retirement plans of other companies, Sprint's
plan is consistent with national and industry standards. According to a 1994
study of 220 major corporations by Executive Compensation Reports, an
independent research organization, 82% of companies similar in size to Sprint
provided retirement plans to their non-employee directors. Of those companies,
68% maintained plans providing benefits equal to or greater than the annual
board retainer--the Sprint's plan provides an annual benefit equal to the
annual board retainer.
In maintaining that Sprint's plan is excessive, the proponent argues that
the plan is unnecessary because "the vast preponderance of Directors at
various corporations are undoubtedly covered by generous retirement policies
at their principal place of employment". While director fees and director
retirement plans are rarely, if ever, a director's sole source of income or
retirement security, such compensation is still necessary to attract and
retain quality outside directors. Sprint's Retirement Plan for Outside
Directors is merely one component of a total compensation package for Outside
Directors. If the plan were not maintained, Sprint would need to pay the
Directors in another fashion, presumably with a greater annual retainer.
The Retirement Plan for Outside Directors offers Sprint certain advantages.
Directors earn benefits under the plan by serving as a Director for at least
five years. This encourages Directors to remain with Sprint for greater
continuity and stability within the Board. The plan also compensates retired
Directors for making themselves available to provide advice and counsel from
time to time to Sprint's Board following their retirement.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
AGAINST THIS PROPOSAL.
17
B. STOCKHOLDER PROPOSAL CONCERNING A STOCKHOLDER ADVISORY COMMITTEE
(Item 4 on Proxy Card)
Ann Bohlander, 415 West Madison, Decatur, Indiana 46733, owner of 120 shares
of Sprint Common Stock, has given notice of her intention to introduce the
following resolution at the Annual Meeting:
Resolved: That the following by-law be adopted:
Article III, Section 10. The Corporation shall have a Stockholder
Advisory Committee of up to fifteen members, selected annually, who may
review any aspect of the business and affairs of the Corporation, and
advise the Board of their views, but shall first evaluate whether the
Corporation has a compliance program that effectively prevents and responds
to violations of law.
As of the record date for determining who is entitled to vote at the
annual meeting, each record or beneficial owner of the Corporation's common
stock shall have the right to nominate one stockholder to the Committee, or
to make a joint nomination with one or more such owners, as long as the
individual or joint holdings of the Corporation's common stock have a
market value of at least $1,000,000.
Each nominee shall qualify for service by notifying the Secretary at
least fourteen days prior to the annual meeting of: (1) the identities of
the nominee and the person or persons who made the nomination; (2) the
number of shares of the Corporation's common stock that were owned or held
on the record date by the person or persons who made the nomination; and
(3) the agreement of the nominee to serve without expense to the
Corporation, in the event that the Board declines to reimburse expenses.
At least ten days prior to the annual meeting, the Secretary shall
designate the nominee who represents the largest number of shares as the
Interim Chairperson and shall send all of the notifications received to
that person, so that he or she may inform the nominees that represent the
largest number of shares that they have been appointed, and call a meeting
to organize the Committee.
STOCKHOLDER'S STATEMENT IN SUPPORT OF STOCKHOLDER PROPOSAL B
A Stockholder Advisory Committee would permit stockholders with a
significant ownership interest in the Corporation to address issues that they
deem to be important, whenever they may arise. It would also permit them to
provide advice and information to the Board which represents their collective
judgment on such issues, either to prevent harm to the interests of
shareholders, or to better serve those interests.
Consideration of whether the Corporation has a compliance program that
effectively prevents and responds to violations of law is proposed because
Sprint and its management have recently been charged with numerous violations
of law. In 1993, for example, Sprint agreed to a $29 million settlement of a
class action that involved alleged violations of the federal securities laws.
Last August, an administrative judge found that Sprint had engaged in more
than 50 labor law violations "by threatening employees with plant closure, by
interrogating employees regarding their union activities, and by other similar
conduct," prior to closing its La Conexion Familiar subsidiary.
Allegations of unlawful conduct may result in unfavorable publicity and
significant costs, whether or not they are ultimately proved. Accordingly, the
proposed one-time evaluation of the compliance program would be a prudent step
toward preventing such publicity and costs in the future.
THE COMPANY'S RESPONSE TO STOCKHOLDER PROPOSAL B
The Board of Directors believes that the proposed Stockholder Advisory
Committee is inappropriate.
While the Board of Directors values the advice and opinions of Stockholders,
it is the Directors' duty to oversee Sprint's business and affairs.
Stockholders of corporations elect directors as their representatives to fill
this role because it is impractical for individual stockholders, or committees
of them, to engage in detailed oversight of management actions. In addition,
there is always the risk that a committee made up of stockholders, who unlike
directors owe no fiduciary duty to other stockholders, will further special
interests not shared by all
18
stockholders at large. Indeed, the proposed criterion for selecting committee
members--support from individual or joint holdings of company stock in excess
of $1 million--would virtually ensure a committee of special interests.
An advisory committee is also unnecessary, particularly in the area of legal
compliance. The Board of Directors undertook a detailed review of the
company's ethics policies in 1992. On an annual basis since then, a Committee
of Sprint's Board of Directors has reviewed the effectiveness of the ethical
and legal compliance program.
Sprint also has a uniform ethics policy which is printed and distributed to
all employees. Ethics seminars have been held to discuss the policy and
respond to employees' questions. A Chief Ethics Officer oversees compliance
efforts company-wide. An 800-number Ethics Helpline (with caller identity
protected) is available 24 hours a day to assist employees who report or seek
help with potential ethics issues.
In today's environment, even companies with the best of policies and
compliance efforts are likely to be sued. At Sprint, legal and ethical issues
are given careful consideration. If Sprint identifies a problem through any of
its established programs or otherwise, it takes prompt remedial action. On the
other hand, if complaints are unfounded, Sprint defends its position. Sprint
is seriously committed to implementing and enforcing its Code of Ethics and to
ensuring fair and consistent treatment of all employees in accordance with the
law.
Sprint received a very similar proposal from the proponent last year calling
for a Stockholder Advisory Committee to perform the function called for under
this proposal. That proposal was defeated, receiving only ten percent of
shares represented at the meeting and entitled to vote on the matter.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE
AGAINST THIS PROPOSAL.
V. OTHER MATTERS TO COME BEFORE THE MEETING
No other matters are intended to be brought before the meeting by Sprint nor
does Sprint know of any matters to be brought before the meeting by others.
If, however, any other matters properly come before the meeting, the persons
named in the proxy will vote the shares represented thereby in accordance with
the judgment of management on any such matter.
By order of the Board of Directors
Don A. Jensen
Vice President and
Secretary
March 7, 1996
A COPY OF SPRINT'S ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 1995, WILL BE SENT TO
STOCKHOLDERS UPON REQUEST WITHOUT CHARGE. REQUESTS SHOULD BE SENT TO INVESTOR
RELATIONS DEPARTMENT, P.O. BOX 11315, KANSAS CITY, MISSOURI 64112.
19
P R O X Y
SPRINT CORPORATION
P.O. BOX 11315, KANSAS CITY, MISSOURI 64112
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON APRIL 16, 1996
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2 AND AGAINST ITEMS 3
AND 4.
The undersigned hereby appoints W.T. Esrey, J.R. Devlin and A.B. Krause, and
each of them, with full power of substitution, as proxies, to vote all the
shares of Common and Preferred Stock of Sprint Corporation (Sprint) which the
undersigned is entitled to vote at the 1996 Annual Meeting of Stockholders to
be held April 16, 1996, and any adjournment thereof, upon the following
matters, AND IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING:
1. To elect the nominees listed below, and each of them, as Directors of Class
I; and while Sprint has no reason to believe that any of the nominees will
decline or be unable to serve, if any do, to vote with discretionary
authority.
[_] FOR all nominees listed below [_] WITHHELD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below
(TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A LINE
THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
DuBose Ausley Warren L. BattsDonald J. Hall
2. To approve the appointment of
Ernst & Young LLP as independent auditors of
Sprint for 1996. FOR [_] AGAINST [_] ABSTAIN [_]
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 3 AND 4.
3. Stockholder proposal concerning retirement
plan for outside directors. FOR [_] AGAINST [_] ABSTAIN [_]
4. Stockholder proposal to establish a
Stockholder advisory committee. FOR [_] AGAINST [_] ABSTAIN [_]
(PLEASE SIGN ON REVERSE SIDE)
THIS PROXY, IF SIGNED AND RETURNED, WILL BE VOTED AS SPECIFIED ON THE REVERSE
SIDE. IF THIS CARD IS SIGNED AND RETURNED WITHOUT SPECIFICATIONS, YOUR SHARES
WILL BE VOTED FOR ITEMS 1 AND 2 AND AGAINST ITEMS 3 AND 4. A majority of said
proxies, or any substitute or substitutes, who shall be present and act at the
meeting (or if only one shall be present and act, then that one) shall have
all the powers of said proxies hereunder.
Please sign exactly as name appears. If
shares are held jointly, any one of the
joint owners may sign. Attorneys-in-fact,
executors, administrators, trustees,
guardians or corporation officers should
indicate the capacity in which they are
signing. PLEASE SIGN, DATE, AND MAIL THIS
PROXY PROMPTLY WHETHER OR NOT YOU EXPECT
TO ATTEND THE MEETING. YOU MAY
NEVERTHELESS VOTE IN PERSON IF YOU DO
ATTEND.
DATE _____________________________ , 1996
PLEASE __________________________________
SIGN Signature
HERE
__________________________________
Signature
--------------
FIDELITY INSTITUTIONAL OPERATIONS CO. FIRST CLASS
P.O. BOX 9107 U.S. POSTAGE
HINGHAM, MA 02043-9107 PAID
PROXY
TABULATOR
--------------
Please detach at perforation before mailing
- --------------------------------------------------------------------------------
FIDELITY MANAGEMENT TRUST COMPANY
and FIRSTIER BANK, N.A., TRUSTEES
P.O. Box 9107, Hingham, Massachusetts 02043-9107
Voting Instructions for Annual Meeting of Stockholders of
Sprint Corporation on April 16, 1996
I hereby direct Fidelity Management Trust Company and FirsTier Bank, n.a.,
either in person or by proxy, to vote all shares of Common Stock of Sprint
Corporation (Sprint) which have been allocated to my account(s) under the Sprint
Retirement Savings Plan, the Sprint Retirement Savings Plan for Bargaining Unit
Employees, the Centel Retirement Savings Plan for Bargaining Unit Employees, and
the Centel Employees' Stock Ownership Plan at the Annual Meeting of Stockholders
to be held April 16, 1996, and any adjournments thereof, in the manner specified
on the reverse side, and in their discretion upon such other matters as may
properly come before the meeting:
Date , 1996
-----------------
If you sign and return this card in
the enclosed envelope for receipt by
Fidelity Management Trust Company by
April 10, 1996, your shares will be
voted as specified on the reverse
side, or if this card is signed and
returned without specifications, your
shares will be voted FOR items 1 and 2
and AGAINST items 3 and 4. Your voting
instructions to the trustees are
confidential.
--------------------------------------
--------------------------------------
Signature 911
You are entitled to direct the voting of the total number of shares of
Common Stock of Sprint allocated to your accounts through February 20, 1996, the
record date for voting at the April 16, 1996, Stockholders Meeting. Your
accounts include one or more of the following: (a) Company Stock Investment Fund
(your contributions), (b) Company Stock Match account, (c) Centel Profit Sharing
account, (d) TRASOP account (formerly Sprint's ESOP), (e) Centel Employees'
Stock Ownership Plan account (Centel ESOP). The Centel ESOP and the Centel
Retirement Savings Plan for Bargaining Unit Employees provide for the trustees
to vote all shares held in the trusts for these two plans for which they do not
receive voting instructions in the same proportions as instructions received for
shares voted. The trustees will vote all unallocated shares held in the Sprint
Retirement Savings Plan (including the TRASOP) and the Sprint Retirement Savings
Plan for Bargaining Unit Employees in the same proportions as instructions
received for shares voted, and any shares allocated to participant accounts in
these plans for which the trustees do not receive voting instructions will not
be voted.
Statements of your accounts will be provided separately.
Please detach card at perforation before mailing
- --------------------------------------------------------------------------------
Sprint Retirement Savings Plan
Sprint Retirement Savings Plan for Bargaining Unit Employees
Centel Employees' Stock Ownership Plan
Centel Retirement Savings Plan for Bargaining Unit Employees
Please vote by filling in the appropriate box below, as shown, using blue or
black ink or dark pencil. Do not use red ink. [_]
The Board of Directors recommends a vote FOR items 1 and 2 and AGAINST items 3
and 4.
1. To elect the nominees listed below, and each of them, as Directors of
Class I; and while Sprint has no reason to believe that any of the
nominees will decline or be unable to serve, if any do, to vote with
discretionary authority.
FOR all WITHHOLD
nominees listed AUTHORITY
below (except as to vote for all
marked to the nominees listed
contrary at left) at left
[_] [_]
(To withhold authority to vote for any individual nominee write the nominee's
name on the line below.)
DuBose Ausley Warren L. Batts Donald J. Hall
- --------------------------------------------------------------------------------
2. To approve the appointment of Ernst & Young LLP as independent auditors
of Sprint for 1996.
FOR AGAINST ABSTAIN
[_] [_] [_]
The Board of Directors recommends a vote AGAINST Items 3 and 4.
3. Stockholder proposal concerning retirement plan for outside directors.
[_] [_] [_]
4. Stockholder proposal to establish a Stockholder advisory committee.
[_] [_] [_]
(Please sign on reverse side.)