EXHIBIT 10a
LOGO
SBC Communications Inc.
SHORT TERM INCENTIVE PLAN
Plan Effective: January 1, 1984
Revisions Effective: November 21, 1997
SHORT TERM INCENTIVE PLAN
TABLE OF CONTENTS
Section Subject Page
1. Purpose...............................................1
2. Definitions...........................................1-2
3. Eligibility...........................................2
4. Awards................................................2-4
5. Adjustments ..........................................4
6. Other Conditions .....................................5
7. Designation of Beneficiaries..........................5
8. Plan Administration...................................5&6
9. Modification or Termination of Plan...................6
SHORT TERM INCENTIVE PLAN
1. Purpose. The purpose of the Short Term Incentive Plan (the "Plan") is to
provide Eligible Employees with incentive compensation based upon the
achievement of financial, service, and operating performance levels and
management effectiveness.
2. Definitions. For purposes of this Plan, the following words and phrases
shall have the meanings indicated, unless the context clearly indicates
otherwise:
Award Year. "Award Year" shall mean the calendar year for which
performance is used to determine one's award under the Plan.
Chairman. "Chairman" shall mean the Chairman of the Board of SBC
Communications Inc.
Committee. "Committee" shall mean the Human Resources Committee
of the Board of SBC Communications Inc.
Eligible Employee. "Eligible Employee" shall mean an Officer or
a non-Officer employee of any SBC company who is designated by
the Chairman as eligible to participate in the Plan.
Officer. "Officer" shall mean an individual who is designated by
the Chairman as eligible to participate in the Plan who is an
elected officer of SBC or of any SBC subsidiary (direct or
indirect).
Retirement. "Retirement" shall mean the termination of an Eligible
Employee's employment with SBC or any of its subsidiaries, for
reasons other than death, on or after the earlier of the following
dates: (1) the date the Eligible Employee is Retirement Eligible as
such term is defined in the SBC Supplemental Retirement Income Plan
("SRIP"); or (2) the date the Eligible Employee has attained one of
the following combinations of age and service at termination of
employment on or after April 1, 1997, except as otherwise indicated
below:
Net Credited Service Age
10 years or more 65 or older
20 years or more 55 or older
25 years or more 50 or older
30 years or more Any age
With respect to an Eligible Employee who is granted an EMP Service
Pension under and pursuant to the provisions of the SBC Pension
Benefit Plan - Nonbargained Program ("SBCPBP") upon termination of
Employment, the term "Retirement" shall include such Eligible
Employee's termination of employment.
SBC. "SBC" shall mean SBC Communications Inc.
3. Eligibility. Each Eligible Employee who during an Award Year was
-----------
in active service is eligible for an award under the Plan (whether or
not so employed or living at the date an award is made); provided that
the employee had at least three months of active service (excluding any
time the employee was absent on account of disability and receiving any
sickness or accident disability benefits under any SBC disability
benefit plan (("Disability Benefits") during the Award Year).
Employees are not rendered ineligible by reason of being a member of
the Board.
4. Awards. The Committee with respect to Officers, or the Chairman with
respect to non-Officer Eligible Employees, shall approve a Target Award
for each employee eligible for an award under the Plan for each Award Year
that the Committee or the Chairman, as applicable, intends to make awards.
The Target Award applicable to an employee otherwise eligible for an award
under the Plan for an Award Year shall be prorated over the Award Year or
the employee shall be ineligible for an award, as follows:
(1) become eligible or ineligible prorate according to time of active
for an award under Plan or service in each eligible position
change from one eligible to the nearest half month
position to another after the
beginning of the Award Year
(2) inter-company transfers prorate for each respective
entities' performance according to
time of active service at each
entity to the nearest half month
(3) receipt of Disability Benefits prorate to the day based on service
for more than three months in while not receiving Disability
an Award Year Benefits
(4) receipt of Disability no reduction is applicable Target
Benefits for three months or Award
less in an Award Year
(5) Retirement or resignation prorate to date of Retirement or
resignation
(6) leave of absence prorate to date leave commences and
from date leave ceases unless
otherwise provided by the Committee
or the Chairman, as applicable
(7) death during an Award Year prorate to date of death
(8) dismissal for cause during or no award
after an Award Year
A percentage of the Target Award for each Award Year to be distributed to
the award recipient will be determined by the Committee, or Chairman, for
Officers and non-Officer Eligible Employees, respectively, based upon
achievement of performance levels during such Award Year of criteria
established by the Committee, or the Chairman, respectively.
The criteria established by the Committee for Officers, or the Chairman
with respect to non-Officer Eligible Employees, upon which the percentages
of the Target Awards referred to above are determined shall give due
regard, as the Committee, or the Chairman, as applicable, deems
appropriate, to one or more of the following for the Award Year:
(a) Financial performance of SBC, individual operating entities thereof
and/or SBC and its consolidated subsidiaries.
(b) Service performance of SBC and of individual operating entities; or
other appropriate operating performance criteria for entities where
service performance is not relevant.
(c) Other criteria in lieu of or in addition to the above as determined
by the Committee or the Chairman, as applicable.
The Committee then with respect to Officers, or the Chairman with respect
to non-Officer Eligible Employees, shall determine the payout of Awards in
such amounts and to such of the Eligible Employees as each may determine
in its sole discretion. Awards shall be paid in cash in the calendar year
the awards are determined, except to the extent that an Eligible Employee
has made an election to defer the receipt of such award pursuant to the
SBC Salary and Incentive Award Deferral Plan or other SBC deferred
compensation plan.
The award to be distributed to an individual may be more or less in the
Committee's or the Chairman's discretion, as applicable, including no
award, than the percentage of the Target Award determined for such
individual; for example, the Committee or the Chairman, as applicable, may
approve an award greater than the Target Award, adjusted for performance,
based on individual performance.
5. Adjustments.
(a) In order to assure the incentive features of the Plan and to
avoid distortion in the operation of the Plan, the Committee or
the Chairman, as applicable, may make adjustments in the criteria
established for any Award Year, whether before or after the end
of the Award Year, to the extent the Committee or the Chairman,
as applicable, deems appropriate, to compensate for or reflect
any extraordinary changes which may have occurred during the
Award Year which significantly alter the basis upon which
performance levels were determined. Such changes may include,
without limitation, changes in accounting practices, tax laws, or
other laws or regulations, or economic changes not in the
ordinary course of business cycles.
(b) In the event of any change in outstanding shares of SBC by reason of
any stock dividend or split, recapitalization, merger,
consolidation, combination or exchange of shares or other similar
corporate change, the Committee or the Chairman, as applicable,
shall make such adjustments, if any, that the Committee or the
Chairman, as applicable, deems appropriate in the performance levels
established for any Award Year.
(c) The Senior Vice President-Human Resources shall approve a new Target
Award for any Officer or non-Officer Eligible Employee whose
position is modified by changes in job responsibilities,
reorganization, etc.; provided, however, that such authority may not
be exercised for positions with a total compensation market rate
exceeding $1.5 million (in such a case the new Target Award shall be
approved by the Committee).
6. Other Conditions.
(a) No person shall have any claim to be granted an award under the Plan
and there is no obligation for uniformity of treatment of Eligible
Employees 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 employee the right to be retained in the employ of
SBC or any subsidiary thereof.
(c) SBC or subsidiary thereof, as applicable, 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) Unless otherwise provided by the Committee, awards under the Plan
shall be excluded in determining benefits under any pension,
retirement, savings, disability, death, or other benefit plans of
SBC except where required by law.
7. Designation of Beneficiaries. An Eligible Employee may designate
----------------------------
pursuant to SBC's Rules for Employee Beneficiary Designations as may
hereafter be amended from time-to-time ("Rules"), which Rules shall
apply hereunder and are incorporated herein by this reference, a
beneficiary or beneficiaries to receive in case of the employee's death
all or part of the awards which may be made to the employee under the
Plan. A designation of beneficiary may be replaced by a new
designation or may be revoked by the employee at any time. A
designation or revocation shall be on a form to be provided for the
purpose and shall become effective only when filed with SBC during the
employee's lifetime with written acknowledgement of receipt from SBC.
In case of the employee's death, an award made under the Plan 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 made to an
employee who is deceased and not subject to such a designation shall be
distributed in accordance with the Rules.
8. Plan Administration.
(a) The Committee or the Chairman, as applicable, shall have full
power to administer and interpret the Plan and to establish rules
for its administration. Awards under the Plan shall be
conclusively determined by the Committee or the Chairman, as
applicable. Any determinations or actions required or permitted
to be made by the Committee or the Chairman, as applicable, may
be delegated by the Committee or the Chairman in its sole
discretion. The Committee or the Chairman, as applicable, or any
delegate thereof, in making any determinations under or referred
to in the Plan shall be entitled to rely on opinions, reports or
statements of officers or employees of SBC and/or of any
subsidiary thereof and of counsel, public accountants and other
professional or expert persons.
(b) The Plan shall be governed by the laws of the State of Texas and
applicable Federal law.
9. Modification or Termination of Plan. This Plan may be modified or
terminated at any time in accordance with the provisions of SBC's Schedule
of Authorizations. A modification may affect present and future Eligible
Employees.
i
SHORT TERM INCENTIVE PLAN
ADMINISTRATIVE GUIDELINES
TABLE OF CONTENTS
Section Subject Page
1. Purpose............................................... 1
2 Award Process......................................... 1
3. Performance Criteria..................................1&2
4. Funding...............................................1&2
5. Distribution of Awards................................ 2
6. Changes/Exceptions.................................... 3
4
SHORT TERM INCENTIVE PLAN
ADMINISTRATIVE GUIDELINES
1. Purpose. The purpose of these Guidelines is to outline the procedures to
be followed in administering SBC's Short Term Incentive Plan (the "Plan").
2. Award Process. The Committee shall approve a Target Award for each
eligible Officer. The Chairman shall approve a Target Award for each
non-Officer Eligible Employee. These Target Awards are based on
market-based rates established for each Eligible Employee and shall
generally be established in January of the Award Year.
Annual financial and/or other performance objectives for Officers for an
Award Year shall be approved by the Committee each year, generally in
January of the Award Year. Objectives for non-Officer Eligible Employees
shall be approved by the Chairman. Annual financial and/or other
performance results (upon which the payment of Awards for Officers shall
be based), maximum funding levels, and payout recommendations requiring
Committee approval, will be submitted to and approved by the Committee
after the Award Year is completed. Results for non-Officer Eligible
Employees shall be approved by the Chairman.
An individual's Target Award will be prorated over the Award Year, if
applicable, according to Section 3(b) of the Plan.
Target Awards will be adjusted for distribution based upon achievement
during the Award Year, of the financial and/or other performance criteria
established by the Committee or the Chairman, as applicable. Discretionary
awards may also be granted as described in Section 5, to be paid out of
funds from the Discretionary Pools.
3. Performance Criteria. The performance criteria established by the
Committee or the Chairman, as applicable, may be one or more of the
following:
Financial Performance Criteria
Achievement of Value Added objectives or other financial objectives
(e.g., gross contributions, revenues, etc.) will be used as financial
performance criteria for all entities.
Value Added shall be a measure of earnings above a return required by
investors (i.e., generally, net operating contribution less a capital
charge).
Value Added performance is determined after adjustment in accordance
with the following:
In order to assure the incentive features of the Plan and to avoid
distortion in the operation of the Plan, the Committee or the
Chairman, as applicable, shall make adjustments in the criteria
established for any Award Year, whether before or after the end of
the Award Year to compensate for or reflect any extraordinary
changes which may have occurred during the Award Year which alter
the basis upon which performance levels were determined. Such
changes include the following: accounting changes, extraordinary
items, income from discontinued operations, and the impact of
material events that have been publicly disclosed.
Other Performance Criteria
Other performance criteria may include, but are not limited to, Value
Drivers, i.e., quantifiable operational and other indicators, such as
revenue growth, customer or subscriber growth, operating margin, etc.,
that are tied to the strategy of the operating entity and are key
barometers of value creation.
4. Funding. Each year, a maximum funding level of 1.0 percent of reported SBC
net income (before any extraordinary loss and/or cumulative effect of
changes in accounting principles) minus amounts paid as Key Executive
Officer Short Term Award(s) pursuant to the 1996 Stock and Incentive Plan
shall be available to payment or awards under the Plan with respect to the
preceding Award Year.
5. Distribution of Awards. Awards for the preceding Award Year will generally
be distributed after completion of the Award Year in accordance with the
following paragraphs. Distribution of all awards is subject to approval by
the Committee or the Chairman, as applicable, generally obtained in
January following the completion of an Award Year.
Formula-Driven Awards -
The Committee, or the Chairman, as applicable, shall establish financial
and/or other performance objectives for SBC and such other entities as
deemed appropriate by the Committee or the Chairman, as applicable.
Up to 100% of the Target Award for the preceding Award Year is paid to
Officers and to non-Officer Eligible Employees in each entity based on the
achievement of applicable financial and/or other performance results of
their entity. An example of a Payout Table for formula-driven awards is
included as Attachment l. For national or international subsidiaries with
small Value Added commitments, the Committee for Officers and the Chairman
for non-Officer Eligible Employees may establish Value Driver
objectives/percentages to be substituted for Value Added commitments.
Discretionary Pools -
After determination of formula-driven awards, the Committee for Officers
and the Chairman for non-Officer Eligible Employees may establish
Discretionary Pools to reward individuals and/or entities for exceptional
performance. Maximum funding available for Discretionary Pools is the
maximum funding level described in Section 4 less the formula-driven
amounts distributed.
The Committee or the Chairman, as applicable, will determine funding for
each pool and provide guidelines for distribution of awards. The following
are examples of factors that may be considered:
Value Added results above objective
Value Driver results
Outstanding customer service results
Advancement of workforce diversity
Outstanding individual contribution
The Chairman will recommend to the Committee the discretionary awards for
officers reporting directly to the Chairman.
6. Changes/Exceptions. Changes in these Guidelines and exceptions to their
provisions may be authorized by the Committee.
Exhibit 1
=============------------------==============---------------==============
Value Added Target Award
Target Payout
$* %
------------------ ---------------
$XXX or above 100%
$XXX 98%
$XXX 96%
$XXX 93%
$XXX 90%
$XXX 87%
$XXX 84%
$XXX 81%
$XXX 78%
$XXX 75%
$XXX 70%
$XXX 65%
$XXX 60%
$XXX 55%
$XXX 50%
Below $XXX 0%
*(expressed in
millions $)
==========================================================================
LOGO
SBC Communications Inc.
SHORT TERM INCENTIVE PLAN
Plan Effective: January 1, 1984
Revisions Effective: November 21, 1997
SHORT TERM INCENTIVE PLAN
TABLE OF CONTENTS
Section Subject Page
1. Purpose...............................................1
2. Definitions...........................................1-2
3. Eligibility...........................................2
4. Awards................................................2-4
5. Adjustments ..........................................4
6. Other Conditions .....................................5
7. Designation of Beneficiaries..........................5
8. Plan Administration...................................5&6
9. Modification or Termination of Plan...................6
SHORT TERM INCENTIVE PLAN
1. Purpose. The purpose of the Short Term Incentive Plan (the "Plan") is to
provide Eligible Employees with incentive compensation based upon the
achievement of financial, service, and operating performance levels and
management effectiveness.
2. Definitions. For purposes of this Plan, the following words and phrases
shall have the meanings indicated, unless the context clearly indicates
otherwise:
Award Year. "Award Year" shall mean the calendar year for which
performance is used to determine one's award under the Plan.
Chairman. "Chairman" shall mean the Chairman of the Board of SBC
Communications Inc.
Committee. "Committee" shall mean the Human Resources Committee
of the Board of SBC Communications Inc.
Eligible Employee. "Eligible Employee" shall mean an Officer or
a non-Officer employee of any SBC company who is designated by
the Chairman as eligible to participate in the Plan.
Officer. "Officer" shall mean an individual who is designated by
the Chairman as eligible to participate in the Plan who is an
elected officer of SBC or of any SBC subsidiary (direct or
indirect).
Retirement. "Retirement" shall mean the termination of an Eligible
Employee's employment with SBC or any of its subsidiaries, for
reasons other than death, on or after the earlier of the following
dates: (1) the date the Eligible Employee is Retirement Eligible as
such term is defined in the SBC Supplemental Retirement Income Plan
("SRIP"); or (2) the date the Eligible Employee has attained one of
the following combinations of age and service at termination of
employment on or after April 1, 1997, except as otherwise indicated
below:
Net Credited Service Age
10 years or more 65 or older
20 years or more 55 or older
25 years or more 50 or older
30 years or more Any age
With respect to an Eligible Employee who is granted an EMP Service
Pension under and pursuant to the provisions of the SBC Pension
Benefit Plan - Nonbargained Program ("SBCPBP") upon termination of
Employment, the term "Retirement" shall include such Eligible
Employee's termination of employment.
SBC. "SBC" shall mean SBC Communications Inc.
3. Eligibility. Each Eligible Employee who during an Award Year was
-----------
in active service is eligible for an award under the Plan (whether or
not so employed or living at the date an award is made); provided that
the employee had at least three months of active service (excluding any
time the employee was absent on account of disability and receiving any
sickness or accident disability benefits under any SBC disability
benefit plan (("Disability Benefits") during the Award Year).
Employees are not rendered ineligible by reason of being a member of
the Board.
4. Awards. The Committee with respect to Officers, or the Chairman with
respect to non-Officer Eligible Employees, shall approve a Target Award
for each employee eligible for an award under the Plan for each Award Year
that the Committee or the Chairman, as applicable, intends to make awards.
The Target Award applicable to an employee otherwise eligible for an award
under the Plan for an Award Year shall be prorated over the Award Year or
the employee shall be ineligible for an award, as follows:
(1) become eligible or ineligible prorate according to time of active
for an award under Plan or service in each eligible position
change from one eligible to the nearest half month
position to another after the
beginning of the Award Year
(2) inter-company transfers prorate for each respective
entities' performance according to
time of active service at each
entity to the nearest half month
(3) receipt of Disability Benefits prorate to the day based on service
for more than three months in while not receiving Disability
an Award Year Benefits
(4) receipt of Disability no reduction is applicable Target
Benefits for three months or Award
less in an Award Year
(5) Retirement or resignation prorate to date of Retirement or
resignation
(6) leave of absence prorate to date leave commences and
from date leave ceases unless
otherwise provided by the Committee
or the Chairman, as applicable
(7) death during an Award Year prorate to date of death
(8) dismissal for cause during or no award
after an Award Year
A percentage of the Target Award for each Award Year to be distributed to
the award recipient will be determined by the Committee, or Chairman, for
Officers and non-Officer Eligible Employees, respectively, based upon
achievement of performance levels during such Award Year of criteria
established by the Committee, or the Chairman, respectively.
The criteria established by the Committee for Officers, or the Chairman
with respect to non-Officer Eligible Employees, upon which the percentages
of the Target Awards referred to above are determined shall give due
regard, as the Committee, or the Chairman, as applicable, deems
appropriate, to one or more of the following for the Award Year:
(a) Financial performance of SBC, individual operating entities thereof
and/or SBC and its consolidated subsidiaries.
(b) Service performance of SBC and of individual operating entities; or
other appropriate operating performance criteria for entities where
service performance is not relevant.
(c) Other criteria in lieu of or in addition to the above as determined
by the Committee or the Chairman, as applicable.
The Committee then with respect to Officers, or the Chairman with respect
to non-Officer Eligible Employees, shall determine the payout of Awards in
such amounts and to such of the Eligible Employees as each may determine
in its sole discretion. Awards shall be paid in cash in the calendar year
the awards are determined, except to the extent that an Eligible Employee
has made an election to defer the receipt of such award pursuant to the
SBC Salary and Incentive Award Deferral Plan or other SBC deferred
compensation plan.
The award to be distributed to an individual may be more or less in the
Committee's or the Chairman's discretion, as applicable, including no
award, than the percentage of the Target Award determined for such
individual; for example, the Committee or the Chairman, as applicable, may
approve an award greater than the Target Award, adjusted for performance,
based on individual performance.
5. Adjustments.
(a) In order to assure the incentive features of the Plan and to
avoid distortion in the operation of the Plan, the Committee or
the Chairman, as applicable, may make adjustments in the criteria
established for any Award Year, whether before or after the end
of the Award Year, to the extent the Committee or the Chairman,
as applicable, deems appropriate, to compensate for or reflect
any extraordinary changes which may have occurred during the
Award Year which significantly alter the basis upon which
performance levels were determined. Such changes may include,
without limitation, changes in accounting practices, tax laws, or
other laws or regulations, or economic changes not in the
ordinary course of business cycles.
(b) In the event of any change in outstanding shares of SBC by reason of
any stock dividend or split, recapitalization, merger,
consolidation, combination or exchange of shares or other similar
corporate change, the Committee or the Chairman, as applicable,
shall make such adjustments, if any, that the Committee or the
Chairman, as applicable, deems appropriate in the performance levels
established for any Award Year.
(c) The Senior Vice President-Human Resources shall approve a new Target
Award for any Officer or non-Officer Eligible Employee whose
position is modified by changes in job responsibilities,
reorganization, etc.; provided, however, that such authority may not
be exercised for positions with a total compensation market rate
exceeding $1.5 million (in such a case the new Target Award shall be
approved by the Committee).
6. Other Conditions.
(a) No person shall have any claim to be granted an award under the Plan
and there is no obligation for uniformity of treatment of Eligible
Employees 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 employee the right to be retained in the employ of
SBC or any subsidiary thereof.
(c) SBC or subsidiary thereof, as applicable, 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) Unless otherwise provided by the Committee, awards under the Plan
shall be excluded in determining benefits under any pension,
retirement, savings, disability, death, or other benefit plans of
SBC except where required by law.
7. Designation of Beneficiaries. An Eligible Employee may designate
----------------------------
pursuant to SBC's Rules for Employee Beneficiary Designations as may
hereafter be amended from time-to-time ("Rules"), which Rules shall
apply hereunder and are incorporated herein by this reference, a
beneficiary or beneficiaries to receive in case of the employee's death
all or part of the awards which may be made to the employee under the
Plan. A designation of beneficiary may be replaced by a new
designation or may be revoked by the employee at any time. A
designation or revocation shall be on a form to be provided for the
purpose and shall become effective only when filed with SBC during the
employee's lifetime with written acknowledgement of receipt from SBC.
In case of the employee's death, an award made under the Plan 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 made to an
employee who is deceased and not subject to such a designation shall be
distributed in accordance with the Rules.
8. Plan Administration.
(a) The Committee or the Chairman, as applicable, shall have full
power to administer and interpret the Plan and to establish rules
for its administration. Awards under the Plan shall be
conclusively determined by the Committee or the Chairman, as
applicable. Any determinations or actions required or permitted
to be made by the Committee or the Chairman, as applicable, may
be delegated by the Committee or the Chairman in its sole
discretion. The Committee or the Chairman, as applicable, or any
delegate thereof, in making any determinations under or referred
to in the Plan shall be entitled to rely on opinions, reports or
statements of officers or employees of SBC and/or of any
subsidiary thereof and of counsel, public accountants and other
professional or expert persons.
(b) The Plan shall be governed by the laws of the State of Texas and
applicable Federal law.
9. Modification or Termination of Plan. This Plan may be modified or
terminated at any time in accordance with the provisions of SBC's Schedule
of Authorizations. A modification may affect present and future Eligible
Employees.
i
SHORT TERM INCENTIVE PLAN
ADMINISTRATIVE GUIDELINES
TABLE OF CONTENTS
Section Subject Page
1. Purpose............................................... 1
2 Award Process......................................... 1
3. Performance Criteria..................................1&2
4. Funding...............................................1&2
5. Distribution of Awards................................ 2
6. Changes/Exceptions.................................... 3
4
SHORT TERM INCENTIVE PLAN
ADMINISTRATIVE GUIDELINES
1. Purpose. The purpose of these Guidelines is to outline the procedures to
be followed in administering SBC's Short Term Incentive Plan (the "Plan").
2. Award Process. The Committee shall approve a Target Award for each
eligible Officer. The Chairman shall approve a Target Award for each
non-Officer Eligible Employee. These Target Awards are based on
market-based rates established for each Eligible Employee and shall
generally be established in January of the Award Year.
Annual financial and/or other performance objectives for Officers for an
Award Year shall be approved by the Committee each year, generally in
January of the Award Year. Objectives for non-Officer Eligible Employees
shall be approved by the Chairman. Annual financial and/or other
performance results (upon which the payment of Awards for Officers shall
be based), maximum funding levels, and payout recommendations requiring
Committee approval, will be submitted to and approved by the Committee
after the Award Year is completed. Results for non-Officer Eligible
Employees shall be approved by the Chairman.
An individual's Target Award will be prorated over the Award Year, if
applicable, according to Section 3(b) of the Plan.
Target Awards will be adjusted for distribution based upon achievement
during the Award Year, of the financial and/or other performance criteria
established by the Committee or the Chairman, as applicable. Discretionary
awards may also be granted as described in Section 5, to be paid out of
funds from the Discretionary Pools.
3. Performance Criteria. The performance criteria established by the
Committee or the Chairman, as applicable, may be one or more of the
following:
Financial Performance Criteria
Achievement of Value Added objectives or other financial objectives
(e.g., gross contributions, revenues, etc.) will be used as financial
performance criteria for all entities.
Value Added shall be a measure of earnings above a return required by
investors (i.e., generally, net operating contribution less a capital
charge).
Value Added performance is determined after adjustment in accordance
with the following:
In order to assure the incentive features of the Plan and to avoid
distortion in the operation of the Plan, the Committee or the
Chairman, as applicable, shall make adjustments in the criteria
established for any Award Year, whether before or after the end of
the Award Year to compensate for or reflect any extraordinary
changes which may have occurred during the Award Year which alter
the basis upon which performance levels were determined. Such
changes include the following: accounting changes, extraordinary
items, income from discontinued operations, and the impact of
material events that have been publicly disclosed.
Other Performance Criteria
Other performance criteria may include, but are not limited to, Value
Drivers, i.e., quantifiable operational and other indicators, such as
revenue growth, customer or subscriber growth, operating margin, etc.,
that are tied to the strategy of the operating entity and are key
barometers of value creation.
4. Funding. Each year, a maximum funding level of 1.0 percent of reported SBC
net income (before any extraordinary loss and/or cumulative effect of
changes in accounting principles) minus amounts paid as Key Executive
Officer Short Term Award(s) pursuant to the 1996 Stock and Incentive Plan
shall be available to payment or awards under the Plan with respect to the
preceding Award Year.
5. Distribution of Awards. Awards for the preceding Award Year will generally
be distributed after completion of the Award Year in accordance with the
following paragraphs. Distribution of all awards is subject to approval by
the Committee or the Chairman, as applicable, generally obtained in
January following the completion of an Award Year.
Formula-Driven Awards -
The Committee, or the Chairman, as applicable, shall establish financial
and/or other performance objectives for SBC and such other entities as
deemed appropriate by the Committee or the Chairman, as applicable.
Up to 100% of the Target Award for the preceding Award Year is paid to
Officers and to non-Officer Eligible Employees in each entity based on the
achievement of applicable financial and/or other performance results of
their entity. An example of a Payout Table for formula-driven awards is
included as Attachment l. For national or international subsidiaries with
small Value Added commitments, the Committee for Officers and the Chairman
for non-Officer Eligible Employees may establish Value Driver
objectives/percentages to be substituted for Value Added commitments.
Discretionary Pools -
After determination of formula-driven awards, the Committee for Officers
and the Chairman for non-Officer Eligible Employees may establish
Discretionary Pools to reward individuals and/or entities for exceptional
performance. Maximum funding available for Discretionary Pools is the
maximum funding level described in Section 4 less the formula-driven
amounts distributed.
The Committee or the Chairman, as applicable, will determine funding for
each pool and provide guidelines for distribution of awards. The following
are examples of factors that may be considered:
Value Added results above objective
Value Driver results
Outstanding customer service results
Advancement of workforce diversity
Outstanding individual contribution
The Chairman will recommend to the Committee the discretionary awards for
officers reporting directly to the Chairman.
6. Changes/Exceptions. Changes in these Guidelines and exceptions to their
provisions may be authorized by the Committee.
Exhibit 1
=============------------------==============---------------==============
Value Added Target Award
Target Payout
$* %
------------------ ---------------
$XXX or above 100%
$XXX 98%
$XXX 96%
$XXX 93%
$XXX 90%
$XXX 87%
$XXX 84%
$XXX 81%
$XXX 78%
$XXX 75%
$XXX 70%
$XXX 65%
$XXX 60%
$XXX 55%
$XXX 50%
Below $XXX 0%
*(expressed in
millions $)
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