Exhibit 10-ww
BELLSOUTH CORPORATION STOCK AND INCENTIVE COMPENSATION PLAN
PERFORMANCE SHARES AWARD AGREEMENT
BellSouth Corporation, a Georgia corporation ("BellSouth"),
acting pursuant to action of its Board of Directors and in accordance with the
BellSouth Corporation Stock and Incentive Compensation Plan (the "Plan"), hereby
grants to ("Employee") Performance Shares under the terms set forth in
this Performance Shares Award Agreement ("Agreement"), effective as
of ___________:
1. Award Grant. BellSouth grants to Employee
Performance Shares as described in Section 9.1 of the Plan effective as
of the date above (the "Award"). This Award is subject to the terms and
conditions of this Agreement, and to the further terms and conditions
applicable to Performance Shares as set forth in the Plan.
2. Performance Cycle. The Performance Cycle with respect to the Award
shall be the three consecutive calendar year period commencing January
1, ____, and ending December 31, ____.
3. Performance Objectives. The Performance Objectives applicable to the
Award shall be those financial performance criteria, and the targeted
level or levels of performance with respect to such criteria, as set
forth on Exhibit "A" attached hereto and incorporated herein by this
reference.
4. Payments.
(a) Administrator's Determination. At the end of the Performance
Cycle, the Administrator shall determine the number of
Performance Shares earned under this Agreement, between zero (0)
and 1.5 times the number of Performance Shares in the Award,
based upon the levels of achievement of the Performance
Objectives during the Performance Cycle (the "Performance Shares
Earned"). The Compensation Committee shall make this
determination, which shall be certified in writing and shall be
final, conclusive and binding upon BellSouth and Employee.
(b) Payment for Performance Shares Earned. Employee shall be paid
in cash an amount determined by multiplying the number of
Performance Shares Earned by the end of period share price
defined as the average of closing prices quoted on the New York
Stock Exchange (NYSE) for all trading days during the period
beginning on October 1, 2006 and ending on December 31, 2006
(the "EOP Share Price"). The amount so determined shall be paid
in two (2) equal installments, with fifty (50%) percent to be
paid as soon as administratively practicable after the
certification by the Compensation Committee, but in no event
later than June 30, ____; and the remaining fifty (50%) percent
to be paid six (6) months after payment of the first
installment.
(c) Dividends. In addition, Employee shall be paid an amount
determined by
multiplying the number of Performance Shares Earned by the
amount of cash dividends that were paid on one Share (acquired
on the first day of the Performance Cycle) during the
Performance Cycle. This amount shall be paid as soon as
administratively practicable after the certification by the
Compensation Committee.
5. Death, Disability or Retirement. In the event of a termination of
Employee's employment with BellSouth or any Subsidiary, or any employer
described in Paragraph 11 (also referred to herein as a "Subsidiary"),
during the Performance Cycle by reason of: (i) death of Employee; (ii)
"Disability" (as defined in the Plan); or (iii) retirement which
entitles Employee to a "Service Pension" under the terms of either the
BellSouth Personal Retirement Account Pension Plan or the BellSouth
Supplemental Executive Retirement Plan (or both), or a retirement
pension under any alternative plan maintained by Employee's employer
which BellSouth determines to be comparable to such a Service Pension,
and not for "Cause" (as defined in the Plan), Employee or his or her
Beneficiary, as the case may be, shall be entitled to prorated payments
under this Agreement. Such payments shall equal the sum of (a) and (b):
(a) the product of (x) the amount described in Paragraph 4(b) above,
multiplied by (y) a fraction, the numerator of which is the
number of whole or partial calendar months elapsed between
January 1, ____, and the date of Employee's termination of
employment, and the denominator of which is thirty-six (36);
such amount to be paid at the times described in Paragraph 4(b)
above; and
(b) the amount determined by multiplying the number of Performance
Shares Earned by the amount of cash dividends that were paid on
one Share (acquired on the first day of the Performance Cycle)
through the date of Employee's termination of employment; such
amount to be paid at the time described in Paragraph 4(c) above.
6. Change in Control. Notwithstanding anything to the contrary in this
Agreement, in the event of a "Change in Control" (as defined in the
Plan), (i) the Performance Cycle described in Paragraph 2 above shall
end on the last day of the calendar quarter most recently preceding (or
coincident with) the occurrence of the Change in Control (referred to
hereinafter as the "Modified Performance Cycle"), (ii) Employee shall
be entitled to a payment equal to the amount determined for the
Modified Performance Cycle pursuant to Paragraph 4(b) above, with the
EOP Share Price for purposes of this Paragraph 6 defined as the average
of closing prices quoted on the NYSE for all trading days during the
90-day period immediately preceding the date of the Change in Control,
multiplied by a fraction, the numerator of which is the number of whole
or partial calendar months elapsed during the Modified Performance
Cycle, and the denominator of which is thirty-six (36), and (iii)
Employee shall be entitled to an amount determined by multiplying the
number of Performance Shares Earned by the amount of cash dividends
that were paid on one Share (acquired on the first day of the
Performance Cycle) during the Modified Performance Cycle. Such amounts
shall be paid as soon as administratively practicable after the end of
the Modified Performance Cycle, but in no event later than six (6)
months after such date.
7. Forfeiture. In the event Employee terminates employment with BellSouth
and its Subsidiaries, under circumstances other than those described in
Paragraph 5 above, prior to the
date on which an amount is payable hereunder, Employee shall forfeit
all of his interest in the Award except to the extent previously paid.
8. Employment and Termination. Neither the Plan, this Agreement nor any
related documents, communications or other material shall give Employee
the right to continued employment by BellSouth or by any Subsidiary or
shall adversely affect the right of any such company to terminate
Employee's employment with or without cause at any time.
9. Tax Withholding. BellSouth or any Subsidiary shall have the right to
withhold from any payment to Employee, require payment from Employee,
or take such other action which such company deems necessary to satisfy
any income or other tax withholding or reporting requirements arising
from this Award of Performance Shares, and Employee shall provide to
any such company such information, and pay to it upon request such
amounts, as it determines are required to comply with such
requirements.
10. Jurisdiction and Venue. Acceptance of this Agreement shall be deemed to
constitute Employee's consent to the jurisdiction and venue of the
Superior Court of ▇▇▇▇▇▇ County, Georgia, and the United States
District Court for the Northern District of Georgia for all purposes in
connection with any suit, action, or other proceeding relating to this
Agreement, including the enforcement of any rights under this Agreement
and any process or notice of motion in connection with such situation
or other proceeding may be serviced by certified or registered mail or
personal service within or without the State of Georgia, provided a
reasonable time for appearance is allowed.
11. Certain Employment Transfers. In the event Employee is transferred to
any company or business in which BellSouth directly or indirectly owns
an interest but which is not a "Subsidiary" as defined in the Plan,
then Employee shall not be deemed to have terminated his employment
under this Agreement until such time, if any, as Employee terminates
employment with such organization and, if applicable, fails to return
to BellSouth or a Subsidiary in accordance with the terms of Employee's
assignment, or Employee otherwise fails to meet the terms of Employee's
assignment, at which time Employee's deemed termination of employment
shall be treated in the same manner as a termination of employment from
BellSouth or a Subsidiary under this Agreement.
12. Non-Transferability. Performance Shares may not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise
hypothecated.
13. Miscellaneous
(a) Employee's rights under this Agreement can be modified,
suspended or canceled only in accordance with the terms of the
Plan.
(b) This Agreement shall be subject to the applicable provisions,
definitions, terms and conditions set forth in the Plan, all of
which are incorporated by this reference in this Agreement and,
unless defined in this Agreement, any capitalized terms in this
Agreement shall have the same meaning assigned to those terms
under the Plan. If there is any inconsistency between the terms
of this Agreement and the terms of the Plan, the Plan's terms
shall supercede and replace the conflicting terms of this
Agreement.
(c) The Plan and this Agreement shall be governed by the laws of the
State of Georgia.
IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇▇ has executed this Agreement as of the
date first written above.
BELLSOUTH CORPORATION:
By:
--------------------------------
Title: Vice President - Human
Resources
Exhibit A
Page 1 of 2
Performance Objectives
2004-2006 BellSouth Performance Share Plan
Total Shareholder Return (TSR) Measure - 50% of BellSouth Performance Share
Award
The payout percentage for 50% of the Performance Share Award shall be based on
BellSouth's annualized total shareholder return ("TSR") (1) for the Performance
Cycle versus the annualized total shareholder return of the S&P 500 Integrated
Telecommunications Index (S5ITEL) based on the following chart:
---------------------------------------------------------------
BellSouth Percentage
Points Above / Below Payout
S&P 500 Integrated Telecom Index Percentage
---------------------------------------------------------------
< x 0% of Target
x to x 50% of Target
x to x 60% of Target
x to x 70% of Target
x to x 80% of Target
x to x 90% of Target
x to x 100% of Target
x to x 110% of Target
x to x 120% of Target
x to x 130% of Target
x to x 140% of Target
> x 150% of Target
---------------------------------------------------------------
Return on Investment(ROI) Measure - 50% of BellSouth Performance Share Award
The payout percentage for remaining 50% of the Performance Share Award shall be
based on BellSouth's return on investment (ROI) (excluding Cingular) based on
the attached chart.
ROI is calculated as: After-Tax Operating Income divided by Average Invested
Capital (2).
---------------------------------------------------------------
BellSouth
Payout (3)
3-Year Average ROI Percentage
---------------------------------------------------------------
---------------------------------------------------------------
< x% 0% of Target
x% 50% of Target
x% 63% of Target
x% 75% of Target
x% 88% of Target
x% - x% 100% of Target
x% 113% of Target
x% 125% of Target
x% 138% of Target
>=x% 150% of Target
---------------------------------------------------------------
(1) Annualized TSR (includes price appreciation + dividends) from 1/1/2004 -
12/31/2006. A more precise definition is attached.
(2) Average Invested Capital = Average Net Property, Plant, and Equipment +
Average Net Working Capital (Excluding Short-Term Debt and Cash) + Average
Net Intangible Assets.
(3) For 3-year average ROI results between those shown, the payout percentage
will be calculated proportionally between the percentages reflected.
Performance Shares Earned shall be based on a simple average of the TSR and ROI
payout percentages. The Executive Nominating and Compensation Committee can
exercise discretion to adjust awards downward.
Exhibit A
Page 2 of 2
1/1/2004 - 12/31/2006 Performance Cycle
3-Year Annualized BellSouth TSR Calculation
1. Total Shareholder Return (TSR) for the 3-Year Performance Cycle is calculated
as follows:
The Performance Cycle is defined as 1/1/2004 through 12/31/2006. The
total shareholder return (TSR) for the purpose of this Award is
calculated by taking the difference between the end of period (EOP)
share price and the beginning of period (BOP) share price and adding to
the result the sum of dividends paid on a share of BellSouth stock
during the Performance Cycle (period dividends). The resultant
calculation is then divided by the beginning of period (BOP) share
price, the result being the total shareholder return for the period
(Period TSR). Beginning of period (BOP) share price shall be defined as
the average of closing prices quoted on the New York Stock Exchange
(NYSE) for all trading days beginning on 10/1/03 and ending on
12/31/03. End of period (EOP) share price shall be defined as the
average of closing prices quoted on the New York Stock Exchange (NYSE)
for all trading days beginning on 10/1/06 and ending on 12/31/06.
2. 3-Year Annualized TSR is then calculated as follows:
The Period TSR from above is then added to the number one (1) and
raised to the 1/3 power. The number one (1) is subtracted from the
result and that result is multiplied by 100 and expressed as a
percentage.
3-Year Annualized TSR expressed as formulas:
a. Period TSR = (EOP share price - BOP share price + period
dividends)/BOP share price
b. 3-Year Annualized TSR = ((1+Period TSR)^(1/3)-1)*100
3. BellSouth TSR Performance will be measured against;
The performance of BellSouth during the Performance Cycle will be
measured against the performance of the S&P 500 Integrated
Telecommunications Index (ticker symbol: S5ITEL). The method of
calculating both Period TSR and 3-Year Annualized TSR for the index
will be the same as outlined in numbers (1) and (2) above.
