-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QqDsiGDY7IY/aWNxzL1+IbfQLSyCLbfqWjc5Tpagze4kgj90X5cqMOc1aZNWvutQ FyALpMgeQdPCCWJl8lZhdw== 0000732713-05-000029.txt : 20050128 0000732713-05-000029.hdr.sgml : 20050128 20050128145354 ACCESSION NUMBER: 0000732713-05-000029 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050124 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050128 DATE AS OF CHANGE: 20050128 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BELLSOUTH CORP CENTRAL INDEX KEY: 0000732713 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 581533433 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08607 FILM NUMBER: 05557741 BUSINESS ADDRESS: STREET 1: 1155 PEACHTREE ST NE STREET 2: ROOM 15G03 CITY: ATLANTA STATE: GA ZIP: 30309-3610 BUSINESS PHONE: 4042492000 MAIL ADDRESS: STREET 1: 1155 PEACHTREE STREET NE CITY: ATLANTA STATE: GA ZIP: 30309-3610 8-K 1 form8k012405.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): January 24, 2005 BellSouth Corporation - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Georgia - -------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 1-8607 58-1533433 - -------------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) Room 15G03, 1155 Peachtree Street, N. E., Atlanta, Georgia 30309-3610 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (404) 249-2000 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry Into a Material Definitive Agreement At its meeting on January 24, 2005, the Executive Nominating and Compensation Committee of the BellSouth Board of Directors (the "Compensation Committee") took the actions described below. Short-Term Incentive Compensation for 2005 The Compensation Committee established performance objectives with respect to executive officers' short-term incentive compensation for 2005. The Compensation Committee designated the executive officers eligible to participate in the annual bonus pool established by the shareholder-approved BellSouth Corporation Stock and Incentive Compensation Plan (the "Plan") and allocated the pool among those officers in amounts which range from 5% to 20%. The Compensation Committee ultimately retains negative discretion with respect to the awards, and it is possible that the entire bonus pool will not be distributed when actual bonus awards are made. All short-term incentive compensation awards to executive officers designated by the Compensation Committee as eligible to participate in the bonus pool under the Plan will be granted using the form of Award Agreement approved by the Compensation Committee and attached hereto as Exhibit 10ss. Long-Term Incentive Compensation for 2005-2007 Performance Period The Compensation Committee established, for all executive officers, the performance objectives that are tied to the Company's total shareholder return for the long-term incentive compensation program with respect to the three-year performance period 2005 through 2007. The Compensation Committee also established, for one executive officer, the performance objectives that are tied to internal performance metrics for the long-term incentive compensation program for the 2005 through 2007 performance period. All such objectives were established under the Plan. Long-term incentive compensation awards for 2005 have not yet been granted. Long-Term Incentive Compensation for 2002-2004 Performance Period The Compensation Committee approved the results of the performance objectives related to the long-term incentive compensation program with respect to the three-year performance period for 2002 through 2004. Pursuant to the terms of the awards, which had been granted in 2002 under the Amended and Restated BellSouth Corporation Stock Plan, certain executive officers will receive a payout based on the Company's performance during this performance period. A form of the Award Agreement pursuant to which the awards had been made is attached hereto as Exhibit 10tt. Item 9.01. Financial Statements and Exhibits (c) Exhibits Exhibit No. 10ss Form of BellSouth Corporation Stock and Incentive Compensation Plan Annual Incentive Award Agreement for Executive Officers (2005 Awards) 10tt Form of BellSouth Corporation Stock Plan Performance Shares Award Agreement (2002 Awards) 10uu Form of BellSouth Corporation Stock Plan Performance Shares Agreement (2003 Awards) SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BELLSOUTH CORPORATION By: /s/ W. Patrick Shannon W. Patrick Shannon Senior Vice President - Finance and Controller January 27, 2005 EX-10 2 form8k012405ex10ss.txt EXHIBIT 10SS Exhibit 10ss BELLSOUTH CORPORATION STOCK AND INCENTIVE COMPENSATION PLAN ANNUAL INCENTIVE AWARD AGREEMENT [2005 Grants] BellSouth Corporation, a Georgia corporation ("BellSouth"), acting pursuant to action of the Executive Nominating and Compensation Committee of the Board of Directors (the "Compensation Committee") and in accordance with the BellSouth Corporation Stock and Incentive Compensation Plan (the "Plan"), hereby grants to ______________ ("Officer") an Annual Incentive Award under the terms set forth in this Annual Incentive Award Agreement ("Agreement"), effective as of ________________ 2005: 1. Award Grant. BellSouth grants to Officer an Annual Incentive Award equal to __% ("Allocated Percentage") of the Annual Bonus Pool 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 Annual Incentive Awards as set forth in the Plan. 2. Annual Bonus Pool. The "Annual Bonus Pool" is equal to the greater of: (x) nine-tenths of one percent (0.9%) of the Operating Cash Flow for BellSouth's 2005 fiscal year, beginning on January 1, 2005 and ending on December 31, 2005; or (y) one and one-half percent (1.5%) of the Net Income for BellSouth's 2005 fiscal year. 3. Performance Objectives. The Award shall be payable if BellSouth has positive Operating Cash Flow or positive Net Income, in each case, for BellSouth's 2005 fiscal year (the "Performance Objectives"). 4. Determination of Award. (a) As soon as practicable following the receipt by the Compensation Committee of the Operating Cash Flow and Net Income from BellSouth's 2005 audited financial statements, the Compensation Committee shall certify in writing whether one or more of the Performance Objectives have been satisfied and, if so, the amount of the Annual Bonus Pool. (b) If one or more of the Performance Objectives have been satisfied, the Compensation Committee shall, as soon as practicable following its certification pursuant to Paragraph 4(a) above, calculate the amount of the Award based on Officer's Allocated Percentage of the Annual Bonus Pool; provided, however, the Compensation Committee may, in its sole discretion, reduce the amount payable to Officer with respect to the Award. 5. Payment of Award. Payment with respect to the Award shall be made in cash as soon as practicable following the Compensation Committee's (i) certification that one or more of the Performance Objectives have been satisfied and (ii) calculation of the amount of the Award, in each case, pursuant to Paragraph 4 above (the "Payment Date"); provided, however, such payment may be subject to deferral under any plan or program that the Administrator may establish for such purpose. 6. Death, Disability or Retirement. In the event of a termination of Officer's employment with BellSouth or any Subsidiary prior to the Payment Date by reason of: (i) death of Officer; (ii) Disability; or (iii) retirement which entitles Officer 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 Officer's employer which BellSouth determines to be comparable to such a Service Pension, and not for Cause, Officer or his or her Beneficiary, as the case may be, shall, if the Compensation Committee certifies that one or more of the Performance Objectives have been satisfied with respect to the Award pursuant to Paragraph 4(a) above, be eligible to receive a prorated payment equal to the product of: (x) Officer's Allocated Percentage of the Annual Bonus Pool multiplied by (y) a fraction, the numerator of which is the number of whole or partial calendar months elapsed between January 1, 2005 and the date of Officer's termination of employment, and the denominator of which is twelve (12) (the "Proration Factor"); provided, however, the Compensation Committee may, in its sole discretion, reduce the amount payable to Officer with respect to the Award under this Paragraph 6. Any amount payable under this Paragraph 6 shall be paid on the Payment Date described in Paragraph 5 above. 7. Forfeiture. In the event Officer terminates employment with BellSouth and its Subsidiaries prior to the Payment Date, under circumstances other than those described in Paragraph 6 above, Officer shall forfeit all of his or her interest in the Award. 8. Tax Withholding. BellSouth or any Subsidiary shall withhold from any payment to Officer or other person under this Agreement an amount sufficient to cover any withholding taxes which may become required with respect to such payment or take any other action as it deems necessary to satisfy any income or other tax withholding requirements with respect to the Award. BellSouth or any Subsidiary shall have the right to require that Officer furnish information deemed necessary by BellSouth or any Subsidiary to meet any tax reporting obligation before making any payment pursuant to the Award. 9. Non-Transferability. The Award may not be sold, transferred, or otherwise disposed of and shall not be pledged or otherwise hypothecated. 10. Employment and Termination. Neither the Plan, this Agreement nor any related documents, communications or other material shall give Officer the right to continued employment by BellSouth or by any Subsidiary, or shall adversely affect the right of any such company to terminate Officer's employment with or without Cause at any time. 11. Modification of Agreement. This Agreement may be modified, amended, suspended or terminated only in accordance with the terms of the Plan. 12. Agreement Subject to Plan. 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. 13. No Right to Award. Nothing in this Agreement or the Plan shall be deemed or construed to create an obligation for the Compensation Committee, BellSouth or any Subsidiary to make any payment with respect to the Award on the Payment Date or at any other time, whether in an amount equal to the Allocated Percentage of the Annual Bonus Pool or any other amount. 14. Severability. Should any provision of this Agreement be held by a court of competent jurisdiction to be unenforceable or invalid for any reason, the remaining provisions of this Agreement shall not be affected by such holding and shall continue in full force in accordance with their terms. 15. Governing Law. The Plan and this Agreement shall be governed by the laws of the State of Georgia without giving effect to conflicts of law principles thereof. 16. Jurisdiction and Venue. Acceptance of this Agreement shall be deemed to constitute Officer's consent to the jurisdiction and venue of the Superior Court of Fulton 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. 17. Successors in Interest. This Agreement shall inure to the benefit of and be binding upon any successor to BellSouth. This Agreement shall inure to the benefit of Officer's legal representatives. All obligations imposed upon Officer and all rights granted to BellSouth under this Agreement shall be binding upon Officer's heirs, executors, administrators and successors. 18. Administration. Any dispute or disagreement which may arise under, or as a result of, or in any way relate to, the interpretation, construction or application of this Agreement shall be determined by the Compensation Committee. Any determination made hereunder shall be final, binding and conclusive on Officer, Officer's heirs, executors, administrators and successors, and BellSouth and its Subsidiaries for all purposes. IN WITNESS WHEREOF, this Agreement has been executed on behalf of BellSouth effective as of the date first written above. BELLSOUTH CORPORATION By: __________________________________ Vice President - Human Resources EX-10 3 form8k012405ex10tt.txt EXHIBIT 10TT Exhibit 10tt BELLSOUTH CORPORATION STOCK PLAN PERFORMANCE SHARES AWARD AGREEMENT [2002 Awards] BellSouth Corporation, a Georgia corporation ("BellSouth"), acting pursuant to action of its Board of Directors and in accordance with the BellSouth Corporation Stock Plan (the "Plan"), hereby grants to __________ ("Employee") Performance Shares under the terms set forth in this Performance Shares Award Agreement ("Agreement"), effective as of March 1, 2002: 1. Award Grant. BellSouth grants to Employee _____ Performance Shares as described in Section 9.2 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 Period. The Performance Period with respect to the Award shall be the three consecutive calendar year period commencing January 1, 2002 and ending December 31, 2004. 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 Period, 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 Period (the "Performance Shares Earned"). The Compensation Committee, in its discretion, shall make this determination, which 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 average of the daily closing prices of a Share of BellSouth Stock as quoted on the New York Stock Exchange (NYSE) for the ten (10) trading days comprised of the five (5) trading days immediately preceding, and the five (5) trading days immediately following, the last day of the Performance Period. 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 end of the Performance Period, but in no event later than June 30, 2005; 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 Period) during the Performance Period. This amount shall be paid as soon as administratively practicable after the end of the Performance Period. 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 Period by reason of: (i) death of Employee; (ii) disability, provided as a result of such disability Employee is eligible for disability benefits under the BellSouth Corporation Long Term Disability Plan or disability benefits under an alternative plan maintained by Employee's employer which BellSouth determines to be comparable to such disability benefits; or (iii) retirement which entitles Employee to a "Service Pension" under the terms of the applicable BellSouth Personal Retirement Account Pension Plan or a BellSouth Supplemental Executive Retirement Plan, 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 or as a result of misconduct in connection with his or her employment, Employee or his or her Beneficiary, as the case may be, shall be entitled to prorated payments under this Agreement. Such payments shall equal: (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, 2002 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 Period) 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, (i) the Performance Period 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 Period"), (ii) Employee shall be entitled to a payment equal to the amount determined for the Modified Performance Period pursuant to Paragraph 4(b) above multiplied by a fraction, the numerator of which is the number of whole or partial calendar months elapsed during the Modified Performance Period, 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 Period) during the Modified Performance Period. Such amounts shall be paid as soon as administratively practicable after the end of the Modified Performance Period, 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 Fulton 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, pledged, assigned or otherwise alienated, other than by will or by the laws of decent and distribution. 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. BELLSOUTH CORPORATION: By: ----------------------------------------------------------- Vice President - Human Resources Exhibit A Page 1 of 2 Performance Objectives 2002-2004 Officer Performance Share Plan 1. The number of performance shares earned shall be based upon BellSouth's annualized total shareholder return ("TSR")* for the performance period versus the annualized total shareholder return of the Telecom 7 Index (defined below) based on the following chart: --------------------------------------------------------------- BellSouth Percentage Points Above / Below Payout Telecom 7 Index --------------------------------------------------------------- < 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 --------------------------------------------------------------- 2. The Executive Nominating, Compensation and Human Resources Committee can exercise discretion to adjust awards downward. 3. The Telecom 7 Index is a capitalization weighted (as of 1/1/2002) measure of Total Shareholder Return of the following companies: ---------------------------------------- ---------------------- Market Capitalization Company Weighting ---------------------------------------- ---------------------- ---------------------------------------- ---------------------- Verizon 42% ---------------------------------------- ---------------------- ---------------------------------------- ---------------------- SBC 39% ---------------------------------------- ---------------------- ---------------------------------------- ---------------------- Qwest 7% ---------------------------------------- ---------------------- ---------------------------------------- ---------------------- Alltel 5% ---------------------------------------- ---------------------- ---------------------------------------- ---------------------- Sprint FON 5% ---------------------------------------- ---------------------- ---------------------------------------- ---------------------- CenturyTel 1% ---------------------------------------- ---------------------- ---------------------------------------- ---------------------- Citizens 1% ---------------------------------------- ---------------------- * Annualized TSR (includes price appreciation + dividends) from 1/1/2002 - 12/31/2004. A more precise definition is attached. Page 2 of 2 1/1/2002 - 12/31/2004 Performance Period 3-Year Annualized TSR Calculation 1) Total Shareholder Return (TSR) for the 3-Year period are calculated as follows: The performance period is defined as 1/1/2002 through 12/31/2004. 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 period (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 the 5 trading days prior to 1/1/2002 and the first 5 trading days after 1/1/2002. The end of period (EOP) share price shall be defined as the average of closing prices quoted on the New York Stock Exchange (NYSE) for the 5 trading days prior to 12/31/2004 and the first 5 trading days after 12/31/2004. 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) 3-Year Annualized Index for Telecom 7 is calculated as follows: a) Each company in the index will have its 3-year annualized TSR calculated as described above. b) Each individual 3-year annualized TSR will be multiplied by the company's market cap weighting (as of 1/1/2002) from the table specified in 3). The resulting weighted TSRs will then be added together to generate the TSR for the index. 3-Year Annualized Index for Telecom 7 expressed as formulas: a) Company "x" weighed TSR=(company "x" 3-year annualized TSR)*(company "x" market capitalization weighting) b) Index TSR=(company 1 weighted TSR)+(company 2 weighted TSR)+.....+ (company 7 weighted TSR) 4) Modifications during the performance period: The Compensation Committee shall make adjustments in the number of performance shares awarded and/or earned in the event of certain corporate transactions or events in accordance with Section 10.6 of the Plan as allowed under Treas. Reg. 1.162-27(e)(2)(iii)(C), or successor rule or regulation. In addition, the Committee shall make adjustments in the Telecom 7 Index and/or the weightings assigned in that Index consistent with the types of adjustments contemplated in the preceding sentence. EX-10 4 form8k012405ex10uu.txt EXHIBIT 10UU Exhibit 10uu BELLSOUTH CORPORATION STOCK PLAN PERFORMANCE SHARES AWARD AGREEMENT [2003 Awards] BellSouth Corporation, a Georgia corporation ("BellSouth"), acting pursuant to action of its Board of Directors and in accordance with the BellSouth Corporation Stock Plan (the "Plan"), hereby grants to ________ ("Employee") Performance Shares under the terms set forth in this Performance Shares Award Agreement ("Agreement"), effective as of March 3, 2003: 1. Award Grant. BellSouth grants to Employee ________ Performance Shares as described in Section 9.2 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 Period. The Performance Period with respect to the Award shall be the three consecutive calendar year period commencing January 1, 2003 and ending December 31, 2005. 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 Period, 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 Period (the "Performance Shares Earned"). The Compensation Committee, in its discretion, shall make this determination, which 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 average of the daily closing prices of a Share of BellSouth Stock as quoted on the New York Stock Exchange (NYSE) for the ten (10) trading days comprised of the five (5) trading days immediately preceding, and the five (5) trading days immediately following, the last day of the Performance Period. 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 end of the Performance Period, but in no event later than June 30, 2006; 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 Period) during the Performance Period. This amount shall be paid as soon as administratively practicable after the end of the Performance Period. 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 Period by reason of: (i) death of Employee; (ii) disability, provided as a result of such disability Employee is eligible for disability benefits under the BellSouth Corporation Long Term Disability Plan or disability benefits under an alternative plan maintained by Employee's employer which BellSouth determines to be comparable to such disability benefits; or (iii) retirement which entitles Employee to a "Service Pension" under the terms of the applicable BellSouth Personal Retirement Account Pension Plan or a BellSouth Supplemental Executive Retirement Plan, 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 or as a result of misconduct in connection with his or her employment, Employee or his or her Beneficiary, as the case may be, shall be entitled to prorated payments under this Agreement. Such payments shall equal: (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, 2003 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 Period) 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, (i) the Performance Period 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 Period"), (ii) Employee shall be entitled to a payment equal to the amount determined for the Modified Performance Period pursuant to Paragraph 4(b) above multiplied by a fraction, the numerator of which is the number of whole or partial calendar months elapsed during the Modified Performance Period, 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 Period) during the Modified Performance Period. Such amounts shall be paid as soon as administratively practicable after the end of the Modified Performance Period, 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 Fulton 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, pledged, assigned or otherwise alienated, other than by will or by the laws of decent and distribution. 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. BELLSOUTH CORPORATION: By: ----------------------------------------------------------- Vice President - Human Resources Exhibit A Page 1 of 2 Performance Objectives 2003-2005 BellSouth Performance Share Plan 1. The number of performance shares earned shall be based upon BellSouth's annualized total shareholder return ("TSR")* for the performance period 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 < 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 2. The Executive Nominating, Compensation and Human Resources Committee can exercise discretion to adjust awards downward. * Annualized TSR (includes price appreciation + dividends) from 1/1/2003 - 12/31/2005. A more precise definition is attached. Exhibit A Page 2 of 2 1/1/2003 - 12/31/2005 Performance Period 3-Year Annualized BellSouth TSR Calculation 1. Total Shareholder Return (TSR) for the 3-Year period are calculated as follows: The performance period is defined as 1/1/2003 through 12/31/2005. 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 period (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 10/1/02 and ending on 12/31/02. 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 10/1/05 and ending on 12/31/05. 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 Performance will be measured against; The performance of BellSouth during the performance period 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. -----END PRIVACY-ENHANCED MESSAGE-----