SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
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(as permitted by Rule 14a-6(e)(2))
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[ ] Soliciting Material Under Rule 14a-12
SPRINT CORPORATION
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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The attached letter, which was mailed by Sprint Corporation on April 15, 2004,
may be deemed "soliciting materials" within the meaning of the Securities
Exchange Act of 1934, as amended, and the regulations of the Securities and
Exchange Commission issued thereunder.
[text follows:]
[Letterhead of SPRINT CORPORATION]
April 15, 2004
Dear Shareholder:
This letter explains why Sprint disagrees with recent voting
recommendations made by Institutional Shareholder Services (ISS) with respect to
three items contained in our 2004 proxy statement. We also direct your attention
to the ISS Alert issued late yesterday that corrects portions of ISS' initial
proxy analysis issued on April 7, 2004. The Alert notes Sprint's extensive
corporate governance reforms and credits Linda Koch Lorimer, the Chair of our
Nominating and Corporate Governance Committee, with playing a key role in these
initiatives throughout 2003 and 2004.
Please review the following information carefully before voting your FON or
PCS shares. We urge you not to follow the ISS voting recommendations for the
following three items and to vote with management on all items.
Proxy Item 1: Vote For Director Linda Koch Lorimer
In its initial proxy analysis, ISS recommended a "withhold" vote for Ms.
Lorimer based on (1) an alleged lack of independence in our director nomination
process and (2) claimed poor judgment of our Board of Directors in determining
Gary Forsee's compensation when he joined Sprint as CEO in March 2003. In its
Alert, ISS reversed its original position with respect to our director
nomination process, stating that it is no longer concerned about that process.
We continue to disagree with ISS' recommendation regarding Ms. Lorimer and the
underlying analysis related to Mr. Forsee's compensation.
Mr. Forsee's compensation was rigorously reviewed by our Compensation
Committee, composed entirely of independent Directors, and the Board, with
advice from an independent compensation advisor and independent legal counsel,
to ensure that Mr. Forsee's compensation conformed with industry peers, taking
into account the benefits that Mr. Forsee forfeited upon his resignation from
his former employer and compensation being paid to newly recruited CEOs at other
major companies.
ISS makes inaccurate statements in its initial proxy analysis regarding Mr.
Forsee's compensation (for example, significantly under-reporting the size and
value of the equity package that he forfeited at his former employer).
ISS also makes statements that we believe are misleading. For example, ISS
focuses on the increase in Mr. Forsee's base salary when he joined Sprint, while
ignoring the fact that in joining us he undertook the role of CEO. In addition,
Mr. Forsee's equity compensation in 2003 reflected one-time awards that he
received in order to compensate him for losing his then-existing equity
compensation at his former employer and to recruit him to Sprint. Yet, ISS makes
no mention of the one-time nature of these grants in its table comparing Mr.
Forsee's annual compensation to that of other industry CEOs. ISS also fails to
disclose that (1) despite ISS' suggestion that Mr. Forsee has a minimum
guaranteed bonus, this applied only in 2003 and (2) the majority of the
equity-based compensation he received when he joined Sprint will not vest until
December 31, 2007.
As Chair of our Nominating and Corporate Governance Committee, Ms. Lorimer
has championed and led extensive corporate governance reforms at Sprint,
including the declassification of our Board. In its Alert, ISS acknowledged her
key role in that regard. (You can read about these reforms on our web site, at
http://www.sprint.com/sprint/ir/cg/.) Ms. Lorimer is a highly respected business
leader. As stated in our proxy statement, she is Vice President and Secretary of
Yale University, New Haven, Connecticut. She is a director of McGraw-Hill, Inc.,
and Yale-New Haven Hospital and a trustee of Hollins University. Before becoming
Vice President and Secretary of Yale University in 1993, Ms. Lorimer was
President of Randolph-Macon Woman's College for more than six years. She has
served as the President of the Board of the American Association of Colleges and
Universities and as Vice Chair of The Center for Creative Leadership.
In conclusion, Sprint and its shareholders benefit from Ms. Lorimer's
experience, counsel and wisdom as a member of the Sprint Board, and Ms.
Lorimer's continued service on the Sprint Board is in the best interest of
Sprint and its shareholders.
We encourage you to vote FOR Ms. Lorimer.
Proxy Item 3: Vote Against the Shareholder Proposal to Require Indexed Options
ISS has recommended that shareholders vote in favor of a shareholder
proposal that would require that all stock options granted to our senior
executives be "indexed" options, meaning that the option exercise price is
indexed or linked to an industry peer group stock performance index. This
recommendation by ISS is inconsistent with ISS' own published positions in
opposition to such a restrictive approach to options.
ISS has recognized that proposals requiring all top executives to receive
only indexed options are "overly restrictive." As to proposals requiring that
companies use solely performance-based options (which include indexed options),
the voting guidelines that appear on ISS' web site indicate that "such stringent
requirements can constitute micromanagement and put the company at a competitive
disadvantage." The voting guidelines appearing on ISS' web site are particularly
critical of indexed options, noting that they trigger variable accounting, can
be subject to manipulation, and can provide rewards to employees even when the
company's stock price has fallen. We agree with ISS' views with respect to the
disadvantages associated with the exclusive use of indexed and other
performance-based options.
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Although we strongly support and extensively utilize performance-based
compensation, and our Compensation Committee carefully evaluates such
compensation, requiring us to use exclusively "indexed" options would make it
more difficult for us to attract, retain and motivate talented executives. In
fact, in a study published by Frederic W. Cook & Co., Inc., titled "The 2003 Top
250," on long-term incentive grant practices for executives in the 250 largest
U.S.-based companies, none of the companies report the use of any indexed
options, much less the exclusive use of indexed options.
We encourage you to vote AGAINST this shareholder proposal.
Proxy Item 5: Vote Against the Shareholder Proposal Concerning an Independent
Chairman
ISS recommends a vote in favor of a shareholder proposal that would require
us to separate the positions of Chairman and CEO. ISS' own voting guidelines
recognize that a designated lead independent director coupled with other
governance structures can permit companies to achieve the same governance
benefits as an independent Chairman.
In its initial proxy analysis, ISS incorrectly analyzed Sprint's lead
independent director governance structure, including the duties of our lead
independent director. Sprint satisfies in practice all of the ISS-identified
components of an effective lead independent director governance structure, with
the exception of one component related to director independence. The difference
is limited to a single ISS independence criterion that is far more stringent
than the latest NYSE standards. Further, this difference relates only to a
single committee member assignment. Sprint also satisfies in practice all of
ISS' required duties for a lead independent director. As reflected in our proxy
statement and on our web site at http://www.sprint.com/sprint/ir/cg/, Sprint has
in place a strong lead independent director governance structure.
The Sprint Board has the power to separate the Chairman and CEO positions
at any time. We believe the Board should have the flexibility to adopt the
governance structure it believes to be in the best interest of Sprint and its
shareholders.
We encourage you to vote AGAINST this shareholder proposal.
We sincerely appreciate your consideration of the above information and
your investment in Sprint.
Sincerely,
/s/ Claudia Toussaint
Vice President, Corporate Governance and Ethics
Corporate Secretary
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