Edgar Filing: SBC COMMUNICATIONS INC

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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 (Amendment No. __ )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement

[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S)240.14a-12

SBC Communications Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:

--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):

--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

--------------------------------------------------------------------------------
(5) Total fee paid:

--------------------------------------------------------------------------------

[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

--------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:

--------------------------------------------------------------------------------
(3) Filing Party:

--------------------------------------------------------------------------------
(4) Date Filed:

--------------------------------------------------------------------------------

[cover page]

[graphic of banner with text: Celebrating Over 125 Years of Service!]

[SBC logo]

Notice of 2003
Annual Meeting and
Proxy Statement

[inside cover]

On January 28, 1878, the New Haven District Telephone Company (a predecessor of
our SBC SNET subsidiary) opened the first telephone exchange in the world. The
next month it issued the first public telephone directory in the world
(reprinted below in its entirety). SBC companies began service in San Francisco
in February 1878, St. Louis in April 1878, and Chicago in June 1878.

[graphic of New Haven District Telephone Company list of subscribers]

SBC COMMUNICATIONS INC.

-----------------------------

Notice of
Annual Meeting of Shareowners

-----------------------------

The 2003 Annual Meeting of Shareowners of SBC Communications Inc. ("SBC"),
a Delaware corporation, will be held at 9:00 a.m. on Friday, April 25, 2003, at
the University of the Incarnate Word, in the Sky Room, 847 E. Hildebrand, San
Antonio, Texas. The items of business are:

1. Elect seven Directors to serve three-year terms
2. Ratify the appointment of Ernst & Young LLP as independent auditors of
SBC for 2003
3. Act upon certain shareowner proposals

and to act upon such other matters as may properly come before the meeting.

Holders of SBC common stock of record at the close of business on February
28, 2003, are entitled to vote at the meeting and any adjournment of the
meeting. A list of these shareowners will be available for inspection during
business hours from April 11 through April 25, 2003, at 175 E. Houston, San
Antonio, Texas, and will also be available at the Annual Meeting.

By Order of the Board of Directors.

/s/ Joy Rick

Joy Rick
Vice President and Secretary

March 14, 2003

IMPORTANT NOTICE
If you do not plan to attend the Annual Meeting to vote your shares, please
complete, date, sign and promptly mail the enclosed proxy card in the return
envelope provided. No postage is necessary if it is mailed in the United
States. Shareowners of record may also give their proxy by telephone or
through the Internet in accordance with the instructions accompanying the
proxy card. Any person giving a proxy has the power to revoke it at any time,
and shareowners who are present at the meeting may withdraw their proxies and
vote in person.

PROXY STATEMENT

ANNUAL MEETING OF SHAREOWNERS
--------------------------------------------------------------------------------

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of SBC Communications Inc. ("SBC") for use at
the 2003 Annual Meeting of Shareowners of SBC. The meeting will be held at 9:00
a.m. on Friday, April 25, 2003, at the Sky Room of the University of the
Incarnate Word, 847 E. Hildebrand, San Antonio, Texas. The purposes of the
meeting are set forth in the Notice of Annual Meeting of Shareowners. This
Proxy Statement and the accompanying proxy card are being mailed beginning
March 14, 2003, to shareowners of record of SBC's common stock, $1.00 par value
per share, at the close of business on February 28, 2003. Each share entitles
the registered holder to one vote. As of January 31, 2003, there were
3,318,835,739 shares of SBC common stock outstanding.

All shares represented by proxies will be voted by one or more of the
persons designated on the enclosed proxy card in accordance with the
shareowners' directions. If the proxy card is signed and returned without
specific directions with respect to the matters to be acted upon, the shares
will be voted in accordance with the recommendations of the Board of Directors.
Any shareowner giving a proxy may revoke it at any time before such proxy is
voted at the meeting by giving written notice of revocation to the Vice
President and Secretary of SBC, by submitting a later-dated proxy, or by
attending the meeting and voting in person. The Chairman of the Board and Chief
Executive Officer will announce the closing of the polls during the Annual
Meeting. Proxies must be received prior to the closing of the polls in order to
be counted.

Instead of submitting a signed proxy card, shareowners may submit their
proxies by telephone or through the Internet using the control number and
instructions accompanying the proxy card. Telephone and Internet proxies must
be used in conjunction with, and will be subject to, the information and terms
contained on the proxy card. Similar procedures may also be available to
shareowners who hold their shares through a broker, nominee, fiduciary or other
custodian.

The proxy card, or a proxy submitted by telephone or through the Internet,
will also serve as voting instructions to the plan administrator or trustee for
any shares held on behalf of a participant under any of the following employee
benefit plans: the SBC Savings Plan, the SBC Savings and Security Plan, the
DonTech Profit Participation Plan, the Old Heritage

Advertising & Publishers, Inc. Profit Sharing Plan, the SBC PAYSOP, the Pacific
Telesis Group Employee Stock Ownership Plan, the Tax Reduction Act Stock
Ownership Plan (the "TRASOP") sponsored by The Southern New England Telephone
Company, the Cingular Wireless 401(k) Savings Plan, and the Cingular Wireless
401(k) Savings Plan for Bargained Employees. Shares in each of the foregoing
employee benefit plans (except the TRASOP and the Old Heritage plan) for which
voting instructions are not received, as well as shares which have not yet been
allocated to participants' accounts in the SBC Savings Plan, subject to the
trustees' fiduciary obligations, will be voted by the trustees in the same
proportion as the shares for which voting instructions are received from other
participants in each such plan. In addition, the proxy card or a proxy
submitted by telephone or through the Internet will constitute voting
instructions to the plan administrator pursuant to The DirectSERVICE Investment
Program sponsored and administered by EquiServe Trust Company, N.A. (SBC's
transfer agent) for shares held on behalf of plan participants.

If a shareowner participates in these plans and/or maintains shareowner
accounts under more than one name (including minor differences in registration,
such as with or without a middle initial), the shareowner may receive more than
one set of proxy materials. To ensure that all shares are voted, please sign
and return every proxy card received or submit a proxy by telephone or through
the Internet for each proxy card (the control numbers will differ on each card).

A shareowner may designate a person or persons other than those persons
designated on the proxy card to act as the shareowner's proxy. The shareowner
may use the proxy card to give another person authority by striking out the
names appearing on the enclosed proxy card, inserting the name(s) of another
person(s) and delivering the signed card to such person(s). The person(s)
designated by the shareowner must present the signed proxy card at the meeting
in order for the shares to be voted.

Where the shareowner is not the record holder, such as where the shares are
held through a broker, nominee, fiduciary or other custodian, the shareowner
must provide voting instructions to the record holder of the shares in
accordance with the record holder's requirements in order to ensure the shares
are properly voted.

The cost of soliciting proxies will be borne by SBC. Officers, agents and
employees of SBC and its subsidiaries and other solicitors retained by SBC may,
by letter, by telephone or in person, make additional requests for

the return of proxies and may receive proxies on behalf of SBC. Brokers,
nominees, fiduciaries and other custodians will be requested to forward
soliciting material to the beneficial owners of shares and will be reimbursed
for their expenses. SBC has retained D. F. King & Co., Inc. to aid in the
solicitation of proxies at a fee of $15,000, plus expenses.

Shareowners who represent 40% of the common stock outstanding and are
entitled to vote must be present or represented by proxy in order to constitute
a quorum to conduct business at the meeting. A list of eligible voters will be
available at the Annual Meeting.

If you plan to attend the meeting in person, please bring the admission
ticket (which is attached to the proxy card) to the Annual Meeting. If you do
not have an admission ticket, you will be admitted upon presentation of
identification at the door.

SBC's executive offices are located at 175 E. Houston, San Antonio, Texas
78205.

Your vote is important. Please sign, date and return your proxy card or
submit your proxy by telephone or through the Internet promptly so that a
quorum may be represented at the meeting.

BOARD OF DIRECTORS
--------------------------------------------------------------------------------

The Board of Directors is responsible for the management and direction of
SBC and for establishing broad corporate policies. The Board of Directors and
various committees of the Board regularly meet to receive and discuss operating
and financial reports presented by the Chairman of the Board and Chief
Executive Officer as well as reports by experts and other advisors. Corporate
review sessions are also offered to Directors to help familiarize them with
SBC's businesses, technology, and operations. The Board held eight meetings in
2002.

Under SBC's Bylaws, the Board of Directors has the authority to determine
the size of the Board, not to exceed 25 Directors, and to fill vacancies. The
Board of Directors currently consists of 21 members, one of whom is an
executive officer of SBC. There are no vacancies on the Board.

SBC's Bylaws provide for a classified Board of Directors with three classes
of Directors. Each class is to consist of an equal number of Directors or,
where an equal number in each class is not possible, be as nearly equal as
possible. The class to which each Director has been assigned is designated as
Group A, Group B or Group C. The term of office of Group A Directors will
expire at the 2003 Annual Meeting, Group B at the 2004 Annual Meeting, and
Group C at the 2005 Annual Meeting.

The Board of Directors has nominated the seven persons listed as nominees
for Group A, all of whom are incumbent Directors, for election at the 2003
Annual Meeting to three-year terms of office expiring at the 2006 Annual
Meeting.

Biographical information about the Directors is provided on pages 7-12.
Except as otherwise noted, Directors who are shown as officers or partners of
other corporations, institutions or firms have held the positions indicated, or
have been officers of the organizations indicated, for more than five years.

Holdings of SBC common stock by SBC Directors are shown on the table on
page 15.

Board Committees

From time to time the Board establishes permanent standing committees and
temporary special committees to assist the Board in carrying out its
responsibilities. The Board has established seven standing committees of
Directors; the principal responsibilities of which are described below. The
biographical information included later in this Proxy Statement identifies
committee memberships held by each Director.

Audit Committee--The Committee met eight times in 2002. It consists of five
non-employee Directors. The Committee oversees the financial reporting
process, the systems of internal accounting and financial controls, the
performance and independence of the independent auditors and the internal
auditors, the annual independent audit of SBC's financial statements, and
related matters. The Committee recommends to the Board the appointment of a
firm to serve as independent auditors, subject to ratification by the
shareowners at the Annual Meeting. The independent auditing firm examines
the accounting records of SBC and its subsidiaries for the coming year.

Corporate Development Committee--The Committee met two times in 2002. It
consists of seven non-employee Directors and one employee Director. The
Committee reviews proposed mergers, acquisitions, dispositions, and similar
transactions.

Corporate Governance and Nominating Committee--This is a new committee that was
created March 1, 2003. The Committee consists of six non-employee Directors.
It is responsible for corporate governance matters, recommending to the
Board the candidates for election to the Board, and for recommending the
compensation of Directors. In recommending Board candidates, the Committee
seeks individuals of proven judgment and competence who are outstanding in
their chosen fields, and it considers factors such as anticipated
participation in Board activities, education, geographic location and
special talents or personal attributes. Shareowners who wish to suggest
qualified candidates should write to the Vice President and Secretary, SBC
Communications Inc., 175 E. Houston, San Antonio, Texas 78205, stating in
detail the qualifications of such persons for consideration by the Committee.

Corporate Public Policy and Environmental Affairs Committee--The Committee met
two times in 2002. It consists of 10 non-employee Directors. The Committee
examines corporate policy and provides

guidance and perspective to SBC management on major public issues, including
legislative and environmental matters.

Executive Committee--The Committee did not meet in 2002. It consists of two
non-employee Directors and one employee Director. The Committee assists the
Board of Directors by acting upon matters when the Board is not in session.
The Committee has the full power and authority of the Board to the extent
permitted by law, including the power and authority to declare a dividend or
to authorize the issuance of common stock.

Finance/Pension Committee--The Committee met four times in 2002. It consists of
seven non-employee Directors and one employee Director. The Committee makes
recommendations to the Board of Directors with respect to investment policy,
dividends, methods of financing the operations of SBC and its subsidiaries,
and oversees the investments of SBC's employee benefit plans.

Human Resources Committee--The Committee met six times in 2002. It consists of
five non-employee Directors. The Committee oversees the management of human
resources activities of SBC, including officer compensation and the design
of employee benefit plans.

SBC Directors to be Elected at the 2003 Annual Meeting (GROUP A)
--------------------------------------------------------------------------------

[PHOTO] GILBERT F. AMELIO, age 60, is Senior Partner of Sienna Ventures,
Sausalito, California, and has served in this capacity since April
2001. Dr. Amelio is also Chairman and Chief Executive Officer of each
of Beneventure Capital, LLC and AmTech, LLC, San Francisco,
California, and has served as such since 1999. Dr. Amelio has also
been Principal of Aircraft Ventures, LLC since 1997. He was Partner
and Director of The Parkside Group, LLC from 1998 to 1999. Dr. Amelio was
elected a Director of SBC in February 2001 and had previously served as an
Advisory Director of SBC from April 1997 to February 2001. He served as a
Director of Pacific Telesis Group from 1995 to 1997. He is a member of the
Corporate Public Policy and Environmental Affairs Committee and the Human
Resources Committee.

[PHOTO] CLARENCE C. BARKSDALE, age 70, was Vice Chairman, Board of Trustees,
Washington University, St. Louis, Missouri, from July 1989 until
2001, except during the period July 1999 to May 2000. He remains a
member of the Board of Trustees of Washington University. Mr.
Barksdale was Chairman of the Board and Chief Executive Officer of
Centerre Bancorporation from 1978 to 1988 and Chairman of the Board
of Centerre Bank N.A. from 1976 to 1988. Mr. Barksdale was Vice Chairman of
Boatmen's Bancshares, Inc. from January through June 1989. He has been a
Director of SBC since October 1983. Mr. Barksdale served as a Director of
Southwestern Bell Telephone Company from 1982 to 1983. He is the Chairman of
the Audit Committee and a member of the Corporate Public Policy and
Environmental Affairs Committee.

[PHOTO] MARTIN K. EBY, JR., age 68, is Chairman of the Board of The Eby
Corporation, Wichita, Kansas. He was also Chief Executive Officer of
The Eby Corporation from October 1985 to April 2002. Mr. Eby has been
a Director of SBC since June 1992. He is a Director of Intrust Bank,
N.A. and Intrust Financial Corporation. He is a member of the Audit
Committee and the Human Resources Committee.

(GROUP A--continued)
--------------------------------------------------------------------------------

[PHOTO] CHARLES F. KNIGHT, age 67, is Chairman of the Board of Emerson
Electric Co., St. Louis, Missouri. Mr. Knight was also Chief
Executive Officer of Emerson Electric Co. from 1973 to 2000. Mr.
Knight has been a Director of SBC since October 1983. He served as a
Director of Southwestern Bell Telephone Company from 1974 to 1983.
Mr. Knight is a Director of Anheuser-Busch Companies, Inc.; BP
p.l.c.; Emerson Electric Co.; International Business Machines Corporation; and
Morgan Stanley Dean Witter & Co. He is the Chairman of the Corporate
Development Committee and a member of the Executive Committee and the
Finance/Pension Committee.

[PHOTO] TONI REMBE, age 66, is a partner in the law firm of Pillsbury
Winthrop LLP, San Francisco, California. Ms. Rembe was elected a
Director of SBC in January 1998 and had previously served as an
Advisory Director of SBC from April 1997 to January 1998. She served
as a Director of Pacific Telesis Group from 1991 to 1997. She is a
Director of AEGON N.V. and Potlatch Corporation. She is a member of
the Corporate Development Committee and the Corporate Public Policy and
Environmental Affairs Committee.

[PHOTO] CARLOS SLIM HELU, age 63, is Chairman of the Board of Carso Global
Telecom, S.A. de C.V., Mexico City, Mexico, and Chairman of the Board
of Telefonos de Mexico, S.A. de C.V. He has also been Chairman of the
Board of America Movil, S.A. de C.V. since September 2000. He is
Chairman Emeritus of Grupo Carso, S.A. de C.V., having served as
Chairman of the Board of Grupo Carso from 1980 to 1998. Ing. Slim has
been a Director of SBC since September 1993. He is a Director of Altria Group,
Inc.; America Movil, S.A. de C.V.; Carso Global Telecom, S.A. de C.V.; Grupo
Financiero Inbursa, S.A. de C.V.; and Telefonos de Mexico, S.A. de C.V. He is a
member of the Corporate Public Policy and Environmental Affairs Committee and
the Finance/Pension Committee.

[PHOTO] PATRICIA P. UPTON, age 64, is President and Chief Executive Officer
of Aromatique, Inc., Heber Springs, Arkansas. Ms. Upton has been a
Director of SBC since June 1993. She is the Chairwoman of the
Corporate Public Policy and Environmental Affairs Committee and a
member of the Human Resources Committee.

SBC Directors Serving Until the 2004 Annual Meeting
(GROUP B)
--------------------------------------------------------------------------------

[PHOTO] HERMAN E. GALLEGOS, age 72, is an independent management consultant.
Mr. Gallegos was a Director of Gallegos Institutional Investors
Corporation from 1990 to 1994. He served as an alternate U.S. Public
Delegate to the 49th United Nations General Assembly from 1994 to
1995. Mr. Gallegos has been a Director of SBC since April 1997. He
served as a Director of Pacific Telesis Group from 1983 to 1997. He
is a member of the Audit Committee and the Corporate Public Policy and
Environmental Affairs Committee.

[PHOTO] JESS T. HAY, age 72, is Chairman of HCB Enterprises Inc, a private
investment firm, Dallas, Texas. He is also Chairman of the Texas
Foundation for Higher Education, Dallas, Texas. Mr. Hay was Chairman
and Chief Executive Officer of Lomas Financial Group from 1969 until
his retirement in 1994. Mr. Hay has been a Director of SBC since
April 1986. He is a Director of Trinity Industries, Inc. and Viad
Corp. He is Chairman of the Corporate Governance and Nominating Committee and a
member of the Audit Committee.

[PHOTO] JAMES A. HENDERSON, age 68, retired. Mr. Henderson was Chairman of
the Board from 1995 and Chief Executive Officer from 1994 of Cummins
Inc., Columbus, Indiana, until his retirement in December 1999. Mr.
Henderson has been a Director of SBC since October 1999. He served as
a Director of Ameritech Corporation from 1983 to 1999. He is a
Director of Championship Auto Racing Teams, Inc.; International Paper
Company; Nanophase Technologies Corporation; Rohm and Haas Company; and Ryerson
Tull, Inc. He is Chairman of the Human Resources Committee and a member of the
Finance/Pension Committee.

[PHOTO] BOBBY R. INMAN, age 71, Admiral, United States Navy, Retired. Admiral
Inman has been a professor since August 2001 and an adjunct professor
since 1987 at the University of Texas at Austin. Admiral Inman served
as Vice Admiral, United States Navy, and Director, National Security
Agency, from 1977 to 1981, and as Admiral, United States Navy, and
Deputy Director, Central Intelligence Agency, from 1981 to 1982. He
has been a Director of SBC since March 1985. Admiral Inman is a Director of
Fluor Corporation; Massey Energy Company; Science Applications International
Corporation; and Temple-Inland Inc. He is the Chairman of the Finance/Pension
Committee and a member of the Corporate Governance and Nominating Committee.

(GROUP B--continued)
--------------------------------------------------------------------------------

[PHOTO] JOHN B. MCCOY, age 59, retired. Mr. McCoy was Chairman from November
1999 and Chief Executive Officer from October 1998 of BANK ONE
CORPORATION until his retirement in December 1999, and Chairman and
Chief Executive Officer of its predecessor, BANC ONE CORPORATION,
from 1987 to 1998. Mr. McCoy has been a Director of SBC since October
1999. He served as a Director of Ameritech Corporation from 1991 to
1999. He is a Director of Cardinal Health, Inc.; Corillian Corporation; and
Federal Home Loan Mortgage Corporation. He is a member of the Corporate
Development Committee and the Corporate Governance and Nominating Committee.

[PHOTO] S. DONLEY RITCHEY, age 69, is Managing Partner of Alpine Partners,
Danville, California. Mr. Ritchey was Chairman of the Board and Chief
Executive Officer of Lucky Stores, Inc. from 1981 to 1986. Mr.
Ritchey has been a Director of SBC since April 1997. He served as a
Director of Pacific Telesis Group from 1984 to 1997. He is a Director
of The McClatchy Company. He is a member of the Audit Committee and
the Corporate Governance and Nominating Committee.

[PHOTO] JOYCE M. ROCHE, age 55, is President and Chief Executive Officer of
Girls Incorporated, New York, New York, and has held this position
since September 2000. Ms. Roche was an independent marketing
consultant from 1998 to 2000. She was President and Chief Operating
Officer of Carson, Inc. from 1996 to 1998, and Executive Vice
President of Global Marketing of Carson, Inc. from 1995 to 1996. Ms.
Roche has been a Director of SBC since October 1998. She served as a Director
of Southern New England Telecommunications Corporation from 1997 to 1998. She
is a Director of Anheuser-Busch Companies, Inc.; The May Department Stores
Company; and Tupperware Corporation. She is a member of the Finance/Pension
Committee and the Corporate Public Policy and Environmental Affairs Committee.

SBC Directors Serving Until the 2005 Annual Meeting (GROUP C)
--------------------------------------------------------------------------------

[PHOTO] JAMES E. BARNES, age 69, retired. Mr. Barnes was Chairman of the
Board, President and Chief Executive Officer of MAPCO Inc., Tulsa,
Oklahoma, from 1986 until 1998. Mr. Barnes has been a Director of SBC
since November 1990. Mr. Barnes is a Director of Parker Drilling
Company and Janus Capital Group Inc. He is a member of the Corporate
Development Committee and the Human Resources Committee.

[PHOTO] AUGUST A. BUSCH III, age 65, is Chairman of the Board of
Anheuser-Busch Companies, Inc., St. Louis, Missouri. Mr. Busch was
also President of Anheuser-Busch Companies, Inc. from 1974 until
2002. Mr. Busch has been a Director of SBC since October 1983. He
served as a Director of Southwestern Bell Telephone Company from 1980
to 1983. Mr. Busch is a Director of Anheuser-Busch Companies, Inc.
and Emerson Electric Co.; and an Advisory Member of the Board of Directors of
Grupo Modelo, S.A. de C.V. He is a member of the Corporate Development
Committee, the Executive Committee and the Corporate Governance and Nominating
Committee.

[PHOTO] WILLIAM P. CLARK, age 71, is Senior Counsel to Clark, Cali and
Negranti, LLP, San Luis Obispo, California. He is a retired
California Supreme Court Justice and former Secretary of the United
States Department of the Interior. Judge Clark has been a Director of
SBC since April 1997. He served as a Director of Pacific Telesis
Group from 1985 to 1997. Judge Clark is a Director of The New Ireland
Fund, Inc. He is a member of the Corporate Development Committee and the
Corporate Public Policy and Environmental Affairs Committee.

[PHOTO] LYNN M. MARTIN, age 63, is Chair of the Council for the Advancement
of Women and Advisor to the firm of Deloitte & Touche LLP, Chicago,
Illinois, and is a professor at the J.L. Kellogg Graduate School of
Management, Northwestern University. Ms. Martin served as U.S.
Secretary of Labor from 1991 to 1993, and as a member of the U.S.
House of Representatives from Illinois from 1981 to 1991. Ms. Martin
has been a Director of SBC since October 1999. She served as a Director of
Ameritech Corporation from 1993 to 1999. She is a Director of certain Dreyfus
Funds; The Procter & Gamble Company; and Ryder System, Inc. She is a member of
the Corporate Public Policy and Environmental Affairs Committee and the
Finance/Pension Committee.

(GROUP C--continued)
--------------------------------------------------------------------------------

[PHOTO] MARY S. METZ, age 65, is President of S. H. Cowell Foundation, San
Francisco, California, and has served in this capacity since 1999.
Dr. Metz was Dean of University Extension of the University of
California, Berkeley, from 1991 until 1998, and is President Emerita
of Mills College. Dr. Metz has been a Director of SBC since April
1997. She served as a Director of Pacific Telesis Group from 1986 to
1997. She is a Director of Longs Drug Stores Corporation; Pacific Gas and
Electric Company; and UnionBanCal Corporation. She is a member of the Corporate
Governance and Nominating Committee and the Corporate Public Policy and
Environmental Affairs Committee.

[PHOTO] LAURA D'ANDREA TYSON, age 55, is Dean of the London Business School,
London, England, and has served in this capacity since January 2002.
Dr. Tyson was Dean of the Walter A. Haas School of Business at the
University of California at Berkeley from July 1998 to December 2001.
Dr. Tyson served as Professor of Economics and Business
Administration at the University of California at Berkeley from 1997
to 1998. She served as National Economic Adviser to the President of the United
States from 1995 to 1996 and as Chair of the White House Council of Economic
Advisers from 1993 to 1995. Dr. Tyson has been a Director of SBC since
October 1999. She served as a Director of Ameritech Corporation from 1997 to
1999. She is a Director of Eastman Kodak Company; Human Genome Sciences, Inc.,
and Morgan Stanley Dean Witter & Co. She is a member of the Corporate
Development Committee and the Finance/Pension Committee.

[PHOTO] EDWARD E. WHITACRE, JR., age 61, is Chairman of the Board and Chief
Executive Officer of SBC and has served in this capacity since
January 1990. Mr. Whitacre has been a Director of SBC since October
1986. He is a Director of Anheuser-Busch Companies, Inc.; Burlington
Northern Santa Fe Corporation; Emerson Electric Co.; and The May
Department Stores Company. He is the Chairman of the Executive
Committee and a member of the Corporate Development Committee and the
Finance/Pension Committee.

Compensation of Directors

Directors who are also employees of SBC or its subsidiaries receive no
separate compensation for serving as Directors or as members of Board
committees. Directors who are not employees of SBC or its subsidiaries receive
a $60,000 annual retainer, $2,000 for each Board meeting and review session
attended and $1,200 for each committee meeting attended. Excluding employee
Directors, the Chairperson of each Committee receives an additional annual
retainer of $5,000, except for the Chairperson of the Audit Committee who
receives an additional annual retainer of $10,000.

Directors may elect to take their retainer in the form of SBC common stock
or cash. Directors may also elect to defer the receipt of their fees and all or
part of their retainers into either Stock Units or into a Cash Deferral
Account. Each Stock Unit is equivalent to a share of common stock and earns
dividend equivalents in the form of additional Stock Units. Stock Units are
converted to common stock and paid out as elected by the Director in up to 15
installments after the Director ceases service with the Board. In addition to
any deferrals into Stock Units, on the date of each Annual Meeting of
Shareowners, each continuing Director also receives an award of Stock Units
equal in value to one and one-half times the annual retainer. In addition, on
the day of each Annual Meeting each continuing non-employee Director who joined
the Board after November 21, 1997, receives a grant of Stock Units equal to
$13,000, limited to 10 annual grants. Deferrals into the Cash Deferral Account
earn interest during the calendar year at a rate equal to the Moody's Corporate
Bond Yield Averages-Monthly Average Corporates for September of the preceding
year ("Moody's"). Annually, Directors may elect to convert their Cash Deferral
Accounts into Stock Units at the fair market value of SBC stock at the time of
the conversion.

SBC provides each non-employee Director with travel accident insurance
while the Director is on SBC business, along with $100,000 of group life
insurance. The total premiums during 2002 for these policies were $1,008 for
travel accident insurance and $9,408 for group life insurance. Directors also
receive certain telecommunications services and equipment from subsidiaries of
SBC. The value of telecommunications services and equipment received, or for
which reimbursement was provided, together with amounts necessary to offset the
Directors' applicable tax liabilities resulting from such services and
benefits, computed at maximum marginal rates, averaged $8,577 per non-employee
Director in 2002. Employee Directors receive similar services and equipment in
connection with their service as officers of SBC.

Non-employee Directors who joined the Board prior to 1997 may receive
pension payments for life following their retirement from the Board. Eligible
non-employee Directors who serve for at least five years will receive, in
quarterly installments, annual amounts equal to 10% of the annual retainer in
effect at the time of termination of Board service, multiplied by the number of
years of service, not to exceed 10 years. If the Director dies prior to the
expiration of 10 years from his or her date of retirement, his or her
beneficiary will be entitled to receive the payments for the remainder of the
10-year period. If an eligible non-employee Director dies while still serving
on the Board, a pre-retirement death benefit will be paid as though the
individual had retired on the date of death.

Directors who formerly served on the Board of Pacific Telesis Group ("PTG")
(which was acquired by SBC on April 1, 1997) do not receive pension benefits
from SBC. As part of their service with PTG, these Directors previously
received PTG Deferred Stock Units (the value of each unit is now based on SBC
common stock). The PTG Deferred Stock Units were issued in exchange for the
waiver by the Directors of certain retirement benefits. PTG Deferred Stock
Units earn dividend equivalents and are paid out in the form of cash after the
retirement of the Director. The units will vest pro-rata each year until the
Director has completed seven years of service. For purposes of vesting and
payout of the PTG Deferred Stock Units and the period during which certain
options originally granted by PTG (which were converted into options to acquire
SBC common stock) may be exercised, service on the SBC Board of Directors will
be deemed to constitute service on the PTG Board. In addition, PTG Directors
were allowed to elect during 1997 to have their prior deferrals of PTG
retainers and fees continued until they leave the SBC Board. These deferrals
earn a rate of interest equal to Moody's plus 4% for deferrals from 1985
through 1992; Moody's plus 2% for deferrals from 1993 through 1995; and for
deferrals after 1995, the 10-year Treasury Note average for the month of
September for the prior year plus 2%.

One member of the immediate family of Mr. Gallegos was employed by a
subsidiary of SBC in 2002 and was paid a total of approximately $114,172.
Amounts paid to this employee were comparable to compensation paid to other
employees performing similar job functions.

In 2002, SBC and/or its subsidiaries obtained legal services from the law
firm of Pillsbury Winthrop LLP, of which Ms. Rembe is a partner, on terms which
SBC believes were as favorable as would have been obtained from unaffiliated
parties.

COMMON STOCK OWNERSHIP OF DIRECTORS AND OFFICERS
--------------------------------------------------------------------------------

The following table sets forth the beneficial ownership of SBC common stock
as of December 31, 2002, held by each Director, nominee and officer named in
the Compensation Table on page 32. As of that date, each Director and officer
listed below, and all Directors and executive officers as a group, owned less
than one percent of the outstanding SBC common stock. Except as noted below,
the persons listed in the table have sole voting and investment power with
respect to the securities indicated.

--------------------------------------------------------------------------------

Total SBC Total SBC
Beneficial Beneficial
Ownership Ownership
Name of (including Name of (including
Beneficial Owner options)(1) Beneficial Owner options)(1)
----------------------- ----------- --------------------------- -----------

Gilbert F. Amelio 5,394 S. Donley Ritchey 16,782
Clarence C. Barksdale 10,977 Joyce M. Roche 2,041
James E. Barnes 6,602 Carlos Slim Helu 2,002
August A. Busch III (2) 46,354 Laura D'Andrea Tyson 11,648
William P. Clark 15,059 Patricia P. Upton 10,393
Martin K. Eby, Jr. 26,856 Edward E. Whitacre, Jr. 5,006,061
Herman E. Gallegos 9,724 John H. Atterbury III 650,309
Jess T. Hay 12,010 Rayford Wilkins, Jr. 431,692
James A. Henderson 23,476 James D. Ellis 868,926
Bobby R. Inman 6,001 William M. Daley 65,000
Charles F. Knight 24,978 Stanley T. Sigman 558,947
Lynn M. Martin 18,825
John B. McCoy 31,584 All executive officers and
Mary S. Metz 12,782 Directors as a group
Toni Rembe (3) 24,785 (consisting of 31 persons,
including those named
above): 9,866,545

--------------------------------------------------------------------------------
(1) This table includes presently exercisable stock options and stock options
that will become exercisable within 60 days of the date of this table. The
following Directors and officers hold the number of options set forth
following their respective names: Dr. Amelio--2,924; Judge Clark--8,772;
Mr. Gallegos--8,772; Dr. Metz--8,772; Ms. Rembe--8,772; Mr. Ritchey--8,772;
Mr. Whitacre--4,469,076; Mr. Atterbury--615,967; Mr. Wilkins--402,477; Mr.
Ellis--845,714; Mr. Daley--65,000; Mr. Sigman--553,810; and all executive
officers and Directors as a group--8,870,453.
This table also includes shares held in an employee benefit plan for the
following persons, who have sole voting power but no investment power with
respect to the number of shares set forth following their respective names:
Mr. Whitacre--1,154; Mr. Atterbury--1,066; Mr. Wilkins--606; Mr.
Ellis--1,210; and Mr. Sigman--219. In addition, of the shares shown in the
above table, the following persons share voting and investment power with
other persons with respect to the number of shares set forth following their
respective names: Dr. Amelio--2,450; Mr. Barnes--6,601; Mr. Busch--6,600;
Judge Clark--5,849; Mr. Hay--3,008; Dr. Metz--1,592, Ms. Rembe--2,441; Mr.
Ritchey--8,008; Dr. Tyson--11,648; Ms. Upton--715; Mr. Whitacre--31,668; Mr.
Atterbury--6,985; Mr. Wilkins--17,932; Mr. Ellis--14,132; and Mr.
Sigman--1242.
(2) Mr. Busch disclaims beneficial ownership of 3,300 shares held in a trust
for a sister.
(3) Ms. Rembe disclaims beneficial ownership of 2,145 shares held in a trust
for her spouse and 296 shares held by her spouse's corporation.

MATTERS TO BE VOTED UPON
--------------------------------------------------------------------------------

Voting

Each share of SBC common stock represented at the Annual Meeting is
entitled to one vote on each matter properly brought before the meeting.
Directors are elected by a plurality of the votes cast. All other matters will
be determined by a majority of the votes cast. Shares represented by proxies
marked to withhold authority to vote with respect to the election of one or
more nominees as Directors, by proxies marked "abstain" on other proposals, and
by proxies marked to deny discretionary authority on other matters will not be
counted in determining the vote obtained on such matters. If no directions are
given and the signed card is returned, the person or persons designated on the
proxy card will vote the shares for the election of the Board of Directors'
nominees and in accordance with the recommendations of the Board of Directors
on the other subjects listed on the proxy card and at their discretion on any
other matter that may properly come before the meeting.

Under the rules of the New York Stock Exchange, on certain routine matters,
brokers may, at their discretion, vote shares they hold in "street name" on
behalf of beneficial owners who have not returned voting instructions to the
brokers. Routine matters include the election of Directors and the ratification
of the appointment of the independent auditors. In instances where brokers are
prohibited from exercising discretionary authority (so-called "broker
non-votes"), the shares they hold are not included in the vote totals and,
therefore, have no effect on the vote. At the 2003 Annual Meeting, brokers will
be prohibited from exercising discretionary authority only with respect to
shareowner proposals.

Election of Directors (Item 1 on Proxy Card)

The following Group A Directors have been nominated by the Board of
Directors on the recommendation of the Human Resources Committee for election
to three-year terms of office that will expire at the 2006 Annual Meeting:

Gilbert F. Amelio Toni Rembe
Clarence C. Barksdale Carlos Slim Helu
Martin K. Eby, Jr. Patricia P. Upton
Charles F. Knight

Shares represented by the accompanying form of proxy will be voted for the
election of the nominees unless other instructions are shown on the

proxy card or provided through the telephone or Internet proxy. If one or more
of the nominees should at the time of the meeting be unavailable or unable to
serve as a Director, the shares represented by the proxies will be voted to
elect the remaining nominees and any substitute nominee or nominees designated
by the Board. The Board knows of no reason why any of the nominees would be
unavailable or unable to serve.

Your Board of Directors Recommends a Vote "FOR"
Its Nominees Listed as Group A Directors.

Ratification of Appointment of Independent Auditors
(Item 2 on Proxy Card)

Subject to shareowner ratification, the Board of Directors, upon
recommendation of the Audit Committee, has appointed the firm of Ernst & Young
LLP to serve as independent auditors of SBC for the fiscal year ending December
31, 2003. This firm has audited the accounts of SBC since 1983. If shareowners
do not ratify this appointment, the Board will consider other independent
auditors. One or more members of Ernst & Young LLP are expected to be present
at the Annual Meeting, will be able to make a statement if they so desire, and
will be available to respond to appropriate questions.

Your Board of Directors Recommends a Vote "FOR" Ratification
of the Appointment of Ernst & Young LLP as Independent Auditors.

Shareowner Proposals (Items 3, 4 and 5 on Proxy Card)

Certain shareowners have advised the Company that they intend to introduce
at the 2003 Annual Meeting the proposals set forth below. The names and
addresses of, and the number of shares owned by, each such shareowner will be
provided upon request to the Secretary of the Company.

Shareowner Proposal A (Item 3 on Proxy Card)

Prolegomenon:

The current system of corporate governance has frequently spawned incredible
rewards for executive corporate officers, at times bordering on the obscene,
and at the expense of the legitimate owners, the shareholders.

Executive management, through an appropriate committee, selects and nominates
individuals to sit on the corporate board, and sets their level of
compensation. Shareholders vote to seat such nominees, usually without

questioning why these individuals were selected. The board members--either
corporate employees, or some known as outside directors if they are not
employees of the corporation--in turn set the remuneration levels of the very
executive corporate officers who brought them into the picture in the first
place. It is a simple case of "I scratch your back, and you scratch mine";
unacceptable in the post-Enron era.

Moreover, more often than not, incentive goals are offered to executive
corporate officers to attract "extraordinarily financially talented managers".
This is a ruse, for the proponents of such proposals are the very same
directors who set the targets which trigger the rewards. At times the bar is
set so low as to make achievement of these objectives virtually impossible to
miss!

At the time of this writing, federal legislation addressing some of these
problems has been instituted. Among other plans, current proposals include
greater specificity of duties and obligations of "outside directors", but we
believe their scope must be widened considerably to become truly effective.
Unfortunately, so far no one has devised a better system to build and operate a
corporate structure. However, a beginning can be made by eliminating some of
the most egregious offenses.

The cry, "it can't be done, because without offering incentives and bonuses we
will never attract the caliber of executives we need", emanates from self
serving individuals. Many corporations did equally well or better in the past
without such recent enhancements. We believe that as long as attractive
compensation is offered, there will always be viable candidates aspiring to top
management positions. Wall Street columnist James B. Stewart (SmartMoney.com,
7/16/02) has the same idea: "Ban noncash executives compensation").

Resolution:

Be it resolved, that this is the sense of the shareholders: upon expiration of
currently existing agreements, no achievement bonuses or incentives shall be
proffered to executive members of corporate management. These spawn greed. The
board shall develop a simple and fair compensatory structure, unencumbered by
complicated emoluments, to replace the current system. The new incentive for
executive corporate officers will be, *if you meet the goals set by your
corporate board you will be retained; if you fail to do so, like other
employees of the corporation, you may be replaced*.

Stockholders are urged to vote for this motion. It is doable.

YOUR DIRECTORS' POSITION

This proposal would eliminate annual bonuses, sales commissions,
performance incentives, and other awards tied to performance of one kind or
another, eliminating the link between performance and compensation. It fails to
provide any guidance on what would replace the performance based compensation
or what would constitute a "simple and fair compensatory structure."

SBC uses performance based awards to directly link compensation to the
achievement of company objectives. In the case of senior executives, the awards
are selected by the Human Resources Committee of the Board in consultation with
an independent consultant and are similar to those used by other major
corporations. These awards not only allow the best performers to be compensated
for superior performance, but focuses managers on those components of the
business most important to the success of the company. In addition, when the
incentives are tied to SBC stock, the performance awards further align the
interests of our managers with those of our shareowners.

Moreover, our competitors and other major corporations routinely offer
various forms of performance awards to attract and retain the very best
candidates. Your Directors believe SBC's shareowners are best served by having
talented, experienced and committed individuals serving as managers and
executives. If SBC offers a compensation package that is less favorable than
its competitors, SBC not only will have difficulty recruiting the best
managers, but may face the loss of some of its most talented executives.

Your Board of Directors Recommends a
Vote "AGAINST" this Proposal.

Shareowner Proposal B (Item 4 on Proxy Card)

This is to recommend that the Board of Directors redeem any poison pill
previously issued (if applicable) and not adopt or extend any poison pill
unless such adoption or extension has been submitted to a shareholder vote.

Shareowner's Supporting Statement:

Shareholder Vote on Poison Pills. This topic won an average 60%-yes vote at 50
companies in 2002.

Harvard Report. A 2001 Harvard Business School study found that good corporate
governance (which took into account whether a company has a poison pill) was
positively and significantly related to company value. This

study, conducted with the University of Pennsylvania's Wharton School, reviewed
the relationship between the corporate governance index for 1,500 companies and
company performance from 1990 to 1999.

Some believe that a company with good governance will perform better over time,
leading to a higher stock price. Others see good governance as a means of
reducing risk, as they believe it decreases the likelihood of bad things
happening to a company.

Since the 1980s Fidelity, a mutual fund giant with $800 billion invested, has
withheld votes for directors at companies that have approved poison pills, Wall
Street Journal, June 12, 2002.

Council of Institutional Investors Recommendation. The Council of
Institutional Investors www.cii.org, an organization of 120 pension funds which
invests $1.5 trillion, called for shareholder approval of poison pills. In
recent years, various companies have been willing to redeem existing poison
pills or seek shareholder approval for their poison pill. This includes
Columbia/HCA, McDermott International and Bausch & Lomb. I believe that our
company should follow suite and allow shareholder participation.

Shareholder Vote on Poison Pills. Yes on 4.

YOUR DIRECTORS' POSITION

SBC does not have a 'shareholder rights' plan, and has no current intention
to adopt one. The Board believes that it will be able to best maximize
shareowner value if it retains the ability to adopt a plan in the future, if
warranted in its judgment, to preserve and protect shareowner interests. The
proponent suggests that rights plans stand between management and shareowners.
To the contrary, the Board of Directors has a fiduciary duty to and is
committed to act in the best interests of SBC and its shareowners. This duty
applies to all actions, including any future adoption of a rights plan.

The economic benefits of a shareholder rights plan to stockholders have
been validated in several studies. A study published in November 1997 by
Georgeson & Company found that companies with shareholder rights plans received
$13 billion dollars in additional takeover premiums during the period 1992 to
1996. The Georgeson study also concluded that (1) premiums paid to acquire
target companies with shareholder rights plans were on average eight percentage
points higher than premiums paid for target

companies that did not have such plans, (2) the presence of a rights plan did
not increase the likelihood of the defeat of a hostile takeover bid or the
withdrawal of a friendly bid, and (3) rights plans did not reduce the
likelihood that a company would become a takeover target. Thus, evidence
suggests that rights plans achieve their principal objectives: protection
against inadequate offers and abusive tactics and increased bargaining power of
the Board resulting in higher value for stockholders.

The Board believes it is important that it retain the flexibility to adopt
a rights plan without having to conduct a shareholder vote in order to maintain
the plan. A rights plan is designed to improve the Board's ability to protect
and advance the interests of SBC and all of its shareowners. It enhances the
ability of the Board to negotiate with potential acquirors and discourages
coercive takeover tactics that would operate to the detriment of our
shareowners. A requirement that we seek shareholder approval for any rights
plan could seriously weaken the Board's negotiating position in a hostile
situation and leave it less able to protect shareowner interests. We believe
that adoption of the proposal would not be in the best interest of our
shareowners.

Your Board of Directors Recommends a
Vote "AGAINST" this Proposal.

Shareowner Proposal C (Item 5 on Proxy Card)

Whereas, we believe that properly structured equity compensation plans for
senior executives can effectively align the interests of executives with those
of long-term shareholders and merit shareholder support;

Whereas, we believe that other types of executive equity incentive
structures, primarily fixed-price option plans, do not align such interests and
may have played a significant role in some of the recent corporate failures in
the United States:

Whereas, we are concerned that so-called mega-grants of fixed, at-the-money
stock options can result in powerful yet perverse incentive effects that are
not in the best interests of shareholders;

Resolved, that shareholders request the Board of Directors include the
following provisions in all executive compensation plans that make available to
senior executives shares or options on shares in the equity of the company:

. Performance "hurdles" that must be met, or "indexing" features, that
govern vesting of options or lapsing of restrictions on shares granted.

. Holding periods for a substantial portion of shares awarded and earned
through stock-related plans.

. Other measures to ensure that executives face downside financial risk,
which they do not face with standard fixed-price stock options.

Supporting Statement

We believe it is important for companies to demonstrate to shareholders
that compensation structures for senior executives incorporate features that
align management's interests with those of shareholders. Equity incentives
should therefore include disciplined features that expose recipients to
downside risk as well as opportunity for gain.

We have a particular concern about extraordinarily large grants of standard
fixed-price stock options, so-called mega-grants. In 2001, Chairman of the
Board and Chief Executive Officer, Edward E. Whitacre, Jr. was granted options
(in total) on 3,605,814 shares, with an estimated grant date present value of
$43,675,000 (amount computed and reported by SBC Communications in its 2002
Proxy Statement).

Fixed-price stock options provide gains to executives if the stock price is
higher than the exercise price after the vesting date. Those gains can result
from general market increases and not necessarily from improved company or
executive performance. Fixed-price stock options also incorporate no downside
financial risk to executives. Shareholders, on the other hand, suffer losses
when the stock price declines.

We also believe the SBC compensation committee of the board, as described
in its 2002 proxy materials, does not fully meet the independence tests that we
would impose, which define a lack of independence to include board interlocks
and applicable here because a compensation committee member is the Chairman and
President of a company on which the SBC Chairman and CEO serves as a director.
We are concerned that this possible lack of independence may have influenced to
the decisions to make the option grants described previously.

Given these concerns about the level of standard fixed-price option grants
in 2001 and the board interlocks, we believe the SBC Board of Directors should
consider alternative forms of executive compensation.

Please support this resolution to help ensure SBC Communications prepares
executive compensation structures that are in greater alignment with long-term
shareholder interests.

YOUR DIRECTORS' POSITION

The proposal urges the Board to adopt a policy that stock options and other
stock-based compensation be subject to performance "hurdles" or "indexing"
features, that stock "earned" by executives be subject to undetermined holding
periods and that executives be subject to downside financial risk. Your Board
of Directors believes this would adversely impact the ability of the company to
attract and retain qualified managers and recommends a vote against this
proposal.

The proposal does not define or address the method of indexing. As a
result, depending on the particular index utilized, the value of options
granted to managers could in any given year create a windfall for the manager
or unfairly penalize the manager, as compared to the present, traditional
method of tying the value of options directly to the market price of the stock.

In the case of stock options, SBC uses the method of pricing used by the
great majority of companies that issue stock options. It establishes the
exercise price based on the market price on the date of grant. As a result, the
value of the option rises with an increase in the market price and falls with a
decrease in the market price, aligning the interests of our managers directly
with those of our shareowners.

The combination of indexing options, imposing holding periods for stock
"earned" by executives and creating financial penalties for executives, as
called for by the proposal, could make SBC non-competitive in keeping and
attracting the talented managers it needs to succeed. Your Board of Directors
is aware of few, if any, major companies that include in their plans the
unusual combination of factors offered by the proposal or that include the
extraordinary requirement that executives or other employees face "downside
financial risk" beyond loss of the value of the stock options or the decline in
the value of stock-based compensation. At a time when SBC faces extensive
competition, changing SBC's compensation plans to make them less attractive
than those offered by its competitors places your company at a severe
disadvantage.

Your Board of Directors Recommends a
Vote "AGAINST" this Proposal.

AUDIT COMMITTEE
--------------------------------------------------------------------------------

Report of the Audit Committee

The Audit Committee oversees the financial reporting process, the systems
of internal accounting and financial controls, the performance and independence
of the independent auditors and the internal auditors, the annual audit of
SBC's financial statements, and related matters. The Board of Directors has
adopted a written charter for the Audit Committee. The Audit Committee is
composed entirely of independent Directors in accordance with the applicable
independence standards of the New York Stock Exchange. Five members of the
Audit Committee, Messrs. Barksdale, Barnes, Hay, Henderson and Ritchey, have
been chief executive officers of publicly held companies and have supervised
chief financial officers.

The Audit Committee: (1) reviewed and discussed with management SBC's
audited financial statements for the year ended December 31, 2002; (2)
discussed with the independent auditors the matters required by Statement on
Auditing Standards No. 61, Communication with Audit Committees, as amended by
Statement on Auditing Standards No. 90, Audit Committee Communications; (3)
received the written disclosures and the letter from the independent auditors
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees; (4) considered whether the provision of
non-audit services is compatible with maintaining the auditors' independence;
and (5) discussed with the auditors the auditors' independence.

Based on the review and discussions, the Audit Committee recommended to the
Board of Directors that the audited financial statements for the year ended
December 31, 2002, be included in SBC's Annual Report on Form 10-K for filing
with the Securities and Exchange Commission.

February 13, 2003

The Audit Committee:

Clarence C. Barksdale,
Chairman Jess T. Hay
James E. Barnes James A. Henderson
Martin K. Eby, Jr. S. Donley Ritchey
Herman E. Gallegos

Principal Accountant Fees and Services

Ernst & Young LLP (E&Y) acts as the principal auditor for SBC and also
provides certain audit-related, tax and other services, the fees for which are
as follows (dollars in millions):

. Audit Fees were $17.5 and $13.3 for 2002 and 2001, respectively. Included
in this category are fees for the annual financial statement audit,
quarterly financial statement reviews, and audits required by federal and
state regulatory bodies.

. Audit-Related Fees were $5.7 and $3.1 for 2002 and 2001, respectively.
These fees, which are for assurance and related services other than those
included in Audit Fees, include charges for audits of employee benefit
plans, consultations concerning financial accounting and reporting
standards, audits in conjunction with proposed or consummated
acquisitions and dispositions, and internal control reviews.

. Tax Fees were $3.8 for both 2002 and 2001. These fees include charges for
tax services for SBC employees working in foreign countries, executive
financial counseling and tax return preparation, and various federal and
state tax research projects.

. All Other Fees were $2.4 and $1.5 for 2002 and 2001, respectively. These
fees include charges for assisting SBC in state regulatory proceedings,
as well as assessing processes used by SBC to accumulate and analyze
operating data.

COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
--------------------------------------------------------------------------------

The Human Resources Committee, composed entirely of independent, outside
Directors, is responsible for establishing and administering SBC's policies
involving the compensation of executive officers. No employee of SBC serves on
this Committee. During the 2002 fiscal year, the members of the Human Resources
Committee were: Jess T. Hay (Chairman), August A. Busch III, Admiral Bobby R.
Inman, John B. McCoy and S. Donley Ritchey. Mr. Busch is Chairman of the Board
of Anheuser-Busch Companies, Inc., where Mr. Whitacre also serves as a member
of the Board of Directors. In addition, Mr. Whitacre serves as a Director and
is on the Compensation and Human Resources Committee of Emerson Electric Co.,
where Charles F. Knight, an SBC Director, is Chairman of the Board.

On March 1, 2003, the Board's new Corporate Governance and Nominating
Committee was constituted and assumed broad governance functions including
those previously assigned to the Human Resources Committee. Concurrently with
the creation of the new Committee, the members of the Human Resources Committee
were named as five of the six members of the Corporate Governance and
Nominating Committee and, effective March 1, 2003, were replaced as members of
the Human Resources Committee by James A. Henderson (Chairman), Gilbert F.
Amelio, James E. Barnes, Martin K. Eby, Jr., and Patricia P. Upton. The
following report of the Human Resources Committee was approved by the Committee
as it existed prior to March 1, 2003.

EXECUTIVE COMPENSATION
--------------------------------------------------------------------------------

Report of the Human Resources Committee
on Executive Compensation

Responsibilities of the Human Resources Committee (the "Committee") of the
Board of Directors include establishing policies governing the compensation of
officers of SBC and certain key executives of its subsidiaries. The Committee
is composed of five non-employee Directors.

The Committee's principal objective in establishing compensation policies
is to develop and administer a comprehensive program designed to attract and
retain outstanding managers who will enhance the profitability of SBC and
create long term value for our shareowners. The policies are designed to
attract and retain high-quality executives, to encourage them to make career
commitments to SBC and to accomplish SBC's short and long term objectives. To
achieve these results, the Committee, in consultation with nationally
recognized compensation and benefits consulting firms, has developed a
compensation program that combines annual base salaries with annual and long
term incentives principally tied to the performance of SBC and SBC's common
stock. The principles used by the Committee in developing the program include
the following:

. To align the financial interests of SBC's executives with those of SBC
and its shareowners, a significant portion of executive compensation
should be "at risk" and tied to the achievement of certain short and long
term performance objectives of SBC.

. Ownership of SBC's common stock by executives should be encouraged
through SBC's compensation program.

. Sustained superior performance by individual officers that enhances the
productivity and/or profitability of SBC should be recognized and
appropriately rewarded. As measured by the Committee, such performance
may include increasing revenues, reducing expenses, efficiently deploying
capital, developing management, and improving service and product
quality, while always complying with the high ethical standards
established by SBC for the conduct of its officers and employees.

The Committee is responsible for approving the compensation of officers of
SBC, including the Named Officers (defined on page 32), and

certain officers of subsidiaries. The following is a summary of the policies
underlying compensation reported for 2002.

Annual Base Salary--The Committee has established a policy that annual base
salaries for officers should be market-based and should relate reasonably to
salaries for similar positions in the 50th to 75th percentile of companies
similar in size. In making this comparison, the Committee used a group
consisting of companies in the telecommunications business and large companies
in diverse businesses (the "Comparator Group"). The Comparator Group and market
data were developed in consultation with the Committee's outside compensation
consultant. Using the market data as a guideline, the Committee then adjusts
the salaries of the individual executives based on their individual
performance, level of responsibility, and experience.

Incentives--To create incentives for superior efforts on behalf of SBC and to
allow employees to share in the very success for which they are responsible,
the Committee has determined that a significant portion of each officer's total
compensation shall be dependent upon the annual and long term performance of
SBC.

Annual Incentives. For their efforts in 2002, officers and other key
executives of SBC and certain subsidiaries received annual incentives under
either the Short Term Incentive Plan or, for certain executive officers,
the 2001 Incentive Plan. The latter plan allows certain compensation paid
to Named Officers to be deductible under Section 162(m) of the Internal
Revenue Code (discussed below). Under each plan, the Committee awards an
annual bonus contingent upon the yearly performance of SBC and the business
unit to which the officer is assigned.

Under the plans, at the beginning of the year, the Committee sets a
target award for each officer as well as the specific performance
objectives applicable to the officer. The target award is set based on the
officer's individual performance, level of responsibility and experience,
with a view to the total of the respective officer's annual salary and
target short term award reasonably relating to the 50th to 75th percentile
of the Comparator Group. The actual payout of the award is dependent upon
the extent to which the financial objectives are achieved. In each case,
the payment of any part of the award is at the discretion of the Committee.
The 2002 financial targets for the Chief Executive Officer and most
executive officers were based on SBC's earnings per share and changes in
the number of access lines;

targets for other executive and non-executive officers were based on the
foregoing targets plus business unit operating income. The Committee
reviewed the performance objectives and corresponding results for 2002 and
determined that the targets for the executive officers, including all of
the Named Officers, had only partially been attained, resulting in the
executive officers receiving bonuses, including discretionary amounts, that
were less than their target amounts, except for one Named Officer who
received slightly more than the target amount.

Long Term Incentives. Since its inception, SBC has provided stock-based
long term incentives to officers and other key executives of SBC and
certain subsidiaries in the form of performance shares and stock options.

Performance shares are designed to tie the executive's financial
interests to those of our shareowners through the establishment of long
term performance awards and the payment of awards in common stock and/or in
cash based upon the price of common stock. Performance shares are granted
under the 1996 Stock and Incentive Plan or its successor, the 2001
Incentive Plan. Performance shares are designed to provide rewards for the
achievement of SBC's financial goals. The financial objectives are designed
to encourage employees to focus on exceeding a specified level of return.
Each officer, including each of the Named Officers, is granted a specific
number of performance shares, each equivalent in value to a share of common
stock. At the end of the performance period, a percentage of the
performance shares, not to exceed 100% of the performance shares granted
(up to 200% for awards granted in 2001 and later), is paid out (i.e.,
converted into common stock and/or cash), based on the annual achievement
of SBC's net income goals averaged over, typically, a three-year period.
The Committee also recognizes the importance of stock options as a means to
further tie the executive's financial interests directly to those of our
shareowners. During 2002, the Committee granted stock options to managers
at all levels, including all of the Named Officers. The target value of the
regular long term grants (combined value of the target performance shares
and stock options) made in 2002 was designed to relate reasonably to the
value of all long term type awards made to the 50th to 75th percentile of
employees holding similar positions with companies in the Comparator Group.
As with other awards, the long term target awards are adjusted to reflect
the officer's individual

performance, level of responsibility and experience. The Chief Executive
Officer target award was designed to reasonably relate to the 75th
percentile of the Comparator Group.

In 2002, SBC's officers received the payout of their performance share
awards for the 1999-2001 performance cycle. The Committee determined SBC
exceeded the 3-year cumulative performance goals set by the Committee. In
accordance with a predetermined formula, 100% of the target performance
shares were distributed.

SBC also provides several alternatives for its managers to invest a
portion of their salaries and annual incentive awards in SBC common stock,
thereby giving these managers an even greater stake in the performance of
SBC. One such opportunity is the Stock Savings Plan, under which a middle
level or above manager may receive stock options based upon the number of
shares purchased by the manager under the program through payroll
deductions.

Compensation for the Chief Executive Officer--The foregoing principles and
policies were applied by the Committee in determining the compensation for the
Chairman of the Board and Chief Executive Officer, Mr. Whitacre, for the last
fiscal year. The Committee set Mr. Whitacre's 2002 annual salary and target
bonus to reasonably relate to the 75th percentile paid by companies in the
Comparator Group, adjusted for his individual performance and experience. Mr.
Whitacre's total cash compensation in 2002 reflects the Committee's view that
Mr. Whitacre's long tenure as Chief Executive Officer, his leadership in the
industry, and the fact that under his tenure and despite an extremely difficult
operating environment, the company has achieved one of the strongest financial
positions in the industry and is well positioned for the future. In addition,
Mr. Whitacre, along with other Named Officers, received stock options and
performance shares, as described above under "Long Term Incentives."

The substantial decline in Mr. Whitacre's total compensation for 2002 from
that of the prior year, as reflected in the tables below, was due to the
absence in 2002 of a special retention award and the grant of significantly
fewer stock options. His compensation was also significantly reduced as a
result of the drop in the price of SBC stock and the related reduction in his
2002 long term incentive payout (performance shares).

Stock Ownership Guidelines--The Committee has established stock ownership
guidelines for the Chief Executive Officer, other executive

officers, and all other officer level employees. The guidelines set a minimum
level of ownership of four times base salary for the Chief Executive Officer,
the lesser of three times base salary or 50,000 shares for other executive
officers and the lesser of one times base salary or 25,000 shares for all other
officers. Newly appointed officers are allowed three years to achieve
compliance with the ownership guidelines.

Limit On Deductibility Of Certain Compensation--Federal income tax law
prohibits publicly held companies, such as SBC, from deducting certain
compensation paid to a Named Officer that exceeds one million dollars during
the tax year. To the extent that compensation is based upon the attainment of
performance goals set by the Committee pursuant to plans approved by the
shareowners, the compensation is not included in the computation of the limit.
Although the Committee intends, to the extent feasible and where it believes it
is in the best interests of SBC and its shareowners, to attempt to qualify
executive compensation as tax deductible, it does not intend to permit this
arbitrary tax provision to distort the Committee's development and execution of
effective compensation plans. Thus, the Committee will continue to exercise
discretion in those instances where the mechanistic approaches necessary under
tax law considerations could compromise the interests of shareholders.

February 19, 2003

The Human Resources Committee:

Jess T. Hay, Chairman John B. McCoy
August A. Busch III S. Donley Ritchey
Admiral Bobby R. Inman

Summary The table below contains information concerning annual and long
Compensation term compensation provided to the Chairman of the Board and Chief
Table Executive Officer and the other most highly compensated executive
officers of SBC (the "Named Officers").

----------------------------------------------------------------------------------------------------------------------------

Long Term Compensation
--------------------------------
Annual Compensation Awards Payouts
------------------------------------- --------------------- ----------
Number Of
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Principal Position Year Salary Bonus Compensation Award(s) Options Payouts Compensation(1)
----------------------------------------------------------------------------------------------------------------------------

Edward E. Whitacre, Jr. 2002 $2,100,000 $4,000,000 $523,345 $0 1,434,242 $1,827,800 $ 192,330
Chairman of the Board and 2001 $2,066,667 $3,800,000 $463,581 $0 3,605,814 $4,202,277 $10,678,990
Chief Executive Officer 2000 $1,886,667 $4,500,000 $512,719 $0 795,488 $3,723,352 $ 5,409,505

John H. Atterbury III 2002 $ 712,000 $ 697,000 $ 64,188 $0 196,782 $ 239,076 $ 58,200
Group President-Operations 2001 $ 523,250 $ 566,668 $ 57,631 $0 182,869 $ 264,196 $ 384,691
2000 $ 387,000 $ 267,500 $ 69,687 $0 72,486 $ 211,492 $ 205,307

Rayford Wilkins, Jr. 2002 $ 738,667 $ 650,000 $ 81,089 $0 157,046 $ 75,707 $ 35,973
Group President 2001 $ 687,000 $ 595,000 $ 42,255 $0 229,083 $ 145,327 $ 457,718
2000 $ 503,733 $ 350,000 $ 31,924 $0 71,914 $ 161,129 $ 237,669

James D. Ellis 2002 $ 727,000 $ 600,000 $102,056 $0 215,637 $ 265,616 $ 86,399
Senior Executive Vice President 2001 $ 722,000 $ 560,000 $110,027 $0 289,683 $ 375,244 $ 2,452,872
& General Counsel 2000 $ 691,167 $ 475,000 $128,099 $0 144,851 $ 476,775 $ 1,258,263

William M. Daley 2002 $ 612,000 $ 809,310(2) $ 76,567 $0 105,000 $ 0 $ 1,171,391
President 2001 $ 50,000 $ 60,000 $ 0 $0 90,000 $ 0 $ 73

Stanley T. Sigman (3) 2002 $ 912,000 $ 921,000 $179,483 $0 301,743 $ 239,076 $ 5,340,968
Former Group President & 2001 $ 842,833 $ 718,959 $ 86,582 $0 368,771 $ 343,475 $ 1,114,228
Chief Operating Officer 2000 $ 595,333 $ 500,000 $ 80,647 $0 71,914 $ 194,759 $ 574,201
----------------------------------------------------------------------------------------------------------------------------

(1) All Other Compensation for 2002 includes benefits imputed to the Named
Officers with respect to premiums on SBC-owned life insurance, as
determined in accordance with IRS guidelines. For Messrs. Whitacre,
Atterbury, Wilkins, Ellis, Daley, and Sigman these amounts were $15,620,
$1,509, $1,233, $3,355, $573, and $1,926, respectively. All Other
Compensation also includes preferential amounts earned on deferred
compensation for Messrs. Whitacre, Atterbury, Ellis, and Sigman of $75,910,
$23,391, $48,724, and $27,777. Mr. Daley's total includes a signing bonus
of $1.1 million, relocation benefits of $11,566 and attorney fees of
$44,852, pursuant to his contract. Mr. Sigman's total includes pay in lieu
of vacation of $110,765, an incentive bonus of $160,000 paid by Cingular,
and a Retention Benefit of $5,000,000, also awarded by Cingular. The
Retention Benefit was valued as of the grant date and consists of phantom
stock units where each unit is based 60% on SBC stock and 40% on BellSouth
stock. The Retention Benefit pays out December 6, 2005, and is forfeited if
Mr. Sigman terminates his employment before then. All other amounts
reported under this heading represent employer matching contributions made
to employee benefit plans.
(2) Includes payout of $159,310 in performance shares for the 2002 performance
cycle.
(3) Mr. Sigman became Chief Executive Officer of Cingular Wireless LLC in
November 2002. Amounts reported include payments by Cingular.

Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
--------------------------------------------------------------------------------

The purpose of the following table is to report exercises of stock options
and stock appreciation rights ("SARs") by the Named Officers during 2002 and
the value of their unexercised stock options and SARs as of December 31, 2002.
SBC has not issued any SARs to the Named Officers.

Number of Securities
Underlying Unexercised Value Of Unexercised In-
Shares Options at Fiscal the-Money Options at
Acquired Year End Fiscal Year End
on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
----------------------- -------- -------- ----------- ------------- ----------- -------------

Edward E. Whitacre, Jr. 0 $0 3,761,031 4,516,666 $3,160,769 $0
John H. Atterbury III 0 $0 557,588 295,577 $ 898,158 $0
Rayford Wilkins, Jr. 0 $0 294,440 323,077 $ 256,289 $0
James D. Ellis 0 $0 744,897 388,000 $ 435,882 $0
William M. Daley 0 $0 30,000 165,000 $ 0 $0
Stanley T. Sigman 0 $0 435,264 517,776 $ 0 $0

"Value of Unexercised In-the-Money Options" figures are based on the year end,
December 31, 2002, SBC common stock price of $27.11.

Long Term Incentive Plans--Awards in Last Fiscal Year
--------------------------------------------------------------------------------

The table below reports performance shares granted to the Named Officers
during the last fiscal year, applicable to the performance periods indicated.

Performance Estimated Future Payouts
Number of or Other Under Non-Stock
Shares, Units Period Until Price-Based Plans
or Other Maturation -------------------------
Name Rights or Payout Threshold Target Maximum
----------------------- ------------- ------------ -------------------------

Edward E. Whitacre, Jr. 202,477 2002-2004 0 202,477 400,000
John H. Atterbury III 32,040 2002-2004 0 32,040 64,080
Rayford Wilkins, Jr. 30,038 2002-2004 0 30,038 60,076
James D. Ellis 35,044 2002-2004 0 35,044 70,088
William M. Daley 21,026 2002-2004 0 21,026 42,052
14,018 2002-2003 0 14,018 28,036
Stanley T. Sigman 50,063 2002-2004 0 50,063 100,126

Each performance share is equivalent in value to one share of SBC common stock.
At the end of a performance cycle, a percentage of the performance shares is
converted into cash and/or SBC common stock, based upon the achievement of
certain objectives. The performance objectives are set on a yearly basis, and
the extent to which a performance objective is met or exceeded is expressed as
a percentage. The annual percentages are then averaged over the term of each
performance period to determine the percentage of performance shares that may
be converted and paid out. The maximum number of performance shares that may be
converted at the end of a performance cycle may not exceed 200% of the target
number of performance shares.

Option Grants in Last Fiscal Year
--------------------------------------------------------------------------------

The table below contains the estimated present value of stock options
granted in 2002, as of their issue date. Option grant A was issued under the
2001 Incentive Plan; option grants B and C were issued under a stock purchase
plan where middle level and above managers received options based on the number
of SBC shares they purchased.

Percent of
Number of Total Options Grant
Securities Granted to Exercise Date
Underlying Employees in or Base Present
Options Fiscal Price Expiration Value
Name Grant Granted Year(1) ($/Share) Date ($000s)
-------------------------------------------------------------------------------------

Edward E. Whitacre, Jr. A 1,200,000(2) 3.33% $35.52 01/25/2012 $8,974
B 25,621 0.07% $36.96 02/01/2012 $ 195
C 208,621 0.58% $33.15 06/01/2012 $1,385

John H. Atterbury III A 160,000(2) 0.44% $35.52 01/25/2012 $1,196
B 4,737 0.01% $36.96 02/01/2012 $ 36
C 32,045 0.09% $33.15 06/01/2012 $ 213

Rayford Wilkins, Jr. A 150,000(2) 0.42% $35.52 01/25/2012 $1,122
B 4,506 0.01% $36.96 02/01/2012 $ 34
C 2,540 0.01% $33.15 06/01/2012 $ 17

James D. Ellis A 175,000(2) 0.49% $35.52 01/25/2012 $1,309
B 7,620 0.02% $36.96 02/01/2012 $ 58
C 33,017 0.09% $33.15 06/01/2012 $ 219

William M. Daley A 105,000(2) 0.29% $35.52 01/25/2012 $ 785

Stanley T. Sigman A 250,000(2) 0.69% $35.52 01/25/2012 $1,870
B 9,455 0.03% $36.96 02/01/2012 $ 72
C 42,288 0.12% $33.15 06/01/2012 $ 281
-------------------------------------------------------------------------------------

(1) Percentages are based on 36,070,879 options granted to employees in 2002.
The total number of shares subject to outstanding options as of December
31, 2002, represented 6.9% of the outstanding shares of SBC.

(2) One-third of these options vest on each anniversary of the grant. These
options also vest at retirement. As of December 31, 2002, none of these
options had vested.

The option values in the table represent the estimated present value of the
options as of their issue date. These values were determined in accordance with
a Black-Scholes option valuation model. The significant assumptions
incorporated in the Black-Scholes model in estimating the value of the options
include the following:

. Options were issued with an exercise price equal to the fair market value
of stock on the date of issuance. The term of each option is 10 years
(unless otherwise shortened or forfeited due to termination of
employment). The expected life of the option grants are 6.5 years for
grant A and 6 years for each of grants B and C.

. In calculating the value of the options, the model assumed an interest
rate of 4.99% for grant A, 4.78% for grant B, and 4.81% for

grant C. These interest rates represent the interest rates on U.S.
Treasury securities on the date of grant with maturity dates
corresponding to that of the expected option lives.

. Expected volatility was calculated for each grant using daily stock
prices for the period prior to the grant date corresponding with the
expected option life, resulting in volatility of 20.38% for grant A,
20.73% for grant B, and 21.33% for grant C.

. The model reflected an expected annual dividend yield of 3.04% for grant
A, 2.92% for grant B, and 3.26% for grant C.

The ultimate value of the options will depend on the future market price of
SBC's common stock, which cannot be forecast with reasonable accuracy. The
actual value, if any, that an optionee will realize upon exercise of an option
will depend on the excess of the market value of SBC's common stock over the
exercise price on the date the option is exercised.

Pension Plans

SBC has a noncontributory pension plan for most of its employees, including
all executive officers, known as the SBC Pension Benefit Plan. Management
participants are generally entitled to receive the greater of two pension
benefits: the Cash Balance Benefit or the CAM Benefit, each of which is subject
to Internal Revenue Code limitations on pay used to calculate pensions. A
participant's Cash Balance Benefit is equal to the balance in the participant's
cash balance account, which is made up of (a) an opening account balance as of
June 1, 1997, which reflects the lump sum present value of the participant's
approximate age 65 accrued benefit under the old plan design, (b) subsequent
monthly basic benefit credits equal to 5% of the participant's compensation
(generally, base pay, commissions, and group incentive awards but not
individual awards), and (c) monthly interest credits on the participant's cash
balance account. The interest rate is equal to the published average annual
yield for the 30-year Treasury Bond, reset quarterly as of the middle of the
preceding quarter. In addition, over the period June 30, 1997, through May 31,
2002, the participant's account received a monthly pro-rata share of the
participant's transition benefit, which was based on an estimate of what the
participant's account balance would have been if the cash balance design had
been applied throughout the participant's employment with SBC, plus additional
credits for those participants whose age plus service exceeded 25 on May 1,
1997. The CAM Benefit is equal to the sum of 1.6% of a participant's average
compensation (generally, base pay, commissions, and other nondiscretionary
bonuses such

as group incentive awards) for the five years ended December 31, 1999 (or any
prior five-year averaging period if it would result in a higher benefit),
multiplied by the number of years of service through the end of the
participant's averaging period, plus 1.6% of the participant's pension
compensation subsequent to the averaging period.

Pension amounts are not subject to reduction for Social Security benefits
or any other offset amounts. The Internal Revenue Code places certain
limitations on pensions that may be paid under Federal income tax qualified
plans. Benefits that are so limited are restored for officers and certain
senior managers from the general funds of SBC either under the Supplemental
Retirement Income Plan (see paragraph below) or another SBC nonqualified plan.
If they continue in their current positions at their current levels of
compensation and retire at the mandatory retirement age of 65, the total
estimated annual pension amounts from the Pension Benefit Plan and the
estimated credited years of service at retirement under the Plan for Messrs.
Whitacre, Atterbury, Wilkins, Ellis, and Daley would be $117,129 (44 years),
$150,388 (43 years), $138,438 (42 years), $96,480 (36 years), and $38,800 (12
years), respectively. Mr. Sigman ceased to accrue benefits under the Pension
Benefit Plan upon commencement of his employment at Cingular Wireless LLC. The
annuity value of his annual pension benefit, based upon approximately 37 years
of service, is $94,752.

The Supplemental Retirement Income Plan (which is not funded by, nor is it
a part of, the Pension Benefit Plan) establishes a target annual retirement
benefit for all officers and certain senior managers, stated as a percentage of
their annual salaries and annual incentive bonuses averaged over a specified
averaging period described below ("Average Annual Compensation"). The
percentage is increased by .715% for each year of actual service in excess of,
or decreased by 1.43% (.715% for mid-career hires) for each year of actual
service below, 30 years of service for executive officers and certain other
officers and 35 years of service for certain other senior managers. Average
Annual Compensation is determined by averaging salaries and actual annual
incentive bonus (or such other portion of the target or annual bonus amount as
the Human Resources Committee may determine) earned during the
36-consecutive-month period out of the last 120 months preceding retirement
that generates the highest average earnings. The target percentages of Average
Annual Compensation are: Chairman of the Board and Chief Executive Officer,
75%; executive officers, 60% to 70%; other officers, 55% to 60%; and certain
other senior managers, 50%. The Supplemental Retirement Income Plan pays the
difference, if any, between the target

amount and what would be payable under the Pension Benefit Plan if the benefits
under the Pension Benefit Plan were paid in the form of an immediate annuity
for life. In the event the participant retires before reaching his or her 60th
birthday, a discount of .5% for each month remaining until the participant's
60th birthday is applied reducing the amount payable under this plan, except
for officers who have 30 years or more of service at the time of retirement. If
they continue in their current positions at their current levels of salary and
most recent bonuses, and if they retire at the mandatory retirement age of 65,
the estimated annual amounts that will be paid in accordance with the
Supplemental Retirement Income Plan for Messrs. Whitacre, Atterbury, Wilkins,
Ellis, Daley, and Sigman would be $5,055,927, $874,945, $844,830, $1,050,930,
$564,977 and $1,383,935, respectively. Mr. Sigman's benefit will be reduced by
the amount of any benefit he receives from the Cingular Wireless LLC pension
plan.

Contracts With Management

On November 21, 1997, the Board of Directors approved revised Change of
Control Severance Agreements (the "Agreements") for each of the Named Officers
in the "Summary Compensation Table" as well as certain other officers (Mr.
Sigman's agreement has terminated). The purpose of the Agreements is to
reinforce and encourage the officers to maintain objectivity and a high level
of attention to their duties without distraction from the possibility of a
change in control of SBC. These Agreements provide that in the event of a
change in control of SBC, as that term is defined in the Agreements and
summarized below, each officer is entitled to certain benefits (the "Severance
Benefits") upon the subsequent termination or constructive termination of his
or her employment, unless such termination is due to death or disability, or
the termination is by SBC for cause (as defined in the Agreements); or is by
the officer for other than good reason (as defined in the Agreements).

The Severance Benefits include the payment of the officer's full base
salary through the date of termination plus all other amounts to which the
officer is entitled under any compensation plan of SBC in effect immediately
prior to the change in control. Also, each officer is entitled to a lump sum
payment equal to three (in the case of Messrs. Whitacre, Ellis, and Daley) or
two (in the case of Messrs. Atterbury and Wilkins) times the sum of (a) the
officer's annual base salary in effect immediately prior to termination, (b)
the most recently paid amount under the Short Term Incentive Plan or as a Key
Executive Officer Short Term Award under the 2001 Incentive Plan,

and (c) the cash value of the target award of performance shares granted under
the 2001 Incentive Plan applicable to each officer for the most current
performance cycle. Additionally, each officer will be provided with life and
health benefits, including supplemental medical, vision and dental benefits,
for three years from the date of termination, if the officer is not otherwise
entitled to the same.

In the event any payment or benefit received or to be received by an
officer in connection with a change in control or the termination of his or her
employment, whether pursuant to his or her Agreement and/or under a benefit
plan (the "Total Payments"), is determined to be an excess parachute payment as
defined in the Internal Revenue Code and thus subject to the 20% Federal excise
tax, SBC will pay the officer an amount equal to the excise tax and all Federal
and applicable state taxes resulting from the payment of the excise tax or from
payment of such Federal and state taxes.

Under the Agreements, in general, change in control is deemed to occur if:
(a) anyone (other than an employee benefit plan of SBC) acquires more than 20%
of SBC's common stock, (b) within a two-year period, the Directors at the
beginning of such period (together with any new Directors elected or nominated
for election by a two-thirds majority of Directors then in office who were
Directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease to constitute a majority of the
Board, or (c) SBC's shareowners either approve a merger or consolidation that
results in someone other than the shareowners immediately prior thereto holding
more than 35% of the voting power of the surviving entity or approve the
complete liquidation of SBC or the disposition of substantially all of SBC's
assets.

SBC has entered into an employment agreement with William M. Daley to act
as President of SBC, beginning December 1, 2001. Under the agreement, he will
receive an annual salary of not less than $600,000 and a target bonus equal or
greater than his salary. His yearly bonus, other than the bonus for 2002, will
be reduced or eliminated if performance objectives set by the Human Resources
Committee are not met. He received a one-time signing bonus of $1,100,000 to
recognize the loss of benefits from his prior employer. Pursuant to the
agreement, Mr. Daley received performance shares and options in 2002 as shown
in the above tables. Mr. Daley will be permitted to participate in the
Supplemental Retirement Income Plan (described under "Pension Plans") with a
target percentage of 60%. In computing Mr. Daley's payments under that plan,
his "Average Annual Compensation" shall not be less than $1,200,000. The
employment

agreement terminates when he reaches age 65. If SBC terminates Mr. Daley's
employment before expiration of the agreement without cause, he will receive a
payment equal to his base salary and the greater of his target bonus or his
bonus for the prior year (which shall not be less than $600,000).

SBC entered into an employment agreement with Mr. Whitacre to act as
Chairman of the Board and Chief Executive Officer for a five-year term ending
November 15, 2006. The agreement may be terminated by either party at the end
of the third year of the contract. During the term of the contract, his base
salary, the target for his bonus, and the value of his long term awards shall
not be less than that in effect for calendar year 2001. The bonus and long term
award are not guaranteed, but are subject to attainment of performance
objectives. Pursuant to the agreement, SBC granted Mr. Whitacre options that
expire in 2011 to acquire 2,500,000 shares of SBC at $39.13 per share.
Three-fifths of the options vest on the third anniversary of the agreement and
the remaining options vest on the fifth anniversary; the options also vest if
his employment is terminated without cause. SBC will provide Mr. Whitacre with
office facilities and support staff, automobile benefits, limited access to
SBC's aircraft, and health care for the rest of his life. If the company
terminates his employment without cause before the end of the term or if he is
unable to perform his duties because of disability or accident, he shall be
entitled to continue to receive his salary and other benefits through the end
of the term.

Upon retirement, provided that he has completed three years of the
employment term, Mr. Whitacre has agreed to provide consulting services and
advice to SBC for three years after his termination of employment in exchange
for an annual fee equal to 50% of his annual salary at retirement. In the event
Mr. Whitacre receives a change in control payment under the Change of Control
Severance Agreements (described above), his employment term shall immediately
expire, and the consulting term shall be extended by the same period the
employment term was reduced.

In connection with the retirement of Cassandra C. Carr, former Senior
Executive Vice President, in March 2002, the Human Resources Committee vested
40,000 options with an expiration date of January 28, 2003, and an exercise
price of $39.25. In addition, SBC agreed to pay her a pro-rata portion of her
target annual bonus, based on the number of days she was employed in 2002.

One member of the immediate family of each of James W. Callaway, Group
President, Mr. Ellis and Mr. Sigman as well as two members of the

immediate family of Mr. Whitacre were employed by subsidiaries of SBC and were
paid a total of approximately $397,000 in 2002. Amounts paid to these employees
include salary, bonus, option exercises, and relocation costs, and are
comparable to compensation paid to other employees performing similar job
functions.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
--------------------------------------------------------------------------------

SBC's executive officers and Directors are required under the Securities
Exchange Act of 1934 to file reports of transactions and holdings in SBC common
stock with the Securities and Exchange Commission and the New York Stock
Exchange and to file a copy of such reports with SBC. Based solely on a review
of the filed reports and written representations that no other reports are
required, SBC believes that during the preceding year all executive officers
and Directors were in compliance with all filing requirements applicable to
such executive officers and Directors, except for the following: (a) two
transactions (totaling 296 shares) that were reported after the respective due
dates by Ms. Rembe for shares indirectly acquired by her spouse, (b) one
transaction involving the sale of 1,000 shares that was reported after the due
date by Mr. Hay; and (c) two transactions (totaling 97 shares), each of which
were made without the actual knowledge of Mr. Daley by a former investment
manager who had discretionary trading authority over an account in which Mr.
Daley had a beneficial interest, were reported by Mr. Daley after the
respective due dates.

STOCK PERFORMANCE GRAPH
--------------------------------------------------------------------------------

[PERFORMANCE GRAPH]

12/97 12/98 12/99 12/00 12/01 12/02
SBC 100 150 139 139 116 84
PEER GROUP 100 148 156 134 129 102
S&P 500 100 129 156 141 125 97

Assumes $100 invested on December 31, 1997, in SBC common stock, Standard &
Poor's 500 Index ("S&P 500") and a Peer Group of other large U.S.
telecommunications companies (BellSouth Corporation and Verizon, Inc.). The
index of telecommunications companies ("Peer Group") is weighted according to
the market capitalization of its component companies at the beginning of each
period. Total return equals stock price appreciation plus reinvestment of
dividends on a quarterly basis.

OTHER BUSINESS
--------------------------------------------------------------------------------

The Board of Directors is not aware of any matters that will be presented
at the meeting for action on the part of shareowners other than those described
herein.

A copy of SBC's Annual Report to the Securities and Exchange Commission on
Form 10-K for the year 2002 may be obtained without charge upon written request
to the Director-External Reporting, 175 E. Houston, 9th Floor, San Antonio,
Texas 78205.

Shareowner Proposals

Proposals of shareowners intended for presentation at the 2004 Annual
Meeting must be received by SBC for inclusion in its Proxy Statement and form
of proxy relating to that meeting by November 15, 2003. Such proposals should
be sent in writing by certified mail to the Vice President and Secretary of SBC
at 175 E. Houston, San Antonio, Texas 78205.

Shareowners whose proposals are not included in the Proxy Statement but who
still intend to submit a proposal at an Annual Meeting and shareowners who
intend to submit nominations for Directors at an Annual Meeting are required to
notify the Vice President and Secretary of SBC of their proposal or nominations
and to provide certain other information not less than 120 days, nor more than
150 days, before the meeting, in accordance with SBC's Bylaws.

[LOGO] Printed on recycled paper

Printed entirely on recycled paper
meeting or exceeding the Environmental
Protection Agency minimum requirements
for recycled paper stock.

[front of card]

[SBC LOGO]
PROXY CARD/VOTING
INSTRUCTION CARD

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON APRIL 25, 2003.

The undersigned hereby appoints Edward E. Whitacre, Jr. and Randall L.
Stephenson, and each of them, proxies, with full power of substitution, to vote
all common shares of the undersigned in SBC Communications Inc. at the Annual
Meeting of Shareowners to be held on April 25, 2003, and at any adjournment
thereof, upon all subjects that may properly come before the meeting, including
the matters described in the proxy statement furnished herewith, in accordance
with the directions indicated on the reverse side of this card or provided
through the telephone or Internet proxy procedures, and at the discretion of
the proxies on any other matters that may properly come before the meeting. IF
SPECIFIC VOTING DIRECTIONS ARE NOT GIVEN WITH RESPECT TO THE MATTERS TO BE
ACTED UPON AND THE SIGNED CARD IS RETURNED, THE PROXIES WILL VOTE SUCH SHARES
IN ACCORDANCE WITH THE DIRECTORS' RECOMMENDATIONS ON THE MATTERS LISTED ON THE
REVERSE SIDE OF THIS CARD AND AT THE DISCRETION OF THE PROXIES ON ANY OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING.

The Board of Directors recommends a vote FOR each of the two Director proposals
(Items 1 and 2) and AGAINST the Shareowner proposals (Items 3, 4 and 5) listed
on the reverse side of this card (each of which is described in the proxy
statement). The Board of Directors knows of no other matters that are to be
presented at the meeting.

The nominees for the Board of Directors are:

01 - Gilbert F. Amelio 04 - Charles F. Knight 06 - Carlos Slim Helu
02 - Clarence C. Barksdale 05 - Toni Rembe 07 - Patricia P. Upton
03 - Martin K. Eby, Jr.

PLEASE SIGN ON THE REVERSE SIDE OF THIS CARD AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE OR, IF YOU CHOOSE, YOU CAN SUBMIT YOUR PROXY THROUGH THE
INTERNET OR BY TELEPHONE.

This proxy card, when signed and returned, or your telephone or Internet proxy,
will also constitute voting instructions to the plan administrator or trustee
for any shares held on your behalf under any of the following employee benefit
plans: the SBC Savings Plan, the SBC Savings and Security Plan, the DonTech
Profit Participation Plan, the Old Heritage Advertising & Publishers, Inc.
Profit Sharing Plan, the SBC PAYSOP, the Pacific Telesis Group Employee Stock
Ownership Plan, the Tax Reduction Act Stock Ownership Plan (the "TRASOP")
sponsored by The Southern New England Telephone Company, the Cingular Wireless
401(k) Savings Plan, and the Cingular Wireless 401(k) Savings Plan for
Bargained Employees. Shares in each of the foregoing employee benefit plans
(except the TRASOP and the Old Heritage plan) for which voting instructions are
not received, as well as shares which have not yet been allocated to
participants' accounts in the SBC Savings Plan, subject to the trustees'
fiduciary obligations, will be voted by the trustees in the same proportion as
the shares for which voting instructions are received from other participants
in each such plan. Similarly, the proxy card or telephone or Internet proxy
will constitute voting instructions to the plan administrator for any shares
held on your behalf pursuant to the DirectSERVICE Investment Program (dividend
reinvestment plan).

(Please mark your proxy and sign on the reverse side.)

--------------------------------------------------------------------------------
FOLD AND DETACH HERE

ADMISSION TICKET

[map] [map]

The Sky Room is located on the 5th Floor, International Conference Center,
Bldg. 2, at the University of the Incarnate Word, at the corner of Hildebrand
and Highway 281.

SBC COMMUNICATIONS INC.
Annual Meeting of Shareowners
Friday, April 25, 2003
University of the Incarnate Word
847 E. Hildebrand, Sky Room
San Antonio, Texas 78212
Doors open at 8:00 a.m.
Meeting begins at 9:00 a.m.

[back of card]

[X] Please mark your votes as in this example.

SBC COMMUNICATIONS INC. THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

Your Directors recommend a vote FOR Items 1 and 2.

For Withhold
All All Exception*
1. Election of Directors. (SEE REVERSE) [_] [_] [_]

For all, except withhold vote from the
following nominee(s):

----------------------------------
For Against Abstain
2. Appointment of Independent Auditors. [_] [_] [_]

Your Directors recommend a vote AGAINST Items 3, 4 and 5.
For Against Abstain
3. Shareowner Proposal A. [_] [_] [_]
4. Shareowner Proposal B. [_] [_] [_]
5. Shareowner Proposal C. [_] [_] [_]

Discontinue mailing Annual Report for this account because I already receive
multiple copies at this address. [_]

Comments: __________________________________________________

Daytime Phone Number: ____________________________________

------------------ ----------------- ------------------
Signature Signature (joint owner) Date

Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, corporate officer, trustee,
guardian, or custodian, please give full title.

--------------------------------------------------------------------------------
FOLD AND DETACH HERE

[SBC logo]

YOUR VOTE IS IMPORTANT!

You can submit your proxy by mail, by telephone, or through the Internet (see
instructions below).

IF YOU SUBMIT YOUR PROXY BY TELEPHONE OR THROUGH THE INTERNET, THERE IS NO NEED
FOR YOU TO MAIL BACK YOUR PROXY CARD.

BY MAIL BY TELEPHONE THROUGH THE INTERNET

www.eproxyvote.com/sbc

Mark, sign and date your Call Toll Free Access the above website
proxy card and return it 1-877-779-8683 on any to authorize the voting
in the enclosed envelope. touch-tone telephone to of your shares as if you
authorize the voting of marked and returned your
your shares as if you proxy card. You may
marked and returned your access the site 24 hours
proxy card. You may call a day, 7 days a week. You
24 hours a day, 7 days a will be prompted to enter
week. You will be the CONTROL NUMBER IN THE
prompted to enter the BOX ABOVE; then just
CONTROL NUMBER IN THE BOX follow the simple
ABOVE; then just follow instructions.
the simple instructions.

THANK YOU FOR VOTING!