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Association of
Ameritech/SBC Retirees SM 2008 AASBCRSM Initiatives
01 Shareholder Proposal Initiative
November 2007: Proposal filed by AASBCR President Carole Lovell
Text of AASBCRSM Shareholder Proposal Co-Sponsored by TelCo
“RESOLVED, the shareholders of AT&T hereby request that the Board include, as a voting item printed in the proxy statement for each annual meeting of stockholders, an advisory resolution proposing that stockholders approve or disapprove the compensation of the named executive officers as set forth in the proxy statement’s Summary Compensation Table (the “SCT”) and the accompanying narrative disclosure of material factors provided to understand the SCT. The board’s proposal shall make clear that the vote is advisory and will not abrogate any employment agreement.”
SUPPORTING STATEMENT: We believe current rules governing senior executive compensation do not give shareholders sufficient influence over pay practices – nor do they give the Board adequate feedback from the owners of the company.
AT&T’s Board has been criticized for excessive CEO pay relative to performance. A study by The Corporate Library (“Pay for Failure: The Compensation Committees Responsible,” March 31, 2006) singled out AT&T as one of eleven large U.S. companies “where the disconnect between pay and performance is particularly stark.”
The study notes that over the five fiscal years through 2005, then-CEO Edward Whitacre received $85.2 million in compensation, while total shareholder return was negative 40.3%. The study stated that 100% LTIP payouts to Whitacre when “shareholder wealth has been diminished by a third over the period goes against common sense.”
Whitacre received a $158.4 million pension package when he retired last June, the highest pension benefit for any U.S. chief executive, according to Pensions & Investments (“Pension Goldmine Awaits AT&T, Occidental CEOs,” April 2, 2007). This included $83.3 million in Senior Executive Retirement Plan (SERP) accumulations.
Whitacre’s pension package was more than 25 times greater than the median combined pension and deferred compensation package of 485 public companies analyzed last year by the Corporate Library.
In case this platinum pension wasn’t enough, Whitacre’s golden parachute (“change in control severance payments”) would have included $23.2 million in lump sum severance, $20.1 million in tax reimbursements, and $67.6 million in accelerated performance share vesting “whether or not the executive’s employment is terminated” (2007 proxy statement).
The Board also targeted Whitacre’s base salary, target bonus and long-term equity at the 75th percentile of the market. According to Institutional Shareholder Services, “such practice has the Lake Wobegon effect of ratcheting CEO compensation since CEOs are like the children of Lake Wobegon, all of them are above average.”
The board did not limit its generosity to Whitacre. After just 5 years at AT&T, former CEO David Dorman left with a yearly pension of $2.1 million and his own $25 million parachute. Compare this to the freezing of the AT&T’s rank-and-file pension plan.
AT&T’s new CEO, Randall Stephenson, continues the trend. His change in control severance package would be in excess of $16.5 million.
The AASBCR will be asking all shareholder/members to support this proposal and mailing in their proxy when the proxies arrive. In addition, the Association will be publishing a special publication providing you with more instructions regarding the proxy vote.
January 2008: All members of the AT&T Retiree coalition officially agree to actively support the AASBCR proposal which TelCo agreed to cosponsor and the following SRA proposal which ACER agreed to cosponsor.
Text of SRA Shareholder Proposal Co-Sponsored by ACER
“RESOLVED, the shareholders of AT&T, Inc. urge the Board to determine future awards of performance-based compensation for executive officers using a measure of earnings that excludes non-cash “pension credits” that result from projected returns on employee pension fund assets, and to report annually to shareholders on the specific financial performance measure used to award performance pay.”
February 2008: AT&T Board of Directors responded to the AASBCR proposal indicating why they believe it is unnecessary and recommending shareholders reject the proposal.
March 2008: AT&T publishes the 2008 Notice of Annual Meeting and Proxy Statement:
http://www.att.com/Investor/ATT_Annual/proxy/pdf/final_2008_proxy.pdf
The AASBCR Stockholder proposal (Item #7) Advisory Shareholder Vote on Compensation Committee Reports and AT&T’s comments about the proposal begins on page 27 (page 30 of the PDF document).
The SRA Stockholder proposal (Item #4) Exclude Pension Credits from Calculations of Performance-Based Pay, which AASBCR supports, and AT&T’s comments about the proposal begins on page 21 (page 24 of the PDF document).
April 2008: The shareholder Meeting - Friday, April 25, 2008. The AASBCRSM proposal received 44% of the vote so it did not pass - this year
December 2007: AASBCR Vice President of AT&T Relations, Tom Cotton discusses designing and implementing a member survey. The AASBCR Board discussed the importance of inviting the other three retiree groups of the AT&T Retiree Coalition to work with AASBCR.
January 2008: Tom Cotton begins a series of meetings with the AT&T Retiree Coalition representatives – representatives of the other three AT&T retiree groups. They work to design the survey and find the right questions to ask the retiree members.
February 2008: Agreement is reached among the AT&T Retiree Coalition members and the structure and content of the 2008 Retiree Survey is set. The time line is accepted in order to have the results compiled and all analysis work performed prior to the April meeting with AT&T. CLICK HERE FOR SURVEY DETAILS
March 2008: The 2008 AT&T Retiree Coalition Health Care Survey was distributed to AASBCR members requesting that they return completed surveys as soon as possible preferably via FAX to AASBCR’s virtual office at (312) 962-2770.
April 2008:
Survey results were compiled along with 30+ pages of comments
(anonymity preserved) and presented to AT&T HR at the Annual Share Holders
Meeting. To view Highlights of the 2008 Benefits Enrollment AT&T Retiree
Survey Results click here.
03 National Retiree Legislation Network (NRLN) Initiative
October 2007: AASBCR Vice President of Legislation, Ray Sternot provides AASBCR’s requirements for the National Retiree Legislation Network (NRLN) 2008 Legislative Agenda. AASBCR shares our Legislative effort recommendations with the NRLN.
December 2007: The NRLN releases the proposed 2008 Legislative Agenda.
January 2008: Ray Sternot, AASBCR VP-Legislation is seated as a member of the board of the NRLN. Carole Lovell, AASBCR President and Ray Sternot, AASBCR VP-Legislation participate in the NRLN strategic planning meeting and finalization of the NRLN 2008 Legislative Agenda.
February 2008: The NRLN 2008 Legislative Agenda is made available to AASBCR members in its entirety.
March 2008: This year, the AASBCR Questions for Candidates was accepted as a nationwide undertaking by the NRLN. The final draft copy is being reviewed by the leadership of the NRLN member organizations. Ray Sternot, AASBCR VP-Legislation is pleased with the results to date. |