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(April 15, 2007)
Proudly representing retirees from the new AT&T
Midwest Region, SBC Midwest Region,
Ameritech, as well as the five Bell Companies in
Illinois, Indiana, Michigan, Ohio, and Wisconsin
To my fellow retirees, current employees and
all other ATT Shareholders:
Most of you have received your ATT proxy
statements this week. Contained in the statement is a Proposal posed
by the Association of Ameritech/SBC Retirees. The proposal is listed
as Proposal “D”, Item 7, on your admission card and is provided on
Page 23 of the Shareholder Meeting Notice.
Bruce Beckman
President, AASBCR, Inc.
The Proposal is as follows:
PROPOSAL
RESOLVED, the shareholders of AT&T Inc. hereby request
that the Board adopt a policy that includes, as a voting item in the
proxy statement for each annual meeting, an advisory resolution,
proposed by AT&T’s management, to approve the compensation of the
named executive officers (“NEOs”), 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 policy should
ensure that shareholders fully understand the vote is advisory and
will not abrogate any employment agreement.
The AASBCR, Inc. asks that
you cast your Ballot “For” this proposal “D”.
The following is our
Supporting Statement:
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.
The advisory vote proposed
here is similar to the nonbinding shareholder vote required since 2003
at the annual meetings of all U.K.-listed firms and, beginning in
2005, at Australia-based companies.
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, CEO Edward Whitacre received $85.2
million in compensation, while total shareholder return was
negative 40.3%. The Corporate Library accordingly gave AT&T’s
Board a “D” for overall effectiveness.
The Corporate Library’s
analysis concludes: “Too much of the current and future compensation
at AT&T is either fixed, or based on the wrong performance metrics, or
the wrong performance metrics measured over too short a time period,
which, while achievable, do not necessarily translate into long-term
growth in shareholder value.” The study asserts that 100% LTIP payouts
to Whitacre when “shareholder wealth has been diminished by a third
over the period goes against common sense.
In our opinion, AT&T’s
executive pension and severance agreements also stand out as
unjustifiably costly and contrary to shareholder interests.
Whitacre’s parachute is
valued at over $25 million – the 17th most costly among
America’s 100 largest corporations (“Platinum Promises,” Business
Week Online, December 12, 2005).
Whitacre’s golden parachute
is particularly excessive, in our view, considering it has a platinum
lining: annual pension payments of $5,494,000 for life, plus an
$18,805,000 lump sum. Last year The Corporate Library singled out
AT&T for bestowing on Whitacre the third largest CEO pension payout
among large U.S. companies.
If you add these together,
it means that AT&T’s shareholders could be paying our CEO $150 million
or more in post-employment severance and pension benefits combined
over the next 20 years (assuming Whitacre’s eligible termination and
longevity).
Last year, 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 AT&T’s rank-and-file pension plan.
An advisory vote would provide useful feedback and
encourage shareholders to scrutinize the new, more extensive
disclosures required by the SEC.
Recently, a leading money
management magazine published an article that stated Edward E.
Whitacre Jr. will get a $158.4 million pension package when he retires
as chairman and chief executive officer of AT&T Inc. — the highest of
any U.S. CEO. That will make him the highest paid retiree in America.
We believe the shareholder should have a say in these matters.
Congressman Barney Frank is
pressing for legislation on this very issue.
Please vote FOR this proposal.
OTHER SHAREHOLDER PROPOSALS
What follows is the opinion of the Blue Bulletin Editor and
does not necessarily reflect the opinions of the AASBCR Board or
Membership.
Proposal A, Item 4
asks that AT&T provide a semi-annual report of all non-deductible
contributions – political and to other organizations. This report
should be to the Board of Directors, with a copy on the AT&T web site
(to save the expense of publishing and mailing. The supporting
statement claims that AT&T contributed $1.3+ Million in 2003-04 and
$1.2+ Million in 2005-06 to ‘soft money’ political contributions and
that this information should be published in one place. The
Directors’ Position seems to be that compiling this information and
putting it on the web would cause unwarranted expenditures and
administrative burdens. And nobody else does this. I thought AT&T
was a Leader. I’m voting “FOR”.
Proposal B, Item 5
asks to amend the corporate bylaws to allow stockholders with 10% of
AT&T stock to call a special board meeting. While I can’t take
seriously the Board’s position that a special meeting will be called
whenever requested by 2/3 of AT&T stockholders, I cannot find a reason
to allow a couple of mutual funds, pension funds, or a hostile
takeover effort to call a special board meeting. I’m voting
“AGAINST”.
Proposal C, Item 6
asks that the Board’s Executive Compensation Committee establish a
“pay for superior performance” standard. If I interpret this
correctly, it is asking that senior executive compensation be awarded
similarly to junior management compensation. The Board disagrees.
I’m voting “FOR”.
Proposal D, Item 7 is the AASBCR Proposal.
Please vote “FOR”.
Proposal E, Item 8
asks that the Supplemental Executive Retirement Plan have limits. To
me, this is an extension of the Board’s Item 3 (which I’m supporting),
which would limit the amount of Executive Severance. I’m voting
“FOR”.
HOWEVER YOU VOTE, PLEASE VOTE ALL YOUR
SHARES!
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