AT&T
Annual Meeting April 24
AT&T CEO Randall Stephenson’s total compensation of $32,032,925 includes a stock award of $19,800,007. Stephenson was number 40 on last year’s list of overpaid CEOs. In a regression analysis done by HIP Investor, he was the 20th most overpaid CEO. That analysis predicted pay based on his performance should have been $16.8 million; instead, his 2018 compensation was $29,118,118. The excess calculated was 138%.
Stephenson maintains the extraordinarily high base salary of $1.8 million, but his stock awards increased to $19,800,007 from $17,069,774 from the prior year.
One issue with CEOs who are overpaid is that it tends to lead to excessive pay for the other named executive officers as well. Several other AT&T executives saw pay increases higher than Stephenson’s 10%. The total disclosed compensation of John Stankey, AT&T President and CEO of Warner Media, increased more than 36% to $22,473,006. He has a base salary of $2,900,000 million, which is considerably higher than CEO base salary at almost all other S&P 500 companies, and practically unheard of for a non-CEO.
Retired CEO of AT&T Communications John Donovan received $27,021,978, an increase of 85% from 2018. This package included a cash severance payment of $7,850,000 upon his retirement from the company. He received accelerated vesting of shares that were not prorated as would typically be the case. The severance payment seems particularly unnecessary given that Donovan’s current retirement benefits total over $16 million.
News reports highlighted that these increases came even as AT&T laid-off employees.
A Forbes article entitled AT&T CEO’s Multimillion Compensation Increased While Thousands Of Employees Were Terminated noted that Stephenson, “applauded President Donald Trump's tax-cut plan and said in a CNBC interview, ‘Lower taxes drives more investment, drives more hiring, drives greater wages.’ He boasted that new jobs will be created, more specifically ‘7,000 jobs of people putting fiber in the ground, hard-hat jobs that make $70,000 to $80,000 per year.’ It didn’t work out this way.”
In fact, as John Brodkin noted in Ars Technica, “While Stephenson's pay rose, AT&T eliminated 7.6 percent of its workforce in 2019. AT&T had 247,800 employees at the end of 2019, down from 268,220 one year earlier. AT&T also slashed capital expenditures by more than $1.6 billion in 2019 and projects a capital-investment cut of more than $3 billion in 2020.”
It is unclear what role pressure from activist hedge fund Elliott Management, which announced its purchase of $3.2 billion in shares in September 2019, may have played in pressuring the company to take some of these actions. But, long-term shareholders have not seen sustained growth. The stock reached its highest price in June 1999 when shares sold for $57. Today, shares hover around $30.
The compensation of AT&T’s median employee was calculated at $98,630. The pay ratio was 325:1.