AT&T
Annual Meeting: April 30
Total compensation for AT&T CEO John Stankey was $21,020,917 in 2020. Notably, the company had two other even-more excessively paid executives: executive chairman Randall Stephenson and incoming CEO of WarnerMedia Jason Kilar, whose compensations totaled $29,154,628 and $52,172,599 in 2020, respectively.
This level of pay for an executive chairman is considered an unnecessary and inappropriate governance practice., Furthermore Kilar’s new-hire package is extraordinarily unusual and was a major component of why ISS recommended against the advisory proposal. In particular, ISS objected to “the magnitude and structure of a sign-on equity award” granted to Kilar, which was “valued at $48 million” and “lacks performance criteria and vests solely over time.” In other words, even if AT&T were to lose 50 percent of its stock value – leaving shareholders with extreme losses – these shares would still be worth over $20 million dollars and fully vest in four years, a timeline that many shareholders would not consider long-term.
An additional concerning component of Kilar’s new-hire package is his base salary. At $2.5 million, it is not only excessive for an NEO, but is higher than the median of entertainment CEOs (including the current and former AT&T CEOs), whom ISS notes “tend to be a highly compensated group.” AT&T refers to this highly-compensated group in its attempt to justify the pay package, stating:
“The structure of Mr. Kilar’s compensation also aligns with that of his peers in the media and technology industry. His total compensation reflects his responsibility in running a preeminent media company and is also in line with industry peers.”
It is important to note that the high pay of these peers is due in large part to lingering corporate governance effects of entertainment industry founders and company structures. As Variety noted in an article last year:
“That’s due in part to the dual-class shareholder system at the likes of ViacomCBS and Comcast, which give controlling shareholders… virtually absolute authority. Corporate boards, composed of loyalists, often rubber-stamp exorbitant pay packages and ensure that bonus goals remain within reach.”
However, with Vanguard and BlackRock as its two largest stockholders, AT&T is not one of these companies. Nevertheless, AT&T discloses three types of peer groups: Telecom, Media, and Technology; General Industry; and Media. Among the peer companies for Kilar: none are general industry, four have dual class stock (AMC, Comcast, CBS, Discovery), and one has controlled stock (Fox).
The bottom line is that the executives of many of the peer groups are paid excessively not because they deserve it, but because they can be. As such, most holders of AT&T stock are unlikely to accept this excessive compensation package.