UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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☒ | Definitive Proxy Statement | |
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☐ | Soliciting Material Pursuant to § 240.14a-12 |
AT&T Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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To Our Stockholders
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ITS A PLEASURE TO INVITE YOU TO OUR 2021 ANNUAL MEETING OF STOCKHOLDERS. I HOPE YOU CAN JOIN US VIRTUALLY ON FRIDAY, APRIL 30, 2021, AT 9:00 A.M. CENTRAL TIME.
Dear Stockholders:
As the new chairman of AT&Ts Board of Directors, Im proud of the companys strong commitment to sound, forward-looking governance.
Our Boards role is to keep our company focused on the long term and represent your interests. We do that by consistently challenging the status quo, offering a diversity of perspectives and taking a hands-on approach to overseeing AT&Ts operations and strategy all the while staying true to our mission of creating value for you.
I can assure you that we listen carefully to our investors, so I hope youre able to join us at our virtual Annual Meeting April 30th. Until then, I join with our entire Board in expressing our thanks for your continued confidence in AT&T.
Sincerely, Bill Kennard |
William E. Kennard INDEPENDENT CHAIRMAN OF THE BOARD | |
Dear Stockholders:
Its a pleasure to invite you to our 2021 Annual Meeting of Stockholders, which again will be a virtual web-based event. I hope you can join us on Friday, April 30, 2021, at 9:00 a.m. at www.virtualshareholdermeeting.com/T2021.
At this years meeting, well update you on the strength of our business and how were bringing to life our companys purpose to create connection with each other, with what people and businesses need to thrive in their everyday lives, and with the stories and experiences that matter.
Youll hear about our 3 areas of market focus designed to drive deep customer relationships:
Leveraging our world-class fiber and wireless infrastructure to carry more broadband traffic and serve more customers across all segments than any other U.S. company
Developing a next-generation entertainment distribution platform built for subscription and advertising-based customer relationships
Creating and curating an industry-leading offer of premium entertainment content that profitably grows our customer relationships beyond our traditional connectivity-based services
Well also discuss the ways we support that with disciplined financial management and a deliberate capital allocation framework, which allows us to invest in growth and reduce debt while creating long-term value and sustaining our dividend for you, our owners.
On behalf of our management team, thank you for your continued support.
Sincerely, John Stankey
March 11, 2021 |
John T. Stankey
CHIEF EXECUTIVE OFFICER AND PRESIDENT
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AT&T Inc. One AT&T Plaza Whitacre Tower 208 S. Akard Street Dallas, TX 75202 |
NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS
Attending the Meeting
The Record Date for AT&Ts 2021 Annual Meeting of Stockholders is March 2, 2021.
Stockholders of Record (shares are registered in your name)
If you were a Stockholder of Record of AT&T common stock at the close of business on the Record Date, you are eligible to attend the meeting, vote, change a prior vote, and submit questions. To access the meeting, visit www.virtualshareholdermeeting.com/T2021 and follow the prompts, which will ask you to enter your 16-digit control number. The control number is shown in a box on your Proxy Card or, if applicable, shown in the Notice of Internet Availability of Proxy Materials.
Beneficial Stockholders (shares are held in the name of a bank, broker, or other institution)
If you were a beneficial stockholder of AT&T common stock as of the Record Date (i.e., you hold your shares through a broker or other intermediary), you may submit your voting instructions through your broker or other intermediary. To access the meeting, visit www.virtualshareholdermeeting.com/T2021 and use your 16-digit control number. You may vote your shares at the meeting or change a prior vote and submit questions. If you are a beneficial stockholder but do not have a control number, you may gain access to the meeting by contacting your broker or by following the instructions included with your proxy materials.
401(k) Plan Participants
If you are a participant in the AT&T Retirement Savings Plan, the AT&T Savings and Security Plan, the AT&T Puerto Rico Retirement Savings Plan, or the BellSouth Savings and Security Plan, and if you participated in the AT&T shares fund on the record date, you are eligible to listen to the meeting via the webcast and submit questions at the meeting. You may access the meeting and submit questions in the same manner as Stockholders of Record. Because plan participants may submit voting instructions only through the plan trustee or administrator, voting instructions must be submitted on or before April 27, 2021.
Guests
The meeting will also be available to the general public at the following link: www.virtualshareholdermeeting.com/T2021. Please note that guests will not have the ability to ask questions or vote.
Asking Questions
If you are a Stockholder of Record, a Beneficial Stockholder, or 401(k) Plan Participant, you may submit questions in writing during the meeting through the meeting portal at www.virtualshareholdermeeting.com/T2021 using your 16-digit control number. In addition, you may submit questions beginning 3 days before the day of the meeting by going to www.proxyvote.com. We will attempt to answer as many questions as we can during the meeting. Similar questions on the same topic will be answered as a group. Questions related to individual stockholders will be answered separately by our stockholder relations team. Our replies to questions of general interest, including those we are unable to address during the meeting, will be published on our Investor Relations website after the meeting.
Stockholder Proponents
Only stockholders who have submitted proposals pursuant to AT&Ts Bylaws may have a proposal submitted at the meeting. Unless otherwise determined by the Chairman of the meeting, each proponent will be permitted to introduce their proposal. The introduction must be relevant to the proposal and, of course, may not otherwise be inappropriate.
Control Number
Your 16-digit control number appears in a box on your Proxy Card, in our Notice of Internet Availability of Proxy Materials, or in the instructions that accompanied your proxy materials. If you do not have a 16-digit control number, you may gain access to the meeting by contacting your broker or by following the instructions included with your proxy materials.
Technical Support
If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the phone number displayed on the virtual meeting website on the meeting date.
VOTING RESULTS
The voting results of the Annual Meeting will be published no later than four business days after the Annual Meeting on a Form 8-K filed with the Securities and Exchange Commission, which will be available in the investor relations area of our website at www.att.com.
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Proxy Statement Summary
This summary highlights information contained elsewhere in this Proxy Statement. Please read the entire Proxy Statement carefully before voting. |
2021 ANNUAL MEETING INFORMATION
Time 9:00 a.m. Central time |
Date Friday April 30, 2021 |
Place www.virtualshareholdermeeting.com/T2021 |
ATTENDING THE MEETING
AGENDA AND VOTING RECOMMENDATIONS
Management Proposals: | Board Recommendation | Page | ||||
1 - Election of Directors |
FOR each nominee |
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3 |
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2 - Ratification of Ernst & Young LLP as auditors for 2021 |
FOR |
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3 - Advisory Approval of Executive Compensation |
FOR |
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Stockholder Proposal: |
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4 - Shareholder Right to Act by Written Consent |
AGAINST |
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2021 PROXY |
SUM1 |
AT&T INC. |
2021 PROXY STATEMENT SUMMARY
DIRECTOR TENURE AND DIVERSITY
We are committed to strong corporate governance that directly aligns with our long-term strategy. Since 2012, the Board has undergone a meaningful, deliberate shift, adding ten new directors with significant experience in key areas that align to the evolution of the strategy. The ongoing refreshment of the Board promotes the long-term interests of stockholders, strengthens Board and management accountability, and builds on our environmental, social and governance leadership. |
DIRECTOR NOMINEES
TENURE
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GENDER
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RACE / ETHNICITY
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DIRECTORS AND NOMINEES*
Name | Age | Gender | Race/ Ethnicity |
Director Since | Principal Occupation | |||||
SAMUEL A. DI PIAZZA, JR. |
70 |
M |
W |
2015 |
Retired Global CEO, PricewaterhouseCoopers International Limited | |||||
RICHARD W. FISHER* |
71 |
M |
W |
2015 |
Former President and CEO, Federal Reserve Bank of Dallas | |||||
SCOTT T. FORD |
58 |
M |
W |
2012 |
Member and CEO, Westrock Group, LLC | |||||
GLENN H. HUTCHINS |
65 |
M |
W |
2014 |
Chairman, North Island and Co-Founder, Silver Lake | |||||
WILLIAM E. KENNARD |
64 |
M |
B |
2014 |
Former United States Ambassador to the European Union and former Chairman of the Federal Communications Commission | |||||
DEBRA L. LEE |
66 |
F |
B |
2019 |
Chair, Leading Women Defined Foundation | |||||
STEPHEN J. LUCZO |
64 |
M |
W |
2019 |
Managing Partner, Crosspoint Capital Partners, L.P. | |||||
MICHAEL B. MCCALLISTER |
68 |
M |
W |
2013 |
Retired Chairman of the Board and CEO, Humana Inc. | |||||
BETH E. MOONEY |
66 |
F |
W |
2013 |
Retired Chairman and CEO, KeyCorp | |||||
MATTHEW K. ROSE |
61 |
M |
W |
2010 |
Retired Chairman and CEO, Burlington Northern Santa Fe, LLC | |||||
JOHN T. STANKEY |
58 |
M |
W |
2020 |
CEO and President, AT&T Inc. | |||||
CYNTHIA B. TAYLOR |
59 |
F |
W |
2013 |
President and CEO, Oil States International, Inc. | |||||
GEOFFREY Y. YANG |
62 |
M |
A |
2016 |
Founding Partner and Managing Director, Redpoint Ventures |
*All Directors are nominated for re-election, except Mr. Fisher, who is retiring at the 2021 Annual Meeting. All Director nominees are independent, except for Mr. Stankey.
Key: F Female; M Male; A Asian; B Black or African American; W White
AT&T INC. |
SUM2 |
2021 PROXY |
2021 PROXY STATEMENT SUMMARY |
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We are committed to strong corporate governance policies that promote the long-term interests of stockholders, strengthen Board and management accountability, and build on our environmental, social and governance leadership. The Corporate Governance section beginning on page 15 describes our governance framework, which includes the following highlights:
CORPORATE RESPONSIBILITY
AT&T is committed to management of environmental, social and governance (ESG) topics throughout our company. The Public Policy and Corporate Reputation Committee assists the Board in its oversight of ESG-related policies and issues affecting AT&T, its stockholders, employees, customers, and the communities in which it operates. The Corporate Responsibility section, beginning on page 27, outlines our approach to these topics. The following are select ESG highlights:
i | Inclusive of AT&T Inc. and AT&T Communications. |
2021 PROXY |
SUM3 |
AT&T INC. |
GENERAL
VOTING
AT&T INC. |
2 |
2021 PROXY |
VOTING ITEMS - MANAGEMENT PROPOSALS |
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ITEM NO. 1 - ELECTION OF DIRECTORS
The Board recommends you vote FOR each of the following candidates
Name |
Age | Director Since | Principal Occupation | |||
SAMUEL A. DI PIAZZA, JR. |
70 |
2015 |
Retired Global CEO, PricewaterhouseCoopers International Limited | |||
SCOTT T. FORD |
58 |
2012 |
Member and CEO, Westrock Group, LLC | |||
GLENN H. HUTCHINS |
65 |
2014 |
Chairman, North Island and Co-Founder, Silver Lake | |||
WILLIAM E. KENNARD |
64 |
2014 |
Former United States Ambassador to the European Union and former Chairman of the Federal Communications Commission | |||
DEBRA L. LEE |
66 |
2019 |
Chair, Leading Women Defined Foundation | |||
STEPHEN J. LUCZO |
64 |
2019 |
Managing Partner, Crosspoint Capital Partners, L.P. | |||
MICHAEL B. MCCALLISTER |
68 |
2013 |
Retired Chairman of the Board and CEO, Humana Inc. | |||
BETH E. MOONEY |
66 |
2013 |
Retired Chairman and CEO, KeyCorp | |||
MATTHEW K. ROSE |
61 |
2010 |
Retired Chairman and CEO, Burlington Northern Santa Fe, LLC | |||
JOHN T. STANKEY |
58 |
2020 |
CEO and President, AT&T Inc. | |||
CYNTHIA B. TAYLOR |
59 |
2013 |
President and CEO, Oil States International, Inc. | |||
GEOFFREY Y. YANG |
62 |
2016 |
Founding Partner and Managing Director, Redpoint Ventures |
All Director nominees are independent, except for Mr. Stankey.
2021 PROXY |
3 |
AT&T INC. |
VOTING ITEMS - MANAGEMENT PROPOSALS
SUMMARY OF BOARD NOMINEE SKILLS, ATTRIBUTES AND EXPERIENCE
The table below summarizes the key skills, attributes and experiences of each of our director nominees that are most relevant to their board service. The fact that a specific area of focus or experience is not designated does not mean the director nominee does not possess that attribute or expertise. Rather, the attributes or experiences noted below are those reviewed by the Corporate Governance and Nominating Committee and the Board in making nomination decisions and as part of the Board succession planning process.
Senior Leadership Global Perspective Government/Regulatory Strategic Planning/M&A Consumer Focus Human Capital Management Investment/Finance Media & Entertainment Technology/Innovation Telecom Name Age Director Since SAMUEL A. DI PIAZZA, JR. 70 2015 SCOTT T. FORD 58 2012 GLENN H. HUTCHINS 65 2014 WILLIAM E. KENNARD 64 2014 DEBRA L. LEE 66 2019 STEPHEN J. LUCZO 64 2019 MICHAEL B. MCCALLISTER 68 2013 BETH E. MOONEY 66 2013 MATTHEW K. ROSE 61 2010 JOHN T. STANKEY 58 2020 CYNTHIA B. TAYLOR 59 2013 GEOFFREY Y. YANG 62 2016
AT&T INC. |
4 |
2021 PROXY |
VOTING ITEMS - MANAGEMENT PROPOSALS |
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2021 PROXY |
5 |
AT&T INC. |
VOTING ITEMS - MANAGEMENT PROPOSALS
AT&T INC. |
6 |
2021 PROXY |
VOTING ITEMS - MANAGEMENT PROPOSALS |
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2021 PROXY |
7 |
AT&T INC. |
VOTING ITEMS - MANAGEMENT PROPOSALS
AT&T INC. |
8 |
2021 PROXY |
VOTING ITEMS - MANAGEMENT PROPOSALS |
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2021 PROXY |
9 |
AT&T INC. |
VOTING ITEMS - MANAGEMENT PROPOSALS
AT&T INC. |
10 |
2021 PROXY |
VOTING ITEMS - STOCKHOLDER PROPOSAL |
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STOCKHOLDER PROPOSAL
A stockholder has advised the Company that such stockholder intends to introduce at the 2021 Annual Meeting the proposal set forth below. The name and address of, and the number of shares owned by, such stockholder will be provided upon request to the Secretary of AT&T at 208 S. Akard Street, Suite 2954, Dallas, Texas 75202.
2021 PROXY |
13 |
AT&T INC. |
VOTING ITEMS - STOCKHOLDER PROPOSAL
BOARD RESPONSE:
This proposal seeks to have AT&T submit a formal charter amendment to our stockholders to reduce the number of shares necessary to act by written consent. AT&T opposes this proposal because our Bylaws permit a group of stockholders holding 15% of the outstanding shares to call for a special meeting of stockholders. At a special meeting, stockholders can review and debate the merits of the proposals submitted to the meeting. In contrast, a written consent permits stockholders to act without discussion or debate. The Company believes that it is in the best interest of our stockholders that we act through open stockholder meetings, ensuring full deliberation and consideration of all viewpoints.
In addition, this proposal would result in an unnecessary waste of corporate resources. Unlike other proposals submitted to stockholders, under Delaware law, a charter amendment to modify AT&Ts written consent provision requires the affirmative vote of two-thirds of all outstanding shares. After a similar stockholder proposal passed at the 2011 Annual Meeting, your Board submitted a proposed charter amendment to stockholders the next year. The proposed amendment received far less than the two-thirds vote required by Delaware law to pass the amendment.
Since that time, this proposal was voted down at the 2014, 2017 and 2018 Annual Meetings. Your Board believes further action on this proposal does not serve the interests of the stockholders.
The Board recommends you vote AGAINST this proposal.
AT&T INC. |
14 |
2021 PROXY |
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AT&T is committed to strong corporate governance principles. Effective governance protects the long-term interests of our stockholders, promotes public trust in AT&T, and strengthens management accountability. AT&T regularly reviews and updates its corporate governance practices to reflect evolving corporate governance principles and concerns identified by stockholders and other stakeholders.
Boards Role in Risk Oversight
2021 PROXY |
15 |
AT&T INC. |
CORPORATE GOVERNANCE
From time to time the Board establishes standing committees and temporary special committees to assist the Board in carrying out its responsibilities. The Board has established six standing committees of Directors, the principal responsibilities of which are described below. The charters for each of these committees may be found on our website at www.att.com.
AUDIT COMMITTEE | ||||
Meetings in 2020: 12 Samuel A. Di Piazza, Jr., Chair ∎ Stephen J. Luczo Michael B. McCallister Cynthia B. Taylor ∎
∎ Financial Expert
Consists of four independent Directors. |
Oversees:
- the integrity of our financial statements
- the independent auditors qualifications and independence
- the performance of the internal audit function and independent auditors
- our compliance with legal and regulatory matters.
Responsible for the appointment, compensation, retention and oversight of the work of the independent auditor.
The independent auditor audits the financial statements of AT&T and its subsidiaries. |
CORPORATE GOVERNANCE AND NOMINATING COMMITTEE | ||||
Meetings in 2020: 5 Matthew K. Rose, Chair Richard W. Fisher* William E. Kennard Debra L. Lee Cynthia B. Taylor
Consists of five independent Directors. |
Responsible for recommending candidates to be nominated by the Board for election by the stockholders, or to be appointed by the Board of Directors to fill vacancies, consistent with the criteria approved by the Board, and recommending committee assignments.
Periodically assesses AT&Ts Corporate Governance Guidelines and makes recommendations to the Board for amendments and also recommends to the Board the compensation of Directors.
Takes a leadership role in shaping corporate governance and oversees an annual evaluation of the Board. |
HUMAN RESOURCES COMMITTEE | ||||
Meetings in 2020: 11 Beth E. Mooney, Chair Scott T. Ford Michael B. McCallister Matthew K. Rose Geoffrey Y. Yang
Consists of five independent Directors. |
Oversees the compensation practices of AT&T, including the design and administration of employee benefit plans.
Responsible for:
- establishing the compensation of the Chief Executive Officer and the other Executive Officers
- establishing common stock ownership guidelines for officers and developing a management succession plan. |
AT&T INC. |
18 |
2021 PROXY |
CORPORATE GOVERNANCE |
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CORPORATE DEVELOPMENT AND FINANCE COMMITTEE | ||||
Meetings in 2020: 6 Scott T. Ford, Chair Richard W. Fisher* Glenn H. Hutchins Stephen J. Luczo Beth E. Mooney Geoffrey Y. Yang
Consists of six independent Directors. |
Assists the Board in its oversight of our finances, including recommending the payment of dividends and reviewing the management of our debt and investment of our cash reserves.
Reviews mergers, acquisitions, dispositions and similar transactions; reviews corporate strategy and recommends or approves transactions and investments.
Reviews and makes recommendations about the capital structure of the Company, and the evaluation, development and implementation of key technology decisions.
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PUBLIC POLICY AND CORPORATE REPUTATION COMMITTEE | ||||
Meetings in 2020: 4 Glenn H. Hutchins, Chair Samuel A. Di Piazza, Jr. William E. Kennard Debra L. Lee
Consists of four independent Directors. |
Assists the Board in its oversight of policies related to corporate social responsibility, including public policy issues affecting AT&T, its stockholders, employees, customers, and the communities in which it operates.
Oversees the Companys management of its brands and reputation.
Recommends to the Board the aggregate amount of contributions or expenditures for political purposes, and the aggregate amount of charitable contributions to be made to the AT&T Foundation.
Consults with the AT&T Foundation regarding significant grants proposed to be made by the Foundation. |
EXECUTIVE COMMITTEE | ||||
William E. Kennard, Chair Samuel A. Di Piazza, Jr. Scott T. Ford Glenn H. Hutchins Beth E. Mooney Matthew K. Rose
Consists of the Chairman of the Board and the Chairpersons of our five other standing committees, each of whom is an independent Director. |
Established to assist the Board by acting upon urgent matters when the Board is not available to meet. No meetings were held in 2020.
Has 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. |
* | Retiring at 2021 Annual Meeting |
2021 PROXY |
19 |
AT&T INC. |
CORPORATE GOVERNANCE
Interested persons may contact the Chairman of the Board or any of the non-management Directors by sending written comments through the Office of the Secretary of AT&T Inc., 208 S. Akard Street, Suite 2954, Dallas, Texas 75202.
AT&T INC. |
20 |
2021 PROXY |
CORPORATE GOVERNANCE |
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Annual Multi-Step Board Evaluations
Each year, the Corporate Governance and Nominating Committee and the Chairman of the Board lead the Board through three evaluations: a Board self-evaluation, Committee self-evaluations, and peer evaluations. Through this process, Directors provide feedback, assess performance, and identify areas where improvement can be made. We believe this approach supports the Boards effectiveness and continuous improvement.
ONE-ON-ONE DIRECTOR PEER EVALUATIONS
Members discuss the performance of other members of the Board including, their: Understanding of the business Meeting attendance Preparation and participation in Board activities Applicable skill set to current needs of the business Responses are discussed with the individual Director if applicable
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ONGOING FEEDBACK
Directors provide ongoing, real-time feedback outside of the evaluation process.
Lines of communication between our directors and management are always open.
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COMMITTEE SELF-EVALUATIONS
Candid open discussion to review the following: Committee process and substance Committee effectiveness, structure, composition, and culture Overall Committee dynamics Committee Charter |
BOARD SELF-EVALUATION SURVEY
Evaluation survey (reviewed annually by the Corporate Governance and Nominating Committee) addresses key topics such as those below, among other things: Process and substance Effectiveness, structure, composition, culture, and overall Board dynamics Performance in key areas Specific issues which should be discussed in the future Responses are discussed and changes and improvements are implemented, if applicable
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2021 PROXY |
21 |
AT&T INC. |
CORPORATE GOVERNANCE |
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2021 PROXY |
23 |
AT&T INC. |
CORPORATE GOVERNANCE
2020 DIRECTOR COMPENSATION TABLE
The following table contains information regarding compensation provided to each person who served as a Director during 2020 (excluding Messrs. Stankey and Stephenson, whose compensation is included in the Summary Compensation Table and related tables and disclosure).
Name | Fees Earned or Paid in Cash ($)(a) |
Stock Awards ($)(b) |
Nonqualified ($)(c) |
All Other Compensation ($)(d) |
Total ($) | ||||||||||||||||||||
SAMUEL A. DI PIAZZA, JR. |
$ |
170,000 |
$ |
220,000 |
$ |
0 |
$ |
15,000 |
$ |
405,000 |
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RICHARD W. FISHER |
$ |
140,000 |
$ |
220,000 |
$ |
1,255 |
$ |
0 |
$ |
361,255 |
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SCOTT T. FORD |
$ |
160,000 |
$ |
220,000 |
$ |
0 |
$ |
0 |
$ |
380,000 |
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GLENN H. HUTCHINS |
$ |
151,250 |
$ |
220,000 |
$ |
0 |
$ |
34,724 |
$ |
405,974 |
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WILLIAM E. KENNARD |
$ |
140,000 |
$ |
220,000 |
$ |
0 |
$ |
15,000 |
$ |
375,000 |
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DEBRA L. LEE |
$ |
140,000 |
$ |
220,000 |
$ |
0 |
$ |
15,000 |
$ |
375,000 |
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STEPHEN J. LUCZO |
$ |
140,000 |
$ |
220,000 |
$ |
0 |
$ |
0 |
$ |
360,000 |
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MICHAEL B. MCCALLISTER |
$ |
140,000 |
$ |
220,000 |
$ |
0 |
$ |
15,000 |
$ |
375,000 |
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BETH E. MOONEY |
$ |
165,000 |
$ |
220,000 |
$ |
0 |
$ |
15,000 |
$ |
400,000 |
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MATTHEW K. ROSE |
$ |
220,000 |
$ |
220,000 |
$ |
0 |
$ |
11,732 |
$ |
451,732 |
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CYNTHIA B. TAYLOR |
$ |
140,000 |
$ |
220,000 |
$ |
0 |
$ |
5,000 |
$ |
365,000 |
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LAURA DANDREA TYSON* |
$ |
51,667 |
|
0 |
$ |
6,152 |
$ |
265,000 |
$ |
322,819 |
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GEOFFREY Y. YANG |
$ |
140,000 |
$ |
220,000 |
$ |
0 |
$ |
0 |
$ |
360,000 |
* | Dr. Tyson retired from the Board in April 2020. |
AT&T INC. |
24 |
2021 PROXY |
|
Certain Beneficial Owners
The following table lists the beneficial ownership of each person holding more than 5% of AT&Ts outstanding common stock as of December 31, 2020 (based on a review of filings made with the Securities and Exchange Commission on Schedules 13D and 13G).
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership |
Percent of Class | ||||||
BLACKROCK, INC. 55 East 52nd St., New York, NY 10055 |
|
485,568,654 |
(1) |
|
6.8% |
| ||
THE VANGUARD GROUP 100 Vanguard Blvd., Malvern, PA 19355 |
|
556,695,212 |
(2) |
|
7.81% |
|
1. | Based on a Schedule 13G/A filed by BlackRock, Inc. with the SEC on January 29, 2021, which reported the following: sole voting power of 424,242,052 shares; shared voting power of 0 shares; sole dispositive power of 485,568,654 shares, and shared dispositive power of 0 shares. |
2. | Based on a Schedule 13G/A filed by The Vanguard Group with the SEC on February 10, 2021, which reported the following: sole voting power of 0 shares; shared voting power of 11,578,781 shares; sole dispositive power of 525,202,532 shares, and shared dispositive power of 31,492,680 shares. |
2021 PROXY |
25 |
AT&T INC. |
COMMON STOCK OWNERSHIP
Directors and Officers
The following table lists the beneficial ownership of AT&T common stock and non-voting stock units as of December 31, 2020, held by each Director, nominee, and officer named in the Summary Compensation Table on page 60. As of that date, each Director and officer listed below, and all Directors and Executive Officers as a group, owned less than 1% of our outstanding common stock. Except as noted below, the persons listed in the table have sole voting and investment power with respect to the securities indicated.
Beneficial Owner | Total Ownership(1)(5) |
Non-Voting Units (2) |
||||||
SAMUEL A. DI PIAZZA, JR. |
|
34,480 |
|
|
65,214 |
| ||
RICHARD W. FISHER |
|
14,391 |
|
|
37,431 |
| ||
SCOTT T. FORD |
|
81,319 |
|
|
85,920 |
| ||
GLENN H. HUTCHINS (3) |
|
167,651 |
|
|
72,040 |
| ||
WILLIAM E. KENNARD |
|
0 |
|
|
43,371 |
| ||
DEBRA L. LEE |
|
0 |
|
|
7,488 |
| ||
STEPHEN J. LUCZO |
|
300,000 |
|
|
12,162 |
| ||
MICHAEL B. MCCALLISTER |
|
53,608 |
|
|
55,554 |
| ||
BETH E. MOONEY |
|
28,700 |
|
|
73,721 |
| ||
MATTHEW K. ROSE |
|
208,050 |
|
|
135,336 |
| ||
CYNTHIA B. TAYLOR |
|
5,718 |
|
|
58,758 |
| ||
GEOFFREY Y. YANG (4) |
|
254,628 |
|
|
30,448 |
| ||
JOHN T. STANKEY |
|
425,253 |
|
|
257,189 |
| ||
RANDALL L. STEPHENSON |
|
2,555,039 |
|
|
827,083 |
| ||
JOHN J. STEPHENS |
|
816,482 |
|
|
473,655 |
| ||
JASON KILAR |
|
411,663 |
|
|
0 |
| ||
DAVID R. MCATEE II |
|
158,628 |
|
|
78,670 |
| ||
JEFFERY S. MCELFRESH |
|
71,399 |
|
|
112,415 |
| ||
All Executive Officers and Directors as a group (consisting of 22 persons, including those named above)
|
|
5,863,090
|
|
|
2,553,575
|
|
AT&T INC. |
26 |
2021 PROXY |
CORPORATE RESPONSIBILITY
ENSURING SUPPLIER RESPONSIBILITY
AT&T is committed to advancing sustainable business practices among our suppliers, focusing on human rights, working conditions, and climate impact. We expect supplier business operations to be conducted in a manner consistent with sustainability and diversity clauses in our contracts, and we require conformance with the AT&T Principles of Conduct for Suppliers as well as the AT&T Human Rights Policy. We facilitate regular sustainability assessments and audits for our suppliers.
In 2020, we set a goal to ensure that 50% of our suppliers (covering purchased goods and services, capital goods and downstream leased assets as a portion of spend) set science-based Scope 1 and Scope 2 greenhouse gas (GHG) emissions reduction targets by 2024.
ENVIRONMENT
PROGRESS TOWARD 2020 TARGETS1
1 2020 data is still being compiled. Represents progress through end of year 2019. New long-range goals will be announced 2Q 2021.
AT&T INC. |
28 |
2021 PROXY |
CORPORATE RESPONSIBILITY |
|
1 Inclusive of AT&T Inc. and AT&T Communications
2021 PROXY |
29 |
AT&T INC. |
CORPORATE RESPONSIBILITY |
AT&T INC. |
30 |
2021 PROXY |
AUDIT COMMITTEE |
|
PRIMARY RESPONSIBILITIES
The Audit Committee is responsible for oversight of management in the preparation of AT&Ts financial statements and financial disclosures. The Audit Committee relies on the information provided by management and the independent auditors. The Audit Committee does not have the duty to plan or conduct audits or to determine that AT&Ts financial statements and disclosures are complete and accurate. AT&Ts Audit Committee charter provides that these are the responsibility of management and the independent auditors.
2021 PROXY |
31 |
AT&T INC. |
AUDIT COMMITTEE
PRINCIPAL ACCOUNTANT FEES AND SERVICES
AT&T INC. |
32 |
2021 PROXY |
AUDIT COMMITTEE |
|
AUDIT COMMITTEE REPORT
The Audit Committee: (1) reviewed and discussed with management AT&Ts audited financial statements for the year ended December 31, 2020; (2) discussed with the independent auditors the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the Securities and Exchange Commission; (3) received the written disclosures and the letter from the independent auditors required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditors communications with the Audit Committee concerning independence; and (4) discussed with the auditors the auditors independence.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements for the year ended December 31, 2020, be included in AT&Ts Annual Report on Form 10-K for filing with the Securities and Exchange Commission. |
February 12, 2021 |
The Audit Committee |
|||
Samuel A. Di Piazza, Jr., Chairman |
||||
Stephen J. Luczo |
||||
Michael B. McCallister |
||||
Cynthia B. Taylor |
2021 PROXY |
33 |
AT&T INC. |
35 | ||||
|
38 |
| ||
|
38 |
| ||
|
39 |
| ||
|
39 |
| ||
|
40 |
| ||
|
41 |
| ||
|
43 |
| ||
|
47 |
| ||
|
54 |
| ||
56 | ||||
|
58 |
| ||
|
58 |
| ||
|
58 |
| ||
|
58 |
| ||
INDEPENDENT COMPENSATION CONSULTANT (Frederic W. Cook & Co., Inc.) |
58 |
ACRONYMS USED
AT&T INC. |
34 |
2021 PROXY |
Our Human Resources Committee (Committee) takes great care to develop and refine an executive compensation program that recognizes its stewardship responsibility to our stockholders while ensuring the ability to attract and retain talent to support a culture of growth, innovation, and performance in an extraordinarily large and complex organization.
|
In this section, we summarize the elements of our compensation program and how our program supports pay for performance.
Topic | Overview | Details | ||
THE FOUNDATION OF OUR PROGRAM |
Our Committee believes that our programs should:
be aligned with stockholder interests,
be competitive and market-based,
pay for performance,
balance both short- and long-term focus, and
be aligned with generally accepted approaches.
To that end, we incorporate many best practices in our compensation program and avoid ones that are not aligned with our guiding pay principles. |
38 | ||
STOCKHOLDER ENGAGEMENT |
Each year, we engage with stockholders to understand their views on executive compensation. In light of their feedback, results of the stockholder advisory vote on our executive compensation program, and market trends, the Committee adjusts our compensation program periodically as it determines to be appropriate. |
39 | ||
OUR COMPENSATION PROGRAM ELEMENTS & PERCENT OF PAY TIED TO PERFORMANCE AND COMMON STOCK PRICE |
Our program includes a number of different elements, from fixed compensation (base salaries) to performance-based variable compensation (short- and long-term incentives), to key benefits, which minimize distractions and allow our executives to focus on our success.
Each element is designed for a specific purpose, with an overarching goal of encouraging a high level of sustainable individual and Company performance well into the future.
For active NEOs, the combination of short- and long-term incentives ranges from 85% to 92% of target pay. Payouts are formula-driven for:
Short-term incentives; and
Performance Shares (which represent 75% of the long-term incentive for most NEOs).
All long-term grants are tied to our common stock price performance.
Our Committee retains the authority to increase or decrease final award payouts, after adjustment for financial performance, to ensure pay is aligned with performance. The Committee exercised such discretion this year when determining short-term payouts for the 2020 performance period, given the impact of COVID-19 on the Companys business and the world. |
40, 42 |
2021 PROXY |
35 |
AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS Executive Summary |
Topic | Overview | Details | ||||
HOW WE MAKE COMPENSATION DECISIONS |
The starting point for determining Executive Officer compensation is an evaluation of market data. The independent consultant compiles compensation information for our Peer Group companies and then presents this information to our Committee for it to consider when making compensation decisions. Our Peer Group companies were chosen based on their similarity to AT&T on a number of factors, including alignment with our business, scale, and/or complexity. |
41 | ||||
TALENT MANAGEMENT
CEO
WarnerMedia CEO |
The Company announced in April 2020 that the Board had selected John Stankey to succeed Randall Stephenson as AT&T CEO. An outside independent executive search firm aided the Board in the selection process. The evaluation criteria included the candidates capabilities to (i) build business strategy and execute the Boards business plan, (ii) develop a diverse top-performing leadership team and workforce, and (iii) efficiently use AT&Ts capital and assets. Mr. Stankey demonstrated his abilities while serving in various AT&T leadership roles; this successful experience was critical to the Boards selection of him to serve as CEO. In conjunction with his July 1 promotion, and in light of his new responsibilities, the Committee adjusted Mr. Stankeys compensation to better align his pay to his CEO peer group.
With Mr. Stankeys promotion, the Board conducted an extensive candidate search to fill the WarnerMedia CEO position, and Jason Kilar was selected to serve in that role as of May 1, 2020. The Board sought a leader to shepherd WarnerMedia through an evolving media and entertainment landscape and integrate WarnerMedias legacy operating units. As CEO of Hulu, Mr. Kilar was instrumental in the development of that companys streaming entertainment service, and he brings a unique expertise to AT&Ts valuable media and entertainment operations. To attract Mr. Kilar and to provide an incentive for him to create stockholder value and to remain with the Company, the Committee offered a competitive annual total target compensation package with a heavier mix of stock-based awards to align with stockholders and the Companys long-term pay philosophy. The Committee, with the advice of its compensation consultant, implemented a pay structure comprised of $2,500,000 base salary and $2,500,000 annual short-term incentive target. Consistent with pay practices for key senior leadership talent in the media and technology industry, the Committee approved for Mr. Kilar Restricted Stock Units valued at $48,000,000 (see description in SCT) that vest and distribute over a four-year period, reflecting the Committees intent to approximate long-term grants of $12,000,000 per year over four years. The Committee does not expect to grant Mr. Kilar additional long-term awards that would vest during such four-year period.
|
|
41,42,48
51, 55 |
|
AT&T INC. |
36 |
2021 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS Executive Summary |
OUR PURPOSE
WE CREATE CONNECTION WITH EACH OTHER, WITH WHAT PEOPLE AND BUSINESSES NEED TO THRIVE EVERY DAY, AND WITH THE STORIES AND EXPERIENCES THAT MATTER. |
OUR VALUES
LIVE TRUE. THINK BIG. PURSUE EXCELLENCE. INSPIRE IMAGINATION.
BE THERE. STAND FOR EQUALITY. EMBRACE FREEDOM. MAKE A DIFFERENCE.
|
Aligned to our purpose of creating connection, AT&T has three areas of market focus. First, we are a broadband connectivity provider with high-capacity broadband networks (fiber and wireless) that connect people and businesses and form the foundation for how we live our daily lives. Second, we are a software-based entertainment provider via HBO Max, which gives us the opportunity to have a relationship with a majority of U.S. households. And, third, we create and tell stories shared on our platforms to drive direct customer engagement and insights and create emotional attachments that can result in long-lasting customer loyalty. Bottom line, we are extremely well positioned for the future of connectivity and content.
2020 CORPORATE / CONSOLIDATED ACCOMPLISHMENTS1
Cash from operations of $43.1 billion with free cash flow of $27.5 billion2 |
Capital expenditures of $15.7 billion, and gross capital investment of $19.7 billion4 | |
Total dividend payout ratio of 54.5%3 |
Fortune Most Admired#1 in telecom |
OPERATIONAL ACCOMPLISHMENTS
|
Broadband connectivity. More than 1 million fiber net additions for the second year in a row; achieved nationwide 5G coverage; nations fastest 5G wireless network and fastest network in the nation5; 1.5 million wireless postpaid phone net additions more than twice as many as in 2018 and 2019 combined; continued FirstNet growth with nearly 2 million connections across more than 15,000 agencies in service, up from more than 1 million connections at the end of 2019. |
|
Software-based entertainment. Launched HBO Max direct-to-consumer streaming platform and AT&T TV next generation premium live and on-demand video service; ended the year with more than 41 million domestic HBO Max/HBO subscribers, two years ahead of our initial forecast. |
|
Create and tell stories. WarnerMedia received 38 Primetime Emmy® Awards, including Outstanding Drama Series (Succession); Outstanding Limited Series (Watchmen); Outstanding Variety Talk Series (Last Week Tonight with John Oliver); Outstanding Television Movie (Bad Education); and Outstanding Documentary or Nonfiction Special (The Apollo). CNN had its most-watched year ever, and cnn.com was the worlds most accessed digital news outlet. WarnerMedias cable networks reach an average of nearly 170 million people across the U.S. each month. |
2021 PROXY |
37 |
AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
ROLE OF THE HUMAN RESOURCES COMMITTEE
The Committee oversees the compensation and benefits program for our senior executives on behalf of the Board of Directors. The Committee is composed entirely of independent Directors. Its current members are Ms. Mooney (Chairman), Mr. Ford, Mr. McCallister, Mr. Rose, and Mr. Yang. The Committees charter is available on our website at www.att.com. The Committee is responsible for:
Compensation-Related Tasks
|
Organizational Tasks
| |||
Determining the compensation for our Executive Officers, including salary and short- and long-term incentive opportunities; Reviewing, approving, and administering our executive compensation plans, including our stock plans; Establishing performance objectives under our short- and long-term incentive compensation plans; Determining the attainment of performance objectives and the resulting awards to be made to our Executive Officers; Evaluating Executive Officer compensation practices to ensure that they remain equitable and competitive; and Approving employee benefit plans.
|
Evaluating the performance of the CEO;
Reviewing the performance and capabilities of other Executive Officers, based on input from the CEO; and
Reviewing succession planning for Executive Officer positions including the CEOs position. |
The Committee has established the following guiding pay principles as the pillars of our compensation and benefits program for 2020. It evaluates changes to our program in light of these goals and the Companys strategic objectives.
AT&T INC. |
38 |
2021 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
|
Our Committee designs our compensation and benefits program around the following market-leading practices:
OUR PRACTICES | WHAT WE DONT DO | |
✓ Pay for Performance: Tie compensation to performance by setting clear and challenging performance metrics/goals, including stock price performance for long-term compensation.
✓ Multiple Performance Metrics and Time Horizons: Use multiple performance metrics and multi-year vesting timeframes to balance short- and long-term focus.
✓ Stock Ownership and Holding Period Requirements: NEOs must comply with common stock ownership guidelines and hold the equivalent of 25% of post-2015 stock award distributions until termination of employment.
✓ Regular Engagement with Stockholders: We regularly engage with stockholders to seek input regarding executive compensation matters.
✓ Dividend Equivalents: Paid at the end of the performance period on earned Performance Shares.
✓ Compensation-Related Risk Review: Performed annually to confirm that our programs do not encourage excessive risk taking and are not reasonably likely to have a material adverse effect on the Company.
✓ Clawback Policy: Provides for the recovery of previously paid executive compensation for any fraudulent or illegal conduct.
✓ Severance Policy: Limits payments to 2.99 times salary and target bonus.
|
û No Single Trigger Change in Control Provisions: No accelerated vesting of equity awards upon a change in control.
û No Tax Gross-Ups, except in extenuating circumstances.
û No Repricing or Buy-Out of underwater stock options.
û No Hedging or Short Sales of AT&T stock or stock-based awards.
û No Supplemental Executive Retirement Benefits for officers promoted/hired after 2008.
û No Guaranteed Bonuses.
û No Excessive Dilution: As of April 30, 2020, our total dilution was less than 1% of outstanding stock. |
We engage in annual dialogue with our stockholders to review how our compensation and benefits program supports our long-term strategic objectives and obtain feedback. The Committee considers feedback from this outreach when evaluating any potential changes to our program. Our stockholders have continued their support of our program with 87.8% of votes cast for approval of the say on pay proposal at the 2020 Annual Meeting of Stockholders.
2021 PROXY |
39 |
AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
COMPENSATION ELEMENTS AND PAY DETERMINATION
Stockholders interests are best represented by a compensation program that is properly structured to attract, retain, and motivate our executives to lead the Company effectively. Our program contains various elements, each designed for a different purpose, with the overarching goal of encouraging a high level of sustainable individual and Company performance well into the future:
FOCUS ON CURRENT YEAR PERFORMANCE
SALARY AND SHORT- TERM INCENTIVES |
+ |
FOCUS ON MULTI-YEAR PERFORMANCE
LONG-TERM INCENTIVES: PERFORMANCE SHARES and/or RESTRICTED STOCK UNITS
|
+ |
FOCUS ON ATTRACTION & RETENTION
RETIREMENT, DEFERRAL/
|
The chart below more fully describes the elements of total direct compensation and their link to our business and talent strategies.
Reward Element | Form | Link to Business and Talent Strategies | ||||||||
Cash
|
Provides current compensation for the day-to-day responsibilities of the position. | |||||||||
FIXED PAY
|
Base Salary
|
A portion may be contributed to the Companys deferral plans.
|
Current pay level recognizes experience, skill, and performance, with the goal of being market competitive.
Future adjustments may be based on individual performance, pay relative to other executives, and/or pay relative to market. | |||||||
Short-Term Incentives |
Cash
|
Aligns pay with the achievement of short-term Company or business unit objectives. | ||||||||
AT RISK PAY |
A portion may be contributed to the Companys deferral plans. |
Payouts are based on achievement of predetermined goals, with potential for adjustment (up or down) by the Committee to align pay with performance.
| ||||||||
Long-Term Incentives |
Common Stock
|
Motivates and rewards the achievement of long-term Company objectives.
Aligns executive and stockholder interests. | ||||||||
Performance Shares Restricted Stock Units
|
||||||||||
AT&T INC. |
40 |
2021 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
|
DETERMINING 2020 TARGET COMPENSATION
The Committee uses market data as the starting point for determining Executive Officer compensation. The independent consultant compiles data from peer companies using both proxy data and third-party compensation surveys.
How the peer groups were chosen
The Committee evaluated compensation against the Corporate Peer Group, or a particular subset thereof, based on the responsibilities of each executives role.
The Corporate Peer Group was based on a recommendation from the independent consultant to ensure the peer group achieves the following:
| Acknowledges AT&Ts strategic business mix by including 14 large telecom, media and technology companies, |
| Scale and business complexity represented by five large general industry companies with complex organizational structures, global operations, and/or diversified product lines, and |
| Includes three entertainment companies reported as direct competitors of the WarnerMedia business. |
The Committee used the Corporate Peer Group for the corporate roles of CEO, CFO and General Counsel. Mr. Stankeys position while he served as COO was evaluated against a subset of the Corporate Peer Group where roles matched the COO responsibilities. Similarly, because of the significant scope of Mr. McElfreshs position, his compensation was evaluated relative to a subset comprised of companies that closely resemble the scale and scope of AT&T Communications. Lastly, Mr. Kilars compensation was evaluated against a specific peer group to recognize pay practices in the media and technology industries.
PEER COMPANIES |
||||||||||||||||||||
CEO, CFO, & GENERAL COUNSEL |
COO |
CEO, AT&T COMMUNICATIONS |
CEO, WARNERMEDIA | |||||||||||||||||
|
Alphabet Amazon Apple Charter Cisco Comcast IBM |
Intel Microsoft Oracle Sprint T-Mobile Verizon Walt Disney |
Apple Charter Cisco Comcast IBM |
Intel Oracle Sprint T-Mobile Verizon |
Apple Charter Cisco Comcast |
Intel Sprint T-Mobile Verizon |
Amazon Comcast | |||||||||||||
|
Boeing Chevron Exxon GE Wal-Mart |
Chevron Wal-Mart |
Chevron Exxon GE Wal-Mart |
| ||||||||||||||||
|
CBS Corp Fox Corp Viacom |
|
CBS Corp Fox Corp |
|
|
AMC Networks CBS Corp Discovery Comm Fox Corp Lions Gate Ent. Netflix | ||||||||||||||
The Corporate Peer Group companies are used to determine our relative performance for the 2020 Performance Share grant for NEOs. |
2021 PROXY |
41 |
AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
The Committees Process for Establishing 2020 Target Compensation
The Committees consultant reviewed market data from the applicable peer groups with members of management and the CEO (for Executive Officers other than himself) to confirm job matches and scoping of market data based on the relative value of each position and differences in responsibilities between jobs at AT&T and those in the applicable peer group. After completing this review, the consultant presented the market data to the Committee.
The Committee used the market data and the CEOs compensation recommendations for the other Executive Officers and then applied its judgment and experience to set Executive Officer target compensation. While the Committee does consider peer group compensation information when setting executive compensation, it does not believe it appropriate to establish compensation amounts based solely on this data. The Committee believes that compensation decisions are multi-dimensional and require consideration of additional factors, including market competition for the position and the executives:
- |
experience, performance, and contributions; |
- |
long-term potential; and |
- |
leadership. |
2020 Target Pay Mix
The Committee designs the executive compensation program to include at-risk pay. It uses a mix of incentive awards and stock-based compensation to tie the interests of our executives to those of our stockholders. The following charts depict the mix of target compensation for Mr. Stankey and the average for the other NEOs. Mr. Stephensons compensation was excluded and Mr. Kilars RSU grant was annualized for the Other NEOs chart.
When Mr. Stankey was appointed CEO, the Committee reevaluated his compensation mix and elected to (i) decrease his salary and short-term target award and (ii) increase his long-term compensation. These changes are intended to further align his long-term interests with the interest of stockholders.
2020 TARGET PAY MIX
*Including Stock Price Performance
AT&T INC. |
42 |
2021 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
|
HOW NEOs WERE PAID FOR PERFORMANCE IN 2020
2020 Short-Term Incentive Awards Attainment and Payouts
At the beginning of 2020, before the COVID-19 pandemic, the Committee established performance metrics applicable to payment of 2020 short-term awards. These metrics were chosen for their link to our corporate strategy and were structured to reflect the responsibilities of each officer. Messrs. McElfresh and Kilar were measured primarily on metrics applicable to their respective segments, while metrics for corporate officers were based on company-wide results.
Performance metrics (and weightings) for Messrs. Stankey, Stephenson, Stephens and McAtee were Earnings Per Share (80%) and Free Cash Flow (20%). Mr. McElfreshs metrics were AT&T Communications Operating Contribution (80%) and corporate Free Cash Flow (20%). In addition, if revenue growth metrics for corporate officers or AT&T Communications officers, respectively, were attained, an additional 15% of the target awards could be earned. Mr. Kilars metrics were WarnerMedia Free Cash Flow (20%), WarnerMedia Operating Contribution (30%), a qualitative award for his success in the Direct-to-Consumer Strategy (30%) and his Individual Performance (20%).
The global COVID-19 pandemic had an unexpected effect on the Companys results in 2020. While the Company fully achieved its Free Cash Flow metrics, the pandemic negatively impacted revenues across all businesses, particularly affecting WarnerMedia and domestic wireless service revenues, which reflected significantly lower international roaming revenues. COVID-19 contributed to lower content licensing and advertising revenues at WarnerMedia. Wireless retail distribution was impacted by temporary store closings, many of which were mandated by local authorities, and by safety protocols that limited the number of people in stores that remained open. As a result of the restrictions, we transformed our distribution model to accommodate how customers want to interact with us, for example, by increasing online transactions.
In response to the pandemic and to account for its effects on our operations, performance goals for our managers other than our executive officers were reset. The Company set a fixed payout of 80% of the target award for the first half of the year for managers in all business units and established new performance goals for the second half of the year. Under the new performance goals our managers below executive officer earned performance bonuses ranging from 85% to 100% of target.
The Committee decided to wait until the end of the year to determine whether and how to adjust metrics for executive officers. In addition, Mr. Stankey, who became CEO on July 1, requested a 50% reduction of his salary for the period he was CEO and, for his 2020 short-term award, a limit of 50% of his annual target. Mr. Stephenson, who became Executive Chairman on July 1, likewise requested a relinquishment of his salary for the second half of 2020 and a 50% reduction in any short-term award that was approved by the Committee.
In January 2021, the Committee met to determine the payout of the 2020 short-term awards for the Named Executive Officers. Corporate Free Cash Flow attainment was 100%, Earnings Per Share attainment was 78%, AT&T Communications Operating Contribution attainment was 91%, Warner Media Free Cash Flow attainment was 115%, and WarnerMedia Operating Contribution attainment was 73%. Each performance metric has an associated payout table based on attainment, and payouts range from 150% of target (110% attainment) down to 30% of target (82% attainment), with no payout below that. Revenue growth metrics, which would provide an additional 15% of a target award, were not attained. As a result, Mr. McElfresh earned a 57% payout, Mr. Kilar earned a 60% payout before consideration of his qualitative metrics, and the other NEOs earned 20% payouts.
The Committee recognized that the original assumptions and performance goals for the 2020 awards were no longer relevant in light of the global pandemic. The Committee recognized that, notwithstanding the pandemic, the Company did have many successes in 2020, including the expansion of broadband connectivity, nationwide 5G deployment, the best full-year postpaid phone net adds in a decade, and HBO and HBO Max subscribers exceeding their target. The Committee recognized that our executive officers executed on the Companys strategy and operated effectively as a team in a challenging environment, putting forth extraordinary efforts on behalf of the Company. As a result, the Committee decided to compensate the executive officers as a team and
2021 PROXY |
43 |
AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
exercised its discretion to grant a payout of 75% of the target award for each NEO, except for Messrs. Stankey and Stephenson, whose requests to limit their compensation were considered and approved. As a result, Messrs. Stankey and Stephenson received payouts of 50% and 37.5% respectively. By comparison, based on the mid-year adjustments to their performance goals, all of our managers below executive officer earned performance bonuses ranging from 85%100% of target, which provided them with higher payout percentages than our NEOs.
Long-Term Incentive Awards with Performance or Restriction Periods Ending in 2020 or Early 2021
Following is a description of the long-term awards our NEOs (other than Mr. Kilar) received:
Form of Award | Performance/Restriction Period and Metrics |
Description | ||
Performance Shares Granted in 2018
75% of 2018 Long-Term Award |
3-year performance period (2018-2020)
Performance metrics:
100% ROIC
Relative TSR payout modifier*
Payout value based on combination of performance attainment and common stock price performance. |
Each Performance Share is equal in value to a share of common stock, which causes the value of the award to fluctuate directly with changes in our stock price over the performance period.
Performance Shares are paid 66% in cash and 34% in common stock. The amount of cash to be paid is based on our stock price on the date the award payout is approved.
Awards are based on a 3-year performance period and maximize both short- and long-term performance. The impact of a single years performance is felt in each of the three Performance Share grants outstanding at any given time, so that strong performance must be sustained every year in order to provide favorable payouts.
Dividend equivalents are paid at the end of the performance period, based on the number of Performance Shares earned.
| ||
RSUs Granted in 2017
25% of 2017 Long-Term Award |
4-year restriction period
Payout value based on common stock price performance. |
RSUs pay in common stock at the end of the restriction period, regardless of whether they vest earlier. RSUs vest 100% after four years or upon retirement eligibility, whichever occurs earlier. Dividend equivalents are paid quarterly in cash on the number of shares outstanding.
|
* | Not applicable to Mr. McElfreshs 2018 Performance Shares because he was not an Executive Officer at the time of the grant. |
AT&T INC. |
44 |
2021 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
|
ROIC Payout Table and Actual Performance Attainment 2018-2020 Performance Period
Determination of Performance Goal |
Performance Below Target Range |
Actual Performance
After conclusion of the performance period, the Committee determined (using the 2018 ROIC payout table summarized on the next page) that we achieved ROIC of 8.4%, which was above the target range, and 290 basis points above the weighted average cost of capital we established based on input from banks. As a result, the Committee directed that 105% of the related Performance Shares be distributed in accordance with the payout table as follows (before applying the TSR modifier, as discussed on the next page).
2021 PROXY |
45 |
AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
Relative TSR Payout Modifier - Payout Table and Actual Performance
The following chart shows the payout table and actual performance for the relative TSR modifier applicable to the 2018 Performance Share grant:
Relative TSR Payout Modifier (2018 - 2020 Performance Period) | ||||||
AT&T Return vs. Peer Group |
Payout Modifier | |||||
Top Quartile |
Add 10 percentage points to final ROIC payout percentage
| |||||
Our 3-year TSR of -11% ranks us at the 22nd percentile of the peer group
|
|
Quartile 2 |
No adjustment to ROIC payout percentage | |||
Quartile 3
| ||||||
Bottom Quartile |
Subtract 10 percentage points from final ROIC payout percentage
|
TSR was measured relative to the peer group shown below. This peer group was established at the time of grant; these companies were removed due to acquisitions: 21st Century Fox, CBS, Sprint and Viacom.
TSR Peer Group for 2018 Performance Share Grant | ||||||||||||
Alphabet |
Charter |
Exxon |
Microsoft |
Verizon | ||||||||
Amazon |
Chevron |
GE |
Oracle |
Walt Disney | ||||||||
Apple |
Cisco |
IBM |
T-Mobile US |
Wal-Mart | ||||||||
Boeing |
Comcast |
Intel |
AT&T INC. |
46 |
2021 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
|
Percent of Grant Value Realized
2018-2020 Performance Share Grant
Based on the combined ROIC and relative TSR performance attainment, the Committee directed that 95% of the Performance Shares be distributed. After the impact of common stock price performance over the 3-year performance period, our NEOs received 70% of the original 2018 Performance Share grant value (without regard to any supplemental grants), as follows:
2018-2020 Performance Share Grant
95% payout
1 |
Closing common stock prices: $39.16 on the 2/1/2018 grant date and $28.80 on the 1/28/2021 payout approval date. |
2017 RSU Grant
After the impact of common stock price performance over the 4-year restriction period, our NEOs received 71% of the original 2017 RSU grant value, as follows:
2017 RSU Grant
2 |
Closing common stock prices: $41.77 on the 1/26/2017 grant date and $29.75 on 1/26/2021, the last date of the restriction period. |
REALIZED COMPENSATION FOR NAMED EXECUTIVE OFFICERS
We believe its difficult to understand the impact of our Committees pay-for-performance philosophy without an explanation of the compensation that our NEOs actually received (realized compensation) relative to their original pay targets (target compensation). The primary difference between realized and target compensation is stock price performance and achievement against pre-established performance goals under our short- and long- term incentive plans. In the preceding sections we detailed our incentive award payouts. The following charts summarize the impact of these payouts on each NEOs total realized compensation for 2020. Note that the realized long-term values shown below do not align to what is reported in the Summary Compensation Table (SCT) because the SCT reflects long-term grant values for 2020 whereas realized compensation shown below includes long-term distribution values of awards with performance/restriction periods ending in 2020 or early 2021.
2021 PROXY |
47 |
AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
John Stankey Chief Executive Officer | ||||
|
John Stankey was appointed Chief Executive Officer in 2020, after serving as President and COO of AT&T Inc. During his 35-year career with the Company, he has held various leadership positions, including CEO-WarnerMedia; CEO-AT&T Entertainment Group; Chief Strategy Officer; President and CEO of AT&T Business Solutions; and President and CEO of AT&T Operations. | |||
New Role
| ||||
Upon Mr. Stankeys appointment to CEO, the Committee adjusted his total compensation by decreasing his base salary and short-term target incentive (details below) and increasing his long-term incentive award with a $4,000,000 supplemental grant comprised of 75% Performance Shares and 25% Restricted Stock Units. This change was intended to further align his long-term interests with those of stockholders.
In response to the years economic stress, Mr. Stankey requested, and the Committee approved, a reduction of his compensation for 2020 (details below). | ||||
2020 Realized Compensation | ||||
Element of Compensation |
Compensation Amount | Rationale | ||
2020 Base Salary
|
$2,050,000
|
Mr. Stankeys annual salary was adjusted from $2,900,000 to $2,400,000 upon his promotion to CEO in July 2020. This adjustment was made to focus his pay more toward long-term incentive compensation.
In response to the unprecedented uncertainty and global economic stress impacting society, including AT&T stockholders and employees, Mr. Stankey requested, and the Committee approved, a 50% reduction of his CEO salary from July 1 to December, 31, 2020. Therefore, Mr. Stankeys salary for this period is $600,000. The forgone salary will not be made up or reimbursed.
| ||
2020 STIP |
Target Award = $6,500,000
Final Award Paid = $3,250,000
50% of target award value realized
|
Mr. Stankeys target STIP was adjusted from an annual target of $7,400,000 to $5,600,000 upon his promotion to CEO in July 2020. This adjustment was made to focus his pay more toward long-term incentive compensation.
Mr. Stankey requested, and the Committee approved, that his STIP be capped at 50% of his annual target. His STIP payout was therefore 50%. The forgone target bonus amount will not be made up or reimbursed.
| ||
Performance Share Payout
75% of 2018 Long-Term Award
(2018-2020 Performance Period)
|
Target Award = $5,531,250
Final Award Paid = $3,880,058
70% of grant value realized
|
Mr. Stankeys performance share payout was based on:
A formulaic payout of 105% of the 141,815 shares granted, based on the Companys performance achievement for ROIC and 10% subtracted for the relative TSR modifier, plus The Companys common stock price change over the 3-year performance period, which reduced the value of the shares earned, including the 2018 supplemental grant.
Performance Shares were paid in 66% cash and 34% common stock.
| ||
RSU Payout
25% of 2017 Long-Term Award
(2017 Grant)
|
Target Award = $1,750,000
41,896 shares paid; valued at $1,246,406
71% of grant value realized
|
The Companys common stock price change over the 4-year restriction period reduced the value of the units granted by 29%.
RSUs were paid in common stock. | ||
Total Realized Compensation
|
$10,426,464 |
AT&T INC. |
48 |
2021 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
|
Randall Stephenson Executive Chairman | ||||
|
Randall Stephenson was appointed to the position of Executive Chairman effective July 2020. Prior to that appointment, he served as Chairman of the Board and Chief Executive Officer. Throughout his 38 years at AT&T, he held a variety of high-level finance, operational, and marketing positions, including serving as Chief Operating Officer from 2004 to 2007, and as Chief Financial Officer from 2001 to 2004. He began his career with the Company in 1982. Mr. Stephenson retired on January 21, 2021. | |||
New Role
| ||||
Upon his appointment to Executive Chairman, the Committee made no adjustments to Mr. Stephensons compensation.
In response to the impact of COVID-19, Mr. Stephenson requested, and the Committee approved, a reduction of his 2020 compensation (details below). | ||||
2020 Realized Compensation | ||||
Element of Compensation |
Compensation Amount | Rationale | ||
2020 Base Salary
|
$900,000
|
Mr. Stephensons salary for 2020 was $1,800,000 (unchanged from 2019).
In response to the economic uncertainty caused by the significant impact of COVID-19, Mr. Stephenson requested, and the Committee approved, the relinquishment of this salary for the period of July 1 through December 31, 2020. Therefore, he did not receive a salary for this period. The forgone salary will not be made up or reimbursed.
| ||
2020 STIP |
Target Award = $6,000,000
Final Award Paid = $2,250,000
37.5% of target award value realized
|
Mr. Stephensons target STIP was not adjusted in 2020.
Mr. Stephenson requested, and the Committee approved, that his STIP payout be limited to 50% of the amount otherwise established by the Committee. His STIP payout was therefore 37.5% of target, or one-half of the 75% established by the Committee for executive officers. The forgone STIP will not be made up or reimbursed.
| ||
Performance Share Payout
75% of 2018 Long-Term Award
(2018-2020 Performance Period)
|
Target Award = $13,725,000
Final Award Paid = $9,589,270
70% of grant value realized |
Mr. Stephensons performance share payout was based on:
A formulaic payout of 105% of the 350,485 shares granted, based on the Companys performance achievement for ROIC and 10% subtracted for the relative TSR modifier, plus The Companys common stock price change over the 3-year performance period, which reduced the value of the shares earned.
Performance Shares were paid in 66% cash and 34% common stock.
| ||
RSU Payout
25% of 2017 Long-Term Award
(2017 Grant)
|
Target Award = $4,175,000
99,952 shares paid; valued at $2,973,572
71% of grant value realized
|
The Companys common stock price change over the 4-year restriction period reduced the value of the units granted by 29%.
RSUs were paid in common stock. | ||
Total Realized Compensation
|
$15,712,842 |
2021 PROXY |
49 |
AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS |
John Stephens Senior Executive Vice President and Chief Financial Officer | ||||
|
John Stephens has 28 years of service with the Company. Mr. Stephens was appointed Chief Financial Officer in 2011. He has responsibility for financial planning, corporate development, accounting, tax, auditing, treasury, investor relations, and corporate real estate. Prior to his current position, Mr. Stephens held a series of successive positions in the finance department. Before joining the Company, Mr. Stephens held a variety of roles in public accounting. | |||
2020 Realized Compensation | ||||
Element of Compensation |
Compensation Amount | Rationale | ||
2020 Base Salary
|
$1,145,833
|
Mr. Stephens received a 2% salary increase from $1,125,000 to $1,150,000 in March 2020.
| ||
2020 STIP |
Target Award = $2,700,000
Final Award Paid = $2,275,000
84% of target award value realized
|
Mr. Stephens target STIP was increased 3% to $2,700,000 in 2020.
Mr. Stephens STIP payout was 75% of his target award. The Committee awarded an additional $250,000 for his individual accomplishments including (i) strategically monetizing non-core assets and investing capital effectively and (ii) refinancing debt to reshape AT&Ts balance sheet with a lower cost of capital and longer, smoother maturity profile.
| ||
Performance Share Payout
75% of 2018 Long-Term Award
(2018-2020 Performance Period)
|
Target Award = $6,750,000
Final Award Paid = $4,933,610
73% of grant value realized
|
Mr. Stephens performance share payout was based on: A formulaic payout of 105% of the 180,322 shares granted, based on the Companys performance achievement for ROIC and 10% subtracted for the relative TSR modifier, plus The Companys common stock price change over the 3-year performance period, which reduced the value of the shares earned, including the 2018 supplemental grant.
Performance Shares were paid in 66% cash and 34% common stock.
| ||
RSU Payout
25% of 2017 Long-Term Award
(2017 Grant)
|
Target Award = $1,750,000
41,896 shares paid; valued at $1,246,406
71% of grant value realized
|
The Companys common stock price change over the 4-year restriction period reduced the value of the units granted by 29%.
RSUs were paid in common stock.
| ||
Total Realized Compensation
|
$9,600,849 |
AT&T INC. |
50 |
2021 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
|
Jason Kilar CEO-WarnerMedia, LLC | ||||
|
Jason Kilar was hired as CEO-WarnerMedia in May 2020 to lead the worlds largest TV and film studio, the Companys news outlets and the new streaming platform HBO Max. As a seasoned media, entertainment, and technology executive he served as the founding CEO of Hulu from 2007 to 2013 and held several leadership positions at Amazon from 1997 to 2006. He is a former board member at DreamWorks Animation and Univision Communications. | |||
New Leadership
| ||||
The Board sought the best talent available to lead WarnerMedia, and Mr. Kilar, with his experience at Hulu and Amazon, among other companies, brings a broad range of expertise in managing a media business. As CEO of WarnerMedia, Mr. Kilar was charged with overseeing a reorganization to realize synergies and help WarnerMedia operate more nimbly in the current media landscape. He also led the successful launch of AT&Ts HBO Max streaming platform, a key element of AT&Ts software-based entertainment strategy.
Consistent with common compensation practices in the media and technology industry, Mr. Kilars compensation is structured differently than executive pay in other industries, including AT&Ts communications businesses. The table below depicts the approximate annual value of the total target compensation for Mr. Kilar, taking into account that the $48,000,000 (see SCT for description) of Restricted Stock Units approved by the Committee will vest each year over the four-year period.
|
Annual Target Compensation | ||||||
Base Salary | Short-Term Target | Restricted Stock Units* | Total Annual Compensation (approximate) | |||
$2,500,000 |
$2,500,000 |
$12,000,000 |
$17,000,000 | |||
*Approximateannual value for the period 2021 2024 |
2020 Realized Compensation | ||||
Element of Compensation |
Compensation Amount | Rationale | ||
2020 Base Salary
|
$1,666,667
|
Mr. Kilars salary is $2,500,000 for 2020.
| ||
2020 STIP |
Target Award = $1,673,497
Final Award Paid = $1,255,123
75% of target award value realized |
Mr. Kilars STIP target is $2,500,000 in 2020.
Mr. Kilars STIP payout was 75% of his target award, prorated for the period worked from May 1, 2020 December 31, 2020.
| ||
RSU Grant |
Mr. Kilar did not receive a long-term distribution in 2020 because he was hired in May. Details of his 2020 long-term incentive grant upon hire are described in the 2020 Long-Term Grants section.
| |||
Total Realized Compensation
|
$2,921,790 |
2021 PROXY |
51 |
AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS |
David McAtee Senior Executive Vice President and General Counsel | ||||
|
David McAtee has served as AT&Ts General Counsel since 2015. He has responsibility for all legal matters affecting AT&T, including the Companys litigation, regulatory matters, and administrative matters before various judicial and regulatory bodies, as well as all merger agreements, dispositions of non-strategic assets, commercial agreements, and labor contracts. Mr. McAtee joined the Company in 2012 after 18 years in government and private practice. | |||
Retention
| ||||
As General Counsel, Mr. McAtee provides great value to the Company. He has deep legal expertise, particularly with antitrust actions, having successfully defended the challenge by the U.S. Department of Justice to AT&Ts acquisition of Time Warner. To retain Mr. McAtees services and in recognition of the value he brings to the Company, the Committee awarded a career retention grant to Mr. McAtee of Restricted Stock Units valued at $9,000,000 under the 2018 Incentive Plan, vesting ten years after the grant date (details in the 2020 Long-Term Grants section). This grant did not contribute to Mr. McAtees realized pay in 2020.
| ||||
2020 Realized Compensation | ||||
Element of Compensation |
Compensation Amount | Rationale | ||
2020 Base Salary
|
$1,295,833
|
Mr. McAtee received a 2% base salary increase from $1,275,000 to $1,300,000 in March 2020.
| ||
2020 STIP |
Target Award = $2,350,000
Final Award Paid = $1,762,500
75% of target award value realized
|
Mr. McAtees target STIP was increased 2% to $2,350,000 in 2020.
Mr. McAtees STIP payout was 75% of his target award.
| ||
Performance Share Payout
75% of 2018 Long-Term Award
(2018-2020 Performance Period)
|
Target Award = $3,750,000
Final Award Paid = $2,719,475
73% of grant value realized
|
Mr. McAtees Performance Share payout was based on: A formulaic payout of 105% of the 99,396 shares granted, based on the Companys performance achievement for ROIC and 10% subtracted for the relative TSR modifier, plus The Companys common stock price change over the 3-year performance period, which reduced the value of the shares earned, including the 2018 supplemental grant.
Performance Shares were paid in 66% cash and 34% common stock.
| ||
RSU Payout
25% of 2017 Long-Term Award
(2017 Grant)
|
Target Award = $925,000
22,145 shares paid; valued at $658,814
71% of grant value realized
|
The Companys common stock price change over the 4-year restriction period reduced the value of the units granted by 29%.
RSUs were paid in common stock.
| ||
Total Realized Compensation
|
$6,436,622 |
AT&T INC. |
52 |
2021 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
|
Jeff McElfresh CEO, AT&T Communications, LLC | ||||
|
Jeff McElfresh joined the Company in 1995, and was appointed CEO of AT&T Communications, LLC, in October 2019. He is responsible for AT&T Communications consumer, business, and technology and operations groups, which provide mobile, broadband, and video services to U.S. consumers and nearly 3 million businesses. He previously served as President-Technology and Operations for AT&T Communications, LLC, and as CEO of Vrio Corp, the Companys pay-TV business in Latin America. | |||
2020 Realized Compensation | ||||
Element of Compensation |
Compensation Amount | Rationale | ||
2020 Base Salary
|
$850,000
|
Mr. McElfreshs salary did not increase in 2020.
| ||
2020 STIP |
Target Award = $1,850,000
Final Award Paid = $1,587,500
86% of target award value realized
|
Mr. McElfreshs target STIP did not increase in 2020.
Mr. McElfreshs STIP payout was 75% of his target award. The Committee awarded an additional $200,000 for his individual accomplishments including (i) the Companys best postpaid market performance in ten years, (ii) the successful nationwide rollout of 5G, and maintaining the Companys position as the industrys fastest network, and (iii) restructuring distribution to improve effectiveness and rationalized costs.
| ||
Performance Share Payout
75% of 2018 Long-Term Award
(2018-2020 Performance Period)
|
Target Award = $729,750
Final Award Paid = $605,223
83% of grant value realized
|
Mr. McElfreshs performance share payout was based on: A formulaic payout of 105% of the 20,014 shares granted, based on the Companys performance achievement for ROIC (and no adjustment for the TSR modifier since he was not an executive officer when this award was granted), plus The Companys common stock price change over the 3-year performance period, which reduced the value of the shares earned, including the 2018 supplemental grant.
Performance Shares were paid in 66% cash and 34% common stock.
| ||
RSU Payout
25% of 2017 Long-Term Award
(2017 Grant)
|
Target Award = $153,750
3,681 shares paid; valued at $109,510
71% of grant value realized
|
The Companys common stock price change over the 4-year restriction period reduced the value of the units granted by 29%.
RSUs were paid in common stock.
| ||
Total Realized Compensation
|
$3,152,233 |
2021 PROXY |
53 |
AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS |
In 2020, the Committee granted our NEOs long-term awards in the form of:
Type of Award | Weight | Performance Metrics | Vesting Period | |||
Performance Shares | 75% 0% for Mr. Kilar |
Performance Metric -100% ROIC Relative TSR Payout Modifier |
3-year performance period | |||
RSUs | 25% 100% for Mr. Kilar |
Payout value based on common stock price performance only |
4-year restriction period |
The associated grant values for these awards were:
2020 TARGET LONG-TERM VALUES
Name | Performance Shares ($) | RSUs ($) | ||||||||||
John Stankey |
|
10,125,000 |
|
|
3,375,000 |
|
||||||
Randall Stephenson |
|
15,750,000 |
|
|
5,250,000 |
|
||||||
John Stephens |
|
8,062,500 |
|
|
2,687,500 |
|
||||||
Jason Kilar |
|
NA |
|
|
48,000,000 |
|
||||||
David McAtee |
|
4,012,500 |
|
|
10,337,500 |
|
||||||
Jeff McElfresh |
|
4,350,000 |
|
|
1,450,000 |
|
The above table summarizes annual awards of Performance Shares and RSUs approved in 2020, and the following additional awards: supplemental grants to Mr. Stankey$3,000,000 in Performance Shares and $1,000,000 of RSUs; one-time grant to Mr. Kilar$48,000,000 of RSUs; and a retention grant to Mr. McAtee$9,000,000 of RSUs. See SCT for the description of Mr. Kilars award approved by the Committee.
2020 PERFORMANCE SHARE GRANTS
The Performance Shares granted in 2020 are for the 2020-2022 performance period. The Committee determined that the Performance Shares would be tied to a ROIC performance metric with a payout modifier based on a comparison of AT&Ts TSR to our Corporate Peer Group.
ROIC Performance Metric
We calculate ROIC for the 2020-2022 performance period by averaging over the three-year performance period: (1) our annual reported net income plus after-tax interest expense minus minority interest, divided by (2) the total of the average debt and average stockholder equity for the relevant year. For mergers and acquisitions activity over $2.0 billion, we exclude the dilutive impacts of intangible amortization, asset write-offs, accelerated depreciation, and transaction and restructuring costs so that the impact of certain significant transactions, including those which may not have been contemplated in the determination of a performance metric, will not have an impact on the performance results. We also exclude the net impact of certain matters to the extent the collective net impact of such matters in one of the following specific categories exceeds $500 million in a calendar year: changes in federal tax laws, changes in accounting principles, expenses caused by natural disasters and non-cash accounting write-downs of goodwill, other intangible assets and fixed assets. Additionally, we disregard gains and losses related to the assets and liabilities of pension and other post-retirement benefit plans.
ROIC Payout Table Description
The ROIC target range for the 2020-2022 performance period was set 75 basis points above our cost of capital, a target that we believe to be challenging, but attainable. For performance above or below the performance target range, the number of Performance Shares are increased or reduced, respectively. Potential payouts range from 0% to 150% of the number of Performance Shares granted.
AT&T INC. |
54 |
2021 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
|
TSR Performance Modifier
We believe that TSR is an important measure because it helps ensure that our executives interests are aligned with those of stockholders. This modifier provides that 2020 Performance Share Award payouts may be adjusted based on our TSR (stock appreciation plus reinvestment of dividends) performance relative to our Corporate Peer Group. TSR performance will be measured over the entire performance period.
TSR PERFORMANCE MODIFIER
2020-2022 Performance Period
AT&T Return vs. TSR Peer Group
|
Payout Modifier
| |
Top Quartile
|
Add 10 Percentage Points to Final ROIC Payout Percentage
| |
Quartile 2
Quartile 3
|
No Adjustment to ROIC Payout Percentage
| |
Quartile 4
|
Subtract 10 Percentage Points from Final ROIC Payout Percentage
|
At the end of the performance period, the number of Performance Shares to be paid out, if any, will be determined by comparing the actual performance of the Company against the predetermined performance objective for ROIC, and modifying the award for relative TSR achievement, if applicable. In addition, the Committee may make additional, discretionary adjustments. Performance Shares, if earned, are paid 34% in common stock, 66% in cash.
2020 RESTRICTED STOCK UNIT GRANTS
For NEOs other than Mr. Kilar, RSUs granted in 2020 vest 100% after four years or upon retirement eligibility, whichever occurs earlier, but do not pay out until the scheduled distribution date. These RSUs receive quarterly dividend equivalents, paid in cash, at the time regular dividends are paid on our common stock. RSUs pay 100% in stock to further tie executives interests to those of stockholders.
2020 Restricted Stock Unit Grant for Mr. Kilar
The Committee approved an award of $48,000,000 (1,646,655 shares) in RSUs upon Mr. Kilars hiring as CEO of WarnerMedia. See SCT for description of the award. Twenty-five percent of the award will vest and distribute each year during a four-year period (approximately $12,000,000 per year). The first vesting and distribution date was February 15, 2021. The ultimate value of the payout on the shares will depend on the value of AT&Ts share price on the vesting dates. The RSUs receive quarterly dividend equivalents paid in cash at the same time regular dividends are paid on the Companys common stock. The RSUs pay 100% in stock to further align Mr. Kilars interests with those of our stockholders. Mr. Kilars employment contract and severance benefits are described on pages 62, 72 and 73.
The Committee approved Mr. Kilars equity grant as a way to attract and retain the unique skill set he brings to the Company and to incentivize stockholder value creation. The structure of Mr. Kilars 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.
2020 Retention Grant for Mr. McAtee
Mr. McAtee received a career retention grant of 305,085 shares of Restricted Stock Units, with an approximate grant date value of $9,000,000, which vests in April 2030. Accumulated dividend equivalents are paid at the end of the grants ten-year restriction period. The award does not vest upon retirement eligibility. Mr. McAtee is eligible for a prorate of the award based on months worked during the restriction period, but not less than 50% of the award, if the Company terminates his employment prior to April 2030.
The Committee awarded these RSUs to Mr. McAtee as an incentive to remain with the Company and to reflect the value, including his proven legal expertise in antitrust matters, they believe he brings to AT&T in a highly competitive marketplace.
2021 PROXY |
55 |
AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS |
|
Pension Benefits
Personal Benefits
We provide our Executive Officers with other limited and market-based personal benefits. The benefits are described below and the value of those benefits to Executive Officers receiving them can be found in the section following the Summary Compensation Table.
Benefit/ Personal Benefit |
Description | Rationale | ||||
FINANCIAL COUNSELING |
Includes tax preparation, estate planning, and financial counseling. |
Allows our executives to focus more on business responsibilities by providing financial counselors to help with their personal financial affairs and tax filings.
| ||||
HEALTH COVERAGE |
A consumer-driven health plan for certain executives, who must pay a portion of the premiums. |
Maintains executives health and welfare, helping to ensure business continuity. | ||||
EXECUTIVE PHYSICAL |
Annual physical for executives who do not receive the health coverage shown above. |
|||||
COMMUNICATIONS |
AT&T products and services provided at little or no incremental cost to the Company. |
Provides 24/7 connectivity and a focus on services customers purchase. | ||||
AUTOMOBILE |
Includes allowance, fuel, and maintenance. |
Recruiting and retention tool. | ||||
EXECUTIVE DISABILITY |
Provides compensation during a leave of absence due to illness or injury. |
Provides security to executives family members. | ||||
HOME SECURITY |
Residential security system and monitoring. |
|||||
EXECUTIVE LIFE INSURANCE |
See page 69. |
|||||
COMPANY-OWNED CLUB MEMBERSHIPS |
In some cases, we allow personal use, but do not pay country club fees or dues for Executive Officers. |
Affords executives the opportunity to conduct business in a more informal environment. | ||||
PERSONAL USE OF COMPANY AIRCRAFT |
Executive officers are required to reimburse the Company for the incremental cost of personal usage. However, the CEO may waive the reimbursement requirement for other Executive Officers. Reimbursements will not be made where prohibited by law.
|
Provides for safety, security, and reduced travel time so executives may focus on their responsibilities. |
Certain of these benefits are also offered as post-retirement benefits to officers who meet age and service requirements. Additional information may be found in the Other Post-Retirement Benefits section of Executive Compensation Tables.
2021 PROXY |
57 |
AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS |
|
COMPENSATION COMMITTEE REPORT
The Human Resources Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussions, the Human Resources Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in our Annual Report on Form 10-K and Proxy Statement for filing with the SEC. |
February 11, 2021 |
The Human Resources Committee |
|||
Beth E. Mooney, Chairman |
||||
Scott T. Ford |
||||
Michael B. McCallister |
||||
Matthew K. Rose |
||||
Geoffrey Y. Yang |
2021 PROXY |
59 |
AT&T INC. |
EXECUTIVE COMPENSATION TABLES |
The table below contains information concerning the compensation provided to the two officers serving as Chief Executive Officer during the year, the Chief Financial Officer, and the three other most highly compensated Executive Officers of AT&T (the Named Executive Officers). Compensation information is provided for the years each person in the table was a Named Executive Officer since 2018.
Name and Principal Position |
Year | Salary ($)(1) |
Bonus ($) |
Stock Awards ($)(2) |
Option Awards ($) |
Non- Equity Incentive Plan Compen- sation ($)(1) |
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) |
All Other Compen- sation ($)(4) |
Total ($) |
|||||||||||||||||||||||||||
J. STANKEY CEO and President |
|
2020 |
|
|
2,050,000 |
|
|
0 |
|
|
13,499,999 |
|
|
0 |
|
|
3,250,000 |
|
|
1,411,950 |
|
|
808,968 |
|
|
21,020,917 |
| |||||||||
|
2019 |
|
|
2,900,000 |
|
|
0 |
|
|
9,525,340 |
|
|
0 |
|
|
7,566,500 |
|
|
2,113,955 |
|
|
367,211 |
|
|
22,473,006 |
| ||||||||||
|
2018 |
|
|
2,058,333 |
|
|
2,000,000 |
|
|
6,889,708 |
|
|
0 |
|
|
4,374,333 |
|
|
574,835 |
|
|
655,696 |
|
|
16,552,905 |
| ||||||||||
R. STEPHENSON Executive Chairman |
|
2020 |
|
|
900,000 |
|
|
0 |
|
|
20,999,989 |
|
|
0 |
|
|
2,250,000 |
|
|
3,763,883 |
|
|
1,240,756 |
|
|
29,154,628 |
| |||||||||
|
2019 |
|
|
1,800,000 |
|
|
0 |
|
|
19,800,007 |
|
|
0 |
|
|
5,280,000 |
|
|
3,589,196 |
|
|
1,563,722 |
|
|
32,032,925 |
| ||||||||||
|
2018 |
|
|
1,800,000 |
|
|
0 |
|
|
17,069,774 |
|
|
0 |
|
|
5,192,000 |
|
|
3,517,806 |
|
|
1,538,538 |
|
|
29,118,118 |
| ||||||||||
J. STEPHENS Sr. Exec. Vice Pres. and CFO |
|
2020 |
|
|
1,145,833 |
|
|
250,000 |
|
|
10,750,008 |
|
|
0 |
|
|
2,025,000 |
|
|
1,059,686 |
|
|
906,618 |
|
|
16,137,145 |
| |||||||||
|
2019 |
|
|
1,125,000 |
|
|
250,000 |
|
|
10,750,027 |
|
|
0 |
|
|
2,310,000 |
|
|
1,482,271 |
|
|
808,030 |
|
|
16,725,328 |
| ||||||||||
|
2018 |
|
|
1,096,875 |
|
|
2,000,000 |
|
|
8,542,439 |
|
|
0 |
|
|
2,057,917 |
|
|
1,324,399 |
|
|
620,674 |
|
|
15,642,304 |
| ||||||||||
J. KILAR |
|
2020 |
|
|
1,666,667 |
|
|
0 |
|
|
49,234,985 |
|
|
0 |
|
|
1,255,123 |
|
|
0 |
|
|
15,824 |
|
|
52,172,599 |
| |||||||||
CEO-WarnerMedia |
||||||||||||||||||||||||||||||||||||
D. MCATEE Sr. Exec. Vice Pres. and General Counsel |
|
2020 |
|
|
1,295,833 |
|
|
0 |
|
|
14,349,990 |
|
|
0 |
|
|
1,762,500 |
|
|
484,566 |
|
|
715,725 |
|
|
18,608,614 |
| |||||||||
|
2019 |
|
|
1,270,833 |
|
|
250,000 |
|
|
4,999,970 |
|
|
0 |
|
|
2,019,600 |
|
|
365,535 |
|
|
445,438 |
|
|
9,351,376 |
| ||||||||||
|
2018 |
|
|
1,058,333 |
|
|
5,000,000 |
|
|
4,731,281 |
|
|
0 |
|
|
1,694,000 |
|
|
100,295 |
|
|
265,367 |
|
|
12,849,276 |
| ||||||||||
J. MCELFRESH CEO-AT&T Communications, LLC |
|
2020 |
|
|
850,000 |
|
|
200,000 |
|
|
5,800,003 |
|
|
0 |
|
|
1,387,500 |
|
|
124,617 |
|
|
210,000 |
|
|
8,572,120 |
| |||||||||
|
2019 |
|
|
567,500 |
|
|
0 |
|
|
5,768,525 |
|
|
0 |
|
|
1,067,000 |
|
|
86,404 |
|
|
186,896 |
|
|
7,676,325 |
| ||||||||||
AT&T INC. |
60 |
2021 PROXY |
EXECUTIVE COMPENSATION TABLES |
|
Stankey | Stephenson | Stephens | Kilar | McAtee | McElfresh | |||||||||||||||||||
PERSONAL BENEFITS |
||||||||||||||||||||||||
Financial counseling (includes tax preparation and estate planning) |
|
14,175 |
|
|
14,000 |
|
|
12,957 |
|
|
0 |
|
|
16,055 |
|
|
10,000 |
| ||||||
Auto benefits |
|
20,568 |
|
|
26,204 |
|
|
14,695 |
|
|
0 |
|
|
15,010 |
|
|
13,912 |
| ||||||
Personal use of Company aircraft |
|
2,285 |
|
|
0 |
|
|
0 |
|
|
2,363 |
|
|
29,722 |
|
|
0 |
| ||||||
Health coverage |
|
57,340 |
|
|
57,340 |
|
|
55,192 |
|
|
0 |
|
|
55,192 |
|
|
5,000 |
| ||||||
Club membership |
|
2,793 |
|
|
1,425 |
|
|
0 |
|
|
0 |
|
|
2,793 |
|
|
0 |
| ||||||
Communications |
|
14,633 |
|
|
6,180 |
|
|
5,044 |
|
|
0 |
|
|
2,882 |
|
|
1,423 |
| ||||||
Home security |
|
1,485 |
|
|
10,296 |
|
|
0 |
|
|
0 |
|
|
0 |
|
|
0 |
| ||||||
Total Personal Benefits |
|
113,279 |
|
|
115,445 |
|
|
87,888 |
|
|
2,363 |
|
|
121,654 |
|
|
30,335 |
| ||||||
Company matching contributions to deferral plans |
|
13,680 |
|
|
1,108,500 |
|
|
610,038 |
|
|
13,461 |
|
|
480,278 |
|
|
117,480 |
| ||||||
Life insurance premiums applicable to the employees death benefit |
|
682,009 |
|
|
16,811 |
|
|
208,692 |
|
|
0 |
|
|
113,793 |
|
|
62,185 |
| ||||||
Total |
|
808,968 |
|
|
1,240,756 |
|
|
906,618 |
|
|
15,824 |
|
|
715,725 |
|
|
210,000 |
|
2021 PROXY |
61 |
AT&T INC. |
EXECUTIVE COMPENSATION TABLES |
GRANTS OF PLAN-BASED AWARDS
Name | Grant Date |
Date |
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards |
Estimated Future Payouts Under Equity Incentive Plan Awards(1) |
All Other Stock Awards: Number of Shares of Stock or Units (#)(2) |
All Other Awards: Number
of |
Exercise or Base Price of Option Awards ($/Sh) |
Grant Date Fair Value of Stock and Option Awards ($) |
||||||||||||||||||||||||||||||||||||||||
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
|||||||||||||||||||||||||||||||||||||||||||
STANKEY |
|
1/30/20 |
|
|
1/30/20 |
|
|
1,110,000 |
|
|
3,700,000 |
|
|
6,105,000 |
|
|
76,142 |
|
|
190,355 |
|
|
304,568 |
|
|
63,452 |
|
9,499,996 |
||||||||||||||||||||
|
6/30/20 |
|
|
6/25/20 |
|
|
840,000 |
|
|
2,800,000 |
|
|
4,620,000 |
|
|
39,696 |
|
|
99,239 |
|
|
158,782 |
|
|
33,080 |
|
|
4,000,003 |
| |||||||||||||||||||
STEPHENSON |
|
1/30/20 |
|
|
1/30/20 |
|
|
1,800,000 |
|
|
6,000,000 |
|
|
9,900,000 |
|
|
168,314 |
|
|
420,785 |
|
|
673,256 |
|
|
140,262 |
|
|
20,999,989 |
| ||||||||||||||||||
STEPHENS |
|
1/30/20 |
|
|
1/30/20 |
|
|
810,000 |
|
|
2,700,000 |
|
|
4,455,000 |
|
|
86,161 |
|
|
215,402 |
|
|
344,643 |
|
|
71,801 |
|
|
10,750,008 |
| ||||||||||||||||||
KILAR |
|
5/1/20 |
|
|
3/23/20 |
|
|
502,049 |
|
|
1,673,497 |
|
|
2,510,246 |
|
|
1,646,655 |
(3) |
|
49,234,985 |
| |||||||||||||||||||||||||||
MCATEE |
|
1/30/20 |
|
|
1/30/20 |
|
|
705,000 |
|
|
2,350,000 |
|
|
3,877,500 |
|
|
42,880 |
|
|
107,200 |
|
|
171,520 |
|
|
35,733 |
|
|
5,349,982 |
| ||||||||||||||||||
|
4/23/20 |
|
|
4/23/20 |
|
|
305,085 |
(4) |
|
9,000,008 |
| |||||||||||||||||||||||||||||||||||||
MCELFRESH |
|
1/30/20 |
|
|
1/30/20 |
|
|
555,000 |
|
|
1,850,000 |
|
|
3,052,500 |
|
|
46,487 |
|
|
116,217 |
|
|
185,947 |
|
|
38,739 |
|
|
5,800,003 |
|
Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table
AT&T INC. |
62 |
2021 PROXY |
EXECUTIVE COMPENSATION TABLES |
|
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2020
Option Awards (1) | Stock Awards | |||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#) |
Number of Securities Underlying Unexercised Options Unexer- cisable (#) |
Option Exercise Price ($) |
Option Expiration Date |
Number of Shares or Units of Stock That Have Not Vested (2) (#) |
Market Value of Shares or Units of Stock That Have Not Vested (2) ($) |
Equity Plans Awards: Number of Unearned Shares, Units or Other Vested (3) (#) |
Equity Payout Value of Unearned Shares, Units Vested (3) ($) |
||||||||||||||||||||||||
STANKEY |
|
2,326 |
|
|
|
|
|
28.24 |
|
|
2/15/21 |
|
||||||||||||||||||||
2020-2022 Perf. Shares |
|
|
|
|
|
|
|
266,497 |
|
|
7,664,454 |
| ||||||||||||||||||||
2020-2022 Perf. Shares Supplemental Grant |
|
|
|
|
|
|
|
138,935 |
|
|
3,995,771 |
| ||||||||||||||||||||
2019-2021 Perf. Shares |
|
|
|
|
|
|
|
280,689 |
|
|
8,072,616 |
| ||||||||||||||||||||
2019-2021 Perf. Shares Supplemental Grant |
|
|
|
|
|
|
|
59,414 |
|
|
1,708,747 |
| ||||||||||||||||||||
STEPHENSON |
|
29,345 |
|
|
|
|
|
28.24 |
|
|
2/15/21 |
|
||||||||||||||||||||
2020-2022 Perf. Shares |
|
|
|
|
|
|
|
589,099 |
|
|
16,942,487 |
| ||||||||||||||||||||
2019-2021 Perf. Shares |
|
|
|
|
|
|
|
715,778 |
|
|
20,585,775 |
| ||||||||||||||||||||
STEPHENS |
|
9,730 |
|
|
|
|
|
28.24 |
|
|
2/15/21 |
|
||||||||||||||||||||
|
39,919 |
|
|
30.35 |
|
|
6/15/21 |
|
||||||||||||||||||||||||
|
2,373 |
|
|
29.87 |
|
|
2/15/22 |
|
||||||||||||||||||||||||
2020-2022 Perf. Shares |
|
|
|
|
|
|
|
301,563 |
|
|
8,672,952 |
| ||||||||||||||||||||
2019-2021 Perf. Shares |
|
|
|
|
|
|
|
402,321 |
|
|
11,570,752 |
| ||||||||||||||||||||
KILAR |
||||||||||||||||||||||||||||||||
2020 Restricted Stock Units |
|
1,646,655 |
|
|
47,357,798 |
|
||||||||||||||||||||||||||
MCATEE |
||||||||||||||||||||||||||||||||
2020-2022 Perf. Shares |
|
150,080 |
|
|
4,316,301 |
| ||||||||||||||||||||||||||
2019-2021 Perf. Shares |
|
187,125 |
|
|
5,381,715 |
| ||||||||||||||||||||||||||
2017 Restricted Stock Units |
|
22,145 |
|
|
636,890 |
|
||||||||||||||||||||||||||
2018 Restricted Stock Units |
|
26,813 |
|
|
771,142 |
|
||||||||||||||||||||||||||
2018 Restricted Stock Units Supplemental Grant |
|
6,319 |
|
|
181,734 |
|
||||||||||||||||||||||||||
2019 Restricted Stock Units |
|
41,583 |
|
|
1,195,927 |
|
||||||||||||||||||||||||||
2020 Restricted Stock Units |
|
35,733 |
|
|
1,027,681 |
|
||||||||||||||||||||||||||
2020 Restricted Stock Units Retention Grant |
|
305,085 |
|
|
8,774,245 |
|
||||||||||||||||||||||||||
MCELFRESH |
||||||||||||||||||||||||||||||||
2020-2022 Perf. Shares |
|
162,704 |
|
|
4,679,367 |
| ||||||||||||||||||||||||||
2019-2021 Perf. Shares |
|
56,886 |
|
|
1,636,041 |
| ||||||||||||||||||||||||||
2019-2021 Perf. Shares Supplemental Grant |
|
66,857 |
|
|
1,922,807 |
| ||||||||||||||||||||||||||
2019 Restricted Stock Award Retention Grant |
|
52,812 |
|
|
1,518,873 |
|
2021 PROXY |
63 |
AT&T INC. |
EXECUTIVE COMPENSATION TABLES |
OPTION EXERCISES AND STOCK VESTED DURING 2020
Option Awards | Stock Awards (1) | |||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($) |
||||||||||||||||
STANKEY |
|
0 |
|
|
0 |
|
|
231,256 |
|
|
7,255,075 |
| ||||||||
STEPHENSON |
|
379,336 |
|
|
2,093,935 |
|
|
473,223 |
|
|
14,839,276 |
| ||||||||
STEPHENS |
|
46,523 |
|
|
318,477 |
|
|
242,107 |
|
|
7,621,121 |
| ||||||||
MCATEE |
|
0 |
|
|
0 |
|
|
140,162 |
|
|
4,483,969 |
| ||||||||
MCELFRESH |
|
0 |
|
|
0 |
|
|
106,049 |
|
|
3,142,146 |
|
AT&T INC. |
64 |
2021 PROXY |
EXECUTIVE COMPENSATION TABLES |
|
PENSION BENEFITS (ESTIMATED FOR DECEMBER 31, 2020)
Name | Plan Name | Number of Years Credited Service (#) |
Present Value of Accumulated Benefits (1) ($) |
Payments During Last Fiscal Year ($) |
||||||||||||||||||
STANKEY |
Pension Benefit PlanNonbargained Program |
|
35 |
|
|
2,000,980 |
|
|
0 |
| ||||||||||||
SRIP |
|
19 |
|
|
423,113 |
|
|
0 |
| |||||||||||||
SERP |
|
34 |
|
|
30,675,183 |
|
|
0 |
| |||||||||||||
STEPHENSON |
Pension Benefit PlanNonbargained Program |
|
38 |
|
|
1,961,964 |
|
|
0 |
| ||||||||||||
Pension Benefit Make Up Plan |
|
15 |
|
|
7,297 |
|
|
0 |
| |||||||||||||
SRIP |
|
22 |
|
|
2,333,675 |
|
|
0 |
| |||||||||||||
SERP |
|
30 |
|
|
63,434,385 |
|
|
0 |
| |||||||||||||
STEPHENS |
Pension Benefit PlanNonbargained Program |
|
28 |
|
|
1,596,821 |
|
|
0 |
| ||||||||||||
Pension Benefit Make Up Plan |
|
8 |
|
|
69,580 |
|
|
0 |
| |||||||||||||
SRIP |
|
12 |
|
|
390,521 |
|
|
0 |
| |||||||||||||
SERP |
|
27 |
|
|
22,809,359 |
|
|
0 |
| |||||||||||||
MCATEE |
Pension Benefit PlanMCB Program |
|
8 |
|
|
147,238 |
|
|
0 |
| ||||||||||||
Pension Benefit Make Up Plan |
|
8 |
|
|
1,184,361 |
|
|
0 |
| |||||||||||||
MCELFRESH |
Pension Benefit PlanMobility and Southeast Management Program |
|
25 |
|
|
369,534 |
|
|
0 |
| ||||||||||||
Pension Benefit Make Up Plan |
|
25 |
|
|
222,533 |
|
|
0 |
|
2021 PROXY |
65 |
AT&T INC. |
EXECUTIVE COMPENSATION TABLES |
QUALIFIED PENSION PLAN
The AT&T/Warner Media Pension Benefit Plan, a qualified pension plan under the Internal Revenue Code, covers most of our employees hired before 2015, including each NEO, except Mr. Kilar. The applicable benefit accrual formula depends on the subsidiaries that have employed the participant. Effective January 1, 2015, no new AT&T management employees are eligible for a pension (2016 for DirecTV). However, employees who are not entitled to participate in the pension plan or whose pension benefits were frozen receive an enhanced 401(k) benefit.
AT&T INC. |
66 |
2021 PROXY |
EXECUTIVE COMPENSATION TABLES |
|
NONQUALIFIED PENSION PLANS
2021 PROXY |
67 |
AT&T INC. |
EXECUTIVE COMPENSATION TABLES |
OTHER POST-RETIREMENT BENEFITS
AT&T INC. |
68 |
2021 PROXY |
EXECUTIVE COMPENSATION TABLES |
|
OTHER POST-RETIREMENT BENEFITS
Personal Benefit | Estimated Amount (valued at our incremental cost) | |
Financial counseling |
Maximum of $14,000 per year for 36 months | |
Financial counseling provided in connection with retirement |
Maximum of $20,000 total | |
Estate planning |
Maximum of $10,000 per year for 36 months | |
Communication benefits |
Average of $4,150 annually | |
Health coverage (Mr. Stephenson only) |
Estimated at $38,900 annually, which is in addition to required contributions from the employee |
2021 PROXY |
69 |
AT&T INC. |
EXECUTIVE COMPENSATION TABLES |
NONQUALIFIED DEFERRED COMPENSATION
Name | Plan (1) | Executive in Last FY (2) ($) |
Registrant in Last FY (2) ($) |
Aggregate Last FY (2)(3) ($) |
Aggregate Distributions ($) |
Aggregate Balance at Last FYE (2) ($) |
||||||||||||||||
STANKEY |
Stock Purchase and Deferral Plan |
|
|
|
|
|
|
|
(357,891 |
) |
|
|
|
|
1,322,601 |
| ||||||
Cash Deferral Plan |
|
|
|
|
|
|
|
8,434 |
|
|
|
|
|
251,914 |
| |||||||
STEPHENSON |
Stock Purchase and Deferral Plan |
|
5,308,500 |
|
|
1,099,140 |
|
|
(3,535,364 |
) |
|
7,758,651 |
|
|
12,264,748 |
| ||||||
Cash Deferral Plan |
|
487,500 |
|
|
|
|
|
234,530 |
|
|
5,096,314 |
|
|
6,139,639 |
| |||||||
STEPHENS |
Stock Purchase and Deferral Plan |
|
2,775,438 |
|
|
596,358 |
|
|
(1,695,036 |
) |
|
472,156 |
|
|
7,494,721 |
| ||||||
MCATEE |
Stock Purchase and Deferral Plan |
|
2,090,638 |
|
|
466,598 |
|
|
(420,894 |
) |
|
1,135,066 |
|
|
2,262,550 |
| ||||||
MCELFRESH |
Stock Purchase and Deferral Plan |
|
383,400 |
|
|
103,800 |
|
|
(262,818 |
) |
|
131,051 |
|
|
1,214,387 |
| ||||||
Cash Deferral Plan |
|
|
|
|
|
|
|
15,515 |
|
|
|
|
|
463,380 |
|
NOTE 1. Amounts attributed to the Stock Purchase and Deferral Plan or to the Cash Deferral Plan also include amounts from their predecessor plans. No further contributions are permitted under the predecessor plans.
NOTE 2. Of the amounts reported in the contributions and earnings columns and also included in the aggregate balance column in the table above, the following amounts are reported as compensation for 2020 in the Summary Compensation Table: Mr. Stankey $1,967, Mr. Stephenson$1,930,356, Mr. Stephens$939,795, Mr. Kilar$0, Mr. McAtee$855,035, and Mr. McElfresh$277,419. Of the amounts reported in the aggregate balance column, the following aggregate amounts were previously reported in the Summary Compensation Table for 2019 and 2018, combined: Mr. Stankey$3,831, Mr. Stephenson$7,035,660, Mr. Stephens$4,778,025, Mr. Kilar$0, Mr. McAtee$1,702,200, McElfresh$453,779.
NOTE 3. Aggregate Earnings include interest, dividend equivalents, and stock price appreciation/depreciation. The Change in Pension Value and Nonqualified Deferred Compensation Earnings column of the Summary Compensation Table includes only the interest that exceeds the SEC market rate, as shown in footnote 3 to the Summary Compensation Table.
AT&T INC. |
70 |
2021 PROXY |
EXECUTIVE COMPENSATION TABLES |
|
2021 PROXY |
71 |
AT&T INC. |
EXECUTIVE COMPENSATION TABLES |
AT&T SEVERANCE POLICY
POTENTIAL PAYMENTS UPON CHANGE IN CONTROL
AT&T INC. |
72 |
2021 PROXY |
EXECUTIVE COMPENSATION TABLES |
|
2021 PROXY |
73 |
AT&T INC. |
OTHER INFORMATION
Pursuant to SEC rules, we are providing the following information about the ratio of the annual total compensation of our median employee to the annual total compensation of Mr. Stankey, our CEO. Given the CEO transition which occurred in 2020, for purposes of the pay ratio calculation we annualized Mr. Stankeys compensation as if he had served as CEO for the entire year. Mr. Stankeys annualized 2020 compensation is based on the following:
Salary: an annualized salary of $1,800,000, which is based on his CEO-level salary rate of $2,400,000 as if such rate had been in effect throughout the entire year and based on the requested and approved 50% reduction of his salary in the second half of the year in response to the global pandemic.
Short Term Incentive: an annual award of $2,800,000, which is calculated based on annualizing his entire 2020 bonus using the annual bonus target applied to the portion of the year he served as CEO and reduced by the requested and approved limit of 50% of his target bonus in response to the global pandemic;
Long-term Incentive: the full value of his long-term incentive awards granted in 2020, which includes the additional grant he received at the time of promotion;
Change in Pension and All Other Compensation: as reported in the Compensation of Executive OfficersSummary Compensation Table
The total compensation of our median employee, $89,399. The final pay ratio calculation is 227:1.
Determination of CEO Pay Ratio | ||||||
Step 1 |
Total compensation of the CEO1 |
$ |
20,320,917 |
| ||
Step 2 |
Total compensation of the median employee2 |
$ |
89,399 |
| ||
Step 3 |
Divide compensation of the CEO by the median employee |
|
227.3 |
| ||
Result |
CEO pay ratio |
|
227:1 |
|
1 | Includes the value of Mr. Stankeys health benefits. |
2 | Includes the cost of group health and welfare benefits. |
Our median employee for 2020 was determined using the compensation of employees who were actively employed on October 1, 2020 (the Measurement Date). We used their cash compensation for the first 3 quarters of the year to determine the median employee.
AT&T INC. |
76 |
2021 PROXY |
OTHER INFORMATION |
|
DETERMINATION OF NUMBER OF EMPLOYEES FOR SELECTION OF MEDIAN EMPLOYEE
USING THE MEASUREMENT DATE OF OCTOBER 1, 2020
Step 1 |
Identify all active US-based employees |
|
|
181,960 |
| |||||||||||||||||||||||||||
Step 2 |
Identify all active non-US based employees in foreign countries with our largest employee populations: |
|
|
39,582 |
| |||||||||||||||||||||||||||
Mexico |
19,893 |
Argentina |
|
4,297 |
|
United Kingdom |
|
4,240 |
|
Slovakia |
|
3,163 |
|
India |
|
3,064 |
|
|||||||||||||||
Colombia |
2,664 |
Brazil |
|
2,261 |
|
|||||||||||||||||||||||||||
Step 3 |
Identify all active non-US based employees in the other 60 foreign countries: |
|
10,850 |
| ||||||||||||||||||||||||||||
Australia |
332 |
Austria |
|
13 |
|
Barbados |
|
2 |
|
Belgium |
|
146 |
|
Bulgaria |
|
87 |
|
|||||||||||||||
Canada |
725 |
Chile |
|
1,211 |
|
China |
|
130 |
|
Costa Rica |
|
239 |
|
Croatia |
|
11 |
|
|||||||||||||||
Cuba |
1 |
Curacao |
|
12 |
|
Czech Republic |
|
1,481 |
|
Denmark |
|
110 |
|
Ecuador |
|
241 |
|
|||||||||||||||
Egypt |
2 |
El Salvador |
|
1 |
|
Finland |
|
33 |
|
France |
|
529 |
|
Germany |
|
678 |
|
|||||||||||||||
Greece |
3 |
Guatemala |
|
2 |
|
Hong Kong |
|
369 |
|
Hungary |
|
166 |
|
Indonesia |
|
2 |
|
|||||||||||||||
Iraq |
1 |
Ireland |
|
71 |
|
Israel |
|
398 |
|
Italy |
|
300 |
|
Japan |
|
445 |
|
|||||||||||||||
Lebanon |
3 |
Lithuania |
|
1 |
|
Malaysia |
|
545 |
|
Moldova |
|
176 |
|
Netherlands |
|
297 |
|
|||||||||||||||
New Zealand |
34 |
Norway |
|
12 |
|
Pakistan |
|
4 |
|
Panama |
|
11 |
|
Peru |
|
219 |
|
|||||||||||||||
Philippines |
78 |
Poland |
|
66 |
|
Portugal |
|
11 |
|
Republic of Serbia |
|
3 |
|
Romania |
|
24 |
|
|||||||||||||||
Russian Federation |
15 |
Singapore |
|
511 |
|
Slovenia |
|
2 |
|
South Africa |
|
12 |
|
South Korea |
|
88 |
|
|||||||||||||||
Spain |
369 |
Sweden |
|
155 |
|
Switzerland |
|
75 |
|
Taiwan |
|
47 |
|
Thailand |
|
14 |
|
|||||||||||||||
Trinidad |
74 |
Turkey |
|
41 |
|
United Arab Emirates |
|
72 |
|
Uruguay |
|
148 |
|
Venezuela |
|
2 |
|
|||||||||||||||
Result |
Total number of active global employees excluding the CEO. |
|
|
232,392 |
|
The total compensation of our median employee, $89,399, was determined using the same methodology we use for Mr. Stankeys Summary Compensation Table compensation, and we included the cost of group health and welfare benefits. The total compensation of the CEO John T. Stankey was $20,320,917, which includes the value of Mr. Stankeys health benefits. The final pay ratio calculation is 227:1.
2021 PROXY |
77 |
AT&T INC. |
|
Discussion and Reconciliation of Non-GAAP Measures
We believe the following measures are relevant and useful information to investors as they are part of AT&Ts internal management reporting and planning processes and are important metrics that management uses to evaluate the operating performance of AT&T and its segments. Management also uses these measures as a method of comparing performance with that of many of our competitors. These measures should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with U.S. generally accepted accounting principles (GAAP).
Free Cash Flow
Free cash flow is defined as cash from operations minus capital expenditures. Free cash flow after dividends is defined as cash from operations minus capital expenditures and dividends on common and preferred shares. Free cash flow dividend payout ratio is defined as the percentage of dividends paid on common and preferred shares to free cash flow. We believe these metrics provide useful information to our investors because management views free cash flow as an important indicator of how much cash is generated by routine business operations, including capital expenditures, and makes decisions based on it. Management also views free cash flow as a measure of cash available to pay debt and return cash to shareowners.
Free Cash Flow and Free Cash Flow Dividend Payout Ratio |
||||
Dollars in millions | Year Ended 2020 |
|||
Net cash provided by operating activities |
$ |
43,130 |
| |
Less: Capital expenditures |
|
(15,675 |
) | |
Free Cash Flow |
|
27,455 |
| |
Less: Dividends paid |
|
(14,956 |
) | |
Free Cash Flow after Dividends |
$ |
12,499 |
| |
Free Cash Flow Dividend Payout Ratio |
|
54.5 |
% |
Cash Paid for Gross Capital Investment
In connection with capital improvements, we negotiate with some of our vendors to obtain favorable payment terms of 120 days or more, referred to as vendor financing, which are excluded from capital expenditures and reported in accordance with GAAP as financing activities. We present an additional view of cash paid for gross capital investment to provide investors with a comprehensive view of cash used to invest in our networks, product developments and support systems, excluding FirstNet reimbursements.
Cash Paid for Gross Capital Investment |
||||
Dollars in millions | Year Ended 2020 |
|||
Capital Expenditures |
$ |
(15,675 |
) | |
Cash paid for vendor financing |
|
(2,966 |
) | |
FirstNet reimbursement |
|
(1,063 |
) | |
Gross Capital Investment |
$ |
(19,704 |
) |
2021 PROXY |
A-1 |
AT&T INC. |
ESG PRIORITIES
OUR COMMUNITIES
AT&T has invested more than $125B over the past 5 years to connect America. Through continued network investment, policy advocacy, product offerings and philanthropy, we are focused on addressing the digital divide that is denying 17M students effective learning resources and bright futures. |
OUR OPERATIONS
AT&T has committed to be carbon neutral across our entire global operations by 2035. We will achieve net zero Scope 1 and 2 emissions the yearly equivalent of 1,104,036 homes electricity use. |
OUR SUPPLY CHAIN
We set a Science Based Target to help ensure that 50% of our suppliers (covering purchased goods and services, capital goods and downstream leased assets as a portion of spend) set their own science-based Scope 1 and Scope 2 emissions-reduction targets by 2024. |
||||||||||||||||||
|
|
|
||||||||||||||||||
$125B INVESTED OVER THE PAST 5 YEARS
|
COMMITTED TO BE CARBON NEUTRAL BY 2035
|
ESTABLISHED SCIENCE-BASED EMISSION REDUCTION TARGETS
|
||||||||||||||||||
RECOGNITION: |
Bloomberg Gender Equality Index CDP Climate Change Leadership Tier (A-) Center for Resource Solutions Green Power Leadership Award (Market Development) CR Magazine 100 Best Corporate Citizens DiversityInc Top 50 Companies for Diversity Hall of Fame Dow Jones Sustainability Index North America Ethisphere Worlds Most Ethical Companies Fortune Best Big Companies to Work For, Worlds Most Admired Companies Great Place to Work Best Workplaces for Diversity Human Rights Campaign Corporate Equality Index JUST Capital Americas Most JUST Companies (JUST 100) National Organization on Disability Leading Disability Employer Newsweek Americas Most Responsible Companies Points of Light The Civic 50 |
i | Scope 1 emissions include direct emissions from sources owned or controlled by the company (such as the fleet). Scope 2 emissions include indirect emissions that result from the generation of purchased energy. |
ii | EPA Greenhouse Gas Equivalencies Calculator. https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator |
AT&T INC. 208 S. AKARD RM 1830 DALLAS, TX 75202 |
VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above
|
|||||
Use the Internet to transmit your voting instructions and access proxy materials. Vote by 11:59 p.m. Eastern Time on April 29, 2021, for shares held directly and by 11:59 p.m. Eastern Time on April 27, 2021, for shares held in a Plan. Use your 16-digit control number to access the above web site and follow the instructions to obtain your records and to create an electronic voting instruction form. |
||||||
During The Meeting - Go to www.virtualshareholdermeeting.com/T2021 |
||||||
You may attend the meeting via the Internet and vote during the meeting. Use your 16-digit control number to access the above meeting web site and follow the instructions. Plan participants must submit their voting instructions before the meeting.
VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on April 29, 2021, for shares held directly and by 11:59 p.m. Eastern Time on April 27, 2021, for shares held in a Plan. Use your 16-digit control number when you call and then follow the instructions. |
||||||
VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||||
D30316-P492777 KEEP THIS PORTION FOR YOUR RECORDS | ||||
|
DETACH AND RETURN THIS PORTION ONLY
Annual Meeting Proxy Card/Voting Instruction Card
AT&T INC.
The Board of Directors recommends a vote FOR the listed nominees. |
Please sign exactly as name(s) appear(s) hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. |
|
||||||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
Important Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting to be held on April 30, 2021:
The Proxy Statement and Annual Report are available at www.proxyvote.com.
|
D30317-P49277
This proxy is solicited on behalf of the Board of Directors for the Annual Meeting on April 30, 2021.
The undersigned hereby appoints William E. Kennard, John T. Stankey and Pascal Desroches, and each of them, proxies, with full power of substitution, to vote all common shares of the undersigned in AT&T Inc. at the Annual Meeting of Stockholders to be held virtually on April 30, 2021, 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, it will be treated as an instruction to 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 all nominees, FOR Items 2 and 3, and AGAINST the stockholder proposal (Item 4) 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.
Please sign on the reverse side and return promptly in the enclosed envelope or, if you choose, you can submit your proxy by telephone, through the Internet or mail it to Broadridge, 51 Mercedes Way, Edgewood, NY 11717. This proxy card, when signed and returned, or your telephone or Internet proxy, will also constitute voting instructions to the (a) plan administrator for shares held on your behalf pursuant to The DirectSERVICE Investment Program (dividend reinvestment plan) and (b) plan administrator or trustee for shares held on your behalf under any of the following employee benefit plans: the AT&T Retirement Savings Plan; the AT&T Savings and Security Plan; the AT&T Puerto Rico Retirement Savings Plan; and the BellSouth Savings and Security Plan. Shares in the employee benefit plans, for which voting instructions are not received (uninstructed shares) will not be voted, subject to the trustees fiduciary obligations. To allow sufficient time for voting by the trustees and/or administrators of the plans, your voting instructions must be received by April 27, 2021.