Notice of At & T inc. 2019 Annual Meeting Of Stockholders and Proxy Statement.
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. )
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
| ☐ | Preliminary Proxy Statement | |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| ☒ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | 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)
Payment of Filing Fee (Check the appropriate box):
| ☒ | No fee required. | |||
| ☐ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
| (1) | Title of each class of securities to which the transaction applies:
| |||
| ||||
| (2) | Aggregate number of securities to which the transaction applies:
| |||
| ||||
| (3) | Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
| |||
| ||||
| (4) | Proposed maximum aggregate value of the transaction:
| |||
| ||||
| (5) | Total fee paid: | |||
| ||||
| ☐ | Fee paid previously with preliminary materials. | |||
| ☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
| (1) | Amount Previously Paid:
| |||
| ||||
| (2) | Form, Schedule or Registration Statement No.:
| |||
| ||||
| (3) | Filing Party:
| |||
| ||||
| (4) | Date Filed:
| |||
| ||||
Notice of At & T inc. 2019 Annual Meeting Of Stockholders and Proxy Statement.
TO OUR STOCKHOLDERS
 |
|
Dear Stockholders:
It’s a pleasure to invite you to our 2019 Annual Meeting of Stockholders. I hope you can join us on Friday, April 26, 2019, at 9:00 a.m., at the Moody Performance Hall, 2520 Flora Street, Dallas, Texas 75201.
At this year’s meeting, we will discuss our strategy to become a modern media company and deliver on our mission to inspire human progress through the power of communication and entertainment.
You’ll hear about how we’re executing on that strategy by building on the solid performance of our communications business, standing up a revolutionary advertising business and continuing to create great entertainment. Most important, we’ll discuss our plans to grow free cash flow and pay down our debt – all while continuing to invest in growth and maintain a solid, steady dividend for you, our owners.
In recent years, you have seen us transform our company in big and dramatic ways. But one thing has not – and will not – change. That’s our goal of delivering strong results for you and sustainable, long-term growth and success for AT&T. On behalf of the Board and our management team, thank you for your continued support.
Sincerely,
Randall Stephenson
|
Dear Stockholders:
In my second term as your company’s Independent Lead Director, I want you to know how proud I am to reaffirm AT&T’s lasting commitment to thoughtful and effective governance.
The Board’s role is to keep our company focused on the long-term and protect the interests of our stockholders. We take a disciplined,hands-on approach to discharging that duty – questioning assumptions, offering alternative points of view and assessing every decision through the lens of building stockholder value.
We have worked hard to recruit and maintain a Board with deep experience and varied backgrounds. In a rapidly evolving marketplace, that diversity of perspectives is crucial to our success in serving our customers and creating value for you.
I hope to see you at our 2019 Annual Meeting. Until then, please accept the gratitude of our entire Board for your enduring confidence in AT&T.
Sincerely,
Matthew Rose
|  | |
IT’S 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&T’s Board of Directors, I’m proud of the company’s strong commitment to sound, forward-looking governance. Our Board’s 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&T’s 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 you’re 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: It’s 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 year’s meeting, we’ll update you on the strength of our business and how we’re bringing to life our company’s 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. You’ll 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 We’ll 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 | |
| | ||
| AT&T Inc. One AT&T Plaza Whitacre Tower 208 S. Akard Street Dallas, TX 75202 | |
NOTICE OF 20192021 ANNUAL MEETING
OF STOCKHOLDERS AND PROXY STATEMENT
To the holders of Common Stock of AT&T Inc.:
The 20192021 Annual Meeting of Stockholders of AT&T Inc. will be held as follows:conducted virtually on the Internet. There will be no in-person meeting.
When: | 9:00 a.m. | |
Web Address: |
| |
The purpose of the annual meeting is to consider and take action on the following:
1. | Election of Directors |
2. | Ratification of Ernst & Young LLP as independent auditors |
3. | Advisory approval of executive compensation |
4. | Any other business that may properly come before the meeting, including |
Holders of AT&T Inc. common stock of record at the close of business on February 27, 2019,March 2, 2021, are entitled to vote at the meeting and any adjournment of the meeting. Please sign, date, and return your proxy card or submit your proxy and/or voting instructions by telephone or through the Internet promptly so that a quorum may be represented at the meeting. Any person giving a proxy has the power to revoke it at any time, and stockholders who are present at the meeting may withdraw their proxies and vote in person.
By Order of the Board of Directors.
Stacey Maris
Senior Vice President, – AssistantDeputy General Counsel
and Secretary
March 11, 20192021
| ||
IMPORTANT
| Please promptly sign, date and return your proxy card or voting instruction form, or submit your proxy and/or voting instructions by telephone or through the Internet
|
| ||
MEETING
|
More information about accessing the meeting
|
The
Stockholders are available at
|
Attending the Meeting
The Record Date for AT&T’s 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&T’s 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.
| | ||
| 1 | ||||
| 3 | ||||
3 | ||||
11 | ||||
Management Proposal – Item No. 3 - Advisory Approval of Executive Compensation | 12 | |||
13 | ||||
| 15 | ||||
15 | ||||
15 | ||||
16 | ||||
16 | ||||
16 | ||||
16 | ||||
17 | ||||
18 | ||||
20 | ||||
20 | ||||
20 | ||||
21 | ||||
22 | ||||
23 | ||||
23 | ||||
24 | ||||
| 25 | ||||
| 27 | ||||
| 31 | ||||
| 34 | ||||
35 | ||||
38 | ||||
43 | ||||
47 | ||||
54 | ||||
| 60 | ||||
| 74 | ||||
74 | ||||
74 | ||||
74 | ||||
74 | ||||
75 | ||||
76 | ||||
A-1 | ||||
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
You may access the meeting by going to www.virtualshareholdermeeting.com/T2021 and following the prompts, which will ask you for your 16-digit control number, shown in a box on your
Proxy Card or your Notice of Internet Availability. If you do not have a control number, contact your broker for access or follow the instructions sent with your proxy materials.
AGENDA AND VOTING RECOMMENDATIONS
| Management Proposals: | Board Recommendation | Page | ||||
1 - Election of Directors | FOR each nominee | 3 | ||||
2 - Ratification of Ernst & Young LLP as auditors for 2021 | FOR | 11 | ||||
3 - Advisory Approval of Executive Compensation | FOR | 12 | ||||
| Stockholder Proposal: | ||||||
4 - Shareholder Right to Act by Written Consent | AGAINST | 13 | ||||
CORPORATE GOVERNANCE HIGHLIGHTS
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:
 | Independent Chairman |
| 11 Independent Director nominees |
| Demonstrated Board refreshment and diversity |
| Independent Audit, Human Resources, and Corporate Governance and Nominating Committees |
| Regular sessions of non-management Directors |
| Annual election of Directors by majority vote |
| Long-standing commitment to sustainability |
| Stockholder right to call special meetings |
| Clawback policy |
| Proxy Access |
 2021 PROXY | SUM1 | AT&T INC. |
GUIDE TO AT&T’S2021 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
| GENDER
| RACE / ETHNICITY
|
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 |
|
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:
GENERAL
| i | Inclusive of AT&T Inc. and AT&T Communications. |
2021 PROXY | SUM3 | AT&T INC. |
Proxy Statement | | |
This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of AT&T Inc. (AT&T, theCompany, orwe) for use at the 20192021 Annual Meeting of Stockholders of AT&T. The meeting will be heldconducted virtually over the Internet at 9:00 a.m. localCentral time on Friday, April 26, 2019, at the Moody Performance Hall, 2520 Flora Street, Dallas, Texas 75201.30, 2021.
The purposespurpose of the meeting areis set forth in the Notice of Annual Meeting of Stockholders (see page i).Stockholders. This Proxy Statement and form of proxy are being sent or made available beginning March 11, 2019,2021, to stockholders who were record holders of AT&T’s common stock, $1.00 par value per share, at the close of business on February 27, 2019.March 2, 2021. These materials are also available at www.edocumentview.com/att.www.proxyvote.com. Each share entitles the registered holder to one vote. As of January 31, 2019,March 2, 2021, there were 7,290,236,9077,138,458,166 shares of AT&T common stock outstanding.entitled to vote at the meeting.
To constitute a quorum to conduct business at the meeting, stockholders representing at least 40% of the shares of common stock entitled to vote at the meeting must be present or represented by proxy.
Acronyms Used
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| ||
|
| |
|
| |
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
 |
This summary highlights information contained elsewhere in this Proxy Statement. Please read the entire Proxy Statement carefully before voting.
Attending the Annual Meeting of Stockholders
If you plan to attend the meeting in person, please bring the admission ticket (attached to the proxy card or the Notice of Internet Availability of Proxy Materials) to the Annual Meeting. If you do not have an admission ticket or if you hold your shares in the name of a bank, broker, or other institution, you may obtain admission to the meeting by presenting proof of your ownership of AT&T stock.
Agenda and Voting Recommendations
Item
| Description
| Board Recommendation
| Page
| |||
MANAGEMENT PROPOSALS: | ||||||
1
|
Election of Directors
|
FOR each nominee
|
5
| |||
2
|
Ratification of Ernst & Young LLP as auditors for 2019
|
FOR
|
13
| |||
3
|
Advisory Approval of Executive Compensation
|
FOR
|
14
| |||
STOCKHOLDER PROPOSAL:
| ||||||
4
|
Independent Chair
|
AGAINST
|
15
| |||
Corporate Governance Highlights
We are committed to good corporate governance, which promotes the long-term interests of stockholders, strengthens Board and management accountability, and helps build public trust in the Company. The Corporate Governance section beginning on page 16 describes our governance framework, which includes the following highlights:
|
|
| ||||||
|
|
| ||||||
|
| |||||||
|
|
|
 |
Current Directors*
| ||||
 |  |  | ||
Senior leadership/Ceo experience global business/ affairs finance/public accounting government/ regulatory industry/ technology investment/private equity
Name
| Age
|
Director Since
| Principal Occupation
| |||
Randall L. Stephenson
|
58
|
2005
|
Chairman, CEO, and President, AT&T Inc.
| |||
Samuel A. Di Piazza, Jr.
|
68
|
2015
|
Retired Global CEO, PricewaterhouseCoopers International Limited
| |||
Richard W. Fisher
|
69
|
2015
|
Former President and CEO, Federal Reserve Bank of Dallas
| |||
Scott T. Ford
|
56
|
2012
|
Member and CEO, Westrock Group, LLC
| |||
Glenn H. Hutchins
|
63
|
2014
|
Chairman, North Island andCo-Founder, Silver Lake
| |||
William E. Kennard
|
62
|
2014
|
Former United States Ambassador to the European Union and former Chairman of the Federal Communications Commission
| |||
Michael B. McCallister
|
66
|
2013
|
Retired Chairman and CEO, Humana Inc.
| |||
Beth E. Mooney
|
64
|
2013
|
Chairman and CEO, KeyCorp
| |||
Joyce M. Roché**
|
71
|
1998
|
Retired President and CEO, Girls Incorporated
| |||
Matthew K. Rose
|
59
|
2010
|
Chairman and CEO, Burlington Northern Santa Fe, LLC
| |||
Cynthia B. Taylor
|
57
|
2013
|
President and CEO, Oil States International, Inc.
| |||
Laura D’Andrea Tyson
|
71
|
1999
|
Distinguished Professor of the Graduate School, Haas School of Business, and Chair of the Blum Center for Developing Economies Board of Trustees at the University of California, Berkeley
| |||
Geoffrey Y. Yang
|
60
|
2016
|
Founding Partner and Managing Director, Redpoint Ventures
|
* All Directors are independent, except for Mr. Stephenson
** Retiring effective April 26, 2019
 |
Executive Compensation Highlights
2019 Program Enhancement
The Committee has approved the use ofNet-Debt-to-Adjusted-EBITDA as a new performance metric with a 20% weighting for determining 2019 short-term incentive awards (payable 2020) for all Executive Officers.
The narrative on pages 40-60 more fully describes how the Committee, with the input of its consultant, has designed and evolved our Executive Officer compensation and benefits program using the Committee’s guiding pay principles as the pillars of the program. We also outline how we establish pay targets and how actual Executive Officer pay is determined. Finally, we provide a description of other benefits.
|
2018 Corporate Short Term Awards
| Metric | Type of Metric | Metric Weight | Attainment | Payout% | ||||
2018 EPS | Quantitative | 60% | 92% | 81% | ||||
2018 FCF | Quantitative | 30% | 98% | 98% | ||||
Collaboration | Qualitative | 10% | n/a | 100% | ||||
| Weighted Average Payout | 88% |
|
Long Term Award – Performance Share Component
2016-2018 Performance Period
| Metric | Metric Weight | Attainment | Payout% | |||
3-Year ROIC | 75% | 7.56% | 101% | |||
3-Year Relative TSR | 25% | Level 6 | 0% | |||
Weighted Average Payout | 76% |
|
| |||||||
|
|
|
Each share of AT&T common stock represented at the Annual Meeting is entitled to one vote on each matter properly brought before the meeting. All matters, except as provided below, are determined by a majority of the votes cast, unless a greater number is required by law or our Certificate of Incorporation for the action proposed. A majority of votes cast means the number of votes cast “for” a matter exceeds the number of votes cast “against” such matter.
If the proxy is submitted and no voting instructions are given,provided, the person or persons designated on the card will vote the shares for the election of the Board of Directors’ nominees and in accordance with the recommendations of the Board of Directors on the other subjects listed on the proxy card and at their discretion on any other matter that may properly come before the meeting.
The Board of Directors is not aware of any matters that will be presented at the meeting for action on the part of stockholders other than those described in this Proxy Statement.
Election of Directors
In the election of Directors, each Director is elected by the vote of the majority of the votes cast with respect to that Director’s election. Under our Bylaws, if a
nominee for Director is not elected and the nominee is an existing Director standing forre-election (orincumbent Director), the Director must promptly tender his or her resignation to the Board, subject to the Board’s acceptance. The Corporate Governance and Nominating Committee will make a recommendation to the Board as to whether to accept or reject the tendered resignation or whether other action should be taken. The Board will act on the tendered resignation, taking into account the Corporate Governance and Nominating Committee’s recommendation, and publicly disclose (by a press release, a filing with the SEC, or other broadly disseminated means of communication) its decision regarding the tendered resignation and the rationale behind the decision within 90 days from the date of the certification of the election results. The Corporate Governance and Nominating Committee in making its recommendation and the Board of Directors in making its decision may each consider any factors or other information that they consider appropriate and relevant. Any Director who tenders his or her resignation as described above will not participate in
the recommendation of the Corporate Governance and Nominating Committee or the decision of the Board of Directors with respect to his or her resignation.
If the number of persons nominated for election as Directors as of ten days before the record date for determining stockholders entitled to notice of or to vote at such meeting shall exceed the number of Directors to be elected, then the Directors shall be elected by a plurality of the votes cast. Because no persons other than the incumbent Directors have been nominated for election at the 20192021 Annual Meeting, the majority vote provisions will apply.
Advisory Vote on Executive Compensation
The advisory vote on executive compensation isnon-binding, and the preference of the stockholders will be determined by the choice receiving the greatest number of votes.
All Other Matters to be Voted Upon
All other matters at the 20192021 Annual Meeting will be determined by a majority of the votes cast.
Abstentions
Except as noted above, shares represented by proxies marked “abstain” with respect to the proposals described on the proxy card and by proxies marked to deny discretionary authority on other matters will not
2021 PROXY | 1 | AT&T INC. |
GENERAL
be counted in determining the vote obtained on such matters.
BrokerNon-Votes
Under the rules of the NYSE,New York Stock Exchange (“NYSE”), on certain routine matters, brokers may, at their discretion, vote shares they hold in “street name” on behalf of beneficial owners who have not returned voting instructions to the brokers. On all other matters, brokers are prohibited from voting uninstructed shares. In instances where brokers are
prohibited from exercising discretionary authority(so-calledbrokernon-votes), the shares they hold are not included in the vote totals.
At the 20192021 Annual Meeting, brokers will be prohibited from exercising discretionary authority with respect to each of the matters submitted other than the ratification of the auditors. As a result, for each of the matters upon which the brokers are prohibited from voting, the brokernon-votes will have no effect on the results.
VOTING
Stockholders of Record
Stockholders whose shares are registered in their name on the Company records (also known as “stockholders of record”) will receive either a proxy card by which they may indicate their voting instructions or a notice on how they may obtain a proxy. Instead of submitting a signed proxy card, stockholders may submit their proxies by telephone or through the Internet. Telephone and Internet proxies must be used in conjunction with, and will be subject to, the information and terms contained on the form of proxy. Similar procedures may also be available to stockholders who hold their shares through a broker, nominee, fiduciary or other custodian.
All shares represented by proxies will be voted by one or more of the persons designated on the form of proxy in accordance with the stockholders’ directions. If the proxy card is signed and returned or the proxy is submitted by telephone or through the Internet without specific directions with respect to the matters to be acted upon, it will be treated as an instruction to vote such shares in accordance with the recommendations of the Board of Directors. Any stockholder giving a proxy may revoke it at any time before the proxy is voted at the meeting by giving written notice of revocation to the Secretary of AT&T, by submitting a later-dated proxy, or by virtually attending the meeting and voting electronically. The Chairman of the Board will announce the closing of the polls during the Annual Meeting. Proxies must be received before the closing of the polls in order to be counted.
Shares Held Through a Broker, Nominee, Fiduciary, or Other Custodian
Where the stockholder is not the record holder (“Beneficial Stockholder”), such as where the shares are held through a broker, nominee, fiduciary or other
custodian, the stockholder must provide voting instructions to the record holder of the shares in accordance with the record holder’s requirements in order to ensure the shares are properly voted. Beneficial Stockholders that attend the virtual meeting will be able to vote, change a prior vote, or ask questions.
Shares Held on Your Behalf under Company Benefit Plans or under The DirectSERVICE Investment Program
The proxy card, or a proxy submitted by telephone or through the Internet, will also serve as voting instructions to the plan administrator or trustee for any shares held on behalf of a participant 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. Subject to the trustee’s fiduciary obligations, shares in each of the above employee benefit plans for which instructions are not received will not be voted. 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.
In addition, the proxy card or a proxy submitted by telephone or through the Internet will constitute voting instructions to the plan administrator under The DirectSERVICE Investment Program sponsored and administered by Computershare Trust Company, N.A. (AT&T’s transfer agent) for shares held on behalf of plan participants.
If a stockholder participates in the plans listed above and/or maintains stockholder accounts under more than one name (including minor differences in registration, such as with or without a middle initial), the stockholder may receive more than one set of proxy materials. To ensure that all shares are voted, please submit proxies for all of the shares you own.
AT&T INC. | 2 | 2021 PROXY |
VOTING ITEMS - MANAGEMENT PROPOSALS |
|
Item No.ITEM NO. 1 - Election of Directors ELECTION OF DIRECTORS
Under our Bylaws, the Board of Directors has the authority to determine the size of the Board and to fill vacancies. Currently, the Board is comprised of 13 Directors, one of whom is an Executive Officer of AT&T. There are no vacancies on the Board. Under AT&T’s Corporate Governance Guidelines, a Director will not be nominated by the Board forre-election if the Director would be 72 or older at the time of the election.
Joyce M. RochéRichard W. Fisher will retire at the 20192021 Annual Meeting and will not stand for re-election. Accordingly, the Board has voted to reduce its size to 12 Directors effective immediately before the meeting.
The Board of Directors has nominated the 12 persons listed below for election as Directors toone-year terms of office that would expire at the 20202022 Annual Meeting. Each of the nominees is an incumbent Director of AT&T recommended forre-election by the Corporate Governance and Nominating Committee. In making these nominations, the Board reviewed the background of the nominees (each nominee’s biography can be found beginning on the next page) and determined to nominate each of the current
Directors forre-election, other than the retiring Director.
The Board believes that each nominee has valuable individual skills, attributes, and experiences that, taken together, provide us with the variety and depth of knowledge, judgment and vision necessary to provide effective oversight of a large and varied enterprise like AT&T. As indicated in the following biographies and under “Summary of Board Nominee Skills, Attributes and Experience” on page 4, the nominees have exhibited significant leadership skills and extensive experience in a variety of fields, including telecommunications, technology, public accounting, health care, education, economics, financial services, law, operations, logistics, government service, public policy, academic research, consulting, and nonprofit organizations, each of which the Board believes provides valuable knowledge about important elements of AT&T’s business. A number of the nominees also have extensive experience in international business and affairs, which the Board believes affords it an important global perspective in its deliberations.
If one or more of the nominees should at the time of the meeting be unavailable or unable to serve as a Director, the shares represented by the proxies will be voted to elect the remaining nominees and any substitute nominee or nominees designated by the Board. The Board knows of no reason why any of the nominees would be unavailable or unable to serve.
The Board recommends you vote “FOR” each of the following candidates
|
|
| ||
Name
| Age
|
Director Since
| Principal Occupation
| |||
Randall L. Stephenson
|
58
|
2005
|
Chairman, CEO, and President, AT&T Inc.
| |||
Samuel A. Di Piazza, Jr.
|
68
|
2015
|
Retired Global CEO, PricewaterhouseCoopers International Limited
| |||
Richard W. Fisher
|
69
|
2015
|
Former President and CEO, Federal Reserve Bank of Dallas
| |||
Scott T. Ford
|
56
|
2012
|
Member and CEO, Westrock Group, LLC
| |||
Glenn H. Hutchins
|
63
|
2014
|
Chairman, North Island andCo-Founder, Silver Lake
| |||
William E. Kennard
|
62
|
2014
|
Former United States Ambassador to the European Union and former Chairman of the Federal Communications Commission
| |||
Michael B. McCallister
|
66
|
2013
|
Retired Chairman and CEO, Humana Inc.
| |||
Beth E. Mooney
|
64
|
2013
|
Chairman and CEO, KeyCorp
| |||
Matthew K. Rose
|
59
|
2010
|
Chairman and CEO, Burlington Northern Santa Fe, LLC
| |||
Cynthia B. Taylor
|
57
|
2013
|
President and CEO, Oil States International, Inc.
| |||
Laura D’Andrea Tyson
|
71
|
1999
|
Distinguished Professor of the Graduate School, Haas School of Business, and Chair of the Blum Center for Developing Economies Board of Trustees at the University of California, Berkeley
| |||
Geoffrey Y. Yang
|
60
|
2016
|
Founding Partner and Managing Director, Redpoint Ventures
| |||
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. Stephenson.Stankey.
|
VOTING ITEMS
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 |
|
Mr. | ||||||||||||||||
|
Mr. Kennard brings expertise in the global telecommunications and media industries including knowledge of the complex regulatory and policy landscape for communications, consumer perspective, and an understanding of the technological and strategic shifts in the industries. He also has experience in international trade and global investment.
| |||||||||||||||
| ||||||||||||||||
|
|  | ||||||||||||||
|
|  |
| |||||||||||||
| Senior |
| Investment/ |
| Global | |||||||||
| Government/ |
| Telecom |
| Media & | |||||||||
Other Public Company Directorships • Ford Motor Company • MetLife, Inc. • Duke Energy Corporation (2014-2021)1
Committees • Corporate Governance and Nominating • Executive (Chair) • Public Policy and Corporate Reputation 1 Not standing for re-election at Duke 2021 annual meeting. |
 | —
DI PIAZZA, JR. Age: 70 Director since 2015 Retired Global Chief Executive Officer of PricewaterhouseCoopers International Limited
|
| ||
|
Mr. Di Piazza served as Global Chief Executive Officer of PricewaterhouseCoopers International Limited (an international professional services firm) from 2002 until his retirement in 2009. Mr. Di Piazza began his36-year career with PricewaterhouseCoopers (PwC, formerly Coopers & Lybrand) in 1973 and was named Partner in 1979 and Senior Partner in 2000. From 1979 to 2002, Mr. Di Piazza held various regional leadership positions with PwC. After his retirement from PwC, Mr. Di Piazza joined Citigroup where he served as Vice Chairman of the Global Corporate and Investment Bank from 2011 until 2014. Since 2010, Mr. Di Piazza has served as the Chairman of the Board of Trustees of The Mayo Clinic. He received his B.S. in accounting from the University of Alabama and earned his M.S. in tax accounting from the University of Houston. He served as a Director of DIRECTV from 2010 until the company was acquired by AT&T Inc. in 2015.
| ||||||||||||||||
|
| |||||||||||||||
Mr. Di
| ||||||||||||||||
|
| | ||||||||||||||
|
|
|
| |||||||||||||
|
VOTING ITEMS
|
| |||||||||||
|
| |||||||||||
|
| |||||||||||
| ||||||||||||
|
|  |
| |||||||||
|
|  |
| |||||||||
| Senior |
| Investment/ |
| Human Capital | |||||||||
| Government/ |
| Media & | |||||||||||
| Global Perspective |
| Strategic Planning/M&A | |||||||||||
Other Public Company Directorships • Jones Lang LaSalle Incorporated • ProAssurance Corporation • Regions Financial Corporation Committees • Audit (Chair) • Executive • Public Policy and Corporate Reputation | ||||
2021 PROXY | 5 | AT&T INC. |
VOTING ITEMS - MANAGEMENT PROPOSALS
| —
Age: 58 Director since 2012 Member and Chief Executive Officer of Westrock Group, LLC
|
| ||
|
Mr. Ford founded Westrock Group, LLC (a private investment firm in Little Rock, Arkansas) in 2013, where he has served as Member and Chief Executive Officer since its inception. Westrock Group operates Westrock Coffee Company, LLC (a fully integrated coffee company), which Mr. Ford founded in 2009, and where he has served as Chief Executive Officer since 2009. Westrock Group also operates Westrock Asset Management, LLC (a global alternative investment firm), which Mr. Ford founded in 2014, and where he has served as Chief Executive Officer and Chief Investment Officer since 2014. Mr. Ford previously served as President and Chief Executive Officer of Alltel Corporation (a provider of wireless voice and data communications services) from 2002 to 2009 and served as an executive member of Alltel Corporation’s board of directors from 1996 to 2009. He also served as Alltel Corporation’s President and Chief Operating Officer from 1998 to 2002. Mr. Ford led Alltel through several major business transformations, culminating with the sale of the company to Verizon Wireless in 2009. Mr. Ford received his B.S. in finance from the University of Arkansas, Fayetteville.
| ||||||||||||
|
Mr. Ford brings extensive experience in the telecommunications industry through his leadership of a large, publicly traded wireless and wireline communications company. He has experience managing complex business operations in various regulatory environments internationally, and has led several major business transformations, including the spin-off of Windstream and Alltel.
| |||||||||||
| ||||||||||||
 | | |||||||||||
|  |
| ||||||||||
|
VOTING ITEMS
| Senior |
| Investment/ |
| Strategic Planning/M&A | |||||||||
| Consumer |
| Global |
| Telecom | |||||||||
| Government/ |
| Human Capital Management | |||||||||||
Past Public Company Directorships • Bear State Financial, Inc. (2011-2018)
• Corporate Development and Finance (Chair) • Executive • Human Resources | ||||
 | —
Age: 65 Director since 2014 Chairman, North Island and Co-Founder, Silver Lake
|
| ||
|
Mr. Hutchins is Chairman of North Island
| ||||||||||||
|
| |||||||||||
| ||||||||||||
| |
| ||||||||||
|
| |
| |||||||||
|
|
| ||||||||||||
|
| |||||||||||||
|
| |||||||||||||
| ||||||||||||||
|
| |
| |||||||||||
|
|  |
| |||||||||||
| Government/ |
| Human Capital |
| Technology/ Innovation | |||||||||
Other Public Company Directorships • Virtu Financial, Inc. Past Public Company Directorships • Nasdaq, Inc. (2005-2017) Committees • Corporate Development and Finance • Executive • Public Policy and Corporate Reputation (Chair) | ||||
AT&T INC. | 6 | 2021 PROXY |
VOTING ITEMS - MANAGEMENT PROPOSALS |
|
VOTING ITEMS
| —
Age: 66 Director since 2019 Chair of Leading Women Defined |
|
Ms. Lee is Chair of Leading Women Defined Foundation (a nonprofit education and advocacy organization in Los Angeles, California), which she founded in 2009. She has served in this capacity since June 2018. Ms. Lee served as Chairman and Chief Executive Officer of BET Networks (a global media and entertainment subsidiary of Viacom, Inc., headquartered in New York, New York) from 2006 until her retirement in 2018. Ms. Lee joined BET Networks in 1986 and served in several leadership roles, including President and Chief Executive Officer (2005-2006), President and Chief Operating Officer (1995-2005), and Executive Vice President and General Counsel (1986-1995). Ms. Lee holds a B.A. in political science from Brown University, a master’s in public policy from Harvard University John F. Kennedy School of Government, and a J.D. from Harvard Law School. Skills and Qualifications Ms. Lee has extensive leadership in the media and entertainment industry. She brings strong operational and transformational experience through the development and execution of innovative strategic plans. | ||||
| Senior |
| Human Capital |
| Strategic | |||||||||
| Consumer |
| Media & | |||||||||||
Other Public Company Directorships • Burberry Group plc • Marriott International, Inc. • The Procter & Gamble Company Past Public Company Directorships • Twitter, Inc. (2016-2019) • WGL Holdings, Inc. (2000-2018) Committees • Corporate Governance and Nominating • Public Policy and Corporate Reputation | ||||
| —
Age: 64 Director since 2019 Managing Partner of Crosspoint Capital Partners, L.P.
|
|
Mr. Luczo is a Managing Partner of Crosspoint Capital Partners, L.P. (a private equity investment firm focused on the cybersecurity and privacy sectors located in Menlo Park, California) and has served in this capacity since Skills and Qualifications Mr. Luczo brings deep experience in technology, business development, strategic planning, and operations through his leadership at Seagate, a global technology company. He has significant experience in financial matters and executing strategic cost initiatives and transactions. | ||||
| Senior |
| Investment/ |
| Strategic | |||||||||
| Human Capital |
| Global |
| Technology/ | |||||||||
Other Public Company Directorships • Morgan Stanley • Seagate Technology plc Committees • Audit • Corporate Development and Finance | ||||
| 7 | AT&T INC. |
VOTING ITEMS - MANAGEMENT PROPOSALS
 | —
Age: 68 Director since 2013 Retired Chairman of the Board and Chief Executive Officer of Humana Inc. |
Mr. McCallister served as Chairman of Humana Inc. (a health care company in Louisville, Kentucky) from 2010 to 2013, and as a member of Humana’s Board of Directors beginning in 2000. He also served as Humana’s Chief Executive Officer from 2000 until his retirement in 2012. During Mr. McCallister’s tenure, he led Humana through significant expansion and growth, nearly quadrupling its annual revenues between 2000 and 2012, and led the company to become a FORTUNE 100 company. Mr. McCallister received his B.S. in accounting from Louisiana Tech University and earned his M.B.A. from Pepperdine University.
| ||||||||||||
|
| |||||||||||
Mr.
| ||||||||||||
| |
| ||||||||||
|
|  |
| |||||||||
| Senior |
| Government/ |
| Strategic | |||||||||
| Consumer |
| Human Capital | |||||||||||
Other Public Company Directorships • Fifth Third Bancorp • Zoetis Inc.
• Audit • Human Resources | ||||
 | —
Age: 66 Director since 2013 Retired Chairman and Chief Executive Officer of KeyCorp
|
| ||
|
Ms. Mooney
| ||||||||||||
|
| |||||||||||
Ms.
| ||||||||||||
|
| |
| |||||||||
|
| |
| |||||||||
|
VOTING ITEMS
| Senior |
| Investment/ |
| Strategic | |||||||||
| Consumer |
| Government/ |
| Human Capital | |||||||||
Other Public Company Directorships • Accenture plc • Ford Motor Company Past Public Company Directorships • KeyCorp (2011-2020) Committees • Corporate Development and Finance • Executive • Human Resources (Chair) | ||||
AT&T INC. | 8 | 2021 PROXY |
VOTING ITEMS - MANAGEMENT PROPOSALS |
|
| —
Age: 61 Director since 2010 Retired Chairman and Chief Executive Officer of Burlington Northern Santa Fe, LLC
|
|
| ||||||||||||
Mr. Rose Skills and Qualifications Mr. Rose has | ||||||||||||
|
| |||||||||||
| ||||||||||||
| Senior |
| Human Capital |
| Strategic | |||||||||
| Government/ |
| Global
| |||||||||||
| ||||||||||||||
• Fluor Corporation Past Public Company Directorships • BNSF Railway Company (2002-2019) • Burlington Northern Santa Fe, LLC (2000-2019) Committees • Corporate Governance and Nominating (Chair) • Executive | |
| ||||||
| —
Age: 58 Director since June 2020 Chief Executive Officer and President,
|
|
Mr. Stankey is Chief Executive Officer and President of AT&T Inc. and has served in this capacity since July 1, 2020. Prior to that, he served as President and Chief Operating Officer from October 2019 through June 2020. From June 2018 through April 2020, Mr. Stankey also served as CEO of Warner Media, LLC. During his tenure with the Company, Mr. Stankey has held a variety of other leadership positions, including serving as CEO-AT&T Entertainment Group (2015 to 2017); Chief Strategy Officer (2012 to 2015); President and CEO of AT&T Business Solutions (2010 to 2011); President and CEO of AT&T Operations, Inc. (2008 to 2010); Group President-Telecom Operations (2007 to 2008); Chief Technology Officer (2004 to 2006); and Chief Information Officer (2003 to 2004). Mr. Stankey began his career with the Company in 1985. He holds a bachelor’s degree in finance from Loyola Marymount University and an M.B.A. from the University of California, Los Angeles. Skills and Qualifications Mr. Stankey has 35 years of experience spanning nearly every area of AT&T’s business, which has provided him with intimate knowledge of our Company, values and culture. He has served in a variety of roles including CEO of WarnerMedia; CEO of AT&T Entertainment Group; Chief Strategy Officer; Chief Technology Officer; CEO of AT&T Operations; and CEO of AT&T Business Solutions. | ||||
| Senior
|
| Consumer
|
| Strategic Planning/M&A | |||||||||
| Global |
| Investment/ |
| Telecom | |||||||||
| Government/ Regulatory |
| Media & |
| Human Capital | |||||||||
| Technology/ Innovation | |||||||||||||
Past Public Company Directorships • United Parcel Service, Inc. (2014-2020) | ||||
2021 PROXY | 9 | AT&T INC. |
VOTING ITEMS - MANAGEMENT PROPOSALS
| —
Age: 59 Director since 2013 President and Chief Executive Officer of Oil States International, Inc.
|
| ||
|
Ms. Taylor is President, Chief Executive Officer and a Director of Oil States International, Inc. (a diversified solutions provider for the oil and gas industry in Houston, Texas) and has served in this capacity since 2007. She previously served as Oil States International, Inc.’s President and Chief Operating Officer from 2006 to 2007 and as its Senior Vice President-Chief Financial Officer from 2000 to 2006. Ms. Taylor was Chief Financial Officer of L.E. Simmons & Associates, Inc. from 1999 to 2000 and Vice President-Controller of Cliffs Drilling Company from 1992 to 1999, and prior to that, held various management positions with Ernst & Young LLP, a public accounting firm. She has been a Director of the Federal Reserve Bank of Dallas since January 2020 and previously served as a Director of the Federal Reserve Bank’s Houston Branch from 2018 to 2019. She received her B.B.A. in accounting from Texas A&M University and is a Certified Public Accountant.
| ||||||||||||
|
| |||||||||||
Ms.
| ||||||||||||
|
| |
| |||||||||
|
|  |
| |||||||||
|
VOTING ITEMS
|
|
| ||||||||||||
|
| |||||||||||||
| Strategic
| |||||||||||||
| ||||||||||||||
| |
| ||||||||||||
|
|
|
| |||||||||||
| Global |
| Human Capital | |||||||||||
| ||||
VOTING ITEMS
Other Public Company Directorships
• Oil States International, Inc.
Past Public Company Directorships
• Tidewater Inc. (2008-2017)
Committees
• Audit
• Corporate Governance and Nominating
| —
Age: 62 Director since 2016 Founding Partner and Managing Director of Redpoint Ventures |
|
| |||||||||||
| Mr. Yang is a founding partner and Managing Director of Redpoint Ventures (a global private equity and venture capital firm based in
| |||||||||||
|
| |||||||||||
Mr. | ||||||||||||
| |
| ||||||||||
|
|  |
| |||||||||
| Senior |
| Investment/ |
| Strategic | |||||||||
| Global |
| Media & |
| Technology/ | |||||||||
Other Public Company Directorships • Franklin Resources, Inc. Committees • Corporate Development and Finance • Human Resources | ||||
AT&T INC. | 10 | 2021 PROXY |
VOTING ITEMS - MANAGEMENT PROPOSALS |
|
Item No.ITEM NO. 2 - Ratification of the Appointment of Ernst RATIFICATION OF THE APPOINTMENT OF ERNST & YoungYOUNG LLP as Independent AuditorsAS INDEPENDENT AUDITORS
This proposal would ratify the Audit Committee’s appointment of Ernst & Young LLP (EY)to serve as independent auditors of AT&T for the fiscal year ending December 31, 2019.2021. The Audit Committee’s decision tore-appoint our independent auditor was based on the following considerations:
quality and performance of the lead audit partner and the overall engagement team,
knowledge of the telecommunications, media and enternainment,entertainment, and technology industries and company operations,
global capabilities and technical expertise,
auditor independence and objectivity, and
the potential impact of rotating to another independent audit firm.
The Audit Committee’s oversight of EY includes regular private sessions with EY, discussions about audit scope and business imperatives, and—as described above—a comprehensive annual evaluation to determine whether tore-engage EY. Considerations concerning auditor independence include:
Limits onnon-audit services: The Audit Committee preapproves audit and permissiblenon-audit services provided by EY in accordance with itsAT&T’s pre-approval policy.
Audit partner rotation:EY rotates the lead audit partner and other partners on the engagement consistent with independence requirements. The Audit Committee oversees the selection of each new lead audit partner.
EY’s internal independence process: EY conducts periodic internal reviews of its audit and other work and assesses the adequacy of partners and other personnel working on the Company’s account.
Strong regulatory framework: EY, as an independent registered public accounting firm, is subject to PCAOB inspections, “Big 4” peer reviews and PCAOB and SEC oversight.
Based on these considerations, the Audit Committee believes that the selection of Ernst & Young LLP is in the best interest of the company and its stockholders. Therefore, the Audit Committee recommends that stockholders ratify the appointment of Ernst & Young LLP. If stockholders do not ratify the appointment, the Committee will reconsider its decision. One or more members of Ernst & Young LLP are expected to be present at the Annual Meeting, will be able to make a statement if they so desire, and will be available to respond to appropriate questions.
The Board recommends you vote FOR this proposal
2021 PROXY |  11 | | ||||||
AT&T INC.
|
VOTING ITEMS - MANAGEMENT PROPOSALS
Item No.ITEM NO. 3 - Advisory Approval of Executive Compensation ADVISORY APPROVAL OF EXECUTIVE COMPENSATION
This proposal would approve the compensation of Executive Officers as disclosed in the Compensation Discussion and Analysis, the compensation tables, and the accompanying narrative disclosures (see pages 4034 through 75)73). These sections describe our executive compensation program.
The Human Resources Committee is responsible for executive compensation and works to structure a balanced program that addresses the dynamic, global marketplace in which AT&T competes for talent. The compensation structure includespay-for-performance and equity-based incentive programs and seeks to reward executives for attaining performance goals.
AT&T submits this proposal to stockholders on an annual basis. While this is anon-binding, advisory vote, the Committee intends to take into account the outcome of the vote when considering future executive compensation arrangements. AT&T is providing this vote as required pursuant to Section 14A of the Securities Exchange Act.
GUIDING PAY PRINCIPLES
Alignment with Stockholders
Utilize compensation elements and set performance targets that closely align executives’ interests with those of stockholders. For example, approximately 67% of 2020 target pay for our currently active NEOs was tied to common stock price performance. In addition, we have executive common stock ownership guidelines and common stock holding requirements, as described on page 58. Each NEO is in compliance with ATT’s common stock ownership guidelines.
Competitive and Market Based Evaluate all components of our compensation and benefits program in light of appropriate peer company practices to ensure we are able to attract and retain world-class talent with the leadership abilities and experience necessary to develop and execute business strategies, obtain superior results, and build long-term stockholder value in an organization as large and complex as AT&T. Pay for Performance Tie a significant portion of compensation to the achievement of predetermined goals and recognize individual accomplishments that contribute to our success. For example, in 2020, 89% of Mr. Stankey’s CEO target compensation (and an average of 88% for other currently active NEOs) was variable and tied to short- and long-term performance incentives, including common stock price performance. Balanced Short- and Long-Term Focus Structure the compensation program to provide an appropriate balance between the achievement of short-and long-term performance objectives, with a clear emphasis on managing the sustainability of the business and mitigating risk. Principled Program Structure our programs so that it aligns with both corporate governance best practices and our strategic objectives, while remaining easy to explain and communicate.
The Board recommends you vote FOR this proposal
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
AT&T INC. |
12 | | ||||||
2021 PROXY | ||||||||
VOTING ITEMS - STOCKHOLDER PROPOSAL |
|
VOTING ITEMS
STOCKHOLDER PROPOSAL
A stockholder has advised the Company that hesuch stockholder intends to introduce at the 20192021 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 Senior Vice President and 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&T’s 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 of Directors believes that AT&T and its stockholders are best served by having Mr. Stephensonfurther action on this proposal does not serve as both Chairman and CEO.
At this juncture in our Company’s history, your Board believes that the Company can more effectively execute its strategy and business plans to maximize stockholder value if the Chairmaninterests of the stockholders.
The Board is also responsible for the Company’s operations on a daily basis. At the same time, the Board believes that, as a matter of sound corporate governance, it is important to pair its Chairman with an independent Lead Director who is vested with substantial responsibility for all Board matters, including its oversight of management. To that end, the Board has again appointed an independent Lead Director (currently, Matthew K. Rose) who presides over regular executive sessions of the non-management members of the Board. Members of management do not attend these sessions. The Lead Director is also responsible for approving the agenda for each Board meeting, presiding at Board meetings at which the Chairman is not present, and acting as the principal liaison between the Chairman and CEO and the nonmanagement Directors. For a complete description of the Lead Director’s responsibilities, please see page 18.
As CEO, Mr. Stephenson is the only Director that is also a member of management. As a result, each committee of the Board other than the Executive Committee is made up solely of independent Directors. The appointment of an independent Lead Director and the use of executive sessions of the Board, along with the Board’s strong committee system and substantial majority of independent Directors, allow the Board to maintain effective oversight of management.
For these reasons, the Board does not support an inflexible policy that the CEO and Chairman roles should never be held by the same person. Instead, the Board has established what it believes to be an appropriate balance for AT&T based on the best interests of AT&T’s stockholders and recommends ayou vote againstAGAINST this proposal.
AT&T INC. | 14 | 2021 PROXY |
|
|
Table of Contents
| |||||||
|
16 |
|
THE ROLEOFTHE BOARD |
23 |
ETHICSAND COMPLIANCE PROGRAM
| |||
|
17 |
|
RISK OVERSIGHT |
24 |
ANNUAL MULTI-STEP BOARD EVALUATION | |||
|
18 |
|
BOARD STRUCTURE |
25 |
COMMUNICATINGWITH YOUR BOARD | |||
|
19 |
|
DIRECTOR NOMINATION PROCESS |
25 |
AVAILABILITYOF CORPORATE GOVERNANCE DOCUMENTS | |||
|
19 |
|
BOARD COMPOSITIONAND REFRESHMENT |
25 |
HOWTO SUBMITA STOCKHOLDER PROPOSAL | |||
|
20 |
|
DIRECTOR INDEPENDENCE |
26 |
RELATED PERSON TRANSACTIONS | |||
|
21 |
|
BOARD COMMITTEES |
26 |
DIRECTOR COMPENSATION | |||
|
23 |
|
PUBLIC POLICY ENGAGEMENT
|
29 |
COMMON STOCK OWNERSHIP | |||
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.
| ||||||||
|
|
| ||||||
|
|
| ||||||
|
|
| ||||||
|
|
| ||||||
The Role of the Board
The Board of Directors is responsible for oversight of management and strategic direction and for establishing broad corporate policies. In addition, the Board of Directors and various committees of the Board regularly meet to review and discuss operational and financial reports presented by the Chairman of the Board and Chief Executive Officer and other members of management as well as reports by experts and other advisors. Corporate review sessions are also offered to Directors to give them more detailed views of our businesses, such as corporate opportunities, technology, and operations.
The Board oversees succession planning and talent development for senior executive positions. The
Human Resources Committee has primary responsibility for developing succession plans for the CEO position.
Members of the Board are expected to attend Board meetings in person, unless the meeting is held by teleconference.means of remote communication. The Board held 10nine meetings in 2018.2020. Directors are also expected to attend the Annual Meeting of Stockholders. All Directors were present at the 20182020 Annual Meeting. In 2018,2020, all Directors attended at least 75% of the total number of meetings of the Board and of the Committees on which each served.
|
CORPORATE GOVERNANCE
Board’s Role in Risk Oversight
The Board is responsible for overseeing our policies and procedures for assessing and managing risk. Management is responsible for assessing and managing our exposures to risk on aday-to-day basis, including the creation of appropriate risk management policies and procedures. Management also is responsible for informing the Board of our most significant risks and our plans for managing those risks. Annually, the Board reviews the Company’s strategic business plans, which includes evaluating the competitive, technological, economic and other risks associated with these plans.
In addition, under its charter, the Audit Committee reviews and discusses with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies, as well as overseeing our compliance program, compliance with legal and regulatory requirements and associated risks.policies. This includes, among other matters, evaluating risk in the context of financial policies, counterparty and credit
risk, and the appropriate mitigation of risk, including through the use of insurance where appropriate. MembersThe Audit Committee also oversees our compliance program and our compliance with legal and regulatory requirements. The internal audit
organization provides the Committee with an assessment of the Company’s risks and conducts assurance reviews of the Company’s internal controls. The finance, compliance and internal audit and compliance organizations are responsible for managing risk in their areas and reporting regularlyeach provide regular updates to the Audit Committee.
The Company’s senior internal auditing executive and Chief Compliance Officer each meet annually in executive session with the Audit Committee. The senior internal auditing executive and Chief Compliance Officer review with the Audit Committee each year’s annual internal audit and compliance risk assessment, which is focused on significant financial, operating, regulatory and legal matters. The Audit Committee also receives regular reports on completed internal audits of these significant risk areas.
In addition, the Audit Committee, as well as the Board of Directors, receive reports from responsible officers onwith responsibilities for cybersecurity. The AT&T Chief Security Office establishes policy and requirements for the security of AT&T’s computing and networking environments.
| ||||||||
| 15 | AT&T INC.
| ||||||
|
| |||||||
|
CORPORATE GOVERNANCE
Ethics and Compliance Program
The Board has adopted a written Code of Ethics applicable to Directors, officers, and employees that outlines our corporate values and standards of integrity and behavior and is designed to foster a culture of integrity, drive compliance with legal and regulatory requirements and protect and promote the reputation of our Company. The full text of the Code of Ethics is posted on our website at non-managementwww.att.com.
Our Chief Compliance Officer has responsibility to implement and maintain an effective ethics and compliance program. He also has responsibility to provide updates on our ethics and compliance programs to the Audit Committee.
The Board of Directors determined that upon the retirement of Mr. Stephenson as Executive Chairman in January 2021, an independent member of the Board would become Chairman and the position of Lead Director would be terminated. Accordingly, the Board elected William E. Kennard to become the first independent Chairman of the Board. Mr. Kennard has served as a Director of AT&T since 2014. In addition, Mr. Kennard presides over meetings of the independent members of the Board, of Directorswho meet in
executive session (without management Directors or management personnel present) at least four times per year. The Lead Director, who is appointed for aone-year term, presides over these sessions. Matthew K. Rose currently serves as Lead Director; his term is scheduled to expire January 31, 2020.
ChairmanEach of the Board and CEO: Randall L. Stephenson
Lead Director: Matthew K. Rose
Audit, Human Resources, Corporate Governance and Nominating, Corporate Development and Finance, and Public Policy and Corporate Reputation Committees, and Executive Committee are composed entirely of independent DirectorsDirectors.
|
Chairman of the Board
Presides over meetings of the Board
Presides over meetings of stockholders
PreparesApproves the agenda for each Board meeting
PreparesApproves the agenda for each stockholder meeting
Chief Executive Officer
In general charge of the affairs of the Company, subject to the overall direction and supervision of the Board and its committees
Consults and advises the Board and its committees on the business and affairs of the Company
Performs such other duties as may be assigned by the Board
Lead Independent Director
|
|
|
|
|
|
|
|
|
|
In addition, the Lead Director may:
|
|
Randall Stephenson currently serves as both Chairman of the Board and Chief Executive Officer. The Board believes that having Mr. Stephenson serve in both capacities is in the best interests of AT&T and its stockholders because it enhances communication between the Board and management and allows Mr. Stephenson to more effectively execute the Company’s strategic initiatives and business plans and confront its challenges. The Board believes that the appointment of a strong independent Lead Director and the use of regular executive sessions of thenon-management Directors, along with the Board’s strong committee system and substantial majority of independent Directors, allow it to maintain effective oversight of management.
|
CORPORATE GOVERNANCE
Nomination Process
DIRECTOR NOMINATION PROCESS
The Board of Directors believes that the Company benefits from having experienced Directors who bring a wide range of skills and backgrounds to the Boardroom. The Corporate Governance and Nominating Committee is responsible for identifying eligible candidates based on our Corporate Governance Guidelines. The Committee considersGuidelines, which includes the consideration of a candidate’s:
general understanding of elements relevant to the success of a large publicly traded company in the current business environment;
understanding of our business;
educational and professional background;
judgment, competence, anticipated participation in Board activities;
experience, geographic location, and special talents or personal attributes.attributes
AlthoughIn addition, the Committee does not have a formal diversity policy, it believes that diversity is an important factor in determining the composition of the Board, and the Committee considers it in making nominee recommendations.
Stockholders who wish to suggest qualified candidates should write to the Senior Vice President—AssistantPresident, Deputy General Counsel and Secretary, AT&T Inc., 208 S. Akard Street, Suite 2954, Dallas, Texas 75202, stating in detail the qualifications of the persons proposed for consideration by the Committee.
BOARD COMPOSITIONAND REFRESHMENT*
Blend of Experiences and
Qualifications of Our Directors
Blend of experiences and Qualifications Senior leadership/Ceo experience global business/ affairs finance/public accounting government/ regulatory industry/ technology investment/private equity Other: law, marketing, labor, operations and logistics, healthcare
Director Tenure and Age
Diversity
*Includes Joyce Roché, who is not standing forre-election at the 2019 Annual Meeting.
AT&T INC. | 16 | 2021 PROXY |
CORPORATE GOVERNANCE |
|
Director Independence
Our Corporate Governance Guidelines require that a substantial majority of our Board of Directors consist of independent Directors. In addition, the NYSE Listing Standards require a majority of the Board and every member of the Audit Committee, Human Resources Committee, and Corporate Governance and Nominating Committee to be independent. For a Director to be “independent” under the NYSE standards, the Board must affirmatively determine that the Director has no material relationship with AT&T, either directly or as a partner, stockholder or officer of an organization that has a relationship with AT&T, other than in his or her capacity as a Director of AT&T. In addition, the Director must meet certain independence standards specified by the NYSE as well as the additional standards referenced in our Corporate Governance Guidelines (found at www.att.com)www.att.com).
Using these standards for determining the independence of its members, the Board has determined that the following Directors are independent:
Samuel A. Di Piazza, Jr. |
| |
Richard W. Fisher |
| |
Scott T. Ford |
| |
Glenn H. Hutchins |
| |
William E. Kennard |
| |
| Geoffrey Y. Yang |
In addition, each member of the Audit Committee, the Corporate Governance and Nominating Committee, and the Human Resources Committee is independent.
In determining the independence of the Directors, the Board considered the following commercial relationships between AT&T and companies at which our Directors serve as Executive Officers: payments byOfficers or employees. AT&T for the use of rights of way and facilities at Burlington Northern Santa Fe, LLC, where Mr. Rose serves as CEO; and interest paid from participationparticipated in a structured finance program through KeyCorp, where Ms. Mooney serves served
as CEO.CEO until May 2020. In addition, each of the foregoing companiesKeyCorp as well as each of the entities where Mr. Ford, Ms. Taylor, and Mr. Yang serve as executive officers purchased communications services from subsidiaries of AT&T. In each case for the year 2018:2020:
The relevant products and services were provided by AT&T or to AT&T on terms determined on anarm’s-length basis that were comparable to the terms provided to or by similarly situated customers or suppliers;
The transactions were made in the ordinary course of business of each company; and
The total payments by AT&T to the Director’s company (for rightsinterest in the case of way or for interest)KeyCorp) or to AT&T by the Director’s company (for communications services) were each substantially less than 1% of the consolidated gross revenues of each of AT&T and the other company. This level is significantly below the maximum amount permitted under the NYSE listing standards for director independence (i.e., 2% of consolidated gross revenues).
In addition, Mr. Kennard, through a private equity investment management company, invests in certain companies that engage in commercial transactions with AT&T. Mr. Kennard is a partner in Astra Capital Management, LLC, holding a 4.4% interest. Astra Capital is the general partner of a limited partnership that has a controlling interest in Communications Technology Services LLC (CTS), Logix Communications L.P. (Logix), and DartPoints Operating Company LLC (DartPoints) each of which has engaged in transactions with AT&T. Noting the limited ownership interest of Mr. Kennard in Astra Capital and that he is not an employee or Executive Officer of Astra Capital, CTS, Logix or DartPoints, together with the fact that AT&T’s revenues from and spending with each of CTS, Logix and DartPoints are not material to AT&T, the Board determined that Mr. Kennard is independent.
2021 PROXY | 17 | AT&T INC. |
CORPORATE GOVERNANCE
BOARD COMMITTEES
From time to time the Board establishes permanent 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.www.att.com.
| ||||
Meetings in 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 auditor’s 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. | |||
| ||||
Meetings in Matthew K. Rose, Chair Richard W. William E. Kennard
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&T’s 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. | |||
* Retiring effective April 26, 2019
| ||||
Meetings in 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. | |||
* Retiring effective April 26, 2019
|
CORPORATE GOVERNANCE
AT&T INC. |
| 2021 PROXY |
CORPORATE GOVERNANCE |
|
| CORPORATE DEVELOPMENT AND FINANCE COMMITTEE | ||||
Meetings in Scott T. Ford, Chair Richard W. Glenn H. Hutchins Stephen J. Luczo Beth E. Mooney Geoffrey Y. Yang
Consists of |
• 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.
| |||
| ||||
Meetings in Glenn H. Hutchins, Chair
Samuel A. Di Piazza, Jr.
William E. Kennard
Debra L. Lee
Consists of | • 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 Company’s 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. | |||
| ||||
William E. Kennard, Chair
Samuel A. Di Piazza, Jr. Scott T. Ford
Beth E. Mooney Matthew K. Rose
Consists of the Chairman of the Board and the standing |
• Established to assist the Board by acting upon urgent matters when the Board is not available to meet. No meetings were held in
• 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 |
* Retiring effective April 26, 2019
2021 PROXY | 19 | AT&T INC. |
ACTIVE ONGOING STOCKHOLDER ENGAGEMENT
CORPORATE GOVERNANCE
AT&T has a long tradition of engaging with our stockholders. We believe it is important for our governance process to have meaningful engagement with our stockholders and understand their perspectives on corporate governance, executive compensation, and other issues that are important to them. The Company meets with institutional investors throughout the year, both in person and by
teleconference. We share the feedback from this
engagement with the Board and incorporate it into our policies and practices. The Company also provides online reports designed to increase transparency on issues of importance to our investors, including sustainability, diversity, political contributions, transparency, and the Proxy Statement and Annual Report.
|
CORPORATE GOVERNANCE
Public Policy Engagement
We participate in public policy dialogues around the world related to our industry and business priorities, our more than 268,000approximately 231,000 employees, our stockholders, and the communities we serve.
In the U.S., the Company and our affiliated political action committees complyare committed to compliance with applicable laws and other requirements regarding contributions to: political organizations, candidates for federal, state and local public office, ballot measure campaigns, political action committees, and trade associations. We engage with organizations and individuals to make our views clear and uphold our commitment to help support the communities in which we operate. We base our U.S. political
contributions on many considerations, supporting candidates who take reasonable positions on policies that promote economic growth as well as affect our long-term business objectives.
The Public Policy and Corporate Reputation Committee of our Board of Directors reviews our advocacy efforts, including political contributions. Additional information about our public policy engagement efforts, including our Political Contributions Policy and a report of U.S. political contributions from our Company and from AT&T’s Employee Political Action Committees, can be viewed on our website at www.att.com.
Find more online.
Our Political Contributions Policy and the AT&T Political Engagement Report are available on our website at www.att.com.
ETHICSAND COMPLIANCE PROGRAMCommunicating with Your Board
The Board has adopted a written Code of Ethics applicable to Directors, officers, and employees that outlines our corporate values and standards of integrity and behavior and is designed to foster a culture of integrity, drive compliance with legal and regulatory requirements and protect and promoteInterested persons may contact the reputation of our Company. The full textChairman of the CodeBoard or any of Ethics is posted on our website at www.att.com.
Our Chief Compliance Officer has responsibility to implement and maintain an effective ethics and compliance program. He also has responsibility to provide updates on our ethics and compliance programs to the Audit Committee.
Find more online.
Our Codenon-management Directors by sending written comments through the Office of Ethics is available on our website at www.att.com.the Secretary of AT&T Inc., 208 S. Akard Street, Suite 2954, Dallas, Texas 75202.
AT&T INC. | 20 | 2021 PROXY |
CORPORATE GOVERNANCE |
|
Annual Multi-Step Board Evaluations
ANNUAL MULTI-STEP BOARD EVALUATIONS
Each year, the Corporate Governance and Nominating Committee and the Lead DirectorChairman 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 Board’s effectiveness and continuous improvement.
|
| |||||
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
| ONGOING FEEDBACK Directors provide ongoing, real-time feedback outside of the evaluation process. Lines of communication between our directors and management are always open. | |||||
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 | ||||||
|
| |||||
| 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
| |||||
2021 PROXY | 21 | AT&T INC. |
CORPORATE GOVERNANCE
Interested persons may contact the Lead Director or thenon-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. The Office will either forward the original materials as addressed or provide Directors with summaries of the submissions, with the originals available for review at the Directors’ request.
AVAILABILITYOF CORPORATE GOVERNANCE DOCUMENTS
A copy of AT&T’s Annual Report to the SEC onForm 10-K for the year 2018 may be obtained without charge upon written request to AT&T Stockholder Services, 208 S. Akard, Room 1830, Dallas, Texas 75202. AT&T’s Corporate Governance Guidelines, Code of Ethics, and Committee Charters for the following committees may be viewed online at www.att.com and are also available in print to anyone who requests them (contact the Senior Vice President and Secretary of AT&T at 208 S. Akard, Suite 2954, Dallas, Texas 75202): Audit Committee, Human Resources Committee, Corporate Governance and Nominating Committee, Corporate Development and Finance Committee, Public Policy and Corporate Reputation Committee, and Executive Committee.
HOWTO SUBMITA PROPOSALFOR NEXT YEAR
If a stockholder wishes to present a proposal or nominate a person for election as a Director at the 2020 Annual Meeting of Stockholders without such proposal or nomination being included in the Company’s proxy materials, such proposal or nomination must be received by the Senior Vice President and Secretary of AT&T at 208 S. Akard, Suite 2954, Dallas, Texas 75202 not less than 90 days nor more than 120 days before the anniversary of the prior Annual Meeting of Stockholders. Since the Annual Meeting of Stockholders will be held on April 26, 2019, written notice of any such proposal or nomination must be received by the Company no earlier than December 28, 2019 and no later than January 27, 2020. In addition, such proposal or nomination must meet certain other requirements and provide such additional information as provided in the Company’s Bylaws. A copy of the Company’s Bylaws may be obtained without charge from the Senior Vice President and Secretary of AT&T. Special notice provisions apply under the Bylaws if the date of the Annual Meeting is more than 30 days before or 70 days after the anniversary date.
Stockholder proposals intended to be included in the proxy materials for the 2020 Annual Meeting must be received by November 12, 2019. Such proposals should be sent in writing by courier or certified mail to the Senior Vice President and Secretary of AT&T at 208 S. Akard Street, Suite 2954, Dallas, Texas 75202.Stockholder proposals that are sent to any other person or location or by any other means may not be received in a timely manner.
Nominations for a Director intended for inclusion in the Company’s proxy materials for the 2020 Annual Meeting must be made in accordance with the proxy access provisions of the Company’s Bylaws and such nomination must be received by the Senior Vice President and Secretary of AT&T at 208 S. Akard, Suite 2954, Dallas, Texas 75202 not less than 120 days nor more than 150 days before the anniversary of the date that the Company mailed its Proxy Statement for the prior year’s Annual Meeting of Stockholders. Written notice of any such nomination must be received by the Company no earlier than October 13, 2019 and no later than November 12, 2019.
|
CORPORATE GOVERNANCE
Related Person Transactions
Under the rules of the SEC, public issuers, such as AT&T, must disclose certain “Related Person Transactions.” These are transactions in which the Company is a participant where the amount involved exceeds $120,000, and a Director, Executive Officer, or holder of more than 5% of our common stock has a direct or indirect material interest.
AT&T has adopted a written policy requiring that each Director or Executive Officer involved in such a transaction notify the Corporate Governance and Nominating Committee and that each such transaction be approved or ratified by the Committee.
In determining whether to approve a Related Person Transaction, the Committee will consider the following factors, among others, to the extent relevant to the Related Person Transaction:
whether the terms of the Related Person Transaction are fair to the Company and on the same basis as would apply if the transaction did not involve a related person,
whether there are business reasons for the Company to enter into the Related Person Transaction,
whether the Related Person Transaction would impair the independence of an outside director, and
whether the Related Person Transaction would present an improper conflict of interest for any of our Directors or Executive Officers, taking into account the size of the transaction, the overall financial position of the Director, Executive Officer or other related person, the direct or indirect nature of the Director’s, Executive Officer’s or other related person’s interest in the transaction and the ongoing nature of any proposed relationship, and any other factors the Committee deems relevant.
|
A Related Person Transaction entered into without the Committee’spre-approval will not violate this policy, or be invalid or unenforceable, so long as the transaction is brought to the Committee as promptly as reasonably practical after it is entered into or after it becomes reasonably apparent that the transaction is covered by this policy.
The employment of the following persons was approved by the Corporate Governance and Nominating Committee under the Company’s Related Party Transactions Policy. The rate of pay for each of these employees is similar to those paid for comparable positions at the Company.
During 2018,2020, asister-in-law of John Stankey, Chief Executive Officer Warner Media, LLC,and President, was employed by a subsidiary with an approximate rate of pay, including commissions, of $132,530. Also during 2018, a brother of John Donovan, Chief Executive Officer, AT&T Communications, LLC, was employed by a subsidiary with an approximate rate of pay, including commissions, of $197,376. In addition, during 2018, a son of William Blase, Senior Executive Vice President – Human Resources, was employed by a subsidiary with an approximate rate of pay, including commissions, of $127,943.$136,068.
AT&T INC. | 22 | 2021 PROXY |
CORPORATE GOVERNANCE |
|
The compensation of Directors is determined by the Board with the advice of the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee is composed entirely of independent Directors. None of our employees serve on this Committee. The Committee’s current members are Matthew K. Rose (Chair), Richard W. Fisher, William E. Kennard, Beth E. MooneyDebra L. Lee and Joyce M. Roché.Cynthia B. Taylor. Under its charter, the Committee annually reviews the compensation and benefits provided to Directors for their service and makes recommendations to the Board for changes. This includes not only Director retainers, but also Director compensation and benefit plans.
The Committee’s charter authorizes the Committee to employ independent compensation and other consultants to assist in fulfilling its duties. From time to time, the Committee engages a compensation consultant to advise the Committee and to provide information regarding director compensation paid by other public companies, which may be used by the Committee to make compensation recommendations to the Board. In addition, the Chief Executive Officer may make recommendations to the Committee or the Board about types and amounts of appropriate compensation and benefits for Directors. Directors who are employed by us or one of our subsidiaries receive no separate compensation for serving as directors or as members of Board committees.
|
CORPORATE GOVERNANCE
The Company offers Directors both cash and equity compensation. Cash compensation comesas set out in the form of antable below. Directors have the ability to defer their annual cash retainer that may be deferredretainers and earn interest at the election of a Director. Equity is offered both as an annual grant and as an opportunity toor may defer thetheir cash compensation into deferred stock units. The value ofthrough deferred stock units is based on the stock price and is converted to a cash payout after retiring from the Board.(See Director Plans).
| | Amount ($) | ||||
Annual Retainer |
| 140,000 |
|
| |
Lead Director Retainer |
| 60,000 |
|
| |
Committee Chair Retainer | |||||
Audit Committee |
| 30,000 |
|
| |
Human Resources Committee |
| 25,000 |
|
| |
Corporate Development and Finance Committee |
| 20,000 |
|
| |
Corporate Governance and Nominating Committee |
| 20,000 |
|
| |
Public Policy and Corporate Reputation Committee |
| 15,000 |
|
| |
Annual Award of Deferred Stock Units |
| 220,000 |
|
| |
Communications Equipment and Services |
| up to 25,000 |
| ||
In January 2021, upon Mr. Stephenson’s retirement as Executive Chairman of the Board, Mr. Kennard, an independent Director, was appointed Chairman of the Board, with an additional annual retainer of $300,000, and the position of Lead Director was terminated.
Under theNon-Employee Director Stock and Deferral Plan (theDirector Plan) eachnon-employee Director annually receives a grant of $220,000 in deferred stock units. The number of units granted is determined by dividing $220,000 by the closing price of AT&T common stock on the last trading day of the month in which the Annual Meeting occurs. Each deferred stock unit is equivalent to a share of AT&T common stock and earns dividend equivalents in the form of additional deferred stock units. The annual grants are fully earned and vested at issuance and are distributed beginning in the calendar year after the Director leaves the Board. At distribution, the deferred stock units are converted to cash based on the then price of AT&T common stock and are paid either in a lump sum or in up to 15 annual installments. Beginning in 2016, the deferred stock units had a grant date value of $170,000. To determine the number of deferred stock units granted, we calculate the nominal value of the award, which is the value that would yield the grant date value after applying an illiquidity discount. We
use the average remaining tenure of the non-employee Directorsinstallments, as the discount period. We then divide the nominal valueelected by the price of AT&T stock on the grant date to determine the number of deferred stock units issued. The nominal value of the award before application of the discount was $231,924 in 2018. Beginning in 2019, the Company will annually issue Directors $220,000 in deferred stock units without an illiquidity discount and the Chair Retainers will increase by $5,000 for the Audit, Corporate Governance and Nominating, and Corporate Development and Finance Committees.Director.
Additionally, Directors may annually elect to defer the receipt of their retainers into either additional deferred stock units or into a cash deferral account under the Director Plan. Directors purchase the deferred stock units at the fair market value of AT&T common stock. Deferrals into the cash deferral account under the plan earn interest during the calendar year at a rate equal to the Moody’s Long-Term Corporate Bond Yield Average for September of the preceding year (Moody’s Rate). Directors may annually choose to convert their cash deferral accounts into deferred stock units at the fair market value of our stock at the time of the conversion. Directors may also use all or part of their retainers to purchase AT&T common stock at fair market value under theNon-Employee Director Stock Purchase Plan.
To the extent earnings on cash deferrals under the Director Plan exceed the interest rate specified by the SEC for disclosure purposes, they are included in the “Director Compensation” table on page 2824 under the heading “Nonqualified Deferred Compensation Earnings.”
Non-employee Directors may receive communications equipment and services pursuant to the AT&T Board of Directors Communications Concession Program. TheUnder the program, equipment and services that may be provided to a Director, other than equipment at his or her primary residence, may not exceed $25,000 per year. All concession services must be provided by AT&T affiliates, except that the Director may use another provider for the Director’s primary residence if it is not served by an AT&T affiliate.
2021 PROXY | 23 | AT&T INC. |
CORPORATE GOVERNANCE
2018 DIRECTOR COMPENSATION TABLE
2020 DIRECTOR COMPENSATION TABLE
The following table contains information regarding compensation provided to each person who served as a Director during 20182020 (excluding Mr.Messrs. Stankey and Stephenson, whose compensation is included in the Summary Compensation Table and related tables and disclosure).
| Name | Fees Earned (a) | Stock (b) | Nonqualified ($) (c) | All Other (d) | Total ($) | |||||||||||||||
Samuel A. Di Piazza, Jr.
|
|
$ 165,000
|
|
|
$ 170,000
|
|
|
$ 0
|
|
|
$ 15,000
|
|
$
|
350,000
|
| |||||
Richard W. Fisher
|
|
$ 140,000
|
|
|
$ 170,000
|
|
|
$ 982
|
|
|
$ 0
|
|
$
|
310,982
|
| |||||
Scott T. Ford
|
|
$ 155,000
|
|
|
$ 170,000
|
|
|
$ 0
|
|
|
$ 0
|
|
$
|
325,000
|
| |||||
Glenn H. Hutchins
|
|
$ 140,000
|
|
|
$ 170,000
|
|
|
$ 0
|
|
|
$ 0
|
|
$
|
310,000
|
| |||||
William E. Kennard
|
|
$ 140,000
|
|
|
$ 170,000
|
|
|
$ 0
|
|
|
$ 0
|
|
$
|
310,000
|
| |||||
Michael B. McCallister
|
|
$ 140,000
|
|
|
$ 170,000
|
|
|
$ 0
|
|
|
$ 14,655
|
|
$
|
324,655
|
| |||||
Beth E. Mooney
|
|
$ 140,000
|
|
|
$ 170,000
|
|
|
$ 0
|
|
|
$ 0
|
|
$
|
310,000
|
| |||||
Joyce M. Roché
|
|
$ 165,000
|
|
|
$ 170,000
|
|
|
$ 0
|
|
|
$ 17,700
|
|
$
|
352,700
|
| |||||
Matthew K. Rose
|
�� |
$ 215,000
|
|
|
$ 170,000
|
|
|
$ 0
|
|
|
$ 14,113
|
|
$
|
399,113
|
| |||||
Cynthia B. Taylor
|
|
$ 140,000
|
|
|
$ 170,000
|
|
|
$ 0
|
|
|
$ 23,145
|
|
$
|
333,145
|
| |||||
Laura D’Andrea Tyson
|
|
$ 155,000
|
|
|
$ 170,000
|
|
|
$ 5,153
|
|
|
$ 30,000
|
|
$
|
360,153
|
| |||||
Geoffrey Y. Yang
|
|
$ 140,000
|
|
|
$ 170,000
|
|
|
$ 0
|
|
|
$ 15,000
|
|
$
|
325,000
|
| |||||
| 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 | |||||||||||||||
RICHARD W. FISHER | $ | 140,000 | $ | 220,000 | $ | 1,255 | $ | 0 | $ | 361,255 | |||||||||||||||
SCOTT T. FORD | $ | 160,000 | $ | 220,000 | $ | 0 | $ | 0 | $ | 380,000 | |||||||||||||||
GLENN H. HUTCHINS | $ | 151,250 | $ | 220,000 | $ | 0 | $ | 34,724 | $ | 405,974 | |||||||||||||||
WILLIAM E. KENNARD | $ | 140,000 | $ | 220,000 | $ | 0 | $ | 15,000 | $ | 375,000 | |||||||||||||||
DEBRA L. LEE | $ | 140,000 | $ | 220,000 | $ | 0 | $ | 15,000 | $ | 375,000 | |||||||||||||||
STEPHEN J. LUCZO | $ | 140,000 | $ | 220,000 | $ | 0 | $ | 0 | $ | 360,000 | |||||||||||||||
MICHAEL B. MCCALLISTER | $ | 140,000 | $ | 220,000 | $ | 0 | $ | 15,000 | $ | 375,000 | |||||||||||||||
BETH E. MOONEY | $ | 165,000 | $ | 220,000 | $ | 0 | $ | 15,000 | $ | 400,000 | |||||||||||||||
MATTHEW K. ROSE | $ | 220,000 | $ | 220,000 | $ | 0 | $ | 11,732 | $ | 451,732 | |||||||||||||||
CYNTHIA B. TAYLOR | $ | 140,000 | $ | 220,000 | $ | 0 | $ | 5,000 | $ | 365,000 | |||||||||||||||
LAURA D’ANDREA TYSON* | $ | 51,667 |
| 0 | $ | 6,152 | $ | 265,000 | $ | 322,819 | |||||||||||||||
GEOFFREY Y. YANG | $ | 140,000 | $ | 220,000 | $ | 0 | $ | 0 | $ | 360,000 | |||||||||||||||
Note
| * | Dr. Tyson retired from the Board in April 2020. |
NOTE (a). Fees Earned or Paid in Cash
The table below shows the number of deferred stock units or shares of common stock purchased in 20182020 by each Director with their retainersretainers. The deferred stock units were purchased under theNon-Employee Director Stock and Deferral Plan.
| ||
| ||
| ||
| ||
| ||
|
In addition,Plan, and the table below shows the number of shares of AT&T common stock were purchased in 2018 by each Director with their retainers under theNon-Employee Director Stock Purchase Plan.
| Director | Purchased in | |||
| 5,534 | |||
| 5,209 | |||
GLENN H. HUTCHINS | 4,950 | |||
STEPHEN J. LUCZO | 4,558 | |||
MATTHEW K. ROSE | 7,224 | |||
CYNTHIA B. TAYLOR | 4,558 | |||
| Director | Shares of Common Stock Purchased in 2020 | |||
RICHARD W. FISHER | 2,277 | |||
MICHAEL B. MCCALLISTER | 2,277 | |||
GEOFFREY Y. YANG | 4,556 | |||
NoteNOTE (b). Stock Awards
Amounts in this column represent the annual grant of deferred stock units that are immediately vested but are not distributed until after the retirement of the Director. The grant date value was determined by applying an illiquidity discount of 26.7%. The illiquidity discount was determined by taking the average expected remaining tenure of the Directors (8.2 years) and then using that average to calculate the illiquidity discount under FASB ASC Topic 718. The nominal value of each award (before applying the discount) was $231,924. The deferred stock units will be paid out in cash in the calendar year after the Director ceases his or her service with the Board, at the times elected by the Director. The aggregate number of stock awards outstanding at December 31, 2018,2020, for each Director can be found in the “Common Stock Ownership” section beginning on page 29.26.
|
CORPORATE GOVERNANCE
NoteNOTE (c). Nonqualified Deferred Compensation Earnings
Amounts shown represent the excess earnings, if any, based on the actual rates used to determine earnings on deferred compensation over the market interest rates determined pursuant to SEC rules.
NoteNOTE (d). All Other Compensation
Amounts in this column include personal benefits for Directors that in the aggregate equal or exceed $10,000, which for 20182020 consisted of communications equipment and services provided under the AT&T Board of Directors Communications Concession Program (described on page 27)23) and gifts,miscellaneous items, as follows: Mr. McCallisterHutchins ($13,39718,799 and $1,258,$925, respectively), and Mr. Rose ($13,30510,807 and $808, respectively), and Ms. Taylor ($12,337 and $808,$925, respectively).
AT&T INC. | 24 | 2021 PROXY |
|
NOTE (d). All Other Compensation (Cont.)All Other Compensation also includes charitable matching contributions of up to $15,000 per year made by the AT&T Foundation on behalf of Directors and employees under the AT&T Higher Education/Cultural Matching Gift Program. CharitableIn 2020, charitable contributions were made on the Directors’ behalf under this program as follows:
| Name | Matching Gifts | |||
|
| $15,000 | ||
|
| $ | ||
|
| $ | ||
|
| $ | ||
|
| $15,000 | ||
BETH E. MOONEY |
| $15,000 | ||
CYNTHIA B. TAYLOR | $ 5,000 | |||
LAURA D’ANDREA TYSON | $15,000 |
In addition, a charitable contribution of $250,000 was made on behalf of Dr. Tyson to the charity of her choice in connection with her retirement from the Board in April 2020.
COMMON STOCK OWNERSHIP
Certain Beneficial Owners
The following table lists the beneficial ownership of each person holding more than 5% of AT&T’s outstanding common stock as of December 31, 20182020 (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 |
| 2. | Based on a Schedule 13G/A filed by The Vanguard Group with the SEC on February |
2021 PROXY | 25 | AT&T INC. |
CORPORATE GOVERNANCECOMMON STOCK OWNERSHIP
The following table lists the beneficial ownership of AT&T common stock andnon-voting stock units as of December 31, 2018,2020, held by each Director, nominee, and officer named in the “SummarySummary Compensation Table”Table on page 62.60. 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 AT&T Beneficial Ownership options) (1) |
| | Non-Voting Stock Units (2) |
| ||
Samuel A. Di Piazza, Jr. | 34,480 | 33,961 | ||||||
Richard W. Fisher | 10,000 | 19,462 | ||||||
Scott T. Ford | 81,319 | 52,757 | ||||||
Glenn H. Hutchins (3) | 167,651 | 41,369 | ||||||
William E. Kennard | 0 | 24,687 | ||||||
Michael B. McCallister | 41,221 | 35,403 | ||||||
Beth E. Mooney | 28,700 | 46,805 | ||||||
Joyce M. Roché | 11,860 | 192,400 | ||||||
Matthew K. Rose | 208,050 | 92,675 | ||||||
Cynthia B. Taylor | 5,718 | 30,035 | ||||||
Laura D’Andrea Tyson | 0 | 145,736 | ||||||
Geoffrey Y. Yang | 205,530 | 13,320 | ||||||
Randall L. Stephenson | 2,253,739 | 402,639 | ||||||
John J. Stephens | 667,836 | 78,212 | ||||||
John M. Donovan | 343,518 | 14,608 | ||||||
David R. McAtee II | 35,677 | 18,763 | ||||||
John T. Stankey | 591,643 | 47,605 | ||||||
All Executive Officers and Directors as a group (consisting of 21 persons, including those named above) | 5,207,952 | 1,353,895 |
| 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
|
| ||
Note 1.
The table to the left includes presentlyNOTE (1). Includes (a) exercisable stock options as well as stock options that became exercisable within 60 days of the date of this table. The following Executive Officers heldtable and (b) restricted stock units distributable within 60 days of the following numbersdate of options:this table, as follows:
| ||||
| ||||
| ||||
|
| Beneficial Owner | Stock Options | Restricted Stock Units | ||||||
JOHN T. STANKEY |
| 2,326 |
|
| 40,266 |
| ||
RANDALL L. STEPHENSON |
| 29,345 |
|
| 96,064 |
| ||
JOHN J. STEPHENS |
| 52,022 |
|
| 40,266 |
| ||
JASON KILAR |
| 0 |
|
| 411,663 |
| ||
DAVID R. MCATEE II |
| 0 |
|
| 22,145 |
| ||
JEFFERY S. MCELFRESH |
| 0 |
|
| 3,544 |
| ||
All Executive Officers |
| 83,693 |
|
| 650,009 |
| ||
In addition, of the shares shown in the table to the left, the following persons share voting and investment power with other persons with respect to the following numbers of shares:
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
|
Note 2.
NOTE (2).Represents number of vested stock units held by the Director or Executive Officer, where each stock unit is equal in value to one share of AT&T common stock. The stock units are paid in common stock or cash depending upon the plan and the election of the participant at times specified by the relevant plan. None of the stock units listed may be converted into common stock within 60 days of the date of this table. As noted under “Compensation of Directors,” AT&T’s plans permitnon-employee Directors to acquire stock units (also referred to as deferred stock units) by deferring
the receipt of retainers into stock units and through a yearly grant of stock units. Officers may acquire stock units by participating in stock-based compensation deferral plans.plans or through vested stock awards. Stock units carry no voting rights.
Note 3.
NOTE (3).Mr. Hutchins disclaims beneficial ownership of 3,322 shares held in trust for his siblings.
NOTE (4). Mr. Yang disclaims beneficial ownership of 33,558 shares held in a limited partnership.
NOTE (5). The following persons share voting and investment power with other persons with respect to the following numbers of shares:
Investment Power Shares | ||||
GLENN H. HUTCHINS | 167,651 | |||
MICHAEL B. MCCALLISTER | 50,364 | |||
BETH E. MOONEY | 28,700 | |||
MATTHEW K. ROSE | 208,050 | |||
CYNTHIA B. TAYLOR | 196 | |||
GEOFFREY Y. YANG | 131,035 | |||
JOHN T. STANKEY | 372,983 | |||
RANDALL L. STEPHENSON | 2,043,589 | |||
JOHN J. STEPHENS | 376,502 | |||
DAVID R. MCATEE II | 132,237 | |||
CORPORATE SOCIAL RESPONSIBILITY
 |
AT&T INC. | 26
| ||
2021 PROXY | ||||
Through our management of environmental, social and governance (ESG) risks and opportunities, AT&T is delivering solutions to leading global challenges and working to ensure our business - and society - are prepared for a more resilient tomorrow. | |
.
GOVERNANCE
|
OurOVERSEEING OUR WORK
AT&T’s commitment to addressing ESG issues includes Board of Directors oversight, officer-level leadership and dedicated teams of corporate social responsibility (CSR) approach is based onprofessionals who collaborate with subject-matter experts throughout the foundational belief in the interconnection of our long-term business success with the strength of our communities and the world. CSR oversight rests with thebusiness.
The Public Policy and Corporate Reputation Committee of theAT&T Board of Directors. Directors oversees our corporate responsibility work.It also oversees our policies for political and philanthropic giving, which include political contributions, corporate contributions approved by the AT&T Contributions Council and grants approvedby the AT&T Foundation.
Our CSRCorporate Social Responsibility Governance Council is led by our Chief Sustainability Officer and comprises senior executives representingis comprised of officers from each of our operating companies with responsibility for business areas linkedoperations aligned to CSR topics we and our stakeholders deem important. Our Code of Business Conduct puts our values into action and details our commitments to ethics, diversity, privacy, the environment, and our communities. Our Principles of Conduct for Suppliers outlines expectations for working with AT&T, including environmental stewardship, diversity, conflict minerals, ethics, labor, and human rights – and every new supplier contract requires acknowledgement.most important ESG focus areas. In addition to the Council, we convene five core issue committees: Community, Employee Activation, Environment, Human Rights, and Online Safety. These committees work closely with experts throughout our operating companies and regions to implement and enhance programs and policies that address ESG issues across AT&T.
REPORTING OUR PROGRESS
We detail our ESG performance through robust public reporting, which many shareholders recognize as members ofbest-in-class. We align to the Joint Audit Cooperation, we work with other telecoms to ensure suppliers uphold our values,Global Reporting Initiative (GRI) and we auditSustainability Accounting Standards Board (SASB) standards and measure progress regularly.disclosure frameworks from CDP (climate change), the Task Force on Climate-related Financial Disclosures (TCFD), the United Nations (U.N.)
|
| |||
|
| |||
Global Compact, and U.N. Sustainable Development Goals (SDGs). We safeguard data using approaches such as encryption, anonymization,also publish annual diversity and other security controls,inclusion reports outlining our progress in cultivating workplace diversity across AT&T and content diversity across WarnerMedia.
Through our biannual Political Engagement Report, we describe how we participate in the political process and disclose our U.S. political contributions. Decisions are mindful of our company values, codes of business conduct, AT&T public policy positions and the best interests of our business and employees – without regard to political party affiliation. The AT&T Board of Directors receives the full list of corporate political contributions and has an opportunity to provide guidance with respect to the company’s contributions. In both 2019 and 2020, AT&T received the leading “Trendsetter” designation from the CPA Zicklin Index of Corporate Political Disclosure and Accountability.
Like all companies, we’re required by law to provide information to government and law enforcement entities, as well as maintaining strictto parties to civil lawsuits, by complying with court orders, subpoenas, lawful discovery requests and other legal requirements. Our Transparency Report lists the number and types of legal demands that have compelled AT&T to provide information about the communications of our customers as well as information permitted by law to be disclosed about Foreign Intelligence Surveillance Act requests.
PROTECTING CUSTOMER DATA AND PRIVACY
Privacy is a fundamental commitment at AT&T. Our Chief Privacy Office is responsible for developing, implementing, and supporting compliance with our privacy and securityprinciples, policies and systems.commitments across all operating companies – including providing regular updates to the AT&T Board of Directors.
Network and data security are critical components for protecting customer privacy. Our Chief Security Office (CSO) establishes global policy and programmatic requirements to ensure security is a part of every organization within the company. Hundreds of dedicated CSO professionals and department-level security specialists across our business are focused on security and compliance programs.
 |
2021 PROXY | 27
| ||
AT&T INC. | ||||
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
| AT&T DEMONSTRATES CORPORATE LEADERSHIP ON CLIMATE CHANGE BY SETTING STRONG GOALS AND TAKING PURPOSEFUL ACTION IN AND OUTSIDE OUR COMPANY. OUR CLIMATE CHANGE STRATEGY IS BASED ON MITIGATION AND RESILIENCE
|
On topMITIGATING IMPACTS
We’ve set a science-based target to reduce Scope 1 and 2 GHG emissions 26% by 2030, from a 2015 base year. In 2020, we committed to become carbon neutral by 2035 for these same emissions categories.
We will also continue to grow our procurement of renewable energy where feasible. In 2020, as part of our continuous improvements in network energy efficiency, last year we signed agreementsprevious commitment to purchase 820MWmore than 1.5 gigawatts of wind power annually,renewable energy capacity, we announced
agreements representing more than 500 megawatts of solar energy – making AT&T one of the largest corporate purchasers of renewablesolar energy in the U.S. In 2019, we plan to build on our leadership in renewable energy as well as take steps to improve our company’s climate resiliency.world.
|
|
|
|
AT&T has a goal to enable carbon savings 10x the footprintOur mitigation efforts also include use of our technology to help customers reduce their own operations by 2025. emissions. Through methodology developed in collaboration with Carbon Trust and BSR, we’ve measured the impact of various technologies and engaged business customers in discussions about how AT&T services can help them achieve their sustainability goals.
BUILDING RESILIENCE
We are in the process of expanding our industry-leading Climate Change Analysis Tool from four pilot states in the Southeast to the entire contiguous U.S. This tool will reach that goal by enhancing the efficiency ofhelp us visualize climate change risk to our network and delivering sustainable customer solutions. To highlight progress on howoperations up to 30 years into the future. And to help communities better prepare for their own climate-related risks, we will continue to make the Argonne National Laboratory climate datasets developed for our customers are using our technologytool available to reduce carbon emissions, we are developing a portfolio of 10x Case Studies, available atatt.com/10x.
|
|
Striving to better manage our operational impacts, including energy, water and waste, is a key focus. We are taking proactive measures to reduce our footprint and be a better steward of the environment.public.
| ||
|
| |
|
CORPORATE SOCIAL RESPONSIBILITY
Progress TowardPROGRESS TOWARD 2020 GoalsTARGETS21
|
|
| ||||||
 |
|
| ||||
|
|
One1 2020 data is still being compiled. Represents progress through end of our top priorities is empowering customers to use our products and services in a safe and responsible manner.year 2019. New long-range goals will be announced 2Q 2021.
AT&T INC. |
28 | 2021 PROXY |
The AT&T Digital You® website includes a collection of resources that educate customers about online safety. Our #LaterHaters movement helps teens find positive reinforcement and the tools they need to boost positivity online and offline. We’re working to elevate the gaming experience through technology, and in doing so, our new #GreatGame campaign encourages good sportsmanship among gamers. And in 2018 we launched ScreenReady, an online safety pilot program, in our greater New York City retail stores.
CORPORATE RESPONSIBILITY |
|
SOCIAL
|
SUPPORTING EMPLOYEES
AT&T invests approximately $200 million each year to engage employees in more than 16 million hours of education and training to help ensure our colleagues have the tools needed for continued success. In 2020, more than 55% of all open positions and 56% of promotions were filled by diverse candidates.1
In addition to fostering employee skills growth, we continually evolve our benefits plans to maintain competitive packages that reflect the needs of our workforce – including benefits for fertility services, adoption, childcare, and elder care. We offer parents up to 12 weeks of paid leave, which may be extended for birthing mothers, when paired with applicable short-term disability benefits.
We also regularly adapt our compensation model to ensure fair and inclusive pay practices across our business. We are buildingcommittedto pay equity for employees who hold the same jobs, work in thesame geographic area, and have the same levels of experienceand performance.
In 2020, given the need for social distancing due to the COVID-19 pandemic, AT&T implemented a stronger business and a more dynamic workforce for all companies as we prepare individualssweeping work-from-home policy for the majority of our employees. We authorized temporary compensation increases for front-line employees who can’t do their jobs from home and temporarily increased available paid time off for employees whose families were impacted by COVID-19 illness.
We also committed more than $100 million to help WarnerMedia cast and crew while on production hiatus, and through the AT&T Employee Relief Fund, we supported more than 275 colleagues requesting assistance for COVID-19-related personal hardships. As we look to life and operations beyond the pandemic, we are revising our business models to support flexible office space and at-home productivity for many employees on a going-forward basis.
VALUING DIVERSITY, EQUITY, AND INCLUSION
In 2020 AT&T published a Board Diversity Statement, noting “AT&T recognizes the value of diversity, and takes into account many factors, including but not limited to gender, race and ethnicity, as important in determining composition and in making nominations to the Board.”
To promote employee engagement and cross-functional diversity and inclusion initiatives across our operating companies, we regularly convene four diversity councils, including the CEO’s Diversity Council led by our most senior executive. We encourage employees to join one or more of our 39 employee groups, which exemplify our company’s commitment to diversity and inclusion through efforts in the workplace, marketplace, and community – while focusing on members’ professional development and opportunities for community service. These groups represent the diverse cultural and experiential dimensions of our workforce, demandssuch as women, people of tomorrow.color, LGBTQ+ individuals, people with disabilities, and veterans.
The country’s reckoning with social justice in 2020 affected us all and deepened our commitment to supporting equity in our company as well as our communities. In the past five years, AT&T has contributed $215 million to increase education, skills building, and career readiness opportunities in Black and underserved communities. And last year, we committed an additional $30 million to further support these communities, which often face long-standing social inequities and higher unemployment – all of which are exacerbated by the COVID-19 pandemic. We continue to advocate for social justice reform in our communities and have joined the OneTen coalition, a group of corporations pledging to collectively hire 1 million Black Americans in the next 10 years.
For our suppliers and vendors, our goal for diversity performance is 21.5% of total procurement expenditures. In 2019, 26.4% of our total supply chain spend – approximately $14.2 billion – was awarded to certified-diverse businesses owned by minorities, women, veterans, LGBTQ+ people, and those with disabilities. And we exceeded our commitment to spend $3 billion with U.S. Black-owned suppliers by the end of 2020.
1 Inclusive of AT&T Inc. and AT&T Communications
2021 PROXY |
29 | AT&T INC. |
CORPORATE RESPONSIBILITY |
Internally,
ADDRESSING THE DIGITAL DIVIDE AND HOMEWORK GAP
2020 laid bare the impact of the digital divide on 17 million students disconnected from learning resources. AT&T has invested more than $125 billion in our network over the past five years to help connect America. Additionally, over the last 12 years, we have invested approximately $200 million and 16 million hours training our employees last year, and we contributed $23over $600 million to their tuition aid.bolster educational programs in under-resourced schools and communities. To help families mitigate the educational impacts of the COVID-19 pandemic, AT&T launched a $10 million Distance Learning and Family Connections Fund to help give parents, students, and teachers expanded access to tech-enabled tools and resources for at-home learning. And we made an additional $10 million commitment to work with Connected Nation to provide our most vulnerable students Wi-Fi hotspots and free AT&T internet service. AT&T will stay focused on network investments, product offers, and philanthropy to support student learning while working to advance policies that will help expand reliable broadband connectivity for all Americans.
SAFEGUARDING CHILDREN
Our internal Online Safety Committee provides oversight and guidance on the digital safety issues impacting our business, customers, and society. We completed a human rights impact assessment across our portfolio of products and services to better understand risks related to potential online child exploitation and child sexual abuse material. And we engage with groups such as Tech Against Trafficking, the WePROTECT Global Alliance and the National Center for Missing and Exploited Children to promote human rights associated with our operations.
KEEPING CONNECTED
AT&T’s National Disaster Recovery team plays a crucial role in keeping our network operational and our customers connected – even in the wake of unpredictable, catastrophic events. With more than $650 million invested in the U.S. and another $15 million invested internationally, our Network Disaster Recovery program is one of the largest and most advanced of its kind.
ENGAGING OUR COMMUNITIES
AT&T Believes is a company-wide, localized effort to create positive change. We harness employees’ creativity and generosity, and join company resources with those of municipalities and external partners to make a stronger impact on local communities and society at large. AT&T Believes lifts communities across 42 cities and counting around the world, focusing on needs such as social equality, building job skills, homelessness, and access to education, careers, and COVID-19-related resources.
Through the end of 2018, 60 percent of AT&T’s management workforce had enrolled in reskilling programs provided or subsidized by the company. And more than 50,000 learners worldwide, including more than 5,000 AT&T employees, had enrolled in nanodegree credential programs, a new pathway to higher education pioneered by Udacity and AT&T.DIVERSITY, EQUITY AND INCLUSION
| WORKFORCE DIVERSITY |
Our efforts to create a culture in which all employees can learn and grow are led by the Chairman’s Diversity Council and our Chief Diversity Officer.TOTAL U.S. WORKFORCE DIVERSITY
TOTAL U.S. MANAGEMENT DIVERSITY
GENDER DIVERSITY
AT&T
|
| |||
|
AUDIT COMMITTEE |
|
AT&T employees donated $29 million to more than 30,000 charities in 2018 to help make our communities stronger and have pledged to give $27.8 million in 2019. Our culture of giving provides resources to support employees’ charitable interests through AT&T Foundation grants, resulting in an additional $4.4 million in 2018. Employees also donated time in their communities, volunteering more than 1 million hours valued at more than $25 million.
1AT&T utilizes the 90% threshold standard for “zero waste” as defined by the Zero Waste International Alliance,http://zwia.org/standards/zw-business-principles/b/
2Represents progress through end of year 2017
3Represents total U.S. workforce numbers, excluding WarnerMedia, through end of year 2018
|
AT&T has a separately designated standing Audit Committee. The Board has adopted a written charter for the Audit Committee, which may be viewed on the Company’s web site at www.att.com. The Audit Committee performs a review and reassessment of its charter annually. The Audit Committee oversees the integrity of AT&T’s financial statements, the independent auditors’ qualifications and independence, the performance of the internal audit function and independent auditors, and AT&T’s compliance with legal and regulatory matters.
The Audit Committee is composed entirely of independent Directors in accordance with the applicable independence standards of the New York Stock Exchange and AT&T. The members of the Audit Committee are Mr. Di Piazza (Chairman), Mr. Luczo, Mr. McCallister, and Ms. Taylor and Dr. Tyson, each of whom
was appointed by the Board of Directors. The Board has
determined that each member of the Audit Committee is financially literate under NYSE listing standards.
In addition, the Board of Directors has determined that Mr. Di Piazza and Ms. Taylor are “audit committee financial experts” and are independent as defined in the listing standards of the New York Stock Exchange and in accordance with AT&T’s additional standards.experts.” Although the Board of Directors has determined that these individuals have the requisite attributes to be considered “audit committee financial experts” as defined under theSEC rules, of the SEC, their responsibilities are the same as those of the other Audit Committee members. They are not AT&T’s auditors or accountants, do not perform “field work” and are not full-time employees. The SEC has determined that an audit committee member who is designated as an audit committee financial expert will not be deemed to be an “expert” for any purpose as a result of being identified as an audit committee financial expert.
PRIMARY RESPONSIBILITIES
PRIMARY RESPONSIBILITIES
The Audit Committee is responsible for oversight of management in the preparation of AT&T’s 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&T’s financial statements and disclosures are complete and accurate. AT&T’s Audit Committee charter provides that these are the responsibility of management and the independent auditors.
Independent Auditor Oversight
The Audit Committee has oversight of the Company’s relationship with the independent auditor and is directly responsible for the annual appointment, compensation and retention of the independent auditor. The independent auditor reports directly to the Audit Committee.
Financial Reporting Review
The Audit Committee reviews and discusses with management and the independent auditor:
the annual audited financial statements and quarterly financial statements;
any major issues regarding accounting principles and financial statement presentations; and
earnings press releases and other financial disclosures.
Internal Audit Oversight
The Audit Committee oversees the activities of the Company’s senior internal auditing executive, including internal audit’s assessment of operational and financial risks and associated internal controls. Significant internal audit reports and corrective action status are regularly discussed with the Audit Committee.
Risk Review
The Audit Committee reviews and discusses with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies. This includes, among other matters, evaluating risk in the context of financial policies, counterparty and credit risk, and the appropriate mitigation of risk, including through the use of insurance where appropriate.
Compliance Oversight
The Audit Committee meets with the Company’s Chief Compliance Officer (CCO)(CCO) regarding the CCO’s assessment of the Company’s compliance and ethics risks, the effectiveness of the Company’s Corporate Compliance Program, and any other compliance related matters that either the Committee or the CCO deems appropriate. The Audit Committee oversees the administration and enforcement of the Company’s Code of Business Conduct, Code of Ethics, and Corporate Compliance Program.
2021 PROXY | 31 | AT&T INC. |
PRINCIPAL ACCOUNTANT FEESPRINCIPAL ACCOUNTANT FEES AND SERVICES
SERVICES
Ernst & Young LLP acts as AT&T’s principal auditor and also provides certain audit-related, tax and other services. The Audit Committee has established apre-approval policy for services to be performed by Ernst & Young. Under this policy, the Audit Committee approves specific engagements when the engagements have been presented in reasonable detail to the Audit Committee before services are undertaken.
This policy also allows for the approval of certain services in advance of the Audit Committee being presented details concerning the specific service to be undertaken. These services must meet service definitions and fee limitations previously established by the Audit Committee. Additionally, engagements exceeding $500,000 must receive advance concurrence from the Audit Committee Chairman. After an auditor is engaged under this authority, the services must be described in reasonable detail to the Audit Committee at the next meeting.
Allpre-approved services must commence, if at all, within 14 months of the approval.
The fees for services provided by Ernst & Young (all of which werepre-approved by the Audit Committee) to AT&T in 20182020 and 20172019 are shown below.
PRINCIPAL ACCOUNTANT FEES
| Principal Accountant Fees (dollars in millions) |
| |||||||
| Item | 2018 | 2017 (e) | ||||||
Audit Fees (a) | $ | 49.3 | $ | 37.3 | ||||
Audit Related Fees (b) | 5.6 | 3.5 | ||||||
Tax Fees (c) | 10.1 | 9.3 | ||||||
All Other Fees (d) | 0.0 | 0.0 | ||||||
| Item | 2020 | 2019 | ||||||||||||||
Audit Fees (a) | $ | 50.5 |
| $ | 52.1 |
| ||||||||||
Audit Related Fees (b) |
| 10.3 |
|
| 5.5 |
| ||||||||||
Tax Fees (c) |
| 9.0 |
|
| 9.5 |
| ||||||||||
All Other Fees (d) |
| 0.0 |
|
| 0.0 |
| ||||||||||
NOTE (a). Audit Fees.
Included in this category are fees for the annual audits of the financial statement audit,statements and internal controls, quarterly financial statement reviews, audits of certain subsidiaries, audits required by Federal and state regulatory bodies, statutory audits, and comfort letters.
NoteNOTE (b). Audit Related Fees.
These fees, which are for assurance and related services other than those included in Audit Fees, include charges for employee benefit plan audits, due diligencesubsidiary audits associated with acquisition and disposition activity, control reviews of AT&T service organizations, and consultations concerning financial accounting and reporting standards.matters.
NoteNOTE (c). Tax Fees.
These fees include charges for various Federal, state, local and international tax compliance, planning, and research projects, as well as tax services for AT&T employees working in foreign countries.
NoteNOTE (d). All Other Fees.
No fees were incurred in 20182020 or 20172019 for services other than audit, audit related and tax.
Note (e). Time Warner Inc. Principal Accountant Fees for 2017.
Time Warner Inc. disclosed the following principal accountant fees for 2017 (dollars in millions), which are not included in this column: Audit - $19.6; Audit Related - $0.5; Tax - $1.8; and All Other - $0.0. 2017 was the last full calendar year prior to AT&T’s acquisition of Time Warner Inc.
AT&T INC. | 32 | 2021 PROXY |
AUDIT COMMITTEE
AUDIT COMMITTEE REPORT
AUDIT COMMITTEE |
|
AUDIT COMMITTEE REPORT
The Audit Committee: (1) reviewed and discussed with management AT&T’s audited financial statements for the year ended December 31,
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, |
February | The Audit Committee | |||
Samuel A. Di Piazza, Jr., Chairman | ||||
Stephen J. Luczo | ||||
Michael B. McCallister | ||||
Cynthia B. Taylor | ||||
|
2021 PROXY | 33 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
| 35 | ||||||
38 | ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
|
| |||||
| 56 | ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| ||||||
| 58 | |||||
| 58 | |||||
58 | ||||||
Acronyms Used
INDEPENDENT COMPENSATION CONSULTANT (Frederic W. Cook & Co., Inc.) |
| ||||
| |||||
ACRONYMS USED
CAM
Career Average Minimum
CDP
Cash Deferral Plan
CEO
Chief Executive Officer
COO
Chief Operating Officer
DTC
Direct to Consumer
EOY
End of Year
EPS
Earnings Per Share
FCF
Free Cash Flow
MCB
Management Cash Balance
NEO
Named Executive Officer
ROIC
Return on Invested Capital
RSU
Restricted Stock Unit
SCT
Summary Compensation Table
SEC
Securities and Exchange Commission
SERP
Supplemental Employee Retirement Plan
SRIP
Supplemental Retirement Income Plan
STIP
Short Term Incentive Plan
SPDP
Stock Purchase and Deferral Plan
TSR
CEO
Chief Executive Officer
DOJ
U.S. Department of Justice
EBITDA
Earnings Before Interest, Taxes, Depreciation, and Amortization
EPS
Earnings Per Share
EY
Ernst & Young LLP
FCF
Free Cash Flow
MCB
Management Cash Balance
NEO
Named Executive Officer
NYSE
New York Stock Exchange
ROIC
Return on Invested Capital
RSU
Restricted Stock Unit
SEC
Securities and Exchange Commission
SERP
Supplemental Employee Retirement Plan
SRIP
Supplemental Retirement Income Plan
SPDP
Stock Purchase and Deferral Plan
SRIP
Supplemental Retirement Income Plan
TSR
Total Stockholder Return
AT&T INC. | 34 | 2021 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS
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 availability of
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, and our key performance achievements.performance.
| Topic | Overview | |||||
| 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 | |||||
|
| |||||
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 • • | ||||||
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 Company’s 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. | |||||
| 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 candidate’s capabilities to (i) build business strategy and execute the Board’s business plan, (ii) develop a diverse top-performing leadership team and workforce, and (iii) efficiently use AT&T’s capital and assets. Mr. Stankey demonstrated his abilities while serving in various AT&T leadership roles; this successful experience was critical to the Board’s 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. Stankey’s compensation to better align his pay to his CEO peer group. With Mr. Stankey’s 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 WarnerMedia’s legacy operating units. As CEO of Hulu, Mr. Kilar was instrumental in the development of that company’s streaming entertainment service, and he brings a unique expertise to AT&T’s 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 Company’s 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 Committee’s 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. |
COMPENSATION DISCUSSION AND ANALYSIS
41,42,48
51, 55
2018 COMPANY PERFORMANCE HIGHLIGHTS
|
| ||
INC. |
| |
| ||
36 | 2021 PROXY | |
COMPENSATION DISCUSSION AND ANALYSIS
|
| OUR VALUES
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
1 See Annex A for EPS and FCF reconciliation.
2 FCF dividend payout ratio is dividends divided by FCF.
3 Based on OneScore Sept. 2018 report. Excludes crowdsourced studies.
4 Based on multiplatform unique visitors and video starts for the 12th and 15th consecutive quarters, respectively.
• 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 | |
COMPENSATION DISCUSSION AND ANALYSISOPERATIONAL ACCOMPLISHMENTS
• | Broadband connectivity. More than 1 million fiber net additions for the second year in a row; achieved nationwide 5G coverage; nation’s 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.
SUMMARYOF INCENTIVE PAYOUTS
• | 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 world’s most accessed digital news outlet. WarnerMedia’s cable networks reach an average of nearly 170 million people across the U.S. each month. |
2018 CORPORATE SHORT TERM AWARDS*
| Metric | Type of Metric | Metric Weight | Attainment | Payout% | ||||||
2018 EPS | Quantitative | 60% | 92% | 81% | ||||||
2018 FCF | Quantitative | 30% | 98% | 98% | ||||||
Collaboration | Qualitative | 10% | n/a | 100% | ||||||
Weighted Average Payout | 88% |
* Mr. Donovan’s Award payout is based on a mix of corporate and business unit performance attainment. Please see page 45 for more information.
LONG TERM AWARD – PERFORMANCE SHARE COMPONENT
2016-2018 PERFORMANCE PERIOD
| Metric | Metric Weight | Attainment | Payout% | |||||
3-Year ROIC | 75% | 7.56% | 101% | |||||
3-Year Relative TSR | 25% | Level 6 | 0% | |||||
Weighted Average Payout | 76% |
After the impact of change in stock price over the 2016 – 2018 performance period, our NEOs received approximately 64% of their original Performance Share grant value.
2019 PROGRAM ENHANCEMENT
| 1 | See Annex A for reconciliation of non-GAAP results. |
| 2 | Free cash flow is cash from operating activities minus capital expenditures. |
The Committee has approved the use ofNet-Debt-to-Adjusted-EBITDA as a performance metric with a 20% weighting for determining 2019 short-term incentive awards (payable 2020) for all Executive Officers.
The narrative on the following pages more fully describes how the Committee, with the input of its consultant, has designed and evolved our Executive Officer compensation and benefits program using the Committee’s guiding pay principles as the pillars of the program. We also outline how we establish pay targets and how actual Executive Officer pay is determined. Finally, we provide a description of other benefits.
| 3 | Free cash flow dividend payout ratio is total dividends paid divided by free cash flow. For 2020, dividends paid totaled $15.0 billion. |
| 4 | Gross capital investment includes capital expenditures and cash payments for vendor financing and excludes FirstNet reimbursements. In 2020, gross capital |
investment included $3.0 billion in vendor financing payments and excluded $1.1 billion of FirstNet reimbursements. |
| 5 | Fastest 5G network based on AT&T analysis of Ookla® of Speedtest Intelligence® data median 5G download speeds for Q4 2020. Fastest network based on analysis by Ookla® of Speedtest Intelligence® data of average download speeds for Q1, Q2, Q3 and Q4 2019, and median download speeds for Q1, Q2, Q3 and Q4 2020. Ookla trademarks used under license and reprinted with permission. |
2021 PROXY | 37 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
ROLEROLE OFTHE HUMAN RESOURCES COMMITTEE
HUMAN RESOURCES COMMITTEE
The Committee’s charter is availableCommittee oversees the compensation and benefits program for our senior executives on our website at www.att.com. Ourbehalf of the Board of Directors. The Committee is composed entirely of independent Directors. TheIts current members of the Committee are:are Ms. RochéMooney (Chairman), Mr. Ford, Mr. McCallister, Mr. Rose, and Mr. Yang. OurThe Committee’s charter is available on our website at www.att.com. The Committee is responsible for:
| Compensation-Related Tasks
| Organizational Tasks
| |||
|
• Reviewing the performance and capabilities of
• Reviewing succession planning for Executive Officer positions including the CEO’s position. |
GUIDING PAY PRINCIPLES2020 GUIDING PAY PRINCIPLES
OurThe Committee has designed an executive compensation program that encourages our leaders to produce outstanding financial and operational results, create sustainable long-term value for our stockholders, and leadestablished the company with ethics and integrity. Ourfollowing guiding pay principles are:
Alignment with Stockholders
Provide compensation elements and set performance targets that closely align executives’ interests with those of stockholders. For example, approximately 69% of target pay for NEOs is tied to stock price performance. In addition, we have executive stock ownership guidelines and stock holding requirements, as described on page 60.
Competitive and Market Based
Evaluate all components of our compensation and benefits program in light of appropriate peer company practices to ensure we are able to attract and retain world-class talent with the leadership abilities and experience necessary to develop and execute business strategies, obtain superior results, and build long-term stockholder value in an organization as large and complex as AT&T.
Tie a significant portion of compensation to the achievement of predetermined goals and recognize individual accomplishments that contribute to our success. For example, in 2018, 93% of the CEO’s target compensation (and, on average, 89% for other NEOs) was variable and tied to short- and long-term performance incentives, including stock price performance.
Balanced Short- and Long-Term Focus
Ensure that the compensation program provides an appropriate balance between the achievement of short- and long-term performance objectives, with a clear emphasis on managing the sustainability of the business and mitigating risk.
Alignment with Generally Accepted Approaches
Provide policies and programs that fit within the framework of generally accepted approaches adopted by leading major U.S. companies.
|
COMPENSATION DISCUSSION AND ANALYSIS
These guiding pay principles serve as the pillars of our compensation and benefits program and any potentialfor 2020. It evaluates changes to theour program are evaluated in light of their ability to help us meet these goals.
CHECKLISTOF COMPENSATION PRACTICESgoals and the Company’s strategic objectives.
AT&T INC. | 38 | 2021 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
|
Our Committee designs our compensation and benefits program is designed around the following market-leading practices:
| OUR PRACTICES | ||||
✓ Pay for Performance: Tie compensation to performance by setting clear and challenging performance
✓Multiple Performance Metrics and Time Horizons:Use multiple performance metrics and multi-year vesting timeframes to
✓ 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
✓Regular Engagement with Stockholders: We regularly engage with
✓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.
| ûNo “Single Trigger” Change in Control Provisions:No accelerated vesting of equity awards upon a change in control.
ûNo Tax
û No Repricing orBuy-Out of underwater stock options.
ûNo Hedging or Short Sales of AT&T
û No Supplemental Executive Retirement Benefits for officers promoted/hired after 2008.
ûNo Guaranteed Bonuses.
û No Excessive Dilution: |
STOCKHOLDER ENGAGEMENTSTOCKHOLDER ENGAGEMENT
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 has taken into accountconsiders feedback from our annualthis outreach to large stockholders when evaluating any potential changes to our program. Of theOur stockholders have continued their support of our program with 87.8% of votes cast for approval of the “say on pay” proposal at the 20182020 Annual Meeting of Stockholders, over 90% were in favor of the advisory vote on executive compensation.Stockholders.
2021 PROXY | 39 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
ELEMENTSOF 2018 COMPENSATIONCOMPENSATION ELEMENTS AND PAY DETERMINATION
It is in our stockholders’ interest that ourStockholders’ interests are best represented by a compensation program bethat is properly structured to make attraction, retention,attract, retain, and motivation ofmotivate our executives to lead the highest quality talent a reality.Company effectively. Our executive compensation and benefits program includes a number of differentcontains various elements, each designed for a different purposes,purpose, with anthe overarching goal to encourageof 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 Company’s 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 Company’s 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 executive’s role.
The Corporate Peer Group was based on a recommendation from the independent consultant to ensure the peer group achieves the following:
Acknowledges AT&T’s 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. Stankey’s 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. McElfresh’s 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. Kilar’s compensation was evaluated against a specific peer group to recognize pay practices in the media and technology industries.
| ||||||||||||||||||||
CEO, CFO,
|
|
| CEO, WARNERMEDIA | |||||||||||||||||
| Alphabet
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. | ||||||||||||||||||||
The chart below more fully describes the three elements of total direct compensation and their link to our business and talent strategies.
| Weightings | ||||||||||||||||||||||||||||||||||
| Reward Element | Form | Link to Business and Talent Strategies | CEO | Average for Other NEOs | ||||||||||||||||||||||||||||||
Base Salary
|
Cash
| • | Provides compensation to |
|
7% |
|
|
11% |
| |||||||||||||||||||||||||
A portion may be contributed to AT&T stock and cash deferral plans. | ||||||||||||||||||||||||||||||||||
Fixed Pay | • | Pay level recognizes experience, skill, and performance, with the goalof being market-competitive.
| ||||||||||||||||||||||||||||||||
| • | Adjustments may be made based on individual performance, pay relative to other executives, and | |||||||||||||||||||||||||||||||||
pay relative to market. | ||||||||||||||||||||||||||||||||||
Cash
| • | Aligns pay with the achievement of short-term objectives.
| ||||||||||||||||||||||||||||||||
A portion may be contributed to AT&T stock and cash deferral plans. | ||||||||||||||||||||||||||||||||||
Short-Term Incentives (see page 45)
| ||||||||||||||||||||||||||||||||||
| • | Payouts based on achievement of goals, with potential for upward or downward adjustment by the Committee to align pay with performance. |
|
23% |
|
|
24% |
| ||||||||||||||||||||||||||
At Risk Pay | ||||||||||||||||||||||||||||||||||
Stock
| 70% | 65% | ||||||||||||||||||||||||||||||||
Long-Term Incentives (see page 48) |
75% Performance Shares (paid 34% in stock, 66% in cash)
25% Restricted Stock Units (paid in stock) | • | Motivates and rewards the achievement of long-term performance.
| |||||||||||||||||||||||||||||||
| • | Aligns executive and stockholder interests. | |||||||||||||||||||||||||||||||||
2021 PROXY | 41 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
DETERMINING 2018 TARGET COMPENSATION
The Committee’s Process for Establishing 2020 Target Compensation
The starting point for determining Executive Officer compensation begins with an evaluation of market data. The consultant compiles data for the Peer Group companies from both proxy and third-party compensation surveys.
|
|
Following is the Peer Group our consultant used to assess market-based compensation for Executive Officers in 2018.
| ||||||
|
|
|
| |||
| ||||||
The consultant reviewed the market data forfrom the Peer Groupapplicable peer groups with members of management and the CEO (for Executive Officers other than himself) to confirm the job matches and scoping of market data based on the relative value of each position and differences in responsibilities between our jobs at AT&T and those in the comparator groups.applicable peer group. After completing this review, the consultant presented the market data to the Committee.
The Committee used the market data and the CEO’s 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 executive’s:
- | 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 coming year. average for the other NEOs. Mr. Stephenson’s compensation was excluded and Mr. Kilar’s RSU grant was annualized for the “Other NEOs” chart.
When setting compensation,Mr. Stankey was appointed CEO, the Committee may determine that Executive Officersreevaluated 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 significant experience and responsibilities or who demonstrate exemplary performance have higher target compensation, while other Executive Officers may have lower target compensation.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. McElfresh’s 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. Kilar’s 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 Company’s 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 Company’s 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
2018 PERFORMANCEexercised 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
AT&TFollowing is a global leader in telecommunications, media, entertainment, and technology. We are transforming into a truly modern media company that will work to create the best entertainment and communications experiences in the world. 2018 was a transformational year as we completed the acquisitiondescription of Time Warner, and we continued to successfully execute on our strategic goals.
To put in perspective the scale, scope, and complexity of our business as compared to our 22 compensation benchmark companies (as shown on page 43), below is a comparison of market cap, revenues, and net income:
Comparison of Scope and Scale
AT&T and Peer Group1($M)
For more information on our financial and operational performance, please see our Annual Report at www.att.com.
We continue to deliver positive returns to our stockholders over the long-term and have a long history of increasing dividends.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 |
|
|
COMPENSATION DISCUSSION AND ANALYSIS
DETERMINATIONOF AWARD PAYOUTSFOR PERFORMANCE PERIODS ENDING DECEMBER 31, 2018
2018 Short-Term Incentive Plan Metrics and Performance Attainment
After reviewing our business plan and determining the business metrics on which our Executive Officers should focus, the Committee established the following performance targets applicable to payment of short-term awards for 2018:
2018 SHORT-TERM INCENTIVE PLAN METRICS
Mr. Stephenson, Mr. McAtee, Mr. Stankey, and Mr. Stephens | Mr. Donovan | |||||||
| Metric | Weight | Metric | Weight | |||||
EPS | 60% |
EPS | 10% | |||||
FCF | 30% | Collaboration | 10% | |||||
Collaboration | 10% | AT&T Communications FCF | 40% | |||||
AT&T Communications Operating Contribution | 40% | |||||||
AT&T Communications Revenue Kicker (see below) | 0 to + 75% | |||||||
2018 SHORT TERM INCENTIVE AWARD PAYOUT STRUCTURE
|
|
| ||||||||
|
|
|
| |||||||
| ||||||||||
|
| |||||||||
|
| |||||||||
|
|
| ||||||||
|
|
|
| |||||||
|
|
COMPENSATION DISCUSSION AND ANALYSIS
The following charts show the performance goals, actual performance attainment and payout percentage for each short-term performance metric.
Short-Term Incentive Performance Goals and Attainment Corporate Financial Metrics Earnings Per Share 60% Weighting Free Cash Flow 30% Weighting Payout %125% 100% 75% 50% 25% 0%Payout 81% $3.50 $3.21 92% of Goal Performance Goal Attainment (after performance adjustments) 1Payout 98% $21.5B $21.1B98% of Goal Performance Goal Attainment (after performance adjustments) 2 1. EPS results were adjusted as follows: Reported EPS Adjustments per per-established award terms: M&A Pension Plan Gains/Losses Tax Reform Discretionary Reductions: Asset Revaluation EPS for Compensation $2.85 .94(.43)(.10)(.05) $3.21 2. Free Cash Flow is net cash from operating activities minus capital expenditures. Free Cash Flow results were adjusted as follows: Reported Free Cash Flow Adjustments per pre-established award terms: M&A Excess Benefit Plan Contributions Free Cash Flow for Compensation $22.4B (1.6) 0.4 $21.1B
|
COMPENSATION DISCUSSION AND ANALYSIS
Short-Term Incentive Performance Goals and Attainment AT&T Communications Financial Metrics Free Cash Flow 40% Weighting Operating Contribution 40% Weighting Payout %125% 100% 75% 50% 25% 0% Payout 78% $24.5B $22.2B91% of Goal Performance Goal Attainment Payout 87% $34.5B $32.3B 94% of Goal Performance Goal Attainment Mr. Donovan was also eligible for an AT&T Communications 2018 Revenue Kicker. This kicker provided for a potential payout of up to an additional 75% of Mr. Donovans short-term target. However, AT&T Communications revenue and operating contribution did not meet the criteria for a payout.
Collaboration - 10% Weighting
The Committee reviewed the ways the executive team and four operating entities worked together to leverage AT&T assets to drive results that benefit stockholders. The Committee determined that each of the NEO’s earned a payout of 100% based on the following accomplishments (among others):
Our merger synergies remain on target to achieve a $2.5B billion run rate by the end of 2021.
Launch of the first, large-scale integrated marketing campaign between WarnerMedia and AT&T Communications.
More relevant advertising across Turner’s TV networks, through the combined efforts of Xandr, AT&T Communications, and WarnerMedia.
Creation of the WarnerMedia Innovation Lab that will combine emerging technologies such as AT&T’s 5G services, Xandr’s advanced ad tech platform capabilities, and content from WarnerMedia to create new and innovative business and consumer experiences.
Deployment of a low cost Direct to Consumer Video service in AT&T Latin America that delivered 85+ live channels, Video on Demand, and multi-language capabilities, with the assistance of Turner’s iStreamPlanet.
Because of the Time Warner acquisition, AT&T was able to launch WatchTV, a 30+ channel, live-TV streaming service.
Final Award Determination
The NEOs whose awards are based on corporate performance metrics each received a performance-adjusted award payout of 88%, and Mr. Donovan’s performance-adjusted award payout was 84%. The Committee maintains the ability to make adjustments to the formula-driven payout as it deems appropriate in order to ensure alignment of Executive Officer pay with performance.
|
COMPENSATION DISCUSSION AND ANALYSIS
Long-Term Incentive Plan Metrics and Performance Attainment –Performance/Restriction Periods Ending in 2018
The following chart describes the structure and terms of long-term awards with performance or restriction periods ending in 2018 or early 2019:
|
|
|
| |||
3-year performance period (2018-2020)
Performance metrics: – –
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.
| |||||
RSUs Granted in 25% of 2017 Long-Term Award | 4-year restriction period
Payout value based on common stock price performance. |
RSUs | ||||
| * | Not applicable to Mr. McElfresh’s 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 – 2016-20182018-2020 Performance Period
Determination of Performance Goal | Performance Below Target Range | |
| ||
We established a ROIC performance target range of 6.50% to 7.50% at the beginning of the 3-year performance period. This target range does not reward or penalize Executive Officers for performance achievement within close proximity to the midpoint of the range. The lower end of the performance target range was set so that it exceeded our internally calculated weighted average cost of capital (determined, in part, based on input from banks) by 100 basis points, ensuring a reasonable return is delivered to stockholders before Executive Officers are eligible for full payout of their target award. We calculate ROIC by taking our annual reported net income minus minority interest and adding after-tax interest expense and dividing that result by the total of the average debt and average stockholder equity for the relevant year, subject to adjustments. The ROIC for each year is then averaged over the 3-year performance period to determine the final performance.
Achievement below the target range results in decreasing levels of award payout. No payout is earned if less than 62% of the performance target range is achieved.
Performance Within Target Range
100% payout if performance falls within the target range.
Performance Above Target Range
Maximum payout of 150% is earned if 157% or more of the performance target range is achieved. Achievement above the target range provides for higher levels of award payout, up to the maximum payout.
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).
No payout is earned if less than 65% of the performance target range is achieved. Achievement below the target range results in decreasing levels of award payout. The payout drops to 0% of the Performance Shares tied to this metric if less than 65% of the low end of the target range is achieved.
Performance Within Target Range
100% payout if performance falls within the target range.
Performance Above Target Range
Maximum payout of 150% is earned if 137% or more of the performance target range is achieved. Achievement above the target range provides for higher levels of award payout, up to the maximum payout.
Actual Performance
After conclusion of the performance period, the Committee determined (using the ROIC payout table) that we achieved 7.56%, which was above the ROIC target range, and 181 basis points above the cost of capital we established based on input from banks.As a result, the Committee directed that 101% of the related Performance Shares be distributed in accordance with the payout table as follows. Our actual performance attainment is also shown:
2021 PROXY | 45 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
ROIC Performance metric (2016-2018 performance period) Performance adjustments used in ROIC calculation Adjustments per pre-established award terms: Reported amount Net Income Plus Interest Expense was adjusted as follows: $ 67.2B 1. M&A Transaction Costs $ 10.5B 2. Asset Abandonments and Impairments (Gains)/Losses$ 2.3B 3. Natural Disasters $ 0.4B 4. Pension Remeasurementc (Gains)/Losses $ 0.3B 5. Changes in Accounting Principle$ (2.9)B 6. Tax Reform $ (20.3)B Adjusted Net Income Plus Interest Expense $ 57.4B Performance Range For100%Relative TSR Payout ACTUAL PERFORMANCE Weighted Average Cost of Capital 8.00% 7.75% 6.75% 6.00%
TSRModifier - Payout Table and Actual Performance Attainment – 2016-2018 Performance Period
AtThe following chart shows the beginning ofpayout table and actual performance for the performance period, the Committee established the following table for determining payout of the Performance Shares tiedrelative TSR modifier applicable to the TSR metric.
Our actual performance attainment is also shown:2018 Performance Share grant:
TSR Performance metric (2015-2017 performance period) AT&T Return vs. S&P 100 Index Payout %* If AT&T is top company 200% Level 1 (82-99.99%) 150% Level 2 (63-81.99%) 125% Level 3 (44-62.99%) 100% Level 4 (25-43.99%) 50% Level 5 (<25%) 0% * Payouts are capped at 90% of the target award if absolute AT&T 3-year TSR is negative, regardless of relative performance. Our 3-year TSR of 35.15% ranks us at the 54th percentile of the S&P 100 Index
|
COMPENSATION DISCUSSION AND ANALYSIS
TSR was measured relative to the following 37 companies, as determined when the grant was established in 2016*:
| Relative TSR Payout Modifier (2018 - 2020 Performance Period) | ||||||
|
| |||||
|
| |||||
Our 3-year TSR
|
|
| No adjustment to
| |||
Quartile 3
| ||||||
| Subtract 10 percentage points from final ROIC payout percentage | |||||
*Time Warner Inc.TSR was included in this group; AT&T completed its acquisitionmeasured relative to the peer group shown below. This peer group was established at the time of Time Warner Inc. in 2018.grant; these companies were removed due to acquisitions: 21st Century Fox, CBS, Sprint and Viacom.
PERCENT OF GRANT VALUE REALIZED – 2016 PERFORMANCE SHARE GRANT (2016-2018 PERFORMANCE PERIOD)
As a result of the combined ROIC and TSR performance attainment, each NEO received 76% of the number of shares granted.
| 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 |
|
|
|
|
| |||||||||||||||||||||||||||||||||
However,
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 were also subject tobe distributed. After the impact of common stock price fluctuationperformance over the3-year performance period, our NEOs received 70% of the original 2018 Performance Share grant value (without regard to any supplemental grants), as another elementfollows:
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 it’s difficult to understand the impact of our long-term incentiveCommittee’s pay-for-performance design. Based onphilosophy without an explanation of the $5.47 decrease incompensation 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 from $35.53 at grant to $30.06 at payout, the value of the shares actually payable decreased 15.4% over theperformance and achievement against 3-yearpre-established performance period.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 NEO’s 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 |
|
|
|
| ||||||||||||||||||||||||||
As a result of both ROIC and relative TSR performance and the absolute change in our stock price, our NEOs realized approximately 64% of their original performance share grant value.
|
PERCENT OF GRANT VALUE REALIZED – 2015 RSUs
Our 2015 RSUs had a4-year vesting period and were paid in early 2019. The final value delivered from these awards was based on our stock price. Over the4-year restriction period, the stock price decreased $2.26 per share, delivering 93% of the original grant value.
|
|
|
| |||||||||||||||||||||||||||
|
|
** Stock price used to determine the number of shares to be granted (target award value is divided by this stock price).
|
COMPENSATION DISCUSSION AND ANALYSIS
NAMED EXECUTIVE OFFICER COMPENSATION
In this section we detail how each NEO’s compensation was impacted by performance attainment. The following tables summarize the compensation our NEOs realized in 2018. The long-term values below do not align to what is reported in the 2018 Summary Compensation Table (SCT) because the SCT reflects long-term grant values for 2018 whereas these tables show the values of the long-term distributions for awards with performance/restriction periods ending in 2018 or early 2019.
AT&T’s 2018 performance highlights are summarized on page 38.
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. Stankey’s 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 year’s 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. Stankey’s 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. Stankey’s 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. Stankey’s 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. Stankey’s performance share payout was based on: • A formulaic payout of 105% of the 141,815 shares granted, based on the Company’s performance achievement for ROIC and 10% subtracted for the relative TSR modifier, plus • The Company’s 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 Company’s 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
| ||||
|
| |||
|
|
Mr. Stephenson retired on January 21, 2021. | ||
| ||||
Upon his appointment to Executive Chairman, the Committee made no adjustments to Mr. Stephenson’s 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
| $
| Mr. Stephenson’s 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
| ||
| Target Award =
Final Award Paid =
| Mr. Stephenson’s target STIP was not adjusted in 2020.
Mr.
| ||
Performance Share Payout 75% of 2018 Long-Term Award (2018-2020 Performance Period)
| Target Award =
Final Award Paid =
| Mr. Stephenson’s performance share payout was based on: • A formulaic payout of • The
Performance Shares were paid in
| ||
RSU Payout
(2017 Grant)
| Target Award =
valued at
|
The
RSUs were paid in common stock. | ||
Total Realized Compensation
| $ | |||
2021 PROXY | 49 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS |
John Stephens Senior Executive Vice President and Chief Financial Officer | ||||||
| John Stephens has | |||||
2020 Realized Compensation | ||||||
| ||||||
| Element of Compensation | Compensation Amount | Rationale | ||||
| $1,145,833 | Mr.
| ||||
| ||||||
2020 STIP |
| |||||
| Target Award =
Final Award Paid =
| Mr. Stephens’ target STIP was increased 3% to
Mr. Stephens’ STIP payout was
| ||||
Performance Share Payout 75% of 2018 Long-Term Award (2018-2020 Performance Period) | Target Award =
Final Award Paid =
| Mr. Stephens’ performance share payout was based on: • A formulaic payout of • The
Performance Shares were paid in
| ||||
RSU Payout 25% of 2017 Long-Term Award (2017 Grant)
| Target Award =
valued at
|
The
RSUs were paid in common stock.
| ||||
|
| |||||
Total Realized Compensation
| $ | |||||
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 world’s largest TV and film studio, the Company’s 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&T’s HBO Max streaming platform, a key element of AT&T’s software-based entertainment strategy. Consistent with common compensation practices in the media and technology industry, Mr. Kilar’s compensation is structured differently than executive pay in other industries, including AT&T’s 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 | ||||||
| ||||
|
| |||
| ||||
| Element of Compensation | Compensation Amount | Rationale | ||
| $
| Mr.
| ||
| Target Award =
Final Award Paid =
| Mr.
Mr.
| ||
| ||||
| Mr.
| |||
|
|
| ||
Total Realized Compensation
| $ | |||
2021 PROXY | 51 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS |
David McAtee Senior Executive Vice President and General Counsel | ||||||
| David McAtee has served | |||||
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&T’s acquisition of Time Warner. To retain Mr. McAtee’s 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. McAtee’s realized pay in 2020.
| ||||||
| ||||||
| Element of Compensation | Compensation Amount | Rationale | ||||
| ||||||
| $ | Mr. McAtee received a 2% base salary increase from $1,275,000 to $1,300,000 in March 2020. | ||||
2020 STIP |
| |||||
| Target Award =
Final Award Paid =
| Mr. McAtee’s target STIP was increased 2% to
Mr. McAtee’s STIP payout was
| ||||
Performance Share Payout 75% of 2018 Long-Term Award (2018-2020 Performance Period) | Target Award =
Final Award Paid =
| Mr. McAtee’s Performance Share payout was based on: • A formulaic payout of • The
Performance Shares were paid in
| ||||
RSU Payout 25% of 2017 Long-Term Award (2017 Grant) | Target Award =
valued at
|
RSUs were paid in common stock.
| ||||
|
|
| ||||
Total Realized Compensation
| $ | |||||
AT&T INC. | 52 | 2021 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
|
| ||||||
|
| |||||
| ||||||
| Element of Compensation | Compensation Amount | Rationale | ||||
| ||||||
| $ | Mr. McElfresh’s salary did not increase in 2020. | ||||
2020 STIP |
| |||||
| Target Award =
Final Award Paid =
| Mr. McElfresh’s target STIP did not increase in 2020. Mr. McElfresh’s STIP payout was 75% of his target award. The Committee awarded an additional $200,000 for his individual accomplishments including (i) the Company’s best postpaid market performance in ten years, (ii) the successful nationwide rollout of 5G, and maintaining the Company’s position as the industry’s 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 =
Final Award Paid =
| Mr. • A formulaic payout of • The
Performance Shares were paid in
| ||||
RSU Payout 25% of 2017 Long-Term Award (
| Target Award =
valued at
|
The
RSUs
| ||||
|
|
| ||||
Total Realized Compensation
| $ | |||||
2021 PROXY | 53 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS |
2018 LONG TERM GRANTS2020 LONG-TERM GRANTS
Our previous sections detailed compensation paidIn 2020, the Committee granted our NEOs long-term awards in 2018 and/or compensation for grants with performance or restriction periods ending in 2018 or early 2019. This section addresses the long-term grants we made in 2018.
The forms of long-term compensation granted to NEOs in 2018 were:form of:
| Weight | Performance Metrics | Vesting Period | |||||
| Performance Shares | 75% 0% for Mr. Kilar | Performance |
| |||||
|
| 3-year performance period | ||||||
| RSUs | 25%
| Payout value based on common stock price performance only | 4-year restriction period | |||||
GrantThe associated grant values for these awards were as follows:were:
2018 LONG TERM INCENTIVE2020 TARGET GRANTLONG-TERM VALUES FOR NEOS
Name | Performance Shares ($)(1) | RSUs ($)(1) | ||||||||
Randall Stephenson | 13,725,000 | 4,575,000 | ||||||||
John Stephens(2) | 6,750,000 | 2,250,000 | ||||||||
John Donovan | 8,531,250 | 2,843,750 | ||||||||
David McAtee(2) | 3,750,000 | 1,250,000 | ||||||||
John Stankey(2) | 5,531,250 | 1,843,750 | ||||||||
| 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 |
| ||||||
(1) These amounts represent the rounded value of theThe above table summarizes annual awards on February 1, 2018, the date the Committee authorized the awards; however, the final terms of the Performance Share grants were not determined until March 29, 2018, which is the grant date for valuation of the awards in the Summary Compensation Table.
(2) Target value includes the value of supplemental long-term grants made upon the Time Warner merger close. The grants made were in the same form (weight 75% Performance Shares and 25% Restricted Stock Units)RSUs approved in 2020, and subjectthe 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 same terms and conditions asdescription of Mr. Kilar’s award approved by the annual grants.Committee.
2018 Performance Share Grants2020 PERFORMANCE SHARE GRANTS
The Performance Shares granted in 20182020 are for the 2018-20202020-2022 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&T’s TSR to our22-company Corporate Peer Group (as shown on page 43).Group.
ROIC Performance Metric
We calculate ROIC for the 2018-20202020-2022 performance period by averaging over the three-year performance period: (1) our annual reported net income plusafter-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 items after taxes and available collectible insurance, if they exceed, individually or in certain combinations,specific categories exceeds $500 million in a calendar year and satisfy other conditions;year: changes in federal tax laws, changes in accounting principles, (except for the impacts of Revenue Recognition under ASC 606, “Revenue from Contracts with Customers”), expenses caused by natural disasters or intentionally caused damage to the Company’s property, andnon-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 (and associated tax effects).plans.
ROIC Payout Table Description
The ROIC target range for the 2018-20202020-2022 performance period was set 10075 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
This measure compares our TSR (stock appreciation plus reinvestment of dividends) relative to that of the 22 companies in our Peer Group. We believe that TSR is an important measure because it helps ensure that our executives remain focusedexecutives’ interests are aligned with those of stockholders. This modifier provides that 2020 Performance Share Award payouts may be adjusted based on the value they are deliveringour TSR (stock appreciation plus reinvestment of dividends) performance relative to our stockholders.Corporate Peer Group. TSR performance will be measured over the entire performance period.
TSR PERFORMANCE MODIFIER
2020-2022 Performance Period
| ||
AT&T Return vs.
| 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
| |
TSR Peer Group
Award payouts will be determined based on our TSR performance relative to our22-company Peer Group shown on page 43. These companies are the same ones that comprise the Peer Group used to assess market- based compensation for 2018. TSR performance will be measured over the entire performance period.
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.
2018 Restricted Stock Unit Grants2020 RESTRICTED STOCK UNIT GRANTS
For NEOs other than Mr. Kilar, RSUs granted in 20182020 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 executiveexecutives’ 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. Kilar’s 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&T’s 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 Company’s common stock. The RSUs pay 100% in stock to further align Mr. Kilar’s interests with those of our stockholders. Mr. Kilar’s employment contract and severance benefits are described on pages 62, 72 and 73.
The Committee approved Mr. Kilar’s equity grant as a way to attract and retain the unique skill set he brings to the Company and to incentivize stockholder interests.value creation. The structure of Mr. Kilar’s compensation also aligns with that of his peers in the media and technology industry. His total compensation reflects his responsibility in running a preeminent media company and is also in line with industry peers.
RISK MITIGATION2020 Retention Grant for Mr. McAtee
By ensuring thatMr. McAtee received a significant portioncareer retention grant of compensation305,085 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 grant’s ten-year restriction period. The award does not vest upon retirement eligibility. Mr. McAtee is eligible for a prorate of the award based on our long-term performance, we reducemonths worked during the risk that executives will place too much focus on short-term achievementsrestriction 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 detriment of our long-term sustainability. Our short-term incentive compensation is structured so that the accomplishment of short-term goals supports the achievement of long-term goals. These elements work together for the benefit of AT&T and our stockholdersCompany and to reduce riskreflect the value, including his proven legal expertise in our incentive plans.
In additionantitrust matters, they believe he brings to the risk moderation actions, we intend,AT&T in appropriate circumstances, to seek restitution of any bonus, commission, or other compensation received by an employee as a result of such employee’s intentional or knowing fraudulent or illegal conduct, including the making of a material misrepresentation in our financial statements.highly competitive marketplace.
2021 PROXY | 55 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS |
Benefits and Personal Benefits
Benefits are an important tool to maintain the market competitiveness of our overall compensation package. We provide personal benefits to our Executive Officers for three main reasons:
To effectively compete for talent: We mustThese benefits allow us to have a competitive program that is robustto help us in our attraction and competitive enough to attract and retain key talent.retention efforts.
To support Executive Officers in meeting the needs of the business:We require thearound-the-clock commitment and availability of our Executive Officers.Officers to be available around-the-clock. Therefore, we provide them benefits that allow us to have greater access to them. These benefits should not be measured solely in terms of any incremental financial cost, but rather based on the value they bring to usthe Company through maximized productivity and availability.
To provide for the safety, security, and personal health of executives:We provide Executive Officers certain personal benefits to provide for their safety and personal health.
Benefits for our Executive Officers are outlined below. The Committee continues to evaluate our personalcontinuously evaluates these benefits based on needs of the business and prevailing market practices/practices and trends.
Benefits
WarnerMedia employees did not participate in the following plans in 2018:
Deferral Opportunities
Tax-qualified 401(k) Plans
Our 401(k) plans offerare offered to substantially all our employees, including each of the NEOs, and provide the opportunity to defer income and receive companyCompany matching contributions. Substantially all of our plans provide our employees the ability to invest in AT&T or other investments. We match 80% of employeemanager contributions, limited to the first 6% of cash compensation (only base salary is matched for officers). EmployeesManagers hired externally on or after January 1, 2015 (2016 for DirecTV), and WarnerMedia employees, do not receive aearn pension benefits, and to account for the lack of a pension benefit, we increased theprovide a 401(k) match to 100% of133-1/3% match on the first 6%3% of eligible 401(k) contributions for these employees.and 100% match on the next 3% of eligible 401(k) contributions.
Nonqualified Plans
We providemid-level and above managers, other than WarnerMedia employees, the opportunity fortax-advantaged savings through two nonqualified plans:plans. WarnerMedia offers eligible employees a separate nonqualified deferral plan, though Mr. Kilar did not participate in 2020.
•Stock Purchase and Deferral Plan
This is our principal nonqualified deferral program for AT&T employees, which we use as a way to encourage our managers to invest in and hold AT&T common stock on atax-deferred basis. Under this plan,mid-level managers and above may annually elect to defer, through payroll deductions, up to 30% of their salary and annual bonus (officers, including the NEOs, may defer up to 95% of their short-term award, which is similar to, and paid in lieu of, the annual bonus paid to other management employees) to purchase AT&T deferred share units at fair market value on atax-deferred basis. Participants receive a 20% match on their deferrals in the form of additional AT&T deferred share units. Participants
also receive makeup matching deferred AT&T share units to replace the match that is not available in the 401(k) because of their participation in our nonqualified deferral plans or because they exceeded the IRS compensation limits for 401(k) plans. Officers do not receive the makeup match on the contribution of their short-term awards.
•Cash Deferral Plan
Through this plan, eligible AT&T managers may also defer cash compensation in the form of salaries and bonuses. The plan pays interest at the Moody’s Long-Term Corporate Bond Yield Average, reset annually, which is a common index used by companies for deferral plans. The SEC requires disclosure in the “SummarySummary Compensation Table”Table of any earnings on deferred compensation that exceed an amount set by the SEC.
These plans are described more fully on page 74.in the Executive Compensation Tables section.
AT&T INC. | 56 | 2021 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
|
Pension Benefits
We offer atax-qualified group pension plan to substantially alla majority of our AT&T managers. However, managersManagers hired externally on or after January 1, 2015 who would otherwise be(2016 for DirecTV) are not eligible to participate in the pension plan, willand instead receive an enhanced match in the 401(k) plan. WarnerMedia managers are not eligible to earn pension benefits, though some employees have frozen pre-merger Time Warner pension benefits.
We also provideprovided supplemental retirement benefits under nonqualified pension plans, or SERPs, to
employees who became officers before 2009. In 2019, Messrs. Stankey and Stephens elected to freeze their SERP benefits as if they had retired at the end of 2019. In exchange, they gave up credits under the plan for all future compensation and service. The frozen benefits will earn a fixed rate of interest equal to 3.7% which represents the discount rate used to determine lump sum benefits for participants who retired in 2019. Additional information on pension benefits, including these plans, may be found beginning on page 68,in the Executive Compensation Tables section, following the “Pension Benefits” table.
|
COMPENSATION DISCUSSION AND ANALYSIS
Personal Benefits
We provide our Executive Officers with other limited and market-based personal benefits. The benefits as follows: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 | ||||
|
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.
| ||||
|
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. | |||
|
Annual physical for executives who do not receive the health coverage shown above. | |||||
|
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. | ||||
|
Includes allowance, fuel, and maintenance. |
Recruiting and retention tool. | ||||
|
Provides compensation during a leave of absence due to illness or injury. |
Provides security to executives’ family members. | ||||
|
Residential security system and monitoring. | |||||
|
See page 69. | |||||
|
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. | ||||
|
|
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 on these post-retirement benefits canmay be found beginning on page 71.in the “Other Post-Retirement Benefits” section of Executive Compensation Tables.
2021 PROXY | 57 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS |
EQUITY RETENTIONAND HEDGING POLICY2020 STOCK OWNERSHIP GUIDELINES
Stock Ownership Guidelines
The Committee has established common stock ownership guidelines for all Executive Officers,2020 as follows.shown below. We include vested shares held in our benefit plans in determining attainment of these guidelines.
| Level | Ownership Guidelines | |
CEO | 6X Base Salary | |
Executive Officers | Lesser of 3X Base Salary or 50,000 Shares | |
All Executive Officers are given 5 years from assuming their position to achieve compliance.meet the minimum requirements.
Each NEO stock holdingswas in compliance with AT&T’s guidelines as of December 31, 2018, can be found in the “Common Stock Ownership” section beginning on page 29. As of December 31, 2018, Randall Stephenson held 2,175,574 vested shares of AT&T stock, a multiple of 34 times his base salary, well exceeding his
6X requirement. In addition, Mr. Stephenson also holds 633,226 shares of vested RSUs, which are subject to a retention period, making his total vested shares a multiple of 44 times his base pay.2020.
Retention of AwardsEQUITY RETENTION
Executive Officers are required to hold shares equivalent, in the aggregate, to 25% of the AT&T shares they receive (after taxes and exercise costs) from an incentive, equity, or option award granted to them after January 1, 2012, until they terminate employment with AT&T.
Hedging PolicyHEDGING POLICY
Executive officers are prohibited from hedging their AT&T stock or stock basedstock-based awards, including through trading in publicly-traded options, puts, calls, or other derivative instruments related to AT&T stock.
In addition to the risk moderation actions, we intend, in appropriate circumstances, to seek restitution of any bonus, commission, or other compensation received by an employee as a result of such employee’s intentional or knowing fraudulent or illegal conduct, including the making of a material misrepresentation in our financial statements.
By ensuring that a significant portion of compensation is based on our long-term performance, we reduce the risk that executives will place too much focus on short-term achievements to the detriment of our long-term sustainability. Our short-term incentive compensation is structured so that the accomplishment of short-term goals supports the achievement of long-term goals.
These elements work together for the benefit of AT&T and our stockholders and to reduce risk in our incentive plans.
ROLEOFTHE COMPENSATION CONSULTANT
INDEPENDENT COMPENSATION CONSULTANT
The Committee is authorized by its charter to employ independent compensation consultants and other advisors. The Committee has selected Frederic W. Cook & Co., Inc. (FW Cook)(FW Cook) to serve as its independent consultant. The consultant reports directly to the Committee. Other than advising the Corporate Governance and Nominating Committee on director compensation, FW Cook provides no other services to AT&T.
The consultant:
Attends all Committee meetings;
Regularly updates the Committee on market trends, changing practices, and legislation pertaining to executive compensation and benefits;
Reviews the Company’s executive compensation strategy and program to ensure appropriateness and market competitiveness;
Makes recommendations on the design of the compensation program and the balance of pay-for-performance elements;
Provides market data for jobs held by senior leaders;
Analyzes compensation from other companies’ proxy and financial statements for the Committee’s review when making compensation decisions;
Assists the Committee in making pay determinations for the Chief Executive Officer; and
Advises the Committee on the appropriate comparator groups for compensation and benefits as well as the appropriate peer group against which to measure long-term performance.
The Committee reviewed the following six independence factors, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, when evaluating the consultant’s independence:
Other services provided to AT&T
��� | Other services provided to AT&T |
Percentage of the consultant’s revenues paid by AT&T
Consultant’s policies to prevent conflicts of interest
Other relationships with compensation committee members
AT&T stock owned by the consultant
Other relationships with Executive Officers
Based on its evaluation of the consultant and the six factors listed above, the Committee has determined that the consultant met the criteria for independence.
The consultant’s duties include:
Attends all Committee meetings;
Regularly updates the Committee on market trends, changing practices, and legislation pertaining to executive compensation and benefits;
Reviews the Company’s executive compensation strategy and program to ensure appropriateness and market-competitiveness;
Makes recommendations on the design of the compensation program and the balance ofpay-for-performance elements;
Provides market data for jobs held by senior leaders;
Analyzes compensation from other companies’ proxy and financial statements for the Committee’s review when making compensation decisions;
Assists the Committee in making pay determinations for the Chief Executive Officer; and
Advises the Committee on the appropriate comparator groups for compensation and benefits as well as the appropriate peer group against which to measure long-term performance.
|
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Committee Report
AT&T INC. | 58 | 2021 PROXY |
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 Form10-K and Proxy Statement for filing with the SEC. |
February | The Human Resources Committee | |||
| ||||
Scott T. Ford | ||||
Michael B. McCallister | ||||
Matthew K. Rose | ||||
Geoffrey Y. Yang | ||||
2021 PROXY | 59 | AT&T INC. |
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 (theNamed Executive Officers). Compensation information is provided for the years each person in the table was a Named Executive Officer since 2016.2018.
SUMMARY COMPENSATION TABLE
| 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 |
| ||||||||||
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 ($) | |||||||||||||||||||||||
R. Stephenson Chairman, CEO and President | 2018 |
| 1,800,000 |
|
| 0 |
|
| 17,069,774 | 0 |
| 5,192,000 |
| 3,517,806 |
| 1,538,538 |
| 29,118,118 |
| |||||||||||||
2017 |
| 1,800,000 |
|
| 0 |
|
| 16,699,980 | 0 |
| 5,310,000 |
| 3,420,059 |
| 1,490,681 |
| 28,720,720 |
| ||||||||||||||
2016 |
| 1,791,667 |
|
| 0 |
|
| 16,063,344 | 0 |
| 5,700,000 |
| 3,474,304 |
| 1,404,401 |
| 28,433,716 |
| ||||||||||||||
J. Stephens Sr. Exec. Vice Pres. and CFO | 2018 |
| 1,096,875 |
|
| 2,000,000 |
|
| 8,542,439 | 0 |
| 2,057,917 |
| 1,324,399 |
| 620,674 |
| 15,642,304 |
| |||||||||||||
2017 |
| 979,167 |
|
| 0 |
|
| 6,999,984 | 0 |
| 1,710,000 |
| 3,574,285 |
| 629,371 |
| 13,892,807 |
| ||||||||||||||
2016 |
| 870,833 |
|
| 0 |
|
| 5,337,167 | 0 |
| 1,840,000 |
| 2,942,086 |
| 591,854 |
| 11,581,940 |
| ||||||||||||||
J. Donovan CEO-AT&T Communications, LLC | 2018 |
| 1,175,000 |
|
| 100,000 |
|
| 10,610,326 | 0 |
| 2,310,000 |
| 50,211 |
| 340,330 |
|
| 14,585,867 |
| ||||||||||||
2017 |
| 1,035,833 |
|
| 0 |
|
| 9,202,738 | 0 |
| 1,965,000 |
| 2,666,182 |
| 323,947 |
| 15,193,700 |
| ||||||||||||||
2016 |
| 858,333 |
|
| 0 |
|
| 4,352,640 | 0 |
| 1,650,000 |
| 2,388,147 |
| 259,190 |
| 9,508,310 |
| ||||||||||||||
D. McAtee Sr. Exec. Vice Pres. and | 2018 |
| 1,058,333 |
|
| 5,000,000 |
|
| 4,731,281 | 0 |
| 1,694,000 |
| 100,295 |
| 265,367 |
|
| 12,849,276 |
| ||||||||||||
2017 |
| 791,667 |
| 0 |
|
| 3,699,987 | 0 |
| 1,350,000 |
| 166,390 |
| 216,501 |
| 6,224,545 |
| |||||||||||||||
J. Stankey CEO – Warner Media, LLC | 2018 |
| 2,058,333 |
|
| 2,000,000 |
|
| 6,889,708 | 0 |
| 4,374,333 |
| 574,835 |
| 655,696 |
| 16,552,905 |
| |||||||||||||
2017 |
| 995,000 |
|
| 0 |
|
| 6,999,984 | 0 |
| 1,800,000 |
| 3,356 |
| 296,243 |
| 10,094,583 |
| ||||||||||||||
2016 |
| 965,833 |
|
| 0 |
|
| 5,881,237 | 0 |
| 1,930,000 |
| 3,730,962 |
| 257,263 |
| 12,765,295 |
| ||||||||||||||
Realized PayCOVID-19 Compensation Reductions Mr. Stankey requested a 50% reduction of his salary for the period of July 1 through December 31, 2020 and, for his 2020 STIP, a limit of 50% of his annual target. Mr. Stephenson likewise requested a relinquishment of his salary for the period of July 1 through December 31, 2020 and, for his 2020 STIP, a 50% reduction in the amount approved by the Committee. In both cases, the Committee considered and approved these requests.
Mr. Stephenson’s realized pay for 2018 was $18,844,528. A summary of realized pay for each of the NEOs is provided on pages 51-55.
NoteNOTE 1.
Each Four of the NEOs deferred portions of their 20182020 salary and/ornon-equity incentive awards into the Stock Purchase and Deferral Plan to make monthly purchases of Company stock in the form of stock units based on the market price of the underlying AT&T stock as follows: Mr. Stephenson—$5,472,400,2,407,500; Mr. Stephens—$2,282,521, Mr. Donovan—$352,500,2,505,000; Mr. McAtee—$579,438,2,063,125; and Mr. Stankey—McElfresh—$118,750.487,500. Each unit that the employee purchases is paid out in the form of a share of AT&T stock at the time elected by the employee, along with applicable matching shares. The value of the matching contributions made during the relevant year is included under “All Other Compensation.” A description of the Stock Purchase and Deferral Plan may be found on page 74.
Note 2.56.
NOTE 2.Amounts in the Stock Awards column for 20182020 represent the grant date values of Performance Shares and Restricted Stock Units. TheMr. Kilar’s Restricted Stock Units
were determined by the Committee in March, using the March 31, 2020, stock price, which valued the grant at $48 million; however, the amount reported in the table represents the grant date values were determined pursuant to FASB ASC Topic 718. Assumptions used for determining the value as of the stock awards reported in these columns are set forth in the relevant AT&T Annual Report to Stockholders in Note 15 to Consolidated Financial Statements, “Share-Based Payments.”May 1, 2020, when he became CEO of Warner Media. The grant date values of Performance Shares included in the table for 20182020 were: Mr. Stankey—$10,124,983, Mr. Stephenson—$12,494,790,15,749,983; Mr. Stephens—$6,284,996,8,062,497; Mr. Donovan—Kilar—$7,766,566,0; Mr. McAtee—$3,477,876,4,012,496; and Mr. Stankey—McElfresh—$5,045,456.4,350,002. The number of Performance Shares distributed at the end of the performance period is dependent upon the achievement of performance goals. Depending upon such achievement, the potential payouts range from 0% of the target number of Performance Shares to a maximum payout of 160% of the target number of Performance Shares. The value of the awards (Performance Shares and Restricted Stock Units) will be further affected by the price of AT&T stock at the time of distribution. The grant date values were determined pursuant to FASB ASC Topic 718. Assumptions used for determining the value of the stock awards reported in these columns are set forth in the relevant AT&T Annual Report to Stockholders in Note 16 to Consolidated Financial Statements, “Share-Based Payments.” To better understand the decisions of the Human Resources Committee with regard to these awards, please see the discussion on pages 54 and 55.
AT&T INC. | 60 | 2021 PROXY |
EXECUTIVE COMPENSATION TABLES |
|
NoteNOTE 3.
Under this column, we report earnings on deferrals of salary and incentive awards to the extent the earnings exceed a market rate specified by SEC rules. For the NEOs, these amounts are as follows for 2018:2020: Mr. Stankey—$1,967, Mr. Stephenson—$131,143,51,216, Mr. Stephens—$0, Mr. Donovan—Kilar—$50,211,0, Mr. McAtee—$0, and Mr. Stankey—McElfresh—$1,910.3,619. Other amounts reported under this heading represent an increase, if any, in pension actuarial value during the reporting period. Mr. Donovan’s actuarial change in pension was ($94,372); the amount reported is $0 pursuant to the SEC rules.
NoteNOTE 4.
This column includes personal benefits, Company-paid life insurance premiums and Company matching contributions to deferral plans, and state and local income tax reimbursements made in connection with business travel (Mr. Stankey).plans. AT&T does not provide other tax reimbursements to Executive Officers except under the Company’s relocation plan.
In valuing personal benefits, AT&T uses the incremental cost of the benefits to the Company. To determine the incremental cost of aircraft usage, we multiply the number of hours of personal flight
usage (including “deadhead” flights) by the hourly cost of fuel (Company average) and the hourly cost of maintenance (where such cost is based on hours of use), and we add per flight fees such as landing, ramp and hangar fees, catering, and crew travel costs. Mr.During their respective periods as CEO, each of Messrs. Stephenson reimbursesand Stankey reimbursed the Company for the incremental cost of histheir personal use of Company aircraft. Messrs. Donovan,Prior to becoming CEO, Mr. Stankey andalong with Mr. Stephens are also required to reimbursereimbursed the Company for the incremental cost of the personal usage of corporate aircraft, other than for travel to outside board meetings. Other Executive Officers may be required by the CEO to reimburse the incremental cost of their personal usage on acase-by-case basis. Reimbursements will not be made where prohibited by law. Mr. McAtee’s amount shown for use of Company aircraft represents flights taken for medical treatments.
| Stephenson | Stephens | Donovan | McAtee | Stankey | ||||||||||||||||||||||||||||||||||||||||
Personal Benefits | ||||||||||||||||||||||||||||||||||||||||||||
| Stankey | Stephenson | Stephens | Kilar | McAtee | McElfresh | |||||||||||||||||||||||||||||||||||||||
PERSONAL BENEFITS | ||||||||||||||||||||||||||||||||||||||||||||
Financial counseling (includes tax preparation and estate planning) |
| 22,074 |
|
| 11,500 |
|
| 14,000 |
|
| 12,318 |
|
| 14,000 |
|
| 14,175 |
|
| 14,000 |
|
| 12,957 |
|
| 0 |
|
| 16,055 |
|
| 10,000 |
| |||||||||||
Auto benefits |
| 27,213 |
|
| 16,176 |
|
| 14,261 |
|
| 16,562 |
|
| 13,736 |
|
| 20,568 |
|
| 26,204 |
|
| 14,695 |
|
| 0 |
|
| 15,010 |
|
| 13,912 |
| |||||||||||
Personal use of Company aircraft |
| 0 |
|
| 0 |
|
| 31,233 |
|
| 0 |
|
| 13,223 |
|
| 2,285 |
|
| 0 |
|
| 0 |
|
| 2,363 |
|
| 29,722 |
|
| 0 |
| |||||||||||
Health coverage |
| 52,152 |
|
| 50,064 |
|
| 50,064 |
|
| 50,064 |
|
| 50,064 |
|
| 57,340 |
|
| 57,340 |
|
| 55,192 |
|
| 0 |
|
| 55,192 |
|
| 5,000 |
| |||||||||||
Club membership |
| 2,877 |
|
| 0 |
|
| 0 |
|
| 2,793 |
|
| 2,793 |
|
| 2,793 |
|
| 1,425 |
|
| 0 |
|
| 0 |
|
| 2,793 |
|
| 0 |
| |||||||||||
Communications |
| 6,037 |
|
| 3,149 |
|
| 4,427 |
|
| 8,007 |
|
| 7,245 |
|
| 14,633 |
|
| 6,180 |
|
| 5,044 |
|
| 0 |
|
| 2,882 |
|
| 1,423 |
| |||||||||||
Home security |
| 7,866 |
|
| 50 |
|
| 344 |
|
| 50 |
|
| 1,453 |
|
| 1,485 |
|
| 10,296 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
| |||||||||||
Total Personal Benefits |
| 118,219 |
|
| 80,939 |
|
| 114,330 |
|
| 89,794 |
|
| 102,514 |
|
| 113,279 |
|
| 115,445 |
|
| 87,888 |
|
| 2,363 |
|
| 121,654 |
|
| 30,335 |
| |||||||||||
Company matching contributions to deferral plans |
| 1,202,860 |
|
| 442,800 |
|
| 126,581 |
|
| 148,588 |
|
| 118,750 |
|
| 13,680 |
|
| 1,108,500 |
|
| 610,038 |
|
| 13,461 |
|
| 480,278 |
|
| 117,480 |
| |||||||||||
Life insurance premiums applicable to the employees’ death benefit |
| 217,459 |
|
| 96,935 |
|
| 99,419 |
|
| 26,985 |
|
| 365,790 |
|
| 682,009 |
|
| 16,811 |
|
| 208,692 |
|
| 0 |
|
| 113,793 |
|
| 62,185 |
| |||||||||||
State and Local Income tax reimbursements in connection with business travel |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 68,642 |
| |||||||||||||||||||||||||||||
Total |
| 1,538,538 |
|
| 620,674 |
|
| 340,330 |
|
| 265,367 |
|
| 655,696 |
|
| 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
GRANTSOF PLAN-BASED AWARDS
| Name | Grant Date | Date of Action by |
Estimated Possible Payouts UnderNon-Equity Incentive | Estimated Future Payouts Under Equity Incentive Plan Awards (1) | All Other Stock Awards: Number of Shares of Stock or Units (2) (#) | All Other Option Awards: Number of Securities Underlying (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stephenson
|
3/29/18
|
|
2/1/18
|
|
| 2,655,000
|
|
|
5,900,000
|
|
|
7,375,000
|
|
|
140,194
|
|
|
350,485
|
|
|
560,776
|
|
|
12,494,790
|
| |||||||||||||||||||||||||||||||||||
2/1/18
|
|
2/1/18
|
|
|
116,828
|
|
|
4,574,984
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
Stephens
|
3/29/18
|
|
2/1/18
|
|
|
900,000
|
|
|
2,000,000
|
|
|
2,500,000
|
|
|
55,541
|
|
|
138,853
|
|
|
222,165
|
|
|
4,950,109
|
| |||||||||||||||||||||||||||||||||||
2/1/18
|
|
2/1/18
|
|
|
46,284
|
|
|
1,812,481
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
6/15/18
|
|
9/28/17
|
|
| 152,344
|
|
|
338,542
|
|
| 423,178
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
6/28/18
|
|
6/28/18
|
|
|
16,588
|
|
|
41,469
|
|
|
66,350
|
|
|
13,823
|
|
|
1,779,849
|
| ||||||||||||||||||||||||||||||||||||||||||
Donovan
|
3/29/18
|
|
2/1/18
|
|
| 1,237,500
|
|
|
2,750,000
|
|
|
5,500,000
|
|
|
87,142
|
|
|
217,856
|
|
|
348,570
|
|
|
7,766,566
|
| |||||||||||||||||||||||||||||||||||
2/1/18
|
|
2/1/18
|
|
|
72,619
|
|
|
2,843,760
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
McAtee
|
3/29/18
|
|
2/1/18
|
|
|
720,000
|
|
|
1,600,000
|
|
|
2,000,000
|
|
|
32,176
|
|
|
80,439
|
|
|
128,702
|
|
|
2,867,650
|
| |||||||||||||||||||||||||||||||||||
2/1/18
|
|
2/1/18
|
|
|
26,813
|
|
|
1,049,997
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
7/1/18
|
|
6/28/18
|
|
| 146,250
|
|
|
325,000
|
|
| 406,250
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
6/28/18
|
|
6/28/18
|
|
|
7,583
|
|
|
18,957
|
|
|
30,331
|
|
|
6,319
|
|
|
813,634
|
| ||||||||||||||||||||||||||||||||||||||||||
Stankey
|
3/29/18
|
|
2/1/18
|
|
|
945,000
|
|
|
2,100,000
|
|
| 2,625,000
|
|
|
55,541
|
|
|
138,853
|
|
|
222,165
|
|
|
4,950,109
|
| |||||||||||||||||||||||||||||||||||
2/1/18
|
|
2/1/18
|
|
|
46,284
|
|
|
1,812,481
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||
6/15/18
|
|
9/28/17
|
|
| 1,291,875
|
|
|
2,870,833
|
|
| 3,588,541
|
| ||||||||||||||||||||||||||||||||||||||||||||||||
6/28/18
|
|
6/28/18
|
|
|
1,185
|
|
|
2,962
|
|
|
4,739
|
|
|
987
|
|
|
127,118
|
| ||||||||||||||||||||||||||||||||||||||||||
| 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 |
| ||||||||||||||||||
NoteNOTE 1.
Represents Performance Share awards, discussed beginning on page 56.
Note 2.54.
RepresentsNOTE 2. Unless otherwise noted, represents Restricted Stock Unit grants, discussed on page 57.55. The units granted in 20182020 are scheduled to vest and distribute in January 2022.2024. Units will also vest upon an employee becoming retirement eligible; however, they are not distributed until the scheduled distribution date. All of the NEOs except for Mr.Messrs. Kilar, McAtee and McElfresh were retirement
eligible as of the grant date. Mr. McElfresh became retirement eligible later in 2020.
NOTE 3. Committee action to approve Mr. Kilar’s award was taken on March 23, calculated based on the March 31 Stock price, but was not effective until Mr. Kilar became CEO of Warner Media on May 1.
NOTE 4. Represents a Restricted Stock Unit grant that vests in April 2030 and does not vest upon retirement eligibility.
|
EXECUTIVE COMPENSATION TABLES
EMPLOYMENT CONTRACTS
Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table
Messrs. Donovan, Stankey and Stephens
Both the 20112016 Incentive Plan and the 20162018 Incentive Plan provide that in the event an employee retires while retirement eligible under the plan, an award of Performance Shares will be prorated based on the number of months worked during the performance period. AT&T has provided that Performance Shares granted after September 28, 2017, to Messrs. Donovan, Stankey or Stephens will not be prorated if they remain employed through December 30, 2020. Further,2020, or in the Company has agreed thatevent of certain changes in their reporting. As a result of this provision, Messrs. Stankey’s and Stephens’ Performance Shares shallcurrent and future grants will not be prorated if (a) they report to an officer or employee of the Company or any of its affiliates other than the Chief Executive Officer of AT&T Inc.; or (b) if the Company creates a higher-level position (e.g., Vice Chairman or Chief Operating Officer of AT&T Inc.) and they are not placed in that role or an equivalent role.prorated.
Mr. Stankey
Following the acquisition of DIRECTV, AT&T entered into an agreement with Mr. Stankey, whose responsibilities included the oversight of DIRECTV operations. The Company agreed to reimburse him for state and local income taxes that he incurred while on business travel outside of Texas (Texas is his primary work location and residence) as well as the income taxes owed on the reimbursement of such state and local income taxes. Amounts reimbursed are reported annually in the Summary Compensation Table under All Other Compensation. Upon Mr. Stankey being reassigned to oversee merger integration planning for our acquisition of WarnerMedia on August 1, 2017, this agreement no longer applied to subsequent compensation.
Upon closing of the acquisition of WarnerMedia, Mr. Stankey was appointed CEO of WarnerMedia. Subsequently, asWarner Media, LLC. As part of his newthis position, he iswas expected to engage in extensive business travel, which willwould require him to file state and local income tax returns in a number of jurisdictions. AT&T has agreed to reimburse Mr. Stankey for any legal fees he incurs in the defense of his state and local income tax returns.returns relating to periods when he was CEO of Warner Media.
Mr. Kilar
Warner Media, LLC entered into an employment contract with Mr. Kilar in 2020 to act as its Chief Executive Officer. Under the agreement, he will receive an initial base salary of $2,500,000 and an annual cash target bonus award of $2,500,000. The bonus is subject to performance measures determined by the Human Resources Committee. Pursuant to the agreement, he received 1,646,655 Restricted Stock Units payable in AT&T stock. One-fourth of the RSUs vest and distribute each year, starting on February 15, 2021. Mr. Kilar also agreed to confidentiality, non-compete, and non-solicitation covenants.
Finally, the contract provides severance benefits in the event (1) Mr. Kilar’s employment is terminated without cause or (2) Mr. Kilar terminates his employment within six months after the sale of the business and assets of Warner Media and the successor does not expressly assume the obligations under Mr. Kilar’s employment contract. These benefits are described on pages 72 and 73.
AT&T INC. | 62 | 2021 PROXY |
EXECUTIVE COMPENSATION TABLES
OUTSTANDING EQUITY AWARDSAT DECEMBER 31, 2018
| Option Awards (1) | Stock Awards | |||||||||||||||||||||||||||||||
| Name | | Number of Securities Underlying Unexercised Options Exercisable (#) |
| | Number of Securities Underlying Unexercised Options Unexer- cisable (#) |
| | Option Exercise Price ($) |
| | 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) ($) |
| | Equity Incentive Plans Awards: Number of Unearned Shares, Units or Other Vested (3) (#) |
| | Equity Incentive Plans Awards: Market or Payout Value of Unearned Shares, Units Vested (3) ($) |
| ||||||||
Stephenson |
| 30,472 |
|
| 23.22 |
|
| 2/17/19 |
| |||||||||||||||||||||||
| 14,627 |
|
| — |
|
| 24.63 |
|
| 6/15/19 |
| |||||||||||||||||||||
| 20,664 |
|
| — |
|
| 25.32 |
|
| 2/16/20 |
| |||||||||||||||||||||
| 379,336 |
|
| — |
|
| 25.54 |
|
| 6/15/20 |
| |||||||||||||||||||||
| 29,345 |
|
| — |
|
| 28.24 |
|
| 2/15/21 |
| |||||||||||||||||||||
2017-2019 Perf. Shares |
| — |
|
| — |
|
| 269,870 |
|
| 7,702,090 |
| ||||||||||||||||||||
2018-2020 Perf. Shares |
| — |
|
| — |
|
| 315,437 |
|
| 9,002,572 |
| ||||||||||||||||||||
Stephens |
| 6,656 |
|
| — |
|
| 23.22 |
|
| 2/17/19 |
| ||||||||||||||||||||
| 16,973 |
|
| — |
|
| 24.63 |
|
| 6/15/19 |
| |||||||||||||||||||||
| 8,454 |
|
| — |
|
| 25.32 |
|
| 2/16/20 |
| |||||||||||||||||||||
| 38,069 |
|
| — |
|
| 25.54 |
|
| 6/15/20 |
| |||||||||||||||||||||
| 9,730 |
|
| — |
|
| 28.24 |
|
| 2/15/21 |
| |||||||||||||||||||||
| 39,919 |
|
| — |
|
| 30.35 |
|
| 6/15/21 |
| |||||||||||||||||||||
| 2,373 |
|
| — |
|
| 29.87 |
|
| 2/15/22 |
| |||||||||||||||||||||
2017-2019 Perf. Shares |
| — |
|
| — |
|
| 113,119 |
|
| 3,228,416 |
| ||||||||||||||||||||
2018-2020 Perf. Shares |
| — |
|
| — |
|
| 124,968 |
|
| 3,566,587 |
| ||||||||||||||||||||
2018-2020 Perf. Shares
|
| 37,322
|
|
| 1,065,170
|
| ||||||||||||||||||||||||||
Donovan | ||||||||||||||||||||||||||||||||
2014 Restricted Stock |
| 56,673 |
|
| 1,617,447 |
|
| — |
|
| — |
| ||||||||||||||||||||
2015 Restricted Stock |
| 29,542 |
|
| 843,129 |
|
| — |
|
| — |
| ||||||||||||||||||||
2017-2019 Perf. Shares |
| — |
|
| — |
|
| 113,119 |
|
| 3,228,416 |
| ||||||||||||||||||||
2017-2019 Perf. Shares
|
| —
|
|
| —
|
|
| 38,085
|
|
| 1,086,946
|
| ||||||||||||||||||||
2018-2020 Perf. Shares |
| 196,070 |
|
| 5,595,838 |
| ||||||||||||||||||||||||||
McAtee | ||||||||||||||||||||||||||||||||
2014 Restricted Stock Units |
| — |
|
| — |
|
| — |
|
| — |
| ||||||||||||||||||||
2015 Restricted Stock Units |
| 8,343 |
|
| 238,109 |
|
| — |
|
| — |
| ||||||||||||||||||||
2015 Restricted Stock Units
|
| 21,996
|
|
| 627,766
|
|
| —
|
|
| —
|
| ||||||||||||||||||||
2016 Restricted Stock Units |
| 45,736 |
|
| 1,305,305 |
|
| — |
|
| — |
| ||||||||||||||||||||
2017 Restricted Stock Units |
| 22,145 |
|
| 632,018 |
|
| — |
|
| — |
| ||||||||||||||||||||
2018 Restricted Stock Units |
| 26,813 |
|
| 765,243 |
| ||||||||||||||||||||||||||
2018 Restricted Stock Units |
| 6,319 |
|
| 180,344 |
| ||||||||||||||||||||||||||
2017-2019 Perf. Shares |
| — |
|
| — |
|
| 59,792 |
|
| 1,706,464 |
| ||||||||||||||||||||
2018-2020 Perf. Shares |
| — |
|
| — |
|
| 72,395 |
|
| 2,066,153 |
| ||||||||||||||||||||
2018-2020 Perf. Shares |
| 17,061 |
|
| 486,921 |
| ||||||||||||||||||||||||||
Stankey |
| 2,073 |
|
| — |
|
| 23.22 |
|
| 2/17/19 |
| ||||||||||||||||||||
| 1,675 |
|
| — |
|
| 24.63 |
|
| 6/15/19 |
| |||||||||||||||||||||
| 2,366 |
|
| — |
|
| 25.32 |
|
| 2/16/20 |
| |||||||||||||||||||||
| 1,658 |
|
| — |
|
| 25.54 |
|
| 6/15/20 |
| |||||||||||||||||||||
| 2,326 |
|
| — |
|
| 28.24 |
|
| 2/15/21 |
| |||||||||||||||||||||
2017-2019 Perf. Shares |
| — |
|
| — |
|
| 113,119 |
|
| 3,228,416 |
| ||||||||||||||||||||
2018-2020 Perf. Shares |
| — |
|
| — |
|
| 124,968 |
|
| 3,566,587 |
| ||||||||||||||||||||
2018-2020 Perf. Shares
|
| —
|
|
| —
|
|
| 2,666
|
|
| 76,088
|
| ||||||||||||||||||||
EXECUTIVE COMPENSATION TABLES |
|
EXECUTIVE COMPENSATION TABLESOUTSTANDING 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 |
| ||||||||||||||||||||||||||
NoteNOTE 1.
Stock options were granted based upon the amount of stock purchased bymid-level and above managers under the Stock Purchase and Deferral Plan, described on page 74.56. Stock options are not currently offered under the plan. Options were vested at issuance but were not exercisable until the earlier of the first anniversary of the grant or the termination of employment of the
option holder. Options expire ten years after the grant date; however, option terms may be shortened due to termination of employment of the holder.
Note 2.NOTE 2.
Mr. Donovan’s 2014 and 2015McElfresh’s 2019 Restricted Stock grants vestAward grant vests in 2019 andDecember 2024. Mr. McAtee’s 2020 respectively.grant of Restricted Stock Units vests in April 2030.
2021 PROXY | 63 | AT&T INC. |
Note
EXECUTIVE COMPENSATION TABLES |
NOTE 3.
Performance Shares are paid after the end of the performance period shown for each award. The actual number of shares paid out is dependent upon the achievement of the related performance objectives and approval of the Committee. In this column, we report
the number of outstanding Performance Shares and their theoretical value based on the price of AT&T stock on December 31, 2018.2020. In calculating the number of Performance Shares and their value, we are required by SEC rules to compare the Company’s performance through 20182020 for each outstanding Performance Share grant against the threshold, target, and maximum performance levels for the grant and report in this column the applicable potential payout amount. If the performance is between levels, we are required to report the potential payout at the next
highest level. For example, if the previous fiscal year’s performance exceeded target, even if it is by a small amount and even if it is highly unlikely that we will pay the maximum amount, we are required by SEC rules to report the awards using the maximum potential payouts. The performance measure for the 20172019 and 20182020 grants is ROIC with a payout adjustment for relative TSR achievement. As of the end of 2018,2020, the ROIC achievement for each of the 20172019 and 20182020 grants was atabove target while the TSR performance was, for the 2019 grant, in the bottomthird quartile of the peer group and, for the 2020 grant, in the fourth quartile of the peer group. As a result, the grants were reported at the targetmaximum payout for ROIC reducedwith a no payout adjustment for TSR performance.performance for the 2019 grant and -10% payout adjustment for the TSR performance for the 2020 grant.
OPTION EXERCISESOPTION EXERCISES AND STOCK VESTED DURING 2018 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 ($) | ||||||||||||||||
STANKEY |
| 0 |
|
| 0 |
|
| 231,256 |
|
| 7,255,075 |
| ||||||||
STEPHENSON |
| 379,336 |
|
| 2,093,935 |
|
| 473,223 |
|
| 14,839,276 |
| ||||||||
STEPHENS |
| 46,523 |
|
| 318,477 |
|
| 242,107 |
|
| 7,621,121 |
| ||||||||
MCATEE |
| 0 |
|
| 0 |
|
| 140,162 |
|
| 4,483,969 |
| ||||||||
MCELFRESH |
| 0 |
|
| 0 |
|
| 106,049 |
|
| 3,142,146 |
| ||||||||
Option Awards | Stock Awards (1) | |||||||||||||||||||
Name | | Number of Shares Acquired on Exercise (#) |
| | Value Realized on Exercise ($) |
| | Number of Shares Acquired on Vesting (#) |
| | Value Realized on Vesting ($) | |||||||||
Stephenson |
| 0 |
|
| 0 |
|
| 282,604 |
| 9,558,204 | ||||||||||
Stephens |
| 0 |
|
| 0 |
|
| 115,187 |
| 3,913,156 |
| |||||||||
Donovan |
| 0 |
|
| 0 |
|
| 117,539 |
| 4,194,049 |
| |||||||||
McAtee |
| 0 |
|
| 0 |
|
| 42,630 |
| 1,339,557 |
| |||||||||
Stankey |
| 2,307 |
|
| 4,910 |
|
| 107,966 |
| 3,668,748 |
| |||||||||
Note 1.
NOTE 1. Included in the above amounts are Restricted Stock Units that vested in 2018.2020, but the payment of which was deferred for certain officers. Restricted Stock Units vest at the earlier of the scheduled vesting date or upon the employee becoming retirement eligible. If the units vest because of retirement eligibility, they are not distributed until the scheduled vesting date.
Restricted Stock Units granted in 20182020 to the following NEOs vested at grant because of their retirement eligibility but will not be distributed until 2022:2024: Mr. Stephenson—116,828,Stankey—96,532, Mr. Stephens—60,107, Mr. Donovan—72,619,Stephenson—140,262, and Mr. Stankey—47,271.Stephens—71,801. Mr. McAtee is notMcElfresh became retirement eligible and his 2014 Restricted Stock Units (7,871) vested and were distributed onin December of 2020, which accelerated the scheduled distribution datevesting of 76,590 units included in 2018.the above table.
AT&T INC. | 64 | 2021 PROXY |
EXECUTIVE COMPENSATION TABLES |
|
PENSION BENEFITS (ESTIMATED FOR DECEMBER 31, 2020)
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefits (1) ($) | Payments During Last Fiscal Year ($) | ||||||||||||||||||
STANKEY | Pension Benefit Plan—Nonbargained Program |
| 35 |
|
| 2,000,980 |
|
| 0 |
| ||||||||||||
SRIP |
| 19 |
|
| 423,113 |
|
| 0 |
| |||||||||||||
SERP |
| 34 |
|
| 30,675,183 |
|
| 0 |
| |||||||||||||
STEPHENSON | Pension Benefit Plan—Nonbargained Program |
| 38 |
|
| 1,961,964 |
|
| 0 |
| ||||||||||||
Pension Benefit Make Up Plan |
| 15 |
|
| 7,297 |
|
| 0 |
| |||||||||||||
SRIP |
| 22 |
|
| 2,333,675 |
|
| 0 |
| |||||||||||||
SERP |
| 30 |
|
| 63,434,385 |
|
| 0 |
| |||||||||||||
STEPHENS | Pension Benefit Plan—Nonbargained Program |
| 28 |
|
| 1,596,821 |
|
| 0 |
| ||||||||||||
Pension Benefit Make Up Plan |
| 8 |
|
| 69,580 |
|
| 0 |
| |||||||||||||
SRIP |
| 12 |
|
| 390,521 |
|
| 0 |
| |||||||||||||
SERP |
| 27 |
|
| 22,809,359 |
|
| 0 |
| |||||||||||||
MCATEE | Pension Benefit Plan—MCB Program |
| 8 |
|
| 147,238 |
|
| 0 |
| ||||||||||||
Pension Benefit Make Up Plan |
| 8 |
|
| 1,184,361 |
|
| 0 |
| |||||||||||||
MCELFRESH | Pension Benefit Plan—Mobility and Southeast Management Program |
| 25 |
|
| 369,534 |
|
| 0 |
| ||||||||||||
Pension Benefit Make Up Plan |
| 25 |
|
| 222,533 |
|
| 0 |
| |||||||||||||
PENSION BENEFITS (ESTIMATEDFOR DECEMBER 31, 2018)
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefits (1) ($) | Payments During Last Fiscal Year ($) | |||||||||||||||||||||||
Stephenson | Pension Benefit Plan—Nonbargained Program | 36 | 1,797,231 | 0 | |||||||||||||||||||||||
Pension Benefit Make Up Plan | 15 | 6,671 | 0 | ||||||||||||||||||||||||
SRIP | 22 | 2,416,985 | 0 | ||||||||||||||||||||||||
SERP | 30 | 56,303,088 | 0 | ||||||||||||||||||||||||
Stephens | Pension Benefit Plan—Nonbargained Program | 26 | 1,441,770 | 0 | |||||||||||||||||||||||
Pension Benefit Make Up Plan | 8 | 60,536 | 0 | ||||||||||||||||||||||||
SRIP | 12 | 425,232 | 0 | ||||||||||||||||||||||||
SERP | 26 | 20,396,786 | 0 | ||||||||||||||||||||||||
Donovan | Pension Benefit Plan—MCB Program | 9 | 163,540 | 0 | |||||||||||||||||||||||
SERP | 10 | 13,857,440 | 0 | ||||||||||||||||||||||||
McAtee | Pension Benefit Plan—MCB Program | 6 | 80,041 | 0 | |||||||||||||||||||||||
Pension Benefit Make Up Plan | 6 | 401,457 | 0 | ||||||||||||||||||||||||
Stankey | Pension Benefit Plan—Nonbargained Program | 33 | 1,811,692 | 0 | |||||||||||||||||||||||
SRIP | 19 | 438,355 | 0 | ||||||||||||||||||||||||
SERP | 33 | 27,327,212 | 0 | ||||||||||||||||||||||||
Note 1.
NOTE 1. Pension benefits reflected in the above table were determined using the methodology and material assumptions set forth in the 20182020 AT&T Annual Report to Stockholders in Note 1415 to Consolidated Financial Statements, “Pension and Postretirement Benefits,” except that, as required by SEC regulations, the assumed retirement age is the specified normal retirement age in the plan unless the plan provides a younger age at which benefits may be received without a discount based on age, in which case the younger age is used. For the Nonbargained Program under the AT&T&T/WarnerMedia Pension Benefit Plan and the Pension Benefit Make Up Plan, the assumed retirement age is the date a participant is at least age 55 and meets the “modified
rule of 75,” which
requires certain combinations of age and service that total at least 75. For the Mobility Program, Southeast Management Program and the Management Cash Balance Program under the AT&T&T/WarnerMedia Pension Benefit Plan, the assumed retirement age for the cash balance formula is age 65. For the AT&T SRIP and its successor, the 2005 SERP, the assumed retirement age is the earlier of the date the participant reaches age 60 or has 30 years of service (the age at which an employee may retire without discounts for age).
The SRIP/SERP benefits are reduced for benefits available under the qualified plans and by a specified amount that approximates benefits available under other nonqualified plans included in the table.
2021 PROXY | 65 | AT&T INC. |
EXECUTIVE COMPENSATION TABLES |
QUALIFIED PENSION PLAN
QUALIFIED PENSION PLAN
We offer post-retirement benefits, in various forms, to nearly all our managers. The AT&T&T/Warner Media Pension Benefit Plan, a “qualified pension plan” under the Internal Revenue Code, covers nearly allmost of our employees hired before 2015, including each of the NEOs.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.pension (2016 for DirecTV). However, they doemployees who are not entitled to participate in the pension plan or whose pension benefits were frozen receive an enhanced 401(k) benefit.
Nonbargained Program
Mr.Messrs. Stephenson, Mr. Stephens, and Mr. Stankey are covered by the Nonbargained Program of the AT&T&T/WarnerMedia Pension Benefit Plan, which is offered to most of ourpre-2007 management employees. Participants in the Nonbargained Program receive the greater of the benefit determined under the CAM formula or the cash balance formula, each of which is described below.
CAM Formula
For each of Mr.Messrs. Stephenson, Mr. Stephens, and Mr. Stankey the greater benefit comes from the CAM formula, which is reported in the Pension Benefits table. The CAM formula provides an annual benefit equal to 1.6% of the participant’s average pension-eligible compensation (generally, base pay, commissions, and annual bonuses, but not officer bonuses paid to individuals promoted to officer level before January 1, 2009) for the five years ended December 31, 1999, multiplied by the number of years of service through the end of the December 31, 1999, averaging period, plus 1.6% of the participant’s pension-eligible compensation for each year from January 1, 2000 through December 31, 2021, and 1% of participant’s pension-eligible compensation for each year thereafter. Employees who meet the “modified rule of 75” and are at least age 55 are eligible to retire without age or service discounts. The “modified rule of 75” establishes retirement eligibility when certain combinations of age and service total at least 75.
Cash Balance Formula
The cash balance formula was frozen, except for interest credits, on January 14, 2005. The cash balance formula provided an accrual equal to 5% of pension-eligible compensation plus monthly interest credits on the participant’s cash balance account. The interest rate is reset quarterly and is equal to the published average annual yield for the30-year Treasury Bond as of the middle month of the preceding quarter.
The programNonbargained Program permits participants to take the benefit in various actuarially equivalent forms, including various forms of life annuities or, for annuities. For
participants terminating on or after May 25, 2018, and receiving their benefit on or after June 1, 2018, this program permits participants to elect to take the benefit in a full lump sum calculated as the present value of the annuity.
Management Cash Balance Program
Mr. Donovan and Mr. McAtee areis covered by the MCB Program of the AT&T&T/WarnerMedia Pension Benefit Plan, which is offered to our management employees hired on or after January 1, 2007 (January 1, 2006 for AT&T Mobility) and before January 1, 2015. After completing one year of service, participants in the MCB Program are entitled to receive a cash balance benefit equal to the monthly credit of an age graded basic credit formula ranging from 1.75% to 4% of the participant’s pension-eligible compensation and a 2% supplemental credit for eligible compensation in excess of Social Security Wage Base plus monthly interest credit at an effective annual rate of 4.5% to the participant’s cash balance account. This program permits participants to take the benefit in various actuarially equivalent forms, including an annuity or a lump sum.
Mobility and Southeast Management Program
Mr. McElfresh is covered by the Mobility Program, which is also part of the tax-qualified AT&T/WarnerMedia Pension Benefit Plan. This program covers employees of AT&T Mobility that were hired prior to 2006. The Mobility Program is the qualified pension plan previously offered by AT&T Mobility that was merged into the AT&T/WarnerMedia Pension Benefit Plan. Participants in the Mobility Program are generally entitled to receive a cash balance benefit equal to the monthly basic benefit credits of 5% of the participant’s pension-eligible compensation (generally, base pay, commissions, and group incentive awards, but not individual awards) plus monthly interest credits on the participant’s cash balance account. The interest rate for cash balance credits is reset quarterly and is equal to the published average annual yield for the 30-year Treasury Bond as of the middle month of the preceding quarter. The plan permits participants to take the benefit in various actuarially equivalent forms, including an
AT&T INC. | 66 | 2021 PROXY |
EXECUTIVE COMPENSATION TABLES |
|
annuity or a lump sum calculated as the greater of the cash balance account balance, or the present value of the grandfathered pension benefit annuity.
In addition, Mr. McElfresh has a pension benefit under the Southeast Management Program, also part of the AT&T/WarnerMedia Pension Benefit Plan. This benefit accrued during his prior employment period at
BellSouth. Going forward, this cash balance account earns only interest credits, with an interest crediting rate for a specific calendar year indexed to the average annual yield for the 30-year Treasury Bond securities published for the prior year’s November, but not less than the floor interest crediting rate of 3.79%.
NONQUALIFIED PENSION PLANS
NONQUALIFIED PENSION PLANS
To the extent the Internal Revenue Code places limits on the amounts that may be earned under a qualified pension plan, managers instead receive these amounts under the nonqualified Pension Benefit Make Up Plan but only for periods prior to the person becoming a participant in the SRIP/SERP, described below. The Pension Benefit Make Up Plan benefit is paid in the form of a10-year annuity or in a lump sum if the present value of the annuity is less than $50,000.
In addition, we offer our Executive Officers and other officers (who became officers prior to 2005) supplemental retirement benefits under the SRIP and, for those serving as officers between 2005-2008, its successor, the 2005 SERP, as additional retention tools. As a result of changes in the tax laws, beginning December 31, 2004, participants ceased accruing benefits under the SRIP, the original supplemental plan. After December 31, 2004, benefits are earned under the SERP. Participants make separate distribution elections (annuity or lump sum) for benefits earned and vested before 2005 (under the SRIP) and for benefits accrued during and after 2005 (under the SERP). Elections for the portion of the pension that accrued in and after 2005, however, must have been made when the officer first participated in the SERP. Vesting in the SERP requires five years of service (including four years of participation in the SERP). Each of the eligible NEOs is vested in the SERP. Regardless of the payment form, no benefits under the SERP are payable until six months after termination of employment. An officer’s benefits under these nonqualified pension plans are reduced by: (1) benefits due under qualified AT&T pension plans and (2) a specific amount that approximates the value of the officer’s benefit under other nonqualified pension plans, determined generally as of December 31, 2008.These supplemental benefits are neither funded by nor are a part of the qualified pension plan.
Each of the NEOs, except for Mr. McAtee, isMessrs. Stankey, Stephenson and Stephens, are eligible to receive SRIP/SERP benefits. Since January 1,2009, no new officer has been permitted to participate in the SERP.
Calculation of Benefit
Under the SRIP/SERP, the target annual retirement benefit is stated as a percentage of a participant’s annual salary and annual incentive bonus averaged over a specified period described below. The percentage is increased by 0.715% for each year of actual service in excess of, or decreased by 1.43% (0.715% formid-career hires) for each year of actual service below, 30 years of service. In the event the participant retires before reaching age 60, a discount of 0.5% for each month remaining until the participant attains age 60 is applied to reduce the amount payable under this plan, except
for officers who have 30 years or more of service at the time of retirement. OfNone of the NEOs currently employed by the Company, only Mr. Stephenson and Mr. Stankey are eligible to retire without eithercurrent NEO SERP participants has an age or service discount under this plan.plan at this time. These benefits are also reduced by any amounts participants receive under AT&T qualified pension plans and by a frozen, specific amount that approximates the amount they receive under our other nonqualified pension plans, calculated as if the benefits under these plans were paid in the form of an immediate annuity for life.
The salary and bonus used to determine the SRIP/SERP benefit amount is the average of the participant’s salary and actual annual incentive bonuses earned during the36-consecutive-month period that results in the highest average earnings that occurs during the 120 months preceding retirement. In some cases, the Committee may require the use of the target bonus, or a portion of the actual or target bonus, if it believes the actual bonus is not appropriate. Effective September 1, 2017, for Mr. Donovan and effective June 16, 2018 for Messrs. Stephens and Stankey, the annual earnings used in the SERP’s “highest average earnings” is fixed at $3.0 million.
The target annual retirement percentage for the Chief Executive OfficerMessrs. Stankey and Stephenson is 60%, and 55% for other NEOs the target percentage ranges from 50% to 60%.Mr. Stephens. Beginning in 2006, the target percentage was limited to 50% for all new participants (see note above on limiting new participants after 2008). If a benefit payment under
2021 PROXY | 67 | AT&T INC. |
EXECUTIVE COMPENSATION TABLES |
the plan is delayed by the Company to comply with Federal law, the delayed amounts will earn interest at the rate the Company uses to accrue the present value of the liability, and the interest will be included in the appropriate column(s) in the “Pension Benefits” table.
Mr. Stephenson’s Benefit
Mr. Stephenson’s SERP benefit was modified in 2010. For purposes of calculating his SERP benefit, the Company froze his compensation as of June 30, 2010. He stopped accruing age and service credits as of December 31, 2012, at which time his benefit was determined as a lump sum amount, which thereafter earns interest. The discount rate for calculating the lump sum as well as the interest crediting rate is 5.8%.
|
EXECUTIVE COMPENSATION TABLES
Messrs. Stankey’s and Stephens’ SERP benefits were modified in 2019. For purposes of calculating their SERP benefits, the Company froze their compensation and stopped accruing age and service credits as of December 31, 2019, at which time their benefits were determined as a lump sum amount, which thereafter earns interest. The discount rate for calculating the lump sum as well as the interest crediting rate is 3.7%.
Forms of Payment
Annuity
Participants may receive benefits as an annuity payable for the greater of the life of the participant or ten years. If the participant dies within ten years after leaving the Company, then payments for the balance
of the ten years will be paid to the participant’s beneficiary. Alternatively, the participant may elect to have the annuity payable for life with 100% or 50% payable upon his or her death to his or her beneficiary for the beneficiary’s life. The amounts paid under each alternative (and the lump sum alternative described below) are actuarially equivalent. As noted above, separate distribution elections are made forpre-2005 benefits and 2005 and later benefits.
Lump Sum
Participants may elect that upon retirement at age 55 or later to receive the actuarially determined net present value of the benefit as a lump sum, rather than in the form of an annuity. To determine the net present value, we use the discount rate used for determining the projected benefit obligation at December 31 of the second calendar year prior to the year of retirement. Participants may also elect to take all or part of the net present value over a fixed period of years elected by the participant, not to exceed 20 years, earning interest at the same discount rate. A participant is not permitted to receive more than 30% of the net present value of the benefit before the third anniversary of the termination of employment, unless he or she is at least 60 years old at termination, in which case the participant may receive 100% of the net present value of the benefit as early as six months after the termination of employment. Eligible participants electing to receive more than 30% of the net present value of the benefit within 36 months of their termination must enter into a written noncompetition agreement with us and agree to forfeit and repay the lump sum if they breach that agreement.
OTHER POST-RETIREMENT BENEFITS
OTHER POST-RETIREMENT BENEFITS
The NEOs who retire after age 55 with at least five years of service (10 years of service for NEOs hired on or after October 1, 2015) or who are retirement eligible under the “modified rule of 75” continue to receive the benefits shown in the following table after retirement, except that of the NEOs, only Mr. Stephenson is entitled to receive executive health coverage after retirement. Benefits that are available generally to managers are omitted from the table. All the NEOs except for Mr.Messrs. McAtee and Kilar are currently retirement eligible.
Financial counseling benefits will be made available to the Executive Officers for 36 months following retirement.retirement or, in the event of the Executive Officer’s death, to the surviving spouse for one year after death, whichever occurs first. We do not reimburse
taxes on personal benefits for Executive Officers, other than certainnon-deductible relocation costs, which along with the tax reimbursement, we make available to nearly all management employees. Through December 31, 2017,
the executive health coverage supplemented the group health plan. Effective January 1, 2018, the executive health coverage is the primary and sole health coverage for eligible participants. The coverage is provided to Mr. Stephenson post-employment based on eligibility provisions that existed before he became CEO. During their employment, officers are subject to an annual deductible on health benefits,co-insurance, and must pay a portion of the premium. Officers who are eligible to receive the executive health coverage in retirement have no annual deductible orco-insurance, but they must pay larger premiums. In
AT&T INC. | 68 | 2021 PROXY |
EXECUTIVE COMPENSATION TABLES |
|
addition, we also provide communications, broadband/TV and related services and products; however, to the extent the service is provided by
AT&T, it is typically provided at little or no incremental cost. These benefits are subject to amendment.
OTHER POST-RETIREMENT BENEFITSOTHER POST-RETIREMENT BENEFITS
| Personal Benefit | Estimated Amount
| |
Financial counseling | Maximum of $14,000 per year for 36 months | |
Financial counseling provided in connection | Maximum of $20,000 total | |
Estate planning | Maximum of $10,000 per year for 36 months | |
Communication benefits | Average of | |
Health coverage (Mr. Stephenson only) | Estimated at $38,900 annually, which is in addition to required contributions from the employee | |
|
EXECUTIVE COMPENSATION TABLES
In the event of the officer’s termination of employment due to death, the officer’s unvested Restricted Stock Units and Restricted Stock, if any, will vest, and outstanding Performance Shares will pay out at 100% of target. As a result, if an active NEO had died at the end of 2018,2020, the amounts of Performance Shares, Restricted Stock Units and/or Restricted Stock, as applicable, that would have vested and been distributed are: Mr. Kilar—$47,357,798; Mr. McAtee—$12,587,619; and Mr. McElfresh—$1,518,873. The amounts of Performance Shares that would have distributed are as follows: Mr. Stankey—$14,849,623; Mr. Stephenson—$18,560,732,25,825,618; Mr. Stephens—$8,733,525, Mr. Donovan—$13,473,049,13,908,797; Mr. McAtee—$8,481,6036,670,882; and Mr. Stankey—McElfresh—$7,634,536.5,714,957.
In addition, in the event of termination of employment due to disability, unvested Restricted Stock Units and Restricted Stock, if any, will also vest; however, Restricted Stock Units will not pay out until their scheduled vesting distribution times. As a result, if such an event had occurred to an NEO at the end of 2018,times (except for Mr. Donovan’s Restricted Stock ($2,460,576)Kilar, whose award would be paid promptly). End-of-year amounts for Messrs. McAtee, McElfresh and Mr. McAtee’s Restricted Stock Units ($3,748,786) would have vested.Kilar are shown above. Conversely, Performance Shares will not be accelerated in the event of a termination due to disability but will be paid without proration, based solely on the achievement of the pre-determined performance goals.
We pay recoverable premiums on split-dollar life insurance that provides a specified death benefit to beneficiaries of each NEO.NEO except Mr. Kilar. The benefit is equal to one times salary during the officer’s employment, except for the CEO (including Mr. Stephenson) who receives two times salary. After retirement, for officers who first participated
beginning in 1998, the death benefit remains one times salary until he or she reaches age 66; the benefit is then reduced by 10% each year until age 70, when the benefit becomesone-half of his or her final salary. For officers who participated prior to 1998, including Messrs. Stephenson and Stephens, the post-retirement death benefit is one times salary. In addition, managers who were officers prior to 1998 are entitled to additional one times salary death benefit while employed and during retirement.
In addition to the foregoing, each of the active NEOs (except Mr. Kilar who is not eligible for this benefit) purchased optional additional split-dollar life insurance coverage equal to two times salary, which is subsidized by the Company. If the policies are not fully funded upon the retirement of the officer, we continue to pay our portion of the premiums until they are fully funded. The officer’s premium obligation ends at age 65.
Mr. Stephens elected to take his death benefits in the form of a ten-year Company-paid annuity payable after death, using an 11% discount rate based on 185% of the value of the death benefits. The increase in the value of the death benefits is to offset the income taxes that will result from the Company-paid benefit that would not be applicable in the case of insurance payments. This alternative payment method was available only to officers who elected the annuity before 1998. If Mr. Stephens had passed away at the end of 2018,2020, his annual death benefit for ten years would have been $1,398,839.$1,430,254.
2021 PROXY | 69 | AT&T INC. |
EXECUTIVE COMPENSATION TABLES |
NONQUALIFIED DEFERRED COMPENSATION
| Name | Plan (1) | Executive in Last FY (2) ($) | 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 |
| |||||||
NONQUALIFIED DEFERRED COMPENSATION
| Name | Plan (1) | Executive Contributions in Last FY (2) ($) | | Registrant Contributions in Last FY (2) ($) |
| | Aggregate Earnings in Last FY (2)(3) ($) |
| | Aggregate Withdrawals/ Distributions ($) |
| | Aggregate Balance at Last FYE (2) ($) | |||||||
Stephenson |
Stock Purchase and Deferral Plan
|
5,584,500
|
|
1,190,100
|
|
|
(3,041,236)
|
|
|
6,785,671
|
|
|
11,491,345
|
| ||||||
Cash Deferral Plan
|
900,000
|
|
—
|
|
|
613,007
|
|
|
7,163,963
|
|
|
15,031,614
|
| |||||||
Stephens |
Stock Purchase and Deferral Plan
|
1,952,000
|
|
429,600
|
|
|
(538,956)
|
|
|
2,341,411
|
|
|
2,232,179
|
| ||||||
Donovan |
Stock Purchase and Deferral Plan
|
352,500
|
|
113,700
|
|
|
(63,581)
|
|
|
402,547
|
|
|
416,937
|
| ||||||
Cash Deferral Plan
|
1,375,500
|
|
—
|
|
|
234,522
|
|
|
—
|
|
|
6,331,583
|
| |||||||
McAtee |
Stock Purchase and Deferral Plan
|
493,438
|
|
135,388
|
|
|
(112,688)
|
|
|
544,345
|
|
|
535,499
|
| ||||||
Stankey |
Stock Purchase and Deferral Plan
|
118,750
|
|
105,550
|
|
|
(350,287)
|
|
|
105,888
|
|
|
1,358,666
|
| ||||||
Cash Deferral Plan
|
—
|
|
—
|
|
|
8,918
|
|
|
—
|
|
|
233,100
|
|
NoteNOTE 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.
NoteNOTE 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 20182020 in the “Summary Compensation Table”: Mr. Stankey— $1,967, Mr. Stephenson—$2,761,243,1,930,356, Mr. Stephens—$757,100,939,795, Mr. Donovan—Kilar—$516,411,0, Mr. McAtee—$291,325,855,035, and Mr. Stankey— $226,210.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 20172019 and 2016,2018, combined: Mr. Stankey—$3,831, Mr. Stephenson—$7,474,620,7,035,660, Mr. Stephens—$1,624,500,4,778,025, Mr. Donovan—Kilar—$2,656,808,0, Mr. McAtee—$337,500, and Mr. Stankey—1,702,200, McElfresh—$6,456.
Note 3.453,779.
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 |
|
STOCK PURCHASESTOCK PURCHASE AND DEFERRAL PLAN DEFERRAL PLAN (SPDP)
Under the SPDP and its predecessor plan,mid-level managers and above may annually elect to defer up to 30% of their salary and annual bonus.bonus (WarnerMedia employees have a separate deferral plan and do not participate in the SPDP or the CDP; Mr. Kilar does not participate in any of the deferral plans). Officers, including the NEOs, may defer up to 95% of their short-term award, which is similar to, and paid in lieu of, the annual bonus paid to other management employees. In addition, the Committee may approve other contributions to the plan. Contributions are made through payroll deductions and are used to purchase AT&T deferred share units (each representing the right to receive a share of AT&T stock) at fair market value on atax-deferred basis. Participants receive a 20% match in the form of additional deferred share units; however, with respect to short-term awards, officer level participants receive the 20% match only on the purchase of deferred share units that represent no more than their target awards. In addition, the Company provides “makeup” matching contributions in the form of additional deferred share units in order to generally offset the loss of match in the 401(k) plan caused by participation in the SPDP and the CDP, and to provide match on compensation that exceeds Federal compensation limits for 401(k) plans. The makeup match is an 80% match on contributions from the first 6% of salary and bonus (the same rate as used in the Company’s principal 401(k) plan), reduced by the amount of matching contributions the employee is eligible to receive (regardless of actual participation) in the Company’s 401(k) plan. (For certain managers hired after January 1, 2015, the 401(k) match and SPDP makeup match is 100%133% on contributions from the first 6%3% of salary.salary and bonus and 100% for the next 3%.) Officer level employees do not receive a makeup match on the contribution of their short-term awards. Deferrals are distributed in AT&T stock at times elected by the participant. For salary deferrals prior to 2011 and bonus deferrals prior to 2012, in lieu of the 20% match, participants received two stock options for each deferred share unit acquired. Each stock option had an exercise price equal to the fair market value of the stock on the date of grant.
Cash Deferral PlanCASH DEFERRAL PLAN (CDP)
Managers who defer at least 6% of salary in the SPDP may also defer up to 50% (25% in the case of mid-level managers) of salary into the CDP. Similarly, managers that defer 6% of bonuses in the SPDP may also defer bonuses in the CDP, subject to the same deferral limits as for salary; however, officer level managers may defer up to 95% of their short-term award into the CDP without a corresponding SPDP deferral. In addition, the Committee may approve other contributions to the plan. We pay interest at the Moody’s Long-Term Corporate Bond Yield Average for the preceding September (theMoody’s rate), a common index used by companies. Pursuant to the rules of the SEC, we include in the “Summary Compensation Table” under “Change in Pension Value and Nonqualified Deferred Compensation Earnings” any earnings on deferred compensation that exceed a rate determined in accordance with SEC rules. Deferrals are distributed at times elected by the participant. Similarly, under its predecessor plan, managers could defer salary and incentive compensation to be paid at times selected by the participant. No deferrals were permitted under the prior plan after 2004. Account balances in the prior plan are credited with interest at a rate determined annually by the Company, which will be no less than the prior September Moody’s rate.
2021 PROXY | 71 | AT&T INC. |
EXECUTIVE COMPENSATION TABLES |
AT&T SEVERANCE POLICY
SEVERANCE POLICY
The AT&T Severance Policy generally limits severance payments for Executive Officers to 2.99 times salary and bonus. Under the AT&T Severance Policy, the Company will not provide severance benefits to an Executive Officer that exceed 2.99 times the officer’s annual base
salary, plus target bonus, unless the excess
payment receives prior stockholder approval or is ratified by stockholders at a regularly scheduled annual meeting within the following 15 months.
POTENTIAL PAYMENTS UPON CHANGEPOTENTIAL PAYMENTS UPON CHANGE IN CONTROL
CONTROL
Change in Control
An acquisition in our industry can take a year or more to complete, and during that time it is critical that the Company have continuity of its leadership. If we are in the process of being acquired, our officers may have concerns about their employment with the new company. Our Change in Control Severance Plan offers benefits so that our officers may focus on the Company’s business without the distraction of searching for new employment. The Change in Control Severance Plan covers our officers, including each of the NEOs.NEOs except for Mr. Kilar who has individual severance provisions.
Description of Change in Control Severance Plan
The Change in Control Severance Plan provides an officer who is terminated or otherwise leaves our Company for “good reason” after a change in control a payment equal to 2.99 times the sum of the executive’s most recent salary and target bonus.annual bonus for the fiscal year in which the Change in Control occurs. The Company is not responsible for the payment of excise taxes (or taxes on such payments). In 2014, the Company eliminated health, life insurance and financial counseling benefits from the plan.
“Good reason” means, in general, assignment of duties inconsistent with the executive’s title or status; a substantial adverse change in the nature or status of the executive’s responsibilities; a reduction in pay; or failure to pay compensation or continue benefits. For the CEO, we eliminated a provision that defined “good reason” to include a good faith determination by the executive within 90 days of the change in control that he or she is not able to discharge his or her duties effectively.
Under the plan, a change in control occurs: (a) if anyone (other than one of our employee benefit plans) acquires more than 20% of AT&T’s common stock, (b) if within a
two-year period, the Directors at the beginning of the period (together with any new Directors elected or nominated for election by atwo-thirds majority of Directors then in office who
were Directors at the beginning of the period or whose election or nomination for election was previously so approved) cease to constitute a majority of the Board, (c) upon consummation of a merger where AT&T Inc. is one of the merging entities and where persons other than the AT&T stockholders immediately before the merger hold more than 50% of the voting power of the surviving entity, or (d) upon our stockholders’ approval of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company’s assets.
If a change in control and a subsequent termination of employment of the NEOs had occurred at the end of 20182020 in accordance with the Change in Control Severance Plan, the following estimated severance payments would have been paid in a lump sum.
POTENTIAL CHANGEPOTENTIAL CHANGE IN CONTROL SEVERANCE PAYMENTS
CONTROL SEVERANCE PAYMENTS ASOF DECEMBER DECEMBER 31, 20182020
| Name | Severance | ($) | | ||
STANKEY | 26,611,000 |
| |||
| 23,322,000 | ||||
| 11,511,500 | ||||
| 10,913,500 | ||||
| 8,073,000 | ||||
| |||||
None of the NEOs hold stock awards that would be subject to automatic vesting in connection with a change in control.
|
Stockholders of Record
Stockholders whose shares are registered in their name on the Company records (also known as “stockholders of record”) will receive either a proxy card by which they may indicate their voting instructions or a notice on how they may obtain a proxy. Instead of submitting a signed proxy card, stockholders may submit their proxies by telephone or through the Internet. Telephone and Internet proxies must be used in conjunction with, andMr. Kilar will be entitled to severance benefits either in the event Mr. Kilar’s employment is terminated without cause or in the event Mr. Kilar terminates his employment within six months after the sale of the business and assets of Warner Media and the successor does not expressly assume the obligations under Mr. Kilar’s employment contract. In either case, he will remain subject to the information and terms contained on the form of proxy. Similar procedures may also be available to stockholders who hold their shares through a broker, nominee, fiduciary or other custodian.
All shares represented by proxies will be voted by one or more of the persons designated on the form of proxy in accordance with the stockholders’ directions. If the proxy card is signed and returned or the proxy is submitted by telephone or through the Internet without specific directions with respect to the matters to be acted upon, it will be treated as an instruction to vote such shares in accordance with the recommendations of the Board of Directors. Any stockholder giving a proxy may revoke it at any time before the proxy is voted at the meeting by giving written notice of revocation to the Secretary of AT&T, by submitting a later-dated proxy, or by attending the meeting and voting in person. The Chairman of the Board will announce the closing of the polls during the Annual Meeting. Proxies must be received before the closing of the polls in order to be counted.
A stockholder may designate a person or persons other than those persons designated on the form of proxy to act as the stockholder’s proxy by striking out the name(s) appearing on the proxy card, inserting the name(s) of another person(s), and delivering the signed card to that person(s). The person(s) designated by the stockholder must present the signed proxy card at the meeting in order for the shares to be voted.
Shares Held Through a Bank, Broker, or Other Custodian
Where the stockholder is not the record holder, such as where the shares are held through a broker, nominee, fiduciary or other custodian, the stockholder must provide voting instructions to the record holder of the shares in accordance with the record holder’s requirements in order to ensure the shares are properly voted.
Shares Held on Your Behalf under Company Benefit Plans or under The DirectSERVICE Investment Program
The proxy card, or a proxy submitted by telephone or through the Internet, will also serve as voting instructions to the plan administrator or trustee for any shares held on behalf of a participant under any of the following employee benefit plans: the AT&T Savings and Security Plan; the AT&T Puerto Rico Retirement Savings Plan; the AT&T Retirement Savings Plan; the BellSouth Savings and Security Plan and the Warner Media, LLC Savings Plan (WM Plan). Subject to the trustee’s fiduciary obligations, shares in each of the above employee benefit plans (other than the WM Plan) for which instructions are not received will not be voted. Shares in the WM Plan for which voting instructions are not received will be voted in the same proportion as shares for which voting instructions are received, except that if the WM Plan shares are attributable to accounts transferred from the Time Incorporated Payroll-Based Employee Stock Ownership Plan or the WCI Employee Stock Ownership Plan, then uninstructed shares will not be voted. To allow sufficient time for voting by the trustees and/or administrators of the plans, your voting instructions must be received by April 23, 2019.
In addition, the proxy card or a proxy submitted by telephone or through the Internet will constitute voting instructions to the plan administrator under The DirectSERVICE Investment Program sponsored and administered by Computershare Trust Company, N.A. (AT&T’s transfer agent) for shares held on behalf of plan participants.
If a stockholder participates in the plans listed above and/or maintains stockholder accounts under more than one name (including minor differences in registration, such as with or without a middle initial), the stockholder may receive more than one set of proxy materials. To ensure that all shares are voted, please submit proxies for all of the shares you own.confidentiality,
AT&T INC. | 72 | 2021 PROXY |
EXECUTIVE COMPENSATION TABLES |
|
non-compete, and non-solicitation covenants (the “Loyalty Provisions”) of his contract. If at the date of his termination, he has been employed for less that two years, the Loyalty provisions will continue to apply for six months; if he has been employed for a longer period, the Loyalty provisions will continue to apply for one year (the applicable period the Loyalty provisions apply is the “Severance Period”).
After his termination of employment, Mr. Kilar shall receive any unpaid salary and a prorated bonus subject to performance. During the Severance Period (6 or 12 months), so long as Mr. Kilar complies with the Loyalty Provisions, he will continue to receive a salary and an amount equal to his target bonus prorated, if necessary, for Severance Period. During the
Severance Period, he will be permitted to continue participation in Warner Media LLC’s health and welfare benefit plans as though he remained an employee. He will also receive the following severance payments, paid monthly over a twelve month period: if employed by Warner Media for three or more years, a severance equal to 1.99 times his salary and target bonus; if employed for more than two years and less than three years, a severance of 1 times his salary and target bonus.
Restricted Stock Units will continue to vest during the Severance Period. He will also receive a prorata portion of the RSUs next scheduled to vest (based on the period between the prior RSU vesting and the end of the Severance Period).
2021 PROXY | 73 | AT&T INC. |
AVAILABILITY OF CORPORATE GOVERNANCE DOCUMENTS
Only copy of AT&T’s Annual Report to the SEC on Form 10-K for the year 2020 may be obtained without charge upon written request to AT&T stockholdersStockholder Services, 208 S. Akard, Room 1830, Dallas, Texas 75202. AT&T’s Corporate Governance Guidelines, Code of Ethics, and Committee Charters for the following committees may attendbe viewed online at www.att.com and are also available in print to anyone who requests them (contact AT&T Stockholder Services at the meeting.above address): Audit Committee, Human Resources Committee, Corporate Governance and Nominating Committee, Corporate Development and Finance Committee, Public Policy and Corporate Reputation Committee, and Executive Committee.
Stockholders of Record (shares are registered in your name)STOCKHOLDER PROPOSALS AND DIRECTOR NOMINEES
An admission ticket is attachedIf a stockholder wishes to your proxy cardpresent a proposal or nominate a person for election as a Director at the 2022 Annual Meeting Noticeof Stockholders without such proposal or nomination being included in the Company’s proxy materials, such proposal or nomination must be received by the Senior Vice President, Deputy General Counsel and Admission Ticket. If you plan to attendSecretary of AT&T at 208 S. Akard, Suite 2954, Dallas, Texas 75202 not less than 90 days nor more than 120 days before the anniversary of the prior Annual Meeting of Stockholders. Since the Annual Meeting please retainof Stockholders will be held on April 30, 2021, written notice of any such proposal or nomination must be received by the admission ticketCompany no earlier than December 31, 2021, and bring it with youno later than January 30, 2022. In addition, such proposal or nomination must meet certain other requirements and provide such additional information as provided in the Company’s Bylaws. A copy of the Company’s Bylaws may be obtained without charge from the Senior Vice President, Deputy General Counsel and Secretary of AT&T. Special notice provisions apply under the Bylaws if the date of the Annual Meeting is more than 30 days before or 70 days after the anniversary date.
Stockholder proposals intended to be included in the proxy materials for the 2022 Annual Meeting must be received by November 11, 2021. Such proposals should be sent in writing by courier or certified mail to the meeting. A stockholderSenior Vice President, Deputy General Counsel and Secretary of record who doesAT&T at 208 S. Akard Street, Suite 2954, Dallas, Texas 75202. Stockholder proposals that are sent to any other person or location or by any other means may not have an admission ticket will be admitted upon presentation of photo identification at the door.received in a timely manner.
Other Stockholders (shares are heldNominations for a Director intended for inclusion in the nameCompany’s proxy materials for the 2022 Annual Meeting must be made in accordance with the proxy access provisions of a bank, broker, or other institution)
You may obtain admission to the meetingCompany’s Bylaws and such nomination must be received by presenting proof of your ownershipthe Senior Vice President, Deputy General Counsel and Secretary of AT&T common stockat 208 S. Akard, Suite 2954, Dallas, Texas 75202 not less than 120 days nor more than 150 days before the anniversary of the date that the Company mailed its Proxy Statement for the prior year’s Annual Meeting of Stockholders. For the 2022 Annual Meeting, written notice of any such nomination must be received by the Company no earlier than October 13, 2021 and photo identification. To be able to vote at the meeting, you will need the bank, broker, or record holder to give you a proxy.no later than November 11, 2021.
HOUSEHOLDING INFORMATION
No more than one annual report and Proxy Statement will be sent to multiple stockholders sharing an address unless AT&T has received contrary instructions from one or more of the stockholders at that address. Stockholders may request a separate copy of the most recent annual report and/or the Proxy Statement by writing the transfer agent at: Computershare Trust Company, N.A., P.O. Box 43078, Providence, RI 02940-3078, or by calling(800) 351-7221. Stockholders calling from outside the United States may call(781) 575-4729. Requests will be responded to promptly. Stockholders sharing an address who desire to receive multiple copies, or who wish to receive only a single copy, of the annual report and/or the Proxy Statement may write or call the transfer agent at the above address or phone numbers to request a change.
VOTING RESULTS
The voting results of the Annual Meeting will be published no later than four business days after the annual meeting on a Form8-K filed with the Securities and Exchange Commission, which will be available in the investor relations area of our website at www.att.com.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
DELINQUENT SECTION 16(a) REPORTS
AT&T’s Executive Officers and Directors are required under the Securities Exchange Act of 1934 to file reports of transactions and holdings in AT&T common stock with the SEC and the NYSE.SEC. Based solely on a review of the filed reports made during or with respect to the preceding year, AT&T believes that all Executive Officers and Directors were in compliance with allthe filing requirements applicable to such Executive Officers and Directors.Directors except as follows. Because of the complex nature of the forms, AT&T files the reports on behalf of the executive officers. During early 2020, while timely reporting certain equity grants, the company inadvertently omitted to disclose, for each of the then-executive officers, one restricted stock unit grant. The reports were subsequently amended to include such grants.
AT&T INC. | 74 | 2021 PROXY |
OTHER INFORMATION COST OF The cost of soliciting proxies will be borne by AT&T. Officers, agents and employees of AT&T and its subsidiaries and other solicitors retained by AT&T may, by letter, by telephone or in person, make additional requests for the return of proxies and may receive proxies on behalf of AT&T. Brokers, nominees, fiduciaries and other custodians will be requested to forward soliciting material to the beneficial owners of shares and will be reimbursed for their expenses. AT&T has retained D. F. King & Co., Inc. to aid in the solicitation of proxies at a fee of 2021 PROXY 75 AT&T INC.COST
PROXY SOLICITATION PROXY SOLICITATION$23,500,$24,500, plus expenses. 77
OTHER INFORMATION
We determinedPursuant 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. Stankey’s compensation as if he had served as CEO for the entire year. Mr. Stankey’s 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 dividing 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 Officers—Summary Compensation Table
The total 2018 compensation of the CEO as disclosed in the Summary Compensation Table by the total 2018 compensation of theour median employee, using the same components of compensation as used in the Summary Compensation Table for the CEO.$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. Stankey’s health benefits. |
| 2 | Includes the cost of group health and welfare benefits. |
Our median employee for 20182020 was determined using the compensation of employees who were actively employed on October 1, 20182020 (theMeasurement Date). We used their cash compensation for the first three3 quarters of the year to determine the median employee.
Determination of Number of Employees for Selection of Median Employee
AT&T INC. | 76 | 2021 PROXY |
| ||
|
|
Step 2 -
Of the above referenced 233,993 active global employees, 44,892 werenon-U.S. employees. We included in our calculation only the employees in the five foreign countries that held our largest foreign employee populations as follows: Mexico (20,214), Argentina (4,177), Slovakia (3,295), Colombia (3,064) and India (2,885). We excluded 11,257 employees in 56 other foreign countries as follows: Australia (266), Austria (12), Barbados (2), Belgium (125), Brazil (2,151), Bulgaria (101), Canada (440), Chile (467), China (78), Costa Rica (242), Curacao (17), Czech Republic (1,251), Denmark (58), Ecuador (379), El Salvador (1), Finland (19), France (183), Germany (289), Greece (3), Guatemala (2), Hong Kong (216), Hungary (2), Indonesia (2), Iraq (1), Ireland (31), Israel (308), Italy (137), Japan (124), Korea (28), Lithuania (1), Malaysia (694), Netherlands (219), New Zealand (16), Norway (11), Pakistan (2), Panama (3), Peru (272), Philippines (64), Poland (13), Portugal (2), Romania (2), Russian Federation (2), Singapore (314), Slovenia (2), South Africa (4), Spain (99), Sweden (43), Switzerland (52), Taiwan (20), Thailand (8), Trinidad (110), Turkey (3), United Arab Emirates (4), United Kingdom (1,066), Uruguay (199), and Venezuela (1,097).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, $95,814,$89,399, was determined using the same methodology we useduse for Mr. Stephenson in theStankey’s Summary Compensation Table compensation, and we included the cost of group health and welfare benefits. The total compensation of the CEO Randall L. StephensonJohn T. Stankey was $29,118,118,$20,320,917, which includes the value of Mr. Stephenson’sStankey’s health benefits. The final pay ratio calculation is 304:227:1.
2021 PROXY | 77 | AT&T INC. |
|
Discussion and Reconciliation of Non-GAAP Measures
TheWe believe the following tables reconcilemeasures are relevant and useful information to investors as they are part of AT&T’s 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 free cash flow(FCF) and earnings per share(EPS) metrics, discussed on page 38,competitors. These measures should be considered in addition to, the most comparable GAAP metrics.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 this metric providesthese 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 stockholders.
FREE CASH FLOWshareowners.
| ||
| ||
|
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 | % | |
Adjusted diluted EPS is calculated by excluding from operating revenues, operating expenses and income tax expense certain significant items that are non-operationalCash 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 non-recurring in nature, including dispositions and merger integration and transaction costs (referredmore, referred to as “Adjusting Items”). Management believes that this measure provides relevantvendor financing, which are excluded from capital expenditures and useful informationreported 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 other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.
Adjusting items include revenues and costs we consider nonoperational in nature, such as items arising from asset acquisitions or dispositions. We also adjust for net actuarial gains or losses associated with our pension and postemployment benefit plans.
ADJUSTED DILUTED EPSsupport systems, excluding FirstNet reimbursements.
| ||
| ||
| ||
| ||
| ||
| ||
|
|
|
|
|
AT&T Corporate Social Responsibility
2025 Goals
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 | ) | |
|
|
| ||
AT&T
|
|
|
Awards, Ratings, and Rankings
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 | ||||||||||||||||||
 |  |  | ||||||||||||||||||
For more information and for a complete list of external recognition, visitatt.com/csr
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 World’s Most Ethical Companies • Fortune Best Big Companies to Work For, World’s Most Admired Companies • Great Place to Work Best Workplaces for Diversity • Human Rights Campaign Corporate Equality Index • JUST Capital America’s Most JUST Companies (JUST 100) • National Organization on Disability Leading Disability Employer • Newsweek America’s 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 towww.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 | ||||||||
| ||||||||
|
| |||||||
| ||||||||
|
| |||||||
|
| |||||||
| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | |||||||||
| |||||||||
| — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —— — —— — — — | |||||||||
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOMTHIS PORTION IN THE ENCLOSED ENVELOPE. qONLY
Annual Meeting Proxy Card/Voting Instruction Card
AT&T INC.
The Board of Directors recommends a vote FOR the listed nominees. | ||||||||||||||||||||||
| 1. | Election of Directors | For | Against | Abstain | ||||||||||||||||||||||||||||||||||||||||
| 1a. | William E. Kennard | ☐ | ☐ | ☐ | ||||||||||
| 1b. | Samuel A. Di Piazza, Jr. | ☐ | ☐ | ☐ | ||||||||||
| 1c. | Scott T. Ford | ☐ | ☐ | ☐ | ||||||||||
| 1d. | Glenn H. Hutchins | ☐ | ☐ | ☐ | ||||||||||
| 1e. | Debra L. Lee | ☐ | ☐ | ☐ | ||||||||||
| 1f. | Stephen J. Luczo | ☐ | ☐ | ☐ | ||||||||||
| 1g. | Michael B. McCallister | ☐ | ☐ | ☐ | ||||||||||
| 1h. | Beth E. Mooney | ☐ | ☐ | ☐ | ||||||||||
| 1i. | Matthew K. Rose | ☐ | ☐ | ☐ | ||||||||||
| 1j. | John T. Stankey | ☐ | ☐ | ☐ | ||||||||||
| 1k. | Cynthia B. Taylor | ☐ | ☐ | ☐ | ||||||||||
| 1l. | Geoffrey Y. Yang | ☐ | ☐ | ☐ | ||||||||||
| ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
| The Board of Directors recommends a vote FOR Items 2 and 3. | For | Against | Abstain | |||||||||||||||||||||||
| Ratification of appointment of independent auditors. | ☐ | ☐ | ☐ | |||||||||||||||||||||||
| 3. | Advisory approval of executive compensation. | ☐ | ☐ | ☐ | ||||||||||||||||||||||
Item 4. |
|
|
|
| ||||||||||||||||||||||
4. | Stockholder Right to Act by Written Consent. | ☐ | ☐ | ☐ | ||||||||||||||||||||||
| IF VOTING BY MAIL, SIGN, DETACH AND RETURN THIS PORTION IN THE ENCLOSED ENVELOPE. | ||||||||||||||||||||||||||
| For | Against | Abstain | For | Against | Abstain | |||||||||||||||||||
| 2. | Ratification of appointment of independent auditors. | ☐ | ☐ | ☐ | 3. | Advisory approval of executive compensation. | ☐ | ☐ | ☐ | |||||||||||||||
| ||||||||||||||||||||||||||||||||||||
|
|
| ||||||||||||||||||||||||
|
| |
|  |
 |
|  | ||
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE . q
| ||||||
|
| |||||
|
| |||||||||||||||||||||||||
| Please sign exactly as name(s) | ||||||||||||||||||||||||||
| 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 trustee’s 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.
