UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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Securities Exchange Act of 1934
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AT&T Inc.
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Notice of At & T inc. 2019 Annual Meeting Of Stockholders and Proxy Statement.
TO OUR STOCKHOLDERS2022 NOTICE OF ANNUAL MEETING OFdK_ ,K __Z __E__ WZKyz_ d_d_D_Ed
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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
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IT’S A PLEASURE TO INVITE YOU TO OUR 2022 ANNUAL MEETING OF STOCKHOLDERS. I HOPE YOU CAN JOIN US VIRTUALLY ON THURSDAY, MAY 19, 2022, AT 3:00 P.M. CENTRAL TIME.
Dear Stockholders: As your chairman of AT&T’s Board of Directors, I’m proud of our Company’s longstanding commitment to strong, effective governance. The Board’s role is to keep our Company focused on sustainable success and represent your interests. To do that, we challenge conventional thinking, offer a diversity of perspectives and take a proactive approach to overseeing AT&T’s direction and operations – all while fulfilling our mission to create value for you. We place a high priority on communicating with our investors, and I hope you can join us at our virtual Annual Meeting on Thursday, May 19th. In the meantime, on behalf of the entire Board, I thank you for your continued confidence in AT&T. Sincerely, Bill Kennard | William E. Kennard INDEPENDENT CHAIRMAN OF THE BOARD | |
Dear Stockholders: It’s my pleasure to invite you to our 2022 Annual Meeting of Stockholders, a virtual web-based event. I hope you can join us at https://meetnow.global/ATT2022 on Thursday, May 19th, starting at 3 p.m. Central time. At this year’s meeting, we’ll update you on our business momentum as we deliver on our Company’s purpose of keeping customers connected. You’ll also hear about the progress we made against our 2021 business priorities: • Grow customer relationships through consistent subscriber growth in Mobility, Fiber and HBO Max. • Improve effectiveness and increase cost efficiencies enabling us to reinvest in our growth areas. • Be deliberate in our capital allocation to ensure the right capital structure to support future business success. Our goal is to generate long-term value for our stockholders by delivering sustainable success. On behalf of the Board and our management team, thank you for your continued support. Sincerely, John Stankey March 22, 2022 | 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 20192022 ANNUAL MEETING
OF STOCKHOLDERS AND PROXY STATEMENT
To the holdersHolders of Common Stock of AT&T Inc.:
The 20192022 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: |
Thursday, May 19, 2022 | |
Web Address: |
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The purpose of the annual meeting is to consider and take actionact 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 21, 2022, are entitled to vote at the meeting and at 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, 201922, 2022
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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
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MEETING
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More information about accessing the meeting
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The
Stockholders are available at www.edocumentview.com/att
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Attending the Meeting
The Record Date for AT&T’s 2022 Annual Meeting of Stockholders is March 21, 2022.
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 https://meetnow.global/ATT2022 and follow the prompts, which will ask you to enter your control number. The control number is 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 https://meetnow.global/ATT2022 and use your 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 May 16, 2022.
Guests
The meeting will also be available to the general public at the following link: https://meetnow.global/ATT2022. 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 https://meetnow.global/ATT2022 using your control number. In addition, you may submit questions beginning three days before the day of the meeting by going to https://meetnow.global/ATT2022. 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 pre-record the introduction of their proposal. The introduction must be relevant to the proposal and, of course, may not otherwise be inappropriate.
Control Number
Your control number appears 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 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 https://investors.att.com.
This summary highlights information contained elsewhere in this Proxy Statement. Please read the entire Proxy Statement carefully before voting. |
2022 ANNUAL MEETING INFORMATION
Time 3:00 p.m. Central time | Date Thursday May 19, 2022 | Place https://meetnow.global/ATT2022 |
ATTENDING THE MEETING
You may access the meeting by going to https://meetnow.global/ATT2022 and following the prompts, which will ask you for your control number, 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 2022 | FOR | 12 | ||||
3 - Advisory Approval of Executive Compensation | FOR | 13 | ||||
Stockholder Proposals: | ||||||
4 - Improve Executive Compensation Program | AGAINST | 14 | ||||
5 - Independent Board Chairman | AGAINST | 15 | ||||
6 - Political Congruency Report | AGAINST | 16 | ||||
7 - Civil Rights and Non-Discrimination Audit | AGAINST | 18 |
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 20 describes our governance framework, which includes the following highlights:
Independent Chairman |
12 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 |
2022 PROXY | SUM 1 | AT&T INC. |
2022 Proxy Statement Summary |
GUIDE TO AT&T’S PROXY STATEMENT
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 eleven new independent 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. | 71 | M | W | 2015 | Retired Global CEO, PricewaterhouseCoopers International Limited | |||||
SCOTT T. FORD | 59 | M | W | 2012 | Member and CEO, Westrock Group, LLC | |||||
GLENN H. HUTCHINS | 66 | M | W | 2014 | Chairman, North Island and North Island Ventures and Co-Founder, Silver Lake | |||||
WILLIAM E. KENNARD | 65 | M | B | 2014 | Former United States Ambassador to the European Union and former Chairman of the Federal Communications Commission | |||||
DEBRA L. LEE | 67 | F | B | 2019 | Chair, Leading Women Defined Foundation | |||||
STEPHEN J. LUCZO | 65 | M | W | 2019 | Managing Partner, Crosspoint Capital Partners, L.P. | |||||
MICHAEL B. MCCALLISTER | 69 | M | W | 2013 | Retired Chairman of the Board and CEO, Humana Inc. | |||||
BETH E. MOONEY | 67 | F | W | 2013 | Retired Chairman and CEO, KeyCorp | |||||
MATTHEW K. ROSE | 62 | M | W | 2010 | Retired Chairman and CEO, Burlington Northern Santa Fe, LLC | |||||
JOHN T. STANKEY | 59 | M | W | 2020 | CEO and President, AT&T Inc. | |||||
CYNTHIA B. TAYLOR | 60 | F | W | 2013 | President and CEO, Oil States International, Inc. | |||||
LUIS A. UBIÑAS | 59 | M | H | 2021 | Former President, Ford Foundation | |||||
GEOFFREY Y. YANG | 63 | M | A | 2016 | Founding Partner and Managing Director, Redpoint Ventures |
*All Directors are nominated for re-election. All Director nominees are independent, except for Mr. Stankey.
Key:F – Female; M – Male; A – Asian; B – Black or African American; H – Hispanic; W – White
AT&T INC. | SUM 2 | 2022 PROXY |
2022 Proxy Statement Summary |
GENERALSTOCKHOLDER ENGAGEMENT
AT&T has a long history of engaging with our stockholders each spring and fall to hear their feedback and discuss relevant topics, informing our Board’s approach to governance, compensation and oversight of ESG initiatives. In 2021, members of our senior management team and independent Board members conducted extensive engagement with stockholders, paying particular attention to investors’ concerns regarding our executive compensation programs and last year’s say on pay vote. Other topics discussed included diversity and inclusion, environmental impact and ESG initiatives, disclosures and oversight. We listened to stockholders’ feedback and discussed changes under consideration to our short-term and long-term incentive programs, in addition to seeking stockholder perspectives on important ESG topics, as we have done in prior years.
The Human Resources Committee and full Board relied on meaningful input from stockholders when assessing and reviewing potential enhancements to our executive compensation programs, including further aligning pay with TSR performance and stockholder interests, providing prior levels of detailed disclosure regarding our short-term plan targets and payouts, and limiting the use of grants particularly without performance components. Additional detail on the feedback received and responsive actions, which build upon a history of responsiveness in prior years, can be found on pages 49-50 in the “Stockholder Engagement” section of the Compensation Discussion and Analysis.
As shown in the following graphic, during both the spring and fall of 2021, we met with stockholders representing a large portion of AT&T’s institutional investor base.(1)
Spring 2021 Outreach (% of Shares Held by Institutional Investors) | Fall 2021 Outreach (% of Shares Held by Institutional Investors) |
1 | “Institutional Investors” does not include retail, insider, and state-owned shares. |
2022 PROXY | SUM 3 | AT&T INC. |
2022 Proxy Statement Summary |
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) HIGHLIGHTS
ESG issues represent risks, opportunities and important external impacts we consider in our strategy and operations. Our approach to ESG is integrated into our business through Board of Directors oversight, officer-level leadership of ESG initiatives across relevant departments and collaboration among dedicated teams of corporate responsibility professionals and subject-matter experts throughout the Company. Pages 32-37 detail how our integrated ESG approach delivers long-term value for AT&T and positive social and environmental impact for our stakeholders.
A sample of independent assessment organizations recognizing our ESG approach and performance is listed on inside back cover.
SELECT HIGHLIGHTS OF ESG INTEGRATION AND IMPACT:
ESG INTEGRATION ACROSS AT&T OPERATIONS |
Focus on material ESG issues (pages 32, 34) | • In 2021, we conducted our 6th stakeholder assessment to identify and prioritize our most material ESG issues and how we should focus our resources, goals and reporting. • We integrate our most material ESG issues into corporate enterprise risk assessment activities. | |
Political engagement transparency (page 35) | • In 2021, our leadership in political engagement transparency was again recognized via independent third-party analysis. |
ENVIRONMENTAL IMPACT |
Net zero emissions by 2035 (page 36) | • Through FY2020, we progressed more than halfway toward our science-based target to reduce Scope 1 and 2 emissions 63% by 2030 (2015 base year). • In 2022 we announced 2 solar energy deals, increasing our commitments to more than 1.7 gigawatts of renewable energy capacity – helping make AT&T the 7th largest corporate renewable energy user in the U.S., according to the EPA. | |
Supplier and customer emissions reductions (pages 35-36) | • Through FY2021, we reached 94% of our science-based target to ensure half our spend is with suppliers that have, or have committed to, set their own science-based targets by 2024. • In 2021, we launched the AT&T Gigaton Goal to equip business customers with connectivity solutions that cumulatively save a gigaton of GHG emissions by 2035. |
SOCIAL IMPACT |
$2B commitment to address the digital divide (page 37) | • In 2021, we introduced AT&T Connected LearningSM and have set a 2025 goal to reach 1 million people in need through the program. • Through the end of 2022, we will launch more than 20 AT&T Connected Learning Centers(SM) in traditionally underserved neighborhoods facing barriers to connectivity. | |
A diverse, equitable and inclusive workforce (page 36) | • In 2021, more than 55% of open positions and 53% of promotions were filled by diverse candidates. • We enhanced the transparency of our workforce diversity by publicly releasing AT&T and WarnerMedia Federal EEO-1 data. |
AT&T INC. | SUM 4 | 2022 PROXY |
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 20192022 Annual Meeting of Stockholders of AT&T. The meeting will be heldconducted virtually over the Internet at 9:3:00 a.m. localp.m. Central time on Friday, April 26, 2019, at the Moody Performance Hall, 2520 Flora Street, Dallas, Texas 75201.Thursday, May 19, 2022.
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, 2019,22, 2022, 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 21, 2022. These materials are also available at www.edocumentview.com/www.envisionreports.com/att. Each share entitles the registered holder to one vote. As of January 31, 2019,March 21, 2022, there were 7,290,236,9077,163,031,266 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
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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
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MANAGEMENT PROPOSALS: | ||||||
1
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Election of Directors
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FOR each nominee
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5
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2
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Ratification of Ernst & Young LLP as auditors for 2019
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FOR
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13
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3
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Advisory Approval of Executive Compensation
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FOR
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14
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STOCKHOLDER PROPOSAL:
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4
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Independent Chair
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AGAINST
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15
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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:
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Current Directors*
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Senior leadership/Ceo experience global business/ affairs finance/public accounting government/ regulatory industry/ technology investment/private equity
Name
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Director Since
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Randall L. Stephenson
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58
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2005
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Chairman, CEO, and President, AT&T Inc.
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Samuel A. Di Piazza, Jr.
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68
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2015
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Retired Global CEO, PricewaterhouseCoopers International Limited
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Richard W. Fisher
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69
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2015
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Former President and CEO, Federal Reserve Bank of Dallas
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Scott T. Ford
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56
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2012
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Member and CEO, Westrock Group, LLC
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Glenn H. Hutchins
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63
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2014
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Chairman, North Island andCo-Founder, Silver Lake
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William E. Kennard
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62
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2014
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Former United States Ambassador to the European Union and former Chairman of the Federal Communications Commission
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Michael B. McCallister
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66
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2013
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Retired Chairman and CEO, Humana Inc.
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Beth E. Mooney
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64
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2013
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Chairman and CEO, KeyCorp
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Joyce M. Roché**
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71
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1998
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Retired President and CEO, Girls Incorporated
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Matthew K. Rose
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59
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2010
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Chairman and CEO, Burlington Northern Santa Fe, LLC
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Cynthia B. Taylor
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57
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2013
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President and CEO, Oil States International, Inc.
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Laura D’Andrea Tyson
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71
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1999
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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
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Geoffrey Y. Yang
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60
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2016
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Founding Partner and Managing Director, Redpoint Ventures
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* 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.
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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% |
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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% |
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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 20192022 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 20192022 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 be counted in determining the vote obtained on such matters.
2022 PROXY | 1 | AT&T INC. |
GENERAL
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 20192022 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 May 16, 2022.
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 | 2022 PROXY |
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. Roché will retire at the 2019 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 1213 persons listed below for election as Directors toone-year terms of office that would expire at the 20202023 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,re-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. TheOther than in connection with the WarnerMedia/Discovery transaction, 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
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Name
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Director Since
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Randall L. Stephenson
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58
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2005
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Chairman, CEO, and President, AT&T Inc.
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Samuel A. Di Piazza, Jr.
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68
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2015
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Retired Global CEO, PricewaterhouseCoopers International Limited
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Richard W. Fisher
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69
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2015
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Former President and CEO, Federal Reserve Bank of Dallas
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Scott T. Ford
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56
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2012
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Member and CEO, Westrock Group, LLC
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Glenn H. Hutchins
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63
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2014
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Chairman, North Island andCo-Founder, Silver Lake
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William E. Kennard
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62
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2014
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Former United States Ambassador to the European Union and former Chairman of the Federal Communications Commission
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Michael B. McCallister
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66
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2013
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Retired Chairman and CEO, Humana Inc.
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Beth E. Mooney
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64
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2013
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Chairman and CEO, KeyCorp
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Matthew K. Rose
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59
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2010
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Chairman and CEO, Burlington Northern Santa Fe, LLC
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Cynthia B. Taylor
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57
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2013
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President and CEO, Oil States International, Inc.
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Laura D’Andrea Tyson
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71
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1999
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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
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Geoffrey Y. Yang
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60
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2016
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Founding Partner and Managing Director, Redpoint Ventures
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Name | Age | Director Since | Principal Occupation | |||
SAMUEL A. DI PIAZZA, JR. | 71 | 2015 | Retired Global CEO, PricewaterhouseCoopers International Limited | |||
SCOTT T. FORD | 59 | 2012 | Member and CEO, Westrock Group, LLC | |||
GLENN H. HUTCHINS | 66 | 2014 | Chairman, North Island and North Island Ventures and | |||
WILLIAM E. KENNARD | 65 | 2014 | Former United States Ambassador to the European Union and former Chairman of the Federal Communications Commission | |||
DEBRA L. LEE | 67 | 2019 | Chair, Leading Women Defined Foundation | |||
STEPHEN J. LUCZO | 65 | 2019 | Managing Partner, Crosspoint Capital Partners, L.P. | |||
MICHAEL B. MCCALLISTER | 69 | 2013 | Retired Chairman of the Board and CEO, Humana Inc. | |||
BETH E. MOONEY | 67 | 2013 | Retired Chairman and CEO, KeyCorp | |||
MATTHEW K. ROSE | 62 | 2010 | Retired Chairman and CEO, Burlington Northern Santa Fe, LLC | |||
JOHN T. STANKEY | 59 | 2020 | CEO and President, AT&T Inc. | |||
CYNTHIA B. TAYLOR | 60 | 2013 | President and CEO, Oil States International, Inc. | |||
LUIS A. UBIÑAS | 59 | 2021 | Former President, Ford Foundation | |||
GEOFFREY Y. YANG | 63 | 2016 | Founding Partner and Managing Director, Redpoint Ventures |
All Director nominees are independent, except for Mr. Stephenson.Stankey.
VOTING ITEMS
2022 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.
AT&T INC. | 4 | 2022 PROXY |
VOTING ITEMS - MANAGEMENT PROPOSALS |
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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.
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Government/ | Telecom | Media & |
• Ford Motor Company • MetLife, Inc. Past Public Company Directorships • Duke Energy Corporation (2014-2021) Committees • Corporate Governance and Nominating • Executive (Chair) • Public Policy and Corporate Reputation |
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DI PIAZZA, JR. Age: 71 Director since 2015 Retired Global Chief Executive Officer of PricewaterhouseCoopers International Limited
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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.
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Mr. Di
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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 |
2022 PROXY | 5 | AT&T INC. |
VOTING ITEMS - MANAGEMENT PROPOSALS
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Age: 59 Director since 2012 Member and Chief Executive Officer of Westrock Group, LLC
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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.
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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.
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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 |
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Age: 66 Director since 2014 Chairman, North Island and North Island Ventures and Co-Founder of Silver Lake
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Mr. Hutchins is Chairman of North Island
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Government/ | Human Capital | Technology/ Innovation |
Past Public Company Directorships • Nasdaq, Inc. (2005-2017) • Virtu Financial, Inc. (2017-2021) Committees • Corporate Development and Finance • Executive • Public Policy and Corporate Reputation (Chair) |
AT&T INC. | 6 | 2022 PROXY |
VOTING ITEMS - MANAGEMENT PROPOSALS |
VOTING ITEMS
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Age: 67 Director since 2019 Chair of Leading Women Defined |
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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 also co-founded The Monarchs Collective (a management consulting firm in Los Angeles, California), where she has served as a partner since 2020. 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
• Twitter, Inc. (2016-2019) • WGL Holdings, Inc. (2000-2018) Committees • Corporate Governance and Nominating • Public Policy and Corporate Reputation |
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Age: 65 Director since 2019 Managing Partner of Crosspoint Capital Partners, L.P.
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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. 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 Past Public Company Directorships • Seagate Technology plc (2002-2021) Committees • Audit • Corporate Development and Finance |
| 7 | AT&T INC. |
VOTING ITEMS - MANAGEMENT PROPOSALS
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Age: 69 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
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Senior | Government/ | Strategic | ||||||||||||
Consumer | Human Capital |
Other Public Company Directorships • Fifth Third Bancorp • Zoetis Inc.
• Audit • Human Resources |
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Age: 67 Director since 2013 Retired Chairman and Chief Executive Officer of KeyCorp
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Ms. Mooney
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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 | 2022 PROXY |
VOTING ITEMS - MANAGEMENT PROPOSALS |
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Age: 62 Director since 2010 Retired Chairman and Chief Executive Officer of Burlington Northern Santa Fe, LLC
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Mr. Rose Skills and Qualifications Mr. Rose has | ||||||||||||
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Age: 59 Director since 2020 Chief Executive Officer and President of
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Mr. Stankey is Chief Executive Officer and President of AT&T Inc. and has served in this capacity since July 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 (2015-2017); Chief Strategy Officer (2012-2015); President and CEO of AT&T Business Solutions (2010-2011); President and CEO of AT&T Operations, Inc. (2008-2010); Group President-Telecom Operations (2007-2008); Chief Technology Officer (2004-2006); and Chief Information Officer (2003-2004). 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 more than 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
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Past Public Company Directorships • United Parcel Service, Inc. (2014-2020) |
2022 PROXY | 9 | AT&T INC. |
VOTING ITEMS - MANAGEMENT PROPOSALS
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Age: 60 Director since 2013 President and Chief Executive Officer of Oil States International, Inc.
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Ms. Taylor is President, Chief Executive Officer and a
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VOTING ITEMS
Other Public Company Directorships
• Oil States International, Inc.
Past Public Company Directorships
• Tidewater Inc. (2008-2017)
Committees
• Audit
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Age: 59 Director since June 2021 Former President of the Ford Foundation |
Mr. Ubiñas served as President of the Ford Foundation (an independent, global nonprofit grant-making organization based in New York, New York) from 2008 to 2013. From 2000 to 2007, he was Senior Partner with McKinsey & Company (a global management consulting firm based in New York, New York), where he led the firm’s west coast media practice working with companies in the technology, telecommunications, and media sectors. Mr. Ubiñas joined McKinsey & Company in 1989, holding various leadership positions prior to being named Senior Partner. Since January 2021, Mr. Ubiñas has served as Chairman of the Statue of Liberty – Ellis Island Foundation, where he previously served as Vice Chair from 2018 until 2021 and has served as a member of its board of directors since 2014. From 2013 to 2017, he served on the Advisory Committee on U.S. Competitiveness of the Export-Import Bank, and from 2010 to 2014, he served on the Advisory Committee for Trade Policy and Negotiations. He holds an A.B. in government from Harvard College and an M.B.A. from Harvard Business School. Skills and Qualifications Mr. Ubiñas has extensive leadership experience and expertise across the broadband and wireless industries, government, and the nonprofit sector, all of which align with AT&T’s priorities to serve customers, investors, and our communities. |
Senior | Government Regulatory | Technology/ | ||||||||||||
Global | Media & | Telecom |
Other Public Company Directorships • Electronic Arts Inc. • FirstMark Horizon Acquisition Corp. • Tanger Factory Outlet Centers, Inc. Past Public Company Directorships • Boston Private Financial Holdings, Inc. (2017-2021) • CommerceHub, Inc. (2016-2018) Committees • Public Policy and Corporate Reputation |
AT&T INC. | 10 | 2022 PROXY |
VOTING ITEMS - MANAGEMENT PROPOSALS |
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Age: 63 Director since 2016 Founding Partner and Managing Director of Redpoint Ventures
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Mr. Yang is a founding partner and Managing Director of Redpoint Ventures (a global private equity and venture capital firm based in
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Global | Media & | Technology/ |
Other Public Company Directorships • Franklin Resources, Inc. • Liberty Media Acquisition Corporation Committees • Corporate Development and Finance • Human Resources |
2022 PROXY | 11 | AT&T INC. |
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)(EY) to serve as independent auditors of AT&T for the fiscal year ending December 31, 2019.2022. 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 companyCompany 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 companyCompany 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
AT&T INC. | 12 | |||||||
2022 PROXY |
VOTING ITEMS - MANAGEMENT PROPOSALS |
VOTING ITEMS
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 4041 through 75)88). 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 64% of annual target pay for active NEOs is tied to stock price performance. In addition, we have executive stock ownership guidelines and stock holding requirements, as described on page 73. Each NEO is in compliance with AT&T’s common stock ownership guidelines.
Competitive and Market Based Evaluate all components of our compensation and benefits program compared to 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 stock price and/or the achievement of predetermined goals and recognize individual accomplishments that contribute to our success. For example, in 2021, 89% of the CEO’s target compensation (and an average, 88% for other active NEOs) was at risk 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. Principled Program Structure our program 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
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AT&T INC.
VOTING ITEMS - STOCKHOLDER PROPOSALS
STOCKHOLDER PROPOSALSSTOCKHOLDER PROPOSALS
A stockholder hasCertain stockholders, as noted below, have advised the Company that he intendsthey intend to introduce at the 20192022 Annual Meeting the proposalproposals set forth below. The name and addressaddresses of, and the number of shares owned by, each 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.
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Oneof Conduct for Suppliers and the AT&T Human Rights Policy. We require suppliers to verify adherence to our Principles of Conduct for Suppliers through a self-attestation process every 18-24 months.
Annually, we engage suppliers representing 80% of spend1 with sustainability assessments developed through both CDP and the Telecommunications Industry Association. These assessments, which cover a range of ESG factors such as environmental management, circular economy, stakeholder engagement and a supplier’s management of its own supply chain, support our ability to integrate sustainability metrics into sourcing decisions. In addition, through our participation alongside peer telecom companies in the Joint Audit Cooperation, we engage suppliers at risk of noncompliance with social standards – such as child or forced labor, health and safety, freedom of association, working hours or compensation – in on-site audits and corrective action plans.
ESG Reporting
AT&T’s ESG reporting practice is led by a dedicated team within the CSR organization led by our CSO, with additional oversight by the PPCRC and Audit Committee. Each year, we engage hundreds of subject matter experts and business unit approvers across the Company to prepare, review, and continuously enhance our reports. Drafts of our top prioritiesannual ESG Summary are reviewed by the CSR Governance Council and senior executives prior to publication. Our ESG disclosures are further validated by our internal legal and finance organizations, and select environmental calculations – such as energy use and GHG emissions – are externally assured by an independent third party.
Our ESG disclosures are underpinned by a regular stakeholder assessment that helps identify and prioritize the most material ESG issues impacting AT&T, as well as those where AT&T significantly impacts external stakeholders. Our most recent assessment was conducted in Q4 2021 and as part of our ongoing governance, we continuously monitor pressing and emerging ESG issues and current events to help prioritize programmatic efforts on those topics, as appropriate.
We seek to deliver a comprehensive reporting suite featuring consistent and comparable metrics. We’ve aligned to the Global Reporting Initiative (GRI)
standards since 2007, to communicate our managerial approach to impacts on broad topics such as the economy, environment, society and human rights. In recognition of investor interest in our management of ESG impacts on enterprise value, we align to relevant industry-specific Sustainability Accounting Standards Board (SASB) standards, the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and the CDP Climate Change assessment. Our reporting also aligns with the United Nations (U.N.) Global Compact and U.N. Sustainable Development Goals, reflecting stakeholder interest in AT&T’s contributions to global sustainable development objectives.
ENVIRONMENTAL IMPACT
AT&T is empowering customersextending our positive environmental impact and optimizing the resilience of our business through enhancements in resource efficiency and efforts to protect our network and stakeholders from environmental risk.
The PPCRC oversees the entirety of AT&T’s environmental and climate-related strategy, including emissions reduction objectives, consumption of electricity and water, investments in renewable energy, waste management and policies governing our supply chain. Our CSO oversees internal management of AT&T’s environmental and climate-related strategy, risks and opportunities. Our President – Network Engineering and Operations has responsibility for the resilience of our network, including energy and water use, and oversees the management of climate-related impacts to our productsoperations. This includes our commitments to renewable energy, network disaster response and services in a safebusiness continuity planning. Our SVP – Audit Services oversees the integration of ESG issues, including environmental and responsible manner.climate-related impacts, into corporate enterprise risk assessment activities. This risk analysis has further oversight by the Audit Committee.
Our CSR Governance Council, led by our CSO and comprised of officers representing business operations and management functions aligned to our most important ESG focus areas, regularly discusses environmental topics such as climate change, emissions and our use of energy and water resources. In addition to the Council, we convene an Environment Committee that works with business unit experts across our operating companies to implement or enhance policies and programs that
1 The supplier sustainability management approach reflects the activities of the AT&T Global Connections and Supply Chain organization within AT&T Communications.
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34 | 2022 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.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) |
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address climate-related risks and opportunities. The Environment Committee is led by our Assistant Vice President (AVP) – Global Environmental Sustainability, a direct report to our CSO.
Mitigating Climate Change
AT&T is positioned for success as the world transitions to a low carbon economy. We’ve committed to becoming carbon neutral, targeting net zero Scope 1 and 2 GHG emissions2 by 2035. To help measure our progress, we launched a science-based target to reduce emissions for these same categories 63% by 2030 (2015 base year) – aligning with a 1.5°C pathway. Between 2015-2020, we reduced reported Scope 1 and 2 greenhouse gas (GHG) emissions 34%, reaching nearly 54% of our 2030 target.
A pillar of our emissions reduction strategy is enhancing operational efficiency. Between 2010-2020, we implemented nearly 147,000 energy efficiency projects – such as the ongoing integration of our centrally-managed Energy Building Management Solution across our footprint – resulting in annualized energy cost savings of approximately $694 million.
We arealso continue to grow our procurement of renewable energy, where feasible. In 2022, we announced 2 new solar energy deals, increasing our commitments to more than 1.7 gigawatts of renewable energy capacity – helping make AT&T the 7th largest corporate renewable energy user in the U.S., according to the EPA Green Power Partnership.
Climate-related Impacts
Extreme weather presents operational risks to AT&T’s network and safety risks to our employees, customers and communities. We’re taking steps to protect our network from threats and costly repairs associated with such events, while helping communities identify and address their own vulnerabilities. By modeling the potential for extreme weather within our geographic information system, our industry-leading Climate Change Analysis Tool (CCAT) helps network engineers analyze how inland and coastal flooding, drought, wind or wildfires may impact existing infrastructure or future network builds – up to 30 years into the future. Over the last 2 years, we’ve been sharing data developed for CCAT with municipalities and organizations such as the New York Power Authority and National Coastal Resilience Fund.
AT&T also assesses how climate-related regulations, developments in technology and market or reputational factors could affect our Company. For example, a cost applied to GHG emissions, such as through an imposed fuel or carbon tax or other pricing mechanism, may drive up the cost of fossil fuel-based energy used to power our network, operations and fleet.
Landfill Diversion
Based upon learnings from our previous 100-facility zero waste program, in 2021 we updated our goal to reduce the amount of U.S. waste we send to landfill 30% by 2030 (2019 base year). This “30x30” initiative addresses our entire waste footprint across more than 3,000 sites and is anticipated to exceed the impact of our 100-facility effort by 104 times, based on weight.
Environmental Performance of our Supply Chain
AT&T’s supply chain impacts our emissions footprint and presents unique climate-related risks and opportunities, and we expect suppliers to reduce the environmental impact of their operations. Through FY2021, we reached 94% of our science-based target to ensure suppliers representing at least half our spend (covering purchased goods and services, capital goods and downstream leased assets) have, or will, set their own science-based Scope 1 and 2 targets by 2024.
We operationalize progress toward this goal by engaging suppliers through CDP assessments and providing incentives to participate in our Preferred Supplier Program, which includes more than 350 companies that have demonstrated a commitment to focus areas such as environmental sustainability.
Supporting Customer Environmental Objectives
We’re helping customers improve their environmental footprint by driving adoption of AT&T broadband-enabled technologies that can reduce GHG emissions, such as online collaboration tools and IoT solutions for fleet, asset and building energy management. We’re measuring this impact through a stronger businessmethodology developed in collaboration with Carbon Trust and a more dynamic workforce for all companiesBSR.
2 Scope 1 emissions include direct emissions from sources owned or controlled by the Company (such as we prepare individuals for the workforce demandsfleet). Scope 2 emissions include indirect emissions that result from the generation of tomorrow.purchased energy.
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35 | AT&T INC. |
Internally,
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)
In 2021, we investedannounced the AT&T Gigaton Goal to deliver connectivity solutions that enable business customers to cumulatively save a gigaton (1 billion metric tons) of GHG emissions between 2018-2035. AT&T-enabled customer GHG emissions reductions measured between 2018-2020 total 72.4 million metric tons of CO2e – approximately $200 million7% of our gigaton goal.
As part of our efforts to achieve our gigaton goal, in 2021 we formed the Connected Climate Initiative to convene the brightest minds from leading technology companies, AT&T Business customers, universities and 16 million hours trainingnonprofits to identify best practices, develop innovative new products and use cases, and scale the innovations of startup partners building 5G- and other broadband-enabled climate solutions. We’re working with businesses including Microsoft, Equinix and Duke Energy, along with research universities such as Texas A&M University and the University of Missouri, and a range of other organizations to make an impact on a global scale.
SOCIAL IMPACT
AT&T’s success depends on motivated employees, satisfied customers, capable suppliers and thriving communities. We work to positively impact all stakeholders by addressing social factors such as human rights, diversity and inclusion, the digital divide and access to resources supporting education and jobs.
Human Rights
Upholding human rights in our employees last year,operations, supply chain and we contributed $23 millionwith our stakeholders is foundational for enabling people to their tuition aid.work safely, confidently and productively. We advocate for human rights-related issues to contribute to global sustainable development objectives and demonstrate that business success and ethical behavior go hand-in-hand.
AT&T’s Human Rights Policy details our approach to human rights. We’re committed to upholding internationally recognized principles supporting rights to privacy, freedom of expression, fair labor practices including freedom of association, ethical use of artificial intelligence and protection from harmful online content – particularly for children. Our CSO is responsible for overseeing the AT&T Human Rights Policy with guidance from the PPCRC. The CSR Governance Council and Human Rights Committee, both comprised of senior executives from across the
Throughbusiness, are responsible for implementing the endAT&T Human Rights Policy throughout our operations. Our Online Safety Committee provides oversight and guidance on digital safety issues impacting our business, customers and society. All 3 groups oversee related due diligence – including regular mapping of 2018, 60 percentpotential risks and issues.
Diversity, Equity and Inclusion
From our Board of Directors to front-line workers across the globe, we seek talented people who represent a mix of backgrounds, identities, abilities and experiences. This is critical to ensure the products, services and content we create reflect the diversity and interests of all segments of society and of the world around us.
Our Board Diversity Statement notes “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.”
Our strategy for employee diversity, equity and inclusion is led by AT&T’s management workforce had enrolledChief Diversity and Development Officer and WarnerMedia’s Chief Enterprise Inclusion Officer, both members of the CSR Governance Council. 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. The Chief Diversity and Development Officer reports regularly to the PPCRC and annually to the full Board to discuss diversity, equity and inclusion-related updates, trends and action plans.
AT&T has joined the OneTen coalition, a group of corporations pledging to collectively hire 1 million Black Americans by 2030. Our CEO signed onto the U.N. Women’s Empowerment Principles, signaling AT&T’s commitment to promoting gender equality and women’s empowerment in reskilling programs provided or subsidized by the company. Andworkplace, marketplace and community. We also signed the Hispanic Promise, a first-of-its-kind national pledge to hire, promote, retain and celebrate Hispanics in the workplace.
In 2021, more than 50,000 learners worldwide, including more than 5,00055% of open positions and 53% of promotions were filled by diverse candidates.3 We also enhanced the transparency of our workforce diversity by publicly releasing both AT&T’s and WarnerMedia’s Federal EEO-1 data.
3 Inclusive of AT&T employees, had enrolled in nanodegree credential programs, a new pathway to higher education pioneered by UdacityCorporate and AT&T.
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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.&T Communications.
AT&T
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) |
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Recognizing the importance of diversity, equity and inclusion to our stakeholders, we publish reports outlining our progress cultivating workplace diversity across AT&T and content diversity across WarnerMedia. This focus on building a more diverse and inclusive workforce is underpinned by the unwavering commitment to ensure that employees donated $29from any and every segment of society are treated with fairness and provided equal opportunities to advance in the Company.
Supply Chain Diversity
Diverse suppliers bring value to our Company through their unique skills and innovative ideas. Our supplier diversity program connects specialized diversity managers with internal sourcing teams to assist minority-, woman-, veteran-, LGBTQ+- and disability-owned enterprises around the U.S. with opportunitiesto provide products and services to AT&T.Our annual goal is to exceed $10B in diverse supplier procurement. In 2020, 24.5% of our spend4 – approximately $13.2B – was awarded to businesses externally certified as diverse by third-party agencies.
Digital Divide
Access to affordable and reliable internet service is critical for work, learning and commerce – and for staying digitally connected to family, friends, news and information. Using our platform to address the digital divide is strategically important to AT&T, as it helps drive social change while expanding our network reach and deepening valuable collaboration with communities, authorities and NGOs.
With oversight by the full Board, our strategy for addressing the digital divide involves collaboration across the entirety of our Company – engaging business units such as CSR, Public Policy, External and Legislative Affairs, Network Technology and Operations, Finance and Marketing.
In 2021, AT&T announced a commitment to invest $2 billion over the next 3 years to help address the digital
divide. This effort combines AT&T’s low-cost broadband service offerings with ongoing community investment, building on approximately $1 billion in contributions between 2018-2020 to help the nation’s most vulnerable communities.
As part of our $2 billion digital divide commitment, we introduced AT&T Connected Learning, a multi-year initiative led by our CSR organization to help stem the tide of learning loss, further narrow the homework gap and empower today’s learners. Through the Connected Learning program, by end of year 2025 we seek to provide 1 million people in need with digital resources. Through the end of 2022, we’re launching more than 20 AT&T Connected Learning Centers in under-resourced neighborhoods facing barriers to connectivity – providing access to high-speed internet and computing devices, as well as opportunities for tutoring and mentorship through our employee-driven AT&T Believes volunteerism initiative. Together with national partners, we’re offering a collection of digital literacy courses to help parents and families build skills and confidence to help their child navigate distance learning and participate effectively and safely in today’s digital world.
Employee Talent Development
As the global economy evolves, it’s crucial to train – and retain – a skilled and diverse workforce, and to help ensure our colleagues have the tools needed for continued success. Led by our Chief Diversity and Development Officer, our internal training organization – AT&T University – works across our business to deliver strategic leadership training, inspire continuous development for current and future roles, and energize our workforce to drive innovation.
In 2020, Chief Learning Officer magazine awarded AT&T Organization of the Year for Learning and Development, and the CLO Editor’s Choice Award for Best in Learning Execution. In 2021, AT&T invested approximately $158 million to engage employees in 15 million hours of education and training, plus more than 30,000 charities in 2018 to help make our communities stronger and have pledged to give $27.8$13 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.higher education tuition assistance.5
14 Supplier diversity spend excludes content and programming spend, and reflects the activities of the AT&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/Global Connections and Supply Chain organization within AT&T Communications.
2Represents progress through end5 Inclusive of year 2017
3Represents total U.S. workforce numbers, excluding WarnerMedia, through end of year 2018AT&T Corporate and AT&T Communications.
2022 PROXY | 37 | AT&T INC. |
AUDIT COMMITTEE
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.https://investors.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.matters, and enterprise risk management, including privacy and data security.
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
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 majorsignificant financial, compliance, ethics, and operational risk exposures and the steps management has taken to detect, 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. The Audit Committee also reviews and discusses with management the Company’s privacy and data security, including cybersecurity, risk exposures, policies, and practices, including the steps management has taken to detect, monitor and control such risks and the potential impact of those exposures on the Company’s business, financial results, operations and reputation.
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AUDIT COMMITTEE |
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.
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 20182021 and 20172020 are shown below.in the following table:
Principal Accountant Fees (dollars in millions) |
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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 |
(dollars in millions)
Item | 2021 | 2020 | ||||||||||||||
Audit Fees (a) | $ | 44.7 |
| $ | 50.5 |
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Audit Related Fees (b) |
| 17.4 |
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| 10.3 |
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Tax Fees (c) |
| 14.2 |
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| 9.0 |
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All Other Fees (d) |
| 0.0 |
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| 0.0 |
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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.
Note (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.
Note (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.
Note (d). All Other Fees.
No fees were incurred in 20182021 or 20172020 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.
2022 PROXY | 39 | AT&T INC. |
AUDIT COMMITTEE
AUDIT COMMITTEE REPORT
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 | ||||
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AT&T INC. | 40 | 2022 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS
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Acronyms Used
INDEPENDENT COMPENSATION CONSULTANT (Frederic W. Cook & Co., Inc.) |
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ACRONYMS USED
CAM
Career Average Minimum
CD&A
Compensation Discussion & Analysis
CDP
Cash Deferral Plan
CEO
Chief Executive Officer
CFO
Chief Financial Officer
DTC
Direct To Consumer
EOY
End Of Year
EPS
Earnings Per Share
FCF
Free Cash Flow
HRC
Human Resources Committee
MCB
Management Cash Balance
NEO
Named Executive Officer
PSA
Performance Share Award
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
Total Stockholder Return
WM SSP
WarnerMedia Supplemental Savings Plan
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
2022 PROXY | 41 | AT&T INC. |
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 | ||||||
To that end, we incorporate many best practices in our compensation program and avoid ones that are not aligned with our guiding pay principles. | 47 | |||||
STOCKHOLDER ENGAGEMENT | Each year, we engage with Following last year’s annual meeting and say-on-pay advisory vote | |||||
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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 average combination of short- and long-term incentives • • | ||||||
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. | 51, 53 |
AT&T INC. | 42 | 2022 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS Executive Summary |
Topic | Overview | Details | ||||
HOW WE MAKE COMPENSATION DECISIONS | The starting point for determining Executive Officer compensation is determining target pay, with an evaluation of market data. The Committee also annually reviews performance metrics used in short-term and long-term incentives, given our NEOs’ compensation is heavily weighted to this at-risk pay. The Committee aligns metrics and payouts to the overall business plan to appropriately incentivize senior management’s performance. At the end of the year, the Committee evaluates the Company’s financial results along with any other pertinent circumstances to approve incentive payouts. | 52-53 | ||||
TALENT MANAGEMENT CFO | In November 2020, AT&T’s Chief Financial Officer John Stephens’ March 31, 2021 retirement was announced and the Board appointed Pascal Desroches to serve in that role effective April 1, 2021. Mr. Desroches previously served as WarnerMedia’s CFO and brings broad experience including corporate finance, public accounting and regulatory compliance to this role as he helps lead the Company through a transformational period. Mr. Desroches’ CFO compensation package encompasses the pay elements as described above and in the Elements of 2021 Compensation section below, which is in line with traditional AT&T executive officer compensation components and targets. His promotional compensation package is described on his realized pay summary and the 2021 Target Long Term Values table (see pages 64 and 68). His CFO compensation does not include any special one-time awards. | 64 |
2022 PROXY | 43 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS Executive Summary |
ACCOMPLISHMENTS AND PRIORITIES
OUR PURPOSE WE 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. | OUR VALUES LIVE TRUE. THINK BIG. PURSUE EXCELLENCE. INSPIRE IMAGINATION. BE THERE. STAND FOR EQUALITY. EMBRACE FREEDOM. MAKE A DIFFERENCE. |
2021 was a year of change for AT&T. We exited the year growing customer relationships in wireless, fiber and HBO Max. We started from a position of strength as one of America’s leading broadband providers, delivering connectivity to consumers, businesses and governments via our wireless and fixed networks. We provide more than 100 million U.S. consumers with communications and entertainment experiences across mobile and broadband and operate a world-class network built for transporting enormous amounts of data. In 2021, we executed well, but we have more to do. We’ve stepped up investment – including about $25 billion in spectrum acquisitions – to grow customer connections and differentiate AT&T by expanding our integrated network. We expect to reach 30 million fiber locations by the end of 2025 and to expand 5G C-band coverage to 200 million Americans by the end of 2023. We’re developing innovative new services that will integrate seamlessly into our connectivity solutions, and we’re expanding our distribution channels to serve more customers in new ways. Through these efforts, we’re establishing AT&T as the network of choice for consumers, businesses, governments and partners.
2021 CORPORATE / CONSOLIDATED ACCOMPLISHMENTS1
• Cash from operations of $42.0 billion with free cash flow2 of $26.8 billion | • Capital expenditures of $16.5 billion and gross capital investment4 of $21.6 billion | |
• Total dividend payout ratio3 of 56% | • Announced or closed more than $50 billion in asset monetization |
PROGRESS WITH PRIORITIES
AT&T delivered strong results in 2021 through execution against its three business priorities:
• | Grow Subscriber Relationships – Added 3.2 million postpaid phone subscribers, more than in the past decade combined; grew fiber subscribers by 1.0 million, the fourth consecutive year in which the Company has added 1 million or more fiber subscribers; added 13.1 million HBO Max and HBO subscribers to reach a total of 73.8 million global subscribers.5 |
1 | See Annex A for reconciliation of non-GAAP financial results and Cautionary Language Concerning Forward-Looking Statements. |
2 | Free cash flow is a non-GAAP financial measure that is frequently used by investors and credit rating agencies to provide relevant and useful information. In 2021, free cash flow is cash from operating activities of $42.0 billion, plus cash distributions from DIRECTV classified as investing activities of $1.3 billion, minus capital expenditures of $16.5 billion. |
3 | Free cash flow total dividend payout ratio is total dividends paid divided by free cash flow. For 2021, dividends paid totaled $15.1 billion. |
4 | Gross capital investment includes capital expenditures and cash payments for vendor financing and excludes |
FirstNet reimbursements. In 2021, gross capital investment included $4.6 billion in vendor financing payments and excluded $0.5 billion in FirstNet reimbursements. |
5 | Global HBO Max and HBO subscribers consist of domestic and international HBO Max and HBO subscribers, and exclude free trials, basic and Cinemax subscribers. Domestic HBO Max and HBO subscribers consist of U.S. accounts with access to HBO Max (including wholesale subscribers that may not have signed in) and HBO accounts, and exclude free trials and Cinemax subscribers. International HBO Max and HBO subscribers consist of non-domestic accounts with access to HBO Max (including wholesale subscribers that may not have signed in) and HBO accounts, and exclude free trial, basic and Cinemax subscribers. |
AT&T INC. | 44 | 2022 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS
2018 COMPANY PERFORMANCE HIGHLIGHTS
COMPENSATION DISCUSSION AND ANALYSIS Executive Summary |
Be Effective and Efficient in Everything We Do – Saw significant increases in customer satisfaction and lower churn with full-year postpaid phone churn of 0.76%, the lowest since we began reporting that metric in 2014; reached more than $3 billion of $6 billion run-rate cost savings target that was primarily reinvested to support customer growth; executed significant transactions to position the Company for improved returns going forward.
Make Deliberate Capital Allocations – In 2021, we invested more than $65 billion in 5G/wireless, fiber and premium content and closed or announced asset monetization initiatives totaling more than $50 billion to transform our business, restructure our operations and provide us additional balance sheet flexibility. And, we positioned our 3 major businesses – AT&T Communications, WarnerMedia and DIRECTV – with the right capital structure, assets and management teams to drive value creation going forward. In the case of WarnerMedia and DIRECTV, we also positioned those businesses with the right partners to optimize returns. Once we close the pending WarnerMedia/Discovery transaction, we expect AT&T to have a capital structure and balance sheet that puts us in an attractive position relative to our peers.
SUMMARY OF INCENTIVE COMPENSATION
Changes to 2021 Short-term Award Design
The Committee added a strategic component for 2021, and rebalanced the metric weightings, to focus on key strategic and transformation initiatives and team effectiveness. Changes were informed by engagement with institutional investors during spring and fall stockholder discussions. Considerations for Executive Officers for this new metric include:
Consistently putting stockholder value above specific operating entity performance
Demonstrating leadership in achieving results that are in line with the Company’s culture and values
Working collaboratively across the organization to build a highly engaged, diverse and inclusive workforce
Driving transformation across the organization consistent with the Company’s multi-year transformation initiative
2021 Corporate Short-term Award Results
Metric | Metric Weight | Attainment | Payout % | ||||||||||||
Earnings Per Share |
| 60 | % |
| 106 | % |
| 130 | % | ||||||
Free Cash Flow |
| 20 | % |
| 105 | % |
| 125 | % | ||||||
Strategic Component |
| 20 | % |
| N/A |
| 100 | % | |||||||
Weighted Average Payout |
| 123 | % |
These metrics apply to corporate NEOs. See additional details, including metrics for business unit leaders, in the section How NEOs Were Paid for Performance in 2021.
2022 PROXY | 45 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS Executive Summary |
Long-term Award – Performance Share Component
Results for 2019-2021 Performance Period
Metric | Metric Weight | Achievement | Payout % | |||||
3-Year ROIC | 100% | 8.0% |
| 100% |
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3-Year Relative TSR Payout Modifier | +10%, 0%, or -10% | Quartile 4 |
| -10% |
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Final Long-Term Payout |
| 90% |
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% of Grant Value Realized |
| 72% |
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For more information, see the sections Long-Term Incentive Awards and ROIC Payout Table and Actual Performance Attainment – 2019 – 2021 Performance Period.
2022 Incentive Compensation
During 2021, the Committee, the Committee’s independent consultant, and management reviewed the design of the short-term and long-term incentive compensation programs. The purpose of the review was to evaluate program design in an evolving business and determine if the current components required adjustment to motivate long-term sustainable performance, better align executive and stockholder interests, and reward for performance that is consistent with external guidance. These changes were informed by engagement with institutional investors during spring and fall stockholder discussions (see pages 49-50).
For 2022, Performance Share awards, which represent 75% of the long-term mix, will be tied to 50% Earnings Per Share growth and 50% ROIC. The relative TSR modifier continues to be a metric and its impact will double to +/-20%; however, if TSR is negative and also in the top quartile of peers, the 20% modifier will not be added. The payout table will be adjusted with a steeper slope to penalize for under-performance and reward for over-performance. The maximum payout for Performance Share awards is 200%, which includes the impact of the TSR modifier. The Committee believes that the changes to the PSA metrics and payout table (i) align the executive’s experience with stockholders, (ii) will motivate a high level of performance, (iii) are consistent with external guidance, and (iv) have goals with adequate sensitivity to potential business outcomes. During the off-season proxy outreach, senior management and the Independent HRC Chair, Beth Mooney, discussed incentive compensation design with institutional investors (not including retail, insider and state-owned stockholders), and these changes are aligned with the feedback from those discussions.
In conjunction with the long-term changes, the short-term performance metrics were updated to replace EPS with Operating Income. FCF remains as a metric for the short-term incentive.
AT&T INC. | 46 | 2022 PROXY |
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COMPENSATION DISCUSSION AND ANALYSIS |
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COMPENSATION DISCUSSION AND ANALYSISROLE OF THE HUMAN RESOURCES COMMITTEE
SUMMARYOF INCENTIVE PAYOUTS
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
The Committee has approvedoversees 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 pillarsfor our senior executives on behalf of the program. We also outline how we establish pay targets and how actual Executive Officer pay is determined. Finally, we provide a descriptionBoard of other benefits.
COMPENSATION DISCUSSION AND ANALYSIS
ROLEOFTHE HUMAN RESOURCES COMMITTEE
Directors. The Committee’s charter is available on our website at www.att.com. Our Committee is composed entirely of independent Directors. TheIts current members of the Committee are:are Ms. Roché (Chairman)Mooney (Chair), Mr. Ford, Mr. McCallister, Mr. Rose, and Mr. Yang. OurThe Committee’s charter is available on our website at https://investors.att.com. The Committee is responsible for:
Compensation-Related Tasks
| Organizational Tasks
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• Reviewing the performance and capabilities of
• Succession planning for Executive Officer positions including the |
GUIDING PAY PRINCIPLES2021 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 componentsthe pillars of our compensation and benefits program. It evaluates changes to our program in light of appropriate peer company practiceswith respect 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 predeterminedthese 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.Company’s strategic objectives.
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.
2022 PROXY | 47 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
These guiding pay principles serve as the pillars ofPAY GOVERNANCE
Our Committee designs our compensation and benefits program and any potential changes to the program are evaluated in light of their ability to help us meet these goals.
CHECKLISTOF COMPENSATION PRACTICES
Our compensation 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 Multi-Year 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.
| û No “Single Trigger” Change in Control Provisions:No accelerated vesting of equity awards upon a change in control.
û No Tax
û No
û No Hedging or Short Sales of AT&T
ûNo Supplemental Executive Retirement Benefits for officers promoted/hired after 2008.
û No Guaranteed Bonuses.
ûNo Excessive Dilution: |
AT&T INC. | 48 | 2022 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
AT&T has a long history of engaging with our stockholders, reaching out to our investors each spring and fall to hear their feedback. In 2021, we conducted extensive engagement with stockholders, paying particular attention to investors’ concerns regarding our executive compensation programs and last year’s say on pay vote.
In the spring of 2021, we reached out to 45 of our stockholders representing 35% of shares outstanding or 66% of shares held by institutional investors1, and held meetings with stockholders representing 45% of institutional investors. In addition to members of our senior management team participating in all meetings, HRC Chair, Beth Mooney, and Board Chairman, William Kennard, led dialogues with stockholders representing 42% of institutional investors. The investor meetings covered an informational deck that AT&T publicly filed in early April 2021, to afford stockholders the opportunity to discuss directly the Committee’s 2020 pay decisions with Directors.
As a result of pay decisions to (i) attract and retain key talent and (ii) transition the CEO role, investors expressed concerns regarding certain compensation elements for a few of our NEOs. With respect to the 2020 short-term incentive awards, the HRC recognized the original goals were no longer relevant given the impact of the global pandemic. The HRC exercised its authority to award a portion of the short-term incentive awards to Executive Officers based on their operational and financial performance, and strong leadership during a challenging year. While we did disclose the original metrics and weightings, payout table and final attainment percentages, investors expressed concern regarding the style of the proxy statement disclosure of the 2020 short-term incentive award payouts. The Committee has taken into accountand full Board took this feedback, from our annual outreach to large stockholders when evaluating our program. Ofas well as the votes cast at the 2018 Annual Meeting of Stockholders, over 90% were in favorresult of the advisorysay on pay vote, seriously – assessing key themes within stockholders’ input and reviewing potential enhancements to our executive compensation programs.
In the fall of 2021, we reached out to 32 of our stockholders representing 37% of shares outstanding or 68% of shares held by institutional investors1, and held meetings with stockholders representing 46% of institutional investors. Independent HRC Chair, Beth Mooney, led the discussion with investors representing 40% of institutional investors. During the dialogues, we listened to stockholders’ feedback and discussed changes under consideration to our short-term and long-term incentive programs. Importantly, we conducted engagement discussions with investors who had voted for our 2021 say on executive compensation.pay proposal, as well as investors who had voted against the proposal.
As shown in the following graphic, during both the spring and fall of 2021, we met with stockholders representing a large portion of AT&T’s institutional investor base.(1)
Spring 2021 Outreach (% of Shares Held by Institutional Investors) | Fall 2021 Outreach (% of Shares Held by Institutional Investors) | |
1 “Institutional Investors” does not include retail, insider, and state-owned shares.
2022 PROXY | 49 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
ELEMENTSOF 2018 COMPENSATIONThe table below summarizes key feedback themes from our stockholders and AT&T’s responsive actions.
Stockholder Feedback | AT&T’s Responsive Actions and/or Goals for Future Years | |
Pay for performance misalignment between executive pay and TSR performance. | The Committee is replacing 100% ROIC with 50% EPS growth and 50% ROIC for the 2022 long-term incentive plan metrics of PSAs to further align executives’ interests with stockholders’ interests as it relates to the Company’s business transformation while maintaining a focus on capital allocation. The relative TSR modifier will remain as an additional metric and the Committee is doubling its potential impact, both upside and downside, to further tie executive compensation to long-term stockholder value creation; however, if TSR is negative and also in the top quartile of peers, the 20% modifier will not be added. The payout table has been redesigned to motivate a high level of performance with a potential for PSAs to pay at 200%, including the TSR modifier. On the other side, the redesigned payout table penalizes more harshly for under-performance. The Committee is committed to an incentive program that is designed to drive long-term sustained performance aligned with stockholder interests. | |
Preference for prior level of detail on the short-term program. | Due to the unprecedented COVID impact on business operations, the Committee waited until the end of the year to evaluate 2020 accomplishments, and recognized the goals set early in the year were no longer relevant in light of the pandemic. At that point, the Committee exercised its authority to award a portion of the short-term incentive awards to Executive Officers based on their operational and financial performance, and strong leadership during a challenging year. Therefore, the STIP disclosures in the 2021 proxy statement were in a different format in comparison to prior years. The disclosure of short-term incentive awards within this 2022 proxy statement reflects a return to AT&T’s customary practices and disclosure before the pandemic, which stockholders have consistently found robust and transparent. | |
Prefer grants of significant value to include a performance component. | The Committee agrees that one-time grants should not be common practice and should only be used in rare circumstances, to ensure attraction, or retention of key talent to drive business results and long-term shareholder value. One-time grants were made in 2020 in connection with business and leadership transitions in order to recruit and retain talent, but only after the Committee determined that such grants were necessary given the competitive market for the qualified executive talent needed and essential to transforming the company. The Committee did not approve any new one-time grants in 2021 and does not anticipate any in the foreseeable future. In the extraordinary circumstance where a one-time grant may be necessary to support the Company’s critical strategic priorities, the Committee commits that the grant will include a performance component based on market conditions for the recruitment or retention of high-quality talent in that position. |
It isThese actions build on compensation best practices and are responsive to stockholder feedback.
For example, upon Mr. Stankey’s promotion to CEO in our stockholders’ interest that our2020, his total target CEO compensation was set lower than the prior CEO’s total target compensation. In addition, Mr. Stankey’s CEO compensation was reallocated to increase the weighting of at-risk compensation by (i) reducing his base salary and short-term target award and (ii) increasing his long-term incentives. See the 2021 Target Pay Mix section. Mr. Stankey’s 2021 total target compensation was not increased from his 2020 CEO target compensation.
AT&T INC. | 50 | 2022 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
COMPENSATION ELEMENTS AND PAY DETERMINATION
Stockholders’ 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, thus creating stockholder value. 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: 75% PERFORMANCE SHARES 25% RESTRICTED STOCK UNITS | + | |||||||||||||
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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
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Cash
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7% |
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11% |
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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.
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• | Adjustments may be made based on individual performance, pay relative to other executives, and | |||||||||||||||||||||||||||||||||
pay relative to market. | ||||||||||||||||||||||||||||||||||
Cash
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A portion may be contributed to AT&T stock and cash deferral plans. | ||||||||||||||||||||||||||||||||||
Short-Term Incentives (see page 45)
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23% |
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24% |
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At Risk Pay | ||||||||||||||||||||||||||||||||||
Stock
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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.
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• | Aligns executive and stockholder interests. | |||||||||||||||||||||||||||||||||
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 | ||||||||||
2022 PROXY | 51 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
DETERMINING 2018 TARGET COMPENSATION
DETERMINING 2021 TARGET COMPENSATION
The Committee uses market data as the starting point for determining Executive Officer compensation begins with an evaluation of market data.compensation. The independent consultant compiles data for the Peer Groupfrom peer companies fromusing both proxy data and third-party compensation surveys.surveys, then presents its findings to the Committee for their review and decision-making process.
How the peer group was chosen
The Company’s independent consultant recommended the peer group that was consistent with the Company’s businesses in 2021, and included companies that operate in the telecom, technology and media industries, as well as large cap companies that are similar to AT&T in scale and business complexity. The Committee reviewed, discussed, and challenged the consultant’s recommendation, then determined the peer group shown below.
The Committee and independent consultant confirmed AT&T’s peer group composition achieves the following:
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Following is
Acknowledges AT&T’s business mix by including the Peer Group our consultant usedthirteen largest telecom, media and technology companies
Represents scale and business complexity by including five of the largest general industry companies with complex organizational structures
Includes three entertainment companies reported as direct competitors to assess market-basedthe WarnerMedia business
At the time of the review, AT&T ranked at the 81st percentile for annual revenue and 80th percentile for enterprise value among its peers.
Based on the responsibilities of each executive’s role, the Committee evaluated compensation against the same or similar positions in the peer group companies. If a peer company did not have a role corresponding to a particular AT&T executive, it was omitted from the peer group for Executive Officers in 2018.the executive.
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Chevron |
General Electric |
IBM Intel
Oracle |
Wal-Mart
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ViacomCBS |
The Committee’s Process for Establishing 2021 Target Compensation
The Committee’s consultant reviewed the market data forfrom the Peer Grouppeer 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.peer group. After completing this review, the consultant presented the market data to the Committee.
The Committee used the market data andwith the CEO’s evaluation of performance and 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 coming year. When setting compensation,position and the Committee may determine that Executive Officers with significant experience and responsibilities or who demonstrate exemplary performance have higher target compensation, while other Executive Officers may have lower target compensation.executive’s:
- | experience, performance, and contributions; |
- | long-term potential; and |
COMPENSATION DISCUSSION AND ANALYSIS
AT&T 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 acquisition 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.
- | leadership. |
AT&T INC. | 52 |
2022 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS
In addition, to determine CEO pay, the Board formalized its annual performance evaluation process. Such performance evaluation consists of the Board reviewing key strategic and leadership behaviors and providing feedback directly to Mr. Stankey regarding his performance and the performance of the Company.
2021 Target Pay Mix
The Committee designs the executive compensation program to include at-risk pay. It uses a mix of incentive awards and stock-based compensation to tie the interests of our executives to those of our stockholders. The following charts depict the mix of target compensation for Mr. Stankey and the average for the other active NEOs.
2021 TARGET PAY MIX
*Including Stock Price Performance
DETERMINATIONOF AWARD PAYOUTSHOW NEOs WERE PAID FOR PERFORMANCE PERIODS ENDING DECEMBER 31, 2018
PERFORMANCE IN 2021
20182021 Short-Term Incentive Plan Metrics andAwards – Performance AttainmentTargets
AfterAt the beginning of 2021, after reviewing our business plan and determining the business metrics on which our Executive Officers should focus, the Committee established the following performance targetsmetrics applicable to payment of 2021 short-term awardsincentive awards. These metrics were chosen for 2018:their link to our business strategy.
2018 SHORT-TERM INCENTIVE PLAN METRICSThe Committee maintained the corporate officers’ primary focus on EPS, and focused Business Unit leaders on their respective operations’ earnings. The Committee also maintained the 20% weighting on Free Cash Flow for all NEOs. The Committee introduced a new strategic metric with a 20% weighting to further drive performance during AT&T’s business strategy transformation within the framework of its cultural pillars. This strategic metric is based on the following considerations:
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 STRUCTUREConsistently putting stockholder value above specific operating entity performance
Demonstrating leadership behaviors in the achievement of results that are consistent with the Company’s stated culture and values
Working collaboratively across the organization to build a highly engaged, diverse, and inclusive workforce
Demonstrating leadership in driving transformation across the organization consistent with the Company’s multi-year transformation initiative
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COMPENSATION DISCUSSION AND ANALYSIS
2021 SHORT-TERM INCENTIVE PLAN METRICS AND WEIGHTINGS
Metrics | Stankey, Desroches, McAtee and Stephens | McElfresh | Lee | Relevance | ||||
Corporate
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AT&T Earnings Per Share | 60% |
Indicator of profitability and a window into our long-term sustainability
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AT&T Free Cash Flow | 20% | 20% | 20% | Important to continue to invest, pay down debt, and provide strong returns to our stockholders
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Strategic | 20% | 20% | 20% | Key strategic and transformation initiatives and team effectiveness
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AT&T Communications
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AT&T Communications EBITDA |
60% |
Clear measurement of operating profitability
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AT&T Latin America
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AT&T Latin America Simple Free Cash Flow | 20% |
Important to focus on getting to self-sustaining cash flow in Latin America
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AT&T Latin America EBITDA | 40% | Clear measurement of operating profitability |
Each financial performance metric has an associated payout table, and all payout tables use the same structure.
SHORT-TERM INCENTIVE PAYOUT TABLE STRUCTURE
Financial Metrics
Payout Level
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Attainment
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Payout
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110%
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150%
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100%
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50%
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30%
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Interpolation is used to determine payout percentages for results that fall between attainment levels shown.
AT&T INC. | 54 | 2022 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
2021 Short-Term Incentive Awards – Performance Attainment and Associated Payout Percentages
Financial Metric Results—80% Weighting
The following charts show the financial metric performance goals, actual performance attainment and payout percentage for each NEO’s 2021 short-term incentive award performance metric.metrics. The strategic metric results are discussed after the financial results.
Corporate
Short-Term2021 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
1. Earnings Per Share results were adjusted as follows: | 2. Free Cash Flow results were adjusted as follows: | |||||||||
Reported EPS |
| $2.76 |
| Reported FCF |
| $26,754 |
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Adjustments per Grant Terms: | Adjustments per Grant Terms: | |||||||||
Merger & Acquisition Activity |
| $0.59 |
| Merger & Acquisition Activity |
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Benefit Plans-Pension Remeasurement |
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Non-cash Accounting Writedowns |
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(Gains)/Losses: Asset Dispositions & Mark-to-Market |
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Earnings Per Share For Compensation |
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| Free cash Flow for Compensation |
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2022 PROXY | 55 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
AT&T Communications
2021 Short Term Incentive
Short-TermPerformance Goals and Attainment
AT&T Communications EBITDA for compensation purposes includes video business results and adjustments, per grant terms, for Merger & Acquisition activity.
AT&T Latin America
2021 Short Term Incentive Performance Goals And Attainment
Latin America EBITDA and Attainmentsimple FCF for compensation purposes are adjusted for currency rate exchanges and Vrio financial results through day of divestiture from AT&T Communications Financial Metrics Free Cash Flow 40%&T.
AT&T INC. | 56 | 2022 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
Strategic Metric Results—20% Weighting Operating Contribution 40% Weighting Payout %125%
As described above (page 53), the Committee established the strategic measures criteria early in 2021, also shown in the table below.
Strategic Measure—Goals |
The team/individual’s demonstration of consistently putting stockholder value above their specific operating entity performance |
Demonstrating leadership behaviors in achievement of results that are consistent with the Company’s stated culture and values |
Working collaboratively across the organization to build a highly engaged, diverse, and inclusive workforce |
Demonstrating leadership in driving transformation across the organization consistent with the Company’s multi-year transformation initiative |
The Committee approved 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 criteriastrategic metric (20% weighting) for a payout.
Collaboration - 10% Weighting
The Committee reviewedall 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%NEOs, based on the following accomplishments (among others):listed below.
Our merger synergies remain on target to achieve a $2.5B billion run rate by the end of 2021.
Strategic Measure – Rationale for 100% Payout |
Our team made difficult decisions to restructure the business and rearrange functions, often at personal diminution of structure and responsibility, with a long-term stockholder value lens. • Positioned our three major businesses—AT&T Communications, WarnerMedia and DIRECTV—with the right capital structure, assets and management teams to drive value creation ○ Invested more than $65 billion in 5G/wireless, fiber and premium content • Repositioned two of our three major businesses—Warner Media and DIRECTV—with the right partners to optimize returns |
Took initiative to work with each other and across business units to address key organizational development and effectiveness issues. • Completed a thorough review of our compensation and benefit programs against market, then adjusted the programs to be more relevant with employees, and to enhance attraction and retention ○ In April 2021, 80% of employee respondents said they would recommend AT&T as a good place to work, compared to 75% in 2019 (will remeasure in April 2022) |
Improved employee engagement results and workforce diversity at the management ranks of the Company. • AT&T’s multigenerational workforce spans Baby Boomers to Gen Z, and includes nearly 7,000 employees who have self-identified as disabled, over 12,000 veterans and nearly 3,000 employees who self-identify as LGBTQ+ individuals • Nearly 43% of AT&T U.S. managers are people of color • AT&T was elevated to DiversityInc Hall of Fame based on its workforce diversity, leadership accountability, talent development programs, workplace practices, supplier results and philanthropy |
Made critical structure and capital allocation decisions to prioritize initiatives that restored market momentum, enabled next generation services, energized product development, and drove progress toward global emissions reductions. • Closed or announced asset monetization initiatives totaling more than $50 billion to transform our business, restructure our operations and provide us additional balance sheet flexibility • Reached more than $3 billion of $6 billion run-rate cost savings target that was primarily reinvested to support customer growth |
2022 PROXY | 57 | AT&T INC. |
Launch of the first, large-scale integrated marketing campaign between WarnerMedia and AT&T Communications.COMPENSATION DISCUSSION AND ANALYSIS
More relevant advertising across Turner’s TV networks, through the combined efforts of Xandr, AT&T Communications, and WarnerMedia.
• Retired 1,000+ apps and migrated 1,000+ apps to the public cloud, reducing inefficiencies and costs and improving data capabilities to support customers • Proactively rationalized our portfolio of low-margin products • Developed new services that will integrate into our connectivity solutions • Consistent with our over-arching ESG objectives, reduced emissions through energy reduction and increased usage of renewable energy |
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’s123%. Ms. Lee’s performance-adjusted award payout was 84%135%, and Mr. McElfresh’s performance-adjusted award payout was 121%.
The Committee maintains the abilitydiscretion to make adjustments to the formula-driven payout as it deems appropriate in order to ensure alignment ofalign 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 describesperformance, but did not make any adjustments to the structure and termsformulaic component of long-termshort-term awards with performance or restriction periods ending in 2018 or early 2019:for 2021.
AT&T INC. | 58 | 2022 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
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Long-Term Incentive Awards with Performance or Restriction Periods Ending in 2021 or early 2022
Following is a description of the long-term awards our NEOs (other than Mr. Desroches) received:
Form of Award | Performance/Restriction Period and Metrics | Description | ||||
Performance Shares Granted in 2019 75% of 2019 Long-Term Award |
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3-year performance period (2019-2021)
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.
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RSUs Granted in 25% of 2018 Long-Term Award | 4-year restriction period
Payout value based on common stock price performance. |
RSUs |
ROIC Payout Table and Actual Performance Attainment – 2016-2018 Performance Period
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2022 PROXY | 59 | 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% Payout ACTUAL PERFORMANCE Weighted Average Cost of Capital 8.00% 7.75% 6.75% 6.00%
TSRROIC Payout Table and Actual Performance Attainment – 2016-20182019-2021 Performance Period
At the beginning of the performance period, the Committee established the following table for determining payout of the Performance Shares tied to the TSR metric.
Our actual performance attainment is also shown:
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
Determination of Performance Goal | Performance Below Target Range |
We established a ROIC performance target range of 7.00% to 8.00% 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 75 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 68% 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 138% 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 2019 ROIC payout table summarized on the next page) that we achieved ROIC of 8.00%, which was within the target range, and 175 basis points above the weighted average cost of capital we established based on input from banks. As a result, the Committee directed that 100% 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).
AT&T INC. | 60 | 2022 PROXY |
Relative TSR was measuredPayout Modifier - Payout Table and Actual Performance
The following chart shows the payout table and actual performance for the relative TSR modifier applicable to the following 37 companies, as determined when the grant was established in 2016*:2019 Performance Share grant:
Relative TSR Payout Modifier (2019 - 2021 Performance Period) | ||||||
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Our 3-year TSR
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*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.
PERCENT OF GRANT VALUE REALIZED – 2016 PERFORMANCE SHARE GRANT (2016-2018 PERFORMANCE PERIOD)
As a result of the combined ROICgrant; these companies were removed due to acquisitions: CBS Corp., Sprint, 21st Century Fox, and TSR performance attainment, each NEO received 76% of the number of shares granted.Viacom.
TSR Peer Group for 2019 Performance Share Grant | ||||||||||||||||||||||||||||||||||||||
Alphabet | Charter | Exxon | Microsoft | Verizon | ||||||||||||||||||||||||||||||||||
Amazon | Chevron | General Electric | Oracle | Walt Disney | ||||||||||||||||||||||||||||||||||
Apple | Cisco | IBM | T-Mobile US | Wal-Mart | ||||||||||||||||||||||||||||||||||
Boeing | Comcast | Intel | ||||||||||||||||||||||||||||||||||||
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However, the Performance Shares were also subject to stock price fluctuation over the3-year performance period as another element of our long-term incentivepay-for-performance design. Based on the $5.47 decrease in our stock price from $35.53 at grant to $30.06 at payout, the value of the shares actually payable decreased 15.4% over the3-year performance period.
2022 PROXY |
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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.
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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.
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** 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 COMPENSATIONPercent of Grant Value Realized
2019-2021 Performance Share Grant
Based on the combined ROIC and relative TSR performance attainment, the Committee directed that 90% of the Performance Shares be distributed. After the impact of common stock price performance over the 3-year performance period, our NEOs (except Mr. Desroches) received 72% of the original 2019 Performance Share grant value (without regard to any supplemental grants), as follows:
2019-2021 Performance Share Grant
1 | Closing common stock prices: $30.06 on the 1/31/2019 grant date and $24.12 on the 1/27/2022 payout approval date. |
2018 RSU Grant
After the impact of common stock price performance over the 4-year restriction period, our NEOs (except Mr. Desroches) received 62% of the original 2018 RSU grant value (without regard to any supplemental grants), as follows:
2018 RSU Grant
2 | Closing common stock prices: $39.16 on the 2/1/2018 grant date and $24.12 on 1/27/2022, the last date of the restriction period. |
REALIZED COMPENSATION FOR NAMED EXECUTIVE OFFICERS
We believe that a full understanding of our Committee’s pay-for-performance philosophy includes a review of the compensation that our NEOs actually received (“realized compensation”) relative to their original pay targets (“target compensation”). The primary difference between realized and target compensation is stock price performance and achievement against pre-established performance goals under our short- and long- term incentive plans. In this sectionthe preceding sections we detail howdetailed our incentive award payouts. The following charts summarize the impact of these payouts on each NEO’s total realized compensation was impacted by performance attainment. The following tables summarizefor 2021. Note that the compensation our NEOs realized in 2018. The long-term values shown below do not align to what is reported in the 2018 Summary Compensation Table (SCT)(SCT) because the SCT reflects long-term grant values for 20182021 whereas these tables show therealized compensation shown below includes long-term distribution values of the long-term distributions for awards with performance/restriction periods ending in 20182021 or early 2019.
AT&T’s 2018 performance highlights are summarized on page 38.2022.
AT&T INC. | 62 | 2022 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
John Stankey
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| John Stankey was appointed Chief Executive Officer in 2020, after serving as President and | |||
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Element of Compensation | Compensation Amount | Rationale | ||
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Mr.
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2021 STIP |
Target Award = $5,600,000
Final Award Paid = $6,888,000
123% of target award value realized | Mr. Stankey’s short-term incentive target was not changed from 2020. Mr. Stankey’s short-term incentive payout was based on: • A payout of 123% of his target award based on performance attainment of EPS, FCF, and strategic goals • The Committee made no award for individual performance | ||
Performance Share Payout 75% of 2019 Long-Term Award (2019-2021 Performance Period) | Target Award =
Final Award Paid =
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Performance Shares were paid in
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RSU Payout 25% of 2018 Long-Term Award (2018 Grant)
| Target Award =
valued at
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RSUs were paid in common stock.
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Total Realized Compensation
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2022 PROXY | 63 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
Pascal Desroches Senior Executive Vice President & Chief Financial Officer | ||||
| Pascal Desroches was appointed Chief Financial Officer effective April 1, 2021 and leads AT&T’s finance organization as well as corporate development and corporate real estate. He previously served as WarnerMedia’s CFO since 2018. Prior to that, he was executive vice president and CFO of Turner Broadcasting when it operated as a subsidiary under Time Warner Inc. Before joining Turner, he held a variety of financial roles within Time Warner, including senior vice president and global controller. Prior to joining Time Warner, Mr. Desroches was a partner at KPMG and served as a senior advisor to the chief accountant of the U.S. Securities and Exchange Commission. Mr. Desroches brings broad experience including corporate finance, public accounting, and regulatory compliance to this role as he helps lead the Company through a transformational period. | |||
2021 Realized Compensation | ||||
Element of Compensation | Compensation Amount | Rationale | ||
2021 Base Salary | $1,250,000 | Mr. Desroches annual salary rate was set at $1,250,000 to reflect his promotion to CFO. | ||
2021 STIP | Target Award = $2,750,000 Final Award Paid = $3,382,500 123% of target award value realized | Mr. Desroches short-term incentive target was set at $2,750,000 to reflect his promotion to CFO. Mr. Desroches short-term incentive payout was based on: • A payout of 123% of his target award based on performance attainment of EPS, FCF, and strategic goals • The Committee made no award for individual performance | ||
WM RSU Payouts Time-based Vested tranches distributing in February 2021 | $2,377,141 | Mr. Desroches 2021 long-term distributions represent vested tranches of RSUs issued for years 2017 through 2020. Each of these awards vests 25% each calendar year over a four-year restriction period and distribute in AT&T stock or cash. Mr. Desroches 2021 long-term award is in the same form and has the same terms as the awards for the other NEOs. | ||
Total Realized Compensation | $7,009,641 |
AT&T INC. | 64 | 2022 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
Lori Lee
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| Lori Lee was appointed CEO-AT&T Latin America and Global Marketing Officer in 2018, after serving as Global Marketing Officer since 2015. She leads strategy, operations and marketing for AT&T Mexico, providing mobile services to more than 19 million consumers and businesses, and previously led Vrio Corp. which provided digital entertainment services throughout South America and the Caribbean. During Ms. Lee’s 24-year career with AT&T, she previously served as Senior Executive Vice President | |||||
2021 Realized Compensation | ||||||
Element of
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2021 Base Salary | $750,000 |
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Performance Share Payout 75% of 2019 Long-Term Award (2019-2021 Performance Period) | Target Award =
Final Award Paid =
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Performance Shares were paid in
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RSU Payout 25% of 2018 Long-Term Award (2018 Grant)
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Total Realized Compensation
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2022 PROXY | 65 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
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COMPENSATION DISCUSSION AND ANALYSIS
David McAtee Senior Executive Vice President and General Counsel | ||||||
| David McAtee has served | |||||
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Element of Compensation | Compensation Amount | Rationale | ||||
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| $ | Mr. McAtee’s base salary was not changed from 2020. | ||||
2021 STIP |
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| Target Award =
Final Award Paid =
| Mr. McAtee’s short-term incentive target
Mr. McAtee’s • A payout of • The Committee
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Performance Share Payout 75% of 2019 Long-Term Award (2019-2021 Performance Period) | Target Award =
Final Award Paid =
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Mr. McAtee’s Performance Share payout was based on: • A formulaic payout of • The
Performance Shares were paid in
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RSU Payout 25% of 2018 Long-Term Award (2018 Grant) | Target Award =
valued at
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Total Realized Compensation
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AT&T INC. | 66 | 2022 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
Jeff McElfresh CEO, AT&T Communications, LLC | ||||
| Jeff McElfresh joined the Company in 1995, and was appointed CEO of AT&T Communications, LLC, in October 2019. He is responsible for AT&T Communications’ consumer, business and technology and operations groups. AT&T Communications serves more than 120 million mobile and broadband customers in the United States and millions of business customers, including nearly all of the Fortune 1000. Mr. McElfresh previously served as President-Technology and Operations for AT&T Communications, LLC, and as CEO of Vrio Corp. | |||
2021 Realized Compensation | ||||
Element of Compensation | Compensation Amount | Rationale | ||
2021 Base Salary | $1,000,000 | Mr. McElfresh’s annual salary for 2021 was set at $1,000,000 as part of the Committee’s annual review of pay. | ||
2021 STIP | Target Award = $2,000,000 Final Award Paid = $2,420,000 121% of target award value realized | Mr. McElfresh’s annual short-term incentive target for 2021 was set at $2,000,000 as part of the Committee’s annual review of pay. Mr. McElfresh’s short-term incentive payout was based on: • A payout of 121% of his target award based on performance attainment of FCF, Communications EBITDA, and strategic goals • The Committee made no award for individual performance | ||
Performance Share Payout 75% of 2019 Long-Term Award (2019-2021 Performance Period) | Target Award = $2,745,000 Final Award Paid = $1,882,274 69% of grant value realized | Mr. McElfresh’s performance share payout was based on: • A formulaic payout of 100% of the 37,924 shares granted 1/31/19, based on the Company’s performance achievement for ROIC, and • Payout of 100% of the 44,571 shares granted 10/1/19, based on the Company’s performance achievement of 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 2019 supplemental grant Performance Shares were paid in 66% cash and 34% common stock. | ||
RSU Payout 25% of 2018 Long-Term Award (2018 Grant) | Target Award = $243,250 6,672 shares paid; valued at $160,929 66% of grant value realized | The Company’s common stock price change over the 4-year restriction period reduced the value of the units granted, including a 2018 supplemental grant, by 34%. RSUs were paid in common stock. | ||
Total Realized Compensation | $5,463,203 |
2022 PROXY | 67 | AT&T INC. |
COMPENSATION DISCUSSION AND ANALYSIS
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COMPENSATION DISCUSSION AND ANALYSIS
2018 LONG TERM GRANTS2021 LONG-TERM GRANTS
Our previous sections detailed compensation paidIn 2021, our NEOs received long-term awards in 2018 and/or compensation for grants with performance or restriction periods ending in 2018 or early 2019. This section addresses the long-term grants we made in 2018.
The forms of long-term compensation granted to NEOs in 2018 were:form of:
| Weight | Performance Metrics | Vesting Period | |||
Performance Shares | 75% | Performance
| 3-year performance period | |||
RSUs | 25% | Payout value based on common stock price performance only |
GrantThe associated grant values for these awards were as follows:were:
2018 LONG TERM INCENTIVE2021 TARGET GRANTLONG-TERM VALUES FOR NEOS
Name | Performance Shares ($)(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 |
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Pascal Desroches |
| 4,500,000 |
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Lori Lee |
| 3,018,750 |
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David McAtee |
| 4,012,500 |
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Jeff McElfresh |
| 6,375,000 |
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| 2,125,000 |
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(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) and subject to the same terms and conditions as the annual grants.RSUs approved in 2021.
20182021 Performance Share Grants
The Performance Shares granted in 20182021 are for the 2018-20202021-2023 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 2018-20202021-2023 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 or state tax laws, changes in accounting principles, (except for the impacts of Revenue Recognition under ASC 606, “Revenueaccounting gains/losses from Contracts with Customers”),asset dispositions and mark-to-market activity, 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 2018-20202021-2023 performance period was set 100125 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.
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 2021 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.
AT&T INC. | 68 | 2022 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS | ||
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TSR PERFORMANCE MODIFIER
2021-2023 Performance Period
AT&T Return vs.
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Quartile 2 Quartile 3 | No Adjustment to ROIC Payout Percentage
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Quartile 4 | Subtract 10 Percentage Points from Final ROIC Payout Percentage
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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.
20182021 Restricted Stock Unit Grants
The Committee revised the RSU vesting provisions for the 2021 grants to ratable three-year vesting, to align with market practice. RSUs granted in 20182021 vest 100% after four years or upon retirement eligibility, whichever occurs earlier, but do not pay out untiland distribute 33-1/3% each year over three years. Other grant terms remain the scheduled distribution date. Thesesame, including RSUs (i) receive quarterly dividend equivalents, paid in cash at the time regular dividends are paid on our stock. RSUscommon stock, (ii) pay 100% in stock to further tie executiveexecutives’ interests to those of stockholders, (iii) are fully vested at grant for retirement eligible officers; however, the award does not distribute until the scheduled distribution date, and stockholder interests.(iv) continue to comprise 25% of NEOs’ total long-term incentives with 75% of total long-term incentives granted in the form of PSAs.
RISK MITIGATIONCONSULTING AGREEMENTS
Randall Stephenson—Retired Executive Chairman
By ensuring thatAt the Committee’s request, Mr. Stephenson agreed to assist AT&T’s senior leadership team for 12 months following his retirement. As the business undergoes a significant portion of compensation is based on our long-term performance, we reducestrategy transformation, the riskCommittee determined that executives will place too much focus on short-term achievementsMr. Stephenson’s experience as CEO would allow him to offer valuable counsel to the detrimentBoard and Management. The support provided by Mr. Stephenson during this period included consultation with the CEO on long-term strategic issues, talent development and management, capital allocation, and building important relationships with external audiences.
In connection with this request and the support provided, Mr. Stephenson received, per a post-employment consulting agreement, a fee of our long-term sustainability. Our short-term incentive$1,000,000. Additionally, to create alignment between the strategic support Mr. Stephenson provided and the company’s performance during the post-employment period, the Committee lifted the automatic proration on Mr. Stephenson’s 2019 and 2020 Performance Share awards. While the grant date value of these performance shares was previously reported in the summary compensation tables for fiscal years 2019 and 2020, the value of such awards at the time the proration was lifted ($12,003,886) is structured so thatrequired to be disclosed in this year’s proxy statement for fiscal 2021. These Performance Share awards remain at risk until the accomplishmentend of short-term goals supports the performance period and remain subject to achievement of long-term goals. These elements work togetherthe same performance goals and approval of the Board.
John Stephens—Retired Senior Executive Vice President and Chief Financial Officer
Mr. Stephens also agreed to assist AT&T’s senior leadership team for 12 months following his retirement as CFO, particularly as the benefit of AT&T and our stockholders and to reduce risk in our incentive plans.
business continues its strategy transformation. Per a post-employment consulting agreement, he will receive compensation for his time: $1,000,000 for consulting services rendered over the year.
In addition, his agreement is structured with performance criteria to reward certain business outcomes that support the risk moderation actions, we intend,financial health of the Company. He will receive $500,000 for achieving each of two goals set forth in appropriate circumstances, to seek restitution of any bonus, commission, or other compensation received bythe agreement: (i) closing an employee as a result of such employee’s intentional or knowing fraudulent or illegal conduct, includingoutstanding corporate tax audit and (ii) the making of a material misrepresentation in our financial statements.Company realizing certain operational and accounting outcomes.
2022 PROXY | 69 | 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 compensationeligible 401(k) contributions (only base salary is matched for officers). EmployeesManagers hired externally on or after January 1, 2015, and WarnerMedia employees, do not receive aearn pension benefits, and to account for the lack of a pension benefit, we increased theprovide an enhanced 401(k) match to 100% of 133-1/3% match on the first 6%3% of eligible 401(k) contributions and 100% match on the next 3% of eligible 401(k) contributions (only base salary is matched for these employees.officers).
Nonqualified Plans
We providemid-level and above managers, other than WarnerMedia employees, the opportunity fortax-advantaged savings through two AT&T nonqualified plans:plans. All active NEOs, except Mr. Desroches, were eligible to elect nonqualified deferrals from 2021 cash compensation through these plans. WarnerMedia offers eligible employees a separate nonqualified deferral plan, the WarnerMedia Supplemental Savings Plan (described below). Mr. Desroches elected deferrals through this plan in December 2019 from his 2021 cash compensation.
•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 pre-tax 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.
AT&T INC. | 70 | 2022 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
WarnerMedia Supplemental Savings Plan
This nonqualified restoration savings plan allows U.S. salaried WarnerMedia employees who earn eligible cash compensation in excess of the IRS compensation limit for tax-qualified plans to make additional pre-tax deferrals to notional investment options that mirror most of the 401(k) funds: up to 50% contributions for compensation up to $500,000 and up to 90% for compensation above $500,000. The Company matches contributions up to the first 6% of deferred compensation between the compensation limit and $500,000, with no match for deferred compensation above $500,000. The matching rate is 133-1/3% on the first 3% of amounts deferred and 100% on the next 3% of deferrals, equating to a maximum 7% match up to $500,000 of compensation.
These plans are described more fully on page 74.in the Executive Compensation Tables section.
Pension Benefits
We offerDuring 2021, we offered atax-qualified group pension planbenefit to substantially allapproximately two-thirds of our AT&T managers. However, managersManagers hired externally on or after January 1, 2015 who would otherwise beare 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. Pension benefits for individuals in scope for the DIRECTV joint venture were frozen as of July 31, 2021.
We also provide supplemental retirement benefits under nonqualified pension plans, or SERPs, to employees who became officers before 2009.
In 2012, Mr. Stephenson elected to freeze his SERP benefit as if he had retired at the end of 2012. Likewise, in 2019, Messrs. Stankey and Stephens elected to freeze their SERP benefits as if they had retired at the end of 2019. They gave up credits under the plan for all future compensation and service. In exchange, the frozen benefits earn a fixed rate of interest equal to the discount rate used to determine lump sum benefits for participants who retired in 2012 and 2019 respectively. The interest credits continue until the SERP benefits are distributed to participants.
At the end of 2022, the Company will freeze the SERP benefits, with similar terms as described above, for individuals that were officers of the Company prior to 2009 (since officers appointed after 2008 are not eligible for SERP benefits). This is a limited officer group, including Ms. Lee.
Messrs. Descroches, McAtee and McElfresh are not eligible for any SERP benefits.
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.
2022 PROXY | 71 | AT&T INC. |
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 Personal Benefits Table following the Summary Compensation Table.
Benefit/ Personal Benefit | Description |
| Rationale | |||
FINANCIAL COUNSELING |
| |||||
| Includes tax preparation, estate planning, and financial counseling. | Allows our executives to focus more on business responsibilities by providing financial counselors to help with their personal financial affairs and tax filings. | ||||
| 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. | Maintains executives’ health and welfare, helping to ensure business continuity. | ||||
COMMUNICATIONS | ||||||
| AT&T products and services provided at little or no incremental cost to the Company. | Provides 24/7 connectivity and a focus on services customers purchase. | ||||
| 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 pages 84-85. | |||||
COMPANY-OWNED CLUB
| In some cases, we allow personal use of Company-owned social club and country club memberships, but do not pay country club fees or dues for Executive Officers. | Affords executives the opportunity to conduct business in a more informal environment. | ||||
PERSONAL USE OF
|
| 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.
AT&T INC. | 72 | 2022 PROXY |
COMPENSATION DISCUSSION AND ANALYSIS |
EQUITY RETENTIONAND HEDGING POLICY2021 STOCK OWNERSHIP GUIDELINES
Stock Ownership Guidelines
The Committee has established common stock ownership guidelines for all Executive Officers,2021 as follows.shown below. We include vested shares held in our benefit plans in determining attainment of these guidelines.
Level | Ownership Guidelines | |
CEO | 6 x Base Salary | |
Executive Officers | Lesser of 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.2021.
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. This requirement further ties executives’ compensation interests to interests of stockholders.
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 an independent compensation consultantsconsultant 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
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
2022 PROXY | 73 | AT&T INC. |
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 |
AT&T INC. | 74 | 2022 PROXY |
SUMMARY COMPENSATION TABLE
The table below contains information concerning thediscloses compensation provided to AT&T’s Named Executive Officers (NEOs), including the Chief Executive Officer, the two individuals serving as Chief Financial Officer during the year, and the other three other most highly compensated Executive OfficersOfficers. Additionally, AT&T is reporting a seventh NEO this year to account for a retired Executive Officer who would have been among the most highly compensated group if working as an active Executive Officer at the end of AT&T (theNamed Executive Officers).the year. Compensation information is provided for the years each person in the table was a Named Executive Officer since 2016.
SUMMARY COMPENSATION TABLE2019.
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 Pay
Mr. Stephenson’s realized pay for 2018 was $18,844,528. A summary of realized pay for each of the NEOs is provided on pages 51-55.
Name and Principal Position | Year | Salary ($)(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 |
| 2021 |
|
| 2,400,000 |
|
| 0 |
|
| 13,420,341 |
|
| 0 |
|
| 6,888,000 |
|
| 1,468,869 |
|
| 643,669 |
|
| 24,820,879 |
| |||||||||
| 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 |
| ||||||||||
P. DESROCHES Sr. Exec. Vice Pres. and CFO |
| 2021 |
|
| 1,250,000 |
|
| 0 |
|
| 5,999,990 |
|
| 0 |
|
| 3,382,500 |
|
| 0 |
|
| 1,112,643 |
|
| 11,745,133 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
L. LEE CEO Latin America & GMO |
| 2021 |
|
| 750,000 |
|
| 0 |
|
| 4,025,002 |
|
| 0 |
|
| 1,822,500 |
|
| 689,009 |
|
| 222,746 |
|
| 7,509,257 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
D. MCATEE Sr. Exec. Vice Pres. & General Counsel |
| 2021 |
|
| 1,300,000 |
|
| 0 |
|
| 5,350,003 |
|
| 0 |
|
| 2,890,500 |
|
| 201,040 |
|
| 801,379 |
|
| 10,542,922 |
| |||||||||
| 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 |
| ||||||||||
J. MCELFRESH CEO-AT&T Communications, LLC |
| 2021 |
|
| 1,000,000 |
|
| 0 |
|
| 8,500,003 |
|
| 0 |
|
| 2,420,000 |
|
| 134,002 |
|
| 275,524 |
|
| 12,329,529 |
| |||||||||
| 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 |
| ||||||||||
J. STEPHENS Retired—Sr. Exec. Vice Pres. and CFO |
| 2021 |
|
| 318,460 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 830,250 |
|
| 831,607 |
|
| 2,164,988 |
|
| 4,145,305 |
| |||||||||
| 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 |
| ||||||||||
R. STEPHENSON Retired—Executive Chairman |
| 2021 |
|
| 125,768 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 2,967,114 |
|
| 13,252,617 |
|
| 16,345,499 |
| |||||||||
| 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 |
| ||||||||||
NoteNOTE 1.
Each Four of the NEOs deferred portions of their 20182021 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: Ms. Lee—$45,000; Mr. Stephenson—McAtee—$5,472,400,3,135,975; Mr. McElfresh—$682,750; and Mr. Stephens—$2,282,521, Mr. Donovan—$352,500, Mr. McAtee—$579,438, and Mr. Stankey—$118,750.889,363. 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.pages 70 and 87.
NOTE 2.Amounts in the Stock Awards column for 20182021 represent the grant date values of Performance Shares and Restricted Stock Units. 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 15 to Consolidated Financial Statements, “Share-Based Payments.” The grant date values of Performance Shares included in the table for 20182021 were: Mr. Stephenson—Stankey—
$12,494,790,10,065,249; Mr. Desroches—$4,500,000; Ms. Lee—$3,018,758; Mr. McAtee—$4,012,502; Mr. McElfresh—$6,374,995; Mr. Stephens—$6,284,996, Mr. Donovan—$7,766,566, Mr. McAtee—$3,477,876,0 and Mr. Stankey—Stephenson—$5,045,456.0. 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.”
2022 PROXY | 75 | AT&T INC. |
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 2018:2021: Mr. Stephenson—$131,143,Stankey – $4,091, Mr. Stephens—Desroches – $0, Ms. Lee–$0, Mr. Donovan—$50,211,McAtee – $0, Mr. McAtee—McElfresh – $7,526 Mr. Stephens–$0, and Mr. Stankey—$1,910.Stephenson – $99,715. 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, relocation benefits, consulting payments and 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.Messrs. Stankey and Stephenson reimbursesreimbursed the Company for the incremental cost of histheir personal use of Company aircraft. Messrs. Donovan, Stankey, and Stephens are also required to reimburse 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. Mr. Desroches’ amount includes travel in connection with his relocation.
The consulting agreement value shown below for Mr. Stephenson includes an estimated value of $12,003,886, which represents the lift on the proration of his outstanding Performance Shares. The Committee approved this action to tie Mr. Stephenson’s consulting term to company performance. See the Consulting Agreements section of the Compensation Discussion and Analysis for more information.
Stephenson | Stephens | Donovan | McAtee | Stankey | ||||||||||||||||||||||||||||||||||||||||||||
Personal Benefits | ||||||||||||||||||||||||||||||||||||||||||||||||
Stankey | Desroches | Lee | McAtee | McElfresh | Stephens | Stephenson | ||||||||||||||||||||||||||||||||||||||||||
PERSONAL BENEFITS |
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||||
Financial counseling (includes tax preparation and estate planning) |
| 22,074 |
|
| 11,500 |
|
| 14,000 |
|
| 12,318 |
|
| 14,000 |
|
| 14,563 |
|
| 16,083 |
|
| 14,656 |
|
| 15,543 |
|
| 10,652 |
|
| 31,500 |
|
| 34,000 |
| ||||||||||||
Auto benefits |
| 27,213 |
|
| 16,176 |
|
| 14,261 |
|
| 16,562 |
|
| 13,736 |
|
| 27,921 |
|
| 12,440 |
|
| 13,100 |
|
| 20,810 |
|
| 16,161 |
|
| 3,453 |
|
| 2,061 |
| ||||||||||||
Personal use of Company aircraft |
| 0 |
|
| 0 |
|
| 31,233 |
|
| 0 |
|
| 13,223 |
|
| 0 |
|
| 127,183 |
|
| 9,801 |
|
| 108,806 |
|
| 0 |
|
| 0 |
|
| 0 |
| ||||||||||||
Health coverage |
| 52,152 |
|
| 50,064 |
|
| 50,064 |
|
| 50,064 |
|
| 50,064 |
|
| 61,408 |
|
| 5,333 |
|
| 59,044 |
|
| 59,044 |
|
| 9,000 |
|
| 14,761 |
|
| 4,784 |
| ||||||||||||
Club membership |
| 2,877 |
|
| 0 |
|
| 0 |
|
| 2,793 |
|
| 2,793 |
|
| 2,793 |
|
| 0 |
|
| 2,793 |
|
| 2,793 |
|
| 0 |
|
| 0 |
|
| 0 |
| ||||||||||||
Communications |
| 6,037 |
|
| 3,149 |
|
| 4,427 |
|
| 8,007 |
|
| 7,245 |
|
| 16,241 |
|
| 27,352 |
|
| 4,060 |
|
| 7,619 |
|
| 1,508 |
|
| 5,618 |
|
| 17,891 |
| ||||||||||||
Home security |
| 7,866 |
|
| 50 |
|
| 344 |
|
| 50 |
|
| 1,453 |
|
| 1,251 |
|
| 16,459 |
|
| 1,025 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 1,673 |
| ||||||||||||
Total Personal Benefits |
| 118,219 |
|
| 80,939 |
|
| 114,330 |
|
| 89,794 |
|
| 102,514 |
|
| 124,177 |
|
| 204,850 |
|
| 104,479 |
|
| 214,615 |
|
| 37,321 |
|
| 55,332 |
|
| 60,409 |
| ||||||||||||
Relocation |
| 0 |
|
| 131,440 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
| |||||||||||||||||||||||||||
Consulting Agreement |
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 1,500,000 |
|
| 12,753,886 |
| |||||||||||||||||||||||||||
Company matching contributions to deferral plans |
| 1,202,860 |
|
| 442,800 |
|
| 126,581 |
|
| 148,588 |
|
| 118,750 |
|
| 13,920 |
|
| 35,000 |
|
| 45,000 |
|
| 475,275 |
|
| 150,950 |
|
| 468,475 |
|
| 432,540 |
| ||||||||||||
Life insurance premiums applicable to the employees’ death benefit |
| 217,459 |
|
| 96,935 |
|
| 99,419 |
|
| 26,985 |
|
| 365,790 |
|
| 505,572 |
|
| 741,353 |
|
| 73,267 |
|
| 111,489 |
|
| 87,253 |
|
| 141,181 |
|
| 5,782 |
| ||||||||||||
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 |
|
| 643,669 |
|
| 1,112,643 |
|
| 222,746 |
|
| 801,379 |
|
| 275,524 |
|
| 2,164,988 |
|
| 13,252,617 |
|
AT&T INC. | 76 | 2022 PROXY |
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 |
Estimated Possible Payouts | 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 ($/Sh) | Grant Date ($) | |||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||
STANKEY |
| 1/29/21 |
|
| 1,680,000 |
|
| 5,600,000 |
|
| 8,400,000 |
|
| 140,625 |
|
| 351,563 |
|
| 562,501 |
|
| 117,188 |
|
|
|
|
|
|
|
| 13,420,341 |
| |||||||||||
DESROCHES |
| 1/28/21 |
|
| 825,000 |
|
| 2,750,000 |
|
| 4,125,000 |
|
| 62,500 |
|
| 156,250 |
|
| 250,000 |
|
| 52,083 |
|
|
|
|
|
|
|
| 5,999,990 |
| |||||||||||
LEE |
| 1/28/21 |
|
| 405,000 |
|
| 1,350,000 |
|
| 2,025,000 |
|
| 41,927 |
|
| 104,818 |
|
| 167,709 |
|
| 34,939 |
|
|
|
|
|
|
|
| 4,025,002 |
| |||||||||||
MCATEE |
| 1/28/21 |
|
| 705,000 |
|
| 2,350,000 |
|
| 3,525,000 |
|
| 55,729 |
|
| 139,323 |
|
| 222,917 |
|
| 46,441 |
|
|
|
|
|
|
|
| 5,350,003 |
| |||||||||||
MCELFRESH |
| 1/28/21 |
|
| 600,000 |
|
| 2,000,000 |
|
| 3,000,000 |
|
| 88,542 |
|
| 221,354 |
|
| 354,166 |
|
| 73,785 |
|
|
|
|
|
|
|
| 8,500,003 |
| |||||||||||
STEPHENS |
| 1/28/21 |
|
| 202,500 |
|
| 675,000 |
|
| 1,012,500 |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
|
|
|
|
|
|
|
| 0 |
|
NoteNOTE 1.
Represents Performance Share awards, discussed beginning on page 56.
Note 2.68.
RepresentsNOTE 2. Unless otherwise noted, represents Restricted Stock Unit grants, discussed on page 57.69. The units granted in 20182021 are scheduled to vest 33-1/3%and distribute each year in January 2022.2022,
2023 and 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. McAtee were retirement eligible as of the grant date.
EXECUTIVE COMPENSATION TABLES
EMPLOYMENT CONTRACTS
Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table
Messrs. Donovan, Stankey and Stephens
Both the 2011The 2018 Incentive Plan and the 2016 Incentive Plan provideprovides 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.
2022 PROXY | 77 | AT&T INC. |
EXECUTIVE COMPENSATION TABLES
OUTSTANDING EQUITY AWARDSOUTSTANDING EQUITY AWARDS AT DECEMBER DECEMBER 31, 20182021
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
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 | ||||||||||||||||||||||||||||||||
2021-2023 Perf. Shares |
| — |
|
| — |
|
| 492,188 |
|
| 12,107,825 |
| ||||||||||||||||||||
2020-2022 Perf. Shares |
| — |
|
| — |
|
| 266,497 |
|
| 6,555,826 |
| ||||||||||||||||||||
2020-2022 Perf. Shares – Supplemental Grant |
| — |
|
| — |
|
| 138,935 |
|
| 3,417,801 |
| ||||||||||||||||||||
DESROCHES | ||||||||||||||||||||||||||||||||
2021-2023 Perf. Shares |
| — |
|
| — |
|
| 218,750 |
|
| 5,381,250 |
| ||||||||||||||||||||
LEE | ||||||||||||||||||||||||||||||||
2021-2023 Perf. Shares |
| — |
|
| — |
|
| 146,745 |
|
| 3,609,927 |
| ||||||||||||||||||||
2020-2022 Perf. Shares |
| — |
|
| — |
|
| 100,288 |
|
| 2,467,085 |
| ||||||||||||||||||||
MCATEE | ||||||||||||||||||||||||||||||||
2021-2023 Perf. Shares |
| — |
|
| — |
|
| 195,052 |
|
| 4,798,279 |
| ||||||||||||||||||||
2020-2022 Perf. Shares |
| — |
|
| — |
|
| 150,080 |
|
| 3, 691,968 |
| ||||||||||||||||||||
2018 Restricted Stock Units |
| 26,813 |
|
| 659,600 |
|
| — |
|
| — |
| ||||||||||||||||||||
2018 Restricted Stock Units – Supplemental Grant |
| 6,319 |
|
| 155,447 |
|
| — |
|
| — |
| ||||||||||||||||||||
2019 Restricted Stock Units |
| 41,583 |
|
| 1,022,942 |
|
| — |
|
| — |
| ||||||||||||||||||||
2020 Restricted Stock Units |
| 35,733 |
|
| 879,032 |
|
| — |
|
| — |
| ||||||||||||||||||||
2020 Restricted Stock Units – Retention Grant |
| 305,085 |
|
| 7,505,091 |
|
| — |
|
| — |
| ||||||||||||||||||||
2021 Restricted Stock Units |
| 46,441 |
|
| 1,142,449 |
|
| — |
|
| — |
| ||||||||||||||||||||
MCELFRESH | ||||||||||||||||||||||||||||||||
2021-2023 Perf. Shares |
| — |
|
| — |
|
| 309,896 |
|
| 7,623,442 |
| ||||||||||||||||||||
2020-2022 Perf. Shares |
| — |
|
| — |
|
| 162,704 |
|
| 4,002,518 |
| ||||||||||||||||||||
2019 Restricted Stock Award – Retention Grant |
| 52,812 |
|
| 1,299,175 |
|
| — |
|
| — |
| ||||||||||||||||||||
STEPHENS |
| 2,373 |
|
| — |
|
| 29.87 |
|
| 2/15/22 |
| ||||||||||||||||||||
2020-2022 Perf. Shares |
| — |
|
| — |
|
| 301,563 |
|
| 7,418,450 |
| ||||||||||||||||||||
STEPHENSON | ||||||||||||||||||||||||||||||||
2020-2022 Perf. Shares |
| — |
|
| — |
|
| 589,099 |
|
| 14,491,835 |
|
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 74.70. 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.retention grant of Restricted Stock Units vests in April 2030.
AT&T INC. | 78 | 2022 PROXY |
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, 2018.2021. In calculating the number of Performance Shares and their value, we are required by SEC rules to compare the Company’s performance through 20182021 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 20172020 and 20182021 grants is ROIC with a payout adjustment for relative TSR achievement. As of the end of 2018,2021, the ROIC achievement for each ofboth the 20172020 and 20182021 grants was atabove target while the TSR performance was in the bottomfourth quartile of the peer group.group for both years. As a result, the grants were reported at the targetmaximum payout for ROIC reducedwith a -10% payout adjustment for the TSR performance.performance for both grants.
OPTION EXERCISESOPTION EXERCISES AND STOCK VESTED DURING 2018 STOCK VESTED DURING 2021
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 ($) | ||||||||||||||||
STANKEY |
| 2,326 |
|
| 3,512 |
|
| 321,250 |
|
| 8,296,978 |
| ||||||||
DESROCHES |
| 0 |
|
| 0 |
|
| 52,083 |
|
| 1,499,990 |
| ||||||||
LEE |
| 0 |
|
| 0 |
|
| 112,971 |
|
| 2,888,370 |
| ||||||||
MCATEE |
| 0 |
|
| 0 |
|
| 134,420 |
|
| 3,366,887 |
| ||||||||
MCELFRESH |
| 0 |
|
| 0 |
|
| 151,823 |
|
| 4,007,282 |
| ||||||||
STEPHENS |
| 49,649 |
|
| 94,252 |
|
| 241,393 |
|
| 5,822,390 |
| ||||||||
STEPHENSON |
| 29,345 |
|
| 26,411 |
|
| 429,467 |
|
| 10,358,732 |
|
Option Awards | Stock Awards (1) | |||||||||||||||||||
Name | | Number of Shares Acquired on Exercise (#) |
| | Value Realized on Exercise ($) |
| | Number of Shares Acquired on Vesting (#) |
| | Value Realized on Vesting ($) | |||||||||
Stephenson |
| 0 |
|
| 0 |
|
| 282,604 |
| 9,558,204 | ||||||||||
Stephens |
| 0 |
|
| 0 |
|
| 115,187 |
| 3,913,156 |
| |||||||||
Donovan |
| 0 |
|
| 0 |
|
| 117,539 |
| 4,194,049 |
| |||||||||
McAtee |
| 0 |
|
| 0 |
|
| 42,630 |
| 1,339,557 |
| |||||||||
Stankey |
| 2,307 |
|
| 4,910 |
|
| 107,966 |
| 3,668,748 |
|
Note 1.
NOTE 1. Included in the above amounts are Restricted Stock Units that vested in 2018.2021, but the payment of which was deferred for certain officers. Restricted Stock Units vest at the earlier of the scheduled vesting date or upon the employee becoming retirement eligible. If the units vest because of retirement eligibility, they are not distributed until the scheduled vesting date.
Restricted Stock Units granted in 20182021 to the following NEOs vested at grant because of their retirement eligibility but will not be distributed until 2022:in prorated payments of 33-1/3% each year in 2022, 2023 and 2024: Mr. Stephenson—116,828,Stankey—117,188, Mr. Stephens—60,107,Desroches—52,083, Ms. Lee—34,939, Mr. Donovan—72,619,McElfresh—73,785, Mr. Stephens—0 and Mr. Stankey—47,271. Mr. McAtee is not retirement eligible and his 2014 Restricted Stock Units (7,871) vested and were distributed on the scheduled distribution date in 2018.Stephenson—0.
2022 PROXY | 79 | AT&T INC. |
EXECUTIVE COMPENSATION TABLES
PENSION BENEFITS (ESTIMATEDPENSION BENEFITS (ESTIMATED FOR DECEMBER DECEMBER 31, 2018)2021)
Name | Plan Name | Number of Years Credited Service | Present Value of Accumulated Benefits (1) ($) | Payments During Last Fiscal Year ($) | ||||||||||||||||||
STANKEY | Pension Benefit Plan—Nonbargained Program |
| 36 |
|
| 2,221,936 |
|
| 0 |
| ||||||||||||
SRIP |
| 19 |
|
| 475,380 |
|
| 0 |
| |||||||||||||
SERP |
| 34 |
|
| 31,866,738 |
|
| 0 |
| |||||||||||||
DESROCHES | Pension Benefit Plan—WarnerMedia Component Part |
| 9 |
|
| 354,170 |
|
| 0 |
| ||||||||||||
WarnerMedia Excess Pension Benefit Plan |
| 9 |
|
| 229,944 |
|
| 0 |
| |||||||||||||
LEE | Pension Benefit Plan—Nonbargained Program |
| 24 |
|
| 1,723,478 |
|
| 0 |
| ||||||||||||
Pension Benefit Make Up Plan |
| 9 |
|
| 72,704 |
|
| 0 |
| |||||||||||||
SERP |
| 24 |
|
| 11,886,837 |
|
| 0 |
| |||||||||||||
MCATEE | Pension Benefit Plan—MCB Program |
| 9 |
|
| 163,982 |
|
| 0 |
| ||||||||||||
Pension Benefit Make Up Plan |
| 9 |
|
| 1,368,657 |
|
| 0 |
| |||||||||||||
MCELFRESH | Pension Benefit Plan—Mobility and Southeast Management Programs |
| 26 |
|
| 387,790 |
|
| 0 |
| ||||||||||||
Pension Benefit Make Up Plan |
| 26 |
|
| 330,753 |
|
| 0 |
| |||||||||||||
STEPHENS | Pension Benefit Plan—Nonbargained Program(2) |
| 28 |
|
| 1,775,783 |
|
| 0 |
| ||||||||||||
Pension Benefit Make Up Plan |
| 8 |
|
| 65,676 |
|
| 6,023 |
| |||||||||||||
SRIP |
| 12 |
|
| 311,868 |
|
| 140,225 |
| |||||||||||||
SERP |
| 27 |
|
| 0 |
|
| 23,398,314 |
| |||||||||||||
STEPHENSON | Pension Benefit Plan—Nonbargained Program |
| 38 |
|
| 0 |
|
| 2,154,723 |
| ||||||||||||
Pension Benefit Make Up Plan |
| 15 |
|
| 0 |
|
| 7,945 |
| |||||||||||||
SRIP |
| 22 |
|
| 2,861,682 |
|
| 77,700 |
| |||||||||||||
SERP |
| 30 |
|
| 0 |
|
| 65,502,669 |
|
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefits (1) ($) | 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 20182021 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 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 Pension Benefit Plan, the assumed retirement age for the
cash balance formula is age 65. For the WarnerMedia Component Part and WarnerMedia, LLC Excess Benefit Pension Plan, the assumed retirement age is the date a participant attains age 62. For the AT&T SRIP and its successor, the 2005 SERP, the assumed retirement age for active employees who have not met their unreduced retirement age as of 12/31/2021 is the earlier of the date the participant (i) reaches age 60, or has(ii) attains 30 years of service (the age at which(when an employee may retire without discounts for age)., or (iii) has pension accruals frozen.
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.
NOTE 2. Mr. Stephens elected a Benefit Commencement Date of 12/1/2021 and the Plan Administrator distributed the benefit accordingly on 1/17/2022.
AT&T INC. | 80 | 2022 PROXY |
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 Pension Benefit Plan (the “Plan”), a “qualified pension plan” under the Internal Revenue Code, covers nearly allprovides ongoing pension accruals to most of our employees hired before 2015, including each ofNEO, except Mr. Desroches. Mr. Desroches has a frozen vested pension benefit under the NEOs.Plan due to his pre-2010 employment at Time Warner, but he no longer earns additional pension benefits. 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. Stankey, Stephenson, Mr.and Stephens, and Mr. StankeyMs. Lee, are covered by the Nonbargained Program of the AT&T 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. Stephenson, Mr. Stephens, and Mr. Stankeythe participating NEOs, 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, forannuities. 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 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 Programs
Mr. McElfresh is covered by the Mobility Program, which is also part of the 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 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
2022 PROXY | 81 | AT&T INC. |
EXECUTIVE COMPENSATION TABLES
NONQUALIFIED PENSION PLANScredits 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 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 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%.
WarnerMedia Component Part
Mr. Desroches has a pension benefit under the WarnerMedia Component Part of the Plan, which accrued during his employment at Time Warner. Benefit accruals under this Program were frozen December 31, 2013. After such date, the participant’s age and service continue to count only for purposes of determining early retirement factors and retirement eligibility.
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 who are currently accruing pension benefits 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.
Mr. Desroches has a frozen benefit under the nonqualified WarnerMedia Excess Pension Benefit Plan. His benefit will be paid in the form of monthly payments over a ten-year period.
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.SERP, subject to certain exceptions not applicable to any Executive Officers. 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, and Ms. Lee, 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 attainsprior to 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. Of the NEOs currently employed by the Company,current NEO SERP participants, only Mr. Stephenson and Mr. Stankey are eligible to retire without eitherMs. Lee has an age or service discount under this plan.plan at this time. These benefits are also reduced by any amounts participants receive under the AT&T Pension Benefit Plan (the qualified pension plansplan) and by a frozen, specific amount that approximates the amount they receive under our
AT&T INC. | 82 | 2022 PROXY |
EXECUTIVE COMPENSATION TABLES |
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 Officer is 60%, for Messrs. Stankey and Stephenson, 55% for other NEOs the target percentage ranges fromMr. Stephens, and 50% to 60%.for Ms. Lee. 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 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.
Messrs. Stankey’s and Stephens’ Benefits
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%.
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
Ms. Lee’s SERP benefit will similarly freeze December 31, 2022, when future compensation, age and service credits will cease. Her benefit will be determined as a lump sum amount, and thereafter earn interest. The discount rate for calculating the lump sum as well as the interest crediting rate is 2.3%.
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.
2022 PROXY | 83 | AT&T INC. |
OTHER POST-RETIREMENT BENEFITS
EXECUTIVE COMPENSATION TABLES
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. McAtee 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 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 $46,200 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 2018,2021, the amounts of Performance Shares, Restricted Stock Units and/or Restricted Stock, as applicable, that would have been vested and been distributed are:include: Mr. Stephenson—McAtee–$18,560,732, Mr. Stephens—$8,733,525, Mr. Donovan—$13,473,049, Mr. McAtee—$8,481,60311,364,561 and Mr. Stankey—McElfresh–$7,634,536.1,299,175. If an active NEO had died at the end of 2021, the amounts of Performance Shares that would have distributed are as follows: Mr. Stankey–$15,772,462; Mr. Desroches–$3,843,750; Ms. Lee–$4,340,719; Mr. McAtee–$6,064,466; Mr. McElfresh–$8,304,246; Mr. Stephens–$5,298,889 and Mr. Stephenson–$10,351,311.
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, Mr. Donovan’s Restricted Stock ($2,460,576)End-of-year amounts for Messrs. McAtee and Mr. McAtee’s Restricted Stock Units ($3,748,786) would have vested.McElfresh and 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. The benefit is equal to one times salary during the officer’s employment, except for the CEO 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
AT&T INC. | 84 | 2022 PROXY |
EXECUTIVE COMPENSATION TABLES |
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 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 2018,2021, his annual death benefit for ten years would have been $1,398,839.$1,430,254.
2022 PROXY | 85 | AT&T INC. |
EXECUTIVE COMPENSATION TABLES
NONQUALIFIED DEFERRED COMPENSATIONNONQUALIFIED DEFERRED COMPENSATION
Name | Plan (1) | Executive in Last FY (2) ($) | Registrant in Last FY (2) ($) | Aggregate Last FY (2)(3) ($) | Aggregate Distributions ($) | Aggregate Balance at Last FYE (2) ($) | ||||||||||||||||
STANKEY | Stock Purchase and Deferral Plan |
| — |
|
| — |
|
| (105,434 | ) |
| — |
|
| 1,217,167 |
| ||||||
| Cash Deferral Plan |
| — |
|
| — |
|
| 7,128 |
|
| — |
|
| 259,042 |
| ||||||
DESROCHES | WarnerMedia Supplemental Savings Plan |
| 599,877 |
|
| 14,700 |
|
| 311,496 |
|
| — |
|
| 5,098,514 |
| ||||||
LEE | Stock Purchase and Deferral Plan |
| 45,000 |
|
| 31,080 |
|
| (12,428 | ) |
| 78,199 |
|
| 195,286 |
| ||||||
MCATEE | Stock Purchase and Deferral Plan |
| 2,064,375 |
|
| 461,355 |
|
| (64,732 | ) |
| 2,374,132 |
|
| 2,349,417 |
| ||||||
MCELFRESH | Stock Purchase and Deferral Plan |
| 516,250 |
|
| 137,030 |
|
| (143,286 | ) |
| — |
|
| 1,724,380 |
| ||||||
| Cash Deferral Plan |
| — |
|
| — |
|
| 13,112 |
|
| — |
|
| 476,492 |
| ||||||
STEPHENS | Stock Purchase and Deferral Plan |
| 2,261,875 |
|
| 457,205 |
|
| (406,229 | ) |
| 3,102,954 |
|
| 6,704,618 |
| ||||||
STEPHENSON | Stock Purchase and Deferral Plan |
| 2,137,500 |
|
| 427,500 |
|
| (435,639 | ) |
| 5,825,317 |
|
| 8,568,792 |
| ||||||
| Cash Deferral Plan |
| — |
|
| — |
|
| 173,724 |
|
| — |
|
| 6,313,362 |
|
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 or WM Supplemental Savings 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 20182021 in the “Summary Compensation Table”: Mr. Stephenson—Stankey—$2,761,243,4,091, Mr. Desroches—$14,700, Ms. Lee—$76,080, Mr. McAtee—$851,355 Mr. McElfresh—$343,306, Mr. Stephens—$757,100, Mr. Donovan—$516,411, Mr. McAtee—$291,325,557,830, and Mr. Stankey— $226,210.Stephenson—$527,215. Of the amounts reported in the aggregate balance column, the following aggregate amounts were previously reported in the “Summary Compensation Table” for 20172020 and 2016,2019, combined: Mr. Stephenson—Stankey—$7,474,620,3,888, Mr. McAtee—$1,674,375, McElfresh—$1,048,698, Mr. Stephens—$1,624,500, Mr. Donovan—$2,656,808, Mr. McAtee—$337,500,4,984,254, and Mr. Stankey—Stephenson—$6,456.
Note 3.3,664,733.
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 footnoteNote 3 to the “Summary Compensation Table”.
AT&T INC. | 86 | 2022 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). Officers, including the eligible 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 SPDPSPDP/CDP makeup match is 100%133-1/3% 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.
WARNERMEDIA SUPPLEMENTAL SAVINGS PLAN (SSP)
As an eligible WarnerMedia employee in December 2019, Mr. Desroches elected SSP deferrals of his 2021 compensation. This nonqualified restoration savings plan allows U.S. salaried WarnerMedia employees who earn eligible cash compensation in excess of the IRS compensation limit for tax-qualified plans to make additional pre-tax deferrals to notional investment options that mirror most of the 401(k) funds: up to 50% contributions for compensation up to $500,000 and up to 90% for compensation above $500,000. The Company matches contributions up to the first 6% of deferred compensation between the compensation limit and $500,000, with no match for deferred compensation above $500,000. The matching rate is 133-1/3% on the first 3% of amounts deferred and 100% on the next 3% of deferrals, equating to a maximum 7% match up to $500,000 of compensation.
2022 PROXY | 87 | 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.
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 20182021 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, 20182021
Name | Severance | ($) | | ||
STANKEY | 23,920,000 |
| |||
| 11,960,000 | ||||
| 6,279,000 | ||||
| 10,913,500 | ||||
| 8,970,000 | ||||
|
None of the NEOs hold stock awards that would be subject to automatic vesting in connection with a change in control.
AT&T INC. | 88 | 2022 PROXY |
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 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.
AVAILABILITY OF CORPORATE GOVERNANCE DOCUMENTS
Only copy of AT&T’s Annual Report to the SEC on Form 10-K for the year 2021 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 https://investors.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 (other than pursuant to Exchange Act Rule 14a-8) or nominate a person for election as a Director at the 2023 Annual Meeting Noticeof Stockholders (other than pursuant to the proxy access provisions of the Company’s Bylaws), 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 May 19, 2022, written notice of any such proposal or nomination must be received by the admission ticketCompany no earlier than January 19, 2023, and bring it with youno later than February 18, 2023. In addition, such proposal or nomination must meet certain other requirements and provide such additional information as provided in the advance notice provisions of 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. In addition to satisfying the deadlines in the advance notice provisions of the Company’s Bylaws, a stockholder who intends to solicit proxies in support of nominees submitted under these advance notice provisions must provide the notice required under Exchange Act Rule 14a-19 to the meeting. A stockholderSenior Vice President, Deputy General Counsel and Secretary of record who does not have an admission ticket willAT&T no later than March 20, 2023.
Stockholder proposals intended to be admitted upon presentation of photo identification at the door.
Other Stockholders (shares are heldincluded in the name of a bank, broker,proxy materials for the 2023 Annual Meeting pursuant to Exchange Act Rule 14a-8 must be received by November 22, 2022. Such proposals should be sent in writing by courier or other institution)
You may obtain admissioncertified mail to the meeting by presenting proof of your ownershipSenior Vice President, Deputy General Counsel and Secretary of AT&T common stockat 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 2023 Annual Meeting made in accordance with the proxy access provisions of the Company’s Bylaws must be received by the Senior Vice President, Deputy General Counsel and photo identification. ToSecretary 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. For the 2023 Annual Meeting, written notice of any such nomination must be able to votereceived by the Company no earlier than October 23, 2022 and no later than November 22, 2022.
Nominations for a Director intended for inclusion in the Company’s proxy materials for the 2023 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, Deputy General Counsel 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 meeting, you will needanniversary of the bank, broker, or record holder to give you a proxy.date that the Company mailed its Proxy Statement for the prior year’s Annual Meeting of Stockholders. For the 2023 Annual Meeting, written notice of any such nomination must be received by the Company no earlier than October 23, 2022 and no later than November 22, 2022.
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,
2022 PROXY | 89 | AT&T INC. |
OTHER INFORMATION
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 SECSEC. Because of the complex nature of the forms, AT&T files the reports on behalf of the Executive Officers and the NYSE.Directors. 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. Due to a miscommunication, a report of a purchase by Mr. Luczo was filed two days late.
COSTCOST OF PROXY SOLICITATION PROXY SOLICITATION
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 $23,500,$24,500, plus expenses.
AT&T INC. | 90 | 2022 PROXY |
OTHER INFORMATION |
We determined the pay ratio by dividing the total 20182021 compensation of the CEO as disclosed in the Summary Compensation Table by the total 20182021 compensation of the median employee, using the same components of compensation and valuation methodology as used in the Summary Compensation Table for the CEO.
The total compensation of our median employee is $107,570. The final pay ratio calculation is 231:1.
Determination of CEO Pay Ratio | ||||||
Step 1 | Total compensation of the CEO1 | $24,820,879 | ||||
Step 2 | Total compensation of the median employee2 | $ 107,570 | ||||
Step 3 | Divide compensation of the CEO by the median employee | 230.7 | ||||
Result | CEO pay ratio | 231:1 |
1 | Includes the value of Mr. Stankey’s health benefits. |
2 | Includes the cost of group health and welfare benefits. |
Our median employee for 20182021 was determined using the compensation of employees who were actively employed on November 15, 2021 (the Measurement Date, changed from October 1 2018 (theMeasurement Datein the prior year to exclude the Vrio employees who left the business on November 14th, 2021). We used their cash compensation for the first three quarters of the yearthrough November 15, 2021 to determine the median employee.
Determination of Number of Employees for Selection of Median Employee
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Step 1 | Identify all active | |||||
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Step 2 | Exclude all non-US based employees except those in the 5 foreign countries with our largest employee populations | (8,941 | ) | |||
Result | Employees used to determine the median employee | 190,388 |
Step 2 -
2022 PROXY | 91 | AT&T INC. |
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).
OTHER INFORMATION
DETERMINATION OF NUMBER OF GLOBAL EMPLOYEES
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Step 1 | Identify all active US-based employees |
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Step 2 | Identify all active non-US based employees in foreign countries with our largest employee populations: |
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Mexico | 20,420 | United Kingdom | 3,343 | Slovakia | 2,787 | |||||||||||
India | 2,490 | Czech Republic | 1,279 | |||||||||||||
Step 3 | Identify all active non-US based employees in the other 57 foreign countries: |
| 8,941 |
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Argentina | 1,242 | Australia | 171 | Austria | 9 | |||||||||||
Belgium | 116 | Brazil | 675 | Bulgaria | 59 | |||||||||||
Canada | 730 | Chile | 405 | China | 97 | |||||||||||
Colombia | 206 | Costa Rica | 209 | Croatia | 11 | |||||||||||
Denmark | 75 | Egypt | 2 | El Salvador | 1 | |||||||||||
Finland | 25 | France | 444 | Germany | 575 | |||||||||||
Greece | 3 | Guatemala | 2 | Hong Kong | 258 | |||||||||||
Hungary | 209 | Indonesia | 2 | Iraq | 1 | |||||||||||
Ireland | 51 | Israel | 438 | Italy | 233 | |||||||||||
Japan | 342 | Jordan | 1 | Lebanon | 2 | |||||||||||
Lithuania | 1 | Malaysia | 402 | Netherlands | 265 | |||||||||||
New Zealand | 30 | Norway | 14 | Pakistan | 3 | |||||||||||
Panama | 11 | Peru | 2 | Philippines | 52 | |||||||||||
Poland | 214 | Portugal | 12 | Republic of Serbia | 2 | |||||||||||
Romania | 25 | Russian Federation | 13 | Singapore | 509 | |||||||||||
Slovenia | 2 | South Africa | 10 | South Korea | 67 | |||||||||||
Spain | 297 | Sweden | 161 | Switzerland | 50 | |||||||||||
Taiwan | 41 | Thailand | 14 | Turkey | 37 | |||||||||||
Uruguay | 5 | Emirates | 75 | Venezuela | 33 | |||||||||||
Result | Total number of active global employees excluding the CEO |
| 199,329 |
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AT&T INC. | 92 | 2022 PROXY |
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The total compensation
Discussion and Reconciliation of Non-GAAP Measures
We believe the following measures are relevant and useful information to investors as they are part of AT&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 median employee, $95,814, was determined using the same methodology we usedcompetitors. These measures should be considered in addition to, but not as a substitute for, Mr. Stephensonother measures of financial performance reported in the Summary Compensation Table and we included the cost of group health and welfare benefits. The total compensation of the CEO Randall L. Stephenson was $29,118,118, which includes the value of Mr. Stephenson’s health benefits. The final pay ratio calculation is 304:1.accordance with U.S. generally accepted accounting principles (GAAP).
The following tables reconcile our free cash flow(FCF) and earnings per share(EPS) metrics, discussed on page 38, to the most comparable GAAP metrics.
Free cash flow is defined as cash from operations and cash distributions from DIRECTV (classified as investing activities) minus capital expenditures. Free cash flow after dividends is defined as cash from operations and cash distributions from DIRECTV (classified as investing activities) 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 from our continued economic interest in the U.S. video operations as part of our DIRECTV equity method investment, 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.
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Free Cash Flow and Free Cash Flow Dividend Payout Ratio | ||||
Dollars in millions | Year Ended 2021 | |||
Net cash provided by operating activities | $ | 41,957 |
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Distributions from DIRECTV classified as investing activities |
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Less: Capital expenditures |
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Free Cash Flow |
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Less: Dividends paid |
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Free Cash Flow after Dividends | $ | 11,685 |
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Free Cash Flow Dividend Payout Ratio |
| 56.3 | % |
Adjusted diluted EPS is calculated byCash Paid for Gross Capital Investment
In connection with capital improvements, we negotiate with some of our vendors to obtain favorable payment terms of 120 days or more, referred to as vendor financing, which are excluded from capital expenditures and reported in accordance with GAAP as financing activities. We present an additional view of cash paid for gross capital investment to provide investors with a comprehensive view of cash used to invest in our networks, product developments and support systems, excluding from operating revenues, operating expensesFirstNet reimbursements.
Cash Paid for Gross Capital Investment | ||||
Dollars in millions | Year Ended 2021 | |||
Capital Expenditures | $ | (16,527 | ) | |
Cash paid for vendor financing |
| (4,596 | ) | |
FirstNet reimbursement |
| (515 | ) | |
Gross Capital Investment | $ | (21,638 | ) |
Cautionary Language Concerning Forward-Looking Statements
Information set forth in this proxy statement contains financial estimates and income tax expense certain significant itemsother forward-looking statements that are non-operationalsubject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. The forward-looking statements included in this proxy statement are made only as of the date of this proxy statement. AT&T disclaims any obligation to update and revise the forward-looking statements contained in this proxy statement based on new information or non-recurring in nature, including dispositions and merger integration and transaction costs (referred to as “Adjusting Items”). Management believes that this measure provides relevant and useful information to investors 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 EPS
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AT&T Corporate Social Responsibility
2025 Goalsotherwise.
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AT&T
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Awards, Ratings, and Rankings
RECOGNITION: | ||||
• 3BL Media 100 Best Corporate Citizens; 2011-2021 • Bloomberg Gender Equality Index; 2018-2022 • CDP Climate Change Leadership Level (A-); 2016-2021 • CPA-Zicklin Index of Corporate Political Disclosure and Accountability Trendsetter; 2019-2021 • Disability:IN 100% Disability Equality Index; 2021 • DiversityInc Top 50 Companies for Diversity; 2001, 2007-2019, 2021 • Dow Jones Sustainability Index North America; 2010-2013, 2017-2021 • Ethisphere World’s Most Ethical Companies; 2020-2022 • Fortune World’s Most Admired Companies; 2009-2010, 2012, 2014-2015, 2017-2021 • Hispanic Association on Corporate Responsibility Corporate Inclusion Index; 2009-2021 • Human Rights Campaign Corporate Equality Index; 2004-2021 • JUST Capital America’s Most JUST Companies (JUST 100); 2018-2022 Top 100 Companies Supporting Healthy Families and Communities; 2019, 2021 • National Organization on Disability Leading Disability Employer; 2017-2021 • Newsweek America’s Most Responsible Companies; 2020-2022 • Points of Light The Civic 50; 2012-2021 |
For more information and for a complete list of external recognition, visitatt.com/csr
AT&T Inc._ One AT&T Plaza Whitacre Tower_ 208 S. Akard Street Dallas, TX 75202_ www.att.com
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ADAM SAMPLE | YOUR VOTE IS IMPORTANT Votes submitted electronically must be received before the polls close on May 19, 2022.
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1234 S. ILLINOIS ST. APT 123 LYNN MA 01901 | ||||||||
| SCAN the QR code or visit www.envisionreports.com/att to vote your shares | |||||||
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CALL 1-800-652-VOTE (8683) within the US, its territories, and Canada | ||||||||
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2022 ANNUAL MEETING – PROXY CARD |
qi IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. qi
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL THE NOMINEES LISTED: |
1. Election of Directors: |
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02 - Scott T. Ford | ☐ | ☐ | ☐ | 07 - Michael B. McCallister | ☐ | ☐ | ☐ | 12 - Luis A. Ubiñas | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||
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| ☐ | ☐ | ☐ | 08 - Beth E. Mooney | ☐ | ☐ | ☐ | 13 - Geoffrey Y. Yang | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||
| ☐ | ☐ | ☐ | 09 - Matthew K. Rose | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 2 AND 3: | ||||||||||||||||
For | Against | Abstain | For | Against | Abstain | |||||||||||
☐ | ☐ | 3. Advisory approval of | ☐ | ☐ | ☐ | |||||||||||
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 4-7: |
For | Against | Abstain | For | Against | Abstain | |||||||||||||||||||
2. | Ratification of appointment of independent auditors. | ☐ | ☐ | ☐ | 3. | Advisory approval of executive compensation. | ☐ | ☐ | ☐ |
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For | Against | Abstain | For | Against | Abstain | |||||||||||||||||||
4. Improve executive compensation program | ☐ | ☐ | ☐ | 5. Independent board chairman | ☐ | ☐ | ☐ | |||||||||||||||||
6. Political congruency report | ☐ | ☐ | ☐ | 7. Civil rights and non-discrimination audit | ☐ | ☐ | ☐ |
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1 U P X C O Y M T G | MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND |
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qi IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE . ENVELOPE. qi
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PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING – MAY 19, 2022
The undersigned hereby appoints |
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 proposals (Items 4-7) 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 below 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 Computershare, PO Box 505044, Louisville KY 40233-9720. 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 May 16, 2022.
NON-VOTING ITEMS
Change of Address– Please print new address below.
AUTHORIZED SIGNATURES – THIS SECTION MUST BE COMPLETED FOR YOUR VOTE TO COUNT; PLEASE DATE AND SIGN BELOW.
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Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
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Date (mm/dd/yyyy) – Please print date below. | Signature 1 – Please keep signature within the box. | Signature 2 – Please keep signature within the box. | ||||||
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