AT&T Dials Wrong Number in Setting CEO Pay

Press Release
For Immediate Release - May 21, 2001
Contact: Molly Lanzarotta
(617) 423-2148 x39

AT&T Dials Wrong Number in Setting CEO Pay

Shareholders hang up on layoffs, controversies, and declining customer service

While tens of thousands of AT&T employees have lost their jobs and shareholders have lost their money, AT&T’s leaders have gained millions of dollars. Shareholders will present a resolution at AT&T’s annual meeting on Wednesday, May 23, in Cincinnati, OH, calling on the company to link executive compensation to issues such as declining customer service, public relations controversies, and layoffs.

Of particular concern to shareholders is Business Week’s conclusion that during the years 1997-99, AT&T CEO Michael Armstrong was among the lowest 30% of large-company CEO’s in terms of delivering corporate profits relative to the size of his pay package. In 1999, Armstrong’s total compensation was $6.8 million, and $3.8 million in 1998. AT&T showed more prudence in setting executive compensation in 2000 by reducing Armstrong’s pay package.

Responsible Wealth supports the restraint shown by AT&T last year in executive pay and would like to see it established as a permanent part of the company’s compensation policy. AT&T shareholder and United for a Fair Economy member Ann Sink, of North Carolina, will present the Responsible Wealth resolution, which is co-sponsored by Walden Asset Management, a Boston-based socially responsible money management company.

AT&T’s customer service quality has declined, reflected in accelerating customer losses in its core long distance business. Consumer boycotts are threatening in response to AT&T’s investment in the pornographic Hot Channel. In addition to thousands of layoffs in the 1990s, AT&T has also alienated long-term management employees by changing the company’s pension plan to reduce the potential benefits for thousands of veteran AT&T staff.

Leading companies, such as IBM, Eastman Kodak, and Bristol-Myers Squibb, already include various non-financial and social responsibility factors in the evaluation of executive compensation, similar to those which Responsible Wealth calls for in this resolution.

Responsible Wealth has filed shareholder resolutions related to executive compensation at seven companies: Disney, FleetBoston, Raytheon, Household International, Exxon Mobil and Citigroup, as well as AT&T. Supporting the resolutions is a recent study by Responsible Wealth co-director Scott Klinger which concludes that skyrocketing CEO pay foreshadows poor stock performance. The report and shareholder resolutions can be found at
www.responsiblewealth.org.

Responsible Wealth, a project of United for a Fair Economy, is a growing network of over 450 businesspeople, investors and affluent Americans in the top 5 percent of income and wealth who work to promote widely shared prosperity. United for a Fair Economy is a national, independent non-profit that spotlights growing economic inequality and inspires action to narrow the wage gap.