U.S. Securities and Exchange Commission
Washington, DC 20549
NOTICE OF EXEMPT SOLICITATION
1. Name of the Registrant:
AT&T INC.
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2. Name of the person relying on exemption:
SNET RETIREES ASSOCIATION
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3. Address of the person relying on exemption:
P.O. BOX 615, SOUTHINGTON, CONNECTICUT 06489
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4. Written materials. Attach written materials required to be submitted
pursuant to Rule 14a-6(g)(1):
(LOGO) SNET RETIREES ASSOCIATION, INC.
_______________________________
P.O. Box 615, Southington, CT 06489
April 2013
DEAR FELLOW AT&T SHAREHOLDER:
We urge you to vote FOR a shareholder proposal that would require ratification
of certain severance compensation packages at AT&T's upcoming Annual Meeting,
scheduled for April 26th in Cheyenne, Wyoming:
ITEM 7: VOTE FOR "SHAREHOLDER RATIFICATION OF EXECUTIVE SEVERANCE PACKAGES"
While we support generous performance-based pay, we believe that requiring
shareholder approval of "golden parachute" severance packages with a TOTAL cost
exceeding 2.99 times an executive's base salary plus target bonus is a prudent
policy that will better align compensation with shareholder interests.
In its opposing statement, the Company asserts that it already has a similar
Severance Policy in place. In 2007, after an association of AT&T retirees
introduced a proposal on Golden Parachutes, the Company adopted a policy to
seek shareholder approval for severance with a "cash value" in excess of 2.99
times base salary plus target bonus.
However, in our view the current policy has a major loophole: It excludes the
value of waiving certain performance conditions on the vesting of restricted
stock units (RSUs) and Performance Shares from the total cost calculation that
would trigger the need for shareholder ratification. The policy states:
"'severance benefits' will not include the cash payments made in lieu of the
accelerated vesting of options or outstanding equity-based awards, or to
compensate for the cancellation of such awards."
Not counting the value of accelerated vesting, or of waived tenure conditions,
on these grants has become potentially more costly as executive compensation
shifts toward very large multi-year equity awards contingent on actual
performance.
According to the 2013 Proxy Statement (page 75), if CEO Randall Stephenson
is terminated after a change in control, or resigns for "good reason," he would
receive (for starters) a lump sum payment of $19.7 million, equal to 2.99 times
his 2012 base salary plus target bonus. Other named executive officers are
likewise eligible for a cash payout equal to 2.99 times base salary plus target
bonus (page 75).
However, this lump sum cash payment is not nearly the total cost of severance
payments triggered by certain terminations. For example, the 2012 Proxy (page
69) more clearly disclosed that CEO Stephenson could receive AN ADDITIONAL
$14.1 MILLION due to the immediate vesting of restricted stock units that
would not otherwise be earned and vested until as long as three years later.
Under AT&T's 2011 Long Term Incentive Plan (LTIP), upon termination after a
change in control (or due to death or disability), "Any restriction periods and
all restrictions imposed on . . . Restricted Stock Units lapse and they shall
immediately become fully vested upon Termination . . . ."
Stephenson's $19.7 million lump sum severance payment also does not include the
value of any of the more than 520,000 Performance Shares (with an estimated
value of $17.7 million) from plan awards that the Proxy states are "unearned"
and "have not vested" since they represent three-year performance cycles ending
after 2013 and 2014 (see Proxy page 63).
Under the terms of the 2011 LTIP, as noted above, restricted stock immediately
vests and becomes payable if a termination follows a change in control or is
due to death or disability. Likewise, "any and all Options . . . immediately
shall become vested and exercisable upon Termination . . ." after a change in
control. Similarly, the overlapping grants of Performance Shares (which are
earned over 3-year performance periods) effectively vest following a change in
control termination, although the number of shares is pro-rated and the payout
is based on the financial performance of AT&T at the end of the remaining
period (as long as three years!) after the executive terminates.
Furthermore, contrary to the Board's opposing statement, the definition of
severance payments in the proposal does not include compensation that is earned
prior to termination, including pension and nonqualified deferred compensation
plans, and executive life insurance benefits, which each pay out millions more.
Executives are already vested in this compensation irrespective of termination.
AT&T made this argument to the SEC in an effort to exclude this proposal from
the proxy - and the SEC rejected AT&T's claims, concluding there was no basis
for omitting the proposal.
We believe our Company's severance approval policy should include the total
cost of termination payments, including the estimated value of accelerated
vesting of RSUs and Performance Shares that otherwise would not have been earned
or vested until the end of the performance period.
We believe a policy of seeking shareholder approval for very large severance
packages will provide valuable feedback, encourage restraint, and strengthen
the hand of the Board's compensation committee.
Please vote FOR Item 7 and thank you for your consideration of this issue.
Sincerely yours,
/s/JoAnn Alix Gagain
JoAnn Alix Gagain
President
The cost of this letter is being borne entirely by the SNET Retirees
Association. This is not a solicitation. Please DO NOT send your proxy card to
the Association.