The Director Compensation Project: AT&T, Inc.

This post is part of an ongoing series that examines the way stock exchange independence rules influence director compensation.  We are including companies from 2010’s Fortune 500 and using information found in their most recent proxy statements.  In addition to state standards and the requirements of SOX, the stock exchanges each have their own standards for independence.  While substantially the same, there are some minor differences between NYSE and NASDAQ rules that are worth noting.  

Under NYSE Rule 303A.01, all listed companies must have a majority of independent directors sitting on their boards.  Directors are not independent if they received over $120,000 in direct compensation, other than director’s fees, in any one year period over the last three years pursuant to Rule 303A.02(b)(ii).  This is a looser restriction than the equivalent NASDAQ Rule, 5605(a)(2), which includes "any compensation."  Rules 303A.06 and 5605 also require that, in addition to the general independence standards, audit committee members must comport with the requirements of  Rule 10A-3 (C.F.R. §240.10A-3).  See also IM-5605-4. Audit Committee Composition.

One can see some of the effects of these rules when looking at the director compensation table from AT&T (NYSE:T) 2011 proxy statement. According to the proxy statement, the company paid the directors the following amounts:

Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards ($)	All Other Compensation ($)	Total ($)
William F. Aldinger III*	48,533	0	0	256,281	304,814
Gilbert F. Amelio	141,167	127,500	765	4,884	274,316
Reuben V. Anderson	130,367	127,500	56,382	2,806	317,055
James H. Blanchard	133,000	127,500	50,333	6,260	317,093
August A.Busch III*	39,100	0	0	290,749	329,849
Jaime Chico Pardo	129,400	127,500	0	15,102	272,002
James P. Kelly	135,100	127,500	35	3,755	266,390
Jon C. Madonna	170,033	127,500	0	7,168	304,701
Lynn M. Martin	130,850	127,500	0	14,757	273,107
John B. McCoy	131,000	127,500	0	7,073	265,573
Mary S. Metz*	39,433	0	2,242	267,974	309,649
Joyce M. Roché	116,600	127,500	0	24,078	268,178
Matthew K. Rose**	30,333	0	0	26	30,359
Laura D’Andrea Tyson	128,800	127,500	1,768	6,177	264,245
Patricia P. Upton	121,200	127,500	24,148	4,314	277,162

*Compensation amount reflects fees earned through retirement date.

**Joined board in September 2010.

 
Director Compensation.
All of the directors were present at the 2010 annual meeting, and they all attended at least 75% of the meetings of the board and committees on which each served. Non-employee directors receive an annual retainer of $85,000, together with $2,000 for each board meeting or corporate strategy session attended. Directors receive additional compensation of $1,700 for each committee meeting attended in person, except members of the Audit and Human Resources Committee. Those directors receive $2,000 for each committee meeting attended. The Chairperson of each committee receives an additional retainer of $10,000, except for the Chairpersons of the Audit and Human Resources Committee who each receive an additional annual retainer of $25,000.

Director Tenure.
Ms. Upton has been a director of AT&T since 1993 and has the longest tenure on the board. Mr. Rose has the shortest tenure and has been a director of AT&T since September 2010. Mr. Kelly and Mr. Anderson were directors of Dana Corporation and Mississippi Chemical Corporation, respectively, preceding each of the company’s bankruptcy filings. Several directors also sit on other boards. Mr. Rose is a director of AMR Corporation, BNSF Railway Company, and Burlington Northern Sante Fe, LLC. Mr. Blanchard is also a director of Synovus Financial Corp. and Total System Services, Inc. Mr. Chico is on the board of CICSA, Honeywell International, Inc., and IDEAL. Ms. Roché is a director of Dr. Pepper Snapple Group, Inc., Macy’s, Inc, and Tupperware Brands Corporation.

CEO Compensation.
Randall L. Stephenson began his career with AT&T in 1982, and he has been the Chief Executive Officer and Chairman of the board since 2007. Prior to becoming the CEO, he was AT&T’s Chief Operating Officer from 2004 to 2007 and Chief Financial Officer from 2001 to 2004. Mr. Stephenson’s total compensation for 2010 was $27,341,628 $1.9 million less than the previous year. Mr. Stephenson held 1,292,248 shares of stock options in 2010, and he was also entitled to benefits such as personal use of private jets, auto benefits, club memberships, life insurance, and home security. Richard G. Lindner has been the President and Chief Financial Officer of AT&T since 2004, and he was previously the CFO for AT&T Mobility. In 2010, he received a salary of $829,167, stock awards of $4,250,009, and total compensation of $8,699,999. He received personal benefits in the amount of $72,257, including relocation costs, financial counseling, auto benefits, and club memberships.