Angry Investors Expected to Slap AT&T; Board
Angered that AT&T; Corp. Chief Executive Robert Allen’s pay rose as the company cuts 40,000 jobs, some institutional investors are expected to withhold support or oppose reelection of the company’s directors at AT&T;’s annual meeting today.
The action won’t be enough to oust the directors, but it would be a rare public slap by investor groups that generally wield their considerable clout in private.
In February, AT&T;’s board gave Allen a salary and bonus of $2.68 million, 20% lower than he received in 1994. But his overall compensation, with stock incentives included, rose to $16 million from $6.7 million in 1994.
Representatives of the disgruntled investment funds said Tuesday they were shocked Allen could receive such a boost when AT&T;’s performance has been mixed for several years.
“We feel it’s in the best interest of our participants that we withhold votes because of the whole Mr. Allen situation,” said Jack Kenneally of the Hotel Employees & Restaurant Employees International Union Pension Fund.
Moreover, some shareholders usually view layoffs as an admission of past management mistakes rather than a sign that managers are taking tough medicine to fix problems.
AT&T; also has become a symbol of the American public’s frustration with massive corporate job cuts and the growing pay gap between top executives and everyday employees.
That frustration reverberated through the presidential primaries this spring and on Capitol Hill. On Monday, Sen. Edward Kennedy (D-Mass.) introduced a bill to give tax breaks to companies that provide better wages, benefits and training for their workers.
AT&T; has defended the job cuts and Allen’s compensation. Spokesman Mark Siegel on Tuesday repeated the company’s view that it saw no reason for voting against any director at the annual meeting, which will be held in Miami.
The funds planning to abstain or vote against AT&T;’s board represent more than 27 million shares. That is a tiny fraction of the more than 1.59 billion outstanding AT&T; shares.
The funds that planned to abstain or vote against AT&T;’s board include the State Board of Wisconsin, which owns 3.3 million shares; Public School Employees Retirement System of Pennsylvania, 3.3 million shares; New York City Employees Retirement System, 4 million shares; New York City Teachers Retirement System, 2 million shares; New York City Police Pension Fund, 1.7 million shares; New York City Board of Education Retirement System, 170,000 shares; and the Teamsters Pension Fund, 2.7 million shares.
Others include the Hotel Employees & Restaurant Employees International Union Pension Fund, the International Brotherhood of Electrical Workers Pension Fund and the Communication Workers of America investment fund.
A few will direct their votes against reelection of the board members that form AT&T;’s compensation committee. They include California Public Employees’ Retirement System, 8.5 million shares; Pennsylvania State Employees, 1.16 million shares; and the Louisiana State Employees Retirement System, 75,000 shares.
