AT&T; Chief Defends Pay to Investors

AT&T; Corp. Chairman Robert Allen said he feels “no pain” accepting more pay while the company is laying off thousands of workers. And he got little at AT&T;’s annual meeting Wednesday.

Just two shareholders, including one representing a large pension fund that had previously criticized Allen, raised the issue.

Meanwhile, the company reported a 17% jump in first-quarter profit, more than it would have earned before breaking up. While AT&T; has not completed its break into three companies, it reported financial performance as if it had.

AT&T; earned $1.44 billion, or 90 cents per share, meeting the expectations of Wall Street analysts. A year ago, AT&T; earned $1.2 billion, or 80 cents per share, in the same period on comparable operations.

Revenue was $12.96 billion, compared to $12.38 billion a year ago.

AT&T;’s stock fell 50 cents to $61.375 on the New York Stock Exchange.

AT&T; began last September to break itself into three, spinning off its communications-equipment manufacturing unit as Lucent Technologies Inc. and the computer maker NCR Corp. Lucent became independent on April 4 and NCR will later this year.

AT&T;’s profit would have been $1.36 billion, or 85 cents per share, if Lucent and NCR were factored in. Lucent will report its performance later this month.

NCR had an operating loss of $37 million in the quarter, down from $172 million a year ago. Its revenue was also lower because of the sale of its chip manufacturing business and its exit from the personal computer business.

Analysts noted AT&T;’s core long-distance business continued to lag competitors, with 7.7% volume growth from a year ago, and probably lost market share. Rival Sprint Corp. reported higher growth on Tuesday. Another rival, MCI Communications Corp., has not reported yet.

AT&T;’s cellular revenue grew 5% and the number of subscribers grew to 5.86 million, up 32% from a year ago. Products and services revenue, which ranges from consulting to cellular phones to submarine systems, was down 15%. Financial services revenue was also down.

At the annual meeting, there was a symbolic gesture about Allen’s pay as 6% of its shareholders, led by some large pension funds including the California Public Employees Retirement System, voted against board members seeking reelection.

The company announced in late February that while Allen received less cash pay in 1995 than 1994, his stock options mushroomed to make his overall compensation potentially worth $16 million.

“Each of these board members has failed in their basic task of deciding your pay,” said Teamsters Pension Fund representative Ed Feigen.

Only one shareholder joined Feigen’s criticism from the floor, and Allen took that as an opportunity to explain and defend his pay. The options can’t be used until 1999 and take effect only if AT&T; meets goals in its stock price, he said.

“I feel no pain in accepting the compensation that may eventuate if--and only if--the shareholders, the customers and the employees of AT&T; also benefit,” Allen said.

Since announcing that its breakup would result in 40,000 job cuts, including 18,000 layoffs, AT&T; has been widely cited in discussions about corporate job cuts and the pay gap between top executives and ordinary workers.

Republican presidential candidate Patrick J. Buchanan made corporate behavior an issue in the primary campaign and criticized AT&T; executives as “bloodless corporate butchers.”