A gen-u-ine example of pay-for-performance citing specific managerial accountability issues has not been seen in these parts for some time. Maybe decades. But before we begin to weep bitter tears of sympathy for AT&T CEO Randall Stevenson, let's address any concerns about the dude's health and welfare: his pay package for 2011 was still a tasty $22 million. That is approximately $5 million less than he made in 2010 - so we're sure there will be some thoughtful belt-tightening in the Stevenson household - but we suspect he'll manage to put this behind him and get on with his life.
From a governance standpoint this is both good news and a rather cynical denial of responsibility by the company's board of directors. The good news is that CEOs are almost never penalized for anything short of, in former Louisiana governor Edwin Edwards' pungent phrase, 'being caught in bed with a live boy or a dead girl.' So kudos to the board for actually taking action, however insignificant in the greater context of runaway executive compensation.
The cynical denial comes from the board's evident refusal to take any responsibility itself. Mega-mergers like AT&T's attempted takeover of rival cell phone provider T-Mobile never happen without board approval of the decision and monitoring of the tactics involved. From an anti-trust standpoint, there was never any doubt that this was a long shot. That Stevenson is taking the hit, however light, suggests that the board is a tad out-of-touch with its competitors' determination and the state of regulatory approval processes in the US: moribund, yes; brain-dead, no.
But cognitive dissonance being a dominant feature of this economy, let's not get ahead of ourselves. A CEO was actually docked real money for something he did or in this case, didn't do. Duly noted. JL
Stacy Cowley reports in CNNMoney:
What's the cost of a $4 billion gamble gone wrong?
For AT&T CEO Randall Stephenson, the answer is, "$2 million." That's the sum by which AT&T's board cut his 2011 compensation as a direct response to the failed T-Mobile takeover bid Stephenson led last year.
AT&T offered $39 billion for T-Mobile, a deal that would have eliminated the fourth-biggest wireless carrier in the U.S. and made AT&T the nation's biggest by far. But the arrangement was a risky one that all sides knew would face heavy regulatory scrutiny.
To entice T-Mobile to roll the dice, AT&T (T, Fortune 500) offered a whopping breakup fee: It agreed to pay T-Mobile $3 billion if the deal didn't go through, plus hand over another $1 billion worth of spectrum.
That's exactly what happened. After the Federal Communications Commission and the Department of Justice both moved to block the deal, AT&T withdrew its bid in December. It then turned its spectrum, plus billions in cash, over to T-Mobile parent Deutsche Telekom.
Stephenson swung for the fences -- and missed.
AT&T's compensation committee took that into consideration for his 2011 pay package, AT&T said Tuesday in a regulatory filing. Despite a "strong operational performance," Stephenson's compensation was slashed by "more than $2 million" as a reflection of the heavy toll T-Mobile took on the company's bottom line, AT&T said.
Stephenson still took home a pretty rich package. On top of a base salary of $1.6 million, he received a $3.8 million "incentive award" and stock compensation worth an estimated $12.7 million. AT&T valued his total 2011 compensation at $22 million -- a 20% drop from the $27 million he collected a year earlier.
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