AT&T Inc.'s chief executive, Randall Stephenson, saw the value of his pay package fall 17 percent to $15 million in 2008, a reduction he asked for as heavy iPhone subsidies ate into earnings and as the company lays off thousands of workers.
The Dallas-based company said Tuesday in a regulatory filing that Stephenson asked the board not to pay him a bonus for 2008 because of the recession and AT&T's plans to cut 12,000 jobs, or 4 percent of its workforce. The job cuts, which will happen throughout 2009, were triggered by the economic crisis and the continued erosion of AT&T's landline telephone business. Meanwhile, the wireless division keeps winning new subscribers, and iPhone sales are hot.
AT&T said in a preliminary proxy filing with the Securities and Exchange Commission that compensation for its executive officers fell 44 percent from 2007 to 2008, even as sales and profits increased. The economy and a change in AT&T's contract with Apple Inc. over the iPhone hurt the company's ability to meet its profit targets, AT&T said.
In the summer of 2008, AT&T, the exclusive iPhone carrier in the U.S., changed its unusual deal with Apple so that the companies would no longer split the iPhone's services revenue.
AT&T now subsidizes the cost of the iPhone to lure more customers and make more money off their contracts – iPhone customers pay about $100 per month for service, giving AT&T the industry's highest revenue per wireless subscriber. The new arrangement is more in line with the industry practices, but AT&T doesn't expect the change to boost earnings until 2010.
AT&T said in the filing that Stephenson pulled down a $1.4 million salary in 2008, a 22 percent improvement over 2007, but didn't get a bonus. In 2007, Stephenson's cash bonus was $4.5 million.
For 2008, he accumulated more than $376,000 in perks, including nearly $142,000 in relocation expenses, $83,000 for personal use of AT&T's corporate jet and $14,000 in financial counseling.
The biggest chunk of Stephenson's pay package came in the form of options and performance-based stock incentives, which totaled $13.2 million for the period.
Stephenson had $4.8 million worth of stock vest in 2008. He didn't exercise any options, according to the filing.
In 2007, Stephenson's pay was $18 million, according to calculations by The Associated Press.
For all of 2008, AT&T earned $12.9 billion, up from $12 billion the year before. Sales rose to $124 billion from $119 billion.
The AP's calculations of total pay includes salary, bonus, incentives, perks, above-market returns on deferred compensation, and the estimated value of stock options and awards granted during the year. The calculations exclude changes in the present value of pension benefits, and they sometimes differ from the totals companies list in the summary compensation table of proxy statements filed with the SEC.