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Corporate Governance

: The Race to the Bottom

The Director Compensation Project: AT&T

By Ashley Dietrich

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This post is part of an ongoing series that examines the way stock exchange independence rules influence director compensation. We are including companies from 2009's Fortune 100 and using information found in their 2009 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 all compensation. Rule 303A.06 requires that, in addition to the general independence standards, audit committee members must comport with the requirements of Exchange Act Rule 10A-3 (C.F.R. §240.10A-3), also known as SOX 301.

One can see some of the effects of these rules when looking at the director compensation table from AT&T (T-NYSE) 2009 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	136,000	127,500	0	21,189	284,689
Gilbert F. Amelio	167,233	127,500	0	3,948	299,272
Reuben V. Anderson	120,650	127,500	0	1,478	300,976
James F. Blanchard	123,250	127,500	0	4,129	296,190
August A. Busch III	121,900	127,500	0	7,158	256,558
Jamie Chico Pardo	37,733	0	0	0	37,733
James P. Kelly	137,100	127,500	0	1,619	266,219
Charles F. Knight	39,100	0	0	19,768	58,868
Jon C. Madonna	153,700	127,500	0	3,587	284,787
Lynn M. Martin	126,000	140,500	0	3,260	269,760
John B. McCoy	128,633	140,500	0	15,068	284,201
Mary S. Metz	118,600	127,500	0	13,356	263,297
Toni Rembe	41,100	0	0	12,225	53,903
Joyce M. Roche	116,600	140,500	0	10,027	267,127
Laura D'Andrea Tyson	111,200	140,500	0	4,004	256,452
Patricia P. Upton	121,500	127,500	0	4,325	253,325

Director Compensation. AT&T's board met nine times in 2008. All directors attended at least 100% of the board meetings. Of the fifteen directors, twelve directors received between $110,000 and $140,000 in cash compensation. The board's average total compensation is $248,890.

Director Tenure. Eight of the fifteen active directors have served on the board since 1999. Mr. Busch has the longest tenure serving on the board since 1983. Several directors also sit on other boards. Ms. Martin, a director since October 1999, also sits on the boards of Constellation Energy Group, Inc.; certain Dreyfus Funds; The Procter & Gamble Company; and Ryder System, Inc. Mr. Willinger, a director since 2003, also sits on the boards of Illinois Tools Works, Inc.; KKR Financial Corp.; and Charles Schawb Corporation.

CEO Compensation. Randall Stephenson is Chairman of the Board, Chief Executive Officer and President of AT&T Inc. He has served in this capacity since June 2007. Mr. Stephenson received $11,565,255 in total compensation for 2008. Of his total compensation, Mr. Stephenson received $1,420,833 as base cash salary. Mr. Stephenson's total compensation is $10,416,729 less than his 2007 figure.

Full post as published by The Race to the Bottom on May 05, 2009 (boomark / email).