Pension to Retire For: $158.5 Million Plus
AT&T CEO Whitacre Gets Big Reward for Performance; Well-Earned
By Dionne Searcey
The Wall Street Journal
Friday, April 27, 2007
Edward Whitacre Jr. turned AT&T Inc. into the largest
telecommunications company in the world by market
capitalization, making acquisition after acquisition. The
company's share price has soared nearly 50% in the past year
alone, leaving many rivals in the dust.
And when the 65-year-old executive steps down, he stands to rank
with the corporate elite in another fashion: His retirement
payout will be among the top pension packages in the country,
weighing in at $158.5 million.
Mr. Whitacre's contract extends through spring 2008, making his
retirement imminent. Some investors are hoping the company will
shed light on when he will be stepping down at an annual
shareholders' meeting in San Antonio today. Analysts say his
likely successor is his well-respected lieutenant, Randall
Stephenson, AT&T's chief operating officer.
In addition to his $158.5 million pension package, Mr. Whitacre
in retirement will have $24,000 in annual automobile benefits,
$6,500 in "home security" each year and access to AT&T's
corporate jet for 10 hours a month, according to AT&T's proxy
filing with the Securities and Exchange Commission.
The Texan and his family will also receive free health insurance
for life. The company will pick up the tab for taxes on most of
these benefits. And he will be paid just over $1 million a year
for three years for work as a consultant to the company during
his retirement. For that period of time he will also receive
$25,000 to cover his country-club fees.
Mr. Whitacre's retirement package ranks second in the U.S. among
those on file with the SEC as of mid-April, according to the
Corporate Library, a Maine-based research firm that tracks
executive salaries and corporate governance, though throughout
history there have been far larger payouts. The firm, which
advocates responsible corporate governance, offered its findings
after analyzing 1,168 proxy statements filed this year.
Topping the list is Richard Handler, chief executive of
Jefferies Group Inc., whose retirement package is valued at a
total of nearly $202 million. Nearly all of that sum is
A spokesman for Jefferies says that Mr. Handler has been at
Jefferies for 17 years and that the company's stock has
appreciated more than 400% since Mr. Handler took a role in
leading the firm in 2000. He said Mr. Handler's deferred
compensation is subject to market risk.
While lavish retirement packages often come under attack by
shareholders and lower-level employees, criticism of Mr.
Whitacre has been muted, mainly because AT&T's share price has
performed well. Unions in the sector have recently remained
quiet about the payout, focusing instead on CEOs whose companies
didn't perform the way AT&T did, such as Verizon Communications
"Ed Whitacre's pay and pension reflect his position as one of
the longest-serving, most successful CEOs in corporate America,"
an AT&T spokesman said. "During his tenure as CEO, AT&T has
outperformed its peers in delivering value to stockholders, and
Mr. Whitacre has positioned the company to continue to create
stockholder value for many years to come."
Still, watchdog groups say his package is too much. "There is
no excuse for this kind of excessive egregious compensation,"
said Alexandra Higgins, senior compensation analyst at the
Mr. Whitacre's pension plan includes $73.8 million in
nonqualified deferred compensation, $61 million from
supplemental retirement income plans, $22.3 million from a
supplemental executive-retirement plan, and $1.4 million from
AT&T's defined benefit pension plan, according to AT&T's proxy
Executive compensation will be on the minds of many during
today's meeting. Up for a vote today is a shareholder proposal
that would require the board to adopt a policy that stockholders
be allowed a nonbinding vote on executive pay packages.
AT&T, which has $120 billion in revenue and more than 100
million customers, says Mr. Whitacre last year earned about
$31.5 million in pay. The company defends his compensation
package by pointing out that AT&T provided a 53% return to
shareholders last year.
While Mr. Whitacre's package isn't drawing much fire, the same
can't be said about Verizon CEO Ivan Seidenberg, who earned
$21.3 million in total compensation last year, according to
Verizon. Mr. Seidenberg stands to receive roughly $26.7
million, including deferred compensation, in retirement benefits
should he step down.
Verizon's stock climbed about 24% in 2006 but is down roughly 4%
from what it was five years ago. "Shareholders at AT&T have
been better served than shareholders at Verizon," said Candice
Johnson, a spokeswoman for the Communications Workers of
Verizon spokesman Peter Thonis says union criticism of pay for
Mr. Seidenberg, who has been at the company 41 years, is tied to
labor groups' efforts to unionize some sectors of Verizon.
"They're motivated by one thing and one thing only -- by their
restriction in not being able to organize parts of Verizon," Mr.
The AFL-CIO is trying to persuade shareholders to withhold votes
for six directors at Verizon's annual meeting on May 3. While
the union is targeting its efforts on Verizon this year, Daniel
Pedrotty, a director in the AFL-CIO's office of investment, says
he thinks Mr. Whitacre's retirement payout "is too much," but
the union isn't planning any action against it.
Mr. Whitacre's pension package has been topped by others
historically. The total retirement package of Lee Raymond,
former chairman and CEO of Exxon Mobil Corp. came to about $351
million, according to the Corporate Library. An Exxon spokesman
ticked off a list of Mr. Raymond's accomplishments as chief
executive, including more than quadrupling the company's market
Giant pension packages aren't an all-American phenomenon. In
2002, Percy Barnevik relinquished the chairmanship of Swedish
investment group Investor AB amid controversy over his pension
from Swiss industrial giant ABB Ltd. Mr. Barnevik agreed to
leave the company, controlled by Sweden's Wallenberg family,
because of allegations he improperly received a retirement
payout from ABB of the equivalent of $87 million.
Mr. Whitacre has been at AT&T through all its incarnations for
43 years, starting as a low-level employee in the field. In his
17 years as CEO, he has orchestrated numerous takeovers, most
recently culminating in the $67 billion acquisition of BellSouth
Corp., which gave the company full control of Cingular Wireless.
Write to Dionne Searcey at