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AT&T CEO to Forgo Bonus
By Amol Sharma
The Wall Street Journal
Friday, January 31, 2009

AT&T Inc. said Chief Executive Randall Stephenson decided to forgo a bonus for 2008, as the company prepares to cut 12,000 workers and forecasts a bleak 2009.

The Dallas telecom provider, which reported a 23% drop in fourth-quarter earnings on Wednesday, also said 120,000 managerial employees, including Mr. Stephenson --roughly 40% of its entire work force -- will not receive salary increases in 2009.

According to an AT&T spokesman, Mr. Stephenson told employees the company is "committed to doing all we can to help preserve and protect jobs, and this is one way to do it.  It was not an easy decision, but it's the right one given the environment."

The company didn't disclose what Mr. Stephenson's 2008 bonus would have been, but it makes up about 25% of his total compensation, including salary and stock grants.  Last year, he earned a $4.5 million bonus.

AT&T expects to file a proxy with full 2008 compensation details in the next several weeks.

On Wednesday, AT&T offered bleak guidance for 2009 that was below Wall Street's expectations, with analysts calculating annual earnings per share of about $1.95 to $2.00, down from $2.16 in 2008.  Beyond layoffs and deferring salary raises, AT&T is also trying to cut costs by pulling back on capital spending by about 10% to 15% in 2009.

The landline business is beginning to take a hit from the economic slowdown, with a long-standing decline of consumer interest in home phones compounded by a pullback in business spending.  Businesses who have laid off workers don't need to spend as much on voice and data services.

In the fourth quarter, AT&T's fourth-quarter consumer wireline revenue fell 5.3% to $5.3 billion, as it lost one million consumer landline connections.  Revenue from large business customers declined 3.7% to $4.5 billion in the fourth quarter.  Wireless continues to be the bright spot.  AT&T had 2.1 million net subscriber additions in the quarter, with 1.9 million new iPhone activations.

Write to Amol Sharma at