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US phone company AT&T paid $ 9m to its executives after finalizing their 2018 acquisition of Time Warner, a $ 85bn contract that was unelected this month after giving a small sum to depositors.
After winning a cheap fight with the U.S. Department of Justice, which filed to suspend the Time Warner deal, AT&T paid John Stankey, a senior official, a final bonus of $ 2m, according to 2019 reports.
The then chief financial officer John Stephens was also given a $ 2m bonus, and David McAtee, the company’s attorney general, was awarded a $ 5m bonus for breaking the contract.
Stankey, Stephens and McAtee were also given the biggest, annual opportunity thanks to the merger of Time Warner, according to Glass Lewis, a share advisory company.
Concerns about AT&T management bonuses culminated at the company’s annual general meeting in April which many shareholders voted against company payroll report.
“AT&T has long had a high payout,” said David Yermack, a professor at New York University Stern School of Business. “It’s amazing that the participants took so long to get frustrated.”
The final bonuses plus are ruined because they seem to benefit those who are doing work that is already part of their job, Yermack said.
But bonuses are made in affiliate and consumer groups to encourage managers to complete their work, says Anh Tran, a professor of economics at City University of London. The cost of retrenchment and other benefits due to the failure of the agreement could be even greater than the cost of bonuses, he said.
AT&T declined to comment on the bonuses but said: “We see WarnerMedia / Discovery’s work generating more revenue than we have paid for Time Warner, or 30% or more, and it is in contrast to the benefits of this partnership to the communications company.”
AT&T advertisers will have 71% of the inclusion WarnerMedia / Find.
Shareholders have expressed concern over the high pay at AT&T. Following the acquisition of Time Warner, Stankey was elected AT&T chief executive in October 2019 and his total salary jumped by a third to $ 22.5m, more than he paid the CEO of corporate business, according to Institutional Shareholder Services. In 2020 Stankey was elected AT&T chief executive.
The company again criticized this year by revealing, just weeks before it was due to start, that WarnerMedia CEO Jason Kilar he was given a $ 48m bonus over four years without any form of work, according to the ISS.
“Advertisers may be skeptical of the lack of functionality in the huge payroll that is given to non-CEOs for the year under review,” the ISS said.
Kilar’s future was still unknown when the Discovery deal was announced.
AT&T also gave McAtee a $ 9m “job reservation” bonus this year.
BlackRock, AT&T’s second largest shareholder, voted for five members of the company’s finance committee for significant bonuses.
The payoff – as well as AT&T’s payroll payments made to former Randall CEO Stephenson – “all of this has taken place between affiliate and peer-to-peer operations,” BlackRock said.
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