ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, February 27, 1996 TAG: 9602270125
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
DATELINE: WASHINGTON
SOURCE: Associated Press
THIS IS NOT A BOARD deciding to reward Mr. Allen for laying off 40,000 people, said AT&T spokesman Dick Gray. He said the board had decided on Allen's 1996 salary before the company's Jan. 2 layoff announcement.
AT&T Chairman Robert Allen could make $9.7 million in the next four years from stock options received following the company's restructuring, which will result in layoffs of 40,000 workers, AT&T has disclosed.
Company officials on Monday defended the pay package, contained in a Securities and Exchange Commission filing, saying it rewards Allen only if his stewardship boosts the company's stock price following the new AT&T breakup.
The SEC filing showed that Allen's 1995 cash paycheck fell by about $512,000 to $3.3 million in 1995 from the year earlier. That's due to a huge restructuring charge AT&T took for the former NCR Corp. computer equipment business. The $1.6 billion special charge meant Allen didn't meet a target for boosting shareholder value.
But Allen received 750,000 stock options, presently worth an estimated $9.7 million, following announcement of the restructuring into three separate companies. The options can be exercised over the next four years only under certain conditions.
AT&T spokesman Dick Gray said Allen would have to meet ``aggressive'' goals to push the company's stock price above certain levels each of the four years. The SEC document said the options excise price was $63.50 a share, meaning the options would be worthless unless the price of AT&T stock met that level.
But Gray said AT&T's stock price has to ``appreciate significantly above $63.50'' in order for Allen to receive the options. Gray didn't specify those yearly targets.
AT&T's Jan. 2 layoff announcement came after the board had decided on Allen's 1995 salary, Gray said.
Allen's pay and options also are based other achievements in 1995: his ability to meet certain goals for personnel and customer satisfaction, the acquisition of McCaw Cellular, a new three-year labor agreement and launch of a new business, AT&T Solutions.
``This is not a board deciding to reward Mr. Allen for laying off 40,000 people,'' Gray said. ``We all understand the force reductions are very painful.''
While the decision on Allen's pay was made before the layoff announcement, Gray said, ``I'm not sure the decision would be any different after that.''
LENGTH: Medium: 52 linesby CNB