Influential proxy advisor Institutional Shareholder Services (ISS) is recommending stockholders vote against AT&T’s executive compensation plan at its April 20 annual meeting after the company granted WarnerMedia CEO Jason Kilar a stock award valued at $48 million.
Kilar’s base salary, at $2.5 million, was above that of current and former AT&T CEOs John Stankey and Randall Stephenson and the median of entertainment chief executives, which tend to be a highly compensated group, ISS said.
The former founding CEO of Hulu landed at WarnerMedia May 1 just before the launch later that month of HBO Max. His 2020 pay package totaled $52 million.
Public companies like AT&T list the compensation of their top five highest-paid executives in so-called proxy statements filed with the SEC. The proxy lists all proposals to be presented for shareholder vote at the annual meeting, including approving prior-year executive compensation. ISS issues detailed reports breaking down each proposal, recommends votes ‘for’ or ‘against’ and explains why. The vote on pay is non-binding but significant dissent by shareholders doesn’t look good.
In a report issued late Thursday, ISS said, “A vote AGAINST this proposal is warranted,” citing “certain concerns surrounding one-time pay decisions made in FY20” — the most concerning being, “the magnitude and structure of a sign-on equity award granted to NEO Kilar, valued at $48 million, which … lacks performance criteria and vests solely over time.” Meaning the award is not linked to improving any metrics at the company.
AT&T said the board “approved Mr. Kilar’s equity grant as a way to attract and retain the unique skill set he brings to the Company and to incentivize stockholder value creation. The structure of Mr. Kilar’s compensation also aligns with that of his peers in the media and technology industry. His total compensation reflects his responsibility in running a preeminent media company and is also in line with industry peers.”
Kilar’s stock will vest in portions of $12 million a year over four years and AT&T has said it doesn’t plan to award Kilar any more stock over that period. However, “Some investors may prefer a stronger commitment from the committee to not grant additional equity awards to Kilar over that period,” ISS said. It noted that a “four-year front-loaded equity award inhibits the committee’s ability to pay based on performance,” referring to the board’s compensation committee which sets exec pay.
ISS also said Kilar’s base salary, at $2.5 million, was above that of current and former AT&T CEOs John Stankey and Randall Stephenson and the median of entertainment chief executives, which tend to be a highly compensated group.