$16m for AT&T boss as 40,000 jobs are cut

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The Independent Online

New York

Just weeks after AT&T announced plans to shed 40,000 workers, it has emerged that its chief executive, Robert Allen, received a pay package in 1995 valued at just over $16m, compared with $6.7m a year earlier.

The revelation is certain to appal AT&T's already beleaguered workforce and deepen the widespread bad publicity that has been afflicting the company ever since it took the original job-cutting decision. It was already a favourite target of caustic comment on the presidential election trail.

Mr Allen has been forced to defend himself, most notably in an ill-humoured memo to staff circulated on Tuesday in which he contended that his pay package was "in line with CEOs of comparable corporations".

The core of Mr Allen's 1995 package was some $5.2m in salary, bonuses and stock. In addition, however, he received 750,000 stock options to buy AT&T shares at today's price beginning in 1999 - options which, according to AT&T, have a value of $10.8m.

In his memo, Mr Allen accused the US media of waging a "relentless" and "inaccurate" smear campaign against AT&T since the unveiling of the job cuts last month.

He insisted: "Restructuring to get to a strong future does unfortunately require force reductions. I'm not immune to the emotions they engender. I'm deeply saddened by the pain and loss this is causing some of our people and their families. But in the end, concern is not enough."

Many within AT&T believe that the job reductions were the result of a litany of bad management decisions, most notable among them the 1990 purchase of the NCR computer company which proved disastrous.

Analysts also question whether Mr Allen should even be retained as chief executive, let alone generously rewarded.

Separately, meanwhile, it also surfaced yesterday that the chief executive officer of GAP, the clothing company, Millard Drexler, sold 1.3 million of his company shares earlier this month, pocketing a personal profit of $64.6m.

Unlike AT&T, GAP continues to flourish. Earlier this week, the company announced it was increasing dividend payments by 25 per cent and splitting its shares 2-for-1.