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Vote yes

13 Mar 2012 By Robert Cyran

Randall Stephenson’s botched plan to buy T-Mobile USA came with a $4 billion tab. The board didn’t see fit to hold him fully accountable. But shareholders can have their own say – and should vote to strip Stephenson of his chairman title and install an independent.

The lumps suffered from the failed $39 billion deal may not be an especially big sum. After a tax benefit, it amounts to less than two months of free cash flow – and AT&T’s market value has actually gone up since the transaction was first announced amid a broader stock rally. Even so, AT&T shareholders would be better off with the funds used to pay the break fee in their company’s coffers than Deutsche Telekom’s.

Stephenson got a mere slap for the misadventure, which also bore additional cost in the form of at least six months’ worth of management distraction. His total compensation for 2011 fell by less than a fifth to $22 million from just over $27 million in the previous year, despite AT&T’s middling performance on various targets such as earnings per share or cash from operations.

Shareholders now have an opportunity to step in where the board opted not to. Another way to make Stephenson responsible – and establish an extra safeguard against another T-Mobile-like misstep – would be to separate the two seniormost roles at AT&T. It’s true the board already has several measures in place to protect investors. For example, Stephenson is the only manager on the board and most important committees are made up solely of independent directors.

But it is simply good governance to separate the two roles. And plenty of challenges lie ahead for AT&T. Accumulating spectrum and shoring up the company’s network to service accelerating data demand are chief among them. Leaving Stephenson to focus on these significant matters and bringing in an independent chairman to run the board would make AT&T all the better. Shareholders missed chances to split the chairman and CEO roles in 2006 and 2009. They shouldn’t let it pass them by again.


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