By ensuring that a significant portion of compensation is based on our long-term performance, we reduce the risk that executives will place too much focus on short-term achievements to the detriment of our long-term sustainability. Our short-term incentive compensation is structured so that the accomplishment of short-term goals supports the achievement of long-term goals. We conduct an annual compensation-related risk review to confirm that our programs do not encourage excessive risk taking and are not reasonably likely to have a material adverse effect on the Company. These elements work together for the benefit of AT&T and our stockholders and to reduce risk in our incentive plans.
INDEPENDENT COMPENSATION CONSULTANT
The Committee is authorized by its charter to employ an independent compensation consultant and other advisors. The Committee has selected Frederic W. Cook & Co., Inc. (FW Cook) to serve as its independent consultant. The consultant reports directly to the Committee. Other than advising the Corporate Governance and Nominating Committee on director compensation, FW Cook provides no other services to AT&T.
To ensure that it continues to receive comprehensive, expert consulting services, and recommendations for setting executive pay to retain and attract talent to execute the Company’s strategic objectives, in 2022 the Committee initiated a Request for Proposal (RFP) process for independent compensation consultant services. FW Cook was invited to respond to the RFP, as were several other companies that provide independent compensation consultant services. After a thorough review process with evaluation of the candidates, the Committee renewed its engagement with FW Cook for independent compensation consultant services.
The consultant:
| • | Attends all Committee meetings; |
| • | Regularly updates the Committee on market trends, changing practices, and legislation |
COMPENSATION DISCUSSION AND ANALYSIS
pertaining to executive compensation and benefits;
| • | Reviews the Company’s executive compensation strategy and program to ensure appropriateness and market competitiveness; |
| • | Makes recommendations on the design of the compensation program and the balance of pay-for-performance elements; |
| • | Provides market data for jobs held by senior leaders; |
| • | Analyzes compensation from other companies’ proxy and financial statements for the Committee’s review when making compensation decisions; |
| • | Assists the Committee in making pay determinations for the CEO; and |
| • | Advises the Committee on the appropriate comparator groups for compensation and benefits as well as the appropriate peer group against which to measure long-term performance. |
The Committee reviewed the following six independence factors, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, when evaluating the consultant’s independence:
| • | Other services provided to AT&T |
| • | Percentage of the consultant’s revenues paid by AT&T |
| • | Consultant’s policies to prevent conflicts of interest |
| • | Other relationships with compensation committee members |
| • | AT&T stock owned by the consultant |
| • | Other relationships with Executive Officers |
Based on its evaluation of the consultant and the six factors listed above, the Committee has determined that the consultant met the criteria for independence.
