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Susan M. Colburn, Vice President / Benefits
AT&T Services, Inc.
105 Auditorium Circle, Room 12-8-30
San Antonio, TX 78205
Sue,
Thank you for responding to my earlier correspondence directed to Mr. Randall Stephenson, Chairman / CEO, on the subject of AT&T ad hoc pension adjustments (for selected AT&T retirees).
The announcement of a pension ad hoc increase for AT&T retirees by Mr. Whitacre during the annual shareowners meeting in San Antonio on April 23, 2007 was met by a positive response from shareowners in attendance.
I learned of Mr. Whitacre’s intention to make such a pension announcement at the annual shareholders meeting by way of a Telco Retiree Association member living in Litchfield Park, Arizona. This former Pacific Bell management retiree had written a personal letter to Mr. Whitacre in 2005 regarding a pension increase (but had not received a response). This same retiree wrote a second personal letter (prior to the 2007 annual shareowners meeting) to Mr. Whitacre indicating she had never received a response from her original request of a retiree pension adjustment. The letter was responded to by a Mr. Joe M. Carranzag who thanked her for her letter. Not satisfied with this response, she made contact again with Mr. "C" indicating she expected a response from Mr. Whitacre. Shortly thereafter (and prior to the 2007 annual stockholders meeting) she received a personal call from Mr. Whitacre who stated "he would soon make her happy and put a smile on her face regarding retiree pensions." (The decision did not "put a smile on her face"… because her pension exceeded the minimum amount).
I received a call from our Telco Association corporate secretary the day before the 2007 shareowners annual meeting, making me aware of our association member’s correspondence with Mr. Whitacre, as well as his personal telephone call which indicated a "soon to be announced pension increase." I shared this information with the AT&T Retiree Coalition members during our conference in San Antonio. (Mr. Whitacre announced the pension ad hoc increase at the shareholders meeting the following day).
Former Pacific Bell / Nevada Bell retirees are fully aware ad hoc adjustments are "one time only" and "do not constitute future commitments by AT&T." (Indeed ad hoc pension adjustment announcements usually [but not always] contain the caveat, "for personal financial planning purposes, please consider that the pension plan does not provide for automatic increases and future increases are not contemplated at this time.") J.R. Moberg Exec V/Pres. Human Resources - May 18, 1995.
Not withstanding these "caveats", the history of the Bell System (Pacific Bell, SBC, AT&T) is replete with pension ad hoc adjustment statements:
March 1981 (B.W. Dial, Vice President-Human Resources) - "As you can understand, there were many factors that had to be considered before this special increase in your pension could be approved. I am glad it is possible to do so at this time. This action has been taken in the light of current business and economic conditions and cannot be considered as an indicator of future management pension changes. Any such decisions will be independent of past or present actions and will remain at the discretion of the AT&T Board of Directors."
June 1984 (B.W. Dial, Vice President-Human Resources) - "I welcome this opportunity to demonstrate Pacific Telesis Group’s continuing interest and concern for the retired employees whose contributions have been so essential to the success of the business." (The pension increase became effective July 1, 1984 and was paid to all retired management employees on service or disability pensions as of June 30, 1984).
May 18, 1995 (J.R. Moberg Exec V/Pres. Human Resources) - "In deciding to provide an increase in pensions at this time, the Board of Directors assessed a number of factors, including the cost and value of all benefits provided to our retirees. We believe the above structure continues to maintain a high level of total benefits while containing costs in a manner that will keep us competitive in an ever changing environment. This increase will be provided by a special amendment to the pension plan that is subject to Internal Revenue Service approval. For personal financial planning purposes, please consider the Pension Plan does not provide for automatic increases and future increases are not contemplated at this time."
August 8, 2005 (SBC Communications Inc.) - "We are pleased to announce that the SBC Board of Directors has approved a pension increase effective June 1, 2000 for more than 110,000 participants. This pension increase is made possible because of the sustained financial growth of our business. It also reflects continuing confidence in our ability to successfully implement our business strategies and compete in the marketplace."
"The company did a thorough reassessment of the loss in buying power experienced over the years by those who had been retired the longest and found a need for a larger increase to these retirees. This resulted in the design of a one-time catch-up increase to make sure that these longer retired employees are put on an equal footing with more recent retirees. As a result, employees who have been receiving monthly pension payments for a short period of time - or their surviving spouses - will receive smaller pension increases."
(It should be obvious that while "ad hoc pension adjustments are not scheduled the history of periodic Bell System pension adjustments, along with greater percentages of increases for those retired the longest, has been established with a pattern of consistency. Further, statements justifying pension ad hoc increases consistently recognize the radical cost of living changes impacting the longer retired pensioners)."
In closing, the retirees of AT&T (and in particular those of the former Pacific Bell/Nevada Bell companies) take umbrage with the leadership of AT&T for its position in the granting of ad hoc pension adjustments to a limited number of retirees based upon pension income and date of retirement, especially "regarding affordability!" As quoted in my correspondence to Mr. Randall Stephenson, Chairman, the "reported dollar value (at the end of 2005 in the AT&T Master Trust Investment Account) totaled $29,539,148,000.00... with pensioners benefit claims payable (end of year) amounting to $38,099,000.00!" (*the current value of the MASTER TRUST INVESTMENT ACCOUNT is not available to me at the time of this writing). Further, to my knowledge the only withdrawals from the pension fund during the past years not identified as ad hoc pension increases were withdrawals of monies in excess of $500 million to offset company health benefits (a provision permitted under the ERISA law).
Former AT&T Chairman of the Board John. D. Debutts stated the following during his last Bell System President’s Conference on November 6, 1978:
"We live in age of systems. Without them we could not hope to manage complexity. But, I would count their cost too much if in pursuit of systems we somehow lost sight of the individual. I have wondered whether in our eagerness to install the latest organization scheme we might not risk forgetting a fundamental truth - and that is, there is no unit of an organization - not the department or division, not the taskforce or the work team - that is more important than the individual human being."
"The attributes of character that will determine whether over the years to come ours will remain a vital enterprise, challenging to its people, profitable to its proprietors and useful to the public - will be competence, openness to change and orientation to people, and a commitment to goals worth striving for. I have entitled it ‘A WILL TO EXELLENCE‘."
I do thank you, Sue, for the task of responding to my correspondence to the Chairman. This was surely an onerous task, and one that should have not occurred because of the intrinsic value and importance of AT&T’s entire management and non-management retiree body.
I suggest this may be a propitious time for the "new AT&T" to reassess its corporate goals and to recognize the contributions being made by all of its managers and employees… and its thousands of retirees!
With warm and personal regards,
Sumner K. Emery, President
cc: Mr. Randall Stephenson, Chairman |
