8-KOther EventsExhibits & Filings

AT&T INC. 8-K Report, Corporate Update (Sep 25, 2015)

Filed September 25, 2015For Securities:TT-PCTBBT-PA

Summary

AT&T Inc. (T) filed an 8-K on September 24, 2015, primarily detailing changes to its Non-Employee Director compensation. The Board of Directors, after a review and consultation with an independent advisor, decided to increase the annual equity grant for directors. This change aims to better align director compensation with the company's scale and complexity. The key modification involves the annual equity grant of deferred stock units (DSUs), which will now have a grant date fair value of $170,000 after applying an illiquidity discount. This represents an increase from the previous $150,000 grant value, which was not subject to an illiquidity adjustment. The illiquidity discount accounts for the delayed distribution of these units until the calendar year after a director leaves the board. Additionally, AT&T will now review director compensation annually starting in 2016 and will cease providing group life insurance to directors.

Key Highlights

  • 1AT&T's Board of Directors has increased the annual equity grant for non-employee directors.
  • 2The grant date fair value of deferred stock units (DSUs) will increase from $150,000 to $170,000.
  • 3An illiquidity discount will be applied to the fair value of DSUs to account for delayed distribution.
  • 4DSUs are fully vested upon issuance but distributed in cash based on stock price the year after a director departs the board.
  • 5Director compensation will be reviewed annually starting in 2016.
  • 6AT&T will discontinue providing group life insurance to its directors.

Frequently Asked Questions

AT&T is increasing director compensation to better reflect the company's size and complexity, as determined by the Board of Directors after a comprehensive review.

The new annual equity grant of deferred stock units will have a grant date fair value of $170,000 after an illiquidity discount is applied. Previously, the grant was valued at $150,000 without such an adjustment.

While the deferred stock units are fully earned and vested at issuance, they are not distributed until the calendar year after the director leaves the board. The distribution will be in cash, converted at the prevailing AT&T stock price at that time.

The illiquidity discount is applied because the deferred stock units cannot be immediately converted to cash. They are held by the company and distributed later, making them less liquid than immediately tradable shares. The discount adjusts the calculated fair value to reflect this delayed access to funds.