Letter to Ed Whitacre

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Scott Raynovich 12/5/2012 | 3:09:10 PM

re: Letter to Ed Whitacre I covered the dividendes here:

"Yes, there were the dividends and such. But this is an incumbent telecom operator. Most of the customers were already plugged in. The dividends and cashflow were handed over by the government in the orginal breakup of AT&T. The access lines have always been there, generating nice, steady income, and you guys didn't even build them. And, as I said, they weren't even covering inflation."

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shareholder 12/5/2012 | 3:09:05 PM

re: Letter to Ed Whitacre Dear Scott,
This is one of the best articles that I have seen from LR. Right on the money - Mr. Ed's money which was the shareholders' money.

I just don't understand corporate boards. I believe they are in total breach of fiduciary, as Mr Ed has done nothing for shareholders. Best case zero or realistically - negative.

Comparing performance to other non-performers and saying that you beat them is absurd. T-bills give you a better return with zero risk and with moderate risk you get pretty decent returns.

Therefore if you cannot provide a reasonable (regardless of the so-called peer performance) return for the risk then one of two things

1) Fire the ceo. if the ceo does not get fired the board needs to be fired.

2) If no ceo or board can get better returns, or positive returns, then the company should not exist. Company should be merged or divested or liquidated.

QED

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waveform 12/5/2012 | 3:06:14 PM

re: Letter to Ed Whitacre Perhaps a better question would be to compare the differences in retirement benefits of the other AT&T folks to Ed's. Most AT&T employees have seen their benefits eliminated. Yes, I am saying they will get nothing.

I myself am a former AT&T employee, but I was laid off years ago. Of course they will only hire me as a contractor now. So I canGÇÖt build any time with the company. I also donGÇÖt get paid holidays, PTO, sick days, healthcare, 401K or anything else. Thanks Ed.

While EdGÇÖs counting his cash, the wife and I will be trying to figure out which bills get paid this month and which ones will have to waitGÇª

I wonder if Verizon is any better these days?

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rjmcmahon 12/5/2012 | 3:06:13 PM

re: Letter to Ed Whitacre waveform; Sorry to hear about your job loss. I've never worked for AT&T so I don't have any inside knowledge on the cutulre there.

I was wondering your opinion on the following article and if you thought it applied to AT&T?

Personally, I think the author wrote a biased article. CEO's such as Whitacre taking so much money exemplify a culture of entitlement yet the writer scapegoats employees. I also believe the author overweights the purpose of an orgnization in that it only exists to enrich shareholders.

I do wonder though if service providers can do better with respect to employees, shareholders, and the country at large and, if so, what AT&T specifically could do to improve such that promises to employees and retirees were backed by a strong and viable organization?

http://www.moldmakingtechnolog...

The culture of entitlement is a GÇ£you owe meGÇ¥ attitude, one where people believe that society, a company, or government owes them something and they do not have to earn or deliver value for what they receive. These people believe they are owed something because of who they are or what social group or union they belong toGÇönot because of what they earn.

People who feel entitled take for granted what they have and keep asking for more, and the more they get the more they expect. They focus more on what they are owed than what they contribute. In a culture of entitlement, peer pressure to perform is replaced by peer pressure to conform to the lowest common denominator; looking good is more important than doing the right thing.

People need to realize that a company in a capitalist economy exists to enrich the shareholders. Companies do not exist simply to employ people. Companies employ people because it is necessary to reach the goal of enriching the shareholders.

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rjmcmahon 12/5/2012 | 3:05:58 PM

re: Letter to Ed Whitacre waveform; Nice post. You are no whiner in my book but rather somebody to be respected. I sincerely hope things work out for you. You deserve it.

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waveform 12/5/2012 | 3:05:58 PM

re: Letter to Ed Whitacre I have to agree that the one section of that article seems to place a lot of blame on the employees. And the author does seem to overweigh the purpose of an organization in only existing to enrich shareholders.

However, in his defense, I must say that I have worked in many organizations where employees were extremely guilty of this (i.e., culture of entitlement) GÇô the employees and their managers and dept heads. I mean, the managers and dept heads must take responsibility for setting the culture or simply allowing it to happen, right?

And if I get to participate in massive stock grants like the big boys are all getting, then I might be more inclined to sway over to the philosophy of companies only existing to enrich shareholders. But if I am required to work 9 to 15 days straight with no overtime, canGÇÖt make my monthly bills, watch my car get repoGÇÖd, get stacks of bills in the mail every time I use supposed health benefits, have to move all over the country every time another telecom company goes under or is bought or merged, watch my wife get laid off from her employer of 10 years because she is out on maternity leave a week or two too long due to complicationsGÇªdo I really need to go on?

Guess I am just a whiner.

But you know, I keep up the faith. I am a veteran. Then I started in this industry pulling 80 to over 100 hours per week for years. I did time with all the big carriers, and many names that are no longer around. But I have no 401K. I have no savings. I have no car. I now have no house either. But I donGÇÖt think any of my former or future employers owes me anything other than a chance to survive, and possibly even a chance get ahead - in exchange for an honest days work. Yet I can remember several years (not too long ago) where there were absolutely no telecom jobs available. But I do consider myself lucky. I remember reading articles about former telecom people that told their stories, GÇ£First I lost my job, then I lost my jet ski, then I lost my boat, then I lost my car, then I lost my houseGÇªthen I lost my wife.GÇ¥

Hey! I still have my wife! ...honey? Are you still there?

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paolo.franzoi 12/5/2012 | 3:05:57 PM

re: Letter to Ed Whitacre
rj,

Can you quote the lines in the article which blames the employees?

I have read it again and am missing this verbage.

What I have seen is:

Ed, I'm looking out for you, buddy. Let me give you some counsel: The club memberships are a bad PR move. Unseemly. So's the home office. I mean, aren't they contradictory? Are you working or retired? Make up your mind.

Your record of shareholder returns is, to say the least, less exemplary.

Perhaps the generous compensation package is in appreciation of all the fine lobbying efforts your team has conducted in Washington to preserve the incumbent footprint and defend yourself against innovation.

Here's what I really think of this pay package: It's a farce. It's a symbol that the pure arrogance and imperial management style of incumbent telcos is here to say. It's proof that your company is focused more on maintaining the status quo and maximizing executive pay, than on innovation and the creation of shareholder value.

seven

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rjmcmahon 12/5/2012 | 3:05:56 PM

re: Letter to Ed Whitacre Can you quote the lines in the article which blames the employees?

Seven; The article is written for an audience of CEO's. Here is an example:

Let your employees know that job security, advancement and pay increases are guaranteed only by high performance and company profits.

It doesn't say

Let management know that job security, advancement and pay increases and large stock options grants are guaranteed only by high performance and company profits.

or

Let your employees know that job security, advancement and pay increases are guaranteed only by high performance and company profits. Do this by being humble, taking a modest pay, recognizing the organization is built on the backs of the many and not buy aggrandizing the individual over the results of the group.

Also it says:

"These people believe they are owed something because of who they are or what social group or union they belong toGÇönot because of what they earn."

and not:

"These executives, setting the culture for the entire organization, believe they are owed something because of their title, being born into privilege, etc. and not because of what they contribute to the company they are privileged to lead. That's why they stack the compensation committees with cronies and patronize shareholders when issues of excessive executive compensation are brought up."

This author is writing from a position of privilege and not from one of the work ethic that built this country. He is expecting companies to care for him via their productivity and profits. He needs to sweat a bit and put some calluses on his hands in my opinion. Waveform has, now it's his turn.

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paolo.franzoi 12/5/2012 | 3:05:56 PM

re: Letter to Ed Whitacre
The first point is accurate - and union employees need to know that creating union jobs to create union jobs is going to fail over time.

The second is also accurate. The people who think they have jobs for life need to realize they don't have jobs for life.

The author is ABSOLUTELY writing from a perspective of a work ethic. SBC employees are like government employees. You can't fire them, so they do as little work as they can get away with. Which is another reason to keep government out (see a road crew anytime you want evidence of this). The problem is that these are now in a competitive environment and the work entitlement is going to end. If not by people ending it, then by the cable companies ending it. Whitacre is the exemplification of this or don't you get the idea.

seven

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rjmcmahon 12/5/2012 | 3:05:55 PM

re: Letter to Ed Whitacre The author is ABSOLUTELY writing from a perspective of a work ethic.

That wasn't the point. The author is saying the problem is with employees having an entitlement attitude yet the pay discrepancy between executive managements and the average worker is reaching record highs. So who is "entitlement" really benefiting?

You can't fire them, so they do as little work as they can get away with.

People who accomplish great things don't do so through fear of being fired. They set up systems where accomplishment is rewarded and reinforced. Self worth is enhanced and so is loyalty. All of this fear stuff, while it might work short term, is extremely short sighted.

The problem is that these are now in a competitive environment and the work entitlement is going to end.

I think people are entitled to a day's pay for a day's work. If that can't be created and accomplished than the system is broken.

If not by people ending it, then by the cable companies ending it. Whitacre is the exemplification of this or don't you get the idea.

This is propaganda. The transition for phone companies is to wireless. The MSOs aren't competitors anymore than the water company is.

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