Notice of 2015 Annual
`Meeting of Stockholders
`and Proxy Statement
`
`To the holders of Common Stock of AT&T Inc.:
`
`The 2015 annual meeting of stockholders of AT&T Inc. will be held as follows:
`
`When:
`
`9:00 a.m. local time, Friday, April 24, 2015
`
`Where:
`
`DoubleTree by Hilton Spokane City Center
`Grand Ballroom
`322 North Spokane Falls Court
`Spokane, WA 99201
`
`The purpose of the annual meeting is to consider and take action on the following:
`1. Election of Directors
`2. Ratification of Ernst & Young LLP as independent auditors
`3. Advisory approval of executive compensation
`4. Any other business that may properly come before the meeting,
`certain stockholder proposals
`
`including
`
`the close of business on
`record at
`Holders of AT&T Inc. common stock of
`February 25, 2015, are entitled to vote at the meeting and any adjournment of the
`meeting.
`
`Please sign, date, and return your proxy card or submit your proxy and/or voting
`instructions by telephone or through the Internet promptly so that a quorum may be
`represented at the meeting. Any person giving a proxy has the power to revoke it at any
`time, and stockholders who are present at the meeting may withdraw their proxies and
`vote in person.
`
`By Order of the Board of Directors.
`
`Stacey Maris
`Senior Vice President and Secretary
`March 10, 2015
`
`Page 2032-001
`
`Solocron Ex. 2032 - Verizon Wireless, AT&T Mobility - IPR2015-00383
`
`

`

`Page 2032-002
`
`Page 2032-002
`
`

`

`PROXY STATEMENT
`
`AT&T INC.
`One AT&T Plaza
`Whitacre Tower
`208 S. Akard Street
`Dallas, TX 75202
`
`Important Notice Regarding the Availability of Proxy Materials for the
`Stockholder Meeting To Be Held on April 24, 2015:
`The proxy statement and annual report to security holders
`are available at www.edocumentview.com/att.
`
`Table of Contents
`
`Proxy Statement Summary
`
`Information About the Meeting and Voting
`
`Related Person Transactions
`
`Board of Directors
`
`Agenda Items To Be Voted Upon
`
`Item 1.
`Item 2.
`
`Item 3.
`Item 4.
`Item 5.
`Item 6.
`
`Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Ratification of the Appointment of Ernst & Young LLP
`as Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Advisory Approval of Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Stockholder Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Stockholder Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`Stockholder Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`2
`
`3
`
`6
`
`7
`
`14
`
`15
`
`22
`22
`23
`25
`27
`
`29
`
`31
`
`51
`
`66
`
`Audit Committee
`
`Compensation Discussion and Analysis
`
`Executive Compensation Tables
`
`Other Information
`
`Your Vote is Important
`
`Please sign, date and return your proxy card or submit
`your proxy and/or voting instructions by telephone or
`through the Internet promptly so that a quorum may
`be represented at the meeting. Any person giving a
`proxy has the power to revoke it at any time, and
`stockholders who are present at the meeting may
`withdraw their proxies and vote in person.
`
`AT&T 2015 Proxy Statement – 1
`
`Page 2032-003
`
`

`

`Proxy Statement Summary
`
`Proxy Statement Summary
`
`This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all the
`information you should consider. You should read the entire Proxy Statement carefully before voting.
`
`Attending the Annual Meeting of Stockholders
`If you plan to attend the meeting in person, please vote your proxy and bring the admission ticket (attached to the proxy card
`or the Annual Meeting Notice) to the Annual Meeting. If you do not have an admission ticket or if you hold your shares in the
`name of a bank, broker, or other institution, you may obtain admission to the meeting by presenting proof of your ownership of
`AT&T stock as of February 25, 2015 (the record date).
`
`Agenda and Voting Recommendations
`
`Item Description
`1
`Election of Directors
`2
`Ratification of Ernst & Young LLP as auditors for 2015
`3
`Advisory approval of executive compensation
`4
`Stockholder Proposal: Political Spending Report
`5
`Stockholder Proposal: Lobbying Report
`6
`Stockholder Proposal: Special Meetings
`
`Board Recommendation
`FOR each nominee
`FOR
`FOR
`AGAINST
`AGAINST
`AGAINST
`
`Page
`15
`22
`22
`23
`25
`27
`
`Name
`
`Age
`
`Randall L. Stephenson
`
`Reuben V. Anderson
`
`Jaime Chico Pardo
`
`Scott T. Ford
`
`Glenn H. Hutchins
`
`James P. Kelly
`
`William E. Kennard
`
`Jon C. Madonna
`
`Michael B. McCallister
`
`John B. McCoy
`
`Beth E. Mooney
`
`Joyce M. Roché
`
`Matthew K. Rose
`
`Cynthia B. Taylor
`
`Laura D’Andrea Tyson
`
`54
`
`72
`
`65
`
`52
`
`59
`
`71
`
`58
`
`71
`
`62
`
`71
`
`60
`
`67
`
`55
`
`53
`
`67
`
`Current Board Members *
`Director
`Since
`
`Principal Occupation
`Chairman, CEO, and President,
`AT&T Inc.
`
`2005
`
`2006
`
`Senior Partner, Phelps Dunbar, LLP
`
`Founder and CEO, ENESA
`Member and Chief Executive Officer,
`Westrock Group, LLC
`Co-Founder, Silver Lake
`Retired Chairman and CEO, United
`Parcel Service, Inc.
`Former United States Ambassador to
`the European Union and former
`Chairman of the FCC
`
`2008
`
`2012
`
`2014
`
`2006
`
`2014
`
`2005
`
`2013
`
`1999
`
`2013
`
`1998
`
`2010
`
`2013
`
`1999
`
`Committees
`
`Executive
`
`Corp. Gov. and Nominating,
`Executive, Public Policy and Corp.
`Reputation
`Audit
`Corp. Dev. and Finance, Executive,
`Human Resources
`Corp. Dev. and Finance
`
`Audit, Corp. Gov. and Nominating
`
`Public Policy and Corp. Reputation
`
`Retired Chairman and CEO, KPMG
`
`Audit, Corp. Gov. and Nominating,
`Executive
`Audit, Public Policy and Corp.
`Retired Chairman and CEO, Humana
`Reputation
`Inc.
`Corp. Gov. and Nominating,
`Retired Chairman and CEO, Bank
`Executive, Human Resources
`One Corporation
`Corp. Dev. and Finance, Public
`Chairman and Chief Executive
`Policy and Corp. Reputation
`Officer, KeyCorp
`Retired President and CEO, Girls Inc. Corp. Gov. and Nominating,
`Executive, Human Resources
`Corp. Gov. and Nominating,
`Human Resources
`
`Chairman and CEO, Burlington
`Northern Santa Fe, LLC
`President and CEO, Oil States
`International, Inc.
`Professor of Business Admin. and
`Econ., Haas School of Business,
`Univ. of California at Berkeley
`
`Audit, Corp. Dev. and Finance
`
`Audit, Public Policy and Corp.
`Reputation
`
`* Each Director is elected annually by a majority of votes cast. All non-employee Directors are independent.
`
`AT&T 2015 Proxy Statement – 2
`
`Page 2032-004
`
`

`

`Compensation Discussion and Analysis
`
`Short-Term Incentives
`
`Objective
`Motivates and rewards the
`achievement of short-term
`Company performance
`
`Key Features and Pay for Performance
`• Aligns executive officers’ interests with our short-term corporate strategy, and aligns pay
`with the achievement of short-term Company and/or business unit objectives.
`• To qualify for a payout, executive officers must achieve at least one of the predetermined
`performance thresholds, as shown below. These objectives support the accomplishment of
`long-term Company goals and emphasize overall results of the Company by establishing one
`set of performance targets.
`• Actual award payouts consider performance against these and other Company and business
`unit metrics as well as individual performance.
`• This element is payable in cash. The executive officers have the option to defer a portion
`into Company stock.
`
`2014 Targets
`Each year the Committee establishes a short-term target award for each executive officer. The
`Committee believes it is important to focus the executive officers on the key objectives of the
`Company (other officers are measured, in part, on the success of their individual business units). The
`key performance objectives adopted by the Committee include the three performance metrics and
`related target ranges shown in the following table. The Company must achieve results in at least one
`of the ranges for the executive officers to receive any portion of the target awards.
`
`2014 Metric
`Consolidated Revenues
`Earnings Per Share
`Free Cash Flow (1)
`
`Target ($)
`134.6 billion
`2.60 per share
`10.5 billion
`
`Target Range ($)
`114.4 – 154.7 billion
`2.08 – 3.12 per share
`8.4 – 12.6 billion
`
`Achievement ($)
`132.4 billion
`2.47 per share (2)
`9.9 billion
`
`1. Net cash from operating activities minus construction and capital expenditures.
`2.
`In accordance with terms of the grant, EPS results were increased by $1.28 per share above reported EPS to remove the
`non-cash effects of gains and losses related to assets and liabilities of pension and medical plans as well as the dilutive
`impacts of merger and acquisition activity and the non-cash write-down of fixed assets.
`
`to the
`the Committee gives weight
`In determining the final payouts for short-term awards,
`achievement of the performance ranges, the overall performance of the Company, business unit
`performance, and the individual performance of each executive officer. Under this program, payouts
`may range from 0% to 200% of the target award. In evaluating executive officers that report to the
`CEO, the Committee will also give weight to the CEO’s recommendations. In order to limit the potential
`for unintended consequences, both favorable and unfavorable, the Committee does not apply a fixed
`formulaic approach to determining final payouts.
`
`2014 Payouts
`The Committee determined that in 2014 the Company’s results were within the target ranges for each
`of the 2014 performance metrics, permitting payout of the short-term awards. The Committee then
`reviewed the Company’s accomplishments as shown on pages 32-33, business unit performance, and
`the individual achievements of each of the Named Executive Officers, as described below:
`
`Randall L. Stephenson
`
`Under Mr. Stephenson’s leadership, AT&T continued to lead the industry in positioning itself for
`future growth through strategic investments to offer integrated capabilities across an increasingly
`diversified base of services, customers, technology platforms and geographies.
`
`AT&T announced its acquisition of DIRECTV, the premier pay TV provider in the U.S. and Latin
`America. The acquisition provides
`immediate and long-term financial benefits,
`significant
`opportunities for integrated offers, and will make AT&T the content distribution leader in the U.S.
`across mobile, video and high-speed Internet platforms. In November 2014, the company announced
`
`AT&T 2015 Proxy Statement – 41
`
`Page 2032-005
`
`

`

`Compensation Discussion and Analysis
`
`it would acquire Mexican wireless provider Iusacell (which closed on January 16, 2015), giving AT&T
`the opportunity to create the first-ever North American Mobile Service area covering more than
`400 million consumers and businesses in Mexico and the United States. Also, AT&T completed its
`acquisition of Leap Wireless, which significantly expanded its prepaid business and added spectrum
`in key markets. Upon completion of the DIRECTV deal, AT&T will be uniquely positioned in the
`market as an integrated, diversified communications company with more than 90% of revenues from
`its growth drivers – mobile, broadband, video and strategic business services.
`
`In 2014, AT&T led the industry in network reliability and investments, which delivered solid financial
`and operational results. It essentially completed its Project VIP network investment plan one year
`ahead of schedule,
`including building: 4G LTE wireless service to 300 million people, high-speed
`Internet service to 57 million customer locations, and fiber connections to more than 725,000
`business locations. AT&T’s enhanced capabilities helped deliver impressive results on its growth
`platforms. The company transformed its wireless business model with its AT&T Next and Mobile
`Share Value programs, moving away from traditional device-subsidy plans. The result was the best
`post-paid wireless subscriber growth in 5 years, record low post-paid customer churn and best-ever
`wireless service margins with strong smartphone sales – all in a highly competitive market. AT&T
`extended its industry lead in providing mobile connectivity for the Internet of Things, especially
`connected cars.
`
`John J. Stephens
`
`Under Mr. Stephens’ leadership, AT&T maintained its commitment to generating long-term returns
`and value for stockholders, while also investing to significantly reposition the company for future
`growth. AT&T generated $31.3 billion in cash from operations from record revenues of $132.4 billion
`in 2014 – the eighth consecutive year that cash from operations has exceeded $30 billion. The
`company’s three-year total stockholder return is 29.8 percent. Mr. Stephens also continued to
`rebalance AT&T’s capital structure, taking advantage of historically low interest rates. Since 2011,
`AT&T’s weighted average cost of debt is 120 basis points lower, allowing the company to hold
`interest costs relatively flat while increasing overall debt by $17.3 billion through the end of 2014.
`
`AT&T’s record of cash generation and industry-leading strong balance sheet has given it the
`flexibility to invest in future growth. The company invested $21.4 billion in its networks in 2014 and
`more than $24.5 billion inclusive of wireless spectrum acquisitions. Also, AT&T announced plans to
`acquire DIRECTV and Mexican wireless provider Iusacell. These transformational acquisitions will
`significantly diversify AT&T’s revenues, capabilities and geographic footprint. AT&T returned
`$11.2 billion to stockholders in 2014 via dividends and share repurchases and increased its
`quarterly dividend for an industry-leading 31st consecutive year.
`
`Rafael de la Vega
`
`In 2014, Mr. de la Vega’s responsibilities were expanded from CEO of AT&T Mobility, to President
`and CEO of AT&T Mobile and Business Solutions, which represents more than $100 billion in annual
`revenues and serves more than 120 million U.S. wireless subscribers and approximately 3.5 million
`business customers. The company successfully repositioned its wireless business model with no-
`device subsidy pricing plans. Total wireless revenues grew by $4 billion and the company had its
`best post-paid customer additions in 5 years and record low post-paid customer churn. AT&T
`significantly expanded its prepaid business with the successful
`integration of its Leap Wireless
`acquisition, which operates under the Cricket brand.
`
`Under Mr. de la Vega’s leadership, AT&T continued to lead the industry in connecting the Internet of
`Things – winning 5 new connected car deals with global automakers and more than 200 other IoT
`contract wins. AT&T’s home security and automation business, Digital Life, grew to 82 markets in
`2014. AT&T Mobility continued to enhance the customer experience, earning awards from
`
`AT&T 2015 Proxy Statement – 42
`
`Page 2032-006
`
`

`

`Compensation Discussion and Analysis
`
`independent third parties for service and the retail purchase experience. Revenues from Strategic
`Business Services grew by double digits and now represent 30% of total wireline business revenues.
`AT&T established a leadership position in providing highly secure cloud connectivity to businesses
`through NetBond, a highly secure networking solution deployed with 10 major cloud service
`providers, such as Amazon, IBM, Microsoft and Salesforce.com.
`
`John Stankey
`
`Under Mr. Stankey’s leadership in 2014, AT&T acquired spectrum and operations critical to future
`growth,
`launched several new growth initiatives,
`and further
`re-engineered its
`asset
`portfolio – divesting non-strategic assets to generate cash for investing in growth platforms. AT&T
`announced its acquisition of premier pay TV provider DIRECTV. The acquisition provides significant
`opportunities for integrated offers, and will make AT&T the content distribution leader in the U.S.
`across mobile, video and high-speed Internet platforms. The company formed a joint venture with
`the Chernin Group, to develop online video content. To enhance AT&T’s spectrum position and
`support future mobility growth, Mr. Stankey led AT&T’s successful participation in the FCC’s recent
`auction of wireless spectrum. Additionally, AT&T closed nearly 50 transactions to acquire spectrum
`and/or wireless operations,
`including the acquisition of Leap Wireless and announced AT&T’s
`acquisition of Mexican wireless operator Iusacell. AT&T generated over $8.1 billion in cash through
`asset monetization in 2014, including $5.9 billion from the sale of AT&T’s stake in America Movil and
`$2 billion from the sale of its incumbent wireline operations in Connecticut.
`
`Wayne Watts
`
`With responsibility for all legal matters affecting AT&T, Mr. Watts effectively led the Company’s
`litigation, regulatory filings, and compliance matters before various judicial and regulatory agencies,
`as well as providing day-to-day legal counsel, including thousands of commercial agreements and
`labor agreements. In 2014, Mr. Watts and his team successfully managed thousands of litigation
`matters involving AT&T, including 139 appeals to various federal and state courts of appeal and the
`U.S. Supreme Court. Under Mr. Watts’ direction, the company effectively advanced its positions
`before federal and state regulators designed to generate a fair regulatory and working environment
`for AT&T’s operational success. Mr. Watts and his team directly supported the Company’s execution
`of transactions in support of its strategic initiatives and objectives. These efforts included the sale of
`AT&T’s wireline operations in Connecticut, negotiating an agreement to acquire DIRECTV, negotiating
`an agreement and completing regulatory approvals for AT&T’s acquisition of Mexican wireless
`provider Iusacell, and the purchase of spectrum in dozens of transactions to help address the
`Company’s near- and mid-term spectrum needs.
`
`Based on the Company achievements and the above accomplishments, the Committee determined to
`pay Named Executive Officers 81% – 93% of their respective target awards. Payouts of 2014 awards
`were as follows:
`
`Name
`Randall Stephenson
`John Stephens
`Rafael de la Vega
`John Stankey
`Wayne Watts
`
`2014 Short-Term Payouts
`Target Award ($)
`5,300,000
`1,625,000
`1,770,000
`1,795,000
`1,465,000
`
`Actual Award ($)
`4,350,000
`1,425,000
`1,425,000
`1,665,000
`1,350,000
`
`AT&T 2015 Proxy Statement – 43
`
`Page 2032-007
`
`

`

`Compensation Discussion and Analysis
`
`Long-Term Incentives
`
`Objective
`
`Motivates and
`rewards the
`achievement of
`long-term Company
`performance
`
`Key Features and Pay-for-Performance
`• The goal of our long-term program is to align executive and stockholder interests.
`• Awards for all officers consist of restricted stock units and performance shares, each
`representing approximately 50% of the grant value of long-term compensation.
`
`Performance Shares
`• Paid in cash at the end of a three-year performance period to the extent applicable
`performance goals are met.
`• Awards pay out at target if performance goals are met, below target or not at all if the
`goals are not met, and above target if the goals are exceeded.
`• Each performance share is equal in value to a share of stock, which causes the value of the
`award to fluctuate directly with changes in our stock price over the performance period.
`• The cash payment value of the performance shares is based on AT&T’s stock price on the
`date an award payout is approved.
`• Because awards are based on a three-year performance period, they maximize the leverage
`of both short- and long-term performance. The impact of a single year’s performance is felt
`in each of the three performance share grants that are outstanding at any given time, so
`that strong performance must be sustained every year in order to provide favorable payouts.
`• Dividend equivalents are paid at the end of the performance period, based on the number of
`performance shares earned.
`
`Restricted Stock Units (RSUs)
`• We structure RSUs to be paid in stock at the end of a retention period, regardless of when
`they vest. RSUs vest 100% after four years or upon retirement eligibility, whichever occurs
`earlier.
`• Through stock price and dividends, RSUs directly tie our officers’ interests to the long-term
`interests of our stockholders.
`• Although RSUs have value at grant, in order for them to retain value or increase in value,
`officers must execute at a high level to drive stockholder returns.
`
`Because AT&T values long-term performance, and to ensure that our compensation program does not
`incent executives to take excessive risks in pursuit of short-term results, long-term incentives are a
`significant part of an officer’s compensation package.
`
`2014 Grants
`In 2014, the Committee granted the Named Executive Officers long-term incentives in the form of 50%
`performance shares and 50% restricted stock units. Target grant values were set using the AT&T
`Market Values as a guideline. Following is more detail on our 2014 long-term grants.
`
`• Performance Shares
`The performance shares granted in 2014 are for the 2014-2016 performance period. The
`Committee determined that the performance measure for 75% of the Performance Shares would
`be Return on Invested Capital and the measure for the remaining 25% would be based on a
`comparison of AT&T’s Total Stockholder Return to the Standard and Poor’s 100 Index (S&P 100).
`
`2014 Performance Share Grants
`(2014 to 2016 Performance Period)
`Performance Measure
`AT&T Total
`Stockholder Return
`vs. S&P 100
`
`AT&T Return on
`Invested Capital
`
`75% of Grant
`
`25% of Grant
`
`Name
`Randall Stephenson
`John Stephens
`Rafael de la Vega
`John Stankey
`Wayne Watts
`
`Target Grant Values ($)
`(amounts are rounded)
`7,250,000
`2,185,000
`2,587,500
`2,587,500
`1,925,000
`
`AT&T 2015 Proxy Statement – 44
`
`Page 2032-008
`
`