WASHINGTON -- In two letters publicly released today, the Communications Workers of America (CWA) is urging AT&T’s CEO, board of directors and largest investors and Business Roundtable to put a stop to controversial proposals from Elliott Management that CWA says will cut jobs and destroy long-term value and are the “archetype ploy of vulture capitalists.”
Elliott Management announced plans last month to extract profits from AT&T by eliminating jobs and divesting critical assets while pumping up the stock price with billions in share buybacks, further enriching billionaire founder and CEO Paul Singer. The new letters from CWA assert that Elliott’s proposals will not benefit communities that rely on AT&T for good jobs and advanced communications networks and instead will undermine the principles detailed in Business Roundtable’s recent high-profile statement on the purpose of corporations to serve all stakeholders. CWA represents about 100,000 working people at AT&T.
In the letter sent to AT&T’s CEO and board last week and shared with the company’s 100 largest investors, the union outlines the flaws in Elliott Management’s critique and analyzes the firm’s past restructuring and capital allocation initiatives. CWA’s analysis shows no evidence that Elliott’s strategies have created long-term value. Hess and Roadrunner, for example, have both significantly underperformed the S&P 500 since Elliott became involved. At both companies, Elliott principals held multiple board seats and divested assets identified by Elliott.
“What seems clear to us is that Elliott’s well-worn combination of operational cutbacks, asset sales, and
increased payments to securities holders has not consistently produced improvements in long-term
performance,” wrote CWA President Chris Shelton in the letter to AT&T’s investors and board. “We believe that all AT&T shareholders should reject claims that spending cuts, headcount reductions, and any proposals to divest DirecTV and Warner Media will lead the way to competitive long-term returns. Instead, we urge you, the board, and AT&T shareholders to reject Elliott Management’s proposal.”
The effect of Elliott’s proposals on employees is a primary concern for CWA. Shelton notes that Elliott envisions no role for workers other than as a source of cost reductions for boosting short-term margins. CWA has been tracking job cuts at AT&T. These cuts already raise concerns about the company’s ability to maintain its service quality with a well-trained, highly-skilled workforce. Noting recent strike actions by union members at AT&T, Shelton warns that “a new and more aggressive strategy of cutbacks...is going to make it more challenging to avoid further disruptions and to improve AT&T’s employee engagement and satisfaction.”
In the letter sent Monday to Business Roundtable -- an organization of CEOs from several major corporations chaired by JPMorgan Chase CEO Jamie Dimon -- the union notes that six signatories to the Business Roundtable Statement of Purpose own approximately 16 percent of AT&T’s shares, compared to less than one percent owned by Elliott Management. What’s more, AT&T CEO and Chairman Randall Stephenson and KeyCorp CEO and Chairman Beth E. Mooney -- also signatories to the Statement -- sit on the board of directors at AT&T.
Business Roundtable members recently issued an updated Statement on the Purpose of a Corporation, which is referenced in both CWA letters, and outlines the business principles Roundtable members commit to pursue. The proposals made by Elliott Management, CWA notes, are not consistent with these principles, and directly contradict the commitments made by Mr. Stephenson and his fellow Roundtable members to invest back into their workforce and generate long-term value for shareholders.
“Business Roundtable’s updated Statement on the Purpose of a Corporation laid out a vision of
inclusive prosperity that stands in stark contrast to Elliott Management’s outdated, disproven
value extraction model,” wrote CWA President Chris Shelton to this group of leaders in business. “I urge Business Roundtable’s leaders to use their platforms to oppose Elliott Management’s intervention at AT&T, to reject proposals that run counter to your articulated principles and to chart an alternative course for corporate decision-making that increases prosperity and connectedness for all Americans.”