AT&T chief says he’s not happy about how fast wages are rising

AT&T CEO John Stankey urged politicians to address inflation at the policy level, arguing an uptick in labor wages that has resulted from current conditions could force it to raise prices for some of its services.

Verizon and Charter Communications recently made headlines for boosting their respective minimum wages for employees to $20 per hour. T-Mobile made a similar move at the end of 2021. While it didn’t provide a minimum wage figure, an AT&T representative told Fierce Wireless earlier this week it has a fully-unionized non-management workforce and its full-time mobility customer service reps earn an average of $26 per hour.

Responding to an analyst question about inflation and the labor market on the company’s Q1 2022 earnings call, Stankey said it factored rising wages into its plan for 2022 and those assumptions “added something with a B into overall cost structure and our expectations around that.”

He said it is in the midst of contract negotiations with some of its employees now. While those discussions will likely land within the parameters of its plan, Stankey added “I’m not happy about the fact that wages are rising as fast as they are.”

“There’s no question there’s wage inflation in the environment and quite frankly at 7% inflation there’s no question there’s pressures across a broad segment of goods and services. And we’re not insulated from that,” he said. “As you look at other parts of our business where people deploy long-life infrastructure like fiber networks, wages are a portion of that deployment cost…they are capitalized and taken over the life of a product that stays in service for many, many, many years. So, while obviously we’d like to pay less in wages, it’s not the end of the world when we’re seeing a little bit of an uptick” since those costs can be recovered over the product’s lifetime.

That said, Stankey added that if action is not taken quickly to address inflation, businesses across the country will be forced to take steps to deal with rising input costs. Almost no industry – wireless included – will be immune from that, he said. The CEO continued AT&T’s history suggests it would be able to successfully implement price increases if it is forced to do so.

“We’ll be very smart and judicious as we have to apply it. But running this business and not sitting here and evaluating where we have options to move on pricing and be successful, I wouldn’t be doing my job properly,” he concluded.

Executive compensation

Stankey’s comments come less than a month after AT&T disclosed its executive compensation levels for 2021 in a filing with the U.S. Securities and Exchange Commission.

The CEO’s pay came in at a total of $24.8 million, including $2.4 million in base pay, $6.9 million in incentive pay and $13.4 million in stock awards. The total figure was up from $21 million in 2020 and $22.5 million in 2019.

CFO Pascal Desroches, who assumed his current role in April 2021, had a compensation package totaling $11.7 million. Jeff McElfresh, who has been CEO of AT&T’s Communications division since October 2019, received $12.3 million. That figure was up from $8.6 million in 2020 and $7.7 million in 2019.

Randall Stephenson, who retired as AT&T’s CEO in mid-2020 but remained with the company as Executive Chairman of its Board until January 2021, was paid $16.3 million. And John Stephens, who retired as AT&T CFO in April 2021, received $4.1 million.

A minimum wage of $20 per hour would equate to a salary of approximately $41,600, assuming 40-hours per week over 52 weeks. A $26 wage would factor out to a little over $54,000 per year.