AT&T CEO Whitacre Says He Will Retire

Edward Whitacre Jr., chairman and CEO of AT&T, delivers a keynote speech during the TelecomNEXT convention in Las Vegas in this March 21, 2006 file photo. Whitacre, who led AT&T Inc.'s expansion into the largest telecommunications company in the nation, announced unexpectedly Friday, April 27, 2007 that he will retire as chairman and chief executive in June. (AP Photo/Jae C. Hong, file) (Jae C. Hong - AP)

SAN ANTONIO -- Edward Whitacre Jr., the blunt-talking Texan who led AT&T Inc.'s growth from the smallest of the Baby Bells into the nation's largest telecommunications company, announced Friday he will retire as chairman and chief executive in June.

He'll be replaced in both roles on June 3 by Chief Operating Officer Randall Stephenson, 47.

"I've always considered it my main priority to ensure the long-term viability of the company," said Whitacre at the annual shareholders meeting, where he unexpectedly announced his retirement. "I have great confidence in the next generation of leadership."

Stephenson, who has been the chief operating officer since 2004, rose through the ranks of AT&T and its predecessors. Formerly the chief financial officer, Stephenson is credited with overseeing the company's drive to reduce debt, which allowed it to make an aggressive string of acquisitions, most recently the $86 billion purchase of BellSouth.

Whitacre, 65, had another year on his contract, but Patrick Comack, an analyst for Zachary Investment Research, said Whitacre's decision to leave sends him out on top.

"He built AT&T into a juggernaut," said Comack, who is often critical of AT&T because of the ongoing competition it faces from cable television. "He's highly respected on Wall Street, a straight shooter."

In Whitacre's 17 years at the helm, he presided over the company's growth from a regional telephone provider to the nation's largest provider of wireless, broadband and traditional phone service.

Recently, some shareholders and advocacy groups have criticized how much Whitacre earns, however.

He'll collect more than $161.6 million, including $73.8 million in deferred compensation and the $84.7 million in his pension fund in his retirement package. He'll also make more than $1 million per year for three years as a consultant for the company, according to AT&T's proxy statement. During that time, his benefits will continue and he'll get some tax help, including the payment of about $15,600 in taxes per year.

But with the stock trading at a five-year high, three shareholder-driven initiatives to limit compensation and pension funds for AT&T executives failed shareholder votes Friday.

"I'm not sure anyone is worth that kind of money, but if anybody is going to get it, at least he did his job," Comack said of Whitacre.

Because of recent successes, the board approved a 6.2 percent increase in monthly benefits for AT&T's oldest and poorest retirees. Roughly 88,000 former employees who retired before 1996 and receive less than $1,200 per month will get the increase starting in October, Whitacre announced Friday.