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How AT&T Inc. (T) Squanders Your Investment

Other large companies called out by the GMI Ratings study for having failing ESG scores have also seen their shareholders push for independent chairs. For example, Wells Fargo & Co (NYSE:WFC) had a shareholder proposal in its 2013 proxy (link opens PDF) pushing for an independent chair. Also, Goldman Sachs Group, Inc. (NYSE:GS) tried (and failed) to gain SEC approval to keep a shareholder proposal calling for an independent chair off its 2013 proxy. Later, the company managed to get the shareholder group to withdraw its proposal in exchange for Goldman’s agreement to increase the outside lead director’s authority.

The GMI Ratings study also suggests that companies with divided CEO and chairman roles produce long-term (five-year) returns nearly 28% higher than the returns at companies with the same person serving in both roles.

The Foolish takeaway
In AT&T Inc. (NYSE:T)’s case, I suspect an independent chair would have contributed to a better system of checks and balances. While it’s difficult to speculate on whether such a governance change would have prevented the costly botched acquisition attempt of T-Mobile, I believe splitting the roles would reduce the risk of costly missteps in the future.

As a shareholder, I hope to see a renewed push for the split next year.


The article 1 Way This Company Squanders Your Investment originally appeared on

Motley Fool contributor M. Joy Hayes, Ph.D. is the Principal at ethics consulting firm Courageous Ethics. She owns shares of AT&T. Follow @JoyofEthics on Twitter. The Motley Fool recommends Goldman Sachs and Wells Fargo. The Motley Fool owns shares of Wells Fargo.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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