Elliott Management Softens Position On John Stankey As CEO Of AT&T

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AT&T searched for several months to replace CEO Randall Stephenson, but ultimately could not find an executive with appropriate telecommunications and media experience who satisfied the hedge fund Elliott Management, according to people familiar with the topic.

Elliott, the hedge fund managed by Paul Singer, remains skeptical of Stankey’s decision-making but has decided that his understanding of AT&T’s sprawling assets makes him a better candidate to succeed Stephenson than any other external candidate, according to people close to the case. Stankey was the only internal finalist candidate to succeed Stephenson, the people said. Elliott said Friday that he “supports John Stankey as the next CEO of AT&T”.

“We have been engaged with the company throughout the research process, which has been solid, including a range of highly qualified external candidates supervised by independent directors,” said Jesse Cohn, partner of Elliott Management, in a statement. “We look forward to working with John as he begins his tenure as CEO. “

It seems like a flip-flop from last year’s Elliott position. Elliott acquired a stake in AT&T because she did not trust his leadership and the way forward. Elliott was skeptical of Stankey’s decision making as the architect for AT&T acquisitions from DirecTV and Time Warner. He argued that AT&T should focus on asset divestiture and debt reduction, prompting the largest US wireless company to sell DirecTV, one of the assets Stankey has strongly championed. AT&T has no plans to sell DirecTV, according to people familiar with the subject.

“AT&T has suffered from operational and execution issues over the past decade, for which the current management team is responsible,” wrote Elliott in a letter dated September 9, 2019. “We have conducted hundreds of interviews with former leaders, competitors and partners, who all raised the same question as we did: given AT&T’s history of strategic and operational issues and the very different skills needed to manage some of these new businesses , does AT&T have the right combination of leadership within the company? “

Over the past five months, AT&T has conducted an executive search process led by board member Beth Mooney, who chairs the board’s human relations committee. The company has hired headhunter Jeff Sanders, vice president and managing partner of the North American CEO office for Heidrick & Struggles, to find suitable candidates to replace Stephenson, said people, who asked not to not be named because the process was private. A shortlisted finalist group was made up of several telecommunications executives, a CEO of a large media company, and an outside executive with operational experience.

“The HR committee process was robust and it considered internal and external candidates,” said an AT&T spokesperson, who declined to detail the candidates or consultants used in the process. “The HR committee and the consultants they officially retained were the only ones involved in the research process. “

None of the candidates understood all of AT & T’s and Stankey’s activities, according to people familiar with Elliott’s thinking process. AT&T has a large telecommunications company, with wireless and wired technology, and a sprawling media empire, which includes HBO, CNN, Turner, DirecTV, Warner Bros. Entertainment, regional sports networks and other assets. After interviewing the candidates, Elliott came to support Stankey as the new CEO, as hiring someone without enough knowledge about the AT&T empire, especially during a pandemic, could be disastrous, the people said.

Elliott is also becoming more comfortable with Stankey because the hedge fund is confident that it will not make new acquisitions for a long time. AT&T will focus on selling more assets and reducing debt in the years to come, Elliott said, the people said.

An Elliott spokesperson declined to comment.

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