Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the registrant is recorded, processed, summarized, accumulated and communicated to its management, including its principal executive and principal financial officers, to allow timely decisions regarding required disclosure, and reported within the time periods specified in the SEC’s rules and forms. The Chief Executive Officer and Chief Financial Officer have performed an evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures as of December 31, 2023. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the registrant’s disclosure controls and procedures were effective as of December 31, 2023.
There have not been any changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Internal Control Over Financial Reporting
a. Management’s Annual Report on Internal Control over Financial Reporting
The management of AT&T is responsible for establishing and maintaining adequate internal control over financial reporting. AT&T’s internal control system was designed to provide reasonable assurance as to the integrity and reliability of the published financial statements. AT&T management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2023. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013 framework). Based on its assessment, AT&T management believes that, as of December 31, 2023, the Company’s internal control over financial reporting is effective based on those criteria.
b. Attestation Report of the Independent Registered Public Accounting Firm
The independent registered public accounting firm that audited the financial statements included in the Annual Report containing the disclosure required by this Item, Ernst & Young LLP, has issued an attestation report on the Company’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
a. There is no information that was required to be disclosed in a report on Form 8-K during the fourth quarter of 2023 but was not reported.
b. In the quarter ended December 31, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a plan for the purchase or sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or a non-Rule 10b5-1 trading arrangement for the purchase or sale of our securities, within the meaning of Item 408 of Regulation S-K.
96
AT&T Inc.
Dollars in millions except per share amounts
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information regarding executive officers required by Item 401 of Regulation S-K is furnished in a separate disclosure at the end of Part I of this report entitled “Information about our Executive Officers.” Information regarding directors required by Item 401 of Regulation S-K is incorporated herein by reference pursuant to General Instruction G(3) from the registrant’s 2024 definitive proxy statement (Proxy Statement) under the heading “Management Proposal Item No. 1. Election of Directors.”
Information required by Item 405 of Regulation S-K is incorporated herein by reference pursuant to General Instruction G(3) from the registrant’s Proxy Statement under the heading “Delinquent Section 16(a) Reports.”
The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the committee are Messrs. Luczo, McCallister and Ubiñas, and Ms. Taylor. The additional information required by Item 407(d)(5) of Regulation S-K is incorporated herein by reference pursuant to General Instruction G(3) from the registrant’s Proxy Statement under the heading “Audit Committee.”
The registrant has adopted a code of ethics entitled “Code of Ethics” that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer, or controller or persons performing similar functions. The additional information required by Item 406 of Regulation S-K is provided in this report under the heading “General” under Part I, Item 1. Business.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this Item is incorporated herein by reference pursuant to General Instruction G(3) from the registrant’s Proxy Statement under the headings “Director Compensation,” “CEO Pay Ratio,” “Pay Versus Performance,” and the pages beginning with the heading “Compensation Discussion and Analysis” and ending with, and including, the pages under the heading “Potential Payments upon Change in Control.”
Information required by Item 407(e)(5) of Regulation S-K is included in the registrant’s Proxy Statement under the heading “Compensation Committee Report” and is incorporated herein by reference pursuant to General Instruction G(3) and shall be deemed furnished in this Annual Report on Form 10-K and will not be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
97
AT&T Inc.
Dollars in millions except per share amounts
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information required by Item 403 of Regulation S-K is included in the registrant’s Proxy Statement under the heading “Common Stock Ownership,” which is incorporated herein by reference pursuant to General Instruction G(3).
Equity Compensation Plan Information
The following table provides information as of December 31, 2023, concerning shares of AT&T common stock authorized for issuance under AT&T’s existing equity compensation plans.
Equity Compensation Plan Information
Plan Category Number of securities to be issued upon
exercise of
outstanding options, warrants and rights
(a) Weighted average
exercise price of outstanding
options, warrants
and rights
(b) Number of securities
remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
Equity compensation plans approved by security holders
65,711,036 (1)
$ — 97,567,370 (2)
Equity compensation plans not approved by security holders — — —
Total 65,711,036 (3)
$ — 97,567,370 (2)
(1) Includes the issuance of stock in connection with the following stockholder approved plans: (a) 0 stock options under the Stock Purchase and Deferral Plan ( SPDP ), (b) 108,480 phantom stock units under the Stock Savings Plan ( SSP ), 17,725,781 phantom stock units under the SPDP, 21,174 restricted stock under the 2011 Incentive Plan, 425,950 restricted stock under the 2016 Incentive Plan and 43,413,267 restricted stock under the 2018 Incentive Plan, (c) 1,871,791 target number of stock-settled performance shares under the 2018 Incentive Plan. At payout, the target number of performance shares may be reduced to zero or increased up to 200%. Each phantom stock unit and performance share is settleable in stock on a 1-to-1 basis. The weighted-average exercise price in the table does not include outstanding restricted stock, performance shares, or phantom stock units.
The SSP was approved by stockholders in 1994 and then was amended by the Board of Directors in 2000 to increase the number of shares available for purchase under the plan (including shares from the Company match and reinvested dividend equivalents). Stockholder approval was not required for the amendment. To the extent applicable, the amount shown for approved plans in column (a), in addition to the above amounts, includes 2,144,593 phantom stock units (computed on a first-in-first-out basis) that were approved by the Board in 2000. Under the SSP, shares could be purchased with payroll deductions and reinvested dividend equivalents by mid-level and above managers and limited Company partial matching contributions. No new contributions may be made to the plan.
(2) Includes 12,326,447 shares that may be issued under the SPDP, 82,053,876 shares that may be issued under the 2018 Incentive Plan, and up to 3,187,047 shares that may be purchased through reinvestment of dividends on phantom shares held in the SSP.
(3) Does not include certain stock options issued by companies acquired by AT&T that were converted into options to acquire AT&T stock. As of December 31, 2023, there were 2,199,257 shares of AT&T common stock subject to the converted options, having a weighted-average exercise price of $20.82. Also, does not include 345,032 outstanding phantom stock units that were issued by companies acquired by AT&T that are convertible into stock on a 1-to-1 basis, along with an estimated 138,149 shares that may be purchased with reinvested dividend equivalents paid on the outstanding phantom stock units. No further phantom stock units, other than reinvested dividends, may be issued under the assumed plans. The weighted-average exercise price in the table does not include outstanding restricted stock, performance shares, or phantom stock units.
98
AT&T Inc.
Dollars in millions except per share amounts
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information required by Item 404 of Regulation S-K is included in the registrant’s Proxy Statement under the heading “Related Person Transactions,” which is incorporated herein by reference pursuant to General Instruction G(3). Information required by Item 407(a) of Regulation S-K is included in the registrant’s Proxy Statement under the heading “Director Independence,” which is incorporated herein by reference pursuant to General Instruction G(3).
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information required by this Item is included in the registrant’s Proxy Statement under the heading “Principal Accountant Fees and Services,” which is incorporated herein by reference pursuant to General Instruction G(3).
Part IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as a part of the report:
Page
(1) Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 )
40
Financial Statements covered by Report of Independent Registered Public Accounting Firm:
Consolidated Statements of Income
43
Consolidated Statements of Comprehensive Income 44
Consolidated Balance Sheets
45
Consolidated Statements of Cash Flows
46
Consolidated Statements of Changes in Stockholders’ Equity
47
Notes to Consolidated Financial Statements
49
(2) Financial Statement Schedules:
II - Valuation and Qualifying Accounts
102
Financial statement schedules other than those listed above have been omitted because the required information is contained in the financial statements and notes thereto, or because such schedules are not required or applicable.
(3) Exhibits:
Exhibits identified in parentheses below, on file with the SEC, are incorporated herein by reference as exhibits hereto. Unless otherwise indicated, all exhibits so incorporated are from File No. 1-8610.
Exhibit Number
2-a Agreement and Plan of Merger, dated as of May 17, 2021, by and among AT&T Inc., Magallanes, Inc., and Discovery, Inc. ( Exhibit 2.1 to Form 8-K filed on May 20, 2021 )*
2-b Separation and Distribution Agreement, dated as of May 17, 2021, by and among AT&T Inc., Magallanes, Inc., and Discovery, Inc. ( Exhibit 2.2 to Form 8-K filed on May 20, 2021 )*
3-a Restated Certificate of Incorporation, filed with the Secretary of State of Delaware on December 13, 2013 ( Exhibit 3.1 to Form 8-K filed on December 16, 2013 )
3-b Bylaws ( Exhibit 3.1 to Form 8-K filed on February 2, 2023 )
3-c Certificate of Designations with respect to Series A Preferred Stock ( Exhibit 3.1 to Form 8-K filed on December 12, 2019 )
3-d Certificate of Designations with respect to Series B Preferred Stock ( Exhibit 3.1 to Form 8-K filed on February 18, 2020 )
3-e Certificate of Designations with respect to Series C Preferred Stock ( Exhibit 3.2 to Form 8-K filed on February 18, 2020 )
99
AT&T Inc.
Dollars in millions except per share amounts
4-a No instrument which defines the rights of holders of long-term debt of the registrant and all of its consolidated subsidiaries is filed herewith pursuant to Regulation S-K, Item 601(b)(4)(iii)(A), except for the instruments referred to in 4-b, 4-c, 4-d, 4-e, 4-f below. Pursuant to this regulation, the registrant hereby agrees to furnish a copy of any such instrument not filed herewith to the SEC upon request.
4-b Guaranty of certain obligations of Pacific Bell Telephone Co. and Southwestern Bell Telephone Co. ( Exhibit 4-c to Form 10-K for the period ending December 31, 2011 )
4-c Guaranty of certain obligations of Ameritech Capital Funding Corp., Indiana Bell Telephone Co. Inc., Michigan Bell Telephone Co., Pacific Bell Telephone Co., Southwestern Bell Telephone Company, Illinois Bell Telephone Company, The Ohio Bell Telephone Company, The Southern New England Telephone Company, Southern New England Telecommunications Corporation, and Wisconsin Bell, Inc. ( Exhibit 4-d to Form 10-K for the period ending December 31, 2011 )
4-d Guarantee of certain obligations of AT&T Corp. ( Exhibit 4-e to Form 10-K for the period ending December 31, 2011 )
4-e Indenture, dated as of May 15, 2013, between AT&T Inc. and The Bank of New York Mellon Trust Company, N.A., as Trustee ( Exhibit 4.1 to Form 8-K filed on May 15, 2013 )
4-f Indenture dated as of November 1, 1994 between SBC Communications Inc. and The Bank of New York, as Trustee ( Exhibit 4-h to Form 10-K for the period ending December 31, 2013 )
4-g Deposit Agreement, dated December 12, 2019, among the AT&T Inc., Computershare Inc. and Computershare Trust Company, N.A., collectively, as depositary, and the holders from time to time of the depository receipts described therein ( Exhibit 4.3 to Form 8-K filed December 12, 2019 )
4-h Deposit Agreement, dated February 18, 2020, among the Company, Computershare Inc. and Computershare Trust Company, N.A., collectively, as depositary, and the holders from time to time of the depositary receipts described therein ( Exhibit 4.3 to Form 8-K filed February 18, 2020 )
4-i Description of AT&T’s Securities Registered Under Section 12 of the Exchange Act
10-a 2018 Incentive Plan ( Exhibit 10-a to Form 10-K for the period ending December 31, 2017 ) **
10-b 2016 Incentive Plan ( Exhibit 10-a to Form 10-Q for the period ending March 31, 2016 ) **
10-c Resolution Regarding John Stankey ( Exhibit 10-b to Form 10-Q for the period ending September 30, 2017 )**
10-d 2011 Incentive Plan ( Exhibit 10-a to Form 10-Q for the period ending September 30, 2015 )**
10-e Short Term Incentive Plan ( Exhibit 10.1 to Form 8-K filed on February 2, 2018 )**
10-f Supplemental Life Insurance Plan ( Exhibit 10.1 to Form 8-K filed on June 26, 2020 )**
10-g Supplemental Retirement Income Plan ( Exhibit 10-e to Form 10-K for the period ending December 31, 2013 )**
10-h 2005 Supplemental Employee Retirement Plan (Exhibit 10-g to Form 10-K for the period ending December 31, 2021) **
10-i Salary and Incentive Award Deferral Plan ( Exhibit 10-k to Form 10-K for the period ending December 31, 2011 )**
10-j Stock Savings Plan ( Exhibit 10-l to Form 10-K for the period ending December 31, 2011 )**
10-k Stock Purchase and Deferral Plan as amended May 18, 2023 ( Exhibit 10.3 to Form 10-Q for the period ending J une 30, 2023 ) **
10-l Cash Deferral Plan as amended July 28, 2022 ( Exhibit 10.2 to Form 10-Q for the period ending September 30, 2022 )**
10-m Master Trust Agreement for AT&T Inc. Deferred Compensation Plans and Other Executive Benefit Plans and subsequent amendments dated August 1, 1995 and November 1, 1999 ( Exhibit 10-dd to Form 10-K for the period ending December 31, 2009 )**
10-n Officer Disability Plan ( Exhibit 10-i to Form 10-Q for the period ending June 30, 2009 )**
10-o AT&T Inc. Health Plan ( Exhibit 10. 2 to Form 10-Q for the period ending June 30, 202 3 )**
10-p Pension Benefit Makeup Plan No.1 ( Exhibit 10-n to Form 10-K for the period ending December 31, 2016 )**
10-q AT&T Inc. Equity Retention and Hedging Policy as amended March 24, 2022 ( Exhibit 10.2 to Form 10-Q for the period ending March 31, 2022 )
10-r Administrative Plan ( Exhibit 10.1 to Form 10-Q for the period ending September 30, 2023 )**
10-s AT&T Inc. Non-Employee Director Stock and Deferral Plan ( Exhibit 10-s to Form 10-K for the period ending December 31, 2022 ) **
10-t AT&T Inc. Non-Employee Director Stock Purchase Plan ( Exhibit 10-t to Form 10-K for the period ending December 31, 2013 )**
100
AT&T Inc.
Dollars in millions except per share amounts
10-u AT&T Inc. Board of Directors Communications Concession Program ( Exhibit 10-u to Form 10-K for the period ending December 31, 2022 )**
10-v Form of Indemnity Agreement between AT&T Inc. and its directors and officers. **
10-w AT&T Executive Physical Program ( Exhibit 10.4 to Form 10-Q for the period ending June 30, 2023 )**
10-x Attorney Fee Payment Agreement for John Stankey ( Exhibit 10.1 to Form 8-K filed on July 3, 2018 )**
10-y $12,000,000,000 Amended and Restated Credit Agreement, dated as of November 18, 2022, among AT&T Inc., the lenders named therein and Citibank, N.A., as agent. ( Exhibit 10.1 to Form 8-K filed on November 18, 2022 )
10-z
Second Amended and Restated Limited Liability Company Agreement of NCWPCS MPL Holdings, LLC ( Exhibit 10.1 to Form 8-K filed on December 12, 2019 )
10-aa
AT&T Inc. Change in Control Severance Plan ( Exhibit 10.1 to Form 8-K filed on June 30, 2014 )**
10-bb
Agreement of Contribution and Subscription, dated February 25, 2021 ( Exhibit 10.1 to Form 8-K filed on February 25, 2021 )
10-cc
Employee Matters Agreement by and among AT&T Inc., Magallanes, Inc., and Discovery, Inc. dated as of May 17, 2021 ( Exhibit 10.3 to Form 8-K Filed on May 20, 2021 )
10-dd
Tax Matters Agreement between AT&T Inc., Magallanes, Inc., and Discovery, Inc. dated as of May 17, 2021 ( Exhibit 10.4 to Form 8-K Filed on May 20, 2021 )
10-ee
Amended and Restated Limited Liability Company Agreement of DIRECTV Entertainment Holdings LLC, dated as of July 31, 2021 ( Exhibit 10.1 to Form 8-K filed August 2, 2021 )
10-ff
Relocation Program Plan ( Exhibit 10.2 to Form 10-Q for the period ending September 30, 2021 )**
10-gg
Amendment Regarding Continuation of Active Employee Participant Benefits in Certain AT&T Benefit Plans in Connection with DIRECTV Transaction ( Exhibit 10.3 to Form 10-Q for the period ending September 30, 2021 ) **
10-hh
Second Amended and Restated Limited Liability Company Agreement of AT&T Fiber Investment, LLC ( Exhibit 10.1 to Form 8-K filed April 7, 2023 )*
21 Subsidiaries of AT&T Inc.
23 Consent of Ernst & Young LLP
24 Powers of Attorney
31 Rule 13a-14(a)/15d-14(a) Certifications
31.1 Certification of Principal Executive Officer
31.2 Certification of Principal Financial Officer
32 Section 1350 Certification
97 AT&T Inc. Clawback Policy
99 Supplemental Interim Financial Information
101 The consolidated financial statements from the Company’s Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 23, 2024, formatted in Inline XBRL: (i) Consolidated Statements of Cash Flows, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Balance Sheets, and (v) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Certain schedules (or similar attachments) have been omitted pursuant to Item 601(a)(5) or Item 601(b)(2) of Regulation S-K. The registrant agrees to furnish copies of such schedules (or similar attachments) to the U.S. Securities and Exchange Commission upon request.
**Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 15(b) of this report.
We will furnish to stockholders upon request, and without charge, a copy of the Annual Report to Stockholders and the Proxy Statement, portions of which are incorporated by reference in the Form 10-K. We will furnish any other exhibit at cost.
ITEM 16. FORM 10-K SUMMARY
None.
101
AT&T Inc.
Dollars in millions except per share amounts
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Allowance for Credit Losses
COL. A COL. B COL. C COL. D COL. E
Additions
(1) (2) (3)
Balance at Beginning of Period Charged to
Costs and Expenses (a) Charged to Other
Accounts
Acquisitions Deductions (b)
Balance at End
of Period (c)
Year 2023
$ 1,011 1,969 — — 2,224 $ 756
Year 2022 $ 1,163 1,865 — — 2,017 $ 1,011
Year 2021 $ 1,457 1,241 — — 1,535 $ 1,163
(a) Includes amounts previously written off which were credited directly to this account when recovered.
Excludes direct charges and credits to expense for nontrade receivables in the consolidated statements of income.
(b) Amounts written off as uncollectible.
(c) Includes balances applicable to trade receivables, loans, contract assets and other assets subject to credit loss measurement (see Note 1).
Allowance for Deferred Tax Assets
COL. A COL. B COL. C COL. D COL. E
Additions
(1) (2) (3)
Balance at Beginning of Period Charged to
Costs and Expenses Charged to Other
Accounts Acquisitions Deductions Balance at End
of Period
Year 2023
$ 4,175 481 — — — $ 4,656
Year 2022
$ 4,343 ( 168 ) — — — $ 4,175
Year 2021
$ 4,557 ( 214 ) — — — $ 4,343
102
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 23rd day of February, 2024.
AT&T INC.
/s/ Pascal Desroches
Pascal Desroches
Senior Executive Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
Principal Executive Officer:
John T. Stankey*
Chief Executive Officer
and President
Principal Financial Officer:
Pascal Desroches
Senior Executive Vice President
and Chief Financial Officer
/s/ Pascal Desroches
Pascal Desroches, as attorney-in-fact
and on his own behalf as Principal
Financial Officer
Principal Accounting Officer:
Sabrina Sanders
Senior Vice President, Chief
Accounting Officer and Controller
/s/ Sabrina Sanders
February 23, 2024
Directors:
William E. Kennard* Beth E. Mooney*
Scott T. Ford* Matthew K. Rose*
Glenn H. Hutchins* John T. Stankey*
Stephen J. Luczo*
Cynthia B. Taylor*
Michael B. McCallister*
Luis A. Ubiñas*
* by power of attorney
103