AT&T Admits Mistake Hiring Trump Lawyer: What should the board's role have been?

By Eve Tahmincioglu

“There is no other way to say it – AT&T hiring Michael Cohen as a political consultant was a big mistake,” wrote AT&T’s chairman and CEO Randall Stephenson in a memo to employees.

But the decision to pay the lawyer of the President of the United States to get advice on a proposed merger should have risen to the boardroom level.

Whether company management did or not is unclear, but it is clear the move has created major problems for the telecommunications company. 

“As to AT&T’s payment to Trump’s attorney, management would have been better to thoroughly investigate this ‘advisory service’ and discuss their findings with their board before entering into any contract,” says William Klepper, a management professor at Columbia Business School and author of The CEO’s Boss: Tough Love in the Boardroom and Governance and Managing Change in the 21st Century.

“Clearly,” he continues, “the advice being sought was regarding its pending merger with Time Warner that was a decision matter at the board level.”

Indeed, AT&T’s board is made up of some high-powered individuals who understand how politics and business should mix, including:

• William E. Kennard, the former United States Ambassador to the European Union and former chairman of the U.S. Federal Communications Commission;

• Samuel A. Di Piazza, Jr., the retired global chief executive officer, PricewaterhouseCoopers International;

• Michael McCallister, the retired chairman of the board and chief executive officer, Humana Inc.;

• and Laura D'Andrea Tyson who chaired the U.S. President's Council of Economic Advisers during the Clinton Administration and was the director of the National Economic Council.

When asked what role the board played in the Cohen decision, AT&T spokeswoman Megan Ketterer declined to comment beyond the published memo from Stephenson and a document she provided Directors & Boards titled: Facts around AT&T & Michael Cohen.

The document provides a short outline of the events around the Cohen hiring, but includes nothing about whether the board was involved in any of the process.

As for the decision, the fact sheet states:

Our Washington DC team hired Cohen for just that purpose, under a one-year contract at $50,000 per month, from January through December 2017. Our contract with Cohen was expressly limited to providing consulting and advisory services, and it did not permit him to lobby on our behalf without first notifying us (which never occurred). We didn’t ask him to set up any meetings for us with anyone in the Administration and he didn’t offer to do so.

Last week, the AT&T top lobbyist who led the hiring announced his exit, but two sources familiar with the situation told Reuters he was forced to retire.

The article also reported that one source said:

AT&T’s board of directors does not hold Stephenson responsible for the lack of vetting.

Clearly, not all company leaders were convinced hiring Cohen was a good idea. Both Ford and Uber reportedly rebuffed the lawyer’s pitches, according to a Wall Street Journal article published last week.

So what should the boards have done?

“Boards, like corporate management, should utilize external advisors to support them in their decision making,” Klepper explains, “but those advisers must be vetted and found to be credible sources that will operate in accordance with a company’s stated code of ethics.”

“It appears,” he adds, “that the court is continuing the vetting of Trump’s attorney that AT&T’s management did not correctly conclude.”