Dave Dorman was CEO at AT&T for 5 years. This entitled him to an annual pension of $2.1 million, which equals about 60 percent of his salary plus bonus in his last 3 years. By contrast, former AT&T accountant Ralph Colotti's annual pension of $28,800 replaces 33 percent of his final pay. He worked at AT&T for 33 years.

Colotti's pension was held down when AT&T changed the pension formula. AT&T describes Mr. Colotti's pension as competitive in the industry. Mr. Dorman's richer deal is "reasonable, customary, and comparable to what similar sized companies offer....Senior executives are provided with enhanced benefits as a way to recruit and retain the best talent and the best leadership possible."

AT&T was taken over by SBC Communications during Mr. Dorman's tenure.


What if the compensation committee of AT&T's board of directors had asked its compensation consultant and AT&T's comensation director to advise them on the questions, "What are the ethical issues here?