AT&T Corp. shareholders will vote on a proposal to give employees who were vested as of Jan. 1, 1998, a choice between a traditional defined benefit plan and a cash balance plan. The Bedminster, N.J.-based company converted to a cash balance plan in 1997.
Domini Social Investments sponsored the resolution, arguing the "method of conversion to the cash balance plan has the potential to dramatically reduce the pension of 30,000 AT&T employees. Longer-service employees retain all benefits, but pension benefits are frozen with no growth for up to 13 years.
AT&T directors recommend voting against the proposal, saying the conversion was done for competitive reasons and adding that AT&T "added a special update transition benefit to the traditional pension formula, which on average yielded a 25% improvement for long-service employees.
The annual meeting is June 11.