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Notice of Annual Meeting of Stockholders

The 2007 Annual Meeting of Stockholders of AT&T Inc., formerly known as SBC Communications Inc., a Delaware corporation, will be held at 9:00 a.m. Central time on Friday, April 27, 2007, at the Alzafar Shrine Temple, 901 North Loop 1604 West, San Antonio, Texas. The items of business are:

Election of 17 Directors
Ratification of the appointment of Ernst & Young LLP as independent auditors of AT&T Inc. for 2007
Approval of the AT&T Severance Policy
Such other matters, including certain stockholder proposals if submitted, as may properly come before the meeting.

Holders of AT&T Inc. common stock of record at the close of business on February 28, 2007, are entitled to vote at the meeting and any adjournment of the meeting. A list of these stockholders will be available for inspection during business hours from April 12 through April 26, 2007, at 175 E. Houston, San Antonio, Texas, and will also be available at the Annual Meeting.

By Order of the Board of Directors.

                                 /s/ Ann Effinger Meuleman
                                  Ann Effinger Meuleman
                                  Senior Vice President and Secretary
                                  March 22, 2007

IMPORTANT NOTICE

If you do not plan to attend the Annual Meeting to vote your shares, please complete, date, sign and promptly mail the enclosed proxy card in the return envelope provided. No postage is necessary if mailed in the United States. Stockholders of record may also give their proxy by telephone or through the Internet in accordance with the instructions accompanying the proxy card. Any person giving a proxy has the power to revoke it at any time, and stockholders who are present at the meeting may withdraw their proxies and vote in person.

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Compensation of Directors

The compensation of Directors is determined by the Board in conjunction with recommendations made by the Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee is composed entirely of independent Directors. None of our employees serve on this Committee. The Committee's current members are August A. Busch III (Chairman), James P. Kelly, John B. McCoy, Mary S. Metz, S. Donley Ritchey, and Joyce M. Roche. Under its charter (available on our web site at www.att.com), the Committee periodically, and at least every two years, reviews the compensation and benefits provided to Directors for their service, and makes recommendations to the Board for changes. This includes not only Director retainers and fees, but also Director compensation and benefit plans.

The Committee's charter authorizes the Committee to employ independent compensation and other consultants to assist in fulfilling its duties. The Committee may also form and delegate authority to subcommittees. From time to time, the Committee engages CCA Strategies LLC, an employee benefits

and compensation consulting firm (which also acts as a consultant to the Human Resources Committee on executive compensation matters), to provide the Committee with information regarding director compensation paid by companies principally in the Fortune 50, Fortune 100 and a special comparator group used by the Human Resources Committee. In reviewing Director compensation, the Committee may request CCA Strategies to provide a study of director compensation disclosed in proxy statements of companies in the comparison groups. After reviewing the study, the Committee may make recommendations to the Board for modifying the compensation of Directors. In addition, from time to time, the Chief Executive Officer may make recommendations to the Committee or the Board about types and amounts of appropriate compensation and benefits for directors.

Directors who are also ours or our subsidiaries' employees receive no separate compensation for serving as Directors or as members of Board committees. Directors who are not ours or our subsidiaries' employees currently receive an annual retainer of $85,000 and $2,000 for each Board meeting or review session attended. Committee members receive $1,700 for each committee meeting attended, except that members of the Audit and Human Resources Committees receive $2,000 for each meeting attended in person. The Chairperson of each committee receives an additional annual retainer of $5,000, except for the Chairpersons of the Audit and Human Resources Committees, each of whom receives an additional annual retainer of $20,000. The Lead Director also receives an additional annual retainer of $20,000.

Directors may choose to take their retainer in the form of our common stock or cash. Directors may also choose to defer the receipt of their fees and all or part of their retainers into either deferred stock units or into a cash deferral account. Each deferred stock unit is equivalent to a share of common stock and earns dividend equivalents in the form of additional deferred stock units. Directors purchase deferred stock units at the fair market value of AT&T common stock. Deferred stock units are converted to common stock and paid out as chosen by the Director in up to 15 annual installments after the Director ceases service with the Board.

Deferrals into the cash deferral account earn interest during the calendar year at a rate equal to the Moody's Long-Term Corporate Bond Yield Average for September of the preceding year ("Moody's Rate"). This interest rate roughly approximates the market interest rate used by the Securities and Exchange Commission ("SEC") for disclosure purposes. Amounts earned above the SEC interest rate are included in the Director Compensation table on page 8 under the heading "Non-qualified Deferred Compensation Earnings." Directors may annually choose to convert their Cash Deferral Accounts into deferred stock units at the fair market value of our stock at the time of the conversion.

Each Director also receives an annual award of deferred stock units equal in value to one and one-half times the base annual retainer. Each nonemployee Director who joined the Board after November 21, 1997, and before September 24, 2004, receives an additional annual grant of deferred stock units equal to $13,000, limited to 10 annual grants.

AT&T does not offer nonemployee Directors a retirement plan or pension. However, Directors who joined the Board before 1997 have vested rights in a former pension plan that we no longer offer. Only benefits that have already vested are payable under the plan. Each Director who is vested in the former pension plan, upon retirement, will receive annually 10% of the annual retainer in effect at the time of his or her retirement multiplied by the number of years of service, not to exceed 10 years. The payments will continue for the life of the Director. If the Director dies before receiving 10 years of payments, the Director's beneficiaries will receive the payments for the remainder of the 10-year period.

Upon our acquisition of Pacific Telesis Group ("PTG") on April 1, 1997, certain of the former PTG Directors joined our Board. These Directors were allowed to continue their prior deferrals of PTG retainers and fees made before they joined the AT&T Board at the PTG rates. Under the PTG plans,

deferrals earn a rate of interest equal to Moody's Rate plus 4% for deferrals from 1985 through 1992, Moody's Rate plus 2% for deferrals from 1993 through 1995, and the 10-year Treasury Note average for the month of September for the prior year plus 2% for deferrals after 1995.

Similarly, upon our acquisition of BellSouth Corporation on December 29, 2006, certain of the former BellSouth Directors joined our Board. These Directors had previously made cash and stock based deferrals under plans offered by BellSouth. These deferrals pay out in accordance with the choices of the Directors. Cash deferrals earn a rate of interest equal to Moody's Monthly Average of Yields of Aa Corporate Bonds for the previous July, while earnings on deferrals in the form of stock units are reinvested in additional deferred stock units at the fair market value of the underlying stock.

Director Compensation

Director	Fees Earned or Paid in Cash ⁽¹⁾	Stock Awards ^{(2) (3)}	Change in Pension Value and Non-qualified Deferred Compensation Earnings ⁽⁴⁾	All Other Compensation	Total
William F. Aldinger III $133,633⁽⁵⁾	$ 97,500	$	0	$3,458	$234,591
Gilbert F. Amelio	129,600	97,500	984⁽⁶⁾	2,323	230,407
Reuben V. Anderson	7,083	0	0	0	7,083
James H. Blanchard	7,083	0	0	0	7,083
August A. Busch III	118,400	97,500	214,680	6,323	436,903
Martin K. Eby, Jr.	129,600	97,500	165,332	4,643	397,075
James A. Henderson	142,666	110,500	0	3,747	256,913
James P. Kelly	7,083	0	0	0	7,083
Charles F. Knight	114,200	97,500	183,721	3,024	398,445
Jon C. Madonna	133,633⁽⁵⁾	97,500	0	821	231,954
Lynn M. Martin	109,200	110,500	0	2,525	222,225
John B. McCoy	119,300	110,500	0	6,153	235,953
Mary S. Metz	112,600	97,500	5,424⁽⁶⁾	5,172	220,696
Toni Rembe	110,833	97,500	423⁽⁶⁾	2,207	210,963
S. Donley Ritchey	145,400	97,500	10,933⁽⁶⁾	2,865	256,698
Joyce M. Roche	112,600	110,500	55	2,435	225,590
Laura D'Andrea Tyson	107,200	110,500	560	3,139	221,399
Patricia P. Upton	116,800	97,500	215,181	3,614	433,095

1. The following table shows the number of deferred stock units purchased in 2006 by each Director with deferrals of their retainers and fees. Each year, Directors may elect to make monthly purchases, during the following calendar year, of deferred stock units at the fair market value of our stock at the time of the purchase.

Director	Deferred Stock Units	Director	Deferred Stock Units
Gilbert F. Amelio	1,288	John B. McCoy	4,087
August A. Busch III	4,072	Mary S. Metz	1,288
James A. Henderson	1,728	Toni Rembe	2,425
Charles F. Knight	3,895	Joyce M. Roche	2,575

2. The stock unit grants were vested at issuance and valued using Statement of Financial Accounting Standard ("FAS") 123R, which also represents the grant date value.

3. Each of Mr. Aldinger and Mr. Madonna hold 4,070 outstanding restricted stock units which were received while they were serving on the Board of Directors of AT&T Corp., before its acquisition by AT&T Inc. (then known as SBC Communications Inc.). Pursuant to the acquisition agreement, these restricted stock units were converted into AT&T Inc. units. The units vest 50% in 2007 and 25% in each of 2008 and 2009. At vesting of the units, each unit is converted into a share of AT&T Inc. stock. Termination of service on the Board before vesting of these units will result in forfeiture of the units. Mr. Madonna was also issued options by AT&T Corp., which were converted into options to acquire 2,496 shares of AT&T Inc. common stock Similarly, Mr. Anderson, Mr. Blanchard, and Mr. Kelly hold 61,210 options, 79,055 options, and 41,099 options, respectively, that were originally granted by BellSouth Corporation while they served on the BellSouth Board before its 2006 acquisition by AT&T Inc.

4. The amounts shown for Mr. Busch, Mr. Eby, Mr. Knight and Ms. Upton represent the total change in the actuarial present value of these Directors' pensions during 2006. This resulted from an increase in the annual retainer from $65,000 to $85,000 during 2006. (The pension plan was discontinued for new Directors joining the Board in 1997 and later.) Amounts shown for all other Directors represent the difference between market interest rates determined pursuant to SEC rules and actual rates used to determine earnings on deferred compensation.

5. Includes fees earned in 2006, along with $10,833 earned in 2005 that were paid in 2006.

6. Includes amounts deferred under Pacific Telesis Group plans before that company's acquisition by AT&T Inc.

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Approval of the AT&T Severance Policy (Item 3 on Proxy Card)

The Board of Directors approved and recommends that the stockholders consider and approve its policy on employment and severance agreements for executive officers of AT&T (the "Policy"). The provisions of the Policy are summarized below, followed by the full text of the Policy.

Summary of Policy

The Policy provides that we will not enter into a future severance agreement with an executive officer that provides for severance benefits in an amount that exceeds 2.99 times the executive's annual base salary plus target bonus, unless the agreement is approved or ratified by our stockholders. The Policy is prospective only; it will not apply to existing agreements with our current executive officers.

For purposes of the Policy, severance benefits include cash payments made by AT&T to the executive officer in connection with his or her termination of employment and the present value of benefits or perquisites provided for periods after the termination of employment. Severance benefits do not include amounts accrued prior to termination, whether or not deferred, and reasonable consulting fees,

among other things. Under the Policy if the Board determines to enter into an employment agreement with severance provisions that exceed the limits of the Policy, the Board will seek stockholder approval of the agreement in advance or ratification within 15 months thereafter. Any agreement that has not been approved in advance will be subject to stockholder ratification and will be retroactively modified to the extent necessary to bring it within the limits of the Policy if it is not ratified.

AT&T Severance Policy

AT&T will not enter into any future severance agreement or future employment agreement with any executive officer that provides for severance benefits in an amount that exceeds 2.99 times the executive's annual base salary plus target bonus, unless such future agreement receives prior shareholder approval or is ratified by shareholders at a regularly scheduled annual meeting within the following 15 months. All other future severance agreements and future employment agreements with executive officers will not be subject to shareholder approval or ratification under the Policy.

An "executive officer" is any person who, at the time the agreement is entered into, is identified by the company as an executive officer as that term is defined in Rule 3b-7 under the Securities Exchange Act of 1934.

"Future employment agreement" means an agreement between AT&T and an executive officer, entered into after the effective date of the Policy, pursuant to which such executive renders services to AT&T or one of its affiliates as an employee. "Future severance agreement" means an agreement between AT&T and an executive officer, entered into after the effective date of the Policy, which relates to such executive's termination of employment with AT&T.

"Severance benefits" means (i) cash payments made by AT&T to the executive officer in connection with and directly related to his or her termination of employment and (ii) the present value of benefits or perquisites provided for periods after the termination of employment. This includes lump-sum payments and the estimated present value of any periodic payments to be made or benefits or perquisites provided following the date of termination that are accrued and paid as a direct result of such termination. "Severance benefits," however, does not include: (i) payments of salary, bonus or performance award amounts that had accrued at the time of termination or had been previously earned and deferred; (ii) payments of accrued compensation or benefits under qualified and non-qualified deferred compensation plans, savings plans, retirement plans, and health and welfare plans; (iii) amounts paid to offset excise tax liability to the extent the excise taxes are incurred because of a prior deferral of income; (iv) any benefits or perquisites provided under plans or programs applicable to managers generally; (v) amounts paid as part of any agreement intended to "make-whole" any loss or forfeiture of benefits from a prior employer; (vi) amounts paid for post-termination consulting services pursuant to a reasonable consulting agreement; (vii) amounts paid for post-termination covenants, such as a covenant not to compete; or (viii) any payment that the Board of Directors determines in good faith to be a reasonable settlement of any claim made against AT&T. In the event of termination of employment by the company following a change in control (as that term is defined in AT&T's Change in Control Severance Plan, as amended from time to time), "severance benefits" will not include the cash payments made in lieu of the accelerated vesting of options or outstanding equity-based awards or to compensate for the cancellation of such awards.

Your Board of Directors Recommends a Vote "FOR"

Approval of the AT&T Severance Policy

Stockholder Proposals (Items 4 through 8 on Proxy Card)

Certain stockholders have advised the Company that they intend to introduce at the 2007 Annual Meeting the proposals set forth below. The names and addresses of, and the number of shares owned by, each such stockholder will be provided upon request to the Senior Vice President and Secretary of AT&T.

Stockholder Proposal A (Item 4 on Proxy Card)

Resolved, that the shareholders of AT&T ("the Company") hereby request that the Company provide a report, updated semi-annually, disclosing the Company's:

Monetary and non-monetary political contributions and expenditures not deductible under section 162 (e)(1)(B) of the Internal Revenue Code, including but not limited to contributions to or expenditures on behalf of political candidates, political parties, political committees and other political entities organized and operating under 26 USC Sec. 527 of the Internal Revenue Code and any portion of any dues or similar payments made to any tax exempt organization that is used for an expenditure or contribution if made directly by the corporation would not be deductible under section 162 (e)(1)(B) of the Internal Revenue Code. The report shall include the following:

a. An accounting of the Company's funds that are used for political contributions or expenditures as described above;

b. Identification of the person or persons in the Company who participated in making the decisions to make the political contribution or expenditure; and

c. The internal guidelines or policies, if any, governing the Company's political contributions and expenditures.

The report shall be presented to the board of directors' audit committee or other relevant oversight committee and posted on the company's website to reduce costs to shareholders.

Supporting Statement

This proposal asks AT&T to disclose its political contributions, and payments to trade associations and other tax-exempt organizations. Current disclosure is insufficient to allow shareholders to fully evaluate the political use of corporate assets.

Company executives exercise wide discretion over the use of corporate resources for political activities. These decisions involve political contributions, called "soft money," and payments to trade associations and related groups that are used for political activities. Most of these expenditures are not disclosed. In 2003-04, the last fully reported election cycle, AT&T contributed at least $1,337,575 in soft money. In the 2005-06 election cycle, AT&T contributed at least $1,210,000 in soft money. (Derived from PoliticalMoneyLine.com).

Our company's payments to trade associations used for political activities are undisclosed and unknown. These activities include direct and indirect political contributions to candidates, political parities or organizations and electioneering communications on behalf of a federal, state or local candidate. In many cases, even management does not know how trade associations use their company's money politically. Absent a system of accountability, corporate executives are free to use the Company's assets for political objectives that are not shared by and may be inimical to the interests of the Company and its shareholders, potentially harming long-term shareholder value.

AT&T has posted its political contributions policy on its website, after receiving a similar resolution last year. However, there is still no single source of information that provides the information sought by this resolution. This report could be prepared at minimal cost, as presumably management already monitors corporate resources used for such purposes. We believe that transparency and accountability in this area will advance our company's interests, and help build long-term shareholder value.

YOUR DIRECTORS' POSITION

Political contributions, where permitted, are an important part of the regulatory and legislative process. AT&T is in a highly regulated industry and the Company's operations are significantly affected by the actions of elected officials at the local, state and national levels, including rates it can charge customers, its profitability and even how it must provide services to competitors. It is important that your company actively participate in the electoral and legislative processes in order to protect your interests as stockholders. We do so by contributing prudently to state and local candidates and by contributing to political organizations and trade associations when such contributions advance AT&T's business objectives and the interests of our stockholders. In making such contributions, AT&T is committed to complying with campaign finance and lobbying laws, and changes that may be enacted in the future, including the laws requiring public disclosure of political contributions and lobbying expenses. The amount of AT&T's expenditures in this area is de minimis as compared to the total expenditures of the Company in a year. The adoption of this proposal would add unnecessary costs to the business.

Each year, your Board of Directors authorizes a maximum amount of aggregate contributions that can be made by your company, as permitted by, and in strict compliance with, applicable law, for the purposes of supporting or opposing any party, committee, candidate for public office, or ballot measure, or for any other political purpose. Except for contributions for ballot measures, no expenditure over $1,000 may be made unless approved by the Chief Executive Officer (lesser amounts may be approved by delegates). All expenditures must be submitted to the Company's attorneys to confirm that each contribution is lawful. AT&T's policy with respect to political contributions is clearly set forth on the Company's website, and can be found at http://www.att.com/gen/investor-relations?pid=7726.

In addition, no company funds, by law, are expended to make Federal political contributions. Federal law has long prohibited corporate contributions to Federal candidates or their political committees. With the enactment of the Bi-Partisan Campaign Finance Reform Act of 2002 (known as the "McCain Feingold Act"), corporate contributions to Federal political parties and Leadership Committees are prohibited, effective November 6, 2002.

As to state and local contributions, state laws determine when and under what circumstances political contributions are permissible. Moreover, a number of states in which AT&T operates have extensive reporting requirements. These rules, in general, are equally applicable to all participants in the political process. This proposal, on the other hand, would impose a set of rules only on your Company.

This proposal would impose unwarranted expenditures of funds and administrative burdens on your company and would be uniquely applicable only to your Company and not to our competitors, unions or any other participants in the process. Your Directors believe that any reporting requirements that go beyond those required under existing law should be applicable to all participants in the process, not just to AT&T.

Your Board of Directors Recommends a
Vote "AGAINST" This Proposal.

Stockholder Proposal B (Item 5 on Proxy Card)

5 - Special Shareholder Meetings

RESOLVED, shareholders ask our board of directors to amend our bylaws to give holders of at least 10% to 25% of the outstanding common stock the power to call a special shareholder meeting.

Shareholders should have the ability, within reasonable limits, to call a special meeting when they think a matter is sufficiently important to merit expeditious consideration. Shareholder control over timing is especially important in the context of a major acquisition or restructuring, when events unfold quickly and issues may become moot by the next annual meeting.

Thus this proposal asks our board to amend our bylaws to establish a process by which holders of 10% to 25% of our outstanding common shares may demand that a special meeting be called. The corporate laws of many states (though not Delaware, where our company is incorporated) provide that holders of only 10% of shares may call a special meeting, absent a contrary provision in the charter or bylaws. Accordingly, a 10% to 25% threshold strikes a reasonable balance between enhancing shareholder rights and avoiding excessive distraction at our company.

Prominent institutional investors and organization support allowing shareholders to call a special meeting. Fidelity, Vanguard, American Century and Massachusetts Financial Services are among the mutual fund companies supporting a shareholder right to call a special meeting. The proxy voting guidelines of many public employee pension funds, including the Connecticut Retirement Plans, the New York City Employees Retirement System and the Los Angeles County Employees Retirement Association, also favor preserving this right. Governance ratings services, such as The Corporate Library and Governance Metrics International, take special meeting rights into account when assigning company ratings.

This topic also won 65% support of JPMorgan Chase & Co. (JPM) shareholders at the 2006 JPM annual meeting.

YOUR DIRECTORS' POSITION

Under the Company's Bylaws, a special meeting of stockholders may be called at any time by the Board of Directors or the Chairman of the Board. The Bylaws also provide that the Chairman of the Board will call a special meeting whenever requested in writing to do so by stockholders representing two-thirds of the shares of AT&T then outstanding and entitled to vote at such meeting. This Bylaw provision conforms to the requirements of the Delaware General Corporation Law. For a company with as many stockholders as AT&T, a special meeting of shareholders is a very expensive and time-consuming affair because of the legal costs in preparing required disclosure documents, printing and mailing costs, and the time commitment required of the Board and members of senior management to prepare for and conduct the meeting. Calling special meetings of stockholders is not a matter to be taken lightly, and should be extraordinary events that only occur when either fiduciary obligations or strategic concerns require that the matters to be addressed cannot wait until the next annual meeting.

Allowing a minority group of stockholders to call special meetings could impose substantial administrative and financial burdens on the Company, and significantly disrupt the conduct of the Company's business. The current Bylaw provision is an appropriate corporate governance provision for a public company of our size because it allows the directors, according to their fiduciary obligations, to exercise their business judgment to determine when it is in the best interests of stockholders to convene a special meeting.

For these reasons, your Board of Directors believes that the adoption of this proposal is not in the best interest of AT&T's stockholders.

Your Board of Directors Recommends a

Vote "AGAINST" This Proposal.

Stockholder Proposal C (Item 6 on Proxy Card)

Resolved: That the shareholders of AT&T ("Company") request that the Board of Director's Executive Compensation Committee establish a pay-for-superior-performance standard in the Company's executive compensation plan for senior executives ("Plan"), by incorporating the following principles into the Plan:

1. The annual incentive or bonus component of the Plan should utilize defined financial performance criteria that can be benchmarked against a disclosed peer group of companies, and provide that an annual bonus is awarded only when the Company's performance exceeds its peers' median or mean performance on the selected financial criteria:

2. The long-term compensation component of the Plan should utilize defined financial and/or stock price performance criteria that can be benchmarked against a disclosed peer group of companies. Options, restricted shares, or other equity or non-equity compensation used in the Plan should be structured so that compensation is received only when the Company's performance exceeds its peers' median or mean performance on the selected financial and stock price performance criteria; and

3. Plan disclosure should be sufficient to allow shareholders to determine and monitor the pay and performance correlation established in the Plan.

Supporting Statement: We feel it is imperative that compensation plans for senior executives be designed and implemented to promote long-term corporate value. A critical design feature of a well-conceived executive compensation plan is a close correlation between the level of pay and the level of corporate performance relative to industry peers. We believe the failure to tie executive compensation to superior corporate performance; that is, performance exceeding peer group performance, has fueled the escalation of executive compensation and detracted from the goal of enhancing long-term corporate value.

We believe that common compensation practices have contributed to excessive executive compensation. Compensation committees typically target senior executive total compensation at the median level of a selected peer group, then they design any annual and long-term incentive plan performance criteria and benchmarks to deliver a significant portion of the total compensation target regardless of the company's performance relative to its peers. High total compensation targets combined with less than rigorous performance benchmarks yield a pattern of superior-pay-for-average-performance. The problem is exacerbated when companies include annual bonus payments among earnings used to calculate supplemental executive retirement plan (SERP) benefit levels, guaranteeing excessive levels of lifetime income through inflated pension payments.

We believe the Company's Plan fails to promote the pay-for-superior-performance principle. Our Proposal offers a straightforward solution: The Compensation Committee should establish and disclose financial and stock price performance criteria and set peer group-related performance benchmarks that permit awards or payouts in its annual and long-term incentive compensation plans only when the Company's performance exceeds the median of its peer group. A senior executive compensation plan based on sound pay-for-superior-performance principles will help moderate excessive executive compensation and create competitive compensation incentives that will focus senior executives on building sustainable long-term corporate value.

YOUR DIRECTORS' POSITION

This proposal calls for the Company to establish an executive compensation program that is based on a comparison of operating and financial results at AT&T to the results at other companies. It would require the Company to pick certain criteria, such as revenues or net income or customer numbers, and base the bonus and long-term compensation of our senior executives solely on a comparison of those criteria. The proposal does not take into account the fact that different companies, although in the same peer group, could be, for example, in different stages of growth, subject to different regulatory and legal requirements, or simply in different geographic areas, any of which could cause a particular company to stress different factors in measuring its performance. Your Board of Directors believes that the proposal therefore focuses on the wrong issue by ignoring other more fundamental and important principles that should be considered in the administration of executive compensation programs.

The Human Resources Committee does look to peer companies and market data to determine appropriate market rates and levels of compensation. However, the determination of the payment for incentive awards is and should be largely tied directly to goals and objectives established by the Human Resources Committee consistent with the specific performance goals and objectives of your Company.

Decisions regarding the compensation of AT&T's executive officers are the responsibility of the Human Resources Committee, which is composed entirely of independent Directors. As stated in the Compensation Discussion & Analysis included in this proxy statement, the Committee believes that its current approach of linking a significant portion of senior executive compensation to specific AT&T performance measures aligns the interests of the Company's senior executives with the long-term interests of the Company's stockholders and gives the Committee the necessary flexibility and discretion to more effectively use performance-based compensation and equity incentive tools in the administration of the Company's executive compensation programs. Moreover, as discussed in the Compensation Discussion & Analysis, a significant portion of the long-term compensation of the Chief Executive Officer already is based on a comparison of AT&T's total stockholder return (stock appreciation plus reinvestment of dividends) to relevant companies in the North American Telecom Index, subject to adjustments described in the Compensation Discussion & Analysis. The Committee believes this mix of performance standards tied to your Company's objectives to a comparison of total stockholder return compared with other companies strikes an appropriate balance.

Your Board of Directors believes that it is in the best interests of stockholders to continue to provide the Committee the flexibility and discretion to use performance-based compensation and equity incentive tools as appropriate, without being restricted by guidelines that would tie compensation to the performance objectives and results of other companies as opposed to the specific objectives of your Company. For these reasons, the Board of Directors believes that the adoption of the proposal is unnecessary and detrimental to the long-term interests of the stockholders.

Your Board of Directors Recommends a

Vote "AGAINST" This Proposal.

Stockholder Proposal D (Item 7 on Proxy Card)

RESOLVED, the shareholders of AT&T Inc. hereby request that the Board adopt a policy that includes, as a voting item in the proxy statement for each annual meeting, an advisory resolution, proposed by AT&T's management, to approve the compensation of the named executive officers ("NEOs"), as set forth in the proxy statement's Summary Compensation Table (the "SCT"), and the accompanying narrative disclosure of material factors provided to understand the SCT. The policy should ensure that shareholders fully understand the vote is advisory and will not abrogate any employment agreement.

SUPPORTING STATEMENT

We believe current rules governing senior executive compensation do not give shareholders sufficient influence over pay practices - nor do they give the Board adequate feedback from the owners of the company.

The advisory vote proposed here is similar to the nonbinding shareholder vote required since 2003 at the annual meetings of all U.K.-listed firms and, beginning in 2005, at Australia-based companies.

AT&T's Board has been criticized for excessive CEO pay relative to performance. A study by The Corporate Library ("Pay for Failure: The Compensation Committees responsible," March 31, 2006) singled out AT&T as one of eleven large U.S. companies "where the disconnect between pay and performance is particularly stark."

The study notes that over the five fiscal years through 2005, CEO Edward Whitacre received $85.2 million in compensation, while total shareholder return was negative 40.3%. The Corporate Library accordingly gave AT&T's Board a "D" for overall effectiveness.

The Corporate Library's analysis concludes: "Too much of the current and future compensation at AT&T is either fixed, or based on the wrong performance metrics, or the wrong performance metrics measured over too short a time period, which, while achievable, do not necessarily translate into long-term growth in shareholder value." The study asserts that 100% LTIP payouts to Whitacre when "shareholder wealth has been diminished by a third over the period goes against common sense."

In our opinion, AT&T's executive pension and severance agreements also stand out as unjustifiably costly and contrary to shareholder interests.

Whitacre's parachute is valued at over $25 million - the 17th most costly among America's 100 largest corporations ("Platinum Promises," BusinessWeek Online, December 12, 2005).

Whitacre's golden parachute is particularly excessive, in our view, considering it has a platinum lining: annual pension payments of $5,494,000 for life, plus an $18,805,000 lump sum. Last year The Corporate Library singled out AT&T for bestowing on Whitacre the third largest CEO pension payout among large U.S. companies.

If you add these together, it means that AT&T's shareholders could be paying our CEO $150 million or more in post-employment severance and pension benefits combined over the next 20 years (assuming Whitacre's eligible termination and longevity).

Last year, after just 5 years at AT&T, former CEO David Dorman left with a yearly pension of $2.1 million and his own $25 million parachute. Compare this to the freezing of AT&T's rank-and-file pension plan.

An advisory vote would provide useful feedback and encourage stockholders to scrutinize the new, more extensive disclosures required by the SEC.

Please vote FOR this proposal.

YOUR DIRECTORS' POSITION

Your Board of Directors believes that this proposal is not in the best interests of AT&T stockholders.

The process requested by the proposal is not necessary because AT&T already has an efficient and meaningful method of communicating with the Board of Directors. As discussed on page 3 under the heading "Board of Directors," stockholders and other interested parties may communicate with members of AT&T's Board of Directors, including the Lead Director, by writing to the Board, or a specific Committee Chair or director through the Office of the Secretary.

We believe that direct communications between stockholders and the Board, including the Human Resources Committee, is a much more effective and accurate method of expressing support or criticism of AT&T's executive compensation practices. Unlike the vote advocated by the proposal, communicating directly with the Board will allow stockholders to voice any specific observations or objections to AT&T's executive compensation practices directly to the decision makers. Moreover, communicating directly with the Board will eliminate the need for the Human Resources Committee to speculate as to the meaning of stockholder approval or disapproval of the compensation set forth in the Company's proxy statement.

In addition, the vote recommended in the proposal would not provide any useful information to AT&T and members of the Human Resources Committee. If implemented, the stockholder proposal would require AT&T stockholders to vote "yes" or "no" on the compensation set forth in the Summary Compensation Table and the accompanying narrative disclosure. Contrary to the assertions in the supporting statement for the proposal, the process advocated by the proposal would not provide "useful feedback" on executive compensation, and it would not give AT&T stockholders the right to approve or disapprove of AT&T's executive compensation practices. The executive officers' compensation is composed of several different elements. Since the vote on the compensation would be either "yes" or "no" as a whole, the Committee would not have any information regarding which element the stockholders were voting against and what their specific objection was. The Committee would be forced to speculate regarding the stockholders' intent.

Moreover, the vote advocated by the proposal fails to recognize that AT&T already has in place a thoughtful, performance-based executive compensation program. AT&T's executive compensation program emphasizes the retention of key executives and the practice of appropriately rewarding key executives for positive results. The Human Resources Committee, which is composed entirely of independent directors, none of whom has an interest in the compensation decisions the Committee makes, oversees AT&T's executive compensation program. The Committee continually monitors the executive compensation program and adopts changes to reflect the dynamic, global marketplace in which AT&T competes for talent. AT&T will continue to emphasize pay-for-performance and equity-based incentive programs that reward executives for results that are consistent with stockholder interests.

Your Board of Directors does not believe the advisory vote called for by the stockholder proposal will enhance AT&T's compensation program. Instead of encouraging stockholders to take advantage of AT&T's current policies and procedures, the proposal advocates substituting a narrower and less effective mechanism.

Your Board of Directors Recommends a

Vote "AGAINST" This Proposal.

Stockholder Proposal E (Item 8 on Proxy Card)

Be it Resolved: That the shareholders of the AT&T Inc. ("Company") hereby urge that the Board of Director's executive compensation committee establish a policy limiting the benefits provided under the Company's supplemental executive retirement plan ("SERP Policy"). The SERP Policy should provide

for the following: (1) a limitation of covered compensation to a senior executive's annual salary, and (2) the exclusion of all incentive or bonus pay from inclusion in the plan's definition of covered compensation used to establish benefits. The SERP Policy should be implemented in a manner so as not to interfere with existing contractual rights of any supplemental plan participant.

Supporting Statement: We believe that one of the most troubling aspects of the sharp rise in executive compensation is the excessive pension benefits provided to senior corporate executives through the use of supplemental executive plans ("SERPs"). Our Company has established a SERP, called the 2005 Supplemental Employee Retirement Plan. The Supplemental Employee Retirement Plan provides the Company's chief executive officer ("CEO") and other senior executives retirement benefits far greater than those permitted under the Company's tax-qualified pension plan. Our proposal seeks to limit excessive pension benefits by limiting the type of compensation used to calculate pension benefits under the SERP plan.

At present, U.S. tax law maintains a $220,000 limit on the level of compensation used to determine a participant's retirement benefit under a tax-qualified pension plan. Our Company has established a SERP as a complement to its tax-qualified plan in order to provide senior executives increased retirement benefits. This is accomplished by raising the level of compensation used in the pension formula to calculate retirement benefits. The SERP establishes a higher compensation level on which to calculate senior executives' pension benefits by including the executive's full salary and annual bonus in the compensation figure. The Company's 2006 proxy statement indicates that the combined salary and bonus figure was $9,249,000 for the CEO, approximately 42 times the $220,000 compensation limit in the Company's tax-qualified pension plan.

Our position is that the inclusion of an executive's annual bonus along with his or her full salary in the pension calculation is overly generous and unjustifiable. The only type of compensation used in the SERP for establishing the level of additional pension benefits should be an executive's annual salary. No variable incentive pay should be included in a senior executive's pension calculation under the SERP. The inclusion of annual bonus or incentive payments in determining increased pension benefits can dramatically increase the pension benefit afforded senior executives and has the additional undesirable effect of converting one-time incentive compensation into guaranteed lifetime pension income.

The proposal's limitation on the type of compensation that can be considered in determining senior executives' retirement benefits to only the executive's salary is a necessary and reasonable restriction on the excessiveness of supplemental retirement benefits. We urge your support for this important executive compensation reform.

YOUR DIRECTORS' POSITION

SERP retirement benefits are part of a comprehensive compensation package used to attract and retain selected senior executives. SERPs are utilized by many large public companies, including many which compete with us for qualified senior executives. The Human Resources Committee, which is comprised entirely of independent directors, is responsible for ensuring that executive compensation is sufficient to attract, retain and reward executives in a competitive business environment.

The Company limits participation in the SERP, and finds the SERP Plan to be a useful component of executive compensation. Any benefit provided under our SERP is offset by amounts payable under any other Company qualified or nonqualified defined benefit pension plan.

The Board recognizes that it must perform its responsibilities in a manner that it believes to be in the best interests of the Company and its stockholders. In order to fulfill those obligations, the Board and the

Human Resources Committee must be able to design and approve executive compensation packages that address the facts and circumstances of an individual executive's situation. Requiring the Board to adopt an arbitrary policy limiting executive retirement benefits would substantially hamper and undermine its ability to attract and retain desirable candidates.

The Human Resources Committee continuously reviews the compensation and benefits for executives. As one of many recent changes, the Human Resources Committee reduced the target SERP percentage to 50% for all new participants.

The Human Resources Committee has engaged an independent consultant to assist it with periodic benchmarking within the Company's compensation peer group to ensure that our executive compensation and benefits programs are competitive with the marketplace. We believe that our SERP and other retirement benefits are consistent with market practice.

For these reasons, your Board of Directors believes it is in the best interests of the Company and its stockholders for the Company to retain the flexibility to consider making SERP benefits part of the compensation package for any or all of its senior executives without being limited by a policy that could put the Company at a significant competitive disadvantage.

Your Board of Directors Recommends a

Vote "AGAINST" This Proposal.

SEC Filing Excerpt
For complete filing click here

Compensation Committee

The Human Resources Committee, composed entirely of independent, nonemployee Directors, is responsible for the compensation of our executives, including the Named Executive Officers, and overseeing our compensation practices. Its charter is available on our web site at www.att.com. None of our employees serve on this Committee. The current members of the Committee are: Mr. Henderson (Chairman), Dr. Amelio, Mr. Blanchard, Mr. Eby, Jr., and Ms. Upton. Mr. Blanchard joined the Committee in January 2007.

The Committee is responsible for determining the compensation of the Chief Executive Officer and other executive officers as well as for certain other employees. It is also responsible for the administration of certain benefit plans and recommending new benefit plans to the Board when Board approval is required.

The Committee is authorized by its charter to employ independent compensation and other consultants. It may also form and delegate authority to subcommittees of the Committee. Presently, the Committee employs CCA Strategies, an employee benefits and compensation consulting firm, to assist the Committee in evaluating executive compensation and benefits on an ongoing basis. A consultant from CCA Strategies attends all Committee meetings and provides information, research and analysis pertaining to executive compensation and benefits as requested by the Committee. CCA Strategies regularly updates the Committee on market trends and makes recommendations for establishing the market values of the top positions at our Company. Recently, CCA Strategies was acquired by JP Morgan Retirement Plan Services.

The Committee sets compensation levels based on the skills, experience and achievements of each executive officer, taking into account the market rates recommended by CCA Strategies and the compensation recommendations by the Chief Executive Officer, except with respect to his own position. The Committee believes that input from both management and the consultant provides useful information and points of view to assist the Committee in determining compensation.

Role of Compensation Consultant The Committee with the assistance of CCA Strategies conducts an annual analysis of historic executive compensation and financial performance and establishes annual market rates. This analysis considers market data from four separate groups of companies as set forth below:

1. a comparator group of 20 companies in the technology, telecommunications and entertainment industries selected by CCA Strategies in consultation with the Committee (in 2005, the Committee used a comparator group of 26 companies in diverse industries);

2. the Fortune 50, excluding financial or privately held institutions;

3. Fortune 25 companies, excluding financial and privately held institutions; and

4. companies in the telecommunications and cable industries.

This analysis includes the removal of outliers where actual compensation practice is not consistent with financial performance or is in the top quartile.

The current comparator group is comprised as follows:

Boeing	IBM	Qwest Communications
Cisco Systems	Intel	Sprint Nextel
Comcast	Johnson Controls	Time Warner
Dell	Lockheed Martin	United Technologies
General Electric	Microsoft	Verizon Communications
Hewlett-Packard	Motorola	Walt Disney
Honeywell	News Corp

The analysis reviews historic compensation rates and realized compensation compared to actual and comparative financial and equity performance.

Actual company performance with respect to growth in revenue and net operating income and total shareholder return was compared to total compensation over a five year period.

Relative company performance was compared to the comparator group, Fortune 50, Fortune 25 and telecommunication and cable companies with respect to total compensation among these respective companies over a 5 year period to test the overall reasonableness of each separate group comparison.

As part of the Committee's process for setting compensation each year, CCA Strategies reviews and summarizes compensation data from the annual analysis and makes recommendations for the Committee to use in determining a market rate for each element of compensation (salary, bonus, and long term compensation) for each executive officer position.

Once the market data is collected, the consultant confers with the Chief Executive Officer as to the Company's views on the relative value of each executive officer position at the Company. The consultant then develops final market rate recommendations for the Committee for each position.

In 2006 the Committee also reviewed a sensitivity analysis prepared by CCA Strategies that analyzed the total value of current compensation and future compensation, including:

     Salary
     Annual incentives
     Long term incentives
     Benefits and perquisites
     Change in control
     Severance

Forecasts were developed of the value of current and future incentive plans projected under threshold, target and optimal company performance including:

     Stock appreciation/depreciation
     Revenue increase/decrease
     Net operating income increase/decrease
     Performance metrics used in incentive plans (threshold, target, maximum)

These forecasts provide the range of potential compensation that executives could receive and permit the Compensation Committee to assess the appropriate level of incentive compensation to be awarded annually.

The consultant presents these market rate recommendations and various studies of executive officer compensation to the Committee.

Compensation Discussion and Analysis

The Human Resources Committee's objective is to develop and maintain compensation packages most likely to attract, retain, motivate, and reward executives. Compensation programs should be sound and consistent with those of other firms of similar size with which we are likely to compete for talent to enable AT&T to employ and retain a high-quality management team.

The Human Resources Committee has adopted the following principles for establishing the amount and form of executive compensation:

     Maximize the alignment of executive compensation with the long-term interests of stockholders;
     Provide competitive compensation to attract, retain and motivate executives;
     Base both short-term bonuses and long-term compensation on performance measures;
     Balance equity-based compensation awarded to executives with the interests of stockholders concerning dilution;
     Establish short-term incentives with a view toward achievement of long-term corporate goals; and
     Provide opportunities for executives to acquire and hold AT&T stock and establish minimum ownership requirements.

The Committee believes that a competitive compensation package should offer:

     A competitive salary
     An annual incentive bonus opportunity
     Long-term compensation tied to company and stock performance
     Tax advantaged opportunities to defer compensation, and
     Pension and other retirement plans.

Compensation

Summary of Compensation The Committee sets compensation levels based on the skills, experience and achievements of each executive officer, taking into account the market rates recommended by CCA Strategies and the compensation recommendations by the Chief Executive Officer, except with respect to his own position. Under this process, we establish compensation for our officers using a combination of salary, annual incentive bonus and long-term incentives. In addition, as other companies do, we provide health and pension plans and other benefits.

Annual Base Salaries Base salaries are designed to attract, retain, motivate and reward competent, experienced executives to operate the business. We emphasize performance based compensation for executive officers, so base salaries are typically less than either target annual bonuses or long term awards. Our executive officers' salaries (other than the Chief Executive Officer) are generally targeted to the 50th percentile of the market, as adjusted for the relative value of the jobs within our Company.

Executives with significant experience and responsibility, who consistently demonstrate exemplary performance, are typically paid more than the market rates set for their position, while less experienced executives may be paid salaries less than the market rates.

The Committee sets Mr. Whitacre's compensation based on his employment contract, discussed on page 46, which requires his total target compensation to be at least what it was in 2001. Mr. Whitacre has been instrumental in reshaping the Company and transforming it into a market-leading global competitor,

and the Committee believes he should be rewarded accordingly. At the time the employment contract was executed, the Committee determined that Mr. Whitacre should be compensated at the then 75th percentile of the market. Because of his long, sustained superior performance, the Committee still believes it is appropriate to pay Mr. Whitacre in accordance with the contract. Mr. Whitacre's salary for 2006 did not change.

Mr. Sigman is the chief executive officer of AT&T Mobility LLC (our wireless subsidiary, formerly known as Cingular Wireless), and his salary and other 2006 compensation was set by the Cingular (now AT&T Mobility) compensation committee pursuant to his employment contract, discussed on page 47.

Short-Term Incentives In 2006, the Committee used annual short-term incentives in the form of performance based annual cash bonuses to compensate the Named Executive Officers as well as other officers. The Committee established performance targets for executive officers using financial and/or operational goals linking compensation to our overall performance. The Committee establishes performance targets after reviewing our business plan and determining the short-term business metrics managers should focus on most in order to drive results. Because of the broad responsibilities of the Named Executive Officers, their targets are tied to Company-wide measures.

Target bonuses for executive officers (except the Chief Executive Officer) were established by generally targeting the 62nd percentile of market for cash compensation (salary plus annual bonus) and then adjusting for the relative value of each position to determine the market rate used by the Committee. By using the 50th percentile for salaries, but the 62nd percentile for total cash compensation (salary and bonus), the Committee emphasizes performance-based compensation over salary.

In determining target bonus amounts, the Committee also considers individual performance, level of responsibility and experience. Bonuses are paid at the Committee's discretion based on the accomplishment of company and/or business unit performance targets set at the beginning of the year and individual performance. As with his base salary, Mr. Whitacre's target bonus is set based on his contract. While his target bonus increased approximately 6% in total from the time of his contract through 2003, it has not increased since that date.

For 2006, the financial and operational targets for short-term awards for the Named Executive Officers, except for Mr. Sigman and Mr. Dorman, were based on net income, free cash flow, customer satisfaction and customer churn (weighted 50%, 30%, 10% and 10%, respectively). Similar targets were established for non-executive officers. If the objectives are not completely met, the bonuses are reduced, or if certain minimum targets are not met, bonuses are eliminated. The Committee also provided for an extraordinary bonus payment of up to 10% of the short-term award if we achieved aggressive year-over-year revenue targets. The total payout based on financial performance is capped at 125% of the target opportunity.

For the 2006 short-term incentive awards, the Committee determined that the Named Executive Officers had exceeded the net income target of $5,608 million. After excluding earnings resulting from the acquisition of BellSouth for the last two days of the year, we had net income of $7,332 million. Our Free Cash Flow target was $6,956 million, and after adjusting for BellSouth, our actual result was $8,013 million. We did not meet our customer satisfaction targets nor did we meet certain of the customer churn targets as a result of re-branding our businesses under the AT&T name. Under a predetermined formula for the awards, the bonuses were paid at 119% of the target for the Named Executive Officers, together with discretionary awards based on individual performance for certain officers other than the Chief Executive Officer. Because Mr. Dorman was with the Company for only one month in 2006, he received a pro-rated portion of his target award under his employment agreement. Mr. Sigman's bonus was determined in accordance with his AT&T Mobility grant, described under his employment contract on page 47.

While the Committee is not limited in its ability to make discretionary bonus payments, it attempts to do so in accordance with Section 162(m) of the Internal Revenue Code, which permits a company to deduct compensation over $1 million paid to the five most highly paid Named Executive Officers only if the payment is made pursuant to a performance-based award under a stockholder approved plan. At the time the Committee sets performance objectives and payout targets for short-term incentives, it also sets the maximum discretionary payment that may be made if the same performance objectives are achieved. This limit is subject to the same conditions as the target payout: if the targets are not met, then the limit is reduced or eliminated. The Committee is not obligated to make discretionary bonuses, and it uses these bonuses to reward exceptional performance. For 2006 the Committee set discretionary target limits of $15 million for Mr. Whitacre, $3.8 million for Mr. Stephenson, and $2 million for Mr. Lindner and Mr. Ellis. The actual discretionary bonuses for 2006 for these officers were well within these limits (as noted above, Mr. Whitacre received no discretionary bonus) and are set out under "Bonuses" in the Summary Compensation Table.

Long-Term Incentives - Introduction In 2002 and before, the Company granted long-term incentives in the form of 40% performance shares and 60% stock options. A performance share is equal in value to one share of our stock and is paid out at the end of the performance period (typically three years) based on the extent to which the performance goals are met. Officers also receive dividend equivalents on the performance shares equal to the dividends on our common stock. In 2003, the previous Committee modified the mix of those elements to one-third performance shares, one-third stock options and one-third restricted stock. The performance objectives for performance shares granted in 2002 and 2003 were based on a net income target for each year in the three-year performance cycle.

Beginning in 2004, the Committee decided to use performance shares instead of stock options or restricted stock to tie the incentive pay of executives more directly to performance and to minimize the dilution of stockholder interests to which equity-based compensation programs may contribute. The Committee continued that policy in subsequent annual grants. While stock options and time-based restricted stock link an executive's interests to those of stockholders, they do not have a performance component or measure. In addition, current accounting rules cause stock options to be dilutive in calculating earnings per share. Therefore, since 2004 the Committee has exclusively used performance shares as long-term compensation for executive officers. The value of performance shares fluctuates directly with changes in the price of our stock, which ties managers' interests directly to those of stockholders. Performance shares are paid out only to the extent that specific internal financial and/or operational objectives are achieved. No payout is made if minimum objectives are not met. Depending on the terms of the grant, payouts are made in a combination of cash and stock or in cash alone; payouts made in whole or in part in cash reduce dilution caused by the payout of stock alone.

Comparison of the Compensation Elements Used for Delivering Value in Long-Term Compensation Plans
2002 Long-Term Compensation	2003 Long-Term Compensation	2004 and Later Long-Term Compensation
Performance Shares (2002-2004 performance period) Stock Options	Performance Shares (2003-2005 performance period) Stock Options Restricted Stock (vested in 2006)	Performance Shares (2004-2006 and later performance periods)

Long-Term Compensation - Awards in 2006 In 2006, the Committee granted executive officers long-term incentives in the form of performance shares for the 2006-2008 performance period. The Committee determined the total amount of long-term incentives to grant each executive officer (except the Chief Executive Officer) by generally targeting the 50th percentile of the long-term market rates and

then adjusting for the relative value of each position within our Company. Mr. Whitacre's long-term compensation was again set based on his contract.

The Committee also decided to use return on invested capital instead of net income as the long-term performance measure for target awards for grants beginning in 2004. This performance measure is calculated by averaging over the three-year performance period (1) our annual net income before extraordinary items plus after-tax interest expense, divided by (2) the total of the average debt and average stockholder equity for the relevant year. We exclude the effects of mergers over $5 billion. Return on invested capital encourages managers to focus not only on net income, but also to ensure that the company's capital is invested effectively. We believe our targets are reasonable and in the interests of stockholders. While we expect our officers to attain these targets, there can be no assurance of their success.

Another change made by the Committee reduced the potential payout by reducing the cap to 150% from the previous cap of 200%, beginning with the 2004 performance share grants. The chart below shows the performance share grants made by the Committee in 2006.

2006 Long-Term Incentive Grants by the Committee
Officer	Grant Value of Performance Shares
Edward E. Whitacre, Jr.	$22,103,216
Richard G. Lindner	2,866,304
Randall L. Stephenson	4,913,634
James D. Ellis	3,992,341

In setting Mr. Whitacre's long-term compensation, the Committee decided that 75% of his performance shares would be tied to return on invested capital (as described above), and the remaining 25% of the award would be based on the comparison of AT&T's total stockholder return (stock appreciation plus reinvestment of dividends) to relevant companies in the North American Telecom Index. We exclude from this index equipment manufacturers and companies with a market capitalization of under $5 billion, and add several cable and, beginning with the 2006 grants, satellite companies not already in the Index. The following chart shows the potential payouts based on total stockholder return:

AT&T Total Stockholder Return compared to the adjusted North American Telecom Index	Payout Percentage
AT&T is the top company	200%
AT&T in 75 - 99th percentile of the Index	150%
AT&T in 50 - 74.99th percentile of the Index	100%
AT&T in 25 - 49.99th percentile of the Index	50%
AT&T below the 25th percentile of the Index	0% (if results exceed a 20% return, then 10% payout)

In each case, the payout is reduced by 10% if AT&T's total stockholder return is negative

Long-Term Compensation - The Results for the 2004-2006 Performance Period As a preliminary matter, it is important to note that the many strategic acquisitions made over the past decade have reshaped the Company and transformed it into a premier global telecom competitor, creating value for our stockholders. These acquisitions are now coming together, and stockholders are benefiting from our dividends and recent stock price appreciation. In 2006, our stock price increased by 46% and had a total return (including the reinvestment of dividends) of 53%. The wealth of our stockholders increased by over $40 billion in market price and the payment of over $5 billion in dividends from January 1, 2006, through December 29, 2006, immediately before the closing of the BellSouth acquisition.

With respect to the 2004-2006 performance period, the performance goals (return on invested capital) were slightly exceeded by the Named Executive Officers. In accordance with a predetermined formula, 104% of the target performance shares were distributed. The Committee also determined that for awards for the 2004-2006 performance period using the AT&T Total Stockholder Return measurement, the Company was in the top half of the index, surpassing 59% of the other companies. Mr. Whitacre received a payout of 100% of the target performance shares tied to this measurement, representing 25% of his target shares. See Total Stockholder Return chart above.

In addition, in 2005 the Committee made two special long-term incentive grants to Mr. Whitacre in connection with two "transforming" acquisitions that were led by him: the acquisition of AT&T Wireless in late 2004 by our AT&T Mobility LLC subsidiary (owned 60% by AT&T Inc. before AT&T Inc. acquired BellSouth in 2006, making AT&T Inc. the sole owner of AT&T Mobility) and the 2005 acquisition of AT&T Corp., the former parent of the Company, allowing the Company to become an end-to-end provider for major companies in the United States and expand its global reach.

In connection with the acquisition of AT&T Wireless, the Committee granted an incentive award to Mr. Whitacre that would be directly tied to the anticipated benefits of the acquisition. The award provided that unless our share of the cumulative pre-tax income for the 2005-2006 performance period met or exceeded the projections upon which the Board voted to proceed with the transaction, there would be no payout on the incentive award. If the results met the original projections, Mr. Whitacre would receive 50% of the target award. If the results exceeded the original projections by up to approximately $1.5 billion (representing our then 60% ownership of AT&T Mobility), he could receive up to 100% of the award. The award was capped at 100%. The achieved results, which included significant operational improvements and synergies, exceeded the amount required to realize the 100% payout.

In addition, in connection with the acquisition of our former parent, AT&T Corp, the Committee granted Mr. Whitacre and Mr. Ellis incentive awards tied to anticipated benefits of that acquisition. The grants are for the 2006-2007 performance period. Under the awards, Mr. Whitacre and Mr. Ellis will receive no payout unless the cumulative pre-tax income of our wireline and parent operations over the performance period reach the original projections used by the Board in approving the transaction. If the original projections are met, they will receive 50% of the award. If they exceed the original projections by up to approximately $1.45 billion, they could receive up to 100% of the award. The award is capped at 100%. We are currently on track to exceed the amount required for 100% payout.

Payouts for Mr. Sigman and a portion of the payouts for Mr. Lindner for the 2004-2006 performance period were made pursuant to awards granted by the AT&T Mobility Board in 2004. Mr. Lindner was Chief Financial Officer until mid-2004 and Mr. Sigman has been Chief Executive Officer of AT&T Mobility since 2002. Based on meeting their performance targets, they received a payout of 100% of their performance units. Because the performance units are not tied to equity, the full payout amount is shown under "Non-Equity Incentive Award Compensation" in the Summary Compensation Table. The awards are described in the Narrative Disclosure to the Summary Compensation Table and Grants Of Plan-Based Awards Table under the description of Mr. Sigman's employment contract. In addition, Mr. Sigman's 2004 grant of restricted stock units vested at the end of 2006 and was paid in cash based on the closing price of AT&T stock in February 2007. Mr. Lindner's 2003 and 2004 grants of restricted stock units by AT&T Mobility were converted into AT&T restricted stock when he rejoined AT&T; the 2003 grant vested in 2006 and the 2004 grant will vest in 2007.

Because Mr. Dorman was an executive officer of AT&T Corp at the time of its acquisition, his long-term incentive awards were pro-rated and paid out and his restricted stock was vested immediately after the acquisition in accordance with the acquired company's change in control plans. As a result, he earned no long-term payouts in 2006.

Post-Retirement Benefits As with other large companies, we offer post-retirement benefits to substantially all of our employees, including each of the Named Executive Officers. AT&T also offers supplemental retirement benefits under non-qualified pension plans to officers as a retention tool. Additional information on post-retirement benefits can be found on page 56, in the narrative following the Pension Benefits table.

Deferral Opportunities and Other Benefits We believe in order to remain competitive in the employment market, it is appropriate to offer deferral plans and other benefits. Our deferral plans provide managers with tax advantaged opportunities for savings. In addition, we use our deferral plans as a way to encourage our managers to invest in and hold AT&T stock. Our tax-qualified 401(k) plan offers substantially all employees the opportunity to defer income through a tax advantaged program, including investing in AT&T stock. We match 80% of the employee contributions with a matching contribution, limited to the first 6% of compensation.

Our principal non-tax qualified deferral program is the Stock Purchase and Deferral Plan. Under that plan, mid-level managers and above may annually elect to defer up to 30% of their salary and annual bonus (officer level managers, including the Named Executive Officers, may contribute up to 100% of their annual bonus) into monthly purchases of AT&T stock at fair market value on a deferred basis. For each share purchased, the participant receives two stock options with a grant price equal to the fair market value of the stock when the options are issued. In addition, participants receive matching shares in AT&T stock at substantially the same matching rate as that in the 401(k) plan, unless they elect to receive their match in the 401(k) plan. Officer level employees do not receive matching shares on the contribution of their bonuses to either plan. Managers may also defer the receipt of stock awards under the Stock Purchase and Deferral Plan, but they do not receive stock options or matching contributions in connection with these deferrals.

Managers may also defer cash compensation through the Cash Deferral Plan. Base compensation (salary and bonus) may be contributed only if a 15% contribution is made to the Stock Purchase and Deferral Plan. The Cash Deferral Plan pays interest at the Moody's Long Term Corporate Bond Yield Average, which is a common index used by companies for deferral plans. The Securities and Exchange Commission requires disclosure in the Summary Compensation Table of earnings on deferred compensation that exceed an amount set by the SEC. Our interest rate, over time, approximates the SEC rate.

These plans as well as previous plans are described under the "Nonqualified Deferred Compensation" table.

As a provider of telecommunications and entertainment services, we want all our employees to use our services. As a result we offer these services at reduced or at no cost to employees. Services provided to the Named Executive Officers are at no cost. We also provide various benefits to our officers that are often offered by other companies, such as financial counseling, estate planning, and the use of a car or an equivalent benefit. We pay income and employment taxes that result from these programs, other than car allowances.

We use private aircraft in our business. It provides security to our officers and facilitates doing business while traveling. For the same reasons, we also permit limited occasional use of the aircraft for personal use with approval of the Chief Executive Officer. The officers are responsible for any applicable taxes incurred from the personal use of the aircraft. These personal and other benefits are described in the notes to the Summary Compensation Table, on page 43.

Stock Ownership Guidelines

The Committee has established stock ownership guidelines for the Chief Executive Officer, other executive officers, and all other officer level employees. The guidelines were increased in 2005 to a minimum level of ownership of five times base salary for the Chief Executive Officer and were continued at the lesser of three times base salary or 50,000 shares for other executive officers and the lesser of one times base salary or 25,000 shares for all other officers. Newly appointed officers are expected to be in compliance with the ownership guidelines within five years of their appointments. We believe all officers subject to these guidelines are in compliance.

Limit on Deductibility of Certain Compensation

Federal income tax law prohibits publicly held companies, such as AT&T, from deducting certain compensation paid to a Named Executive Officer that exceeds $1 million during the tax year. To the extent that compensation is based upon the attainment of performance goals set by the Committee pursuant to plans approved by the stockholders, the compensation is not included in the limit. The Committee intends, to the extent feasible and where it believes it is in the best interests of AT&T and its stockholders, to attempt to qualify executive compensation as tax deductible where it does not adversely affect the Committee's development and execution of effective compensation plans. For example, to enable bonuses and long-term compensation to be deductible, the Committee makes these awards under incentive plans approved by stockholders as much as possible. Similarly, gains on stock option exercises may be deductible if granted under a stockholder approved plan since they are tied to the performance of the Company's stock price. Salaries and other compensation not tied to performance are not deductible to the extent they exceed the $1 million limit.

Policy on Restitution

AT&T's Code of Business Conduct reaffirms the importance of high standards of business ethics. Adherence to these standards by all employees is the best way to ensure compliance and secure public confidence and support. All employees are responsible for their actions and for conducting themselves with integrity. Any failure on the part of any employee to meet any of the standards embodied in this Code of Business Conduct will be subject to disciplinary action, including dismissal.

We reserve the right and, if appropriate, will seek restitution of any bonus, commission, or other compensation received by any employee as a result of the employee's intentional or knowing fraudulent or illegal conduct, including the making of a material misrepresentation contained in the Company's financial statements.

Employment Contracts

We have entered into employment contracts with certain Named Executive Officers. The material provisions of these contracts are discussed in the narrative following the Grants of Plan-Based Awards Table, on page 46.

Compensation Committee Report

Although recent changes by the Securities and Exchange Commission in the proxy statement rules have substantially reduced the requirement of a report from the Human Resources Committee, the Committee continues to believe it is important to take this opportunity to express our thoughts on compensation directly to stockholders.

In 2003, the Board of Directors adopted a number of corporate governance initiatives, including a new Code of Ethics, new Corporate Governance Guidelines and a new committee devoted to corporate governance matters and Director nominations. Previously, the Human Resources Committee had carried out many of the new committee's functions, and the Board determined to move all the members of the then Human Resources Committee to the new Corporate Governance and Nominating Committee. As a result, new members were appointed to the Human Resources Committee in March 2003.

Upon assuming office in 2003, the current Committee undertook a comprehensive review of the executive compensation program, including the use of salaries, short-term bonuses and long-term incentive awards. The Committee, assisted by consultants, analyzed current compensation trends, studied published recommendations of respected business organizations on the subject of executive compensation, reviewed proxy statements of other companies, and compared our program to those of other leading companies. The Committee also solicited input from former members of the Committee and the Board of Directors. Because annual compensation had been set the preceding January, the new Committee first was able to affect annual compensation in January 2004.

In 2001, the previous Committee initiated and approved an Employment Contract to retain Mr. Whitacre as the Chief Executive Officer of AT&T for a period of five years which coincided with his reaching the normal retirement age of 65. The Employment Contract was subsequently reviewed and approved by the Board of Directors, effective November 16, 2001.

During 2004, the Committee conducted a review of the Employment Contract with the assistance of independent outside consultants. The target compensation established in 2001 was analyzed based on 2001 market data, CEO employment agreements for other telecommunication companies and then current market data. Based on this review and the competitive demand for CEOs in the telecommunications industry, the Committee determined that the 2001 target compensation levels were appropriate.

The contract was entered into at a time when telecommunications and technology companies were, in general, performing well and in favor with investors. Equity markets were at an all-time high, which drove compensation packages. Compensation for experienced CEOs was at especially high levels. It was not clear which companies were going to emerge as "winners." Several major companies were searching for new CEOs. The Committee at the time was facing an extraordinarily competitive environment for executives with proven track records in telecommunications and technology.

The provisions of the contract, including the post-retirement benefits and the stipulation that salary and incentive targets not be reduced, were consistent with compensation practice for long-serving and successful CEOs at the time.

In March 2006, this Committee determined it was in the best interest of the stockholders to extend the contract to April 2008, without change, to allow the successful integration of the then completed AT&T Corp acquisition and the then pending BellSouth acquisition. Mr. Whitacre has served as CEO since 1990, an unusually long and successful tenure during which he accumulated benefits over this entire time period. The increase in his compensation for 2006 is directly a result of the increase in the stock

price which rose 46% in 2006. The Committee believes that the continued employment of Mr. Whitacre was a major factor in the Company's success. We believe the Company's current position as the industry leader demonstrates that our confidence in his leadership was justified.

The Committee also found that our compensation programs were sound and consistent with those of other companies of similar size. Our programs enabled us to attract and retain a high quality management team. An individual and business unit performance evaluation system based upon financial and non-financial objectives was in place and rigorously followed. The Committee also determined that there were opportunities to tie the incentive pay of executives more directly to performance and to minimize dilution from equity-based compensation programs.

To make our compensation programs even more beneficial to our stockholders, the Committee implemented certain changes in the compensation program, including:

Replaced stock options and restricted stock with performance shares as long term compensation. Unlike options and restricted stock, performance shares are not only tied in value to the price of the stock, but allow the Committee to require attainment of performance standards as a condition of payment of the award.

Adopted return on invested capital as the principal long-term performance measure in lieu of net income. This change is designed to encourage managers to focus not only on net income, but also on ensuring capital is invested effectively. For the CEO, the Committee used total stockholder return as a performance measure for 25% of his award in order to measure our performance against that of other companies in the industry.

Replaced the Change in Control agreements with a plan that provides, among other things:

- Payment of 2.99 times salary and target bonus upon termination of employment for officers. This change removed long term compensation from the calculation and made the 2.99 multiplier applicable to all officers, where some officers previously had a multiple of three times compensation and others had a multiple of two times compensation - Provided that in a merger of the Company, the change in control is deemed to occur at closing of the transaction, not upon a stockholder vote - Provided that we would only pay excise taxes (and all taxes resulting from the payment of the excise taxes) to the extent the excise taxes were incurred because of prior deferrals of income by an officer.

Reduced the target supplemental retirement percentage to 50% for all new participants.

The Committee has also established a set of principles, set forth in the Compensation Discussion and Analysis on page 32, that the Committee uses in setting compensation.

The Committee also notes that it is aware of allegations at other companies about back-dating of stock options. The Committee disapproves of such conduct and has not found any such impropriety at AT&T. The Company has strong ethical requirements of its employees, including pre-clearance of trading in AT&T stock by officers.

The Human Resources Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussions, the Human Resources Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in AT&T's Annual Report on Form 10-K and Proxy Statement for filing with the Securities and Exchange Commission.

February 13, 2007

The Human Resources Committee:

James A. Henderson, Chairman	Mrtin K. Eby, Jr.
Gilbert F. Amelio	Ptricia P. Upton
James H. Blanchard

Compensation Tables

Summary Compensation Table

The table below contains information concerning the compensation provided to the Chairman of the Board and Chief Executive Officer, the Senior Executive Vice President and Chief Financial Officer, and the other most highly compensated executive officers of AT&T (the "Named Executive Officers").

Name and Principal Position	Year	Salary	Bonus	Stock Awards ⁽¹⁾	Option Awards ⁽²⁾ ⁽³⁾	Non-Equity Incentive Plan Compensation	Change in Pension Value and Nonqualified Deferred Compensation Earnings⁽⁴⁾
Edward E. Whitacre, Jr. ⁽⁶⁾Chairman and Chief Executive Officer	2006	$2,100,000	$0	$46,790,044	$62,801	$6,783,000	$ 4,529,134
Richard G. Lindner ⁽⁶⁾Senior Executive Vice President and Chief Financial Officer	2006	677,833	300,000	2,932,824	141,119	1,914,050	1,656,860
Stanley T. Sigman President and Chief Executive Officer-Wireless	2006	1,152,500	360,000⁽⁷⁾	14,325,408	4,190,186	5,085,000	2,278,189
Randall L. Stephenson ⁽⁶⁾Chief Operating Officer	2006	946,167	400,000	6,440,549	509,395	2,023,000	4,071,367
James D. Ellis ⁽⁶⁾Senior Executive Vice President and General Counsel	2006	819,000	1,000,000	6,767,792	398,129	1,103,130	1,028,399
David W. Dorman	2006	114,167	174,534⁽⁷⁾	0	0	0	18,812,442
Retired - President

Name and Principal Position	All Other Compensation⁽⁵⁾	Total
Edward E. Whitacre, Jr. ⁽⁶⁾Chairman and Chief Executive Officer	$461,945	$60,726,924
Richard G. Lindner ⁽⁶⁾Senior Executive Vice President and Chief Financial Officer	125,681	7,748,367
Stanley T. Sigman President and Chief Executive Officer-Wireless	1,173,247	28,561,530
Randall L. Stephenson ⁽⁶⁾Chief Operating Officer	192,151	14,582,629
James D. Ellis ⁽⁶⁾Senior Executive Vice President and General Counsel	201,357	11,317,807
David W. Dorman Retired - President	25,608,987	44,710,130

1. The amounts in this column do not necessarily represent the value of the awards granted, nor are they a prediction of what will be paid to the employee. The amounts in this column represent the expense taken by the Company in 2006 for portions of stock-based awards granted in 2004, 2005 and 2006 that mature in 2006 or later. Under generally accepted accounting principles, we are required to accrue the expense of the award ratably over the period the award is earned. Under Securities and Exchange Commission rules, if the award is payable in stock, we are required to use the grant date value, which may be adjusted for performance in the case of performance shares, without including dividends or any increase in the value of the stock. In contrast, if the award is payable in cash but based on the price of AT&T stock, we are required by these rules to include in the calculation any increase in the price of AT&T stock during 2006 with respect to the accrued portion of the award as well as any dividend equivalents. Simply paying an award in the form of cash creates a significant difference in the amount included in the column for an officer. Because of the 46% increase in the price of AT&T stock during 2006, the amounts reported for awards under this column increased significantly. If the amounts related to the increase in the stock price and the dividend equivalents are excluded, the reported amounts under this column would be as follows: Mr. Whitacre--$26,638,972, Mr. Lindner--$2,094,990, Mr. Sigman--$7,629,320, Mr. Stephenson--$4,339,375, and Mr. Ellis--$4,606,634.

2. Assumptions used for determining the value of the option awards reported in these columns are set forth in the 2006 AT&T Annual Report to Stockholders in footnote 11, "Stock-Based Compensation," on pages 72-74. Because Mr. Sigman's awards were granted by AT&T Mobility, which as a partnership was required to use FAS 133 to value its awards, we have used the same value for Mr. Sigman in this column. 3. The values included in this column, except for Mr. Sigman, represent stock options acquired under the Stock Purchase and Deferral Plan, described in the narrative following the Nonqualified Deferred Compensation table Mr. Sigman's amount represents the increase in value of his stock appreciation rights determined under FAS 133. The amounts were determined by AT&T Mobility, which as a partnership was required to use FAS 133. 4. Under this column, we are required to report deferred compensation earnings on salary and other incentive awards that the individual elects to defer where the earnings exceed a market rate specified by Securities and Exchange Commission rules. For the Named Executive Officers, these amounts are as follows: Mr. Whitacre--$268,019, Mr. Lindner--$88,757, Mr. Sigman--$66,009, Mr. Stephenson--$560, and Mr. Ellis--$124,353. All other amounts reported under this heading represent the increase in pension actuarial value. 5. This column includes personal benefits and other items shown in the table below. In valuing personal benefits, AT&T uses the incremental cost to the Company of the benefit. To determine the incremental cost of aircraft usage, we multiply the number of hours of personal flight usage by the average hourly cost of fuel, oil, maintenance and line service and add per flight fees, such as landing, ramp and hangar fees, catering, and crew travel costs. With respect to Mr. Sigman, the incremental cost of aircraft usage was determined by AT&T Mobility by multiplying the number of hours of personal flight usage by the average hourly cost of fuel, oil, maintenance and miscellaneous aircraft expenses.

Personal Benefits	Whitacre	Lindner	Sigman	Stephenson	Ellis	Dorman
Financial counseling (including tax preparation)	$ 14,000	$ 14,000	$ 10,380	$ 14,000	$ 14,000	$55,680
Estate planning	0	0	492	0	11,711	0
Auto benefits	26,889	18,248	14,642	14,932	14,210	6,260
Personal use of company aircraft	38,214	0	213,406	45,958	39,069	76,649
Supplemental health insurance premiums	10,548	9,816	10,548	9,816	9,938	6,461
Payment of health insurance premiums for family members	0	0	0	0	0	4,419
Club membership	24,505	7,494	0	8,355	6,141	0
Relocation	0	23,387	0	0	0	0
Other (communications and security)	7,923	7,619	3,384	7,002	2,011	0
Total Personal Benefits	$122,079	$ 80,564	$252,852	$100,063	$ 97,080 $	149,469

Tax reimbursements	$ 25,384	$ 12,847	$731,000	$9,359	$ 10,867	$14,228,673
Company matching contributions to deferral plans	100,800	32,270	125,748	45,370	39,264	0
Life insurance premiums applicable to the employees' death benefit *	213,682	0	63,647	37,359	54,146	65,362
Severance payments	0	0	0	0	0	11,165,483
Total	$461,945	$125,681	$1,173,247	$192,151	$201,357	$25,608,987

*We pay recoverable premiums on company-owned split dollar life insurance that provides a specified death benefit to the named executive officer equal to a multiple of his salary as follows:

Mr. Whitacre--4, Mr Ellis--3, all other named executive officers--2, less $50,000 that is provided under the group life insurance plan. We also pay a portion of the premium for optional additional coverage equal to two times salary, except for Mr. Lindner. The policies also provide a benefit to the Company that equals or exceeds all of the premiums paid, thereby allowing the Company to recoup all of the premiums. If the policies are not fully funded upon the retirement of the officer, we continue to pay premiums until they are fully funded. Mr. Dorman did not participate in this program, but had officer-owned insurance provided by AT&T Corp.

6. Consistent with Company policy to encourage ownership of Company stock, certain of the Named Executive Officers deferred portions of their 2006 salary and/or bonus (non-equity incentive awards) into the Stock Purchase and Deferral Plan, described under "Deferral Opportunities and Other Benefits" on page 37, to make monthly purchases of Company stock in the form of stock units based on the price of the underlying AT&T stock as follows: Mr. Whitacre--$126,000, Mr. Lindner--$737,188, Mr. Stephenson--$1,983,563, and Mr. Ellis--$1,172,401. Each unit that the employee purchases is paid out in the form of a share of AT&T stock at the times elected by the employee In addition, the officers received matching contributions and stock options based on the number of share units purchased; the value of the matching contributions is included under "All Other Compensation" and the stock option valuations are included under "Option Awards."

7. All of Mr. Dorman's bonus and $160,000 of Mr. Sigman's bonus were paid solely pursuant to their respective employment agreements.

Grants of Plan-Based Awards

		Estimated Possible Payouts Under Estimated Future Payouts Under Non-Equity Incentive Plan Awards Equity Incentive Plan Awards
Name	Grant Date	Threshold ($)	Target ($)	Maximum ($)	Threshold (#)	Target (#)	Maximum (#)	All Other Stock Awrds: Number of Shares of Stock or Units (#)	All Other Option Awards: Number of Securities Underlying Opitons ⁽¹⁾ (#)
Edward E. Whitacre, Jr.	1/26/06	0	5,700,000	7,125,000	0	866,453	1,407,986	-	-
	2/15/06	-	-	-	-	-	-	-	6,841
	6/15/06	-	-	-	-	-	-	-	3,550
Richard G. Lindner	1/26/06	0	900,000	1,125,000	0	112,360	168,540	-	-
	2/15/06	-	-	-	-	-	-	-	9,892
	6/15/06	-	-	-	-	-	-	-	25,867
Stanley T. Sigman	2/15/06	0	1,462,500	2,193,750	-	-	-	-	-
	4/1/06	-	-	-	0	139,429	209,144	-	-
	4/1/06	-	-	-	-	-	-	69,924	-
Randall L. Stephenson	1/26/06	0	1,700,000	2,125,000	0	192,616	288,924	-	-
	2/15/06	-	-	-	-	-	-	-	19,405
	6/15/06	-	-	-	-