July 11 (Bloomberg) -- Edward Whitacre, who retired as chief executive officer of AT&T Inc. on June 2, underperformed the Standard & Poor's 500 Index during his entire 17 1/2 years of running the company. For that stellar performance, his eventual total pay may come to as much as $517 million. And that's only for the last 13 years.

With the exception of 2006, Whitacre's performance for shareholders was consistent, as in consistently poor.

He became CEO in January 1990. From Dec. 31, 1989, until his last day on the job, cumulative total return was 394 percent versus a cumulative return of 528 percent for the S&P 500.

Last year was a banner year for AT&T, with total return of 53 percent against 16 percent for the index.

If 2006 is disregarded and AT&T's cumulative total return is measured from Dec. 31, 1989, to Dec. 31, 2005, it declines to 180 percent versus 397 percent for the S&P 500.

To get a closer look at Whitacre's performance, I measured his total return in 17 time windows, stretching from 17 years to one year, with all ending on Dec. 31, 2006. He managed to beat the S&P 500 in only three of those windows, the three narrowest ones, and only because of that tremendous return in 2006.

So, did Whitacre do anything for his shareholders?

Well, he sure made the company a lot larger. He seemed to lead a single-handed effort to restore the company to its status prior to Jan. 1, 1984, when AT&T Corp., with its operating subsidiaries, was the world's largest corporation, with 1 million employees.

The Breakup

Then the company, after being pursued for years by the U.S. Justice Department, consented to be broken into seven so-called Baby Bells and what was left of the original AT&T.

Six years after the AT&T breakup, Whitacre became CEO of one of those Baby Bells, Southwestern Bell Corp.

Seven years after that, he acquired another Baby Bell, Pacific Telesis Group, and renamed his company SBC Communications Inc.

Two years later, he gobbled up Ameritech Corp. And in 2006, he pickup up BellSouth Corp. Over a nine-year period, he had put together four of the seven Baby Bells.

Along the way, in 2005, he acquired the remainder of AT&T and renamed his consolidated company AT&T Inc. The company is now based in San Antonio.

As for his compensation, Whitacre's board swooned over his empire building and rewarded him accordingly.

Here is Whitacre's cumulative pay from 1994 through 2006. (The U.S. proxy disclosure system changed, effective in 1994, and the figures from earlier years aren't readily comparable):

* $21 million in base salary.

* $58 million in bonuses.

* Free share grants worth $16 million at the time they were granted.

* Option gains of $47 million.

* Payouts under other long-term incentive plans of $37 million.

Unexercised Shares

* Miscellaneous compensation of $46 million.

* A pension with a lump-sum value at retirement of $85 million. (Not all of this figure is solely attributable to Whitacre's last 13 years of employment.)

Those numbers round to $309 million.

And there's more.

* As of Dec. 31, 2006, Whitacre was holding 9.2 million unexercised option shares. Assuming that future stock price growth, measured from the $39.50 close on July 10, will be 5.85 percent a year (which is the anticipated appreciation rate for the stock), Whitacre, if he waits until his options expire, will clear another $133 million of gains.

* He also has some presently unvested long-term incentive grants with performance periods stretching to the end of 2008. If his company performs merely at ``target'', never mind delivering ``maximum'' performance, Whitacre stands to receive payouts totaling another $75 million based on the company's current stock price.

That adds up to $517 million, and it doesn't include what Whitacre received or will receive in 2007 for his last five months as CEO.

You can't single out any outside directors as being responsible for this loathsome outcome because none of them served on the board compensation committee for the full period of my analyses.

One thing we know for sure: The board compensation committee just loved Ed Whitacre, so much so that they forgot who they and Whitacre worked for, the company's shareholders.

(Graef Crystal is a columnist for Bloomberg News. The opinions expressed are his own.)

To contact the writer of this column: Graef Crystal in Las Vegas at at graefc@bloomberg.net.

Last Updated: July 11, 2007 00:02 EDT