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shareholders who were glad to see Mike Armstrong departing will surely be pleased to learn he's getting a nice parting gift.

The company said Monday that it rewarded ex-chief C. Michael Armstrong, architect of a failed foray into cable that ended in the telco's four-way breakup and a humiliating reverse stock split, with a $2.5 million "completion bonus."

The company revealed the payout in its annual report, filed Monday with regulators. The company attributed the ample reward to Armstrong's "successful spin-off of AT&T Broadband and the close of the merger with



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And who could fault AT&T's board for giving Armstrong a little walking-around money, considering his nearly six-year tenure and impressive list of accomplishments?

After all, it's not everyone who can completely change a company's focus -- and then, billions of dollars of shareholder losses later, change it right back.

In the fall of 1997, Armstrong took the foundering phone giant and undertook a giant effort to refashion it into the nation's largest phone and cable company. But the resulting conglomerate failed to deliver on the promise of the all-in-one communications shop.

So after spending a gargantuan sum, nearly $100 billion by some counts, to buy cable companies such as TCI and MediaOne, Armstrong reversed field with a dramatic decision to split the company into four component parts: business services, consumer phone, wireless and cable. Armstrong and the cable business later landed in the hands of Comcast.

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AT&T's recent struggle

Shares of AT&T, on a split and reverse-split adjusted basis, were trading at about $46 on Oct. 20, 1997, when Armstrong was tapped to run the company. In little more than a year, the stock topped $100 as Wall Street bought into Armstrong's makeover plan. But that was more or less the end of the good times for AT&T holders, who will notice that their shares closed Monday at $16.20.

As some supporters said Monday, "$2.5 million is just a drop in the bucket for AT&T." Indeed, Armstrong made $4 million in cash salary and bonus in 2001.