SCHEDULE 14A INFORMATION
          Proxy Statement Pursuant to Section 14(a) of the Securities
                     Exchange Act of 1934 (Amendment No. )

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      (as permitted by Rule 14a-6(e)(2))
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                                      AT&T
- -------------------------------------------------------------------------------
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      14a-6(i)(3).

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[AT&T LOGO]


- -----------------------------------
1997
Notice of
Annual Meeting
and
Proxy Statement
- -----------------------------------







Wednesday, May 21, 1997
at 9:30 a.m. local time
Meadowlands Exposition Center
355 Plaza Drive
Secaucus, New Jersey





                               NOTICE OF MEETING

     The 112th Annual Meeting of Shareholders of AT&T Corp. (the "Company") will
be held at the Meadowlands Exposition Center, 355 Plaza Drive, Secaucus, New
Jersey, on Wednesday, May 21, 1997, at 9:30 a.m. local time, for the following
purposes:


     [bullet] To elect Directors for the ensuing year (page 6);

     [bullet] To ratify the appointment of auditors to examine the Company's
accounts for the year 1997 (page 12);

     [bullet] To approve the AT&T 1997 Long Term Incentive Program (page 13);

     [bullet] To act upon such other matters, including shareholder proposals
(page 24), as may properly come before the meeting.

     Holders of common shares of record at the close of business on April 1,
1997 will be entitled to vote with respect to this solicitation.

                                              Marilyn J. Wasser
                                              Vice President - Law and Secretary

April 1, 1997




                                                     [AT&T LOGO]




                                                     32 Avenue of the Americas
                                                     New York, NY 10013-2412

Robert E. Allen
Chairman of the Board

                                                                   April 1, 1997

Dear Shareholder:

     It is a pleasure to invite you to your Company's 1997 Annual Meeting in
Secaucus, New Jersey, on Wednesday, May 21, beginning at 9:30 a.m. local time,
at the Meadowlands Exposition Center. This will be AT&T's 112th Annual Meeting
of Shareholders. If you plan to attend the meeting, an admission ticket will be
required and is attached to the proxy card. For your convenience, a map of the
area and directions to the Center are printed on the back of the admission
ticket.

     The Center is fully accessible to disabled persons, and we will provide
hearing amplification and sign interpretation for our hearing-impaired
shareholders.

     Whether you own a few or many shares of stock and whether or not you plan
to attend in person, it is important that your shares be voted on matters that
come before the meeting. I urge you to specify your choices by marking the
enclosed proxy card and returning it promptly in the envelope provided. If you
sign and return your proxy card without specifying your choices, it will be
understood that you wish to have your shares voted in accordance with the
Directors' recommendations.


     Thank you for your interest.

                                            Sincerely,


                                            /s/ R.E. Allen



AT&T Corp.
Executive Offices
32 Avenue of the Americas
New York, NY 10013-2412

                                PROXY STATEMENT

     This proxy statement and the accompanying proxy/voting instruction card
(proxy card) are being mailed beginning April 1, 1997 to holders of common
shares in connection with the solicitation of proxies by the Board of Directors
for the 1997 Annual Meeting of Shareholders in Secaucus, New Jersey. Proxies are
solicited to give all shareholders of record at the close of business on April
1, 1997 an opportunity to vote on matters that come before the meeting. This
procedure is necessary because shareholders live in all states and abroad and
most will not be able to attend. Shares can be voted only if the shareholder is
present in person or is represented by proxy.

     When your proxy card is returned properly signed, the shares represented
will be voted in accordance with your directions. You can specify your choices
by marking the appropriate boxes on the enclosed proxy card. If your proxy card
is signed and returned without specifying choices, the shares will be voted as
recommended by the Directors. Abstentions marked on the proxy card are voted
neither "for" nor "against," but are counted in the determination of a quorum.

     If you wish to give your proxy to someone other than the Proxy Committee,
all three names appearing on the enclosed proxy card must be crossed out and the
name of another person or persons (not more than three) inserted. The signed
card must be presented at the meeting by the person or persons representing you.
You may revoke your proxy at any time before it is voted at the meeting by
executing a later-dated proxy, by voting by ballot at the meeting, or by filing
an instrument of revocation with the inspectors of election in care of the Vice
President - Law and Secretary of the Company at the above address.

                                       1




     Your vote is important. Accordingly, you are urged to sign and return the
accompanying proxy card whether or not you plan to attend the meeting. If you do
attend, you may vote by ballot at the meeting, thereby canceling any proxy
previously given.

     As a matter of policy, proxies, ballots, and voting tabulations that
identify individual shareholders are kept private by the Company. Such documents
are available for examination only by the inspectors of election and certain
personnel associated with processing proxy cards and tabulating the vote. The
vote of any shareholder is not disclosed except as may be necessary to meet
legal requirements.

Voting Shares Held in Dividend Reinvestment
and Savings Plans

     If a shareholder is a participant in the AT&T Shareowner Dividend
Reinvestment and Stock Purchase Plan ("DRISPP") or the AT&T Employee Stock
Purchase Plan ("ESPP"), the proxy card will represent the number of full shares
in the DRISPP and the ESPP accounts on the record date, as well as shares
registered in the participant's name. If an employee shareholder is a
participant in the AT&T Employee Stock Ownership Plan, AT&T Long Term Savings
Plan for Management Employees, AT&T Long Term Savings and Security Plan, AT&T
Retirement Savings and Profit Sharing Plan, AT&T of Puerto Rico, Inc. Long Term
Savings Plan for Management Employees, AT&T of Puerto Rico, Inc. Long Term
Savings and Security Plan, Lucent Long Term Savings Plan for Management
Employees, Lucent Long Term Savings and Security Plan, Lucent Retirement Savings
and Profit Sharing Plan, AGCS Savings Plan, AGCS Hourly Savings Plan, or AT&T
Capital Corporation Retirement and Savings Plan, the proxy card will also serve
as a voting instruction for the trustees of those plans where all accounts are
registered in the same name. If cards representing shares in the above-named
plans are not returned, those shares will not be voted except for shares in the
employer shares fund in the AT&T Long Term Savings and Security Plan which will
be voted by the trustee of the Plan.

                                       2





Annual Meeting Admission

     If you are a registered owner and plan to attend the meeting in person,
please detach and retain the admission ticket which is attached to your proxy
card and return the proxy card with the "Annual Meeting" box marked. A
beneficial owner who plans to attend the meeting may obtain an admission ticket
in advance by sending a written request, with proof of ownership, such as a bank
or brokerage firm account statement, to: Manager - Proxy, AT&T Corp., 295 North
Maple Avenue, Room 1203P1, Basking Ridge, New Jersey 07920-1002. Admittance to
the annual meeting will be based upon availability of seating.

     Shareholders who do not present admission tickets at the meeting will be
admitted upon verification of ownership at the admissions counter.

     Highlights of the meeting will be included in a mid-year report to
shareholders. Information on obtaining a full transcript of the meeting will
also be included in the mid-year report.

     Securities and Exchange Commission ("SEC") rules require that an annual
report precede or be included with proxy materials. Shareholders with multiple
accounts may be receiving more than one annual report which is costly to AT&T
and may be inconvenient to these shareholders. Such shareholders may authorize
AT&T to discontinue mailing extra reports by marking the "Annual Report" box on
the proxy card for selected accounts. At least one account must continue to
receive an annual report. Eliminating these duplicate mailings will not affect
receipt of future proxy statements and proxy cards. To resume the mailing of an
annual report to an account, please call the AT&T shareholder services number,
1-800-348-8288.

     Comments from shareholders about the proxy material or about other aspects
of the business are welcome. Space is provided on the back of the proxy card for
this purpose. Although such comments will not be answered on an individual
basis, they are analyzed and used to determine what kinds of additional
information should be furnished in various Company publications.

                                       3


     On January 1, 1997, there were 1,623,487,646 shares of AT&T common stock
outstanding. Each common share is entitled to one vote on each matter properly
brought before the meeting.

BOARD OF DIRECTORS

     The Board of Directors has the responsibility for establishing broad
corporate policies and for overseeing the overall performance of the Company.
However, in accordance with corporate legal principles, it is not involved in
day-to-day operating details. Members of the Board are kept informed of the
Company's business through discussions with the Chairman and other officers, by
reviewing analyses and reports sent to them each month, and by participating in
Board and committee meetings.

     The Board held 15 meetings in 1996 and the committees held 21 meetings. The
average attendance in the aggregate of the total number of meetings of the Board
and the total number of committee meetings was 95%.

COMMITTEES OF THE BOARD

     The Board has established a number of committees, including the Audit
Committee, the Compensation and Employee Benefits Committee, and the Directors
and Public Policy Committee, each of which is briefly described below. Other
committees of the Board are: the Executive Committee, the Finance Committee, and
the Proxy Committee (which votes the shares represented by proxies at the annual
meeting of shareholders).

     The Audit Committee meets with management to consider the adequacy of the
internal controls and the objectivity of financial reporting. The committee also
meets with the independent auditors and with appropriate Company financial
personnel and internal auditors about these matters. The committee recommends to
the Board the appointment of the independent auditors, subject to ratification
by the shareholders at the annual meeting. Both the internal auditors and the
independent auditors periodically meet alone with the committee and always have
unrestricted access to the committee. The committee, which consists of five
non-employee Directors, met five times in 1996.

                                       4




     The Compensation and Employee Benefits Committee administers management
incentive compensation plans, including stock option plans, and it keeps
informed and advises the Board as to employee benefit plans. The committee
establishes the compensation structure for senior managers of the Company and
makes recommendations to the Board with respect to compensation of the officers
as listed on page 47. The committee, which consists of five non-employee
Directors, met six times in 1996.

     The Directors and Public Policy Committee advises and makes recommendations
to the Board on all matters concerning directorship and corporate governance
practices, including the compensation of Directors and the selection of
candidates as nominees for election as Directors, and it provides guidance with
respect to matters of public policy. The committee, which consists of four
non-employee Directors, met three times in 1996. The committee recommended this
year's director candidates at the January 1997 Board Meeting.

     In recommending Board candidates, this committee seeks individuals of
proven judgment and competence who are outstanding in their respective fields.
It considers such factors as anticipated participation in Board activities,
education, geographic location, and special talents or personal attributes.
Shareholders who wish to suggest qualified candidates should write to: Vice
President - Law and Secretary, AT&T Corp., 32 Avenue of the Americas, New York,
New York 10013-2412, stating in detail the qualifications of such persons for
consideration by the committee.

COMPENSATION OF DIRECTORS

     Directors who are not employees received an annual retainer of $30,000 and
a fee of $1,500 for each Board, committee, and shareholder meeting attended. The
chairpersons of the Audit Committee, Compensation and Employee Benefits
Committee, and Finance Committee each received an additional annual retainer of
$7,500. Other non-employee Directors who chaired committees received additional
annual retainers of $5,000. Pursuant to the Company's Deferred Compensation Plan
for Non-Employee

                                       5




Directors, 15% of the annual retainer for each non-employee Director was
deferred and credited to a portion of a deferred compensation account, the value
of which is measured from time to time by the value of AT&T common shares (the
"AT&T shares portion"). Directors may have elected to defer the receipt of all
or part of the remainder of their compensation into the AT&T shares portion or
the cash portion of the deferred compensation account (the "cash portion"). The
AT&T shares portion was credited on each dividend payment date for AT&T common
stock with a number of deferred shares of AT&T common stock equivalent in market
value to the amount of the quarterly dividend on the shares then credited in the
accounts. The cash portion of the deferred compensation account earned interest,
compounded quarterly, at an annual rate equal to the average interest rate for
ten-year United States Treasury notes for the previous quarter, plus 5%.
Non-employee Directors with at least five years' service were eligible for an
annual retirement benefit equal to their annual retainer at retirement. The
benefit begins at age 70 and is payable for life. The Company also provided
non-employee Directors with travel accident insurance when on Company business.
A non-employee Director may have purchased life insurance sponsored by the
Company. The Company shared the premium expense with the Director; however, all
the Company contributions will be returned to the Company at the earlier of (a)
the Director's death or (b) the later of age 70 or 10 years from the policy's
inception. This benefit will continue after the non-employee Director's
retirement from the Board.

     Directors who were also employees of the Company or a subsidiary of the
Company received no compensation for serving as Directors.

ELECTION OF DIRECTORS (Item A on Proxy Card)

     The Proxy Committee intends to vote for the election of the ten nominees
listed on the following pages unless otherwise instructed on the proxy card.
These nominees have been selected by the Board on the recommendation of the
Directors and Public Policy Committee. If you do not wish your shares to be
voted for particular nominees, please identify the exceptions in the designated
space

                                       6




provided on the proxy card. Directors will be elected by a plurality of the
votes cast. Any shares not voted (by abstention, broker non-vote, or otherwise)
have no impact on the vote.

     If at the time of the meeting one or more of the nominees have become
unavailable to serve, shares represented by proxies will be voted for the
remaining nominees and for any substitute nominee or nominees designated by the
Directors and Public Policy Committee or, if none, the size of the Board will be
reduced. The Directors and Public Policy Committee knows of no reason why any of
the nominees will be unavailable or unable to serve.

     Directors elected at the meeting will hold office until the next annual
meeting or until their successors have been elected and qualified. For each
nominee there follows a brief listing of principal occupation for at least the
past five years, other major affiliations, and age as of January 1, 1997.

NOMINEES FOR ELECTION AS DIRECTORS


[PHOTO OF ROBERT E. ALLEN]]


Robert E. Allen, Chairman and Chief Executive Officer of AT&T since 1988.
Trustee of Mayo Foundation. Director of U.S.-Japan Business Council; Baldrige
Foundation; Bristol-Myers Squibb Co.; Chrysler Corporation; and PepsiCo, Inc.
Director of AT&T since 1984; Chairman of the Executive Committee and the Proxy
Committee. Age 61.


[PHOTO OF KENNETH T. DERR]]

Kenneth T. Derr, Chairman and Chief Executive Officer of Chevron Corporation
(international oil company) since 1989. Director of Chevron Corporation;
Citicorp; and Potlatch Corporation. Director of AT&T since 1995; member of the
Audit Committee and the Compensation and Employee Benefits Committee. Age 60.

                                       7


[PHOTO OF M. KATHRYN EICKHOFF]

M. Kathryn Eickhoff, President of Eickhoff Economics Inc. (economic consultants)
since 1987. Associate Director for Economic Policy, U.S. Office of Management
and Budget (1985-1987). Director of Fleet Bank, NA; Pharmacia & Upjohn, Inc.;
and Tenneco Inc. Director of AT&T since 1987; member of the Audit Committee and
the Finance Committee. Age 57.


[PHOTO OF WALTER Y. ELISHA]

Walter Y. Elisha, Chairman since 1983 and Chief Executive Officer since 1981 of
Springs Industries, Inc. (textile manufacturing). Director of Springs
Industries, Inc. and Cummins Engine Company, Inc. Director of AT&T since 1987;
Chairman of the Directors and Public Policy Committee and member of the Finance
Committee. Age 64.


[PHOTO OF GEORGE M. C. FISHER]

George M. C. Fisher, Chairman and Chief Executive Officer since 1996 and
Chairman, President, and Chief Executive Officer (1993-1996) of Eastman Kodak
Company (imaging company). Chairman and Chief Executive Officer of Motorola,
Inc. (1990-1993). Vice President of the Board of Directors of the University of
Illinois Foundation and Vice Chairman, The Business Council. Chairman of U.S.
Council on Competitiveness (1991-1993). Elected to American Academy of Arts and
Sciences and the National Academy of Engineers. President's Advisory Council for
Trade Policy and Negotiations (ACTPN). Director of Eastman Kodak Company and
General Motors Corporation. Age 56.

                                       8


[PHOTO OF RALPH S. LARSEN]]

Ralph S. Larsen, Chairman and Chief Executive Officer of Johnson & Johnson
(pharmaceutical, medical, and consumer products) since 1989. Director of Johnson
& Johnson; New York Stock Exchange, Inc.; and Xerox Corporation. Director of
AT&T since 1995; member of the Audit Committee and the Finance Committee. Age
58.





[PHOTO OF DONALD F. McHENRY]




Donald F. McHenry, President of IRC Group (international relations consultants)
since 1981; University Research Professor of Diplomacy and International
Relations, Georgetown University, since 1981. Director of Bank of Boston Corp.
and its subsidiary, First National Bank of Boston; Coca-Cola Co.; International
Paper Co.; and SmithKline Beecham Corp. Director of AT&T since 1986; member of
the Audit Committee, the Compensation and Employee Benefits Committee, and the
Directors and Public Policy Committee. Age 60.





[PHOTO OF MICHAEL I. SOVERN]]




Michael I. Sovern, President Emeritus and Chancellor Kent Professor of Law at
Columbia University; President (1980-1993). President of Shubert Foundation.
Director of Sequa Corp. and Warner-Lambert Company. Director of AT&T since 1984;
Chairman of the Audit Committee and member of the Finance Committee and the
Proxy Committee. Age 65.

                                       9








[PHOTO OF JOHN R. WALTER]




John R. Walter, President and Chief Operating Officer of AT&T since November
1996. Chairman and Chief Executive Officer of R.R. Donnelley & Sons Company
(1989-October 1996). Member International Advisory Council, Singapore Economic
Development Board. Director of Abbott Laboratories; Dayton Hudson Corporation;
and Deere & Company. Director of AT&T since November 1996. Age 49.



[PHOTO OF THOMAS H. WYMAN]




Thomas H. Wyman, Senior Advisor of SBC Warburg Inc.,
Chairman of S.G. Warburg & Co. Inc. (1992-1996), and Vice Chairman of S.G.
Warburg Group plc (1993-1995) (investment banking). Chairman of UB Investments
US Inc. (1989-1996) (food products). Chairman and Chief Executive Officer of CBS
Inc. (1983-1986). William H. Donaldson Faculty Fellow, Yale School of Management
(1987-1989). Director of General Motors Corporation; Hughes Electronics Corp.;
and Zeneca Group plc (U.K.). Director of AT&T since 1981; Chairman of the
Compensation and Employee Benefits Committee; member of the Directors and Public
Policy Committee, the Executive Committee, and the Proxy Committee. Age 67.




                                       10





STOCK OWNERSHIP OF MANAGEMENT AND DIRECTORS

     The following table sets forth information concerning the beneficial
ownership of AT&T common stock as of January 1, 1997 for (a) each current
Director elected to the Board in 1996 and each of the nominees for Director; (b)
each of the named officers (the "named officers" as defined in the Compensation
and Employee Benefits Committee Report, herein) not listed as a Director; and
(c) Directors and executive officers as a group. Except as otherwise noted, the
nominee or family members had sole voting and investment power with respect to
such securities.

                                                Number of Shares
                               -------------------------------------------------
                                  Beneficially        Deferral
    Name                            Owned (1)         Plans (2)       Total
- ----------------------------   ------------------   ------------   ----------
    (a)
Robert E. Allen ............        678,452(3)        109,266        787,718
Kenneth T. Derr    .........          1,000               126          1,126
M. Kathryn Eickhoff   ......          3,000               666          3,666
Walter Y. Elisha   .........          9,715             3,391         13,106
George M. C. Fisher   ......          5,000(4)              0          5,000
Belton K. Johnson  .........          9,516               451          9,967
Ralph S. Larsen ............          1,000             1,657          2,657
Donald F. McHenry  .........          1,171             1,030          2,201
Michael I. Sovern  .........          1,200               451          1,651
John R. Walter  ............         50,000                 0         50,000
Joseph D. Williams .........         20,000                30         20,030
Thomas H. Wyman    .........          1,000             1,570          2,570
     (b)
Harold W. Burlingame  ......        139,762(5)          9,349        149,111
Richard W. Miller  .........        124,648(6)              0        124,648
Lars Nyberg  ...............         21,778(7)              0         21,778
John D. Zeglis  ............        138,279(8)         37,604        175,883
     (c)
Directors and Executive
 Officers as a Group  ......      1,702,017(9)        165,591      1,867,608

Footnotes

   1. No individual Director or nominee for Director or named officer
      beneficially owns 1% or more of AT&T's outstanding common shares, nor do
      the Directors and executive officers as a group.

                                       11



2. Share units held in deferred compensation accounts.

3. Includes beneficial ownership of 566,219 shares which may be acquired within
   60 days pursuant to stock options awarded under employee incentive
   compensation plans.

4. Includes 4,912 shares acquired on February 4, 1997.

5. Includes beneficial ownership of 125,978 shares which may be acquired within
   60 days pursuant to stock options awarded under employee incentive
   compensation plans.

6. Includes beneficial ownership of 111,699 shares which may be acquired within
   60 days pursuant to stock options awarded under employee incentive
   compensation plans.

7. Includes beneficial ownership of 17,289 shares which may be acquired within
   60 days pursuant to stock options awarded under employee incentive
   compensation plans.

8. Includes beneficial ownership of 136,957 shares which may be acquired within
   60 days pursuant to stock options awarded under employee incentive
   compensation plans.

9. Includes beneficial ownership of 1,443,703 shares which may be acquired
   within 60 days pursuant to stock options awarded under employee incentive
   compensation plans.

SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE

     The Company notes that during 1996 one Director and three officers filed
untimely reports on transactions in, or holdings of, AT&T common stock as
follows: Belton K. Johnson, one report regarding one transaction; Gail J.
McGovern and Joseph P. Nacchio, each one report regarding one holding; and John
C. Petrillo, two reports regarding two holdings.

RATIFICATION OF APPOINTMENT OF AUDITORS
(Item B on Proxy Card)

     Subject to shareholder ratification, the Board of Directors, upon
recommendation of the Audit Committee, has reappointed the firm of Coopers &
Lybrand L.L.P. ("Coopers & Lybrand") as the independent auditors to examine the
Company's financial statements for the year 1997. Coopers & Lybrand has audited
the Company's books for many years. Your Directors recommend

                                       12


that shareholders vote FOR such ratification. Ratification of the appointment of
auditors requires a majority of the votes cast thereon. Any shares not voted (by
abstention, broker non-vote, or otherwise) have no impact on the vote. If the
shareholders do not ratify this appointment, other independent auditors will be
considered by the Board upon recommendation of the Audit Committee.

     Representatives of Coopers & Lybrand are expected to attend the annual
meeting and will have the opportunity to make a statement if they desire and to
respond to appropriate questions.

     For the year 1996, Coopers & Lybrand also examined the financial statements
of the Company's subsidiaries and provided other audit services to the Company
and subsidiaries during restructure and in connection with SEC filings, review
of financial statements, and audits of pension plans.


                    ---------------------------------------

DIRECTORS' PROPOSAL TO APPROVE THE AT&T 1997 
LONG TERM INCENTIVE PROGRAM
(Item C on Proxy Card)

  In January 1997, the Board of Directors approved, subject to shareholder
approval, the AT&T 1997 Long Term Incentive Program (the "Plan"). The purpose of
the Plan is to encourage selected employees of the Company, and its affiliates,
to acquire a proprietary and vested interest in the growth and performance of
the Company, to generate an increased incentive to contribute to the Company's
future success and prosperity, thus enhancing the value of the Company for the
benefit of shareholders, and to enhance the Company's ability to attract and
retain individuals of exceptional managerial talent upon whom, in large measure,
the sustained progress, growth, and profitability of the Company depends. The
Plan is similar to the Company's 1987 Long Term Incentive Program (the "1987
Plan") which expires in April 1997. It is intended as a successor to the 1987
Plan and will become effective on June 1, 1997, if it is approved by the
shareholders. No award will be granted pursuant to the Plan after May 31, 2002.

                                       13


   The Company currently maintains the 1987 Plan and the AT&T 1984 Stock Option
Plan (collectively the "Prior Plans"), both of which were previously approved by
the shareholders. Long term awards granted after the effective date of the Plan
would be made under the Plan. Awards currently outstanding under the Prior Plans
would not be affected.

Differences Between the Plan and the 1987 Plan

     The types of awards available under the Plan are the same as the types of
awards available under the 1987 Plan, and the Plan will be administered
generally the same as the 1987 Plan. However, there are several differences
between the Plan and the 1987 Plan.

     First, all employees are eligible to be selected to receive awards under
the Plan. Only salaried employees were eligible for awards under the 1987 Plan.
It is intended that a 100 share per employee stock option award will be made to
substantially all employees in 1997 under the Plan. In addition, it is
anticipated that regular stock option awards will be made under the Plan to a
larger group of employees than under the 1987 Plan. Only about 800 employees
received stock options and other awards annually under the 1987 Plan. About
9,000 employees are anticipated to receive stock options or other awards
annually under the Plan.

     Second, the Plan will have a fixed total of 100 million shares of AT&T
common stock available for awards under the Plan during the five-year term of
the Plan, including up to 15 million shares that may be used for the 1997
all-employee grant. The share total is further limited, as only a maximum of 15
million shares may be used for awards other than stock options (e.g., restricted
stock, performance shares, or other stock unit awards). Under the 1987 Plan,
0.6% of the outstanding shares of AT&T common stock were available for awards in
each calendar year the 1987 Plan was in effect, with shares not used in one year
being available in subsequent years.

     Finally, the Plan provides that awards to employees who are, or are likely
to be, "covered employees" under the Internal Revenue Code ("Code") may be made
subject to the achievement of certain performance goals, in order that the
compensation to such

                                       14


employees qualifies as "performance-based compensation" under the Code, and
therefore is deductible for federal income tax purposes by the Company.

Plan Benefits

     Because the Plan is discretionary and based on Company financial
performance, it is not possible to determine or to estimate the benefits or
amounts that will be received in the future, or that would have been received in
1996 had the Plan been in effect in 1996, by individual employees or groups of
employees under the Plan.

Types of Awards

     The Plan would permit the granting of any or all of the following types of
awards: (1) stock options, including incentive stock options ("ISOs") under the
Code, (2) stock appreciation rights ("SARs"), in tandem with stock options or
free-standing, (3) restricted stock, (4) performance shares and performance
units conditioned upon meeting performance criteria, and (5) other awards of
stock or awards valued in whole or in part by reference to, or otherwise based
on, stock or other property of the Company ("other stock unit awards"). In
connection with any award or any deferred award, payments may also be made
representing dividends or their equivalent.

Authority of Compensation Committee

     The Plan shall be administered by the Compensation and Employee Benefits
Committee of the Board ("Committee"), each of the members of which is a
"Non-Employee Director" as defined in the Securities Exchange Act of 1934
("Exchange Act"), and an "outside director" as defined in the Code. The
Committee has the authority to select employees to whom awards are granted, to
determine the types of awards and the number of shares covered, and to set the
terms, conditions, and provisions of such awards and to cancel or suspend
awards. The Committee shall be authorized to interpret the Plan and to
establish, amend, and rescind any rules and regulations relating to the Plan, to
determine the terms and provisions of any agreements entered into under the
Plan, and to

                                       15


make all other determinations which may be necessary or advisable for the
administration of the Plan. All employees of the Company and its subsidiaries
and other affiliates are eligible to be participants.

Shares Subject to Plan

     Subject to adjustment as described below, 100 million shares of AT&T common
stock shall be available for awards granted under the Plan during the five-year
term of the Plan, including up to 15 million shares that may be used for a stock
option grant to substantially all employees in 1997. On December 31, 1996, the
closing price of one share (as reported in the New York Stock Exchange Composite
Transactions on a when-distributed basis) was $41-3/4. Under the 1987 Plan,
during 1996, total awards including options granted represented 0.866% of AT&T
common shares outstanding on December 31, 1996. In the future, if another
company is acquired by the Company or combines with the Company, any of the
Company's shares covered by or issued as a result of the assumption or
substitution of outstanding grants of the acquired company would not be deemed
issued under the Plan and would not be subtracted from the shares available for
grant under the Plan. If any shares subject to any award under the Plan or under
the Prior Plans are forfeited, or such award is settled for cash, or expires or
otherwise is terminated without issuance of shares, the shares subject to such
award shall again be available for grant pursuant to the Plan. The number of
shares available for awards under the Plan shall also be increased by the number
of shares withheld by or tendered to the Company in connection with the payment
of the exercise price of an option or other award under the Plan or the
satisfaction of tax withholding obligations. The shares of stock deliverable
under the Plan may consist in whole or in part of authorized and unissued
shares, treasury shares, or shares purchased in the open market, or otherwise.

Stock Options

     The price per share of stock purchasable under any stock option will be
determined by the Committee, but shall not be less than 100%

                                       16


of the fair market value of the stock on the date of the grant of such option.
The term of each option shall be fixed by the Committee. Options shall be
exercisable at such time or times as determined by the Committee, but no ISO
shall be exercisable after the expiration of ten years from the date the option
is granted. The fair market value with respect to ISOs first exercisable in any
one year as to any participant may not exceed the maximum limitation in Section
422 of the Code. Options shall be exercised by payment in full of the purchase
price, either in cash or, at the discretion of the Committee, in whole or in
part, in stock of the Company or other consideration having a fair market value
on the date the option is exercised equal to the option price.

Stock Appreciation Rights

     An SAR may be granted free-standing or in tandem with new options or after
the grant of a related option that is not an ISO. Upon exercise of an SAR, the
holder thereof is entitled to receive the excess of the fair market value of the
shares for which the right is exercised (calculated as of the exercise date or,
if the Committee shall so determine in the case of any SAR not related to an
ISO, as of any time during a specified period before the exercise date) over the
grant price of the SAR. The grant price (which shall not be less than the fair
market value of the shares on the date of grant) and other terms of the SAR
shall be determined by the Committee. Payment by the Company upon such exercise
will be in cash, stock, other property or any combination thereof, as the
Committee shall determine. Unless otherwise determined by the Committee, any
related option shall no longer be exercisable to the extent the SAR has been
exercised and the exercise of an option shall cancel the related SAR to the
extent of such exercise.

Restricted Stock

     Restricted stock may not be disposed of by the recipient until certain
restrictions established by the Committee lapse. Recipients of restricted stock
are not required to provide consideration other than the rendering of services
or the payment of any minimum amount required by law. The participant shall
have, with respect to restricted stock, all of the rights of a stockholder of
the Company, including the right to vote the shares, and the right to receive
any

                                       17


cash dividends, unless the Committee shall otherwise determine. Upon termination
of employment during the restriction period, all restricted stock shall be
forfeited, subject to such exceptions, if any, as are authorized by the
Committee.

     A minimum three (3) year restriction period shall apply to restricted stock
awards under the Plan that are not subject to performance conditions restricting
transfer, except that a restriction period of less than three (3) years may
apply to such awards with respect to up to five (5) million shares.

Performance Awards

     From time to time, the Committee shall select a period during which
performance criteria determined by the Committee are measured for the purpose of
determining the extent to which a performance award has been earned. Performance
awards may be in the form of performance shares, which are units valued by
reference to shares of stock, or performance units, which are units valued by
reference to cash or property other than stock. Performance awards may be paid
in cash, stock, other property, or a combination thereof. Recipients of
performance awards are not required to provide consideration other than the
rendering of service or the payment of any minimum amount required by law.

Other Stock Unit Awards

     To enable the Company and Committee to respond quickly to significant
developments in applicable tax and other legislation and regulations and
interpretations thereof, and to trends in executive compensation practices, the
Committee shall also be authorized to grant to participants, either alone or in
addition to other awards granted under the Plan, awards of stock and other
awards that are valued in whole or in part by reference to, or are otherwise
based on, common stock or other property ("other stock unit awards"). Other
stock unit awards may be paid in common stock of the Company, cash, or any other
form of property as the Committee shall determine.

     The Committee shall determine the employees to whom other stock unit awards
are to be made, the times at which such awards

                                       18


are to be made, the number of shares to be granted pursuant to such awards, and
all other conditions of such awards. The provisions of other stock unit awards
need not be the same with respect to each recipient. The participant shall not
be permitted to sell, assign, transfer, pledge, or otherwise encumber the shares
prior to the later of the date on which the shares are issued, or the date on
which any applicable restriction, performance, or deferral period lapses. For
any such award or shares subject to any such award, the transferability of which
is conditional only on the passage of time, such restriction period shall be a
minimum of three (3) years. Stock (including securities convertible into stock)
granted pursuant to other stock unit awards may be issued for no cash
consideration or for such minimum consideration as may be required by applicable
law. Stock (including securities convertible into stock) purchased pursuant to
purchase rights granted pursuant to other stock unit awards may be purchased for
such consideration as the Committee shall determine, which price shall not be
less than the fair market value of such stock or other securities on the date of
grant.

Nonassignability of Awards

     Unless the Committee determines otherwise at the time of an award, no award
granted under the Plan shall be assigned, transferred, pledged, or otherwise
encumbered by a participant, otherwise than by will, by designation of a
beneficiary after death, or by the laws of descent and distribution. Each award
shall be exercisable, during the participant's lifetime, only by the
participant, or, if permissible under applicable law, by the participant's
guardian or legal representative.

Deferrals of Awards

     The Committee may permit participants to defer the distribution of all or
part of the specified stock, cash, or other consideration in accordance with
such terms and conditions as the Committee shall establish.

Adjustments

     In the event of any change affecting the shares of common stock by reason
of any stock dividend or split, recapitalization,

                                       19


reorganization, merger, consolidation, spin-off, combination, or exchange of
shares or other corporate change, or any distributions to common shareholders
other than cash dividends, the Committee shall make such substitution or
adjustment in the aggregate number or class of shares which may be distributed
under the Plan (including the substitution of similar options to purchase the
shares of, or other awards denominated in the shares of, another company) and in
the number, class, and option price or other price of shares subject to the
outstanding awards granted under the Plan as it deems to be appropriate to
maintain the purpose of the original grant.

     The Committee shall be authorized to make adjustments in performance award
criteria or in the terms and conditions of other awards in recognition of
unusual or non-recurring events affecting the Company or its financial
statements or changes in applicable laws, regulations, or accounting principles.
The Committee may correct any defect, supply any omission, or reconcile any
inconsistency in the Plan or any award in the manner and to the extent it shall
deem desirable to carry it into effect.

Administration

     The Committee may delegate to one or more senior managers or one or more
committees of senior managers the right to grant awards and to cancel or suspend
awards with respect to employees who are not officers or directors. The Board
may assume responsibilities otherwise assigned to the Committee and may amend,
alter, or discontinue the Plan or any portion thereof at any time, provided that
no such action shall impair the rights of a participant without the
participant's consent and provided that no amendment shall be made without
shareholder approval if such approval is necessary to qualify for or to comply
with any tax or regulatory requirement. The Committee may amend the terms of any
award theretofore granted, prospectively or retroactively, but no such amendment
shall impair the rights of any participant without his or her consent. However,
the Committee may not amend the terms of any option to reduce the option price.
Determinations of fair market value under the Plan shall be made in accordance
with the methods and procedures established by the Committee.

                                       20


Code Section 162(m) Performance-Based Compensation

     If the Committee determines at the time restricted stock, a performance
award, or other stock unit award is granted to a participant who is then a
senior manager or an E-band employee that such participant is, or is likely to
be, as of the end of the tax year in which the Company would claim a tax
deduction in connection with such award, a "covered employee" under Code Section
162(m), then the Committee may provide as to such award that the lapsing of
restrictions thereon and the distribution of cash, shares, or other property
pursuant thereto, as applicable, shall be subject to the achievement of one or
more objective performance goals established by the Committee, which shall be
based on the achievement of specified levels of one or any combination of the
following: net cash provided by operating activities, earnings per share from
continuing operations, operating income, revenues, gross margin, return on
operating assets, return on equity, economic value added, stock price
appreciation, total shareholder return, or cost control, of the Company or the
affiliate or division of the Company for or within which the participant is
primarily employed. Such performance goals also may be based upon the
achievement of specified levels of Company performance (or performance of the
applicable affiliate or division of the Company) under one or more of the
measures described above relative to the performance of other corporations. Such
performance goals shall be set by the Committee within the time period
prescribed by, and shall otherwise comply with the requirements of, Section
162(m) of the Code, or any successor provision thereto, and the regulations
thereunder.

     The Plan provides that, subject to any adjustments described above, no
participant may be granted options and/or SARs in any three calendar year period
with respect to more than two million shares and that the maximum dollar value
payable with respect to other performance units or other stock unit awards that
are valued with reference to property other than shares and granted to any
participant in any one calendar year is $10,000,000.

                                       21


Change of Control

     To maintain all of the participants' rights in the event of "change of
control" of the Company, unless the Committee determines otherwise at the time
of grant with respect to a particular award:

     (i) any options and SARs outstanding as of the date such change of control
is determined to have occurred, and which are not then exercisable and vested,
shall become fully exercisable and vested to the full extent of the original
grant;

     (ii) the restrictions and deferral limitations applicable to any restricted
stock shall lapse, and such restricted stock shall become free of all
restrictions and limitations and become fully vested and transferable to the
full extent of the original grant;

     (iii) all performance awards shall be considered to be earned and payable
in full, and any deferral or other restriction shall lapse and such performance
awards shall be immediately settled or distributed; and

     (iv) the restrictions and deferral limitations and other conditions
applicable to any other stock awards or any other awards shall lapse, and such
other stock unit awards or such other awards shall become free of all
restrictions, limitations, or conditions and become fully vested and
transferable to the full extent of the original grant.

     Change of control of the Company shall mean the happening of any of the
following events:

     (i) an acquisition by any individual, entity, or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (A) the then outstanding shares of common stock of the Company or
(B) the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of Directors; excluding,
however, certain acquisitions by or from the Company or by Company employee
benefit plans or certain shareholder approved merger or sale transactions
involving the Company;

     (ii) a change in the composition of the Board such that the individuals
who, as of the effective date of the Plan, constitute the

                                       22


Board, cease for any reason to constitute at least a majority of the Board,
unless such change is approved by certain members of the current Board;

     (iii) with certain exceptions, the approval by the shareholders of the
Company of a merger, reorganization or consolidation, or sale or other
disposition of all or substantially all of the assets of the Company or, if
consummation of such corporate transaction is subject, at the time of such
approval by shareholders, to the consent of any government or governmental
agency, the obtaining of such consent; or

     (iv) the approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.

Tax Aspects of the Plan

     The Company believes that under present law, the following are the federal
tax consequences generally arising with respect to awards granted under the
Plan. The grant of an option or SAR will create no tax consequences for an
employee or the Company. The employee will have no taxable income upon
exercising an ISO (except that the alternative minimum tax may apply), and the
Company will receive no deduction when an ISO is exercised. Upon exercising an
SAR or an option other than an ISO, the employee must recognize ordinary income
equal to the difference between the exercise price and the fair market value of
the stock on the date of exercise; the Company will be entitled to a deduction
for the same amount. The treatment to an employee of a disposition of shares
acquired through the exercise of an option depends on how long the shares have
been held and if such shares were acquired by exercising an ISO or by exercising
an option other than an ISO. Generally, there will be no tax consequence to the
Company in connection with a disposition of shares acquired under an option
except that the Company may be entitled to a deduction in the case of a
disposition of shares acquired under an ISO before the applicable ISO holding
periods have been satisfied.

     With respect to other awards granted under the Plan that are settled either
in cash or in stock or other property that is either transferable or not subject
to substantial risk of forfeiture, the

                                       23


participant must recognize ordinary income equal to the cash or the fair market
value of shares or other property received; the Company will be entitled to a
deduction for the same amount. With respect to awards that are settled in stock
or other property that is restricted as to transferability and subject to
substantial risk of forfeiture, the participant must recognize ordinary income
equal to the fair market value of the shares or other property received at the
first time the shares or other property become transferable or not subject to
substantial risk of forfeiture, whichever occurs earlier; the Company will be
entitled to a deduction for the same amount.

     Adoption of this proposal requires an affirmative vote by the holders of a
majority of the outstanding common stock. Any shares not voted (whether by
abstention, broker non-vote, or otherwise) have the effect of a negative vote.
Your Directors recommend a vote FOR approval of the AT&T 1997 Long Term
Incentive Program.

     To obtain a full text copy of the Plan, please call the AT&T shareholder
services number, 1-800-348-8288.

SHAREHOLDER PROPOSALS

     AT&T receives many suggestions from shareholders, some as formal
shareholder proposals. All are given careful consideration. After discussion
with Company representatives and clarification of the Company's position, many
proposals are withdrawn.

     Proponents of five shareholder proposals have stated that they intend to
present the following proposals at the annual meeting. Information on the
shareholdings of the proponents is available by writing to: Manager - Proxy,
AT&T Corp., 295 North Maple Avenue, Room 1203P1, Basking Ridge, New Jersey
07920-1002. The proposals and supporting statements are quoted below. The Board
has concluded it cannot support these proposals for the reasons given.

                                       24


Shareholder Proposal 1:

Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Ave., N.W., Suite
215, Washington, DC 20037, has submitted the following proposal:

"RESOLVED: That the shareholders recommend that the Board direct management that
  within five days after approval by the shareholders of this proposal, the
  management shall publish in newspapers of general circulation in the cities of
  New York, Washington, D.C., Detroit, Chicago, San Francisco, Los Angeles,
  Dallas, Houston and Miami, and in the Wall Street Journal and U.S.A. Today, a
  detailed statement of each contribution made by the Company, either directly
  or indirectly, within the immediately preceding fiscal year, in respect of a
  political campaign, political party, referendum or citizens' initiative, or
  attempts to influence legislation, specifying the date and amount of each such
  contribution, and the person or organization to whom the contribution was
  made. Subsequent to this initial disclosure, the management shall cause like
  data to be included in each succeeding report to shareholders. And if no such
  disbursements were made, to have that fact publicized in the same manner.

"REASONS: This proposal, if adopted, would require the management to advise the
  shareholders how many corporate dollars are being spent for political purposes
  and to specify what political causes the management seeks to promote with
  those funds. It is therefore no more than a requirement that the shareholders
  be given a more detailed accounting of these special purpose expenditures that
  they now receive. These political contributions are made with dollars that
  belong to the shareholders as a group and they are entitled to know how they
  are being spent. Last year the owners of 73,310,807 shares, representing
  approximately 7.4% of shares voting, voted FOR this proposal.

"If you AGREE, please mark your proxy FOR this resolution."

                     ---------------------------------------

                                       25


     Your Directors recommend a vote against the above proposal. Last year this
proposal was defeated by more than 92% of the shares voted.

     It is AT&T's policy to comply fully with all federal and state laws
governing corporate contributions to political candidates. Employees and, in
some states, the Company may contribute to a Political Action Committee ("PAC")
or directly to a state candidate's campaign. Under federal and state election
laws, PACs must publicly disclose information about PAC contributions. Many
states also require candidates to disclose contributions above a specified
limit. Therefore, information about political expenditures is readily available
without the need for additional disclosures by AT&T.

     AT&T corporate expenditures in support of federal and state government
affairs activities on legislative and regulatory matters are a legitimate
business expense. These important activities assure that public officials
understand AT&T's position on matters that are significant to the future of the
Company. Moreover, some jurisdictions require that various types of lobbying
expenses be publicly disclosed. For example, the recently enacted Lobbying
Disclosure Act of 1995 requires U.S. companies to file with the U.S. Congress,
semiannually, a statement of the issues for which each company has engaged in
lobbying activities. Also required is a statement of the expenditures incurred
in connection with those activities. Aside from complying with this and other
legal disclosure obligations to which it is subject, AT&T does not disclose sub-
segments of its business expenses.

     This proposal also would have the Company incur the costs of placing
advertisements in newspapers even if "no such disbursements" were made, which is
not an effective use of shareholder money. For the reasons given above, your
Directors believe that the proposal serves no useful purpose and would clearly
result in a waste of Company resources. Therefore, your Directors again
recommend that shareholders vote AGAINST this proposal.

                     ---------------------------------------

                                       26


Shareholder Proposal 2:

Mark Seidenberg, P.O. Box 6102, Woodland Hills, CA 91365, has submitted the
following proposal:

"The stockowners hereby recommend that the Board of Directors adopt the
  following policies for all dealings with China and the former Soviet Union:

  1.  Goods or services produced in whole or part by slave or forced labor shall
      not be acceptable for delivery to the corporation, its subsidiaries,
      affiliates, or joint ventures. A suitable certificate of origin shall be
      required.

  2.  Goods provided by the corporation, its subsidiaries, affiliates, or joint
      ventures shall not be sold to or otherwise provided to any facility
      utilizing slave or forced labor. A suitable certificate of use shall be
      required.

  3.  The right of on-site inspection to determine the existence of slave or
      forced labor shall be vigorously pursued.

  4.  The corporation shall cooperate promptly, energetically, and fully with
      the United States government and any international organization in their
      laws or policies to discourage the use of slave or forced labor.

"For purposes of this resolution, the term 'former Soviet Union' shall mean the
  countries of, and any combination thereof, Russia, Ukraine, Kazakhstan,
  Georgia, Armenia, Azerbaijan, Uzbekistan, Belarus (Byelorussia), Kyrgyzstan
  (Kirghizia), Moldova (Moldavia), Tajikistan (Tadzhikistan), and Turkmenistan
  (Turkmenia)."


Supporting Statement:

"The outrageous arrest, incarceration, trial, and expulsion of American Harry Wu
  in the summer of 1995 by the Chinese Communist regime put the spotlight on the
  immense Chinese laogai forced labor system. Mr. Wu has been exposing this
  hideous system for years.

                                       27


"Slave and forced labor are widespread in China and the former Soviet Union.
  China's laogai camps and factories include about 20,000,000 forced laborers,
  and the gulags of the former Soviet Union have about 4,000,000. They produce
  numerous products, including sophisticated machinery and electronics, and much
  of it is intended for export. This vast problem has prompted the state of
  California to pass a law refusing to buy slave-made goods from overseas.

"AT&T has multi-million dollar deals with China and the former Soviet Union, but
  has no comprehensive anti-slave labor policies, as proposed by this
  resolution. Here's what AT&T's current policy lacks:

  --No by-law or corporate article includes it.

  --No board resolution includes it.

  --No agreement with joint ventures or affiliates includes it.

  --No specific written guideline for buyers, sales personnel, or other
    employees or agents covers all sales or purchases.

  --No standard clause on it is in all purchase or sales contracts.

  --No specific penalty for violations by customers, suppliers, employees, or
    agents exists.

  --No relevant certificates of origin (for all purchases) or use (for all
    sales) are utilized.

  --No mention is made in AT&T's Code of Conduct booklet 'A Personal
    Responsibility' regarding the U.S. statute banning the importation of
    slave-made goods, while several other laws are specifically enumerated.

"Much of AT&T's business is conducted overseas and is beyond the reach of U.S.
  law, but not beyond managerial control.


"If you can imagine any convincing argument against having this anti-slave labor
  policy, I can't. But, believe me, AT&T's board will think of something. Please
  read the board's argument thoroughly to see if it has any substance, and then
  vote your own conscience."

                    ---------------------------------------

     Your Directors recommend a vote against this proposal. In 1994 and 1996,
this proposal was defeated by more than 94% and 91%, respectively, of the shares
voted.

                                       28


     AT&T continues to respect the international human rights concerns expressed
in Mr. Seidenberg's most recent proposal. AT&T, nonetheless, opposes the
bureaucratic and costly process proposed by this resolution because existing
AT&T practices and policies have proven effective and adequate. AT&T's worldwide
business practices continue to be guided by the principles contained in AT&T's
Code of Conduct entitled Our Business Ethics: Living Our Common Bond. These
principles apply to all persons associated with AT&T's subsidiaries and
affiliates located in China and the former republics of the Soviet Union. Under
AT&T business practices and the guidelines contained in the Code of Conduct, all
AT&T employees are reasonably compensated and directed to respect individuals
and act with integrity. The Code specifically requires that AT&T employees be
honest and ethical in all of the Company's business matters. In addition, AT&T
undertakes substantial efforts to remain in compliance with all domestic and
foreign laws, including laws relating to human rights, employment, domestic and
foreign customs, and trade laws.

     As a result, AT&T has substantial practices and programs in place to
protect against human rights abuses in China and the former republics of the
Soviet Union.

     AT&T believes that this proposal always has been and continues to be
unnecessary. Therefore, your Directors again recommend that shareholders vote
AGAINST this proposal.

                    ---------------------------------------

Shareholder Proposal 3:

Mark Sterancsak, 757 Paramus Road, Paramus, NJ 07652, has submitted the
following proposal:

"That along with the brief biography of the people nominated for AT&T's company
  directors, a personal statement of belief should be published. It should
  include where they want the company to go, what they have done in the past,
  and more importantly, how they want to get it there.

                                       29


"Reasoning: The people we shareholders nominate to run our company will be in
  charge of billions of dollars worth of physical and monetary resources, as
  well the lives of several thousand people.

"Ifound the biographies for the 1996 woefully inadequate to make any decisions.
  For example, Walter Y. Elisha's bio stated he was the Chairman and CEO of
  Springs Industries since 1983 and a Director at AT&T since 1987. It also says
  he is 63 years old, sat on AT&T's Compensation and Finance Committee, and its
  Committee on Directors. That's it.

"Ipicked Mr.  Elisha for no  particular  reason other than I don't know him from
  Adam.  Where did he come from?  Why was he  chosen?  What did he do at Springs
  Industries  that caught the eye of AT&T's board of directors?  Obviously he is
  an  accomplished  man and the company thinks enough of him to nominate him for
  another term.

"When we choose a president for this country or even a councilperson for our
  particular municipality, the candidates go through a formalized process that
  lasts several months so we can get an idea of who they are and how they would
  act in certain situations.

"Ithink it would be good to know at least that much from the people we put in
  charge of this company, and in cases like mine, our investments."

                    ---------------------------------------

     Your Directors recommend a vote against this proposal. AT&T believes that
the additional personal information and statement of belief required by this
proposal would be of little use to the vast majority of AT&T shareholders who
expect the Board to act and vote in the best interests of the Company. Most
shareholders recognize that a brief statement cannot effectively communicate the
many factors that go into a Director's decision or the Director's approach to
the complex and varied matters to come before the Board.

                                       30


     AT&T's proxy material is prepared according to the rules and specifications
of the SEC consistent with New York Business Corporation Law. As a legal
document, the proxy statement must contain the principal occupation or
employment of each Director during the past five years, his or her age, the year
first elected to AT&T's Board, certain AT&T committee memberships, the number of
AT&T shares owned, and other directorships they hold.

     Beyond this factual information, an effort to provide more detailed
biographies and directional statements by each nominee to the proxy statement
would be costly to all shareholders and an ineffective means to provide
information to limited groups of interested shareholders. Additional information
about the Directors can be obtained at far less expense and more effectively by
writing to the AT&T Investor Relations group or the AT&T Office of the Corporate
Secretary. Therefore, your Directors recommend that shareholders vote AGAINST
this proposal.

                   ---------------------------------------

Shareholder Proposal 4:

United States Trust Company of Boston, 40 Court Street, Boston, MA 02108, and
Women's Division of the General Board of Global Ministries of The United
Methodist Church, 475 Riverside Drive, New York, NY 10115, have submitted the
following proposal:

"Resolved, the shareholders request that:

"The Board institute a comprehensive Executive Compensation Review, with a
  summary report available to shareholders by September 1997. Among the
  questions to be considered are 1) whether the compensation of corporate
  executives should be frozen during periods of significant corporate downsizing
  and cost-cutting; 2) whether company performance targets should be measured
  relative to peer group companies, rather than only by internally set goals; 3)
  what are appropriate performance measurements for the long-term incentive
  program during the period of restructuring; 4) how executive compensation will
  be adjusted in light of AT&T's smaller size following the restructuring;

                                       31


  5) whether a cap should be placed on compensation packages for officers to
  prevent our company from paying excessive executive compensation; and 6) ways
  to link compensation to social and environmental performance.

"Whereas:

"In 1995 Robert Allen, AT&T's CEO, received $5.85 million in pay (more than
  $2,800 an hour) and stock options worth over $10 million more, as he announced
  plans to eliminate the jobs of 40,000 AT&T employees, among the largest job
  cuts in U.S. history. These jobs cuts have made AT&T a central symbol in the
  national debate over "downsizing".

"Mr. Allen's total compensation in 1995 represented an increase of more than
  130% over the previous year. Compensation expert Professor Graef Crystal
  described Robert Allen's compensation as "An Ordinary Performer with an
  Extraordinary Pay Package." Mr. Crystal further explains that an investment in
  AT&T stock on March 31, 1988 (the beginning of Mr. Allen's tenure) would by
  December 31, 1995, have yielded only 72% of the value that would have been
  obtained by making equal investments in MCI Communications and Sprint.

"Our company has had a policy of compensating key officers, including Mr. Allen,
  based on success in serving shareholders, customers, and employees. AT&T
  executives also receive a substantial portion of compensation from meeting
  long-term profitability goals. Shortly after the September, 1995
  restructuring, AT&T's compensation committee made several unilateral changes
  to the company's executive compensation policies: 1) measures of employee and
  customer satisfaction were subordinated to achieving certain restructuring
  goals; 2) for purposes of defining the long-term performance share payout of
  senior officers in 1996 and 1997, the committee would assume goals are met and
  pay 100% of the performance payout in each of these years without regard to
  the firm's actual profitability; 3) senior officers were given a stock option
  grant ranging in value from 1.5 to 4.5 years of salary. The principal reason
  offered for

                                       32


  these lucrative bonuses was to retain key personnel. These changes were made
  without shareholder approval.


"Subsequent to these compensation changes, the company lost key executives,
  including President Alex Mandl. AT&T also continues to lose long distance
  market share. The changes to the compensation policy have not had their
  desired impact of focusing managerial attention on shareholder, customer and
  employee issues; and have only served to widen the economic gap between
  corporate leaders and average employees."

                    ---------------------------------------


     Your Directors recommend a vote against the above proposal. The
Compensation and Employee Benefits Committee has always and continues to perform
an analysis of compensation relative to the Company's financial performance and
industry-wide trends.

     The Committee's regular practice is to review annually the executive
compensation program from a number of perspectives, including competitive
analysis of pay level and mix, linkage of program design to results of
operations, strategic goals, consistency with compensation and governance
trends, and the promotion of AT&T's Common Bond principles. In 1996, the
Committee met six times, including special sessions, to review CEO and executive
compensation issues. The Committee considered a wide range of issues including
those raised by the proponents. These considerations helped to shape the design
of various aspects of the 1997 compensation program and were important factors
in the 1996 compensation awards to the Chairman and other named officers.

     AT&T believes that the proxy disclosure process already provides an
opportunity for shareholders to become informed of and express concerns about
compensation matters. This process requires detailed and highly specific
descriptions of compensation matters and, in fact, one-half of the total number
of pages in this proxy statement relate to compensation. Consequently, the
creation and publication of a lengthy report is unnecessary and could require

                                       33


the Company to reveal both proprietary information and sensitive analyses which
would not benefit the Company or shareholders. Therefore, your Directors
recommend that shareholders vote AGAINST this proposal.

                    ---------------------------------------

Shareholder Proposal 5:

Bartlett Naylor, 1255 N. Buchanan, Arlington, VA 22205, has submitted the
following proposal:

"RESOLVED: That shareholders urge that the Board of Directors provide that all
  future non-cash compensation components, such as options that are designed to
  help retain senior management, are nullified if the manager leaves the Company
  before retirement.

"AT&T's difficulties over the past few years have been well documented, and the
  future looks rockier. Yet as shareholders have suffered top management has
  been generously rewarded. In 1995 President and Chief Operating Officer, Alex
  Mandl received 2,540,000 restricted stock awards, and 438,484 stock options.

"This summer Mandl announced his resignation in a move that shocked Wall Street.
  As Fortune reports, "The circumstances of Mandl's departure--its abruptness,
  the obscurity of his new company, the specter of lucre vanquishing
  prestige--draw unwanted attention to AT&T's mediocre performance and raise
  questions about where things are headed."

"This departure also displays a fundamental fallacy in the theory that rising
  executive compensation will keep the best managers on board, create high
  performance and motivate top management. AT&T requires executives who bring
  commitment to the company's long term growth, and a vision for the company's
  future that extends beyond the date they cash in on their options.

"Top AT&T executives received a great deal of publicity when they announced they
  were cutting 40,000 jobs. AT&T's reported 800-person public relations
  department could not keep AT&T's CEO from winning the moniker "Corporate
  Killer".

                                       34


"Though the 40,000 figure, later lowered, caught public attention, AT&T has been
  using down-sizing for large write-offs over the past 12 years. As author Alan
  Downs points out, when AT&T announced the 40,000 figure they had not
  determined who would be affected. "They looked at their numbers and said,
  `How many jobs do we have to eliminate in order to look good?' not, `What
  kind of talent do we need to run our business tomorrow, and what can we do
  without?' "

"We believe that shareholders are not served by such actions. A recent study
  spoke directly to shareholder value: "In terms of the cumulative returns on
  common stock, for the target companies results indicated that for each $1.00
  invested in a portfolio of downsizing companies at the beginning of the year
  of the downsizing, the value of the portfolio would have grown to $1.047 three
  years later. The same amount invested in a portfolio of companies in the same
  industry would have grown, on average, to $1.343 by Year +3."

"Yet by the time long-term shareholders realize these problems, the executives
  who created them are long gone, having cashed in on options and working for a
  different set of shareholders. Corporate executives must be held accountable
  for their failures, not simply rewarded for their success.

"For the above reasons, we urge you to vote FOR the proposal."

                     ---------------------------------------


     Your Directors recommend a vote against the above proposal. AT&T's
compensation plans provide for the cancellation of all outstanding stock-based
compensation awards if an employee terminates employment for any reason other
than retirement, disability, or death. Vested stock options continue to be
exercisable only until the ninetieth day after termination of employment or the
original expiration date of the option, whichever occurs first. Only the
Compensation and Employee Benefits Committee of the Board has the authority to
amend this policy when it is in AT&T's best interest.

                                       35


     AT&T's policy for canceling stock options for terminated employees is
substantially similar to that proposed by Mr. Naylor. AT&T's policy differs from
Mr. Naylor's proposal in only two respects. AT&T permits employees, or their
surviving family members, to exercise options following the catastrophic events
of the employee's death or disability. Second, employees are permitted to
exercise vested options for a very limited period following employment. The
securities law restrictions on exercising options while in possession of
material non-public information often prohibit such exercises for long periods
during employment. Mr. Naylor's proposal would eliminate these exemptions,
thereby unfairly penalizing employees and their families and encourage employees
to exercise rather than hold options. This does not align their interest with
shareholders. Therefore, your Directors recommend that shareholders vote AGAINST
this proposal.

                     ---------------------------------------


     Approval of the preceding shareholder proposals would require a majority of
the votes cast thereon. Any shares not voted (whether by abstention, broker
non-vote, or otherwise) have no impact on the vote.

ADVANCE NOTICE PROCEDURES

     Under the Company's By-Laws, no business may be brought before an annual
meeting except as specified in the notice of the meeting (which includes
shareholder proposals that the Company is required to set forth in its proxy
statement under SEC Rule 14a-8) or as otherwise brought before the meeting by or
at the direction of the Board or by a shareholder entitled to vote who has
delivered notice to the Company (containing certain information specified in the
By-Laws) not less than 90 nor more than 120 days prior to the first anniversary
of the preceding year's annual meeting. These requirements are separate and
apart from and in addition to the SEC's requirements that a shareholder must
meet in order to have a shareholder proposal included in the Company's Proxy
Statement under SEC Rule 14a-8.

     A copy of the full text of the By-Law provisions discussed above may be
obtained by writing to AT&T's Office of the Corporate Secretary.

                                       36


SUBMISSION OF SHAREHOLDER PROPOSALS

  Proposals intended for inclusion in next year's proxy statement should be sent
to: Vice President - Law and Secretary, AT&T Corp., 32 Avenue of the Americas,
New York, New York 10013-2412, and must be received by December 2, 1997.

OTHER MATTERS TO COME BEFORE THE MEETING

     In addition to the matters described above, there will be an address by the
Chairman of the Board and a general discussion period during which shareholders
will have an opportunity to ask questions about the business.

     In the event that any matter not described herein may properly come before
the meeting, or any adjournment thereof, the Proxy Committee will vote the
shares represented by it in accordance with its best judgment. At the time this
proxy statement went to press, the Company knew of no other matters which might
be presented for shareholder action at the meeting.


BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

     The Compensation and Employee Benefits Committee ("Committee") is composed
of five independent non-employee Directors. The Committee is responsible for
setting and administering executive officer salaries and the annual bonus and
long-term incentive plans that govern the compensation paid to all senior
managers of the Company, except that the Board (other than Directors who are
employees) is responsible for setting and administering salaries and the annual
bonus of the officers listed on page 47 (the "named officers"), based upon
recommendations of the Committee.

Compensation Philosophy

     The Company's programs are designed to provide executives with a
competitive earnings opportunity, with actual earnings linked to the short-term
and long-term performance of the Company, and

                                       37


the sustained performance of the individual. The Committee has developed
executive compensation governing principles that provide guidance in the design
and operation of the senior management compensation plans and in the review of
executive performance:

     Competitiveness: Total compensation for senior managers is targeted between
     the mean and the 75th percentile of a group of direct industry competitors
     and selected other Fortune 100 companies with which the Company competes
     for talent.

     Performance Contingency: The design of the total compensation package
     reflects a bias toward variable pay that matches pay to the achievement of
     short-term and long-term performance objectives. For individuals named in
     the Summary Compensation Table, the variable portion of the pay package
     ranges from 70%-80% of total target pay.

     Accountability to Stakeholders: Performance matrices used in the Company's
     incentive programs support value creation for our three key stakeholders:
     shareholders, customers, and employees.

     Balance Between Short-Term and Long-Term Performance: The compensation
     structure for senior managers emphasizes long-term performance results over
     short-term results at a ratio of approximately 2 to 1.

     Tax Effectiveness: Elements of compensation under the annual bonus and
     long-term incentive plans qualify for exemption from the annual limit on
     tax deductibility under Section 162(m) of the Code. In addition, the
     Company has a salary and incentive award deferral plan which permits
     compensation deferred under the plan to be exempt from the limit on tax
     deductibility.

     The Company's executive compensation program consists of two key elements:
(1) an annual component, i.e., base salary and annual bonus and (2) a long-term
component, i.e., performance shares, stock options, and restricted stock. The
policies with respect to each of these

                                       38


elements, as well as the basis for determining the compensation of the Chairman
of the Board and CEO, Mr. Allen, are described below:

     (1) Annual Component: Base Salary and Annual Bonus

     Base Salary: Base salaries for executive officers are determined with
reference to a position rate for each officer. These position rates are
determined annually by evaluating the responsibilities of the position and
comparing it with other executive officer positions in the marketplace. Market
data are provided through surveys conducted by external compensation consultants
and presented to the Committee annually as part of the determination of the
succeeding year's executive compensation structure. Annual salary adjustments
recognize sustained individual performance by the executive, with overall salary
increase funding levels sensitive to both market movement and Company
performance.

     The Committee presents the salary recommendations for the named officers to
the Board for approval. These salary recommendations are based on performance
criteria such as the individual's contribution to the Company, the executive's
experience and expertise, and the individual's relative position to the
applicable position rate. There are no individual performance matrices or
pre-established weightings given to each factor.

     Annual Bonus: The annual bonus for the Chairman and for the other named
officers is (i) 0.4% of the Company's net cash provided by operating activities,
for the annual performance period, divided by the total number of named officers
with respect to such period, or (ii) a lesser amount based on factors including
the Company's performance relative to pre-set financial, employee, customer, and
individual performance targets applicable to bonuses to other executive
officers.

     The annual bonus for other executive officers is determined based on
achievements in several performance areas measured against pre-set targets. The
pre-set financial target is based on Economic Value Added ("EVA"), which
measures the return on investment. Employee attitude measures are determined by
an

                                       39


index called People Value Added ("PVA") which focuses on employee views
regarding leadership and contributions to the diversity of the Company. The
customer measure is Customer Value Added ("CVA"), and it measures the relative
value that customers perceive when our services are compared with those of our
competitors. Targets for these measures were reviewed and approved by the
Committee.

     (2) Long-Term Component: Performance Shares, Stock Options, and Restricted
          Stock

     To align shareholder and executive officer interest, the long-term
component of the Company's executive compensation program uses grants whose
value is related to the value of AT&T common stock. Grants of performance
shares, stock options, and restricted stock are made under the AT&T 1987 Long
Term Incentive Program which was approved by the shareholders. Historically,
performance shares and stock options have been granted annually based on
position rate, while restricted stock awards are granted on a selective basis
for purposes of retention or reward for performance. The size of annual
performance share and stock option award levels are related to survey results of
award levels of comparable companies in the marketplace. The size of previous
grants and the number of shares held by an executive are not considered in
determining annual award levels. Our target is to deliver approximately half of
this long-term incentive value via performance shares and half via stock
options. The awards provide rewards to executives upon creation of incremental
shareholder value and the attainment of long-term goals.

     Performance Shares: Performance shares, which are awards of units
equivalent in value to shares of AT&T common stock, are awarded annually in
numbers based on an executive's position rate. Historically, payout of 0% to
150% of such performance shares is made in the form of cash and/or shares of
AT&T common stock (with a required minimum of 50% in shares) at the end of a
three-year performance period based on the Company's return to equity ("RTE")
performance compared with a target. However, if an executive's annual
compensation is subject to the limit on tax deductibility, under Section 162(m)
of the Code, in the last year of

                                       40


a performance period, then the executive shall receive an other stock unit award
payout in lieu of the performance share payout, and the value of the payout to
each such executive for the performance period shall be (i) 0.13% of the
Company's net cash provided by operating activities for each year in the
performance period, divided by the total number of executives receiving such
payouts, or (ii) a lesser amount, based on factors that include targets for the
Company's RTE established for performance shares for such performance period.

     To address the transition period associated with the Company's restructure,
and the difficulty of setting long-term financial targets while the restructure
was in progress, the Committee deemed the performance criteria for the 1994-1996
and 1995-1997 performance cycles to have been met at the target level. The
opportunity to earn a payout above 100% was eliminated, and all other terms and
conditions of the award continue to apply. For the same reason, grants for the
1996-1998 cycle were issued in the form of three-year stock units. For named
executive officers, the net cash provided by operating activities formula and
the Committee's authority to exercise negative discretion will continue to apply
in determining the actual payout for the 1994-1996, 1995-1997, and 1996-1998
cycles. In 1997, the Company will re-institute a performance share program tied
to three-year relative total shareholder return ("TSR") as measured against a
peer group of industry competitors. TSR equals the sum of the appreciation in
the price of AT&T common stock and dividends paid over the period.

     Stock Options: Stock options are granted annually to executive officers,
also in numbers based on their position rate. Like performance shares, the
magnitude of such awards is determined annually by the Committee. Stock options
are granted with an exercise price equal to or greater than the fair market
value of AT&T common stock on the day of grant. Stock options become exercisable
after the expiration of a period of time, typically between one and six years
and continue to be exercisable until ten years from the date granted. Such stock
options provide incentive for the creation of shareholder value over the long
term since the full benefit of the compensation package cannot be realized
unless an

                                       41


appreciation in the price of AT&T common stock occurs over a specified number of
years. In 1996, no stock option grants were made to named officers.

     Restricted Stock: Restricted stock awards are granted occasionally to
executive officers under the AT&T 1987 Long Term Incentive Program, primarily
for purposes of retention. Restricted stock is subject to forfeiture and may not
be disposed of by the recipient until certain restrictions established by the
Committee lapse. Recipients of restricted stock are not required to provide
consideration other than the rendering of services or the payment of any minimum
amount required by law. Details of restricted stock awards made to named
officers in 1996 are included on page 47.

CEO Compensation

     During 1996, the Company's most highly compensated officer was Robert E.
Allen, Chairman of the Board and CEO. Mr. Allen's 1996 performance was reviewed
by the Committee and discussed with the non-employee Directors and Mr. Allen.
The Committee's recommendations to the Board concerning the annual component
(base salary and annual bonus) of Mr. Allen's compensation, and their approval
of his long-term component (performance shares, stock options, and restricted
stock) were predicated on the considerations discussed below.

     Base Salary: Mr. Allen's salary was reviewed in comparison with the
salaries of CEOs of other Fortune 20 companies, industry competitors, and
selected other large industrial companies during the Company's annual
compensation survey and review process. The Committee considered these external
survey data and Mr. Allen's contributions to the business in awarding him a 4%
salary increase.

     Annual Bonus: After determining the maximum award payable to Mr. Allen
based on the Company's net cash provided by operating activities, the Committee
exercised its discretion in determining the actual bonus payable based on
achievement of pre-set performance targets related to 1) value creation for
shareholders, customers, and employees and 2) goals related to the restructuring
of the Company.

                                       42


     The shareholder element of performance was measured against an EVA target
for the year of $2.3 billion, and the successful and timely completion of the
spin-offs of Lucent Technologies Inc. ("Lucent") and NCR Corporation ("NCR") and
the sale of AT&T's interest in AT&T Capital Corporation ("AT&T Capital"). The
customer and employee elements of performance were measured against CVA and PVA
metrics.

     In determining Mr. Allen's bonus, the Committee reviewed the Company's
absolute achievement against these metrics, the context in which achievement
occurred, and the impact on stakeholders of actions taken during the year.

     Absolute Achievement Levels - The Company achieved its EVA target, but the
     Committee noted that it did so, in part, by modifying spending plans,
     resulting in lower average capital deployed. The Committee therefore
     determined that, with respect to financial performance, the additional
     metric of Earnings Per Share ("EPS") results should be considered. EPS
     results were below expectations, resulting primarily from underperformance
     in the long distance and credit card businesses. The Company met 100% of
     the CVA and PVA targets and successfully spun-off Lucent on September 30,
     NCR on December 31, and completed the sale of its interest in AT&T Capital
     on October 1 for approximately $1.8 billion.

     Context for Achievement - The Committee acknowledged that 1996 saw AT&T
     addressing its markets while simultaneously preparing for unprecedented
     industry change on the competitive, technological, and regulatory fronts.
     The Committee also acknowledged that, in this environment, the Company
     faced the additional challenge of restructuring one of the world's largest
     corporations in a way that would provide new opportunities for
     shareholders, new benefits for customers, and would successfully transition
     the Company's employees into the restructured businesses.

     Impact on Stakeholders - Strong customer and shareholder response to the
     creation of Lucent and NCR has been reflected in the new companies'
     positive market performance: at the time of the January 1997 Committee
     meeting, Lucent had risen 60%

                                       43


     above its opening price on the day of its initial public offering, and NCR
     had risen 5% above its initial when-issued opening price on December 11,
     1996. In contrast, these positive results were dampened by AT&T's
     disappointing performance in the face of a very strong overall market. As a
     result, shareholders experienced a 9% decrease in the value of their
     AT&T-related holdings during 1996, though the broad market rose 20% (S&P
     500). For customers, AT&T made significant progress in the area of new
     products and services. By the end of 1996, the Company had launched an
     array of new services for consumer and business customers: AT&T
     WorldNet(SM), which positioned AT&T as a leading provider of Internet
     access; AT&T One Rate, a new residential, flat-rate calling plan which
     brings simplicity to the consumer long-distance market; AT&T.ALL(SM), a new
     service platform for business customers that provides integrated billing
     and customer care for local, long distance, Internet access, messaging, and
     wireless services; and a national roll-out of wireless digital PCS
     services.

     Based on these considerations, the Committee awarded a bonus of $1,250,000
to Mr. Allen, substantially below the target level and an 18% reduction from his
1995 award.

     Long-Term Incentives: Mr. Allen also received a performance share payout
early in 1996. After determining the maximum award payable to Mr. Allen based on
the Company's net cash provided by operating activities, the Committee exercised
its discretion in determining the actual payout based on RTE performance for the
period 1993-1995. The actual average return achieved was 99.7% of the target,
resulting in a payout of 98.8% of the performance shares awarded to Mr. Allen at
the beginning of 1993.

     No stock option or restricted stock grants were made to Mr. Allen in 1996.

                                   The Compensation and Employee
                                   Benefits Committee
                  
                                   Thomas H. Wyman, Chairman
                                   Kenneth T. Derr
                                   Belton K. Johnson
                                   Donald F. McHenry
                                   Joseph D. Williams

                                       44




                        FIVE-YEAR PERFORMANCE COMPARISON

The graph below provides an indicator of cumulative total shareholder returns
for the Company as compared with the S&P 500 Stock Index, New Peer Group(1), and
Old Peer Group(2). Due to recent restructuring activities, the Company has
created a new peer group that includes companies which better reflect its new
strategic focus on providing global telecommunications services. The performance
of the old peer group is displayed here for comparative purposes as required by
SEC Reg. S-K Item 402(l)(4), and will not be provided in the future.

[PLOT POINTS FROM LINE CHART]


                           New      Old
                           Peer     Peer
          AT&T    S&P500   Group    Group

1991       100     100      100      100
1992       134     108      110      104
1993       141     118      133      126
1994       139     120      121      133
1995       183     165      170      188
1996       176     203      184      233



Assumes $100 invested on December 31, 1991 in AT&T common stock, the S&P 500
Index, New Peer Group common stock, and Old Peer Group common stock with the
reinvestment of all dividends, including the Company's distribution to
shareholders of Lucent common stock on September 30, 1996(3). For the purpose of
this chart, the Lucent distribution is treated as a non-taxable cash dividend
that would have been converted to additional AT&T shares at the close of
business on September 30, 1996.

                                       45


Footnotes

1. The new peer group is composed of the largest companies worldwide which
compete against the Company in its primary industry segment of
telecommunications services and, to a significantly lesser degree, its industry
segment in financial services. The returns of each company have been weighted
according to their respective stock market capitalization for purposes of
arriving at a peer group average. The new peer group is comprised of the S&P
Telephone Index (Alltel Corporation; Ameritech Corporation; Bell Atlantic
Corporation; BellSouth Corporation; Frontier Corporation; GTE Corporation; NYNEX
Corporation; Pacific Telesis Group; SBC Communications Inc.; and U.S. West
Communications Group); British Telecom plc; Cable & Wireless plc; MBNA Corp.;
MCI Communications Corporation; Sprint Corporation; and WorldCom, Inc.

2. The old peer group is composed of the largest companies worldwide which
competed against the Company in the industry segments of information movement
and management, telecommunication equipment manufacturing, financial services,
and leasing. None of the companies in this group offered a fully comparable
range of products and services, although each was widely recognized as a
competitor of AT&T. The returns of each company have been weighted according to
their respective stock market capitalization for purposes of arriving at a peer
group average. The members of the old peer group are as follows: American
Express Company; Ameritech Corporation; Apple Computer, Inc.; Bell Atlantic
Corporation; Bell South Corporation; Cable & Wireless plc; Digital Equipment
Corp.; GTE Corporation; Hewlett-Packard Co.; Intel Corp.; International Business
Machines Corporation; L.M. Ericsson Telefonaktiebolaget; MCI Communications
Corp.; Motorola, Inc.; NEC Corp.; Northern Telecom Limited; NYNEX Corporation;
Pacific Telesis Group; SBC Communications Inc.; Sprint Corporation; Texas
Instruments Incorporated; U.S. West Communications Group; and Xerox Corporation.

3. Data Source: S&P Compustat

                                       46


                           SUMMARY COMPENSATION TABLE

                                       Annual Compensation(2)
                             -----------------------------------------------
                                                                  Other
                                                                 Annual
                                                                 Compen-
Name and                                                         sation(3)
Principal Position (1)        Year    Salary ($)    Bonus ($)       ($)
- ---------------------------- ------- ------------- ------------ ------------
Robert E. Allen              1996    1,186,333     1,250,000    785,521
 Chairman of the Board and   1995    1,153,000     1,524,400    581,079
 CEO                         1994    1,109,000     2,253,600    467,636

Lars Nyberg                  1996      659,000       772,915    129,472
 Chairman and CEO-NCR(9)     1995      295,384       760,506    122,198
                             1994            0             0          0

Richard W. Miller            1996      612,500       477,000    172,206
 Senior Executive Vice       1995      595,000       466,200     82,658
 President-AT&T and Chief    1994      572,000       712,800     50,881
 Financial Officer

John D. Zeglis               1996      538,500       544,000    328,595
 General Counsel and         1995      481,000       379,700    226,425
 Senior Executive Vice       1994      463,000       597,500    193,184
 President-AT&T

Harold W. Burlingame         1996      431,667       383,000    282,962
 Executive Vice              1995      420,000       329,800    192,016
 President-AT&T              1994      404,000       518,900    167,432




                                                Long-Term Compensation(2)
                                      --------------------------------------------
                                         Awards (4)              Payouts
                                      ------------------------------ -------------
                                      Restricted                                     All Other
                                         Stock                            LTIP        Compen-
Name and                               Award(s) (5)       Options/      Payouts(7)    sation(8)
Principal Position (1)       Year            ($)          SARs (#)(6)       ($)           ($)
- --------------------------   ----      ---------------- -------------- ------------- -----------
                                                                      
Robert E. Allen              1996             0                  0      2,177,408       89,954
 Chairman of the Board and   1995             0          1,219,659      1,855,396      102,989
 CEO                         1994             0             99,783      1,885,567      104,422

Lars Nyberg                  1996        98,852(b)               0        489,127    2,288,588
 Chairman and CEO-NCR(9)     1995        45,036(b)         590,975              0            0
                                      2,222,500(c)                                 
                             1994             0                  0              0            0

Richard W. Miller            1996     1,975,000(a)               0        483,255      137,202
 Senior Executive Vice       1995     1,333,500(c)         400,089        439,703      133,022
 President-AT&T and Chief    1994             0             35,445        421,951      131,652
 Financial Officer                                                         

John D. Zeglis               1996     1,975,000(a)               0        373,825       42,094
 General Counsel and         1995     1,333,500(c)         390,121        341,248       43,702
 Senior Executive Vice       1994             0             27,090        327,470       41,927
 President-AT&T                                                            

Harold W. Burlingame         1996             0                  0        309,803       41,185
 Executive Vice              1995     1,079,500(c)         312,766        281,732       45,279
 President-AT&T              1994             0             22,243        270,356       38,662


                                       47


Footnotes

1.  Includes Chairman of the Board and Chief Executive Officer and the four
    other most highly compensated individuals who were executive officers of
    AT&T at the end of 1996, as measured by salary and bonus. Mr. Nyberg ceased
    to be an executive officer of AT&T effective with the 12/31/96 spin-off of
    NCR.

2.  Compensation deferred at the election of named officers is included in the
    category (e.g., bonus, LTIP payouts) and year it would have otherwise been
    reported had it not been deferred.

3.  Includes (a) payments of above-market interest on deferred compensation, (b)
    dividend equivalents paid with respect to long-term incentive compensation
    paid during the year, (c) tax payment reimbursements, and (d) relocation
    reimbursements.

4.  All awards were granted with respect to AT&T common stock and then
    subsequently adjusted, depending on the grant date, for the impact of the
    spin-off to AT&T shareholders of common stock of Lucent, NCR, or both. In
    the case of restricted stock unit awards, the amounts shown represent the
    dollar value on the date originally granted. The amounts shown for stock
    options represent the number of shares of common stock resulting from the
    spin-off adjustments. These anti-dilution adjustments were intended to
    preserve the economic value of the options at the time of the spin-offs. In
    the case of the Lucent spin-off, the adjustment was calculated by
    multiplying the number of shares of AT&T common stock under the original
    award by a factor of 1.34777, and dividing the original exercise price by
    the same factor. A similar calculation was made at the time of the NCR
    spin-off, using a factor of 1.06026. For Messrs. Allen, Miller, Zeglis, and
    Burlingame, a portion of their outstanding stock options was converted into
    a combination of adjusted AT&T options and SARs exercisable with respect to
    shares of Lucent and NCR common stock. This balancing of risk and
    opportunity among the three companies mirrored the impact that the
    restructuring had on the Company's shareholders. It was accorded to the
    named executive officers cited above by virtue of their membership on the
    Transition Steering Committee, whose charter was to ensure the creation of
    three healthy, independent companies as a result of the restructuring.
    Awards shown for Mr. Nyberg represent his AT&T option grants as adjusted for
    the Lucent spin-off. Effective 12/31/96, these awards were canceled and
    replaced by options to purchase shares of NCR.

5a. On October 16, 1996, an award of 50,000 restricted stock units each was
    granted to Messrs. Miller and Zeglis to acknowledge their contribution to
    the restructuring and transition of AT&T and to incent their continued
    employment with the Company. The value at the date of grant of these
    restricted stock units is reflected in the table. These grants vest two
    years from the date of grant with respect to 50% of the units, and four
    years from the date of grant with respect to the remaining 50% of the units,
    and carry stringent penalties for competition and other specified adverse
    activities. Dividends on such units are paid in cash to holders thereof.

                                       48





5b. Mr. Nyberg received 1,596 and 834 restricted shares in 1996 and 1995,
    respectively, in each case pursuant to the Retirement Plan for Officers of
    NCR. Dividends on these shares are reinvested in additional shares of
    restricted stock. The value of such awards at grant is reflected in the
    table.

5c. On September 25, 1995, the Committee granted awards of restricted stock
    units to Messrs. Nyberg, Miller, Zeglis, and Burlingame as part of a special
    equity incentive/retention program. The value of such awards as of the
    original grant date is reflected in the table. These grants vest four years
    after the date of grant and carry stringent penalties for competition and
    other activities adverse to the Company. Dividend equivalents on such units
    are paid in cash to holders thereof. The aggregate value at 12/31/96 for
    outstanding restricted stock and restricted stock unit awards was: Mr.
    Nyberg $2,106,121, Mr. Miller $3,466,127, Mr. Zeglis $3,466,127, and Mr.
    Burlingame $1,014,191.

6.  For 1995, figures include the regular annual grant of options as well as a
    special equity incentive/retention grant made in connection with the
    Company's restructuring. The special grant becomes exercisable four years
    from the date of grant as long as the recipient is still in the employ of
    the Company and, for three-quarters of the grant, only to the extent that
    price targets of $48.9857, $53.1845 and $57.7332, respectively, have been
    met. If such price targets are not met, this portion of the grant becomes
    exercisable six years from the date of grant. No option grants were made to
    named officers in 1996.

7.  Includes distribution in 1996 to Messrs. Allen, Nyberg, Miller, Zeglis, and
    Burlingame of performance shares whose three-year performance period ended
    December 31, 1995. For Mr. Allen, the value of 12,000 AT&T restricted shares
    which vested in 1996 is also reflected in the payout for that year.

8.  In 1996, includes (a) Company contributions to savings plans (Mr. Allen
    $6,000, Mr. Nyberg $0, Mr. Miller $6,000, Mr. Zeglis $6,000, and Mr.
    Burlingame $6,000); (b) dollar value of the benefit of premiums paid for
    split-dollar life insurance policies (unrelated to term insurance coverage)
    projected on an actuarial basis (Mr. Allen $43,981, Mr. Nyberg $13,588, Mr.
    Miller $113,479, Mr. Zeglis $22,914, and Mr. Burlingame $24,438); and (c)
    payments equal to lost Company savings match caused by IRS limitations (Mr.
    Allen $39,973, Mr. Nyberg $0, Mr. Miller $17,723, Mr. Zeglis $13,180, and
    Mr. Burlingame $10,747). In addition, for Mr. Nyberg, includes (1)
    $1,900,000 lump sum cash payment in lieu of benefits and entitlements that
    would have become payable to him under a special pension arrangement
    established for him by AT&T, had he remained employed by AT&T, and (2)
    $375,000 special bonus in connection with Mr. Nyberg's employment agreement
    with the Company.

9.  Mr. Nyberg was hired by the Company and became an executive officer of the
    Company in July 1995. The compensation disclosed for 1995 relates only to a
    partial year.

                                       49


                   AGGREGATED OPTION/STOCK APPRECIATION RIGHTS
                ("SAR") EXERCISES IN 1996 AND YEAR-END VALUES(1)



                                                                                                      Value of
                                                                               Unexercised          In-the-Money
                                                                              Options/SARs          Options/SARs
                                                                           at Year End (#)(4)    at Year End ($)(4)
                                                                         ---------------------- --------------------
                              Shares Acquired                                Exercisable/          Exercisable/
Name (2)                      on Exercise (#)    Value Realized ($)(3)       Unexercisable         Unexercisable
- ---------------------------- ------------------ ------------------------ ---------------------- --------------------
                                                                                          
Robert E. Allen    .........       43,103               1,303,924                801,982              10,208,856
                                                                               1,341,556               1,214,028
Lars Nyberg  ...............            0                       0                 17,289                  59,367
                                                                                 573,686                 118,734
Richard W. Miller  .........            0                       0                153,653                 241,798
                                                                                 385,924                 181,622
John D. Zeglis  ............            0                       0                194,949               1,940,321
                                                                                 481,998                 491,535
Harold W. Burlingame  ......            0                       0                180,408               2,227,078
                                                                                 389,471                 407,812
                                                            
                                                                         
Footnotes                                                                
                                                                               
1.  As explained in Note 4 to the Summary Compensation Table, all outstanding   
    stock options and other stock-based awards were adjusted at the time of the 
    spin-off of Lucent and NCR to preserve the economic value in the awards at  
    that time. All figures in the above table reflect these adjustments. For    
    Messrs. Allen, Miller, Zeglis, and Burlingame, a portion of their           
    outstanding stock options was converted into a combination of adjusted AT&T 
    options and SARs exercisable with respect to Lucent and NCR shares. This    
    balancing of risk and opportunity among the three companies mirrored the    
    impact that the restructuring had on the Company's shareholders. It was
    accorded to the named executive officers cited above by virtue of their
    membership on the Transition Steering Committee, whose charter was to ensure
    the creation of three healthy, independent companies as a result of the
    restructuring. Consistent with accounting principles governing such
    conversions, the adjusted options and SARs retain the same term and vesting
    provisions as the original options. For Mr. Nyberg, the figures shown
    represent the number and value of his AT&T options, as adjusted for the
    spin-off of Lucent. These options were canceled effective 12/31/96 and
    replaced with options to purchase shares of NCR.

2.  Includes Chairman of the Board and Chief Executive Officer and the four
    other most highly compensated executive officers as measured by salary and
    bonus.

3.  For Mr. Allen, includes the value of an exercise of 14,068 Lucent SARs.

4.  For Messrs. Allen, Miller, Zeglis, and Burlingame, includes adjusted AT&T
    options and Lucent and NCR SARs.

                                       50


                   LONG-TERM INCENTIVE PLANS-AWARDS IN 1996



                                                         
                                                         Estimated Future Payout
                                                             of Stock Units     
                                          Performance     Under Non-Stock Price 
                              Number of   Period Until       Based Plan (2)                             
                                Stock      Maturation    -----------------------
            Name (1)            Units      or Payout            Target (#)
- --------------------------    ---------   ------------   -----------------------
                                                       
Robert E. Allen  ..........    38,949     1996-1998             38,949
Lars Nyberg(3)   ..........    14,225     1996-1998             14,225
Richard W. Miller   .......    12,436     1996-1998             12,436
John D. Zeglis   ..........    11,370     1996-1998             11,370
Harold W. Burlingame   ....     7,974     1996-1998              7,974
                                               

Footnotes

1.  Includes Chairman of the Board and Chief Executive Officer and the four
    other most highly compensated executive officers as measured by salary and
    bonus.

2.  In January 1996, the Stock Unit Awards listed in the table were awarded. If
    they remain named officers at the end of 1998, the value of the payout to
    Messrs. Allen, Miller, Zeglis, and Burlingame shall be (i) 0.13% of the
    Company's net cash provided by operating activities for each year in the
    performance period, divided by the total number of executives receiving such
    payouts, or (ii) a lesser amount, based on factors, such as targets for the
    Company's earnings, RTE, and cash flow for the period.

3.  For Mr. Nyberg, the figure provided represents his AT&T grant as adjusted
    for the spin-off of Lucent. Effective 12/31/96, this grant was canceled and
    replaced with an NCR Stock Unit Award covering the same period.

EMPLOYMENT AGREEMENTS

     AT&T entered into two letter employment agreements with Lars Nyberg, one on
April 18, 1995 (the "1995 Agreement") and the other on June 7, 1996 (the "1996
Agreement"), providing for Mr. Nyberg's employment with NCR. The 1995 Agreement
provides for an initial base salary of $600,000 per year, a guaranteed 1995
annual incentive award of $590,000, and awards under the AT&T 1987 Long Term
Incentive Program of 10,555 performance units and options to purchase 38,484
shares of AT&T common stock. The 1995 Agreement also provides for an award to
Mr. Nyberg of 7,397 performance units that were payable in the first quarter of
1996 and

                                       51


8,783 performance units that were payable in the first quarter of 1997. At the
time of the spin-off of NCR, such performance units were converted into
comparable awards based on NCR common stock under the NCR Management Stock Plan.
Mr. Nyberg also received additional equity-based awards in 1995, which are
reflected in the Summary Compensation Table.

     The 1996 Agreement supplements the 1995 Agreement and provides for an
annual bonus of $375,000, payable by NCR to Mr. Nyberg on June 1 of each of the
years 1996 through 1998, and a bonus of $3,875,000, payable by NCR to Mr. Nyberg
on June 1, 1999, provided in each case that Mr. Nyberg is employed by NCR on
such dates. In the event his employment is terminated as a result of death,
disability, involuntary termination other than for "cause," or "termination for
good reason" (as such terms are defined in the 1996 Agreement), Mr. Nyberg (or
his estate) will receive a one-time payment of $5,000,000, less any bonus
payments already received. The 1996 Agreement also provides for a bonus of
$2,000,000 to be paid to Mr. Nyberg on or after June 1, 1999 upon execution of
an employment contract with NCR for an additional two-year period beyond June 1,
1999.

     The 1996 Agreement provides that, after the spin-off of NCR, 400,000 stock
options for shares of AT&T common stock and 35,000 AT&T restricted stock units
that were granted to Mr. Nyberg in September 1995 will continue to become
exercisable or vest, as applicable, in accordance with the terms under which
such awards were granted, and that such restricted stock units will not be
converted into comparable awards based on NCR common stock but will remain
outstanding. The 1996 Agreement also provides that, after the spin-off of NCR,
NCR will provide Mr. Nyberg with (i) a grant of options to purchase a number of
shares of NCR common stock such that the market price per share of NCR common
stock at the date of grant multiplied by such number of shares equals
$5,000,000, and (ii) a grant of a number of restricted shares of NCR common
stock such that the market price per share of NCR common stock at the date of
grant multiplied by such number of restricted shares equals $5,000,000. Such
options and restricted shares will become exercisable or vest, as applicable, in
September 1999. Finally, the 1996 Agreement also

                                       52


provides for a lump-sum cash payment by AT&T to Mr. Nyberg of $1,900,000 upon
consummation of the spin-off of NCR in lieu of benefits and entitlements that
would have become payable to Mr. Nyberg under a special pension arrangement
established for him by AT&T, had he remained employed by AT&T.

PENSION PLANS

     The Company maintains the AT&T Management Pension Plan, a non-contributory
pension plan which covers all management employees, including Messrs. Allen,
Miller, Zeglis, and Burlingame. The normal retirement age under this plan is 65;
however, retirement before age 65 can be elected under certain conditions.

     Under the AT&T Management Pension Plan, annual pensions are computed on an
adjusted career average pay basis. The adjusted career average pay formula is
the sum of (a) 1.6% of the average annual pay for the six years ending December
31, 1992, times the number of years of service prior to January 1, 1993, plus
(b) 1.6% of pay subsequent to December 31, 1992. Only the basic salary is taken
into account in the formula used to compute pension amounts.

     Federal laws place limitations on pensions that may be paid from the
pension trust related to the AT&T Management Pension Plan. Pension amounts based
on the AT&T Management Pension Plan formula which exceed the applicable
limitations will be paid as an operating expense.

     The Company also maintains the AT&T Non-Qualified Pension Plan. Under the
plan, annual pensions for Messrs. Allen, Miller, Zeglis, and Burlingame and
other senior managers are computed based primarily on actual annual bonus awards
under the Company's Short Term Incentive Plan. Pension benefits under this plan
will generally commence at the same time as benefits under the AT&T Management
Pension Plan. The annual pension amounts payable under this plan are equal to
the greater of the amounts computed under the Basic or Alternate Formula
described below.

Basic Formula:

     The sum of (a) 1.5% of the average of the actual annual bonus awards for
     the three-year period ending December 31, 1989,

                                       53


     times the number of years of service prior to January 1, 1990, plus (b)
     1.6% of the actual annual bonus awards subsequent to December 31, 1989.

Alternate Formula:

     The excess of (a) 1.7% of the adjusted career average pay, over (b) 0.8% of
     the covered compensation base, times years of service to retirement, minus
     the benefit calculated under the AT&T Management Pension Plan formula
     (without regard to limitations imposed by the Internal Revenue Code). For
     purposes of this formula, adjusted career average pay is determined by
     dividing the sum of the employee's total adjusted career income by the
     employee's actual term of employment at retirement. Total adjusted career
     income is the sum of (A) and (B), where (A) is the sum of (i) the
     employee's years of service prior to January 1, 1993, multiplied by the
     employee's average annual compensation (within the meaning of the AT&T
     Management Pension Plan) for the three-year period ending December 31,
     1992, without regard to the limitations imposed by the Internal Revenue
     Code, plus (ii) the employee's years of service prior to January 1, 1990,
     multiplied by the average of the employee's actual annual bonus awards for
     the three-year period ending December 31, 1989, and (B) is the sum of the
     employee's actual compensation (within the meaning of the AT&T Management
     Pension Plan) after December 31, 1992, without regard to the limitations
     imposed by the Internal Revenue Code, and actual annual bonus awards
     subsequent to December 31, 1989. The covered compensation base used in this
     formula is the average of the maximum wage amount on which an employee was
     liable for social security tax for each year beginning with 1961 and ending
     with 1996. In 1996, the covered compensation base was $27,600.

     In 1993, an alternative minimum formula ("AMF"), applicable to active
senior managers with five years of service who are participants in the AT&T
Non-Qualified Pension Plan as of December 31, 1993, was established. The annual
pension amount payable under the AMF is equal to the greater of the amounts

                                       54


computed under Formulas A and B plus an additional percent increase factor as
described below:

  Formula A:

     The sum of (a) 1.5% of the average of the total compensation for the
     three-year period ending December 31, 1992, times the number of years of
     service prior to January 1, 1993, plus (b) 1.6% of the total compensation
     from January 1, 1993, to December 31, 1993. For purposes of this Formula A,
     total compensation shall be basic salary plus actual annual bonus awards.
     The pension amounts resulting from this Formula A will be reduced to
     reflect retirements prior to age 55.

  Formula B:

     The excess of (a) 1.7% of the adjusted career average pay, over (b) 0.8% of
     the covered compensation base, times years of service to December 31, 1993.
     For purposes of this Formula B, adjusted career average pay is determined
     by dividing the sum of the employee's total adjusted career income used for
     purposes of Formula A, by the employee's actual term of employment to
     December 31, 1993. The covered compensation base used in this Formula B is
     the average of the maximum wage amounts on which an employee was liable for
     social security tax for each year beginning with 1959 and ending with 1993.
     In 1993, the covered compensation base was $22,800. The pension amounts
     resulting from this Formula B will be reduced to reflect retirements prior
     to age 60.

     An additional percent increase factor based on age and service is applied
to the pension amount resulting from the higher of Formula A or B. The total AMF
pension results in a fixed benefit and such amount is reduced by the amount
payable under the AT&T Management Pension Plan. It is anticipated that after
1997, a senior manager's normal pension increases resulting from additional age
and service as well as possible future pension plan amendments could cause the
regular accrued pension benefit to exceed the fixed

                                       55


AMF benefit. Pensions resulting from the AMF will be payable under the AT&T
Non-Qualified Pension Plan.

     As part of his employment agreement, the Company entered into a
supplemental pension arrangement with Mr. Miller. Pursuant to Mr. Miller's
arrangement, if employment is terminated for any reason other than
Company-initiated termination for "cause," as defined in the arrangement, after
completion of eight years of Company service, he will be entitled to immediate
pension benefits based on his actual net credited service and calculated under
the then-existing Company qualified and non-qualified pension formulas, but
without reference to age and service eligibility requirements. Pension benefits
payable under this arrangement will be paid out of the Company's operating
income, and will be offset by all amounts actually received by Mr. Miller under
any other Company qualified or non-qualified retirement plan or arrangement. In
addition, Mr. Miller will be entitled to certain other post-retirement benefits
that are generally made available to retired executive officers and service
pension-eligible senior managers from time to time.

     In 1995, the Company also entered into an individual pension arrangement
with Mr. Nyberg that required certain minimum service requirements. Since this
arrangement terminated upon the spin-off of NCR on December 31, 1996, Mr. Nyberg
did not attain the minimum service requirements. Pursuant to the June 7, 1996
agreement between the Company and Mr. Nyberg, upon the spin-off, the Company
paid $1.9 million to Mr. Nyberg in lieu of all potential benefits and
entitlements under his individual pension arrangements.

     Senior managers, including Messrs. Miller and Zeglis, and certain other
management employees who are hired at age 35 or over, are covered by a
supplemental AT&T Mid-Career Pension Plan. For specified managers retiring with
at least five years in level, the plan provides additional pension credits equal
to the difference between age 35 and their maximum possible years of service
attainable at age 65, but not to exceed actual net credited service, at
approximately one-half the rate in the AT&T Management Pension Plan.

                                       56


     Pension amounts under either the AT&T Management Pension Plan formula, the
AT&T Non-Qualified Pension Plan, or the AT&T Mid-Career Pension Plan are not
subject to reductions for social security benefits or other offset amounts. If
Messrs. Allen and Burlingame continue in the positions as previously stated and
retire at the normal retirement age of 65, the estimated annual pension amount
payable under the AT&T Management Pension Plan formula and the AT&T
Non-Qualified Pension Plan would be $1,471,000 and $483,100, respectively. For
Mr. Zeglis, the estimated annual pension amount payable under the AT&T
Management Pension Plan formula, the AT&T Non-Qualified Pension Plan, and the
AT&T Mid-Career Pension Plan would be $600,800. For Mr. Miller, the estimated
annual pension amount payable under the AT&T Management Pension Plan formula,
the AT&T Non-Qualified Pension Plan, and the AT&T Mid-Career Pension Plan would
have been $390,200; however, Mr. Miller elected to resign effective March 31,
1997. Amounts shown are straight life annuity amounts not reduced by a joint and
survivorship provision which is available to these officers named.

     The Company has reserved the right to purchase annuity contracts to satisfy
its unfunded obligations to any of these officers under the AT&T Non-Qualified
Pension Plan. In the event the Company purchases an annuity contract for any
officer, the pension payments for such officer will vary from that set forth
above. Then there would be a tax gross-up payment to the officer, and annuity
benefits paid by the annuity provider will be reduced to offset the tax gross-up
payment. The after-tax pension benefit will be the same as the after-tax benefit
the participant would otherwise have received under the AT&T Non-Qualified
Pension Plan.

RELATED TRANSACTIONS

     During 1996, Mr. Ron J. Ponder, an Executive Vice President of the Company,
had an outstanding interest-free loan currently in the amount of $350,000, which
was incurred on July 30, 1993 for the purpose of assisting in the purchase of a
personal residence. Full repayment of the principal shall be due and payable on
July 30, 1998 (five years from the effective date of the loan).

                                       57


OTHER INFORMATION

     A Directors' and Officers' Liability policy was placed, effective September
30, 1996, with Lloyds of London and other carriers. The policy insures AT&T for
certain obligations incurred in the indemnification of its Directors and
Officers under New York law or under contract, and insures Directors and
Officers when such indemnification is not provided by AT&T. The policy premium
from September 30, 1996 through July 1, 1997 is $800,000. An interim policy was
purchased to cover the corporation from July 1, 1996 through September 30, 1996
prior to the final separation of Lucent at a cost of $320,000.

     The cost of soliciting proxies in the accompanying form will be borne by
the Company. In addition to solicitations by mail, a number of regular employees
of the Company and of its subsidiaries may solicit proxies in person or by
telephone. The Company also has retained Morrow & Co. to aid in the solicitation
of proxies, at an estimated cost of $18,000 plus reimbursement of reasonable
out-of-pocket expenses.

     The above notice and proxy statement are sent by order of the Board of
Directors.

                                Marilyn J. Wasser
                                Vice President - Law and
                                Secretary

Dated: April 1, 1997

                                       58



[AT&T LOGO]

32 Avenue of the Americas
New York, NY 10013-2412





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 Recycled
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P
R                                  AT&T Corp.                        
O              32 Avenue of the Americas, New York, NY 10013-2412    [AT&T LOGO]
X              
Y                    This proxy is solicited on behalf of
         the Board of Directors for the Annual Meeting on May 21, 1997
- --------------------------------------------------------------------------------

The undersigned hereby appoints R.E. Allen, M.I. Sovern and T.H. Wyman, and each
of them, proxies, with the powers the undersigned would possess if personally
present, and with full power of substitution, to vote all common shares of the
undersigned in AT&T Corp. at the annual meeting of shareholders to be held at
the Meadowlands Exposition Center in Secaucus, New Jersey, at 9:30 A.M. on May
21, 1997, and at any adjournment thereof, upon all subjects that may properly
come before the meeting, including the matters described in the proxy statement
furnished herewith, subject to any directions indicated on the other side of
this card. If no directions are given, the proxies will vote for the election of
all listed nominees and in accord with the directors' recommendations on the
other subjects listed on the other side of this card. In the event that any
other matter may properly come before the meeting, or any adjournment thereof,
the proxy committee is authorized, at their discretion, to vote the matter. (If
you have indicated any changes or voting limitations on this side of the card,
please mark the "Special Attention" box on the other side.)

This card also provides voting instructions for shares held in the dividend
reinvestment plan and, if registrations are identical, shares held in the
various employee stock purchase and savings plans as described in the proxy
statement. Your vote for the election of directors may be indicated on the other
side. Nominees are: R.E. Allen, K.T. Derr, M.K. Eickhoff, W.Y. Elisha, G.M.C.
Fisher, R.S. Larsen, D.F. McHenry, M.I. Sovern, J.R. Walter, and T.H. Wyman.
Please sign on the other side and return promptly to P.O. Box 8872, Edison, NJ
08818-9241. If you do not sign and return a proxy, or attend the meeting and
vote by ballot, your shares cannot be voted.

- --------------------------------------------------------------------------------
Comments:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

If you have written in the above space, please mark the "Special Attention" box
on the other side of this card. Comments will be reviewed but not responded to
on an individual basis. Instead, they will be addressed through various Company
publications.



[x} Please mark your                                                    |
    vote with an X in                                                   | 8777
    black or blue ink.                                                  |_____

                        Directors recommend a vote "FOR"
- --------------------------------------------------------------------------------
                         WITHHELD                          
               FOR ALL   FROM ALL                                               
               nominees  nominees                          FOR  AGAINST  ABSTAIN
                                                                                
A. Election of                            B. Ratification                   
   Directors                                 of Auditors                    
   (page 6)                                  (page 12)                      
                                                                            
FOR ALL EXCEPT the following nominee(s):  C. AT&T 1997                      
                                             Long Term                     
                                             Incentive                      
                                             Program                        
                                             (page 13)                      
                                             
- ----------------------------------------


                      Directors recommend a vote "AGAINST"
                       the shareholder proposals regarding
- --------------------------------------------------------------------------------

                               FOR       AGAINST        ABSTAIN

1. Political Contributions
   (page 25)

2. Operations in
   China and the 
   Former Soviet
   Union
   (page 27)

3. Director's Personal
   Statement of
   Belief
   (page 29)

4. Executive
   Compensation
   Review
   (page 31)

5. Non-Cash
   Compensation of
   Manager Leaving
   Before Retirement
   (page 34)
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
SPECIAL ATTENTION
Mark here if you have noted
comments or voting limitations
on the reverse.

ANNUAL REPORT
Mark here to discontinue
extra annual report (page 3).

ANNUAL MEETING
Mark here if you plan to attend
the annual meeting.
- --------------------------------------------------------------------------------


SIGNATURE(S) __________________________________________DATE ______________, 1997

Please sign this proxy as name(s) appears above and return it promptly whether
or not you plan to attend the meeting. If signing for a corporation or
partnership or as agent, attorney or fiduciary, indicate the capacity in which
you are signing. If you do attend the meeting and decide to vote by ballot, such
vote will supersede this proxy.