The Association of U S West Retirees



Qwest rewards executives
Notebaert, Shaffer get restricted stock worth $14.8 million
By Jeff Smith
Rocky Mountain News
Saturday, February 18, 2006

Qwest Communications has granted its top two executives nearly $15 million worth of restricted stock and several million options, with the rewards contingent on them staying at the Denver telco until 2010.  Qwest gave 1,459,000 restricted shares worth around $9 million to Chief Executive Dick Notebaert and 948,000 restricted shares worth $5.8 million to Chief Financial Officer Oren Shaffer.  Both rewards were pegged to Thursday's close of $6.15 a share.

In addition, Notebaert got 2.3 million options to purchase stock at $6.15 a share, while Shaffer got 1.5 million options at the same exercise price.

The restricted stock and options will fully vest on Feb. 16, 2010.  Notebaert and Shaffer must remain with the Denver telco until then to reap the possible rewards, according to a regulatory filing Friday.  Exceptions include a change in control of the company, such as a sale or merger.

This is the second time in less than a year the two were granted restricted stock.

In October, the company issued 1 million restricted shares to Notebaert worth $4.15 million and 625,000 shares to Shaffer worth $2.6 million.  Those shares, however, vest on Dec. 31 of this year, which raised speculation then that Notebaert and Shaffer might decide to leave the company in 2007.

Qwest spokesman Bob Toevs said the latest grants reward the "steady, ongoing enhancement of shareholder value."  Shares of Qwest rose 27.3 percent in 2005.

Toevs also noted the restricted stock, besides having the incentive for the two to stay another four years, has certain performance bars designed to build the company's long-term value.

For example, Notebaert and Shaffer won't get the restricted stock award unless Qwest's closing stock price averages $7.50 a share for 188 consecutive trading days between now and Feb. 16, 2008, or $8 for 188 consecutive trading days between Feb. 17, 2008, and Feb. 16, 2010.

"If shareholders don't realize the stock appreciation, then the executives aren't going to realize the potential rewards," Toevs said.

Still, Nelson Phelps, executive director of the Association of U S West Retirees, said the rewards are simply too much.

"As we've said before, we really strongly believe the executive compensation being paid is excessive, particularly when you look at both the employees and retirees," Phelps said.  "Again, it's the haves and have nots."

Phelps said the retirees would continue to "hammer" on that issue at the company's annual stockholder meeting this spring.

Qwest also gave restricted shares and options to a group of five senior executives:  Barry Allen (251,000 shares and 368,000 options);  Richard Baer (220,000 shares and 323,000 options);  Paula Kruger (172,000 shares and 252,000 options);  Thomas Richards (156,000 shares and 228,000 options);  and John Richardson (59,000 shares and 87,000 options).

Qwest Communications
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