The Association of U S West Retirees



No 'winks or nods' in Notebaert ethics talk
Culture change put Qwest back on track, DU audience hears
By Joyzelle Davis, Rocky Mountain News
Saturday, April 1, 2006

Before he took the stage to deliver a speech on Friday to the University of Denver's Daniels College of Business, Qwest Chief Executive Dick Notebaert ducked into a campus coffee shop for a bottle of water.  The cashier, unaware of whom he was talking to, asked Notebaert if he was there to hear "the Qwest guy" speak.

"Then he said: 'He's here to give a speech on ethics,' " Notebaert recalled to the audience of Daniels students, alumni and sponsors. " 'Isn't that ironic?' "

Ironic because Notebaert was brought in to fix the near-bankrupt telecommunications company in mid-2002 after Qwest's credibility was tainted by missed revenue forecasts and a federal investigation into an alleged $3 billion financial fraud.

The government has since charged seven former Qwest executives, including former Chief Executive Joe Nacchio.

Under Notebaert's watch, Denver-based Qwest has strengthened its finances -- increasing annual revenues last year for the first time since the 2000 merger of U S West and Qwest -- and placed an emphasis on ethics and customer service.

"It takes 20 years to build a great reputation and five minutes to wreck it," Notebaert said.  "How long does it take to get it back?"

Notebaert, who joined Qwest from telecommunications equipment maker Tellabs, acknowledged that the company still has work to do.  But he said Qwest has made strides by "celebrating whistle-blowing" among employees who have witnessed potential wrongdoing, encouraging communication and establishing a culture that doesn't tolerate "winks or nods."

Notebaert's speech was of particular interest to the audience at Daniels, which received millions of dollars from cable pioneer Bill Daniels to incorporate ethics into its business curriculum.

One of the audience members asked Notebaert if excessive executive compensation might have motivated the spate of highly publicized cases of corporate misconduct in recent years.

Notebaert replied that a diligent board of directors should employ performance goals and external consultants to determine appropriate compensation.  Earlier this week, Qwest said it paid Notebaert a package valued at more than $14.8 million, including stock-option grants of nearly 5 million shares with an estimated value of $13.2 million.

"We are moving more and more toward performance-based vs. pulse-based" pay packages, he said.

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