Point: Alarming signal
By Vincent Carroll, Columnist
Rocky Mountain News
Friday, August 4, 2006
Sol Trujillo presided as CEO of U S West for all of two
years, having marched his way to the top during a
quarter-century as a loyal company man. Trujillo was not an
entrepreneur who risked his own resources and reputation on
a new idea or product; he was an executive who spent his
career in a highly regulated industry in which real
competition had been, for many years, a novelty. And yet
this week we learned that when Trujillo left U S West in
2000 as a result of its merger with Qwest, he pocketed $72
million, including a $36.9 million "change-in-control
payment." And that doesn't include his stock options, which
no doubt were worth a separate fortune.
"Greedy and gluttonous, lining their pockets," is how an
attorney for the Association of U S West Retirees put it,
and that sounds about right.
This is not just a moralistic judgment based on imprecise
notions of fairness and earned rewards. It's also a
fiduciary verdict. As Thursday's
News story recounts, Qwest canceled a planned
$273 million stock dividend payment at the time of
Trujillo's departure because new management "believed the
money would be better spent on investing in video services,
wireless programs and customer-service improvements."
So it was OK to stiff shareholders while showering riches on
departing executives. This would be the first alarming
signal transmitted by management of the newly merged Qwest.
But it would not be the last.