Qwest execs receive millions in stock
Notebaert and Shaffer are rewarded for helping turn the company around, but retirees criticize the pay.
By Beth Potter, Staff Writer
Denver Post
Tuesday, October 25, 2005

Qwest's chief executive and chief financial officer last week received restricted stock worth about $6.8 million at Qwest's current stock price, according to a Securities and Exchange Commission filing.

CEO Richard Notebaert got 1 million shares and CFO Oren Shaffer received 625,000 shares.  They can't cash in the stock until the end of 2006, and to do so they must still work for the Denver-based phone company.

Qwest stock closed Monday at $4.19 a share, making Notebaert's stock worth about $4.2 million and Shaffer's stock worth $2.6 million.

"The board wants to reward their achievements," said Chris Hardman, Qwest spokesman. "It's in the best interest of the company to deliver a compensation that created the right blend of incentives and performance recognition."

Notebaert's 2004 pay package was estimated at $11 million to $12.5 million, depending on what value two outside research firms placed on 1.9 million stock options he received in 2004.

Shaffer was paid $800,000 in 2004 and received a bonus of $1.68 million. He also received 800,000 in stock options.

In the Monday SEC filing, Qwest also changed the way it compensates its board of directors, offering directors $50,000 per year to attend 12 board meetings and 40,000 in stock options per year. Those options will be issued each January and vest four years later.

Members new to the board this year received 48,000 stock options Thursday, with a strike price of $4.15.

For the past three years, Qwest did not give its directors stock options, according to its 2005 proxy statement. Each director was paid $30,000 a year and given $2,000 for each meeting attended.

Under Notebaert and Shaffer, Qwest has substantially reduced its debt, improved customer service and seen its credit ratings rise, Hardman said.

The two men came in when Qwest was on the brink of bankruptcy in 2002.  Notebaert replaced former CEO Joe Nacchio, who was fired after Qwest's stock plummeted in the face of an accounting scandal.

"The tasks they have faced have been substantial and unique in the current corporate environment," Hardman said.

But a spokesman for Qwest retirees blasted the stock awards, complaining that under Notebaert, benefits of more than 26,000 retirees have been cut to their lowest levels ever.

"We heard all of this positive support and things he was going to do to help retirees and he's done the opposite and padded his own pockets," said Nelson Phelps, executive director of the Association of US West Retirees. "He's not our friend."

Qwest is scheduled to release its third quarter earnings next Tuesday.

Staff writer Aldo Svaldi contributed to this report.

Staff writer Beth Potter can be reached at 303-820-1503 or bpotter@denverpost.com.