give stock profits to charity
Qwest CEO nets options income of $18.4 million
By Jeff Smith
Rocky Mountain News
Friday, November 10, 2006
Qwest Chief Executive Dick Notebaert netted $18.4 million from
exercising stock options this week -- and he plans to give all
his after-tax profits to charities. The stock sales by
Notebaert come on the heels of the Denver telco's third
consecutive quarterly profit, with stock prices at four-year
The move to give the after-tax profits to charities emerges at a
time when Notebaert has angered thousands of telephone company
retirees with plans to cut health care and life-insurance
Notebaert's plan to give his proceeds to charities led Curtis
Kennedy, the retirees group's attorney, to quip Thursday: "How
about giving it to the Association of U S West Retirees, which
is nonprofit and serving the interests of tens of thousands of
Qwest spokesman Bob Toevs said Notebaert views his charitable
contributions as a personal decision.
In addition, Qwest Chief Financial Officer Oren Shaffer made
$18.5 million pretax from option sales this week, and Qwest
Chief Legal Officer Rich Baer netted $6.4 million. Neither
Shaffer nor Baer have said how they plan to use their money.
Toevs said he's not aware of any executives who plan to leave
An option grants an individual a right during a specified time
in the future to buy a certain number of shares at a fixed
price. If share prices go up, the individual can pocket the
difference between the market price and the cost to exercise the
In general, the retirees group has bristled at the stock sales
and the timing, and has criticized Qwest's executive
compensation as excessive.
Group members have written hundreds of letters and e-mails to
Notebaert complaining about the plan to cut retiree benefits.
Nelson Phelps, executive director of the retirees' group, said
this week he thinks Notebaert should take cutbacks as well.
Toevs noted the company still is paying the monthly health care
premiums for those who retired before 1991, which he said are
most of the retirees. Qwest is legally obligated to do so.
He further noted that the executive team led by Notebaert has
turned the company around financially, averting a possible
bankrupty in 2002, and that stockholders overall have been
rewarded by that turnaround.
Qwest recently announced a plan to buy back as much as $2
billion of stock, which will increase shareholder values by as
much as 12 percent.
Notebaert made enough money to retire when he was chief
executive of Ameritech, now part of SBC Communications. He
could net an additional $30 million if he exercised his options
remaining after this week's exercise.
Notebaert also has restricted stock worth $22.5 million at
Thursday's closing price of $8.45. Notebaert made a salary of
$1.1 million last year and a bonus of $3.15 million.
Shaffer could make an additional $8.5 million in option profits
after this week's transactions and has restricted stock worth
Toevs said the options are granted as part of an executive's
overall compensation package. The board of directors deemed the
packages reasonable given company performance and the
compensation packages provided by similar companies in the
Notebaert's option sales
3.875 million shares at $8.55 for a gross of $33.1 million.
Exercise cost: $14.7
million (at prices of $3.44 to $4.70 a share).
Pretax profit: $18.4
Plans to give all to charities.
Shaffer's option sales
Sold: 3.287 million
shares at $8.55 for a gross of $28.1 million
Exercise cost: $9.6
Pretax profit: $18.5
Hasn't said how he will use the money.
- 14 cents
smithje@RockyMountainNews.com or 303-954-5155.