ranks low for executive pay vs. return
Group: Notebaert overpaid in light of stock performance
By Jeff Smith
Rocky Mountain News
Tuesday, May 8, 2007
Qwest Communications is ranked among the 12 worst U.S.
corporations in terms of the huge gap between executive
compensation and shareholder performance, according to a
respected independent research firm. The Corporate Library
report lists Home Depot, Pfizer, Time Warner Inc., Verizon
Communications and Wal-Mart as "pay for failure" companies for
the second consecutive year.
Qwest is named with Abbott Laboratories and Wyeth as "pay for
failure near misses."
The Corporate Library, based in Portland, Maine, lists Qwest CEO
Dick Notebaert as getting $44.5 million of compensation in the
past two fiscal years, while the shareholder return since 2001
is negative 40.8 percent.
"It continues to be the case that far too much executive
compensation is delivered without any link to performance at
all," Paul Hodgson, senior research associate, wrote in the
executive summary of the report. "Within the current examples,
executives are showered with golden hellos, golden goodbyes,
excessive retirement benefits and perquisites for which they are
quite able to pay themselves."
Qwest spokeswoman Diane Reberger countered that shareholder
returns actually have about doubled since Notebaert came aboard.
"Dick has only been there since (June) 2002. It would be much
more meaningful to look at the performance of his tenure,"
Reberger said. "This seems like an apples-to-oranges
Hodgson responded that he did give Qwest a break, putting it
into a "slightly different class."
"While the five-year return is negative, they have begun to
recover (shareholder) fortunes," Hodgson said.
Still, "given that proviso, they are still down 40 percent from
2001 stock prices."
He said his examination of Qwest also shows that it has
"virtually guaranteed" executive compensation higher than its
He also pointed to bonuses, which have been paid out almost
every year regardless of shareholder performance, and noted that
Notebaert received a multimillion-dollar restricted stock award
pegged to about a 20 percent stock price gain.
At the time of the award, Qwest's stock was trading at $6.15 a
share and had to go up to $7.50 for six months. That's an
increase "of not very much to not very much," Hodgson said.
"That doesn't seem like a particularly challenging metric."
Short end of the stick
$44.5 million: Qwest Communications' CEO Dick
Notebaert's compensation past two fiscal years.
-40.8% Five-year shareholder return, 2001-06.
Source: The Corporate Library
smithje@RockyMountainNews.com or 303-954-5155