The Association of U S West Retirees



Investors seek more input on executive pay
Shareholders for companies such as Qwest are seeking oversight over compensation packages at upcoming annual meetings. 
By Steve Raabe
Denver Post
Sunday, April 3, 2009

Disgruntled investors increasingly are calling for shareholder oversight of executive compensation, putting large businesses on notice that corporate salaries must reflect companies' financial performance.

Qwest shareholders vote May 13 to put them among the first nationally to have a voice on the issue.

The "say on pay" provision proposed by a Minnesota shareholder asks Qwest's board of directors to submit the salaries for its top executives to a nonbinding annual vote by owners of Qwest stock.

"Executive compensation is a very hot issue among investors," said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware.

"Qwest has had some corporate governance and compensation issues that go back to the Nacchio era," Elson said in a reference to Qwest's former chief executive who received salary, bonuses and stock awards totaling more than $200 million during his five-year tenure.

Joe Nacchio is serving a six-year federal prison term for illegal insider trading.

Current Qwest CEO Ed Mueller received $10.4 million in total compensation in 2008.

The Qwest say-on-pay vote and a related provision on shareholder approval of executive retirement benefits put the telecommunications company in the spotlight this month as a number of Colorado public companies hold annual meetings.

Most of the meetings lack the topical interest of executive compensation, focusing instead on the typical functions of electing directors and appointing auditors.

Few companies nationwide have approved shareholder oversight on compensation, but the votes are getting tighter every year, Elson said.

Shareholders at DuPont recently defeated a say-on-pay proposal with 53 percent of shares voting against it and 46 percent in favor.

"If 20 percent of your shareholders are voting for these proposals, that's a big expression of support," Elson said.

Aflac, Blockbuster and Verizon Communications are among the handful of companies that have agreed to give investors an advisory voice on compensation.

Corporate governance research firm RiskMetrics said shareholders this year have filed more than 100 resolutions asking for a say on pay.  Analysts expect some of the measures to pass as investors show displeasure at high compensation while stock prices lag from economic weakness.

In her proposal, Qwest shareholder Mary Ann Neuman of New Hope, Minn., said the company's executive salaries and benefits "stand out as unjustifiably costly."

Qwest, in its proxy statement filed with the Securities and Exchange Commission, called its compensation "thoughtful" and "in the best interest of our stockholders."

It recommends a "no" vote on the measure.

Steve Raabe: 303-954-1948 or