Qwest adopts new severance policy during annual meeting
By Sandy Shore, AP Business Writer
Friday, May 23, 2008
Communications shareholders won greater control over some
executive severance agreements Thursday as they peppered the
telecom's CEO with questions about retiree benefit cuts and top
management perks. The shareholders also approved a slate
of directors for the board and an independent auditor during the
Qwest Communications International Inc. annual meeting downtown.
One angry retiree after another told the Qwest managers their
pensions and benefits have lost value, even as Chief Executive
Ed Mueller received a compensation package valued at $17.4
And, at least one noted, Qwest continues to pick up the legal
tab for ex-chief Joe Nacchio, who is appealing an insider
trading conviction and battling civil fraud charges.
"I really wonder if you in senior management at Qwest are in the
same loop as the rest of us," said Mary Ann Neuman, vice
chairwoman of one retirees group.
Several others echoed concerns about Mueller's compensation
package, which included use of the corporate jet for some family
travel and Qwest's agreement to buy his home in California as
part of his relocation package.
Qwest purchased his house for $8.9 million in September and sold
it in December for $7.1 million, net of closing costs and
commissions, for an incremental cost to the company of $1.8
Nelson Phelps, executive director of the Association of U S West
Retirees, said retirees received a 2.8 percent average increase
in the pension in 1996, the last increase that has been granted.
His association represents retirees of the former U S West,
which was acquired by Qwest, and of the newly combined company.
Phelps asked the board to consider a request to increase
Under the measure that was passed, shareholder approval will be
required for severance agreements with a total value exceeding
2.99 times the sum of an executive's base salary plus target
bonus. It passed with 54 percent of the vote.
A proposal to separate the roles of the board chairman and chief
executive was rejected.
Retirees have filed a lawsuit against the company over a change
in life insurance and fighting a threat to take away a pension
The company changed the way it pays life insurance premiums to a
flat $10,000 cap. Previously, it varied from job to job.
Company spokesman Bob Toevs said the company has not changed
Nacchio has appealed his April 2007 conviction for illegally
selling $52 million worth of stock in 2001 when, prosecutors
argued, he knew Qwest was at risk but didn't tell investors.
He also is one of several former Qwest executives facing civil
fraud charges filed by the Securities and Exchange Commission.
The regulatory agency alleges they coordinated a financial fraud
that allowed Qwest to improperly report about $3 billion in
The cases grew out of a multibillion-dollar accounting scandal
that forced Qwest to restate $2.2 billion of revenue.
The Denver-based company operates a fiber optics network and is
the primary telephone provider in 14 mostly Western states.
Qwest's stock closed down 7 cents at $4.55 a share Thursday.