Retirees criticize 'golden parachute' deal
for Qwest CFO
By Jeff Smith
Rocky Mountain News
Tuesday, September 23, 2008
A potential multimillion-dollar "golden parachute" for Qwest's
new chief financial officer is being criticized by a retirees
group, which says shareholders should approve such packages.
But the Denver
telco said the severance provision is appropriate and necessary
to recruit top talent. Qwest last week named Joseph
Euteneuer, a former XM Radio and Comcast executive, its new CFO.
His contract includes a severance provision that would provide
2.99 times his annual salary and target bonus if he resigns or
loses his job after a sale or merger. That would be worth
$4.9 million based on his current salary and target bonus.
In addition, Eutenauer's 1.06 million stock options and 489,000
restricted shares would vest immediately upon a change in
control. That potentially could be worth millions of
The stock awards on top of the severance payment multiplier
triggers a shareholder approval standard that received a
majority vote at Qwest's annual meeting in May, according to
Michael Calabrese, vice president of the think tank New America
However, the proposal, made by Hazel Floyd of the Association of
U S West Retirees and approved by 54 percent of the
shareholders, was non-binding, and the Qwest board has yet to
take action on it.
Floyd sent a letter to Qwest in August urging the proposal's
confirmation but hasn't received a response, said Nelson Phelps,
executive director of the retirees group.
"My view is that they've been quite frankly thumbing their nose
at us from the standpoint of any response to the letter or
following the recommendation," Phelps said. He noted that
the agreement comes at a time when Americans again are being
hurt by corporate excess.
Said Qwest spokeswoman Diane Reberger: "Our board is carefully
considering Qwest's severance policy, and will, of course, act
in the best interests of our stockholders. Our
compensation committee believes that Mr. Euteneuer's employment
agreement is appropriate, given today's market for executive
talent, and in the best interests of the company and its
No one is suggesting Qwest is primed for a merger or sale.
But there is some history to this issue. Former U S West
CEO Sol Trujillo received a golden parachute valued at $72
million after the merger with Qwest.
Former Qwest CEO Richard Notebaert received $8 million in
severance pay, but could have received many times that if a
takeover offer of MCI had gone through and he had left the
company. Current Qwest CEO Ed Mueller has a comparable
Calabrese, who brought the issue of Euteneuer's severance to the
attention of the retirees group this week, said another
explanation may be that Qwest's board does plan to adopt the
stricter standard -- but didn't want Euteneuer's severance
agreement to apply.
"It would be quite easy to adopt a policy that probably won't
have teeth until the next crowd comes in," Calabrese said.