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5 Qwest execs made $27 million in '05
Notebaert's package as CEO, chairman worth $14.8 million
By David Milstead, Rocky Mountain News
Friday, March 31, 2006

Qwest paid its five best-paid executives more than $27 million last year, including a package for CEO Dick Notebaert valued at more than $14.8 million.  The figures include stock-option grants of nearly 5 million shares in March 2005 with an estimated value of $13.2 million.  Notebaert received 2 million of those, valued at $5.3 million.

Most of the options were granted with an exercise price of $3.89 per share.  Qwest stock has risen roughly $3 since, and the options have already become usable, so barring a collapse in price, the executives will take home even more than the estimated value.

Qwest disclosed the compensation in its annual proxy statement to shareholders, which will be mailed in advance of its May 24 meeting at the Seawell Grand Ballroom of the Denver Performing Arts Complex.

Stockholders will vote on four shareholder proposals at the annual meeting.

One urges the board to pursue bonuses already paid to executives if financial results are later restated.  Another requests the board seek shareholder approval for future supplemental executive retirement plans . A third would require majority voting for board seats, and another requests the company separate the jobs of chairman and CEO, which are held by Notebaert.

The company opposes all the shareholder proposals, saying either that they are unnecessary because of existing policies or that the proposal would put Qwest at a competitive disadvantage.

While much of the compensation information in Tuesday's filing has been disclosed, the document provides the first full picture of 2005 pay for the company.

It also reveals Notebaert received $1,090,635 in "other" annual compensation last year, including $462,498 of travel on Qwest's corporate aircraft. Notebaert's aircraft use totaled $189,296 in 2004.

For 2005, Qwest also gave Notebaert $75,000 in "flexible benefits" pay, financial consulting services worth $54,943, and personal assistant and office expense compensation of $49,652.  Qwest then gave Notebaert an extra $437,392 to pay the taxes on the benefits he received.

Notebaert had a "target" bonus of $2.2 million on top of his $1.1 million salary.  Qwest met its corporate goals for revenue, net income and cash flow, giving Notebaert his target, the company said.  Then, the board's compensation committee used an "individual performance" measure to increase the target bonus 43 percent, to $3.15 million.

In setting the individual performance mark, the board's committee considered the financial measures and "resolution of certain legal matters;  successful negotiation of new collective bargaining agreements;  implementation of a leadership training program for certain management employees;  and a restructuring of Qwest's balance sheet."

Top figures

Dick Notebaert's $14.8 million pay:
  Salary:  $1,100,000
  Bonus:  $3,150,000
  Other annual compensation:  $1,090,635
  Restricted stock award:  $4,150,000
  Stock option grant, estimated value:  $5,327,620
  401(k) and life insurance:  $14,556

Qwest Communications
Q: NYSE
$6.83
- 6 cents

David Milstead is finance editor of the Rocky Mountain News. He can be reached at milstead@RockyMountainNews.com or 303-892-2648.

http://www.rockymountainnews.com/drmn/tech/article/0,2777,DRMN_23910_4584083,00.html