retirees aim to rein in executive pay, hold on to benefits
By Associated Press
Rocky Mountain News
Tuesday, May 23, 2006
Retirees of Qwest Communications International Inc. will try
once more to revise corporate governance policies when Qwest
holds its annual shareholder meeting here Wednesday — and a
few may complain about high pay to executives. Up for a
vote is a proposal from retirees to require that
shareholders approve retirement benefits for executives that
go beyond what other managers receive.
Another aims to recover performance-based pay to executives
if it later turns out that the company performed worse
financially than previously stated.
Two proposals from other shareholders would require that
Qwest Communications International Inc. have a separate
chairman and chief executive officer (CEO Richard Notebaert
now holds both titles) and that directors be voted in by a
majority, not a plurality.
Qwest declined to comment Tuesday beyond its proxy
statement, in which management recommended rejecting all
four shareholder proposals.
The company also has asked shareholders to approve directors
to the board, an auditor and a compensation proposal.
The Association of U S West Retirees, representing retirees
of Qwest and the Baby Bell it acquired, tried unsuccessfully
last year to pass the "claw-back" proposal seeking to
recover executives’ performance-based pay.
The proposal came about after Qwest agreed to pay $250
million to settle civil fraud charges that alleged it
artificially inflated its revenue during the tenure of
former CEO Joseph Nacchio.
Qwest, in its proxy, said it already has a policy to deal
with recovering compensation.
The proposal on executives’ retirement pay, also a repeat,
comes as chief executives of other companies have walked
away with millions of dollars and other benefits.
"While CEOs are increasing their benefits, corporations are
removing benefits from employees and retirees," said Nelson
Phelps, executive director of the retirees association.
"There’s got to be some balance."
Retirees are fighting threats to take away a death benefit
for retirees’ survivors. A Qwest spokesman said he could
not comment on pending litigation.
Research firm Glass Lewis & Co. said shareholders should
reject the proposal, which Qwest has said could limit its
competitiveness in luring qualified executives. Glass Lewis
recommended approving the other three shareholder proposals.
The proxy advisory firm Institutional Shareholder Services
Inc. has recommended that shareholders vote for all four
Roughly two dozen retirees typically attend Qwest’s annual
meetings from around the 14-state region where Qwest
provides local phone service. Phelps said he expected at
least one retiree to bring up executive compensation.
Notebaert received $4.25 million in base pay and salary last
year, plus 1 million shares of restricted stock and options
for 2 million shares.
In the first quarter, Qwest reported its first net profit
since mid-2000 without including any gains from asset sales.
"We’re very supportive of the leadership and the steps
they’ve taken to turn the company around," said Mimi Hull,
president of the retirees association. "Our only issue is,
don’t do it on the back of retirees by taking away benefits
earned in our working years."