AUSWR
The Association of U S West Retirees
 

 

 

Qwest chiefs cause feathers to fly
Benefits caps, Notebaert's compensation lead some stockholders to squawk
By Andy Vuong, Staff Writer
Denver Post
Thursday, May 24, 2007

The mood was light before Qwest's annual shareholders meeting Wednesday, with chairman and chief executive Dick Notebaert chatting and posing for photos with a shareholder advocate dressed in a chicken suit.

But the meeting, held at the Grand Hyatt in downtown Denver, grew tense at times.

The company disclosed that all four shareholder proposals were defeated, including one that would have given investors an advisory vote on executive compensation and another that would have linked three-quarters of executive stock awards to Qwest's performance.

During a question-and-answer session that followed, shareholders grilled Notebaert about his compensation, which some deem excessive, and the company's decision to cap life-insurance benefits for retirees.

The benefit cut was "such a shock and such a punch to the stomach," Donnetta Mitchell said during emotional remarks.

The change, which was announced last year and went into effect Jan. 1, reduced life-insurance coverage for retirees from a full year's salary to $10,000. 

Mitchell's husband, a retiree, had contemplated not having life-saving surgery last year so his family could receive full life-insurance benefits, which he told Notebaert in an e-mail last October.  He died just days after he sent the e-mail.

Mitchell, who flew in from Salt Lake City, encouraged Notebaert to "do the right thing" and reinstate the full coverage. 

Notebaert said he couldn't comment about the matter because it is in litigation.  Retirees attorney Curtis Kenney has filed a class-action lawsuit in Denver federal court seeking a reversal of the change.

Retiree Mary Ann Neuman of Minnesota complained about not receiving responses to letter to Notebaert.  Notebaert said he stopped responding to retirees' letters after finding that one of his replies made its way to an Internet blog and was mocked.

Shareholder Linda Baggus of Denver said she makes $55,000 annually as a schoolteacher and wondered why Notebaert deserves to make so much more.

Last year Notebaert earned $1.1 million in salary and $4.1 million in bonuses, and received stock and option awards valued at $16.7 million on the day they were granted.  Notebaert also received $757,913 worth of perks and other compensation.

Notebaert has been credited turning around a company that was on the brink of bankruptcy when he took over in June 2002.  Qwest's debt has been pared nearly in half, and the company has posted five straight quarterly profits.  The stock is trading at a five-year high, closing Wednesday at $10.06, up 6 cents.

Notebaert noted Wednesday that he donated to nonprofits the proceeds of an $18 million stock-option sale last year.  Along those lines, Baggus asked if he would give $10 million of his own money to fund life-insurance coverage for Qwest's 49,000 retirees.

"No," Notebaert said flatly.

Baggus received a short round of applause after her remarks.

Before the meeting, shareholder advocate Scott Adams put on a chicken suit and held a small rally with more than a dozen retirees and shareholders to promote a proposal that would give investors an annual advisory vote on executive pay.  They held signs with slogans such as "Stop Ruffling Our Feathers - Give Shareholders a Say on Pay."

Adams, who works on pension policy for the American Federation of State, County and Municipal Employees, noted that Verizon Communications recently adopted such a policy.

Even though the Qwest measure was defeated, Adams said afterward he hopes to open a dialogue with Qwest management about the proposal.

Also rejected were shareholder measures to split the roles of chairman and CEO, require shareholder approval on supplement retirement plans for executives and link 75 percent of equity compensation for executives to company performance.

About 150 shareholders attended the meeting.

Staff writer Andy Vuong can be reached at 303-954-1209 or avoung@denverpost.com.

http://www.denverpost.com/business/ci_5971213