chiefs cause feathers to fly
Benefits caps, Notebaert's compensation lead some stockholders
By Andy Vuong, Staff Writer
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
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
"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
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