AUSWR
The Association of U S West Retirees
 

 

 

Qwest adopts new severance policy during annual meeting
By Sandy Shore, AP Business Writer
Dener Post
Friday, May 23, 2008

DENVER—Qwest Communications shareholders won greater control over some executive severance agreements Thursday as they peppered the telecom's CEO with questions about retiree benefit cuts and top management perks.  The shareholders also approved a slate of directors for the board and an independent auditor during the Qwest Communications International Inc. annual meeting downtown.

One angry retiree after another told the Qwest managers their pensions and benefits have lost value, even as Chief Executive Ed Mueller received a compensation package valued at $17.4 million.

And, at least one noted, Qwest continues to pick up the legal tab for ex-chief Joe Nacchio, who is appealing an insider trading conviction and battling civil fraud charges.

"I really wonder if you in senior management at Qwest are in the same loop as the rest of us," said Mary Ann Neuman, vice chairwoman of one retirees group.

Several others echoed concerns about Mueller's compensation package, which included use of the corporate jet for some family travel and Qwest's agreement to buy his home in California as part of his relocation package.

Qwest purchased his house for $8.9 million in September and sold it in December for $7.1 million, net of closing costs and commissions, for an incremental cost to the company of $1.8 million.

Nelson Phelps, executive director of the Association of U S West Retirees, said retirees received a 2.8 percent average increase in the pension in 1996, the last increase that has been granted.  His association represents retirees of the former U S West, which was acquired by Qwest, and of the newly combined company.

Phelps asked the board to consider a request to increase pensions.

Under the measure that was passed, shareholder approval will be required for severance agreements with a total value exceeding 2.99 times the sum of an executive's base salary plus target bonus.  It passed with 54 percent of the vote.

A proposal to separate the roles of the board chairman and chief executive was rejected.

Retirees have filed a lawsuit against the company over a change in life insurance and fighting a threat to take away a pension death benefits.

The company changed the way it pays life insurance premiums to a flat $10,000 cap.  Previously, it varied from job to job.  Company spokesman Bob Toevs said the company has not changed death benefits.

Nacchio has appealed his April 2007 conviction for illegally selling $52 million worth of stock in 2001 when, prosecutors argued, he knew Qwest was at risk but didn't tell investors.

He also is one of several former Qwest executives facing civil fraud charges filed by the Securities and Exchange Commission.  The regulatory agency alleges they coordinated a financial fraud that allowed Qwest to improperly report about $3 billion in revenue.

The cases grew out of a multibillion-dollar accounting scandal that forced Qwest to restate $2.2 billion of revenue.

The Denver-based company operates a fiber optics network and is the primary telephone provider in 14 mostly Western states.

Qwest's stock closed down 7 cents at $4.55 a share Thursday.

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