NW stock contest 2004 Now through Dec. 31, sign up to play in our annual stock-picking contest. Winner gets lunch on us.			Boeing Digest Sign up for our Boeing e-mail newsletter.

Weekly interest and loan rates | Northwest stock contest 2003 Tax tips | Consumer affairs | Home values

Qwest shareholders to curb compensation for executives

By Catherine Tsai
The Associated Press

	JACK DEMPSEY / AP Qwest shareholder Gerald Armstrong presented shareholder proposals during Qwest's annual shareholders meeting in Denver.
	E-mail this article Print this article Search archive

The measure was among three successful proposals by shareholders upset over the high pay given to Qwest executives as the company's stock was sliding earlier this year.

The vote means that growth in the pension fund will be excluded when executive bonuses are calculated. Shareholders also limited directors to one-year terms and called on the board to seek shareholder approval for big severance packages — ones worth more than three times an executive's base salary and bonus.

Unlike in past years, the changes had the backing of directors for Qwest, chaired by new Chief Executive Richard Notebaert.

"Isn't it nice to come to an annual meeting and be treated as stockholders and shareholders and not as potential terrorists?" Edward Kerber quipped before presenting the severance proposal.

Police in riot gear attended last year's meeting in Ohio amid shareholder anger over poor stock prices and the activities of then-CEO Joe Nacchio, who was replaced in June 2002 as federal regulators began an inquiry into Qwest's accounting practices.

Four other shareholder proposals failed, including one requiring that a majority of directors not have significant business ties to Qwest. A measure that would have tied executives' stock-option grants to Qwest's performance against its peers got 45 percent approval, falling just short.

A proposal to require Qwest to expense its stock options also failed. Notebaert said he favors the idea but that there should be a standard for all companies. Among Qwest's peers, Verizon, SBC and BellSouth already expense options.

Qwest founder and Denver billionaire Philip Anschutz, Notebaert and Frank Popoff won re-election to the board, facing no competitors. Notebaert and Popoff received at least 90 percent approval from shareholders, but Anschutz received only 80 percent.

"I'm just a little bit leery of Mr. Anschutz owning so much of this company and the conflict of interest," said Sandy Sanden, 51, a Qwest technician.

The shareholder advisory group Glass Lewis had recommended against re-electing Anschutz, saying his business relationships with Qwest created conflicts of interest. Anschutz representatives have said he acts in Qwest's best interest and has a right to be a director as the company's largest stockholder with a 17 percent stake.

The board remains largely the same one that was sitting when federal regulators began examining whether Qwest artificially boosted its revenue, prompting a restatement that wiped out $2.5 billion in earnings.

The board has yet to decide whether members already elected to three-year terms will resign at the next annual meeting in the spring.

Retirees, incensed that Qwest's last two chief executives left with tens of millions of dollars, have tried since 2001 to rein in executive severance pay. This year, they gained management's support for their two proposals limiting bonuses and big severance packages.

The retirees plan to bring back the failed proposal to further limit conflicts of interest among directors and present two more concerning corporate governance, said Nelson Phelps, head of the retirees' association.

"Shareholders are finally waking up and becoming more active," he said.

Qwest, launched as a fiber-optic network company in 1988, got into the local phone business in 2000 when it bought the Baby Bell US West, the main carrier in 14 Western states since the 1984 breakup of AT&T.

Copyright © 2003 The Seattle Times Company