Qwest on defensive at meeting
Shareholders and retirees grill the board of directors and executives, but CEO Ed Mueller takes it in stride.
By Kimberly S. Johnson
The Denver Post
Friday, May 23, 2008

Shareholders and retirees ripped into Qwest's executives and board of directors during their annual meeting Thursday, asking for better leadership and accountability.

It was the first annual meeting for chairman and CEO Ed Mueller, who was bombarded with questions from retirees seeking better benefits and shareholders looking to pare down executive compensation.  More than 100 people attended.

"(It went) fine," Mueller said after the meeting at the Denver Performing Arts Complex.  "The shareholders have a right to express themselves.  I don't think I was surprised about anything."

Executive compensation challenged

The company's stock closed at $4.55 Thursday, down more than 1.5 percent.  That is lower than the roughly $5 it was trading at when former CEO Joe Nacchio was ousted in 2002.

And shareholders wanted answers, particularly in light of soaring compensation for CEOs nationwide.

One thorny issue: the $1.2 million Mueller made when Qwest bought his California home.  The company ended up taking a $1.8 million loss on the property.

Mueller was the only one to respond to pointed questions about the board's oversight of executive compensation and decreasing retiree benefits.

Two long-standing members of the board, Linda Alvarado and Frank Popoff, were repeatedly referred to when shareholders asked how Qwest will change.

"To what do these people owe their tenure?" asked Gerald Armstrong, a shareholder advocate in Denver.

"We have an excellent board of directors that represent the shareholders really well," Mueller responded.  "These people do good work for you.  These people are dedicated."

A shareholder proposal by Armstrong that would have separated the roles of chairman and CEO was rejected, with 83 percent of shareholders voting against it.

Retirees leave satisfied

Retirees said Mueller's response to their concerns was much better than that of his predecessors, Dick Notebaert and Nacchio.  They said a shift from trying to hold the CEO fully accountable for the company's failings to focusing on the board was more successful.

"He listened and agreed to sit down and talk to us," said Nelson Phelps, executive director of the Association of US West Retirees.  "We were able to get our issues out.  It was the most successful meeting we've had since Qwest was formed."

The group was successful in passing its proposal requesting that the board seek shareholder approval of future severance agreements of senior executives that would be more than 2.99 times the sum of an executives's base salary plus targeted bonus.

Kimberly S. Johnson: 303-954-1088 or kjohnson@denverpost.com

http://www.denverpost.com/business/ci_9352147