Angry Shareholders Confront a Bloated CEO
Qwest, the giant Denver-based phone company, is riding high these days. The telecom came before shareholders last week, at the company's annual meeting, with nearly $600 million in 2006 profits -- and a whopping share price hike -- to happily report.
Who deserves the credit -- and reward -- for that stunning "performance"? Give the brass ring, says a grateful Qwest corporate board, to company CEO Dick Notebaert.
In 2006, Qwest bestowed upon Notebaert $1.1 million in salary, $4.1 million in bonus, $760,000 for country club memberships and assorted other perks, and stock grants and option awards worth $16.7 million.
Over the course of the year, Notebaert also collected $18.4 million cashing out stock options he picked up in previous years and, to top things off, saw $8.4 million of his previously awarded stock grants vest their way into his personal portfolio.
Depending on how you define what gets counted in annual CEO pay, Notebaert in 2006 made somewhere between $16.5 million (Denver Post) to $33 million (Minneapolis Star Tribune).
Researchers at Institutional Shareholder Services have a somewhat different perspective on Notebaert's paycheck. Of every $100 in corporate net income that Qwest's 38,000 employees generated last year, they point out, $4.16 went the CEO's way.
In effect, this most generous reward proclaims to the world that Dick Notebaert's contribution to his company's success last year was 1,600 times greater than the average Qwest worker's.
And what exactly did Notebaert do to merit such a king-sized share of the fruits from Qwest's success? Last week, at the Qwest annual meeting, shareholder Linda Baggus wanted an answer.
Baggus, a high school teacher, observed that she makes $55,000 a year.
"How is the service that you render," she asked CEO Notebaert, "so much more valuable than the service I render?"
Notebaert offered no specifics in his reply. His pay, he explained, depends on his "performance" and reflects the realities of a "very competitive market" for executive talent.
"Different jobs," he summed up, "get different pay rates."
Other shareholders at the Qwest annual meeting had a more specific take on the elements behind the company's latest profit upsurge.
Under Notebaert, pointed out a Salt Lake City widow of a retired Qwest employee, retirees have had their life insurance coverage slashed from "a full year's salary to $10,000." Healthcare benefits have also been capped.
Workers still on the job have felt some squeezing, too. A pending federal lawsuit, for instance, is charging that Qwest call center workers have been forced to work overtime without getting "properly paid."
Schoolteacher Linda Baggus asked Notebaert, at last week's meeting, if he'd be willing to plow $10 million from his CEO pay to restore full life insurance coverage for Qwest retirees.
"No," came Notebaert's answer.
That wouldn't be the annual meeting's only piece of negativity. Four shareholder reform resolutions, all designed to put the brakes on "runaway CEO pay," went down to defeat after Qwest management mobilized against them.
Notebaert did his executive best, throughout the meeting's contentious exchanges, to smooth over shareholder critiques and then end the proceedings on an upbeat note.
"This is a great country," he would marvel in his concluding remarks, "where we can gather to agree and disagree."
Agree and disagree, Notebaert might well have added, and walk off with a few dozen million a year.
Editor's note: a correction was made to this article after posting.