This article was originally published on 5/20/2001 in The Denver Post
Our local phone company is on a Qwest, all right: to stuff the pockets of its board members and executives with obscene piles of cash.
Ride the Light? Ride this: Since June 30 – the day Qwest took over US West – directors and executives have bagged more than $328 million in profits from stock options, according to data fromFirst Call/Thomson Financial.
CEO Joe “I am not embarrassed” Nacchio accounted for more than $141 million of that figure, but his underlings aren’t shy about gorging on massive sums either.
Lewis Wilks, president, Internet and multimedia markets, netted $35.5 million, and Stephen Jacobsen, former executive VP of global business and government markets, scored $34.2 million.
If you already feel nauseated about this information-superhighway robbery, skip the next paragraph because the list goes on: Gregory Casey, executive VP, wholesale markets, $26 million; Craig Slater, director, $21.8 million; Marc Weisberg, executive VP corporate development, $19.2 million; Robert Woodruff, recently retired chief financial officer, $19 million; Drake Tempest, general counsel, $9.1 million; Cannon Harvey, director, $5.6 million; Brij Khandelwal, former chief information officer, $3.7 million; Thomas Matthews, retired executive VP human resources, $3.5 million; Peter Mannetti, former president, Qwest wireless, $3.2 million; James Smith, executive VP, consumer markets, $3.1 million; Betsy Bernard, former executive VP, consumer and small-business markets, $2.8 million; Hank Brown, director, $208,660; and Robin Szeliga, the new CFO, $125,000.
Despite notions to the contrary, stock-option money doesn’t flow from a magic fiber-optic cable. It comes from shareholders in the form of diluted stock value. Theoretically, that doesn’t hurt investors in a booming company, but lately Qwest’s stock is a dud.
It’s down about 23 percent since June 30, compared with about 11 percent for the S&P 500.
Also irksome is that Qwest has nickeled and dimed everyone in its first 10 months of owning US West.
Pay phones now cost two quarters after last week’s hike; directory assistance is $1.25; and Caller ID is soon to rise $1 to $6.95 per month.
Additionally, Qwest has cut more than 11,000 workers and pared its annual charitable contributions by $6.5 million.
What’s more, Qwest won’t shut off those arrogant blue Q’s that have made the nighttime Denver skyline resemble something like a Las Vegas strip joint, but then where else do you feel at home sitting on all those obscene profits?
There is, of course, another way of looking at all of this. It’s the way I would look at it if I were an ambitious Qwest executive vs. a jaded Qwest consumer. It goes like this: Qwest was an uncertain proposition when Nacchio and his crew of overpaid underlings signed on in the mid-1990s. They came from better-known companies and accepted smaller salaries in exchange for stock options, which, for all anybody knew then, were worthless.
Yet in a few fast-dealing years, they built a company with so much value that it was able to acquire US West using nothing more than its stock as currency.
It should have been the other way around. Qwest should have been this little fiber-optic play that US West would acquire, but then we’re talking about US West.
Today, Qwest stock is up about 600 percent from its 1997 beginnings. Like it or not, this is why the Qwest brass are now making millions of dollars a year.
Nacchio says he’s not embarrassed about what he makes, and his original shareholders don’t bristle at the comment. But those who became Qwest shareholders in the June 30 merger will find it hard to imagine that Team Nacchio will be worth what it’s paid.
For these new shareholders, Joe, I am embarrassed for you.
Denver Post business editor Al Lewis can be reached at 303-820-1306 or alewis@ denverpost.com.
