Qwest chairman paid $27 million
The company, which faces a regulatory probe of its accounting practices, says it paid Chairman Joseph Nacchio over $27 million last year and scaled back its ties with auditor Arthur Andersen.
Nacchio's 2001 compensation, excluding stock options, was more than six times greater than his 2000 compensation of $4.22 million, according to Qwest's filing with the Securities and Exchange Commission.
Shares of Qwest, the No. 4 U.S. local telephone company, sank 64 percent in 2001 as the company cut its growth outlook several times due to slowing sales, weak demand for data services and a drop in telephone access lines. Shares of Qwest closed Tuesday at $7.01, down 20 cents, or 2.8 percent, on the New York Stock Exchange.
The company faced further pressure this year as it came under formal review by the SEC, scrambled to relieve a cash crunch, and cut its 2002 financial forecasts. Qwest also warned it may take a first-quarter charge of up to $30 billion due to accounting changes.
Still, Nacchio's 2001 salary rose to $1.17 million, up from about $855,000 in 2000. His bonus fell to $1.5 million from $2.3 million in the prior year, according to the SEC filing.
Nacchio also received $24.4 million under a long-term incentive plan, 7.25 million stock options and other compensation such as use of the corporate airplanes.
The 7.25 million stock options would be worth as much as $194 million if Qwest's stock increases 10 percent a year, the filing said. Last year, Nacchio reaped $74.6 million by exercising other stock options, according to the filing.
Separately, Qwest filed a prospectus for its previously announced plan to issue up to $2.5 billion in debt and equity securities.
Andersen relationship under review
Qwest also said it would no longer use Arthur Andersen for consulting services and said it would review whether to keep the firm as its auditor. More than 120 firms have ditched Andersen as auditor in the United States following a criminal charge that the firm obstructed justice by destroying documents in the Enron scandal.
"Arthur Andersen LLP served as our independent accountants for the fiscal year ending Dec. 31, 2001. In light of current circumstances relating to Arthur Andersen LLP, this engagement for 2002 is subject to review by our board," the company said in the filing.
Andersen in 2001 billed Qwest $1.35 million for auditing services and $10.5 million for consulting services and other matters, according to the filing.
The SEC last week launched a formal review of Qwest and its accounting practices in 2000 and 2001. The company, which has said it used proper accounting methods, cautioned that the SEC review may require it to restate its results.
The SEC already had been reviewing Qwest's purchase of assets from bankrupt telecommunications firm Global Grossing. Qwest earlier this month said the SEC staff recommended action against the telephone company for excluding certain information from an earnings release for the fourth quarter and full-year 2000.
Story Copyright © 2002 Reuters Limited. All rights reserved.