Risk & Compliance

Qwest Defeats Shareholder Proposals

The measures had been supported by two influential shareholder advisory firms.
Stephen TaubMay 27, 2004

Shareholder proposals intended to change the structure of the board of directors of Qwest Communications International Inc. were easily defeated at the company’s annual meeting on Tuesday.

A measure requiring that board members be independent, without business ties to Qwest, received just 28.8 percent of the votes cast, down from 36.3 percent of votes in favor of the same proposal at the company’s previous annual meeting, according to Dow Jones.

That meeting had been held in December, after a delay due to the company’s restatement of its earnings.

A proposal to amend the company’s bylaws to require an independent director “who has not served as CEO” to be the board chairman also received support from about 28 percent of the votes cast. And another proposal that sought shareholder approval for certain pension benefits for senior executives received less than 30 percent of the votes cast, according to the wire service.

None of the measures were binding.

Qwest was able to defeat these measures even though they were supported by two influential shareholder advisory firms: Institutional Shareholder Services and Glass Lewis & Co.

Nelson Phelps, executive director of the Association of U.S. West Retirees, told Dow Jones it was “disappointing” that the board independence proposal got fewer votes than it did in December. But he thought the votes on the other measures, which had been proposed for the first time, were promising. “It was a good first vote,” Phelps added, noting that the retirees own less than 2 percent of the company’s stock.

On the other hand, two management-supported proposals easily passed. One called for the declassification of the board; that is, all board members will now face reelection simultaneously. The proposal other allows for the removal of directors without cause. Both measures are popular among shareholder activists.