Communications Day’s Grahame Lynch writes:

CEO Sol
Trujillo was paid US$72m (A$95m) as a so-called “golden parachute” when
he left the US West CEO job before its merger with Qwest in June 2000. The Rocky Mountain News,
one of two daily newspapers in Denver, Colorado, today revealed that
the full extent of Trujillo’s package was not previously known as there
was no obligation to report it to the US securities regulator.

Revelations
of the package have angered retired staff of the company who lost
considerable amounts of money when Qwest’s stock tanked after the
dot-com bust. The Association of US West Retirees told the newspaper
that the agreement, signed on June 29, 2000, was “outrageous”.

“We’re
the little people, the retirees who built the company, and these big
shots were taking care of themselves … greedy and gluttonous, lining
their pockets,” said a spokesman for the group.

The newspaper
said the US$72m payment was comprised of a $36.9 million
change-in-control payment, a $10 million payment to sign the agreement,
a $13.7 million pension payment, a $5.5 million aeroplane allowance, $2
million worth of office space and administrative support, and nearly $1
million in additional benefits.

These benefits included
memberships at two Colorado country clubs, limousine services and a
$13,000 expense budget to visit the World Economic Forum. The newspaper
said that both Qwest and Trujillo, via Telstra, did not comment on the
revelations. The report added that Trujillo originally fell out with
then Qwest CEO Joe Nacchio over a plan to pay US West shareholders a
dividend. “Nacchio believed the money would be better spent on
investing in video services, wireless programs and customer-service
improvements,” the newspaper reported. The disagreement saw Qwest
obliged to reverse the previous announcement of a dividend on 7 June,
with Trujillo leaving two weeks later.

The Trujillo departure
from US West ahead of the Qwest merger provided one of the defining
moments of the US telecom crash of 2000-1. Om Malik’s book Broadbandits
records that Trujillo personally favoured a merger with Global
Crossing, but was obliged to sell out to Qwest when they offered a $5
billion premium. That book suggests that Trujillo had planned to resign
upon completion of the merger, announced mid-1999, as early as February
2000.

Another book, Confessions of a Wall Street Analyst
by Dan Reingold, tells another story. Qwest CEO Joe Nacchio refused to
serve as a co-CEO with Trujillo, describing him to a Merrill Lynch
banker as a “bozo”. This led to the deal being re-negotiated with
Trujillo “elevated” to co-chairman, which in any event he never took up
as he departed before the firms merged.

Peter Fray

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