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| 2004
News and Press Releases |
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SETTLEMENT "OR" DISMISSAL:
Qwest OKs Changes To Settle 3 Lawsuits Accord Might Trim
Anschutz Role On Board
By: Kris Hudson
The Denver Post. February 18, 2004
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EXCERPT: Qwest agreed Tuesday to make numerous changes in the responsibilities and oversight of its board to settle three shareholder lawsuits pending against it. Under a proposed settlement filed in Denver District Court, Qwest agreed to changes that could lessen the roles of company founder Philip Anschutz and his two delegates on the board. The settlement would end three 'derivative' lawsuits filed against Qwest in 2002 in Colorado and Delaware. In a derivative action, a shareholder sues a company and its officers on behalf of the company in a bid to return assets or money to the company. The settlement is subject to a judge's approval in a June 15 hearing. Several lawsuits are still pending against Qwest, including those that allege violations of securities laws and those brought under the Employee Retirement Income Security Act. Among the governance changes Qwest will introduce under the settlement: Qwest's board must appoint a lead independent director free of significant business ties to the company. That director will coordinate 'the agenda and activities' of the board's other independents. At least two-thirds of the 12-member board must qualify as independent under New York Stock Exchange Rules. The requirement appears moot because all but one of Qwest's directors - chief executive Richard Notebaert - fits the NYSE's description as independent. Qwest's board must annually evaluate the performance of Qwest's CEO, chief financial officer, chief operating officer and vice president of internal audit. It must annually review Qwest's internal financial reporting procedures. The board must place only independent directors on three important board committees - the audit committee, executive compensation committee and nominating and governance committees. Yet to be decided is whether that requirement will affect Anschutz and his two delegates on the board, Anschutz employees Craig Slater and Cannon Harvey. They fit the NYSE designation of independent because Anschutz's companies do not collect more than 2 percent of their revenue from doing business with Qwest. However, Anschutz's ownership of 17 percent of Qwest's stock classifies the three directors as 'affiliated.' Sources close to Qwest's board said Tuesday that the board soon will decide if its affiliated directors must step down from the key committees. Anschutz serves on the nominating and compensation committees, Slater on the compensation committee and Harvey on the nominating committee. Anschutz spokesman Jim Monaghan declined to comment. A portion of the settlement favored Anschutz and several former Qwest execs. It reads that the plaintiffs settled in part because they 'would have had substantial difficulty prevailing on their insider-trading claims under Delaware law.' In addition to the governance changes, the settlement requires that $ 25 million from Qwest's $ 200 million insurance pool for its directors and officers be reserved to pay judgments or settlements of other lawsuits. 'We're glad to have settled and have these cases dismissed.'
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