<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
QWEST COMMUNICATIONS INTERNATIONAL
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[QWEST LOGO APPEARS HERE]
April 12, 1999
Dear Stockholder,
I am very pleased to invite you to the second Annual Meeting of Stockholders
of Qwest Communications International Inc. The meeting will be held at the
Hyatt Regency Denver, the Grand Ballroom, 1750 Welton Street, Denver, Colorado
on Wednesday, May 5, 1999, starting at 10:00 a.m. local time. If you plan to
attend the meeting, please call 1-888-858-7914 or register online at
www.qwest.net/ir/meeting.html by May 1, 1999.
Important information about the matters to be acted upon at the Annual
Meeting is set forth in the accompanying Notice of Annual Meeting of
Stockholders and Proxy Statement.
Your vote is important. On behalf of the Board of Directors, I urge you to
mark, sign and return the enclosed proxy card promptly, use Qwest's Internet
voting procedures or cast your vote via telephone at 800-840-1208, even if you
plan to attend the Annual Meeting. Mailing your completed proxy card or using
Qwest's telephone or Internet voting procedures will not prevent you from
voting in person at the meeting if you wish to do so.
Members of your Board of Directors and management look forward to greeting
personally those stockholders who attend.
Sincerely,
/s/ Joseph P. Nacchio
Joseph P. Nacchio Chairman and Chief
Executive Officer
<PAGE>
QWEST COMMUNICATIONS INTERNATIONAL INC.
555 SEVENTEENTH STREET, 700 QWEST TOWER
DENVER, COLORADO 80202
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 1999
----------------
To the Stockholders of Qwest Communications International Inc.:
The Annual Meeting of Stockholders (the "Annual Meeting") of Qwest
Communications International Inc., a Delaware corporation, will be held at the
Hyatt Regency Denver, the Grand Ballroom, 1750 Welton Street, Denver, Colorado
on Wednesday, May 5, 1999, starting at 10:00 a.m. local time, for the
following purposes:
1. To elect all 12 members of the Board of Directors to hold office until
the next annual meeting and until their successors are elected and
qualified;
2. To consider and vote upon a proposal to approve the Qwest
Communications International Inc. Employee Stock Purchase Plan (the "Stock
Purchase Plan Proposal");
3. To consider and vote upon a proposal to amend Qwest's Amended and
Restated Certificate of Incorporation to increase the authorized number of
shares of Qwest common stock (the "Certificate Amendment Proposal").
4. To transact such other business as may properly come before the
meeting or any adjournment or postponement of the meeting.
Only stockholders of record at the close of business on March 22, 1999, are
entitled to notice of and to vote at this Annual Meeting and at any
adjournment or postponement thereof.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. TO
ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE ENCOURAGED TO MARK,
SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, USE QWEST'S
INTERNET VOTING PROCEDURES OR CAST YOUR VOTE VIA TELEPHONE AT 800-840-1208. A
POSTAGE PREPAID ENVELOPE IS ENCLOSED.
ANY STOCKHOLDER ATTENDING THE ANNUAL MEETING MAY VOTE IN PERSON EVEN IF THAT
STOCKHOLDER HAS RETURNED A PROXY, HAS USED QWEST'S INTERNET VOTING PROCEDURES
OR HAS VOTED BY TELEPHONE.
By Order of the Board of Directors
/s/ Drake S. Tempest
Drake S. Tempest
Corporate Secretary
Denver, Colorado
April 12, 1999
<PAGE>
QWEST COMMUNICATIONS INTERNATIONAL INC.
700 Qwest Tower, 555 Seventeenth Street
Denver, Colorado 80202
PROXY STATEMENT
General
This Proxy Statement is being furnished in connection with a solicitation by
the Board of Directors (the "Board") of Qwest Communications International
Inc. ("Qwest" or the "Company") for use at the Annual Meeting of Stockholders
to be held at the Hyatt Regency Denver, the Grand Ballroom, 1750 Welton
Street, Denver, Colorado on Wednesday, May 5, 1999, starting at 10:00 a.m.
local time, and at any adjournment or postponement thereof (the "Annual
Meeting"). This Proxy Statement is being furnished to holders of Qwest's
common stock (the "Common Stock"). This Proxy Statement and accompanying proxy
will be mailed on or about April 12, 1999 to all Qwest stockholders entitled
to vote at the meeting. Unless the context otherwise requires, the term
"Qwest" and the "Company" includes Qwest, its principal operating subsidiary,
Qwest Communications Corporation ("QCC"), and Qwest's other consolidated
subsidiaries.
Voting Rights; Revocability of Proxy
Only stockholders of record at the close of business on March 22, 1999 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of the Record Date, there were 350,423,179 shares of Common Stock outstanding.
Each share of Common Stock is entitled to one vote.
The holders of a majority of the shares entitled to vote at the Annual
Meeting, whether present in person or represented by proxy, will constitute a
quorum for the transaction of business at the Annual Meeting. In the election
of directors, the twelve nominees who receive the greatest number of votes
cast for the election of directors by the holders of Common Stock entitled to
vote at the Annual Meeting will become directors at the conclusion of the
tabulation of votes. A vote withheld for a nominee in the election of
directors will be excluded entirely from the vote and will have no effect.
Approval of the Stock Purchase Plan Proposal requires the affirmative vote of
a majority of the outstanding shares of Common Stock as of the Record Date
represented in person or by proxy at the Annual Meeting and entitled to vote.
Approval by the Certificate Amendment Proposal requires the affirmative vote
of a majority of the outstanding shares of Common Stock entitled to vote
thereon at the Annual Meeting.
Abstentions will have no effect on the election of directors. Abstentions on
the Stock Purchase Plan Proposal and the Certificate Amendment Proposal will
be counted toward the tabulation of votes cast on each proposal and will have
the effect of a negative vote. Shares registered in the names of brokers or
other "street name" nominees for which proxies are voted on some, but not all
matters, will be considered to be voted only as to those matters actually
voted, and will not be considered for any purpose as to the matters with
respect to which a beneficial holder has not provided voting instructions
(commonly referred to as "broker non-votes") and will therefore have the
effect of a vote against the Stock Purchase Plan Proposal and Certificate
Amendment Proposal. Abstentions and broker non-votes are counted for purposes
of determining the presence or absence of a quorum for the transaction of
business.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. The Company's transfer agent, ChaseMellon
Shareholder Services L.L.C., has been appointed by the Board of Directors to
act as the inspector of election for the meeting.
As of the Record Date, Mr. Philip F. Anschutz beneficially owned 160,194,664
shares of Common Stock, representing approximately 45.7% of the voting power
of the Common Stock outstanding at that date. Mr. Anschutz has advised Qwest
that he intends to vote all of the shares beneficially owned by him in favor
of all director nominees, the Certificate Amendment Proposal and the Stock
Purchase Plan Proposal.
<PAGE>
The shares of Common Stock will be voted according to the stockholders'
directions when voted properly. Unless otherwise directed, the shares
represented by proxies will be voted "For" all nominees and "For" the Stock
Purchase Plan Proposal and the Certificate Amendment Proposal.
The proxy and any votes cast using Qwest's telephone or Internet voting
procedures may be revoked prior to exercise by delivering written notice of
revocation to the Secretary of Qwest at the principal executive office of
Qwest, 555 Seventeenth Street, 700 Qwest Tower, Denver, Colorado 80202, by
executing a later dated proxy, by casting a later vote using the telephone or
Internet voting procedures or by attending the meeting and voting in person.
The cost of solicitation of the proxies will be paid by Qwest. Officers,
directors and regular employees of the Company, without additional
compensation, also may solicit proxies by further mailing, by telephone or
personal conversations. Qwest has no plans to retain any firms or otherwise
incur any extraordinary expense in connection with the solicitation. Copies of
solicitation material will be furnished to brokers, fiduciaries and custodians
to forward to beneficial owners of the Common Stock held in their names. Qwest
will reimburse brokers and other persons representing beneficial owners of
shares for their reasonable expenses in forwarding solicitation material to
such beneficial owners.
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<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of the Record Date by (i) each person known by
Qwest to beneficially own more than five percent of the Qwest Common Stock;
(ii) each director and nominee for director of Qwest; (iii) each of the
current executive officers of Qwest named in the Summary Compensation Table
below; and (iv) all current directors and executive officers of Qwest as a
group.
<TABLE>
<CAPTION>
Address for Amount and Nature of Percent of
Name 5% Owners Beneficial Ownership(1) Outstanding Shares(2)
---- --------------------------- ----------------------- ---------------------
<S> <C> <C> <C>
Philip F. Anschutz...... Suite 700 160,194,664(3) 45.7%
555 Seventeenth Street
Denver, CO 80202
FMR Corp................ 82 Devonshire Street 21,588,350 6.2%
Boston, Massachusetts 02109
Gregory M. Casey........ -- *
Jerry R. Davis.......... -- *
Jordan L. Haines........ 5,508 *
Cannon Y. Harvey........ 10,000 *
Stephen M. Jacobsen..... 91,000 *
Douglas M. Karp......... 1,588 *
Brij Khandelwal......... -- *
Vinod Khosla............ -- *
Richard T. Liebhaber.... 80,000 *
Thomas J. Matthews...... -- *
John A. McMaster........ -- *
Joseph P. Nacchio....... 1,773,836(4) *
Douglas L. Polson....... 66,008 *
Larry A. Seese.......... 100,000 *
Craig D. Slater......... 82,000 *
W. Thomas Stephens...... 5,959 *
Michael Tarpey.......... 2,700 *
John C. Taylor.......... 64,609 *
Drake S. Tempest........ 2,300(5) *
A. Dean Wandry.......... 96,222 *
Marc B. Weisberg........ 55,200(6) *
Lewis O. Wilks.......... 70,000 *
Robert S. Woodruff...... 318,710(7) *
Directors and Executive
Officers as a Group (23
persons)............... 163,020,304 46.5%
</TABLE>
- --------
* Less than one percent.
(1) Except as otherwise indicated, Qwest believes that the persons listed in
the above table have sole investment and voting power with respect to all
shares beneficially owned by them, subject to applicable community
property laws. For purposes of this table, beneficial ownership is
determined in accordance with Rule 13d-3 under the Securities Exchange Act
of 1934, as amended, and generally includes voting or investment power
with respect to securities. Under that Rule, securities relating to
options are deemed to be beneficially owned if they are currently
exercisable or exercisable within 60 days. The amounts shown in the table
do not include shares relating to options not currently exercisable or not
exercisable within 60 days.
(2) Based upon 350,423,179 shares of Common Stock issued and outstanding as of
the Record Date, plus, as to the holder thereof only and no other person,
exercise of all derivative securities that are exercisable or convertible
currently or within 60 days of the Record Date.
(3) Does not include 20,336 shares held as custodian for one of Mr. Anschutz's
children, as to which beneficial ownership is disclaimed, or 8,600,000
shares issuable upon exercise of a warrant held by Anschutz Family
3
<PAGE>
Investment Company LLC of which Anschutz Company, a corporation wholly
owned by Mr. Anschutz, is the manager and one percent equity owner.
(4) Includes 1,600 shares owned by or for the benefit of Mr. Nacchio's
children.
(5) Includes 2,300 shares owned by Mr. Tempest's spouse as to which beneficial
ownership is disclaimed.
(6) Includes 200 shares owned by Mr. Weisberg's son as to which beneficial
ownership is disclaimed.
(7) Includes 2,000 shares owned by Mr. Woodruff's spouse as to which
beneficial ownership is disclaimed.
PRINCIPAL STOCKHOLDER
As of the Record Date Mr. Anschutz was the beneficial owner of approximately
45.7% of the outstanding shares of Common Stock. Anschutz Company has granted
or expects to grant from time to time security interests in all or part of its
shares of the Common Stock in connection with transactions entered into by it
or its affiliates. Although not anticipated, under certain circumstances,
shares of Common Stock could be sold pursuant to such security interests,
which could result in a change of control of the Company for purposes of
Delaware law.
PROPOSAL 1--ELECTION OF DIRECTORS
Nominees
Each of the twelve nominees for the twelve positions on the Board of
Directors is currently a member of the Board of Directors. The nominees for
directors of Qwest, their ages and positions with Qwest and biographies are
set forth below:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Philip F. Anschutz.......... 59 Director and Chairman of the Board
Joseph P. Nacchio........... 49 Director, Chairman and Chief Executive Officer
Robert S. Woodruff.......... 50 Director, Executive Vice President--Finance and
Chief Financial Officer
Jerry R. Davis.............. 60 Director
Jordan L. Haines............ 71 Director
Cannon Y. Harvey............ 58 Director
Douglas M. Karp............. 43 Director
Vinod Khosla................ 44 Director
Richard T. Liebhaber........ 63 Director
Douglas L. Polson........... 57 Director
Craig D. Slater............. 41 Director
W. Thomas Stephens.......... 56 Director
</TABLE>
Each person nominated has agreed to serve if elected, and management has no
reason to believe that any of the nominees will be unavailable for service.
Shares represented by executed proxies will be voted, if authority to do so is
not withheld, for the re-election of the twelve nominees. In the event that
any nominee should be unavailable for election as a result of an unexpected
occurrence, such shares will be voted for the election of such substitute
nominee as management may propose.
Philip F. Anschutz has been a Director and the Chairman of the Board of
Qwest since February 1997. He was a Director and Chairman of the Board of QCC
from November 1993 until September 1997. He has been a Director and Chairman
of the Board of Anschutz Company, Qwest's principal stockholder, for more than
five years, and a Director and Chairman of the Board of The Anschutz
Corporation, a wholly owned subsidiary of Anschutz Company, for more than five
years. Since the merger of Southern Pacific Rail Corporation ("SPRC") and
Union Pacific Corporation ("UP") in September 1996, Mr. Anschutz has served as
Vice-Chairman of UP. Prior to the merger, Mr. Anschutz was a Director of SPRC
from June 1988 to September 1996, Chairman of SPRC from October 1988 to
September 1996, and President and Chief Executive Officer of SPRC from October
1988 to July 1993. He also has been a Director of Forest Oil Corporation since
1995. Mr. Anschutz serves on the Compensation Committee and Executive
Committee.
4
<PAGE>
Joseph P. Nacchio became Director, Chairman and Chief Executive Officer of
Qwest in February 1999 after having been Director, President and Chief
Executive Officer of Qwest since February 1997 and of QCC since January 1997.
Prior to joining Qwest he was Executive Vice President of AT&T's Consumer and
Small Business Division since January 1996. In that capacity he was
responsible for AT&T's core consumer long distance business, and AT&T's
DirecTV, AT&T Alascom and Language Line businesses. He was also responsible
for marketing and sales targeted at all consumer and small businesses in the
United States. In 1994 and 1995 Mr. Nacchio was President of AT&T's Consumer
Communications Services long distance, a winner of the Malcolm Baldrige
National Quality Award for Excellence. From November 1991 until August 1994,
Mr. Nacchio was President of AT&T's Business Communications Services unit
focused on the long distance communications needs of business customers. Since
joining AT&T in June 1970 he held assignments in network operations,
engineering, marketing and sales. Mr. Nacchio earned an M.S. degree in
management from the Massachusetts Institute of Technology in the Sloan Fellows
Program. He also received an M.B.A. degree and a B.S. degree in electrical
engineering, both from New York University. Mr. Nacchio serves on the
Executive Committee.
Robert S. Woodruff became a Director and Executive Vice President--Finance
and Chief Financial Officer of Qwest in February 1997. He served as interim
Chief Operating Officer of Qwest and QCC from November 1996 through April
1997. He has served as a Director of QCC since December 1996. He became
Executive Vice President--Finance, Chief Financial Officer and Treasurer of
QCC in August 1994. He serves as a Director of FSI Acquisition Corp.,
Government Communications Inc., Qwest Transmission Inc., Qwest Properties,
Inc., and U.S. TeleSource, Inc., all of which are wholly owned subsidiaries of
QCC. He is also Sole Administrator of QCC's Mexican subsidiaries, Opticom,
S.A. de C.V., Servicios Derecho de Via, S.A. de C.V., and S.P. Servicios
Mexico, S.A. de C.V. Prior to joining Qwest he had been a partner in the
accounting firm of Coopers & Lybrand since 1984, where his responsibilities
included providing services to communications companies. Mr. Woodruff received
a B.B.A. degree in accounting, with honors, from the University of Wisconsin.
Jerry R. Davis has been a Director of Qwest since April 1999. He was Vice
Chairman of Union Pacific Railroad from September 1998 until his retirement in
March 1999, and was President and Chief Operating Officer of Union Pacific
Railroad from September 1996 until September 1998. Mr. Davis was President,
Chief Executive Officer and a director of SPRC from February 1995 until
September 1996. Before joining SPRC, Mr. Davis was Executive Vice President
and Chief Operating Officer of CSX Transportation from January 1992 to
February 1995.
Jordan L. Haines was appointed a Director of Qwest in June 1997. He was
Chairman of the Board of Fourth Financial Corporation, a Kansas-based bank
holding company, and its subsidiary, Bank IV Wichita, N.A., from 1983 until
his retirement in 1991. He has been a member of the Board of Directors of KN
Energy, Inc. since 1983 and a Director of Forest Oil Corporation since 1996.
Mr. Haines serves on the Audit Committee, the Compensation Committee and the
Executive Committee.
Cannon Y. Harvey has been a Director of Qwest since February 1997, and was
Director of QCC from December 1996 until September 1997. He has been President
and Chief Operating Officer of both Anschutz Company and The Anschutz
Corporation since December 1996. From February 1995 until September 1996 he
served as Executive Vice President--Finance and Law of SPRC; from September
1993 to February 1995 he served as Senior Vice President and General Counsel
of SPRC; from May 1993 to September 1993 he served as Vice President--Finance
and Law and General Counsel of SPRC. Prior to joining SPRC, Mr. Harvey was a
Partner in the law firm of Holme Roberts & Owen LLP for more than five years.
Mr. Harvey serves on the Audit Committee and the Executive Committee.
Douglas M. Karp became a director of Qwest in July 1998. He has been a
Managing Director of E.M. Warburg, Pincus & Company, LLC since May 1991 and a
member of its Operating Committee since January 1, 1999. Prior to joining
Warburg, Pincus, Mr. Karp was a Managing Director of Mergers and Acquisitions
at Salomon Brothers Inc. and a manager with the Boston Consulting Group and
founder of its New York office. Mr. Karp serves as a director of the Journal
Register Company, TV Filme, Inc., Primus Telecommunications Group, Golden
Books Family Entertainment, StarMedia Network Inc. and PageNet do Brasil. Mr.
Karp was a
5
<PAGE>
director of LCI International, Inc. ("LCI") from February 1993 until LCI was
acquired by the Company in July 1998. Mr. Karp graduated summa cum laude from
Yale University and received a J.D. degree cum laude from Harvard Law School.
Vinod Khosla was a co-founder of Daisy Systems and founding Chief Executive
Officer of Sun Microsystems where he pioneered open systems and commercial
RISC processors. Mr. Khosla holds a Bachelor of Technology in Electrical
Engineering from the Indian Institute of Technology in New Delhi, a Master's
Degree in Biomedical Engineering from Carnegie Mellon University and an MBA
from the Stanford Graduate School of Business. He serves as a member of the
board of directors at Concentric Network and Excite Inc., as well as several
private companies. Mr. Khosla has been a General Partner of the venture
capital firm Kleiner Perkins Caufield & Byers (KPCB) since 1986.
Richard T. Liebhaber has been a Director of Qwest since February 1997. He
has been a Managing Director of Veronis, Suhler & Associates, Inc., the New
York media merchant banking firm, since June 1, 1995. Mr. Liebhaber has been a
member of the board of directors of Objective Communications, Inc. since
August 1994, the board of directors of Alcatel Network Systems, Inc. since
June 1995, the board of directors of Geotek Communications, Inc. since April
1995, the board of directors of Internet Communications Corporation since May
1997, and the board of directors of Scholz Master Builders since December
1985. From December 1985 to his retirement in May 1995, Mr. Liebhaber served
as Executive Vice President of MCI Communications Corporation and as a member
of its Management Committee. Mr. Liebhaber was a member of the board of
directors of MCI Communications Corporation from July 1992 until his
retirement in May 1995.
Douglas L. Polson has been a Director of Qwest since February 1997, and was
Director of QCC for more than five years until 1997. He has been a Director
and Vice President--Finance of both Anschutz Company and The Anschutz
Corporation for more than five years. He was a Director of SPRC from June 1988
to September 1996; Vice Chairman of SPRC from June 1988 to September 1996; and
a Vice President of SPRC from October 1988 to September 1996.
Craig D. Slater has been a Director of Qwest since February 1997 and a
Director of QCC since November 1996. He has been President of Anschutz
Investment Company since August 1997 and Vice President--Acquisitions and
Investments of both Anschutz Company and The Anschutz Corporation since August
1995. Mr. Slater served as Corporate Secretary of Anschutz Company and The
Anschutz Corporation from September 1991 to October 1996 and held various
other positions with those companies from 1988 to 1995. He has been a Director
of Forest Oil Corporation since 1995 and Internet Communications Corporation
since 1996. Mr. Slater serves on the Executive Committee.
W. Thomas Stephens was appointed a Director of Qwest in June 1997. He is
President, Chief Executive Officer and a director of MacMillan Bloedel
Limited, Canada's largest forest products company. He served from 1986 until
his retirement in 1996 as President and Chief Executive Officer of Manville
Corporation, an international manufacturing and resources company. He also
served as a member of the Manville Corporation Board of Directors from 1986 to
1996, and served as Chairman of the Board from 1990 to 1996. Mr. Stephens is a
Director of The Putnam Funds and New Century Energies. He serves on the Audit
Committee, the Compensation Committee and the Executive Company.
Board of Directors Meetings and Committees
The Board held 30 meetings during 1998, including both regularly scheduled
and special meetings and actions by unanimous written consent.
Audit Committee. The Board established an Audit Committee in May 1997 to:
(i) make recommendations concerning the engagement of independent public
accountants; (ii) review with Qwest management and the independent public
accountants the plans for, and scope of, the audit procedures to be utilized
and results of audits; (iii) approve the professional services provided by the
independent public accountants; (iv) review the
6
<PAGE>
adequacy and effectiveness of Qwest's internal accounting controls; and (v)
perform any other duties and functions required by any organization under
which Qwest's securities may be listed. Cannon Y. Harvey, Jordan L. Haines and
W. Thomas Stephens serve on the Audit Committee. The Audit Committee met three
times during 1998.
Compensation Committee. Philip F. Anschutz, Jordan L. Haines and W. Thomas
Stephens serve on the Compensation Committee. The Compensation Committee
determines the salaries, cash bonuses and fringe benefits of the executive
officers, reviews the salary administration and benefit policies of Qwest and
administers the Growth Share Plan and the Equity Incentive Plan. Messrs.
Haines and Stephens act as a separate subcommittee of the Compensation
Committee and determine the grant of options and other awards under the Equity
Incentive Plan. The Compensation Committee held six meetings during 1998,
including both regularly scheduled and special meetings and actions by
unanimous written consent.
Each Director attended more than 75% of the aggregate number of Board and/or
applicable committee meetings in 1998.
Executive Committee. The Board established an Executive Committee in
February 1999 to exercise all the powers and authority of the Board in the
management of the Company, except as prohibited by the Delaware General
Corporation Law. Philip F. Anschutz, Joseph P. Nacchio, Cannon Y. Harvey,
Jordan L. Haines, Craig D. Slater and W. Thomas Stephens serve on the
Executive Committee.
Recommendation of the Board
THE BOARD RECOMMENDS THAT THE QWEST STOCKHOLDERS VOTE "FOR" EACH NAMED
NOMINEE FOR DIRECTOR.
EXECUTIVE OFFICERS AND MANAGEMENT
The following are (i) Qwest's executive officers who are not directors, and
(ii) senior management of QCC:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Stephen M. Jacobsen..... 40 Executive Vice President--Business Markets (QCC)
Brij Khandelwal......... 53 Executive Vice President and Chief Information
Officer (QCC)
Thomas J. Matthews...... 58 Executive Vice President--Human Resources (QCC)
John A. McMaster........ 42 Executive Vice President--International (QCC)
Larry A. Seese.......... 53 Executive Vice President--Network Engineering and
Operations (QCC)
Drake S. Tempest........ 45 Executive Vice President, General Counsel and
Corporate Secretary (QCI and QCC)
Lewis O. Wilks.......... 45 President--IP and Multimedia Markets (QCC)
Gregory M. Casey........ 40 Senior Vice President--Broadband Capacity (QCC)
Michael Tarpey.......... 53 Senior Vice President--Communications (QCC)
John C. Taylor.......... 41 Senior Vice President--Consumer Markets (QCC)
A. Dean Wandry.......... 58 Senior Vice President--Government Markets and Fiber
Sales (QCC)
Marc B. Weisberg........ 41 Senior Vice President--Corporate Development (QCC)
</TABLE>
Stephen M. Jacobsen became Executive Vice President--Business Markets of QCC
in December 1998 after having been Senior Vice President, Consumer Markets of
QCC since March 1997. Prior to joining Qwest, Mr. Jacobsen was Regional Vice
President, Consumer and Small Business Markets for AT&T. During his 16-year
career at AT&T, Mr. Jacobsen held key managerial positions in marketing,
sales, product management and network operations. Mr. Jacobsen holds a M.S.
degree in management from the Massachusetts Institute of Technology in the
Sloan Fellows Program and a B.S.B.A. degree from the University of Arizona.
7
<PAGE>
Brij Khandelwal became Executive Vice President and Chief Information
Officer of QCC in October 1997. Prior to joining Qwest he was Vice President
and Chief Information Officer at Lucent Technologies Network Systems from
November 1995 to October 1997. At Lucent from August 1994 to October 1997, he
was responsible for global delivery of enterprise information systems and
services aligned with corporate strategic and tactical goals. He is
experienced in a wide range of information technologies, systems and processes
affecting the business enterprise, including sales, marketing, financial,
operations, and R&D. From August 1990 through August 1994 he was Director,
Systems Development at GE Aerospace/Martin Marietta, where he was responsible
for architecture and delivery of enterprise information systems. Mr.
Khandelwal holds a B.S. from the University of Roorkee (Roorkee, India), a
M.S. degree from the University of Nebraska, and a Ph.D. degree from the
University of Wisconsin.
Thomas J. Matthews has been Executive Vice President--Human Resources of
Qwest since September 1998. Mr. Matthews is responsible for all of Qwest's
employment related matters, including Qwest's relationship with its employees
and all employment decisions. Prior to joining Qwest, Mr. Matthews provided
independent consulting services to companies including IBM, Atlas Air and The
Anschutz Corporation, Qwest's principal stockholder, was Senior Vice President
and Chief Administrative Officer for Southern Pacific Railroad from 1991 to
1996 when it was acquired by Union Pacific Railroad, and was a senior
executive with various corporations, including Burlington Northern Railroad,
Texas Air Corporation and Airborne Express. Mr. Matthews earned a B.S. degree
from the University of Southern California and also completed post graduate
legal studies.
John A. McMaster became Executive Vice President--International of QCC in
November 1998. Mr. McMaster is also the interim CEO of Qwest's European
partner company, KPNQwest. Mr. McMaster joined Qwest following a 20-year
career at AT&T Corporation where he most recently served as vice president of
AT&T's $26 billion consumer markets business, which included more than 18,000
employees. Mr. McMaster also served as managing director of the AT&T United
Kingdom business and has held assignments in sales, marketing, product
management, network operations and human resources. Mr. McMaster is also a
Director of N.J. Manufacturers Insurance Company, West Trenton, New Jersey.
Larry A. Seese became Executive Vice President--Network Engineering and
Operations of QCC in October 1997. From 1968 to October 1997, he was employed
by AT&T, most recently as Vice President of Network Operations. During Mr.
Seese's 29-year tenure at AT&T, he was responsible for managing the
operations, reliability and cost performance of AT&T's voice and data networks
and worked on the development of advanced switching systems and the
development of lightwave systems. He has experience in all aspects of network
planning, development, certification and deployment. Mr. Seese holds a B.S.
degree from the University of Kentucky and a M.S. degree from Columbia
University, both in electrical engineering. He also received a M.S. degree
from the Sloan School of Management at the Massachusetts Institute of
Technology.
Drake S. Tempest has been Executive Vice President, General Counsel and
Corporate Secretary of QCI and QCC since October 1998. As Qwest's chief legal
officer, Mr. Tempest is responsible for guiding Qwest's legal policy, assuring
compliance with legal requirements and supervising Qwest's regulatory
activities. Prior to joining Qwest, Mr. Tempest was a partner in the New York
office of the law firm of O'Melveny & Myers LLP, where his practice included
general corporate matters emphasizing mergers and acquisitions and securities
transactions. Mr. Tempest earned a B.A. degree from Williams College,
completed graduate studies at Oxford University, and received a J.D. from Yale
University.
Lewis O. Wilks became President--IP and Multimedia Markets of QCC in
December 1998 after having been President--Business Markets of QCC since
October 1997. Mr. Wilks, who previously was president of GTE Communications,
has extensive senior-level management experience in delivering communications
services to the corporate sector. While Mr. Wilks served as president of GTE
Communications, he oversaw national sales, service and marketing activities
for the competitive local exchange markets. The business unit, under his
leadership, was responsible for all consumer, business and strategic accounts
as well as long-distance, media ventures and Internet product distribution.
Before joining GTE, Mr. Wilks was a senior executive with MCI Corporation, and
held a variety of management positions with Wang Laboratories.
8
<PAGE>
Gregory M. Casey became Senior Vice President--Carrier Markets of QCC in
June 1997. In this capacity, he is responsible for all of Qwest's carrier
marketing and sales programs. Prior to joining Qwest, Mr. Casey was, since
1996, Vice President of Carrier Relations and Regulatory Affairs at LCI, with
responsibility for managing relationships with RBOCs and LECs and negotiating
interconnection arrangements and wholesale pricing for resale of local
service. From 1991 to 1996, he was employed by ONCOR Communications Inc.,
where he served as Senior Vice President of Regulatory Affairs and Telephone
Company Relations. Prior to joining ONCOR, he was Senior Vice President and
General Counsel for Telesphere International Inc. Mr. Casey holds a B.A.
degree in political science from the University of Connecticut and a J.D.
degree from DePaul University College of Law.
Michael P. Tarpey became Senior Vice President--Communications of QCC in
November 1998. Prior to joining Qwest, he served for three years as senior
vice president of worldwide public relations for NCR Corporation in Dayton,
Ohio. Previously he was with AT&T Corp for 20 years where he held a variety of
sales, marketing and communication assignments. Earlier he was responsible for
public relations at Duracell batteries and was a journalist for 7 years in the
Midwest. Mr. Tarpey studied business and journalism at Indiana University.
John C. Taylor became Senior Vice President--Consumer Markets of QCC in June
1998. Prior to the merger with LCI, Taylor headed up LCI's Consumer Business
Segment in 1997, after serving as vice president of corporate development and
investor relations at LCI since 1995. Prior to joining LCI, Taylor spent 12
years at MCI Communications Corporation in a variety of key positions in
financial and strategic planning, business development, sales channel
development and partner marketing. His most recent position with MCI was
director of partner marketing for the company's consumer markets division. He
holds a B.S. degree in finance from West Virginia Wesleyan.
A. Dean Wandry became Senior Vice President--Cable & Access Services for QCC
in November 1994 and Senior Vice President--New Business Development for QCC
in December 1995. In 1981 Mr. Wandry formed Citation Cable Systems Limited,
which merged into Fanch Communications, Inc. in 1986. Following the merger, he
served as Vice President--Operations until he joined Qwest. He joined Bayly
Corp., a multinational apparel manufacturer, in 1967 and served as President
of the Sales and Marketing Division from 1977 to 1981. He holds a B.S. degree
in economics from the University of Colorado.
Marc B. Weisberg became Senior Vice President--Corporate Development of QCC
in September 1997. Prior to joining Qwest, he was the founder and owner of
Weisberg & Company, where he provided investment banking and advisory services
to clients in several industries, including telecommunications, multimedia and
emerging technologies. Mr. Weisberg holds a B.A. degree from Michigan State
University.
9
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Director Compensation
Directors who are officers or employees of Qwest or any of its affiliates do
not receive compensation, except as officers or employees of Qwest or its
affiliates.
Directors who are neither officers nor employees of Qwest or any of its
affiliates, other than Mr. Liebhaber, are entitled to receive $24,000 per
annum for serving as directors of Qwest. Each director who is neither an
officer nor an employee of Qwest or any of its affiliates, other than Mr.
Liebhaber, is entitled to receive an attendance fee of $2,000 per meeting of
the Board and of a committee of which he is a member. The Board has adopted
the Qwest Communications International Inc. Equity Compensation Plan for Non-
Employee Directors (the "Director Equity Plan") pursuant to which each
director who is not an employee of Qwest or any of its affiliates may elect to
receive directors' fees in the form of Qwest Common Stock. Directors may elect
on a quarterly basis to receive their directors' fees either in Qwest Common
Stock or in cash.
Mr. Liebhaber has a consulting agreement with QCC. The consulting agreement
provides that he will be paid an annual retainer fee of $125,000 for 1999 plus
reimbursement for out-of-pocket expenses not to exceed $10,000 annually
without QCC's prior approval. Mr. Liebhaber received $250,000 in consulting
fees for 1998. Mr. Liebhaber agreed to waive director's fees in consideration
for these payments. See "Certain Transactions."
Messrs. Slater and Liebhaber, directors of Qwest, currently hold a total of
12,500 and 10,000 growth shares, respectively, pursuant to the Qwest Growth
Share Plan. The value of such growth shares has been capped at a value
generally determined by the $11.00 per share price of the Company's Common
Stock in the Initial Public Offering and the performance cycle will end on a
date in 2001 selected by Qwest in its sole discretion. Based upon the
provisions of the Growth Share Plan and their respective growth share
agreements, as amended, the maximum amount payable to Messrs. Slater and
Liebhaber with respect to their growth shares is $2.3 million and $1.8 million
respectively.
Messrs. Slater, Liebhaber and Harvey have each been granted stock options
pursuant to the Equity Incentive Plan. Mr. Slater has been granted stock
options covering a total of 650,000 shares of Qwest Common Stock with 250,000
options having an exercise price of $11.00 per share and vesting at the rate
of 20% per year beginning at the same time as Mr. Slater's growth shares and
400,000 options having an exercise price of $30.00 per share and vesting at
the rate of 20% per year beginning on December 1, 1998. Mr. Liebhaber has been
granted stock options covering a total of 300,000 shares of Qwest Common
Stock, with 200,000 options having an exercise price of $11.00 per share and
vesting at the rate of 20% per year beginning at the same time as Mr.
Liebhaber's growth shares and 100,000 shares having an exercise price of
$30.00 per share and vesting at the rate of 20% per year beginning on December
1, 1998. Mr. Harvey has been granted stock options covering a total of 200,000
shares of Qwest Common Stock with an exercise price of $30.00 per share and
vesting at the rate of 20% per year beginning on December 1, 1998.
Executive Compensation
The following table summarizes the compensation paid or accrued to Qwest's
chief executive officer and four other most highly compensated executive
officers of Qwest and its operating subsidiaries (the "named executives" or
"named executive officers") during the last three completed fiscal years. The
position identified in the table for each person is that person's current
position at Qwest unless otherwise indicated.
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------ -----------------------
Awards Payouts
-----------------------
Number of
Securities
Other Annual Underlying LTIP All Other
Name/Principal Position Year Salary Bonus Compensation options Payouts Compensation
----------------------- ---- -------- -------- ------------ ----------------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Joseph P. Nacchio....... 1998 $630,000 $567,128 -- -- $1,107,909 $1,686,596(1)
Chairman and Chief 1997 593,461 300,000 -- 6,000,000 -- 7,405,273
Executive
Officer 1996 -- -- -- -- -- --
Lewis O. Wilks.......... 1998 $279,875 $243,669 $200,000(2) -- -- --
President--IP and 1997 50,750 -- 200,000(3) 700,000 -- --
Multimedia Markets
of QCC 1996 -- -- -- -- -- --
Stephen M. Jacobsen..... 1998 $207,353 $245,245 -- -- -- --
Executive Vice 1997 143,020 -- $132,085(3) 600,000 --
President--Business
Markets of QCC 1996 -- -- -- -- -- --
Robert S. Woodruff...... 1998 $220,375 $165,242 $ 25,000(4) -- -- $ 10,140
Executive Vice 1997 200,000 70,000 25,000(4) 400,000 $9,453,025 7,750
President--Finance and
Chief Financial Officer 1996 182,200 25,000 2,083 -- -- 5,466
Larry A. Seese.......... 1998 $235,750 $163,186 $280,964(2) -- -- --
Executive Vice 1997 54,994 -- 200,000(3) 750,000 -- --
President--Network
Engineering and 1996 -- -- -- -- -- --
Operations of QCC
</TABLE>
- --------
(1) The amount shown represents the second installment of the "equalization
payment" ($1,469,861) (see "--Employment Contracts and Termination of
Employment and Change-in-Control Arrangements") paid to Mr. Nacchio in
1998 together with interest of $208,485 that accrued on the equalization
payment in 1998, and Qwest's contribution to Qwest's 401(k) plan of
$8,250.
(2) The amount shown represents transition payments to compensate the
executive for benefits forfeited with a prior employer upon employment
with Qwest.
(3) The amount shown represents relocation payments.
(4) The amount shown represents QCC's forgiveness of a portion of a loan.
Stock Option Grants
There were no stock option grants to the named executives in 1998.
Option Exercises and Holdings
The following table sets forth information with respect to the named
executive officers concerning options exercised by the named executive
officers during 1998 and unexercised options held at the end of 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options at Fiscal Year End Options at Fiscal Year End
Acquired Value ----------------------------- ---------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ------------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Nacchio....... 565,549 $15,577,415 1,834,451 3,600,000 $ 71,543,589 $ 140,400,000
Lewis O. Wilks.......... -0- -0- 140,000 560,000 3,675,000 14,700,000
Stephen M. Jacobsen..... 89,000 2,498,125 1,000 510,000 39,000 19,890,000
Robert S. Woodruff...... -0- -0- 80,000 320,000 1,600,000 6,400,000
Larry A. Seese.......... -0- -0- 200,000 550,000 5,425,000 14,918,750
</TABLE>
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
Mr. Nacchio. Qwest and Joseph P. Nacchio entered into an employment
agreement dated as of December 21, 1996, and amended as of January 3, 1997,
pursuant to which Mr. Nacchio joined Qwest as its President and Chief
Executive Officer effective January 4, 1997, for a term through the close of
business on
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<PAGE>
December 31, 2001, unless terminated earlier by either party. The agreement
provides for an annual base salary of $600,000, a $300,000 bonus for 1997, and
a $300,000 bonus for 1998. Mr. Nacchio may participate in the employee benefit
plans available to Qwest's senior executives according to the plans' terms and
conditions. Under the agreement, Mr. Nacchio has been granted 300,000 growth
shares under Qwest's Growth Share Plan, with a five year performance cycle
commencing January 1, 1997 and a "beginning company value" of $1 billion.
The value of the growth shares is capped at a value generally determined by
the $11.00 per share price of the Qwest Common Stock in the Initial Public
Offering. The growth shares will vest in 20% increments on each January 1
beginning January 1, 1998, provided that the final 20% increment will vest on
the date in 2001 that ends the performance cycle, as determined by Qwest in
its sole discretion. The growth share agreement between Qwest and Mr. Nacchio
provides for terms that are different from the general terms of the Growth
Share Plan in certain respects. Annually, Mr. Nacchio may elect to receive
payment for up to 20% of his vested growth shares in shares of Qwest Common
Stock; the growth shares for which he has received payment will be canceled.
The number of growth shares granted to Mr. Nacchio are subject to adjustment
upon changes in Qwest's capital structure in connection with mergers and other
reorganizations. If Mr. Nacchio's employment is terminated for good reason
(generally, resignation after a reduction in title or responsibility) or other
than for cause (as defined below), he will vest in one-twelfth of the 20% of
growth shares subject to annual vesting for the year of termination for each
full month of employment in such calendar year. A change in control (as
defined in the employment agreement) will not result in full vesting of, or
payment for, the growth shares unless Mr. Nacchio is terminated without cause
or resigns for good reason after the change in control. If his employment is
terminated for cause, he will be paid for his vested growth shares based on
the value of Qwest as of the end of the immediately preceding calendar year.
Upon payment of certain dividends, the growth shares will vest 100% and Mr.
Nacchio will be paid for a portion of the growth shares. Termination of the
Plan will not be a "triggering event," as defined in the Growth Share Plan,
with respect to Mr. Nacchio's growth shares.
Qwest has granted Mr. Nacchio an option under Qwest's Equity Incentive Plan
to purchase six million shares of Qwest Common Stock. See "--Equity Incentive
Plan." The exercise price is $11.00 per share. The option will vest 20% per
year beginning on December 31, 1997 and will become fully vested upon Mr.
Nacchio's death, disability or retirement. If Mr. Nacchio resigns for good
reason (as defined in the growth share agreement) or if Qwest terminates his
employment other than for cause, he will vest in one-twelfth of the 20%
increment scheduled to vest for the year of termination for each full month of
employment with Qwest during such year. If Qwest terminates his employment
without cause or if he resigns for good reason (as defined in the employment
agreement, provided that for this purpose the occurrence of a change in
control by itself is not good reason), in each case following a change in
control, the option will become fully vested. If Mr. Nacchio's employment
terminates for any other reason, he will forfeit the unvested portion of his
option and retain the vested portion of his option, provided that if his
employment is terminated for cause, he can exercise the vested portion of the
option only until the first to occur of (1) the date that is six months after
the day after his termination or (2) June 30, 2003. He can exercise the vested
portion of the option at any time before the option expires. Generally, the
option will terminate and expire on June 30, 2003.
The employment agreement also provides that in order to compensate Mr.
Nacchio for certain benefits from his former employer, AT&T, that Mr. Nacchio
may lose or forfeit as a result of his termination of employment and
commencement of employment with Qwest, Qwest will pay him $10,735,861, as
adjusted (the "equalization payment"). The equalization payment is to be made
in three installments. The first installment of $7,232,000 was paid in 1997
and the second installment of $1,469,861, together with interest of $173,273,
was paid in 1998. The remaining installment of $2,034,000 is scheduled to be
paid in 1999, with annual interest at the rate of 5% from January 7, 1997, to
the date of payment. If Mr. Nacchio's employment is terminated for cause
(including any willful misconduct materially detrimental to Qwest, felony
conviction, or nonfeasance with respect to duties set forth in the employment
agreement) on or before December 31, 1999, the agreement provides that he will
repay to Qwest a portion of the equalization payment previously paid. If a
termination for cause occurs after December 31, 1999, the equalization payment
will not be repaid. If Qwest terminates Mr. Nacchio's employment other than
for cause or if Mr. Nacchio resigns for good reason, which for this purpose
includes a change in
12
<PAGE>
control of Qwest or certain other events, Qwest will be obligated to make
certain payments to him, including an amount equal to two times his base
salary at the rate in effect on the date of employment termination and any
installments of the equalization payment that have not yet been made, with
interest. Mr. Nacchio will also be entitled to continuation of certain
benefits, including welfare benefits and participation in the Qwest Growth
Share Plan for a two-year period following termination. For this purpose,
change in control means the acquisition of 20% or more of Qwest by an
individual, entity (not controlled by Philip F. Anschutz) or group if the new
acquirors own a larger percentage of Qwest than entities controlled by Philip
F. Anschutz. The agreement provides that if Mr. Nacchio receives any payments
upon a change in control that are subject to the excise tax of Section 4999 of
the Internal Revenue Code, Qwest will pay Mr. Nacchio an amount that
reimburses him in full for the excise tax.
Mr. Wilks. Qwest and Lewis O. Wilks entered into an employment letter
agreement dated October 8, 1997 pursuant to which Mr. Wilks joined Qwest as
President--Business Markets. Under the agreement, Mr. Wilks is entitled to an
annual base salary of $273,000 and a minimum bonus at the end of his first
year of employment of $100,000. Mr. Wilks also received reimbursement for
relocation expenses in the amount of $200,000. The agreement also provides for
the grant to Mr. Wilks of a stock option pursuant to the Qwest's Equity
Incentive Plan covering 700,000 shares of Qwest Common Stock with an exercise
price per share of $23.75. The option becomes exercisable as to 140,000 shares
of Qwest Common Stock at the end of each of the first four years of employment
and an additional 70,000 shares at the end of each of the fifth and sixth
years of employment. Mr. Wilks also received a transition payment of $200,000
in 1998, payable $50,000 during each calendar quarter beginning January 1,
1998.
Mr. Seese. Qwest and Larry A. Seese entered into an employment letter
agreement dated September 19, 1997, pursuant to which Mr. Seese joined Qwest
as Executive Vice President--Network Engineering and Operations. Mr. Seese is
entitled to an annual base salary of $230,000 and a minimum bonus at the end
of his first year of employment of $92,000. Mr. Seese also received
reimbursement for relocation expenses of $200,000. The agreement also provides
for the grant to Mr. Seese of a stock option pursuant to Qwest's Equity
Incentive Plan covering 750,000 shares of Qwest Common Stock with an exercise
price per share of $22.875. The option becomes exercisable as to 200,000
shares of Qwest Common Stock at the end of each of the first two years of
employment, an additional 100,000 shares of Qwest Common Stock at the end of
each of the third through the fifth years of employment and an additional
50,000 shares of Qwest Common Stock at the end of the sixth year of
employment. If the value of Mr. Seese's options is less than $1,000,000 on the
sixth anniversary of his employment, the Company will pay him the difference.
If Mr. Seese's employment is terminated for any reason other than cause during
his first two years of employment, he will be entitled to a lump sum payment
of one year's base salary.
Mr. Jacobsen. Qwest and Stephen M. Jacobsen entered into an employment
letter agreement dated March 7, 1997, pursuant to which Mr. Jacobsen joined
Qwest as its Senior Vice President--Consumer Markets. Under the agreement, Mr.
Jacobsen is entitled to an annual base salary of $185,000, which has been
increased to $192,770 for 1998. Mr. Jacobsen also received reimbursement for
relocation expenses in the amount of $132,085. The agreement provides for the
grant to Mr. Jacobsen of 30,000 growth shares pursuant to the Growth Share
Plan. If Mr. Jacobsen's employment with Qwest terminates for any reason other
than cause, he will be entitled to a lump sum payment of one year's base
salary.
Mr. Woodruff. In November 1996 QCC extended Robert S. Woodruff an unsecured,
noninterest-bearing loan in the principal amount of $100,000. The principal
amount is forgiven in monthly increments of $2,083 beginning December 1, 1996.
As of December 31, 1997 the outstanding principal balance of the loan was
$72,921 and as of December 31, 1998 the outstanding principal balance was
$35,417. If Mr. Woodruff terminates employment voluntarily or if QCC
terminates his employment on account of willful misconduct, QCC may declare
the unforgiven outstanding principal amount due and payable within 45 days
after the date he terminates employment. If Mr. Woodruff's employment
terminates for any other reason, the outstanding principal balance will be
forgiven. In December 1996, QCC and Mr. Woodruff entered into a letter
agreement to provide that if his employment is terminated for reasons other
than willful misconduct, he will receive either a lump sum payment equal to
one year's compensation at his then current rate or payment in accordance with
QCC's severance policy then in effect, as he elects.
13
<PAGE>
Change in Control. The Qwest Growth Share Plan provides that upon a "change
of control" of Qwest or a termination of the Qwest Growth Share Plan, the
outstanding growth shares will become fully vested. For this purpose, "change
of control" is defined as either (A) the acquisition by an individual, entity
or group (as defined in the Exchange Act), other than Anschutz Company, The
Anschutz Corporation, or any entity controlled by Philip F. Anschutz
("Anschutz Entities"), of beneficial ownership of 20% or more of either (i)
the then-outstanding shares of Common Stock or (ii) the combined voting power
of the then-outstanding voting securities of Qwest entitled to vote generally
in the election of directors and the beneficial ownership of the individual,
entity or group exceeds the beneficial ownership of the Anschutz Entities or
(B) the Anschutz Entities no longer have beneficial ownership of at least 20%
of Qwest's Common Stock or 20% of the combined voting power.
The Equity Incentive Plan provides that, upon a "change in control," all
awards granted under the Equity Incentive Plan will vest immediately. For this
purpose, a "change of control" is defined as either (A) the acquisition by any
individual, entity or group (within the meaning of section 13(d)(3) or
14(d)(2) of the Exchange Act), other than Anschutz Company, The Anschutz
Corporation, any entity or organization controlled by Philip F. Anschutz
(collectively the "Anschutz Entities") or a trustee or other fiduciary holding
securities under an employee benefit plan of Qwest of 50% or more of either
(i) the then outstanding shares of common stock or (ii) the combined voting
power of the then outstanding voting securities of Qwest entitled to vote
generally in the election of directors or (B) at any time during any period of
three consecutive years after June 23, 1997, individuals who at the beginning
of such period constitute the Board (and any new director whose election to
the Board or whose nomination for election by Qwest's stockholders was
approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of such period or whose
election and nomination for election was previously so approved) cease for any
reason to constitute a majority thereof.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Under Section 16(a) of the Exchange Act, Qwest's directors and certain of
its officers and persons holding more than ten percent of Qwest's Common Stock
are required to file forms reporting their beneficial ownership of the Qwest
Common Stock. Such persons are also required to furnish Qwest copies of the
forms so filed. Based solely upon the review of the copies of such forms
provided to Qwest and written certifications from each such person, Qwest
believes that during the fiscal year ended December 31, 1998, all directors,
executive officers and persons holding more than 10% of Qwest's Common Stock
were in compliance with their filing requirements.
Board Compensation Committee Report on Executive Compensation
The report of the Compensation Committee of the Board of Directors (the
"Compensation Committee") shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933, as amended, or under the Securities
Exchange Act of 1934, as amended, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
General
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"). Philip F.
Anschutz, Jordan L. Haines and W. Thomas Stephens serve on the Committee. Mr.
Anschutz does not participate in the grant of stock options and other awards
under the Company's Equity Incentive Plan and such awards are approved solely
by Messrs. Haines and Stephens. None of the Committee members are employees of
the Company.
The Company's overall compensation philosophy is to link executives' total
compensation to the short-term and long-term performance of the Company so as
to maximize long-term stockholder value. The policy is designed to provide a
competitive compensation program that will enable the Company to attract,
motivate,
14
<PAGE>
reward and retain executives and other employees who have the skills,
experience and talents required to promote the short and long-term financial
performance and growth of the Company.
The Company's executive compensation has three elements; base salary, annual
or short term incentive compensation and long-term incentive compensation in
the form of stock options. Generally, the Company's cash compensation policy
is designed to provide executive officers and other management personnel with
a base salary that is competitive but somewhat below the norm for its industry
and to use quarterly incentive cash bonuses to yield total compensation that
is equal to the total cash compensation paid to management personnel of the
Company's competitors, depending upon the Company's results of operations
relative to quarterly performance goals. Awards of options under the Company's
Equity Incentive Plan will be based on criteria that reflect contributions to
long-term stockholder value. Stock option grants are generally made at levels
comparable to competitive organizations in order to direct executive
performance toward increased stockholder value. The Committee has used, and
expects to continue to use, stock-based incentive grants, including options,
as a significant component of executive compensation.
The Committee is endeavoring to maximize the deductibility of compensation
under section 162(m) of the Internal Revenue Code to the extent practicable
while maintaining competitive compensation. Section 162(m) of the Internal
Revenue Code denies a tax deduction to any publicly held corporation, such as
the Company, for compensation in excess of $1,000,000 paid to any named
executive officer unless such compensation is performance based under section
162(m). Compensation paid pursuant to agreements entered into prior to the
time that the Company became a publicly held corporation is not subject to the
deduction limitation for a transition period. The Company and the Committee
have taken all action required under section 162(m) so that compensation
attributable to the exercise of options under the Company's Equity Incentive
Plan will be deductible.
Base Salary
Mr. Nacchio's base salary for 1997 through 2001 was negotiated within the
context of the employment agreement executed between Mr. Nacchio and the
Company as of December 21, 1996 and amended as of January 3, 1997.
The base salaries of certain other officers also were negotiated within the
context of employment agreements between them and the Company. Except as
affected by those agreements, the base salaries of all executive officers and
other key management personnel are set at the discretion of the Committee,
based upon the recommendations of the Chief Executive Officer.
Cash Bonus
Under his employment agreement, Mr. Nacchio was entitled to receive a cash
bonus of $300,000 for 1998. Based upon Mr. Nacchio's success in accomplishing
strategic acquisitions and successful implementation of the 1998 business
plan, the Committee authorized a total bonus for Mr. Nacchio for 1998 of
$567,128. The Committee authorized bonuses for certain of the other named
executive officers for 1998 based upon the Company's operational and financial
results and the contributions of those individuals.
Quarterly Bonus
Prior to the acquisition of LCI, Qwest had an annual cash bonus plan based
on its results as measured against its business plan. LCI had a quarterly
bonus plan for all employees based on its results, individual contribution and
position. Effective July 1, 1998, Qwest adopted the LCI plan for Qwest's
corporate officers. Effective January 1, 1999, all employees of the Company
became covered by a plan similar to the LCI plan referenced above, with
quarterly target bonuses ranging from 60% for vice presidents to 5% for those
employees in the lowest salary grade.
LCI had a stock option plan that granted options to key new hires and
significant promotions and an annual grant to director level employees and
above. Qwest had no such periodic option plan.
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Effective January 1, 1999, Qwest adopted a stock option grant policy under
which all employees are eligible to participate in a plan to grant options for
performance and reward significant promotions and key new hires. As of
February 11, 1999, there were 35,000,000 shares authorized for issuance of
which 23,308,812 shares had been granted.
Growth Shares
Prior to the Company's initial public offering of its Common Stock in June
1997, the Company's Growth Share Plan provided the long-term incentive
compensation element of executive compensation. Pursuant to his employment
agreement, Mr. Nacchio received a grant of 300,000 growth shares at the time
of his employment. Certain of the other named executive officers also received
growth share grants under the Growth Share Plan. All of the outstanding growth
shares, including those held by Mr. Nacchio and the other named executive
officers, were amended at the time of the initial public offering of the
Company's Common Stock to cap the value of the growth shares at a value
generally determined by the $11 per share price (as adjusted to reflect a
subsequent two for one stock split) of the Company's Common Stock in the
Initial Public Offering and to provide that the growth share grants will
terminate and become payable on a date in 2001 selected by the Company. The
individuals who held growth shares at the time of the Initial Public Offering
also received stock options pursuant to the Company's Equity Incentive Plan to
provide incentive compensation with respect to appreciation in the Company's
Common Stock subsequent to the Initial Public Offering. The Committee does not
intend to grant any additional growth shares under the Growth Share Plan.
Stock Options
The Committee believes that long-term incentive compensation in the form of
stock options is the most direct way of making executive compensation
dependent upon increases in stockholder value. The Company's Equity Incentive
Plan provides the means through which executive officers can build an
investment in Common Stock which will align such officers' economic interests
with the interests of stockholders. The value of stock options historically
has increased as a result of increase of the price of the Common Stock, and
such options are highly valued by employees. The Committee believes that the
grant of stock options has been and will continue to be a significant
component of its success in attracting and retaining talented management
employees in an extremely competitive environment.
The exercise price of each option has generally been the market price of the
Common Stock on the date of grant. The most recent option grants generally
provide for delayed vesting over a period of five years and have a term of ten
years. The Committee believes that stock options give the executive officers
greater incentive throughout the term of the options to strive to operate the
Company in a manner that directly affects the financial interests of the
stockholders both on the long term, as well as the short term, basis.
In determining the number of option shares to grant to executive officers,
the Committee considers on a subjective basis the same factors as it does in
determining the other components of compensation, with no single factor
accorded special weight. The recommendation of the Chief Executive Officer is
of paramount importance in determining awards to persons other than himself.
The Committee intends to continue its practice of basing executive
compensation on stock price and other financial performance criteria, and on
its qualitative evaluation of individual performance. The Committee believes
that its compensation policies promote the goals of attracting, motivating,
rewarding and retaining talented executives who will maximize value for the
Company's stockholders.
Compensation Committee
Philip F. Anschutz, Chairman
Jordan L. Haines
W. Thomas Stephens
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Performance Measurement Comparison
The following chart shows the Center for Research in Security Prices
("CRSP") Total Returns Index from June 23, 1997 to December 31, 1998 for (i)
Qwest Common Stock, (ii) Nasdaq Stock Market (US Companies) and (iii) Nasdaq
Telecommunications Stocks. All values assume reinvestment of the full amount
of all dividends.
[PERFORMANCE GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG QWEST COMMUNICATIONS INTERNATIONAL, INC.,
MARKET INDEX AND PEER INDEX
Measurement period Company Market Peer
(Fiscal Year Covered) Index Index Index
- --------------------- ----------- ---------- ---------
FYE 12/31/96 $ 88.782 $ 86.262
FYE 01/31/97 $ 95.092 $ 88.351
FYE 02/28/97 $ 89.832 $ 85.909
FYE 03/31/97 $ 83.966 $ 80.201
FYE 04/30/97 $ 86.591 $ 83.250
FYE 05/30/97 $ 96.404 $ 93.566
FYE 06/24/97 $ 100.000 $ 100.000 $ 100.000
FYE 06/30/97 $ 97.321 $ 99.357 $ 100.675
FYE 07/31/97 $ 111.161 $ 109.844 $ 107.008
FYE 08/29/97 $ 145.536 $ 109.677 $ 103.411
FYE 09/30/97 $ 164.732 $ 116.158 $ 116.869
FYE 10/31/97 $ 220.536 $ 110.145 $ 120.315
FYE 11/28/97 $ 195.089 $ 110.696 $ 121.278
FYE 12/31/97 $ 212.500 $ 108.920 $ 127.736
FYE 01/30/98 $ 253.125 $ 112.356 $ 135.849
FYE 02/27/98 $ 250.893 $ 122.905 $ 147.680
FYE 03/31/98 $ 277.678 $ 127.444 $ 161.689
FYE 04/30/98 $ 275.446 $ 129.608 $ 159.796
FYE 05/29/98 $ 236.161 $ 122.494 $ 157.076
FYE 06/30/98 $ 249.107 $ 131.135 $ 172.594
FYE 07/31/98 $ 288.393 $ 129.750 $ 179.971
FYE 08/31/98 $ 178.571 $ 104.311 $ 136.518
FYE 09/30/98 $ 223.661 $ 118.718 $ 153.483
FYE 10/30/98 $ 279.464 $ 123.569 $ 165.892
FYE 11/30/98 $ 285.714 $ 135.742 $ 174.620
FYE 12/31/98 $ 357.143 $ 153.114 $ 208.594
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Anschutz, a member of the Compensation Committee, is a Director and
Chairman (not an executive officer position) of Qwest, a Director and Chairman
of Anschutz Company, Qwest's majority stockholder, and a Director and Chairman
of The Anschutz Corporation, a subsidiary of Anschutz Company. Certain
transactions and relationships between Qwest and Anschutz Company or one of
its affiliates are described directly below under "Certain Transactions."
CERTAIN TRANSACTIONS
Certain affiliates of Anschutz Company indirectly provide facilities to
Qwest at prevailing market rates. Qwest rents its corporate office in Denver,
Colorado from a limited partnership in which Mr. Anschutz serves as a general
partner and indirectly holds limited partner interests, and rents certain
telecommunications equipment used by Qwest at its corporate office from an
affiliate of Anschutz Company. Such expenses totaled $2.6 million for the year
ended December 31, 1998.
Affiliates of Anschutz Company incur certain costs on Qwest's behalf,
including primarily insurance and corporate transportation services, and
allocate such costs to Qwest based on actual usage. The cost to Qwest for such
services was approximately $4.3 million for the year ended December 31, 1998.
Qwest had a tax sharing agreement with Anschutz Company that provided for
the allocation of tax liabilities and benefits. The tax sharing agreement
expired on June 5, 1998. Operations prior to that date are still subject to
the provisions of the agreement. In general, the agreement requires Qwest to
pay to Anschutz Company the applicable income taxes for which Qwest would be
liable if it filed a separate return and requires Anschutz Company to pay
Qwest for losses or credits which would have resulted in a refund of taxes as
if Qwest had filed a separate return. The payments under the agreement may be
made in the form of cash, setoffs, contributions to capital, dividends, notes
or any combination of the foregoing. The tax benefits payable to Qwest under
the existing agreement through December 31, 1996 of $11.1 million were
forgiven. The tax sharing agreement was amended, effective as of January 1,
1997 (the "Effective Date"), to provide that Qwest will be responsible to
Anschutz Company to the extent of income taxes for which Qwest would have been
liable if it had filed a separate return after giving effect to any loss or
credit carryover belonging to Qwest from taxable periods after the Effective
Date. Anschutz Company will be responsible to Qwest to the extent an unused
loss or credit can be carried back to an earlier taxable period after the
Effective Date.
Anschutz Company guaranteed a QCC construction loan with an outstanding
balance at December 31, 1997, of approximately $10.9 million. The construction
loan, which was repaid in 1998, pertained to a network construction project
undertaken by QCC for an interexchange carrier. The guarantee was limited to
indemnification against defective construction, warranty or other claims of
the interexchange carrier that would reduce or eliminate the interexchange
carrier's obligation to pay QCC. In addition, Anschutz Company guaranteed
certain performance bonds totaling $175.0 million furnished by Qwest to
support its construction obligations under a contract for sale of dark fiber.
The bonds were later released. Qwest has agreed to indemnify Anschutz Company
and its subsidiaries against any cost or losses incurred by any of them as a
result of their providing credit support to Qwest (in the form of collateral
pledges, guarantees, bonds or otherwise).
Richard T. Liebhaber, a Director of Qwest, entered into a consulting
agreement with an affiliate of Anschutz Company in December 1996 to provide
consulting services in 1997 and serve on the Board of Qwest and its
subsidiaries upon request. The agreement was assigned to Qwest in February
1997. Mr. Liebhaber was required under the contract to provide a minimum of 30
days of consulting services to QCC during 1998 and was paid $250,000 plus out-
of-pocket expenses during 1998. The consulting fees have been reduced to
$125,000 for 1999. Mr. Liebhaber was granted 10,000 growth shares, effective
December 1, 1996, with a performance cycle ending in 2001 under the Qwest
Growth Share Plan. Mr. Liebhaber was also granted options to purchase 300,000
shares of Qwest Common Stock. (See "Director Compensation" above).
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No director or executive officer of Qwest and its operating subsidiaries was
indebted to Qwest or its subsidiaries at any time since the beginning of 1998
in excess of $60,000, except Mr. Woodruff as described above in the Proxy
Statement under the description of his employment contract.
2. ADOPTION OF THE QWEST COMMUNICATIONS INTERNATIONAL INC. EMPLOYEE STOCK
PURCHASE PLAN
Employee Stock Purchase Plan. Effective November 1, 1998, the Board adopted
the Qwest Communications International Inc. Employee Stock Purchase Plan (the
"Employee Stock Purchase Plan"). In order to receive favorable tax treatment
under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"), stockholder approval of the Employee Stock Purchase Plan is required.
A summary of the material features of the Employee Stock Purchase Plan
follows. This summary is qualified in its entirety by reference to the full
text of the Employee Stock Purchase Plan, which is set forth in Exhibit A
hereto and incorporated by reference herein.
The Employee Stock Purchase Plan provides eligible employees of the Company
and its designated subsidiaries with an opportunity to acquire shares of the
Company's Common Stock and thereby acquire an interest in the future of the
Company. The maximum number of shares of Common Stock that may be purchased
under the Employee Stock Purchase Plan, in the aggregate, is 760,000.
Employees eligible to participate in the Employee Stock Purchase Plan
include each employee of the Company and of each adopting parent or subsidiary
if the employee customarily works for the Company, parent or subsidiary more
than 20 hours per week and 5 months in any calendar year. Nonemployee
directors, leased employees, independent contractors and employees who own
stock possessing 5% or more of the total combined voting power or value of all
classes of the Company's or any designated parent or subsidiary's capital
stock are not eligible to participate in the Employee Stock Purchase Plan. To
the extent permitted by Section 423 of the Code and regulations thereunder, an
individual who is reclassified as a common-law employee as a result of a final
court decree, or the settlement of an administrative or judicial proceeding
will become eligible to participate after two years of employment (including
any service recharacterized as common law employment).
An option to purchase Common Stock under the Employee Stock Purchase Plan
(an "Offer") was made on November 1, 1998 (the "Offer Date") and will last for
27 months (the "Offer Period") ending on January 31, 2001. Subsequent Offers
may be made under the Employee Stock Purchase Plan, however, no Offer will
have a term of more than 27 months.
An eligible employee may participate in an Offer by authorizing payroll
deductions of up to 15% of base salary per pay period. Amounts withheld will
be held for the credit of the participant as part of the Company's general
funds and will not accrue any interest. On the last day of each month (the
"Purchase Date"), the entire account balance of a participating employee is
applied to purchase shares of the Company's Common Stock at a purchase price
equal to 85% of the fair market value of the Common Stock on the last trading
day of the month in which the Common Stock is purchased (the "Option Price").
In no event, however, is an employee permitted to purchase more than 20,000
shares of Common Stock during an Offer Period.
An employee who is not eligible to participate in the Plan on the effective
date of an Offer but who becomes eligible during the term of the Offer may
participate in the Offer by authorizing payroll deductions as described above.
Any employee who does not elect to participate in an Offer within the period
for initial enrollment may also subsequently elect to participate in the Offer
by authorizing payroll deductions. An employee may increase or decrease the
rate of his or her withholding during an Offer Period, but not more frequently
than once per payroll period.
Options granted under the Employee Stock Purchase Plan are not transferable
by an employee other than by will or the laws of descent and distribution. The
Options may be exercised, during an employee's lifetime, only by the employee
and may not be sold, pledged, assigned or otherwise transferred.
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In the event of any change in the outstanding Common Stock of the Company
due to reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger, consolidation, offering of rights or any other
change in the structure of the Common Stock, adjustments may be made in the
number, kind and price of shares available for purchase under the Employee
Stock Purchase Plan and in the minimum and maximum number of shares which an
individual employee is entitled to purchase.
The Company has the right to terminate or amend the Employee Stock Purchase
Plan at any time without stockholder approval unless stockholder approval is
required by Section 423 of the Code or another law or regulation. If not
previously terminated by the Company, the Employee Stock Purchase Plan will
terminate on the date as of which participants have exercised options to
purchase a number of shares equal to or greater than the number of shares
subject to the Plan.
Administration. A committee designated by the Board may designate a plan
administrator to administer the Employee Stock Purchase Plan. The committee
has the exclusive right to interpret the provisions of the Employee Stock
Purchase Plan and to determine any questions arising under the Plan.
Certain Federal Income Tax Consequences. A participant's contributions
through payroll deductions are not tax deductible but will constitute a part
of the cost basis of the Common Stock purchased under the Employee Stock
Purchase Plan.
No tax liability results on the grant of an option or the purchase of Common
Stock. The employee becomes liable for Federal income tax on the disposition
of the Common Stock. In order to receive the beneficial treatment provided
under Section 423 of the Code, a participant must hold the Common Stock for
two years from the Offer Date, or one year from the Purchase Date, whichever
is later.
If an employee disposes of shares acquired under the Employee Stock Purchase
Plan after the holding period, or if an employee dies while holding any shares
acquired under the Employee Stock Purchase Plan, the employee must include in
gross income, as compensation, in the taxable year of disposition or death, an
amount with respect to each share equal to the lesser of (i) the excess of the
fair market value of the share at the time of the disposition or death over
the amount paid for the share, or (ii) the excess of the fair market value of
the share on the first day of the Offer over 85 percent of the fair market
value of the share on the first day of the Offer. The Company will not be
allowed a corresponding deduction for the amount treated as ordinary income.
Except in the case of death, the basis of the shares in the employee's hands
at the time of the disposition will equal the price paid for the shares
increased by the amount, if any, included in the employee's gross income as
compensation. Any additional gain recognized will be treated as short-term or
long-term capital gain depending on the holding period of such shares. In the
case of death of the employee, the basis of the shares to the employee's
estate or heirs will be determined under Section 1014 of the Code.
If an employee disposes of any of the shares purchased under the Employee
Stock Purchase Plan before the expiration of the required holding period, the
employee must include in gross income, as compensation, an amount with respect
to each share equal to the excess of the fair market value of the share on the
last trading day prior to the date of purchase over the price paid for such
share pursuant to the Employee Stock Purchase Plan. Such amount will be
includible in the gross income of the employee for the employee's taxable year
in which the disposition occurs. The Company will be allowed a corresponding
deduction in the same year and in the same amount required to be included in
gross income by the employee if and to the extent such amount is an ordinary
and necessary business expense and satisfies the test of reasonable
compensation, provided that the Company's deduction with respect to certain
officers may be limited by Section 162(m) of the Code.
The basis of the shares in the hands of the employee will be the amount paid
for the shares plus the amount, if any, included in the employee's gross
income as compensation. Any gain or loss will be short-term or long-term
capital gain or loss depending on the holding period for such shares. The
holding period for the shares will commence on the date the option is
exercised with respect to such shares.
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The foregoing is intended as a summary of certain Federal income tax
consequences associated with the Employee Stock Purchase Plan and it does not
purport to be a complete statement of such consequences. It is recommended
that employees eligible to participate in the Employee Stock Purchase Plan
consult their own tax advisors for counseling. Tax treatment under foreign,
state, local or other law, including estate tax law, is not covered in this
summary.
Stockholder Approval. The affirmative vote of the holders of a majority of
the shares of Common Stock present, in person or represented by proxy, and
entitled to vote at the Annual Meeting is required to approve the Employee
Stock Purchase Plan. The Board believes the Employee Stock Purchase Plan is in
the best interests of the Company and its stockholders and is important in
order to help assure the ability of the Company to continue to recruit and
retain highly qualified employees.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE ADOPTION OF PROPOSAL 2.
3. THE CERTIFICATE AMENDMENT PROPOSAL
Qwest is authorized to issue a maximum of 625,000,000 shares of stock
pursuant to its Certificate of Incorporation. The approval of the Certificate
Amendment Proposal is required by the Delaware General Corporation Law to
increase the number of authorized shares of Common Stock from 625,000,000
shares to 2,025,000,000 shares.
The increase in the number of authorized shares of Common Stock that will be
accomplished by the Certificate Amendment Proposal will ensure that additional
shares of Common Stock will be available, if and when needed, for issuance
from time to time for any proper purpose approved by the Board, including
issuances to effect acquisitions, to grant options, to provide for stock
splits, to raise capital and for other corporate purposes. As of the date
hereof, there are no arrangements, agreements or understandings for the
issuance of additional shares of Common Stock other than shares to be issued
in acquisitions in the ordinary course of business. The Board believes that
the availability of the additional authorized shares for issuance upon
approval of the Board without the necessity for, or the delay inherent in, a
meeting of Qwest's stockholders will be beneficial to Qwest and its
stockholders by providing Qwest with the flexibility required to promptly
consider and respond to future business opportunities and needs as they arise.
The affirmative vote of a majority of the shares of Common Stock outstanding
and entitled to vote at the Annual Meeting is required to approve the
Certificate Amendment Proposal.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE ADOPTION OF PROPOSAL 3.
CERTIFIED INDEPENDENT PUBLIC ACCOUNTANTS
The firm of KPMG LLP has served as independent auditors for the fiscal year
ending December 31, 1998, and has been selected to serve for the 1999 fiscal
year. A representative of KPMG LLP is expected to be present at the Annual
Meeting, will have an opportunity to make a statement if he or she so desires
and will be available to respond to appropriate questions.
21
<PAGE>
ANNUAL REPORT ON FORM 10-K
Qwest will provide without charge to any requesting stockholder a copy of
its Annual Report on Form 10-K for the 1998 fiscal year. Written requests
should be made to Drake S. Tempest, Corporate Secretary, addressed to Qwest
Communications International Inc. at 700 Qwest Tower, 555 Seventeenth Street,
Denver, Colorado 80202.
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at Qwest's 2000
Annual Meeting of Stockholders must be received by the Corporate Secretary of
Qwest not later than December 31, 1999, in order to be included in the proxy
statement and proxy relating to the 2000 Annual Meeting.
OTHER MATTERS
The Board knows of no other business to be presented at the meeting, but if
other matters do properly come before the meeting, it is intended that the
persons named in the proxy will vote in respect thereof in accordance with
their judgement.
The Board encourages you to have your shares voted by signing and returning
the enclosed proxy or to vote using Qwest's telephone or Internet voting
procedures. The fact that you will have returned your proxy or voted using
Qwest's telephone or Internet voting procedures in advance will not affect
your right to vote in person should you attend the meeting. However, by
signing and returning the proxy or using Qwest's telephone or Internet voting
procedures, you have assured your representation at the Annual Meeting. Thank
you for your cooperation.
By Order of the Board of Directors
/s/ Drake S. Tempest
Drake S. Tempest
Corporate Secretary
Denver, Colorado
April 12, 1999
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This document constitutes part of a prospectus covering securities
that have been registered under the Securities Act of 1933.
The date of this Prospectus is October 6, 1998
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QWEST COMMUNICATIONS INTERNATIONAL INC.
EMPLOYEE STOCK PURCHASE PLAN
Effective November 1, 1998
1. PURPOSE OF PLAN.
The purpose of the Qwest Communications International Inc. Employee Stock
Purchase Plan (the "Plan") is to provide eligible employees who wish to become
stockholders of Qwest Communications International Inc. (the "Company"), or who
wish to increase their stockholdings in the Company, with an opportunity to
purchase shares of the Company's common stock, par value $0.01 per share
("Common Stock"), on a basis that is more convenient and more favorable than
would otherwise be available. It is believed that employee participation in
ownership of the Company on this basis will be to the mutual benefit of both the
employees and the Company. It is intended that the Plan constitute an "employee
stock purchase plan" (a "Stock Purchase Plan") within the meaning of Section 423
of the Internal Revenue Code of 1986, as amended (the "Code").
2. EMPLOYEES ELIGIBLE TO PARTICIPATE.
Any employee of the Company or any "parent corporation" of the Company
within the meaning of Section 424(e) of the Code (a "Parent"), or "subsidiary
corporation" of the Company within the meaning of Section 424(f) of the Code (a
"Subsidiary") which adopts the Plan with the consent of the Company (an
"Employing Corporation") is eligible to participate in the Plan immediately on
the employee's date of hire. Payroll deductions may begin with respect to the
first payroll period for which it is administratively feasible under the payroll
system in place from time to time, if the employee completes the enrollment
procedure outlined in Section 4(b) hereof by the applicable payroll cutoff date.
Notwithstanding the foregoing and to the extent permitted by Section 423 of the
Code and any rules or regulations promulgated thereunder, an employee whose
customary employment with the Company or an Employing Corporation is for twenty
(20) hours or less per week or for not more than five (5) months in any calendar
year shall not be eligible to participate in the Plan.
The term "employee" as used herein shall (i) have the meaning applicable
under Treasury Regulation Section 1.421-7(h), (ii) shall not include a member of
the Board of Directors of the Company or of an Employing Corporation who is not
also an employee of the Company or of an Employing Corporation, (iii) shall not
include leased employees within the meaning of Section 414(n) of the Code; and
(iv) shall not include any individual (A) who provides services to the Company,
any Employing Corporation or any division thereof under
This document constitutes part of a prospectus
covering securities that have been registered
under the Securities Act of 1933.
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<PAGE>
an agreement, contract, or any other arrangement pursuant to which the
individual is initially classified as an independent contractor or (B) whose
remuneration for services has not been treated initially as subject to the
withholding of federal income tax pursuant to Section 3401 of the Code, unless
the individual is subsequently reclassified as a common law employee as a result
of a final decree of a court of competent jurisdiction or the settlement of an
administrative or judicial proceeding. To the extent permitted by Section 423 of
the Code and any rules or regulations promulgated thereunder, an individual who
is reclassified as a common law employee as a result of a final decree of a
court of competent jurisdiction or the settlement of an administrative or
judicial proceeding shall become eligible to participate, if otherwise eligible
under this Section 2 hereof, after two years of employment (including any period
of service recharacterized as common law employment).
3. ELIGIBLE COMPENSATION.
Compensation eligible for payroll deductions ("Compensation") shall be base
salary. Compensation does not include overtime, bonuses, commissions, severance
pay, incentive pay, shift premium differentials, pay in lieu of vacation,
imputed income for income tax purposes, patent and award fees, awards and
prizes, back pay awards, reimbursement of expenses and living allowances,
educational allowances, expense allowances and reimbursements, disability
benefits, fringe benefits, deferred compensation, compensation under the
Company's stock plans, amounts paid for services as an independent contractor,
or any other compensation excluded by the Stock Purchase Plan Committee (the
"Committee") in its discretion, applied in a uniform manner. The preceding
sentence notwithstanding, Compensation shall be determined before giving effect
to any salary reduction agreement pursuant to a qualified cash or deferred
arrangement (within the meaning of Section 401(k) of the Code) or to any similar
salary reduction agreement pursuant to any cafeteria plan (within the meaning of
Section 125 of the Code).
4. TERMS OF OFFERS.
(a) Offer Dates.
An option to purchase Common Stock under the Plan (an "Offer") shall be
made on November 1, 1998 (the "Offer Date") and shall last for 27 months (the
"Offer Period") ending on January 31, 2001. The Committee shall determine the
date or dates upon which one or more subsequent Offers, if any, may be made
under the Plan, provided that, in no event shall any Offer have a term of more
than twenty-seven (27) months.
(b) Elections to Participate.
In order to participate in an Offer, an eligible employee must sign and to
the plan administrator designated by the Committee in its sole discretion (the
"Plan Administrator") an enrollment/payroll deduction authorization form or
complete such other
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procedures as the Plan Administrator may require or permit. The eligible
employee must authorize regular payroll deductions in either (i) a specified
whole dollar amount for each payroll period or (ii) any full percentage of
Compensation, in each case not exceeding the maximum percentage of the
employee's Compensation per pay period, to be applied toward the purchase of
Common Stock pursuant to the Offer. The "maximum percentage" means the percent
of Compensation available for payroll deductions which shall be specified by the
Committee at the beginning of the term of an Offer, and which shall not exceed
fifteen percent (15%). Payroll deductions may begin with respect to the first
payroll period following the date of hire for which it is administratively
feasible under the payroll system in place from time to time if the signed
enrollment/payroll deduction authorization form is submitted to the Plan
Administrator, or such other procedure as may be required or permitted by the
Plan Administrator is completed, by the applicable payroll cutoff date.
If a participant authorizes payroll deductions pursuant to clause (ii) in
the foregoing paragraph, the amount of Compensation to be deducted shall be
determined for each payroll period on a basis of the percentage of Compensation
authorized for deduction by the participant, which amount shall be increased or
decreased (as applicable) on a prospective basis to reflect changes in such
Compensation during the term of the Offer.
5. PARTICIPATION.
(a) In General.
On the effective date of an Offer, each then eligible employee who has
elected to participate in the Offer as provided in Section 4(b) hereof shall be
granted an option to purchase, during the term of the Offer, the maximum number
of shares of Common Stock provided in Section 6(d) hereof. The number of shares
of Common Stock purchased by the eligible employee during the term of the Offer
shall be determined by the employee's payroll deduction elections made in
accordance with the terms of the Plan.
(b) Newly Eligible Employees.
Each employee who is not eligible to participate in the Plan on the
effective date of an Offer but who becomes eligible to participate during the
term of the Offer shall be granted an option to purchase, during the term of the
Offer, the maximum number of shares of Common Stock provided in Section 6(d)
hereof. The number of shares of Common Stock purchased by the eligible employee
during the term of the Offer shall be determined by the payroll deduction
elections made in accordance with the terms of the Plan. In such cases, payroll
deductions may begin with respect to the first payroll period following the
employee's date of eligibility for which it is administratively feasible under
the payroll system in place from time to time, if the employee's signed
enrollment/payroll deduction authorization form is submitted to the Plan
Administrator, or such other procedure as may be required or permitted by the
Plan Administrator is completed prior to the applicable payroll cutoff date.
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(c) Enrollment During an Offer.
Any employee who does not elect to participate in a particular Offer within
the period for initial enrollment may subsequently elect to participate in such
Offer. In such cases, payroll deductions may begin with respect to the first
payroll period for which it is administratively feasible under the payroll
system in place form time to time, if the employee's signed enrollment/payroll
deduction authorization form is submitted to the Plan Administrator, or such
other procedure as may be required or permitted by the Plan Administrator is
completed prior to the applicable payroll cutoff date.
(d) Changes in Payroll Deduction Authorization.
Participants are permitted to increase or decrease their rate of payroll
deduction, subject to the terms and limitations of the Plan. A participant shall
not be permitted to make more than one such change per payroll period with
respect to any Offer. Any such change shall be effective for a given payroll
period provided that the employee's signed enrollment/payroll deduction
authorization form has been submitted to the Plan Administrator, or such other
procedure as may be required or permitted by the Plan Administrator has been
completed prior to the applicable payroll cutoff date. A reduction of the
payroll deduction percentage to zero shall be treated as a request to
discontinue participation in the Offer but shall not constitute a withdrawal
from the Plan in accordance with Section 11 hereof. A participant may resume
participation in an Offer and reinstate payroll deductions with respect to the
first payroll period after the election to resume participation for which it is
administratively feasible under the payroll system in place from time to time,
by submitting a new enrollment/payroll deduction authorization form or
completing such other procedure as may be required or permitted by the Plan
Administrator prior to the appropriate payroll cutoff date.
(e) Notice of Dispositions.
Each participant in an Offer shall notify the Company of any disposition of
shares of Common Stock purchased pursuant to the Plan prior to two years from
the date of the Offer or one year from the date of purchase, whichever is later,
or prior to the expiration of such other holding period as may be specified
under Section 423(a) of the Code, as amended from time to time, provided,
however, that no participant may dispose of such shares of Common Stock in
violation of the restriction imposed by Section 8(d) hereof.
(f) Equivalent Rights.
All employees granted options under the Plan shall have the same rights and
privileges under the Plan except that the number of shares each participant may
purchase shall bear a uniform relationship to the employee's eligible
Compensation and shall depend upon the payroll deduction the employee
authorizes.
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<PAGE>
(g) Trading Day.
For purposes of the Plan, a "Trading Day" is a day on which shares of
Common Stock are traded on the NASDAQ National Market, the principal stock
exchange or other market on which the Common Stock is traded on such date.
6. PARTICIPATION LIMITATIONS.
(a) Five Percent Owners.
Notwithstanding anything herein to the contrary, no employee shall be
granted an option to purchase any shares of Common Stock under the Plan pursuant
to any Offer if the employee, immediately after the option is granted, owns or
would own shares (including all shares which may be purchased under outstanding
options under the Plan) possessing five percent (5%) or more of the total
combined voting power or value of all classes of shares of capital stock of the
Company, the Employing Corporation, or any Parent or Subsidiary. For purposes of
the foregoing limitation, the rules of Section 424(d) of the Code (relating to
attribution of stock ownership) shall apply in determining share ownership, and
Common Stock which the employee may purchase under outstanding options shall be
treated as stock owned by such employee.
(b) $25,000 Value Limitation.
If pursuant to the terms of an Offer under the Plan, an employee would be
granted one or more options that would cause a violation of Section 423(b)(8) of
the Code, such options shall not be granted and the employee shall instead be
granted options to purchase shares in an amount that, when combined with the
employee's right to purchase shares under all Stock Purchase Plans of the
Company, the Employing Corporation and its Parents and Subsidiaries, will not
cause the employee's right to purchase shares of Common Stock to accrue at a
rate which exceeds twenty-five thousand dollars ($25,000) of the Fair Market
Value of such shares (determined at the time such options were granted) for each
calendar year in which such options are outstanding at any time. In determining
this limitation, the rules of Section 423(b)(8) of the Code and the regulations
thereunder shall apply.
(c) Fair Market Value.
Unless otherwise defined by the Committee at the time of the Offer, the
"Fair Market Value" of the Common Stock on any date shall mean the closing price
on that date on the NASDAQ National Market, the principal stock exchange or
other market on which the Common Stock is traded or if such day is not a Trading
Day, on the immediately preceding Trading Day. If the price of the Common Stock
is not reported on any securities exchange or national market system, the Fair
Market Value of the Common Stock on a particular date shall be as determined by
the Committee.
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<PAGE>
(d) Maximum Number of Shares.
The maximum number of shares of Common Stock which an employee will be
permitted to purchase pursuant to any one Offer shall be 20,000 shares. If the
foregoing participation limitation is reached, payroll deductions shall cease,
has been reached shall be returned to the employee.
7. OPTION PRICE.
The price at which shares of Common Stock may be purchased with respect to
any Offer made under the Plan shall be determined by the Committee, but may not
be less than eighty-five percent (85%) of the Fair Market Value of a share of
Common Stock on the last Trading Day of the month in which the Common Stock is
purchased (the "Option Price").
8. EXERCISE OF OPTIONS.
(a) Purchase of Common Stock.
At the end of each payroll period, each participant shall have deducted
from his pay the amount authorized pursuant to Sections 4 or 5 hereof, as
applicable. This amount shall be held for the credit of the participant by the
Company as part of its general funds and shall not accrue any interest. On the
last Trading Day of each full month during the term of the Offer (the "Purchase
Date"), a participant shall be deemed to have exercised the option to purchase,
at the Option Price, that number of full and fractional shares of Common Stock
which may be purchased with the amount deducted from the participant's
Compensation during that calendar month (the "Purchase Period") and excess funds
from the preceding month, if any, provided that only full shares shall be
purchased from the Company and any excess aggregate funds shall be retained for
use in purchasing full shares from the Company in subsequent months.
(b) Custodian.
On each Purchase Date, the Plan Custodian designated by the Committee shall
receive from the Company, at the Option Price, as many full shares of Common
Stock as may be purchased with the funds received from the participants during
the Purchase Period and excess funds from the preceding month, if any. Upon
receipt of the Common Stock so purchased, the Custodian shall allocate to the
credit of each participant the number of full and fractional shares of Common
Stock to which that participant is entitled. Subject to any restriction imposed
by the Committee as permitted under Section 8(e) hereof, and any other
limitation that may be imposed by the Committee from time to time, a certificate
representing the number of full shares of Common Stock to which a participant is
entitled shall be issued to the participant, at the participant's expense, upon
request. Certificates shall not be issued with respect to fractional shares or
with respect to any shares prior to the last day of the sixth month following
the date such shares were purchased. Unless otherwise
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<PAGE>
requested by the participant (if permitted under this Section 8), Common Stock
purchased under the Plan shall be held by and in the name of, or in the name of
a nominee of, the Plan Custodian for the benefit of each participant, who shall
thereafter be a beneficial stockholder of the Company.
(c) Rights as a Stockholder.
A participant's rights as a stockholder of record of the Company shall
begin when the Plan Custodian makes a purchase of Common Stock on behalf of the
participant. Shares of Common Stock issued to participants shall be transferable
in accordance with applicable securities laws except as provided in Section 8(d)
hereof.
(d) Restrictions on Transfer of Common Stock.
Participants shall have no right to sell, encumber, or otherwise transfer
Common Stock purchased under the Plan until after the last day of the sixth
month following the month in which the Common Stock is purchased, unless the
Committee, in its sole discretion, waives or modifies such restriction. Any
attempt to sell, encumber or otherwise transfer Common Stock in violation hereof
shall be null and void.
(e) Enforcement of Restrictions.
The Committee shall enforce the restriction on transfer of Common Stock
provided in Section 8(d) hereof by requiring that the Common Stock Certificate
be held in the custody of the Company or the Plan Custodian while the
restriction remains in effect. The Committee may, in its sole discretion,
enforce this restriction through different or additional means as it shall deem
necessary or appropriate.
9. NUMBER OF SHARES TO BE OFFERED.
The maximum number of shares of Common Stock that may be purchased under
the Plan is 760,000. Such shares may be treasury shares, or authorized and
unissued shares, as the Board of Directors of the Company (the "Board") may
determine in its sole discretion.
10. ADMINISTRATION AND INTERPRETATION OF THE PLAN.
The Plan shall be administered by the Plan Administrator designated by the
Committee. The members of the Committee shall be designated by the Board. Except
as expressly provided herein, the Committee shall have the exclusive right to
interpret the provisions of
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<PAGE>
the Plan and to determine any questions arising hereunder or in connection with
the administration of the Plan, including the remedying of any omission,
inconsistency, or ambiguity, and the determination of benefits, eligibility and
interpretation of Plan provisions. The Committee's decisions, determinations,
interpretations or other actions in respect thereof shall be conclusive and
binding upon all participants, former participants, beneficiaries, heirs,
executors, assigns, and all other parties.
11. WITHDRAWAL FROM THE PLAN.
A participant may, at any time and for any reason, by giving notice to the
Plan Administrator, elect to withdraw from any further participation in the
Plan. A certificate for all full shares purchased under the Plan shall be issued
automatically as soon as administratively feasible after the last day of the
sixth month following the last date of purchase under the Plan. Prior to such
date, the participant may request a certificate for any full shares held in the
participant's account for more than six months. The participant shall receive a
check for any fractional share and any funds not applied toward the purchase of
shares. The participant may elect to recommence participation in the Plan by
executing and delivering to the Plan Administrator a new enrollment/payroll
deduction authorization form or completing such other procedures as may be
required or permitted by the Plan Administrator prior to the applicable payroll
cutoff date. A participant may withdraw from the Plan and recommence
participation as provided in this Section 11 only once during any six (6) month
period.
12. RIGHTS NOT TRANSFERABLE.
Options granted under the Plan shall not be transferable by a participant
other than by will or the laws of descent and distribution, and shall be
exercisable, during a participant's lifetime, only by the participant.
13. TERMINATION OF EMPLOYMENT.
In the event of a participant's retirement, death, or other termination of
employment, no payroll deductions shall be made from any Compensation then due
and owing to such employee at such time, and a certificate representing the
number of full shares of Common Stock then credited to the participant's account
and a check for any fractional share and funds not applied toward the purchase
of shares as of that date shall be issued and delivered to the participant or
the participant's representative as soon as administratively feasible after the
last day of the sixth month following the last date of purchase under the Plan.
Prior to such date, the participant may request a certificate for any full
shares held in the participant's account for more than six months.
14. LEAVES OF ABSENCE AND PERIODS OF INACTIVE EMPLOYMENT.
A participant may elect to continue to make payroll deductions under the
Plan for the first ninety (90) days of any period of inactive employment or
leave of absence if the participant continues to receive Compensation from the
Company as defined in Section 3
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<PAGE>
hereof. If a participant does not receive Compensation from the Company during a
period of inactive employment or leave of absence, the participant's payroll
deductions shall immediately cease; however, such deductions shall resume
automatically if the participant returns to active employment from inactive
status or a leave of absence within ninety (90) days. If a participant elects to
discontinue the payroll deduction, such election shall be treated as a
withdrawal from participation in the Offer in accordance with Section 5 hereof.
In any event, a participant shall be treated as having withdrawn from the Offer
in accordance with Section 5 hereof on the ninety-first (91st) day of any period
of inactive employment or leave of absence.
15. REORGANIZATION.
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, offering of rights, or
any other change in the structure of Common Stock, the Committee may make such
adjustments, if any, as it may deem appropriate in the number, kind, and price
of shares available for purchase under the Plan, and in the minimum and maximum
number of shares which a participant is entitled to purchase.
16. AMENDMENTS.
The Board may review and modify the operation and administration of the
Plan quarterly and may amend the terms of the Plan at any time without obtaining
the approval of the stockholders of the Company unless stockholder approval is
required by Section 423 of the Code or by any other applicable law, regulation
or rule. The Board may not amend the Plan in any manner which would materially
and adversely affect an option previously granted to a participant without the
consent of such participant; provided, however, that the Board may at any time
make such amendments as it may deem necessary to cause the Plan to comply with
the requirements of Rule 16b-3 promulgated by the SEC under the Securities
Exchange Act of 1934, as amended.
17. TERMINATION OF PLAN.
The Plan and all rights of participants shall terminate (i) on the date as
of which participants have exercised options to purchase a number of shares
equal to or greater than the number of shares then subject to the Plan or (ii)
if earlier, the date as of which the Committee or the Board terminates the Plan.
Upon termination, all payroll deductions shall cease and all amounts credited to
participants' accounts shall be equitably applied to the purchase of full shares
of Common Stock then available under the Plan. The participants shall be issued
checks for any fractional shares and all funds not utilized to purchase shares.
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<PAGE>
18. REQUIRED GOVERNMENTAL APPROVALS.
The Plan, all options granted under the Plan and all other rights inherent
in the Plan are subject to receipt by the Company of all necessary approvals or
consents of governmental agencies which the Company, in its sole discretion,
shall deem necessary or advisable. Notwithstanding any other provision of the
Plan, all options granted under the Plan and all other rights inherent in the
Plan are subject to such termination and/or modification as may be required or
advisable in order to obtain any such approval or consent, or which, as a result
of consequences attaching to any such approval or consent, may be required or
advisable in the judgment of the Committee in order to avoid adverse impact on
the Company's overall wage and salary policy.
9. NO EMPLOYMENT RIGHTS.
The Plan does not, directly or indirectly, create in any employee or class
of employees any right with respect to continuation of employment by the Company
or any Employing Corporation, and it shall not be deemed to interfere in any way
with the Company's or any Employing Corporation's right to terminate, or
otherwise modify, an employee's employment at any time with or without cause.
20. GENDER.
Pronouns shall be deemed to include both the masculine and feminine gender,
and words used in the singular shall be deemed to include both the singular and
the plural, unless the context indicates otherwise.
21. EXPENSES.
Expenses of administering the Plan, including any expenses incurred in
connection with the purchase by the Company of shares for sale to participating
employees, shall be paid by the Employing Corporations. Each participant shall
be responsible for all expenses associated with certificating and selling shares
purchased by the participant under the Plan.
22. GOVERNING LAW.
All rights and obligations under the Plan shall be construed and
interpreted in accordance with the laws of the State of Delaware, without giving
effect to principles of conflict of laws.
23. EFFECTIVE DATE.
The Plan shall become effective on November 1, 1998.
QWEST COMMUNICATIONS INTERNATIONAL INC.
Dated: October 6, 1998 By: /S/ Robert S. Woodruff
----------------------
Robert S. Woodruff
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. THIS PROXY Please mark
WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED [X] your votes
STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3. as indicated
</TABLE>
1. ELECTION OF DIRECTORS WITHHOLD AUTHORITY TO VOTE
01 Philip F. Anschutz FOR FOR ALL NOMINEES LISTED
02 Jerry R. Davis [_] [_]
03 Jordan L. Haines
04 Cannon Y. Harvey
05 Douglas M. Karp
06 Vinod Khosla
07 Richard T. Liebhaber
08 Joseph P. Nacchio
09 Douglas L. Polson
10 Craig D. Slater
11 W. Thomas Stephens
12 Robert S. Woodruff
To withhold authority to vote for any individual nominees,
write their names on the line provided below:
- -----------------------------------------------------------
2. APPROVAL OF THE FOR AGAINST ABSTAIN
STOCK PURCHASE [_] [_] [_]
PLAN PROPOSAL
3. APPROVAL OF FOR AGAINST ABSTAIN
THE CERTIFICATE [_] [_] [_]
AMENDMENT
PROPOSAL
I WILL ATTEND THE YES NO
ANNUAL MEETING: [_] [_]
Signature(s)
Dated ____________________________, 1999
NOTE: Please sign this proxy as your name appears hereon, including the title
"Executor," "Trustee," etc. if such is indicated. If joint account, each joint
owner should sign. If stock is held by a corporation, this proxy should be
executed by a proper officer.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
YOUR VOTE IS IMPORTANT!
You can vote in one of three ways:
1. CALL TOLL FREE 1-800-840-1208 on a touch-tone telephone and follow the
instructions below. There is NO CHARGE to you for this call.
OR
2. Vote by Internet at our Internet address: http://www.eproxy.com/QWST and
provide your consent and e-mail address to receive proxy materials on-line
in the future.
OR
3. Mark, sign and date your proxy card and return it promptly in the enclosed
envelope.
VOTE BY TELEPHONE OR INTERNET
QUICK * * * EASY * * * IMMEDIATE
**IF YOU WISH TO VOTE YOUR SHARES BY TELEPHONE OR INTERNET, PLEASE FOLLOW THE
INSTRUCTIONS BELOW **
YOUR TELEPHONE OR INTERNET INSTRUCTION WILL AUTHORIZE THE NAMED PROXIES IN THE
SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD
. You will be asked to enter a Control Number which is located in the box in
the lower right hand corner of this form.
. After voting your shares you will be asked if you wish to attend the
meeting.
VOTE BY PHONE: FOR U.S. STOCKHOLDERS ONLY, CALL TOLL-FREE ON A TOUCH-TONE
TELEPHONE
1-800-840-1208 ANYTIME. THERE IS NO CHARGE TO YOU FOR THIS CALL.
After entering your Control Number you will hear these instructions:
OPTION #1:
To vote as the Board of Directors recommends on ALL proposals: Press 1
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
OPTION #2:
If you choose to vote on each proposal separately, press 2. You will hear
these instructions:
PROPOSAL 1:
To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees, press 2
To WITHHOLD FOR AN INDIVIDUAL nominee, Press 3 and listen to the instructions
PROPOSAL 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0
PROPOSAL 3: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
VOTE BY INTERNET: THE WEB ADDRESS IS: HTTP://WWW.EPROXY.COM/QWST
If you vote by telephone or Internet there is no need for you to mail in your
proxy.
THANK YOU FOR VOTING.
CALL **TOLL FREE** ON A TOUCH TONE TELEPHONE
1-800-840-1208--ANYTIME
THERE IS NO CHARGE TO YOU FOR THIS CALL.
<PAGE>
PROXY
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON MAY 5, 1999
COMMON STOCK
QWEST COMMUNICATIONS INTERNATIONAL INC.
The undersigned hereby appoints Joseph P. Nacchio, Drake S. Tempest and
Robert S. Woodruff, or any of them, with full power of substitution, as a
proxy or proxies to represent the undersigned at the Annual Meeting of
Stockholders of QWEST COMMUNICATIONS INTERNATIONAL INC. to be held at the
Hyatt Regency Denver, the Grand Ballroom, 1750 Welton Street, Denver, Colorado
on Wednesday, May 5, 1999, starting at 10:00 a.m. local time, and at any
adjournments or postponements thereof, and to vote at the meeting all the
shares of Common Stock held of record by the undersigned at the close of
business on March 22, 1999, as designated on the reverse side.
Shares will be voted as specified. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR EACH OF THE PROPOSALS. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED IN FAVOR OF EACH OF THE PROPOSALS IN ACCORDANCE WITH THE BOARD OF
DIRECTORS RECOMMENDATIONS. The proxies or substitutes may vote in their
discretion upon any other business that may properly come before the Annual
Meeting or any adjournments.
(Continued and to be signed on the reverse side)
FOLD AND DETACH HERE
<PAGE>
YOUR VOTE IS IMPORTANT!
You can vote in one of three ways:
1. CALL TOLL FREE 1-800-840-1208 on a touch-tone telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this call.
OR
2. Vote by Internet at our Internet address: http://www.eproxy.com/qwst
OR
3. Mark, sign and date your proxy card and return it promptly in the enclosed
envelope.
If you wish to provide us with your on-line consent and e-mail address in
order to receive proxy materials on-line in the future, please register on-line
to receive them at the web site registration page of our transfer agent,
ChaseMellon Shareholder Services, at http://www.eproxy.com/qwst.
