<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 INC.
(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:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[LOGO OF QWEST]
March 15, 2000
Dear Stockholder,
I am very pleased to invite you to the 2000 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 3, 2000, starting at 10:00 a.m. local time. If you plan to
attend the meeting, please call 888-858-7914 or register online at
www.qwest.net/ir/meeting.html by April 26, 2000.
Important information about the matters to be acted upon at the Annual
Meeting is included in the accompanying Notice of Annual Meeting of
Stockholders and Proxy Statement.
Your vote is important. On behalf of your Board of Directors, I urge you to
vote promptly by mail, telephone, fax or the Internet by following the
instructions on the enclosed proxy card even if you plan to attend the Annual
Meeting. Mailing your completed proxy card or using Qwest's telephone, fax 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.
700 QWEST TOWER
555 SEVENTEENTH STREET
DENVER, COLORADO 80202
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 3, 2000
----------------
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 3, 2000, starting at 10:00 a.m. local time, for the
following purposes:
1. To elect all eleven 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 amend the Qwest Communications
International Inc. Equity Incentive Plan (the "Equity Incentive Plan
Proposal");
3. 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 7, 2000, 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, PLEASE VOTE PROMPTLY BY
MAIL, TELEPHONE, FAX OR THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE
ENCLOSED PROXY CARD EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING. MAILING
YOUR COMPLETED PROXY CARD OR USING QWEST'S TELEPHONE, FAX OR INTERNET VOTING
PROCEDURES WILL NOT PREVENT YOU FROM VOTING IN PERSON AT THE MEETING IF YOU
WISH TO DO SO.
By Order of the Board of Directors
/s/ Drake S. Tempest
Drake S. Tempest
Corporate Secretary
Denver, Colorado
March 15, 2000
<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 3, 2000, 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 March 15, 2000 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 7, 2000 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of the Record Date, there were 753,092,658 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 eleven 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 Equity Incentive 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.
Abstentions will have no effect on the election of directors. Abstentions on
the Equity Incentive Plan 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 Equity Incentive Plan
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. ADP Financial Information Services, Inc. has
been appointed by the Board of Directors to act as the inspector of election
for the meeting.
As of the Record Date, Anschutz Company beneficially owned 284,000,004
shares of Common Stock, representing approximately 37.7% of the voting power
of the Common Stock outstanding at that date. Anschutz Company has advised
Qwest that it intends to vote all of the shares beneficially owned by it in
favor of all director nominees and the Equity Incentive 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 Equity
Incentive Plan Proposal.
The proxy and any votes cast using Qwest's telephone, fax 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, 700 Qwest Tower, 555 Seventeenth Street, Denver, Colorado 80202, by
executing a later dated proxy, by casting a later vote using the telephone,
fax 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; 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...... 555 Seventeenth Street 284,000,004(3) 37.7%
Denver, CO 80202
BellSouth Corporation... 1155 Peachtree Street 74,000,000 9.8%
Atlanta, GA 30309-3610
David R. Boast.......... -- *
Gregory M. Casey........ -- *
Jerry R. Davis.......... 1,183 *
Jordan L. Haines........ 16,047 *
Cannon Y. Harvey........ 100,000 *
Stephen M. Jacobsen..... 202,000 *
Douglas M. Karp......... 3,176 *
Brij Khandelwal......... 70,000 *
Vinod Khosla............ 468 *
Thomas J. Matthews...... -- *
Afshin Mohebbi.......... -- *
Joseph P. Nacchio....... 4,373,032(4) *
Douglas L. Polson....... 130,976(5) *
Craig D. Slater......... 279,000 *
W. Thomas Stephens...... 13,949 *
Drake S. Tempest........ 161,600(6) *
Marc B. Weisberg........ 220,400(7) *
Lewis O. Wilks.......... 150,000 *
Robert S. Woodruff...... 572,420(8) *
Directors and Executive 290,294,255+ 38.5%+
Officers as a Group (20
persons)...............
</TABLE>
- --------
* Less than one percent.
+ Includes 284,000,004 shares (37.7%) owned by Qwest's principal stockholder.
(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 753,092,658 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 40,672 shares held as custodian for one of Mr. Anschutz's
children, as to which beneficial ownership is disclaimed, or 17,200,000
shares issuable upon exercise of a warrant held by Anschutz Family
Investment Company LLC of which Anschutz Company, a corporation wholly
owned by Mr. Anschutz, is the manager and one percent equity owner.
(4) Includes 3,200 shares owned by or for the benefit of Mr. Nacchio's
children as to which beneficial ownership is disclaimed.
3
<PAGE>
(5) Includes 60 shares owned by Mr. Polson's children as to which beneficial
ownership is disclaimed.
(6) Includes 4,600 shares owned by Mr. Tempest's spouse as to which beneficial
ownership is disclaimed.
(7) Includes 400 shares owned by one of Mr. Weisberg's children as to which
beneficial ownership is disclaimed.
(8) Includes 4,000 shares owned by Mr. Woodruff's spouse as to which
beneficial ownership is disclaimed.
PRINCIPAL STOCKHOLDER
As of the Record Date Anschutz Company was the beneficial owner of
approximately 37.7% 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 eleven nominees for the 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........... 60 Director and Chairman of the Board
Joseph P. Nacchio............ 50 Director, Chairman and Chief Executive Officer
Robert S. Woodruff........... 51 Director, Executive Vice President--Finance,
Chief Financial Officer and Treasurer
Jerry R. Davis............... 61 Director
Jordan L. Haines............. 72 Director
Cannon Y. Harvey............. 59 Director
Douglas M. Karp.............. 44 Director
Vinod Khosla................. 45 Director
Douglas L. Polson............ 58 Director
Craig D. Slater.............. 42 Director
W. Thomas Stephens........... 57 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 eleven 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 and Non-Executive Chairman of SPRC from 1993
to September 1996. 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 April 1999 after having been Director, President and Chief Executive
Officer of Qwest since February 1997 and of QCC since January 1997. He has
been Chairman and a Director of KPNQwest N.V. since 1999. 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,
Chief Financial Officer and Treasurer 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. Mr. Woodruff has been a Director of KPNQwest N.V. and
Qwest Cyber.Solutions LLC since 1999. 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. Mr. Haines serves on the Audit Committee, the
Compensation Committee, the Executive Committee, and the subcommittee of the
Compensation Committee that determines the grant of options and other awards
under Qwest's Equity Incentive Plan.
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--Finance and Law 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 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.
5
<PAGE>
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 director of LCI
International, Inc. ("LCI") from February 1993 until LCI was acquired by the
Company in June 1998. Mr. Karp graduated summa cum laude from Yale University
and received a J.D. degree cum laude from Harvard Law School.
Vinod Khosla became a director of Qwest in June 1998. He 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 M.B.A. 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 since 1986. Mr. Khosla serves on the Audit Committee.
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 Executive Vice President of both
Anschutz Company and The Anschutz Corporation Since August 1999, having
previously served as Vice President 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 was
President, Chief Executive Officer and a director of MacMillan Bloedel
Limited, Canada's largest forest products company, from 1996 to 1999. 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 Trans Canada Pipelines, Fletcher Challenge
Canada, The Putnam Funds and New Century Energies. He serves on the Audit
Committee, the Compensation Committee, the Executive Committee, and the
subcommittee of the Compensation Committee that determines the grant of
options and other awards under Qwest's Equity Incentive Plan.
Board of Directors Meetings and Committees
The Board held 17 meetings during 1999, 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 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. Jordan L. Haines, Vinod Khosla and W. Thomas Stephens serve on the
Audit Committee. The Audit Committee met six times during 1999.
6
<PAGE>
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 1999,
including both regularly scheduled and special meetings and actions by
unanimous written consent.
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. The Executive Committee held one meeting during 1999.
Each Director attended more than 75% of the aggregate number of Board and/or
applicable committee meetings in 1999.
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>
David R. Boast.......... 48 Executive Vice President--Planning, Engineering,
Network and Operations (QCC)
Gregory M. Casey........ 41 Senior Vice President--Wholesale Markets (QCC)
Stephen M. Jacobsen..... 41 Executive Vice President--Business Markets (QCC)
Brij Khandelwal......... 54 Executive Vice President and Chief Information Officer (QCC)
Thomas J. Matthews...... 59 Executive Vice President--Human Resources (QCC)
Afshin Mohebbi.......... 36 President and Chief Operating Officer (QCI and QCC)
Drake S. Tempest........ 46 Executive Vice President, General Counsel and
Corporate Secretary (QCI and QCC)
Marc B. Weisberg........ 42 Senior Vice President--Corporate Development (QCC)
Lewis O. Wilks.......... 46 President--Internet and Multimedia Markets (QCC)
</TABLE>
David R. Boast became Executive Vice President--Planning, Engineering,
Network and Operations of QCC in August, 1999. In this capacity, he is
responsible for the planning, engineering and operation of the Qwest network.
Mr. Boast joined Qwest in May 1999 as Senior Vice President--Qwest Internet
Solutions. In this position, he oversaw business development and operations of
Qwest Internet Solutions, which include IP Communications and professional
services groups that position Qwest as the end-to-end Internet solutions
provider for businesses. Prior to joining Qwest, Mr. Boast was, since 1994,
Vice President of the Global Dial Access Network at UUNET. Previously, he was
at Legent Corporation, formerly Morino Associates, for 12 years where he held
a variety of client services, business development, marketing, and project
development assignments. Prior to his tenure at Legent Corporation, he was
with The Ohio Bell Telephone Company and The Chesapeake and Potomac Telephone
Company for a total of 10 years. Mr. Boast attended Niagara University, Kent
State University and the Wharton School of Business Executive Development
Program at the University of Pennsylvania.
7
<PAGE>
Gregory M. Casey became Senior Vice President--Wholesale 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.
Stephen M. Jacobsen became Executive Vice President--Business Markets of QCC
in September 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.
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. 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 QCC
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, a wholly owned subsidiary of 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.
Afshin Mohebbi has been President and Chief Operating Officer of Qwest since
May 1999. He has been a Director of Qwest Cyber.Solutions LLC since 1999.
Prior to joining Qwest, since 1997, he was British Telecommunications's ("BT")
President and Managing Director of United Kingdom markets. Prior to joining
BT, he was with SBC Communications and its Pacific Bell unit since 1983. Mr.
Mohebbi earned a B.S. in electrical engineering with an emphasis on
communications systems from the University of California at Irvine, an M.B.A.
degree, graduating as a dean's scholar, from the University of California, and
a telecommunications engineering certificate from the University of California
Los Angeles.
Drake S. Tempest has been Executive Vice President, General Counsel and
Corporate Secretary of Qwest 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. He has been a Director of KPNQwest N.V. since 1999. 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.
Marc B. Weisberg became Senior Vice President--Corporate Development of QCC
in September 1997. Mr. Weisberg oversees Qwest's merger and acquisition
activity and strategic alliances. He is also President and Chief Executive
Officer of U.S. TeleSource, Inc., Qwest's wholly-owned venture capital
subsidiary. Prior to joining Qwest, he was the founder and owner of Weisberg &
Company, where he provided investment banking
8
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and advisory services to clients in several industries, including
telecommunications, multimedia and emerging technologies. He has been a
Director of Advanced Radio Telecom Corp. since 1999. Mr. Weisberg holds a B.A.
degree from Michigan State University.
Lewis O. Wilks became President--Internet and Multimedia Markets of QCC in
December 1998 after having been President--Business Markets of QCC since
October 1997. He has been a Director of Qwest Cyber.Solutions LLC since 1999
and of Salus Media Corp. since 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. Before
joining GTE, Mr. Wilks was a senior executive with MCI Corporation, and held a
variety of management positions with Wang Laboratories.
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 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 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.
Richard T. Liebhaber, who resigned as a director on January 20, 2000, had a
consulting agreement with QCC under which he was paid of $125,000 for 1999
plus expenses. Mr. Liebhaber waived director's fees in consideration for these
payments. See "Certain Transactions." Mr. Liebhaber has a consulting agreement
with The Anschutz Corporation, an affiliate of Anschutz Company, that is
effective January 1, 2000 and pursuant to which he is paid $50,000 per year
plus expenses. He also serves on the board of directors of KPNQwest N.V. Mr.
Liebhaber holds growth shares pursuant to the Qwest Growth Share Plan and has
been granted options under the Qwest Equity Incentive Plan, as described
below. As long as Mr. Liebhaber is a consultant to The Anschutz Corporation,
the growth shares and the options will continue to be outstanding and he will
continue to vest in the growth shares and options.
Mr. Slater, a director of Qwest, and Mr. Liebhaber 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 $5.50 per share price of Qwest's Common Stock in
Qwest's 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, Harvey, and Liebhaber have each been granted stock options
pursuant to the Equity Incentive Plan. Mr. Slater has been granted stock
options covering a total of 1,300,000 shares of Qwest Common Stock with
500,000 options having an exercise price of $5.50 per share and vesting at the
rate of 20% per year beginning at the same time as Mr. Slater's growth shares
and 800,000 options having an exercise price of $15.00 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 400,000 shares of Qwest Common Stock
with an exercise price of $15.00 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 600,000 shares of Qwest Common Stock, with 400,000
options having an
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<PAGE>
exercise price of $5.50 per share and vesting at the rate of 20% per year
beginning at the same time as Mr. Liebhaber's growth shares and 200,000 shares
having an exercise price of $15.00 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 five 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.
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....... 1999 $679,672 $863,006 -- 9,000,000 $ 1,107,894(1) $2,248,003(2)
Chairman and Chief 1998 630,000 567,128 -- -- 1,107,909 1,686,596
Executive Officer 1997 593,461 300,000 -- 12,000,000 -- 7,405,273
Afshin Mohebbi.......... 1999 $305,769(3) $311,062 $296,327(4) 2,700,000 -- $ 386(5)
President and Chief 1998 -- -- -- -- -- --
Operating Officer 1997 -- -- -- -- -- --
Lewis O. Wilks.......... 1999 $299,796 $302,839 -- 1,000,000 -- $ 726(5)
President--Internet and 1998 279,875 243,669 $200,000(6) -- -- --
Multimedia Markets of 1997 50,750 -- 200,000(7) 1,400,000 -- --
QCC
Drake S. Tempest........ 1999 $250,000 $224,258 $300,000(8) 400,000 -- $ 726(5)
Executive Vice 1998 54,968 -- 200,000(8) 900,000 -- --
President, General 1997 -- -- -- -- -- --
Counsel and Corporate
Secretary
Stephen M. Jacobsen.....
Executive Vice 1999 $235,000 $223,879 -- 700,000 -- $ 726(5)
President--Business 1998 207,353 245,245 -- -- -- --
Markets of QCC 1997 143,020 -- $132,085(7) 1,200,000 -- --
Robert S. Woodruff...... 1999 $239,780 $245,880 $ 25,000(9) 600,000 -- $ 928(5)
Executive Vice 1998 220,375 165,242 25,000(9) -- -- 10,140
President--Finance and 1997 200,000 70,000 25,000(9) 800,000 $9,453,025 7,750
Chief Financial Officer
</TABLE>
- --------
(1) The amount shown represents a payment for growth shares pursuant to the
growth share agreement between Qwest and Mr. Nacchio.
(2) The amount shown represents the third installment of the "equalization
payment" ($2,034,000) (see "--Employment Contracts and Termination of
Employment and Change-in-Control Arrangements") payable to Mr. Nacchio in
1999 together with interest of $208,485 that accrued on the equalization
payment in 1999, allowances included in Mr. Nacchio's income under the
Qwest flexible spending plan of $928, and Qwest's contribution to Qwest's
401(k) plan of $4,590.
(3) Mr. Mohebbi was employed by Qwest in May 1999. The compensation shown in
the table is the compensation earned since that date.
(4) The amount shown represents Qwest's forgiveness of a portion of a loan
($100,000), Qwest's payment of relocation expenses ($28,327) and a
transition payment ($168,000).
(5) The amount shown represents allowances included in the executive's income
under the Qwest flexible spending plan.
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<PAGE>
(6) The amount shown represents transition payments.
(7) The amount shown represents relocation payments.
(8) The amount shown represents a guaranteed signing bonus and transition
payment paid to Mr. Tempest pursuant to the employment letter agreement
between Qwest and Mr. Tempest.
(9) The amount shown represents QCC's forgiveness of a portion of a loan.
Stock Option Grants
The following table sets forth information concerning options granted in
1999 to the Company's executive officers named in the Summary Compensation
Table.
<TABLE>
<CAPTION>
Percent (%) of Potential Realizable Value at
Total Options Assumed Annual Rate of Stock
Number of Granted to Exercise Price Appreciation for Option(1)
Options Employees Price per Expiration ---------------------------------
Name Granted During 1999 Share Date 5% 10%
- ---- --------- -------------- --------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Nacchio....... 8,500,000(2) 24.99% $28.50 8/13/2009 $ 152,349,723 $ 386,084,111
500,000(3) 1.47% $28.50 8/13/2009 $ 8,961,748 $ 22,710,830
Afshin Mohebbi.......... 1,600,000(4) 4.70% $39.44 5/27/2009 $ 39,683,251 $ 100,565,149
1,100,000(2) 3.23% $28.50 8/13/2009 $ 19,715,847 $ 49,963,826
Lewis O. Wilks.......... 1,000,000(2) 2.94% $28.50 8/13/2009 $ 17,923,497 $ 45,421,660
Drake S. Tempest........ 400,000(2) 1.18% $28.50 8/13/2009 $ 7,169,399 $ 18,168,664
Stephen M. Jacobsen..... 700,000(2) 2.06% $28.50 8/13/2009 $ 12,546,448 $ 31,795,162
Robert S. Woodruff...... 600,000(2) 1.76% $28.50 8/13/2009 $ 10,754,098 $ 27,252,996
</TABLE>
- --------
(1) The potential realizable value is based on the appreciated value of Qwest
Common Stock minus the per share exercise price, multiplied by the number
of shares subject to the option. The appreciated value of Qwest Common
Stock is calculated assuming that the fair market value of Qwest Common
Stock on the date of grant appreciates at the indicated rate, compounded
annually, for the entire term of the option. The 5% and 10% rates of
appreciation are set by the Securities and Exchange Commission and do not
represent Qwest's estimate or projection of future increases in the price
of Qwest Common Stock.
(2) The options were granted effective August 13, 1999 and have the following
terms. The options vest in four annual installments of 25% beginning on
August 13, 2000. Generally, upon a change in control following the closing
of the U S WEST merger, the options will vest if the executive is
terminated without cause or if the executive suffers a material diminution
of his duties.
(3) The option was granted effective August 13, 1999 and is subject to the
additional condition that it will vest in four annual installments of 25%
beginning on August 13, 2000 only if the published closing price of Qwest
Common Stock equals or exceeds $45.00 per share for each of 30 consecutive
trading days before the second anniversary of the closing of the U S WEST
merger. If this condition is not met, the option will vest in full on May
13, 2009.
(4) Mr. Mohebbi's option, which was granted on May 27, 1999, vests in five
annual installments of 20%, commencing on May 27, 2000.
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<PAGE>
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 1999 and unexercised options held at the end of 1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options At Fiscal Year End Options At Fiscal Year End(1)
Acquired Value ---------------------------- ------------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ------------ -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Nacchio....... 1,881,000 $64,418,474 4,187,902 13,800,000 $ 157,046,325 $ 310,500,000
Afshin Mohebbi.......... -0- -0- -0- 2,700,000 -0- 21,650,000
Lewis O. Wilks.......... 410,000 9,382,117 150,000 1,840,000 4,668,750 40,645,000
Drake S. Tempest........ 25,000 571,093 155,000 1,120,000 4,432,024 26,387,464
Stephen M. Jacobsen..... 160,000 6,458,753 22,000 1,540,000 825,000 41,650,000
Robert S. Woodruff...... -0- -0- 320,000 1,080,000 8,960,000 22,140,000
</TABLE>
- --------
(1) Based on the closing price of Qwest Common Stock on December 31, 1999
($43.00) minus the per share exercise price of the unexercised options,
multiplied by the number of shares represented by the unexercised options.
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 December 31, 2001, unless terminated earlier by either party.
Under the agreement Mr. Nacchio received an initial 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 was 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 $5.50 per share price of the Qwest Common Stock in the Initial Public
Offering (as adjusted to reflect subsequent stock splits). The growth shares
vest in 20% increments on each January 1 beginning January 1, 1998, provided
that the final 40% increment will vest on January 1, 2001. Mr. Nacchio will
receive a payment of approximately $24.4 million for his remaining growth
shares on January 1, 2001. 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.
The employment agreement also provides for payments to compensate Mr.
Nacchio for certain benefits from his former employer that were lost or
forfeited. Pursuant to that provision, Qwest has paid him $10,735,861, as
adjusted (the "equalization payment"). The equalization payment was made in
three installments. The first
12
<PAGE>
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 was payable in 1999, together with
interest of $208,485. Mr. Nacchio elected to defer the payment due in 1999
under the Company's Deferred Compensation Plan. If Qwest terminates Mr.
Nacchio's employment other than for cause ("cause" includes any willful
misconduct materially detrimental to Qwest, felony conviction, or nonfeasance
with respect to duties set forth in the employment agreement) or if Mr.
Nacchio resigns for good reason, which for this purpose includes a change in
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
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.
In April 1999, the Company changed Mr. Nacchio's title to Chairman and Chief
Executive Officer. In connection with the contemplated merger of Qwest and U S
WEST and in recognition of the additional duties and responsibilities
incumbent upon Mr. Nacchio in connection with the implementation of the merger
and his anticipated role in the management of the combined company, Qwest and
Mr. Nacchio entered into an amendment to the employment agreement. The
modifications provide that, effective upon the closing of the merger, Mr.
Nacchio's annual base salary will be increased from $680,000 to $1 million and
his target annual bonus will be increased from 110% to 150% of his base
salary. In addition, Mr. Nacchio will receive a cash payment of $750,000 at
the earlier of the closing of the merger or January 1, 2001.
Mr. Mohebbi. Qwest and Afshin Mohebbi entered into an employment agreement
dated May 20, 1999, pursuant to which Mr. Mohebbi joined Qwest as its
President and Chief Operating Officer. Under the agreement, Mr. Mohebbi is
entitled to an annual base salary of $500,000 and a target annual bonus of
105% of his base salary. The agreement provides that, for the second quarter
of 1999, the target annual bonus is prorated based on his hire date, and for
the third and fourth quarters of 1999, Mr. Mohebbi is guaranteed a minimum
bonus at the target rate. Mr. Mohebbi received reimbursement for relocation
expenses in the amount of $28,327 and a transition payment of $168,000. The
employment agreement also provides for the grant to Mr. Mohebbi of a stock
option pursuant to Qwest's Equity Incentive Plan covering 1,600,000 shares of
Qwest Common Stock with an exercise price of $39.4375. The option becomes
exercisable in annual installments of 20% at the end of the first five years
of his employment. In addition, the employment agreement provides for a second
option grant of 400,000 shares of Qwest Common Stock on the third anniversary
of Mr. Mohebbi's employment with an exercise price to be equal to the price at
the close of business on the date of grant. The second grant will vest in
annual installments of 20% beginning on the first anniversary of the date of
the second grant. The employment agreement also provides that Mr. Mohebbi will
become a member of the Qwest Board. If Mr. Mohebbi's employment with Qwest is
terminated other than for cause or if he terminates his employment for "good
reason," he will be entitled to 12 months' then base salary, his target bonus
for the year of termination prorated based on the number of months he was
employed during that year, and a continuation of his Qwest employee benefits
for a period of 18 months, unless he obtains employee benefits from another
employer prior to the end of the 18 month period. The term "good reason"
includes any of a diminution of Mr. Mohebbi's titles, offices, positions, or
authority; the assignment to Mr. Mohebbi of any duties inconsistent with his
position, authority or material responsibilities or the removal of his
authority or material responsibilities; Qwest's failure to make any payments
due under the employment agreement or to comply with the material terms of the
employment agreement; and a change in control of Qwest (as defined in the
Equity Incentive Plan). Qwest and Mr. Mohebbi entered into an unsecured,
noninterest-bearing loan in the principal amount of $600,000 from Qwest to
Mr. Mohebbi pursuant to his employment agreement. The loan agreement modifies
the terms of the employment agreement and provides that the principal amount
is forgiven in thirty-six monthly increments beginning July 1, 1999. As of
December 31, 1999 the outstanding principal balance was $500,000.
13
<PAGE>
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 was 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. In 1999 his base salary was increased to
$300,000 and his target annual bonus was 100% of his annual salary. 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 1,400,000 shares of
Qwest Common Stock with an exercise price per share of $11.875. The option
becomes exercisable as to 280,000 shares of Qwest Common Stock at the end of
each of the first four years of employment and an additional 140,000 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. If Mr. Wilks' 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. Tempest. Qwest and Drake S. Tempest entered into an employment letter
agreement dated October 6, 1998 pursuant to which Mr. Tempest joined Qwest as
its Executive Vice President and General Counsel. Under the agreement, Mr.
Tempest is entitled to an annual base salary of $250,000 and a target annual
bonus of 90% of his annual salary. The target bonus for the fourth quarter of
1998 and the first quarter of 1999 was guaranteed. Mr. Tempest received
payments of $200,000 on November 1, 1998 and $300,000 on November 1, 1999 in
connection with his commencement of employment with Qwest. The employment
letter agreement also provides for the grant to Mr. Tempest of a stock option
pursuant to Qwest's Equity Incentive Plan covering 900,000 shares of Qwest
Common Stock with an exercise price of $14.0625. The option vests in annual
installments of 20% per year at the end of the first five years of employment.
If Mr. Tempest'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. 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 was increased
to $192,770 for 1998 and $235,000 for 1999. 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. Qwest and Robert S. Woodruff entered into an unsecured,
noninterest-bearing loan in the principal amount of $100,000 from Qwest to Mr.
Woodruff in November 1996. The principal amount is forgiven in monthly
increments of $2,083 beginning December 1, 1996. As of December 31, 1999 the
outstanding principal balance was $22,917. If Mr. Woodruff terminates
employment voluntarily or if Qwest terminates his employment on account of
willful misconduct, Qwest 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, Qwest 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 Qwest's severance policy then in effect, as he
elects.
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 (the
"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. It is anticipated
that completion of the merger with U S WEST will constitute a "change in
control" for all growth shares other than Mr. Nacchio's growth shares.
14
<PAGE>
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 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. Options
granted under the plan before June 1, 1998 are subject to a different
definition of change in control which will be triggered if, among other
events, entities controlled by Mr. Anschutz cease to have beneficial ownership
of at least 20% of Qwest's voting stock or outstanding stock. It is
anticipated that completion of the merger with U S WEST will constitute a
"change in control" for options granted before June 1, 1998.
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, 1999, all directors,
executive officers and persons holding more than 10% of Qwest's Common Stock
were in compliance with their filing requirements, except that Mr. Polson made
a gift of 1,100 shares of Qwest Common Stock to a charity in December 1999
that was not reported until March 2000.
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.
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. 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, 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
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yield total cash 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
Committee has approved an increase in Mr. Nacchio's base salary to $1 million
effective upon the closing of the merger with U S WEST in recognition of the
additional duties and responsibilities incumbent upon him in connection with
the implementation of the merger and his expected role in the management of
the combined company.
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
Based upon Mr. Nacchio's success in accomplishing strategic acquisitions,
including the merger agreement with U S WEST and successful implementation of
the 1999 business plan, the Committee authorized a total bonus for Mr. Nacchio
for 1999 of $863,006. In recognition of the increased responsibilities that
Mr. Nacchio will undertake in managing the combined company following the
consummation of the merger with U S WEST, his target annual bonus will
increase from 110% of his base salary to 150% of his base salary, effective
upon the closing of the merger.
The Committee authorized bonuses for certain of the other named executive
officers for 1999 based upon the Company's operational and financial results
and the contributions of those individuals.
Quarterly Bonus
Effective January 1, 1999, all employees of the Company became covered by a
quarterly cash bonus plan based on results, individual contribution and
position, with quarterly target bonuses ranging from 60% for vice presidents
to 5% for those employees in the lowest salary grade.
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.
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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 $5.50 per share price (as
adjusted to reflect subsequent stock splits) 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. The
outstanding growth shares, except the growth shares held by Mr. Nacchio, will
become fully vested and will be paid at the closing of the merger with
U S WEST. Mr. Nacchio's growth shares will become fully vested and will be
paid on January 1, 2001.
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 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.
Effective August 13, 1999, the Equity Incentive Plan Committee granted
options to the Chief Executive Officer and certain executives. The Committee
considered, among other things, a report from an outside compensation
consultant that shows that the options, when considered in the context of each
executive's total annual compensation, are reasonable compensation for
services to be rendered following the closing of the U S WEST transaction
because the option grants are competitive, particularly taking into account
the highly competitive market for executive talent in the telecommunications
and high technology industries, and are consistent with Qwest's historic
executive compensation philosophy, particularly taking into account the
significant increase in the executives' duties and responsibilities expected
to occur after closing of the U S WEST transaction.
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, 1999 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.
Measurement period Company Market Peer
(Fiscal Year Convered) Index Index Index
FYE 12/30/1994 $ - $ 51.059 $ 64.609
FYE 01/31/1995 $ - $ 51.328 $ 64.501
FYE 02/28/1995 $ - $ 54.025 $ 67.425
FYE 03/31/1995 $ - $ 55.629 $ 67.454
FYE 04/28/1995 $ - $ 57.381 $ 67.337
FYE 05/31/1995 $ - $ 58.866 $ 68.245
FYE 06/30/1995 $ - $ 63.631 $ 73.938
FYE 07/31/1995 $ - $ 68.305 $ 80.401
FYE 08/31/1995 $ - $ 69.691 $ 82.547
FYE 09/29/1995 $ - $ 71.296 $ 83.320
FYE 10/31/1995 $ - $ 70.885 $ 78.954
FYE 11/30/1995 $ - $ 72.548 $ 83.603
FYE 12/29/1995 $ - $ 72.165 $ 84.598
FYE 01/31/1996 $ - $ 72.526 $ 86.663
FYE 02/29/1996 $ - $ 75.290 $ 88.889
FYE 03/29/1996 $ - $ 75.543 $ 88.964
FYE 04/30/1996 $ - $ 81.801 $ 92.350
FYE 05/31/1996 $ - $ 85.554 $ 94.578
FYE 06/28/1996 $ - $ 81.698 $ 91.778
FYE 07/31/1996 $ - $ 74.425 $ 79.977
FYE 08/30/1996 $ - $ 78.599 $ 83.831
FYE 09/30/1996 $ - $ 84.608 $ 86.389
FYE 10/31/1996 $ - $ 83.671 $ 82.806
FYE 11/29/1996 $ - $ 88.862 $ 84.154
FYE 12/31/1996 $ - $ 88.788 $ 86.502
FYE 01/31/1997 $ - $ 95.089 $ 88.599
FYE 02/28/1997 $ - $ 89.830 $ 85.910
FYE 03/31/1997 $ - $ 83.974 $ 80.201
FYE 04/30/1997 $ - $ 86.587 $ 83.250
FYE 05/30/1997 $ - $ 96.395 $ 93.566
FYE 06/24/1997 $100.000 $100.000 $100.000
FYE 06/30/1997 $ 97.321 $ 99.356 $100.675
FYE 07/31/1997 $111.161 $109.828 $106.870
FYE 08/29/1997 $145.536 $109.669 $103.219
FYE 09/30/1997 $164.732 $116.171 $116.609
FYE 10/31/1997 $220.536 $110.117 $119.940
FYE 11/28/1997 $195.089 $110.701 $121.001
FYE 12/31/1997 $212.500 $108.794 $126.496
FYE 01/30/1998 $253.125 $112.237 $134.921
FYE 02/27/1998 $250.893 $122.791 $146.924
FYE 03/31/1998 $277.678 $127.324 $161.009
FYE 04/30/1998 $275.446 $129.469 $158.753
FYE 05/29/1998 $236.161 $122.281 $155.567
FYE 06/30/1998 $249.107 $130.822 $170.287
FYE 07/31/1998 $288.393 $129.293 $177.098
FYE 08/31/1998 $178.571 $103.736 $133.729
FYE 09/30/1998 $223.661 $118.137 $150.706
FYE 10/30/1998 $279.464 $123.237 $164.591
FYE 11/30/1998 $285.714 $135.703 $174.386
FYE 12/31/1998 $357.143 $153.305 $208.275
FYE 01/29/1999 $428.125 $175.598 $240.532
FYE 02/26/1999 $438.839 $159.858 $237.767
FYE 03/31/1999 $514.955 $171.486 $258.811
FYE 04/30/1999 $610.268 $176.308 $273.003
FYE 05/28/1999 $608.929 $172.246 $276.261
FYE 06/30/1999 $472.321 $187.627 $275.147
FYE 07/30/1999 $421.429 $184.895 $268.406
FYE 08/31/1999 $410.714 $192.218 $256.889
FYE 09/30/1999 $422.321 $191.906 $255.036
FYE 10/29/1999 $514.286 $205.853 $301.975
FYE 11/30/1999 $488.393 $227.813 $314.856
FYE 12/31/1999 $614.286 $276.962 $362.700
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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 principal 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
In September 1999, Qwest and Anschutz Digital Media, Inc. ("ADMI"), an
affiliate of Anschutz Company, entered into an agreement to form a joint
venture called Slingshot Networks LLC to provide advanced digital production,
post-production and transmission facilities, digital media storage and
distribution services, telephony-based data storage and enhanced services,
access and routing services. Qwest and ADMI each own 50% of the joint venture.
Qwest contributed approximately $84.8 million consisting of a promissory note
payable over nine years at an annual interest rate of 6%. Qwest's investment
in the joint venture is accounted for under the equity method. The agreement
between Qwest and ADMI also provided that Qwest would purchase certain
telephony-related assets and all of the stock of Precision Systems, Inc., a
telecommunications solutions provider, from ADMI in exchange for a promissory
note in the amount of $34 million. The promissory note is payable over nine
years and bears interest at an annual rate of 6%.
Certain affiliates of Anschutz Company indirectly provide facilities to
Qwest at prevailing market rates. Qwest rents its corporate office in Denver,
Colorado from an entity in which Mr. Anschutz holds interests, and rents
certain telecommunications equipment used by Qwest at its corporate office
from an affiliate of Anschutz Company. Such expenses totaled approximately $4
million for the year ended December 31, 1999.
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 $2.1 million for the year ended December 31, 1999.
Richard T. Liebhaber, a former 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 and $125,000 plus out-of-pocket expenses 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 600,000 shares of
Qwest Common Stock. (See "Director Compensation" above).
In April 1999, Qwest entered into a registration rights agreement with
Anschutz Company covering all of the approximately 320,000,000 shares then
owned by Anschutz Company and 17,200,000 shares issuable upon exercise of a
warrant owned by the Anschutz Family Investment Company LLC. The agreement
provides for eight demand registrations and unlimited piggyback registrations.
Demand registrations must cover at least 5,000,000 shares.
In 1999, Qwest paid $200,000 to an employee of Anschutz Company for
legislative consulting services provided to Qwest.
In April 1997, Qwest paid Pacific Pipeline Systems, Inc. ("PPSI"), an
affiliate of Anschutz Company, approximately $6.7 million for the transfer to
Qwest of two conduits within PPSI's pipeline in California.
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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 1999
in excess of $60,000, except Mr. Mohebbi as described above in the Proxy
Statement under the description of his employment contract.
2. APPROVAL OF AN INCREASE IN THE SHARES AVAILABLE UNDER THE
QWEST COMMUNICATIONS INTERNATIONAL INC. EQUITY INCENTIVE PLAN
The Qwest Board has adopted an amendment to the Qwest Equity Incentive Plan
that, among other things, provides that the maximum number of shares of Qwest
common stock available for award under the plan at any time is 10% of the
aggregate number of shares that are issued and outstanding, reduced by the
number of shares subject to outstanding awards granted under the plan and
outstanding options granted under any other plan or arrangement of Qwest. The
amendment will be effective upon approval by the stockholders.
The plan, which was adopted by the Qwest Board and approved by its
stockholders in June 1997, May 1998 and November 1999 provides for the grant
of non-qualified stock options, incentive stock options, stock appreciation
rights, restricted stock, stock units and other stock grants to employees of
Qwest and its affiliates and consultants to Qwest. The purposes of the plan
are to provide those who are selected for participation with added incentives
to continue in the long-term service of Qwest and to create in such persons a
more direct interest in the future success of the operations of Qwest by
relating incentive compensation to increases in stockholder value, so that the
interests of those participating in the plan are more closely aligned with the
interests of Qwest's stockholders. The plan is also designed to provide a
financial incentive that will help Qwest attract, retain and motivate the most
qualified employees and consultants.
Presently, there are 75,000,000 shares reserved for awards under the plan.
The amendment provides that the number of shares of Qwest common stock
available for awards under the plan at any time shall equal 10% of the
aggregate number of shares then issued and outstanding (determined as of the
close of trading on the New York Stock Exchange on the trading day immediately
preceding such time), reduced by the number of shares that are subject to
outstanding awards granted under the plan and outstanding options granted
under any other plan or arrangement of Qwest (excluding Qwest's Employee Stock
Purchase Plan). Upon exercise of an option, the shares issued upon exercise of
such option will no longer be considered to be subject to an outstanding award
or option. In addition, no award granted under the plan will become void or
otherwise be adversely affected solely because of a change in the number of
Qwest shares that are issued and outstanding from time to time, provided that
changes in the issued and outstanding shares may result in adjustments to
outstanding awards as described in "Adjustment in Number of Shares;
Reeligibility of Shares," below. Based on the number of shares that were
issued and outstanding on February 29, 2000, the number of shares that would
be available for awards under the amended plan would be approximately 8.2
million. The closing price of the Qwest common stock on February 29, 2000 was
$46.25. If approved by the stockholders, the amendment replaces and supersedes
the amendment that was approved by the stockholders in November 1999 and that
would have provided generally that upon the consummation of the merger of
Qwest and U S WEST, the number of shares available for awards under the plan
would be an amount equal to the lesser of (1) 200 million and (2) 10% of the
total number of shares of Qwest common stock outstanding as of the close of
business on the date on which the effective time of the merger occurs.
The following summary of the plan is qualified by reference to the complete
text of the plan, which is incorporated by reference and attached as Exhibit
A.
Participation. The plan provides that awards may be made to employees and
consultants who are responsible for Qwest's growth and profitability.
Directors who are not employees of Qwest and its affiliates or consultants to
Qwest are not eligible. Qwest currently considers all of its employees and
certain of its consultants to be eligible for grant of awards under the plan.
As of February 29, 2000, there were approximately 10,000 eligible participants
and approximately 5,700 participants held outstanding options. The plan is a
discretionary plan and, accordingly, it is not possible at present to
determine the amount or form of awards that will be available for grant to any
individual during the term of the plan.
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Administration. The plan is administered by a subcommittee of Qwest's
Compensation Committee composed of members of the Compensation Committee other
than Mr. Anschutz. The committee must be structured at all times so that it
satisfies the "non-employee director" requirement of Rule 16b-3 under the
Exchange Act. To the extent practicable, Qwest intends to satisfy the similar
requirement of Section 162(m) of the Code with respect to grants to employees
whose compensation is subject to Section 162(m) of the Code. The committee has
the sole discretion to determine the employees and consultants to whom awards
may be granted under the plan and the manner in which such awards will vest.
Options, stock appreciation rights, restricted stock and stock units are
granted by the committee to employees and consultants in such numbers and at
such times during the term of the Plan as the committee shall determine,
except that the maximum number of shares subject to one or more options or
stock appreciation rights that can be granted during any calendar year to any
employee or consultant is 40 million shares of Qwest common stock, except that
the maximum number of shares that can be granted pursuant to incentive stock
options is 75 million shares, and except that incentive options may be granted
only to employees. In granting options, stock appreciation rights, restricted
stock and stock units, the committee will take into account such factors as it
may deem relevant in order to accomplish the plan's purposes, including one or
more of the following: the extent to which performance goals have been met,
the duties of the respective employees and consultants, and their present and
potential contributions to Qwest's success.
The plan provides that the committee may delegate authority to grant stock
options and other awards to specified officers of Qwest. Pursuant to that
authority, the committee has delegated authority to Joseph P. Nacchio,
Chairman and Chief Executive Officer of Qwest, to grant options and other
awards to such employees and consultants as he may determine; provided that
the maximum number of shares that may be granted to any one individual by Mr.
Nacchio is 200,000 (as adjusted for stock splits, stock dividends,
recapitalizations and other dilutive changes in the Qwest common stock), the
maximum aggregate number of shares that may be granted to all individuals by
Mr. Nacchio is 10 million (as adjusted for stock splits, stock dividends,
recapitalizations and other dilutive changes in the Qwest common stock), and
no grants of options or other awards may be made by Mr. Nacchio to any
employee or consultant who is covered by Section 16(b) of the Exchange Act.
References in this section to grants and other actions by the committee shall
include a reference to Mr. Nacchio to the extent that the committee has
delegated such authority to him.
Exercise of Options. The committee determines the exercise price for each
option; however, incentive stock options must have an exercise price that is
at least equal to the fair market value of the Qwest common stock on the date
the incentive stock option is granted (at least equal to 110% of fair market
value in the case of an incentive stock option granted to an employee who owns
Qwest common stock having more than 10% of the voting power). An option holder
may exercise an option by written notice and payment of the exercise price in
(1) cash or certified funds, (2) by the surrender of a number of shares of
Qwest common stock already owned by the option holder for at least six months
with a fair market value equal to the exercise price, or (3) through a
broker's transaction by directing the broker to sell all or a portion of the
Qwest common stock to pay the exercise price or make a loan to the option
holder to permit the option holder to pay the exercise price. Option holders
who are subject to the withholding of federal and state income tax as a result
of exercising an option may be provided with an election to satisfy the
minimum required income tax withholding obligation through the withholding of
a portion of the Qwest common stock to be received upon exercise of the
option.
Option Term. The committee determines the term of each Option, which shall
be no longer than ten years (five years in the case of an incentive stock
option granted to an employee who owns Qwest common stock having more than 10%
of the voting power). Unless the committee provides otherwise, the following
provisions apply in the event of an employee's termination of employment. If
the option holder's services are terminated for cause, as determined by Qwest,
the option terminates immediately. If the option holder becomes disabled, the
option may be exercised for one year after the option holder terminates
employment on account of disability. If the option holder dies during
employment or in the one-year period referred to in the preceding sentence or
in the three-month period following termination of employment other than on
account of cause, death, or disability, the option may be exercised for one
year after the option holder's death. If the option holder terminates
employment for any reason other than cause, disability, or death, the option
may be exercised for three months
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after termination of employment. In all cases, the option can be exercised
only to the extent it is vested at the time of termination of employment and
only during the term of the option.
Restricted Stock. The committee may grant a participant a number of shares
of restricted stock as determined by the committee in its sole discretion.
Grants of restricted stock may be subject to such restrictions, including for
example, continuous employment with Qwest for a stated period of time or the
attainment of performance goals and objectives, as determined by the committee
in its sole discretion. The restrictions may vary among awards and
participants. If a participant dies or becomes disabled or retires pursuant to
Qwest's retirement policy, the restricted stock will become fully vested as to
a pro rata portion of each award based on the ratio of the number of months of
employment completed at termination of employment from the date of the award
to the total number of months of employment required for each award to become
fully vested. The remaining portion of the restricted stock will be forfeited.
If a participant terminates employment for any other reason, all unvested
shares of restricted stock will be forfeited.
Stock Units. The committee may grant stock units to participants. The
committee determines the number of stock units to be granted, the goals and
objectives to be satisfied, the time and manner of payment, and any other
terms and conditions applicable to the stock units.
Stock Appreciation Rights. The committee may grant stock appreciation rights
to participants, either separately or in tandem with the grant of options. The
committee determines the period during which a stock appreciation right may be
exercised and the other terms and conditions applicable to the stock
appreciation rights. Upon exercise of a stock appreciation right, a
participant is entitled to a payment equal to the number of shares of Qwest
common stock as to which the stock appreciation right is exercised times the
excess of the fair market value of a share of Qwest common stock on the date
the stock appreciation right is exercised over the fair market value of a
share of Qwest common stock on the date the stock appreciation right was
granted. The amount may be paid in shares of Qwest common stock, in cash, or
in a combination of cash and Qwest common stock as the committee determines in
its sole discretion. Upon termination of employment, stock appreciation rights
are exercisable in the same manner as options. If a stock appreciation right
is granted in tandem with an option, exercise of the stock appreciation right
or the option will result in an equal reduction in the number of shares
subject to the corresponding option or stock appreciation right.
Other Stock Grants. The committee may award stock bonuses to such
participants, subject to such conditions and restrictions, as it determines in
its sole discretion. Stock bonuses may be outright grants or may be
conditioned on continued employment or attainment of performance goals as the
committee determines in its sole discretion. The Qwest Board may, in its sole
discretion, establish other incentive compensation arrangements pursuant to
which participants may acquire Qwest common stock or provide that other
incentive compensation will be paid in Qwest common stock under the Plan.
Nontransferability. Except as may be otherwise permitted by the committee,
options, stock appreciation rights, stock units and restricted stock awards
granted under the plan are not transferable other than by will or by the laws
of descent and distribution.
Adjustment in Number of Shares; Reeligibility of Shares. The number of
shares eligible for award under the plan, the number of shares subject to
outstanding awards, the number of shares that may be granted to any
individual, the number of shares available for grant pursuant to incentive
stock options, and the number of shares subject to a delegation of authority
are subject to adjustment on account of stock splits, stock dividends,
recapitalizations and other dilutive changes in Qwest common stock. Shares of
Qwest common stock covered by unexercised non-qualified or incentive stock
options that expire, terminate or are canceled, together with shares of Qwest
common stock that are forfeited pursuant to a restricted stock grant or any
other award (other than an option) under the plan or that are used to pay
withholding taxes or the option exercise price, will again be available for
option or grant under the plan.
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Change in Control. All awards granted under the plan shall immediately vest
upon any "change in control" of Qwest unless otherwise provided by the
committee at the time of grant. 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. Options granted under the plan before June 1,
1998 are subject to a different definition of change in control which will be
triggered if, among other events, entities controlled by Mr. Anschutz cease to
have beneficial ownership of at least 20% of Qwest's voting stock or
outstanding stock. It is anticipated that completion of the merger with U S
WEST will give rise to a "change in control" for options granted before June
1, 1998.
Merger and Reorganization. Upon the occurrence of (1) the reorganization
(other than a bankruptcy reorganization), merger or consolidation of Qwest
(other than a reorganization, merger or consolidation in which Qwest is the
continuing company and that does not result in any change in the outstanding
shares of Qwest common stock), (2) the sale of all or substantially all of the
assets of Qwest (other than a sale in which Qwest continues as a holding
company of an entity that conducts the business formerly conducted by Qwest),
or (3) the dissolution or liquidation of Qwest, all outstanding options will
terminate automatically when the event occurs if Qwest gives the option
holders 30 days' prior written notice of the event. Notice is also given to
holders of other awards. Notice is not required for a merger or consolidation
or for a sale if Qwest, the successor, or the purchaser makes adequate
provision for the assumption of the outstanding options or the substitution of
new options or awards on terms comparable to the outstanding options or
awards. When the notice is given, all outstanding options fully vest and can
be exercised prior to the event and other awards become exercisable and
payable.
Amendment and Termination. The Qwest Board may amend the plan in any respect
at any time provided stockholder approval is obtained when necessary or
desirable, but no amendment can impair any option, stock appreciation right,
award or unit previously granted or deprive an option holder, without his or
her consent, of any Qwest common stock previously acquired. The plan will
terminate on June 22, 2007, unless it is terminated earlier by the Qwest
Board.
Federal Income Tax Consequences of Issuance and Exercise of Options under
the Plan. When a non-qualified stock option is granted, there are no income
tax consequences for the option holder or Qwest. When a non-qualified stock
option is exercised, in general, the option holder recognizes compensation
equal to the excess of the fair market value of the Qwest common stock on the
date of exercise over the exercise price. If, however, the sale of the Qwest
common stock at a profit would subject the option holder to liability under
Section 16(b) of the Exchange Act, the option holder will recognize
compensation income equal to the excess of (1) the fair market value of the
Qwest common stock on the earlier of the date that is six months after the
date of exercise or the date the option holder can sell the Qwest common stock
without Section 16(b) liability over (2) the exercise price. The option holder
can make an election under Section 83(b) of the Code to measure the
compensation as of the date the non-qualified option is exercised. The
compensation recognized by an employee is subject to income tax withholding.
Qwest is entitled to a deduction equal to the compensation recognized by the
option holder for Qwest's taxable year that ends with or within the taxable
year in which the option holder recognized the compensation, assuming that the
compensation amounts satisfy the ordinary and necessary and reasonable
compensation requirements for deductibility and that the deduction is not
limited by Section 162(m) of the Code.
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When an incentive stock option is granted, there are no income tax
consequences for the option holder or Qwest. When an incentive stock option is
exercised, the option holder does not recognize income and Qwest does not
receive a deduction. The option holder, however, must treat the excess of the
fair market value of the Qwest common stock on the date of exercise over the
exercise price as an item of adjustment for purposes of the alternative
minimum tax. If the option holder makes a "disqualifying disposition" of the
Qwest common stock (described below) in the same taxable year the incentive
stock option was exercised, there are no alternative minimum tax consequences.
If the option holder disposes of the Qwest common stock after the option
holder has held the Qwest common stock for at least two years after the
incentive stock option was granted and one year after the incentive stock
option was exercised, the amount the option holder receives upon the
disposition over the exercise price is treated as capital gain for the option
holder. Qwest is not entitled to a deduction. If the option holder makes a
"disqualifying disposition" of the Qwest common stock by disposing of the
Qwest common stock before it has been held for at least two years after the
date the incentive stock option was granted and one year after the date the
incentive stock option was exercised, the option holder recognizes
compensation income equal to the excess of (1) the fair market value of the
Qwest common stock on the date the incentive stock option was exercised or, if
less, the amount received on the disposition over (2) the exercise price. At
present, Qwest is not required to withhold income or other taxes. Qwest is
entitled to a deduction equal to the compensation recognized by the option
holder for Qwest's taxable year that ends with or within the taxable year in
which the option holder recognized the compensation, assuming that the
compensation amounts satisfy the ordinary and necessary and reasonable
compensation requirements for deductibility and that the deduction is not
limited by Section 162(m) of the Code.
The plan provides that option holders are responsible for making appropriate
arrangements with Qwest to provide for any additional withholding amounts.
Furthermore, Qwest shall have no obligation to deliver shares of Qwest common
stock upon the exercise of any options, stock appreciation rights, awards or
units under the plan until all applicable federal, state and local income and
other tax withholding requirements have been satisfied.
Under Section 162(m) of the Code, Qwest may be limited as to federal income
tax deductions to the extent that the total annual compensation in excess of
$1 million is paid to Qwest's Chief Executive Officer or any one of the four
highest paid executive officers who were employed by Qwest on the last day of
the taxable year. However, certain "performance-based compensation," the
material terms of which are disclosed to and approved by Qwest's stockholders,
is not subject to this limitation on deductibility. Qwest has structured the
plan with the intention that compensation resulting from options and awards
granted under the plan would be deductible without regard to the limitations
otherwise imposed by Section 162(m) of the Code.
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 Equity
Incentive Plan Proposal. The Board believes the Equity Incentive Plan Proposal
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.
CERTIFIED INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP has served as independent auditors for the
fiscal year ending December 31, 1999, and has been selected to serve for the
2000 fiscal year. A representative of Arthur Andersen 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.
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On June 11, 1999, Qwest entered into a business venture with its previous
certifying accountant, KPMG LLP, that effectively impaired KPMG's
independence. As a result, KPMG LLP notified Qwest that it would be unable to
continue as Qwest's certifying accountant. Qwest, on the recommendation of its
Audit Committee, selected Arthur Andersen LLP to serve as its certifying
accountant, effective June 18, 1999, with respect to subsequent periods.
KPMG LLP's reports on Qwest's financial statements for the years ended
December 31, 1998 and 1997 did not contain an adverse opinion or disclaimer of
opinion and were not qualified as to audit scope or accounting principles.
During the years ended December 31, 1998 and 1997 or for the subsequent
interim period through the date of change in accountants, Qwest did not have
any disagreement with KPMG LLP on any matter of accounting principles,
financial statement disclosure, or auditing scope or procedures, which
disagreement, if not resolved to the satisfaction of KPMG LLP, would have
caused KPMG LLP to make reference to the subject matter of the disagreement in
connection with its report.
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 1999 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 2001
Annual Meeting of Stockholders must be received by the Corporate Secretary of
Qwest not later than December 31, 2000, in order to be included in the proxy
statement and proxy relating to the 2001 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.
By Order of the Board of Directors
/s/ Drake S. Tempest
Drake S. Tempest
Corporate Secretary
Denver, Colorado
March 15, 2000
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- --------------------------------------------------------------------------------
EXHIBIT A
QWEST COMMUNICATIONS INTERNATIONAL INC.
EQUITY INCENTIVE PLAN
(effective June 23, 1997)
(amended and restated, effective , 2000)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<C> <S> <C>
ARTICLE I--INTRODUCTION................................................... A-1
1.1 Establishment.................................................... A-1
1.2 Purposes......................................................... A-1
1.3 Effective Date; Amendment........................................ A-1
ARTICLE II--DEFINITIONS................................................... A-1
2.1 Definitions...................................................... A-1
2.2 Gender and Number................................................ A-3
ARTICLE III--PLAN ADMINISTRATION.......................................... A-3
3.1 General.......................................................... A-3
3.2 Delegation by Committee.......................................... A-3
ARTICLE IV--STOCK SUBJECT TO THE PLAN..................................... A-3
4.1 Number of Shares................................................. A-3
4.2 Other Shares of Stock............................................ A-4
4.3 Adjustments for Stock Split, Stock Dividend, Etc................. A-4
4.4 Other Distributions and Changes in the Stock..................... A-4
4.5 General Adjustment Rules......................................... A-5
4.6 Determination by the Committee, Etc.............................. A-5
ARTICLE V--CORPORATE REORGANIZATION; CHANGE IN CONTROL.................... A-5
5.1 Reorganization of Qwest.......................................... A-5
5.2 Required Notice.................................................. A-5
5.3 Acceleration of Exercisability................................... A-6
5.4 Change in Control of Qwest....................................... A-6
5.5 Reorganization of Affiliated Corporations........................ A-6
ARTICLE VI--PARTICIPATION................................................. A-7
ARTICLE VII--OPTIONS...................................................... A-7
7.1 Grant of Options................................................. A-7
7.2 Stock Option Certificates........................................ A-7
7.3 Restrictions on Incentive Options................................ A-10
7.4 Shareholder Privileges........................................... A-10
ARTICLE VIII--RESTRICTED STOCK AWARDS..................................... A-10
8.1 Grant of Restricted Stock Awards................................. A-10
8.2 Restrictions..................................................... A-10
8.3 Privileges of a Stockholder, Transferability..................... A-11
8.4 Enforcement of Restrictions...................................... A-11
ARTICLE IX--STOCK UNITS................................................... A-11
ARTICLE X--STOCK APPRECIATION RIGHTS...................................... A-11
10.1 Persons Eligible................................................. A-11
10.2 Terms of Grant................................................... A-11
10.3 Exercise......................................................... A-11
10.4 Number of Shares or Amount of Cash............................... A-12
10.5 Effect of Exercise............................................... A-12
10.6 Termination of Services.......................................... A-12
</TABLE>
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<TABLE>
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ARTICLE XI--STOCK BONUSES................................................. A-12
ARTICLE XII--OTHER COMMON STOCK GRANTS.................................... A-12
ARTICLE XIII--RIGHTS OF PARTICIPANTS...................................... A-12
13.1 Service.......................................................... A-12
13.2 Nontransferability............................................... A-12
13.3 No Plan Funding.................................................. A-13
ARTICLE XIV--GENERAL RESTRICTIONS......................................... A-13
14.1 Investment Representations....................................... A-13
14.2 Compliance with Securities Laws.................................. A-13
14.3 Changes in Accounting Rules...................................... A-13
ARTICLE XV--OTHER EMPLOYEE BENEFITS....................................... A-14
ARTICLE XVI--PLAN AMENDMENT, MODIFICATION AND TERMINATION................. A-14
ARTICLE XVII--WITHHOLDING................................................. A-14
17.1 Withholding Requirement.......................................... A-14
17.2 Withholding With Stock........................................... A-14
ARTICLE XVIII--REQUIREMENTS OF LAW........................................ A-15
18.1 Requirements of Law.............................................. A-15
18.2 Federal Securities Law Requirements.............................. A-15
18.3 Governing Law.................................................... A-15
ARTICLE XIX--DURATION OF THE PLAN......................................... A-15
</TABLE>
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QWEST COMMUNICATIONS INTERNATIONAL INC.
EQUITY INCENTIVE PLAN
ARTICLE I
INTRODUCTION
1.1 Establishment. Qwest Communications International Inc., a Delaware
corporation, effective June 23, 1997, established the Qwest Communications
International Inc. Equity Incentive Plan (the "Plan") for certain employees of
the Company (as defined in subsection 2.1(f)) and certain consultants to the
Company. The Plan permits the grant of incentive stock options within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended, non-
qualified stock options, restricted stock awards, stock appreciation rights,
stock bonuses, stock units and other stock grants to certain key employees of
the Company and to certain consultants to the Company.
1.2 Purposes. The purposes of the Plan are to provide those who are selected
for participation in the Plan with added incentives to continue in the long-
term service of the Company and to create in such persons a more direct
interest in the future success of the operations of the Company by relating
incentive compensation to increases in shareholder value, so that the income
of those participating in the Plan is more closely aligned with the income of
the Company's shareholders. The Plan is also designed to provide a financial
incentive that will help the Company attract, retain and motivate the most
qualified employees and consultants.
1.3 Effective Date; Amendment. The initial effective date of the Plan was
June 23, 1997. The Plan is hereby amended and restated, as of the date the
shareholders approve the amended and restated plan. The provisions of the
Plan, as so amended and restated, shall apply to any Award (as defined in
subsection 2.1(b)) granted on or after the date the shareholders approve the
amended and restated plan and, to the extent that the provisions of this
amended and restated Plan do not adversely affect the Award, shall also apply
to Awards granted prior to the date the shareholders approve the amended and
restated Plan.
ARTICLE II
DEFINITIONS
2.1 Definitions. The following terms shall have the meanings set forth
below:
(a) "Affiliated Corporation" means any corporation or other entity that
is affiliated with Qwest through stock ownership or otherwise and is
designated as an "Affiliated Corporation" by the Board, provided, however,
that for purposes of Incentive Options granted pursuant to the Plan, an
"Affiliated Corporation" means any parent or subsidiary of the Company as
defined in Section 424 of the Code.
(b) "Award" means an Option, a Restricted Stock Award, a Stock
Appreciation Right, a Stock Unit, grants of Stock pursuant to Article XI or
other issuances of Stock hereunder.
(c) "Board" means the Board of Directors of Qwest.
(d) "Code" means the Internal Revenue Code of 1986, as it may be amended
from time to time.
(e) "Committee" means a committee consisting of members of the Board who
are empowered hereunder to take actions in the administration of the Plan.
The Committee shall be so constituted at all times as to permit the Plan to
comply with Rule 16b-3 or any successor rule promulgated under the
Securities Exchange Act of 1934 (the "1934 Act"). Except as provided in
Section 3.2, the Committee shall select Participants from Eligible
Employees and Eligible Consultants of the Company and shall determine the
awards to be made pursuant to the Plan and the terms and conditions
thereof.
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(f) "Company" means Qwest and the Affiliated Corporations.
(g) "Disabled" or "Disability" shall have the meaning given to such terms
in Section 22(e)(3) of the Code.
(h) "Effective Date" means the original effective date of the Plan, June
23, 1997.
(i) "Eligible Employees" means those employees (including, without
limitation, officers and directors who are also employees) of the Company
or any subsidiary or division thereof, upon whose judgment, initiative and
efforts the Company is, or will become, largely dependent for the
successful conduct of its business. For purposes of the Plan, an employee
is any individual who provides services to the Company or any subsidiary or
division thereof as a common law employee and whose remuneration is subject
to the withholding of federal income tax pursuant to section 3401 of the
Code. Employee shall not include any individual (A) who provides services
to the Company or any subsidiary or division thereof under 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 even if 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. Leased employees
within the meaning of section 414(n) of the Code shall not be treated as
employees under this Plan.
(j) "Eligible Consultants" means those consultants to the Company who are
determined, by the Committee, to be individuals whose services are
important to the Company and who are eligible to receive Awards, other than
Incentive Options, under the Plan.
(k) "Fair Market Value" means the average of the mean between the bid and
the asked prices of the Stock or the closing price, as applicable, on the
New York Stock Exchange, the principal stock exchange or other market on
which the Stock is traded, over the five consecutive trading days ending on
a particular date or by such other method as the Committee, or the
individual or individuals to whom the Committee has delegated authority to
grant Awards, may specify at the time an Award is granted. If the price of
the Stock is not reported on any securities exchange or national market
system, the Fair Market Value of the Stock on a particular date shall be as
determined by the Committee. If, upon exercise of an Option, the exercise
price is paid by a broker's transaction as provided in subsection
7.2(g)(ii)(D), Fair Market Value, for purposes of the exercise, shall be
the price at which the Stock is sold by the broker.
(l) "Incentive Option" means an Option designated as such and granted in
accordance with Section 422 of the Code.
(m) "Non-Qualified Option" means any Option other than an Incentive
Option.
(n) "Option" means a right to purchase Stock at a stated or formula price
for a specified period of time. Options granted under the Plan shall be
either Incentive Options or Non-Qualified Options.
(o) "Option Certificate" shall have the meaning given to such term in
Section 7.2 hereof.
(p) "Option Holder" means a Participant who has been granted one or more
Options under the Plan.
(q) "Option Price" means the price at which each share of Stock subject
to an Option may be purchased, determined in accordance with subsection
7.2(b).
(r) "Participant" means an Eligible Employee or Eligible Consultant
designated by the Committee from time to time during the term of the Plan
to receive one or more of the Awards provided under the Plan.
(s) "Qwest" means Qwest Communications International Inc. and any
successor thereto.
(t) "Restricted Stock Award" means an award of Stock granted to a
Participant pursuant to Article VIII that is subject to certain
restrictions imposed in accordance with the provisions of such Section.
(u) "Share" means a share of Stock.
(v) "Stock" means the $0.01 par value common stock of Qwest.
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(w) "Stock Appreciation Right" means the right, granted by the Committee
pursuant to the Plan, to receive a payment equal to the increase in the
Fair Market Value of a Share of Stock subsequent to the grant of such
Award.
(x) "Stock Bonus" means either an outright grant of Stock or a grant of
Stock subject to and conditioned upon certain employment or performance
related goals.
(y) "Stock Unit" means a measurement component equal to the Fair Market
Value of one share of Stock on the date for which a determination is made
pursuant to the provisions of this Plan.
2.2 Gender and Number. Except when otherwise indicated by the context, the
masculine gender shall also include the feminine gender, and the definition of
any term herein in the singular shall also include the plural.
ARTICLE III
PLAN ADMINISTRATION
3.1 General. The Plan shall be administered by the Committee. In accordance
with the provisions of the Plan, the Committee shall, in its sole discretion,
select the Participants from among the Eligible Employees and Eligible
Consultants, determine the Awards to be made pursuant to the Plan, the number
of Stock Units, Stock Appreciation Rights or shares of Stock to be issued
thereunder and the time at which such Awards are to be made, fix the Option
Price, period and manner in which an Option becomes exercisable, establish the
duration and nature of Restricted Stock Award restrictions, establish the
terms and conditions applicable to Stock Bonuses and Stock Units, and
establish such other terms and requirements of the various compensation
incentives under the Plan as the Committee may deem necessary or desirable and
consistent with the terms of the Plan. The Committee shall determine the form
or forms of the agreements with Participants that shall evidence the
particular provisions, terms, conditions, rights and duties of Qwest and the
Participants with respect to Awards granted pursuant to the Plan, which
provisions need not be identical except as may be provided herein; provided,
however, that Eligible Consultants shall not be eligible to receive Incentive
Options. The Committee may from time to time adopt such rules and regulations
for carrying out the purposes of the Plan as it may deem proper and in the
best interests of the Company. The Committee may correct any defect, supply
any omission or reconcile any inconsistency in the Plan or in any agreement
entered into hereunder in the manner and to the extent it shall deem expedient
and it shall be the sole and final judge of such expediency. No member of the
Committee shall be liable for any action or determination made in good faith.
The determinations, interpretations and other actions of the Committee
pursuant to the provisions of the Plan shall be binding and conclusive for all
purposes and on all persons.
3.2 Delegation by Committee. The Committee may, from time to time, delegate,
to specified officers of Qwest, the power and authority to grant Awards under
the Plan to specified groups of employees and consultants, subject to such
restrictions and conditions as the Committee, in its sole discretion, may
impose. The delegation shall be as broad or as narrow as the Committee shall
determine. To the extent that the Committee has delegated the authority to
determine certain terms and conditions of an Award, all references in the Plan
to the Committee's exercise of authority in determining such terms and
conditions shall be construed to include the Qwest officer or officers to whom
the Committee has delegated the power and authority to make such
determination. The power and authority to grant Awards to any employee or
consultant who is covered by Section 16(b) of the 1934 Act shall not be
delegated by the Committee.
ARTICLE IV
STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. The maximum aggregate number of Shares that may be
issued under the Plan at any time pursuant to Awards shall equal 10% of the
aggregate number of Shares that are issued and outstanding at such time
(determined as of the close of trading on the New York Stock Exchange on the
trading day
qwest equity incentive plan
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immediately preceding such time), reduced by the number of Shares that are
subject to outstanding Awards granted under this Plan and outstanding options
granted under any other plan or arrangement of the Company or any subsidiary
of the Company (excluding the Company's Employee Stock Purchase Plan) at such
time. Upon exercise of an option (whether granted under this Plan or
otherwise), the Shares issued upon exercise of such option shall no longer be
considered to be subject to an outstanding Award or option for purposes of the
immediately preceding sentence. Notwithstanding anything to the contrary
contained herein, no Award granted hereunder shall become void or otherwise be
adversely affected solely because of a change in the number of Shares of the
Company that are issued and outstanding from time to time, provided that
changes to the issued and outstanding Shares may result in adjustments to
outstanding Awards in accordance with the provisions of this Article IV. The
maximum number of Shares with respect to which a Participant may receive
Options and Stock Appreciation Rights under the Plan in any calendar year is
40,000,000. The maximum number of Shares as to which Incentive Options may be
granted is 75,000,000. The Shares may be either authorized and unissued Shares
or previously issued Shares acquired by Qwest. Such maximum numbers may be
increased from time to time by approval of the Board and by the stockholders
of Qwest if, in the opinion of counsel for Qwest, stockholder approval is
required. Qwest shall at all times during the term of the Plan and while any
Options or Stock Units are outstanding retain as authorized and unissued Stock
at least the number of Shares from time to time required under the provisions
of the Plan, or otherwise assure itself of its ability to perform its
obligations hereunder.
4.2 Other Shares of Stock. Any shares of Stock that are subject to an Option
that expires or for any reason is terminated unexercised, any shares of Stock
that are subject to an Award (other than an Option) and that are forfeited,
and any shares of Stock withheld for the payment of taxes or received by Qwest
as payment of the exercise price of an Option shall automatically become
available for use under the Plan, provided, however, that no more than
75,000,000 shares of Stock may be awarded pursuant to Incentive Options.
4.3 Adjustments for Stock Split, Stock Dividend, Etc. If Qwest shall at any
time increase or decrease the number of its outstanding Shares or change in
any way the rights and privileges of such Shares by means of the payment of a
stock dividend or any other distribution upon such shares payable in Stock, or
through a stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Stock, then in relation to
the Stock that is affected by one or more of the above events, the numbers,
rights and privileges of the following shall be increased, decreased or
changed in like manner as if they had been issued and outstanding, fully paid
and nonassessable at the time of such occurrence: (i) the Shares as to which
Awards may be granted under the Plan, (ii) the Shares then included in each
outstanding Award granted hereunder, (iii) the maximum number of Shares
available for grant to any one person in a calendar year, (iv) the maximum
number of Shares available for grant pursuant to Incentive Options, and (v)
the number of Shares subject to a delegation of authority under Section 4.2 of
this Plan.
4.4 Other Distributions and Changes in the Stock. If
(a) Qwest shall at any time distribute with respect to the Stock assets
or securities of persons other than Qwest (excluding cash or distributions
referred to in Section 4.3), or
(b) Qwest shall at any time grant to the holders of its Stock rights to
subscribe pro rata for additional shares thereof or for any other
securities of Qwest, or
(c) there shall be any other change (except as described in Section 4.3)
in the number or kind of outstanding Shares or of any stock or other
securities into which the Stock shall be changed or for which it shall have
been exchanged,
and if the Committee shall in its discretion determine that the event
described in subsection (a), (b), or (c) above equitably requires an
adjustment in the number or kind of Shares subject to an Option or other
Award, an adjustment in the Option Price or the taking of any other action by
the Committee, including without limitation, the setting aside of any property
for delivery to the Participant upon the exercise of an Option or the full
vesting of an Award, then such adjustments shall be made, or other action
shall be taken, by the Committee and shall be
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effective for all purposes of the Plan and on each outstanding Option or Award
that involves the particular type of stock for which a change was effected.
Notwithstanding the foregoing provisions of this Section 4.4, pursuant to
Section 8.3 below, a Participant holding Stock received as a Restricted Stock
Award shall have the right to receive all amounts, including cash and property
of any kind, distributed with respect to the Stock after such Restricted Stock
Award was granted upon the Participant's becoming a holder of record of the
Stock.
4.5 General Adjustment Rules. No adjustment or substitution provided for in
this Article IV shall require Qwest to sell a fractional share of Stock under
any Option, or otherwise issue a fractional share of Stock, and the total
substitution or adjustment with respect to each Option and other Award shall
be limited by deleting any fractional share. In the case of any such
substitution or adjustment, the aggregate Option Price for the total number of
shares of Stock then subject to an Option shall remain unchanged but the
Option Price per share under each such Option shall be equitably adjusted by
the Committee to reflect the greater or lesser number of shares of Stock or
other securities into which the Stock subject to the Option may have been
changed, and appropriate adjustments shall be made to other Awards to reflect
any such substitution or adjustment.
4.6 Determination by the Committee, Etc. Adjustments under this Article IV
shall be made by the Committee, whose determinations with regard thereto shall
be final and binding upon all parties thereto.
ARTICLE V
CORPORATE REORGANIZATION; CHANGE IN CONTROL
5.1 Reorganization of Qwest. Except as provided otherwise by the Committee
at the time an Award is granted, upon the occurrence of any of the following
events, if the notice required by Section 5.2 shall have first been given, the
Plan and all Options then outstanding hereunder shall automatically terminate
and be of no further force and effect whatsoever, and other Awards then
outstanding shall be treated as described in Sections 5.2 and 5.3, without the
necessity for any additional notice or other action by the Board or Qwest: (a)
the merger or consolidation of Qwest with or into another corporation or other
reorganization (other than a reorganization under the United States Bankruptcy
Code) of Qwest (other than a consolidation, merger, or reorganization in which
Qwest is the continuing corporation and which does not result in any
reclassification or change of outstanding shares of Stock); or (b) the sale or
conveyance of the property of Qwest as an entirety or substantially as an
entirety (other than a sale or conveyance in which Qwest continues as a
holding company of an entity or entities that conduct the business or
businesses formerly conducted by Qwest); or (c) the dissolution or liquidation
of Qwest.
5.2 Required Notice. At least 30 days' prior written notice of any event
described in Section 5.1 shall be given by Qwest to each Option Holder and
Participant unless (a) in the case of the events described in clauses (a) or
(b) of Section 5.1, Qwest, or the successor or purchaser, as the case may be,
shall make adequate provision for the assumption of the outstanding Options or
the substitution of new options for the outstanding Options on terms
comparable to the outstanding Options except that the Option Holder shall have
the right thereafter to purchase the kind and amount of securities or property
or cash receivable upon such merger, consolidation, other reorganization, sale
or conveyance by a holder of the number of Shares that would have been
receivable upon exercise of the Option immediately prior to such merger,
consolidation, sale or conveyance (assuming such holder of Stock failed to
exercise any rights of election and received per share the kind and amount
received per share by a majority of the non-electing shares), or (b) Qwest, or
the successor or purchaser, as the case may be, shall make adequate provision
for the adjustment of outstanding Awards (other than Options) so that such
Awards shall entitle the Participant to receive the kind and amount of
securities or property or cash receivable upon such merger, consolidation,
other reorganization, sale or conveyance by a holder of the number of Shares
that would have been receivable with respect to such Award immediately prior
to such merger, consolidation, other reorganization, sale or conveyance
(assuming such holder of Stock failed to exercise any rights of election and
received per share the kind and amount received per share by a majority of the
non-electing shares). The
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provisions of this Article V shall similarly apply to successive mergers,
consolidations, reorganizations, sales or conveyances. Such notice shall be
deemed to have been given when delivered personally to a Participant or when
mailed to a Participant by registered or certified mail, postage prepaid, at
such Participant's address last known to the Company.
5.3 Acceleration of Exercisability. Participants notified in accordance with
Section 5.2 may exercise their Options at any time before the occurrence of
the event requiring the giving of notice (but subject to occurrence of such
event), regardless of whether all conditions of exercise relating to length of
service, attainment of financial performance goals or otherwise have been
satisfied. Upon the giving of notice in accordance with Section 5.2, all
restrictions with respect to Restricted Stock and other Awards shall lapse
immediately, all Stock Units shall become payable immediately and all Stock
Appreciation Rights shall become exercisable. Any Options, Stock Appreciation
Rights or Stock Units that are not assumed or substituted under clauses (a) or
(b) of Section 5.2 that have not been exercised prior to the event described
in Section 5.1 shall automatically terminate upon the occurrence of such
event.
5.4 Change in Control of Qwest.
(a) In General. Unless provided otherwise by the Committee at the time of
the grant of an Award, upon a change in control of Qwest as defined in
subsection 5.4(b), then (i) all Options shall become immediately
exercisable in full during the remaining term thereof, and shall remain so,
whether or not the Participants to whom such Options have been granted
remain employees or consultants of the Company; (ii) all restrictions with
respect to outstanding Restricted Stock Awards shall immediately lapse;
(iii) all Stock Units shall become immediately payable; and (iv) all other
Awards shall become immediately exercisable or shall vest, as the case may
be, without any further action or passage of time.
(b) Definition. For purposes of this Plan, a "change in control" shall be
deemed to have occurred if either (i) any individual, entity, or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 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 the Company, acquires beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the 1934 Act) of fifty percent (50%) or more
of either (A) the then-outstanding shares of Stock ("Outstanding Shares")
or (B) the combined voting power of the then-outstanding voting securities
of the Company entitled to vote generally in the election of directors
("Voting Power") or (ii) at any time during any period of three consecutive
years (not including any period prior to the Effective Date), individuals
who at the beginning of such period constitute the Board (and any new
director whose election by the Board or whose nomination for election by
the Company'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 or nomination for election was
previously so approved) cease for any reason to constitute a majority
thereof.
5.5 Reorganization of Affiliated Corporations. If an Affiliated Corporation
is merged or consolidated with another corporation (other than a merger or
consolidation pursuant to which the Affiliated Corporation continues to be, or
the continuing corporation is, affiliated with Qwest through stock ownership
or control), or if all or substantially all of the assets or more than fifty
percent (50%) of the stock of the Affiliated Corporation is acquired by any
other corporation, business entity or person (other than a transaction in
which the successor is affiliated with Qwest through stock ownership or
control), or in the case of a reorganization (other than a reorganization
under the United States Bankruptcy Code) including a divisive reorganization
under Section 355 of the Code, or liquidation of the Affiliated Corporation,
the Committee may, as to outstanding Awards, make appropriate provision for
the protection of outstanding Awards granted to Eligible Employees of, and
Eligible Consultants to, the affected Affiliated Corporation by (i) providing
for the assumption of outstanding Options or the substitution of new Options
for outstanding Options by the successor on terms comparable to the
outstanding Options, (ii) providing for the adjustment of outstanding Awards,
or (iii) taking such other action with respect to outstanding Awards as the
Committee deems appropriate.
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ARTICLE VI
PARTICIPATION
Participants in the Plan shall be those Eligible Employees who, in the
judgment of the Committee, are performing, or during the term of their
incentive arrangement will perform, vital services in the management,
operation and development of the Company, and significantly contribute, or are
expected to significantly contribute, to the achievement of long-term
corporate economic objectives. Eligible Consultants shall be selected from
those non-employee consultants to the Company who are performing services
important to the operation and growth of the Company. Participants may be
granted from time to time one or more Awards; provided, however, that the
grant of each such Award shall be separately approved by the Committee and
receipt of one such Award shall not result in automatic receipt of any other
Award. Upon determination by the Committee that an Award is to be granted to a
Participant, written notice shall be given to such person, specifying the
terms, conditions, rights and duties related thereto. Each Participant shall,
if required by the Committee, enter into an agreement with Qwest, in such form
as the Committee shall determine and which is consistent with the provisions
of the Plan, specifying such terms, conditions, rights and duties. Awards
shall be deemed to be granted as of the date specified in the grant resolution
of the Committee, which date shall be the date of any related agreement with
the Participant. In the event of any inconsistency between the provisions of
the Plan and any such agreement entered into hereunder, the provisions of the
Plan shall govern.
ARTICLE VII
OPTIONS
7.1 Grant of Options. Coincident with or following designation for
participation in the Plan, a Participant may be granted one or more Options.
The Committee in its sole discretion shall designate whether an Option is an
Incentive Option or a Non-Qualified Option; provided, however, that only Non-
Qualified Options may be granted to Eligible Consultants. The Committee may
grant both an Incentive Option and a Non-Qualified Option to an Eligible
Employee at the same time or at different times. Incentive Options and Non-
Qualified Options, whether granted at the same time or at different times,
shall be deemed to have been awarded in separate grants and shall be clearly
identified, and in no event shall the exercise of one Option affect the right
to exercise any other Option or affect the number of shares for which any
other Option may be exercised. An Option shall be considered as having been
granted on the date specified in the grant resolution of the Committee.
7.2 Stock Option Certificates. Each Option granted under the Plan shall be
evidenced by a written stock option certificate or agreement (an "Option
Certificate"). An Option Certificate shall be issued by Qwest in the name of
the Participant to whom the Option is granted (the "Option Holder") and in
such form as may be approved by the Committee. The Option Certificate shall
incorporate and conform to the conditions set forth in this Section 7.2 as
well as such other terms and conditions that are not inconsistent as the
Committee may consider appropriate in each case.
(a) Number of Shares. Each Option Certificate shall state that it covers
a specified number of shares of Stock, as determined by the Committee.
(b) Price. The price at which each share of Stock covered by an Option
may be purchased shall be determined in each case by the Committee and set
forth in the Option Certificate, but, in the case of an Incentive Option,
in no event shall the price be less than 100 percent of the Fair Market
Value of the Stock on the date the Incentive Option is granted.
(c) Duration of Options; Restrictions on Exercise. Each Option
Certificate shall state the period of time, determined by the Committee,
within which the Option may be exercised by the Option Holder (the "Option
Period"). The Option Period must end, in all cases, not more than ten years
from the date the
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Option is granted. The Option Certificate shall also set forth any
installment or other restrictions on exercise of the Option during such
period, if any, as may be determined by the Committee. Each Option shall
become exercisable (vest) over such period of time, if any, or upon such
events, as determined by the Committee.
(d) Termination of Services, Death, Disability, Etc. The Committee may
specify the period, if any, during which an Option may be exercised
following termination of the Option Holder's services. The effect of this
subsection 7.2(d) shall be limited to determining the consequences of a
termination and nothing in this subsection 7.2(d) shall restrict or
otherwise interfere with the Company's discretion with respect to the
termination of any individual's services. If the Committee does not
otherwise specify, the following shall apply:
(i) If the services of the Option Holder are terminated within the
Option Period for "cause", as determined by the Company, the Option
shall thereafter be void for all purposes. As used in this subsection
7.2(d), "cause" shall mean willful misconduct, a willful failure to
perform the Option Holder's duties, insubordination, theft, dishonesty,
conviction of a felony or any other willful conduct that is materially
detrimental to the Company or such other cause as the Board in good
faith reasonably determines provides cause for the discharge of an
Option Holder.
(ii) If the Option Holder becomes Disabled, the Option may be
exercised by the Option Holder within one year following the Option
Holder's termination of services on account of Disability (provided
that such exercise must occur within the Option Period), but not
thereafter. In any such case, the Option may be exercised only as to
the shares as to which the Option had become exercisable on or before
the date of the Option Holder's termination of services because of
Disability.
(iii) If the Option Holder dies during the Option Period while still
performing services for the Company or within the one year period
referred to in (ii) above or the three-month period referred to in (iv)
below, the Option may be exercised by those entitled to do so under the
Option Holder's will or by the laws of descent and distribution within
one year following the Option Holder's death, (provided that such
exercise must occur within the Option Period), but not thereafter. In
any such case, the Option may be exercised only as to the shares as to
which the Option had become exercisable on or before the date of the
Option Holder's death.
(iv) If the services of the Option Holder are terminated (which for
this purpose means that the Option Holder is no longer employed by the
Company or performing services for the Company) by the Company within
the Option Period for any reason other than cause, Disability, or
death, the Option may be exercised by the Option Holder within three
months following the date of such termination (provided that such
exercise must occur within the Option Period), but not thereafter. In
any such case, the Option may be exercised only as to the shares as to
which the Option had become exercisable on or before the date of
termination of services.
(e) Transferability. Each Option shall not be transferable by the Option
Holder except by will or pursuant to the laws of descent and distribution.
Each Option is exercisable during the Option Holder's lifetime only by him
or her, or in the event of Disability or incapacity, by his or her guardian
or legal representative. The Committee may, however, provide at the time of
grant or thereafter that the Option Holder may transfer a Non-Qualified
Option to a member of the Option Holder's immediate family, a trust of
which members of the Option Holder's immediate family are the only
beneficiaries, or a partnership of which members of the Option Holder's
immediate family or trusts for the sole benefit of the Option Holder's
immediate family are the only partners. Immediate family means the Option
Holder's spouse, issue (by birth or adoption), parents, grandparents, and
siblings (including half brothers and sisters and adopted siblings). During
the Option Holder's lifetime the Option Holder may not transfer an
Incentive Option under any circumstances.
(f) Consideration for Grant of Option. Each Option Holder agrees to
remain in the employment of the Company or to continue providing consulting
services to the Company, as the case may be, at the
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pleasure of the Company, for a continuous period of at least one year after
the date the Option is granted, at the rate of compensation in effect on
the date of such agreement or at such changed rate as may be fixed, from
time to time, by the Company. Nothing in this paragraph shall limit or
impair the Company's right to terminate the employment of any employee or
to terminate the consulting services of any consultant.
(g) Exercise, Payments, Etc.
(i) Manner of Exercise. The method for exercising each Option granted
hereunder shall be by delivery to Qwest of written notice specifying
the number of Shares with respect to which such Option is exercised.
The purchase of such Shares shall take place at the principal offices
of Qwest within thirty days following delivery of such notice, at which
time the Option Price of the Shares shall be paid in full by any of the
methods set forth below or a combination thereof. Except as set forth
in the next sentence, the Option shall be exercised when the Option
Price for the number of shares as to which the Option is exercised is
paid to Qwest in full. If the Option Price is paid by means of a
broker's loan transaction described in subsection 7.2(g)(ii)(D), in
whole or in part, the closing of the purchase of the Stock under the
Option shall take place (and the Option shall be treated as exercised)
on the date on which, and only if, the sale of Stock upon which the
broker's loan was based has been closed and settled, unless the Option
Holder makes an irrevocable written election, at the time of exercise
of the Option, to have the exercise treated as fully effective for all
purposes upon receipt of the Option Price by Qwest regardless of
whether or not the sale of the Stock by the broker is closed and
settled. A properly executed certificate or certificates representing
the Shares shall be delivered to or at the direction of the Option
Holder upon payment therefor. If Options on less than all shares
evidenced by an Option Certificate are exercised, Qwest shall deliver a
new Option Certificate evidencing the Option on the remaining shares
upon delivery of the Option Certificate for the Option being exercised.
(ii) The exercise price shall be paid by any of the following methods
or any combination of the following methods at the election of the
Option Holder, or by any other method approved by the Committee upon
the request of the Option Holder:
(A) in cash;
(B) by certified check, cashier's check or other check acceptable
to the Company, payable to the order of Qwest;
(C) by delivery to Qwest of certificates representing the number
of shares then owned by the Option Holder, the Fair Market Value of
which equals the purchase price of the Stock purchased pursuant to
the Option, properly endorsed for transfer to Qwest; provided
however, that no Option may be exercised by delivery to Qwest of
certificates representing Stock, unless such Stock has been held by
the Option Holder for more than six months; for purposes of this
Plan, the Fair Market Value of any shares of Stock delivered in
payment of the purchase price upon exercise of the Option shall be
the Fair Market Value as of the exercise date; the exercise date
shall be the day of delivery of the certificates for the Stock used
as payment of the Option Price; or
(D) by delivery to Qwest of a properly executed notice of exercise
together with irrevocable instructions to a broker to deliver to
Qwest promptly the amount of the proceeds of the sale of all or a
portion of the Stock or of a loan from the broker to the Option
Holder required to pay the Option Price.
(h) Date of Grant. An Option shall be considered as having been granted
on the date specified in the grant resolution of the Committee.
(i) Withholding.
(i) Non-Qualified Options. Upon exercise of an Option, the Option
Holder shall make appropriate arrangements with the Company to provide
for the amount of additional withholding
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required by Sections 3102 and 3402 of the Code and applicable state
income tax laws, including payment of such taxes through delivery of
shares of Stock or by withholding Stock to be issued under the Option,
as provided in Article XVII.
(ii) Incentive Options. If an Option Holder makes a disposition (as
defined in Section 424(c) of the Code) of any Stock acquired pursuant
to the exercise of an Incentive Option prior to the expiration of two
years from the date on which the Incentive Option was granted or prior
to the expiration of one year from the date on which the Option was
exercised, the Option Holder shall send written notice to the Company
at the Company's principal place of business of the date of such
disposition, the number of shares disposed of, the amount of proceeds
received from such disposition and any other information relating to
such disposition as the Company may reasonably request. The Option
Holder shall, in the event of such a disposition, make appropriate
arrangements with the Company to provide for the amount of additional
withholding, if any, required by Sections 3102 and 3402 of the Code and
applicable state income tax laws.
7.3 Restrictions on Incentive Options.
(a) Initial Exercise. The aggregate Fair Market Value of the Shares with
respect to which Incentive Options are exercisable for the first time by an
Option Holder in any calendar year, under the Plan or otherwise, shall not
exceed $100,000. For this purpose, the Fair Market Value of the Shares
shall be determined as of the date of grant of the Option.
(b) Ten Percent Stockholders. Incentive Options granted to an Option
Holder who is the holder of record of 10% or more of the outstanding Stock
of Qwest shall have an Option Price equal to 110% of the Fair Market Value
of the Shares on the date of grant of the Option and the Option Period for
any such Option shall not exceed five years.
7.4 Shareholder Privileges. No Option Holder shall have any rights as a
shareholder with respect to any shares of Stock covered by an Option until the
Option Holder becomes the holder of record of such Stock, and no adjustments
shall be made for dividends or other distributions or other rights as to which
there is a record date preceding the date such Option Holder becomes the
holder of record of such Stock, except as provided in Article IV.
ARTICLE VIII
RESTRICTED STOCK AWARDS
8.1 Grant of Restricted Stock Awards. Coincident with or following
designation for participation in the Plan, the Committee may grant a
Participant one or more Restricted Stock Awards consisting of Shares of Stock.
The number of Shares granted as a Restricted Stock Award shall be determined
by the Committee.
8.2 Restrictions. A Participant's right to retain a Restricted Stock Award
granted to him under Section 8.1 shall be subject to such restrictions,
including but not limited to his continuous employment by or performance of
services for the Company for a restriction period specified by the Committee
or the attainment of specified performance goals and objectives, as may be
established by the Committee with respect to such Award. The Committee may in
its sole discretion require different periods of service or different
performance goals and objectives with respect to different Participants, to
different Restricted Stock Awards or to separate, designated portions of the
Shares constituting a Restricted Stock Award. In the event of the death or
Disability of a Participant, or the retirement of a Participant in accordance
with the Company's established retirement policy, all required periods of
service and other restrictions applicable to Restricted Stock Awards then held
by him shall lapse with respect to a pro rata part of each such Award based on
the ratio between the number of full months of employment or services
completed at the time of termination of services from the grant of each Award
to the total number of months of employment or continued services required for
such Award to be fully nonforfeitable, and such portion of each such Award
shall become fully nonforfeitable. The remaining
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portion of each such Award shall be forfeited and shall be immediately
returned to Qwest. If a Participant's employment or consulting services
terminate for any other reason, any Restricted Stock Awards as to which the
period for which services are required or other restrictions have not been
satisfied (or waived or accelerated as provided herein) shall be forfeited,
and all shares of Stock related thereto shall be immediately returned to
Qwest.
8.3 Privileges of a Stockholder, Transferability. A Participant shall have
all voting, dividend, liquidation and other rights with respect to Stock in
accordance with its terms received by him as a Restricted Stock Award under
this Article VIII upon his becoming the holder of record of such Stock;
provided, however, that the Participant's right to sell, encumber, or
otherwise transfer such Stock shall be subject to the limitations of Section
13.2.
8.4 Enforcement of Restrictions. The Committee shall cause a legend to be
placed on the Stock certificates issued pursuant to each Restricted Stock
Award referring to the restrictions provided by Sections 8.2 and 8.3 and, in
addition, may in its sole discretion require one or more of the following
methods of enforcing the restrictions referred to in Sections 8.2 and 8.3:
(a) Requiring the Participant to keep the Stock certificates, duly
endorsed, in the custody of Qwest while the restrictions remain in effect;
or
(b) Requiring that the Stock certificates, duly endorsed, be held in the
custody of a third party while the restrictions remain in effect.
ARTICLE IX
STOCK UNITS
A Participant may be granted a number of Stock Units determined by the
Committee. The number of Stock Units, the goals and objectives to be satisfied
with respect to each grant of Stock Units, the time and manner of payment for
each Stock Unit, and the other terms and conditions applicable to a grant of
Stock Units shall be determined by the Committee.
ARTICLE X
STOCK APPRECIATION RIGHTS
10.1 Persons Eligible. The Committee, in its sole discretion, may grant
Stock Appreciation Rights to Eligible Employees or Eligible Consultants.
10.2 Terms of Grant. The Committee shall determine at the time of the grant
of a Stock Appreciation Right the time period during which the Stock
Appreciation Right may be exercised and any other terms that shall apply to
the Stock Appreciation Right.
10.3 Exercise. A Stock Appreciation Right shall entitle a Participant to
receive a number of shares of Stock (without any payment to Qwest, except for
applicable withholding taxes), cash, or Stock and cash, as determined by the
Committee in accordance with Section 10.4 below. If a Stock Appreciation Right
is issued in tandem with an Option, except as may otherwise be provided by the
Committee, the Stock Appreciation Right shall be exercisable during the period
that its related Option is exercisable. A Participant desiring to exercise a
Stock Appreciation Right shall give written notice of such exercise to Qwest,
which notice shall state the proportion of Stock and cash that the Participant
desires to receive pursuant to the Stock Appreciation Right exercised. Upon
receipt of the notice from the Participant, Qwest shall deliver to the person
entitled thereto (i) a certificate or certificates for Stock and/or (ii) a
cash payment, in accordance with Section 10.4 below. The date Qwest receives
written notice of such exercise hereunder is referred to in this Article X as
the "exercise date". The delivery of Stock or cash received pursuant to such
exercise shall take place at the principal offices of Qwest within 30 days
following delivery of such notice.
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10.4 Number of Shares or Amount of Cash. Subject to the discretion of the
Committee to substitute cash for Stock, or Stock for cash, the number of
Shares that may be issued pursuant to the exercise of a Stock Appreciation
Right shall be determined by dividing: (a) the total number of Shares of Stock
as to which the Stock Appreciation Right is exercised, multiplied by the
amount by which the Fair Market Value of one share of Stock on the exercise
date exceeds the Fair Market Value of one Share of Stock on the date of grant
of one Share of Stock Appreciation Right, by (b) the Fair Market Value of one
Share of Stock on the exercise date; provided, however, that fractional shares
shall not be issued and in lieu thereof, a cash adjustment shall be paid. In
lieu of issuing Stock upon the exercise of a Stock Appreciation Right, the
Committee in its sole discretion may elect to pay the cash equivalent of the
Fair Market Value of the Stock on the exercise date for any or all of the
Shares of Stock that would otherwise be issuable upon exercise of the Stock
Appreciation Right.
10.5 Effect of Exercise. If a Stock Appreciation Right is issued in tandem
with an Option, the exercise of the Stock Appreciation Right or the related
Option will result in an equal reduction in the number of corresponding
Options or Stock Appreciation Rights that were granted in tandem with such
Stock Appreciation Rights and Options.
10.6 Termination of Services. Upon the termination of the services of a
Participant, any Stock Appreciation Rights then held by such Participant shall
be exercisable within the time periods, and upon the same conditions with
respect to the reasons for termination of services, as are specified in
Section 7.2(d) with respect to Options.
ARTICLE XI
STOCK BONUSES
The Committee may award Stock Bonuses to such Participants, subject to such
conditions and restrictions, as it determines in its sole discretion. Stock
Bonuses may be either outright grants of Stock, or may be grants of Stock
subject to and conditioned upon certain employment or performance related
goals.
ARTICLE XII
OTHER COMMON STOCK GRANTS
From time to time during the duration of this Plan, the Board may, in its
sole discretion, adopt one or more incentive compensation arrangements for
Participants pursuant to which the Participants may acquire shares of Stock,
whether by purchase, outright grant, or otherwise. Any such arrangements shall
be subject to the general provisions of this Plan and all shares of Stock
issued pursuant to such arrangements shall be issued under this Plan.
ARTICLE XIII
RIGHTS OF PARTICIPANTS
13.1 Service. Nothing contained in the Plan or in any Option, or other Award
granted under the Plan shall confer upon any Participant any right with
respect to the continuation of his employment by, or consulting relationship
with, the Company, or interfere in any way with the right of the Company,
subject to the terms of any separate employment agreement or other contract to
the contrary, at any time to terminate such services or to increase or
decrease the compensation of the Participant from the rate in existence at the
time of the grant of an Award. Whether an authorized leave of absence, or
absence in military or government service, shall constitute a termination of
service shall be determined by the Committee at the time.
13.2 Nontransferability. Except as provided otherwise at the time of grant
or thereafter, no right or interest of any Participant in an Option, a Stock
Appreciation Right, a Restricted Stock Award (prior to the
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completion of the restriction period applicable thereto), a Stock Unit, or
other Award granted pursuant to the Plan, shall be assignable or transferable
during the lifetime of the Participant, either voluntarily or involuntarily,
or subjected to any lien, directly or indirectly, by operation of law, or
otherwise, including execution, levy, garnishment, attachment, pledge or
bankruptcy. In the event of a Participant's death, a Participant's rights and
interests in Options, Stock Appreciation Rights, Restricted Stock Awards,
other Awards, and Stock Units shall, to the extent provided in Articles VII,
VIII, IX, X and XI, be transferable by will or the laws of descent and
distribution, and payment of any amounts due under the Plan shall be made to,
and exercise of any Options may be made by, the Participant's legal
representatives, heirs or legatees. Notwithstanding the foregoing, the Option
Holder may not transfer an Incentive Option during the Option Holder's
lifetime. If in the opinion of the Committee a person entitled to payments or
to exercise rights with respect to the Plan is disabled from caring for his
affairs because of mental condition, physical condition or age, payment due
such person may be made to, and such rights shall be exercised by, such
person's guardian, conservator or other legal personal representative upon
furnishing the Committee with evidence satisfactory to the Committee of such
status.
13.3 No Plan Funding. Obligations to Participants under the Plan will not be
funded, trusteed, insured or secured in any manner. The Participants under the
Plan shall have no security interest in any assets of the Company, and shall
be only general creditors of the Company.
ARTICLE XIV
GENERAL RESTRICTIONS
14.1 Investment Representations. Qwest may require any person to whom an
Option, Stock Appreciation Right, Restricted Stock Award, Stock Unit, or Stock
Bonus is granted, as a condition of exercising such Option or Stock
Appreciation Right, or receiving such Restricted Stock Award, Stock Unit, or
Stock Bonus, to give written assurances in substance and form satisfactory to
Qwest and its counsel to the effect that such person is acquiring the Stock
for his own account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other effects as Qwest
deems necessary or appropriate in order to comply with Federal and applicable
state securities laws. Legends evidencing such restrictions may be placed on
the Stock certificates.
14.2 Compliance with Securities Laws. Each Option, Stock Appreciation Right,
Restricted Stock Award, Stock Unit, and Stock Bonus grant shall be subject to
the requirement that, if at any time counsel to Qwest shall determine that the
listing, registration or qualification of the shares subject to such Option,
Stock Appreciation Right, Restricted Stock Award, Stock Unit, or Stock Bonus
grant upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, is necessary as a
condition of, or in connection with, the issuance or purchase of shares
thereunder, such Option, Stock Appreciation Right, Restricted Stock Award,
Stock Unit or Stock Bonus grant may not be accepted or exercised in whole or
in part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained on conditions acceptable to the
Committee. Nothing herein shall be deemed to require Qwest to apply for or to
obtain such listing, registration or qualification.
14.3 Changes in Accounting Rules. Except as provided otherwise at the time
an Award is granted, notwithstanding any other provision of the Plan to the
contrary, if, during the term of the Plan, any changes in the financial or tax
accounting rules applicable to Options, Stock Appreciation Rights, Restricted
Stock Awards, Stock Units or other Awards shall occur which, in the sole
judgment of the Committee, may have a material adverse effect on the reported
earnings, assets or liabilities of Qwest, the Committee shall have the right
and power to modify as necessary, any then outstanding and unexercised
Options, Stock Appreciation Rights, outstanding Restricted Stock Awards,
outstanding Stock Units and other outstanding Awards as to which the
applicable services or other restrictions have not been satisfied.
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ARTICLE XV
OTHER EMPLOYEE BENEFITS
The amount of any compensation deemed to be received by a Participant as a
result of the exercise of an Option or Stock Appreciation Right, the sale of
shares received upon such exercise, the vesting of any Restricted Stock Award,
receipt of Stock Bonuses, distributions with respect to Stock Units, or the
grant of Stock shall not constitute "earnings" or "compensation" with respect
to which any other employee benefits of such employee are determined,
including without limitation benefits under any pension, profit sharing,
401(k), life insurance or salary continuation plan.
ARTICLE XVI
PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may at any time terminate, and from time to time may amend or
modify the Plan provided, however, that no amendment or modification may
become effective without approval of the amendment or modification by the
shareholders if shareholder approval is required to enable the Plan to satisfy
any applicable statutory or regulatory requirements, or if Qwest, on the
advice of counsel, determines that shareholder approval is otherwise necessary
or desirable.
No amendment, modification or termination of the Plan shall in any manner
adversely affect any Options, Stock Appreciation Rights, Restricted Stock
Awards, Stock Units, Stock Bonuses or other Award theretofore granted under
the Plan, without the consent of the Participant holding such Options, Stock
Appreciation Rights, Restricted Stock Awards, Stock Units, Stock Bonuses or
other Awards.
ARTICLE XVII
WITHHOLDING
17.1 Withholding Requirement. Qwest's obligations to deliver shares of Stock
upon the exercise of any Option, or Stock Appreciation Right, the vesting of
any Restricted Stock Award, payment with respect to Stock Units, or the grant
of Stock shall be subject to the Participant's satisfaction of all applicable
federal, state and local income and other tax withholding requirements.
17.2 Withholding With Stock. At the time the Committee grants an Option,
Stock Appreciation Right, Restricted Stock Award, Stock Unit, Stock Bonus,
other Award, or Stock or at any time thereafter, it may, in its sole
discretion, grant the Participant an election to pay all such amounts of tax
withholding, or any part thereof, by electing (a) to have Qwest withhold from
shares otherwise issuable to the Participant, shares of Stock having a value
equal to the amount required to be withheld or such lesser amount as may be
elected by the Participant; provided however, that the amount of Stock so
withheld shall not exceed the minimum amount required to be withheld under the
method of withholding that results in the smallest amount of withholding, or
(b) to transfer to Qwest a number of shares of Stock that were acquired by the
Participant more than six months prior to the transfer to Qwest and that have
a value equal to the amount required to be withheld or such lesser amount as
may be elected by the Participant. All elections shall be subject to the
approval or disapproval of the Committee. The value of shares of Stock to be
withheld shall be based on the Fair Market Value of the Stock on the date that
the amount of tax to be withheld is to be determined (the "Tax Date"). Any
such elections by Participants to have shares of Stock withheld for this
purpose will be subject to the following restrictions:
(a) All elections must be made prior to the Tax Date.
(b) All elections shall be irrevocable.
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(c) If the Participant is an officer or director of Qwest within the
meaning of Section 16 of the 1934 Act ("Section 16"), the Participant must
satisfy the requirements of such Section 16 and any applicable Rules
thereunder with respect to the use of Stock to satisfy such tax withholding
obligation.
ARTICLE XVIII
REQUIREMENTS OF LAW
18.1 Requirements of Law. The issuance of Stock and the payment of cash
pursuant to the Plan shall be subject to all applicable laws, rules and
regulations.
18.2 Federal Securities Law Requirements. If a Participant is an officer or
director of Qwest within the meaning of Section 16, Awards granted hereunder
shall be subject to all conditions required under Rule 16b-3, or any successor
rule promulgated under the 1934 Act, to qualify the Award for any exception
from the provisions of Section 16(b) of the 1934 Act available under that
Rule. Such conditions shall be set forth in the agreement with the Participant
which describes the Award or other document evidencing or accompanying the
Award.
18.3 Governing Law. The Plan and all agreements hereunder shall be construed
in accordance with and governed by the laws of the State of Delaware.
ARTICLE XIX
DURATION OF THE PLAN
Unless sooner terminated by the Board of Directors, the Plan shall terminate
at the close of business on June 22, 2007, and no Option, Stock Appreciation
Right, Restricted Stock Award, Stock Unit, Stock Bonus, other Award or Stock
shall be granted, or offer to purchase Stock made, after such termination.
Options, Stock Appreciation Rights, Restricted Stock Awards, other Awards, and
Stock Units outstanding at the time of the Plan termination may continue to be
exercised, or become free of restrictions, or paid, in accordance with their
terms.
Dated: , 2000
QWEST COMMUNICATIONS INTERNATIONAL INC.,
a Delaware corporation
By:_______________________________________
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QWEST
Proxy Services
P.O. Box 9079
FARMINGDALE, NY 11735
VOTE BY TELEPHONE, INTERNET OR FAX
QUICK***EASY***IMMEDIATE
**IF YOU WISH TO VOTE YOUR SHARES BY TELEPHONE OR INTERNET, PLEASE FOLLOW THE
INSTRUCTIONS BELOW**
YOUR TELEPHONE, INTERNET OR FAX 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 1-800-690-6903 ANYTIME. THERE IS NO CHARGE TO YOU FOR THIS CALL.
After entering your Control Number you will hear the following 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 the
following 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
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
VOTE BY INTERNET:
THE WEB ADDRESS IS: HTTP://WWW.PROXYVOTE.COM
------------------------
If you vote by telephone, fax or Internet there is no need for you to mail in
your proxy.
VOTE BY FAX: Mark, sign and date your proxy card and fax it to 303-992-1822
anytime.
THANK YOU FOR VOTING.
TO VOTE, MARK BLOCKS BELOW
IN BLUE OR BLACK INK: QWECOM KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
- --------------------------------------------------------------------------------
QWEST COMMUNICATIONS INTERNATIONAL INC.
If you plan to attend our meeting, please check this box. [ ]
Vote on Directors
1. Proposal to elect Directors. For Withhold To withhold authority
The nominees All All Except to vote, mark 'For
for Directors are: All Except' and write
01) Philip F. Anschutz [ ] [ ] [ ] the nominee's number
02) Jerry R. Davis, on the line below.
03) Jordan L. Haines
04) Cannon Y. Harvey, ---------------------
05) Douglas M. Karp,
06) Vinod Khosla,
, 07) Joseph P. Nacchio,
08) Douglas L. Polson
09) Craig D. Slater,
10) W. Thomas Stephens,
11) Robert S. Woodruff
Vote On Proposals For Against Abstain
2. Approval of the Equity Incentive Plan Proposal [ ] [ ] [ ]
3. Approval of any other matters to be voted upon [ ] [ ] [ ]
________________________________________________ _______________________
Signature [PLEASE SIGN WITHIN BOX] Date
________________________________________________ _______________________
Signature (Joint Owners) Date
<PAGE>
YOUR VOTE IS IMPORTANT
You can vote in one of four ways:
1. Call toll-free 1-800-690-6903 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: www.proxyvote.com and provide
your consent and e-mail address to receive proxy materials on-line in the
future.
or
--
3. To vote by fax, mark, sign and date your proxy card and fax it to
303-992-1822
or
--
4. 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 www.proxyvote.com
QWECO2
- --------------------------------------------------------------------------------
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 3, 2000
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 3,
2000, 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 7, 2000, 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.
