For Whom Your Bell Tolls
Last June, as exhausted U S West workers in Arizona and 13 other states toiled under mandatory 70-hour work weeks, three retiring big shots at the company's Denver headquarters reaped $45.1 million in cash severance payments.
U S West CEO Richard McCormick got $24.5 million. Chief financial officer Michael Glinsky walked away with $11.3 million. General counsel Charles Russ got $9.3 million.
McCormick and his cronies retired after U S West spun itself off into two companies, U S West, the phone company, and Media One Group, a cable-television company.
In March, when the severance package was first announced, McCormick took time from his many social engagements to tell the Denver Post: "There isn't any consumer that is going to pay this [$45.1 million] bill."
Later this year, as McCormick wings his way to Geneva, Switzerland, where he will head the International Chamber of Commerce, you can bet U S West will ask the Arizona Corporation Commission to stick its residential users with a $5 million tab--Arizona's share of the $45.1 severance package.
Here's how U S West will try to bamboozle the Corporation Commission at next summer's rate-hike hearings: The $5 million--our share of funding the carefree retirements of McCormick, Glinsky and Russ--will be camouflaged as one of many business expenses. U S West will ask the commissioners to allow it to tap residential users with a monthly rate increase of about $2.50 per primary phone line, or a total of $71 million, because the cost of business has gotten so high.
Although the formal rate proposal has yet to be unveiled to the commission, U S West confirms these numbers.
But when asked to confirm that U S West will ask the commission to make us pay for Arizona's share of the severance package, Jim Roof, U S West's Phoenix spokesman, waffles a little. He says the appropriate accountant is out of town, so he "hasn't been able to confirm" but it is "pretty likely" that U S West will ask the commissioners to force Arizona customers to pony up.
Corporation Commission chair Jim Irvin says through a spokesman that he cannot comment on the case because he has not yet seen it. His fellow commissioners, Carl Kunasek and Tony West, could not be reached for comment.
Greg Patterson, the executive director of the Residential Utilities Consumer Office, the agency that is supposed to protect consumers from such outrageous charges, says he will oppose an attempt to make customers pay for effete "business expenses."
But Roof, putting the company spin on the matter, seems to suggest that customers really shouldn't complain. After all, he says, when you divvy up $5 million among 1.4 million Arizonans who have primary residential lines, heck, they'd pay less than 25 cents per year for their share.
He doesn't like the term "golden parachute."
"The concept of 'golden parachute' for the majority of people is a pejorative term," Roof says. "And I understand it; I don't have a golden parachute. . . ."
You get the feeling Roof himself might be a little disgusted by the severance packages, but he's a seasoned company man and too smart to say anything derogatory.
"I didn't say it was right; I didn't say it was wrong," he says, when pressed repeatedly to comment on whether he's repulsed by McCormick's $24.5 million cash buyout.
He defers such questions to Dick MacKnight, the executive director of public relations for U S West's corporate headquarters in Denver.
When asked to comment on the $45.1 million that found its way into the pockets of the three retiring top dogs, MacKnight avers: "We consider that to be a proper, legitimate business expense, which would be treated as a business expense for the purpose of setting rates."
C'mon, Dick, what's proper or legitimate about giving $45.1 million to three guys?
". . . If you look at the amount of service these folks had, and you look at what they were giving up in terms of their future employment, it really sort of evens out," says MacKnight.
MacKnight tries to paint McCormick as a worthy recipient of the phone company's largess. He was chairman and CEO of a $25 billion company with operations around the world. He supervised more than 60,000 employees. He was always at the low end of the pay scale when compared to industry peers.
Under McCormick's leadership, he adds, investors in U S West enjoyed a 120 percent increase in their investments over two years.
Furthermore, MacKnight says, by "advocating the spin-off" (he doesn't mention stockholders had insisted on the spin-off in the first place back in 1995) McCormick had "eliminated his own job."
We should all be so altruistic. Who wouldn't eliminate his job if he had $24.5 million waiting in the wings?
Last summer, after the three big shots at U S West got their multimillion-dollar cash retirement payments, workers in the U S West empire went on strike.
See, to increase the bottom line leading up to his parachute jump, McCormick, et al., had forced workers to put in 70-hour weeks for months on end. Workers were burned out and stressed. To top it all off, U S West honchos were threatening to reduce their medical benefits.
Joe Gosiger, a union leader in Arizona who has worked at U S West for 25 years, helped organize the strike. He thought of himself as a "telephone person," an old-fashioned guy who believed the phone company should take care of workers and customers.
The phone company used to be a "family thing," he says.
But under people like McCormick, it became a ruthless company that did not honor the dignity of the worker, he says.
How could McCormick and his cronies force men to work 70-hour weeks for months on end without expecting them to break?
After the strike ended, U S West agreed to reduce the mandatory overtime. Health benefits were preserved.
This issue wasn't over wages, says Gosiger; it was over the shabby treatment of the rank and file.
"The bottom line," he says, "is that you measure a person's worth by their service to the company. I cannot fathom that a person can convince himself what he does in a company is worth $24.5 million."
Or that we should have to pay for it.
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