Qwest Head Axed Over Accounting

NEW YORK -- Joseph Nacchio, the chairman and chief executive of Qwest Communications International, was forced to resign Monday night by the company's board, executives involved in the decision said.

Nacchio is expected to be succeeded by Richard Notebaert, the former chairman of the Ameritech Corp. and the president and chief executive of Tellabs, a telecommunications network provider, the executives said.

The executives said Nacchio also resigned from the board, although he will stay on as a consultant during the transition.

Nacchio, who has been criticized for often being combative with the company's shareholders, is the latest chief executive of a large corporation to resign amid questions over accounting practices and corporate governance procedures.

Qwest's accounting practices are under investigation by the U.S. Securities and Exchange Commission, which is looking into deals Qwest entered to swap fiber-optic capacity with companies like Global Crossing and Enron. Qwest recently had difficulty raising money to meet its obligations, forcing credit rating agencies to cut its rating to junk status.

Nacchio's ouster came after months of deteriorating prospects for Qwest, a company formed in 1995 by the billionaire investor Philip Anschutz. He joins another chief executive of a large telecommunications company, Bernard Ebbers of WorldCom, who was ousted in April.

As chief executive, Nacchio, a former AT&T executive, helped build Qwest from a small fiber-optic carrier in Denver into one of the world's largest telephone companies, eventually acquiring U.S. West in 2000, a Baby Bell that grew out of the breakup of AT&T. Qwest's rapid growth began to sputter in the last year.

His management style came under criticism in October after he lost his temper during a conference call with analysts who asked for detailed information on company sales.

Qwest dismissed Arthur Andersen as its auditor earlier this year after its accounting came under scrutiny.

Graef Crystal, an independent expert on executive compensation, estimated that Nacchio received about $87 million in compensation in 2001, despite a widening of Qwest's losses and a 65 percent plunge in its stock price.

The bulk of Nacchio's compensation came in the form of stock options and payments related to his work on Qwest's acquisition of U S West in 2000, while his base salary climbed to $1.2 million last year from $855,000 the previous year.

Notebaert, in contrast, took a voluntary pay cut of 26 percent last year that lowered his base salary to $556,733, according to regulatory filings.