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CWA Scores Excessive CEO Severance at Citizens
CWA is calling on shareholders of Citizens Communications Co. to support good corporate governance and by voting against the reelection of members of the Compensation Committee of the company's board of directors.
Shareholders will take up this issue and others at the company's annual meeting on May 26 in Stamford, Conn.
In a letter to shareholders, CWA District 1 Vice President Chris Shelton pointed out that the Citizens board provided an extravagant and excessive compensation and severance package for Leonard Tow, Citizens former chief executive officer.
"Citizen's board has doled out excessive stock grants, bonus payments, split-dollar life insurance benefits and lavish perks to Tow, who resigned in July 2004," a year and a half prior to the expiration of his employment contract which triggered massive payments under his severance agreement, Shelton wrote.
In fact, according to the 2005 proxy statement, Citizens took a charge in the third quarter of more than $61.6 million, which represented the company's estimate of the "cost of all components of Dr. Tow's separation agreement arrangements," Shelton pointed out
Among the components of Tow's very generous plan:
A cash lump sum payment of $5.7 million; a $3.2 million cash payment for post-retirement advisory and consulting services that the agreement stipulates will not be provided; a $1.6 million cash payment for "phantom equity awards;" a grant of 2.1 million shares of common stock, plus the right to acquire up to 10 million; and reimbursement of all tax, financial, estate planning, legal and accounting services.
"Last year, a stockholder proposal calling for the shareholder approval of severance agreements won the support of a majority - 58 percent - of the Citizens shareholders who voted on the proposal. However, the board ignored the will of its shareholders and did not implement the proposal," Shelton said.
The actions of members of the Compensation Committee have resulted in "an enormous loss of corporate assets...the committee should be held accountable for that loss and denied reelection to the Board of Directors," he stressed.
Shareholders will take up this issue and others at the company's annual meeting on May 26 in Stamford, Conn.
In a letter to shareholders, CWA District 1 Vice President Chris Shelton pointed out that the Citizens board provided an extravagant and excessive compensation and severance package for Leonard Tow, Citizens former chief executive officer.
"Citizen's board has doled out excessive stock grants, bonus payments, split-dollar life insurance benefits and lavish perks to Tow, who resigned in July 2004," a year and a half prior to the expiration of his employment contract which triggered massive payments under his severance agreement, Shelton wrote.
In fact, according to the 2005 proxy statement, Citizens took a charge in the third quarter of more than $61.6 million, which represented the company's estimate of the "cost of all components of Dr. Tow's separation agreement arrangements," Shelton pointed out
Among the components of Tow's very generous plan:
A cash lump sum payment of $5.7 million; a $3.2 million cash payment for post-retirement advisory and consulting services that the agreement stipulates will not be provided; a $1.6 million cash payment for "phantom equity awards;" a grant of 2.1 million shares of common stock, plus the right to acquire up to 10 million; and reimbursement of all tax, financial, estate planning, legal and accounting services.
"Last year, a stockholder proposal calling for the shareholder approval of severance agreements won the support of a majority - 58 percent - of the Citizens shareholders who voted on the proposal. However, the board ignored the will of its shareholders and did not implement the proposal," Shelton said.
The actions of members of the Compensation Committee have resulted in "an enormous loss of corporate assets...the committee should be held accountable for that loss and denied reelection to the Board of Directors," he stressed.