CenturyLink Inc. is reducing its board of directors from 16 to 13, the fixed-line telecommunications company disclosed in a regulatory filing Wednesday.
Three individuals who hailed from the Denver-based phone company CenturyLink acquired last year, Qwest Communications International Inc., are going to be leaving the board.
Those changes will take effect on May 23, the same date CenturyLink is holding its annual shareholders meeting in Monroe, La., according to proxy statements filed with the Securities and Exchange Commission.
Charles L. Biggs, 70, and James A. Unruh, 70, both former Qwest directors, have agreed not to stand for reelection upon the expiration of their terms. It was previously reported that Edward Mueller, the 64-year-old former Qwest CEO and chairman, would resign from the board.
These executives had joined CenturyLink’s board on April 1, 2011, when CenturyLink closed its acquisition of Qwest.
CenturyLink still has another board member from Qwest, 60-year-old Michael J. Roberts, according to CenturyLink’s website on its board of directors.
During CenturyLink’s annual meeting, shareholders will vote on a proposal that would provide for the annual election of directors. Under CenturyLink’s restated articles of incorporation, the board is divided into three classes with each class elected every three years. If shareholders approve the proposal, the “current classified board will be declassified over a” period of two years.
Earlier this year, the board’s Nominating and Corporate Governance Committee unanimously recommended the change.
“The Committee considered the view of some shareholders who believe that classified boards have the effect of reducing the accountability of directors to shareholders because classified boards limit the ability of shareholders to evaluate and elect all directors on an annual basis,” CenturyLink revealed in the regulatory filing. “The Committee in its evaluation gave considerable weight to the approval at the 2011 annual meeting of a shareholder proposal urging the Board to take the necessary steps to elect directors annually.”
Shareholders next month will vote on a variety of items ranging from director appointments to an amendment that would provide for an increase in the number of shares of common stock authorized for issuance.
The board has adopted an amendment that would increase the number of shares of common stock authorized for issuance from 800 million to 1.6 billion shares. As of April 4, 2012, the company had about 621.2 million common shares issued and outstanding and roughly 45.8 million common shares reserved for issuance.
“Although our management currently has no definitive plans for the issuance of any additional authorized shares, the authorization of additional shares would permit the issuance of shares for future stock dividends, stock splits, possible acquisitions, stock incentive plans, and other appropriate corporate purposes,” CenturyLink said.
The telecom giant cautioned that “any further issuance [of shares] could have a dilutive effect on the equity interests of current shareholders and could potentially have a negative effect on the market price of our Common Shares.”
CenturyLink’s board is asking shareholders to vote no on a number of shareholder proposals, including one that would defer bonuses for senior executives.
“We are concerned that short-term incentive compensation plans can encourage senior executives to manage for the short-term and take on excessive risk,” states part of the shareholder proposal, which was submitted by the Communications Workers of America Members’ General Fund. “The recent Wall Street financial crisis illustrates what can happen when executives are rewarded for short-term performance without any effort to ensure that the performance is sustainable.”
The board, which includes Chief Executive Glen F. Post, III, doesn’t think the proposal is the best way to protect shareholders. “We believe our current executive compensation program, consisting of a balanced mix of annual cash bonuses and long-term equity awards, achieves the central goal of the proponent’s objective to encourage the creation of sustainable shareholder value,” CenturyLink declared in the filing.
The annual meeting will be held at 10 a.m. local time at CenturyLink’s headquarters. Shareholders who held shares as of the close of business on April 4 are entitled to vote those shares at the meeting. For access to the regulatory materials, click here.