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Montana Standard

Although the last round of laid-off workers in Touch America got no severance pay and their remaining benefits are shaky, others in management were paid when the company shed them, internal documents at Touch America show.

High payouts The five top members of management exercised their change-of-control agreements last year — resulting in a $5.4 million payout to top executives Robert Gannon, Mike Meldahl, Jerrold Pedersen and Mike Zimmerman.

Those men held what are termed Tier 1 agreements and those payments produced outrage among stockholders, resulting in a lawsuit at a time when the company was struggling.

Touch America filed for Chapter 11 bankruptcy protection on June 18.

However, what is not well known is that other employees with Tier 2 and Tier 3 agreements also got change-of-control money when they left the company, and nearly $1.5 million was paid to seven other employees in February: Touch America attorney Susan Callaghan received $182,718; fellow attorney Brian Holland, $184,662; executive secretary Susan Breining, $101,586; vice president of human resources Robert Cenek, $278,066; treasurer Harry Freebourn, $279,049; Cortlandt Freeman, vice president of corporate communications, $205,298; and Rose Ralph, director of corporate and shareholder services, $167,194, according to those documents.

Bonuses, pay increases The documents obtained by The Montana Standard, and verified by two outside reliable sources as accurate Touch America information, also illustrated bonuses and the increase in pay shelled out to top executives as well.

At one time, Gannon was making $247 an hour and taking home weekly pay of $9,903, while Meldahl made $5,337 a week. Pedersen got $4,951 and Zimmerman $3,609, before pay cuts ranging from 20 to 22 percent were instituted. In addition, 11 other employees at the firm were making more than $100,000 a year, taking home anywhere from $2,060 to $3,499 per week.

A look at W-2 earnings also shows that Gannon's five-year average — from 1997 to 2001 — was $722,790. Meldahl's yearly pay took a jump from paying $177,593 before the breakup of Montana Power in 1997 to pulling down $579,387 in 2001. The top executives' pay fluctuated from year to year, but five-year averages show all the men, including Perry Cole, who left the company last year, made annual salaries ranging from $223,546 on the low end to Gannon's $722,700.

The highest bonus paid to Gannon is listed at $271,649 in 1999. Following was Meldahl with a stated bonus of $245,737. All Tier 1, 2, and 3 employees listed had bonuses listed — 20 of them. Some of those employees, like Gannon, have already been paid change-of-control money, but still work for the company. Others were paid their change of control when they left Touch America's employment under their own volition.

Touch America spokeswoman Linda McGillen refused comment on who has left the company and other personnel matters.

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