SOURCE: Verizon Shareowners

May 03, 2007 14:51 ET

Retiree Shareowners in Dead Heat With Verizon at 49% of Vote Each Over Say on Executive Pay Proxy

Company Says Proxy Vote Is "Too Close To Determine." Recount to Come

PITTSBURGH, PA -- (MARKET WIRE) -- May 3, 2007 -- Shareowners at Thursday's Verizon (NYSE: VZ) Annual meeting in Pittsburgh are split, with 49% voting for and 49% voting against a proposal on the Verizon proxy to give shareowners an Advisory Vote on Executive Compensation (Item #6 on Verizon Proxy), according to preliminary results.

This proxy asks the Verizon Board of Directors to include, as a voting item at future annual meetings, an advisory resolution allowing shareowners to approve or disapprove the executive compensation package of the company's senior executive officers.

According to a Verizon press statement issued at the meeting, "The preliminary results for the proposal on an advisory vote on senior executive compensation are too close to determine whether the proposal passed or was defeated. The outcome will be determined by the final tabulation."

The "Say on Pay" proxy was put forth by Verizon's own retirees, led by C. William Jones and members of the Association of BellTel Retirees Inc. This is the tenth year that members of the Association (www.BellTelRetirees.org) have proposed shareowner proxies to force corporate governance changes at their former employer.

During that time period the 100,000-plus-member retiree group has served up shareowner victories over the company in 2003, 2004 and 2005. The non-profit retiree group was started in 1996 by just seven NYNEX retirees to protect the pensions and benefits of company retirees and surviving spouses.

According to Mr. Jones who also serves as President of the retiree association, "This vote, regardless of the final outcome after the recount, is a major moral victory for shareowners and the retirees of this company."

He added, "Long-term shareowners, believe that the owners of the company should be able to express their approval or disapproval of the Board's compensation package for the CEO and the other senior executives. An advisory vote would provide useful feedback and encourage shareowners to scrutinize the new, more extensive disclosures required by the SEC."

AP reports say that according to a company filing, Verizon Chairman and CEO Ivan Seidenberg's 2006 compensation was valued at $20.2 million, including salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. Over the five fiscal years through 2005, Mr. Seidenberg received $75.1 million in total expected compensation, while total shareholder return was negative 26.8%, according to the Corporate Library.

According to Institutional Shareholder Services, in the U.K. the required shareholder advisory vote on compensation policies, "has proven a valuable tool in encouraging companies to improve their practices... [and] has contributed to a significant increase in constructive dialogue between companies and directors."

Past Proxy Victories Versus Verizon:

In 2003 -- The retirees won 59% of the vote with an Executive Severance Agreement proposal to limit overly generous executive compensation packages and golden parachutes. At the time it was the first proxy loss by Verizon or any other Bell System company in its 100-year history.

In 2003 -- Verizon agreed to implement another retiree proposal prior to its annual shareholders meeting to exclude pension credits from the calculation of executive compensation, which had gained 43% of shareholder votes the previous year.

In 2004 -- The retirees were forced to come back at the company on the Executive Severance Agreement proposal after Verizon failed to follow shareholders' mandate to limit executive compensation packages and golden parachutes. After retirees authored a new, binding proposal mandating the change, Verizon relented, agreeing to seek shareholder approval for any future Executive Severance Agreement more than 2.99 times an executive's base salary and bonus.

In 2005 -- Before the company's proxy ballot went out to shareowners, Verizon agreed to a retiree proxy's demand to reign-in Supplemental Executive Retirement Plan (SERP) income for senior executives. Before this change, executives received SERP contributions equal to 32% of their combined base salary plus bonus for every dollar above $210,000 during their first 20 years in the plan. In 2004 the payout amounted to $161 million and more than $400 million over three years, according to Verizon estimates. The agreement negotiated by retiree leaders reduced these excessive amounts including the 32 percent level down to a range of 4% to 7%.

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