SOURCE: Verizon Shareowners

May 18, 2007 17:15 ET

Retiree Shareowners Defeat Verizon in Proxy Again

50.18% Shareowners Want "Say Over Executive Pay"

NEW YORK, NY -- (MARKET WIRE) -- May 18, 2007 -- Shareowners of Verizon Communications (NYSE: VZ) have sided with the company's retirees, with 50.18% supporting a proxy proposal to give company shareowners an Advisory Vote on Executive Compensation (Item #6 on Verizon Proxy), the company announced late today.

For the retirees it is their 4th proxy win in the last 5 years, including negotiated victories in 2004 (Executive Severance Agreements) and 2005 (Supplemental Executive Retirement Plan).

The successful proxy proposal says the Verizon Board of Directors must 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.

Preliminary results at the May 3 shareowners meeting in Pittsburgh were too close to call, requiring a recount. The company has 2.92 billion shares outstanding.

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 have proposed shareowner proxies to force corporate governance changes at their former employer resulting in four wins that changed the company's corporate bylaws.

Over the last decade the 100,000-plus-member retiree group has served up shareowner victories or negotiated corporate bylaw reforms with Verizon in 2003, 2004, 2005 and now 2007. 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 after promised cost of living adjustments were halted.

According to Mr. Jones who is co-founder and President of the retiree association, "BellTel Retirees have either won outright or negotiated important bylaw changes against Verizon in four of the last five years. Every year we have made a significant impact. This is an important victory in the fight by shareowners to seek true corporate reforms."

He added, "We and other long-term shareowners, believe that the owners, not the managers of the company, should have the power to express our approval or disapproval of the Board's compensation package for the CEO and the other senior executives. Next year's Verizon advisory vote on executive pay will provide the company leaders 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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