Although the vote announced at Verizon's annual meeting in Louisville
was merely advisory, a "no" vote on the compensation for CEO Ivan
Seidenberg and other executives would have been embarrassing for the
New York-based communications company.
Even a leading critic of the compensation said afterward that the
90 percent vote in favor of the package shows that most shareholders
are pleased with
Verizon Communications Inc., which
has posted consistent profits.
"They can always do better," said Bill Jones, president of the
Association of BellTel Retirees, which tried to marshal opposition to
the pay package. "And this is one of the areas where we can continue
to work with them."
During a question-and-answer session with shareholders, Seidenberg
said he was pleased that most shareholders decided that the
compensation package is "competitively priced."
Seidenberg said Verizon has outperformed the broader market in
recent years, posting solid earnings growth in a tumultuous economy.
He also expressed a goal of increasing the company's dividend.
"Our company has done very well," he said.
Seidenberg's compensation was valued at $20.2 million in 2008,
essentially the same as in the previous two years, according to
calculations by The Associated Press, which factor in salary, bonus,
incentives, perks, above-market returns on deferred compensation and
the estimated value of stock options and awards granted during the
At face value, he is the best-paid CEO in the U.S.
telecommunications industry, though much of his compensation is in
stock that has fallen in value since it was granted.
Although Verizon said about 90 percent of the executive
compensation is tied to performance, Jones complained those targets
are set too low.
AFL-CIO official Rand Wilson said at the annual meeting that
Seidenberg's compensation was excessive at a time many people find
themselves in a "dire circumstance."
"We think it's obscene that somebody makes 300 times more than the
average worker," Wilson said at a gathering of about two dozen union
activists before the annual meeting.
Several shareholders praised Seidenberg's stewardship of Verizon
during the question-and-answer session.
A rejection of the pay packages by shareholders had been considered
a long shot, given that Seidenberg's compensation is hardly unusual,
and the company has been posting consistent profits.
But his pay had been targeted by the Association of BellTel
Retirees, making this case an example of what happens when a company
faces well-organized and motivated shareholders. Already, Verizon
has eliminated some of the pay practices its shareholders deemed
Jones said he was disappointed by the lopsided vote announced
Thursday, but said the proposal will lead to improvements in the
company. He said the company "worked hard trying to get a positive
vote, and they did."
Verizon is one of 15 companies adopting their own provisions for
letting shareholders vote on pay this year. Some financial companies
that have received money from the Troubled Assets Relief Program, or
TARP, also will be required to conduct similar votes. There has also
been movement in Congress to force all companies to hold such votes,
something President Barack Obama supported when he was a senator.
Verizon introduced the "say on pay" provision after the BellTel
Retirees group got a slim majority in 2007 for its nonbinding
proposal for such a provision.
Wilson said the "say on pay" vote will come up again at Verizon's
future annual meetings.
Separately, a proposal advocated by Jones to separate the roles
of chairman and chief executive was soundly defeated. Seidenberg now
holds both titles.
Meanwhile, preliminary tallies show approval for a shareholder
proposal that would lower the threshold for calling a special
meeting of shareholders. Current bylaws state that holders of 25
percent of shares may call such a meeting; the measure apparently
approved lowers that to 10 percent.
Shares in Verizon lost 98 cents, or 3.2 percent, to $29.78 in
afternoon trading Thursday.