Verizon To Let Hldrs Vote
On Pay Advisor Disclosure >VZ
DOW JONES NEWSWIRES
January 9, 2007 1:54 p.m.
By Kaja Whitehouse
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Verizon Communications (VZ) said
it plans to let investors vote on whether the company should disclose
any outside ties it may have with firms that have advised the board on
how to pay its top executives.
The communications company was spotlighted for
potential conflicts on executive pay last year when the New York Times
reported that the board's compensation consultant, Hewitt Associates
Inc. (HEW), was also assisting the company with numerous other projects.
More than 25 companies have been pressured by
institutional shareholders in recent months to come clean about
relationships with their compensation consultants. Shareholders pushing
the effort worry that consultants may be reluctant to provide objective
advice on executive pay if they rely on management's approval to win
other consulting jobs, such as crafting benefits for rank-and-file
workers.
A Verizon spokesman declined to confirm the company's
reported relationship with Hewitt Associates, but said its board changed
compensation consultants last fall. The new advisor, Pearl Meyer &
Partners, provides no other consulting services for Verizon and "there
are no plans to use this consultant for any other purpose," said
spokesman Bob Varettoni.
Hewitt officials declined to comment, saying they do
not talk about their clients, spokeswoman Suzanne Zagata-Meraz said.
Verizon received a proposal from CWA Communications, a
labor union for communications workers, in November requesting
shareholders vote on whether the company should disclose any
relationships it may have had with its compensation consultants over the
past five years. Verizon plans to allow the proposal to go to a vote at
the company's annual shareholders' meeting in May, said Varettoni.
Shareholders will often withdraw proposals at companies
that agree to at least some of their terms. Verizon hasn't yet ruled out
making more information about this available in its coming proxy
statement, but the issue is "still under consideration," said Varettoni.
Other companies that have received such proposals are
Wal-Mart Stores Inc. (WMT), General Electric Co. (GE), Home Depot Inc.
(HD,) WGL Holdings Inc. (WGL) and DTE Energy Co. (DTE).
Also expected to let the proposal go to a vote is
utility company WGL Holdings Inc. (WGL), according to Louis Melizia of
the International Brotherhood of Teamsters, the union that submitted the
proposal. Officials from WGL weren't immediately available to confirm
this, said spokeswoman Jan Davis.
Proposals at General Electric, Home Depot and DTE
Energy have been or will be withdrawn because the companies have agreed
to voluntarily make these disclosures.
Wal-Mart is still in discussions with the AFL-CIO, the
union that submitted the proposal there in December, said Daniel
Pedrotty, the AFL-CIO's director of the office of investments. Wal-Mart
officials declined to comment.
More companies are expected to receive proposals on
this issue. The AFL-CIO, which submitted proposals to GE, Home Depot and
Wal-Mart, plans to submit one to Sarah Lee Corp. (SLE) as early as this
week, said Pedrotty. Also, a group of 13 institutional investors that
sent a joint letter to the 25 largest Standard & Poor's 500 companies
asking for this information - including Wal-Mart, GE and Home Depot -
plan to submit a proposal on this issue to companies that don't
adequately respond to their request for more disclosure.
Under new Securities and Exchange Commission rules put
in place this year, companies will be required to disclose the names of
their compensation consultants, but not the other business relationships
they may have with them. Shareholders behind the effort have likened
such ties to when auditing firms provided consulting work for the
companies they were auditing - a situation that some critics have said
contributed to accounting scandals like those at Enron Corp. and
WorldCom Inc.
-By Kaja Whitehouse, Dow Jones Newswire; 201-938-2243;
kaja.whitehouse@dowjones.com
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