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Dow Jones Newswires, January 9, 2007 article


The Wall Street Journal  

January 9, 2007 1:54 p.m. EST


Verizon To Let Hldrs Vote On Pay Advisor Disclosure >VZ

January 9, 2007 1:54 p.m.

   By Kaja Whitehouse 

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;

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