Labor Fights Verizon Board
Over CEO's Compensation
By SIOBHAN HUGHES and KAJA WHITEHOUSE
April 6, 2007
Hoping to repeat what it sees as successes at Home
Depot Inc. and Pfizer Inc., the nation's largest labor-union
group has begun a campaign to oust the Verizon Communications
Inc. board members who oversaw what the union says is $110 million in
pay for Chief Executive Ivan Seidenberg over a five-year period in which
company shares have sagged.
"I defy anybody to say this guy's earned the money,"
AFL-CIO Secretary-Treasurer Richard Trumka said at a meeting to outline
a plan to vote against Verizon's compensation committee. He called
Verizon "the poster child for pay for pulse."
![[Ivan Seidenberg]](HC-GG887_Seiden_20070322131235.gif)
The organization, whose 54 labor-union affiliates hold
$400 billion in assets through pension plans, said it plans to meet with
Glass, Lewis & Co. and Institutional Shareholder Services. It has held
talks with the office of the New York State comptroller and two of the
nation's largest public pension funds -- California Public Employees'
Retirement System and California State Teachers' Retirement System --
among others, and plans to meet with mutual funds that hold shares of
Verizon to win their support.
Verizon is already fighting back ahead of its annual
meeting, set for May 3 in Pittsburgh. Saying that total shareholder
return -- which combines dividends and stock-price gains -- was 35% last
year, Verizon spokesman Peter Thonis says the union's "arguments are
unfounded."
Another Verizon spokesman, Robert Varettoni, says, "The
money that Mr. Seidenberg actually received over this five-year period
was less than half the amount that the AFL-CIO cites." He said not all
of the stock and options awards granted during the period have vested.
Mr. Seidenberg earned more than $21.3 million last
year, including stock-based awards valued at $13.1 million, according to
a proxy filing. In 2005, his total pay increased more than 9%, despite a
21.7% decline in one-year total returns, according to a report from ISS.
Glass Lewis gave Verizon a "C" grade on pay for performance last year.
The unions are holding up Home Depot and Pfizer as
examples of shareholders' power. In January, Home Depot ousted its CEO,
Robert Nardelli, after holders withheld votes of more than 30% from some
directors over pay-for-performance concerns. Pfizer's former chairman,
Henry McKinnell, was forced out last year following a similar vote-no
campaign, sparked by anger over Pfizer's poor share price and $83
million in estimated retirement benefits for Mr. McKinnell.
Verizon says that there's a distinction between the
telecommunications titan and Pfizer and Home Depot, whose executives
were criticized partly over big severance packages. "Our CEO works
without a severance agreement," said Mr. Thonis.
Write to Siobhan Hughes at
siobhan.hughes@dowjones.com1 and Kaja Whitehouse at
kaja.whitehouse@dowjones.com2
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