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Note:  C. William Jones and Cornish F. Hitchcock, respectively the president of the retiree association that presented the shareholder proposal addressed in the article below and the attorney representing the association in relation to the proposal, are members of the Forum's Advisory Panel.

For additional information about the Forum's project relating to proposed U.S. adaptations of advisory voting on executive compensation policies, see

Advisory Voting


New York Times, May 19, 2007 article


The New York Times

Executive Pay: Proxy Season

The New York Times spotlights the one season a year when shareholders can express their opinions on management.

Go to Special Section »

May 19, 2007

Say-on-Pay Gets Support at Verizon 

A proposal to give Verizon Communicationsshareholders a voice in its executive pay practices passed with 50.18 percent of the vote, the company said yesterday — the clearest sign yet of investor irritation over chief executive compensation.

Verizon, which has a market value of $124 billion, is the largest and most widely held company where a so-called say-on-pay proposal has received support from a majority of shareholders. A similar resolution passed at Blockbuster this month. During this proxy season, shareholders at some 20 companies have voted on such proposals, which are nonbinding.

Verizon shareholders had voted on the proposal at the annual meeting on May 3, but the results were too close to call and required a recount, which was disclosed yesterday.

“It was a vote whose time had come at Verizon,” said Brian Foley, an expert on executive pay in White Plains. “People were frustrated with the way management had been paid relative to performance and even though performance in the last year had been better, it was coming off a low.”

Ivan G. Seidenberg, Verizon’s chief executive, received a pay package worth $20 million last year, an 11 percent increase over 2005, according to Equilar Inc., a compensation research firm in San Mateo, Calif.

C. William Jones, president of the Association of Belltel Retirees Inc. and sponsor of the Verizon proposal, said he was thrilled with the results and would wait to see how the company responded. The proposal, which asked that shareholders be given an advisory vote on executive pay at Verizon each year, is not binding.

“If the company does something about it we will be delighted,” Mr. Jones said. “If it doesn’t, we will be back next year with a binding proposal, would be my guess.”

The company said that independent election inspectors tabulated the vote and certified the final results. “The board is committed to continuous review of the company’s compensation practices and will further consider its policies in light of the high level of shareholder interest and the active discussion taking place with respect to the advisory vote issue in a variety of forums, including in the U.S. Congress,” Verizon said in a statement.

The Belltel Retirees, a 100,000-member organization, has forced governance changes at Verizon in the past. It has often focused on the company’s executive pay practices, which it says are not adequately tied to performance.

Mr. Jones said the association’s members lobbied Verizon shareholders hard on the proposal. “We went to the employees of Verizon; we wrote to every shareholder that holds 3,000 or more shares; we contacted all the pension funds that own Verizon shares; and we got some help from the unions,” he said. “It was a big push.”

Shareholder dismay over executive pay has been a common theme at annual meetings this year. At yesterday’s meeting for owners of J. C. Penney, a proposal to limit executive severance payments won majority support.

Advisory votes on executive pay are an annual event at public companies in Britain and Australia but most United States companies that have received such proposals from their owners have lined up against them. An exception was Aflac Inc., an insurance company that changed its policy this year, giving shareholders a say on its pay. beginning in 2009.

Stockholders at several companies have come close to passing such resolutions; at Merck, for example, 49.2 percent voted in support of an advisory vote on pay.

Last month, the House of Representatives passed a bill sponsored by Barney Frank, the Massachusetts Democrat who is chairman of the Financial Services Committee, that would give shareholders the right to an advisory vote on executive pay.

The Verizon vote indicates that the legislation on pay is unnecessary, Mr. Foley said.

Amy Borrus, deputy director of the Council of Institutional Investors, said the results at Verizon showed investors’ growing desire to communicate views on executive compensation directly to corporate directors. “At Verizon this speaks very loudly to the board,” she said, “and the board should adopt the proposal.”


Copyright 2007 The New York Times Company




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