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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


Wall Street Journal, May 19, 2007 article


The Wall Street Journal  

May 19, 2007


Verizon Holders Pass 'Say-on-Pay' Plan

May 19, 2007; Page A3

Verizon Communications Inc.'s shareholders narrowly approved a nonbinding proposal to give shareholders an advisory vote on executive compensation, one of the first such "say-on-pay" measures to win a majority at a U.S. company.

The final tally, which came two weeks after the vote at the company's annual shareholder meeting, showed 50.18% of the votes cast favored the proposal. Verizon is under no obligation to implement the resolution, but spokesman Peter Thonis said the company's board will review the result and consider what actions to take.

[I S]

The New York-based telecommunications provider is the second company -- and the biggest -- to announce that its shareholders cleared a "say-on-pay" proposal at annual meetings this year. Blockbuster Inc.'s shareholders approved a similar measure earlier this month. Similar proposals came close to winning a majority of votes at several other concerns, including Merck & Co., where a measure won 49.2% of the vote, and AT&T Inc., where one garnered 43.8%, based on preliminary tallies tracked by Institutional Shareholder Services, a proxy-advisory firm in Rockville, Md.

ISS and Glass, Lewis & Co., another proxy-advisory firm, both supported passage of the Verizon measure.

A collection of activist shareholders, state and union pension funds and mainstream investment firms have sponsored these proposals. In Verizon's case, the Association of BellTel Retirees, made up of former employees, proposed the initiative. "Of course, I'm thrilled," said Bill Jones, the BellTel group's president. "I think the move is good for Verizon. I certainly don't think it hurts."

The AFL-CIO threw its weight behind the BellTel proposal and lobbied shareholders to support it, arguing that Chief Executive Ivan Seidenberg's compensation from 2002 to 2006 was excessive, given the company's performance. Last year, Mr. Seidenberg received $21.3 million in total compensation.

Mr. Seidenberg is guiding the company though a $23 billion program to upgrade its old copper phone lines with faster fiber-optic ones to deliver television service. That program has hurt Verizon's stock in past years. But recently, it has rebounded as it begins to reap the dividends from those investments, signing up ultra-high-speed Internet and television customers. Verizon shares are up 14% this year and rose 45 cents Friday to $42.59 apiece in 4 p.m. New York Stock Exchange composite trading.

Some investors say they will press Verizon to move forward with the proposal. "We're going to hold the compensation committee directly accountable if they don't implement an advisory vote by next year," said Richard Ferlauto, director of pension investment policy for the American Federation of State, County and Municipal Employees. Members of AFSCME own roughly 4% of the company through various pension funds, Mr. Ferlauto said.

It isn't clear how the resolution would be implemented. Dan Pedrotty, director of the AFL-CIO's office of investment, said he advocates an up-or-down vote on the compensation guidelines the company is using to calculate executive pay, which would allow voters to vote down a "pay-for-failure" system that rewards lackluster performance.

Two other related Verizon shareholder proposals failed by small margins, comprising one to let shareholders approve severance packages and another to require the company to disclose who its compensation consultants are. Both proposals got about 47% of the votes.

--Joann S. Lublin contributed to this article.

Write to Roger Cheng at roger.cheng@dowjones.com2 and Amol Sharma at amol.sharma@wsj.com3

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