Verizon Holders Pass
'Say-on-Pay' Plan
By ROGER CHENG and AMOL SHARMA
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]](http://online.wsj.com/public/resources/images/HC-GG887_Seiden_20051027183226.gif)
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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