Date of Update 03/31/08
DEAR ASSOCIATION MEMBER:
If you are a Verizon shareowner, we urge you to VOTE FOR your Association’s shareholder resolution on Verizon’s proxy card for the upcoming Annual Meeting on May 1, 2008, in Lincoln, Nebraska.
Please vote your proxy FOR Item 5 and Separate the Roles of Board Chairman and CEO.
The Chairman should be selected from among the independent directors: Proxy Item 5 asks the Board to amend Verizon’s Corporate Governance Guidelines so that in the future the Board will select its Chairman from among the directors who do not also serve as an executive officer of the company.
It should be no surprise that recent studies have shown that companies with non-chairman CEOs produce substantially higher shareholder returns than companies where the CEO fills both roles. The Board should be focused on holding the CEO accountable to the company s owners. But when the CEO is also Chairman of the Board, we believe it is far more likely that lines of accountability are blurred, that compensation is less tightly aligned with shareholder returns, and that the decision to replace a poorly-performing CEO is skirted or delayed.
We believe that an independent Board Chair is particularly appropriate at Verizon. For many years the compensation of Verizon s senior executives has been disconnected from returns to shareholders, in our view.
For the second consecutive year, a study by the Corporate Library singled out Verizon as one of 12 Pay for Failure companies that exhibit the worst combination of excessive CEO pay and negative shareholder returns over the most recent five-year period. ( Pay for Failure II: The Compensation Committees Responsible, May 2007).
The study notes that over the five fiscal years through 2006, CEO Ivan Seidenberg received $68.6 million in compensation, while total shareholder return was negative 5%. And while Seidenberg s compensation rose to $20.3 million in 2007, the stock price today is just barely above March 2003 levels.
The accountability problem at Verizon is further compounded, in our view, because too many of Verizon s directors serve on too many boards in addition to their primary occupation and too many have had financial relationships with Verizon other than their directorship. Eight of Verizon s 12 nominated directors (66%) serve on at least two other corporate boards and three serve on more (Moose, Neubauer and Nicolaisen). By comparison, a survey of board practices at 1,275 large U.S. companies by the Investor Responsibility Research Center in 2005 found that 66% of directors at these companies serve on no more than one other board, while 87% serve on no more than two others.
I will present this proposal in person on May 1 and will deliver an appeal to the officers, board and shareholders that retirees, who built this company, are having financial difficulties while the officers are being showered with exorbitant pay packages.
Bob Rehm will also speak to the issues that retirees face.
I hope you will join me and vote your shares FOR proxy Items 5.
Please DO NOT send your proxy card to the Association. If you vote on-line, proxy material was sent out a few days ago.
If you vote by mail, the proxy material should be coming out shortly. If you don t receive your proxy material by early next week, contact the Verizon Shareowner s number 800-631-2355 or your broker.
C. William Jones
President and Executive Director
Association of BellTel Retirees Inc.