Verizon Retirees: Don’t Prioritize Executive Compensation Over Shareowner Interests
Two Retiree Shareholder Proposals Aim to Reform Pay Practices
COLD SPRING HARBOR, N.Y. — Retiree shareholders at Verizon (NYSE:VZ) will present two proposals at this year’s annual meeting in an effort to rein in runaway executive compensation. The 2020 annual meeting is scheduled for May 7 in San Diego.
One proposal would require shareholder approval of any Verizon “Golden Parachute” plan (Item #8) that pays out severance or termination payouts that are equal to or greater than 300% of an executive officer’s base salary plus target short-term bonus.
For example, Verizon discloses in the proxy statement that if CEO Hans Vestberg is terminated without cause, he could receive an estimated $39 million in termination payments, nearly seven times his 2019 base salary plus short-term bonus.
“No one objects to a reasonable severance payout in the right circumstances,” said Jack Cohen, Chairman of the non-profit Association of BellTel Retirees (www.BelllTelRetirees.org). “But some of these golden parachutes are so huge they make no economic sense. That’s why we propose a shareholder vote on golden parachutes above a certain size.
“Shareholders, who invested our trust and, perhaps, life savings in Verizon, do not comprehend why it makes good business sense to throw excessive compensation at executives who might already be walking out the door.”
Last year, this proposal received 37% support from shareholders.
Every year for nearly two decades, the company’s own retirees have sought corporate governance and executive compensation reforms, winning majority support for three proposals and achieving partial reforms on numerous other issues, including the initial adoption of a Golden Parachute approval policy.
A second executive compensation reform proposed by BellTel Retirees seeks to limit guarantees of “Above-Market Returns on Nonqualified Executive Savings Plans” (Item #4). The proposal targets an investment option offered only to senior executives that allows them to reap “above-market earnings” on portions of their nonqualified retirement savings.
“Gross disparities between the retirement benefits offered to senior executives and the benefits for most other employees can risk employee morale and damage long-term stock value,” Mr. Cohen asked. “What’s good for a few executives, personally, may not be in the corporation’s best interest or the interest of shareholders.”
###