Retiree Proxies to Limit Golden Parachutes, Strengthen Clawback Policy at Verizon
COLD SPRING HARBOR, NY, April 5, 2021—Members of the non-profit Association of BellTel Retirees, Inc. will present two proxy proposals this year on behalf of retiree shareholders at the Verizon (NYSE:VZ) virtual annual shareowners meeting, May 13, 2021.
Retirees aim to be an integral check against excessive senior management compensation and governance practices not aligned with shareowner interests.
The group is again targeting Golden Parachutes, with a measure (Item #6) to require shareowner approval of new and renewed senior executive compensation packages that include severance or termination payments more than 2.99 times base salary plus target short-term bonus. A similar proposal earned 43.5% support in 2020.
This measure seeks to bring current payment structures in line with a formula derived from a 2003 BellTel-backed proxy which won the support of 59% of shareowners. That shareowner mandate has since been effectively circumvented because the company does not consider the value of paying out unearned RSU’s (Restricted Stock Units) and PSU’s (Performance Stock Units) if a senior executive terminates after a change in control and in some other circumstances.
BellTel aims to provide shareowner scrutiny over exit packages like the one available to Verizon CEO Hans Vestberg. As disclosed in the 2021 Proxy, Verizon estimates that Vestberg would receive a payout worth $39.4 million, or more than seven times his 2020 base salary plus short-term bonus, upon termination after a change in control.
“During a pandemic, when so many people are out of work, who would oppose a ‘reasonable’ severance in the right circumstances?” asked BellTel Chairman Jack Cohen. “Some of these golden parachutes are so huge they make no economic sense and hurt the shareholders, who ought to have a say when they are above a certain size. Verizon should stop using accounting gymnastics to avoid a shareholder vote on these enormous exit packages.”
The group is also revisiting its proposal to amend Verizon’s Senior Executive Clawback Policy (Item #5). Currently, it permits cancellation or recoupment of cash and equity-based compensation only when executives engage in “willful misconduct” resulting in a material restatement of the corporation’s financial results.
The retirees believe this standard is too vague and propose changing the wording to “conduct,” and not only limited to financial harm. The proposal would further ensure shareholders are given transparent results of any investigation of these incidents.
“The issue of ‘willful misconduct’ ascribes a motive to any such actions, which is very easy to challenge but very difficult to prove,” said Mr. Cohen. “In cases of misconduct, it is the position of the Association that financial consequences should be incurred regardless of intent.”
Founded in 1996, the Association of BellTel Retirees Inc., have long championed Verizon retiree shareholder rights, including 11 proxy measures that have led to changes in corporate governance, three by outpolling the company in the shareowner vote.
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