Verizon Retirees Pop Golden 'Chutes

FORT WAYNE, Ind. -- Retirees of Verizon Communications (NYSE: VZ) today defeated the telecommunication giant at the company’s annual meeting in Fort Wayne, Ind, in a shareholder vote putting the brakes on costly executive golden parachutes.By a margin of 59 to 41 percent retiree members of the non-profit Association of BellTel Retirees Inc. (www.belltelretirees.org) were victorious in its efforts to get executives to trim what retirees call overly generous executive compensation packages and golden parachutes. Earlier this year, a second retiree proposal, Excluding Pension Credits from Executive Compensation Packages, that garnered 42.7 percent of shareholder support in 2002, was withdrawn by the retiree proposers after Verizon management agreed to make it a part of their company policy.A third retiree proxy proposal on the ballot called for a majority of the company’s board of directors to be independent and free of board interlocks or business relationships. That measure gained 23 percent of today’s shareholder vote.“For a little grassroots retiree organization to defeat Verizon in the proxy is nothing short of Herculean, but to win two proxies in just one year is absolutely remarkable. This proves that small investors can make a huge difference,” said C. William Jones, Executive Director of the Association, who retired from NYNEX as a Managing Director.Putting the Brakes on Costly Executive Golden Parachutes:This golden parachute proposal now requires shareholder approval for future severance agreements with senior executives, including golden parachute agreements that provide benefits exceeding 2.99 times the sum of the executive’s base salary plus bonus. Last year 30.9 percent of shareholder supported the measure.Such agreements have in the past granted multi-million dollar provisions, in addition to retirement benefits, to executives, primarily when there is a “change of control” situation. Proposer Robert Rehm, a BellTel board member, notes that Verizon’s post-merger severance agreements are unjustifiably costly, which allows executives to resign or be terminated and receive the liquidated value of their multi-year employment agreements if there is a “change of control.” This is defined to include situations where another person or entity acquires as little as 20 percent of the company’s voting stock, even if the person never makes a tender offer or takes control.In the case of Verizon’s CEO Ivan Seidenberg and Chairman Charles Lee, the liquidation of their agreements would come to tens of millions of dollars, awarding them nearly the same compensation whether they stay or leave. For example, if Seidenberg is terminated or “constructively discharged” under this broad “change of control” definition, the 2002 proxy statement indicates that he would receive most of his pay package for a period of three years – a payout well in excess of $50 million.BellTel leaders say compare this to the treatment of company retirees, many with 30 or more years of loyal service. In a break with company tradition, most retirees have not received a pension cost-of-living adjustment in more than a decade, allowing inflation to erode the purchasing power of their fixed pension income.The agreement to Exclude Pension Credits from Executive Compensation Packages reached by Verizon management with retiree proposers, C. William Jones, Joseph A. Ristuccia and his wife Ann, immediately amended the company’s policy that allowed executive compensation to be based partially on pension plan earnings. Retirees argued that if “pension credits” were excluded from performance-based pay formulas, executive bonuses could be lower and more in line with their true value to the corporation. Further, retirees say, executives would be less likely to hoard pension surpluses rather than using them for their intended purpose, such as paying benefits, including much needed and long overdue cost-of-living adjustments to retirees.The Verizon 2003 shareholder meeting was held Wednesday, April 23 at the Grand Wayne Center, 120 W. Jefferson Boulevard in Fort Wayne, Indiana.Starting in 1998, the BellTel Retirees were the first grassroots retiree organization in the nation to launch a proxy resolution campaign tapping into the power of its tens of thousands of shareholder members against their former employer.The Association of BellTel Retirees was formed in 1996 by a handful of NYNEX retirees to advocate for retiree pension and benefit rights. Today the non-for-profit association, based in Cold Spring Harbor, NY, has grown to include more than 90,000 Verizon retirees among its membership. The Association can be contacted at P.O. Box 33, Cold Spring Harbor, New York 11724 or 800-261-9222 or [email protected]Verizon Communications Inc.