Form PX14A6G VERIZON COMMUNICATIONS Filed by: ASSOCIATION OF BELLTEL RETIREES

April 11, 2019 5:06 PM

          SECURITIES & EXCHANGE COMMISSION

          WASHINGTON, D.C. 20548

 

          NOTICE OF EXEMPT SOLICITATION (VOLUNTARY SUBMISSION)

 

          Name of Registrant: Verizon Communications Inc.

          Name of Person Relying on Exemption: Association of BellTel Retirees

          Address of Person Relying on Exemption: P.O. Box 33, Cold Spring Harbor, New York 11724

          Written materials are submitted pursuant to Rule 14a-6(g)(1) promulgated under the Securities Exchange Act of 1934:

 

 

 

Senior Staff Manager
Stef Baker
(631) 367-3067

BOARD OF
DIRECTORS

Officers
Jack K. Cohen
Chairman of the Board
(914) 245-3129

Lionel Brandon
Executive Vice President
(607) 656-7971

Donald R. Kaufmann
Chief Financial Officer
(717) 398-2423

Una Kelly
Treasurer
(516) 729-5787

Thomas M. Steed
Assistant Treasurer &
V.P. Labor Relations
(845) 457-9848

Pamela M. Harrison
Secretary
(845) 225-6497

Directors
Robert G. Gaglione
(516) 676-0937

John W. Hyland
(845) 278-9115

Donald R. Kaufmann
(717) 398-2423

John Kolimaga
(215) 694-7708

David J. Simmonds
(732) 636-4847

Board Member
Emeritus
Louis Miano

Board Member
Emeritus
Robert A. Rehm

Board Member
Emeritus
C. William Jones

Board Member
Emeritus
Eileen T. Lawrence

April 2019

 

          THIS LETTER IS INTENDED FOR VERIZON SHAREOWNERS ONLY

 

     If you do not own Verizon stock, please pass this on to anyone you know who does. The Association

     introduced the executive retirement plan proposal (Item 4) and Association Chairman Jack Cohen

     introduced the Executive Severance proposal (Item 8), both described below. If you do not receive your

     Verizon proxy statement by April 8th, contact your broker or call Computershare Trust Company at 1-800-

     631-2355. PLEASE DO NOT RETURN PROXY CARDS to the Association.

 

DEAR FELLOW ASSOCIATION MEMBER:

 

We urge you to vote FOR Item 4 and FOR Item 8 on Verizon’s proxy card for the upcoming Annual

Meeting, scheduled to be held May 2nd in Orlando, Florida.

 

Item 8: Vote FOR the “Severance Approval Policy”

 

While we support performance-based pay, we believe that requiring shareholder approval of “golden

parachute” severance packages with a total cost exceeding 2.99 times an executive’s base salary plus target

bonus is a prudent policy that will better align compensation with shareholder interests.

 

Verizon’s 2019 Proxy discloses (page 66) that if CEO Hans Vestberg is terminated without cause, whether or

not his termination follows a change in control, he will receive an estimated $27.6 million in termination

payments, nearly seven (7) times his 2018 base salary plus short-term bonus.

 

These termination payments are in addition to compensation that is earned prior to termination, including

pension plans, deferred compensation plans, and executive life insurance benefits, which pay out millions

more.

 

A decade ago, following a 59% shareholder vote in favor, Verizon adopted a policy to seek shareholder

approval for severance with a “cash value” in excess of 2.99 times salary plus target short-term bonus. But

the current policy has a huge loophole, in our view: The Company policy excludes the value of the

accelerated vesting of performance shares (PSUs) and of restricted stock (RSUs), including accrued dividends,

from the total cost calculation that would trigger the need for shareholder ratification (2019 Proxy, page 49).

 

If a senior executive terminates after a change in control, “all of that [executive’s] then-unvested PSUs will

fully vest at the target level performance” (2019 Proxy, page 49). Had the executive not terminated, the

PSUs would not vest or pay out until the end of the performance period – as long as 3 years later – and could be

worthless if performance compared badly to the Dow Peer index and free cash flow metrics used by the

Board. And because PSUs and RSUs are by far the largest component of compensation, this loophole

excludes the majority of severance payouts from the 2.99 times salary plus bonus threshold that triggers

the need for shareholder approval.

 

For example, former CEO Lowell McAdam will receive an estimated $27 million in separation payments due

to his retirement at year-end 2018, nearly five times his 2018 base salary plus short-term bonus. These

payments represent the estimated value of performance-based equity grants that cover periods ending Dec. 31,

2020 – as long as two years after his departure (2019 Proxy page 66).

 

Item 4: Vote FOR Limiting “Nonqualified Savings Plan Earnings” for Senior Executives

 

Verizon continues to offer senior executive officers far more generous retirement saving benefits

 

 


 

than rank-and-file managers and other employees receive under the tax-qualified saving plans. We

urge you to support this proposal, submitted by the Association of BellTel Retirees, to prohibit the

practice of paying above-market earnings on the non-tax-qualified retirement saving or deferred

income account balances of senior executive officers.

 

The Verizon Executive Deferral Plan allows executives to contribute or defer compensation

significantly above the applicable IRS limits on 401(k) accounts, including without limit their

base salary and short-term bonus.

 

For example, in 2017 then-CEO Lowell McAdam received $73,949 in “above-market

earnings” on his nonqualified plan assets (2018 Proxy, Summary Compensation Table,

page 46, column h).

 

Institutional Shareholder Services (ISS), the leading proxy advisory firm for institutional

investors, has recommended a vote FOR this proposal each of the past two years. In its 2018

proxy analysis, ISS concluded that paying “above-market earnings on investment options is not

common market practice” and “is not a best practice, as this additional cost has no basis in

executive performance.”

 

For CEO McAdam, these above-market earnings came on top of $325,150 in Company

matching contributions to his Executive Deferral Plan account and $18,850 to his

Management Savings Plan account (2018 Proxy, page 47).

 

The $418,000 in total Company matching contributions and “above-market earnings” received by

McAdam for just one year dwarfed the maximum Company contribution available to managers or

other employees participating only in the tax-qualified Savings Plan. Verizon provides a matching

contribution equal to 100% of the first 6% of base salary and short-term incentive compensation

that a participant contributes (Proxy, page 48).

 

Such massive disparities between retirement benefits offered to upper management and rank-

and-file employees create potential morale problems and reputational risk, which can

adversely affect shareholder value.

 

We also urge you to use your “say on pay” to vote AGAINST Item 3: “Advisory Vote to

Approve Executive Compensation.” A No Vote will send a message that limiting above-market

earnings on senior executive retirement accounts and requiring shareholder approval of golden

parachute severance benefits are reforms needed to better align executive pay with shareholder

interests.

 

Please Vote Your Proxy Card FOR Item 4 and FOR Item 8.

 

Sincerely yours,


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