The shareholders named below have advised us that they
intend to have their proposal presented at the Annual
Meeting. Each of the shareholder proposals must receive
the affirmative vote of a majority of eligible shares
present at the Annual Meeting, in person or by proxy,
and voting on the matter to be approved. The Board of
Directors has concluded that it cannot support these
proposals for the reasons given.
Item 3 on Proxy Card:
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600
Virginia Avenue, N.W., Suite 215, Washington, DC 20037,
owner of 424 shares of the Company’s common stock,
proposes the following:
“RESOLVED: That the stockholders
of Verizon, assembled in Annual Meeting in person and
by proxy, hereby request the Board of Directors to take
the necessary steps to provide for cumulative voting
in the election of directors, which means each stockholder
shall be entitled to as many votes as shall equal the
number of shares he or she owns multiplied by the number
of directors to be elected, and he or she may cast all
of such votes for a single candidate, or any two or
more of them as he or she may see fit.
Reasons: Many states have mandatory
cumulative voting, so do National Banks. In addition,
many corporations have adopted cumulative voting. Last
year, the owners of 609,365,978 shares, representing
approximately 35% of shares voting, voted FOR this proposal.
If you AGREE, please mark your proxy
FOR this resolution.”
BOARD OF DIRECTORS’ POSITION
The Company, like most other major corporations, elects
directors by providing that each share of common stock
has one vote. The Board of Directors firmly believes
that the present system of electing directors, in which
directors elected are those receiving a plurality of
the votes cast by the shareholders as a whole, best
assures that the directors will represent the interests
of all shareholders, and not just a particular group.
The great majority of states do not have mandatory cumulative
voting and the Revised Model Business Corporation Act
recommends that state laws not mandate cumulative voting.
According to recent data published by the Investor Responsibility
Research Center, more than 90% of the companies it tracks
do not provide for cumulative voting.
The Board of Directors opposes cumulative voting because
it would permit special interest groups to leverage
their voting power and elect one or more directors representing
that group’s narrow interest. Directors elected
by such a “special interest” constituency
may have difficulty fulfilling their fiduciary duty
of loyalty to the Company and its shareholders due to
inherent conflicts between the Company and its shareholders’
interests, on the one hand, and the director and his
or her constituency, on the other. The Board of Directors
believes that these potential conflicts create factionalism
and undermine the ability of the Board members to work
together effectively for the best interests of all shareholders
and not a selected few.
The Company’s shareholders, at the 2004 annual
meeting, rejected a proposal for cumulative voting by
a substantial margin, and should continue to do so.
At the Company, cumulative voting is not necessary to
provide management accountability. The Board is committed
to continuing its good corporate governance practices
as presented in its Corporate Governance Guidelines,
which include, among others, such safeguards as an annually
elected Board, a majority of independent directors,
a rotating presiding director, independent Board committees
overseeing audit, compensation and corporate governance
matters, confidential voting by shareholders and the
absence of any shareholder rights plan (commonly referred
to as a “poison pill”).
For the foregoing reasons, the Board believes that
cumulative voting is not in the best interests of the
Company and its shareholders.
The Board of Directors recommends a vote AGAINST