Shareholder Proposals (Item 7 on Proxy Card)
Kenneth Steiner, 14 Stoner Avenue, Apt. 2M, Great Neck, New York 11021, owner of 2,790 shares of the Company’s common stock, proposes the following:
7 – Special Shareowner Meetings
RESOLVED, Shareowners ask our board to take the steps necessary unilaterally (to the fullest extent permitted by law) to amend our bylaws and each appropriate governing document to give holders of 15% of our outstanding common stock (or the lowest percentage permitted by law above 15%) the power to call a special shareowner meeting.
This includes that such bylaw and/or charter text will not have any exclusionary or prohibitive language in regard to calling a special meeting that apply only to shareowners but not to management and/or the board (to the fullest extent permitted by law).
Special meetings allow shareowners to vote on important matters, such as electing new directors that can arise between annual meetings. Shareowner input on the timing of shareowner meetings is especially important when events unfold quickly and issues may become moot by the next annual meeting. This proposal does not impact our board’s current power to call a special meeting.
This proposal topic won more than 60% support at CVS, Sprint and Safeway.
The merit of this Special Shareowner Meeting proposal should also be considered in the context of the opportunity for additional improvement in our company’s 2011 reported corporate governance in order to more fully realize our company’s potential:
The Corporate Library, an independent investment research firm, rated our company “High Concern” in executive pay — $37 million for Ivan Seidenberg.
Performance Share Units for our executives covered a three-year period, which was not sufficiently long-term, and were payable in cash, which did nothing to tie executive performance with long-term shareholder value. Even worse, more than half of the target PSU’s were paid for underperforming more than half of our company’s peer group in terms of relative Total Shareholder Return. Underperforming our industry peers should not result in monetary awards of any kind to our executives.
Our CEO was also entitled to a potential $30 million payment in the event of a change in control. Combined with executive perks for our CEO such as the personal use of company aircraft and contribution to a non-qualified deferral plan, these examples suggested that executive pay practices were not aligned with shareholder interests.
Please encourage our board to respond positively to this proposal to initiate improved corporate governance and financial performance: Special Shareowner Meetings – Yes on 7.
BOARD OF DIRECTORS’ POSITION
Verizon’s Board of Directors believes that this proposal is unnecessary because Verizon’s shareholders already have a meaningful right to call a special meeting. Under Verizon’s bylaws, any shareholder who owns at least 10%, or multiple shareholders who together own at least 25%, of Verizon’s stock may call a special meeting of shareholders. There are only limited circumstances under which a special meeting requested in accordance with the Bylaws would not occur, each of which is designed to prevent costly meetings that are unnecessary because they cannot result in legal action or because shareholders have recently had or will soon have an opportunity to address issues. These circumstances are:
the stated business of the special meeting is not a proper subject for shareholder action under Delaware law;
the stated business either will be taken up at a shareholder meeting called by the Board to be held within 90 days or was already taken up at a shareholder meeting held within the past 90 days; or
the request is made during the period beginning when shareholders may propose business for the Company’s annual meeting and ending at the annual meeting (in this case shareholders already have an opportunity to propose business for the annual meeting without forcing the Company to incur the expense of a special meeting).
A special meeting of shareholders is an extraordinary event that is both expensive and time-consuming. The Board has carefully considered this issue in each of the past four years and firmly believes that the ownership thresholds and the common sense safeguards contained in Verizon’s current bylaw provision strike an appropriate balance between the right of shareholders to call a special meeting and the interests of Verizon and its shareholders in promoting the appropriate use of company resources.
The Board of Directors recommends that you vote AGAINST this proposal.