Verizon Retiree-Shareholders Seek to Curb Above Market Executive Pay, Punish Misconduct
March 20 2018 - 9:43AM
Activist retirees at Verizon (NYSE:VZ) are seeking to hold
corporate leaders more accountable with two proxy proposals on this
year’s ballot: one to claw back earnings from executives whose
conduct harms shareholders and another prohibiting above-market
earnings for senior executives on certain retirement and deferred
income accounts.
Proposals by the 134,000-member Association of BellTel Retirees,
(www.BellTelRetirees.Org) have forced the telecom giant to improve
its corporate policies 11 times since 1998, three by majority
shareholder vote and eight negotiated off the ballot. The 2018
Verizon Shareholders meeting is on May 3 in Seattle.
The Clawback Proposal (Item 8), introduced by
BellTel chairman Jack Cohen, focuses on conduct by
an executive harmful to the company, including failure to prevent
corporate reputational damage. It seeks to hold company leaders
accountable by clawing back compensation if they violate laws,
regulations or company policy that result in financial penalties
ultimately paid by shareholders.
Verizon ties a vast majority of senior executive compensation to
financial performance, making it necessary to disincentivize
harmful actions that favor short-term gain at the expense of
reputation or long-term interests.
The second proposal (Item 9) by the Association of
BellTel Retirees, addresses serious concerns about the
Verizon board paying above-market earnings on the
multi-million-dollar balances in non-qualified senior executive
retirement accounts (SERPs). Above-market earnings are not
performance-based and fail to align management incentives with
long-term shareholder interests.
Further, existing gross disparities between retirement benefits
for senior executives and other employees risk corporate morale
problems.
“We can’t allow special deals and sweetheart packages for
executives that run counter to the interests of the corporation as
a whole,” said Mr. Cohen, who spent his 26-year
career with the company and its predecessors. “We need to
ensure that decisions made at Verizon are in the best interest of
the company, including all shareholders, retirees, and
employees.”
Last year, Institutional Investor Services (ISS) flagged the
company’s practice of granting above-market earnings, saying “this
non-performance-based benefit creates additional costs to
shareholders.”
ISS also noted that the payment of “above market or preferential
earnings to executives … increases the ultimate expense of the plan
to shareholders and is not considered a best practice.”
In 2016, according to Equilar, Verizon paid CEO Lowell McAdam
$17.4 million. Beyond his regular compensation, it granted him
$100,855 in “above market earnings” on his non-qualified plan
assets, which totaled just under $12 million at year-end.
These above-market earnings came on top of $424,000 in company
matching contributions to his Deferral Plan account and $21,200 to
his Management Savings Plan account.
Verizon matches 100% of the first 6% of base salary and of
short-term incentive compensation that a participant
contributes.
Media Contact: Butler Associates Tel:
212-685-4600Tom Butler - TButler@Butlerassociates.com Jason Fink –
JFink@ButlerAssociates.comVictoria Carman –
vcarman@butlerassociates.comPatrick Rheaume –
prheaume@butlerassociates.com
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