BellTel Retirees Praise Verizon on Changes to Its Performance Stock Compensation for Top Executives

BellTel Retirees Withdraw Their Proxy Resolution


COLD SPRING HARBOR, NY--(Marketwire - Mar 19, 2013) - In its Proxy statement, Verizon Communications (NYSE: VZ) disclosed that it has substantially reduced the payouts of performance-based stock that its senior executives can earn for below-average stock returns. The Association of BellTel Retirees Inc. ( agreed to withdraw their shareholder resolution urging an even higher performance bar after Verizon's Board of Directors agreed to change the company's Performance Stock Unit payout thresholds consistent with the retirees' proposal.

The shareholder resolution submitted by the Association proposed that multi-million dollar awards of Performance Shares (PSUs) should not vest or pay out unless Verizon's total shareholder return is at least equal to or above the median for the Dow peer index selected by the Board. The proposal received the support of more than 30 percent of the shares voted at each of the past three Verizon Annual Meetings.

This year, after the Association's proposal had qualified for the 2013 Proxy, the Verizon Board agreed to change its PSU policy to move toward the retirees' proposal.

"Although Verizon's new hurdles for paying out huge performance stock awards to top executives does not align executive pay and performance to the degree we proposed, the Board's changes are a big step in the right direction and so the Association agreed to withdraw our more demanding proposal," stated C. William Jones, president of the Association of BellTel Retirees Inc.

"We argued for years that large Performance Stock payouts for negative stock price performance, or for total shareholder returns as low as the bottom 26th percentile among the Dow Peer group, did not adequately align pay with performance," Mr. Jones added. "We are pleased that the Board finally agreed that a higher performance bar promotes shareholder interests."

Each year Verizon's senior executives receive Long-Term Incentive Plan awards with a potential payout between 10 and 13 times base salary. These grants are divided between PSUs (60%) and Restricted Stock Units (40%).

The problem is that prior to Verizon's policy change, PSUs paid out at 50% of Target for relative shareholder return (TSR) as low as the bottom 26th percentile -- that is, if Verizon performs as low as 25th among its 34 Related Dow Peers.

Last year ISS Proxy Advisory Services recommended a vote in favor of the Association of BellTel Retirees' proposal, stating that Verizon's long-term equity plan "provides for a 50 percent payout for performance just above the 25th percentile of the company's peer group... Further, payouts may be generated even though the company's three-year TSR is negative but performs above the 25th percentile of the peer group."

For example, CEO Lowell McAdam's PSU Target Award for the 2011-2013 grant cycle is $8.75 million. At the end of this year he will receive 50% of Target ($4.375 million) even if Verizon's TSR is outperformed by 74% of the Related Dow Peers -- nearly bottom quartile performance. At the high end, McAdam can receive 200% of Target ($17.5 million) if Verizon ranks among the top four (above the 90th percentile).

Verizon's reformed PSU payout schedule, disclosed in their Proxy Statement, reduces the payout at the low end to 32% of Target, which for CEO McAdams represents a $1.4 million reduction compared to the previous policy. In addition, Verizon's new policy adopts the Association's proposal in last year's Proxy that it scale the PSU award in proportion to relative performance compared to the Dow Peers index.

Verizon's Board made an additional change not included in the retirees' proposal. For the 2012-2014 PSU cycle it adds a free cash-flow metric as an additional measuring stick that the Board stated would focus the executives more on the company's overall business strategy (and not only on total shareholder return).

Jones noted that Verizon has changed its executive compensation and governance policies a half-dozen times in reaction to substantial votes in favor of Association of BellTel Retirees shareholder proposals over the past decade. These included a majority vote in favor of an annual "say on pay" advisory vote for shareholders (first implemented by Verizon, but now required by statute) and a majority vote in favor of shareholder approval of excessive 'golden parachute' severance agreements, a policy that Mr. Jones has proposed strengthening in a proposal pending a vote at the 2013 Annual Meeting.

"The BellTel Retirees have demonstrated over and over again that a group of small but very engaged shareholders can reshape the compensation and governance policies of a corporate giant in a manner that benefits all company owners," Mr. Jones added.


Tom Butler
Email Contact
Stu Miller
Email Contact

Butler Associates, LLC.
204 East 23
rd Street
New York, NY 10010


View Comments (1)

Recommended for You

  • Tycoon buys 30 Rolls-Royces for Macau hotel

    A Hong Kong tycoon has placed the biggest ever order for Rolls-Royce cars, agreeing to buy 30 Phantoms to chauffeur guests at a luxury resort he's building in the global gambling capital of Macau. Stephen Hung's $20 million purchase surpasses the 14 Phantoms bought by Hong Kong's Peninsula Hotel in…

    Associated Press
  • 1 Tip To Lose Belly Fat

    It's Hollywood's Hottest Diet And Gets Rid Of Stubborn Fat Areas Like Nothing Else.

  • Tycoon's arrest sends shock wave through Russia

    Tycoon's arrest sends shock wave through Russia MOSCOW (AP) — The arrest of a Russian telecoms and oil tycoon has sent shock waves through the country's business community, with some fearing a return to the dark days of a decade ago, when the Kremlin asserted its power by imprisoning the country's…

    Associated Press
  • Before You Buy Alibaba, Check Out 4 Top China Stocks

    Before You Buy Alibaba, Check Out 4 Top China Stocks While investors gear up for Alibaba Group 's (BABA) hotly anticipated initial public offering, don't forget about other Chinese stocks that are worth keeping an eye on. Today's Young Guns Screen of

    Investor's Business Daily
  • Play

    Citi, Bank of America Offer Discounted Mortgages

    Citigroup and Bank of America will offer mortgages at discounted interest rates to help borrowers with low incomes or subprime credit. AnnaMaria Andriotis joins MoneyBeat. Photo: Getty.

    WSJ Live
  • As Fed takes baby steps, Cramer's trick for profit

    In turn, Cramer says making money in the market, involves looking at the environment through the lens of the Fed. "The trick is to remember that they speak for the common person," Cramer said. "The Fed wants the common person to make money." With that backdrop always in mind, Cramer says it becomes…

  • Costco Stores in Canada to Stop Taking American Express

    “The credit card relationship between American Express and Costco Wholesale Canada will not be renewed when it expires” on Dec. 31, the company said today in an e-mail to Canadian customers. The message was attributed to Lorelle Gilpin, vice president of marketing and membership for Costco…

  • "The Retiree Next Door": How successful retirees stretch their savings

    "The Retiree Next Door": How successful retirees stretch their savingsBy the time she hit her late 40s, Toni Eugenia wasn’t sure she would ever be able to retire. Eugenia, 56, a pharmacy technician who lived in Houston, was nearly $200,000 in debt and

    Yahoo Finance
  • Master's Degree in Nursing

    CCNE accredited MS in nursing in as few as 18 months online. Learn more today!

    AdChoicesNorwich UniversitySponsored
  • CNBC Anchor Calls Out Fed-Hater Bill Fleckenstein In Startling Shouting Match

    CNBC Bill Fleckenstein of Fleckenstein Capital appeared on CNBC's Futures Now program on Tuesday. Futures Now host Jackie DeAngelis came out swinging, asking Fleckenstein right at the top if he was willing to admit that he had misunderstood monetary policy. Sounding taken aback, Fleckenstein…

    Business Insider
  • Beanie Babies creator's sentence debated in court

    Beanie Babies creator's sentence debated in court CHICAGO (AP) — Federal prosecutors seeking to put the billionaire creator of Beanie Babies in prison for hiding millions in Swiss bank accounts told appellate court judges Wednesday that the toymaker's sentence of probation threatens to erode the…

    Associated Press
  • Apple to unveil new iPads, operating system on Oct. 21 : report

    The company plans to unveil the sixth generation of its iPad and the third edition of the iPad mini, as well as its operating system OS X Yosemite, which has undergone a complete visual overhaul, the Internet news website said. Trudy Muller, a spokeswoman for Apple, declined to comment. The iPad is…

  • Gilead Stock Is Falling On These Drug Setbacks

    Gilead Stock Is Falling On These Drug Setbacks Gilead Sciences (GILD) shares are backsliding Wednesday on news that the patient drop-out rate for hepatitis C drug Sovaldi is quadruple that of clinical trials. In addition, the biotech's Phase 2 study results

    Investor's Business Daily
  • Here's What Mark Cuban Wishes He Knew About Money In His 20s

    Cuban is the owner of the Dallas Mavericks basketball team. Billionaire investor and entrepreneur Mark Cuban is generous with his advice. When we asked him what he wishes he'd known about money in his 20s, he said:

    Business Insider
  • Margaritaville casino owners seek bankruptcy

    The owner of Biloxi's Margaritaville casino has filed for Chapter 11 bankruptcy protection Tuesday, only hours before a hearing where the landlord aimed to seize the property. The filing by MVB Holding LLC in U.S. Don Dornan, a lawyer for landlord Clay Point LLC, said the company had planned to ask…

    Associated Press
  • Norwich Information Security MS

    Online, accredited, top ranked. NSA Center of Academic Excellence. Recognized by the Department of Homeland Security. Download your free brochure!

    AdChoicesNorwich UniversitySponsored
  • Embraer to sell 50 E-175 jets to Republic in $2.1 billion deal

    Brazil's Embraer SA, the world's third largest commercial planemaker, said on Wednesday it booked a firm order from U.S. The deal, which will be included in Embraer's order book for the third quarter, is valued at $2.1 billion, the planemaker said in a securities filing. The planes will be operated…

  • Play

    What the Fed Meeting Means for Bonds

    Janet Yellen & Co. are expected to hint at their timetable for raising interest rates. Here's how investors should prepare ahead of the meeting.

    WSJ Live
  • Don't care about Alibaba? Here's why it may matter

    When the Alibaba Group Holding prices its initial public offering Thursday, small businesses in particular will be watching. Founder Jack Ma -the former English-teacher-turned-dot-com billionaire-has touted his e-commerce platform as a way for smaller merchants to expand their international…

  • SHOE COMPANY: Our CEO Just Disappeared And Most Of The Money Is Gone

    "and like that: he's gone." This is an actual headline from a company press release: "CEO and COO disappeared, most of the company's cash missing." (Via FastFT) In a statement, German-based shoe company Ultrasonic said its CFO,  Chi Kwong Clifford Chan, has been unable to reach the company's CEO,…

    Business Insider
  • Don't buy Alibaba stock: 'Dean of Valuation'

    Investors should steer clear of Alibaba , valuation expert Aswath Damodaran said Wednesday. On CNBC's " Fast Money ," Damodaran, a professor of finance at New York University's Stern School of Business, noted that he was looking at Alibaba stock from the perspective of a long-term investor, not a…

  • Billionaire Investor Says Chinese People Work Harder And Western Companies Could Face Deep Trouble After Alibaba IPO

    Michael Moritz, the chairman of VC firm Sequoia Capital, is a huge fan of Chinese internet companies and reiterated his enthusiasm for the Chinese market in an interview with The Wall Street Journal Wednesday. The billionaire investor described the Alibaba IPO as a “major landmark event” that is as…

    Business Insider
  • Wondering How You Could Save on Home Insurance?

    Get a quote from Farmers Insurance and discover how you could save. Speak with an agent to get the knowledge you need to make an informed decision.

    AdChoicesFarmers InsuranceSponsored
  • Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More

    Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More Stocks were firm on Wednesday morning ahead of the FOMC meeting outcome. Tuesday’s rally may have sparked higher interest again, and investors are looking for bargains

    24/7 Wall St.