COLD SPRING HARBOR, N.Y., March 20, 2018 (GLOBE NEWSWIRE) -- 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.
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