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May 4, 2007

Verizon Shareholders
May Get 'Say on Pay'

Shareholder support for a proposal asking to give Verizon Communications Inc. investors an advisory vote on executive pay was too close to call, raising the prospect that Verizon might be the first company where the say-on-pay effort has been passed.

The result of the vote at Verizon's annual shareholder meeting will be determined after further tabulation, which may take about a week, the New York telecommunications company said. A preliminary tally showed a tie of 49% "for" and 49% "against" the proposal, said the Association of BellTel Retirees, a Verizon retirees group.

The proposal, put forward by C. William Jones, president of the retirees group, asked that investors be given a nonbinding vote on executive pay. This type of proposal -- which has become a pet issue for activist shareholders and some legislators -- has fallen short of receiving a majority of support at other companies, including Bank of New York Co. and Morgan Stanley.

Dozens of firms have been targeted with these proposals this year, up from just a handful when the idea was tested in 2006. Highlighting this issue, the House passed a bill to formalize this tactic at public companies. In February, supplemental-insurance firm Aflac Inc. became the first to announce adoption of this change, saying it will give investors a nonbinding vote starting in 2009.

Verizon's compensation practices were a target at the annual meeting, with several proposals asking the company to make changes to its pay practices and a campaign to withhold votes for directors because of what some shareholders said was a disconnect between chief executive pay and performance.