Shareholder Proposals – Item 7 on Proxy Card
The Association of BellTel Retirees Inc., 181 Main
Street, P.O. Box 33, Cold Spring Harbor, New York
11724, owner of 214 shares of the Company’s
common stock, and Robert A. Rehm, 5 Erie Court, Jericho,
New York 11753, owner of 5,137 shares of the Company’s
common stock propose the following:
RESOLVED: The shareholders of Verizon hereby urge
our Board of Directors to adopt a policy such that
the Board will not nominate a candidate for director
who is employed full-time and also serves on the board
of more than two other for-profit corporations. This
policy would not affect the unexpired terms of directors
The job of serving as a corporate director has taken
on added complexity and significance in recent years,
requiring more time and attention. Boards are under
greater pressure from federal regulators and shareholders
A 2005 survey by the National Association of Corporate
Directors reported that outside directors spent an
average of 191 hours on board duties for each company
board on which they serve – equivalent to nearly
five 40-hour work weeks. This is up from 156 hours
The NACD survey suggests that a director who serves
on three boards (or more) – as nearly all Verizon’s
directors do – would need to dedicate at least
three working months each year to board service alone.
We do not believe a director can both work in a demanding
full-time job and serve on more than one or two other
The Council of Institutional Investors, which represents
large pension funds, recommends that “absent
unusual, specified circumstances, directors with full-time
jobs should not serve on more than two other boards.”
The CII also recommends that active CEOs (of which
there are five on Verizon’s Board) serve on
only one other board.
Nine of Verizon’s 14 directors (65%) serve on
at least two other company boards. By comparison,
a 2005 survey of board practices at 1,275 large U.S.
companies by the Investor Responsibility Research
Center found that 66% of directors at these companies
serve on no more than one other board, while 87% serve
on no more than two others.
Verizon’s Governance Guidelines state that directors
must “be willing and able to devote sufficient
time to fulfill his or her responsibilities,”
but without specifying any limit on board directorships
or other outside commitments.
We believe that at least three current directors exceed
the standard we propose:
Joseph Neubauer is Chairman & CEO of ARAMARK and
serves on the boards of Verizon, Wachovia and Federated
Sandra Moose is President of Strategic Advisory Services
and serves on the boards of Verizon, Rohm and Haas,
AES Corporation, and the Loomis Sayles Funds.
James Barker is Chairman or Vice Chairman of four
companies and serves on the boards of Verizon and
This problem is compounded by a lack of independence,
in our view. The Corporate Library considers half
the Board non-independent because the CEO and six
“outside related” directors have or recently
have had a financial relationship with the company
other than their directorship.
We believe shareholders should be confident that their
directors will be able to devote sufficient time and
attention to the business of Verizon.
Please vote FOR this reasonable policy.
BOARD OF DIRECTORS’ POSITION
Verizon’s Corporate Governance Guidelines provide
that a Director who serves as an executive officer
of a public company should not serve on more than
three public company boards, including the Board of
the company that employs him or her. The Guidelines
also provide that the other Directors should not serve
on more than six public company boards. The Guidelines
permit Directors to retain their current affiliations
unless the Board determines that continuing them will
impair the Director’s ability to serve on Verizon’s
Board. These limits are generally consistent with,
and in some cases more restrictive than, those of
other public companies.
The Board believes that Verizon and its shareholders
benefit from the diversity of experience, knowledge
and perspective gained by Directors who serve on other
boards. Each of Verizon’s Directors has consistently
devoted significant time and energy and provided valuable
guidance to Verizon. The Board believes that, in view
of the Board’s existing policy on other directorships,
and given the high standards of governance and independence
to which its Directors are held, the goals of this
proposal have already been achieved.
Accordingly, the Board of Directors recommends a vote
AGAINST this proposal.
* This is an interactive electronic version of Verizon’s 2006
Annual Report to Shareholders, and it is intended to be complete and
accurate. The contents of this version are qualified in their entirety
by reference to the printed version. A reproduction of the printed version
is available in PDF format on this website.