Advisory Vote Related to Executive Compensation
(Item 3 on Proxy Card)
The Board of Directors of Verizon is committed to excellence in governance and recognizes the interest its shareholders have expressed in Verizon’s compensation program. As part of that commitment, the Board is providing Verizon’s shareholders with an annual opportunity to provide an advisory vote related to executive compensation.
The Human Resources Committee of the Board has overseen the development of a compensation program that is described more fully in the “Compensation Discussion and Analysis” section of this proxy statement and in the tables and narrative in the “Executive Compensation” section. The program promotes a performance-based culture and aligns the interests of shareholders and executives by linking a substantial portion of compensation to the Company’s performance. It balances short-term and longer-term compensation opportunities to ensure that the Company meets short-term objectives while continuing to produce value for its shareholders over the long term. The program is also designed to attract and to retain highly-talented executives who are critical to the successful implementation of Verizon’s strategic business plan.
- Incentive-based pay represents approximately 90% of an executive’s total compensation opportunity, with approximately 70% tied to Verizon achieving outstanding relative shareholder return over the long term and the remaining approximately 20% tied to achievement of challenging annual performance metrics.
- Base salary represents only approximately 10% of an executive’s total compensation opportunity.
- The Committee continually reviews best practices in governance and executive compensation and has revised Verizon’s practices to:
- Eliminate an employment agreement for the CEO;
- Eliminate guaranteed pension and supplemental retirement benefits;
- Eliminate executive perquisite allowances;
- Adopt a policy requiring shareholder approval of certain executive severance agreements;
- Adopt a policy prohibiting the Committee’s independent compensation consultant from doing any work for the Company;
- Require executive officers to maintain certain stock ownership levels; and
- Adopt a policy that allows the Company to recapture incentive payments paid to an executive who engages in financial misconduct.
For the reasons discussed above, the Board recommends that shareholders vote in favor of the following resolution:
“Resolved, that the shareholders approve the overall executive pay-for-performance compensation policies and procedures employed by the Company, as described in the Compensation Discussion and Analysis and the tabular disclosure regarding named executive officer compensation, together with the accompanying narrative disclosure, in the proxy statement.”
While the resolution is non-binding, the Board values the opinions that shareholders express in their votes and in any additional dialogue. It will consider the outcome of the vote and those opinions when making future compensation decisions.
The Board of Directors recommends that you vote FOR this proposal.