Proxy Statement
Approval of Verizon Communications Inc. Short-Term Incentive Plan
(Item 5 on Proxy Card)

Introduction

In 2001, Verizon’s shareholders approved the Verizon Communications Inc. Short-Term Incentive Plan, which is referred to as the 2001 STIP. On February 5, 2009, the Human Resources Committee adopted the amended and restated Verizon Communications Inc. Short-Term Incentive Plan. This plan, which is referred to as the 2009 STIP, is described in this section and a copy of the plan is attached as Appendix C to this proxy statement. The Board of Directors directed that the 2009 STIP be submitted to shareholders for approval at the 2009 Annual Meeting. It will become effective on the date the shareholders approve the plan.

The Committee will not make any awards under the 2009 STIP unless it is approved by shareholders. The main features of the 2009 STIP are outlined below, but this summary is qualified by reference to the complete text of the plan in Appendix C.

Purpose

The primary purpose of the 2009 STIP is to facilitate the Company’s ability to achieve its short-term financial and operating goals by offering key employees at the senior management level performance-based annual incentive opportunities. Under the 2009 STIP, awards may be made based on achievement of key performance measures at the corporate, business unit and/or individual levels. By enabling the Company to attract and retain highly qualified employees, the 2009 STIP will be a factor in the Company’s continued success. The 2009 STIP is substantially the same as the 2001 STIP.

Administration and Participation

Approximately 400 key senior management employees of Verizon and certain related companies are currently eligible to participate in the 2009 STIP. The Committee is responsible for administering the 2009 STIP and may delegate its authority, subject to any limitations imposed by law or the regulations of any applicable stock exchange.

Limitation on Awards

Under the 2009 STIP, no awards will be paid for any plan year in which Verizon’s return on equity attributable to Verizon, or ROE, is 8% or less. The 2009 STIP also limits the aggregate amount that may be awarded in any plan year. If Verizon’s ROE exceeds 8% in a plan year, the Committee may establish an award pool equal to 5% of Verizon’s consolidated net income attributable to Verizon, or CNI. In determining the amount of the award pool, the Committee will not consider CNI in excess of $5 billion thereby limiting the maximum award pool to $250 million in any plan year. However, the Committee may reduce the award pool and may authorize awards that total less than the amount of the award pool but cannot authorize awards that exceed 100% of the award pool. Verizon’s ROE and CNI will be determined after adjusting for certain extraordinary gains and losses, impairments and nonrecurring events.

The 2009 STIP also restricts the maximum award a participant may receive. The maximum award is determined by the participant’s annual base salary on the last day of the plan year in accordance with the following table:

Salary Position

Maximum Percentage
of Award Pool

Highest and 2nd Highest Paid

3.50%

 

3rd and 4th Highest Paid

2.50%

 

5th and 6th Highest Paid

1.25%

 

7th through 25th Highest Paid

0.85%

 

Each Other Participant

less than 0.50%

 

The Committee may reduce but not increase the maximum award for any participant.

Payment of Awards

In determining whether and to what extent awards will be paid to participants, and in exercising its negative discretion to reduce the maximum award for any participant, the Committee will consider factors that it deems appropriate, including Verizon’s financial and operating performance for the plan year, the performance of the participant’s business unit and the participant’s achievement in relation to established measures.

All awards will be paid in cash. Participants are permitted to defer payment of all or a portion of their awards, subject to any conditions imposed by the Committee and subject to any restrictions under Section 409A of the Code and the terms of the applicable deferred compensation plan.

The Committee has not made any awards under the 2009 STIP. Because the Committee annually determines whether to grant awards and the amount of the awards to be made to any one individual or group of individuals based on the Company’s performance, it is not possible to determine the amount of awards or the individuals or group of individuals who will receive awards under the 2009 STIP. If the 2009 STIP had been in effect in 2008, the award pool would have totaled $250 million.

Amendment or Termination of the 2009 STIP

Unless it is terminated earlier, the 2009 STIP will remain in effect until the close of business on the date of Verizon’s annual meeting of shareholders in the year 2019, at which time the right to grant awards under the 2009 STIP will terminate. Before that date, the Committee may amend, suspend or terminate the 2009 STIP in whole or in part. Any amendment or revision that would cause the 2009 STIP to fail to comply with any requirement of applicable law, regulation or rule if it were not approved by shareholders will not be effective unless approved by Verizon’s shareholders.

If certain extraordinary gains and losses, impairments and nonrecurring events affect the Company, or if there is a change in applicable laws, regulations or accounting principles, the Committee will adjust the terms and conditions of, and the criteria included in, awards under the plan to prevent an increase or decrease in the benefits or potential benefits intended to be available under the 2009 STIP.

Change in Control

If there is a change in control of the Company, as defined in the 2009 STIP, all unpaid outstanding awards will become immediately nonforfeitable and payable at the normal payment date. The awards for the year in which the change in control occurs and for any earlier year for which 2009 STIP awards have not been paid at the time the change in control occurs will be determined by using no less than the individual’s target award for the year immediately preceding the change in control.

The Board of Directors recommends that you vote FOR approval of the amended and restated Verizon Communications Inc. Short-Term Incentive Plan.