Shareholder Proposals (Item 6 on Proxy Card)
We have been advised that the shareholders submitting the proposals or their representatives intend to present the following proposals at the annual meeting. The Board of Directors has concluded that it cannot support these proposals for the reasons stated.
Item 6 on Proxy Card:
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue, N.W., Suite 215, Washington, D.C. 20037, owner of 424 shares of the Company’s common stock, proposes the following:
RESOLVED: “That the Board of Directors take the necessary steps so that NO future NEW stock options are awarded to senior executive officers, nor that any current stock options are repriced or renewed (unless there was a contract to do so on some).”
REASONS: “Stock option awards have gotten out of hand in recent years, and some analysts MIGHT inflate earnings estimates, because earnings affect stock prices and stock options.”
“There are other ways to “reward” senior executive officers, including giving them actual STOCK instead of options.
“Recent scandals involving CERTAIN financial institutions have pointed out how analysts can manipulate earnings estimates and stock prices.” Last year the owners of 170,491,337 shares, representing approximately 8.5% of shares voting, voted FOR this proposal.
“If you AGREE, please vote YOUR proxy FOR this resolution.”
BOARD OF DIRECTORS’ POSITION
Both the existing Verizon Long-Term Incentive Plan and the proposed amended and restated Plan already address many of the concerns raised by the proposal. They prohibit:
- Granting stock options below fair market value;
- Repricing stock options; and
- “Reloading” stock options in future grants.
Since 2004, the Human Resources Committee of the Board of Directors has not granted any stock options and has no plans to grant stock options in 2009 or in the future. The Board believes that this proposal is too restrictive and that the Committee should have the flexibility to grant stock options if the Committee decides that it is appropriate in the future.
The Board of Directors recommends that you vote AGAINST this proposal.