Shareholder Proposals (Item 7 on Proxy Card)
Kenneth Steiner, 14 Stoner Avenue, 2M, Great Neck, New York 11021, owner of 1,609 shares of the Company’s common stock, proposes the following:
7-Special Shareowner Meetings
RESOLVED, Shareowners ask our board to take the steps necessary to amend our bylaws and each appropriate governing document to give holders of 10% of our outstanding common stock (or the lowest percentage allowed by law above 10%) the power to call special shareowner meetings. This includes that such bylaw and/or charter text will not have any exception or exclusion conditions (to the fullest extent permitted by state law) that apply only to shareowners but not to management and/or the board.
Statement of Kenneth Steiner
Special meetings allow shareowners to vote on important matters, such as electing new directors, that can arise between annual meetings. If shareowners cannot call special meetings, management may become insulated and investor returns may suffer. Shareowners should have the ability to call a special meeting when a matter is sufficiently important to merit prompt consideration.
Fidelity and Vanguard supported a shareholder right to call a special meeting. The proxy voting guidelines of many public employee pension funds also favor this right. Governance ratings services, such as The Corporate Library and Governance Metrics International, have taken special meeting rights into consideration when assigning company ratings.
The merits of this Special Shareowner Meetings proposal should also be considered in the context of the need for improvements in our company’s corporate governance and in individual director performance. In 2008 the following governance and performance issues were identified:
- The Corporate Library www.thecorporatelibrary.com, an independent investment research firm rated our company:
“D” in Overall Board Effectiveness.
“F” was the previous Verizon rating.
“Very High Concern” in executive pay – $26 million for Ivan Seidenberg and $18 million each for Dennis Strigl and Lowell McAdam.
“High Governance Risk Assessment.”
- We did not have an Independent Chairman – Independence concern.
- Our key Audit Committee chairman, Thomas O’Brien, had 21-years director tenure-Independence concern.
- Plus Mr. O’Brien was the Lead Director at BlackRock (BLK) another D-rated company according to The Corporate Library.
- We had no shareholder right to:
Act by written consent.
Additionally eight of our directors, including directors who had increased responsibilities as noted, also served on boards rated “D” by the Corporate Library:
Verizon Audit Committee Chairman
The above concerns shows there is need for improvement. Please encourage our board to respond positively to this proposal:
Special Shareowner Meetings-
Yes on 7
BOARD OF DIRECTORS’ POSITION
Verizon is governed by a highly qualified, experienced and effective Board of Directors, which has placed a high priority on effective governance. The Board agrees that it is important for shareholders to have the ability to call a special meeting. As a result, in February 2008 the Board amended the Company’s bylaws to provide that the holders of 25 percent or more of Verizon’s stock may call a special meeting of shareholders. This threshold prevents a small group of shareholders from calling a special meeting on topics that may not be of concern to the majority of shareholders. This is important because a special meeting of shareholders is an extraordinary event that is both expensive and time-consuming. Accordingly, the Board believes that the existing bylaw provision strikes an appropriate balance between the right of shareholders to call a special meeting and the interests of the Company and its shareholders in promoting the appropriate use of Company resources.
In addition to lowering the stock ownership requirement to call a special meeting, this proposal also requests that the Board amend the existing bylaw provision to remove “exceptions or exclusions that apply only to shareholders.” There are only two limited circumstances under which a special meeting requested in accordance with the Bylaws would not occur:
- If the Board exercises its fiduciary duty and determines that the business that the shareholders seek to address at the special meeting is not a proper subject for shareholder action under Delaware law; or
- If the purpose of the special meeting requested by shareholders is scheduled to be addressed at a duly called annual meeting that will be held within 90 days of the request.
If these common sense safeguards were eliminated, the proposal would permit a small group of shareholders to call a special meeting and have the Company and its shareholders incur costs to advance narrow interests without any limitation on the number or frequency of meetings.
For these reasons, the Board believes that shareholders already have a meaningful right to call a special meeting and that the proposal is not in the best interests of Verizon and its shareholders.
Accordingly, the Board of Directors recommends that you vote AGAINST this proposal.