Shareholder Proposals (Item 7 on Proxy Card)
The International Brotherhood of Electrical Workers’ Pension Benefit Fund, 900 Seventh Street, N.W., Washington, D.C. 20001, owner of 140,700 shares of the Company’s common stock, proposes the following:
RESOLVED: That the stockholders of Verizon Communications (“the Company”), assembled in Annual Meeting in person and by proxy, hereby request the Board of Directors to take the necessary steps to provide for cumulative voting in the contested election of directors, which means each stockholder shall be entitled to as many votes as shall equal the number of shares he or she owns multiplied by the number of directors to be elected, and he or she may cast all of such votes for a single candidate, or any two or more of them as he or she may see fit.
Cumulative voting means that each shareholder may cast as many votes as equal the number of shares held, multiplied by the number of directors to be elected. Each shareholder may cast all such cumulated votes for a single candidate or split votes between one or more candidates, as each shareholder sees fit.
We believe that cumulative voting increases the possibility of electing at least one director with a viewpoint independent of management. In our opinion, this will help achieve the objective of the board representing all shareholders.
We urge our fellow shareholders to vote yes for cumulative voting and the opportunity to enhance our Board with a more independent perspective.
BOARD OF DIRECTORS’ POSITION
Verizon strongly believes in shareholder democracy. At the present time, each share of Verizon common stock has one vote, and each candidate for Director must receive a majority of the votes cast to be elected to the Board. The entire Board of Directors is elected annually. Verizon adopted majority voting at the request of our shareholders, and the Board believes that this is the most equitable system for electing Directors.
The proponent suggests that cumulative voting is necessary to provide for “at least one director with a viewpoint independent of management.” However, of the Directors nominated for election at the Annual Meeting of Shareholders, 10 are independent of management under the standards established by The New York Stock Exchange and The Nasdaq Stock Market, as well as Verizon’s Corporate Governance Guidelines, which include more stringent independence standards than those of the exchanges. In addition, the candidates were recommended by the Corporate Governance and Policy Committee, which is composed entirely of independent Directors. As a result, the significant majority of Director candidates already has a “viewpoint independent of management.”
Contrary to the proponent’s assertion that cumulative voting would “help achieve the objective of the board representing all shareholders,” cumulative voting would permit special interest groups to leverage their voting power and elect one or more Directors. The Board is concerned that a Director elected by a “special interest” constituency may base decisions on the interests of the group responsible for his or her election rather than acting in the best interests of Verizon and all of its shareholders. In other words, cumulative voting is unlikely to lead to an independent viewpoint – it is likely to lead to a viewpoint that is aligned with a narrow special interest rather than the interests of Verizon’s shareholders as a whole.
The Board of Directors firmly believes that the present system best assures that the elected directors will represent and act in the interests of all shareholders, and not just a particular group, and that this proposal is not in the best interests of Verizon and its shareholders.
The Board of Directors recommends that you vote AGAINST this proposal.