Proxy Statement
Executive Compensation

Introduction

The Human Resources Committee oversees the development and implementation of the total compensation program for Verizon’s named executive officers. Throughout the discussion and analysis of compensation, we refer to the Board of Directors as the Board and the Human Resources Committee as the Committee.

For 2010, Verizon’s named executive officers were:

Ivan G. Seidenberg

Chairman and Chief Executive Officer

Lowell C. McAdam

President and Chief Operating Officer

Virginia P. Ruesterholz

Executive Vice President and President, Verizon Services Operations

Daniel S. Mead

Executive Vice President and President and Chief Executive Officer of
Verizon Wireless Joint Venture

Francis J. Shammo*

Executive Vice President and Chief Financial Officer

John F. Killian*

Former Executive Vice President and Chief Financial Officer

* Mr. Killian ceased to serve as Chief Financial Officer on November 1, 2010, when Mr. Shammo assumed that position.
Mr. Killian retired from the Company on December 31, 2010.

2010 Company Operations and Key Management Changes

During 2010, Verizon continued to take significant steps in its strategic transformation to deliver the best wireless and broadband experience, further focusing Verizon’s asset base around its fastest growing businesses – wireless, FiOS fiber-optic services and other broadband development and global internet protocol networks. These include the following strategic successes:

  • Verizon Wireless launched a fourth generation broadband network based on long-term evolution technology (LTE), which covers over 110 million Americans and is the world’s first large-scale LTE network.
  • Verizon Wireless developed a smartphone franchise around the Android operating system, which has been so successful that smartphone penetration within the Verizon Wireless customer base has increased from 14.6% in November 2009 when the first Android-based smartphone was introduced, to 26.1% as of December 31, 2010.
  • Verizon successfully completed the spin off of assets and liabilities of local exchange and related business assets in predominantly rural areas in 14 states to Frontier Communications Corporation. This transaction focused the Company’s wireline operations primarily in densely populated areas, approximately 60% of which have access to Verizon’s broadband FiOS product offering.

In addition, under the leadership of its management team, Verizon delivered strong financial and operating results in 2010 despite a challenging economic environment. Highlights of Verizon’s 2010 performance and notable achievements include the following:

  • Free cash flow totaled $16.9 billion, up 16.4% from the prior year;
  • $2.20 in adjusted earnings per share;
  • $2.5 billion in net income attributable to Verizon;
  • $106.6 billion in consolidated total revenue;
  • Verizon increased its stock dividend by 2.6% and returned $1.85 per share to investors through the Frontier transaction;
  • Verizon’s total return for 2010 ranked 217th among the companies in the Standard & Poor’s 500 Index and 10th among the Related Dow Peers;
  • 2.0 million wireless net retail customer additions (non-acquisition related); and
  • 4.1 million in FiOS broadband customers and 3.5 million in FiOS video customers as of December 31, 2010.

During 2010, the Committee also oversaw key changes in the senior management team reflecting our ongoing succession planning efforts. Mr. McAdam became our President and Chief Operating Officer in October 2010 – a critical step in the succession planning efforts for when Mr. Seidenberg retires. Mr. Shammo became our Executive Vice President and Chief Financial Officer, replacing Mr. Killian who retired on December 31, 2010 after a long and distinguished career with Verizon. Mr. Mead became our Executive Vice President and the President and Chief Executive Officer of Verizon Wireless, replacing Mr. McAdam in that position.

Role and Function of the Compensation Committee

The Committee oversees all aspects of the compensation program for Verizon’s named executive officers, except that the compensation of Mr. Seidenberg is approved by the independent members of the Board after reviewing and considering the Committee’s evaluation and recommendations. The Committee generally evaluates and approves each element of the other named executive officers’ compensation.

The Committee has the sole authority to retain and to terminate a compensation consultant and to approve the consultant’s fees and all other terms of the engagement. The Committee has retained Pearl Meyer & Partners as its consultant (the “Consultant”). The Consultant advises the Committee on all matters related to the compensation of the named executive officers and assists the Committee in interpreting the Consultant’s data as well as data received from the Company. The Consultant participates in all Committee meetings. The Committee holds an executive session with the Consultant each time it meets. No members of management are present at the executive sessions.

The Committee’s policy does not permit its Consultant to do any work for the Company while that firm is acting as the Committee’s consultant. In compliance with the terms of this policy, neither Pearl Meyer & Partners nor its affiliates have performed any work for the Company or any Company affiliate since the date it was retained by the Committee in 2006.

The Committee makes an independent determination on all matters related to the compensation of the named executive officers. In making its determination, the Committee may seek the CEO’s views on whether the existing compensation policies and practices continue to support the Company’s business objectives, appropriate performance goals, the Company’s performance and the contributions of the other named executive officers to that performance.

The Committee may also consult with the Executive Vice President of Human Resources on matters related to the design, administration and operation of the Company’s compensation program. The Committee has delegated administrative responsibility for implementing its decisions on compensation and benefits matters to the Executive Vice President of Human Resources. He reports to the Committee on the actions he has taken under this delegation.

At the request of the Committee, in 2010 management and the Consultant continued their annual shareholder outreach program with the Company’s large institutional investors to discuss the design and operation of Verizon’s executive compensation program. Management and the Consultant participated in conference calls with certain large institutional investors and provided a detailed report to the Committee on the results of those calls. In addition, the Committee regularly monitors best practices and emerging trends in executive compensation. After taking into account these discussions and this information, the Committee determines whether it should make changes to the compensation program.