Shareholder Proposals (Item 8 on Proxy Card)
William Steiner, 112 Abbottsford Gate, Piermont, NY 10968, owner of 9,000 shares of the Company’s common stock, proposes the following:
8 – Shareholder Action by Written Consent
RESOLVED, Shareholders request that our board of directors undertake such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting (to the fullest extent permitted by law). This includes written consent regarding issues that our board is not in favor of.
This proposal topic won majority shareholder support at 13 major companies in 2010. This included 67%-support at both Allstate and Sprint. Hundreds of major companies enable shareholder action by written consent.
Taking action by written consent in place of a meeting is a means shareholders can use to raise important matters outside the normal annual meeting cycle. A study by Harvard professor Paul Gompers supports the concept that shareholder dis-empowering governance features, including restrictions on shareholder ability to act by written consent, are significantly related to reduced shareholder value.
The merit of this Shareholder Action by Written Consent proposal should also be considered in the context of the opportunity for additional improvement in our company’s 2011 reported corporate governance in order to more fully realize our company’s potential:
The Corporate Library, an independent investment research firm rated our company “D” with “High Governance Risk” and said there were concerns related to the composition of our board. Four directors had 14 to 16 years long-tenure. It is increasingly difficult to consider board members independent after so many years of service.
Joseph Neubauer received our highest negative votes (15%-negative), had 16-years tenure and yet chaired our executive pay committee with $37 million for Ivan Seidenberg. A relatively new director, Rodney Slater, was already our second highest negative vote-getter (11%-negative) and yet was on our nomination committee.
Please encourage our board to respond positively to this proposal to support improved corporate governance and financial performance: Shareholder Action by Written Consent – Yes on 8
BOARD OF DIRECTORS’ POSITION
The Board of Directors has carefully considered this proposal and does not believe that it is in the best interests of all shareholders. Action by written consent can result in certain shareholders being denied the ability to vote or otherwise have a say on proposed corporate action. The Board strongly believes that shareholder democracy can best be assured by shareholder action being taken at an appropriately called annual or special meeting of shareholders. Shareholder meetings provide the best opportunity for discussion and interaction among the Company’s stakeholders so that all points of view may be considered prior to a vote.
The Board also opposes this proposal because action by written consent can occur with little or no advance notice to the Company, minority shareholders and the market. As a result, the Board may not have a meaningful opportunity to consider the merits of the proposed action, to consider alternative courses of action or to communicate its views to shareholders. For example, hostile or insurgent shareholders have relied on consent solicitations as a coercive tool to threaten or fundamentally change companies without providing all shareholders with notice or an opportunity to be engaged in the consideration of such changes at a shareholders meeting.
The Board believes that adoption of this proposal is unnecessary in the context of Verizon’s overall corporate governance. Contrary to the implication of the proposal, Verizon’s shareholders have the ability to raise important matters outside of the annual meeting cycle. Any shareholder owning at least 10%, or any group owning 25%, of Verizon’s common stock has the right to call a special meeting of shareholders. As a result, shareholders holding far fewer shares than the majority contemplated by the proposal already have the ability to cause important matters to be addressed in a forum that permits the involvement of all shareholders and constructive engagement with the Board and management.
This right is particularly meaningful at Verizon where the Board has demonstrated its willingness to listen to and respond to shareholder concerns. For a number of years, at the Board’s request, Verizon senior executives have conducted a semiannual outreach program to discuss governance matters, executive compensation and shareholder proposals with major institutional shareholders. The Board has demonstrated its ongoing commitment to good governance by adopting majority voting for the election of directors, implementing a shareholder advisory vote on executive compensation before it was required to do so and providing shareholders with the right to call a special meeting and approve any shareholder rights plan put in place by the Board.
The Board of Directors recommends that you vote AGAINST this proposal.