Verizon Agrees to Yearly Advisory Vote On Executive Pay
Friday, November 2, 2007
Verizon Communications will hold a vote each year for investors to weigh in on executive pay, the second time a U.S. company has allowed such a measure.
The advisory vote will begin in 2009, Verizon said yesterday in a statement. Shareholders passed a proposal in May calling on the company to adopt such a measure.
Verizon, which paid chief executive Ivan G. Seidenberg $21.3 million last year, has been one of the main targets of labor groups seeking to rein in compensation. The AFL-CIO said Seidenberg didn't deserve the pay he received from 2002 through 2006 because Verizon's share price fell during that time.
"This is a victory," said Dan Pedrotty, director of the office of investment at the AFL-CIO, the largest U.S. labor federation. "They should be commended for adopting it."
The New York company should allow a vote before 2009, and investors still have a "a high degree of disapproval" over Seidenberg's pay, Pedrotty said.
Verizon joined Home Depot, Pfizer, Time Warner and Wal-Mart on the "pay-for-failure" list compiled in May by the Corporate Library. The independent group, which monitors companies' governance policies, singled out those that paid chief executives more than $15 million while their share prices declined and trailed competitors in the past five years.
Aflac, the world's largest seller of supplemental health insurance, in February became the first U.S. company to adopt an advisory vote on executive pay.
Verizon also said it would spell out more specifically the types of payments that are part of a severance payout in senior executives' employment agreement. In addition, consultants who advise the board's human resources committee must not do business with the company itself, it said.