New SEC disclosure rules are producing criticism of an increasing number of companies’ executive compensation practices, but Verizon Communications is sure to be the AFL-CIO’s “poster boy” for excess pay in 2007, according to the labor coalition’s chief shareholder activist.
The telecom giant faces at least three proxy proposals to limit executive pay and institute a shareholder vote on compensation when it holds its annual meeting May 3, and the union coalition now is urging shareholders to vote no on all the members of Verizon’s compensation committee. The committee is rife with conflicts of interest and has paid Verizon CEO Ivan Seidenberg for “nothing more than having a pulse,” says Richard Trumka, secretary-treasurer at the union, at a briefing about the union’s new Web site dedicated to tracking executive pay.
The AFL-CIO is meeting with institutional investors, mutual funds and other shareholder activists to push through the three proposals in conjunction with other groups, such as the Association of BellTel Retirees. One proposal seeks to require shareholder votes on severance pay that is more than 2.99 percent of an executive’s salary, one seeks a nonbinding “say on pay” vote, and the last seeks to limit the number of boards on which Verizon directors can serve.
Seidenberg’s total compensation was $75.1 million from fiscal years 2000 through 2005, while total shareholder return was negative 26.8 percent during that period, according to the Corporate Library.
Verizon spokesman Bob Varettoni declined to comment beyond the company’s response to the proposals in its proxy statement, which noted that the proposals could put Verizon at a competitive disadvantage because it wouldn’t be able to vest stock options for executives in severance agreements.
One of the proposals, the shake-up of Verizon’s compensation committee, may not be far-fetched. Members of Verizon’s compensation committee need to get a majority of shareholders to approve their position. Trumka is confident the coalition will be able to get the votes to eliminate the current committee members.
“If not this year, then next year,” he says. “If not next year, we’ll continue” to push ahead with the proposal.
The AFL-CIO has taken a large role in seeking redress of allegedly excessive executive pay. Last year, the companies that Trumka identified as “poster children” for excessive pay were Home Depot and Pfizer, both of which had ousted their CEOs over complaints about their compensation packages. The AFL-CIO is also urging members to call lawmakers to support the say-on-pay House bill, which was proposed by Rep. Barney Frank, D-Massachusetts.