Verizon Shareholders' Net Neutrality, Compensation Proposals Defeated

By Josh Long

Verizon Communications Inc. on Thursday said shareholders have approved management proposals to elect 11 directors to the board for one year, ratified the appointment of Ernst & Young as its independent registered public accounting firm and approved the compensation of its executives as described in a proxy statement.

However, all six shareholder proposals on the ballot were defeated following shareholders’ votes and the conclusion of Verizon’s board that it couldn’t support any of the ideas.

Verizon cautioned the results of its annual shareholders meeting are preliminary until its final results are tabulated and certified by independent election inspectors.

The shareholders’ proposals included a Net neutrality proposal and a proposal by the Association of BellTel Retirees that potentially would have made it more difficult for executives to receive equity awards.

One proposal asked Verizon provide shareholders a list of certain individuals employed by the company who previously served in a government capacity or as a staff member of a congressional committee or regulatory agency and disclose information as to whether those people had engaged in a matter that impacted Verizon’s business. Last year the proposal received 11.6 percent of the shares voting. Verizon’s board asserted the company already must make disclosures under federal law and Securities and Exchange Commission rules.

Another proposal requested that Verizon’s board authorize the preparation of a report, updated annually, concerning several lobbying policies, a list of payments used for such activities and related issues.

“Absent a system of accountability, company assets could be used for policy objectives contrary to Verizon’s long term interests,” read the statement in favor of the proposal.

Verizon’s board, however, responded in the proxy statement that the company’s “lobbying activities are already subject to an extensive framework of laws, public disclosure and internal oversight.”

A shareholder’s proposal that has been successful at other companies also failed: asking the board to amend Verizon’s bylaws to give holders of 15 percent of the company’s outstanding common stock the power to call a special shareholders meeting. The proposal won more than 60 percent support at CVS, Sprint and Safeway and would not impact the board’s authority to hold a special meeting, according to the statement in favor of it.

Verizon’s board declared the proposal was unnecessary because “any shareholder who owns at least 10 percent, or multiple shareholders who together own at least 25 percent , of Verizon’s stock may call a special meeting of shareholders.”

Yet another proposal that reportedly won shareholders’ approval at 13 major companies in 2010 was voted down by Verizon shareholders. The proposal called for the allowance of shareholder action by written consent. That would allow shareholders to raise important issues outside of an annual meeting. The board contended the measure could result in certain shareholders being excluded and deprive the company of sufficient notice in order to meaningfully consider a proposed action.