Institutional Shareholder Services is recommending Verizon Communications Inc. investors vote for a shareholder proposal requiring the company to exclude pension income from its bottom line in determining performance-based pay for top executives. However, ISS recommends a vote against a similar proposal by General Electric Co. shareholders at its upcoming annual meeting.
ISS said it evaluates these proposals based on the magnitude of the contribution made by a pension plan to a companys net earnings, and the degree to which those net earnings are used as a factor in determining executive incentive compensation. Since Verizon "would have reported a significant and material net loss for fiscal 2001 had it not included over $1.8 billion in pension income in its calculation of net income we believe this proposal warrants shareholder support.
Both meetings are scheduled for April 24.