Shareholder proposals calling for an independent board chair at Verizon, strengthening the company's executive compensation clawback policy, and eliminating the payment of above-market earnings into the company's non-qualified retirement plan were defeated at the company's annual shareholder meeting Thursday, despite support from a number of large pension funds, according to a Verizon Communications Inc. news release.
Exact vote tallies were not provided by Verizon. However, according to preliminary results provided by a spokesman for BellTel Retirees, which was involved with two of the proposals, the non-qualified retirement plan proposal was supported by 28% of shareholders, while the clawback proposal was supported by 35.4% of shareholders.
All three proposals were supported by the $222.5 billion California State Teachers' Retirement System, West Sacramento; $204.9 billion Florida State Board of Administration, Tallahassee; and the $151 billion Texas Teacher Retirement System, Austin. The C$337.1 billion ($262.6 billion) Canada Pension Plan Investment Board, Toronto, supported the independent board chair and clawback proposals.
The clawback proposal, filed by Jack Cohen, chairman of the Association of BellTel Retirees, called for amending the company's current clawback policy "to state 'conduct' — rather than 'willful misconduct' — may trigger application" of the policy, citing concerns that the language in the current policy was too "narrow" and "vague" to ever be applied and does not provide for the disclosure of information surrounding recoupments.
The non-qualified savings plan proposal, filed by the Association of BellTel Retirees, called for a policy prohibiting "the practice of paying above-market earnings on the non-tax-qualified retirement saving or deferred income account balances of senior executive officers."
"Above-market earnings are not performance-based and fail to align management incentives with long-term shareholder interests," the association said in an earlier new release on the proposal. "Further, existing gross disparities between retirement benefits for senior executives and other employees risk corporate morale problems."
Also, the Florida State Board of Administration voted against Verizon's executive pay plan, which was ultimately ratified by shareholders. CalSTRS, Texas Teachers and the CPPIB supported the pay package.
"Verizon had some important omissions in both of their short-term and long-term incentive plan awards, and what they did disclose was not very impressive," said Tracy Stewart, senior corporate governance analyst at the FBSA, in an email on the pension fund's say-on-pay vote. For instance, "they underperformed the targets of 70% of their short-term plan metrics, which were lowered from last year, but managed to receive very close to target compensation levels," Ms. Stewart wrote.
Proxy-voting advisory firm Institutional Shareholder Services had recommended that shareholders vote for all three shareholder proposals and approve the compensation package.